Transatlantic Value Chains with Swiss Participation and Rules of Origin: Is Trade Creation Dominating Trade Diversion?

• Research unit: SECO
• Project number: 2013-DPWW-11

Key words (English)

Transatlantic Free Trade Agreement (TAFTA), Trade, Trade Barriers

Short description (English)

A Transatlantic Trade and Investment Partnership (TTIP) Agreement between the EU and the US should foster economic growth, jobs and competitiveness on both sides of the Atlantic. For such an agreement different barriers to trade would have to be removed. In this regard, tariff rates are not the biggest obstacle. Non-tariff trade barriers (NTBs) such as product regulations (TBT/SPS), complex customs procedures (rules of origin, RoO) and differences in internal market access (services, construction, public procurement, foreign direct investments and so on) constitute far larger barriers.

Switzerland which is not party to TTIP will be affected by trade diversion. However, the country could also benefit in terms of growth from the stimulation in transatlantic trade.

The purpose of the study is to obtain an analysis of the economic impact on global value chains involving companies located in Switzerland of possible RoO-regimes in TTIP, TTIP plus (EU, US, EFTA, Canada, Mexico, and Turkey) or TTIPplus/TPP. Further, the impact on Switzerland of a reduction of e.g. SPS in TTIP will be analysed.

Project aims (English)

The study to be accomplished by the Agent will focus on RoO and give an overview of RoO options in TTIP, TTIP plus and TTIP mult. The impact of different RoO-regimes will be analysed for selected sectors/products as identified by SECO: Most notably automobiles, as companies in Switzerland are important suppliers for EU car manufacturers; precision instruments such as medical devices where companies in Switzerland not only produce finished goods but also supply US or EU manufacturers; chemicals / pharmaceuticals that are dominated by multi-national companies and characterized by intra-firm trade; and textiles where value chains are global and value added per country often not considerable such that RoO can be hard to fulfil and cumulation becomes all the more important. If it turns out that one of the examples does not yield results it could be replaced by an example from the machine industry. The study will identify those RoO that may not match the sourcing policy of firms in TTIP in global value chains regarding suppliers out of Switzerland and that therefore generate trade diversion.

For the section on SPS an example of a processed agricultural good shall be analysed to deduct how Swiss products might be affected from a cut back of SPS regulation by the US for EU products that are competing with Swiss products.

The final study will be published in SECO’s publication series «Strukturberichterstattung».