WT/TPR/S/77 Trade Policy Review
Page 28
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) OVERVIEW
1. Under the 1923 Customs Union Treaty, Switzerland and Liechtenstein form a customs
territory for which common trade policy measures are set up by Switzerland (Chapter II(5)(ii)).
Therefore, the same trade measures generally apply to imports to the customs territory.  As a result of
its membership in the European Economic Area (EEA), Liechtenstein has adopted a Market Controland Surveillance Mechanism (MCSM) (Box II.1) to  allow the sale in its market of goods produced
and traded in conformity with either Swiss or EEA rules.
2. Switzerland and Liechtenstein accord at least MFN treatment to all their trading partners, and
rely almost exclusively on tariffs as their major border (protection) measure.  The customs tariff
consists entirely of specific duties.  Multilateral trade liberalization within the WTO framework hascontributed to the reduction of customs duties, leading to the lowering of the overall tariff protection
(measured by means of ad valorem  equivalents) to around 9% on average.  However, agriculture
(WTO definition) remains the most protected sector with an average tariff protection of 34.3%:  the
ad valorem  equivalent of tariffs on products such as meat reaches 678%.  Tariffs on non-agricultural
products, already low at the time of the last Trade Policy Review (TPR) of Switzerland in 1996, have
remained relatively stable, with an ad valorem  equivalent average of 2.3%.
3. Other measures affecting imports such as licensing, standards, and technical regulations, have
remained broadly unchanged since the last TPR of Switzerland.  The WTO Plurilateral Agreement on
Government Procurement, to which both Switzerland and Liechtenstein are signatories, is the main
framework governing public purchases.  Moreover, except for a safeguard duty on imports of pork
and pork products from 1 May to 31 December 1999 (under the special safeguard clause of the WTO
Agreement on Agriculture), Switzerland and Liec htenstein have not applied contingency trade
remedies (anti-dumping, countervailing, and safeguard actions) since 1982.
4. Various incentive schemes are available to producers, mainly manufacturers of agricultural
products, and to exporters (e.g. export subsidies for specified agricultural products).  Schemes not
involving tariff concessions or export subsidies are applied differently in Switzerland and
Liechtenstein.  The incentives are granted with a view to, inter alia , reducing production costs and
minimizing the negative impact of specific import duties on the international competitiveness of their
goods.  Changes in the customs tariff and the use of additional tares for customs purposes also play a
part.  Except for restrictions maintained in comp liance with international obligations, and controls on
products containing gold, Switzerland and Liechtenst ein have virtually no other measures (e.g. export
taxes or charges) that negatively affect their exports.
5. In Switzerland, the Federal Tribunal upheld, in recent years, the principle of international
exhaustion in cases involving trade marks and copyright, and national exhaustion in a case involving
patent rights.  Liechtenstein has legally adopted the principle of international exhaustion for trade
marks, copyright and rights related to copyright (with the exception of rental rights) and EEA-wide
exhaustion for patents.
6. In the area of competition policy, Switzerland has amended its legislation with a view to
aligning it on that of its major trading partner, the European Union.  Remaining controversial issues
include the non-prohibition of dominant positions by the Swiss legislation and its lack of automatic
sanctions against unlawful restraints on competition.  Liechtenstein relies on the competition-policy
framework provided by the EEA.Switzerland and WT/TPR/S/77
Liechtenstein Page 29
(2) MEASURES DIRECTLY AFFECTING IMPORTS
(i) Registration, documentation, and customs procedures
7. Trading activities in Switzerland and Liechtenstein are generally open to nationals and
foreigners with a valid residence and work permit, except for certain commercial branches and certain
services;  special approval requirements apply to certain occupations and businesses
(Chapter IV(2)(iii);  (3)(ii);  and (4)).
8. The timing of customs declaration by importers depends on the shipping method used:
24 hours, by road;  48 hours, by waterway;  and seven days, by rail or air.  The declaration must be
made on a prescribed form or via computer.  The co mputerization allows early declaration (i.e. prior
to the arrival of the goods at the customs office) and therefore accelerates clearance.  Declarations
may be simplified, i.e. on a periodical (weekly or monthly) basis, for merchandise regularly importedthrough the same customs office, and collective in case of several shipments for the same importer.
9. Switzerland and Liechtenstein have no specific legislation on customs valuation, as they levy
only specific customs duties (by gross weight in most cases).  Consequently, changes were not
required in laws and regulations relating to the provisions of the WTO Agreement on Implementation
of Article VII of GATT 1994.
1  In fact, goods whose packaging ensures sufficient protection against
damage during transport are cleared on the basis of their gross weight.  The dutiable gross weight
comprises the actual weight of the goods and their packaging, including any packing material and
supports on which the goods are presented.  Unpacked goods and those whose packagings do not
provide "sufficient" protection against transport damage, are liable to an additional tare, a supplement
equal to the difference between the gross and net weights. 2  The tare is calculated by customs
authorities and expressed as a percentage of the net weight (the net weight being the actual weight of
the goods, and the weight of the supports and the immediate packing materials, excluding the packingmaterial for protection of the goods during international transport).
10. The rates of additional tares currently applied range from zero to 100%.
3  The rate of 100% is
applied on:  certain petroleum gases and other gaseous hydrocarbons;  chlorine;  hydrogen;  oxygen,
argon, nitrogen, and other rare gases;  carbon di oxide;  anhydrous ammonia;  other inorganic
components (compressed or liquefied gas and gas dissolved under pressure);  certain acyclichydrocarbons;  dichloromethane (methylene chloride – compressed or liquefied, or dissolved under
pressure);  and oxirane (ethylene oxide).  For certain products, the rates of additional tares vary with
the form of the product (e.g. crystallized sugar in bulk, or not) and also if the goods are bleached or
not (e.g. certain woven fabrics).
4  Packagings and supports that are subject to import duty at a rate
significantly higher than that applicable to the goods they contain are cleared separately if, due to theirnature, they are suitable for repetitive use.
5
11. Given that all the usual commercial documents are in order, customs clearance is normally
completed immediately.  Appeals against a decision or action of the Swiss customs administration
must be lodged (in written) with the customs house that has initiated the decision or the action leading
                                                     
1 WTO documents G/VAL/N/1/CHE/1, 28 August 1995 and G/VAL/N/1/LIE/1, 6 November 1996.
2 The decision as to whether packaging is adequate  is determined by the packaging requirements that
the same type of goods must meet for international transport by rail, in homogeneous loads.
3 Appendix 1 of the tariff book.
4 Items of HS subheadings:  55121100;  55129100;  55131100;  55131900;  and 55141100-1900.
5 See Government of Switzerland (1987) (as at 1 January 1996) for details on clearance on the basis of
gross and net weight, and application of additional tares.WT/TPR/S/77 Trade Policy Review
Page 30
to the appeal.  There were:  12 appeals in 1996, of which one  was successful;  14 in 1997, of which
two were successful;  13 in 1998, of which one was successful;  and 10 in 1999.
12. Appeals against decisions of the Liechtenstein Customs Office may be lodged with the
Government;  importers who are not satisfied with the decision can successively appeal to the
Administrative Court, and to the State Court whose ruling is final.  According to the authorities, nosuch appeals have so far been lodged.
6
(ii) Tariffs, other duties, and taxes
(a) General features
13. Switzerland and Liechtenstein accord at least MFN treatment to all their trading partners,
regardless of their WTO membership.  Under the 1923 Customs Union Treaty, as amended up to
1995, the Swiss tariff generally applies to imports to the customs union.  Under the provisions of the
1986 Customs Tariff Law, as amended up to 1 January 1999, the Swiss Federal Council may modifytariffs for the customs union.  The modifications are temporary until their approval by the Federal
Assembly.
14. Goods imported to Switzerland and Liechtenstein are generally subject to the customs tariff
and the value-added tax (VAT).  Tariff quotas apply to 283 lines (agricultural imports), i.e. some
3.4% of all lines at the HS eight-digit level:  Table III.1 presents those under which no imports tookplace in 1999 (either out of quota, or both in and out of quota) in 1999.  Moreover, customs tariffs on
certain agricultural products (HS chapters 6, 7 a nd 8) are modified on a seasonal basis (seasonal
tariffs) to take into consideration domestic harvests.  Under the threshold-price system
(Chapter IV(2)(ii)), customs tariffs on feeding stuffs are adjusted quarterly (where appropriate) with a
view to aligning import prices on domestic prices.
15. In addition, other duties and taxes apply to specified products:  the mineral oil tax and surtax
on certain mineral fuels and oils, organic chemicals, lubricating preparations, prepared additives for
mineral oils, and mixed alkylbenzenes;  the monopoly duty on distilled beverages;  the motor vehicle
tax on cars and car parts;  the incentive tax on certain extra-light heating oils;  the tobacco tax;  the
veterinary tax;  and the plant-health inspection tax.
7
(b) Tariff structure
16. The tariff classification is based on the 1996 Harmonized System (HS).  The tariff comprises
only specific duties.  Since the last TPR of Switzerland, customs tariffs have been lowered as a result
of the implementation of multilateral liberalization under the WTO (e.g. under the WTO Agreement
on Agriculture).  The tariff, as modified up to January 2000, has 8,033 lines at the HS eight-digit
level.
                                                     
6 The Liechtenstein Customs Office was established in 1995.  Before then, all customs matters
concerning Liechtenstein were handled by the Swiss cu stoms administration.  There is close coordination
between the two customs administrations to ensure consistent implementation of the Treaty of the EuropeanEconomic Area (in Liechtenstein) to whic h Switzerland is not a contracting party.
7 The statistical tax has been abolished as from 1 July 1995.Switzerland and WT/TPR/S/77
Liechtenstein Page 31
Table III.1
Restrictive impact of tariff quotas, 1999
HS code Out-of-quota tariff In-quota tariff
Tariff-quota lines with no imports
02021099 758.00 Fr./ 100 kg.. gross 69.00 Fr./ 100 kg. gross
02022019 1,233.00 Fr./ 100 kg. gross 109.00 Fr./ 100 kg. gross
02022099 1,233.00 Fr./ 100 kg. gross 159.00 Fr./ 100 kg. gross
02032299 474.00 Fr./ 100 kg. gross 50.00 Fr./ 100 kg. gross
02042190 845.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02043090 749.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02044190 858.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02109049 670.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
07094099 588.00 Fr./ 100 kg. gross 10.00 Fr./ 100 kg. gross
10070029 38.00 Fr./ 100 kg. gross 29.30 Fr./ 100 kg. gross
20098029 82.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
20099019 82.00 Fr./ 100 kg. gross 20.00 Fr./ 100 kg. gross
22029049 3.54 Fr./ litre 36.00 Fr./ 100 kg. gross
Tariff lines with no out-of-quota imports
01011919 1,309.00 Fr./ piece 90.00 Fr./ piece
01021091 2,500.00 Fr./ piece 60.00 Fr./ piece
01021099 1,500.00 Fr./ piece 60.00 Fr./ piece
01029019 1,275.00 Fr./ piece 95.00 Fr./ piece
01029099 1,275.00 Fr./ piece 60.00 Fr./ piece
01031090 1,000.00 Fr./ piece 10.00 Fr./ piece
02011019 758.00 Fr./ 100 kg. gross 94.00 Fr./ 100 kg. gross
02011099 758.00 Fr./ 100 kg. gross 69.00 Fr./ 100 kg. gross
02021019 758.00 Fr./ 100 kg. gross 94.00 Fr./ 100 kg. gross
02023019 2,057.00 Fr./ 100 kg. gross 109.00 Fr./ 100 kg. gross
02031199 347.00 Fr./ 100 kg. gross 43.00 Fr./ 100 kg. gross
02032991 2,304.00 Fr./ 100 kg. gross 50.00 Fr./ 100 kg. gross
02044290 809.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02061019 1,53.00 Fr./ 100 kg. gross 79.00 Fr./ 100 kg. gross
02061029 919.00 Fr./ 100 kg. gross 153.00 Fr./ 100 kg. gross
02062190 153.00 Fr./ 100 kg. gross 110.00 Fr./ 100 kg. gross
02062290 919.00 Fr./ 100 kg. gross 190.00 Fr./ 100 kg. gross
02062990 919.00 Fr./ 100 kg. gross 140.00 Fr./ 100 kg. gross
02064199 68.00 Fr./ 100 kg. gross 68.00 Fr./ 100 kg. gross
02068090 68.00 Fr./ 100 kg. gross 49.00 Fr./ 100 kg. gross
02071290 566.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02071319 1,581.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02071329 2,280.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02072490 422.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02072590 497.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02072629 647.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02073299 297.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02073319 937.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02073399 1,180.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
Table III.1 (cont'd)WT/TPR/S/77 Trade Policy Review
Page 32
HS code Out-of-quota tariff In-quota tariff
02073519 1,966.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02073699 456.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
02109079 2,269.00 Fr./ 100 kg. gross 30.00 Fr./ 100 kg. gross
06031039 1,200.00 Fr./ 100 kg. gross 25.00 Fr./ 100 kg. gross
07031049 472.00 Fr./ 100 kg. gross 2.90 Fr./ 100 kg. gross
07041029 163.00 Fr./ 100 kg. gross 7.00 Fr./ 100 kg. gross
07049039 190.00 Fr./ 100 kg. gross 3.00 Fr./ 100 kg. gross
07051999 753.00 Fr./ 100 kg. gross 10.00 Fr./ 100 kg. gross
07070039 85.00 Fr./ 100 kg. gross 10.00 Fr./ 100 kg. gross
07070049 144.00 Fr./ 100 kg. gross 10.00 Fr./ 100 kg. gross
07089089 292.00 Fr./ 100 kg. gross 10.00 Fr./ 100 kg. gross
07109029 140.00 Fr./ 100 kg. gross 55.00 Fr./ 100 kg. gross
08061029 272.00 Fr./ 100 kg. gross 40.00 Fr./ 100 kg. gross
20041019 224.00 Fr./ 100 kg. gross 50.00 Fr./ 100 kg. gross
20096019 3.47 Fr./l 34.00 Fr./ 100 kg. gross
20099039 256.00 Fr./ 100 kg. gross 100.00 Fr./ 100 kg. gross
20099079 256.00 Fr./ 100 kg. gross 70.00 Fr./ 100 kg. gross
Source : WTO Secretariat calculations, based on data provided by the Swiss authorities.
17. The simple average of ad valorem  equivalents of the MFN tariffs, as at early January 2000,
was estimated at 8.9%, with a standard deviation of 33.1%.8  The coefficient of variation of 3.7
depicts high dispersion of the tariff rates (the ad valorem  equivalents) 9;  the high dispersion of the
rates is a consequence of the imposition of specific duties, which have given rise to a wide range ofad valorem  equivalents (AVE) that largely differ from one tariff line to another (Box III.1).  The
modal interval (59.3% of all the tariff lines) comprises rates ranging from zero (excluded) to 5%
(included).
 10  The zero rate applies to 18% of the lines, including crude petroleum and natural gas,
metal ore, certain non-metallic mineral products (except petroleum and coal), leather products (except
footwear and wearing apparel), certain chemicals, electricity, and products to which duty-freetreatment applies under the Pharmaceutical Initiative
11, the Information Technology Agreement, and
the Plurilateral Agreement on Trade in Civil Aircraft.
18. The simple average tariff on imports of agricultural products (WTO definition) is 34.3%;  the
average for manufacturing products is 2.3% (Table III.2).12  The maximum applied rate (on an AVE
basis) is 678% and applies to out-of-quota imports of fresh, chilled or frozen meat and edible offal ofpoultry (HS subheading 02071329);  rates higher than 400% apply to meat of bovine animals, meat of
swine, edible offal, certain dairy products and live plants, and specified edible vegetables, roots and
tubers, such as lettuce, chicory, carrots and celeriac (Table AIII.1).
                                                     
8 For products subject to tariff quota, the out-of-quo ta duties are used.  Therefore the tariff analysis is
based on 7,635 tariff lines at the HS eight-digit level (excluding lines with no ad valorem  equivalents).
9 The coefficient of variation is the ratio of  the standard deviation to the average rate.
10 The modal interval is the range of rates with the highest frequency.
11 The list of pharmaceutical products concerned includes items of HS Chapters 28-30, 32, 34-35, and
38-39.
12 Strictly speaking the phrase "manufacturing produ cts" refers to non-agricultural products, and
includes mining and quarrying.Switzerland and WT/TPR/S/77
Liechtenstein Page 33
Box III.1:  Features of the Swiss and Liechtenstein tariff
The Swiss/Liechtenstein tariff consists exclusively of specific duties.  Despite the seeming simplicity of
their administration and the resultant gains in processing time, specific duties bear important
shortcomings, including lack of transparency and predictability, which make ad valorem  tariffs
preferable.  Indeed, the level of pr otection afforded domestic producers by means of specific duties is not
obvious and should be assessed; the duty-collection ratio (the ratio of tariff revenue to the import value)and the ad valorem equivalent (the ratio of specific duties to import prices) are generally used as
estimates.
The duty-collection ratio underestimates the level of tariff protection because the actual tariff revenue, as
a result of tariff exemptions and concessions, preferen tial tariff treatment, and inefficiencies in collection,
does not reflect the real tariff burden borne by fully dutiable imports.  Since it is based on data on which
the impact of tariff protection has already been observe d, this method can only be used for a retrospective
assessment;  it cannot be used to assess the impact of a change in tariff for which revenue and importvalue have not been observed.  Therefore, the method based on ad valorem  equivalents (AVE) is
generally preferred.  For AVE calculation purposes, and given the difficulties in obtaining the currentworld price for each product, it is assumed that the average import price of each category of product borne
by individual HS eight-digit tariff lines, has remained stable since 1999.  Thus, the average price recorded
for each tariff line in 1999 is used as an estimate of the price that prevailed in early January 2000.
In fact, as a result of worldwide trade liberalization, and of the relative stability of the Swiss franc vis-à-
vis the major European currencies (the euro since 1999) and the U.S. dollar (at least up to early 2000),
average import prices for Switzerland and Liechtenstein have been declining slightly since 1996 (by about
2.2% in 1999).  The use of the 1999 average import prices for the calculation of the AVE for early 2000
may, ceteris paribus , lead to an underestimation of the level of tariff protection if the trend were
maintained (the level of protection being inversely linked to the world prices and to the exchange rates).Nevertheless, the appreciation of the Swiss franc against the euro in the early months of 2000 would haveoffset (to a certain extent) a possible decline in the import prices, thereby strengthening the assumption.Subject to these observations, the simple average of the AVE of the tariff, as at early January 2000, was
estimated at 8.9% (section (b) in the main text).
Variations in import prices through fluctuations of world prices and/or the exchange rates may continually
affect the structure of a given tariff with specific duties and make difficult the assessment of the level of
tariff protection afforded domestic producers.  In a world of floating exchange rates, such an assessment
should be continual even if the tariff and world prices (in the currencies of exporting countries) remainfixed.  Moreover, specific duties provide disparate levels of protection to domestic production of similargoods:  the basis of the tariff being the weight of imported goods, its impact tends to be higher forrelatively heavy and cheap products than for sophisticated high-value supplies within the same tariffcategory.
The use of specific duties provides no gains in terms of customs valuation, which has to be undertaken in
any case for internal-taxation purposes:  for instance, in the case of Switzerland and Liechtenstein, thevalue-added tax (which is worldwide ad valorem ), and the motor vehicle tax (applied on an ad valorem
basis, at least on fiscal grounds).  Nevertheless, the imposition of specific tariffs removes the country's
obligations under the relevant provisions of the WTO Agreement when it assesses the value for internal-
taxation purposes.
Awareness of these shortcomings has generally led to frequent changes (in a pragmatic way) of specific
duties, together with the granting of incentives under various schemes designed to enhance the positive
escalation of the tariff, with a view to further increas ing the effective rate of protection.  In the case of
Switzerland and Liechtenstein, changes to tariffs are made on a quarterly basis for duties on agriculturalproducts.  Incentive schemes based on import prices such as the Price Compensation scheme are alsoavailable to local producers.  The resort to additional tares also plays its part by contributing to a further
increase of the weight of selectively specified products, thereby increasing the level of tariff protection.WT/TPR/S/77 Trade Policy Review
Page 34
Table III.2
Applied MFN tariff, 2000
(Per cent)
8-digit tariff lines
Simple average tariff Share
%Number%
Total 8.9 8,033 100.0
WTO Agriculturea34.3 1,904 23.7
WTO Non-agriculture (excluding petroleum) 2.3 6,113 76.1
Petroleum 0.0 16 0.2
HS chapter 01-24 36.6 1,952 24.3
HS chapter 25-97 2.4 6,081 75.7
a Annex 1 of the WTO Agreement on Agriculture defines the scope of agriculture as HS Chapters 01 to 24 less fish and fish
products (Chapter 3), plus selected items from Chapters 29, 33, 35, 38, 41, 43, 50, 51, 52, and 53.
Source : WTO Secretariat calculations based on data provided by the Swiss authorities.
19. Using ISIC (Revision 2), in aggregate, the tariff displays:  negative escalation from first-stage
processed goods with an average tariff rate of 21.6% to semi-finished products with an average rate of4%;  and positive escalation from semi-finished to finished goods with an average rate of 8.5%.
13
Positive tariff escalation is most pronounced on food products, and moderate on textiles, leatherproducts (except footwear and wearing apparel), wood and wood products (except furniture), rubber
products, and certain chemicals.  Escalation is mixed (i.e. positive from a stage of processing to
another and then negative, or vice-versa) on the other products (Table AIII.2).  This result isindicative, rather than precise, not only because it is subject to price fluctuations (including variations
of exchange rates), but also due to various duty and tax concessions on imported inputs, mainly those
used in the processing of agricultural products (section (e)) and to the imposition of tariff quotas with
in- and out-of-quota tariff rates.  Incentive schemes (e.g. the Price Compensation scheme) contribute
to enhancing tariff escalation and/or the level of effective protection.  Adjustments of the incentivesand of tariffs (Chapter IV(2)(ii)) to correct the shortcomings of specific duties may contribute to
upholding the level of effective protection (Box III.1).
20. In the Uruguay Round, Switzerland and Liechtenstein bound specific customs duties on
agricultural products (except seafood) and mixed duties (the higher of specific or ad valorem  tariffs)
on the other products.  Some 99% of all tariff lines at the HS eight-digit level are currently bound.
Import duties have not yet been bound on gas, petroleum, and related products.  As of 1 January 2000,
Switzerland and Liechtenstein have reduced their bound tariffs on all products, but textiles, to theirUruguay Round final levels. The average bound rate of 12.2% is higher than the average applied tariff
because of ceiling bindings on mostly agricultural products and clothing (some 15% of all tariff lines),
with the bound duties reaching some 770% on meat products.  However, by end-June 2000, the
applied duties were found to be higher than the bound tariff for three tariff lines at the HS eight-digit
level (Table III.3).  According to the Swiss authorities, the reason seems to be copy errors dating fromthe transfer of the WTO Schedule of Switzerland and Liechtenstein into HS96
14;  the errors are to be
                                                     
13 The average tariff for imports under HS 25-97 is 2.4%, a grouping that includes mining and
quarrying, but excludes processed agricultural products.  Using ISIC (Revision 2), the average tariff is 6.8% for
"manufacturing" as defined by Major Division 3, a grouping which incudes processed agricultural products;
average tariffs for Major Division 1 (agriculture) and Major Division 2 (mining and quarrying) are 33.5% and0.7%, respectively.
14 The analysis is based on the HS96 version of the WTO Schedule of Switzerland and Liechtenstein.
The latter are among the WTO Members covered under the waiver Decisions on the Introduction of theSwitzerland and WT/TPR/S/77
Liechtenstein Page 35
corrected as soon as possible.  "Other duties and charges" were bound at the zero rate.  Furthermore,
under Article 5 of the WTO Agreement on Agriculture, Switzerland and Liechtenstein have reserved
the right to invoke the special safeguard clause for almost all agricultural products (section (v)).
Table III.3
Tariff lines where applied MFN rates are found to be higher than the current bound rates, January 2000
HS subheading MFN duty rate Bound duty rate
20092019 20.00 Fr./ 100 kg gross 14.00 Fr./100 kg gross
52062510 24.80 Fr./ 100 kg gross 23.6 Fr./100 kg gross or 1.02% whichever is higher
52062590 45.80 Fr./ 100 kg gross 43.4 Fr./100 kg gross or 5.16% whichever is higher
Source : WTO Secretariat, based on data provided by the Swiss authorities.
(c) Tariff preferences
21. Following the 1923 Customs Union Treaty between Switzerland and Liechtenstein, all goods
are freely traded between the two countries.  The EFTA Convention, the free-trade agreement
concluded between the European Communities and Switzerland, and the EEA Agreement (for
Liechtenstein) provide for free-trade in industrial products, subject to a valid certificate of origin.Therefore, with the exception of a few products subject to low tariff rates, imports of non-agricultural
products from the EC and the other EFTA members, to Switzerland and Liechtenstein, are duty free.
In addition, as a result of its EEA membership, Liechtenstein accords (on a reciprocal basis)
preferential treatment to imports from the other participating members.  In general, few agricultural
products are subject to preferential tariffs when they are imported into the customs union.
22. Under free-trade agreements concluded between EFTA and certain central and eastern
European countries (Chapter II(5)(iii)(a)), Israel, Morocco, the Palestinian Authority, and Turkey,
Switzerland and Liechtenstein grant preferential tariffs to imports of industrial products and of a
limited range of agricultural products from these countries.  Preferential tariffs also apply to industrial
goods and to a limited range of agricultural products covered by the bilateral agreement concludedbetween Switzerland and the Faroe Islands.  Agricultural products covered by the agreements are
afforded preferential tariff treatment only if shipped directly from the beneficiary country to
Switzerland or Liechtenstein.
15
23. Under their Generalized System of Preferences (GSP) scheme, Switzerland and Liechtenstein
grant non-reciprocal preferential tariff treatment to developing countries, subject to a valid certificateof origin:  duty-free access is granted for seafood and manufactured products and for some
agricultural products;  and reduced tariff rates are granted on certain textile and agricultural products.
Imports of certain agricultural products (mainly vegetables and preparations of vegetables, fruit, nuts,
coffee, tobacco and other products of plants), and textile and clothing products (mainly items of
HS chapters 55-63) from the least developed countries are also duty-free.  In 1998, some 2.3% (2.4%
in 1997) of imports to the customs union, corresponding to a GSP utilization rate of 56% (47% in
1997), were made under the GSP scheme;  the utilization rate was 62% (57% in1997) for least
                                                                                                                                                                    
HS changes into WTO Schedules of Tariff Concessions (see WTO document G/MA/TAR/2/Rev.22,
15 June 2000).  In addition to the products contained in Ta ble III.3, the transfer has also affected other tariff
lines for which the applied rates would have been higher than the bound customs duties if the comparison werebased on the original version of the WTO Schedule of Tariff Concessions of Switzerland and Liechtenstein.
15 Under the Customs Union Treaty, bilateral trade agreements concluded by Switzerland also apply to
Liechtenstein.WT/TPR/S/77 Trade Policy Review
Page 36
developed countries.16  Around 45% of total imports to the customs union under the GSP scheme in
1997 and 1998 were accounted for by China (32.6% and 30.1%) and India (13.9% and 14.1%).17
(d) Other duties and taxes
24. Switzerland and Liechtenstein apply the same internal duties and taxes to imports.  Following
a 1993 constitutional amendment by Switzerland, the fiscal duties on imported cars and car parts18,
and fuels and related products were replaced by a 4% motor vehicle tax, and a mineral oil tax andsurtax (respectively) in January 1997.  The motor vehicle tax is levied on the invoice price for a
contract of sale or commission, or on the catalogue price in all other cases.  The tax basis is the
customs-duty-inclusive c.i.f. value;  the tax authority may increase the taxable value by the addition of
the price of missing parts of incomplete or unfinished vehicles.
19  The mineral tax and surtax are
specific (Table AIII.3).  The rates of the tax are re duced in some instances on the basis of the final use
of the products (Table AIII.4).
25. Since 1 July 1999, the monopoly (excise) duty, which had differentiated between domestic
production and imports of distilled beverages, has been aligned on the tax on locally distilled spirit20:
the standard rate is Sw F 29 per litre of absolute alcohol;  certain wines and wine products are subject
to a lower rate of Sw F 14.50 per litre of absolute alcohol.  A mixed tax of 5.998 centimes a piece or25% of the retail price (whichever is higher), wi th a minimum of 10.923 centimes a piece, is levied on
tobacco.  In addition to the customs tariff, and to the mineral oil tax and surtax, an incentive tax of
Sw F 10.14 per 1,000 litres (measured at 15 
o C) applies to extra-light heating oils of a sulphur content
by weight of more than 0.1%, i.e. gas oils.21  Since 1 January 2000, the tax has also been collected on
volatile organic compounds (VOC) at the rate of Sw F 1 per kg. of VOC22;  this rate will be increased
to Sw F 2 in  2001 and to Sw F 3 per kg. of VOC on 1 January 2003.  A veterinary tax and a plant-
health inspection tax are also collected on imports of certain agricultural products (section (viii)(b)).A tax of Sw F 1.60 per kg. (gross) is levied on imports of poultry to source a "Poultry Compensation
Fund" which grants financial support for poultry production.
23
26. The major change to the value-added tax (VAT) system since the previous TPR of
Switzerland, in 1996, has been the increase of the rates on 1 January 1999.  The reduced rate that
applies to "essential" products and services (e.g. items for personal consumption, including cattle,poultry, fish, and medicine, periodicals, food, non-alcoholic beverages, radio and broadcasting
services) was increased from 2% to 2.3%;  the rate of 3% on hotel services was increased to 3.5%;
and the standard rate from 6.5% to 7.5%.  The VAT is levied on the customs-duty-inclusive c.i.f. price
of imports – the taxable value also includes the incentive tax where applicable – and on the sale price
                                                     
16 The GSP utilization rate is equal to the share of imports made under the GSP scheme in total GSP
eligible imports.
17 Cyprus;  Hong Kong, China;  Mexico;  the Republic of Korea;  and Singapore have been graduated
(excluded) from GSP treatment since 1997.  The revised GSP scheme entered into force in March 1997.
18 Items of HS subheadings 87021010;  87029010;  87031000 to 87039030;  87042110;  87042120;
87043120;  87049010;  and 87049020.
19 The following are not subject to the tax:  chassis mounted with cabs;  certain specified "motor
wagons";  motor vehicles of a total weight exceeding 3, 500 kg., i.e. those subject to the charge on heavy goods
vehicles;  electric motor vehicles;  motor vehicles for invalids, admitted duty free;  motor vehicles admitted dutyfree as Confederation war equipment;  new material moun ted in "repair and improvement traffic";  and motor
vehicles imported as personal belongings, wedding gifts, inherited goods, or in the framework of diplomatic or
consular relations.
20 The monopoly duty no longer applies to imports of raw materials for distilling.
21 Items of HS subheadings 27100024 and 27100014.
22 Mostly items of HS Chapter 29 and some similar items of HS Chapters 27 and 38.
23 The taxes on agricultural imports are pa rt of the customs tariffs on the products.Switzerland and WT/TPR/S/77
Liechtenstein Page 37
of locally produced goods;  exports are "zero-rated" for refund purposes (refunds of VAT on exports
of final goods and on inputs used for their production).  Goods and services excluded from VAT still
range from educational, cultural, health and social services, to services performed by social
associations and official stamps.24  The same VAT system is applicable by Liechtenstein.
27. Following its EEA membership, Liechtenstein introduced an excise tax currently ranging
from Sw F 0.94 per tonne of salt used by industries to Sw F 175 per tonne of unpacked kitchen salt.The tax has been introduced to comply with the EEA principle of non-discriminatory State
monopolies;  it is deemed to have the effect that the Swiss State monopoly over salt had on the
demand for this product in Liechtenstein (Chapter II(5)(iii)(b)).
25
(e) Duty and tax exemptions and refunds
28. Under Article 4 of the Customs Tariff Law, the Swiss Federal Council may reduce or order
the total or partial temporary suspension of duties applicable to imports of certain products to the
customs union.  Customs tariffs are currently suspended on war equipment and acrylonitrile
methacrylate/butadiene acrylonitrile elastomer graft copolymer (items of HS subheading 3906.9090).
Under a 1999 Ordinance, refunds may be granted on duties paid on imports of certain products
depending on their final use.26  Eligible products include live swine, animal products, fruit, cereals,
fodder goods, oilseeds, edible oils, textiles and clothing, and aluminium and articles thereof.  For
instance, customs duties are refunded by 15% on imports of specified cereals, residues and waste from
food industries, and prepared animal fodder for the fattening of poultry;  the animals fed with these
imported products should be slaughtered between 1 January and 31 December 2000.
29. Under Article 17 of the Federal Customs Law and Article 39 of its Ordinance, products
temporarily exported or imported for processing (processing traffic) may qualify for tariff reductions
or exemptions if so required by particular economic interests, more particularly the upholding of theinternational competitiveness of local products, and if there are no predominant interests to the
contrary.  The processing traffic scheme provides for tariff reductions and exemptions in case of
scarcity of agricultural commodities and substances, or if no other measures can be used to
compensate for input-price disadvantages in the production of the concerned goods.  Partial or total
refunds of tariffs may be granted on by-products, waste, and losses of weight resulting from theprocessing.  Tariff reductions or exemptions may also be granted on imports of processed products,
contingent upon exports of the same quantity of similar goods (goods of the same quality and in the
same state) (section (3)(iv)).
30. Particular requirements apply to imports of certain products liable to the processing traffic
scheme:  specific guarantees are required with respect to the final use of individual consignments;and for textiles and textile products, the import declaration must be made to either the customs office
of S
t. Gall or of St. Margrethen.  An additional tax (taxe de contrôle) is collected on the gross weight
of imports liable to tariff exemptions or reductions to cover administrative costs:  the tax is of
Sw F 0.20 per 100 kg. of cereals to be denatured;  and Sw F 0 .15 per kg. of other products, with a
minimum of Sw F 7 per consignment.
                                                     
24 See WTO (1996) for more details.
25 The tax is collected to avoid differences in the price of salt with Switzerland.
26 Ordonance sur l'allègement douanier selon l'emploi, 20 septembre 1999 (état au 15 février 2000).WT/TPR/S/77 Trade Policy Review
Page 38
(iii) Import prohibitions, licensing, and controls
(a) Import prohibitions
31. Switzerland and Liechtenstein maintain import prohibitions under international conventions
to which they are signatories (e.g. the Convention on International Trade in Endangered Species of
Wild Fauna and Flora - CITES), and for public health and safety reasons (toxic chemical substances,
"ABC" weapons and antipersonnel mines).  Under Annex 3.1 of the Ordinance relating to
Environmentally Haza rdous Substances, t he manufacture, supply, import, and use of certain
chemical substances are also banned on the basis of environmental protection, and/or public healthand safety considerations.
27  Imports of certain plants and plant products are also prohibited on
phytosanitary grounds (section (viii)(b)).
(b) Import licensing and controls
32. There have been no major changes in the import licensing and control systems of Switzerland
and Liechtenstein since 1996.28  The non-automatic licensing system used to administer tariff quotas
affects some 283 tariff lines at the HS eight-digit level, up from 233 in 1996 (agricultural products in
particular).29  The quota shares are allocated for a limited period of time.  They may be transferred
between owners of non-automatic import licences.  In  principle, a reserve supply is sometimes set
aside specifically to enable new importers to participate in the market.30  In certain cases, the
allocation of tariff-quota shares is subject to, inter alia , "prise en charge" requirements, i.e. the
purchase of like products from producers in Switz erland or Liechtenstein, or participation in
auctioning (Chapter IV(2)(ii)).  The period within which the holder of a tariff-quota share can import
the specific quantity ranges from two week s to one year according to the product.
33. Automatic licensing applies to out-of-quota imports, commercial imports of certain articles
containing gold31, and to a range of products subject to mandatory reserve stock requirements.32  The
validity of an automatic licence is not limited as long as the conditions on which it was granted aremet.  In consequence, for products deemed of vital importance and subject to mandatory reserve stock
requirements (section (x)), the licensing system is non-automatic for imports within quotas and
automatic for out-of-quota imports.  More generally, products subject to non-automatic licences for
imports within quotas are also subject to automatic licences out of quota.  In the case of products for
which mandatory reserve stocks are required, the issuance of automatic licences is subject to thepayment of portions of the customs duty that are not collected by the Customs Administration (e.g.
portions covering costs related to compulsory reserve stocks).
33  Furthermore, parallel importers of
motor vehicles not in possession of Swiss homo logation documents must be licensed and pay a
licence tax.  The Market Control and Surveillance Mechanism (MCSM) facilitates imports to
                                                     
27 These include hexachlorocyclohexane,  aldrin,  di eldrin,  endrin,  heptachlor and heptachlorepoxid,
isodrin,  kelevan,  chlodecone,  telodrin,  stroban,  toxaphene,  hexachlorobenzene,  PCBs,  PCTs,  halogenated
naphtalenes,  halogenated diarylalkanes,  DDT,  2,4,5-T,  and PCP.
28 See WTO (1996) for details of the changes introduced in the licensing system in 1995.
29 The non-automatic licence is delivered (upon written request) to persons or companies domiciled in
Switzerland or Liechtenstein.  Its validity is not limited.
30 Tariff quotas are determined for one year, but their shares under the non-automatic licensing system
may be allocated for shorter periods (WTO Document G/LIC/N/1, 2 and 3/CHE/1, 16 May 1997).
31 IMF (1999).
32 The 1998 General Ordinance on Imports of Agricultural Products (Annexes) contains a negative list
of agricultural products subject to the licence.
33 The portion of customs duties depends on the category of products;  for example, it is 1.45 centimes
per litre of petrol.Switzerland and WT/TPR/S/77
Liechtenstein Page 39
Liechtenstein of goods (including motor vehicles) produced under EEA regulations
(Chapter II(5)(iii)(b)).
34. Applications for licences must be submitted three to five days in advance of the importation.34
Fees are to be paid for the administration of data on tariff quotas (Sw F 8 per consignment) and for the
allocation of tariff-quota shares (Sw F 30 per allocation).  Special allocations (upon special request)
are subject to a fee of Sw F 80 per allocation.35  According to the authorities, the fees cover the cost of
administrative services involved.
35. Switzerland and Liechtenstein maintain import controls (through permit requirements) for
health, safety, security, phytosanitary and environmental considerations (section (viii)(b)).  Since
1996, amendments to existing legislation or enactment of ordinances have rationalized the controls.
For instance, a permit is required for imports of dual-use products (chemical and war weapons) toprevent dissemination of mass destruction weapons;  imports by the Governments are not subject to a
permit.
36. Appeals against a decision relating to licensing are made to the administrative authority or to
the Appeals Commission and, at second instance, to the Swiss Federal Court.
(iv) Trade sanctions
37. Switzerland applies autonomously the UN sanctions against Iraq, Sierra Leone, and Angola
(UNITA), and the EU sanctions against the Federal Republic of Yugoslavia and Serbia.  The UN
sanctions against Libya have been suspended since April 1999.
38. Liechtenstein applies the sanctions endorsed by the United Nations Security Council against
Iraq, Somalia, Liberia, Angola (UNITA), Rwanda, Sierra Leone, the Federal Republic of Yugoslavia,
and Erithea and Ethiopia (since 13 June 2000).  It also applies sanctions endorsed by the EU against
the Federal Republic of Yugoslavia and Serbia.
(v) Contingency trade remedies
39. Switzerland and Liechtenstein have a monistic legal system under which public international
laws and international treaties form an integral part of the national legislation.  Therefore,  like all
other international obligations that are binding on the two countries, the WTO Agreements on
Safeguards, Anti-Dumping, and Subsidies and Countervailing Measures became part of the nationallegal systems (on ratification), and consequently have legal force in the customs territory.
36
40. Article 7 of the Swiss Customs Tariff Law allows introduction or increases in tariffs;
Article 11 provides for temporary tariff increases on agricultural products in application of safeguard
provisions under international trade agreements;  and Article 1 of the Federal Law on External
Economic Measures provides for non-tariff measures in emergency situations (subject to approval byParliament within six months).  The competent authority for investigations into alleged cases of
dumping or subsidization is the State Secretariat for Economic Affairs in Switzerland and the Office
for Foreign Affairs in Liechtenstein;  the State Secretariat was named the Federal Office for ExternalEconomic Affairs until the 1999 restructuring of the Federal Department of Economy (Chapter II(2)).
                                                     
34 The period is longer for imports of goods subject to the approval of the Cantonal Veterinary Office
or the Plant Protection Service;  the importer generally needs to approach only one body.
35 Allocations of tariff-quota shares that require, inter alia , consultations with interested parties on the
market situation.
36 GATT (1991) and WTO (1996).WT/TPR/S/77 Trade Policy Review
Page 40
41. Invoking the special safeguard right, retained with respect to a large range of agricultural
products under Article 5 of the WTO Agreement on Agriculture, from 1 May to 31 December 1999
Switzerland and Liechtenstein levied a safeguard duty on imports of pork meat and its by-products;
the duty was calculated on the difference between the reference price fixed by the authorities and the
f.o.b. price (Table III.4).37  The safeguard duty was levied in addition to the normal customs tariffs.  If
the difference in the reference and f.o.b. prices exceeded 10% but was inferior or equal to 40%, therate of the safeguard duty was 30% of the difference in excess of 10%.  Differences in prices that
exceeded 40% bore additional (cumulative duties) of:  50% of the difference in excess of 40% but
inferior or equal to 60%;  70% of the difference in excess of 60% but inferior or equal to 75%;  and
90% of the difference in excess of 75%. With the exception of this 1999 special safeguard duty,
Switzerland and Liechtenstein have not applied any contingency trade remedies (anti-dumping,countervailing, and safeguard actions) since 1982.
38
Table III.4
Special safeguard duties on pork meat and its by-products, 1 May-31 December 1999
Items subject to special safeguard duties
Reference price
Heading No. Description of goods(Sw F/100 kg.)
0203 Meat of swine, fresh, chilled or frozen
Fresh or chilled
Hams, shoulders and cuts thereof, with bone in
0203 1299 Other 350
0203 1999 Other 506
Frozen
Hams, shoulders and cuts thereof, with bone in
0203 2999 Other 585
0209 Pig fat, free of lean meat, and poultry fat, not rendered or otherwise
extracted, fresh, chilled frozen, salted, in brine, dried or  smoked
Pig fat, free of lean meat
0209 0019 Other 50
0210 Meat and edible meat offal, salted, in brine, dried or smoked;  edible
flours and meals of meat or meat offal
Meat of swine
0210 1199 Other 1,800
0210 1299 Other 500
0210 1999 Other 1,900
  Duties
Difference between the reference price and the f.o.b. import
price = Dif.Supplementary duties
]10% – 40%] 30% of the Dif. exceeding 10%
]40% - 60%] In addition, 50% of the Dif. exceeding 40%
]60% - 75%] In addition, 70% of the Dif. exceeding 60%
Over 75% In addition, 90% of the Dif. exceeding 75%
Source : Information provided by the Swiss authorities.
42. Switzerland and Liechtenstein retain the right to use the transitional safeguard mechanism of
Article 6 of the WTO Agreement on Textiles and Cl othing.  They have also undertaken a programme
                                                     
37 Ordonnance sur l'application de la clause de sauvegarde spéciale dans le domaine de la viande de
porc, 30 April 1999.
38 See GATT (1991) and WTO (1996) for details on safeguard actions taken up to 1982.Switzerland and WT/TPR/S/77
Liechtenstein Page 41
to integrate their textile and clothing products into GATT 1994 rules;  the lists of products integrated
during Phases I (16% of their 1990 imports) and II (17%) of implementation of the Agreement
included specified yarns such as certain cotton yarns, specified carpets, certain suits and ensembles,
certain woven articles, and specified curtains, drapes and interior blinds.39  The transitional safeguard
mechanism cannot be used in respect of such integrated goods;  rather, GATT 1994 Article XIX is
available.
(vi) Rules of origin
43. Switzerland and Liechtenstein apply the same non-preferential rules of origin, which have not
changed since 1996. Under these rules, products are considered as originating from a country if they
are either wholly obtained or "sufficiently transformed" in that country (i.e. non-originating
components must not exceed 50% of the f.o.b. export value, or the four-digit HS tariff heading of thefinal product must differ from that of the foreign inputs).  Special rules apply to certain products,
mainly chemicals, textiles, and metals.
40  In general, "minor" transformations (e.g. packaging,
blending and mixing) do not confer origin even if they contribute to 50% of the value or a change in
the four-digit HS tariff heading.
44. In general, the preferential rules of origin require a local content of at least 50% or 70% of
value added.  For certain HS chapters, a change of tariff heading or certain working or processing
rules have to be met in addition to or instead of the main origin rules.41  In 1997, the concept of pan-
European cumulation was introduced:  it allows the cumulation of inputs from central and eastern
European countries (CEECs), including the Baltic States and Slovenia, and from EFTA, the EU and
Turkey (since 2000).42
45. The preferential rules of origin governing trad e in industrial products (other than textiles and
clothing) with the EU and EFTA facilitate the incorporation of semi-manufactured inputs from thirdcountries (through a tolerance rule) as well as processing activities outside the preferential zone
(through a loosening of the territoriality principle), without jeopardizing the preferential status of the
final product.
43  Alternative rules for chemical substances and products allow third-country raw
materials to reach 40% of the value of the resulting basic chemicals (HS chapters 28-29), and 25% of
the value of plastic products (HS chapter 39) without loss of preferential status.44
46. Imports from the other EEA members to Liechtenstein are governed by Protocol 4  (on rules
of origin) of the EEA Treaty.  Two sets of rules of  origin are applicable in the trade relations between
Switzerland, and Liechtenstein and the other members of the European Economic Area (EEA).
Indeed, exports by Liechtenstein of goods originating from Switzerland are subject to the provisions
of the 1972 Swiss-EU Free Trade Agreement (SEFTA ).  Although the SEFTA does not provide for
                                                     
39 WTO documents G/TMB/N/50, 28 April 1995 and Adds.1 and 2, and G/TMB/N/206,
6 February 1997 and Adds.1, 2 and 3.
40 The countries of origin and of exportation of textiles and clothing must be specified in the import
declaration to trace changes in the pattern  of international production and trade.
41 Some adjustments were also made to take into consideration changes due to the introduction of the
HS 1996 nomenclature and new technological developments.
42 The cumulation criteria stipulate that an input th at meets the preferential rules of origin in any
country of the area of the pan-European cumulation can be used as an "originating input" in the determination ofthe origin of a new good (produced in another country of the area) in which the input is incorporated.
43 Under a general tolerance rule, certain semi-manuf actured inputs, from third countries that are not
already included in a special list, may constitute up to 10% of the ex-factory price of the final product.  A
loosening of the territoriality principle allows for temporary exportation, provided that the value-added outsidethe preferential area does not exceed 10% of the ex-factory price.
44 WTO (1996).WT/TPR/S/77 Trade Policy Review
Page 42
full cumulation of origin, the EEA members have al lowed Liechtenstein to continue applying it with
Swiss non-originating materials;  however, when Liechtenstein applies the EEA Protocol 4 in order to
obtain an EEA product, full cumulation with Swiss materials is not possible.45
47. Since 1 January 1996, the origin rules governing imports under the GSP scheme has allowed
the cumulation of local materials (materials from the customs territory) with inputs from beneficiary
countries.  In addition, under a general "tolerance rule", preferential status is maintained if the share ofthird-country components – otherwise not accepted – does not exceed 5% of the ex-factory price of
the product.  Cumulation is possible among members of regional economic groupings.  According to
the authorities, only ASEAN members (ASEAN is the only regional economic grouping in the Swiss
GSP scheme) have so far taken advantage of this possibility.
46
(vii) Local-content and local-purchase requirements
48. Provisions (based on, inter alia , conventions and agreements) for the "broadest possible use"
of European works, with particular attention to domestic audio-visual productions, are still in force in
both Switzerland and Liechtenstein.47  Moreover, the " prise en charge " (tariff-quota allocation)
system under which traders are required to match their imports of certain agricultural goods
(e.g. meat, eggs, and certain cereals) with specified shares of domestic production has also beenmaintained (Chapter IV(2)(ii)).
(viii) Standards and other technical requirements
(a) Standardization, testing, and certification
49. In pursuance of the 1995 Law on Technical Barriers to Trade (Loi sur les entraves techniques
au commerce, LETC), Swiss technical regulations have been aligned on those of its major trading
partners (mostly on the regulations of the EU) in eighteen areas, including machinery, electrical
equipment, electromagnetic compatibility, medical devices (some 5% of the devices, e.g. invitro-diagnostica, are for the time being excluded), pharmaceutical products, telecommunication
equipment, motor vehicles, and tractors.
48  Harmonization initiatives are still under way in areas such
as building products (harmonized regulations are to enter into force by the end of 2000), pressure
vessels, invitro-diagnostica, civil explosives, recreational craft, cable cars, and chemicals.49
Nevertheless, differences still subsist in "harmonized" technical regulations for health, safety, and
environmental considerations (Table III.5).
                                                     
45 This differs from the pan-European system.  In the EEA cumulation, each step of work undertaken in
each country of the zone can be added;  in the pan-Eur opean cumulation, the origin criteria must be fulfilled at
least once in a single country.  For example, in the EEA, 20% can be added in the first country and 30% in the
second country and the good can then be shipped as an originating one into the third country;  in the pan-European zone, the 50% rule must be met in a single country.
46 WTO (1996).  Singapore has been excluded from the Swiss GSP scheme and from the related
regional cumulation since 1997.
47 WTO documents GATS/EL/83 and 83-A, 15 April 1994 and 15 April 1995 respectively.
48 The law provides the basis for the Federal Council to conclude international agreements on technical
regulations (e.g. mutual recognition agreements) and for unilateral recognition of results of foreign conformityassessments.  See WTO (1996) for details on the law.
49 With the exception of lifts, the products are those listed in WTO (1996).  The harmonization is to be
completed within the next two years.Switzerland and WT/TPR/S/77
Liechtenstein Page 43
Table III.5
Technical barriers affecting imports from countries participating in the EEA, June 2000
Marketing in Switzerland subject to formal product approval?
No Yes
Household appliances (some types) Household appliances (some features)
Certain electro-medical equipment Certain electro-medical equipment
Textiles Lifting and mechanical handling appliances
Cosmetics Construction machinery
Toys Certain electrical equipment
Tobacco products Information technology, telecommunicationsNo
Machinery and data processing
FoodstuffsaMedicinal products
Construction products Dangerous substancesDifferent technical
requirements between EEA
countries and Switzerland
Yes
Motor vehicles Precious metals
a Except for irradiated foodstuffs, which must be approved in Switzerland.
Source : Hanser et al (1995), and information provided by the Swiss authorities.
50. Standardization is still in the hands of private bodies grouped under the Swiss Association for
Standardization (Schweizerische Normen-Vereini gung, SNV), a private non-profit association
comprising 600 members, including private associations, institutions, and representatives from the
public sector.  In consequence, standardization rests with a variety of governmental and private
bodies, including the Swiss Association of Mach inery Manufacturers and the Swiss Association of
Electrical Apparatus Manufacturers. 50  Standards are initiated and discussed at the level of the
relevant agencies.  Except for building products and pharmaceuticals51, for which the competencies
are still shared between the Confederation and the Cantons, product legislation is generally enacted by
the Federal Council and individual departments.52  After the entry into force of legislation under
preparation in these two areas (the new Federal Law on the Marketing of Building Products and the
Federal Therapeutic Goods Act, envisaged for summer 2000 and 2001, respectively), the regulatorycompetence for all products will be at the federal level.
51. The Swiss Accreditation Service (SAS), an independent division within the Swiss Federal
Office for Metrology, provides the national system for the assessment and accreditation of
laboratories, as well as for inspection and certification bodies.  Under the LETC, "test reports or
conformity certificates by foreign organizations are only acceptable if it can be shown (subject to
Swiss technical regulations on the concerned product) that:  (a) the test or conformity assessment
procedures followed meet Swiss requirements;  and (b) the foreign organization has qualificationsequivalent to those required in Switzerland".
52. In areas, such as machines and electrical equipment, no formal product approval is required.
53
Switzerland concluded a mutual recognition agreement (MRA) with the EU, which is to enter into
                                                     
50 Participants are from all economic sectors.  The SNV is a member of, inter alia , the International
Organization for Standardization (ISO) and the European Committee for Standardization (CEN).
51 All pharmaceutical products (prescription and over-the-counter) must be approved and registered by
the Inter-cantonal Drug Commission (IKS) before being placed on sale in Switzerland.
52 The Swiss Parliament has conferred its powers for establishing technical regulations on the Federal
Council and the departments, which issue implementing ordinances;  the LETC is the outline law in the field.
53 Switzerland implements, on a unilateral basis, the New and Global Approach Directives of the EU.
According to the Swiss authorities, the cost related to conformity assessment procedures in Switzerland is, onaverage, below 1% of the value of the product.WT/TPR/S/77 Trade Policy Review
Page 44
force on 1 January 2001, subject to ratification by the EU Member States (Chapter II(5)(ii)).54  A n
MRA between Switzerland and Canada has been in force since 1 May 1999.
53. The Liechtenstein Chamber of Industry and Commerce is a member of the Swiss Association
for Standardization.  Like other members, the Chamber may initiate standards that are discussed at the
level of the relevant agencies;  Liechtenstein does not have its own standards.  A 1996 Act and an
ordinance enable Liechtenstein private companies to be accredited as testing, inspection, calibration,and certification bodies.  Currently, there is one accredited certification body for quality managing
systems.  A 1995 Act on the marketability of goods, amended in 1997, provides for the sale in
Liechtenstein of goods produced in conformity w ith either the Swiss or the EEA rules (Box II.1).
54. In February 2000, some 87% (65% in 1996) of the 10,945 standards in force in the customs
territory corresponded to international standards (e.g. ISO, IEC, CEN, CENELEC, ETSI, DIN, NF)
(Chart III.1).
05001,0001,5002,0002,5003,0003,5004,000
INB SIA SEV VSM VSS NIHS PTCNationalInternationalChart III.1
Standards in the customs union, February 2000
Note :
Source : 3,757
6352,726
1,679
11 10656
291 22960306352233
0Number of standards
INB = cross-sectoral standards; SIA = building; SEV = electrical equipment; VSM =machinery; 
VSS = road construction; NIHS = watches; PTC = telecommunications.
Swiss Association for Standardization (Schweizerische Normen-Vereini gung, SNV ).
(b) Health, sanitary, phytosanitary, and environmental protection regulations
55. Three regimes (prohibition, authorization, and phytosanitary certificate) apply to imports of
plants, plant, products, and other related items to Switzerland and Liechtenstein.55  Differences in
                                                     
54 This agreement will facilitate the trade in industr ial products through the mutual recognition of tests,
certificates, and other technical rules and procedures.  It is less comprehensive than the EEA Agreement;  inparticular, it falls short of the "Cassis de Dijon principle".
55 The products covered are:  items of HS chapters 6 (live trees and other plants;  bulbs, roots and the
like;  and cut flowers and ornamental foliage);  7 (edible vegetables and certain roots and tubers);  8 (edible fruitSwitzerland and WT/TPR/S/77
Liechtenstein Page 45
implementation of the regimes exist on the grounds of the origin of imports:  imports from the
European and Mediterranean Plant Protection Organization (EPPO) members are distinguished from
those from non-member countries.  For instance, import prohibition applies to potatoes (HS 07019010
and 07019099), potato plants (HS 07011010 and 07011090), certain fertilizers, vine, fruit trees and
other host plants of San José scale, and host plants of virosis of fruit trees from non-EPPO member
countries.56  Documentary requirements vary accordingly.  Imports of host plants of bacterial canker
and fruit susceptible of being infected are banned regardless of their origin.  Imports of live trees and
seeds are subject to phytosanitary certificates issued by the exporting country.  Residues of plants and
storage-protective chemicals on imported fruit and vegetables, and the use of additives in foodstuffs
are strictly regulated.  For items subject to import licensing, applications for authorization must be
submitted to the Federal Phytosanitary Service (Federal Office of Agriculture) two weeks in advanceof importation, and imports under the phytosanitary certificate regime must be announced to the
Service 24 hours in advance.  A fee of Sw F 5 per application is charged.
56. Import prohibitions also apply to ozone depleting substances.
57  Imports of forest reproductive
material, especially certain varieties of trees deemed important for Swiss or Liechtenstein forestry
(eleven varieties of conifers and 31 varieties of leaf-bearing trees), and of forest plants, are subject toauthorization by the Federal Directorate of Forestry.  Applications must be submitted 7 to 14 days in
advance of importation.  A fee of Sw F 5 to Sw F 20 is charged;  in addition, a phytosanitary control
charge, ranging from Sw F 20 to Sw F 50, applies if the required documents (licence and/or
phytosanitary certificate) are not produced.
57. Imports, transit, and exports of animals and animal products are subject to a permit based on
veterinary and species protection regulations,
58;  the permits are issued by the Federal Veterinary
Office.  Applications for the permit should be submitted (together with the import licence, and theCITES documents, as appropriate) at least one week in advance of importation.  A fee of Sw F 15 per
application is charged.  Live poultry and poultry products from Lombardia (Italy) are currently
prohibited from importation to the customs union due to Avian Influenza.  Dogs and cats from
Malaysia are presently subject to particular sanitary restrictions.
58. Imports of blood and blood products, and im munobiological products for human use are
subject to licensing.  A special permit is required for imports (exports) of narcotic drugs, psychotropic
substances and precursors used and marketed for legal purposes.  The licence and the permit are
issued by the Federal Public Health Office (OFSP).
                                                                                                                                                                    
and nuts;  peel of citrus fruit or melons);  10 (cereals);  12 (oil seeds and oleaginous fruits;  miscellaneous
grains, seeds and fruit;  industrial or medicinal plants;  and straw and fodder);  and 31 (fertilizers).  The regimes
are based on the Federal Law on Agriculture, 29 April 1998;  the Ordinance on Plant Protection, 5 March 1962;and the Ordinance on the Campaign against San José Scale, Bacterial Canker and Virosis of Fruit Trees
Constituting a General Danger, 28 April 1982.
56 Ordinance on Plant Protection, Article 19.
57 CFCs;  HCFCs;  halons;  HBFC;  1,1,1,-trichloroethane;  tetrachlorocarbon;  and bromomethane.
Imports of HCFCs in refrigeration will be banned from the end of 2001, and of refill of existing haloninstallations from the end of 2002;  the use of methyl bromide will be restricted to specific indoor fumigation
(under licence).
58 Ordinance on the Import, Transit and Export of Animals and Animal Products, 20 April 1988;  the
Law on Epizootics, 1 July 1966;  the Law on Foodstuffs, 9 October 1992, as amended up to 1997;  the Federal
Law on Fishing, 21 June 1991;  the Law on the Protection of Animals, 9 March 1978;  Ordinance on the
Conservation of Species, 19 August 1981;  the Convention on International Trade on Endangered Species ofWild Fauna and Flora (CITES);  and the Law on Hunting, 20 June 1986.  The Bovine SpongiformEncephalopathy (BSE) crises led to the amendments of the Law on Foodstuffs and of the Ordinance onCosmetics.WT/TPR/S/77 Trade Policy Review
Page 46
59. Carbon-zinc batteries containing more than 0.01% mercury and more than 0.015% cadmium
(by weight), and alkali-manganese batteries/accumulators containing more than 0.025% mercury are
prohibited from importation to Switzerland and Liechtenstein.  Under the 1983 Federal Law relating
to the Protection of the Environment (as amended up to 1997), certain taxes are collected on volatile
organic compounds and "extra light" heating oils for environmental protection purposes
(section (ii)(d) above).
(c) Marking, labelling, and packaging
60. The Swiss regulations on marking, labelling and packaging generally apply to imports to
Liechtenstein.  However, EEA originating products that do not comply with the Swiss regulations
may be imported to Liechtenstein under the MCSM (Box II.1).
61. To be imported to the customs union, products must be labelled in the three official languages
of Switzerland (German, French, and Italian).  In general, the label or packaging must indicate the
specific name of the product, the metric measure, the sale and unit prices, the dates of manufacture
and expiry, the weight of each component in the case of mixed products, and ingredients and additives
in decreasing order of weight.  Mandatory labelling and packaging requirements apply mostly to
foodstuffs and technical appliances.  Imports of m eat and eggs (fresh or cooked), produced in a
manner prohibited in Switzerland, must be labelled as such.  These banned production methods,
which must be labelled, include the use of  hormones, antibiotics and other antimicrobial substances
as performance stimulators (for meat), and rearing of hens in battery cages (for eggs).59
62. Since 1 July 1999, genetically modified organisms (GMO) must be indicated on labels if they
make up:  1% or more of the total weight of foodstuffs for human consumption;  2% or more of
compound foodstuffs for animal consumption;  and 3% or more of the total weight of inputs used for
the production of foodstuffs for animal consumption.  The 1990 Law on the Protection of Consumersalso provides a framework for producer and consumer associations to determine product-related
information requirements in consumers' interest.  If no agreement is reached, the Federal Council may
issue compulsory labelling requirements.  Moreover, eco-labelling systems are also used by
companies on a voluntary basis.
(ix) Government procurement
63. Switzerland and Liechtenstein are signatories to the WTO Plurilateral Government
Procurement Agreement (GPA).  The GPA constitutes the main framework governing purchases by
their central governments.
64. The GPA was transposed into Swiss federal legislation by the 1994 Federal Law on
Government Procurement (as amended up to 1997) and its 1995 Ordinance (as amended up to1999).
60  The legislation provides for, inter alia , periodic adjustments of definitions and threshold
                                                     
59 The declaration requirements apply from the points of distribution to the final consumers, both in
retail trade and in establishments wh ere meals are prepared for the public, such as restaurants or hospitals
(Ordinance relating to the Declaration of Agricultural Products Stemming from Production Methods Prohibitedin Switzerland, 3 November 1999).  The Ordinance (based on Article 18 of the 1998 Federal Law onAgriculture) entered into force on 1 January 2000 and will be amended shortly to include products of animal
origin.
60 The Ordinance specifies the procurement regime for purchases covered by the Federal Law as well
as for remaining areas, i.e procurements below the relevant threshold values;  purchases by the federal railways,the Federal Alcohol Board, the federal polytechnic schools and their research institutions, postal and automobileservices of the Swiss Post, and the armament enterprises.Switzerland and WT/TPR/S/77
Liechtenstein Page 47
values to the relevant GPA provisions.61  The ratification of the 1996 Intercantonal Concordat by the
cantons translated the GPA into cantonal laws.  Moreover, the 1995 Federal Law on Internal Market
provides for non-discrimination in public procurement at cantonal and local levels.62  Cantons and
communes are amending their legislation accordingly.
65. Procurement at the federal level is generally limited to projects in sectors in which the
Confederation has responsibility, including utilities, transportation, communications, defence andconstruction;  42 purchasing offices for goods have been designated and 122 for services.  Purchasing
entities are free, in principle, to call open or selective tenders (at least three bidders);  selective tenders
are more common.  Single tendering is confined to the cases foreseen in the GPA.
63  Contracts must
be awarded to the supplier that has presented the most economically advantageous offer, closest to the
criteria specified in the tender documentation.  Neither the Law nor the Ordinance provide forpreferential treatment to Swiss suppliers.  Complaints related to public procurement may be lodged
with a complaints Commission in case of infringement of federal procurement legislation.
66. Switzerland concluded a bilateral agreement on government procurement with the EU
(Chapter II(5)(ii)). The agreement is to come into  effect on 1 January 2001 at the earliest, subject to
ratification by the EU Member States.
64  The agreement provides for the extension of the GPA to
purchases by communes, the railways, the telecommunications services, institutions operating in the
area of energy, and by private companies operating with exclusive or special rights in the areas of
water, electricity, and transport.  A best endeavour clause encourages purchasers to not discriminate
against suppliers from other parties to the agreement in procurement below the relevant threshold
values.65
67. Based on 1988 estimates, procurement carried out by cantonal and communal governments is
about double the federal government purchases.66  Federal purchases, including procurement by the
former PTT and the federal railways, amounted to Sw  F 7.7  billion in 1996, Sw F 8.2 billion in 1997
and Sw F 5.3 billion (excluding purchases by PTT) in 1998.  Electronic equipment, vehicles, and
machinery are still the most important expenditure groups, accounting together for more than 80% of
the total purchases in value.  Public purchases from abroad represented 16% of the total in 1998,
down from 20% in 1995 and 18% in 1996, but up from 12% in 1997.67
68. In Liechtenstein, in addition to the GPA, public procurement is also governed by the relevant
EEA rules (e.g. the threshold values are those set by the EEA).  A law and a regulation entered into
force on 1 January 1999 to incorporate the international obligations of Liechtenstein (under the GPA
and the relevant EEA provisions) into national legislation.  In general, open tenders are required for
                                                     
61 Going beyond the coverage of the GPA, the Swiss legislation also applies to project and feasibility
studies.  The reservations made by Switzerland on the application of the GPA to other signatories who have notextended comparable and effective access to Swiss firms in certain areas currently apply to:  Canada and the
United States (non-application to regional bodies and entities in the water, electricity, and local transportsectors, and to airports and ports);  Japan (electricity and local transport);  the Republic of Korea (airports and
local transport);  and Israel (local transport).  See WT O (1996) for more details on the legal framework and the
international obligations of Switzerland in the area of public procurement.
62 The Federal Law on Internal Market entered into force on 1 July 1996 and became fully operational
on 1 July 1998.  Its purpose is to eliminate restraints on competition arising from cantonal and communalregulations, with regard to government procurement and worker mobility in Switzerland.
63 Article 13 of the 1994 Federal Law on Government Procurement, as amended.
64 The Swiss population accepted, by public referendum on 21 May 2000, the seven bilateral
agreements concluded with the EU.
65 Wasescha (2000).
66 Estimation by the Swiss Federal Administration of Finance, Berne.
67 Wernli (1997, 1998 and 1999).WT/TPR/S/77 Trade Policy Review
Page 48
construction works and related purchases.  Public procurement in the other areas is made through
selective tenders.  There are no de jure  preferences for local suppliers.  Complaints related to public
purchases may be lodged with the Government, the Administrative Court, or with the EFTA
Surveillance Authority if EEA provisions are concerned.  In 1999, public procurement by the
Liechtenstein Government, the communities, and comp anies with exclusive or special rights exceeded
€  30 million.
69. A joint declaration by Liechtenstein and certain neighbouring Swiss cantons enable the latter
to tender (on a reciprocal basis) for purchases below the threshold values.
(x) Other measures
70. Compulsory reserve stocks are required for sugar, rice, wheat, seeds, edible oils and fats, soap
and detergents, cocoa, coffee, fodder goods, fertilizers, antibiotics, fuels, coal, and lubricants.  For thispurpose, imports of these products to the customs union are subject to a licence (section (iii)(b)).  A
fee is included in the customs tariffs levied on thes e products to cover the administrative costs related
to the management of the reserve (storing and losses  related to falls in prices).  The reserve stocks
currently correspond to six months of consumption (on average) of each product;  they are to be
reduced gradually to the equivalent of four months of consumption by 2003 for foodstuffs and4.5 months for petroleum products.  The reserve-stock requirement is to be abolished for cocoa, soap
and detergents, certain fertilizers and seeds by 2003, and for fodder goods by 2007.  Compulsory
reserve stocks are no longer required for tea;  their abolition is under way for coal.
71. Ongoing offset arrangements cover military equipment;  these amount to Sw F 3.1 billion for
the period 1992-05.  In accordance with the 1998 Federal Law on Agriculture (Article 26),
countertrade on meat with Brazil, Argentina, and Austria was abolished on 1 January 2000.
According to the authorities, Switzerland and Liechtenstein have no agreements with foreigngovernments or enterprises designed to influence the quantity or value of goods and services exported
to the customs union.  Likewise, the authorities are not aware of the existence of such agreements
between private companies operating in the customs union and foreign enterprises.
(3) M
EASURES DIRECTLY AFFECTING EXPORTS
(i) Registration
72. Similar registration and documentation requirements apply to importers and exporters
(Section (2)(i));  the formalities confer the title of trader.  An export declaration is required (regardless
of the type of product and its destination) for statistical purposes.
(ii) Prohibitions, controls, quotas, licensing, and voluntary restraints
73. Switzerland and Liechtenstein maintain export controls by means of licensing requirements
for safety, security, and environmental reasons, and to ensure compliance with international
obligations under treaties and conventions (e.g. th e Basel Convention on international transport of
hazardous waste, CITES, the Convention on Chemical Weapons, the Treaty on Nuclear Non-
Proliferation) to which they are signatories.  The range of products covered has remained virtually
unchanged since the last TPR of Switzerland in 1996, and includes weapons, dual-use goods for theproduction of conventional weapons and weapons of mass destruction.  A licence is also required for
commercial exports of certain articles containing gold.
68
                                                     
68 IMF (1999).Switzerland and WT/TPR/S/77
Liechtenstein Page 49
74. Except for restrictions maintained in compliance with international obligations and controls
on certain products containing gold, the authoritie s are not aware of any retention requirements or
restrictive practices operating on exports from Switzerland and Liechtenstein.  Export quotas on
certain metal residues and discharges, ferrous scrap, and used rails, railway wagons, and vessels for
breaking up were abolished on 1 July 1996.
(iii) Export taxes, charges, and levies
75. According to the authorities, Switzerland and Liechtenstein have no export taxes, charges and
levies.
(iv) Export subsidies
76. Switzerland and Liechtenstein grant export subsidies on agricultural products, including dairy
products (e.g. cheese, preserved milk products, cream, yoghurt, sterilized milk), breeding and dairycattle, horses, and processed food products (e.g. chocolates, egg products, cereal products, sugar and
molasses).  The subsidies generally consist of direct contributions to price reduction or to input costs
(Chapter IV(2)(ii) and (iii)).
77. Under the WTO Agreement on Agriculture, Switzerland and Liechtenstein have reduced their
export subsidies on dairy products from Sw F 444 million in 1995 to Sw F 284 million in 2000;  oncattle and horses from Sw F 35 million to Sw F 22 million;  on fruit from Sw F 26 million to
Sw F 17 million;  on potatoes from Sw F 4 million to Sw F 2 million;  and on other processed food
products from Sw F 180 million to Sw F 115 million.
69
78. According to the Liechtenstein authorities, a few Liechtenstein food processing companies
benefit from the Swiss export subsidy scheme;  given the size of the Liechtenstein economy and that
some of the subsidized goods are neither produced nor exported by it (Chapter IV(2)(iii)), the bulk of
the subsidies notified to the WTO are granted by Switzerland and benefit Swiss farmers.
(v) Duty and tax concessions
79. The Swiss Federal Law on Customs (Article 17) and its Ordinance (Article 39) provide for
duty reductions or exemptions under the processing traffic scheme (section (2)(ii)(e) above).
Moreover, exports are "zero-rated" for VAT refund purposes (section (2)(ii)(d)).
(vi) Export promotion and finance
80. The Swiss Office for Trade Promotion (OSEC) , an association of some 2000 members (90%
of them representatives of small and medium-sized enterprises) is the central body commissioned by
the Confederation to promote trade.70  OSEC is financed up to 45% by the Confederation, with
contributions from its members and its own resources making up the difference.  The annual
contribution of the Confederation, amounting to some Sw F 13 million, is destined for collectiveservices.  The international activities of OSEC include participation in, and organization of, fairs,
organization of sales missions abroad, market analyses
71, advice and information on trade, and
invitation of foreign customers to Switzerland.  It also promotes imports from developing and
transition economies.  Export promotion activities are also carried out by the Swiss representations in
                                                     
69 WTO Schedule LIX – Switzerland and Liechtenstein, 15 April 1994.
70 Conseil Fédéral (2000).
71 Since 1 January 1999, financial assistance from the Government for marketing communications and
market analyses has been limited to a maximum of 50% of total costs.WT/TPR/S/77 Trade Policy Review
Page 50
foreign countries, and by private non-profit associations or organizations, with which OSEC
collaborates.
81. The legislation on export promotion is currently under review.  A new law is to be submitted
to Parliament and is to enter into force in spring 2001.  Under the new law, promotion activities are to
be confined to trade information, advice, and mark eting assistance, with a view to increasing the
number of beneficiary companies, mainly small and medium-sized enterprises.  Cooperation amongexport promoters is also to be enhanced and the network of embassies, consulates and chambers of
commerce is to be better integrated.  Subsidies for export promotion (including subsidies for
infrastructure) will remain stable at around Sw F 15 million per year.
82. The mixed credit scheme, administered by the State Secretariat for Economic Affairs, is still
available for exports to countries whose GDP per capita is below US$3,030 per year (1998) and forexports that comply with the OECD  guidelines for tied-aid credits (Helsinki package).  All goods and
services purchased in this context must have at least 51% Swiss origin.  Annual public funds
disbursed by Switzerland under the scheme amount to some Sw F 55 million (1996 figures).  The
People's Republic of China, and Egypt are the major beneficiaries.  The main products supplied by
Switzerland under the scheme are medical equipment and machine tools.  Liechtenstein does notparticipate in the mixed credit scheme.
83. According to the authorities, Liechtenstei n does not have its own export promotion and
finance schemes.  However, the Government of Liechtenstein and individual companies are members
of OSEC.  The member contribution of Liechtenst ein amounts to Sw F 64,500 per year.  This allows
Liechtenstein companies to use the services of OSEC in the same way as Swiss enterprises.
72
(vii) Export insurance and guarantees
84. Established under a 1958 Federal law73, the Swiss Export Risk Guarantee Scheme (GRE) is
aimed at creating and safeguarding employment opportunities, while promoting foreign trade through,
inter alia,  the diversification of export destinations.  On 1 July 1998, Switzerland revised the GRE to
bring it into line with the provisions of the arrangement on the harmonization of export-credit regimes
concluded under the OECD (the arrangement came into force on 1 April 1999).  The GRE covers
political and related transfer risks, and guarantees or letters of credit issued by acceptable privatebanks (since 1996).  As a general rule, at least 50% of the export value insured must be of Swiss
origin;  the maximum guarantee is 95% of the delivery value.
85. At the end of 1999, the total outstanding commitment of export guarantees amounted to some
Sw F 6.8 billion, up from nearly Sw F 6 billion in 1996 and Sw F 6.5 billion in 1998;  new guarantees
amounted to about Sw F 2.4 billion, up from Sw F 1.3 billion in 1994 and Sw F 2 billion in 1998.  Animprovement (in 1995-99) in the financial situati on of the Export Risk Guarantee Agency (which
administers the scheme) led to the reimbursement of Sw F 935 million on previous advances from the
Confederation;  by the end of 1999, the agency s till owed Sw F 650 million to the Confederation.
Turkey, Indonesia, China, Iran, and Mexico have been among the major destinations for which export
guarantees have been provided since 1996.  The machinery sector still accounts for more than threefifths of new guarantees, followed by chemicals (36% in 1999).
 74
                                                     
72 The services costs are higher for non-members of OSEC than for the members, who pay an annual
contribution to the Organization.
73 The Federal Law on Guarantees against Export Risks, 26 September 1958 and its Ordinance as
revised on 1 July 1998.
74 Bureau pour la garantie contre les risques à l'exportation (various issues).Switzerland and WT/TPR/S/77
Liechtenstein Page 51
86. According to the authorities, Liechtenstein has no export insurance and guarantee schemes.
(viii) Other provisions
87. Switzerland has 27 free ports at its main frontier posts, including the international airports of
Geneva and Zurich, and at most of its major trade and industrial centres.  Free ports are operated by
private enterprises.  Under Article 42 of the 1925 Federal Customs Law (as amended), free ports are
considered as extraterritorial areas where goods may be stored indefinitely (without customsinspection), unpacked, repacked, labelled, preserved, analysed, sorted, divided, mixed, and sampled.
Processing activities resulting in changes of tariff classification are subject to customs authorization.
Goods may also be stored in federal bonded warehouses (under customs control for up to five years)
where they may only undergo processing that is essential for their preservation.
75
88. According to the authorities, there are neither export-processing zones nor free ports in
Liechtenstein;  Liechtenstein companies have not so far used facilities of free ports established in
Switzerland.
(4) MEASURES AFFECTING PRODUCTION AND TRADE
(i) Subsidies and adjustment assistance
89. Switzerland and Liechtenstein have reduced their total aggregate measurement of support
(AMS) to agriculture from some Sw F 4.3 billion in 1995 to Sw F 3.3 billion in 1998 and to
Sw F 2.9 billion in 1999;  under WTO commitments , their AMS was to be reduced from around
Sw F 5.1 billion in 1995 to Sw F 4.4 billion in 1999 (Sw F 4.6 billion in 1998).76
90. The Swiss Confederation and cantons grant financial support to industrial and services
companies with activities closely linked to manufacturing processes and that realize investment
projects in areas under economic renewal.77  Areas considered to be under economic renewal are those
where:  the average unemployment over the last three years has exceeded the national average by atleast 10%;  the trend in the number of jobs has been markedly less favourable than the national
average;  or there are clear indications that at least one of the aforementioned situation will occur
shortly, in particular that the prospects for the most important sectors of the economy and for the
largest firms are unfavourable.
78
91. Eligible projects must be innovative, i.e. the product and the manufacturing process must be
technologically up-to-date and increase the national and international competitiveness of the
company.  Financial assistance is allocated under the scheme in the form of federal tax reliefs (partial
or full), interest subsidies on investment credit s, and investment-credit guarantees.  The maximum
amount of the investment credit taken into consideration for the grants (interest subsidies and
guarantees) is one third of the investment project costs (hard assets and start up costs);  interestsubsidies may be granted on credits of up to Sw F 5 million per project.  The maximum duration of
financial assistance is eight years for guarantees, five years for interest contributions, and ten years for
                                                     
75 Private bonded warehouses and the Rhine River port of Basel also provide storage facilities (Dun and
Bradstreet, Inc., 1999).
76 WTO document G/AG/NG/S/1, 13 April 2000.
77 The scheme replaced the 1978 programme for economically vulnerable regions (WTO, 1996).  It
entered into force on 1 July 1996 and will end after five years.
78 Arrêté fédéral en faveur des zones économiques en redéploiement, 6 octobre 1995;  Ordonnance sur
l'aide en faveur des zones économiques en redéploiement, 10 juin 1996;  Ordonnance concernant ladétermination des zones économiques en redéploiement, 30 juin 1997.WT/TPR/S/77 Trade Policy Review
Page 52
tax relief.  Contrary to the other forms of assistance under the scheme, tax relief is contingent upon
either a guarantee or an interest subsidy.  The number of beneficiary projects increased from five in
1996 to 30 in 1999 for tax relief, six to 44 for interest subsidies, and eight to 25 for guarantees.  The
financial assistance by the Confederation and the cantons with respect to losses related to guarantees
declined from Sw F 9.2 million in 1996 to Sw F 0.7 million in 1999, and interest subsidies declined
from Sw F 3.8 million to Sw F 3.6 million.  In 1999, 45 projects, worth some Sw F 384 million (downfrom about Sw F 719 million in 1996) were supported by the Confederation under the scheme (all
forms of assistance combined).
92. Duty and tax exemptions and refunds are available for certain products and services
(sections (2)(ii)(d) and (ii)(e)).  Under the price compensation scheme for processed agricultural
products, contributions (e.g. refunds) are granted by the Swiss Confederation to reduce the prices offinal goods and costs of inputs used for their pro duction (Chapter IV(2)(ii)).  The Confederation also
grants subsidies in the form of:  direct payments (some Sw F 2.5 billion in 1998) to agricultural
production (Chapter IV(2)(ii));  interest subsidies (of 2 percentage points on the normal rates) and
direct grants and allowances for the development of tourism (about Sw F 3.6 million per year over
1997-01) (Chapter IV(4)(iv));  and direct grants and allowances to monopoly suppliers ofinfrastructural services such as railways and other public transport.  Financial assistance by the Swiss
Confederation to suppliers of public transport se rvices amounted to some Sw F 3.3 billion in 1996,
Sw F 3.8 billion in 1997, Sw F 5.7 billion in 1998, and Sw F 3.8 billion in 1999.  Subject to
restrictions on the use of tax exemptions, Swiss cantons may also grant subsidies (on an individual
basis) to the extent that these do not distort competition between firms located in different cantons
(Chapters II(4) and IV(4)(i)(a)).
79
93. Liechtenstein subsidizes milk used for the production of butter;  the subsidy permits the price
of this input to be lowered down to its level in Switzerland.  Direct payments from the Liechtenstein
Government to agriculture amounted to Sw F 7.47 million in 1998;  Sw F 8.85 million was budgeted
for 1999.  Payments  for ecological purposes (already included in the preceding totals) am ounted to
some Sw F 3.1 million in 1996, 3.2 million in 1997, 3.4 million in 1998, and 4 million budgeted for
1999 (Chapter IV).80  The Government also provides financial support of some Sw F 500,000 per year
for international tourism marketing activities, and of Sw F 12 million per year for public transport.
Moreover, the Swiss incentive schemes (mentioned in the previous paragraph) based on customs duty
and tax concessions also apply to Liechtenstein products.
(ii) Assistance for research and regional development
94. Switzerland still ranks among the most research-intensive OECD countries;  the Swiss
Confederation has spent some Sw F 2 billion on research and development in recent years.81  Public
expenditure on research amounted to Sw F 1.25 b illion in 1998, and Sw F 1.44 billion and 1.36 billion
were budgeted for 1999 and 2000, respectively.  The total budget for agricultural research in 2000 is
Sw F 165 million.82  Government assistance of up to 50% of the total cost may be provided by the
Federal Commission for Technology and Innovation (CTI ) to research programmes (with an industrial
interest) proposed jointly by a private company and a non-profit research unit, provided that the
proposal is adopted by the CTI;  the subsidized research must take place in the non-profit unit
                                                     
79 WTO (1996).
80 Given that Switzerland and Liechtenstein implement the same agricultural policy, formulated by the
Swiss Government, the categories of direct payments and their eligibility criteria are identical.
81 Office Fédéral de la Statistique (1999).
82 The 1996 budget for the research stations amounted to Sw F 94 million (Office fédéral de
l'agriculture, 1999a).Switzerland and WT/TPR/S/77
Liechtenstein Page 53
(university or other research centres) and the private company interested in the research must pay 50%
or more of the project costs.
95. The following special funds may be engaged by the CTI over the period 2000-03 (in
Sw F million):  120 for common research projects in technical universities;  80 for centres of
excellence in technical universities;  40 for EURE KA;  30 for impulse programme "Soft net";  20 for
impulse programme "MedTech";  and 10 each for start-up network (research spin-offs), research inprofessional training, and intelligent manufacturing systems.  Since 1997, the Swiss Government has
provided financing totalling Sw F 10 million (Sw F 4 million in 2000) under a scheme aimed at
developing environmental technologies.  Under the scheme, the Government finances up to 50% of
the costs of eligible products.  The financing must be paid back if the technologies are "successfully
commercialized".
96. Switzerland has signed a bilateral agreement on research and development with the EU.  The
agreement, which is to come into effect on 1 January 2001, subject to ratification by the EU Member
States, will enable Switzerland to participate in EU research programmes and will allow the
participation of EU researchers in Swiss programmes.
97. The Government of Liechtenstein provides a financial support of Sw F 250,000 per year to
each of the research programmes of the Swiss National Fund and the Austrian Fund for Scientific
Research.  As a member of the EEA, Liechtenstein contributes Sw F 4 million (distributed over four
years) to the Research and Development Programme of the EU.
98. The Swiss Guarantee Co-operative is commissioned to administer a programme of guarantees
and interest subsidies on investment credits to small and medium-sized enterprises in mountain areas.
In the case of a guarantee, the principal loan (for which a guarantee is provided) must not exceed
Sw F 500,000 and a deposit equivalent to 1% of the amount must be made by the beneficiary;  theFederal Council covers 90% of the losses of the Co-operative and its extraordinary expenses.  The
interest subsidies may be up to 40% over a maximum period of six years.  They are not necessarily
linked to a credit guarantee and these two forms of support cannot be granted concurrently with other
types of assistance by the Confederation.
83  Moreover, a significant share (some 57% in 1998) of
direct payments provided to producers of agricult ural goods is also aimed at regional development
(Chapter IV(2)(ii)).84  In 1999, losses on guaranteed loans covered by the Swiss Confederation
amounted to Sw F 2.9 million;  the related total fe deral commitments were Sw F 482 million;  and
interest subsidies granted by the Confederation amounted to Sw F 0.3 million.
(iii) Competition policy
(a) Legislation
99. The Swiss Federal Constitution (as revised in 1998) guarantees freedom of economic
activities (Articles 27 and 94) and allows the formulation and implementation of competition policies
by the Confederation (Articles 96 and 97).85  On 1 July 1996, the Federal Law on Cartels and other
                                                     
83 Loi fédérale encourageant l'octroi de cautionnements et de contributions au service de l'intérêt dans
les régions de montagne, 25 juin 1976 (as amended up to 1 January 1994);  Ordonance encourageant l'octroi de
cautionnements et de contributions au service de l'in térêt dans les régions de montagne, 22 décembre 1976 (as
amended up to 26 November 1997).
84 Office fédéral de l'agriculture (1999b).
85 Certain areas (specified in the Constitution) are excluded such as postal and telecommunication
services, and activities falling under the exclusive rights of the cantons (Article 94 (4)).WT/TPR/S/77 Trade Policy Review
Page 54
Restraints of Competition (LCart, 6 October 1995) replaced the 1985 Act.86  Under the LCart,
competition agreements (whether horizontal or vertical) are deemed illicit if they:  (i) have a
significant effect on competition without being justified for (specified) reasons of economic
efficiency;  or (ii) suppress "effective competition".87  The LCart applies in principle to all anti-
competitive arrangements producing their effects in Switzerland, regardless of the sector of economic
activity or a company's ownership status.  Exceptions to the application of the LCart include areaswhere other provisions of law restricting trade take precedence
88, and areas where the Federal Council
may grant exceptional authorization on the grounds of compelling public interest.
100. The LCart does not prohibit dominant positions89, but it addresses abuses (e.g. trade boycotts;
price discrimination;  imposition of unfair prices or conditions;  restrictions on production, outlets, or
technical development;  subordination of conclusion of contracts to supply of additional goods andservices by partners).  However, the propensity of dominant positions to absolutely suppress
"effective competition" may lead the Commission to prohibit the concentration that would create or
strengthen them.  Therefore, for prior control purposes, mergers and acquisitions must be notified to
the Competition Commission (Comco)
90 if, during the most recent financial year prior to the proposed
transaction:  (i) the enterprises concerned reported joint turnover of at least Sw F 2 billion (or of atleast Sw F 500 million in Switzerland);  and (ii) at least two of the enterprises concerned reported
individual turnover in Switzerland of at least Sw F 100 million.
91  Notwithstanding the above
thresholds, notification is required if a decision enacted by the Commission has established that a
participating firm occupies a dominant position in a market in Switzerland, and if the concentration in
question involves either that same market, a related market, or an upstream or downstream market.  A
concentration project may be implemented if the Comco does not open an investigation within one
month from the date of notification.92
101. The Comco currently consists of 14 members, mostly independent experts, who take decision
by simple majority;  the President and two Vice-Presidents are nominated by the Federal Council,
which also appoints the other members.  A Secretariat, with currently 36 professionals, carries out
investigations and submits the results to Comco for decision.93  This ensures the separation of
                                                     
86 See WTO (1996) for details on the 1985 law.  Given that cartel agreements were given six months to
be brought into compliance with the new legislation, the LCart became fully operational only on
1 January 1997.
87 Agreements among competitors to fix prices, restrict quantities or segment markets are deemed to
suppress "effective competition".
88 Provisions that establish an official market or price system, or entrust certain enterprises with the
performance of public interest tasks, and grant them special rights (e.g. health care, public transport, public
media, universal postal services, and trade-oriented agriculture).  In addition, the LCart does not apply to effectson competition that result exclusively from laws governing intellectual property.
89  Under the LCart (Article 4 (2)), one or more firms hold a dominant position if that position enables
them, on either the supply or the demand side, to behave in a substantially independent manner with regard tothe other participants in the market.
90 The Comco, which  replaced the Cartel Commission, has decision-making power.
91 Special thresholds apply to certain sectors.  They are based on:  20 times the turnover of companies
operating in the media sector;  10% of total balance sheet assets of banks;  and on the aggregate annual grosspremiums of insurance companies.  See "Ordonnance sur le contrôle des con centrations d'entreprises,
17 juin 1996", for more details on, inter alia , rules for calculating turnover and special thresholds, regulations
governing notifications of concentra tion, and related procedural aspects.
92 The biggest merger, in terms of company size and potential implications for competition in the Swiss
market for financial services, was the case of UBS and SBS.  The merger, which was notified to Comco in early1998, was authorized contingent upon, inter alia , a reduction of the number of branch offices and subsidiary
banks.
93 Règlement intérieur de la Commission de la concurrence, 1 juillet 1996 (état au 1er janvier 1997).Switzerland and WT/TPR/S/77
Liechtenstein Page 55
investigatory and decision-making procedures, while the final political responsibility lies with the
Federal Council.  The Secretariat can also make recommendations and conduct investigations on the
basis of the 1995 Federal Law on Internal Market, which also deals with competition issues
(section (2)(ix));  however, the Comco cannot impose decisions and sanctions under this law.
102. The LCart provides for administrative and criminal sanctions in case of non-compliance with
an amicable settlement, a decision by the competition authorities, or a decision by an appeals body.Failure to notify a concentration may also give rise to administrative and criminal penalties.
Administrative sanctions (for legal entities) may be as high as three times the illegal gain, or (if the
latter cannot be determined) 10% of the previous year's turnover realized in Switzerland.  A fine of up
to Sw F 1 million may be levied if the parties fail to provide the notification required by the LCart.
Criminal penalties (for individuals) may consist of fines of up to Sw F 100,000.  In addition, the
following remedies are foreseen by civil law:  removal or cessation of the restriction on competition;
damages and reparations;  and remittance of illicitly ea rned profits.  Parties to an agreement and third
parties may appeal any decision by Comco or its Secretariat to the Appeals Commission.
94  Rulings
by the Appeals Commission may in turn be taken before the Federal Court through administrative
appellate channels, following a determination of th e unlawful nature of a restraint on competition or
of an instance of concentration by Comc o, or a decision by the Appeals Commission.
103. A determination of the unlawfulness of a restraint on competition does not give rise to
penalties.  Such penalties are imposed only in the event of , inter alia , non-compliance with amicable
settlements and administrative decisions, or non-compliance linked to the concentration of enterprises.
The "Vitamin Cartel" case, where high penalties were imposed on the participating enterprises abroad,
strengthened the public perception of this shortcoming.  The Secretariat of the Comco has submitted
proposals to the Federal Council concerning the introduction of such "direct penalties".  A decision isawaited from the Federal Council in this regard.
104. Between 1 July 1998 and 30 June 1999, Comco concluded investigations on, inter alia :
unlawful agreements (fuel-oil burners and gas burners, technical gases, and artificial insemination of
cattle);  abuses of dominant positions (Swisscom – Centrex and Minolta);  and of both these anti-
competitive practices (lists of hospitals for semi-private insurance plans offering a limited choice).
95
Investigations have been initiated against Volkswagen and Citroen PSA to determine whether these
companies unduly discriminate against Swiss residents intending to buy cars outside the Swiss
territory.
105. Liechtenstein does not have a competition legislation.  Competition issues are dealt with
under international treaties to which Liechtenstein is a signatory, more precisely under the EEA andEFTA Agreements (Chapter II(5)(iii)).  The Office of National Economy has jurisdiction over
competition issues, unless the jurisdiction of the State Court is provided.  A complaint against
exclusive rights over passenger transportation by bus has been under investigation since 1998.
(b) Price regulation and controls
106. The 1985 Swiss Federal Law on Price Surveillance has not been amended since 1 April 1996.
Therefore, there have been no major changes to the framework of price regulation and controls in
Switzerland since its last TPR.  The Price Inspector (appointed by the Federal Council and supported
by a staff of 13 persons) observes price developmen ts in markets where competition is hindered or
                                                     
94 The Appeals Commission has initial appellate jurisdiction for administrative decisions taken by the
Comco or its Secretariat.  Comco has limited powers in th e agricultural sector where several restrictions are still
in force.
95 Commission de la concurrence (various years).WT/TPR/S/77 Trade Policy Review
Page 56
impeded96, with a view to preventing or rectifying abusive behaviour (e.g. abusive price increases or
price maintenance by cartels or dominant firms).97  Measures to eliminate or preclude abuses are taken
with the consent of the parties involved;  however, companies or organizations that fail to meet (or
attempt to avoid) recommendations related to prices (e.g. negotiated or decreed prices) are liable to a
fine of up to Sw F 100,000.
107. Since 1996, the Price Inspector has launched enquiries on issues including:  health (hospital
fees, medical fees, medicine prices);  the supply and waste disposal systems of communes (electricity,
gas, water, and sewage taxes, waste disposal, and cable TV fees);  telecommunication services (prices
of telephone directories);  state monopolies (postal services, television);  and cantonal monopolies
(insurance on house property, notary's matters).  In most cases, the price increase was notified to the
Price Inspector in advance;  the Inspector had the right only to make recommendations since theprices were approved or fixed by the authorities.
108. Liechtenstein maintains price controls on public transport, telecommunication, postal and
medical services, and drugs and medical equipment.  Electricity and gas prices are set by two
state-owned companies (Chapter IV(3)(ii)).  Price controls maintained by Switzerland on agricultural
products are also in force in Liechtenstein (Chapter IV(2)(ii) and (iii)).
(c) Exclusivity rights
109. The range of exclusive rights (public, semi-public or private) granted to suppliers of goods
and services has shrunk since the last TPR of Switzerland in 1996.  For instance, the monopoly on
production and trade in gunpowder was removed on 1 January 2000.  The implementation of the
"Agricultural Policy 2002" led to the liquidatio n of the Swiss Butter Supply Board (BUTYRA) in
April 1999 and the Swiss Cheese Union in January 2000.  State intervention in trade in bread flour is
also to be terminated after the coming harvest.  Moreover, certain state-owned companies such asSwisscom have been partially privatized and formulation of restructuring programmes is under way in
sectors such as energy (Chapter IV(3)(ii)).  Table AIII.5 presents an overview of public and semi-
public companies and organizations that still hold exclusive rights in the Swiss economy.
110. In Liechtenstein, state-owned or private enterprises hold exclusive rights or exercise
monopoly power over the supply of electricity, gas, telecommunication network, public passengertransport, rail transport (through a concession transferred to the Austrian Federal Railway in 1870)
and certain postal services.  Swiss companies listed in Table AIII.5 and that operate in the agricultural
sector also exercise their exclusive rights or their monopoly power in Liechtenstein.
(iv) Protection of intellectual property rights
(a) Overview
111. Before its 1996 TPR, Switzerland had revised its intellectual property legislation with a view
to implementing the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS).  In line with its intention to ensure compa tibility of its legislation with EU law, Switzerland
                                                     
96 Areas where "effective competition" is absent are deemed favourable for abusive pricing.  Therefore,
cartels and similar organizations are required to notify any price increases to the Price Inspector.
97 The Price Surveillance Office collaborates with the Competition Commission.  Other bodies (with
limited powers) such as the Market Observation Authority (for agricultural products) and thetelecommunications regulator (OFCOM) also observe prices of specified goods and services (Chapter IV).Switzerland and WT/TPR/S/77
Liechtenstein Page 57
had also taken certain initiatives and others are under way in areas such as protection of designs,
patents, and copyright and neighbouring  rights. 98
112. The Swiss Law on the Protection of Trademarks and Indications of Source, as revised in
August 1992, extends protection to indications of source in the field of services, indirect indications of
provenance, and types or recipes that imply a geographical origin.99  For goods, the provenance
criteria include:  the place of manufacture;  the location of the basic materials or components used formanufacturing;  and/or compliance with manufacturi ng principles and quality requirements customary
or mandatory in the originating country or region (the specified geographical area).  The origin of
services is determined by the place where the supplying company has its registered office, or by the
country or domicile of the persons exercising actual control over the company.
100  The right to a trade
mark belongs to the person who first files the mark ;  the mark should be used within five years of
registration.101  Opposition by the owner of an earlier tr ade mark is possible within three months of
publication.  The term of validity is ten years, renewable indefinitely.
113. The 1992 Federal Law on Copyright and Neighbouring Rights also covers computer
programs and the widespread use of protected works, including photocopies, copies of phonograms
and videograms for private use, use of phonograms for broadcasting or performance purposes, andrental of copies of works.
102  Compulsory licences may be granted only for the production of
phonograms.  Producers of phonograms are eligible fo r protection if they are nationals of a WTO
Member or if the first publication of the sound re cording took place in a WTO Member's territory.
The law provides for protection for 70 years following the author's death.
114. The revised Federal Law on Industrial Designs extends priority rights (under the Paris
Convention) to all WTO Members, including those availing themselves of the transitional period
provided for in the TRIPS Agreement.  Protection is granted for a maximum term of 15 years (dividedinto three consecutive periods of five years) from the date of deposit.
103  With the exeption of graphic
representations (drawings or pictures) of watches, only bibliographic data are published;  while
designs for embroideries can be deposited under seal, those concerning watches cannot.104  The law is
being revised to bring it into conformity with EU le gislation and to adapt it to the Geneva Act of the
Hague Agreement Concerning the International Registration of Industrial Designs of 1999.
                                                     
98 See WTO (1996) for details on changes introduced in the legislation up to 1995.
99 The revision of the law also extended the period of withholding of the goods by customs, and
addressed the right of customs to require security, in accordance with Articles 55 and 53.1 of the TRIPS
Agreement, respectively.  Other Swiss legislation protecting geographical indications includes:  Article 16 of the
Federal Law on Agriculture, 29 April 1998;  the Ordinance on the Protection of Designations of Origin andGeographical Indications for Agricultural and Deri ved Products (except wine);  the Federal Decree on
Viticulture, 19 June 1992;  and the Ordinance on Viticulture and the Importation of Wine (7 December 1998),governing wine designations.
100 For Swiss provenance, the criteria include, inter alia , names of region, canton or locality, as well as
the Swiss Federal Cross, Matterhorn, and images of William Tell (WTO document IP/Q2/CHE/1,
7 October 1997).
101 Applications for registration must be submitted to the Swiss Federal Institute of Intellectual
Property, with the exception of certain specific areas (e.g. applications for registration of geographicalindications of agricultural and derived products, which must be submitted to the Federal Office for Agriculture).
102 The right to remuneration for widespread use can  be exercised only through collecting societies.
The royalties for the rights (exclusive and remuneration rights) under collective management should not exceed
10% of the revenue received by the copyright user (3% in the case of related rights).
103 An applicant may request the maximum term of protection at the time of registration, subject to the
payment of the registration fee for the full term (Sw F 120 per five-year period, i.e. Sw F 360).
104 WTO document IP/Q2/CHE/1, 17 October 1997.WT/TPR/S/77 Trade Policy Review
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115. Liechtenstein made changes to its legislation on intellectual property following its EEA
membership and also to comply with the WTO Agreement on TRIPS.  The new legislation is
comparable with those of the EU and Switzerland, on which it is largely based.  Therefore,
amendments made by Liechtenstein to comply w ith the TRIPS Agreements were largely similar to
those made by Switzerland with regard to, inter alia , border measures and priority rights.  The 1928
Act on Designs and Models, as amended up to 1998, is under complete revision with a view toaligning it on the latest developments in the EU in this regard.  The competent authority in the field of
intellectual property (except patents) is the Office of National Economy.
116. Within the framework of the Customs Union Tr eaty, the Swiss Ordinance on the Protection of
Appellations of Origin and Geographical Indica tions with respect to Agricultural Products and
Processed Agricultural Products is applicable in Liechtenstein.  Under a 1978 bilateral agreement
105,
Switzerland and Liechtenstein form a unitary territory for patents;  the applicable legislation is the
1954 Swiss Federal Law on Patents, as amended up to 1995.  Therefore, patents delivered by the
Swiss Federal Institute of Intellectual Property as well as European patents designating Switzerland
are also valid in Liechtenstein (Table III.6).106  The last amendments to the law were made with a
view to compliance with the WTO Agreement on TRIPS.  Changes were made relating to, inter alia ,
the conditions for granting compulsory licences, and the circumstances in which a patent is considered
to be exploited.  The law provides for the revocation of a compulsory patent if its granting "fails to
satisfy the needs of the Swiss market" within two years.107  No compulsory licences have so far been
granted.  The law is being revised to align it on EU legislation.
117. Switzerland and Liechtenstein are members of, inter alia , the World Intellectual Property
Organization (WIPO), and parties to the European Patent Convention (EPC).  Switzerland is also a
member of the International Union for the Protection of New Varieties of Plants (UPOV).
(b) Enforcement
118. Conflicting interpretations (at cantonal levels) on parallel or grey imports were addressed by
the Swiss Federal Tribunal through judgements delivered in recent years.  The Court ruled on cases
involving trade marks (the Chanel case), copyright (the Nintendo case) and patents (the Kodak case).
In the areas of copyright and trade mark rights, the Court upheld the principle of internationalexhaustion and authorized parallel imports.  In contrast, in the case involving patent rights, the
Tribunal upheld the principle of national exhaustion.
                                                     
105 The Treaty on the Protection Conferred by Patents for Inventions, 22 December 1978.
106 A European patent application that designates Switzerland and Liechtenstein may be filed with
either the Institute or directly with the European Patent Office.  An international patent application may be filedwith either the Institute or the WIPO.
107 Any interested person may seek the revocation.  Moreover, importation of the patented product is
equated with exploitation (see WTO, 1996).  Other Swiss laws on the protection of intellectual property rights(IPR) include:  the Federal Law on the Protection of Plant Varieties, 20 March 1975, and its 1977 Ordinance;
and the Federal Law on the Protection of the Topographies of Semiconductor Products, 9 October 1992, and its
Ordinance.  Other Liechtenstein laws on IPR include:  the Law on Copyright and Neighbouring Rights,19 May 1999, and its Ordinance;  the Law on the Protection of the Topographies of Semiconductor Products,19 May 1999;  and the Law on the Protection of Trad emarks and Geographical In dications, 12 December 1996,
and its Ordinance.Switzerland and WT/TPR/S/77
Liechtenstein Page 59
Table III.6
Registrations of intellectual property rights, 1996-98
Year 1996 1997 1998
SWITZERLAND
Residents 2,504 2,408 2,025 Applications by:
Non-residents 701 581 564
Residents 1,035 708Patentsa
Grants to:
Non-residents 439 396591b
PCTc
(Total applications submitted through the Swiss Federal Institute)467 484 563
Residents 6,384 6,506 6,794 Applications by:
Non-residents 3,824 3,975 4,055
Residents 9,091 7,778 5,987Trade marksd
Grants to:
Non-residents 5,489 5,591 3,615
Madrid System
(International registrations)2,370 2,017 2,466
Residents 701 662 648 Applications by:
Non-residents 321 320 375
Residents 603 601 587Industrial designs
Grants to:
Non-residents 310 296 343
Residents 2 3 2 Topography and
semiconductor productsApplications by
 and grants to:Non-residents 0 1 0
LIECHTENSTEIN
Trademarks
Grants to: Residents
Non-residents143
244130
375172
273
Madrid System(International registrations)74 105 93
Industrial designs
Grants to: Residents/
Non-residents91 0 8
a Including data on Liechtenstein.
b For 1998, the information necessary to distinguish between patents granted to residents and non-residents is not available.
c Patent Cooperation Treaty.
d The 1992 revision of the Law on Trademarks (with the replacement of the principle of use with the principle of registration, a nd
extension of protection offered to services) led to a surge in applications for registration and delays in their complete treat ment.
Therefore, the number granted was superior to  the number of applications up to 1997.
Source: Swiss and Liechtenstein authorities.
119. In Switzerland, sanctions against infringements of intellectual property rights may consist of:
the payment of damages covering the lucrum cessans , the damnum emergens , and the costs incurred
in defending the right (civil law);  compensation for non-pecuniary injury and any profits awarded to
the right holder (Code of Obligations);  and fines of up to Sw F 100,000 and/or imprisonment, for
intentional infringements such as counterfeiting and piracy (penal law).  In Liechtenstein, sanctions
against infringements of intellectual property rights may consist of:  damages and compensation;
confiscation in civil proceedings;  imprisonment for a term not exceeding one year;  or a fine (penal
provisions).  Professional infringers of trade mark rights and copyrights are liable to imprisonment for
up to three years (up to five years for fraudulent infringement of trade mark rights).WT/TPR/S/77 Trade Policy Review
Page 60
120. There were 13 seizures of counterfeit goods in 1995, 12 in 1996, 14 in 1997, 31 in 1998, and
100 in 1999.108  The seizures concerned mostly clothing and accessories, expensive watches and
components of watches, pharmaceuticals, computer software and hardware, pirated copies of video-
games, movies, furniture, topographies of integrated circuits, and stereo sets and toys.  In eight of
these cases, the customs authorities suspended the release into circulation of goods suspected of
infringing intellectual property rights ex officio  and informed the right holders.  In the other cases, the
customs authorities seized the goods based upon an application lodged by the right holder. In the vast
majority of the cases, the right holders applied for pr ovisional measures at the civil or criminal court
and initiated proceedings leading to a decision on the merits of the case.  In cases where the court
found the goods seized to be infringing, the judge ordered their destruction or disposal.
121. In Liechtenstein, international exhaustion is set by law for trade mark rights109, copyright, and
rights related to topography.110  On patents, certain amendments were made to the bilateral agreement
concluded by Switzerland and Liechtenstein to comp ly with the EU principle extended to the EEA:
the amendments allow the application of EEA-wide exhaustion in Liechtenstein.111  Thus, prevention
of parallel imports of patented products from the EEA member countries is possible in Switzerland
but not in Liechtenstein.  Indeed, in relation to EEA countries, the principle of EEA-wide exhaustion
prevails;  imports from the other EEA members to Liechtenstein are made possible thanks to the
MCSM (Box II.1).  However, the Swiss principle of  national exhaustion of patents applies to imports
to the customs territory from non-EEA member countries.
                                                     
108 The increase in the number of seizures results from the increasing awareness of right holders of the
existence and functioning of the Swiss intellectual property right protection system;  moreover, training courseshave also been given to customs agents.
109 The holder of a trade mark has the right to prohibit third parties from using it for goods that have
been marketed under it by him or with his consent in a country outside the EEA only if such use creates a risk of
deception for the consumer (Article 16,  Paragraph 6 of the Trademark Act).
110 Articles 13 of the Copyright Act, and 7 of the Topography Act.  However, rental rights are excluded
from this provision.
111 Article 1 of the Additional Agreement of 2 November 1994 to the Treaty of 22 December 1978
between Switzerland and Liechtenstein on the protection conferred by patents for inventions (see IP/N/4/LIE/1).