By Frédéric Lelièvre and Justine Fleury
In 11 years as head of SECO, what are the main changes you witnessed in the structure of the Swiss economy?
I started at the same time as the strong franc crisis. The currency hit parity with the euro in August 2011, so much so that there was concern about whether this would put some industries at risk because of export difficulties. If we take into account the whole decade, there was only a small decrease in the employment rate in the industrial sector, from 27% in 2010 to 25% in 2019. As for its share of GDP, it has remained the same at 26%.
I am one of those who are convinced that a country needs a strong industry, and I am very pleased that we have managed to maintain it in Switzerland. It is rather within this industrial structure that the main changes have taken place. The pharmaceutical and chemical industry has steadily increased its share of GDP (editor's note: its exports share rose from 39% in 2011 to 50% in 2019).
In what way has the economy become stronger, and weaker than in 2011?
The Swiss economy has proved resilient during the recent crises, among other things because of its high degree of diversification. The pharmaceutical industry is one of our strengths, as it has proven to be very resilient to economic cycles, although there are also talks about the risks due to its large share in the industry.
In ten years, Switzerland's relations with its main partner, the European Union (EU), have become very uncertain, which is another weakness...
I think this uncertainty goes beyond the EU. The challenges that come from the global economy are probably greater than they were ten years ago. At that time, this protectionist trend was less strong. During the pandemic, almost a third of all restrictions were export-related. We have always tried to fight these restrictions, whenever we could in the WTO or in free trade agreements. These barriers particularly affect Switzerland, which is highly integrated in the global economy. The environment has changed over the past decade, and this is not only due to protectionism during the Trump presidency.
The trade situation has also become tense with China...
That's true, even though the free trade agreement is working well. We would like to improve it. But there are also issues related to our values, with the situation in Xinjiang for example. The economic relationship is not the only one that matters.
Among the other changes you have experienced, we can mention the digitalisation of the Swiss economy, which has accelerated with the pandemic. We see this with the widespread use of home office. What do you think will be the most lasting change?
The pandemic has shown us, on the one hand, that Switzerland is well placed in international comparison, but on the other hand, that we still have some gaps to fill. The pace at which we digitise should be a little more sustained.
E-commerce should also be regulated at the international level. We are negotiating rules at the WTO, like those we have for trade in goods and services. But this is taking a lot of time, even though this sector is developing rapidly.
The energy transition is another major issue. How can we measure the magnitude of the effort required to reach net zero emissions by 2050?
The Federal Office for the Environment is in charge of the energy policy, but SECO evaluates the proposals from an economic perspective. We estimate the cost of this transformation at 73 billion Swiss francs by 2050, which includes the renovation of buildings, the electrification of transport and industry, and electricity production.
This represents costs for companies and households, and unnecessary costs must be avoided. However, Switzerland has good preconditions for this transformation. In particular, its electricity supply is almost CO2-free. In addition, we have seen a decoupling of greenhouse gas emissions from economic development.
The trading sector is developing in the right direction, and showing more transparency
Among the energies is oil, a large part of which is traded worldwide from Zug or Geneva. What’s your take on the commodity trading activity in Switzerland?
This is a subject that has been with me from the start of my tenure at SECO. I remember that before, there was no institutionalised dialogue with these companies, nor with the NGOs which were very critical of them. We first proposed a report on raw materials to the Federal Council and, above all, invited companies, NGOs, and cantons such as Zug, Geneva, and also Ticino, which is very active in gold trading, to roundtable discussions on the most pressing issues of the day. I am quite proud that we have managed to establish this contact between these different parties. This has been extremely important for the development of the companies, but also for the NGOs who have seen that this sector is moving. It is developing in the right direction, and is becoming more transparent.
Do you have a message for these fossil fuel traders about their future in a decarbonised world?
I don't have a message for any sector. Switzerland does not have an industrial policy. It's up to us to create the best framework conditions, and it's up to corporations to decide what they want to do.
On the subject of framework conditions, many of the ballots are against the free economy. We saw this with the Responsible Business Initiative, which was narrowly defeated, or the free trade agreement with Indonesia, which was accepted by a narrow majority. Do you agree with this?
Yes, with the vote on the Responsible Business Initiative, we knew it was going to be close. However, I was extremely impressed that the free trade agreement with Indonesia passed by such a narrow margin. One of the reasons for this was the focus on palm oil, even though it represents only a tiny part of our trade with Indonesia. Our role is to better explain what trade agreements bring and we still have a lot to do in terms of transparency.
