The Protocol No. 2 of the free trade agreement between Switzerland and the European Community of 1972 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).
For products listed in Table 1 of Protocol No. 2 commodity-price related differences in costs of products are compensated for when trade between the EU and Switzerland occurs. Therefore, reference prices and price differences between the EU and Switzerland of the respective commodities (e.g. butter, milk powder, wheat flour) are determined in order to calculate the corresponding border duties and export subsidies per product. The reference prices and price differences are defined in Protocol No. 2 and are generally updated every year. .
As commodity prices in Switzerland are higher than in the EU, Switzerland as a result of the agreement has the right to grant export subsidies and to charge customs duties upon importation of such products. On the other hand, the EU abstains both from export subsidies as well as from charging customs duties.
The described system of price adjustment is also defined in the so-called "Chocolate Law" (Federal Law on the import and export of agricultural products; SR 632.111.72), which differentiates between trade with the EU (taking into account the regulations of Protocol No. 2) and with non-EU countries. Further information on the Chocolate Law can be found on the homepage of the Swiss Customs Administration.
Last modification 16.08.2016