News From 6 to 12 October, Pascal Couchepin led an important economic delegation to Vietnam and Hong Kong. During the trip, several issues of importance to the watch industry were raised.
In addition to the Vice-president of the Confederation, the delegation consisted of representatives of the Federal Department of Foreign Affairs, the State Secretariat for the Economy (seco), the main sectors of the economy - including, for watchmaking, the author of these lines - and several journalists. In Vietnam, it was received by the following personalities: Tran Duc Luong, President of the Republic, Vu Khoan, deputy Prime Minister, Truong Dinh Tuyen, Trade Minister, and Vo Hong Phuc, Minister for the Plan and Investment.
The discussions focused mainly on the reform process set in motion by the country to prepare for membership of the World Trade Organisation (WTO) and on Swiss-Vietnamese bilateral trade. It should be pointed out in this respect that while Switzerland does indeed export watches to Vietnam, it imports in return watch straps and bracelets (valued at 14 million francs in 2001).
With regard to watchmaking, three problems in particular were raised. Firstly, the rate of customs duties, which are as high as 40 %. Secondly, the fact that Vietnam does not use the ATA carnet, so valuable for facilitating the presentation of products to potential clients. Lastly, the problem of counterfeiting - copies of watches are in fact sold in a number of the country's cities.
According to our Vietnamese hosts, the question of customs duties should be resolved satisfactorily within the framework of negotiations on Vietnam's membership of the WTO. On this point, it should be emphasised that bilateral discussions with Switzerland on this subject have just begun. With regard to the ATA carnet, the Trade Minister promised to look at the matter again with his trade advisers in order to gain a better understanding of how the system works. The seco and the FH will be able to provide support in this context. Lastly, the Vietnamese government made clear its intention to take measures against counterfeiting, which in its view harms manufacturers and consumers, as well as the state through lost tax revenues.
Although Vietnam is still a developing country, the delegation was clearly aware during this mission of its willingness to open up to world trade and to develop its economy, whilst maintaining the regime in place.
The transition was particularly striking for the delegation when, inbound from Ho Chi Minh City, it arrived in Hong Kong, one of the most important actors on the stage of world trade, where it was welcomed by Tung Chee-hwa, Chief Executive, Henry Tang, Secretary for Commerce, Industry and Technology, and Antony Leung, Financial Secretary.
Representatives of the watch industry naturally raised the issue of "Swiss made" and aired their concerns regarding use of the indication "Swiss made" for watches assembled in Hong Kong. Hong Kong legislation, it will be remembered, attributes origin according to the place of assembly of the movement. It is therefore possible to use this indication on watches that are cased-up in Hong Kong but equipped with "Swiss made" movements. The Swiss delegation expressed the hope that this question could be resolved within the framework of WTO negotiations on rules of origin, by adopting a formula whereby the origin of the watch depends on the place of final assembly of the product, a position shared notably by the European Union, Japan and China. Henry Tang replied that Hong Kong did indeed defend a different position based on its interpretation of the concept of "last substantial transformation". He pointed out however that Hong Kong was prepared to discuss this matter in order to find a satisfactory solution depending on proposals made during the WTO negotiations. During bilateral discussions, he even admitted that he was not totally averse to the notion of final assembly and to the effect of this operation on the quality of the product, particularly in the case of top-of-the-range watches.
Although this mission was positive - it allowed the FH to make known its concerns over problems encountered by the Swiss watch industry in Vietnam and in Hong Kong, while the responses given indicate a willingness to reach solutions - it has to be admitted that the issues are certain to remain on the agenda for some time to come and that we will have to continue to lobby for change.
October 24, 2002