China and Switzerland have formed a free-trade agreement set to cut the import tariffs placed on Swiss watches and luxury goods going into the country.
The move should help to revive the sales of Swiss watches in China after declines owing to its government crack down on luxury gifting and the high taxes paid on imported luxury goods.
China’s assistant minister of commerce, Yu Jianhua said: "In the first year we will cut import duties on Swiss watches by 18%, then 5% annually in the following years. They will be cut by 60% in 10 years."
The lower duties should help to reduce the price of Swiss watches in China. Under the agreement Switzerland will offer zero tariffs on 99.7% of the value of goods from China, while China will allow 84% of Swiss exports to be duty-free.
The latest Swiss export figures for watches, released by the Federation for Swiss Watchmaking, show that Chinese exports were down 22% last month compared to April 2012.