Chinese authorities have revealed key points of a provisional free trade agreement with Switzerland, among them the reduction of Chinese customs duties on Swiss watches by 60 per cent over the next ten years.This content was published on May 28, 2013 - 09:27
China’s commerce ministry announced the details of the accord on Monday, which is expected to be signed in July but must still be ratified by Swiss parliament. Switzerland is the first continental European country to make a free trade deal with China.
Under the agreement, duties on Swiss watches would be reduced by 18 per cent in the first year, with five per cent reductions in subsequent years. The announcement comes just a few days after Prime Minister Li Keqiang’s state visit to Switzerland, during which he met with Swiss leaders to hammer out the particulars of the deal. Switzerland was the new Chinese prime minister’s first stop on his European tour.
In addition, the deal calls for 84 per cent of Swiss exports to China to be duty-free. On Saturday, however, Swiss Economics Minister Johann Schneider-Amman told Swiss radio that the figure was 93 per cent.
For its part, Switzerland will charge customs duties on very few Chinese imports. All industrial goods such as textiles, metal products and car parts will be exempt.
China is the third-largest market for Swiss watches, making the deal a boon for Swiss watch makers who have experienced a major decline in Chinese sales recently. According to the Federation of the Swiss Watch Industry, exports to China dropped by nearly 26 per cent in the first quarter of 2013.
Jean-Paul Biver, the chairmain of Swiss luxury watch brand Hublot, told Swiss radio on Tuesday that he was happily surprised by the deal.
"What the Swiss government has done is exceptional. Cutting import duty by more than half really is a great victory,” Biver said, pointing out that his company would be able to offer competitive prices in China thanks to the reduction in import duties.
Switzerland recognised the newly established People’s Republic of China in January 1950, one of the first Western states to do so.
Bilateral relations between Switzerland and China have developed at a brisk pace since Deng Xiaoping launched his policy of liberalisation and reform in 1979.
Since 2002 China, including Hong Kong, has been Switzerland’s most important trade partner in Asia.
The trading volume reached a record SFr15.2 billion ($15.6 billion) last year - an increase of nearly 12% on 2010.
China is among the top three trading partners of Switzerland, behind the EU and the US.
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