swissinfo.ch | Oct 4, 2011

Swiss seek fresh impetus from India trade talks

by Simon Bradley, swissinfo.ch

Switzerland is confident that free trade talks with India may soon be concluded, but major differences still need to be ironed out.

Indian President Pratibha Patil and a 45-strong business delegation are visiting Switzerland for two days of talks on boosting bilateral relations, including financial and research cooperation.

India is among the top four trading partners of Switzerland in Asia. The trade volume between the two countries stood at SFr3.6 billion ($3.95 billion) last year.

In her speech on Monday in the capital Bern, Patil said there were “enormous synergies” between both economies and “great scope for enhancement of the current economic interaction”.

“In key areas such as clean technology, environmental protection and urban waste collection, Swiss industries can provide us with innovative solutions,” she said.

“India too has gained recognition from the world for its human resources… and emerged as a hub for high-quality, cost-competitive manufacturing.”

Since 2008, Switzerland, as a member of the European Free Trade Association (Efta), has been negotiating a free trade agreement with India that aims to be finalised by the end of 2011.

Window of opportunity

Martin Zbinden, head of the Free Trade Agreements Division at the State Secretariat for Economic Affairs (Seco), is optimistic this target can be met.

“This is still the common objective or maybe the very beginning of next year,” he told swissinfo.ch. “We are speeding up the rhythm of negotiation with two more full sessions planned this year.”

Elections are planned in India next March and some personnel changes are expected, so both sides recognise that there is a window of opportunity to finalise the accord, he added.

Zbinden, who has been involved in numerous free trade accords, said the Indian trade negotiators were not necessarily tougher than others.

Every country defends their interests in such negotiations, including Switzerland, he noted.

“But India is well aware of its economic potential and influence and the importance of its markets.”

Swiss Foreign Minister Micheline Calmy-Rey, who also holds the rotating presidency this year, felt the ambitious agreement would give “fresh impetus to relations”.

Negotiating obstacles

But a number of major sticking points remain.

Switzerland is seeking to improve access to the Indian market for its chemical and pharmaceutical products, machines and watches. But India refuses to lower customs duties for certain products in these sectors, which account for 30 per cent of bilateral trade.

“Small Indian businesses active in these sectors could be at risk,” said Isolda Agazzi of the Swiss non-governmental organisation Alliance Sud.

Switzerland is also seeking to reinforce intellectual property rights. It wants to extend patent protection for pharmaceutical products to prevent Indian producers of cheap generic drugs benefiting from clinical tests developed by other companies.

But development aid groups argue that tighter patent protection would harm the production of generics in India.

Agazzi said Switzerland would probably have to follow the European Union, which is also holding free trade talks with India, and drop some demands over data exclusivity.

Limited visas

Another stumbling block is over greater access to the Swiss market for Indian export services, especially the information and communication technology (ICT) sector, and fewer immigration restrictions.

Switzerland’s labour market opened for citizens from the EU and Efta countries in 2002, while permits for those from other countries are limited to highly skilled labour.

This year the Swiss authorities will hand out just 8,500 visas to non-EU employees who want to work in Switzerland for more than a few months, presenting numerous headaches for ICT contractors.

And while India’s ICT sector continues to grow rapidly, Switzerland estimates it will face a shortfall of 32,000 skilled ICT workers by 2017.

Last month the economics ministry published a report outlining 40 measures to cope with the overall shortage of skilled workers expected from 2020. It proposed to better exploit the national labour market while also encouraging targeted immigration.

The issue of foreign workers pouring into Switzerland has proven a hot potato during the current election year.

“We need a controlled increase in quotas while stimulating interest so Swiss companies invest in IT people,” said Andreas Knöpfli, president of the Swiss ICT trade body Swico.

Simon Bradley, swissinfo.ch