Switzerland among vanguard shaping global digital age

While global data flows and digital services boost the economy, they also raise privacy concerns over personal, financial, and health data stored in the cloud. Keystone

A new deal on digital services trade between Singapore and EFTA states, including Switzerland, seeks to reconcile the need for privacy and security with the desire for innovation and growth in increasingly data-driven economies. It also shows that even coalitions of small economies can help set global standards in the new digital age.

Behind our increasingly online world is a hidden realm of digital plumbing. And like the pipes, vents and valves of household plumbing, you only notice it when things go wrong. Amazon Web Services in October apologisedExternal link after an outage at its giant cloud-computing centre in northern Virginia knocked out thousands of websites, as well as the planet’s biggest online banking, communication and social media operations.

The failure – just the most prominent of many in recent years – shows the international nature of the data infrastructure and services that enmesh us all. 

In October Switzerland and its European Free Trade Association (EFTA) partners signed a key digital economy agreement with Singapore to both secure this free flow of data across borders, while protecting privacy, security and intellectual property. What follows is an explanation of why it matters and what it all means.

What does it mean for everyday life?

The digital world permeates our lives. Online shopping, smartphone apps, streaming music and video (and reading this webpage) are only the most obvious examples. 

Cars, and lately even fridges and ovens, that in the past could be fixed with rolled-up sleeves and elbow grease are increasingly software driven and connected to the net. Firmware is constantly updated and information transmitted.

Our increasingly automated homes send status updates like a teen on social media.

Businesses from finance to farming rely on digital data. Even bread starts with wheat planted straight as an arrow by GPS-linked tractors, before being processed, tracked and shipped with digital logistics, and marketed, sold online and delivered to kitchen tables. The Covid pandemic only accelerated cloud-based collaboration in work.

About halfExternal link of the roughly $23 billion (CHF18.4 billion) in services trade between the EFTA states (Switzerland, Iceland, Liechtenstein and Norway) and Singapore could have been delivered digitally, according to Singapore’s Ministry of Trade and Industry. Of that, about 20%External link would be financial services, key for the Swiss economy.

In a digital world, it’s no longer just physical goods that zoom around the world.

Mira Burri, professor of International Economic and Internet Law at the University of Lucerne unilu.ch

“Take the example of a smartphone,” says Mira Burri,External link professor of International Economic and Internet Law at the University of Lucerne. “The phone itself is traded as a good. But the smartphone is also a platform for services: your app store, your music, your movies. And then there are social media, like Instagram or Facebook, which are free but collect and trade data.”

That involves data crossing borders, digital payments, contracts and identification, as well as fears over safety, cybersecurity, protecting personal data and preventing crime.

How does Switzerland benefit from digital trade?  

Switzerland and Singapore, both among the top ten richestExternal link per-capita countries thanks to advanced service industries, are poised to take advantage of the growth in digital transactions that the latest agreement advances.

Last month’s digital economic agreement provides a template for simplifying trade by cutting paperwork, recognising e-contracts and signatures, adding payment options, ensuring data can move across borders and protecting intellectual property like computer source code, according to the Swiss State Secretariat for Economic Affairs (SECO).

“Typical barriers to digital trade include paper-based administrative procedures, regulatory uncertainty around cross-border data flows and the protection of source code,” says Antje Baertschi, a SECO spokesperson.

Over 60% of the world’s economic production is now linked to digital transactions, with online sales of goods and services to businesses and consumers worth €26 trillion (CHF24.1 trillion) as far back as 2019, according to a European Commission reportExternal link.

Such figures show the scale of what’s at stake and how barriers – from protectionism, conflicting or over-complicated local rules, or out-of-date systems – can hurt economic potential, and stymie innovation and cooperation in new areas such as artificial intelligence (AI).

Unlike traditional trade deals, digital agreements aren’t about opening services markets to foreign companies or cutting tariffs but about offering legal certainty, which is particularly important for small and mid-sized enterprises, says Burri at the University of Lucerne. 

Smaller companies offering products and services that involve data crossing borders can’t afford the heavy cost of complying with disparate regulations in different nations. Governments, particularly those of small nations like Switzerland and Singapore, also need to cooperate because of new and unexpected challenges, such as the explosion of AI technology and businesses, that are difficult to contend with in isolation. 

Does the deal guarantee that privacy and data will be safe?

While international data flows and digital services may boost the economy, they also raise concerns, particularly over privacy of individuals whose online habits, financial standing and even health stats may be collected and stored in the cloud. 

Businesses worry that their intellectual property can be stolen and governments that national security may be threatened by opening critical infrastructure to cyberattacks.

“If you download or listen to let’s say a song on Apple Music, this automatically sends certain data to Apple. They would know, for example, who the user is, what her preferences are and with whom she shares music,” Burri says. This kind of expansion of trade beyond the mere provision of a service leads to “certain tensions, because the moment you trade data, part of it can be personal data”.

“So other issues come into play. And it’s then not only about regulating trade but also, all of a sudden, it starts being about personal data protection, cybersecurity or national security issues,” she adds.

These tensions are what digital economy agreements seek to resolve. Not only is this important for growth and innovation but also to give ordinary people and businesses the certainty that their country adequately protects their privacy and consumer rights. 

The Swiss government saysExternal link the EFTA-Singapore accord guarantees free flow of data in line with “personal data protection regulations”, while “it also seeks to bolster consumer confidence in digital trade by requiring the parties to maintain […] regulations to safeguard consumers and prevent unsolicited communications (spam).” 

That confidence is essential for the economy, too.

Switzerland and Singapore, both among the top ten richest per-capita countries thanks to advanced service industries, are poised to take advantage of the growth in digital transactions that the latest agreement advances. Keystone / AP

The World Trade Organization (WTO) and the Organization for Economic Co-operation and Development (OECD) estimateExternal link global economic output would be slashed by 5% if digital flows were regulated in a fragmented way. Yet the opposite, removing all regulation, would also hinder growth because of the loss of trust. On the other hand, balancing freedom and rules would add 2% to the economy, they say. 

“A country can domestically regulate the data economy while also committing to free data flows and protect the fundamental rights and interests of its citizens,” Burri says. The kind of digital agreements struck with Singapore “are a smart way to reconcile this need to foster the data-driven economy while protecting policy space”.

Studies suggest digital protectionism hurts both local and foreign business, she says.

Why can’t the world agree on rules?

The WTO has been trying to reach agreements on e-commerce without great success since the late 1990s, when the internet was a different beast. That lack of progress has led to countries such as Switzerland and its partners seeking bilateral or regional deals.

The deadlock is partly due to conflicts between the three main economic powers: the European Union, the United States and China. The EU’s focus on regulating markets and protecting citizens’ rights collides with a laissez-faire American approach to business and, in turn, China’s demands for control by the combined communist party and state apparatus.

“Here national priorities and values clash,” Burri says. “Europe treats privacy as a fundamental right, the US has a low level of privacy protection and champions free speech, and China puts national security first. This EU-US-China triangle has blocked the WTO from reaching global digital trade rules.”

The US has largely withdrawn from joint rulemaking on digital trade, with an agreement reached between the US and Japan in 2019 being the last event of note, she adds.

In 2025, 82 WTO members struckExternal link a deal in areas such as electronic signatures and contracts, as well as safeguards against online fraud. Yet once again it fell shortExternal link of adopting rules related to data because of remaining divisionsExternal link between the US, EU and China, as well as opposition expressed by countries including India and South Africa.

While the negotiation convenors, Japan, New Zealand and Singapore – also supported by Switzerland – have tried to push forward, the fate of the agreement and how it can be incorporated into WTO law are still uncertain. 

What is Switzerland’s digital future?

Switzerland had previously been relatively quiet on developing updated digital trading rules, focusing instead on multilateralism through the WTO. The logjam there, however, means that it and other EFTA nations are turning to more comprehensive digital accords like the one with Singapore, following their first such deal in 2023 with Moldova.

“Its role as a rule-maker in this area is fairly recent, starting with the EFTA-Moldova agreement and becoming more visible with EFTA-Singapore,” Burri says.

Earlier agreements with nations including Japan, China and Mexico were more limited, with only minimal or outdated provisions on digital, rather than dedicated chapters.

“This agreement, at this point in time, is also geopolitically an important sign,” Burri says. “It shows very clearly that Switzerland and the EFTA countries are ready to be at the forefront of digital trade rulemaking at the same level as very progressive countries like Singapore, the UK or Japan. It’s a sign of regulatory innovation and deeper international cooperation.” 

Edited by Tony Barrett/vm/ts