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Proposed Switzerland-United States Free Trade Agreement

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Initial discussions about a free trade agreement between Switzerland and the United States have been ongoing since the early 2000s.[1] [2] The closest the two countries have become to formally beginning such negotiations was in 2006, though these attempts were suspended, mainly because of the resistance from the Swiss agricultural sector.[3] In 2018, Swiss trade representatives revived the proposal by attracting interest from some U.S. officials such as Ambassador Edward McMullen.[4] Since then, formal negotiations have yet to be initiated though the topic continues to comes up in economic policy discussions,[5] though some Swiss commentators believe the Biden administration is less receptive than its predecessor.[6][7]

Procedure

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Under Swiss law, if a sufficient number of signatures are collected by registered voters within a certain timeframe after both houses of parliament pass the respective deal, any free trade agreements are put to the vote in a nationwide referendum. In a such referendum, a simple majority of nationwide cast votes ("Yes" votes) in favor of the agreement is required for it to come into force.[8]Of the dozens of agreements Switzerland has signed with other countries, only one has ever gone through review by referendum, namely the agreement with Indonesia in 2021: 51.6% of voters ended up approving it. [9]

In the United States, a simple majority in both houses of Congress is sufficient.[10]

Economic relations

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Switzerland and the United States have long been key economic partners, particularly in terms of foreign direct investment and foreign portfolio investment. U.S. foreign direct investment (FDI) in Switzerland (stock) was $212.2 billion in 2022, whereas Switzerland's FDI in the United States (stock) was $307.2 billion in 2022.[11]

On trade, Switzerland has a surplus with the U.S: In 2022, Switzerland imported goods worth 37.5 billion (just over 40 billion in US Dollars as per the average 2022 exchange rate) Swiss Francs from the US and exported goods worth CHF 62.4 billion Swiss Francs (worth around 65 billion US dollars as per the average 2022 exchange rate), making the U.S. the leading export destination for goods from Switzerland.[12] U.S. official trade figures show a trade deficit with Switzerland since 2013.[13] Pharmaceuticals are the primary goods imported by the US from Switzerland, while Switzerland's largest imports from the U.S. are chemical end-products and active chemical agents.[14]

Analysis

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A study released by independent Swiss free-market liberal think tank Avenir Suisse and endorsed by the U.S. Embassy in Switzerland concluded that a trade agreement between Switzerland and the U.S. would net positively affect both. Within five years, trade in goods could increase by more than $14 billion and more than 40,000 new jobs could be created – 27,500 of them in the United States and 13,500 in Switzerland.[15][14]

A more critical commentator at Swiss economic magazine Handelszeitung stated in November 2018 that, despite the fact that 15% of Swiss non-agricultural exports go to the United States, the customs hurdles to reaching the US market are considerable: "Swiss [non-agricultural] companies had to hand over 300 million francs in customs duties to the US authorities in 2017.The savings that the [non-agricultural sectors] of the Swiss economy could achieve through an agreement are eight times higher than that of their U.S. counterparts. This discrepancy is largely due to the fact that three-quarters of U.S. exports to Switzerland already carry very little if any customs duty. In the estimation of the article's author, Switzerland would need to incorporate the agricultural sector into any agreement to make it worthwhile for the U.S.[16]

Two scholars at the University of St Gallen believe a Swiss-U.S. free trade agreement would need to go beyond customs duty and toll reduction and "...include the unification of industry standards, procedures and regulations" for different sectors.[17]

One Swiss sector that is projected to be positively affected by a Swiss-US FTA is that of pharmaceuticals.[18]

Advocacy

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Support

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U.S. advocates of such an agreement include the conservative Heritage Foundation, which sees "Switzerland's strong commitment to free-market capitalism" as showing that it is "an ideal partner for an America seeking to reassert and deepen its own commitment to economic freedom."[19] Other U.S. supporters include the Foundation for Economic Education.[20] The U.S-based American Swiss Foundation also supports a free trade agreement. [21]

In Switzerland, all major center to right-wing parties support beginning negotiations for a Free Trade Agreement with the United States.[22] This includes the nationalist right-wing Swiss People's Party, Switzerland's largest political party.[23]

Opposition

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The Green Party of Switzerland declared its opposition to a free-trade agreement with the U.S in 2005, citing concerns about importation of American genetically modified meat and dairy products.[24]

Swiss farmer's Associations generally oppose the trade deal on the basis of agricultural food safety regulations purportedly being much less stringent in the United States than in Switzerland.[25]

Developments

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In 2006, Switzerland and the United States established the joint Trade and Investment Cooperation Forum (TICF).[26]

Switzerland planned beginning negotiations for an agreement with then-U.S. President Trump due to the latter's attendance at the 2019 World Economic Forum in Davos.[27] Per Reuters, President Trump affirmed his support for a trade deal in talks with Swiss president Ueli Maurer in 2019.[28]

Current U.S. Ambassador to Switzerland, Scott Miller, revealed in a November 2023 interview with economic magazine Finanz und Wirtschaft that the two countries were close to an agreement around 2019-2020, but that Swiss negotiators wanted to exempt the agricultural sector from the treaty, which the U.S. side opposed.[29]

References

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  1. ^ Hufbauer, Gary Clyde (February 2006). THE SHAPE OF A SWISS-US FREE TRADE AGREEMENT. Peterson Institute for International Economics. pp. 3–10. ISBN 9780881323856.{{cite book}}: CS1 maint: date and year (link)
  2. ^ "Toward a US-Swiss Trade Agreement". Competitive Enterprise Institute. 2024-02-07. Retrieved 2024-06-26.
  3. ^ swissinfo.ch, S. W. I. (2018-09-24). "Swiss want to restart free trade deal talks with the US". SWI swissinfo.ch. Retrieved 2024-06-19.
  4. ^ DeVore, Veronica (2018-12-20). "'Swiss farmers could make a lot more money selling to the US'". SWI swissinfo.ch. Retrieved 2024-06-20.
  5. ^ swissinfo.ch, S. W. I. (2021-09-03). "Pence pushes for US-Swiss free-trade deal". SWI swissinfo.ch. Retrieved 2024-06-20.
  6. ^ "Biden beerdigt US-Freihandelspläne mit der Schweiz". Tages-Anzeiger (in German). 2021-10-04. Retrieved 2024-06-20.
  7. ^ Eisenring, Christoph (2020-11-08). ""Mit Biden als Präsident wird es viel schwieriger werden, der Schweizer Position in Washington Gehör zu verschaffen"". Neue Zürcher Zeitung (in Swiss High German). ISSN 0376-6829. Retrieved 2024-06-20.
  8. ^ "Bundesrat verzichtet auf vereinfachte Genehmigung von Freihandelsabkommen". www.admin.ch. Retrieved 2024-07-10.
  9. ^ Chandrasekhar, Anand (2021-03-07). "Swiss free trade deal with Indonesia narrowly survives referendum". SWI swissinfo.ch. Retrieved 2024-07-10.
  10. ^ "TRADE PROMOTION AUTHORITY ANNOTATED" (PDF). February 2007. Retrieved 14 July 2024.{{cite web}}: CS1 maint: url-status (link)
  11. ^ "Switzerland". United States Trade Representative. Retrieved 2024-07-06.
  12. ^ "Bilateral relations Switzerland–United States of America". www.eda.admin.ch. Retrieved 2024-06-19.
  13. ^ Bureau, US Census. "International Trade". www.census.gov. Retrieved 2024-06-20. {{cite web}}: |last= has generic name (help)
  14. ^ a b "Time for a Free Trade Agreement between Switzerland and the US". Avenir Suisse. Retrieved 2024-06-19.
  15. ^ Switzerland, U. S. Mission (2019-08-23). "Swiss Study Finds Swiss-U.S. Bilateral Trade Is a Win-Win Situation". U.S. Embassy in Switzerland and Liechtenstein. Retrieved 2024-06-19.
  16. ^ "USA-Schweiz: Warum ein Freihandelsabkommen eine Illusion ist". Handelszeitung (in Swiss High German). Retrieved 2024-06-19.
  17. ^ Newsroom (2018-01-23). "Freihandelsabkommen mit den USA – Eine verpasste Chance für die Schweiz?". HSG Startseite - Universität St.Gallen (in German). Retrieved 2024-07-09. {{cite web}}: |last= has generic name (help)
  18. ^ "Why Switzerland Needs a US FTA to Stop it 'Falling Through the Cracks'". PharmaBoardroom. Retrieved 2024-06-20.
  19. ^ Feulner, Edwin J. "It's Time for a Free Trade Agreement With Switzerland". The Heritage Foundation. Retrieved 2024-06-19.
  20. ^ Kim, Anthony B. (27 October 2018). "5 Reasons a U.S.-Swiss Trade Agreement Should Be Pursued". Foundation for Economic Education. Retrieved 19 June 2024.
  21. ^ "Speech Details | American Swiss Foundation". www.americanswiss.org. Retrieved 2024-07-04.
  22. ^ "Nationalrat stimmt für Verhandlungen über Freihandelsabkommen mit den USA". Neue Zürcher Zeitung (in Swiss High German). 2019-06-20. ISSN 0376-6829. Retrieved 2024-06-19.
  23. ^ "Schweizer Weltoffenheit als Trumpf". SVP Schweiz (in German). Retrieved 2024-06-19.
  24. ^ Engler, Fabienne (2005-08-30). "Nein zu Freihandelsabkommen Schweiz-USA". GRÜNE Schweiz (in German). Retrieved 2024-06-19.
  25. ^ Zaugg, Sven; Studer, Ruedi; Menzato, Nico (17 May 2019). "Freihandel mit den USA – Bauern und Grüne sind skeptisch". Blick.
  26. ^ "The Federal Council approves the US-Swiss Trade and Investment Cooperation Forum". www.admin.ch. Retrieved 2024-06-21.
  27. ^ swissinfo.ch, S. W. I. (2019-01-06). "Swiss-US free trade deal on WEF agenda". SWI swissinfo.ch. Retrieved 2024-06-19.
  28. ^ Shalal, Andrea (May 16, 2019). "Trump open to talks on U.S.-Swiss free trade deal: Swiss president". Reuters. Retrieved 19 June 2024.
  29. ^ ""In der Schweiz liegen gewaltige russische Vermögen in verschleierten Strukturen"". Finanz und Wirtschaft (in German). 2023-11-23. Retrieved 2024-06-19.
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