Switzerland inches towards the complete elimination of tariffs on industrial goods
Hevin Demir, Philipp Weber-Lortsch and Maura Decosterd of Deloitte discuss the impact of the revised Swiss Customs Act on industrial goods.
The revised Swiss Customs Act will scrap tariffs on industrial goods. This is good news for Swiss companies and consumers alike, as intermediary goods will become cheaper and customs clearance more effective and less costly.
Both chambers of Parliament (National Council and Council of States) have approved a revised text of the Swiss Customs Act. Formal endorsement is expected during the Parliament’s Autumn 2021 session, and entry into force should follow as of January 1 2022.
Pursuing a macroeconomic policy geared towards increasing exports (by allowing Swiss firms to access cheaper intermediary goods) and opening up the Swiss market to competition, the Federal Council has put forward a revised Customs Tariffs Act (modifying Annex 1 of the 1986 LTaD (632.10)) that intends to reduce customs tariffs on industrial goods to zero, unilaterally and at once.
In addition to this, the modified Customs Tariff Act also addresses tariff nomenclature in an effort to simplify it. Internationally, it is not unheard of to partially or completely remove custom tariffs on industrial goods. Other WTO member states, such as Singapore, Hong Kong and New Zealand have also done this.
For this revision of the Swiss Customs Tariff Act, chapters 25 to 97 are in scope, and this means that everything from bicycles, automobiles, to electrical appliances and all types of intermediary goods (such as aluminium, welding materials, plastics) will enter Switzerland at a zero tariff rate. Agricultural and fishery products are excluded, and so are certain chemicals.
It is estimated that the cost of clearing industrial goods will reduce by approximately 20%.
However, this does not mean that preferential proofs of origin will become obsolete. Where products are to be re-exported and cumulation of origin is necessary, preferential proofs of origin will still be necessary even though certain materials have entered Switzerland duty-free. The same applies to transit trade (where goods are re-exported without any modification).
From a legislative perspective, the two chambers of Parliament (the National Council and the Council of States) have approved the modified text of the Customs Tariff Act, however they must move to formally endorse the text in a third formal reading expected for the end of 2021 (i.e. the Autumn session). If the outcomes of the third reading are positive, and no referendum is initiated against the revised Customs Tariff Act, then it should enter into force on January 1 2022.
How should Swiss firms react to this news? In preparation of the entry into force of the adjusted Customs Tariff Act, Swiss manufacturers should assess their current supply chain set-up and the tariffs that they currently use, and work towards optimising the supply chain in order to reap the maximum benefits from the tariff elimination.
Senior manager, Deloitte
Assistant manager, Deloitte