Swiss business unfazed by US election outcome

Watches are the main Swiss export product to the US Keystone

The results of last week's mid-term elections in the United States are unlikely to have a major impact on Swiss companies.

Experts say they have observed an increasing interest by Swiss firms in the US market over the past six months.

For Mario Brossi from Location Switzerland, the country’s foreign investment agency in North America, there are only two possible scenarios and neither of them will affect the Swiss business community.

If President Bush and the Democrats who won control of the House of Representatives and the Senates in last Tuesday’s elections, don’t cooperate no change is to be expected until the presidential elections in November 2008, according to Brossi.

“If both sides find common ground their policy is likely to focus on Iraq, immigration and internal security,” he told the Swiss news agency.

Martin Naville, chief executive of the Swiss-American Chamber of Commerce, foresees only very limited changes for Swiss firms even if the Democrats succeeded in introducing more protectionist measures.

“The main Swiss exports are watches, hi-tech products and financial services and Switzerland is not an important market for US companies looking for outsourcing opportunities,” says Naville.

Renewing relations

Only indirectly would the Swiss economy be affected by a general downturn and free trade restrictions. However, developing countries and emerging markets such as China and Mexico could face serious setbacks, said Naville.

A “complete paralysis” is the more likely scenario for the next two years and Swiss businesses would stand to lose out.

“Europeans could even benefit if Bush has to be more bipartisan,” he said.

In the same vein Martin von Walterskirchen, director of the Swiss Business Hub – United States, doesn’t exclude the US and Europe renewing their close ties.

“The image of the US will improve in Switzerland and as a result, Swiss firms feel more inclined to do business with a partner they like,” he said.

Von Walterskirchen points out that there has been an increasing interest in the US which was triggered more than anything by the economic upswing in Switzerland.

Clouds

In August the Swiss American Chamber of Commerce warned of clouds in bilateral economic relations.

Swiss investment in the US slowed down considerably in recent years and negotiations on a free trade agreement were dashed earlier this year.

However, bilateral trade reached new records in 2005. The European Union remains Switzerland’s main trading partner.

swissinfo with agencies

Key facts

Switzerland is the second largest foreign investor in the US manufacturing sector.
Swiss companies have created nearly half a million high-value jobs in the US.
The US invests over $101 billion in Switzerland – more than in South America and the Middle East combined.
Switzerland is the 8th largest buyer of US private services and purchases more US goods than Russia and Saudi Arabia together.
650 US companies employ 67,000 people in Switzerland.

Swiss-US economic ties

From the Swiss perspective:

Swiss exports grew 14% last year to the record level of SFr16.1 billion.
The US is the second largest export market (10.7%) behind Germany (20%) but ahead of France (8.5%), Italy (8.2% and Britain (5.1%).
Foreign direct investments (FDI) of Swiss companies in the US remain high with about 34% of all FDI, compared with 5.4% to Germany.

From the US perspective:

Exports of US goods to Switzerland increased more than 16% to $10.7 billion – making Switzerland the 17th largest export market.
US exports to Switzerland are four times those of US exports to Austria and larger than US exports to Saudi Arabia and Russia combined.