SWITZERLAND

In many ways, Switzerland is a key partner for Germany in terms of values and interests, particularly in the area of trade and innovation. The economies of both countries are closely intertwined: Germany has been Switzerland’s most important trading partner with more than 22 percent of foreign trade. Conversely, Switzerland is also a key economic partner for Germany: in 2020, it ranked eighth among Germany’s foreign trade partners (making it the fourth-largest non-EU country in this ranking behind the U.S., China and the United Kingdom).

The total value of Swiss direct investment in Germany amounted to 62.8 billion Swiss francs at the end of 2019. Swiss companies employed approximately 260,000 people in Germany in 2019. German direct investment in Switzerland amounted to 51.7 billion Swiss francs at the end of 2019. In the same year, German companies employed approximately 123,000 people in Switzerland. The 300,000 German nationals living in Switzerland in 2019 constituted the second biggest group of foreign nationals in the country behind the Italians Find more information here: https://www.seco.admin.ch/ seco/de/home/Aussenwirtschaftspolitik_Wirtschaft- liche_Zusammenarbeit/Wirtschaftsbeziehungen/laende- rinformationen/europa—zentralasien.html (20/01/2020). . 

The partnership in the area of innovation is similarly important. Switzerland is one of the most innovative countries in the world. For Switzerland, Germany is by far the most important partner for research and innovation (especially in information and communication technologies, health sciences and nanotechnology). Much of this cooperation happens within the EU research framework programme, Horizon 2020: association with the research framework programme, however, has been suspended – which is the quite controversial consequence of the failure of talks on a Swiss-EU framework agreement to manage mutual relations.

At the global level, the similar regulatory approach (market economy, strong export orientation, innovation potential) and the compatible ideas regarding the role and reform of the World Trade Organization (WTO) are just as important as the figures mentioned above.

Basically, there is a high willingness in both countries to work together. This is illustrated, among other things, by the numerous meetings that happen at all government levels: there are annual meetings between the Swiss State Secretariat for Education, Research and Innovation (SBFI) and the German Federal Ministry of Education and Research (BMBF).

There is some tension in the debate on the modalities of cooperation, such as the free movement of German and European workers in Switzerland. A referendum was held in September 2020 on the “termination initiative“ introduced by the national-conservative, Eurosceptical Swiss People’s Party (SVP), the acceptance of which would have meant an end to the free movement of people. The initiative was clearly rejected by a 61,7% majority of voters. A serious crisis in the bilateral relations with Germany and the EU was thus averted. However, in May 2021, the Swiss Federal Council officially terminated the talks about a joint framework agreement with the EU after 7 years, before the Swiss parliament or the public were given the chance to vote on the agreement. An opportunity had thus been missed to put the cooperation that had been based on bilateral agreements on a basis promising more long-term stability. 

What is now looming is the gradual drifting apart of these two judicial areas, which is already becoming apparent in several economic sectors (electricity market, medical engineering, etc.). The exclusion from the EU research programme Horizon 2020 has been met with criticism in Switzerland. This criticism is to some extent shared by some representatives of the German research community and government (i.a. by former Minister of Research Anja Karliczek and by the current Minister of Research Bettina Stark-Watzinger).While Switzerland, generally, demonstrates a high willingness to cooperate, the country wavers between pragmatism in economic policy and very profound reservations about possible constraints regarding its own sovereignty.

A close network of partnerships links Switzerland and Germany at the federal level and also between the federal states, cantons (Euregio Bodensee, RegioTriRhena, Internationale Bodenseekonferenz), and municipalities.

Especially in the area of trade, imagining German-Swiss relations without considering the European level would be impossible. Switzerland has had extensive access to the EU single market since 1999 due to seven bilateral agreements. According to a study by the Bertelsmann Foundation, Switzerland is the country that benefits most from the single markethttps://www.bertelsmann-stiftung.de/fileadmin/files/ BSt/Publikationen/GrauePublikationen/EZ_Study_Single- Market.pdf (08/01/2020).. What impact the failure of the framework agreement will have on bilateral relations is still an open question. This is already becoming apparent in various sectors. This is why the business community is exerting growing pressure on the Swiss government to submit a clear alternative plan to Brussels on the future of relations after the unilateral abandonment of negotiations. However, key political parties have not come to an agreement yet on what such a plan could look like. 

Switzerland and the EU are working closely together in the context of the Covid crisis. For this and other reasons, Switzerland is seeking a bilateral health agreement with the EU.

Considering how broad the existing cooperation is in the area of trade and innovation, there is no need for a fundamental change. However, there is still enormous potential for cooperation and mutual learning, especially in the field of digitalisation. The same applies to the future of data protection. The added value of closer cooperation in the healthcare sector has become abundantly clear during the Covid crisis.

For now, an important opportunity for fully exploiting the potential of closer European cooperation has been missed by the Swiss Federal Council’s decision to end the talks on a framework agreement. Now, pragmatic solutions need to be found, in order to update some bilateral agreements and to re-start discussions on the future design of relations. 

In the short and medium term, the creeping erosion of relations that is to be feared needs to be stopped and understanding for each side’s sensitivities and concerns must be improved. A more intense dialogue at the party-political level could play an important role in these efforts: the lack of support from most moderate political parties was a major reason for the failure of the framework agreement.

Germany’s relations with Switzerland are a multi-layered network that stretches from the municipal to the European level. This means that German foreign policy towards Switzerland must also be conceived at the European, municipal and regional levels. When it comes to understanding Swiss sensitivities, there is room for improvement. As a country surrounded by large neighbours, there is always a slight fear of being disadvantaged and dominated. Questions that seem technical from a German or European point of view are sometimes interpreted in Switzerland in a very political manner.

Even if there is no substantial reason for blaming Germany and the EU for the failure of the framework agreement, they should be more mindful of Swiss sensitivities (no unnecessary barbs) and idiosyncracies (limited role of the Federal Council, involvement of parties and associations) in discussions on future relations.

It would also be important to understand Switzerland as part of the global west and as a key ally in strengthening a rules and values-based multilateral world order, because Switzerland is much more than just a partner in terms of trade and innovation. It offers (based on its image as an honest broker) dialogue and mediation platforms, not least due to the international importance of Geneva. Moreover, its position in United Nations bodies makes it clear that it is one of the partners with whom Germany has closely matching values and interests. This was also evident during the Covid crisis: Switzerland opposed protectionist tendencies in the WTO. At the same time, like Germany, it made it a point to back up the World Health Organisation which was coming under criticism.

Especially the years 2023 and 2024 – when Switzerland will occupy a seat in the UN Security Council for the first time – could offer an opportunity for deepening this close cooperation by involving Switzerland in European policy coordination processes even earlier. 

Even with regard to security policy, Switzerland is therefore an important partner for Germany – despiistits neutrality and non-membership of NATO. The country participates in several UN and (civilian) EU missions and is a partner in the area of counter-terrorismLago, Pascal 2019: Switzerland – Perspectives for a More Transnational Swiss Security Policy, in: Avenir Suisse – An International Think Tank Report on Security in Europe, in: https://www.avenir-suisse.ch/publication/security-in-europe/ (30.01.2020). Closer cooperation in cyber security matters would be of added value for both sides. Overall, Switzerland undoubtedly belongs to Germany’s closest circle of trade, economic and value partners worldwide.

Olaf Wientzek heads the Multilateral Dialogue in Geneva for KAS.