Free Trade Agreements

How Swiss small and medium-size enterprises (SMEs) secure benefits from Switzerland’s numerous free trade agreements.

Free Trade Agreements

Worldwide custom rates

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FTA China and GCC

Learn more about the bilateral Free Trade Agreement (FTA) between Switzerland and China and the multilateral Agreement between the EFTA and the Arab Gulf Co-operation Council.

FTA China and GCC

Free Trade Agreements

Free trade agreementsAgreements are becoming increasingly important within the context of international commerce. Given the different written laws and forms of legal practice that exist across the world and the different interpretations of the law that are culturally conditioned, it is impossible to devote too much attention to devising “good” agreements. Model agreements have proven to be useful, particularly for companies with little experience in this area. are international treaties concluded between two parties (individual countries or transnational groupings) in order to safeguard free trade.

Free trade agreements are designed to improve business links with important partners around the world. They aim to eliminate or at least minimise barriers to international markets for the Swiss economy. CustomsCustoms duties are a form of tax payable to the State mainly when importing goods into a customs territory. From a protectionist perspective, protective duties play an important role as they are designed to afford domestic producers some protection against foreign competition. In most countries, customs duties are levied as an ad valorem duty, which means the level of duty payable is calculated as a percentage of the value of a given product. By contrast, Switzerland applies the “specific tariff” system for most goods. The specific tariff here is payable per 100 kg net weight. Given the numerous customs duty reductions under the General Agreement on Tariffs and Trade (GATT; now the World Trade Organization), customs are now much less important in terms of international trade. In Switzerland, the Swiss Federal Customs Administration (FCA) is responsible for levying customs duties. Internationally, customs administration authorities are members of the broader World Customs Organization (WCOOMD). duties and non-tariff trade barriers (e.g. technical regulations, packaging and labelling regulations, import quotas) are to be reduced.

In addition to the EFTA agreement and the free trade agreement with the European Union, Switzerland currently has a network of 28 free trade agreements with 38 partners outside the EU, and new agreements are continually being negotiated.

Most of the Swiss agreements are concluded within the context of the European Free Trade Association (EFTA)Today, (only) Iceland, Liechtenstein, Norway and Switzerland still belong to the EFTA (European Free Trade Association). Denmark, Finland, the United Kingdom, Austria, Portugal and Sweden opted out of the Association and subsequently joined the European Union (EU). Founded in 1960, the EFTA has its headquarters in Geneva. The aims of the founding members (including Switzerland), for whom entry to the then European Economic Community (EEC, now the EU) could not be countenanced for political reasons, were the protection of their interests, an improved negotiating position with respect to the EEC, and the creation of a free trade zone.

The free trade agreement in force between the EFTA states and the EEC since 1973 created a free trade zone without custom duties or volume restrictions for the commercial and industrial sectors and for the mining industry. Since 1994, the three EFTA states of Liechtenstein, Norway and Iceland have been cooperating with the EU within the framework of the European Economic Area (EEA). Like the single European market of the European Union, the EEA allows the free movement of goods, services, capital and persons. Switzerland decided against entering the EEA in a 1992 referendum.

Today, the EFTA states are relatively insignificant in terms of Switzerland's foreign trade, with just 0.2% of total exports destined for these countries. The EFTA does, however, retain a certain level of importance in for Switzerland as a platform for negotiating free trade agreements. In recent years, the EFTA has concluded an entire series of such agreements with Central European and Mediterranean countries. The EFTA has also been trying for some time to develop free trade agreements with overseas countries. This process has already seen some success; agreements of this kind have been signed with Singapore, Canada and Mexico, for example. The EFTA website features an overview of the countries with whom the EFTA (and, by implication, Switzerland) has concluded free trade agreements, as well as the consolidated texts of the agreements.

http://www.efta.int/content/free-trade/fta-countries
. In addition, Switzerland is also entitled to negotiate free trade agreements without the involvement of EFTA, as was the case, for example, with China, Japan and the Faroe Islands.

A current overview of the network of Swiss free trade agreements can be found in the section www.seco.admin.ch.

Content of the agreements

The essential component of every agreement is trade in merchandise (in particular the reduction of customs duties and other trade restrictions). These regulate trade in industrial products (HS Chapter 25-97), fish and processed agricultural products. Trade in unprocessed agricultural products tends to be regulated in separate bilateral agricultural agreements.

In addition to trade in merchandise, other aspects which are often covered in new agreements include the protection of intellectual property rights, trade in services, investments, public procurement and technical regulations. These are the so-called «second-generation agreements».

Benefits of the agreements

In 2013 agreements concluded with free trade partners, with the exception of the FTA with the EU, cover 22.6% of Switzerland's total exports. This corresponds to 51% of Switzerland's exports to markets outside the EU. Free trade agreements promote in particular the growth, added value and competitiveness of Switzerland as a business location.

Free trade agreements have reduced the price of products for Swiss consumers and have increased the range of products available. At the same time, Swiss producers benefit from more advantageous prices for semi-finished goods and raw materials.

Application within the SME field

It is often the case that not enough attention is paid to the topics of free trade agreements and declarations of origin by export companies. When determining the country of origin, coordination between company management, the export department, procurement, quality assurance, logistics and finances is required. If, for example, the purchasing department switches suppliers on the grounds of lower prices (previous country of origin Switzerland; new country of origin China/third country), then the export department also needs to be informed, because this could cause the country of origin to change. Price and production changes or exchange rate fluctuations can also have effects on the assessment of the country of origin. As a consequence, if the calculations are not checked regularly and if incorrect declarations are made as a result, this can lead to the retrospective payment of customs duties and substantial fines being imposed on companies.

The responsible export managers or export administrators should at least be familiar with the basic principles underpinning the application of free trade agreements, and need to know which rules are applicable. Further information about country of origin rules and country of origin products is to be found in the Country of origin.

Free trade agreementsAgreements are becoming increasingly important within the context of international commerce. Given the different written laws and forms of legal practice that exist across the world and the different interpretations of the law that are culturally conditioned, it is impossible to devote too much attention to devising “good” agreements. Model agreements have proven to be useful, particularly for companies with little experience in this area. are international treaties concluded between two parties (individual countries or transnational groupings) in order to safeguard free trade.

Free trade agreements are designed to improve business links with important partners around the world. They aim to eliminate or at least minimise barriers to international markets for the Swiss economy. CustomsCustoms duties are a form of tax payable to the State mainly when importing goods into a customs territory. From a protectionist perspective, protective duties play an important role as they are designed to afford domestic producers some protection against foreign competition. In most countries, customs duties are levied as an ad valorem duty, which means the level of duty payable is calculated as a percentage of the value of a given product. By contrast, Switzerland applies the “specific tariff” system for most goods. The specific tariff here is payable per 100 kg net weight. Given the numerous customs duty reductions under the General Agreement on Tariffs and Trade (GATT; now the World Trade Organization), customs are now much less important in terms of international trade. In Switzerland, the Swiss Federal Customs Administration (FCA) is responsible for levying customs duties. Internationally, customs administration authorities are members of the broader World Customs Organization (WCOOMD). duties and non-tariff trade barriers (e.g. technical regulations, packaging and labelling regulations, import quotas) are to be reduced.

In addition to the EFTA agreement and the free trade agreement with the European Union, Switzerland currently has a network of 28 free trade agreements with 38 partners outside the EU, and new agreements are continually being negotiated.

Most of the Swiss agreements are concluded within the context of the European Free Trade Association (EFTA)Today, (only) Iceland, Liechtenstein, Norway and Switzerland still belong to the EFTA (European Free Trade Association). Denmark, Finland, the United Kingdom, Austria, Portugal and Sweden opted out of the Association and subsequently joined the European Union (EU). Founded in 1960, the EFTA has its headquarters in Geneva. The aims of the founding members (including Switzerland), for whom entry to the then European Economic Community (EEC, now the EU) could not be countenanced for political reasons, were the protection of their interests, an improved negotiating position with respect to the EEC, and the creation of a free trade zone.

The free trade agreement in force between the EFTA states and the EEC since 1973 created a free trade zone without custom duties or volume restrictions for the commercial and industrial sectors and for the mining industry. Since 1994, the three EFTA states of Liechtenstein, Norway and Iceland have been cooperating with the EU within the framework of the European Economic Area (EEA). Like the single European market of the European Union, the EEA allows the free movement of goods, services, capital and persons. Switzerland decided against entering the EEA in a 1992 referendum.

Today, the EFTA states are relatively insignificant in terms of Switzerland's foreign trade, with just 0.2% of total exports destined for these countries. The EFTA does, however, retain a certain level of importance in for Switzerland as a platform for negotiating free trade agreements. In recent years, the EFTA has concluded an entire series of such agreements with Central European and Mediterranean countries. The EFTA has also been trying for some time to develop free trade agreements with overseas countries. This process has already seen some success; agreements of this kind have been signed with Singapore, Canada and Mexico, for example. The EFTA website features an overview of the countries with whom the EFTA (and, by implication, Switzerland) has concluded free trade agreements, as well as the consolidated texts of the agreements.

http://www.efta.int/content/free-trade/fta-countries
. In addition, Switzerland is also entitled to negotiate free trade agreements without the involvement of EFTA, as was the case, for example, with China, Japan and the Faroe Islands.

A current overview of the network of Swiss free trade agreements can be found in the section www.seco.admin.ch.

Content of the agreements

The essential component of every agreement is trade in merchandise (in particular the reduction of customs duties and other trade restrictions). These regulate trade in industrial products (HS Chapter 25-97), fish and processed agricultural products. Trade in unprocessed agricultural products tends to be regulated in separate bilateral agricultural agreements.

In addition to trade in merchandise, other aspects which are often covered in new agreements include the protection of intellectual property rights, trade in services, investments, public procurement and technical regulations. These are the so-called «second-generation agreements».

Benefits of the agreements

In 2013 agreements concluded with free trade partners, with the exception of the FTA with the EU, cover 22.6% of Switzerland's total exports. This corresponds to 51% of Switzerland's exports to markets outside the EU. Free trade agreements promote in particular the growth, added value and competitiveness of Switzerland as a business location.

Free trade agreements have reduced the price of products for Swiss consumers and have increased the range of products available. At the same time, Swiss producers benefit from more advantageous prices for semi-finished goods and raw materials.

Application within the SME field

It is often the case that not enough attention is paid to the topics of free trade agreements and declarations of origin by export companies. When determining the country of origin, coordination between company management, the export department, procurement, quality assurance, logistics and finances is required. If, for example, the purchasing department switches suppliers on the grounds of lower prices (previous country of origin Switzerland; new country of origin China/third country), then the export department also needs to be informed, because this could cause the country of origin to change. Price and production changes or exchange rate fluctuations can also have effects on the assessment of the country of origin. As a consequence, if the calculations are not checked regularly and if incorrect declarations are made as a result, this can lead to the retrospective payment of customs duties and substantial fines being imposed on companies.

The responsible export managers or export administrators should at least be familiar with the basic principles underpinning the application of free trade agreements, and need to know which rules are applicable. Further information about country of origin rules and country of origin products is to be found in the Country of origin.

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