US additional tariffs: Switzerland continuing negotiations

On 11 and 12 March, the US launched two investigations against Switzerland under Section 301 of the US Trade Act, which addresses ‘unfair or discriminatory trade practices’. The first investigation focuses on alleged overcapacity in industrial production and its causes, while the second investigation concerns possible failures to impose and effectively enforce a prohibition on the importation of goods produced with forced labour. In addition to Switzerland, a series of other countries, as well as the EU, are affected by these investigations.

On 2 June, the US Trade Representative (USTR) published the findings of its Section 301 investigation into the failure to combat trade in goods produced with forced labour. It concludes that, of the 60 economies examined, only some had introduced such a prohibition, and that even those that had done so had failed to effectively enforce it. On that basis, the USTR issued recommendations to impose flat-rate additional tariffs of 12.5% on countries such as Switzerland, which have not introduced a prohibition on the importation of goods produced with forced labour. For countries with an existing or future import ban, it recommends a tariff rate of 10%.

These recommendations will not come into force immediately; instead, interested parties are invited to submit comments prior to a public hearing. The Federal Council strongly rejects the allegations made in the course of this investigation and, at its meeting on 5 June, decided to set out Switzerland’s position once again during this public hearing process. It will point out that, rather than imposing an import ban, Switzerland is pursuing a comprehensive approach that combines government regulation, mandatory risk assessments initiated by the private sector, and international cooperation. This approach focuses on efforts to prevent and tackle the root causes within supply chains. These approaches differ in method, but not in their aim or effectiveness. Switzerland’s approach does not harm US industry.

The additional tariffs resulting from the Section 301 investigations are likely to replace the 10% additional tariffs imposed under Section 122, which are in force until 24 July. At the same time, it is expected that additional tariffs may be imposed as a result of the Section 301 investigations into overcapacity, the findings and recommendations of which are expected in the coming weeks.

Trade Negotiations with the US are continuing. In the negotiations, the Federal Council is taking current developments into account and is seeking an outcome that will provide a satisfactory long-term framework for economic relations between the two countries, irrespective of legal and political developments in the US.