Preference calculations in trade with the United Kingdom (UK) remain a challenge for Swiss exporters. As of 9 June 2021 and 1 September 2021, however, there will be some relief. What has changed in 2021 and what do Swiss exporters need to bear in mind to ensure that their goods pass through customs smoothly?
Goods produced in Switzerland and exported to the UK
Until now, problems with preference calculations have arisen, among other things, because the bilateral Trade and Cooperation Agreement (TCA) between the EU and the UK is not identical in all aspects to the bilateral agreement between Switzerland and the UK. This concerns above all the rules of origin. Swiss exporters had to contend with two major disadvantages:
Goods with a preferential Swiss origin could be imported into the UK at preferential or duty-free rates, depending on the relevant customs tariff number. But compared to EU companies exporting to the UK, Swiss companies had to meet stricter origin criteria:
a.) In the agreed trade agreement between Switzerland and the UK of 11 February 2019 (in force since 1 January 2021), "stricter" rules of origin applied than for EU countries. As a rule, only a value added of 60 - 70 percent led to a Swiss origin of the goods.
b.) EU and Turkish materials used in the production were classified as third country.
As of 9 June 2021, the disadvantage listed in letter b.) no longer applies. The input materials from the EU and Turkey can now be added (cumulated) to the Swiss origin.
With the intended accession of the UK to the revised PEM Convention (Pan-Euro-Mediterranean preferential rules of origin) on 1 September 2021, the second disadvantage - letter a.) - will also cease to apply. The revised PEM Convention provides for "more liberal" rules of origin. As a rule, a value added of 50 percent is sufficient to obtain the origin of the goods. This means that from 1 September 2021, Swiss exporters will once again be on an equal footing with companies in the EU.
The Swiss exporter can also choose whether to apply the new or the old rules from 1 September 2021. If he opts for the new, liberal rules, he must actively confirm this in the first consignment - by noting the new origin text. The original text is supplemented with the additional words ".... in accordance with the transitional rules for origin ....". Here is an example of the text of the new declaration of origin: "The exporter (approved exporter; authorisation no. .........) of the goods to which this commercial document relates declares that these goods, unless otherwise specified, are preferential ................. originating goods in accordance with the transitional rules of origin."
Reexport of EU and Turkish goods by Swiss companies
So-called through trade, i.e. the onward shipment of unchanged preferential origin goods from the EU and Turkey, is still not possible. If the Swiss exporter sends goods with EU and Turkish origin to the UK, he still cannot issue a preferential proof of origin. As a result, the recipient in the UK must pay customs duty.
If the EU originating goods are transported directly from the EU to the UK, the import is duty free.
Conclusion
In view of the changes in the law, Swiss exporters should update their supplier information and check preference calculations and proofs of origin in detail before shipping. Internationally active freight forwarders in Switzerland offer customers comprehensive support in this regard. The aim is to get shipments across the customs borders to the UK smoothly, in compliance with the law, on time and, if necessary, with a formally valid proof of origin.
