Economics minister defends Mercosur deal and casts doubt on EU deal before next year

Guy Parmelin headed the defense ministry before stepping into the role of economics minister this year. © Keystone / Peter Klaunzer

Amid criticism from the political right and left, Swiss economics minister Guy Parmelin defends the recent Mercosur trade deal, talks about bracing for a recession, and says the country is unlikely to strike a deal with the EU before next year.

In a 2-page interviewExternal link in the German-language paper SonntagsZeitung, Parmelin said he was convinced that signing the controversial free trade deal with the Mercosur region is good for the economy amid competition with the EU. Under the deal, around 95% of Swiss exports to the region will be exempt from tariffs.

“The EU has also recently negotiated a free trade agreement. We can’t afford to fall behind. Too much is at stake for our economy,” Parmelin told the paper.

The deal has come under criticism in Switzerland as world leaders like French president Emmanuel Macron threaten to hold off a trade deal with Brazil over the country’s handling of fires in the Amazon rainforest.

Parmelin responds: “These are empty threats. I am convinced, Macron will sign the deal.”

On Saturday, the left-wing Greens political party are exploring the possibility of a referendumExternal link for binding climate protection measures in the deal. 

Parmelin defended the deal arguing it gives Switzerland more influence and leverage to prevent deforestation and that the deal includes commitments not to buy products from newly cleared land.

The former farmer has also faced scrutiny from the agricultural sector and his own right-wing political party who worry about growing competition from imports. To this, he says the deal protects jobs and offers significant tariff savings as well as new export opportunities.

EU in the new year

While Parmelin believes a trade deal with the US is possible this year, he was more pessimistic about negotiations with the EU on the framework agreement that have dragged on for more than four years. He doesn’t believe serious discussions with the EU can happen until next year.

“I don’t think we can wrap it up this year. Our agenda and that of the EU allow a conclusion only next year at the earliest,” he said referring to Swiss federal elections and a new European Commission that will be settled this fall.

He said that the sticking points in the EU framework agreement have not been resolved including wage protects and the citizen directive.

Parmelin hopes that “reason prevails” when it comes to concerns about cooperation on research with Switzerland. “I believe that the EU would weaken itself if it no longer cooperates with Switzerland in the field of research.”

He added that, “We will be forced to look for alternatives, perhaps together with Great Britain, if the EU remains dogmatic.”

Parmelin hinted that the government is working on a Plan B but did not provide further details.

It appears that not all federal councilors are of the same view when it comes to the EU. In a speechExternal link at an annual gathering of ambassadors on Saturday evening, fellow federal councillor Ueli Maurer declared that the EU agreement had failed and would peter out. This caused a stir according to the NZZ am SonntagExternal link paper given that foreign minister Ignazio Cassis has said the ministry continues to work on a deal.