The landmark free trade agreement between Switzerland and China came into effect this week on Tuesday, July 1, 2014, with both countries cutting import tariffs to boost bilateral trade. The comprehensive agreement also addressed customs procedures between the two countries, as well as issues of intellectual property and dispute resolution.

Under the agreement, China will eliminate tariffs on 84.2 percent of Swiss imports, either immediately or gradually over the next 5 to 10 years. In total, tariffs are reduced on 96.5 percent of Swiss products. Consumers in China can expect more affordable Swiss goods, including cheese, luxury watches, chemicals and fine machinery. Likewise, Switzerland will phase out tariffs on 99.7 percent of Chinese imports, mainly textiles, agricultural products and industrial goods.

“There are many advantages of this agreement for both Swiss multinationals and SMEs, especially since China and Switzerland are complementary economies,” said Maureen Bloechlinger, Manager in Dezan Shira & Associates Shanghai office.

Switzerland is the second European nation after Iceland to sign an FTA with China, and analysts are now predicting that China will overtake Germany as Switzerland’s largest export market by 2035. China is currently the largest importer of Swiss industrial goods in Asia, and is the alpine nation’s third most important trading partner. Bilateral trade between China and Switzerland totaled more than US$22.5 billion in 2013.

Another bilateral agreement on labor and employment cooperation between the two nations came into force earlier last month on June 9, 2014. Together, the Swiss Government said the two agreements will significantly promote economic growth and development.