2023-05-15 19:11:26
Great Britain is looking to close ranks with Switzerland
After Brexit, the British are looking for allies. What the talks are regarding and why they might alienate the EU.
Will Switzerland drink tea with Great Britain in the future? The United Kingdom wants to move closer to Switzerland and is preparing for a new free trade agreement.
Foto: Richard Baker (In Pictures via Getty Images)
Great Britain wants to intensify its relations with Switzerland following leaving the EU and negotiate a new free trade agreement. A visit by British Trade Minister Kemi Badenoch to Federal Councilor Guy Parmelin in Zurich and Bern on Monday marked the start. Talks will formally begin in London in a week.
Why are there talks between Great Britain and Switzerland at all?
Until Brexit, trade between Switzerland and Great Britain was regulated by bilateral agreements with the EU. But with the exit from the EU, the British had to re-establish their relations with Switzerland. To this end, both sides concluded a provisional trade agreement that has been in force since the beginning of 2021.
The initiative for the talks now comes primarily from the British. Because more than three years following Brexit the country is still struggling with the economic consequences. Great Britain now sees a partner in Switzerland. A close alliance between the two countries – for example on the financial market – might represent a counterweight to the EU.
What do the negotiations mean for Switzerland’s relationship with the EU?
Caricature: Felix Schaad
In view of the already difficult relations with the EU, the negotiations with Great Britain are delicate. Because the alliance might cause resentment in Brussels – and ultimately harm Switzerland.
While Great Britain made a conscious decision to leave, Switzerland is dependent on a partnership with the EU in many respects. This is still by far the most important trading partner for Switzerland.
In addition, some sectors of the economy such as the energy or pharmaceutical industries for a supply of medicines and electricity depend on close cooperation with the EU. Exports to the UK, on the other hand, have declined in recent years and play a relatively minor role.
Federal Councilor Parmelin also addressed this conflict of objectives during a media briefing on Monday evening: “The Federal Council’s main goal is to stabilize relations with the EU. The world is moving – it’s not the same world as it was two or three years ago.”
Parmelin may have alluded to the fact that the Federal Council ended negotiations on a framework agreement with the EU two years ago. Talks regarding the next agreement suffered another setback last week when it became known that the Swiss chief negotiator Livia Leu her resignation has given.
“Now we want to discuss with other countries,” said the Economics Minister. There is now “a unique opportunity” to negotiate a free trade agreement with Great Britain.
What is the trade deal regarding? For English tea and short bread?
English Breakfast Tea is one of the well-known export hits from Great Britain. However, the conversations are mainly regarding topics that are difficult to digest.
Foto: Alamy Stock Photo
When you think of products from Great Britain, the first thing that comes to mind is English Breakfast Tea. But there are comparatively few products from Great Britain that can be found in Swiss retail. At Coop, for example, it is mainly cheese, fish, cookies, chips, beer and spirits, according to a Coop spokesman. Well-known brands include Tyrrell’s chips, Walker’s Guetsli and cheddar cheese.
Great Britain hopes to lower tariffs on imports of red meat, baked goods and even chocolate into Switzerland. According to the UK, it supplies agricultural products worth over 5.5 billion pounds (6.2 billion Swiss francs) to Switzerland every year.
… it’s all regarding the finances
Rather, the focus of the talks is on the financial industry. London and Zurich are both important European financial centres. Great Britain also has a lively start-up scene. There are many innovative young financial companies, so-called fintechs. It is attractive for Swiss start-ups if they can also gain a foothold in Great Britain without too much difficulty.
In turn, banks and stock exchanges also benefit from easier market access for companies and lively trading. The London Stock Exchange remains the largest stock exchange in Europe, followed by Paris, Zurich and Frankfurt. During her stay in Switzerland, the British Minister for Trade visited the Swiss stock exchange SIX.
British Trade Minister Badenoch during her visit to the Swiss stock exchange SIX in Zurich.
Photo: Twitter
What does Switzerland trade with Great Britain?
By far the most important trading product in freight transport has recently been precious metals and precious stones. Here, too, the reason for this is the strong financial centres, between which a corresponding number of valuables (gold bars, etc.) are traded.
A large part of the gold sold worldwide is processed in refineries in Switzerland and exported once more – especially to China and India. Much of this gold comes from the UK, home to the world’s major precious metals exchanges. However, the trade in valuables fluctuates greatly from year to year. From a Swiss perspective, Great Britain is also an important sales market for luxury watches. Whether these areas are also part of the talks remained unclear for the time being.
… and the industry?
Great Britain is also an important sales market for the Swiss machine, electrical and metal industries. Accordingly, the industry is hoping for improvements here in the talks. The Swissmem association is pushing for the recognition of standards and certifications and for Swiss industrial companies to be able to sell their products more easily to the public sector in Great Britain. Specifically, this involves energy and water supply companies as well as the railway sector.
But Switzerland also buys industrial goods from Great Britain – for example buses: in 2017 and 2018 the British manufacturer of double-decker buses, Alexander Dennis, delivered nineteen double-decker Postbuses to eastern Switzerland. According to a manager of the bus manufacturer Alexander Dennis, a free trade agreement would simplify the supply of spare parts for the buses.
The British company Alexander Dennis has delivered double-decker Postbus buses. The vehicles were inaugurated in 2017 in Engelburg in the canton of St. Gallen.
Photo: Gian Ehrenzeller (Keystone)
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