Today, Trade Secretary Kemi Badenoch flew to Switzerland to launch negotiations on a new UK-Switzerland free trade agreement (FTA) to boost trade between the two services superpowers.
Switzerland is one of the wealthiest countries in the world and the UK’s 10th largest trading partner. The two countries are among the world’s leading service economies, exporting almost £15 billion worth of services including financial, professional, legal, and architecture every year.
The current UK-Switzerland FTA is based on an EU-Swiss deal from more than 50 years ago – 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.
Business and Trade Secretary Kemi Badenoch said, “As two of the world’s leading service economies, there’s a huge prize on offer to both the UK and Switzerland by updating our trading relationship to reflect the strength of our companies working in areas ranging from finance and legal, to accountancy and architecture.
“The UK and Switzerland are natural trading partners and today’s launch will play to our strengths as services superpowers, while also boosting investment in emerging technologies, data innovation, and digital trade.”
ONS figures published earlier this year showed UK services exports reaching record highs in 2022, totalling £397 billion – an increase of 20% compared to 2021 in current prices.
The Business and Trade Secretary will launch talks on the new, modernised deal with her counterpart Federal Councillor Guy Parmelin in Bern, the country’s capital city.
During her visit, Badenoch will also go to SIX, the operator of the 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.
A refresh of our trading relationship with Switzerland will add to the UK’s growing armoury of powerful service-focused deals by removing remaining market access barriers, improving regulatory cooperation and enabling UK firms to compete on an equal footing in Switzerland, now and in the future.
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.
It will also 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.
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.”
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.
Policy Chairman of the City of London Corporation, Chris Hayward, said, “The UK and Switzerland are the two largest financial centres in Europe which means strengthening our services trade relationship is a top priority for the sector. An enhanced trade agreement would address key cross-cutting issues including mobility, data flows and digital trade to the benefit of both jurisdictions.
“Negotiating a new free trade deal with Switzerland along with a ground-breaking mutual recognition agreement in financial services presents a unique opportunity to set a new paradigm for services trade, and would provide a template for the UK’s future trading relationships.”
Alexander Dennis Fleet Sales Director, Matthew Lawrence, said, “We’re the world’s leading manufacturer of double-deck buses and bus companies in Switzerland and 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.”
Claire Machin, Executive Director, International Policy, Association of the British Pharmaceutical Industry, said, “Negotiation of an Enhanced Trade Agreement between the UK and Switzerland provides a pivotal opportunity for a world-leading agreement between two life science superpowers. Prioritisation of life sciences in negotiations could help to boost the growth of our two innovation-intensive economies and set world-leading standards to encourage the creation and adoption of the next wave of scientific technologies.”
During her visit to Switzerland, Badenoch will also meet with leading female business leaders at Advance, a network of close to 140 Swiss companies committed to increasing the share of women in management in Switzerland.