The USA is now Switzerland’s biggest export market and in 2019 Switzerland exported more to the US than to France, Italy, the UK and Austria combined and twice as much as Brazil, Russia, India and China combined. However, as Martin Naville of the American Chamber of Commerce in Switzerland recently told PharmaBoardroom, this relationship needs to be strengthened by an FTA between the two countries, especially if a new deal between the US and the EU is struck.
The Swiss-US trading relationship has flourished in recent years. For Naville, this is a repudiation of the idea that US President Donald Trump is against foreign trade. “Switzerland has done even better during the Trump years,” he proclaims.
“The country has seen exports grow by more than ten percent on average every year since the Clinton Administration, 16 years with Democrats in the White House, 12 years with the Republicans. The Swiss-American relationship in terms of trade and foreign direct investment (FDI) is growing extremely well in both directions. Basically, every Swiss company with the ability and opportunity to invest in America is doing so.”
Although Switzerland and the USA entered into exploratory talks regarding a free trade agreement (FTA) 14 years ago, the discussion broke down over the question of the highly protected Swiss agriculture sector. To this day, Switzerland remains the only country in the world to refuse to negotiate an FTA with the US.
The risk is that the moment the EU starts to negotiate with the USA, Switzerland will look on from the outside. A Swiss-US FTA would act as an insurance to stop us falling between the cracks
However, with Brexit necessitating the UK drawing up new deals with its trading partners and the potential for a realignment of the relationship between the EU and the US, Naville feels that the time is ripe for Switzerland and the US to enter into fresh FTA discussions.
“There is a widely expressed willingness to discuss a Swiss-US FTA on both sides,” he notes. “In the US, the relevant government entity USTR has been very stretched working on the USMCA, the US-Japan FTA, country embargoes and other issues. Now that the USMCA and Japan FTA are done, there could be a window of opportunity to get a US-Switzerland trade deal done.”
In terms of why such a deal would be beneficial for Switzerland and its pharma-centric economy, Naville explains that “Firstly, if nobody else had an FTA, it would only be a “nice to have” for Switzerland. The problem is the relative competitiveness. The largest trading partners of the US such as Canada, Mexico, Japan, South Korea, and Brazil have FTAs. Switzerland does not and we need one to prevent ever being at a competitive disadvantage relative to our biggest competitor in the US, the EU. The UK will most probably get some kind of trade agreement with the US because of the special relationship between the two, as will the EU, especially if Trump gets re-elected.”
He continued, “The risk is that the moment the EU starts to negotiate with the USA, Switzerland will look on from the outside. A Swiss-US FTA would act as an insurance to stop us falling between the cracks. The issue of tariffs is not so serious anymore, but an FTA would be beneficial for small and medium-sized companies in removing non-tariff barriers, aligning categories, processes, and standards, and reducing complexity.”
Naville is confident that this important deal can be sealed, noting a number of senior US officials who are positively predisposed to Switzerland, which, despite being a relatively small country, represents the seventh-largest foreign direct investor in the US. Germany, with an economy ten times the size of Switzerland’s, has a similar level of FDI in the US.
He stated, “In general, the goodwill from the US towards Switzerland has been enormous. For example, last year US Secretary of State Mike Pompeo stayed in Switzerland for three days before going to Germany for four hours. Other key leaders such as Secretary of the Treasury Steven Mnuchin, Commerce Secretary Wilbur Ross and Secretary of Education Betsy de Vos have also visited. Last year, Swiss President Maurer visited US President Trump in the White House, the first such visit in history! Trump himself loves Switzerland and has frequently skied here. And with US Ambassador to Switzerland and Liechtenstein, Edward T. McMullen, jr., we are lucky to have a real businessman with very strong ties into the White House as a bridge between our two countries.”
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