An efficient infrastructure, labour market flexibility and lean administrative procedures make Switzerland an attractive business location and enhance its international competitiveness. However, economic policy is challenged by increasing internationalisation of production processes and by continuing structural change. Moreover, it is becoming increasingly difficult to reconcile certain domestic concerns with international agreements, which are a prerequisite for access to foreign markets by Swiss companies. In 2015, this was evident, in particular, in relation to the new constitutional amendment on immigration and the bilateral agreements between Switzerland and the European Union.
European Economic Integration
Preparatory work towards implementing the new constitutional provisions regarding immigration dominated Switzerland’s European policy in the year under review. Studies show that the discontinuation of certain Swiss-EU Bilateral Agreements would substantially reduce Switzerland’s attraction as a business location and that a comprehensive free trade agreement with the EU as a substitute would not meet the needs of the Swiss economy. These findings strengthen the resolve of the Swiss Government to pursue the approach of bilateral agreements as the basis for Switzerland’s relations with the EU.
Based on the 2004 Agreement between the European Community and the Swiss Confederation on taxation of savings income, which was amended in 2015, automatic exchange of information in accordance with the OECD standard is to be introduced between Switzerland and the EU from 2018.
WTO and Free Trade Agreements
The tenth Ministerial Conference of the World Trade Organization (WTO) held in Nairobi in December 2015 approved an extension of the Information Technology Agreement («ITA II»). The Members of the WTO also agreed to discontinue export subsidies on agricultural products after a transitional period of five years. The Federal Council will, consulting the economic sectors concerned, replace existing export contributions for processed agricultural products by WTO conforming measures.
In 2015, Switzerland continued to expand its network of free trade agreements. A new agreement with Bosnia and Herzegovina entered into force, and Guatemala’s Protocol of Accession to the EFTA-Central America FTA was signed. The existing free trade agreements with Albania and with Serbia were supplemented with new provisions on trade and sustainable development. Negotiations on free trade agreements with Vietnam and with Malaysia were continued, and free trade talks started with the Philippines and with Georgia. As soon as the possible impact of the comprehensive free trade agreement under negotiation between the EU and the USA (TTIP) on the competitiveness of Switzerland’s economy can be assessed, the Federal Council will decide on further steps to be taken.
Economic Development Cooperation
In the area of economic development cooperation, the importance of policy coherence is increasing – i.e. the need to gear the various government policies towards the objectives of sustainable development. This principle is also a cornerstone of the 2030 Agenda for Sustainable Development. The Federal Council will address the goals of the 2030 Agenda, which must now be put in more concrete terms, in the Report to the Parliament on Switzerland’s International Cooperation 2017-2020. Switzerland made considerable contributions, too, to the establishment of the Asian Infrastructure Investment Bank and to the implementation of the Green Climate Fund.