Swiss flag

Switzerland country brief

Overview

Australia and Switzerland enjoy friendly relations based on shared political and economic interests. A key element of the contemporary bilateral relationship is Switzerland's significant investment in Australia. Cultural ties 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 United Nations (UN) and World Trade Organization (WTO).

Political overview

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 United Federal Assembly for a four-year term. A new Federal Council was elected in December 2011 following the October 2011 parliamentary election. The position of President of the Swiss Confederation is rotated annually among Councillors. In December 2013 the Federal Council elected Foreign Minister Didier Burkhalter as Switzerland's President for 2014.

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 2015.

At the October 2011 parliamentary elections the (right-wing) Swiss People's Party (SVP) won the largest share of votes (26.6 per cent) followed by: (left) Social Democrat Party (SP) (18.7 per cent); (liberal) Free Democrat Party (FDP) (15.1); (centrist) 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 in the SVP in June 2008 — two each from the FDP and SP, and one from the SVP, CVP and BDP.

Foreign policy

Though not a European Union (EU) member state, Switzerland has become increasingly integrated with the EU by concluding bilateral issue-specific accords. Switzerland acceded to the European Free Trade Association (EFTA) in 1960 and signed a Free Trade Agreement with the European Economic Community (EEC) in 1972. Currently Switzerland is seeking to negotiate a Swiss-EU free trade agreement (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.

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 (PfP), and plays an active role in conflict mediation. It is one of four members (with Sweden, Poland, and the Czech Republic) of the UN Neutral Nations Supervisory Commission monitoring the demilitarised zone between North and South Korea. Switzerland eventually became a member of the United Nations in September 2002.

Switzerland is a member of the Council of Europe (CoE), the Europe-Atlantic Partnership Council (EAPC), the European Bank for Reconstruction and Development (EBRD), the International Bank for Reconstruction and Development (IBRD), the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD), the Organisation for the Security and Cooperation in Europe (OSCE), and the World Trade Organisation (WTO).

Economic overview

Switzerland is an open economy with one of the highest standards of living and one of the highest per capita incomes in the world. Switzerland's GDP was estimated at $374 billion in 2013. Switzerland's prosperity is based on labour skills and technological expertise in manufacturing as well as earnings from services such as tourism and banking. In the 2012-13 World Economic Forum Competitiveness Index Switzerland ranked number one for the fourth consecutive year.

Switzerland is an important trading nation and a net exporter (in 2013, the trade surplus was equivalent to A$29 billion). In 2013 goods and services exports amounted to over a half of its GDP. Switzerland weathered the 2009 Global Financial Crisis (GFC) comparatively well as measures stimulating domestic demand helped to compensate for losses in the financial and export sectors, also caused by the high value of the Swiss Franc. Although not a member of the Eurozone, Switzerland's economy is heavily interlinked with Europe and is landlocked by countries that are members of the Eurozone (which receive around 58 per cent of its exports). Persistent low growth and structural issues in the Eurozone since the GFC has placed pressure on the Swiss economy, but Switzerland's underlying competitiveness has enabled its economy to remain resilient so far, although specific sectors continue to suffer not only from problems in export markets, but also from structural problems in Switzerland (high-wage country, overvaluation of Swiss Franc and legal issues around its financial sector following from stronger international efforts to contain tax evasion and tax fraud). Switzerland has retained its AAA credit rating and its economy is estimated to have grown, albeit slowly, by an estimated 1.9 per cent in 2013.

Ongoing structural reform and measures to boost GDP growth over the longer term, including improving competition policy, social security reform and reducing high price levels by liberalising sectors such as electricity, energy, telecommunications and postal services, will assist Switzerland's continued economic strength. Switzerland's agriculture sector remains highly protected. Farm subsidies are the highest in the world. Swiss farmers can receive support equivalent to as much as three-quarters of the value of production.

Key economic indicators

After contracting by 1.9 per cent in 2009 following the global financial crisis, the Swiss economy has rebounded strongly. It grew by 3.0 per cent in 2010, 1.9 per cent in 2011 and 1.0 percent in 2012. Swiss GDP is estimated to have risen by 1.9 per cent in 2013 and inflation is forecast to be negative again at -0.2 per cent. . Unemployment levels remain around 3 per cent.

Bilateral relations

Cultural relations

People to people links are significant, with around 43,000 Swiss visitors to Australia in 2012-13 with an above average length of stay. Several thousand 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 arts. Bangarra performed in Switzerland in March 2011, Australian films featured prominently at the Zurich Film Festival in September 2010 and the Sydney Symphony Orchestra visited Switzerland in August 2010.

The science and education sectors are an increasingly important area of bilateral cooperation. The Swiss Australian Academic Network (SAAN) was established in 2005 to increase scientific exchanges between the two countries. SAAN currently has about 250 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.

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 aimed at further strengthening bilateral ties. Australian ministers regularly visit Switzerland for meetings in Geneva or to attend the annual World Economic Forum (WEF) in Davos. Prime Minister Tony Abbott and the Minister for Trade and Investment, Andrew Robb, participated in the World Economic Forum (WEF) in January 2014.

Bilateral agreements and official dialogue

Australia and Switzerland have a number of bilateral agreements including on: Double Taxation; Defence and Supply; Nuclear Safeguards (covering the import of Australian uranium for peaceful purposes); Extradition; Mutual Assistance on cooperation on law enforcement agencies; a Memorandum of Understanding (MOU) on exchanges on health regulations; an MOU on Exchange of Trainees; and an MOU between the Swiss Federal Department of Economic Affairs, Education and Research and Australia's Department of Industry on cooperation in the fields of science, research and innovation.

In 2006, Australia and Switzerland signed a bilateral social security agreement to give improved social security protection to people who have lived and/or worked in both countries. The social security agreement also exempts Australian employers from the need to provide Swiss social security support for Australian employees sent temporarily to work in Switzerland, provided the employee remains covered in Australia by compulsory superannuation arrangements. Further information is available on the Australian Taxation Office website. In 2008, Australia and Switzerland signed an air services agreement. Texts of bilateral agreements are available from the AUSTLII website.

Australia continues to look for opportunities to broaden and deepen the relationship, including through ongoing senior officials talks on foreign policy and economic issues and an annual financial dialogue. The most recent senior officials talks were held in Berne in March 2013. The (Berlin-based) Australian Ambassador regularly visits Bern and other Swiss cities.

Bilateral trade and investment relationship

Trade and investment

In 2012, merchandise trade between Australia and Switzerland was worth A$3.6 billion. Total merchandise exports were A$681 million and total merchandise imports A$2.89 billion. The major Australian export to Switzerland was jewellery, followed by gold, meat (excluding beef) and pharmaceutical products. Major Australian imports were medicaments, gold and watches and clocks.

Two-way services trade amounted to around A$1.8 billion in 2012. Australia's services exports amounted to A$656 million and imports from Switzerland to A$1.16 billion. Australia's major services exports included transportation and personal travel. In 2012-13, 43,000 Swiss visited Australia and 873 Swiss students were enrolled in Australian educational institutions in 2013.

Switzerland is a significant investor in Australia. Switzerland was Australia's fifth largest source of foreign direct investment (A$23 billion) and sixth largest investor overall (A$49 billion) in 2012. Australian total foreign investment in Switzerland amounted to A$27.5 billion in 2012. 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.

The Australian Trade Commission (Austrade) contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, and governments develop international markets, win productive foreign direct investment, promote Australian education internationally and strengthen Australia's tourism industry. Austrade's website is a valuable resource for information on international opportunities in these areas, including Switzerland. Austrade has an office in Frankfurt which covers Switzerland.

Updated March 2014