Swiss – U.S. Economic Relations: Opportunities and Challenges

Photo credit: Alain Kübli Photography

I am very happy to be speaking to all of you today. Thank you, Professor Dr. Hengartner, for the kind introduction, and thank you, Professor Dr. Kellerhals, for the opportunity not only to attend this event, but to speak to your illustrious members.

It is an honor to be standing at the podium where Winston Churchill delivered one of his famous speeches more than 70 years ago.  I have a passion for history and of course Churchill played an important role in our history.  In fact, one of his great quotes has helped established a certain credo I have lived by.  Churchill was known to say, “For myself, I am an optimist—it does not seem much use being anything else.”

For those who know me, I consider optimism an important part of diplomacy.  Churchill’s optimism fueled his tenacity and focus and that perspective is particularly relevant today.

As U.S. Secretary of State Mike Pompeo said in televised remarks at the World Economic Forum in Davos in January, “It’s interesting times that we live in.”  He went on to talk about the fact that people around the world are asking questions that have not been asked in a long time. Questions like: “Is economic globalization really good for me?”  “Are our leaders working to secure our national interests abroad?” And, “How can we work together in ways that protect our individual interests?”

Like Secretary Pompeo and President Trump, I believe that these questions are important and the fact that people are openly asking them is a positive development. In answering these questions, people are embracing time-tested truths. Truths like this:

  • Nations do matter. No international body can stand up for a people as well as their own leaders can.
  • Strong border laws are key to strong nations. This is how we keep our people safe and protect our sovereignty.
  • Sturdy alliances built on key principles are key to shared security. We need all nations to contribute to security imperatives. And:
  • Economic security is the key to national security. Robust defenses are not possible without healthy economies to undergird them.

Tonight, I’ll talk about what we are doing domestically to enhance our economic prosperity and security, the approach we are taking to these issues internationally, then focus on our bilateral economic partnership with Switzerland.

In the Trump Administration, the administration is working hard with Congress to implement the primary components of its pro-growth policy agenda. We are reforming regulation and removing the red tape that has constricted entrepreneurs. We are lowering taxes so that businesses and families can make their own choices on what to do with their hard-earned money.

This economic blueprint – low taxes, streamlined regulations, and trade reform – is working.  Wage growth is up. Job openings outnumber the number of unemployed for the first time on record. Manufacturing added nearly 300,000 jobs in 2018, the most since 1997. Small business optimism is at a record high. And this trend has continued in the first two months of 2019. The current growth of the U.S. economy is the ninth consecutive year of GDP growth, and this expansion will be the longest on record if it continues in the second half of 2019 (WTO Review).

Let me further illustrate the Administration’s pro-growth agenda. To continue increasing American families’ prosperity, the United States is taking important steps. We are working to capitalize on our resources and technology to achieve energy independence.  Energy independence is not just financially attractive by itself; it provides opportunities for job creation and economic growth as lower electricity costs reduce manufacturing costs for American-made products. And we are well on our way; the U.S. has been a net oil exporter since December of 2018. This is the first time in 75 years that we have exported more oil than we import. U.S. oil production has boomed thanks to new technological improvements.

As Switzerland well knows, it is also important to invest in infrastructure as a backbone to vibrant commerce that connects citizens with opportunities.  Let me give you an example of the progress we have made in infrastructure: by the end of fiscal year 2018, the U.S. Department of Transportation made available around $65 billion for infrastructure improvements. The Department is committed to revitalizing America’s infrastructure using federal dollars as seed money to encourage additional infrastructure investment by states, localities and private sector partners. Congress has also made bipartisan appeals for further funding for infrastructure and innovation in the U.S. transportation modalities.

Additionally, historic investment through Department of Transportation programs has begun to address the long-awaited infrastructure needs of our rural communities, streamlined project delivery, and invested in projects that benefit all Americans. We are not only investing more money, we are shortening the approval process so that projects can move ahead.  These infrastructure initiatives make the United States an even more attractive place to invest.

While infrastructure includes traditional airports, roads and bridges, it also includes the internet.  Connectivity is key in today’s economy.  The private sector must be protected against all forms of industrial espionage including cyber theft.  Just as you do in Switzerland, the United States is working hard to make sure we have an economic climate that truly values innovation. To this end, we are renewing our commitment to the enforcement of intellectual property rules to encourage people and businesses to innovate and to protect their inventions.

With our low unemployment comes a challenge related to workforce development issues; we are focusing on distressed communities and where there may be low levels of participation in the labor force. While overall rates of unemployment are at a historic low, there remains a segment of Americans who have dropped out of the workforce.  This is often because businesses have closed or moved away or because the workers do not have the skills for jobs in today’s economy. The U.S. government in conjunction with business leaders has developed programs that teach or update job skills, promote lifelong learning, and offer training in trades. We are particularly grateful to Switzerland for sharing your experience on creating apprenticeship and job-training programs.  We can and will learn much from your example that has been so successful over the years.

Now, having outlined what we are doing at home in the United States, I would like to briefly outline how our government is looking at multilateral institutions and bilateral partnerships to maximize mutual economic prosperity and security.

There is a lot more work to do, namely on the level of multilateral institutions.  Switzerland is the generous host of many international organizations.  We do not take that for granted.  We need to work together to make sure that these organizations are achieving ends that are good for the peoples of our nations.  The way to preserve these critical institutions is to make sure that they are performing in a way that reflects well on our collective goals.  And that means revisiting the purpose of each institution and asking if it still makes sense, 25 or 70 years after it was created.  Does it work? Is it achieving its ends?  The United States is going back to ask those hard questions that just have not been asked for too long.  Do these institutions deliver and are they delivering in a way that is reflective of the world’s current needs? If they are not, we need to change them, we need to update them. We need to bring them into this century.

I would particularly like to mention the World Trade Organization in this respect. President Trump’s 2018 Trade Policy Agenda advocates for “sensible and fair reforms to the WTO.”

The U.S. government is committed to reforming the global trading system in ways that lead to more fair outcomes for U.S. workers and businesses, and more efficient markets for countries around the world. Our goal is to strengthen international trade, and prevent other countries from benefitting from unfair trade practices.

To do this, we want to help build a better multilateral trading system.  We want the WTO to serve as a negotiating forum, to constrain market-distorting countries, and to promote markets that are more efficient. The WTO is no longer functioning as well as it used to.  The U.S. remains eager to work with like-minded countries to build a global economic system that will lead to higher living standards in the U.S. and around the world.

This is not new:  for the past two decades under Republican and Democrat Presidents, the United States has been concerned that the WTO is not operating as the contracting parties envisioned. Multiple administrations have voiced various concerns with the WTO system and the direction in which it has been headed. In December of 2018, during the 2-day country review at the WTO in Geneva, the U.S. listed several challenges that need to be addressed.

I would like to sum up these concerns without going into too much detail:

First, the WTO dispute settlement system has given itself powers that the WTO members never intended it to have. The United States has grown increasingly concerned with the activist approach of the Appellate Body on procedural issues, interpretative approach, and substantive interpretations. These approaches and findings do not respect WTO rules as written and agreed by the United States and other WTO Members.

Second, there is the concern about the WTO’s ability to reach agreements critical to a modern global economy, like the Doha round that stopped after 15 years of negotiations.

Finally, the WTO needs to change how it looks at questions of development and what criteria are set to designate what is a developing country. The situation now is that any country can self-declare as a developing country, which entitles it to special treatments.  In practice, this means that more advanced countries receive the same flexibilities as very low-income countries, despite these more advanced countries’ very significant role and advantages in the global economy.

And when we do address global concerns together – Switzerland and the United States and a host of other partners – these institutions will be able to serve our nations as intended during the decades that follow.  This will be profitable not only for the U.S. economy but also for the Swiss economy and for those of other countries around the world.

The U.S. Government is also working closely with partners to address intellectual property protection, collaborating with various trading partners on IP-related training and capacity building around the world. Domestically and abroad, bilaterally and in regional groupings, the U.S. Government remains engaged in building stronger, more streamlined, and more effective systems for the protection and enforcement of intellectual property.

As our President has made clear, our national Trade Agenda is driven to achieve “free, fair, and reciprocal” trade relations, which are critical to the U.S. national security policy.  It includes a focus on renegotiating and revising trade deals.  The United States is working toward trade arrangements that are not only good for partner nations, but that also value and protect the interests of American workers.  We will alter trade deals that are not in the U.S. national interest, by reducing barriers to trade and adopting policies that promote true market competition and opportunity for all countries.  We are open to explore new bilateral agreements based on free, fair and reciprocal trade.

I would now particularly like to highlight the United States approach to economic security and prosperity and our partnership with Switzerland.    Our two countries and enjoying an unprecedented strong and vibrant partnership that is the result of trust and friendship between our republics.  In both of our nations, pro-growth policies matter.  The United States and Switzerland are currently two of the most vibrant and innovative economies in the world.  Avoiding needless over-regulation that constrains rather than enables economic growth is a priority.  Switzerland is our top Research and Development partner world-wide, as both our nations know that today’s research is tomorrow’s innovative application leading to continued economic prosperity, whether in artificial intelligence or in other exciting areas.  Switzerland as a developed and prosperous nation shares our commitment to cyber and intellectual property safeguards and the U.S. will continue that partnership.  Investing in the future, which includes both physical infrastructure improvements, and development of our workforce talent, are domestic priorities we share and where the United States can benefit from Swiss experiences.

So, what does this mean for the relationship between the U.S. and Switzerland?  Well, we have a strong partnership already.  You know the numbers- Switzerland is the 7th largest source of Foreign Direct Investment in the United States, with a cumulative direct investment in the U.S. of $202 billion. Switzerland’s direct investment in the U.S. is led by manufacturing, finance and insurance, and wholesale trade.  Swiss affiliates directly support half a million jobs in the United States.  And this is a reciprocal relationship; U.S. FDI in Switzerland is $250 billion, led by manufacturing, nonbank holding companies, and finance and insurance.

We also have a strong trade relationship:  Switzerland was the United States’ 17th largest goods export market and our 15th largest supplier of goods imports in 2017. U.S. goods and services trade with Switzerland totaled more than $120 billion in 2017.

Many people, myself included, believe we can make this economic partnership even stronger.  And we are working together to move in that direction.  I was in Washington, D.C. in December for the signing of a Memorandum of Understanding between our two nations on apprenticeships. The new agreement will build upon ongoing collaboration between the United States and Switzerland to encourage businesses-led development of apprenticeship programs and partnerships with other stakeholders.  If anyone doubts the value the United States places on this relationship, take a look at who participated in the signing – the Secretaries of Commerce, Labor, and Education, and Advisor to the President Ivanka Trump, who heads up the President Initiative for Workforce Development.

In addition to apprenticeships and job training, I mentioned the Administration’s interest in pursuing bilateral trade agreements that are mutually beneficial.  Switzerland has been open about its desire to pursue such a mutually beneficial agreement and I applaud your leadership’s commitment to this issue.  Whether I meet with a Swiss CEO, government leader or farmers, I hear the desire for a trade agreement between the U.S. and Switzerland that serves the interest of both countries.

In December, then-Federal Councillor for economic affairs Johann Schneider-Ammann met with the Deputy U.S. Trade Representative to talk about a potential trade agreement between the U.S. and Switzerland.  Last month, Federal Councillor Ignazio Cassis met with U.S. Secretary of State Mike Pompeo and the two leaders focused on reviewing the mutual benefits of the robust U.S.-Swiss economic and trade relationship while discussing possible next steps in a trade agreement.

While these discussions take time, the process is moving forward.  The new Federal Council, led by President Ueli Maurer, and with strong leadership from Federal Councillor Parmelin, has expressed interest in continuing the discussions toward a potential trade agreement.  The U.S. strongly values Switzerland as an investor and as a partner in furthering our mutual prosperity.  A trade agreement could fit well with this Administration’s overall goals of security and prosperity through free, fair and reciprocal trade.

If I could circle back to the Churchill quote I mentioned at the beginning of my remarks; Churchill said, “For myself, I am an optimist—it does not seem much use being anything else.”  He exhibited that optimism in leading Britain during its darkest hours of WWII.  Optimism inspires leaders to achieve great things.

The same holds true today.  We are all focused on doing right by our citizens.  Despite the global complexities and challenges, I believe that is what we all really desire – strong institutions, strong Republics, and strong economies – not just to have them, but for the greater good of our people.

I am truly honored as U.S. Ambassador to Switzerland and Liechtenstein to continue to work with our colleagues in business, government, academia, and society to ensure that our robust partnership continues to grow and strengthen the vitality of our great nations.  With both our countries focused on policies and partnerships that enhance our economic security and prosperity, my optimism inspires me and I am encouraged that we will have an impact domestically, bilaterally and internationally.  Thank you.