Credit Suisse Says EU Enlargement Good For Switzerland

by Ulrika Lomas, Tax-News.com, Brussels

05 June 2002

An Economic Briefing published by Credit Suisse entitled “The European Union - the big push eastward”, says Switzerland stands to benefit greatly from increased trade with eastern European nations. Currently, 61% of Switzerland's external trade is with the 15 countries of the EU, and a mere 2.5% with the ten prospective new members of the Union, although the figure has doubled in the last ten years. Main trading partners to the east are Poland, Hungary and the Czech Republic. But Swiss direct investment in these countries, at a mere 1% of total Swiss external investment, doesn't match up to the trading volumes.

Trade with Eastern Europe has proved to be more robust than western-directed trade, having continued to increase even during the problem year of 2001. But Switzerland also faces the challenge of increased competition from imports from the region. The most important Swiss exports to Eastern Europe are chemicals, machinery and electronics.

Once enlargement takes place, Swiss trade relations with the new entrants, currently dealt with under ex-EFTA rules, will be governed by the Free Trade Agreement signed between Switzerland and the EU in 1972, and of course also by the famous seven 'bilaterals' which are just now coming into effect, and by any further bilateral agreements which result from the tough negotiations now developing between Brussels and Switzerland over the EU's proposed information-sharing regime.

One special case is 'free movement of people', which was negotiated with each EU member state individually, as well as with Brussels, so that different transition periods apply for different countries. It's unclear whether Switzerland would have the opportunity to negotiate in a similar way with each new member; and in any case a new referendum might be required over the issue.

Whatever the difficulties, Switzerland is well-placed geographically, linguistically and financially to benefit from the opening up of Eastern Europe to western trade and investment.

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