Switzerland and UK: ‘We are both ‘islands’ but in very different ways’, says Leo Docherty

Brexit, the exclusion from Horizon Europe, the war in Ukraine: Bern and London are seeking deeper cooperation. © Keystone / Peter Klaunzer

Switzerland and the UK are both looking for the right relationship with the European Union. At the same time, they are trying to strengthen their bilateral relationship, as the UK Minister for Europe, Leo Docherty, explains in an interview.

Docherty was on a two-day working visit to Switzerland at the end of February, where he met State Secretaries Livia Leu (foreign affairs) and Martina Hirayama (education, research and innovation).

The visit comes almost a year after the UK and Switzerland decided to strengthen bilateral and international cooperation, and in the same month that the Swiss government approved a negotiating mandate for an updated free-trade agreement (FTA) with Britain.

Leo Docherty was appointed as a Parliamentary Under Secretary of State at the Foreign, Commonwealth & Development Office (FCDO) on 27 October 2022. Richard Townshend Photography

SWI swissinfo.ch: Everyone seems to want to join the EU except Switzerland and the UK. What unites the two countries in this outsider role?

Leo Docherty: The Swiss have built a great nation in the heart of Europe, undeterred by any waves of pressure that might surround it. The British are an island people, whose long history and destiny has been shaped by the sea. We are both “islands” but in very different ways.

Taken together we are important partners, and that’s because both the UK and Switzerland have so much in common. We have that strong relationship with each other precisely because it is based on shared values. We both depend on commerce and trade; Switzerland is the UK’s third-largest trade partner outside the EU. We share a common love of law and order, a desire to live in peace with our neighbours, and a mutual commitment to the preservation of the freedom of the individual.

SWI: Both countries are also on the sidelines in the EU’s research programme Horizon Europe. After being excluded from it, last November they signed a research collaboration agreement. What specific projects are being set up under this?

L.D.: Last year our foreign ministers signed a memorandum of understanding on cooperation in London which included a commitment to do more together in research and innovation. This is an area State Secretary Hirayama and I touched upon in our discussion during my visit.

In terms of specific projects, the Royal Society has opened its prestigious Newton International Fellowship Programme which we hope will attract many applicants from Switzerland. Likewise, the Swiss Government Excellence Scholarships will launch later in the year and will be open to UK researchers. These schemes will help us to attract emerging talent and build a globally connected research and innovation workforce.

Elsewhere in the space domain, a UK-Swiss Letter of Intent was recently signed between the heads of our space agencies. This is an important and progressive step, highlighting joint priorities and ambitions, and increased dialogue on mutual areas of interest in space.

And on innovation, in June a UK-Swiss Innovation Forum will take place in Basel with a focus on closer collaboration on life sciences.

SWI: The Swiss government this month approved the mandateExternal link to launch negotiations on enhancing the bilateral trade agreement. Switzerland talks of a possible extensive ‘enhanced’ trade agreement. What should it contain, according to the UK? And when can an agreement be expected?

L.D.: There are huge opportunities and much to gain from enhancing our existing trading relationship, so I am pleased we expect to launch negotiations for a new free-trade agreement in spring.

We hope it will cover a broader number of key areas including investment, digital and data, while also reflecting our long partnership in research and development. It also provides an opportunity to increase cooperation in areas of mutual interest that trade can support, such as our ambitions for tackling climate change.

I know that UK and Swiss business leaders are enthusiastic about an upgraded FTA. It will provide opportunities to grow our trade further, including by removing and lowering tariffs not covered by the current trade agreement, and reducing non-tariff barriers. It could allow for new models for regulatory cooperation, as well as opportunities to deliver benefits across the whole services sector.

Last year we agreed to extend the Services Mobility Agreement for a further three years, maintaining high-quality access for service suppliers in both countries to each other’s markets. Negotiators will explore how best to provide business with long-term certainty on mobility as part of the talks for an enhanced FTA.

SWI: Switzerland is the UK’s tenth-largest trading partner. Conversely, the UK is Switzerland’s eighth-largest trading partner (excluding precious metals). What difference could an enhanced trade deal make to these figures?

L.D.: Trade between our two nations has tripled over the past 20 years and we have a huge opportunity to build on these ties by negotiating an enhanced UK-Swiss FTA.

An FTA will boost both our economies, increase investment and bring our business links and commercial environment even closer together.

For example, services represent over 70% of GDP for both our economies, and UK financial services exports to Switzerland are worth nearly £2 billion (CHF2.25 billion), despite there being no bespoke trade agreement in this area at present.

Digital is another area where we can go further – 85% of UK services exports to Switzerland were digitally delivered in 2020 as we overcame the Covid pandemic.

SWI: For several years Switzerland and Britain have been thrashing out a post-Brexit financial services treaty. Can we expect a deal to be finalised by the end of summer 2023, as the Swiss finance ministry has said?

L.D.: We are committed to deepening our cooperation on financial services by negotiating a Mutual Recognition Agreement. This first-of-its-kind agreement is an opportunity for the most advanced cooperation between two advanced financial centres, with negotiations expected to conclude in the summer.

SWI: Ukrainian Prime Minister Denys Shmyhal said the second Ukraine Recovery Conference (URC) in London in June should define the extent of international funding to repair up to $700 billion (CHF656 billion) of destroyed infrastructure. What are the current estimates of damage to Ukraine? Will the conference determine which countries and organisations will provide these funds?

L.D.: The UK and Switzerland are steadfast in our commitment to ensuring Ukraine’s economic stability. The World Bank has assessed Ukraine’s reconstruction needs at over $349 billion; this will almost certainly increase given Russia’s targeting of Ukraine’s civilian critical infrastructure.

It is crucial that the international community does all it can to support the government of Ukraine. To meet the massive cost of reconstruction, mobilising the private sector is essential. We are developing options to unlock private investment for this purpose and are keen to collaborate with international partners. And this year’s URC – which the UK is proud to co-host with Ukraine on June 21-22 in London – will build on the decisions taken in Lugano to bring together a diverse range of actors from the international community, private sector and civil society to sustain international support for Ukraine. It will help Ukraine unlock the investment and expertise it needs to rebuild as a resilient democracy with a green and modernised economy and the ability to deter and withstand future Russian aggression.

SWI: The EU has set up a working group and is also discussing with global partners the potential use of Russian assets frozen under sanctions to rebuild Ukraine. Should those assets be used to fund the reconstruction of Ukraine?

L.D.: Law enforcement agencies in the UK are currently able to seize foreign assets with links to criminality or unlawful conduct, by making use of powers granted under the Proceeds of Crime Act 2002.

We are looking at what we can do in the long term to raise money for the reconstruction of Ukraine using Russian assets. We are exploring what options there may be to do so and are working closely with HM Treasury to make progress.

The interview was conducted in writing.