Protocol No. 2

Protocol No 2 of the 1972 free trade agreement regulates the trade of processed agricultural products between Switzerland and the EU. Products are divided into those which are subject to price compensating measures (Table 1; e.g. milk chocolate, biscuits, baby food) and those for which free trade applies (Table 2; e.g. coffee, jam, water, beer). When the legislation commonly known as the “chocolate law” was abolished on 1 January 2019, export subsidies ended for agricultural raw materials used in processed agricultural products.

The products listed in Table 1 are subject to price compensation measures when traded between Switzerland and the EU. These measures offset the difference in product costs arising due to the price of raw materials. Reference prices and price differences between the EU and Switzerland are determined for certain raw materials (e.g. butter, milk powder, wheat flour) in order to calculate each product’s corresponding customs duties and export subsidies. These reference prices and price differences are listed in Protocol No 2 and are generally updated every year.

As commodity prices in Switzerland are higher than in the EU, this agreement gives Switzerland the right to charge customs duties upon importation of processed agricultural products. The EU, on the other hand, abstains from both export subsidies and customs duties.

This system of price adjustment takes into account the regulations of Protocol No 2 and therefore differentiates between trade with the EU and trade with non-EU countries. The homepage of the Federal Office for Customs and Border Security provides further information.