The US and Switzerland could swiftly forge a trade agreement to greatly benefit the people of both countries and, equally as important, lead the way for trade agreements worldwide, a new Competitive Enterprise Institute report argues.
“As sister republics, the United States and Switzerland have partnered for centuries. With shared cultural and economic underpinnings, we are poised to help ourselves while demonstrating to the world that free trade among free people can be based on mutual recognition,” said report co-author Kent Lassman, CEI president. “Consumers in both countries would gain access to new products and services at lower prices, while producers would gain access to new markets.”
“Too many trade agreements are stuck in years-long stalemates due to disputes over countless side-issues unrelated to trade,” explained report co-author Ryan Young, CEI senior economist. “The US and Switzerland could set a precedent with a fast-track trade agreement focused only on trade.”
Today’s free trade agreements (FTAs) are longer and more complex than in previous decades and routinely include trade-unrelated issues like environmental provisions, labor and regulatory standards, and intellectual property. Each trade-unrelated provision is an additional failure point in negotiations and can add hours, days, or even weeks and months of haggling.
NAFTA got bogged down in the 1990s over side-issues, and the USMCA that replaced it put side-provisions into the main agreement that slowed negotiations and ballooned the final agreement page count to more than 2,000. Such complicated, time-consuming negotiations discourage new deals, as well. A US-European Union trade deal, for example, is likely years away at best.
America is already Switzerland’s largest non-European trading partner. A trade agreement would see Americans gain better access to high-value Swiss exports such as watches, pharmaceuticals, textiles, and higher-end food products such as cheese and chocolate. US manufacturers, already Switzerland’s largest source of capital equipment, would gain even deeper access to the Swiss market.
The keystone of a US-Swiss FTA should be mutual recognition of regulations. If a product or service meets one partner country’s regulatory standards, it should get automatic approval in the other country. The agreement should also include select trade-related policies, such as tariff relief.
“The mega-agreement approach to FTAs is failing,” said Young. “A simpler, trade-only approach can revive stalled agreements around the world. A US-Swiss FTA can set a positive example that could open opportunities for millions of people around the world.”
View the report, Toward a US-Swiss Trade Agreement, by Ryan Young and Kent Lassman