41.This agreement was laid on 28 February, and the scrutiny period is scheduled to end on 4 April. It was considered by the Internal Market Sub-Committee at its meeting on 14 March.
42.Liechtenstein is the UK’s joint 127th largest trading partner, accounting for less than 0.1% of total trade. The large majority (over 90%) of UK-Liechtenstein trade is in services. The UK mostly exports construction, telecommunications and computer services to Liechtenstein, while imports are largely in insurance and pension services.
43.Liechtenstein and Switzerland enjoy close political and economic ties, underpinned by a number of bilateral treaties. The cornerstone of this relationship is the 1923 Swiss-Liechtenstein Customs Treaty, which established a customs union between the two countries. Liechtenstein is also a member of the European Economic Area (EEA).
44.Two trilateral Agreements enable Liechtenstein to participate in the 1972 EU-Swiss Free Trade Agreement (FTA) and the 1999 EU-Swiss Agriculture Agreement. The UK-Swiss-Liechtenstein Additional Agreement (‘the Additional Agreement’) rolls over these trilateral Agreements into a single instrument. The purpose of the Additional Agreement is therefore to ensure that the FTA and Agriculture Agreement incorporated into the UK-Swiss Trade Agreement will continue to extend to Liechtenstein.
45.Our report Scrutiny of international agreements: Treaties considered on 12 March 2019 discussed in detail the differences between the new UK-Swiss Trade Agreement and the precursor EU-Swiss Agreements. As summarised below, these differences will also apply to the Additional Agreement insofar as they relate to the incorporated FTA and Agriculture Agreement.
46.Subject to the conditions outlined in our previous report, the UK and Liechtenstein will continue to recognise (in technical terms, ‘cumulate’) EU materials as originating in Liechtenstein or the UK respectively for three years. Furthermore, Liechtenstein will be required to recognise EU working or processing as UK working or processing. These arrangements will be revisited no later than six months before the end of the three-year period.
47.The FTA, as incorporated, also lays the groundwork for these cumulation provisions to apply in respect of materials (and in some cases working or processing) from other Parties to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (‘the PEM Convention’). For this to apply, however, further FTAs must be in place with those other countries.
48.As noted in our report on the UK-Swiss Trade Agreement, some of the annexes to the incorporated Agriculture Agreement have been disapplied. These concern organic products and sanitary and phytosanitary measures in relation to plant health, animal feed, seeds, animal health and trade in animals and animal products.
49.We explained in our previous report that the disapplication of sanitary and phytosanitary provisions for the cited agricultural products does not in itself imply that trade in these products will have to stop. Facilitations provided under the precursor Agriculture Agreement may, however, fall away. We also noted that guidance published by the Swiss Government indicates that, in a ‘no deal’ scenario, Switzerland will only be able to accept imports of animals and animal products from the UK once the UK is ‘listed’ by the European Commission as a third country for animal health purposes. This will also be true of imports of animals and animal products to Liechtenstein.
50.The excluded annex on organic products provides for the certification, labelling and sale of products as organic. The Government has laid draft Statutory Instruments (SIs) for the continued recognition of organic products from Liechtenstein as equivalent for a limited period of time. However, a reciprocal arrangement is required for the UK to be able to continue exporting products marketed as organic to Liechtenstein.
51.The impact of disapplying these parts of the Agriculture Agreement on UK-Liechtenstein trade is unclear, but is unlikely to be significant, given the extremely small size of UK-Liechtenstein trade in goods.
52.The Additional Agreement is intended to enter into force at the same time as the UK-Swiss Trade Agreement, subject to completion of the necessary domestic ratification procedures by the three Parties. The parliamentary report notes that it is not possible for the Additional Agreement to enter into force by 29 March 2019. Article 3(3), however, allows for the Additional Agreement to be applied provisionally.
53.Responsibility for the proper functioning of the Additional Agreement will be with the Joint Committee relevant to the incorporated FTA. Article 2(1) of the Additional Agreement entitles Liechtenstein to a representative with the Swiss delegation to the Joint Committee.
54.Trade between the UK and Liechtenstein is small but dominated by services. We are therefore disappointed that neither the Government’s Explanatory Memorandum nor the parliamentary report address intended future UK-Liechtenstein services trade.
55.We report the Additional Agreement between the United Kingdom, Switzerland and Liechtenstein for information.
33 Additional Agreement between the United Kingdom of Great Britain and Northern Ireland, the Swiss Confederation and the Principality of Liechtenstein extending to the Principality of Liechtenstein certain provisions of the Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation, CP65, 2019: [accessed 14 Mar 2019]
34 Goods exported to Liechtenstein are mostly electrical machinery and equipment, followed by precious stones or metals. Top goods imported comprise nuclear reactors, mechanical appliances and materials such as plaster or cement.
35 Règlement (CEE) n 2840/72 du Conseil, du 19 décembre 1972, portant conclusion d’un accord entre la Communauté économique européenne et la Confédération suisse, arrêtant des dispositions pour son application et portant conclusion de l’accord additionnel sur la validité pour la principauté de Liechtenstein de l’accord entre la Communauté économique européenne et la Confédération suisse du 22 juillet 1972, (1972), p 188. English translation (reflecting subsequent amendments) at [accessed 12 March 2019], Council Decision of 26 September 2007 concerning the conclusion of an additional Agreement between the European Community, the Swiss Confederation and the Principality of Liechtenstein extending to the Principality of Liechtenstein the Agreement between the European Community and the Swiss Confederation on trade in agricultural products; , 13 October 2007, p 5
36 European Union Committee, (33rd Report, Session 2017–19, HL Paper 315)
37 The PEM Convention is a multilateral agreement between the EU and members of the pan-Euro-Mediterranean zone, notably: Iceland, Liechtenstein, Norway, Switzerland, Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority, Syria, Tunisia, Turkey, Albania, Bosnia and Herzegovina, Macedonia, Montenegro, Serbia, Kosovo, the Faroe Islands, Moldova, Georgia and Ukraine.
38 ,, . Only part 4 of the latter SI relates to organic products.