BEIJING China will cut import duties on Swiss watches by 60 percent in ten years as part of a free-trade agreement set to be signed in July, the Ministry of Commerce said on Monday, at a time when luxury watchmakers are faced with falling Chinese sales.
Under the pact, Switzerland will offer zero tariffs on 99.7 percent of the value of goods from China, while China will allow 84 percent of Swiss exports to be duty-free, Assistant Minister of Commerce Yu Jianhua told a press conference on Monday.
Switzerland will be the first continental European country to sign a free trade deal with China. Iceland was the first European country to sign a free trade pact with China in April, part of moves to reduce trade disputes with countries in the region.
The latest pact will benefit Switzerland's watchmakers, notably Swatch Group and Richemont, whose timepieces are popular with Chinese consumers.
"In the first year, we will cut import duties on (Swiss watches) by 18 percent and then by around 5 percent annually in the following years," Yu said. "They will be cut by 60 percent in ten years."
"The prices of Swiss watches tend to come down by some range (for Chinese consumers)."
Sales of luxury watches have tumbled in recent months, hurt in part by a government crackdown on giving gifts to officials for favours, and as growth in the world's second-biggest economy falters.
Yu said lower duties will reduce the price of Swiss watches sold in China, but noted it is difficult to calculate just how much prices will fall as there are other taxes including the value-added tax and the consumption tax.
China is Switzerland's third-biggest trade partner after the European Union and the United States, and the free trade deal covers industrial goods as well as agricultural products.
All industrial goods, including textiles, clothes, metal products, auto parts and components, from China to Switzerland will enjoy zero tariffs. More than 960 types of Chinese agricultural products will be on the list of duty exempt items, Yu said.
(Reporting By Xiaoyi Shao and Koh Gui Qing; Editing by Sanjeev Miglani)