Free trade agreements are international treaties involving two parties; they are either individual countries or even two transactional groupings entering into an agreement aimed at safeguarding free trade. Free trade agreements are aimed at improving relations with some important partners all across the whole world. Free trade agreement helps in forming friendship partnership between the two countries involved. The two countries tend to draw a number of benefits from each other as well as promoting peaceful co-existence between them (Swirterland Global Entreprise n.p).
Switzerland entered into a free trade agreement with the European Union. Germany being a member of the European Union has been in a bilateral relationship with Switzerland and hence enjoyed the free trade agreement assigned between Switzerland and the European Union. Germany is a part of European Union which has the responsibility of undertaking as well as facilitating all the trade agreement negotiations for its members. Therefore, Germany is an integral part of European Union and hence dealing with Germany means dealing with the European Union ( Swirterland Global Entreprise n.p).
Germany and Switzerland have been in a free trade agreement for a while. Their free trade agreement has in a number of ways contributed to a number of things. For instance it has contributed to the establishment of a peaceful co-existence between the two countries. It has also opened up a number of industries, linkages as well as cooperation. This cooperation has enhanced as well as has given a number benefits to both countries. The following is the free trade agreements between Switzerland and Germany.
Switzerland's trade relation with European Union, and specifically with Germany, dates back in the 40th. The results of the World War altered the attitude of Europe to other countries. All the Europeans came into an agreement that the economic integration was very critical in an effort to avoid the occurrence of another war. Germany being one of the core countries in the European Union believed that Europe's former enemy only required a stable political as well as an economic integration in order to bring peace among them (Marianne n.p).
As for the Switzerland, the consequences of war were basically the opposite of what Germany thought. The Swiss held the idea that it was the absolute national sovereignty together with the strict non-involvement that saved Switzerland from experiencing wreckage in the second World War. Switzerland eventually entered into a European free trade Association in the year 1960 and since then, Switzerland has been trading well with EU member countries. Switzerland has been having a network of almost 28 free trade agreements (FTAs) involving the 38 partners, who are outside the European Union (European Union).
Switzerland free trade agreement aims at minimizing any barriers which might exist on the international market and which have a direct impact on the Swiss economy. Switzerland being a landlocked country is surrounded by four European member countries such as Germany, France and Italy. As a result of this geographical location, European Union plays a very vital role in the Swiss trade flow as well as Swiss trade policy. According to the European commission, almost 900,000 Europeans work in Switzerland. A number of others have moved across the border. This has happened due to the free trade agreement signed between them and the Switzerland ( Swirterland Global Entreprise).
The free trade agreements usually contain a number of provisions guiding on the movement of goods as well as having intellectual property rights. These agreements are usually considered as the first generation agreements. Trade of the basic industrial products, which include fish as well as a number of other processed agricultural ones, are usually one of the main beneficial in these agreements. They are covered in a separate bilateral agricultural agreement. One of the main reasons for this special treatment is the absence of a common policy on agriculture (Swirterland Global Entreprise).
Switzerland has free trade policies which aim at improving the framework conditions specifically for the economic relations with a number of relevant economic partners. One main reason of motivating Switzerland to reach a free trade agreement is to provide the Swiss companies with well-structured as well as unobstructed, stable and a non-discriminatory access to the market of member countries. Moreover, Switzerland has been in the front line in this cooperation. Besides, Germany has also been very supportive in terms of the trade, policies and laws. This has made these two countries very successful in terms of their trade and cooperation in a number of ways. Hence, there is a success of the agreement between these countries (Yuan'an).
Switzerland has a close integration to the world's economy. The economy structure of Switzerland has a characteristic of a pronounced outward orientation. In a greater extent the prosperity of Switzerland greatly depends on the international trade which involves the trading of goods and services together with the investment across the borders. One of the way in which Swiss aims at achieving these objectives is through a multilateral approach in accordance to the frame work of the World Trade Organization. Through the involvement of other countries and especially the European Union countries, Switzerland aims at expanding its market share. Germany is given the responsibility of facilitating a trade agreement hence the free trade agreement with Germany has the same implications as that of European Union (Marianne n.p).
There are a number of criteria to be fulfilled in order to determine whether two countries will be involved in a free trade agreement. Firstly, they ought to look at their current as well as the potential economic statutes, which will be derived from the partnership; secondly, to the extent of the existing and potential discrimination that might result from the conclusion of the free trade agreements especially between the partners being involved (Yuan'an n.p).
Importance of Trade Agreements between Switzerland and Germany
Free trade agreement has in a great way promoted the growth of market in Switzerland, led to adding value as well as has increased the competition of business . As a result of the free trade agreement the Swiss exporters have been given an improved access to the a wide range of sale market with an approximate cover of more than 2 billion consumers as well as the having a gross domestic averaging for more than 22,000 Swiss Francs. Switzerland has experienced a tremendous growth on its imports as well as exports. According to the statistics Switzerland's international trading has seen a growth of 5.7% per annum from the year 1988 to the year 2008. In a period of four years Switzerland's trade with Germany has boosted Switzerland's growth to approximately more than 10% per year (Swiss Confederation).
How It Works
The free trade agreement has equally enabled Swiss export industry to have a remarkable savings especially in custom duties. For instance, during a trade transaction in the year 2008, the Swiss export industry indicated an approximated savings of 420 million in Swiss Francs which could have been levied if there has been no existence of free trade agreement between the countries. The free trade agreement does not only benefit the Swiss export industry but all the consumers as well as the manufacturers in the country as well (European Union).
As a result of the agreement between Switzerland and Germany, the consumers have benefited a lot from low priced products as well as a wide range choice of the products. Manufactures, on other hand, have benefited greatly from the prices of their semi-finished products together with improved access to the law materials which are not commonly found in Switzerland. Moreover, companies have been able to import capital goods for instance machines as well as the electronic equipment at more attractive prices (European Union).
Free trade agreement has also led to a direct investment by the Switzerland. In total, a considerable amount of capital which is more than 23 billion Swiss francs has been accumulated. This equals for almost 5% of all the Switzerland's total accumulated exports. There has also been an increase in the abroad total investment of the Switzerland by almost 12.6%. There has been also a tremendous growth in capital for almost 18% from the time the Free Trade Agreement between Switzerland and Germany came into effect (Marianne).
Germany, on other hand, has also benefited a lot from the bilateral trade with Switzerland, because the European Union has been able to increase on its market share. Two thirds of the Swiss exports go to European Union. According to European Union, (European Union) a considerable number of the citizens live and work in Switzerland while a number of them find themselves traveling across the boarders. It became possible only after the Free Trade Agreement has been signed ( Swirterland Global Entreprise).
The most important thing in Free Trade Agreement is the creation of a free trade zones especially for the industrial products. Most of the Swiss people benefit from the freedom of moving around Germany in looking from employment. Most of them have been able to get their dream jobs while others still accompany their relatives abroad. Companies in Switzerland also enjoy expertise from Germany as a result of the free movement of people. This has led to the development of being experienced in the country. In addition, small as well as medium-based companies in Switzerland are doing business on the European market. This has boosted the customer base as well as improved the rate of production. Those companies in the border enjoy this benefits a lot especially due to the fact that they are at a proximate distance from Germany (Swirterland Global Entreprise).
The free movement of people gives Germans right to take residence in Switzerland. This happens after securing an employment contract in the country. The free movements of people do not only apply to the employees, but also to the students. Students are free to choose any institution in the European Union. This is very important especially in the improvement of the education system. Another important fact is that companies are able to recruit enough personnel (Swirterland Global Entreprise).
Transport of goods between Germany and Switzerland is of great importance. Due to agreement, the transport system is extremely effective between Switzerland and Germany. Germany accepts the tax levied by the Swiss government on the heavy goods vehicle tax. By doing so, the government is recognizing the Swiss policy on the transportation. As part of the agreement, there has been an overload transport Agreement between the Swiss Government and the Germany Government in reference to the European Union. The aim of the agreement was to have huge transportation of the materials by railway between the two countries. This was also formally instituted into the Constitution by the Swiss Government. The central agreement was in fact on the part of the heavy good vehicle tax. This was done in order to open up linkages between the two countries and enhance transportation of goods from one part of the country to another (Swirterland Global Entreprise).
There has been also improvement of air transport. Low cost flights have been established with the collaboration of Germany aviation industry and the Swiss aviation. Air travel has even become easier with time. While in the past days the state had to seek for permission in order to fly over the territory of their respective country, with the establishment of the agreement, the restriction which existed is no longer in power. There has also been harmonization of the safety regulations. These regulations are controlled by the European Aviation Safety Agency. This agency has been bestowed with the responsibility of licensing as well as supervising the technical requirements of the aircraft. Switzerland has also been involved in the creation of a single European Sky which aims at restructuring the air traffic as well as controlling the European airspace (Marianne).
Both the Germany and Switzerland have benefited a lot in their film industry. There has been an increase in the production, due to the increased market space as well as the interchange of the expertise between the two countries. Switzerland has been involved in this program of film making. The Swiss filmmakers have also benefited a lot from their European counterpart, where they have been able to learn from their expertise. They can also apply money especially for the development of individual projects (Swiss Confederation).
Since the beginning of the Switzerland participation in the film making process over 60% of the request by the Swiss film makers to have their films supported have been accepted. The media industry has also benefited a lot on the funding from the European Union countries. This has in a way promoted the film industry in both countries (Swiss Confederation).
In conclusion the Free Trade Agreement between Switzerland and Germany has had a number of benefits which have been accrued by both countries. Switzerland has had an increase in the rate of production in respect to its industrial systems. Movement of people across the borders has also been defining feature since they are able to complement each other on those activities and processes which lack in their country. A number of people became employed, have an access to travelling etc
Therefore, Free Trade Agreement between countries come with a number of benefits accrued to those countries. Thus it is crucial for each country to have a partnership in which they can share their resources in order to achieve a combined development. Switzerland and Germany have benefited in a number of ways through their cooperation. Germany has been able to outsource its technological and expertise to Switzerland while Switzerland has been able to export a number of its products to Germany.
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