'Swiss-Made' Proposal Needs Reworking

By William George Shuster -- JCK Online, 2/1/2008 2:00:00 AM

Aproposal by the Federation of the Swiss Watch Industry FH to toughen Switzerland's “Swiss Made” watch ordinance must be revised to comply with European trade treaties and a Swiss government plan to protect the viability of “Swiss” and Swiss flag trademarks, the Swiss Federal Council says.

The FH proposal had called for greater use of Swiss-made components (80 percent for mechanical watches, 50 percent for quartz). However, the council said in late November that FH must withdraw, review, and revise its proposal. It cited its own pending legislation to strengthen and protect “Swiss” trademarks and noted that a 1972 pact on watches with the European Union prohibits unilateral changes. It urged FH to bring its proposal into compliance with the pending legislation and international agreements and resubmit it.

At least one Swiss newspaper said the council's action means FH's proposal is “dead.” Some opponents suggest revision would erase what they consider its objectionable sections. However, Jean-Daniel Pasche, FH president, told JCK the council's action wasn't a rejection of FH's proposal, only a directive to review and revise it where necessary. “The Federal Council looks on it favorably,” he said. “It's only concerned with its details.”

Pasche added, “It's logical that if they revise the law, we'll revise our proposal. So, this wasn't a surprise, but it's very important to know the contents of the draft law [and] how it could affect our proposal.”

FH's proposal is endorsed by major Swiss watchmakers, including Swatch Group, Rolex, and the Richemont Group. It's opposed by some smaller watchmakers, who claim it favors large watchmakers. They say if they're forced to use higher-price Swiss components, they might have to raise prices or close.