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Euro-Med: important for the Swiss textiles and clothing industry.

New Cumulation of Origin: Euro-Med Zone

After years of difficult negotiations and an intensive persuasion campaign, the efforts of the Swiss textiles and clothing industry have at last been rewarded: on 1 January 2006, the EU-EFTA-Morocco cumulation arrangements entered into force. Arrangements with the remaining countries bordering on the Mediterranean are expected to follow in the near future.

The Swiss textiles and clothing industry in particular is dependent on the expansion of the pan-European cumulation zone to include the Mediterranean countries. The existence of a cumulation option is therefore a life-or-death matter for a number of firms. Allow me to explain.

Diagonal Cumulation from the Perspective of the Swiss Textiles and Clothing Industry

In the past, the lack of a cumulation option covering the Mediterranean countries burdened especially the Swiss embroidery industry, to name but one example in this context, with a huge competitive disadvantage vis-a-vis its European competitors. Over the past years, the production of ready-to-wear undergarments has increasingly shifted from inside the EU to low wage countries such as Morocco and Tunisia. And if semi-finished products from Switzerland were used to manufacture the ready-made underwear in those countries, the finished product could not be supplied to customers in the EU at the preferential rate of duty.

Euro-Med cumulation solves this problem: it permits the sourcing and subsequent processing of semi-finished products in various countries without the end-product losing its entitlement to preferential rates when it is imported into the EU. In concrete terms, this means that embroideries with Swiss preferential origin can be supplied duty-free to Morocco or Tunisia, for example, where they are then made into lingerie. The ready-to-wear lingerie can thereafter be supplied to customers within the EU, again free of duty. The same applies to export products from Switzerland for which the semi-finished products were supplied from the EU, from other EFFA countries, from Turkey, Bulgaria, Romania, and now from the Mediterranean region too.

No Cumulation means a Loss of Customers and Tighter Margins

Especially in the textiles field, where duties remain a cost factor and margins are by necessity slim. cumulation of origin is of major importance if the preferential rate of duty is to be obtained. In the past, the fact that no cumulation was possible often caused the loss of attractive orders and customers.

By Karin Jung, Department Head Economy & Statistics, Swiss Textile Federation
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Article Details
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Author:Jung, Karin
Publication:EFTA Bulletin (Switzerland)
Geographic Code:4EXSI
Date:Jul 1, 2006
Previous Article:Euro-Med free trade area: the benefits of cumulation.
Next Article:Chapter III: stakeholders' views.

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