Parallel import ban divides Switzerland

Pharmaceuticals are one of the few products that may escape from competition from parallel imports Keystone

The Swiss Business Federation, economiesuisse, has added fuel to the protectionism debate by calling for a ban on parallel imports to stay in place.

The federation claims that restrictions on these imports boost Swiss innovation while ensuring that sectors such as the pharmaceutical industry flourish.

Parallel imports are branded goods manufactured or purchased abroad at a reduced cost and then sold in Switzerland at a lower than usual price.

Speaking at the launch of the annual economiesuisse Economic and Political Report in Zurich on Tuesday, outgoing president Ueli Forster recognised that a ban on such practices restricts free trade. But he claimed that Switzerland still has one of the most liberal trade policies in Europe.

“We are a country without natural resources and therefore innovation plays a fundamental role in the growth of our economy,” he told swissinfo. “In the hierarchy of goals we are of the opinion that protecting innovation is the priority.

“In the area of copyright and brand law Switzerland is more liberal than the European community. Restrictions only apply to certain areas, such as patented products.”

The Swiss Foundation for Consumer Protection rejected the argument, blaming trade restrictions for creating an island of high prices for consumers in Switzerland.

“We know of the pressures the pharmaceutical industry is facing, but our duty is to stand up for consumer rights,” said spokesman Thomas Meier.

“A lot of products in Switzerland are clearly priced much higher than in the rest of Europe.”

Lifting the ban

Switzerland’s largest supermarket chain, Migros, has threatened to launch a referendum against import restrictions which it says is damaging its trade.

Last November Migros announced its intention to bypass intermediaries when it imports certain items from abroad in response to competition from German discounters Aldi and Lidl.

“It is unusual for Migros to speak out on political issues. [But] the stakes are extremely high for consumers who will be further discriminated against if the government’s bill is passed,” Migros chairman Claude Hauser told Bilan magazine.

“We agree with the pharma industry being well protected, one of the aims of the revised legislation, but we don’t want any strengthening of the legislation on parallel imports.”

The national Competition Commission recommended the lifting of the ban on parallel imports in 2003 except in the case of pharmaceutical goods, a proposal that should be discussed in parliament soon.

“We fully support patent rights as our country relies heavily on innovation,” the head of the commission, Walter Stoffel, told swissinfo.

“But it is not justified to isolate Switzerland from the rest of Europe because this leads to higher prices in the smaller market – namely Switzerland.

According to Stoffel, the pharmaceutical industry is a special case, with prices also influenced by different and complicated healthcare regimes in individual countries.

Unique rules

Forster also believes the pharmaceutical industry is governed by a unique set of market rules.

“Pharmaceutical prices are controlled everywhere so it is not a free market. We also note there is a lot of piracy in many countries,” he added.

“We believe that even if parallel imports are allowed the savings for consumers would be minimal because trade would absorb most of the savings.”

swissinfo, Matthew Allen in Zurich

In brief

Bans on parallel import bans exist in Switzerland for many consumer products, including drugs and photographic films.

In 1999 the Swiss federal court upheld the ban on parallel imports by ruling against Kodak after it attempted to sell film manufactured abroad at prices.lower than the local market’s.

Three years later the Swiss parliament voted to give the Competition Commission greater powers to fine companies found guilty of price fixing.

Key facts

At the economiesuisse conference, vice-president Rudolf Ramsauer called for the debate on energy production in Switzerland to move on.
According to Ramsauer, electricity consumption has risen 21% since a moratorium on the building of new nuclear power plants was voted in 1990, but production has increased by just 17%.
Nuclear energy currently provides 40% of Switzerland’s electricity.