Roger Williams explores Switzerland to discover how this unique nation can inspire benefits in the British trade.
Watches, clocks and cheese, while part of the popular image of Switzerland, do not define this famously neutral country.
Land-locked, Switzerland has borders with Austria, France, Germany, Italy and Lichtenstein and has enjoyed close bilateral treaties with the EU, enabling access to the EU’s market.
A new draft treaty with the EU has placed these arrangements in jeopardy but more of that later.
Switzerland is a small country, only some eight and a half million in population and 16,000 square miles in area. The main centres of this population are Zurich, Geneva, Basel and Bern where one in ten Swiss live and work.
Swiss, German and French are almost universally spoken with many residents competent in the local language as well as Italian and English.
The Swiss economy is around $680 billion, about a quarter of the UK’s with 75 per cent in the service sector and only one per cent from agriculture. It peaked in size in 2014 and has shrunk then grown, then shrunk and grown again since then.
Switzerland’s exports, goods and services, represent two-thirds of Swiss economic output including a significant percentage for re-exports.
Main products outside of banking and investment management, are precious metals and gems (26 per cent of exports); pharmaceuticals (24 per cent); machinery, computers, clocks and watches (15 per cent).
These exports are sent to other European countries which account for nearly half of all exports; a third to Asia and about 15 per cent to the USA. Germany is the top destination for Swiss exports followed closely by the USA – the UK comes in eighth place.
Switzerland can trace its roots as an independent country to the mid-17th century although its neutrality dates back further to its protestant reformation over 100 years earlier when it broke from Rome. The country is organised into Cantons of which there are 26. Laws and bureaucracy can vary from Canton to Canton.
Switzerland is not a member of the EU, the European Economic Area or the Eurozone, but it is a founding member of EFTA and is in the Schengen Area and the European Single Market through bilateral treaties.
These treaties are part of a patchwork quilt of more than 100 separate agreements which, under pressure from the EU, have been reworked and included in a new draft treaty.
The Swiss are being threatened with expulsion from the Schengen Area and the European Single Market unless they approve the draft treaty, which took over four years to ‘complete’.
The EU has said that the agreement is final and will not be re-opened. Does this sound familiar? The Swiss have said it must be put out for public consultation. The EU have imposed a June deadline for acceptance of the new treaty.
The main sticking point for the Swiss is national sovereignty. The judicial supervision imposed by the treaty brings with it the possibility of “foreign judges” in the form of the European Court of Justice, something outlawed by Switzerland’s founding charter.
The EU is unwilling to accept Switzerland’s wage and worker protection laws which mitigate heavily in favour of Swiss jobs for Swiss workers.
The EU is threatening denial of Single Market access which, amongst other products and services, includes denial of recognition of the Swiss Stock Exchange which enables Swiss stocks and shares to be traded on EU based exchanges and platforms.
It means that the Swiss must make changes in legislation to mirror EU legislation over migration, social security regulation, and many other key policy areas.
Pieter Cleppe from Open Europe in Brussels summarised the position clearly as follows: “They were given a six-month ultimatum in December. If the EU carries out its threat, Switzerland will see its market access revoked.”
The parallels with Brexit are all too obvious and it has been stated in the Swiss parliament that: “This is a carbon copy of the UK transition arrangement. We end up becoming a passive member of the EU without voting rights.”
The member of parliament expanded on the similarities to say that the text allowed the ECJ to muscle into sensitive areas covering tax codes, farming, healthcare, and Canton’s state-aid policies.
A leading Swiss businessman said: “We shouldn’t allow ourselves to be rushed and we shouldn’t be blackmailed… The EU could learn a thing or two from Switzerland’s flexible labour markets.”
This impasse comes at a time when a referendum challenges the Swiss gun culture which has deep roots. The Swiss have compulsory military service. Each service person can keep the firearm with which they served when their tour of duty finishes.
Additionally, all citizens without criminal records can own a firearm and this applies to most foreign nationals living in the country. Substantial increased demand for guns for sport and self-protection has been evidenced in the press since attacks in Paris. Buying a firearm in Switzerland is not particularly complicated.
However, enough signatures have been collected and a referendum on gun ownership is scheduled for May this year. Despite this and the pressure applied by the EU to change, many commentators believe change in laws on gun ownership is unlikely.
The Swiss market for field sports products is difficult to attack. Hammerli and SIG are resident manufacturers and RUAG is headquartered in Switzerland.
There are spinoffs of SIG and government-owned facilities. So, despite a ‘gun culture’ and although there is ease of purchase and a preponderance of wealthy citizens, the market is crowded and relatively small.
A distributor is essential and the proximity of Germany, Austria and Italy means that a German, Austrian or Italian distributor is possibly the easiest and likely most effective option, perhaps in that order.
Partnership with one of these and an offer of premium brands is a definite advantage.
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