Switzerland is the latest country to be targeted by the United Kingdom for an overhaul of post-Brexit trade relationships.
The UK department for international trade announced on Thursday (28 April) that it was launching a ‘call for input’ from stakeholders to guide its approach to negotiations for an ‘enhanced’ free trade agreement between the two sides.
These talks are expected to get under way “during 2022”, and will aim to create an FTA which builds on the existing UK-Swiss trade agreement, dating from February 2019 – the primary purpose of which had been to replicate the existing EU-Swiss trade relationship as far as possible.
‘Services superpowers’ to seek better terms of trade
The core focus of the negotiations between London and Bern will be on cooperation on services. This is because the EU-Swiss trade agreement is primarily focused on trade in goods, with few provisions in services that go beyond basic WTO commitments.
However, services – notably financial services – dominate the economies of both countries, and account for almost 50% of the value of bilateral trade between the two sides.
“As two services superpowers, we have a huge opportunity to negotiate a modern, ambitious, unprecedented deal that will boost both our economies and show the world what is possible between two like-minded and innovative nations who are firmly within Europe but outside of the EU,” claimed UK international trade secretary Anne-Marie Trevelyan.
In January 2021, the UK and Switzerland announced an intention to negotiate a deal on mutual recognition on financial services, covering a range of sectors including insurance, banking and asset management.
This could remove some of the existing barriers to establishment of financial sector businesses, especially if accompanied by relatively liberal provisions on visa-free movements of professional people. However, the UK will not set out its negotiating objectives in detail until it has received feedback from stakeholders.
Improved provisions on digital trade are also expected to feature in the discussions.
Low rate of preference utilisation
UK-Swiss trade for most industrial products are already duty-free, although DIT noted that preference utilisation rates for UK exports to Switzerland in 2019 were quite low, at just 57%.
Agricultural trade, meanwhile, is subject to a plethora of tariff rate quotas on either side, although one of the key agri-food export products traded between the two sides – cheese – is duty-free thanks to a ‘zero-for-zero’ deal originally negotiated between Switzerland and the EU and ‘inherited’ by the UK post-Brexit.
The DIT’s prospectus accompanying the call for input makes no reference at all to sanitary and phytosanitary measures.
The EU has a comprehensive veterinary agreement in place with Switzerland, but the UK is unlikely to seek to replicate that agreement with Switzerland – as it would imply indirect alignment of UK legislation with that of the EU.
Post-Brexit FTA upgrade programme continuing
The UK has stated its intention of progressively reviewing and upgrading the FTAs which it rolled over when it left the EU.