Swiss seek improved trade with Brazil and Chile

São Paulo, the biggest city in South America, is home to numerous Swiss investments Keystone

Economics Minister Johann Schneider-Ammann is keen to demonstrate that Switzerland’s foreign trade strategy for emerging markets is not just empty talk.

After visits to India and Russia in the first half of 2011, he is off to Brazil and Chile this week accompanied by a large business delegation.

One of the main aims of the visit from October 12-18 is to stimulate negotiations for a free trade agreement with Mercosur, the trade block of South American nations, similar to the one between the European Free Trade Association (Efta) and Chile.

Brazil, Switzerland’s most important trading partner in Latin America, is a leading Bric nation, together with Russia, India and China.

In December 2006, the Swiss government approved a strategic plan to make these countries a priority and improve market access and protect investments by Swiss firms.

Chile is one of Switzerland’s privileged trade partners, especially since the signing of a free trade agreement in 2004, the first in Latin America. 

“Thanks to its open economy and numerous free trade accords, Chile is in a position to play the role of regional economic platform,” the economics ministry said in a statement.

Talks will also centre on relations between Efta and Mercosur, as well as exchange rate issues. Both Brazil and Switzerland are dealing with recent rises in their own currencies.

In addition, an agreement is due to be signed between Brazil and Switzerland covering the exchange of young professionals.

Potential risks

The visit, which takes place just a few days ahead of the Swiss federal elections on October 23, is seen as extremely strategic.

“Brazil has a huge market which will become more significant in the coming years. Growth should remain above average in the future, making it important for all sectors of our economy,” Jan Atteslander, head of foreign trade relations at the Swiss business federation, economiesuisse, told swissinfo.ch.

Atteslander, who is part of the delegation, also underscored Chile’s economic importance.

“Our ties are strong, not only because of free trade, but especially thanks to the outstanding economic strategy of the Chilean government,” he said.

This offers excellent opportunities for companies active in the manufacturing, health and infrastructure sectors, he added.

“Tourism is also an interesting area for investment by Swiss companies.”
 

Other were more nuanced.

“For many years Chile has had a stable economy, a well-educated population and good infrastructure. This is a great advantage for Swiss companies. But Brazil offers greater potential; more people live in São Paulo than in the whole of Chile, and economic development there is impressive,” said Stefan Eiselin, deputy editor-in-chief of the Swiss weekly business magazine Handelszeitung.

“But the risks are higher in Brazil. Government investment has been reduced and the real-estate market is in danger of overheating. We cannot rule out obstacles but current trends point in Brazil’s favour.”

Free trade

Observers say an agreement should improve access to the largest consumer market in South America.

“We already have a good economic relationship with Brazil, but it could be improved for both sides if trade and investment activities were facilitated. And this can be achieved via a free trade agreement like the ones we have already signed with 23 other countries,” Atteslander said.

The participation of the Brazilian President Dilma Rousseff at the fifth European Union-Brazil summit in Belgium on October 3-4 is seen as a positive signal, especially Brazil’s attempt to break deadlocked talks between Mercosur and the EU, which were suspended in 2006.

“Obviously if Brazil and Mercosur can seal a free trade deal with the EU, Switzerland and Efta could also do so soon,” said the economiesuisse official.

But negotiations will not be easy.

“These countries are very self-confident and want to secure clear benefits during negotiations,” Marie-Gabrielle Ineichen-Fleisch, head of the State Secretariat for Economic Affairs (Seco), told the NZZ am Sonntag newspaper ahead of last week’s visit to Switzerland of Indian President Pratibha Patil.

Brazil-Chile visit

During the visit from October 12-18, Swiss Economics Minister Johann Schneider-Ammann will meet Brazilian Vice-President Michel Termer, Economics Minister Fernando Pimentel, Foreign Minister Antonio Patriota and Science and Technology Minister Aloizio Mercadante.

In Chile he will meet President Sebastián Piñera, Economics Minister Pablo Longueira and Foreign Minister Alfredo Moreno.

Apart from official talks, Schneider-Ammann will also hold sessions with local economic business associations and Swiss firms in both countries. He is due to visit Swiss firms, including Clariant in Santiago.

In São Paulo the delegation will also attend a conference on exchange rate fluctuations, organised by the Swiss Business Hub and the Federation of State Industries of São Paulo (FIESP).

Economic figures

In 2010 Brazil and Chile registered economic growth of 7.5% and 5.3% respectively.

Last year the volume of trade between Switzerland and Brazil amounted to SFr3.2 billion, a 19% increase on 2009. Exports totalled SFr2.3 billion and imports stood at SFr849 million.

In 2009, Swiss investments in Brazil rose to SFr12.8 billion and Swiss firms employed 106,000 staff.
 
In 2010, exports to Chile stood at SFr205.9 million and imports SFr149.5 million.

At the end of 2009, Swiss investments in Chile totalled SFr1.5 billion and Swiss firms employed 13,300 people.

(Adapted from Portuguese by Simon Bradley)