“Last chance” for US free-trade deal

Many US companies have chosen Switzerland for their international or European headquarters Keystone Archive

The Swiss-American Chamber of Commerce warns that Switzerland must now seize the chance for a free-trade agreement with the United States.

The two countries start exploratory discussions this autumn, but the thorny issue of agricultural subsidies must be overcome by the cut-off date for signing the deal in June 2007.

Martin Naville, head of the Swiss-American Chamber of Commerce, fears that Switzerland may lose out to the European Union if it fails to take advantage of the current “window of opportunity”.

“Switzerland is on the list for this round of bilateral free trade agreement negotiations [with the US],” he told swissinfo, adding that US-EU relations were “too complex at the moment” to allow similar talks between Washington and Brussels.

“The next window of opportunity will probably be five or six years away. By then the EU could well be on the list and not Switzerland,” he said.

“If that happens, Switzerland will fall between the cracks as we will not be able to negotiate on our own and will not be part of the EU talks. The risk is not imminent, but it is acute.”

Economics Minister Joseph Deiss travelled to Washington last month to set the free-trade accord ball rolling after the Swiss government decided in May to increase cooperation with the US.

Protectionism

Deiss announced after his trip that experts from both sides will meet this autumn and a decision will be taken on whether to start negotiations proper by the end of the year.

An agreement could see an abolition of customs duties on manufactured goods and preferential access to US markets compared with EU rivals. But the US is likely to demand an end to Switzerland’s protective measures in the agricultural sector, opening the way for cheap imports of cereals, maize and rice.

The subject of agricultural subsidies is also on the table of the current World Trade Organization (WTO) trade-liberalisation negotiations that are seeking to ensure fairer trading conditions for developing countries.

“In the US it is hard to understand that Switzerland is a champion of exports and a world champion of agricultural protectionism,” said Naville.

“Things are very badly balanced in Switzerland when a sector that accounts for 1.1 per cent of GDP defines our entire economic policy.”

Economic partner

“This is a situation that has to be solved and we have to solve it together because the farmers alone cannot solve it,” Naville said.

Naville said the situation should be addressed by the entire economy, not just by the agricultural sector. “This is not a case of industry against agriculture.”

“We don’t have to change everything in two years [the deadline for the free trade agreement to be signed], but we must have a plan in place that could take 20 years to complete.”

The United States is Switzerland’s second largest market for exports after Germany and the most important destination for Swiss foreign direct investments. In 2004 Switzerland had a SFr8.533 billion ($6.77 billion) trade surplus with the US.

In addition, a number of US companies, including Google, IBM, Microsoft and eBay, have opened offices in Switzerland in the last 18 months.

“Switzerland is not a dwarf but a key economic partner with the US,” said Naville. “But if we have a problem with the US, we have the entire world competing against us and we can lose that market very quickly.”

swissinfo, Matthew Allen in Zurich

Key facts

A decision on whether Switzerland will negotiate a free trade deal will be made by the end of the year. If negotiations are started, the deal must be signed by June 2007.
Switzerland’s trade surplus with the US rose to SFr8.533 billion ($6.77 billion) in 2004.
The US is Switzerland’s second largest export market.