Significant Ag Obstacles to Overcome in Potential US-Switzerland FTA, Panelists Say

Switzerland is “absolutely convinced” it needs a free trade agreement with the U.S., which could benefit U.S. agricultural exporters, a Switzerland ambassador and Switzerland trade expert said during a Dec. 3 Heritage Foundation panel. But a deal may be unlikely, particularly because Switzerland faces the difficult decision of accepting U.S. agricultural safety standards over those of the European Union, a trade expert said. That decision presents a significant barrier to a potential trade deal.

“These are not insurmountable barriers,” said William Reinsch, a senior adviser at the Center for Strategic and International Studies and former undersecretary of Commerce for export administration. “But these are barriers that are going to have to be surmounted one way or another. And they do have implications for Swiss trade with the European Union.”

Jacques Pitteloud, Switzerland’s ambassador to the U.S., said a trade deal is possible. The relationship between the two nations “is as good as ever,” he said, but added that agricultural trade seems to be “the elephant in the room.” Patrick Dummler, a senior research fellow for Avenir Suisse, a Switzerland think tank, said the U.S. and Switzerland can find creative solutions around agricultural issues and added that there is a Swiss market for U.S. exports. Dummler pointed to nuts, which have a “very, very limited” production base in Switzerland. He also said Switzerland would be willing to import soybeans, corn and beef under certain circumstances.

“Is agriculture really going to stand in the way of something that's so much more important?” Pitteloud said. “The window of opportunity is now … this is a low hanging fruit. Let’s catch it.”

Agricultural negotiations could prove difficult, Reinsch said. While Switzerland is not an EU member, it conforms to many of the EU’s regulations -- including regulations surrounding food safety and testing -- to more easily trade with its neighboring countries. Switzerland may be forced to choose between accepting U.S. food standards or those of the EU, Reinsch said.

“That is going to put the government of Switzerland in a complicated position of doing exactly what President Trump wants them to do, which is to choose,” Reinsch said. “I’m not sure that’s a fair demand, but I think that’s what the U.S. demand is going to be.”

If the U.S. forces Switzerland to choose, Switzerland “will have no choice but to stick with the EU regulations,” Pitteloud said, because the EU is Switzerland's main market. “It’s not going to be a piece of cake,” he said. “That's probably one of the big land mines we are facing, but it's doable.”

Dummler said there are trade provisions Switzerland can include in a potential deal to ease pressure on Swiss farmers and minimize backlash from the EU. This includes declaring food origin and production methods to Switzerland consumers, which would give consumers the option of buying U.S., Swiss or EU products. Dummler also recommended tariff quotas for certain agricultural goods and separate tariff systems for raw and processed foods, such as raw and canned tomatoes. “All of this would ease the pressure on the Swiss farming industry and would of course increase the probability of concluding an agreement on the Swiss side,” he said.

Even with a set of creative measures, a trade deal that includes U.S. agriculture will make it more difficult for Switzerland “to have normal, ongoing commerce with the European Union,” Reinsch said. “It can be resolved. There seems to be a spirit of goodwill on both sides. But it's not going to be simple, and it’s not going to be short.”