Switzerland and China officially launched free trade agreement negotiations, aimed at boosting business ties, at the World Economic Forum in Davos on Friday.

Swiss Economics Minister Johann Schneider-Ammann and China Trade Minister Chen Deming signed a memorandum of understanding that will allow technical talks on intellectual property rights, removing import barriers and other issues.

Schneider-Ammann said the deal most stood to benefit firms in the fields of machinery, precision instruments, energy, pharmaceuticals and chemicals.

“We believe that the successful conclusion of the free trade agreement will further enhance future political trust between the two sides,” said Chen Deming.

A feasibility study published last year suggested that Switzerland’s gross domestic product (GDP) could be boosted by 0.23 per cent while firms could make annual savings of SFr290 million ($304 million) per year if trade barriers were lifted.

China is Switzerland’s most important trading partner in Asia, with Swiss exports to the powerhouse economy totalling SFr5.2 billion ($5.52 billion) in 2009.

But Switzerland was warned to tread carefully on the thorny issue of civil rights during negotiations. Chen Deming said social rights would only be discussed if they directly related to trade between the two countries.

If not, “it will delay the negotiation process and that would not be fair to Swiss companies or help the development of the two economies,” Deming said.

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