Swiss ‘chocolate law’ subsidy for exporters to end in 2019

The law was introduced in 1974 but was never officially challenged at the World Trade Organization. Keystone

A so-called “chocolate law”, introduced in 1974 to compensate Swiss food exporters for the high price of domestic milk and cereals, will end next year. 

On Friday, the Federal Council announced the law would no longer be effective from January 1, 2019. 

The law enabled the government to protect Swiss dairy and wheat farmers from foreign imports via high tariffs without penalising exporters of transformed food products like chocolate. Companies like Nestlé and Lindt & Sprüngli therefore received money from the government based on the amount of food products containing Swiss milk and cereals they exported. The compensation amounted to almost CHF100 million ($104.7 million) a year to make up for the difference between Swiss and global market prices for milk and grains. 

The Federal Council cited the World Trade Organization’s decision in 2015 to put an end to agricultural export subsidies by 2020 as the reason for Friday’s announcement. However, instead of paying compensation to chocolate exporters, the government proposes paying a special allowance to Swiss milk and cereal producers. It plans to achieve this by modifying the Federal Law on Agriculture and introducing two new ordinances. 

To keep chocolate exporters happy, the government intends to amend a customs ordinance to simplify procedures for importing certain milk products and cereals.