Clouds loom despite Swiss-US trade boom

Clouds are on the horizon for Swiss-US trade, say experts

Trade between Switzerland and the United States boomed last year, but the Swiss-American Chamber of Commerce has warned of clouds on the horizon.

This content was published on August 22, 2007 minutes

Too little investment by Swiss companies in the US and stifling controls at US borders were threatening commerce, said the chamber. A free trade agreement between the two countries remains on ice.

According to figures released by the chamber, exports of Swiss goods to the US rose in 2006 by 13 per cent to SFr18 billion ($10.8 billion).

US exports into Switzerland increased by 28 per cent to SFr8.3 billion in the same period. This resulted in a record trade surplus of almost SFr10 billion in favour of Switzerland.

"This is a great success; a rise of 13 per cent for Swiss goods to America really solidifies the position of the US as the second-largest export market for Swiss goods," the chamber's CEO, Martin Naville, told swissinfo.

It was the second time in a row that US exports to Switzerland had grown substantially, he added.

As for investments, the chamber said that figures for 2005 – the latest available – showed that US investment in Switzerland had "increased massively and make the US the largest foreign investor in Switzerland – by far", without citing figures.

A large part of this was due to more than 30 US firms, such as giants IBM and Kraft, moving over to or establishing European operations in the country, it said.

Naville said attractions were not just lower corporate taxes but quality of life and work conditions.

Periods of cloud

But there was also a less sunny outlook. The chamber said that Swiss investments in the US only rose by $3 billion to $125 billion in 2005.

This still made the country the seventh biggest investor in the US, but it was losing ground to France, Germany, Japan and Canada, said Naville.

The chamber also had criticism for strict US security measures, which it said seemed "too far-reaching" and represented a threat to the efficient flow of goods across borders, as well as stifling further investment.

However, the biggest trade storm of late has been the failure to establish a free trade agreement between the two countries. Negotiations broke down last year over agriculture.

Both sides have since agreed to define areas of common interest and intensify cooperation. Last month, the head of the State Secretariat for Economic Affairs, Jean-Daniel Gerber, travelled to Washington for talks.

Stormy spells

But Naville is pessimistic about any immediate resolution to the situation.

"Currently with the trade promotion authority of President Bush not being likely, the Doha round [of world trade talks] being on the rocks, it will be very difficult during the remainder of the Bush administration for Switzerland and America to come to a free trade agreement," Naville told swissinfo.

He said he hoped for a window of opportunity in the next administration.

Naville stressed that strong agreements were also needed with the European Union, Switzerland's largest trade partner. However, he had concerns about the recent focus on Asia.

Swiss Economics Minister Doris Leuthard earlier this year visited India, China and Brazil, all emerging economies.

"In Switzerland we tend to forget that the US is the second-largest trading partner and the most important investor in Switzerland, and our economic policy weight and parliamentary initiatives should have the same kind of weighting," said Naville.

"While we should not forget India and China, we're currently focusing too much on Asia and too little on the US."

swissinfo, Isobel Leybold-Johnson

Swiss-US agreements

An attempt at a free trade deal failed in January 2006 after Washington did not accept Swiss attempts to exempt certain agricultural products from the accord.

Instead Bern and Washington signed two agreements in May 2006 to intensify cooperation between the two nations.

One is on expanding dialogue on all matters of mutual interest and another created the US Swiss Trade and Investment Forum to strengthen economic relations.

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