China, Switzerland sign free trade agreement

Updated 07 July 2013
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China, Switzerland sign free trade agreement

BEIJING: China and Switzerland yesterday 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.
Afterward, they celebrated the agreement, which aims to liberalize 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 yesterday'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 yesterday'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 center.
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 percent, 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 $ 22.8 billion 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.
Schneider-Ammann said the deal is also important for hedging risks.
"We get a chance to spread out the risk of the Swiss economy a little bit over the borders of our European neighborhood," he said. "It has a great importance."
The EU economy has experienced serious turmoil over the past several years in the wake of the global financial crisis and due to sovereign debt instability that engulfed Greece and other member states including Spain, Italy and Portugal.
The EU and China have jousted over mutual claims of unfair trade practices in sectors including Chinese solar panels, leading to worries that the dispute could spiral out of control.
Total trade between China and the EU last year exceeded $ 500 billion when the EU had 27 members. Croatia joined this month.
A visit to Beijing last month by the EU's trade chief, who held talks with Gao, helped damp down tensions and increased optimism the two sides can come to terms on their differences.
Schneider-Ammann said doing so was vital for smaller countries like his own.
"It's absolutely important that the bigger economies find ways to keep open their markets because (the) more open the global market... the better the chances to do business," he said.
The deal, for which negotiations formally began in January 2011, still needs approval by the Swiss parliament to take effect.
Schneider-Ammann told Neue Zuercher Zeitung: "If all goes as planned, from our point of view, the agreement can be implemented by mid-2014."
Separately, Schneider-Ammann expressed concern about the value of the Swiss franc, which he said remained too strong.
"The Swiss franc is still overvalued," he told reporters after the signing.
The purchasing power of the Swiss franc against the euro, he said, is about 131-132 francs to the single currency, weaker than Friday's exchange rate of about 123.
"That's the overvaluation of our currency," he said.
The franc is a traditional haven for investors in times of international turmoil, which drives up its value and can weaken the competitiveness of Switzerland's exports.
The Swiss central bank set a minimum exchange rate of 1.20 francs to the euro in September 2011 amid global financial instability.


Southwest challenged engine maker over speed of safety checks

Updated 20 April 2018
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Southwest challenged engine maker over speed of safety checks

  • The proposed inspections would have cost $170 per engine for two hours of labor
  • Southwest Airlines Chairman and CEO Gary Kelly explained the airline’s maintenance procedures in a 59-second video posted to Twitter

WASHINGTON/PARIS: Southwest Airlines clashed with engine-maker CFM over the timing and cost of proposed inspections after a 2016 engine accident, months before the explosion this week of a similar engine on a Southwest jet that led to the death of a passenger, public documents showed.
The proposed inspections would have cost $170 per engine for two hours of labor, for a total bill to US carriers of $37,400, the US Federal Aviation Administration said in its August 2017 proposal, citing the engine manufacturer.
The documents reveal that airlines including Southwest thought the FAA had “vastly understated” the number of engines that would need to be inspected — and therefore the cost.
The documents are part of the public record on the FAA’s initial proposal for inspections and the response from airlines made in October, within the designated comment period.
The FAA and CFM International made the inspection recommendations after a Southwest flight in August 2016 made a safe emergency landing in Florida after a fan blade separated from the same type of engine. Debris ripped a foot-long hole above the left wing. Investigators found signs of metal fatigue.
On Tuesday, a broken fan blade touched off an engine explosion on Southwest Airlines flight 1380, shattering a window of the Boeing 737 jet and killing a passenger. It was the first death in US airline service since 2009.
The FAA is not bound by any specified time periods in deciding whether to order inspections and must assess the urgency of each situation.
Southwest and other airlines in their responses in October objected to a call by CFM to complete all inspections within 12 months. The FAA proposed up to 18 months, backed by Southwest and most carriers. Southwest also told the FAA that only certain fan blades should be inspected, not all 24 in each engine.
“SWA does NOT support the CFM comment on reducing compliance time to 12 months,” Southwest wrote in an October submission.
CFM is a joint venture of General Electric Co. and France’s Safran.
Southwest said in its submission that the FAA’s proposal would force the carrier to inspect some 732 engines in one of two categories under review — much higher than the FAA’s total estimate of 220 engines across the whole US fleet.
“The affected engine count for the fleet in costs of compliance ... appears to be vastly understated,” it said.
Southwest spokeswoman Brandy King said on Thursday that the comments “were to add further clarification on items included in the proposed AD (airworthiness directive).”
She said the company had satisfied CFM’s recommendations, but she did not immediately answer questions about how many engines had been inspected and whether the failed engine had been inspected.
Late on Thursday, Southwest Airlines Chairman and CEO Gary Kelly explained the airline’s maintenance procedures in a 59-second video posted to Twitter. He said the airline hires GE to do heavy overhaul or maintenance work on all of its engines.
“So GE provides the guidelines for maintenance inspections and repairs over the life of the engines,” he said.


The airline on Tuesday evening said it would conduct accelerated ultrasonic inspections of the fan blades on CFM56 engines within the next 30 days.
“In addition to our accelerated inspections we are meeting with GE and Boeing on a daily basis regarding the progress of the inspections and we will continue to work with them throughout the rest of the investigation,” Kelly said in the video.
The FAA said on Wednesday it would finalize the airworthiness directive it had proposed in August within two weeks. It will require inspections of some CFM56-7B engines. FAA officials acknowledged that the total number of engines affected could be higher than first estimated.
The FAA, which has issued more than 100 airworthiness directives just since the beginning of this year, has said that the time it takes to finalize directives depends on the complexity of the issue and the agency’s risk assessment based on the likelihood of occurrence and the severity of the outcome.
The National Transportation Safety Board said on Thursday that investigators would be on the scene into the weekend but declined any new comment on the investigation.
Investigators said one of the fan blades on Tuesday’s Southwest flight broke and fatigue cracks were found.