Preferential origin

Preferential bilateral tariffs are agreed contractually under free trade agreements (FTA). They apply to products that are manufactured entirely in the territory of the state party, or sufficiently worked or processed there to fall within the scope of the agreement. In addition, under the Generalized System of Preferences (GSP) Switzerland unilaterally applies lower duties to products from states it recognises as developing countries.

The origin criteria that these products must fulfil to qualify for preferential tariffs are set out in the origin protocol to the FTA in question or in the Ordinance on Rules of Origin for Preferential Tariffs for Developing Countries (SR 946.39).

Cumulation practice in relation to origin

Cumulation means adding together all of the value creation – such as the production of primary materials or processing at individual stages of manufacture – that is generated in different free trade partner countries. It is used to establish whether a good fulfils the criteria for 'originating product' status. Product origin can be cumulated in a number of ways: (i) bilateral cumulation between two parties to a single FTA; (ii) diagonal cumulation between three or more parties to FTAs that apply the same rules of origin; (iii) extended cumulation between three or more partners to FTAs with different rules of origin; and (iv) full cumulation, in which the different stages of manufacture in different parts of a free trade zone are added together.

Study on the effects of regionalisation of rules of origin in free trade agreements

In 2022 SECO mandated an external study to analyse the economic potential of additional cumulation possibilities in Switzerland's FTAs. The study examines the impact of a form of extended cumulation called "regionalisation of rules of origin", which consists of three or more free trade partners – all of whom with FTAs in force among them – forming a common cumulation of origin zone. The results show that such regionalisation of rules of origin would have a positive economic impact on Switzerland. It would contribute to a greater use of FTAs and thus allow companies to make additional tariff savings.

Regional Convention on Pan-Euro-Mediterranean Preferential Rules of Origin (PEM Convention)

The Regional Convention of 15 June 2011 on Pan-Euro-Mediterranean Preferential Rules of Origin (the 'PEM Convention'; SR 0.946.31) came into force in Switzerland on 1 January 2012. The object of the Convention is to determine standard rules of origin between PEM partner countries to ease trade and to integrate supply chains within the zone without changing the substance of the FTAs that already exist in the zone. The Convention creates a diagonal cumulation zone.

Revised PEM Convention

By adopting the PEM Convention in 2011, the parties undertook to revise the old rules from the 1970s that no longer correspond to today's manufacturing chains. On 7 December 2023 the contracting parties adopted the revised PEM convention, which will come into force on 1 January 2025. The revision simplifies the legal framework and certification of origin, permits more flexible supply chains, and thus ensures a better fit between the rules of origin and actual production chains in the PEM zone.

As the revision of the Convention, which requires unanimous agreement of the parties, was blocked for a long time, the vast majority of the parties to the Convention decided to apply the revised rules bilaterally as a transitional solution. These new rules apply to trade with the EU and a number of other free trade partners. Until 31 December 2024, exporting companies can choose to apply either the rules of the current Convention or the revised rules of origin. Further information is available in the information note below.

Specialist staff
Last modification 20.12.2023

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