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India’s share in the global GDP is five percent, a fraction of what it was in 1820, when it started to contract, and a fraction of what it could be today measured against the size of its population or against the example set by China. Strong actors in world trade like EU member States or Switzerland are aware of the gap between reality and the theoretical claim of India’s economy and see it positively as a potential to tap. Both, EU countries as a trading bloc and Switzerland in the framework of the European Free Trade Association, EFTA, of which she is a member, have been negotiating free trade agreements with India. Free Trade agreements lower custom duties and other infringements to mutual market access and are driving forces for economic development. The most successful economies of the world adhere to the free trade philosophy; those who reject this philosophy lag behind. Last year, Switzerland registered an impressive diplomatic success by signing a free trade agreement with China. Negotiations with India have been dragging on since early 2008, with Commerce Ministers of both sides regularly and enthusiastically promising a conclusion “by the end of the year”, but never, however, clarifying which year. The current state of the negotiations resembles a stand-still, since on the Swiss side, the machine industries declare themselves satisfied with the results reached so far, whereas the pharmaceutical, chemical and watch industries reject the current state of the agreed provisions. They blame the negotiations for not having obtained from India guarantees regarding the protection of patents and other intellectual property rights of their industries. In fact, Indian authorities just refuse what Chinese authorities have recognised and conceded in their respective treaty that is, the fundamental logic and benefit for all of respecting the rights of industries to the protection of their research efforts and achievements incorporated in patents. Protection of intellectual property rights is, for industry, one of the core elements of the principles of Rule of Law. As long as the pharmaceutical, chemical and watch industries of Switzerland do not get satisfactory concessions by India in this field, they will reject any free trade treaty and see to it that the Swiss government does likewise. On another economically - and psychologically – relevant topic, the relation Switzerland-India has been brought forward more successfully, at least in legal theory. When the Swiss Government announced, in early 2009, that they were ready to adapt existing Double Taxation Avoidance Treaties with regard to tax evasion provisions, the Indian Government were fast in applying for the revision of the then existing Treaty. For once, the mutual interest in having an updated tax treaty resulted in a very fast conclusion of the necessary Revision Protocol: it was signed in August 2010 and ratified in October 2011. Since then, India has the right to Administrative Assistance that is, to file requests with the Swiss Government for lifting bank secrecy in cases of alleged tax evasion. If the legal framework is there for developing the relationship in this field, the reality shows another picture. Whereas in older cases of Legal Assistance, Indian Justice authorities took in some cases years to respond to Swiss requests, Indian requests for administrative assistance in tax matters under the updated Treaty lack documentation standards defined by the Treaty to be honoured by Swiss authorities. It appears now that both countries’ interest to have the Treaty revised was more unequivocal than their interest to have it implemented expeditiously. Switzerland and India, being so much different from each other with many regards that they could be perfectly complementary in so many fields and successful together, still have not found the way to realise their common potential. Is it for the governments to change? Or for the actors of private economy? Or are both waiting until global economy shows them the way by leaving them behind? The future will show, who else.

17^th April 2014 / Philippe Welti

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