Swiss Downplay Chances Of Free Trade Deal With US

by Ulrika Lomas, Tax-News.com, Brussels

20 January 2006

The chances of the United States and Switzerland reaching a Free Trade Agreement are receding as both sides continue to disagree over the treatment of agriculture.

This was the basic message relayed by Swiss Economics Minister Joseph Deiss as he addressed reporters in Bern, following a Cabinet level meeting focusing on recent free trade discussions between the United States and Switzerland, which appear to have ended without any clear progress having been made.

The major stumbling block continues to be the issue of agriculture. Whilst the United States is pushing for a global agreement covering all sectors, the Swiss are holding out for differentiated treatment for certain agricultural products.

Deiss is due to meet the US trade representative, Rob Portman, at the end of January at the World Economic Forum meeting in Davos to decide whether to proceed with formal negotiations. However, time is limited; the US Trade Promotion Authority (TPA) expires in June 2007, and without that authority, Swiss business groups, who strongly support an FTA with the US, warn it would be almost impossible for a free trade pact to be successfully negotiated and ratified.

In theory, the economies of both countries stand to gain much from the removal of tariff and other barriers to trade. According to the Swiss-American Chamber of Commerce, the US ranks as the second largest recipient country for Swiss exports, with its market totalling more than 10% of Swiss exports, while US exports to Switzerland exceed those to India and Russia combined. Switzerland is also the 8th largest buyer of US private sector services.

Furthermore, the US is the most important destination for Swiss direct investments abroad, making Switzerland the 6th largest foreign direct investor in the US. Conversely, Switzerland is the 4th most important destination for US direct investments, making the US the most important foreign investor in Switzerland.

Some opponents of a free trade deal fear that the US may insist on information exchange provisions that would further erode banking secrecy. However economiesuisse, the Swiss Business Federation, has argued that banking confidentiality has "nothing to do in practice" with a free trade agreement.

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