Could direct democracy trip up Swiss trade deals?

From Switzerland to the world: containers at the Port of Switzerland on the Rhine river in Basel. Gaetan Bally / Keystone

As global trade rules fray, countries are scrambling to shore up export markets and diversify partners. For highly globalised, export-dependent Switzerland, there could be an added complication: the ballot box.

The clock is ticking. By March 31, Swiss authorities hope to finalise a deal with Washington capping US tariffs at 15%. Yet even if they meet the deadline, and parliament signs off on the agreement, a delay looms – Swiss voters could yet force a referendum. Given public hostility to US President Donald Trump and his tariffs, and the razor-thin acceptance of a trade deal with Indonesia in 2021, approval would be far from certain.

Whether it will come to a ballot remains unclear. Cédric Wermuth, the leader of the left-wing Social Democrats, told the Neue Zürcher Zeitung in January that he would consider launching a referendum – which requires 50,000 signatures – “if necessary”. But for now, with no final agreement on the table, and US politics volatile, opposition is largely rhetorical.

Yet what is clear is that the US talks are just one of several trade fronts facing scrutiny and a possible vote in Switzerland in the near future. A deal with South American trade bloc Mercosur awaits ratification; an updated agreement with China is also in the works. At a time of geopolitical shifts and fragmenting trade rules, is popular involvement a source of legitimacy, or a brake on economic agility?

Legal shortcut

For years, Swiss authorities leaned towards speed. Labelling trade deals as “standard agreements”, they even managed to avoid public votes altogether. Since such deals all tend to be similar in aim and design – regardless of the trade partner – they need not be subject to an “optional referendum”, the government argued. Parliament approved them; citizens didn’t.

The practice endured, despite the fact that it “infringed the constitution”, says Louis Gebistorf from the Centre for Democracy Studies Aarau. There was little public outcry over what many saw as a legal technicality, while the government defended the approach with arguments of efficiency and predictability. Parliamentary approval, Gebistorf says, still gave a “relatively high” degree of democratic legitimacy.

Giving voters the option

Not everybody was convinced. In 2014, a trade deal with China sparked debates about human rights as well as questions about public involvement in ratification. And a few years later, when the government moved to codify the “standard agreement” approach in law, pushback from political and civil society groups led to a U-turn. Ever since, all new trade deals have been open to being challenged to referendum – a “positive development from a democratic point of view”, says Gebistorf.

The shift has also made Switzerland an outlier. Elsewhere, public involvement in trade policy is mostly confined to lobbying, protesting, or passively accepting executive – or even corrupt – decisions. In a rare case when direct democracy did get involved at the EU level, it failed: a 2014 European Citizens’ Initiative against EU deals with the US and Canada collected three million signatures before being rejected on technical grounds.

>> Read more about how direct democracy is having problems at the European level in our recent analysis:

The referendum’s practical impact on Swiss trade policy is more nuanced. Groups focused on sustainability or human rights welcome the broadened participation possibility, says Isolda Agazzi of Alliance Sud, an umbrella organisation for Swiss aid NGOs. Just one deal – the EFTA-Indonesia free trade agreement in 2021 – has actually been taken to a public vote; but the mere possibility of a referendum challenge has made authorities more attentive to civil society concerns, she says.

The tight outcome of the Indonesia vote – 51.6% approved it – was also a clear sign that public acceptance can’t be taken for granted, Agazzi adds.

Negotiated behind closed doors

Another question is whether the prospect of voter ratification damages the Swiss negotiating position. Charlotte Sieber-Gasser, a researcher at Geneva’s Graduate Institute, argues such fears are overstated. According to her, Swiss officials working on the Indonesia deal even said the prospect of a referendum strengthened their hand, giving them leverage to secure environmental concessions. The same dynamic applies in ongoing talks with China, where the Swiss are pushing for a human rights chapter in an updated agreement, she adds.

Rather, Sieber-Gasser has other democratic concerns. The big issue is that while parliament and voters can sign off on trade deals, their involvement amounts more to a veto option rather than to real participation, she reckons. They can say yes or no, but they can’t make substantial changes to agreements that are largely hammered out behind closed doors before being presented as a final – and inevitable – package.

The decisive moment comes early on, when officials draft the negotiating mandate, Sieber-Gasser explains. And as long as politicians, civil society and voters aren’t more involved at this early stage, the final seal of approval is “window dressing”. Meanwhile, if citizens feel pressure to accept deals that they don’t really like, this can damage trust in the government, she says – or even “hollow out democratic rights”.

>> How do referendums and people’s initiatives in Switzerland actually work? Read and watch more in our explainer:

Slower doesn’t mean worse

Michele Salvi, from the liberal think tank Avenir Suisse, disagrees. The Swiss procedure – including the right to referendum – means business and civil society concerns are already very present in trade, he argues. Rather, he worries that the referendum threat could even encourage excessive caution: negotiators might focus more on surviving a domestic ballot rather than securing “the best possible outcome”, he says.

Still, Salvi is not keen to restrict democratic involvement, even if it can lead to situations that a free-trade-friendly think tank might not like: for example, the recent European Parliament vote to delay the ratification of the EU’s trade deal with Mercosur, which sparked criticism by those who say Europe – like Switzerland – needs to pull together and find new trade alliances in the face of US pressure.

That’s just democracy, Salvi says. And in Switzerland, there’s no alternative: the country’s sometimes slow decision-making – which some worry is a weakness in fast-moving times – is built into a system which has proven its worth in the long run, he says.

As for the US deal, slowness could even be a strategy. For Sieber-Gasser, the more time goes on, the greater the chances that Trump’s plans will have changed, or that he’ll no longer be in office. Swiss negotiators may use the ratification process to “play for time”, she says. But the strategy isn’t without risk: in January, Trump raised tariffs on South Korean imports from 15% to 25% – after accusing Seoul of failing to ratify a trade deal with Washington fast enough.

Edited by Benjamin von Wyl/ts