Expert explains how Switzerland brings the US tariffs away

Balz Hösly finds: The relationship between Switzerland and the European Union is centrally in coping with the current crisis. And he says how the Swiss economy remains successful despite turbulence.

31 percent inches to imports from Switzerland – how did you react when you heard the announcement by President Trump?

Balz Hösly: I was shocked over the height. It was not surprising that tariffs are imposed. Switzerland has no special position in the United States. However, it seems important to me that you look at the entire export balance of our country: ten percent go to the United States – nothing more. High tariffs are extremely uncomfortable for the exporters concerned, but more than ten percent of the export performance is not affected.

Various Swiss politicians and business leaders trusted that Trump likes Switzerland and it doesn’t get that bad.

These were air locks – reality shows a different picture. Trump does not want to make a special regulation for Switzerland because he would create a prejudicism for all his politics.

To person

Andrea Zahler / CH Media

Balz Hösly is the president of the location marketer Greater Zurich Area. The lawyer used to sit for the FDP on the Zurich cantonal council. Hösly also presides the Hallenstadion AG and is a member of the board of the Zurich Chamber of Commerce. (Be.)

How should Switzerland react?

The reaction was very good. Switzerland is subject to America in every strength test. The State Secretary for Economic Affairs immediately traveled to the United States to accept the conversation. The Federal President Keller-Sutter has now had a telephone conversation with the American president. Switzerland must try to propose President Trump a deal. However, there is a problem.

Which?

The scope for action is limited. Switzerland has no tariffs on industrial products. So we cannot offer a customs reduction. It is also not an option not to export to the USA.

To count the planned investments of Swiss companies together and present Trump – is that a good plan?

In theory, this results in a deal situation. The Swiss industry could say that over the next ten years we are investing 100 billion in the United States. The question then is how the state should guarantee this. It is not the one who makes investments. But it could be the starting point for negotiations.

What is the goal? To bring the tariff completely away – or to achieve a reduction?

Many American economists find that the European market should not be weakened. An ideal goal is a zero interest policy between the United States and the EU, as Elon Musk stimulated. It would be attractive for Switzerland if we could sail with a deal between Washington and Brussels.

Some politicians and commentators find: With the enemy attitude of the United States to Switzerland, the new contract package with the EU gain in importance. Do you share the assessment?

I would not speak of enemy attitude, but we have to see that Switzerland’s special position is a dream compared to the United States. And blocking can be observed in the world. Here the USA, there, Russia and China, in between Europe. In Russia and China, the right of the stronger applies – and increasingly in America.

The only block in which the right of the rule of law still applies is Europe. Switzerland as a small country is dependent on clear legal framework conditions, which are also met. Switzerland has only one reliable partner: Europe. And one thing is noticeable in the contracts with the EU.

What?

Switzerland has been able to negotiate special conditions with the EU that no other country has reached. The special conditions affect exactly the economic areas that are the most important for Switzerland. Switzerland should not miss this opportunity. The EU has no interest and probably no capacities to keep negotiations with Switzerland in the event of a failure of the contracts. Second, you shouldn’t forget China.

How do you mean that?

Because of the difficulties with the United States, the Chinese economy will flood with its export products due to the difficulties with the United States. Switzerland also threatens to get into a defensive situation.

It is therefore good if we can lean on the EU’s internal market. Yes, Switzerland had to do concessions in the negotiations with Brussels. But they are manageable. Switzerland lives from the fact that it can trade with other countries in peace. The door to the EU is wide open. It is not in the interest of the country’s interest.

The EU contracts mean a restriction of their sovereignty for Switzerland.

We can vote on the contract. We can tell him. We implement every further development of law exclusively according to our democratic rules of the game. If we don’t want to participate in one point, the EU can decide countermeasures.

This is nothing unusual between contractual partners. What Switzerland has to find is the inner sovereignty: we have to consistently take advantage of the scope when implementing the further EU law. There can also be a disagreement with Brussels. Switzerland has to say goodbye to the preceding obedience and also exhaust international contracts. We don’t like to do that – but we have to learn it.

Swiss companies are confronted with uncertainty regarding the further relationship with the EU, now the American tariffs are added – is there a weighty disadvantage?

In international business, uncertainty is poison. Every entrepreneurial activity has a basic risk. However, it should be calculable and not become too big. For example, the United States has a very strict law on product liability.

Some companies do not export to America because this risk is too great for them. Therefore, the trade barriers between the Swiss production location and the European sales market must not become too large. Because companies could come to the conclusion: To minimize the risks, it is better to produce in the EU. This would damage the Swiss workplace.

With his tariffs, Donald Trump wants to ensure that foreign companies in the United States produce. Will the Swiss companies do more?

The pharmaceutical industry is already producing considerably in the United States. Stadler Rail also has production facilities in America. Minimizing risks such as high tariffs are one reason for this. Switzerland has to make its framework conditions for manufacturing companies well. This maintains companies from taking other locations into account.

What are the main factors?

I see five important points that make up the attractiveness of the Swiss market: specialists and talents that are interesting for technology companies and highly specialized companies. Free movement with the EU makes a decisive contribution here. Secondly, the seamless access to the EU’s large internal market is important. Third, the tax burden in Switzerland is moderate above everything, both for companies and individuals.

And fourth?

The high quality of life. Many talented people feel comfortable here because of the security, the leisure activities, the good schools. After all, we have a modern service industry that can support international companies all over the world. These include, for example, management consultants, financial services institutes, large insurance companies. The combination of the five factors make the location outstanding in Europe and globally interesting.

Now there is a problem with immigration. It is high, the living space in Switzerland is scarce.

The housing problem is a challenge – but for every successful metropolitan region. In Switzerland, we went too far in regulating housing construction, generally in the regulations in the building system. For example, construction activities are increasingly inhibited in the city of Zurich. But when you talk about immigration, you shouldn’t throw all movements into a pot.

Namely?

There is work immigration, immigration in the asylum area, illegal immigration and family reunification. Immigration from the EU takes place because Swiss companies are urgently looking for specialists. So we want to attract specialists from Europe. The EU would rather keep it and would probably not be unhappy if Switzerland calls the protective clause that is included in the new contract.

The clause calls for serious economic problems. The clause is a firmer.

Should we call the clause if there are no problems? You have to remain realistic. Take a look at the SVP’s 10 million initiative. If there are 9,999,999 people in Switzerland, who will decide who can no longer come into the country? Do the workers have to stay outside that help the farmers? The nurses? People in the hospitality industry or in the high-tech industry? This is a completely unsolved problem. When we terminate the free movement of people with the EU, we saw on the AST, which contributes significantly to the economic success of Switzerland.

The business associations have been saying for years that Switzerland has to better use the domestic potential of workers. But apparently that doesn’t happen.

Our prosperity has led to a certain amount of relaxation. I am a lawyer and find that there are increasingly young lawyers who find a workload of 80 percent sufficient. Our prosperity makes it difficult to fully exploit the domestic potential.

You have underlined the importance of the EU contract package. If it is rejected by the voters, Switzerland can conclude free trade agreements with as many countries as possible.

Ah yes? A free trade agreement only offers protection against tariffs. However, there are further hurdles in export: the approval regulations, the so -called non -tariff trade barriers.

If you are allowed to sell a teddy bear in Switzerland, it does not mean that you can do so in other countries – because the dye in the teddy may not be approved there. Fulfilling admission criteria can be complex and expensive for a company. Brexit should be a warning to us.

What do you want to do?

In the UK, thousands of small companies go bankrupt because they can no longer afford the additional costs and bureaucracy for export to the EU. The decoupling from the internal market of the European Union also has serious consequences for Switzerland.

What will be economical in Switzerland in the coming years?

The margins are falling in many industries. And yet we have an unbroken trend towards over -regulation and an expansion of state administrations. Switzerland is sick in the same hospital as the EU.

The legislative template for Blockchain/DLT is such an inhibition, which jeopardizes the successful so -called crypto Valley in Zug and Zurich. We have to deal with regulating in stock. I see a difference between the United States and Europe: the United States allows innovation and then regulate that we in Europe want to issue regulations in advance. This chokes innovation.