WellTax Blog

Switzerland and United Kingdom: together we stand

March 14, 2019

Federal Councillor Guy Parmelin and British Trade Minister Liam Fox signed a bilateral trade agreement in Bern on 11 February 2019 ensuring mutual economic and trade relations between UK and Switzerland even after the Brexit. 

The commercial agreement, in line with the Federal Council’s “Mind the Gap” strategy, highlights that the economic and commercial rights and obligations deriving from the Swiss agreements with the European Union (EU) will remain in force between the two contracting countries. The agreement reproduces a large part of the trade agreements concluded with the EU and which currently govern relations between Switzerland and the United Kingdom: the 1972 free trade agreement, the agreement on public markets, the agreement on the fight against fraud, a part of the Agreement on Mutual Recognition on Conformity Assessment and the Agricultural Agreement of 1999. Although they are different agreements, they all aim to reduce or eliminate trade barriers and discrimination in economic exchanges.

Some agreements between Switzerland and the EU are based on the harmonization or recognition of the equivalence of bilateral rules (i.e. the 2009 agreement on customs facilitation and security, some areas of that agricultural agreement – including the annexe constitutes the so-called ‘veterinary agreement’ – and some parts of the agreement on mutual recognition with regard to conformity assessment) and cannot be fully reproduced at this stage.

In this occasion, Switzerland, the United Kingdom and the Principality of Liechtenstein have also signed an agreement to include the territory of Liechtenstein within the scope of the relevant provisions of the trade agreement: this by virtue of the current customs union between Switzerland and Liechtenstein.

These latter will be effective as soon as those existing agreements between Switzerland and the EU would no longer be valid. If the transition phase envisaged for the British exit from the EU starts on 30 March 2019, the bilateral agreements between Switzerland and the EU would remain applicable also to relations between Switzerland and the United Kingdom. In that case, the agreements would serve as a basis for economic and commercial relations between Switzerland and the United Kingdom after the end of the transitional phase. Otherwise, if the United Kingdom left the EU without reaching an agreement on March 29 next, the agreement would be applied provisionally starting from March 30, 2019.

Therefore, the Federal Council aims to maintain the rights and obligations in force in relations with the United Kingdom as far as possible after Brexit and possibly extend them in some sectors. To this end, Switzerland and the United Kingdom have already signed agreements on road transport, air transport and insurance. In December 2018, the Federal Council also approved an agreement with the United Kingdom concerning citizens’ rights.

Switzerland is a crucial market for UK goods and services. Bilateral trade between the UK and Switzerland is worth over £31.7 billion a year. In 2017 it was the sixth export market for Swiss goods (11.4 billion francs) and the eighth-largest import market in our country (6 billion francs).  In 2017, direct Swiss investments in the United Kingdom amounted to 54 billion francs: in order of importance, it is the fifth recipient of Swiss direct investments. The value of British direct investments in Switzerland was instead of 60 billion francs. Helvetica country is in ninth place as a destination for British direct investments.

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