2024-01-10 09:32:24
Federal Council
Bern, 10.01.2024 – On January 10, 2024, the Federal Council adopted the report on foreign economic policy 2023. To navigate an environment marked by geopolitical tensions, Switzerland continues to rely on an open and diversified foreign economic policy.
Geopolitical tensions between economic powers continued to increase during the year under review. Russian military aggression in Ukraine and, previously, the COVID-19 pandemic, have demonstrated the importance of having resilient international value chains. Many states have reassessed their interdependencies. By carefully choosing their partner states and relaunching certain sectors of activity, they wish to reduce economic and security risks in critical sectors.
With this in mind, as well as that of decarbonization, economic powers are increasing industrial policy initiatives with vast subsidy programs. These initiatives can have both positive and negative effects on certain parts of the Swiss economy, because, as a highly specialized economy and characterized by a relatively small domestic market, Switzerland is closely intertwined in international value chains.
Given current geopolitical tensions, Switzerland, like other states, is seeking to position itself as an independent actor among established economic powers. To do this, it relies on proven instruments to maintain and create favorable framework conditions for the economy. These aim in particular at great economic openness, regulations conducive to competition, great availability of human capital (training, research and innovation), physical capital and knowledge capital, healthy public finances, an attractive tax policy, freedom of enterprise, high legal security, a flexible labor market and efficient infrastructure.
Switzerland is taking various measures to promote its economic position, such as the removal of customs duties on industrial products, which came into force on January 1, 2024. It is also committed at the international level by working towards stable relations with the EU and to the conclusion of new bilateral and multilateral instruments. It is also seeking to expand its possibilities for cooperation with its closest trading partners, in particular to ensure secure value chains.
In the past, Switzerland has decided not to apply a “vertical industrial policy”, i.e. focused on specific sectors. In addition to carrying a high risk of market distortions, poor incentives and policy failures, this type of policy can be expensive for taxpayers and often has mixed results. Furthermore, Switzerland does not have a sufficiently large internal market nor the economic structures necessary to implement industrial policy measures.
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Communication DEFR
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Federal Council
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