Draft:Proposed Switzerland-United States Free Trade Agreement

Initial discussions about a free trade agreement between Switzerland and the United States have been ongoing since the early 2000s. The closest the two countries have become to beginning such negotiations was in 2006, though these attempts were suspended, mainly because of the resistance from the Swiss agricultural sector. In 2018, Swiss trade representatives revived the proposal by attracting interest from some U.S. officials such as Ambassador Edward McMullen. Since then, formal negotiations have yet to be initiated though the topic continues to comes up in economic policy discussions, though some Swiss commentators believe the Biden administration is less receptive than its predecessor.

Procedure
Under Swiss law, if a sufficient number of signatures are collected by registered voters within a certain timeframe after both houses of parliament pass the respective deal, any free trade agreements are put to the vote in a nationwide referendum. In a such referendum, a simple majority of nationwide cast votes ("Yes" votes) in favor of the agreement is required for it to come into force. Of the dozens of agreements Switzerland has signed with other countries, only one has ever gone through review by referendum, namely the agreement with Indonesia in 2021: 51.6% of voters ended up approving it.

In the United States, a simple majority in both houses of Congress is sufficient.

Current economic relations
Switzerland and the United States have long been key economic partners, particularly in terms of foreign direct investment and foreign portfolio investment. U.S. foreign direct investment (FDI) in Switzerland (stock) was $212.2 billion in 2022, whereas Switzerland's FDI in the United States (stock) was $307.2 billion in 2022.

On trade, Switzerland has a surplus with the U.S: In 2022, Switzerland imported goods worth 37.5 billion (just over 40 billion in US Dollars as per the average 2022 exchange rate) Swiss Francs from the US and exported goods worth CHF 62.4 billion Swiss Francs (worth around 65 billion US dollars as per the average 2022 exchange rate), making the U.S. the leading export destination for goods from Switzerland. U.S. official trade figures show a trade deficit with Switzerland since 2013. Pharmaceuticals are the primary goods imported by the US from Switzerland, while Switzerland's largest imports from the U.S. are chemical end-products and active chemical agents.

Analysis
A study released by independent Swiss free-market liberal think tank Avenir Suisse and endorsed by the U.S. Embassy in Switzerland concluded that a trade agreement between Switzerland and the U.S. would net positively affect both. Within five years, trade in goods could increase by more than $14 billion and more than 40,000 new jobs could be created – 27,500 of them in the United States and 13,500 in Switzerland.

A more critical commentator at Swiss economic magazine Handelszeitung stated in November 2018 that, despite the fact that 15% of Swiss non-agricultural exports go to the United States, the customs hurdles to reaching the US market are considerable: "Swiss [non-agricultural] companies had to hand over 300 million francs in customs duties to the US authorities in 2017.The savings that the [non-agricultural sectors] of the Swiss economy could achieve through an agreement are eight times higher than that of their U.S. counterparts. This discrepancy is largely due to the fact that three-quarters of U.S. exports to Switzerland already carry very little if any customs duty. In the estimation of the article's author, Switzerland would need to incorporate the agricultural sector into any agreement to make it worthwhile for the U.S.

Two scholars at the University of St Gallen believe a Swiss-U.S. free trade agreement would need to go beyond customs duty and toll reduction and "...include the unification of industry standards, procedures and regulations" for different sectors.

One Swiss sector that is projected to be positively affected by a Swiss-US FTA is that of pharmaceuticals.

Support
U.S. advocates of such an agreement include the conservative Heritage Foundation, which sees "Switzerland's strong commitment to free-market capitalism" as showing that it is "an ideal partner for an America seeking to reassert and deepen its own commitment to economic freedom." Other U.S. supporters include the Foundation for Economic Education. The U.S-based American Swiss Foundation also supports a free trade agreement.

In Switzerland, all major center to right-wing parties support beginning negotiations for a Free Trade Agreement with the United States. This includes the nationalist right-wing Swiss People's Party, Switzerland's largest political party.

Opposition
The Green Party of Switzerland declared its opposition to a free-trade agreement with the U.S in 2005, citing concerns about importation of American genetically modified meat and dairy products.

Swiss farmer's Associations generally oppose the trade deal on the basis of agricultural food safety regulations purportedly being much less stringent in the United States than in Switzerland.

Developments
In 2006, Switzerland and the United States established the joint Trade and Investment Cooperation Forum (TICF).

Switzerland planned beginning negotiations for an agreement with then-U.S. President Trump due to the latter's attendance at the 2019 World Economic Forum in Davos. Per Reuters, President Trump affirmed his support for a trade deal in talks with Swiss president Ueli Maurer in 2019.

Current U.S. Ambassador to Switzerland, Scott Miller, revealed in a November 2023 interview with economic magazine Finanz und Wirtschaft that the two countries were close to an agreement around 2019-2020, but that Swiss negotiators wanted to exempt the agricultural sector from the treaty, which the U.S. side opposed.