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Swiss government proposes grey market imports in bid to cut prices

ZURICH, May 29 (Reuters) - The Swiss government proposed on Wednesday allowing grey market imports as a way to help cut high domestic prices for hard-pressed consumers who often pay far more than in neighbouring Germany or France for the same products.

So-called grey market goods are authentic goods that can be sold for less by bypassing official distribution channels. Wholesalers routinely demand a premium from Swiss retailers to reflect relatively high spending power in the wealthy country.

The issue has gained prominence due to a campaign for a binding voter referendum to ensure fair prices in Switzerland, where price tags on everyday items are among the highest in Europe and often shock visitors.

The Swiss cabinet said the referendum drive was on the right track but went too far in its efforts to make companies cut prices. It recommended voters reject the plan and instead get behind the government's alternative proposal.

"Domestic and foreign companies should under certain circumstances be obliged to supply companies from Switzerland with delivery channels abroad. Unjustified international price discrimination can thus be countered consistently," it said.

The counterproposal avoids negative consequences for domestic business and skirts conflicts with Switzerland's international obligations, it added.

Consumer prices for private Swiss households were 56 percent higher than the average for 15 western European Union countries in 2017. Only Icelanders, on an island in the Atlantic Ocean more than 1,000 km (620 miles) from the European mainland, paid higher prices, the government noted.

Prices that Swiss pay for consumer goods were 31% above the EU average. Meanwhile, prices for services such as healthcare, housing and energy were 68% higher, making it even harder to close the price gap with neighbours.

Many prosperous Swiss shrug off the steep prices they pay, noting salaries are also high.

The government cited the famous Big Mac index of comparative purchasing power parity which showed that last year it took a worker in Zurich 13 minutes to earn the price of a McDonald's flagship hamburger versus 18 minutes in Berlin or Vienna, 23 minutes in Paris and 24 minutes in Rome.

Still, many Swiss residents regularly drive over the border to neighbouring Germany, France, Italy or Austria to shop for cheaper goods, harming local businesses that lose out on billions of dollars worth of annual sales. (Reporting by Michael Shields Editing by Helen Popper)