Swiss cautiously optimistic about WTO talks

Swiss farmers could lose up to SFr2.5 billion in revenue if the government stops its subsidies Keystone

Switzerland is hopeful that a way can be found to put global trade liberalisation talks back on track by the end of the month.

World Trade Organization (WTO) negotiations collapsed last September amid disagreement over agricultural subsidies.

Developing countries want Europe and the United States to drop subsidies worth some $350 billion (SFr435 billion) a year to farmers, so they can compete on a level playing field.

But Switzerland’s farmers have called on the government to defend their interests and not to bow to international pressure to relax import tariffs.

Senior Swiss trade official Luzius Wasescha believes the obstacles to an agreement on a framework accord are not insurmountable.

“There are a certain number of alarm signals, but being an optimist I would say that we will finally get somewhere by the end of the month,” Wasescha told swissinfo.

The Geneva-based WTO is keen to make some progress with the talks before the US presidential election in November and the transition to a new administration at the European Commission in Brussels.

Subsidies and support

The talks on agriculture cover export subsidies, domestic support for farmers and market access.

Wealthy countries such as Switzerland and Japan, as well as developing nations with large but inefficient farming sectors, are reluctant to open their markets too far for fear of putting their own farmers out of business.

Wasescha concedes that Switzerland – which has come under increasing pressure to liberalise its agricultural sector – has a “reputation for being protectionist”.

The Organisation for Economic Cooperation and Development recently noted that Swiss farmers were “heavily subsidised”, while “stiff foreign trade barriers” hindered competition from abroad.

But the country’s chief negotiator at the WTO is quick to defend the government’s position on agriculture.

“Switzerland, with 7.5 million inhabitants, is 11th in the world when it comes to imports of agricultural products… so I invite all the critics to look at the figures and the reality,” he said.

“It is clear that the high costs of production in a country like Switzerland explain the very high tariffs we have.”

Not a special case

But Petros Mavroidis, a legal expert at Neuchâtel University who has written extensively on the WTO, said Switzerland could not consider itself to be a special case.

“You can find idiosyncrasies in each and every WTO member,” he said.

“The question is not what each WTO member thinks of itself. The question is what provisions the WTO contract makes for special cases – and it doesn’t do that for anyone except developing countries.”

The Swiss government is nonetheless under pressure not to make concessions which would bring an end to subsidies for the country’s farmers.

Figures from the Federal Agriculture Office suggest that Swiss farmers could lose as much as SFr2.5 billion ($2 billion) in annual revenues.

Wasescha said the challenge for WTO members was to come up with a fair system which would offer a “flexible approach” to the lowering of tariffs.

“We are absolutely convinced that a one-size-fits-all approach will not be a success,” he said.

“We think that the sharing of the burden has to be devised in a way that those who are taking advantage of export opportunities should pay more than those who are just net importers.”

Agreement unlikely

Mavroidis is sceptical that agreement can be reached by the end of July.

“Don’t forget, there are only two weeks left,” he said, adding that failure to make progress did not mean that a global trade pact was out of the question.

“I’m not one who believes that [last September’s WTO ministerial conference in] Cancun was a huge failure, and I think the negotiations don’t have to finish between now and the end of the year.

“They could go on for two, three or even four years. Quite frankly, I just don’t think this is a huge problem.”

Trade officials, however, fear that if the WTO misses the July deadline, it could be months or even years before talks resume, with the risk that commercial tensions will mount between the world’s leading economic powers.

swissinfo, Robert Brookes

In brief

The WTO has set itself an end-of-July deadline to hammer out an agreement aimed at restarting trade liberalisation negotiations.

Senior Swiss trade official Luzius Wasescha is optimistic that some agreement can be reached.

But Swiss farmers have called on the government not to bow to international pressure to abandon agricultural subsidies.

Key facts

The Swiss agricultural sector accounts for roughly 1.5 per cent of GDP and employs about three per cent of the working population.
Swiss agricultural export subsidies currently stand at SFr200 million a year.
The OECD said in its last report that the government’s support for agriculture in Switzerland was “still very high”.