Free trade with Vietnam: a window of opportunity in Asia opens up for Swiss SMEs

After more than fourteen years of negotiations, the EFTA states — Switzerland, Iceland, Liechtenstein and Norway — have announced the conclusion of talks on a free trade agreement with Vietnam. For Swiss businesses, the stakes go beyond trade diplomacy: the aim is to secure better market access to one of Asia’s most dynamic markets, in a context where profit margins are often determined by customs duties, logistics and legal certainty.

The agreement is not yet in force. It must be signed and then submitted to the Swiss Parliament. But for an exporting SME, an industrial supplier, a service provider or a group already operating in South-East Asia, now is a good time to review its supply chains, suppliers and commercial ambitions. A free trade agreement does not automatically generate sales; however, it does make certain doors easier to open.

Fourteen years of negotiations to close the competitive gap

According to economiesuisse, negotiations began more than fourteen years ago and resumed in Geneva on 8 September 2025 following a long hiatus, before culminating in the announced conclusion. The framework is that of the European Free Trade Association (EFTA), of which Switzerland is a member alongside Iceland, Liechtenstein and Norway. This type of agreement generally aims to reduce or eliminate customs duties, facilitate trade in goods and services, improve investment conditions and incorporate commitments relating to sustainable development.

For Switzerland, there is also a defensive interest at stake. economiesuisse points out that the European Union and the United Kingdom already have similar agreements with Vietnam. Without a comparable framework, a Swiss company may find itself at a disadvantage compared to a European or British competitor, even if its product is of equivalent quality. In certain tenders, in the retail sector or within industrial supply chains, a difference in import costs may be enough to tip the balance in a decision.

This point is important for SME managers: a free trade agreement is not just a matter for large multinationals. It can influence the final price of a machine, a component, a precision instrument, a cleantech solution or a niche product. It can also enhance the predictability of a business expansion project or a local partnership by clarifying certain rules of the commercial game.

A Vietnamese market that already features significantly in Swiss figures

Vietnam is no longer a distant market viewed from the sidelines. According to economiesuisse, the volume of bilateral trade with Switzerland stands at around 2.5 billion francs, making it Switzerland’s third-largest trading partner in the ASEAN region. More than 100 Swiss companies operate there, accounting for over 17,000 jobs in total.

This presence is driven by Vietnam’s growing role as a production hub, a trading platform and a link in global value chains. economiesuisse notes that the Vietnamese economy is posting average growth rates of over 6 per cent per year and ranks among the world’s fastest-growing economies. For a Swiss company, this can mean two things: a deeper market for sales opportunities, but also a production or subcontracting environment that needs to be carefully assessed.

According to economiesuisse, the potential highlighted relates in particular to infrastructure and cleantech. These sectors are of direct relevance to a significant part of the Swiss economic fabric: engineering, industrial equipment, processing technologies, energy efficiency, water management, automation and specialised components. However, the opportunities are not uniform. A company selling to public-sector clients, a firm supplying an international integrator, or an SME relying on a local distributor will not face the same risks or reap the same benefits.

Vietnam may also be of interest to companies seeking to diversify their markets. In a global environment marked by trade tensions and protectionist tendencies, having multiple markets can reduce dependence on a single region. This does not, however, obviate the need for a detailed analysis: distance, lead times, exchange rates, product compliance, after-sales service and contractual protection remain key factors.

Customs duties: the gains lie in the administrative details

The most obvious benefit of a free trade agreement is the reduction, or even elimination, of customs duties on many products. For an SME, this can improve the competitiveness of an offering or breathe new life into profit margins. But the benefit is never automatic. It depends on the exact product, its tariff classification, its preferential origin and the documents provided at the time of import.

In practice, a company will need to check whether its goods meet the rules of origin set out in the agreement. These rules determine whether a product can be considered to originate in Switzerland, the EFTA or Vietnam for preferential purposes. A product assembled in Switzerland using foreign components, for example, may require specific analysis. Stock records, supplier declarations and proof of processing then become tools that serve both commercial and administrative purposes.

It is therefore in the interests of finance and logistics managers to work together. The sales department may promise a more attractive price; however, the export department must be able to correctly document the origin, and the freight forwarder must apply the correct customs procedure. An error in classification, incomplete evidence or an overly optimistic assumption can turn an expected tariff advantage into an unforeseen cost.

For Swiss importers, the agreement may also change the equation. If an SME purchases components or finished products from Vietnam, a reduction in import duties can improve the purchase cost. But here too, the list price is not enough: one must take into account lead times, quality, inspections, contractual terms, liability in the event of defects and traceability. Free trade facilitates the crossing of borders; it is no substitute for commercial due diligence.

What SMEs can do in preparation for ratification

The agreement still has to go through the institutional stages. economiesuisse states that the next step will be signature, followed by submission to Parliament by the Federal Council. Until the text comes into force, companies cannot yet take advantage of the benefits it provides. However, they can already begin preparing for its practical implementation.

The first step is to map out the relevant trade flows: products exported to Vietnam, imports from Vietnam, components incorporated into resold products, distribution contracts, and investment or subcontracting projects. This mapping exercise helps to identify the product lines where a tariff reduction could have a real impact, and those where the impact would be marginal.

The second step is to review the basic data: tariff codes, product descriptions, proof of origin, invoices, certificates and supplier declarations. Many SMEs only become aware of the requirements of a preferential agreement when a foreign customer requests proof or when a freight forwarder flags up a problem. Planning ahead avoids having to negotiate under time pressure.

The third aspect concerns commercial strategy. If competitors from the European Union or the United Kingdom are already benefiting from a preferential framework, the entry into force of an EFTA–Vietnam agreement may provide an opportunity to review certain prices, re-engage with prospective customers or hold discussions with a local distributor. But caution is needed: the Vietnamese market has its own practices, channels and constraints. A local partner, a customs adviser and a tailored contractual analysis can make the difference between an opportunity and an unpleasant surprise.

Companies already operating in Vietnam should also review their structures. economiesuisse notes that Switzerland is the 22nd largest foreign direct investor in Vietnam. A free trade agreement can enhance the appeal of an investment, but it does not, on its own, resolve issues relating to governance, local taxation, transfer pricing, financing, intellectual property or compliance. These points warrant a case-by-case review with competent specialists.

Sustainability: an area to monitor beyond the announcement

According to economiesuisse and the Swiss Confederation’s statement, the announced agreement includes a section dedicated to sustainability. In particular, the parties are committed to international environmental and labour standards, including those of the International Labour Organisation and the Paris Agreement on climate change. The text also addresses the sustainable management of forests, fisheries and other natural resources, with regular dialogue to monitor progress on these commitments.

For a Swiss SME, this chapter is by no means trivial. Sustainability requirements are increasingly featuring in tenders, client audits, supplier reports and procurement policies. A company importing from Vietnam will need to be able to explain its supply chain, document certain practices and respond if a customer requests social or environmental guarantees.

It would, however, be unwise to regard the sustainability chapter as a comprehensive insurance policy. The practical implementation, monitoring of commitments and their translation into business practices will need to be observed once the agreement comes into force. Companies would be well advised to maintain their own control procedures: supplier selection, contractual clauses, reasonable audits, reporting mechanisms and internal documentation.

The free trade agreement with Vietnam looks set to be a significant step forward for Switzerland’s foreign economic policy. It has the potential to improve access to a growing market, reduce certain competitive disadvantages and encourage new investment. However, its true value will depend on the final text, its timetable for entry into force and the ability of businesses to turn a tariff advantage into a sustainable commercial advantage. For Swiss SMEs, the sensible course of action is to prepare for it now, without confusing market opening with a guarantee of success.