An Ex-Post Utilization Study of the Sino-Swiss Free Trade Agreement in the Swiss Watch Industry

Sammanfattning: This thesis contributes to the growing body of literature which examines the utilization of Free Trade Agreements (FTAs). The Sino-Swiss Free Trade Agreement (SSFTA) was not only China’s first FTA with a continental European country, but also a milestone for the Swiss foreign policy. However, the Swiss government needs to demonstrate that the SSFTA works in practice and delivers the negotiated benefits to its export industries. The watch industry is Switzerland’s third largest export sector. This study calculated the utilization rate on the import of watch components from China based on Swiss customs data. Furthermore, in-depth interviews were conducted with nine participants in the watch industry to explore the satisfaction level on the export of Swiss watches to China. The results reveal a utilization rate on the import side of 64.9% and realized tariff savings of almost 3 Mio. CHF for the watchmakers on the import of watch parts. Moreover, the qualitative results indicate that the satisfaction level among FTA users has increased since 2014. The most frequent determinants of non-utilization are perceived negligible savings and the administrative burden while it has been found that smaller watchmakers are not being significantly disadvantaged. Despite the fact that a renegotiation of the tariffs would be desirable, the luxury tax imposed by China remains the biggest irritation for direct watch exports to China. These findings contribute to the yet limited knowledge of the utilization on an industry level and provide policy recommendations for a further upgrading of the SSFTA.