Challenges in the foreign economic policy context

The international context sets the framework for Switzerland's foreign economic policy. The following major trends are decisive for the positioning and orientation of the strategy:

World order in a state of flux

On the international stage, a number of emerging actors have gained importance, contributed to geopolitical shifts, and called into question the established world order. Multilateralism has faced challenges for some time. This is shown in particular by the developments in the World Trade Organization (WTO).

The West is increasingly competing with the systems of alternative economic orders. The influential economic actors, namely China, the EU and the United States, represent different government, economic and value systems. They are shaping international debate with their beliefs and seeking broad implementation of their regulatory approaches.

While distant markets continue to be opened up, we can observe a re-gionalisation of international value chains. This trend is also evident with the conclusion of major regional trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP) or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Sources: World Bank (2021): GDP at constant 2010 US$.

Protectionist tendencies and criticism of globalisation

Protectionist tendencies have grown in recent years and trade barriers as a political lever have become more important. These are far-reaching developments for Switzerland as an internationally-integrated economy.

Structural change and growing domestic inequality in many countries, the resulting domestic policy tensions, and global threats – such as global health risks, climate change and biodiversity loss – are also changing the political perception of globalisation. The criticism levelled against globalisation ranges from calls for enhanced social and environ-mental standards to a fundamental rejection of trade and multilateral economic cooperation. It is important to emphasise that economic prosperity and environmental and social policy are mutually dependent.

The COVID-19 pandemic has led to record slumps in economic performance across the world and has compounded regional, social and economic challenges in a number of states. The debt burden has risen significantly in many countries due to the economic mitigation measures put in place. The pandemic has illustrated the global interconnectedness of value chains and reinforced protectionist tendencies.

The demands placed on foreign economic policy

Foreign economic policy is becoming more thematically diverse.

The importance of sustainable economic development is reflected in the United Nations 2030 Agenda and in multilateral agreements, such as the Paris Agreement. Besides considering the impact on natural resources (climate, air, waterways, biodiversity), the aspects that are relevant to trade also include compliance with the International Labour Organization’s core labour standards, particularly local employment conditions.

Technological developments change both the structure of trade flows and the nature of cross-border economic relations. Guaranteeing a suitable regulatory framework for the digital economy is crucial, both for the attractiveness of Switzerland as a location and to ensure that cross-border economic relations are as smooth as possible. Switzerland faces different regulatory approaches, which are mainly shaped by the United States, the EU and China.

Last modification 22.11.2021

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