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EU hits Switzerland with new tax

Some Swiss exports to the EU will be subject to a new tax from March 1 Keystone

Some Swiss exports to the European Union are to be subject to new tariffs as of March 1 in a unilateral move by Brussels.

This content was published on February 18, 2004 - 16:53

The Swiss government on Wednesday said it had been told of the new tax on re-exports by local firms before receiving confirmation from Brussels on the matter.

“Switzerland has not yet officially been informed [about this],” said Stephan Schmid, a spokesman for the State Secretariat for Economic Affairs (Seco) in Bern.

Schmid said Switzerland would fight the decision and confirmed that an explanation had been sought from the authorities in Brussels.

“Bern will do all it can to ensure that this measure does not come into force,” he said.

On Thursday the European Commission in Brussels defended its position, saying the new measure was no more than a "clarification".

Commission spokesman Jonathan Todd said the tax on re-exports was "not new" and that all EU countries except Germany had been imposing it for some time.

“Surprising” decision

Until now products and materials imported to Switzerland and subsequently exported back to the EU have not been subject to customs charges.

Luzius Wasescha, a senior Swiss official with responsibility for the country’s international trade relations, told swissinfo he was “surprised” that Switzerland had not been contacted by Brussels.

He also warned of the potential long-term consequences for Swiss trade ties with the EU if a compromise could not be agreed.

“If we lose this customs privilege to re-export goods that have been assembled in Switzerland with raw materials from an EU partner, our industry will abandon cooperation with the European countries and look instead to India, China, Asia or Latin America.

“So economically speaking, the EU is shooting itself in the foot by taking this decision,” he added.

Cost to business

Officials at Seco said they were unable to put a price tag on the cost to Swiss companies, but warned that many businesses would suffer as a result.

“It’s not possible to quantify exactly what this will mean for the Swiss economy,” commented Seco’s Antje Baertschi.

“But we are talking about a considerable sum, especially when you bear in mind the number of companies affected by this,” she added.

According to the economics ministry, the new tax will affect a large number of sectors - including the textile, chemical and pharmaceutical industries – which rely on raw materials from EU member states.

The Swiss Business Federation, economiesuisse, described the tax as "an affront against Switzerland".

"Brussels is really unbelievable sometimes," said Gregor Kündig of economiesuisse, "and this has got to be avoided at all costs."

Long-term damage?

Wasescha does not believe the EU’s decision to impose a tax on re-exports is related to the continuing deadlock over a series of stalled bilateral treaties between Brussels and Bern.

“We have always had a very good relationship with the EU,” said Wasescha, “and I am sure that we will be able to sit around the table before the end of the month and realise that this was all a misunderstanding.”

The European Commission also denied there was even "the remotest link" between the imposition of the tax and the state of bilateral negotiations.

Wasescha said he would now consult with his colleagues at the economics ministry before communicating an “official reaction” to Brussels.

swissinfo, Ramsey Zarifeh

Key facts

The new tax is to be levied on products exported from Switzerland to the European Union which were made using raw materials imported from EU member states.
The chemical, textile and pharmaceutical industries are likely to be most affected by the tax.
Swiss trade officials say they hope a compromise with the EU can be reached before the tax comes into force on March 1.

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