Executive Summary

The National Council debates on June 17, 2026 the free trade agreement with the Mercosur states (Argentina, Brazil, Paraguay, Uruguay). In parallel, Switzerland is negotiating with the USA on a bilateral tariff agreement following the collapse of the multilateral WTO order. Economic law professor Thomas Cottier welcomes the free trade strategy in principle, but criticizes negotiations with the USA as one-sided to Switzerland's detriment and warns of undermining the multilateral order.

People

  • Thomas Cottier (emeritus professor of European and International Economic Law; president of the Switzerland–Europe Association)
  • Simone Hulliger (moderator, SRF Tagesgespräch)

Topics

  • Mercosur free trade agreement
  • USA tariff policy and bilateral negotiations
  • Swiss trade policy
  • Forced labor and trade sanctions
  • Multilateral world trade order

Clarus Lead

Switzerland finds itself in a trade policy dilemma: While it traditionally relies on the multilateral WTO order – on which 85% of world trade is conducted – this has lost its binding force after the USA has effectively withdrawn. Cottier warns against an asymmetrical agreement with Washington that makes Switzerland a guarantor of US investments without receiving comparable protection guarantees. The negotiations reveal a fundamental dilemma: a small, open export economy can ill afford defensive industrial policy, but is pressured by tariff claims (here: accusations of failing to sanction forced labor).

Detailed Summary

Mercosur Agreement as a Stabilization Instrument

Cottier assesses the Mercosur free trade agreement as politically sensible, but emphasizes that its economic significance should not be overstated. The tariff concessions are limited to ten years and account for less than 2% of Swiss consumption – a "manageable" scope despite resistance from farmers and Greens. More important is alignment with the EU position: because the European Union already has such an agreement with Mercosur, Switzerland had to follow suit to avoid competitive disadvantage. The agreement contains a special environmental chapter that Cottier welcomes as progress, even if critics deem it too weak.

USA Negotiations: Asymmetrical Dependence

The central point of conflict is the tariff agreement with the USA. Following the collapse of WTO judicial authority (repeal of tariff preferences by the US Supreme Court in February 2020), Switzerland is attempting to restore stability through bilateral negotiations. The USA uses Article 310 of the American Trade Act to impose tariffs against alleged "unfair trade practices" – a legal basis that requires no proof of causality.

A weak point: the USA accuses Switzerland of not doing enough against forced labor in global supply chains. Cottier confirms that Switzerland pursues a development policy approach (support rather than sanctions), while the USA demands trade restrictions. In the Memorandum of Understanding from November 14, 2025, Switzerland promised improvement – but without legal binding force. The agreement could bring a maximum 15-percent tariff, but subject to higher "Most Favored Nation" tariffs, should the USA introduce these vis-à-vis other trading partners.

The Investment Dilemma

A particularly critical point: the Memorandum requires that Swiss companies invest 200 billion US dollars in the USA. Cottier rejects this: "With this, the federal government assumes responsibility for relocating Swiss jobs to the USA. That is not a government's function." Investment decisions should be left to the market. A large portion of this sum would flow into pharmaceuticals and other strategic sectors anyway – the federal council's obligation is redundant and dangerous.

Multilateralism under Pressure

Cottier criticizes that Switzerland undermines the WTO order through bilateral deals, which as a small nation it is existentially dependent on. The EU is different: it can threaten countervailing tariffs and cushion concessions. Switzerland does not have this power. Instead, it should proceed legally against exorbitant tariffs – through lawsuits before US courts (jurisdiction New York, appeals in Washington, potentially Supreme Court) or through coordinated class actions with other affected companies. This is legally uncertain, but at least a principled stance.

Industrial Policy as a Way Out?

Cottier suggests that Switzerland could consider a minimalist industrial policy in strategic areas (data centers, critical infrastructure) – not for protectionism, but for gaining autonomy. This contradicts Swiss tradition, but has gained relevance given worldwide protection pressure.

Core Statements

  • Switzerland relies on three pillars: WTO multilateralism (85% of world trade), EU bilaterals, and free trade agreements – but the first pillar is crumbling because the USA has withdrawn.
  • The Mercosur agreement is politically rational (alignment with EU), but economically limited to less than 2% of consumption.
  • USA negotiations produce an asymmetrical agreement that burdens Switzerland unilaterally: 15% maximum tariff, unlimited investment commitment, lack of legal certainty.
  • Cottier demands that Switzerland sue over excessive US tariffs rather than adapt – but this does not correspond to Swiss tradition of finding compromises.
  • Minimal industrial policy in strategic sectors may be necessary in the long term to preserve autonomy.

Critical Questions

  1. [Evidence/Data Quality] Cottier cites "2% of Swiss consumption" as a benchmark for Mercosur impacts – is this calculation based on current trade flow models or older scenarios? How sensitive is this quota to changes in agricultural or pharmaceutical imports?

  2. [Source Validity] The USA accuses Switzerland of "forced labor in supply chains." Cottier acknowledges that Switzerland purchases products from third countries and re-exports them – does Switzerland have complete transparency requirements for such chains, or are gaps documented?

  3. [Conflicts of Interest] Cottier criticizes that the federal council commits to the 200-billion investment commitment. Who in the federal council and in business is driving this promise – and what conflicts of interest arise if Swiss firms expect Bern to back them?

  4. [Causality/Alternatives] Cottier proposes that Switzerland file tariff lawsuits before US courts. Is this legally realistic if the US executive justifies the case via Article 310 of the Trade Act – an instrument with broad political discretionary scope?

  5. [Feasibility/Risks] The Memorandum provides for an "agreement with the USA," but this may remain only an Executive Agreement without Senate approval. How binding is such a deal for subsequent US administrations – and does Switzerland risk losing credibility if the USA breaks it?

  6. [Side Effects] Cottier warns that bilateral deals undermine the WTO order. If Switzerland introduces a forced labor chapter with Washington but not with other partners (e.g., China, Vietnam), does this not exacerbate the WTO-decay problem?

  7. [Data Quality] Cottier mentions that the EU has just introduced steel tariffs against Switzerland – and that Gäufingen (steel mill) is under pressure. Are these EU tariffs a test case for the scope of protective measures that the USA could also use?

  8. [Assumptions/Counter-Hypotheses] Cottier affirms that a small export economy like Switzerland can hardly pursue industrial policy. But: can strategically promoted clusters (data security, biotech, micromechanics) create counterweight without becoming protectionist?

Source Bibliography

Primary Source: SRF Tagesgespräch – Economic Law and Swiss Trade Policy (17.06.2026) – download-media.srf.ch

Verification Status: ✓ 17.06.2026

This text was created with the support of an AI model. Editorial Responsibility: clarus.news | Fact Check: 17.06.2026