Subchapters:
- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Business relations
Trade relations with the EU
Switzerland is a member of the EFTA, but not a member of the EU and the EEA. Even though it is not a member country of the EU, it is economically very closely connected with its member countries thanks to bilateral agreements. EU member states are Switzerland’s most important trading partner, especially its neighboring countries, especially Germany. Switzerland accounts for approximately 7% of European foreign trade. Approx. 67% of Swiss imports come from EU countries, approx. 50% of Swiss exports go to the EU. Switzerland is the 3rd largest investor in EU countries. In terms of goods, trade between the EU and Switzerland is concentrated in several sectors, mainly products of the chemical and pharmaceutical industry, medical products, precision mechanics tools and watches.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports to the EU (billion CHF) | ON | ON | 114.95 | 108.79 | ON |
| Imports from the EU (CHF billion) | ON | ON | 132.80 | 120.94 | ON |
| Balance with the EU (CHF billion) | ON | ON | -17.85 | -12.15 | ON |
Source: Federal Customs Office, Swiss-Impex
Trade relations with the Czech Republic
In 2021, goods with a total value of CZK 7billion were destined for Switzerland, i.e. 1.5% of Czech exports (16th place). In the same period, goods with a total value of CZK 4billion went from Switzerland to the Czech market, i.e. 1.0% of Czech imports (20th place). In 2021, mainly road vehicles, office machines and equipment for automatic data processing, essential oils and fragrances, polishing and cleaning products were exported to Switzerland. The most important items of import to the Czech Republic in 2021 were pharmaceutical products and medicines, gold, not coinage (except gold ores and concentrates) and electrical equipment, devices and appliances.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from the Czech Republic (billion CZK) | 36.8 | 59.1 | 70.2 | 68.9 | 71.9 |
| Imports to the Czech Republic (billion CZK) | 59.2 | 37.7 | 38.5 | 39.4 | 46.4 |
| Balance with the Czech Republic (billion CZK) | 22.4 | -21.4 | -31.6 | -29.5 | – 25.5 |
Source: businesscarriers.com
Trade relations with countries outside the EU
Switzerland’s most important trade partners outside the EU have long been the USA (12.5%), China (7.56%), Great Britain (3.17%) and Japan (2.61%). The rest of the world (excluding the EU – 56%) accounts for 17% of Switzerland’s total trade in goods.
(Data is shown excluding gold bullion and other precious metals, coins, precious stones and gems, as well as works of art and antiques)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports to non-EU countries (CHF billion) | ON | ON | 127.39 | 116.5 | ON |
| Imports from non-EU countries (CHF billion) | ON | ON | 72.35 | 61.37 | ON |
| Balance with non-EU countries (CHF billion) | ON | ON | 55.04 | 55.13 | ON |
Source: Federal Customs Office, Swiss-Impex
Foreign direct investment
In 2020 (the most recent figure from the Swiss National Bank SNB), the stock of foreign direct investment in Switzerland was CHF 1,216 billion. Of this, CHF 1,159 billion (95%) accounted for equity and CHF 58 billion (5%) for corporate loans. When broken down by end investors, 73% of the invested capital belonged to investors from EU countries and 13% to investors from the USA. However, this classification points to the domicile of entities that actually exercise control over Swiss companies, only conditionally. Intermediary companies play an important role in this area in Switzerland. The SNB therefore publishes an alternative breakdown by country of origin of the final beneficiaries of investments in Switzerland. According to this breakdown, US investors managed 47% and EU investors 29% of the share capital in Switzerland. Foreign direct investment income in Switzerland decreased by 36% from CHF 109 billion to CHF 69 billion in 2020 compared to 2019 due to the coronavirus pandemic. At the same time, dividends and net interest transferred to investors abroad reached CHF 73 billion, resulting in a drop in reinvested income of CHF 4 billion. The decline in investment income concerned both subsidiaries in the service sector (– CHF 35 billion to CHF 53 billion) and in the industry sector (– CHF 5 billion to CHF 16 billion).
According to statistical data of the Czech National Bank, as of 31 December 2020 (the most recent data), direct investments in Switzerland amounted to 2.6% of the volume of all Czech direct investments abroad. This makes Switzerland the 8th most popular destination for Czech investors after the Netherlands, Luxembourg, Slovakia, Cyprus, Great Britain, Romania and Poland.
FTAs and treaties
Treaties with the EU
A Free Trade Agreement /FTA/ has existed between the Czech Republic and the EU since 1972. Mutual relations are also regulated by a number of sectoral bilateral agreements (so-called Bilaterale I from 1999 – free movement of persons, reduction of trade restrictions, access to public contracts, agriculture, land and air transport, science and research, and Bilaterale II from 2004 – other economic agreements, internal security, asylum policy, environment and culture). However, there is still no overarching agreement, despite the fact that the final text of the Framework Agreement (IFA) was negotiated in 2018. The goal of the IFA was to define a framework valid for all bilateral agreements between the EU and CH – i.e. for those already in force, including the FTA, as well as for newly negotiated ones in the future, and to solve the still non-existent judicial supervision and enforcement of compliance with existing bilateral agreements.
Contracts with the Czech Republic
The contractual relations of the Czech Republic and the Czech Republic are based on international bilateral and multilateral contractual documents by which both countries are bound. In addition to them, those parts of the EU acquis are relevant for them, which, based on the contractual relations between the EU and CH, are also reflected in the bilateral relations of individual member states with CH. Some bilateral contractual documents are thus not implemented, because the legal acts of the European Community are preferentially applied to specific issues. The most important bilateral treaties include the Treaty between the Czech Republic and the Czech Republic on the avoidance of double taxation in the field of income and property taxes, which – to the extent standard in Europe – prevents income and property from being taxed in the states of both contracting parties. The agreement between the Czech Republic and SK and CH on the support and mutual protection of investments provides a legal framework for the protection of investments, and Agreement No. 1 and No.
Developmental cooperation
Switzerland is an important donor in the field of development cooperation and humanitarian aid. According to the OECD, its official development assistance (ODA) was CHF 3.589 billion in 2021 (i.e. 0.51% of GDP). Despite the economic losses caused by the coronavirus, the country has increased its contributions by more than 243 million CHF compared to 2020 with the aim of mitigating the global consequences of the pandemic and preventing a humanitarian disaster following the rise of the Taliban in Afghanistan. Swiss international cooperation is carried out primarily through the Federal Agency for Development and Humanitarian Aid (DEZA) and the Division for Economic Cooperation and Development within the Federal Economic Office (SECO). These two institutions are entrusted with the implementation of the Federal Act on International Development Cooperation and Humanitarian Aid. The involvement of Czech companies cannot be counted on now.
Prospective fields of study (MOP)
According to the Global Innovation Index 2021, Switzerland is the most innovative country in the world, and it has been in first place continuously since 2011. Science, research and innovation thus represent the biggest strategic opportunity for Czech entities in the long term. In this area, Switzerland belongs to the world leaders, and therefore it is in the interest of the Czech Republic to strive not only to apply Czech solutions in Switzerland, but also to find a way to participate in the Swiss ones. In November 2020, the Swiss government adopted the Digital Foreign Policy Strategy 2021-24. During its implementation, many interesting opportunities arise in the field of digitization across all directions and sectors. The Swiss also want to build a European data center in Geneva in cooperation with other European states.
ICT
Digital sovereignty is also a very current topic in Switzerland. In addition, the pandemic has triggered turbo-digitalization. Switzerland has long been an importer of ICT knowledge and services, even though it offers excellent starting conditions for digital transformation. Geographically, the canton of Zurich, the canton of Bern and its surroundings, and the canton of Geneva offer the most opportunities in the ICT sector. Industry-wise, opportunities can be found across all key sectors. Cloud services, virtual and augmented reality are promising.
Engineering industry
The MEM (engineering, electrical and metalworking) sector is Switzerland’s key industry, with exports accounting for nearly 27% of total exports in 2020. The number one strategic topic is its digitization, especially the automation of production and processes, new technologies and trends, as well as the development and development of digital skills, products and services. The MEM sector successfully combines traditional production know-how with innovative, future-oriented technologies. There are many sectors and fields in the Swiss engineering industry, and thus it offers Czech subjects a wide portfolio of opportunities.
Chemical industry
The chemical and related pharmaceutical industries are among the most important sectors of the Swiss economy. It accounts for 4.8% of Switzerland’s total GDP. In a global comparison, Switzerland is a very favorable place for research and innovation in the field of biomedicine. Switzerland owes its top position to foreign experts to a large extent. Possibilities are in academic collaboration, collaboration on clinical research, subcontracting of laboratory equipment, information technology, projects with artificial intelligence or investment opportunities.
Healthcare and pharmaceutical industry
The Swiss health policy and its priorities are based on the “Gesundheit 2030” concept from 2020. In addition to new elements such as the eHealth 2.0 innovation strategy, which targets the gaps in the digitalization of the Swiss healthcare system, the new concept also focuses on the ever-increasing need to secure the living conditions of an aging population. The health care system is under pressure, among other things, due to the lack of qualified personnel and gaps in the digitization of the sector. These areas thus offer the greatest opportunities for Czech solutions.
Agricultural and food industry
Swiss agriculture is an extremely generously subsidized economic sector. The share of the total import of agricultural and food products into the country exceeds their export. Switzerland is not able to cover 40% of its food needs with its own products, and is thus dependent on importing them from abroad. Opportunities for Czech exporters are mainly in the supply of high-quality agricultural commodities and agricultural machinery.
