Switzerland still pays millions in customs duties for its watches
Published: Sunday, Jul 14th 2024, 09:40
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Ten years after it came into force, the free trade agreement between China and Switzerland is to be revised. Switzerland is particularly keen to make progress on customs duties, as millions of francs are still being paid to Beijing for the export of Swiss watches.
During a visit by Economics Minister Guy Parmelin to China at the beginning of July, Switzerland reaffirmed its intention to press ahead with the modernization of the free trade agreement (FTA). The negotiating mandate adopted in May is currently being consulted with the relevant parliamentary committees and the cantons.
In 2014, Switzerland was the first European country to conclude such an agreement with China. "A dream for most countries," says Thierry Theurillat, professor at the HEG-Arc University of Applied Sciences in Neuchâtel and specialist in economic and urban development in Switzerland, China and Southeast Asia. This is all the more true for Switzerland, which exports luxury goods.
One of the aims of the agreement was to reduce the very high taxes on expensive products at the time. The problem is that this did not happen from one day to the next. Taxes are still levied on Swiss luxury goods today, emphasizes Theurillat.
Added to this is the cumbersome Chinese administration: "These administrative meanderings are a means for China to comply with the agreement on paper and remain protectionist at the same time," said the expert. Beijing had not taken any great risks by signing the agreement.
Impossible to quantify savings
Trade in goods is one of the key points that Bern wants to work on, as high customs duties are still being levied, as Fabian Maienfisch, spokesman for the State Secretariat for Economic Affairs (Seco), admits.
Several million francs are still being paid for Swiss watches, he says. The duty rate for these products is currently between 4.4 and 9.2 percent. Most pharmaceutical products are also affected.
Although two thirds of machinery exports to China benefit from duty-free market access, the FTA only provides partial concessions for 11% of these exports. 12 percent of exports are completely excluded from the FTA.
It is currently impossible to quantify the specific tariff savings on exports to China since the agreement was signed. Beijing does not provide any usable data in the public sector, says Maienfisch.
However, there have been considerable savings in Chinese imports to Switzerland. However, the Chinese embassy did not respond to inquiries from the Keystone-SDA news agency.
Business card for China
Lionel Fatton, Assistant Professor of International Relations at Webster University in Geneva, sees no cause for concern when it comes to Switzerland's potential dependence on China. China is Switzerland's most important trading partner in Asia and the third largest trading partner of all, behind the EU and the USA.
Although China is a master at instrumentalizing economic relations, says Fatton, it has no interest in doing so with Switzerland, which is too small. Especially as the agreement between the two countries serves Beijing as a "calling card" to strengthen its relations with other countries, particularly in Eastern Europe. It has been on a diplomatic offensive there for several months.
Switzerland has a compartmentalized approach to China that other large nations cannot afford, explains Fatton. It could address economic relations and at the same time leave aside the Bürgenstock summit on Ukraine. Despite an invitation from Bern, Beijing did not attend this meeting. The same applies to human rights issues. The topic of human rights is not included in the current free trade agreement.
©Keystone/SDA
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