Switzerland and LiechtensteinWT/TPR/S/208 Page 99
Payments for ecological farming
Source:Information provided by the Liechtenstein authorities.
(iii) Key subsectors
(a) Food, beverages, and tobacco products
Food manufacturing remains the most protected industrial activity in the customs union (see also section (ii) above). Tariffs are high, on average, and prohibitive in many cases, reaching 1,468.7% on edible frozen offal of bovine animals, other than tongue or liver. A tariff quota of 1.7 million hectolitres is in place on white and red whine (Table IV.4). Most food products and beverages are subject to the reduced VAT rate of 2.4%. Excise duties are collected on tobacco products and certain alcoholic beverages (Chapter III(2)(v)). Imports of food, beverages, and tobacco products amounted to US$6.5 billion in 2007, while exports were US$5.3 billion.
An agreement (between the EC and Switzerland) on processed agricultural products, which entered into force in 2005, abolished or reduced tariffs and export subsidies for numerous processed agricultural products when traded between the two parties. In addition, their bilateral trade in cheese was fully liberalized as of 1 June 2007.
Switzerland's food processing subsector has been a major beneficiary of the export subsidy scheme, receiving Sw F 90 million in 2005 and in 2006 each (Table IV.6). However, export subsidies for processed products have declined in recent years, mainly due to the above-mentioned agreement with the EC. Food processing companies located in Liechtenstein are eligible for the Swiss export subsidy scheme.
(b) Livestock, dairy, and related products
Livestock breeding and production of dairy goods are the most important agricultural activities in Switzerland and Liechtenstein (Table IV.1). Imports of various live animals, certain animals for slaughter, dairy products, and casein are subject to tariff quotas (Table IV.4). Average applied MFN tariffs are 50.05% on live animals (HS code 01), 128.8% on meat and edible meat offal (HS code 02), and 58.1% on dairy products (HS code 04). Product-specific subsidies remain in place for butter (Chapter III(4)(i)). Various milk products are eligible for price support (section (ii) above). A system of milk production quotas, established in 1999, is to be phased out by April 2009. Only a few producers remain within the quota system.
There are some 28,000 milk producers in Switzerland. Production has been relatively stable for more than three decades, at some 4 million tonnes per year. Milk production per cow has increased continuously, while the number of cows declined from nearly 800,000 in 1980 to some 690,000 in 2007.
Despite the high level of protection and policy intervention, imports in some meat and dairy products remain significant: for example, imports of meat and meat products amounted to US$581 million in 2007, and imports of dairy products were US$477 million. Due to price differences with neighbouring countries, consumers in Swiss border regions heavily rely on the cross-border-purchase of the most protected products (e.g. meat and dairy products, alcoholic beverages).