Swiss talks promise new trade opportunities
Sandy Begbie: enthusiastic
UK Business and Trade Secretary Kemi Badenoch is to begin talks on a trading agreement with Switzerland, updating a 50-year-old deal that pre-dates the digital age.
Switzerland is the UK’s 10th largest trading partner and in 2020 Scottish exports to the country amounted to more than over £700 million, 30% of which was in financial and insurance services.
However, the current UK-Switzerland free trade agreement is based on an EU-Swiss deal before the advent of the home computer or the internet – and does not cover services, investment, digital or data.
With most of the UK’s services exports to Switzerland delivered electronically – almost 69% in 2020 – both sides are keen to rectify this in upcoming talks.
Sandy Begbie, chief executive at Scottish Financial Enterprise, said: “The prospect of increased trade and cooperation with Switzerland presents major opportunities for Scotland’s financial services industry.
“We are enthusiastic to see financial and related professional services at the centre of the agreement.”
Switzerland’s demand for imports is expected to grow in real terms by 78% by 2050. The new deal could lower tariffs on UK exports to Switzerland, which could reduce annual duties for UK businesses by around £7.4 million.
The FTA will benefit the more than 14,000 UK businesses which already export goods to Switzerland, 86% of which are small and medium-sized enterprises (SMEs), by creating simpler trade rules for products of origin, customs procedures and digitisation.
Larbert-based bus manufacturer Alexander Dennis supplies low-emissions buses to Switzerland, and says that an FTA with Switzerland could open up further opportunities.
The company’s fleet sales director, Matthew Lawrence, said: “We supplied Swiss national operator PostAuto with a fleet of low-emissions Alexander Dennis double decker buses.
“A free-trade agreement between the UK and Switzerland would benefit us and our Swiss customers in streamlining the supply of spare parts, while also opening up business opportunities for further British-built buses.”
Ms Badenoch will launch talks on the new, modernised deal with her counterpart Federal Councillor Guy Parmelin in Bern. She will also go to the SIX Swiss Exchange, Europe’s 3rd biggest stock exchange and one of the industry’s most respected post-trade service providers. “
Whilst at SIX she will visit the innovation accelerator Tenity where she will meet startups already operational in the UK including Enterprise Bot, Xworks, SmartPurse and Jrny.
CEO of SIX, Jos Dijsselhof, said: “The new UK-Switzerland free trade agreement’s shared ambition hold also great importance for the financial sector, fostering cooperation, trade, and mobility.
“SIX welcomes this move, supporting open and international capital markets, promoting healthy exchange and competition between the two major financial centres in Switzerland and the UK.”
- Switzerland is a key investment partner to the UK with the total stock of Swiss foreign direct investment in sectors such as textiles, chemicals, manufacturing and financial services worth £74 billion in 2021, while UK investment into Switzerland was worth £52 billion.
- A new FTA would look to boost this even further, helping facilitate more investment by Swiss companies into communities around the UK and seeking preferential terms for UK investors in Switzerland.
- Switzerland ranks as the UK’s 2nd largest trading partner in Trade in Professional and Business Services. In 2022, total PBS trade with Switzerland amounted to £9.2 billion (39% of total UK services trade with Switzerland).
- In 2020 (the latest year for which statistics are available) Scotland exported over £700 million of services to Switzerland, 30% of which was in financial and insurance services.
- In 2022 Scotland imported £264 million and exported £222 million in goods.
- Talks will also look to provide long-term certainty on business travel, particularly for services firms, helping firms in a wide range of sectors, from life sciences to tech to share expertise, form vital partnerships and expand into new markets.
- The UK will also seek to cut remaining tariffs on UK exports such as red meat, chocolate and baked goods, which are currently very high. Switzerland imports over £5.5bn a year of agri-goods under product lines where tariffs still apply for the UK.