Deepening an economic and commercial bond they can build on a long-standing friendship of mutual respect

China is an important partner of Switzerland's, so it is worth remembering that its first contacts with China go back as far as the mid-17th century, when traders and watchmakers traveled here.

Then, by the latter part of the 18th century and into the 19th, trade relations were developing at such a pace that by 1912, Switzerland already had a trade agency in Shanghai.

The first official contacts came in 1906, and a treaty of friendship was signed in 1918.

Perhaps more important than this, however, is the fact that Switzerland was one of the first Western nations to formally recognize the People's Republic of China, on January 17, 1950.

According to the Swiss Sinologist Harro von Senger, this early recognition and the fact that, during the Cold War, Switzerland was a window on the world for China, are two reasons that the Chinese hold the Swiss in such high esteem.

And, the People's Republic made its first appearance on the international stage when Premier Zhou Enlai took part in the Indochina Conference, in Geneva, Switzerland in 1954.

Bilateral relations between the two were on their way to further development and they gained greater significance and quickened their pace after Deng Xiaoping began the reform and opening-up policy of 1979.

As the Swiss President Micheline Calmy-Rey has stated, "Our relationship is long-lasting. We've had a very close relationship ever since we recognized the People's Republic of China. Back in 2007, we signed a treaty with China to reinforce and institutionalize our bilateral relationship in various fields, including trade, culture and science."

Strategic step

In making the next logical step in bilateral relations, the two countries decided, in January 2009, to do a feasibility study on a Free Trade Agreement (FTA). The leaders of both countries agreed that this was an important task, one that would increase trade flow in both ways, as well as joint work on technology, energy, environmental protection, and the medical, educational and cultural sectors.

An FTA would be a positive step for both, but, from the Swiss point of view, it is easy to understand the need to reach an agreement. Between 1988 and 2008, total Swiss trade with the world grew less than 6 percent annually. But, the country's commerce with free trade partners grew more than 10 percent annually in the four years after entry into a free trade agreement.

FTAs also have a positive impact on foreign direct investment (FDI). During the same 1988-to-2008 period, Swiss FDI increased annually by about 12 percent. Annual growth of Swiss FDI towards free trade partners though was on average above 18 percent.

Since China is Switzerland's most important Asian trading partner, it is clear why negotiations with China are a priority with its foreign trade policy makers.

After China joined the World Trade Organization in 2001, internal reforms and opening up of the economy became foreign economic policy instruments.

China now has 14 FTA partners comprising of 31 economies with agreements signed with eight.

The Chinese government sees FTAs as a useful means of further opening its economy to the outside world and a good sign of its intent to integrate itself more with the global economy.

At Davos, Switzerland in January of this year, Switzerland and China formally began some important bilateral talks.

China's Commerce Minister Chen Deming said that he expected to see successful results from the negotiations in the not-too-distant future because they would increase mutual trust between the two countries and promote economic development.

After the opening ceremony, Swiss Federal Councilor Johann N. Schneider-Ammann said he agreed with Chen because, "The free trade agreement will further enhance trade and investment relations on a mutually beneficial basis, and create many new opportunities for closer exchanges and cooperation.

"From my point of view, the idea is clear: encourage the Chinese to come here and stay here."

Schneider-Ammann then added, "It's my sincere wish to get the FTA signed as soon as possible so the Swiss can compete in China and the Chinese in Switzerland."

Calmy-Rey then suggested the possibilities that lay ahead, by saying, "Imagine the challenge to negotiating a free trade agreement with a country the size of China."

Striking an optimistic note, she added, "What is noticeable is seeing the interest in Switzerland coming from within China. It means the opportunities and potential outlets for companies from both countries, which are already intense, are becoming even more powerful."

Kurt Haerri, president of the Swiss-Chinese Chamber of Commerce, also noted that, "China is a huge country undergoing tremendous change and it is absolutely thrilling to see the opportunities for both countries with a possible FTA."

Belief in the bond

Both countries say they agree that they have much to gain, but that negotiating and signing the FTA will not be plain sailing.

However, Calmy-Rey recalled an incident from back when she was foreign minister and was with China's Minister Li Zhaoxing, and they took their keys and threw them into the snow of a Swiss mountainside, as a traditional sign of good luck.

Actually, this is an old Chinese tradition for young newlyweds, signifying an everlasting, unbreakable bond. That being the case, it is hard to see the negotiations faltering, so the future should be a good one, enriching for both countries.

(China Daily 07/12/2011 page17)