Is Switzerland more important to America than China? Well, it depends on what is important to you.
As Chairman of the Swiss American Chamber of Commerce, I believe that the relationship between Switzerland and the US offers a model for how cross-border investment can strengthen economic ties between nations, creating much-needed jobs and adding to global prosperity through financial partnership. Our government also understands this too, and I am sure that this message will be reinforced when Federal Councillor Ueli Maurer, Head of the Federal Department of Finance, and Federal Councillor Johann Schneider-Ammann, Head of the Federal Department of Economic Affairs, Education and Research, visit the US next week.
Meanwhile, the whole world is watching America and its new President to try to understand where his administration is going in terms of economic and trade policies and the impacts they might have on its trade partners. Early talk of border taxes and trade tariffs has stoked concern about the risk of trade wars and a so-called "new era of US protectionism."
President Donald Trump put it this way: "There are two simple rules: buy American and hire American." For some countries, that's worrying. For others, it’s a great opportunity -- one that Switzerland is already embracing.
So who really matters to America when it comes to jobs? Well, if you look at the net figures (employment in the US by foreign companies minus US-created jobs in that country), then Switzerland creates more American jobs than China. That’s 370,000 net jobs in America’s favor according to the latest figures*. Globally, Switzerland ranks second only to Japan in the net jobs it creates for America. And if you add in all the jobs supported by exports to Switzerland, the total soars to more than 700,000.
Switzerland is a minnow on the world stage – a small, landlocked country of about 8 million people, accounting for less than one percent of global gross domestic product. We live in the popular imagination as a land of chocolate, mountains and cuckoo clocks. But you won’t find much in the way of lederhosen, yodeling or bank secrecy anymore – perception lags behind the reality. And the reality is that in terms of American jobs, Switzerland is a true heavyweight. And these jobs are well paid, with American workers in Swiss-owned companies earning an average of more than $100,000 a year, higher than jobs from any other major country*.
Switzerland is the seventh-largest foreign investor in the US, and Swiss investments are growing at the second-highest rate of any country*. It's a two-way street, with about a fifth of global investment in Switzerland coming from the US.That helps explains why Switzerland has added more jobs to the US economy than any other major country since 2008, so that Swiss companies now contribute more than 460,000 jobs, spread across every state*. Swiss companies are among the top three foreign employers in more than half a dozen states from New Jersey through Arkansas to California, with New Mexico, North Dakota and Louisiana showing the fastest growth.
Swiss companies are prominent in manufacturing in chemicals, food and electronics, and in services like banking and insurance. World-class companies including Nestle SA, Novartis AG, ABB Ltd., Credit Suisse Group AG and UBS Group AG have important US operations.
Given that the most famous Swiss-American is Albert Einstein, maybe it is not so surprising that Switzerland is the biggest foreign investor in research & development in the US, accounting for a fifth of total foreign investment*. R&D is vital for tomorrow’s jobs – recent research estimated that for every one percent increase in R&D, America would benefit from a .38 per cent increase in jobs
∗∗. And Swiss companies are the number one investor in high-value growth industries such as pharmaceuticals and medicine.
Of course, while Switzerland matters to the US, the US in turn is absolutely vital to Switzerland. US companies export goods and services worth more than $50 billion to Switzerland annually. And exports are growing, both ways. We value our economic relationship. We also value the historical and cultural ties, underpinned by our shared values. In addition, our two governments have agreed to co-operate more in vocational education and training. In Switzerland we have a long and successful tradition of apprenticeships.
Extending the partnership between Switzerland and the US will help grow the economic ties to the mutual benefit of both countries. With more than 500 Swiss companies providing jobs for Americans already, we can expect further investment. What's good for Switzerland is also good for America.
*Data drawn from the report, “Switzerland’s Economic Footprint in the United States (2017)”, underlying data from the U.S. Department of Commerce Bureau of Economic Analysis (bea.gov)
**Huo, J. (2015.) How Nations Innovate: The Political Economy of Technological Innovation in Affluent Capitalist Economies. Oxford, UK: Oxford University Press.
Sergio P. Ermotti is Group CEO of UBS, and Chairman of the Swiss American Chamber of Commerce.
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