Signed, sealed and soon to be delivered, the new provisions governing Swiss Made accreditation will take effect on January 1st 2017. The 2013 amendment of the federal law on trademarks and indications of origin stipulates that at least 60% of the value of industrial products must originate in Switzerland (see below). Furthermore, as the Federation of the Swiss Watch Industry (FH) notes, the product must be given its essential characteristics in Switzerland. “We see this as a victory,” Jean-Daniel Pasche, FH President, declared. “In the past, we came out strongly in favour of a specific clause for watches that would have fixed this rate at 80% for mechanical timepieces. However, it quickly became clear this would be impossible to achieve. In view of agreements with the European Union and rules in place within the World Trade Organisation, an 80% figure would have been seen as a non-tariff barrier to trade and therefore a protectionist measure. This is why we are extremely satisfied with this outcome.”
Six years went by between the first proposal brought before the Swiss Parliament and approval of the Swissness project in 2013. It then took the Conseil Fédéral a further two years to rule on implementation ordinances and set an enforcement date. Last-minute attempts were made to stall proceedings as certain politicians pointed to the impact the new legislation could have on the Swiss economy, already squeezed by the strong national currency. However, the lower house refused any postponement which, said the Conseil Fédéral, may lead to misuse of the “Swiss” name.
A final consultation
Opponents to the Swissness project include a group of watchmakers who joined forces as the Swiss Made interest group. They include Mondaine and its Co-CEO Ronnie Bernheim. As Mr Bernheim recently declared in the Swiss-German press, in order to reach the 60% threshold, brands could be tempted to buy cheaper hence less quality components from abroad which neither creates value in Switzerland nor benefits the customer. Conversely, the use of Swiss-made components will cause prices to shoot up. He concluded that “either way, the result is a drop in competitiveness and sales, leading to job losses and lower tax revenue.”
The fight may be over, these disgruntled bosses still have a chance to make themselves heard: while the new law will come into force in 2017, a consultation procedure regarding provisions for watches will run until December 2nd 2015. The Federation of the Swiss Watch Industry declared that “the FH has been campaigning for a strengthening of the Swiss Made ordinance on watches since 2007 and is of course delighted such a consultation is taking place. Swissness required that the ordinance set a rate of 60%, and imposed that the technical development of the watch and movement, which determines the characteristics of a watch, take place in Switzerland.” Needless to say, Jean-Daniel Pasche is confident as to the outcome of this consultation, given the FH’s weight within the branch. Come December, victory will be complete.
Swiss Made: Current Regulations versus Swissness Amendment
The current “Ordinance regulating the use of the name ‘Swiss’ on watches” of 1971 sets the criteria by which a watch may qualify as “Swiss Made” as follows:
A watch is considered Swiss if:
- its movement is Swiss, i.e.
- the movement is assembled in Switzerland,
- the movement has been inspected by the manufacturer in Switzerland, and
- the components of Swiss manufacture account for at least 50% of the total value, without taking into account the cost of assembly;
- its movement is cased up in Switzerland, and
- the manufacturer carries out the final inspection in Switzerland.
In order to merit the Swiss Made label, the Swissness amendment requires that for industrial production (e.g. watches), at least 60% of the production costs are attributable to operations carried out in Switzerland; this may include the costs for assembly, research and development, and legally or industrially regulated quality assurance and certification. Moreover, at least one essential manufacturing process must take place in Switzerland.
In contrast to the existing ordinance, the Swissness amendment applies not only to the movement and final inspection, but to every component of the watch (including wristlets and cases).
Source: Swiss Watch Industry: Prospects and Challenges, Credit Suisse, October 2013