Economic policy
Swiss Textiles welcomes free trade agreement with Mercosur
A ray of hope in economically uncertain times: On Wednesday afternoon, the Federal Council announced the agreement on a free trade agreement between the EFTA and Mercosur states. Until now, the South American economic area has sealed itself off with high tariffs - a sticking point for the Swiss textile and clothing industry. Now the path to a market with great potential is finally clear. The negotiations, which have been ongoing since 2017, were successfully concluded just a few months after the EU.
The agreement with India has not yet come into force, but the next piece of news is already in the pipeline: yesterday, Wednesday, in Buenos Aires, Federal Councillor Guy Parmelin announced the conclusion of a free trade agreement between EFTA and the South American Mercosur organisation (Argentina, Brazil, Bolivia, Paraguay and Uruguay).
New prospects for the textile industry
The agreement provides access to a challenging market:
- Tariff reduction: The agreement is of great importance for the Swiss textile and clothing industry. Up to now, customs duties of up to 35 per cent - together with other levies increasing prices by almost 50 per cent - have prevented competitive market access. In future, tariffs on 95 per cent of Swiss exports are to be gradually reduced.
- Potential: With over 260 million people, Mercosur is one of the largest markets alongside the USA without an existing agreement with Switzerland. Countries such as Uruguay in particular have a growing middle class that is interested in high-quality products. The sector is already recording rising exports worth CHF 15 million, particularly in technical textiles.
- Diversification: In a geopolitically unstable situation with tensions between the USA, China and the EU, an additional sales market helps to spread risks. Mercosur could also serve as an alternative production location or raw material supplier - and as a bridge to North and Latin America.
- Competitive disadvantage vis-à-vis the EU averted: An agreement between the EU and Mercosur coming into force soon would put Swiss companies without equivalent access at a severe disadvantage. The EFTA agreement has averted this danger for the time being.
Ratify the agreement as quickly as possible
Swiss Textiles is calling on the Federal Council and Parliament to ratify the agreement swiftly - as was recently the case with the agreement with India. A quick approval process could even give the Swiss textile industry a head start over the EU.