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.
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. 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.