Administration Trump threatens punitive tariffs on Swiss pharmaceutical exports
The trade dispute is coming to a head. In mid-October, the US wants to introduce punitive tariffs on imports of cheese, olives and aircraft from the EU. Until now, Switzerland has been directly affected by such measures only in the case of aluminum and steel products - an area in which exports to the United States are of little importance. But according to research by the NZZ this could change. This can be concluded at least from non-public statements by the US Trade Representative Robert Lighthizer.
According to several well-informed sources, the latter told pharmaceutical representatives that Washington is considering introducing tariffs on exports of pharmaceutical goods from Switzerland. This would make the sector sensitive. The US is the second most important market for local industry after the EU. The export of chemical-pharmaceutical products has been growing strongly in recent years. In 2018, it reached a new record.
Lucrative market
Washington is reportedly bothered by the high export surplus of Switzerland in the trade in medicines. It supplied goods to the United States for some 40 billion francs last year, while imports amounted to around 21 billion. The negative trade balance from the American point of view is largely due to pharmaceutical products. In 2018, these accounted for around 53 percent of goods exports to the US, as figures from the State Secretariat for Economic Affairs (Seco) show. According to the industry association Interpharma, the share of exports to the country has tripled since 1990 from 8 percent to almost 24 percent.
In addition to a large market and innovative companies, which belong to the world's top, the development is due among other things to above-average prices. The United States does not state this unlike Switzerland and other countries. The country spends the most on medicines per capita worldwide. According to American media, this should be a key issue in the election campaign. Another factor is that some of the exports from Switzerland are intermediate products which are further processed.
Protectionist course
The Department of Economic Affairs (WBF) in Bern is reportedly about Lighthizer's statements in the picture. However, the Office of the US Trade Representative (USTR) has not officially contacted Switzerland. Whether the considerations also lead to political decisions or are "only" a threat, is therefore questionable. Washington does not look at the cards. The American Embassy in Bern referred to the USTR for information. This did not comment on request. Observers suspect that Lighthizer wants to put the pharmaceutical industry under pressure.
A role should also play the preliminary talks on a free trade agreement that lead Bern and Washington. The considerations within the Administration Trump show how difficult the discussions are. Obviously agriculture is not the only area that stands in the way of negotiations. Rather, the pharmaceutical industry could prove to be the real problem.
A free trade agreement should not stand a chance if Switzerland further increases its export surplus in trade in goods. Economics Minister Guy Parmelin recently dampened expectations in an interview with the NZZ. "The Americans consider the reduction of the trade deficit with Switzerland as important," said the SVP Federal Council. If talks begin, there must at least be a chance of success.
So far, the contacts between Bern and Washington at the highest level are considered excellent. In May, Donald Trump received Federal President Ueli Maurer in the White House. Nevertheless, Lighthizer's thoughts on Bern are worrying. Washington has repeatedly followed words with action. The measure would fit the commercial policy of the administration of the impulsive president. This wants to correct trade deficits with various countries about punitive tariffs.
Include services
Companies affected by the move would be Swiss companies such as Novartis and Roche, but also the German Merck Group or the US biotechnology group Biogen, which is building a state-of-the-art production facility in Luterbach near Solothurn. The American considerations are known Novartis, says company spokesman Daniel Zehnder. "We are watching the development with great interest." The company does not want to make any further statements at the moment, especially as the topic pertains to the entire pharmaceutical industry.
The industry association Interpharma argues that goods are only part of the trade. It is important to include the services, says CEO René Buholzer. Also important are the licenses and patents, where Switzerland is worse in terms of numbers. He also emphasizes that local companies employ more than 10,000 people in the US. These made about the same amount of investment for research and development as in Switzerland. A spokesman for Roche says they have a strong presence in the US and a complete value chain.
Switzerland received argumentative support in the last few days from American parliamentarians. Twenty members of the Congress have signed a letter launched by MP Donald Beyer and published on the Internet service Twitter. This was under Barack Obama from 2009 to 2013 ambassador in Bern. The undersigned urge Lighthizer to prioritize a free trade agreement with Switzerland. The letter states that bilateral trade relations, including goods and services, are largely balanced. Both sides would benefit from an agreement.
Parmelin meets Trade Minister
The parliamentarians also recall that Switzerland is the seventh largest foreign investor in the US. Despite its small size, it is an economic "power house" that finances more research and development in the United States than any other country. On average, those from Switzerland paid the highest wages from foreign companies.
A similar line of argument could be followed by Economy Minister Guy Parmelin. He will be in Washington next week and attend the World Bank Annual Meeting. According to a spokesman for his department, a meeting with US Commerce Secretary Wilbur Ross is also planned. The WBF and the Seco are in regular contact with the American authorities to address various topics.
Meanwhile, US Trade Representative Robert Lighthizer has been heavily absorbed by the dispute with China - and is unlikely to have much time for Switzerland at the moment. On Thursday and Friday, Washington and Beijing held high-level talks.