Switzerland and the UK sign trade agreement

The continuation of economic and trade relations between Switzerland and the United Kingdom after the UK’s withdrawal from the European Union (Brexit) is assured. Federal Councillor Guy Parmelin and the British Secretary of State for International Trade, Liam Fox, signed a bilateral trade agreement in Bern on February 11, 2019

The trade agreement signed today by Switzerland and the UK ensures the continuation of the economic and commercial rights and obligations arising from the agreements between Switzerland and the European Union (EU). This new agreement lays the foundations for the two parties to continue their sound economic and trade relations once the United Kingdom has left the EU.

The new agreement was concluded as part of the Federal Council’s ‘Mind the Gap’ strategy. It replicates the vast majority of the trade agreements with the EU that currently govern relations between Switzerland and the United Kingdom: the 1972 Free Trade Agreement, the Agreement on Public Procurement, the Agreement on the Fight against Fraud, part of the Agreement on Mutual Recognition in Relation to Conformity Assessment and the 1999 Agreement on Agriculture. These various agreements have the effect of reducing or even eliminating trade barriers and discrimination in bilateral economic exchange.

Some agreements between Switzerland and the EU are based on harmonization, or, recognition of the equivalence of rules between the two parties (2009 Agreement on Customs Facilitation, some sections of the Agreement on Agriculture including the annex known as the ‘veterinary agreement’ and some sections of the Agreement on Mutual Recognition in Relation to Conformity Assessment) and cannot be replicated in their entirety at this stage. 

An additional agreement between Switzerland, the United Kingdom and the Principality of Liechtenstein to extend the relevant provisions of the trade agreement to the territory of Liechtenstein under the Swiss-Liechtenstein Customs Union was also signed today.

The signed agreement will come into force as soon as the Swiss/EU agreements cease to apply to relations between Switzerland and the UK. If the Brexit transition period begins as planned on 30 March, the Swiss/EU agreements will continue to apply between Switzerland and the UK. In this scenario, the agreement will serve as a basis for economic and trade relations between the two parties after the end of the transition period. Should the United Kingdom leave the EU on 29 March without a deal, the agreement will come into effect on a provisional basis from 30 March 2019.

As part of its ‘Mind the Gap’ strategy, the Federal Council wishes to ensure that the existing mutual rights and obligations in its relationship with the UK will continue to apply as far as possible after the UK leaves the EU, and to expand them in certain areas. With this in mind, Switzerland and the UK have already signed agreements on road transport, air transport and insurance. In December 2018 the Federal Council adopted an agreement on citizens’ rights with the United Kingdom.

The UK is currently one of Switzerland’s major economic partners. In 2017, it was the sixth most important export market for Swiss goods (CHF 11.4 billion) and the eighth most important import market (CHF 6 billion). Switzerland is the UK’s fifth main export partner outside of the EU (after the US, China, Hong Kong and UAE). Swiss direct investments in the UK amounted to CHF 54 billion in 2017, making it the fifth most important destination country for Swiss investment. Switzerland, meanwhile, was the ninth most attractive destination country for UK investments, which amounted to CHF 60 billion.

Economic relations between Switzerland and the United Kingdom after Brexit (as of 11.02.2019)

Free trade agreement between Switzerland and the EU:

‘Deal’ scenario

In the event of the UK’s orderly withdrawal from the EU, the free trade agreement between Switzerland and the EU1 will continue to apply in dealings with the UK during the transition period, prospectively until 2020. During that period, the UK will continue to be treated as an EU Member State in contractual and customs terms, even though it will formally no longer be a member. For the companies concerned that means that the FTA can continue to be ap- plied for trade between Switzerland and the UK until the end of the transition period. Until such time, nothing changes.

‘No Deal’ scenario

Should the United Kingdom and the EU fail to reach an agreement (No deal), the free trade agreement between Switzerland and the EU will cease to be applicable in dealings with the United Kingdom from the date of withdrawal. The trade agreement signed between Switzer- land and the United Kingdom provides for the existing mutual rights and obligations under  the Free Trade Agreement between Switzerland and the EU to continue on a bilateral level from the date of withdrawal. The provisions of the Free Trade Agreement between Switzer- land and the EU (including Protocol No. 2 on Trade in processed agricultural products) will therefore be incorporated into a bilateral agreement between Switzerland and the United Kingdom.

For information relating to Protocol 3 of the FTA (regarding rules of origin) see information note on ‘Preferential Rules of Origin (Protocol No. 3 FTA Switzerland-EU)’.www.admin.ch