Government moves to help Swiss exporters

Container ship carrying exports, docked at a Basel port picswiss.ch

The government has approved measures to compensate Swiss exporters who get their fingers burned abroad.

Under the plans, exporters would be able to cover their risks on orders from private companies. At present, they can only do so on orders from state-owned enterprises.

Friday’s move is part of efforts aimed at a total revision of Switzerland’s Export Risk Guarantee law, which dates back to 1958.

The government-run Export Risk Guarantee scheme is designed to make it easier for exporters to do business in countries where political or economic instability could jeopardise receipt of payment.

But it doesn’t cover all eventualities.

“At present, the Swiss export risk agency can only cover public risks, which is a disadvantage to Swiss exporters because all the other export credit agencies of OECD countries can cover the private-buyer risk,” Beatrice Maser at the State Secretariat for Economic Affairs (Seco) in Bern told swissinfo.

The present cover for public debtors is currently limited to 95 per cent of the risk, and would be limited to 85 per cent for private debtors if the plans are approved by both houses of the Swiss parliament.

The reform is seen as benefiting small and medium-sized enterprises the most, because the big multinationals can do business through their foreign subsidiaries.

But a small Swiss company which wants to sell a product to a private buyer in Brazil is currently unable to turn to help from the Export Risk Guarantee scheme.

Economic changes

According to Maser, the current system has also failed to take account of economic changes around the globe.

Privatisation in importing countries, particularly in central and eastern Europe and in developing countries, has reduced the scheme’s scope.

“Given the developments in developing and transition countries, more and more public entities are being privatised. That means there are fewer and fewer public entities buying goods, and more and more private buyers,” said Maser.

“Only by introducing coverage of the private-buyer risk will the Swiss exporter have a level playing field with other countries’ exporters,” she added.

Reorganisation of the government’s Export Risk Guarantee scheme also includes measures to set up an independent company called Swiss Insurance Against Export Risks.

The organisation would be based in Zurich and have a board of seven to nine members nominated by the cabinet. However, the government itself would not be represented.

Maintaining jobs

Many cantons, political parties and associations have endorsed the government plans, seeing them as an attempt to preserve jobs and Switzerland’s competitiveness.

The Swiss Business Federation, economiesuisse, and Swissmem, the umbrella organisation of Switzerland’s machine industry, also welcomed the move, arguing that it would eliminate a blatant flaw.

However, the Social Democratic Party and the Swiss People’s Party have spoken out against the proposals.

The Export Risk Guarantee scheme was founded in 1934 as an instrument to combat unemployment and promote foreign trade.

It is a legally dependent, self-supporting fund managed by the government, and derives its income from guarantee fees and borrowers’ repayments from debt rescheduling.

This year Swiss exports valued at SFr3 billion ($2.39 billion) out of a total volume of SFr140 billion are expected to be covered by the scheme.

swissinfo with agencies

Key facts

Swiss exports are expected to total SFr140 billion this year.
The Export Risk Guarantee scheme is expected to cover SFr3 billion of them.
The present cover for public debtors is limited to 95 per cent of the risk.
It is planned to be limited to 85 per cent for private debtors.

In brief

A planned law on Export Risk Guarantee would put Swiss exporters on the same footing as their foreign competitors.

Exporters would be able to cover their risks on orders from private foreign companies. At present, they can only do that on orders from state authorities.

The majority of cantons, political parties and associations are backing the move.

Notable exceptions are the Social Democratic Party and the Swiss People’s Party.