The Bilaterals I (1999) complemented the Free Trade Agreement of 1972 by means of a gradual controlled mutual opening of markets. This put the relations between these two important trading partners on a broader footing. Both partners benefited from the dismantling of barriers to trade. Eased trade conditions and stronger competition resulted in increased growth, leading to greater job security as well as job creation.
The positive economic impact of these sector agreements is recognised today. Various studies on the bilateral agreements (incl. the 2015 SECO report on the economic consequences of the discontinuation of Bilateral Agreements I) show that a discontinuation of these agreements would result in much weaker economic growth in Switzerland. There would also be other drawbacks, such as a loss of legal certainty, and Switzerland would be less able to attract investment and skills. Particularly important for the economy are the free movement of persons, the removal of technical barriers to trade and public procurement.
The importance of the bilateral agreements has further increased as a result of their extension to the Eastern European growth markets of the new EU states.
The economic advantages can be summed up as follows:
- Swiss companies now find new business opportunities in markets that were formerly closed to them, notably with regard to certain agricultural products, civil aviation, overland transport and public procurement. It is now easier for Swiss companies active in these sectors to penetrate the European markets and to benefit from the potential economies of scale. For example, Swiss suppliers are able to compete under the same conditions as their European competitors in public procurement markets, including for municipal utility services, waste disposal and transport infrastructure – sectors where Central and Eastern Europe has a great need to modernise and in which the EU will continue to provide substantial financial assistance in the years to come.
- Foreign suppliers have also gained free access to the Swiss market, which has tended to increase competition in the sectors concerned, providing incentives for increased productivity.
- Direct savings have been possible in relation to the already liberalised trade in goods due to the simplification of rules for product approval (dismantling technical barriers to trade). Testing whether products destined for the entire European market comply with the regulations in force (conformity assessment) is now carried out by only one certification body, either in Switzerland or in the EU.
- The free movement of persons has had the biggest economic impact, making it easier to transfer Swiss staff to positions in the EU states, and also to recruit workers for the Swiss labour market. Thanks to the Agreement on the Free Movement of Persons, the Swiss labour market effectively includes the entire area of the EU and ETFA. Conditions that simplify the international mobility of labour have resulted in a more efficient use of resources, making it easier for Swiss businesses to hire suitably qualified staff. This reduces the risk of staff shortages and excessive wage levels. This is all the more important since, for demographic reasons, the Swiss work force is likely to diminish in the medium term. The new arrangement will help raise productivity and gross domestic product (GDP), keeping the Swiss labour market attractive over the long term.
The second series of bilateral agreements, Bilateral Agreements II (2004), extended cooperation to important policy areas such as internal security, asylum, the environment and cultural affairs. Only the Agreement on Processed Agricultural Products, which facilitates exports for the food industry, is a market liberalisation measure comparable to those of Bilateral Agreements I. The Bilateral Agreements II do, however, cover economic interests in certain areas, such as:
- the interests of the financial sector (AEOI, efforts to combat fraud)
- strengthening of Switzerland’s position as a tourist destination with the introduction of the Schengen visa
- facilitation of cross-border traffic by removing the need for systematic border controls (Schengen)
- tax advantages for internationally active Swiss companies, which receive tax relief through the adoption of the parent-subsidiary directive (AEOI)