When talk turns to the benefits to Switzerland of the bilateral treaties with the EU, Swiss exports are usually the focal point. Without the bilaterals, it is said, access to the EU market would have been far more difficult as Swiss companies would have been fighting with one hand tied behind their backs. So the bilaterals, especially the agreement on trade barriers, were of fundamental – almost existential – importance for Swiss exporters. That may be true for some companies and sectors. But it does not apply to business as a whole, based on a detailed study by the KOF forecasting centre at Switzerland’s Federal Institute of Technology in Zurich and incorporated into Avenir Suisee’s new report “Bilaterals – what else?”

No impact on export volumes

For a start, excluding pharmaceuticals, only about 28 per cent of Swiss exports to the EU are actually covered by the trade barriers deal, with the machine tools industry particularly important here. Secondly, the statistics suggest the accord had no effect on export volumes of the products concerned. Indeed, exports of goods covered by the bilateral deal rose by just 50 per cent between 1988 and 2013. By contrast, exports of other products doubled in the same period. Along with that came a clear expansion in the range of products exported. However, it does seem, at least indirectly, that Swiss exports to non EU countries did benefit from the deal. The introduction of EU-accepted standards, or ones considered in line with its norms, boost exports to developing and fast industrialising countries.

Importe beleben den Wettbewerb

Lorries at the Gotthard: greater competition thanks to the bilateral treaties has helped consumers. Picture: Wikimedia Commons.

Matters look different for imports. Exaggerating slightly, it can be said that the biggest effect of the bilateral treaties was not on exports, but imports. Goods – both products covered by the trade deal and those outside it – imported from the EU doubled. Based on the KOF’s work, about half the import growth from EU countries was attributable to the trade facilitation deal. Today, almost exactly three quarters of Swiss imports come from the EU. To a much lesser extent, imports from non EU states also rose – for example, because (non Swiss) companies, that had previously sold goods to the EU, used harmonisation to expand to Switzerland too. These different developments were also reflected in the current account. Switzerland’s trade deficit vis a vis the EU rose slightly in the period under review, and especially after 1992. At the same time, the surplus with non EU states climbed notably as Swiss exporters expanded into markets beyond the EU, while imports from those areas rose only slightly.

Greater domestic competition

The fact that imports gained more from the bilaterals than exports comes as unwelcome news to Swiss protectionists. They will see it as evidence the bilateral approach by no means helped the Swiss alone, but also benefited all EU exporters to Switzerland. For any proponent of competition, however, that is excellent news. Switzerland’s domestic market was for years protected from full competition by dissimilar product rules to the EU. Harmonisation and simplified homologation eroded that. Consumers – meaning everyone in Switzerland – have been the winners. They profited from greater product choice and possibly from lower prices thanks to the pressure of new imports. Given that inadequate competition has been a longstanding bugbear of the Swiss domestic market, this benefit of bilateralism can hardly be praised enough. It has brought not just greater competition, but also reforms and liberalising pressures that are most welcome – indeed necessary – for the economy, but which – sadly – continue to be met with scant enthusiasm politically.