Welcome to the Embassy of Switzerland in Washington, D.C. My colleagues and I are excited to have you here.
The United States and President Trump are very present in the Swiss media every day. However, the media coverage hardly allows us to obtain a reliable appreciation of what is going on in the United States. Therefore I commend you for coming to the U.S. and participating in the SelectUSA Summit, where you will get firsthand information from people with insights. This event at the Swiss Embassy has the same purpose: it should provide you with concise and reliable information.
Switzerland is a major trading partner of and investor in the United States, and the U.S. is the most important investor in Switzerland, as well as the second trading partner after our neighbor Germany. Martin Naville will certainly provide you with more comprehensive data in a moment.
The Swiss economic footprint in the U.S. is an untold success story. Untold in the U.S., but in Switzerland as well. That is why the Swiss Embassy has published the data on Swiss investment state-by-state and other statistics on bilateral trade relations. People are always impressed when they learn about it.
Earlier this year when President Trump met with President Berset and a delegation from the Swiss Federal Council at the World Economic Forum in Davos, it came as no surprise that economic ties proved to be the most important part of the discussion. President Trump recognized the quality of this relationship.
The economic exchange between Switzerland and the United States is balanced if goods and services are included in the equation. Switzerland is not a currency manipulator despite having been placed on a watch list in 2016 under the previous administration. It is understood in Washington that the Swiss National Bank’s policy is not aimed at weakening the Swiss franc in order to favor exports, but is a response to the monetary policy of the ECB.
When I assumed my position as Ambassador of Switzerland to the United States four years ago, financial and tax issues were very much at the center of the Swiss Embassy’s work. The Letter of Intent signed with the Department of Justice allowed financial institutions to deal with the past. But its implementation was at the very beginning, and little did we know then how the negotiations between the U.S. authorities and the individual banks would work out. Fortunately, we have gone far and only a handful of financial institutions have their records still open.
Despite the large array of topics in bilateral relations, trade issues are the dominating topic these days. In March, President Trump imposed tariffs on steel (25%) and aluminum (10%). Some trading partners were granted a grace period since there were ongoing trade negotiations. In the meantime, the tariffs are applicable to almost all countries, including the EU and NAFTA, with not even a handful of exceptions.
I do not see the U.S. raising trade barriers as an objective per se, as is often reported in the media. The current administration, however, does seem to be serious about a number of professed goals. Let me name what may arguably be the three most important: (1) reducing the United States’ trade deficit, (2) reshoring some of the industries lost, and (3) better defending its interests in the protection of intellectual property rights in order to keep its advanced position in technology, research and development. The critical attitude toward the WTO is, in my view, not driven by principled thinking against multilateralism, but because WTO rules seem to tie the United States’ hands when it comes to rearranging global trade flows; and they are not powerful enough or sufficiently developed to protect U.S. interests, namely in the areas of IPRs and digital trade.
Immediately after the announcement of the new tariffs on steel and aluminum, Deputy USTR Gerrish informed me and outlined to me how country exemption requests can be submitted. To protect the interests of Swiss companies and the Swiss economy, Switzerland subsequently submitted a request. The answer is still pending, as it is for other countries. In the meantime, some 16,000 product-specific exemption requests have been filed with the Department of Commerce. Such requests must be submitted either by American importers or customers or by subsidiaries of Swiss companies in the U.S. The Department of Commerce is now processing an enormous number of requests, and those will even increase with EU companies submitting their requests as well.
During the recent visit of President of the Council of States Karin Keller Sutter, trade issues were an important topic from a different angle. Several conversation partners raised the issue of a free trade agreement between our two countries. To be clear: there is no Swiss government position on this. However, I personally believe that it is worthwhile looking at this issue now. A U.S.-Swiss free trade agreement is, in my view, more promising and beneficial than waiting for the TTIP to be concluded and then trying to join it. We do not know when and whether the TTIP will resume and whether the EU is open to Switzerland joining the agreement (that being said, we have always assumed that the U.S. would be positive). Eventually a U.S.-Swiss FTA would probably face less resistance from the Swiss agriculture lobby than Switzerland joining the TTIP because under the TTIP there would be much more competition for Swiss agriculture than under a bilateral FTA.
Tax reform, together with the deregulation agenda, is a major success of the Trump administration. Lowering the corporate tax rate from 35% to 20% is beneficial for both U.S. companies and non-U.S. companies, including subsidiaries of Swiss companies. Fortunately, the Border Adjustment Tax was not included in the final version of the tax code. We joined other countries in lobbying in Washington for that outcome.
Focusing on Switzerland, the U.S. tax reform makes the U.S. competitive again and now it is even more important to pass our own corporate Tax Reform 17 currently under consideration in the Swiss Parliament.
Our contacts and daily exchanges with the new administration are positive, in particular with Ed McMullen, President Trump’s Ambassador to Switzerland, and his team. Since early last year, there have been meetings at all levels with a positive businesslike atmosphere.
Switzerland might be affected by the new administration’s measures and might have different positions on an array of issues, but Switzerland has never been a target of the new administration.
The Embassy of Switzerland in Washington and the other Swiss representations in the United States would be glad to support you in your endeavors. Please do not hesitate to contact us if need be.
I would like to finish on a positive note and with an announcement. The Swiss Consulate General in Chicago, which served as the Business Hub for the U.S. for a long time, was closed five years ago. That was a mistake and has weakened the Swiss presence in the Midwest and U.S. Earlier this year, Federal Councillor Cassis decided to reopen it in 2019. Many stakeholders, including the Swiss-American Chamber of Commerce and Switzerland Global Enterprise, were supportive in this matter. The persistence eventually bore fruit by contributing toward further strengthening the economic relations between our two countries.
Check against delivery.