Switzerland and LiechtensteinWT/TPR/S/208 Page 90
IV. trade policies by sector
The services sector remains the backbone of the economies of Switzerland and Liechtenstein in terms of output and employment. Both countries are net exporters of services. The manufacturing sector in the Customs Union is highly diversified and export-oriented, while the contribution of agriculture to GDP remains marginal.
The agriculture sector is still subject to substantial state intervention in Switzerland and Liechtenstein. Agriculture (ISIC, Revision 2 definition) remains highly protected, with an average tariff of 22.7%. Domestic support to agricultural production has remained high by international comparison. The customs union has continued the gradual move away from price support to direct payments to farmers. Switzerland remains an important user of export subsidies, mainly on dairy products. Tariff quotas are in place for 26 product categories; the quotas have been filled for certain products. Indicative prices are used for a number of agricultural products, mainly fodder. A price compensation scheme is in place to compensate exporters of processed agricultural goods for the high costs of locally produced inputs. Liechtenstein maintains its own direct payments system.
The manufacturing sector accounts for nearly 98% of merchandise exports from Switzerland and almost 100% from Liechtenstein. Apart from incentives schemes mostly oriented towards the processing of agricultural products, Switzerland and Liechtenstein do not have policies specific to manufacturing. Tariffs are low on most manufactured goods (ISIC definition), averaging 6.9%; nonetheless, they remain high on most food and certain textile products.
Switzerland adopted a new energy policy in 2007 with a view to securing energy supply and reducing CO2 emissions. A new electricity law, also adopted in 2007, provides for partial liberalization of the Swiss electricity market as of 2009, and for full liberalization as of 2014. The law also established an electricity commission to regulate the electricity market. Liechtenstein's electricity market has been liberalized since 2005.
Financial services, in particular private banking and asset management, are of key importance to employment and GDP generation in both countries. In Switzerland, a unified financial market supervisory authority is being created and is to be operational as of January 2009. Switzerland also revised the legal framework for its insurance subsector in 2006. In Liechtenstein, total assets deposited in banks have grown strongly since 2004. Liechtenstein established the integrated Financial Market Authority in 2005 and has taken steps to strengthen rules for the prevention of money laundering, including through the establishment of the Financial Intelligence Unit in 2001. Liechtenstein has been on the OECD's List of Uncooperative Tax Havens since 1998.
An amendment to Switzerland's Telecommunications Law in 2007 is aimed at unbundling the local loop. The former monopolist for telecom services, Swisscom, has retained a large market share and has remained majority state owned. In Liechtenstein, a new Communication Act has eliminated the licence system. Postal services in Switzerland have been further liberalized, by the reduction of the threshold for services reserved for SwissPost to 100 g. Bilateral air transport liberalization through the agreement with the EC, provides for non-discrimination between Swiss and EC/EFTA air transport companies. Switzerland's land transport policy continues to be guided by the objective of transfering transiting merchandise freight from road to rail transport. Tourism has remained an important generator of foreign exchange in both Switzerland and Liechtenstein.