SHANGHAI – The free trade agreement (FTA) signed between Switzerland and China last year in Beijing is due to come into effect on July 1, 2014, says the Ministry of Commerce (MOFCOM). The event is being highlighted as of special significance, as it is the first FTA between China and a continental European nation.
Its provisions will grant increased market access for 84.2 percent of Swiss exports to China, such as fine machinery, power plants, chemicals and watches, which are to receive greatly reduced or zero tariffs. In the other direction, Switzerland has agreed to implement zero tariffs on 99.7 percent of Chinese exports, mainly industrial products and produce.
The agreement also stipulates new customs procedures between the two countries and extends to a number of business practices such as intellectual property, competition, transparency and dispute settlement. Bilateral trade between China and Switzerland reached US$26.3 billion in 2012, the vast majority Swiss exports to China.
Chris Devonshire-Ellis of Dezan Shira & Associates comments, “This agreement will allow China’s rising middle class to enjoy certain personal status symbols at close-to-normal global prices, such as Swiss Watches, which at present are subject to hefty luxury taxes.”
“It will also give the Swiss watch-making industry a boost and may result in some premium brands located elsewhere in Europe establishing production bases in Switzerland. This will depend on the degree to which luxury brands are specifically tied to one country.”
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