"Swiss SMEs have to learn to deal with protectionism"
It's not only in day-to-day business that protectionism has become a familiar topic, but in the media too. But protectionism is not a new phenomenon, says Alfonso Orlando, Head of ExportHelp at S-GE (Switzerland Global Enterprise). In this interview, he talks about Swiss exports and explains how Swiss SMEs can deal with the hurdles.
Protectionism is a challenge for Swiss SMEs
SMEs are responsible for 45% of Swiss exports. Although these companies are largely satisfied with their own export businesses, the challenges facing exporters have grown in recent years owing to trade barriers and customs hurdles. This is due not least to global protectionism.
Since 2009, over 1,000 new protectionist measures have been introduced. This is shown by the latest data from the University of St. Gallen's Global Trade Alert, which captures the development of global trade on an annual basis. "Protectionist measures are used by countries to protect their own markets and to strengthen the economy and production in their own countries," says Alfonso Orlando. Global Trade Alert provides the Head of ExportHelp at Switzerland Global Enterprise with important information for his day-to-day work.
Protectionism is widespread
Who are the culprits and who is worst affected by protectionism? It's not Switzerland. But it too affects other countries with trade-distorting measures. Find out which countries erect trade barriers and which countries fall victim to them in our interactive map.
Alfonso Orlando on protectionism and Swiss exports
Mr. Orlando, how do you explain the increase in protectionism?
Alfonso Orlando*: Protectionism has always been with us. It's not a new phenomenon. However, since Donald Trump's election as President of the United States, the topic has attracted increasing attention in the media. This explains the impression that it is something new. Swiss companies have to learn to deal with such measures, and have done so in the past.
According to Global Trade Alert, the US implements an above-average number of trade-distorting measures, but Germany does too. Are Swiss SMEs affected by this?
The study "SME Export Outlook" produced some very interesting data about this in the spring. Of the surveyed companies, 31% said they had noticed an increase in trade barriers in the US, and 21% in China. Russia, Brazil, and Germany were also frequently mentioned. So was Turkey; around 10% said that trade to Turkey had become more difficult. But it is impossible to make generalizations about this; it always depends on the sector and the product.
To what extent can Switzerland's free trade agreements make it easier for companies to export to these countries?
The goal of free trade agreements is to make access to international markets as barrier-free as possible: The aim is for tariffs and other trade barriers to be dismantled. This means that they are a good way of counteracting protectionist tendencies. Today, Switzerland has a network of 30 free trade agreements with 40 partners outside the EU – in addition to the EFTA convention and the free trade agreement with the European Union. New agreements are continuously being negotiated. Among other things, Switzerland is holding discussions with the US and the negotiations on an agreement with the Mercosur states have recently been concluded in substance.
ExportHelp at S-GE is the first point of contact for Swiss SMEs with administrative export questions. How can your team support SMEs?
With regard to import restrictions or import formalities, it is important to prepare well so that there are no surprises at customs. For this, we provide Swiss SMEs with a free online tool. This database gives SMEs an overview, for example, of customs tariffs in the different export destinations. SMEs also benefit from our global network. In this way, we can clarify SMEs' questions and concerns regarding their export activities. We also use various channels such as newsletters or social media to inform them about current developments or changes in the law.
SMEs should prepare well for the situations in the various markets.
How can Swiss SMEs protect themselves against trade barriers and protectionism?
Basically, a company cannot protect itself against trade barriers. But SMEs can learn to deal with them. What is important is to be aware of the situations in the various markets and to know what to expect. That's what decisions are based on. Do I want to take on that market with all its advantages, but also with its challenges? This is also a question of risk tolerance.
Are there some glimmers of hope too? Markets where there are new opportunities for Swiss SMEs?
Certainly, there are interesting markets, including traditional markets such as Europe and the US, but China too. The free trade agreement between Switzerland and China has been in force since July 1, 2014. Moreover, China has a growing middle class. But Indonesia is also interesting, and the continent of Africa is especially interesting. Africa is showing broad potential with new projects in the areas of infrastructure, health, and consumer goods. There are opportunities in Nigeria for example, Africa's strongest economic power. This is something that SMEs should not ignore.