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U.S. DEPARTMENT OF STATE
SWITZERLAND: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS





                           SWITZERLAND

                     Key Economic Indicators
                    (Millions of U.S. dollars)


                                     1992      1993      1994

Income, Production and Employment:

Real GDP (1980 prices)            148,689   140,044    72,988(1)
Real GDP Growth (pct.)               -0.3      -0.9       1.8(1)
GDP (at current prices)           241,354   232,179   123,464(1)
Real Per Capita GDP                21,729    20,448       N/A
Labor Force (000s)                3,572.8   3,552.1   3,503.1(2)
  of Which are Foreigners           948.5     935.3     944.8(2)
Unemployment Rate (pct.)              2.5       4.5       4.6(2)

Money and Prices:

Money Supply (M2/pct. gwth.)          0.5      -7.9      -2.8(3)
Base Interest Rate (pct.)             6.0       4.0       3.5(2)
Personal Saving Rate (pct.)          12.7      12.0      11.7(4)
Retail Inflation (pct.)               4.0        .3       1.2(3)
Wholesale Inflation (pct.)            0.1       0.2      -0.7(3)
Consumer Price Index                133.9     138.3     140.0(3)
Exchange Rate (USD/Sfr)             0.712     0.677     0.699(3)

Balance of Payments and Trade:

Total Exports                      61,377    58,653    30,996(1)
  Exports to U.S.                   4,989     5,020     2,693(1)
Total Imports                      61,798    56,695    30,083(1)
  Imports from U.S.                 3,660     3,247     1,739(1)
External Public Debt               91,715   102,159       N/A
Debt Service Payments ($Bil.)         7.0       7.4       7.8(4)
Gold and Foreign Exch. Reserves    26,691    27,648    30,022(3)
Trade Balance                        -421     1,957       913(1)
  Trade Balance with U.S.           1,329     1,773       954(1)


N/A--Not available.
(1) First half of 1994.
(2) End of June 1994.
(3) Average of first six months of 1994.
(4) Estimated.



1.  General Economic Framework

    As a country that has only its famous mountains as natural
resources, Switzerland derives its wealth from international
trade in goods and services.  Swiss exporters of goods mainly
operate in hi-tech niche markets, where they often have a clear
competitive advantage over foreign rivals.  In services, Swiss
banking and other financial services are reputed for their
efficiency, performance and customer privacy.  But when Swiss
voters decided in December 1992 to reject the European Economic
Area (EEA) treaty, Switzerland found itself in the awkward
position of being located in the heart of Europe, without being
part of the EEA, nor being a member of the EU.  With over 60
percent of its exports going to Europe, the Swiss government is
making every effort to limit the negative effect on the
domestic economy that may result from the EEA rejection.  In
this respect, the conclusion of the Uruguay Round was
considered by experts as a way to avoid possible discrimination
against Swiss products in EU markets.  Parliament will discuss
the ratification of the GATT agreement in December 1994, and if
no referendum delays the process of ratification, Switzerland
should join the WTO by May 1995.

    In general, Switzerland does not use any fiscal policy
tools to stimulate the economy.  The exception to the rule was
a $400 million investment bonus, launched by the Federal
government in 1993, which stimulated construction activity in
1994.  As a result of economic recession and excessive
government spending toward the end of the 1980's, Switzerland
had combined budget deficits on all three government levels of
over $10 billion, or 4.2 percent of GDP, at the end of 1993. 
Financed by government bonds, the large budget deficits also
caused public debt to increase.  Federal and cantonal
governments initiated measures to curb expenditures in order to
reduce budget deficits from 1994 on.

    The main objective of Swiss monetary policy is price
stability.  Under the responsibility of the Swiss National Bank
(SNB), monetary policy is carried out through open market
operations.  Besides being independent from the government, the
SNB keeps its independence from other central banks.  However,
the small size of the country, and the free movement of
capital, make Switzerland highly vulnerable to events in Europe
and other world financial centers.  Lately, the large budget
deficits and public debt raised concerns over possible negative
influences on interest rates.


2.  Exchange Rate Policies

    In the mid and long-term, the SNB does not follow any
exchange rate policy, and the Swiss franc is not pegged to any
foreign currency.  However, in cases where the Swiss currency
would be likely to appreciate considerably over a short period,
the SNB takes measures to prevent further appreciation.


3.  Structural Policies

    Because of Switzerland's high level of dependence on
international trade, few structural policies have a significant
effect on U.S. exports.  One exception is the field of
services, where Swiss telecommunication policy has a
significant impact on demand for U.S. exports.  The PTT (a
public corporation within the government) still has a monopoly
over voice transmission, and telecommunication equipment has to
be approved by an (independent) Federal office.

    Agriculture is heavily regulated and supported by the
Federal government.  Farmers' revenues are pegged to those of
blue collar workers in industry through guaranteed prices or
direct payments. Prices of agricultural imports are raised to
domestic levels by variable import duties and by requiring
importers to buy domestic products at high prices as a
condition of importing.  In parallel to the Uruguay Round, the
Swiss government started to reform agricultural policy by
switching from price subsidies to direct payments.  As a result
of the Uruguay Round, Switzerland will have to convert all
non-tariff barriers into tariffs and reduce them by an average
of 30 percent within six years.  These changes are likely to
have a favorable effect on U.S. agricultural exports. 

    In November 1993, the Swiss electorate voted in favor of a
change from a 6.2 percent turnover tax on goods to a 6.5
percent value added tax (VAT) on goods and services.  The
introduction of the new tax system at the beginning of 1995 is
expected to add 1.5 percentage points to the consumer price
index.  If the SNB can ward off the beginning of a wage-price
spiral, the one-time impact of the VAT on prices should have no
influence on the growth of the economy.


4.  Debt Management Policies

    As a net international creditor, debt management policies
are not relevant to Switzerland.  The country participates in
the Paris Club for Debt Rescheduling and is an active member of
the OECD.  Switzerland joined the International Monetary Fund
and the World Bank in 1992 and holds a seat on the Executive
Board.


5.  Significant Barriers to U.S. Exports

    Import Licenses:  In general, import licenses are required
for all imports of goods.  They are granted freely and serve
primarily statistical purposes.  However, import licenses for
agricultural products are subject to quotas and tied to the
obligation for importers to take a certain percentage of the
domestic production.  The implementation of the Uruguay Round
will remove some of these restrictions that also affect U.S.
agricultural exports (asparagus, wine).

    Services Barriers:  With the exception of
telecommunications, the Swiss services sectors feature no
significant barriers to U.S. exports.  A new banking law,
entering into force on January 1995, allows foreign banks to
open up subsidiaries, branches, or representative offices in
Switzerland without approval by the Federal Banking
Commission.  This liberalization is based upon reciprocity, and
the Government of Switzerland, vis-a-vis countries where it
does not have extensive contacts already, will require written
assurance that reciprocal access is provided.  In addition, a
new Federal law on stock exchanges, which should enter into
force in mid-1995, will replace the existing system of cantonal
regulations.  The new law is characterized by a high degree of
self regulation and contains the principle of national
treatment.

    Insurance is subject to an ordinance which requires the
placement of all risks physically situated in Switzerland with
companies located in the country.  Therefore, it is necessary
for foreign insurers wishing to do business in Switzerland to
establish a subsidiary or a branch here.  Government
regulations do not call for any special restrictions on foreign
insurers established in Switzerland.

    Attorneys and lawyers, like members of other professions
which require certification (physicians, pharmacists,
therapists, engineers, and architects) must pass a federal, or
in some cases a cantonal, examination and obtain appropriate
certification before they may set up a business of their own.

    The most serious barriers to U.S. exports exist in the
domain of telecommunications.  The Swiss PTT controls the
public network and all services related to voice transmission. 
Satellite communication requires licensing by the PTT, and
telecommunication equipment has to be approved by the Federal
Office of Telecommunication (separate from the PTT).  The Swiss
PTT has the possibility to take stakes in private companies
operating in the domain of Value Added Network Services (VANS),
which have been liberalized, whereas the private sector has no
access to markets controlled by the PTT.

    Standards, Testing, Labeling, and Certification:  As
mentioned before, telecommunications equipment has to be
certified by the Federal Office of Telecommunication. 
Household electrical appliances must be tested and approved by
the Swiss electrotechnical association, a semi-official body. 
Cars, motorcycles and trucks have to comply with Swiss
technical standards.  Finally, drugs (prescription and
over-the-counter) must be approved and registered by the
intercantonal Drug Agency.  Other standards and technical
regulations in force in Switzerland are based on international
norms.  Labels are required to be in German, French and Italian.

    Investment Barriers: In most cases, foreign investment in
Switzerland is granted national treatment.  Some restrictions
on foreign investment apply to the following areas:  Ownership
of real estate by foreigners; limits on the number of foreign
workers; and restrictions concerning the number of foreign
directors on the boards of corporations registered in
Switzerland.  For reasons of national security, foreign
participation in the hydro-electric and nuclear power sectors,
operation of oil pipelines, transportation of explosive
materials, television and radio broadcasting, operation of
Swiss airlines, and maritime navigation, are restricted by law.

    According to Article 711 of the Code of Obligations, the
Board of Directors of a joint stock company (with the exception
of holding companies) must consist of a majority of members
permanently residing in Switzerland and having Swiss
nationality.  Swiss corporate shares are issued as registered
shares (in the name of the holder) or bearer shares.  In the
past, Swiss corporations often imposed restrictions on the
transfer of registered shares to limit foreign ownership.  But
new legislation introduced in July 1992 and the increased
reliance of public companies on the international capital
markets forced Swiss companies to open their shares to foreign
investors.  At present, to prevent or hinder a takeover by an
outsider, public corporations must get governmental approval,
citing significant reasons relevant to their survival or the 
conduct and purpose of their business.  Public corporations may
limit the number of registered shares that can be held by any
one shareholder to a certain percentage of the issued
registered stocks.  Most corporations limit the number of
shares to between two and five percent of the relevant stock.

    Strict regulations govern the admission of foreigners
seeking to enter the Swiss labor market.  Nevertheless, the
foreign labor force represents more than a quarter of the total
workforce.  Sectors like construction and tourism rely on a
pool of unskilled, low-paid seasonal workers.  High-tech and
research-intensive sectors depend on highly skilled and
specialized foreign workers.  In the chemistry industry, for
instance, the proportion of foreigners working in research
departments exceeds 40 percent.

    In September 1994, parliament agreed to liberalize to some
extent the law governing the purchase of property by foreign
nationals or foreign-owned companies.  Under the modified law,
foreigners would no longer need an authorization from cantonal
governments to acquire real estate.  However, to avoid
speculation, ownership of property by foreigners will be
limited to the purpose of 'own use', which means that only
foreigners working and living in Switzerland, or companies
located in Switzerland, are allowed to buy property.  The
system of quotas for the acquisition of secondary residences by
foreign nationals was maintained under the new law.

    Government Procurement Practices:  On the federal level,
Switzerland fully complies with GATT rules concerning public
procurement.  On the cantonal and local level, however,
procurement practices are still subject to certain restrictions.

    Customs Procedures:  Customs procedures in Switzerland are
straightforward and not burdensome.  All countries are afforded
GATT most-favored-nation treatment.


6.  Export Subsidies

    Switzerland's only subsidized exports are in the domain of
agriculture, where exports of dairy products (primarily cheese)
and processed food products (chocolate products, grain-based
bakery products, etc.) benefit from state subsidies.  Rare
temporary surpluses of domestic products, like beef or
concentrated apple juice, are also subsidized.  The
implementation of the Uruguay Round will require a gradual
reduction of export subsidies in Switzerland.


7.  Protection of U.S. Intellectual Property.

    Switzerland has one of the best regimes in the world for
the protection of intellectual property, and protection is
afforded equally to foreign and domestic rightsholders. 
Switzerland is a member of all major international intellectual
property rights conventions and was an active supporter of a
strong IPR text in the GATT Uruguay Round negotiations.

    Patent protection is very broad, and Swiss law provides
rights to inventors that are comparable to those available in
the United States.  Switzerland is a member of both the
European Patent Convention and the Patent Cooperation Treaty,
making it possible for inventors to file a single patent
application in the United States (or other PCT country, or any
member of the European Patent Convention, once it enters into
force) and receive protection in Switzerland.  If filed in
Switzerland, a patent application must be made in one of the
country's three official languages (German, French, Italian)
and must be accompanied by detailed specifications and if
necessary by technical drawings.  The duration of a patent is
20 years.  Renewal fees are payable annually on an ascending
scale.  Patents are not renewable beyond the original 20-year
term.

    According to the Swiss Patent Law of 1954, as amended, the
following items cannot be covered by patent protection: 
surgical, therapy and diagnostic processes for application on
humans and animals; inventions liable to disturb law and order
and offend "good morals."  Nor are patents granted for species
of plants and animals and biological processes for their
breeding.  In virtually all other areas, coverage is identical
to that in the United States.

    Trademarks are also well-protected.  Switzerland recognizes
well-known trademarks and has established simple procedures to
register and renew all marks.  The initial period of protection
is 20 years.  Service marks also enjoy full protection. 
Trademark infringement is very rare in Switzerland -- street
vendors are relatively scarce here, and even they tend to shy
away from illegitimate or gray-market products.

    A new copyright law in 1993 improved a regime that was
already strong.  The new law explicitly recognizes computer
software as literary works and establishes a remuneration
scheme for private copying of audio and video works which
distributes proceeds on the basis of national treatment.  
Owners of television programming are fully protected and
remunerated for rebroadcast and satellite retransmission of
their works, and rights-holders have exclusive rental rights. 
Collecting societies are well established.  Infringement is
considered a criminal offense.  The term of protection is life
plus 70 years.

    The Swiss also protect layout designs of semiconductor
integrated circuits, trade secrets, and industrial designs. 
Protection for integrated circuits and trade secrets is very
similar to that available in the U.S., and protection for
designs is somewhat broader.


8.  Workers Rights

    a.  The Right of Association

    All workers, including foreign workers, have freedom to
associate freely, to join unions of their choice, and to select
their own representatives.  The change from an industrial to a
service-based economy, the high standard of living shared by a
prosperous workforce, and the Swiss system of direct democracy,
which accords citizens a voice on important political, social,
and economic issues, are some of the reasons for the limited 
interest in union membership.  Unions are free to publicize
their views and determine their own policies to represent
member interests without government interference.  The Swiss
Trade Unions Federation belongs to the International
Confederation of Free Trade Unions and the World Confederation
of Labor, as well as to the European Trade Union Confederation.

    The right to strike is legally recognized, but a unique
informal agreement between unions and employers--in existence
since the 1930's--has meant fewer than 10 strikes per year
since 1975.  There were no significant strikes in 1994.

    b.  The Right to Organize and Bargain Collectively

    Swiss law gives workers the right to organize and bargain
collectively and protects them from acts of anti-union
discrimination.  The government encourages voluntary 
negotiations between employer and worker organizations.  There
are no export processing zones.

    c.  Prohibition of Forced or Compulsory Labor

    There is no forced or compulsory labor, although there is
no specific statute or constitutional ban on it.

    d.  Minimum Wage for Employment of Children

    The minimum age for employment of children is 15 years. 
Children over 13 may be employed in light duties for not more
than 9 hours a week during the school year and 15 hours
otherwise.  Employment between ages 15 and 20 is strictly
regulated.  For example, youths may not work at night, on
Sundays, or under hazardous or dangerous conditions.

    e.  Acceptable Conditions of Work

    There is no national minimum wage.  Employer associations
and unions negotiate industrial wages during the collective
bargaining process.  Such wage agreement are also widely
observed by non-union establishments.  The labor act
established a maximum 45-hour workweek for blue- and
white-collar workers in industry, services, and retail trades,
and a 50-hour workweek for all other workers.   Overtime is
limited by law to 120 hours annually.

    The labor act and the Federal Code of Obligations contain
extensive regulations to protect worker health and safety.  The
regulations are rigorously enforced by the Federal Office of
Industry, Trades, and Labor, providing a high standard of
worker health and safety.  The government is in the process of
completely revising the labor law dating from 1948.  It plans
to abolish the ban on night and Sunday work for women in
industry.  Instead, it proposes to introduce provisions which
will ensure adequate working conditions for all workers, male
and female, who are employed on night shifts.  These provisions
will include specific measures designed to protect their safety
and health, assist them to meet family and social
responsibilities, and provide appropriate compensation.  There
were no allegations of workers' rights abuses from domestic or
foreign sources.

    f.  Rights in Sectors with U.S. Investments

    Except for special situations (e.g. employment in dangerous
activities regulated for occupational, health and safety or
environmental reasons), legislation concerning workers rights
does not distinguish among workers by sector, by nationality,
by employer, or in any other manner which would result in
different treatment of workers employed by U.S. firms from
those employed by Swiss or other foreign firms.



  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
                                                                
              Category                          Amount          

Petroleum                                                629
Total Manufacturing                                    1,923
  Food & Kindred Products                   (1)
  Chemicals and Allied Products             234
  Metals, Primary & Fabricated              132
  Machinery, except Electrical              303
  Electric & Electronic Equipment           (1)
  Transportation Equipment                   10
  Other Manufacturing                       594
Wholesale Trade                                        9,482
Banking                                                1,791
Finance/Insurance/Real Estate                         17,823
Services                                               1,156
Other Industries                                          98
TOTAL ALL INDUSTRIES                                  32,901   

(1) Suppressed to avoid disclosing data of individual companies

Source: U.S. Department of Commerce, Bureau of Economic
Analysis
(###)


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