Impact of Global Value Added Chains on Switzerland

Press release, 14.01.2015

Today, the Federal Council adopted the 2014 Foreign Economic Policy Report. The report’s feature topic is the impact of global value added chains on the Swiss economy. In the year under review, the WTO Trade Facilitation Agreement was adopted and a new free trade agreement between Switzerland and China, in particular, entered into force. Switzerland continued cooperation with developing countries promoting sustainable economic development and strengthening the administrative capacity of governmental players

The feature topic illustrates how global value added chains have a significant impact on economic competitiveness and trade and investment flows of industrial countries. From the perspective of an efficiency-oriented economy the objective is that a location specializes on steps in the production process for which it has comparative advantages, while further upstream or downstream steps in the process are carried out in other countries. Therefore, end products contain intermediate products and components originating in an increasing number of different customs territories, involving a corresponding frequency of cross-border movement of components in the course of a production process. For Switzerland, which is heavily integrated in world trade, this creates an increased need to work, within the framework of its foreign economic policy, towards a continued reduction of trade barriers around the world. At the national level, special attention will have to be paid to maintaining the flexibility of the labour market, the promotion of innovation, education, the easing of administrative burdens and to the opening up of services markets.

WTO, bilateral agreements with the EU, and free trade agreements
In the year under review, the WTO Trade Facilitation Agreement was adopted as part of the Doha Round agenda. This paves the way for the future implementation of other decisions passed by the WTO Ministerial Conference at the end of 2013 in Bali, relating to specific agricultural and development issues. For the remaining Doha issues, which include controversial subjects such as market access for industrial products, services and agricultural products, a work programme will have to be developed. Switzerland will continue to participate in the plurilateral negotiations on a services agreement, on IT products and on environmental goods and services.

With the EU an agreement on cooperation between the competition authorities entered into force. In the field of taxation the Federal Council adopted a negotiating mandate on the introduction of the automatic exchange of information with the EU, and a joint understanding with the EU Member States on corporate taxation was signed. In May Switzerland and the EU began negotiations on an institutional agreement with the objective of securing and developing the "bilateral approach". This allowed for the continuation of the negotiations in particular on an electricity agreement, on the participation in the European Emissions Trading System and on topics in the area of food safety and public health. However, against the background of the new Article 121a on immigration of the Federal Constitution, the EU is making the signing of new agreements conditional upon a solution being found to the free movement of persons. In October, the Federal Council approved a draft negotiating mandate in this regard.

In addition to the bilateral free trade agreement between Switzerland and China, free trade agreements between the EFTA-States and the States of the Gulf Cooperation Council, and Costa Rica and Panama entered into force. Negotiations on a free trade agreement between EFTA and Guatemala were concluded, similar negotiations with Indonesia and with Vietnam continued and began with Malaysia. The updating and deepening of existing free trade agreements also gained importance, e.g. relating to the agreement between EFTA and Turkey. Switzerland further concluded a bilateral investment protection agreement with Georgia. Switzerland's recent agreements on free trade and on investment protection include provisions relating to the consistency with sustainability objectives. The Federal Council pursues sustainability objectives in Switzerland's entire relationship with its partner countries, including within the framework of dialogue fora and cooperation projects.

Economic development cooperation
The implementation of economic and trade policy measures in the context of the "Message" by the Federal Council on "International Cooperation 2013-2016" showed positive interim results. The bilateral and multilateral projects in developing countries focussed on the mobilization of their own financial resources and the responsible management thereof, on cooperation between governmental players and the private sector, as well as on the strengthening of management capabilities of public utilities. Switzerland established a negotiating mandate with regard to the determination of the global objectives for sustainable development ("post-2015" Agenda) and participated in the related international debate. Switzerland also made a financial contribution towards the newly-formed Green Climate Fund.

Embargo measures
Swiss embargo measures focussed on the developments in the Ukraine and on Switzerland's measures to avoid circumvention of related international sanctions. The sanctions against Iran were suspended on a selective basis as a result of international negotiations on Iran's nuclear programme.

The feature topic and the executive summary of the report are available in English on the Internet.


Executive Summary of the Foreign Economic Policy Report 2014(pdf, 102kb)
Feature topic of the Foreign Economic Policy Report 2014(pdf, 542kb)


Address for enquiries:

Christian Etter, Ambassador, Federal Council Delegate for Trade Agreements,
Member of the Executive Board, SECO, Tel. 058 464 08 62

Hervé Lohr, Head of the International Economic Law Division,
Foreign Economic Affairs Directorate,
SECO, Tel. 058 464 08 40


Publisher:

The Federal Council
Federal Department of Economic Affairs, Education and Research