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Swiss links to the US economy: the global economy has been in the doldrums for quite a while now. Each one of us awaits a recovery. Swiss News looks at how the US economic pick up can influence the recovery of the Swiss economy.

Not only are the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area.  and Switzerland tied together by a deeply held love of liberty, but maybe, and more importantly, by a close relationship bound by money, investment and trade.

The total Swiss investment in the US last year was $274 billion and the total US investment in Switzerland was $268 billion. In the form of direct investments alone, Switzerland has invested in the US an amazing a·maze  
v. a·mazed, a·maz·ing, a·maz·es

v.tr.
1. To affect with great wonder; astonish. See Synonyms at surprise.

2. Obsolete To bewilder; perplex.

v.intr.
 amount of $8,013.70 per man, woman and child in Switzerland.

Also, the US is the largest direct investor in Switzerland, accounting for 8.5 per cent of US direct investment, and ranking Switzerland as the fourth most important destination for US investment dollars.

So how then does Switzerland manage to attract such a strong interest from the US business community? Well the answer is simple as the Swiss-American Chamber of Commerce (SACC SACC School-Age Child Care
SACC South African Council of Churches
SACC South Arkansas Community College (El Dorado)
SACC Standard Acquisition Clauses and Conditions (Canada)
SACC Sexual Assault Crisis Center
) is keen to point out.

"Switzerland has an effective and transparent tax system, moderate tax rates, accessible tax authorities, and the availability of tax concessions and rulings," states the SACC.

Other factors that swing in Switzerland's favour are its highly qualified labour force and more flexible labour laws than in most other European countries. Add to that the high quality of life, excellent educational institutions and low crime rate and you'll see those US investment dollars queuing up to be let in.

Important Test Market

Switzerland is certainly one of the most sought after business location for major US corporations. Over the last year we've seen such US notables as razor blade ra·zor·blade also ra·zor blade  
n.
A thin sharp-edged piece of steel that can be fitted into a razor.

razor blade nhoja de afeitar

razor blade 
 manufacturer Gillette. retail giant Wal-Mart, internet auction house Ebay, fashion empire Ralph Lauren Ralph Lauren (born Ralph Lifschitz on October 14, 1939) is an American fashion designer and business executive. Life
Ralph J. Lauren was born in the New York City borough of The Bronx to Ashkenazi Jewish immigrants Fraydl (Kotlar) and Frank Lifshitz, a house
 and consumer goods consumer goods

Any tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or more, and
 giant Procter & Gamble all move their European headquarters to Switzerland.

American businesses are even. being advised to use Switzerland as a test market for products they intend to try and sell in Europe.

The US department of trade's Country Commercial Guide (CCG CCG Chicago
CCG Collectible Card Game
CCG Canadian Coast Guard
CCG Country Commercial Guide
CCG Children's Cancer Group
CCG Commission Canadienne des Grains (Canadian Grain Commission) 
) describes Switzerland as "an excellent test market for businesses hoping to introduce new products to Europe".

It cites the country's highly developed, multilingual market, its location in the middle of Europe, and its well-educated and affluent population.

This advice is not news to at least two American companies--McDonalds and Starbucks--which have already used Switzerland as a test bed for planned overseas expansion.

Close Economic Ties

US Senator Phil Gramm William Philip "Phil" Gramm (born July 8, 1942, in Fort Benning, Georgia, USA) served as a Democratic Congressman (1978–1983), a Republican Congressman (1983–1985) and a Republican Senator from Texas (1985–2002).  is also vice president of Switzerland's largest banking concern, UBS UBS Union Bank of Switzerland
UBS United Bible Societies
UBS United Blood Services
UBS United Buying Service
UBS Used Bookstore
UBS University Business Services
UBS Universal Building Society (UK)
UBS Ulaanbaatar Broadcasting System
. He recently told the assembled members of the Swiss-American Chamber of Commerce that few nations are more closely bound economically than Switzerland and the United States.

"Together our relationship creates jobs, growth and opportunities for both of our countries and the world," noted Gramm. "Needless to say, I'm proud to be a small part of all of that."

The facts regarding the strong link between the US and Switzerland speak for themselves. Some 700 Swiss companies This is a list of Swiss companies, currently active and former ones:
: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z   See also  External links

A
  • Adriatica PR&A Watch Co Sagl
  • Asea Brown Boveri (ABB)
  • ACM Forex
  • Adecco
 have significant operations in the US, while some 600 US companies operate in Switzerland.

Also there are 69,500 Swiss citizens living and working in the US, while 13,400 Americans live and work in Switzerland.

US-Led Recovery Expected

Despite the economic slowdown Swiss companies have been doing well in the US market, increasing exports by 2.6 per cent over 2002, while US companies saw their volume of exports to Switzerland drop back by 5.6 per cent.

But Senator Gramm is optimistic op·ti·mist  
n.
1. One who usually expects a favorable outcome.

2. A believer in philosophical optimism.



op
 about the economic outlook for the US and the knock-on effects that will have on the Swiss economy.

"The recovery has already begun," explains Gramm. "The economic growth that was lost in the first quarter in all probability will be realized in the third and fourth quarters as those economic investments now come forward."

This growth will have a positive effect on the economy of Switzerland The economy of Switzerland is one of the world's most stable economies. Its policy of long-term monetary security and bank secrecy has made Switzerland a safe haven for investors, creating an economy that is increasingly dependent on a steady tide of foreign investment.  and the rest of Europe.

Post-War Friction

However, there are some concerns that frictions caused by the war in Iraq will put substantial strains on the relationship between Europe and the US.

"It is clear in retrospect that the US and Europe have been drifting apart for some 20 years," warned Gramm as he highlighted the major difference of opinion between the two over the functions for NATO NATO: see North Atlantic Treaty Organization.
NATO
 in full North Atlantic Treaty Organization

International military alliance created to defend western Europe against a possible Soviet invasion.
 and the United Nations in the light of the second Gulf War.

"The relevant question now seems to me to be what kind of economic legs do the frictions created by the war in Iraq have?" posed Gramm. "How will they fundamentally impact the relationship between the US and Germany or the US and France?"

"Do people buy products and invest based on hurt feelings and political differences? I think happily the answer is 'no'. In the end, people will want to buy the best product at the lowest possible price and will invest based on expected return Expected Return

The average of a probability distribution of possible returns, calculated by using the following formula:
 and risk. The reality is that Europe and America need each other. As my grandmother used to say "blood is thicker than water "Blood is thicker than water" is an English-language proverb which generally means that the bonds of family and common ancestry are stronger than those bonds between unrelated people. It first appeared in the medieval German beast epic 'Reinhart Fuchs' (c. , but money is thicker than blood," concludes Gramm with a smile.
Swiss FDI flows abroad by geographical destination,
1997-2001, mio CHF

                        1997    1998    1999    2000    2001

EU                     12598   10155   21359   28917   10077
USA                     7690    3226   13557   33678    9271
Developing Countries    4024   11487   11720   11532    6555
Rest of World                                   5000    2828
Japan                   -203     124     628     336     466

Source: Unctad

Swiss FDI flows abroard, 2001

EU                       34%
USA                      32%
Developing Countries     22%
Rest of World            10%
Japan                     2%

Note: Table made from pie chart.


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Author:O'Brien, Tom
Publication:Swiss News
Date:Nov 1, 2003
Words:891
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