BEIJING, July 6: China and Switzerland on Saturday signed a free trade agreement (FTA) — Beijing’s first in continental Europe — in a deal that comes against a backdrop of trade tensions between the Asian giant and the European Union (EU).

Chinese Commerce Minister Gao Hucheng and Swiss Economy Minister Johann Schneider-Ammann inked the accord in a ceremony at the Commerce Ministry in Beijing before officials and reporters.

The agreement aims to liberalise trade in goods and services and increase the $26.3 billion in bilateral commerce they rang up in 2012. China, in April signed its first FTA with a European country — non-EU member Iceland — but Saturday’s deal marks the first with an economy in mainland Europe.

Gao, at a post-signing press conference with Schneider-Ammann, said the agreement would promote trade cooperation with Europe in general. “China should launch similar cooperation with other countries in Europe, even the European Union,” he added, signalling China’s desire for an FTA with the 28-nation bloc.

Switzerland ranked as the world’s 19th-largest economy in 2012, according to the World Bank. China is the world’s second-biggest.

“This free trade agreement has an important significance for the relationship between the two countries,” Schneider-Ammann told AFP after Saturday’s signing ceremony. He noted that China is the world’s single biggest developing market with a growing middle-class.

Fiercely independent Switzerland is not a member of the EU and even waited decades to join the United Nations. Nonetheless, it is an economic heavyweight known for high-value luxury goods, such as its world famous watches, pharmaceuticals and as a financial centre.

Switzerland mainly sells watches, pharmaceuticals and chemicals, as well as machinery to China, which ships mostly textiles and machinery back to Switzerland.

In an interview with Swiss paper Neue Zuercher Zeitung, Schneider-Ammann said tariffs imposed on luxury watches could fall by 60 per cent, while Switzerland will remove similar taxes on Chinese textiles and shoes. Unlike most western countries, Switzerland enjoys a huge trade surplus with China, amounting to $22.8bn last year.

Switzerland and China had signed a preliminary FTA agreement in May during a visit to the landlocked, alpine European nation by Chinese Premier Li Keqiang. —AFP