Swiss tackle protectionism at Davos meeting

World Economic Forum

Swiss Economics Minister Doris Leuthard is calling on governments to keep markets open and avoid protectionist measures despite the financial crisis.

Leuthard was speaking to swissinfo in Davos, where she has been attending the World Economic Forum’s annual summit. On Saturday she meets representatives of more than 20 countries on the sidelines of the WEF to convince them that free trade is one solution to the economic downturn.

The meeting will focus on this year’s agenda for the World Trade Organization’s latest – and spluttering – round of negotiations, the Doha Cycle, which is aimed at guaranteeing better access to markets worldwide.

swissinfo: Here in Davos, most participants at the WEF meeting are very pessimistic about the economic crisis. Do you share this outlook?

Doris Leuthard: Many countries are suffering from a strong recession. Nobody knows how long it will last nor how severe it will be. The outlook is changing all the time. But it isn’t worth scaring ourselves all the time.

The [Swiss] government is doing its best to handle the situation. We are concerned. I get updates every week on the trade position with our partners. The most important thing is that we boost our economy – especially the export sector – and work towards closer ties with our partners.

There are still some obstacles, but a lot of countries want to cooperate with us and reduce the number of technical trade hurdles.

swissinfo: According to the head of the WEF, there isn’t a single company CEO who understands the crisis. Isn’t this the case for you too?

D.L.: Yes, because in September the collapse of the Lehman Brothers bank really changed the situation. This bankruptcy had consequences and altered the nature of the crisis in unforeseen ways.

For the first time, it wasn’t just a few markets that were affected, but the global market. This is why the measures taken by the United States, China and Europe are very important. If these economic stimulus plans work fairly quickly, we could get out of this crisis situation quite soon. But nobody can guarantee it.

The current situation shows that globalisation has made huge strides. We are all vulnerable to a crisis emerging elsewhere. There needs to be transparency and surveillance of the financial markets and the economy.

We need multilateral organisations that can carry out these tasks. Otherwise we will not be able to react to the first signals [next time round].

swissinfo: You have been criticised inside Switzerland by some politicians who say you aren’t doing enough to help the economy. Do you understand this criticism?

D.L.: I’ve heard this criticism, which is coming mostly from the left. Other politicians seem satisfied by the planned measures we plan, which will be gradually put into practice.

I listen to the criticism, but the government believes that Switzerland’s situation is somewhat particular. The effects of the crisis on our markets have an impact at a later time than in Germany or France. We don’t have a housing crisis and we don’t have a credit crunch. Small and medium-sized companies have access to credit. That is why we are taking action step by step.

We could of course announce a stimulus package equivalent to one per cent of our Gross Domestic Product simply by adding cantonal measures, tax breaks and changes to unemployment benefit. Overall, we are close to what our neighbours are doing.

swissinfo: There is a fear that protectionism will make a comeback because of the crisis. Is this a concern for you?

D.L.: It’s a risk. Bigger markets can sustain themselves to a certain extent. We are worried that technical hurdles will reappear or that customs duties will be increased. So far concrete measures decided by a number of countries do not represent any kind of risk and are rational.

But we must discuss this and pay attention to the evolution of the situation. Switzerland’s needs access to foreign markets, which is why we are talking to countries with even more markets than ours to help the World Trade Organization’s latest round of negotiations on opening markets move forward.

swissinfo: In Davos, Switzerland will present a document calling on signatories to refuse to resort to protectionism. What is it demanding exactly?

D.L.: It is a Swiss initiative. In Davos, there are discussions about protectionism. We want to give a concrete signal, something more than just words.

We want countries or entrepreneurs to say that it would be totally wrong to close access to markets and to implement protectionist measures. We want them to say that they want open markets, access to products and services for all. That would provide a stimulus and an important sign of openness in this time of crisis.

swissinfo-interview: Pierre-François Besson in Davos

World Economic Forum

The World Economic Forum started life as the European Management Forum in 1971. Formed by German-born businessman Professor Klaus Schwab, the forum was designed to connect European business leaders to their counterparts in the United States to find ways of boosting connections and solving problems.

It is a non-profit organisation with headquarters in Geneva that is funded by the varying subscription fees of its members.

The forum took its current name in 1987 as it broadened its horizons to provide a platform for finding solutions to international disputes. WEF claims to have helped calm disputes between Turkey and Greece, North and South Korea, East and West Germany and in South Africa during the apartheid regime.

WEF conducts detailed global and country specific reports and conducts other research for its members. It also hosts a number of annual meetings – the flagship being Davos at the beginning of each year.

In 2002, this meeting was moved to New York for a one-off change of venue to support the city following the 9/11 terrorist attacks of the previous year.

Davos has attracted a number of big names in the world of business, academia, politics and show business. These include: Nelson Mandela, Bill Clinton, Tony Blair, Bono, Angela Merkel, Bill Gates and Sharon Stone.

As the forum grew in size and status in the 1990s, it attracted rising criticism from anti-globalisation groups, complaining of elitism and self-interest among participants.

The 2009 WEF in Davos runs from January 28 to February 1.

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