PARTNER-ATLAS

SWITZERLAND

as a partner for safeguarding our prosperity via free trade and innovation

01 — The key questions for the Partner-Atlas

RELEVANCE: What relevance does Switzerland have for Germany with regard to “safeguarding our prosperity via free trade and innovation”?

In many ways, Switzerland is a central 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 2018, it was number 9 among Germany’s foreign trade partners (and thus the fourth largest non-EU country after the USA, China, and the United Kingdom).

Swiss direct investments in Germany amounted to 49.5 billion Swiss francs in 2017 (7th position out of all investors). Swiss companies employ 260,908 people in Germany (2nd position). According to Deutsche Bundesbank, Switzerland was the fourth most important investor in Germany at the end of 2017. In 2016, more than 2,000 companies were based in Germany, the majority of which belonged to a Swiss parent company. Swiss companies directly employ 458,000 people[i].

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). This is often undertaken via the EU research framework programme, Horizon 2020: there is a total of 800 collaborative projects with a funding volume of 7.6 billion euros. Between 2013 and 2018, the Swiss National Science Foundation supported more than 2,000 projects with German participation.

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

WILLINGNESS: To what extent is Switzerland willing to work with Germany in realising this interest?

Essentially, the two countries are very willing to work together. This is also evident from the numerous meetings 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).

The discussion is not without tension with respect to the modalities of cooperation, such as the free movement of German and European workers in Switzerland. For example, a referendum was held in September 2020 on the termination initiative tabled by the nationally conservative, Eurosceptical Swiss People’s Party (SVP), the acceptance of which would have meant an end to the free movement of people and thus, plunge bilateral relations with Germany and the EU into a crisis. Eventually, the clear rejection of the initiative (61.7% vs 38.3%) mirrored the pragmatic and cooperation-oriented stance towards Germany and the EU of the large majority of the Swiss population.

STATUS QUO: How close is Germany and Switzerland's current cooperation in this area?

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.

German-Swiss relations, particularly with regard to trade, cannot currently be conceived of without taking the European level into account. 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 market[ii]. Both sides are currently finalising efforts to establish a framework agreement to stabilise relations.

Switzerland and the EU are working closely together in the context of the coronavirus crisis, but it is not just for this reason that Switzerland is seeking a bilateral health agreement with the EU.

 

POTENTIAL: What is the potential for strengthening the partnership between Germany and Switzerland in this area?

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 digitisation. The same applies to the future of data protection, a field in which both countries are currently undergoing a comprehensive reform. The added value of closer cooperation in the healthcare sector has become abundantly clear during the coronavirus crisis. In the European context, the new framework agreement between Switzerland and the EU would stabilise relations between Germany and Switzerland and raise them to a higher level.

The negotiations have been concluded in principle, but the many important political players are now calling for clarifications and in some even for amendments. The EU side has – after four years of negotiations – refused a renegotiation of the text. For Germany and the EU (especially following the complicated talks with the UK), a successful conclusion would symbolise their capacity to engage in partnership, and the decisive phase of the talks will probably fall within the German presidency of the EU Council. A failure to agree on an agreement would likely not have an immediate impact but would in the long term lead to the increasing divergence of rules on both sides, thus hampering the prospects for a further deepened relationship in the areas of trade and research.
The debate on the EU’s next Multiannual Financial Framework (MFF) should include provision of sufficient funds for the next research framework programme.

POLICY RECOMMENDATION: What in German foreign policy has to change in order to fully exploit this potential?

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 level. There is room for improvement in understanding Swiss sensitivities. 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. This means that when negotiating the framework agreement, for example, tact is required (without abandoning one’s own lines in the sand).

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 very strong overlapping values and interests. This has also been evident during the coronavirus crisis: Switzerland has opposed protectionist tendencies in the WTO. At the same time, like Germany, it demonstratively put itself forward with respect to the World Health Organisation which was coming under criticism. Furthermore, Switzerland has officially submitted its candidacy for a non-permanent seat on the United Nations Security Council in 2023-4. The seat elections will take place in June 2022.

Switzerland is thus also an important partner for Germany with regard to security policy, despite its 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-terrorism[iii]. Closer cooperation in the area of cyber security 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.

[i] 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].

[ii] https://www.bertelsmann-stiftung.de/fileadmin/files/ BSt/Publikationen/GrauePublikationen/EZ_Study_Single- Market.pdf [08/01/2020].

[iii] Lago, 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].

SWITZERLAND

  • Population: 8,654,622
  • Capital: Bern
  • Interest: Safeguarding our Prosperity via Free Trade and Innovation
  • Region: Europe and North America
  • Potential partner countries: Russia, Switzerland, Ukraine

04 — The region

Europe and North America

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SWITZERLAND

In many ways, Switzerland is a central 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 2018, it was number 9 among Germany’s foreign trade partners (and thus the fourth largest non-EU country after the USA, China, and the United Kingdom).

  • Population: 8,654,622
  • Capital: Bern
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SERBIA

Serbia is of central importance for Germany in terms of regulating global migration flows. Since the beginning of the refugee crisis in 2014, a large proportion of refugees from the Middle East, Central and South Asia have been traversing the “Balkan route”. Its main route leads from Turkey and Greece via Bulgaria, North Macedonia and Serbia to Hungary and Croatia which form the border of the EU. Continuing on from there is difficult because the Hungarian government in particular undertakes very rigid border controls to prevent entry without valid travel documents.

  • Population: 8,737,371
  • Capital: Belgrade
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UKRAINE

Since the beginning of the conflict in Eastern Ukraine and the unlawful annexation of Crimea, parts of the country have not been under the control of Kyiv. It is in Ukraine that it will be decided what significance internationally recognised borders will have in 21st century Europe, whether territories can be unilaterally altered, and whether the right of the (militarily) stronger will again take precedence over the sovereignty, self-determination, territorial integrity and inviolability of borders.

 

  • Population: 43,733,762
  • Capital: Kyiv
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BELARUS

Belarus is often perceived negatively in the West due to its deficits in terms of democracy and civil liberties. This fails to take into account that the country can be seen as an anchor of stability in terms of security policy, with its position in the centre of Central Eastern Europe, and that it has been committed to international conflict resolution for some time.

  • Population: 9.449.254
  • Capital: Minsk
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RUSSIA

Economic growth and employment in Germany largely depend on key, energy-intensive industries, such as chemical or metal production. Despite the increasing importance of renewable energies, petroleum and natural gas – the first and second most important energy sources in Germany – play an important role for these industries.

  • Population: 145,934,462
  • Capital: Moscow
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