Cabinet trade strategy leaves observers baffled

The Swiss have to decide which way to go over agriculture Keystone

News that Switzerland is to look into concluding a free-trade accord on agriculture with the European Union has provoked a mixture of surprise and confusion.

The announcement came on the same day that Economics Minister Joseph Deiss raised doubts about the prospects for an accord between Switzerland and the United States.

Deiss said on Wednesday that differences over agriculture could scupper the chances of reaching a deal with the US even before negotiations had started.

A decision on whether to proceed with formal talks with Washington will be taken by the end of the month.

Deiss also announced that the cabinet had mandated the economics and foreign ministries to investigate a free-trade accord on agriculture with the EU.

“Here the hurdles will be smaller than with the US,” said Deiss, adding that up to 60 per cent of trade with EU importers of Swiss products had already been liberalised.

Tactics

Observers had mixed views on the motives behind what appeared to be a sudden shift towards Europe. Economics commentator Beat Kappeler said it might be a tactical move aimed at Switzerland’s farmers.

“It could be that the government is giving a signal to the agricultural lobbies in Switzerland, saying we have other options which are nearly as drastic as the ones with the US and if you don’t like the second, we’ll take the first with the EU,” he told swissinfo.

“It could be tactics… because until now the government has given no indication about an agreement on agriculture with the EU.”

Kappeler said an accord with the US could still be possible and that the EU plan might simply be a warm-up to allow Switzerland to formulate a clear position.

For its part, the Swiss Business Federation, economiesuisse, said an agreement with the EU would only be an addition and not an alternative to a deal with the US.

Switzerland should not miss out on the biggest market in the world, it said.

Backtracking

Some press commentators suggested that the Swiss government had gone off the idea of a free trade deal with Washington because it had concluded that the disadvantages outweighed the potential benefits.

Other theories were that the government expected negotiations with Washington to fail and needed a back-up plan.

The confusion wasn’t helped by the government’s recent decision to shift its foreign policy focus towards the US and other important non-EU partners.

Unclear

Diana Wallis, a Euro-MP who chairs the committee for relations with Switzerland, said she was not surprised by Bern’s apparent change of focus, but added that it was far from clear what Switzerland wanted from the EU.

“I’m not sure exactly what’s meant by a free-trade agreement with the EU in the sense that through the bilateral accords you could almost argue that you [already] have free trade plus,” she told swissinfo.

Switzerland has signed two packages of bilateral treaties with the EU, which have ended many trade barriers, and already cover many agricultural products.

“The door has always been open to further bilateral accords and it’s quite clear that there are still issues left over from the first two sets [of bilaterals],” she said. “So I don’t think that anybody would be surprised if Switzerland wants to look further.”

swissinfo, Isobel Leybold-Johnson

Key facts

Switzerland initiated exploratory talks with the US on a free trade agreement last year, touting the benefits of access to the world’s largest economy.
But Swiss attempts to exclude certain agricultural products from the deal were not acceptable to Washington.
Supporters of free trade say Switzerland is being held hostage by farming lobbies, even though agriculture accounts for less than 0.5% of gross domestic product.

In brief

The economics and foreign ministries have been mandated to write a report on the advantages and disadvantages of a free-trade accord with the EU.

Deiss says Swiss-EU cooperation in the agriculture sector is already far advanced.

Up to 60 per cent of trade with the most important importers of Swiss products in the EU was already liberalised, he said. From 2007 Swiss cheese will be subject to free trade in the EU.