The National Council lawmakers sided with major industry players and opted for less stringent conditions than those required by the govermnent, newspaper Tages Anzeiger reported.
The issue has been brought to the table in order to prevent a watering down of the qualification of certain products sold as Swiss made, and to stop companies free-riding on the Swiss reputation for quality.
A recent customer survey found that people are willing to spend up to 20 percent more for products described as being Swiss made. The value of this description is thought to benefit Switzerland to the tune of nearly six billion francs ($6.27 billion) per year.
There is therefore a lot riding on the decision to alter the criteria required for a product to use the label.
The National Council voted by 101 to 68 to adopt a more industry-friendly set of conditions than those proposed by the government.
The bill requires that food producers need to ensure that 80 percent of raw materials in mildly processed foods such as yoghurt should come from Switzerland, although milk producers should ensure that 100 percent of their products are of Swiss origin.
This will have consequences for Swiss dairy company, Emmi, which sells “Swiss” yoghurts in the United States without a single drop of Swiss milk.
Highly processed foods, such as biscuits and chocolate, should in future contain at least 60 percent of Swiss raw foodstuffs, although an exception was made for products which contain foods that are either difficult to grow in Switzerland, such as cocoa, or are seasonal, such as cherries.
This is a departure from the recommendations by the government, which sought a minimum of 80 percent of Swiss-produced ingredients for food products.
The lower house also proposed that 60 percent of production costs should be incurred in Switzerland, and that 60 percent of the production of industrial products should take place in Switzerland.
The bill will now proceed to the upper house.