Switzerland is a landlocked, mountainous country in central Europe that is roughly half the size of Tasmania. It enjoys one of the world’s highest standards of living thanks to a highly-skilled labour force, technological expertise in manufacturing and a strong financial services sector. Its stable, transparent and effective institutions, combined with high-quality infrastructure and low corporate tax rates, make Switzerland one of the most competitive economies globally.
Switzerland has a federal structure with three levels of government: the Confederation (federal government equivalent), the cantons (state/territory government) and the communes (local government). The Swiss Confederation consists of a seven-member Federal Council (cabinet equivalent) which is elected by the Federal Assembly for a four-year term. The position of President of the Swiss Confederation is rotated annually among the Councilors. In December 2014 the Federal Council elected Justice Minister Simonetta Sommaruga as Switzerland’s President for 2015. The Federal Assembly is Switzerland’s national legislature. It has two chambers: the National Council and the Council of States. The National Council has 200 members elected on a (mostly) proportional representation basis. The Council of States has 46 members: two from each canton (territorial/administrative sub-division) and one from each half-canton. The two chambers serve concurrent four-year terms. The next parliamentary elections will be in October 2015.
At the October 2011 parliamentary elections the Swiss People’s Party (SVP) won the largest share of votes (26.6 per cent), followed by the Social Democrat Party (SP) (18.7 per cent), the Free Democrat Party (FDP) (15.1 per cent), the Christian Democratic People’s Party (CVP) (12.3 per cent), the Greens (8.4 per cent), the newly-formed Conservative Democratic Party (BDP) (5.4 per cent), and the Green Liberal Party (GLP) (5.4 per cent). The Federal Council was then formed from the four largest parties and the BDP, which was formed after a split from the SVP in June 2008 — two each from the FDP and SP, and one from the SVP, CVP and BDP.
While Switzerland has a long-standing tradition of neutrality and is not a member of NATO, it participates in peacekeeping missions, including NATO’s Partnership for Peace. Switzerland also plays an active role in conflict mediation, most recently during the Ukraine crisis as annual Chair of the Organization for Security and Cooperation in Europe in 2014. Switzerland is one of four members (with Sweden, Poland, and the Czech Republic) of the United Nations (UN) Neutral Nations Supervisory Commission monitoring the demilitarised zone between North and South Korea. Switzerland eventually became a member of the UN in September 2002. It is a candidate for a non-permanent seat on the UN Security Council for the period 2023-24.
Switzerland has concluded more than 100 sector-specific bilateral agreements with the European Union (EU). It acceded to the European Free Trade Association in 1960 and signed a Free Trade Agreement (FTA) with the European Economic Community in 1972. Currently Switzerland is seeking to negotiate a Swiss-EU FTA on unprocessed agricultural products and a framework agreement on European electricity sharing. Trade in processed agricultural products was liberalised as part of the 2004 package of bilateral accords with the EU. Switzerland became a member of the Schengen area in December 2008, and full implementation took place in March 2009.
More than 20 international organisations are headquartered in the Swiss city of Geneva, including various UN agencies, the World Trade Organization (WTO), the World Health Organization and the International Committee of the Red Cross.
Switzerland is an open economy with one of the highest standards of living and one of the highest per capita incomes in the world. Swiss GDP growth in 2014 was 2.0 per cent. Its prosperity is based on labour skills and technological expertise in manufacturing as well as earnings from services such as tourism and banking. In the 2014-15 World Economic Forum Competitiveness Index, Switzerland was ranked number one for the sixth consecutive year. Switzerland is an important trading nation and a net exporter (in 2014, its trade surplus was approximately $36.0 billion). In 2014 goods and services exports reached a new record of CHF 208.4 billion ($252.4 billion).
Switzerland has weathered the negative effects of the 2009 Global Financial Crisis (GFC) comparatively well and has retained its AAA credit rating. However, the Swiss National Bank’s decision in January 2015 to remove its exchange rate cap on the Swiss franc against the euro, which had shielded Swiss exporters from a loss of competitiveness since 2011, will likely dampen economic growth in 2015.
Although not a member of the bloc, Switzerland is deeply integrated with the EU. Its large Eurozone neighbours (France, Germany, Austria and Italy) absorb approximately 35 per cent of all Swiss exports. Persistently low growth and structural issues in the Eurozone since the GFC have placed negative pressure on the Swiss economy. Moreover, the Swiss Government’s planned implementation of annual immigration quotas, as mandated by a popular referendum in 2014, could jeopardise Swiss-EU agreements on market access. The Swiss Government has until 2017 to negotiate a compromise with the EU regarding the free movement of people.
Switzerland has come under increasing pressure in recent years from members of the international community to reform its banking secrecy laws. In 2014 the Swiss Government agreed to conform to OECD regulations on administrative assistance in tax matters, including tax evasion. The government has renegotiated its double taxation agreements with numerous countries to meet OECD standards.
Australia and Switzerland enjoy an increasingly dynamic relationship based on shared political and economic interests, which are supported by regular high-level dialogue. A key element of contemporary ties is Switzerland’s significant investment in Australia. Cultural links have traditionally been close, and many Swiss have made valuable contributions to Australia. There is expanding cooperation in the areas of scientific research and development, education and two-way investment.
The Australian Ambassador to Germany, based in Berlin, is also accredited to Switzerland. Australian representation in Switzerland, based in Geneva, consists of a Consulate-General and the Australian missions to the UN and WTO.
Significant recent developments
Bilateral ties have been strengthened in recent times following a series of high-level visits. Swiss Foreign Minister, Didier Burkhalter, visited Australia in October 2013 and signed a memorandum of understanding establishing a Strategic Dialogue between Australia and Switzerland to further strengthen bilateral ties. Foreign Minister Bishop, Trade and Investment Minister Robb and Communications Minister Turnbull each visited Switzerland in 2014. Prime Minister Abbott attended the World Economic Forum (WEF) in Davos in 2014, and Assistant Treasurer Frydenberg attended the WEF in 2015. Australian ministers regularly visit Switzerland for multilateral meetings in Geneva.
Australia and Switzerland have concluded a number of bilateral agreements, including on: double taxation, social security, defence and supply, nuclear safeguards (covering the import of Australian uranium for peaceful purposes), air services, extradition, and mutual assistance on cooperation on law enforcement. Memoranda of understanding have been signed on cooperation in the fields of science, research and innovation, trainee exchanges and a regular dialogue on health regulations. Texts of bilateral agreements are available from the AUSTLII website.
More recently, on 3 March 2015 Australia and Switzerland agreed to increase cooperation to tackle tax evasion.
The contribution of Swiss immigrants during the early years of European settlement in Australia helped foster the country’s multicultural society. Contemporary links remain strong, with around 52,000 Swiss visitors to Australia in 2014 and almost 1,500 Swiss students enrolled in Australian educational institutions in 2014. Tens of thousands of Australians visit Switzerland every year. Australian artists have a presence in Switzerland through performing tours and visual arts shows, and feature in private and public collections, including Indigenous Australian art. Most recently, the Australian Youth Orchestra toured Switzerland in August 2014.
Science and education
The science and education sectors are an increasingly important area of bilateral cooperation. The first meeting of the Swiss-Australian Joint Committee for Cooperation in the Areas of Science, Research and Innovation was held in Canberra on 27 November 2014. At the meeting, umbrella organisations representing the interests of Swiss and Australian universities signed a memorandum of understanding to encourage the exchange of experts working on common research projects.
The Swiss Australian Academic Network (SAAN) was established in 2005 to increase scientific exchanges between the two countries. SAAN currently has more than 650 members in both countries. Growing numbers of Swiss students are studying at Australian universities and more than 40 Australian education providers achieved Austrade-assisted export success in Switzerland. Leading providers include the University of Melbourne and Macquarie University.
Bilateral trade and investment relationship
Australia and Switzerland’s bilateral investment relationship is a significant source of prosperity for both countries. Total two-way trade remains modest and heavily weighted in Switzerland’s favour.
In 2014, total two-way merchandise trade totaled $3.39 billion. Australia’s imports from Switzerland (predominantly medicaments, gold and watches and clocks) reached $2.85 billion. Australian exports to Switzerland (chiefly gold, followed by silver and platinum, jewellery and meat) totaled $548 million. Two-way services trade was more balanced in 2013. Australia’s services exports amounted to $1.05 billion and imports from Switzerland to $1.33 billion. Australia’s major services exports included transportation and telecommunication, computer and information services.
Switzerland was Australia’s eighth-largest source of foreign direct investment ($19 billion) and tenth-largest investor overall ($54.6 billion) in 2014. Australian total foreign investment in Switzerland amounted to $41.2 billion in 2014. Notable Swiss companies with a base in Australia include Glencore Xstrata (mining), Novartis Pharmaceuticals, Roche, Nestlé, SGS, ABB, Holcim and financial services companies Credit Suisse, Zurich and UBS.
An Australian Honorary Consulate was established in Zurich in 2012 to consolidate an Australian presence in this significant commercial centre and to support consular and business promotion activities. Notable Australian companies in Switzerland are Macquarie Group and biopharmaceutical group CSL Behring. Switzerland welcomes FDI in manufacturing, services, and research and development. The State Secretariat for Economic Affairs and its Business Location Switzerland are the government bodies charged with facilitating such investment. Strict limits on the entry of foreign workers restrict the entry of firms in labour-intensive industries. Switzerland offers a high level of protection for all forms of intellectual property. Patents, industrial designs and models, trademarks and copyrights are legally recognised in Switzerland.