Ideal FTA Provisions

When addressing the Swiss ideal treaty clauses, the SECO interviewees mentioned the existence of model treaty provisions at the level of the European Free Trade Association (EFTA) as ‘best practice’ for EFTA and Switzerland, which are differentiated according to individual trade and trade-related issue areas. These model provisions are followed by the Swiss government when negotiating both under the umbrella of EFTA and on the bilateral track. According to one interviewee, the model treaty provisions are up-to-date with the notable exception of services and investment, where EFTA is relying on an outdated framework for its trade negotiations based on a GATS mode-three differentiation between investments in services and goods.

A useful proxy approach to look at the degree to which the actual Swiss trade agreements approach the ideal treaty provisions (i.e. the deep commitments on services, investment, IPR, public procurement, standards and competition policy that Switzerland pursues) consists of assessing the depth of existing Swiss FTAs. The deeper the agreement, the closer it comes the Swiss ex ante negotiating template goals. Figure 3.4 displays the levels of commitments found

41 |P a g e in Swiss FTAs which are in force or have been signed recently, ranked from highest to lowest on the overall depth index (as per the abovementioned DESTA approach).

Figure 3.4 Commitment levels per issue area in Swiss FTAs

Source: DESTA database

Figure 3.4 indicates the FTAs with Japan (2009), Colombia (2008) and Georgia (2016) as the agreements with the highest level of aggregate depth. Upon closer examination, one can see that the corresponding treaties exhibit relatively high commitment levels on services, investment, intellectual property, public procurement, and standards, and low levels only for competition policy. By means of illustration, the recently concluded FTA with Georgia contains public procurement provisions extending commitments beyond the central level to comprise sub-central and local public procuring entities as well as public enterprises in some utilities sectors. On intellectual property, the agreement features tangible provisions on patentability as well as enforcement. Regarding services, the EFTA-Georgia agreement contains liberalisation provisions on the movement of natural persons in the provision on services.

The pattern in Figure 3.4 matches the information retrieved from our different sources. In the 2016 Foreign Economic Policy Report (pp. 836-886), the Swiss Federal Council places emphasis on offensive interests particularly in the issue areas of investment, services, public

42 |P a g e procurement, intellectual property rights, and standards. This finding is confirmed in a recent study on EFTA’s PTA strategy commissioned by the EU Directorate-General Policy Department (2016, pp. 22-31).

When elaborating on the negotiating template used by EFTA, the SECO interviewees equally pointed to several FTAs with a high depth value in Figure 3.4. More specifically, three out of five trade policy experts affirmed that the recently concluded FTA with Georgia (highlighted in blue) exhibits a high degree of overlap with the model treaty design. The willingness of Georgia to make commitments towards Switzerland and its fellow EFTA members was primarily attributed to the existence of an ambitious FTA between Georgia and the European Union, as well as Georgia’s determination to signal its liberal-mindedness to the Western European audience (see also 2016 Foreign Economic Policy Report, p. 860). One interviewee further mentioned the FTAs with Colombia, Peru and Hong Kong as being relatively close to the ideal negotiating template. Our analysis based on the DESTA data indicates that while the FTA with Colombia (highlighted in blue) might indeed serve as a template in future negotiations, the treaties with Peru and Hong Kong feature shallow commitments in several issue areas with offensive Swiss interests, notably services in the case of Peru and public procurement in the case of Hong Kong.

The design of existing Swiss FTAs (Figure 3.4) further allows for a comparison with the level of ambition enshrined in the prospective partner states’ existing trade agreements (Figure 3.3).

As affirmed above, on average, the potential partners exhibit low levels of commitments especially on public procurement and intellectual property rights. This implies that if Switzerland seeks to conclude FTAs in line with the EFTA template, the partner states will have to be incited to make ambitious reciprocal commitments especially in these two issue areas during the bargaining process.

In addition to the clauses found in existing treaties, the SECO interviewees detailed several issue areas where Switzerland seeks to move beyond existing preferential commitment levels in breadth and depth. In this context, new or more ambitious provisions would mainly build on the existing WTO framework (WTO+ provisions), but can potentially also relate to issue areas currently not regulated at the multilateral level (WTOx). Moreover, several already concluded agreements, both with and without Swiss participation, could serve as a reference for more ambitious or novel treaty clauses. Table 3.5 provides a summary of these provisions as indicated by the interviewees.

Table 3.5 Additional FTA provisions pursued by Switzerland

Issue area Nature of

commitment Description Reference agreement(s)

Investment WTO+ National treatment

commitments, notably with Comprehensive Economic and Trade Agreement (CETA)

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Issue area Nature of

commitment Description Reference agreement(s) respect to pre- and

post-establishment Public procurement WTO+ Coverage of procuring entities

extending to the sub-central level

Existing Swiss FTAs and WTO Government Procurement

Agreement Technical barriers to

trade WTO+ Mutual Recognition

Agreements (MRAs) on good manufacturing practices

EC-South Korea

Sanitary and

phytosanitary measures WTO+ MRAs TTIP²⁹

Digital security WTOx Regulatory framework in FTA Transpacific Partnership Agreement (TPP) Rules of Origin WTO+ Design of more liberal rules of

origin NA

Trade remedies WTO+ Ban of the use of anti-dumping duties and countervailing

measures

Existing Swiss FTAs with prohibition clauses Trade facilitation WTO+ Further advances in expediting

trade flows WTO Trade Facilitation Agreement Sustainable

development WTOx Confirmation of provisions in

found in recent FTAs Existing Swiss FTAs with sustainable development

chapters Source: The information in this table is based upon desk research of existing information on the issue areas and expert interviews.

29 Since the TTIP negotiations are still on-going, it is difficult to determine the scope of the SPS provisions enshrined in a potential final agreement. However, the proposals initially tabled by the negotiation parties indicate their willingness to achieve clauses on equivalence and mutual recognition regarding SPS (see for example Art. 8 of the European Commission’s proposal for the SPS chapter as published on January 7, 2015).

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