Europe Day 2016: BAK Basel presents its study on the relevance of the Bilateral Agreements for Swiss companies

As part of Europe Day 2016, the University of Fribourg had the pleasure of welcoming Mr. Kai Gramke from the Swiss-based economic research firm BAK Basel Economics. The presentation was delivered in English to reflect its importance for those students currently following the Master in European Business programme.
Mr. Gramke is in charge of strategic project development at BAK Basel. He analyzes major global trends with the goal of increasing their relevance in politics and society, and was therefore able to distill the most pertinent points about the applicability of the bilateral agreements for Swiss companies during his interactive and engaging presentation.
In order to set the stage and give the necessary context for the presentation to follow, Mr. Gramke gave the audience a historical overview of the world economy, and its relation to the economic balance of power over time. He outlined the increasingly prominent role Asia is playing in the global economy, but also took the time to showcase how this actually represents Asia’s gradual return to power, a position they already occupied in the 1700s. He then spoke about the current risks the Swiss economy is facing in the short, medium and long term, and the increasing world-wide trend toward trade liberalisation. For example, he promoted the benefits of multilateral agreements over bilateral agreements between two parties. Incidentally, Switzerland is a world champion with respect to the number of free-trade agreements it has concluded. This lead to a discussion about the current set of bilateral agreements between Switzerland and the EU, which are now in a state of uncertainty given the recent vote in Switzerland on mass immigration. This risk is enhanced by the fact that at the same time, major free trade agreements, some on an inter-continental basis, are being negotiated between other countries. The TPP (the Trans-Pacific Partnership) concluded in February 2016, and the ongoing negotiations for the TTIP (the Transatlantic Trade and Investment partnership) between the USA and the EU are two of the most prominent examples.


Kai Gramke pointing out the new intercontinental free trade agreements around the world

Mr. Gramke reinforced the idea that the seven bilateral agreements are bound as a group, and would therefore dissolve as a group if one of the agreements was cancelled. Should this happen, a previous set of agreements dating from the early 1970s (e.g. the free trade agreement with the EU) or even the 1950s (e.g. air travel) would take effect, but these agreements do not currently reflect the nature of how business has changed over the last 40 years. To give a concrete example, thousands of flights would need to be cancelled or rerouted because air travel was severely restricted and controlled under those agreements. This would have a huge impact on accessibility with a price tag of roughly CHF 117 billion to the Swiss economy. Obviously, these agreements would be partly open for re-negotiation, but this takes time and in the meantime creates enormous uncertainty. Furthermore, Mr. Gramke was able to predict the economic impact of scrapping the agreement on the free movement of persons, based on the BAK Basel scenario. The strongest effect would stem from the shortage of trained specialists, meaning lost immigration. He forecasts a shortage of 300,000 trained specialists, causing GDP to fall by more than CHF 250 billion. Further impacts would be felt in lost investment, lost research, and increases in trade barriers. According to his calculations, the total cost of cancelling the bilateral agreements to the Swiss economy is roughly CHF 630 billion (until 2035).

Mr. Gramke finished his presentation by emphasizing the consequences that changes to the bilateral agreements would have for Swiss businesses’ competitive position, and welcomed a series of thoughtful and engaging questions from faculty and students.

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Faculty of Economics and Social Sciences
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Phone: 00 41 (26) 300 8200
Fax: 00 41 (26) 300 9725

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