Sometimes it’s the small revolutions that have a big impact. What Great Britain implemented with Brexit with a lot of publicity now seems to be happening in Switzerland with much less fuss: The Swiss let the negotiations on an institutional framework agreement with the EU fall through at the end of May. For years, Switzerland enjoyed the best of both worlds: complete sovereignty on its own soil and unhindered access to a market of 450 million EU citizens. The breakdown of negotiations now threatens a kind of de facto “Schwexit”.
Bilateral agreements complicate global trade
A strange situation. Both parties originally wanted a general legal text summarising the trade agreements of the last 40 years between Switzerland and the EU. Although this makes perfect sense – especially if one looks at Swiss trade data, according to which the landlocked country conducts most of its trade with the EU – the political forces seem to no longer want too open a relationship. Taken on its own, this is perhaps only a curious and annoying side note for trading companies. But the Brexit demonstrated it impressively and now, little by little, other states seem to be proving it: Multilateral negotiations and the spirit of the “global village” seem to be crumbling. Instead, bilateral negotiations are increasingly coming to the fore. Everyone is trying to shape their trade relations in the way that is best for them. So is global trade in danger of becoming a network of hermitages again?
Assessing the impact of global trade
Companies engaged in global trade now have to cope with à la carte trade restrictions. Sometimes it is environmental reasons (e.g. when importing goods derived from endangered species, numerous requirements apply and documentation must be provided; details are set out in the CITES regulation). Sometimes there are political motives, such as the protection of a local industry, or social motives. But regardless of the rationale, the complexity of trade and access to certain trade facilitation (such as reduced tariffs due to preferential origin) now requires companies to assess the impact of global trade at every stage of the value chain.
So, at first glance, it may seem like a good idea to change a supplier in order to reduce costs by ten per cent. However, the calculation can certainly change quickly if you have to pay 15 per cent import duties. Or a practical example: the design of a new trainer collection seems to be a job for the design department. So far, so good. But what if exceeding a certain threshold for the leather content of the shoes means a change in product classification and thus in the duties to be paid?
Overall, the transition from an open partnership between all WTO members to à la carte trade agreements and arrangements is a burden on business and global trade. If you are well prepared, with a high level of automation and modern software, you are in a good position. If not, you are facing significant disruption along your supply chain that will cause you some more headaches.
This makes it all the more important to position yourself now in the best possible way for these and future changes. We offer a system that has been tried and tested for many years and that many customers use. And one that keeps you up to date with all customs changes – so you have one less thing to worry about.