Changes

==People==

==People==

Switzerland sits at the crossroads of several major European cultures, which have heavily influenced the country's languages and cultural practices. Switzerland has four official languages--German, French, Italian, and Romansch (based on Latin and spoken by a small minority in the Canton Graubunden). The [[German]] spoken is predominantly a Swiss dialect, but newspapers and some broadcasts use High German. Many Swiss speak more than one language. English is widely known, especially among professionals.  

Switzerland sits at the crossroads of several major European cultures, which have heavily influenced the country's languages and cultural practices. Switzerland has four official languages--German, French, Italian, and Romansch (based on Latin and spoken by a small minority in the Canton Graubunden). The [[German]] spoken is predominantly a Swiss dialect, but newspapers and some broadcasts use [[High German]]. Many Swiss speak more than one language. [[English]] is widely known, especially among professionals.  

More than 75% of the population lives in the central plain, which stretches between the [[Alps]] and the [[Jura]] Mountains and from [[Geneva]] in the southwest to the [[Rhine]] River and [[Lake Constance]] in the northeast. Resident foreigners and temporary foreign workers make up about 20% of the population.  

More than 75% of the population lives in the central plain, which stretches between the [[Alps]] and the [[Jura]] Mountains and from [[Geneva]] in the southwest to the [[Rhine]] River and [[Lake Constance]] in the northeast. Resident foreigners and temporary foreign workers make up about 20% of the population.  

*A bicameral legislature--the Federal Assembly;  

*A bicameral legislature--the Federal Assembly;  

*A collegial executive of seven members--the Federal Council; and  

*A collegial executive of seven members--the Federal Council; and  

*A judiciary consisting of a regular court in Lausanne--the Federal Tribunal--and special military and administrative courts. *The Federal Insurance Tribunal is an independent division of the Federal Tribunal that handles social security questions; its seat is in Lucerne. The Federal Criminal Court, located in Bellinzona, is the court of first instance for all criminal cases under federal jurisdiction.

*A judiciary consisting of a regular court in [[Lausanne]]--the Federal Tribunal--and special military and administrative courts.

**The Federal Insurance Tribunal is an independent division of the Federal Tribunal that handles social security questions; its seat is in [[Lucerne]].

**The Federal Criminal Court, located in [[Bellinzona]], is the [[court of first instance]] for all criminal cases under federal jurisdiction.

*The Constitution provides for separation of the three branches of government.  

*The Constitution provides for separation of the three branches of government.  

The top executive body is the seven-member cabinet called the Federal Council. The Federal Assembly individually elects the seven Federal Councilors in a joint session of both houses at the opening of a new legislature. Federal Councilors are elected for 4-year terms; there are no term limits and no provision to recall the cabinet or individual members during the legislature. Each year, the Federal Assembly elects from among the seven Federal Councilors a president and vice president, following the principle of seniority. The member who is vice president one year traditionally is elected president the next. Although the Constitution provides that the Federal Assembly chooses and supervises the cabinet, the latter has gradually assumed a preeminent role in directing the legislative process as well as executing federal laws.  

The top executive body is the seven-member cabinet called the Federal Council. The Federal Assembly individually elects the seven Federal Councilors in a joint session of both houses at the opening of a new legislature. Federal Councilors are elected for 4-year terms; there are no term limits and no provision to recall the cabinet or individual members during the legislature. Each year, the Federal Assembly elects from among the seven Federal Councilors a president and vice president, following the principle of seniority. The member who is vice president one year traditionally is elected president the next. Although the Constitution provides that the Federal Assembly chooses and supervises the cabinet, the latter has gradually assumed a preeminent role in directing the legislative process as well as executing federal laws.  

Under an arrangement between the four major parties called the "magic formula" which was introduced in 1959 but ended in December 2003, two Federal Councilors (ministers) were elected each from the Christian Democrats, the Social Democrats, and the Free Democrats and one from the Swiss People's Party. Under the new magic formula starting January 1, 2004, the new party composition of the cabinet changed to the following composition: 1 Christian Democrat, 2 Social Democrats, 2 Free Democrats, and 2 representatives of the Swiss People's Party. This arrangement was shaken up in the aftermath of the 2008 federal elections: a leftist coalition of Social Democrats, Greens and Christian Democrats formed a parlamentary majority to oust Councilor Christoph Blocher, the iconic leader of the [[Swiss People's Party]], from office even though his party had just achieved a decisive electoral victory. He was replaced by party colleague Evelin Widmer-Schlumpf, who was subsequently banned from the party for conspiring against Blocher, along with fellow Councilor Samuel Schmid. The two went on to form a new breakaway party, the Conservative Democratic Party. The Swiss People's Party has since returned as a participant in the national government following the demission of Schmid, who was replaced by Ueli Maurer.

Under an arrangement between the four major parties called the "magic formula" which was introduced in 1959 but ended in December 2003, two Federal Councilors (ministers) were elected each from the Christian Democrats, the Social Democrats, and the Free Democrats and one from the Swiss People's Party. Under the new magic formula starting January 1, 2004, the new party composition of the cabinet changed to the following composition: 1 Christian Democrat, 2 Social Democrats, 2 Free Democrats, and 2 representatives of the Swiss People's Party. This arrangement was shaken up in the aftermath of the 2008 federal elections: a leftist coalition of Social Democrats, Greens and Christian Democrats formed a parliamentary majority to oust Councilor Christoph Blocher, the iconic leader of the [[Swiss People's Party]], from office even though his party had just achieved a decisive electoral victory. He was replaced by party colleague Evelin Widmer-Schlumpf, who was subsequently banned from the party for conspiring against Blocher, along with fellow Councilor Samuel Schmid. The two went on to form a new breakaway party, the Conservative Democratic Party. The Swiss People's Party has since returned as a participant in the national government following the demission of Schmid, who was replaced by Ueli Maurer.

The Constitution requires that Federal Councilors act collectively in all matters, not as individual ministers or as representatives of their parties. Each Councilor heads one of seven federal departments and is responsible for preparing legislation pertaining to matters under its jurisdiction. The president, who remains responsible for the department he heads, has limited prerogatives and is first among equals (there is no formal prime minister).  

The Constitution requires that Federal Councilors act collectively in all matters, not as individual ministers or as representatives of their parties. Each Councilor heads one of seven federal departments and is responsible for preparing legislation pertaining to matters under its jurisdiction. The president, who remains responsible for the department he heads, has limited prerogatives and is first among equals (there is no formal prime minister).  

The cantons regulate local government. The basic unit of local government, which administers a village, town, or city, is the commune or municipality. Citizenship is derived from membership in a commune and can be conferred on non-Swiss by a commune. Cantons are subordinate to federal authority but keep autonomy in implementing federal law.  

The cantons regulate local government. The basic unit of local government, which administers a village, town, or city, is the commune or municipality. Citizenship is derived from membership in a commune and can be conferred on non-Swiss by a commune. Cantons are subordinate to federal authority but keep autonomy in implementing federal law.  

===Referenda===

===[[Referendum|Referenda]]===

A strong emphasis on ballot votes arises out of the traditional Swiss belief that the will of the people is the final national authority. Every constitutional amendment adopted by parliament is automatically brought to the ballot and has to carry a double majority of votes and states in order to become effective. The voters themselves may actively seek changes to the Constitution by means of the popular initiative: 100,000 voters may with their signatures request a national vote on a proposed constitutional amendment. New federal legislation also is subject to popular review, under the so-called referendum: 50,000 signatures suffice to call a ballot vote on any federal law adopted by parliament. The Assembly can declare an act to be too urgent to allow time for popular consideration, but this is rare. At any rate, an act passed urgently must have a time limit and is later subject to the same constitutional provisions on popular review as other legislation. This device provides a useful channel for linking laws closely to the will of the people and reducing the influence of elites. A stunning example of this process occured in November 2009, when swiss voters turned out at the polls in huge numbers to approve of an amendment to the constitution banning the construction of minarets <ref>http://www.admin.ch/ch/d//pore/va/20091129/det547.html Official voting results (in German)</ref>. This decision of a vast majority of voters to take a stand against political Islam came after a campaign in which the establishment elites had presented a unified front against the measure: all political parties except the [[Swiss People's Party]] had strongly opposed the suggested amendment, and most of the media openly mocked its supporters as racist and foolish.

A strong emphasis on ballot votes arises out of the traditional Swiss belief that the will of the people is the final national authority. Every constitutional amendment adopted by parliament is automatically brought to the ballot and has to carry a double majority of votes and cantons in order to become effective. The voters themselves may actively seek changes to the Constitution by means of the popular [[initiative]]: 100,000 voters may with their signatures request a national vote on a proposed [[constitutional amendment]]. New federal legislation also is subject to popular review, under the so-called referendum: 50,000 signatures suffice to call a ballot vote on any federal law adopted by parliament. The Assembly can declare an act to be too urgent to allow time for popular consideration, but this is rare. At any rate, an act passed urgently must have a time limit and is later subject to the same constitutional provisions on popular review as other legislation. This device provides a useful channel for linking laws closely to the will of the people and reducing the influence of elites. A stunning example of this process occurred in November 2009, when Swiss voters turned out at the polls in huge numbers to approve of an amendment to the constitution banning the construction of [[minaret]]s <ref>http://www.admin.ch/ch/d//pore/va/20091129/det547.html Official voting results (in German)</ref>. This decision of a vast majority of voters to take a stand against political Islam came after a campaign in which the establishment elites had presented a unified front against the measure: all political parties except the [[Swiss People's Party]] had strongly opposed the suggested amendment, and most of the media openly mocked its supporters as racist and foolish.

===Political Conditions===  

===Political Conditions===  

In recent years, Switzerland has seen a gradual shift in the party landscape. The rightist Swiss People's Party (SVP), traditionally the junior partner in the four-party coalition government, more than doubled its voting share from 11% in 1987 to 22.5% in 1999, and finally to 26.6% in 2003, thus overtaking its three coalition partners. This shift in voting shares ended the 44-year old "magic formula," the power-broking agreement of the four coalition parties, and gave a second seat in the 7-person Swiss cabinet to the Swiss People's Party at the expense of the Christian Democrats, now the weakest party with 14.4% of the votes. For the first time in Swiss history, the SVP has two seats in the government, reflecting its new status as Switzerland's most popular party.  

In recent years, Switzerland has seen a gradual shift in the party landscape. The rightist Swiss People's Party (SVP), traditionally the junior partner in the four-party coalition government, more than doubled its voting share from 11% in 1987 to 22.5% in 1999, and finally to 26.6% in 2003, thus overtaking its three coalition partners. This shift in voting shares ended the 44-year old "magic formula," the power-broking agreement of the four coalition parties, and gave a second seat in the 7-person Swiss cabinet to the Swiss People's Party at the expense of the Christian Democrats, now the weakest party with 14.4% of the votes. For the first time in Swiss history, the SVP has two seats in the government, reflecting its new status as Switzerland's most popular party.  

On December 10, 2003, Christoph Blocher--a self-made industrialist and main figure of the right-populist Swiss People's Party known for his strong opinions on asylum and migration and law and order issues--was elected to the cabinet by parliament, replacing the incumbent Christian Democrat Justice and Police Minister Ruth Metzler. The parliament also elected the Free Democrat Hans-Rudolf Merz to replace retiring Finance Minister Kaspar Villiger. Both Blocher and Merz are strong advocates of drastic public spending cuts in order to reduce the country's mounting $102 billion francs state deficit and are staunch opponents to Switzerland's entering the European Union. On June 14, 2006, the Federal Council elected Doris Leuthard of the Christian Democratic Party. Leuthard replaced the retiring Joseph Deiss and has assumed the Economics and Trade portfolio that Deiss managed. Leuthard’s election and Deiss’ resignation do not change the dynamics of the Federal Council. The current makeup of the government remains fiscally conservative and against further integration with the European Union.  

On December 10, 2003, [[Christoph Blocher]]--a self-made industrialist and main figure of the right-populist Swiss People's Party known for his strong opinions on asylum and migration and law and order issues--was elected to the cabinet by parliament, replacing the incumbent Christian Democrat Justice and Police Minister Ruth Metzler. The parliament also elected the Free Democrat Hans-Rudolf Merz to replace retiring Finance Minister Kaspar Villiger. Both Blocher and Merz are strong advocates of drastic public spending cuts in order to reduce the country's mounting $102 billion francs state deficit and are staunch opponents to Switzerland's entering the European Union. On June 14, 2006, the Federal Council elected Doris Leuthard of the Christian Democratic Party. Leuthard replaced the retiring Joseph Deiss and has assumed the Economics and Trade portfolio that Deiss managed. Leuthard’s election and Deiss’ resignation do not change the dynamics of the Federal Council. The current makeup of the government remains fiscally conservative and against further integration with the European Union.  

The Constitution limits federal influence in the formulation of domestic policy and emphasizes the roles of private enterprise and cantonal government. However, the Confederation has been compelled to enlarge its policymaking powers in recent years to cope with national problems such as education, agriculture, energy, environment, organized crime, and narcotics.  

The Constitution limits federal influence in the formulation of domestic policy and emphasizes the roles of private enterprise and cantonal government. However, the Confederation has been compelled to enlarge its policymaking powers in recent years to cope with national problems such as education, agriculture, energy, environment, organized crime, and narcotics.  

==Foreign Relations==

==Foreign Relations==

Traditionally, Switzerland has avoided alliances that might entail military, political, or direct economic action.  Since its forces suffered a major military defeat in the Middle Ages, it has stayed strictly neutral.  Switzerland maintains diplomatic relations with almost all countries and has no major dispute in its bilateral relations. Historically, it has served as a neutral intermediary between hostile powers and host to major international treaty conferences.  After [[World War I]], it hosted the [[League of Nations]] headquarters; during [[World War II]] it represented German interests in America and American and British interests in Germany. Since 1980, Switzerland has represented American interests in Iran.  It also played a key role in brokering a truce agreement between the Sudanese Government and Sudan's Peoples Liberation Army (SPLA) for the Nuba Mountain region, signed after a week's negotiations taking place near [[Lucerne]] in January 2002.  

Traditionally, Switzerland has avoided [[alliance]]s that might entail military, political, or direct economic action.  Since its forces suffered a major military defeat in the Middle Ages, it has stayed strictly [[neutral]].  Switzerland maintains diplomatic relations with almost all countries and has no major dispute in its bilateral relations. Historically, it has served as a neutral intermediary between hostile powers and host to major international treaty conferences.  After [[World War I]], it hosted the [[League of Nations]] headquarters; during [[World War II]] it represented German interests in America and American and British interests in Germany. Since 1980, Switzerland has represented American interests in [[Iran]].  It also played a key role in brokering a truce agreement between the Sudanese Government and Sudan's Peoples Liberation Army (SPLA) for the Nuba Mountain region, signed after a week's negotiations taking place near [[Lucerne]] in January 2002.  

The Swiss Constitution declares the preservation of Switzerland's independence and welfare as the supreme objective of Swiss foreign policy. Below this overarching goal, the Constitution sets five specific foreign policy objectives: further the peaceful coexistence of nations; promote respect for human rights, democracy, and the rule of the law; promote Swiss economic interests abroad, alleviate need and poverty in the world; and the preservation of natural resources.  

The Swiss Constitution declares the preservation of Switzerland's independence and welfare as the supreme objective of Swiss [[foreign policy]]. Below this overarching goal, the Constitution sets five specific foreign policy objectives: to further the peaceful coexistence of nations; promote respect for [[human rights]], [[democracy]], and the [[rule of law]]; promote Swiss economic interests abroad, alleviate need and poverty in the world; and preserve natural resources.  

The Swiss feel a moral obligation to undertake social, economic, and humanitarian activities that contribute to world peace and prosperity. This is manifested by Swiss bilateral and multilateral diplomatic activity, assistance to developing countries, and support for the extension of international law, particularly humanitarian law. Switzerland (mainly Geneva) is home to many international governmental and nongovernmental organizations, including the [[International Committee of the Red Cross]] (whose flag is essentially the Swiss flag with colors reversed--the Red Cross historically being a Swiss organization). One of the first international organizations, the [[Universal Postal Union]], is located in Bern.  

The Swiss feel a moral obligation to undertake social, economic, and humanitarian activities that contribute to world peace and prosperity. This is manifested by Swiss bilateral and multilateral diplomatic activity, assistance to developing countries, and support for the extension of international law, particularly humanitarian law. Switzerland (mainly Geneva) is home to many international governmental and nongovernmental organizations, including the [[International Committee of the Red Cross]] (whose flag is essentially the Swiss flag with colors reversed--the Red Cross historically being a Swiss organization). One of the first international organizations, the [[Universal Postal Union]], is located in Bern.  

Switzerland in October 2000 implemented an ordinance to enforce UN sanctions against the Taliban (UNSCR 1267), which it subsequently amended in April 2001 in accord with tighter UN regulations (UNSCR 1333). On May 2, 2002, the Swiss Government eased the sanctions regime in accord with UNSCR 1388 and 1390, lifting the ban on the sale of acetic acid (used in drug production), Afghani Airlines, and Afghani diplomatic representations. The weapons embargo, travel restrictions, and financial sanctions remain in force. The Swiss Government in November 2001 issued an ordinance declaring illegal the terrorist organization [[al Qaeda]] as well as possible successor or supporting organizations. More than 200 individuals or companies linked to international terrorism have been blacklisted to have their assets frozen. Thus far, Swiss authorities have blocked about 72 accounts totaling 34 million francs.  

Switzerland in October 2000 implemented an ordinance to enforce UN sanctions against the Taliban (UNSCR 1267), which it subsequently amended in April 2001 in accord with tighter UN regulations (UNSCR 1333). On May 2, 2002, the Swiss Government eased the sanctions regime in accord with UNSCR 1388 and 1390, lifting the ban on the sale of acetic acid (used in drug production), Afghani Airlines, and Afghani diplomatic representations. The weapons embargo, travel restrictions, and financial sanctions remain in force. The Swiss Government in November 2001 issued an ordinance declaring illegal the terrorist organization [[al Qaeda]] as well as possible successor or supporting organizations. More than 200 individuals or companies linked to international terrorism have been blacklisted to have their assets frozen. Thus far, Swiss authorities have blocked about 72 accounts totaling 34 million francs.  

==Defence==

==Defence==

==Economy==

==Economy==

Despite a dearth of natural resources, the Swiss economy is among the world's most advanced and prosperous. Per capita income is virtually the highest in the world, as are wages. Trade has been the key to prosperity in Switzerland. The country is dependent upon export markets to generate income while dependent upon imports for raw materials and to expand the range of goods and services available in the country. Switzerland has liberal investment and trade policies, notwithstanding agriculture, and a conservative fiscal policy. The Swiss legal system is highly developed, commercial law is well defined, and solid laws and policies protect investments. The Swiss franc is one of the world's soundest currencies, and the country is known for its high standard of banking and financial services. Switzerland is a member of a number of international economic organizations, including the World Trade Organization (WTO), the International Monetary Fund, the World Bank, and the Organization for Economic Cooperation and Development (OECD).

Despite a dearth of [[natural resources]], the Swiss economy is among the world's most advanced and prosperous. Per capita income is virtually the highest in the world, as are wages. Trade has been the key to prosperity in Switzerland. The country is dependent upon [[export]] markets to generate income while dependent upon imports for raw materials and to expand the range of goods and services available in the country. Switzerland has liberal investment and trade policies, notwithstanding agriculture, and a conservative fiscal policy. The Swiss legal system is highly developed, commercial law is well defined, and solid laws and policies protect investments. The Swiss franc is one of the world's soundest currencies, and the country is known for its high standard of banking and financial services. Switzerland is a member of a number of international economic organizations, including the [[World Trade Organization]] (WTO), the [[International Monetary Fund]], the [[World Bank]], and the [[Organization for Economic Cooperation and Development]] (OECD).

The Swiss economy expanded by 2.7% in 2006, the fastest rate in six years, thus confirming sustained growth over the last four years. GDP growth was primarily due to the positive evolution of private consumption and expansion of investment in fixed assets and software. For once, all export industries benefited from increased demand from foreign markets. With a surplus of $9.6 billion (SF 11.7 billion), the Swiss trade balance reached unprecedented levels. On the inflation side, import prices increased more rapidly than exports.  

Switzerland's machinery, metals, electronics, and chemicals sectors are world-renowned for precision and quality. Together they account for well over half of Swiss export revenues. In agriculture, Switzerland is about 60% self-sufficient. Only 7.5% of the remaining imports originated from the U.S. Swiss farmers are one of the most highly protected and subsidized producer group in the world. OECD estimates show that Switzerland is subsidizing more than 70% of its agriculture, compared to 35% in the EU. According to the newly adopted "2008-2011 Agricultural Program", Switzerland intends to reduce its subsidies from SF 14.1 billion (U.S. $11.6 billion) to SF 13.6 billion (U.S. $10.5 billion) over the next four years. In March 2007, the parliament increased the initial government bill by SF 150 million (U.S. $123 million) on the grounds that Swiss farm reforms were going too fast. The parliament also accepted international parallel imports for fertilizers and tractors. Swiss farmers will be allowed to import tractors produced in China or India and sold in the EU, and save up to $41 million (SF 50 million) annual in expenses. German [[fertilizer]] could save another $20 million (SF 25 million). A more general bill on parallel imports will be presented by the Justice Ministry to parliament by the end of 2007.

Switzerland was ranked as the most competitive economy in the World Economic Forum’s 2006 Global Competitiveness Report for the first time, reflecting the country’s sound institutional environment, excellent infrastructure, efficient markets, competent macroeconomic management, world-class educational attainment, and high levels of technological innovation, which boost Switzerland's competitiveness in the global economy. The country has a well-developed infrastructure for scientific research, companies spend generously on research and development, and intellectual property protection is strong. Business activity benefits from a well-developed institutional framework, characterized by the rule of law, an efficient judicial system, and high levels of transparency and accountability within public institutions. Higher education and training are rapidly growing in importance as engines of productivity growth.

[[Tourism]], [[banking]], [[engineering]], and [[insurance]] are significant sectors of the economy and heavily influence the country's economic policies. Swiss trading companies have unique marketing expertise in many parts of the world, including Eastern Europe, the Far East, Africa, and the Middle East. Not only does Switzerland have a highly developed [[tourism]] infrastructure (making it a good market for tourism-related equipment and services), the Swiss also are intrepid travelers. Per capita, more Swiss visit the United States every year than from any other country. Tourism is the most important U.S. export to Switzerland (earning almost $1.5 billion). In 2004, more than 285,000 Swiss came to the United States as tourists.  

 

Being a nation that depends upon exports for economic growth, and due to the fact that it is so closely linked to the economies of Western Europe and the United States, Switzerland was not able to escape recent slowdowns experienced in these countries. During most of the 1990s, the Swiss economy was Western Europe's weakest, with annual GDP growth averaging 0% between 1991 and 1997. Beginning in late 1997, the economy steadily gained momentum until peaking in 2000 with 3% growth in real terms. The economy returned to lackluster growth during 2001-2003, but has been growing at or above potential since 2004--2.5% per annum. The Swiss Economic Ministry reports that strong global demand, particularly in the U.S. and Asia, and better Euro zone growth has helped Switzerland’s economic recovery. Long-run economic growth, however, is predicated on structural reforms. In order to maximize its economic potential, Switzerland will need to push through difficult agrarian and competition policy reforms. These are essential if the government is to reduce its budget deficits and meet its 3% growth target.  

In 2005, the dollar/Swiss franc exchange rate continued to be shaped by geopolitical tensions. The dollar depreciated further against the Swiss franc from SF 1.49 in October 2002 to SF 1.31 in 2003, to 1.28 in 2005 to 1.23 in July 2006, and 1.22 in January 2007. The strengthening of the Euro, however, helped Switzerland to minimize the pressure from a weakening dollar. The Swiss National Bank raised interest rates on June 15, 2006 to 1.5%, the third increase since January 2006. The Swiss National Bank also said it expected economic growth to be a robust 2.5% in 2006 and 2007.

In 2005, the dollar/Swiss franc exchange rate continued to be shaped by geopolitical tensions. The dollar depreciated further against the Swiss franc from SF 1.49 in October 2002 to SF 1.31 in 2003, to 1.28 in 2005 to 1.23 in July 2006, and 1.22 in January 2007. The strengthening of the Euro, however, helped Switzerland to minimize the pressure from a weakening dollar. The Swiss National Bank raised interest rates on June 15, 2006 to 1.5%, the third increase since January 2006. The Swiss National Bank also said it expected economic growth to be a robust 2.5% in 2006 and 2007.

While the number of bankruptcies in Switzerland had been on the rise for four years, reaching alarming levels in 2005 (10,800), the rate dropped by 4.7% in 2006. Compared to other European countries, Switzerland's bankruptcy rates ranks fourth (1.35%) among the hardest hit countries, after Luxemburg (2.39%), Austria (1.9%) and France (1.49%).  

While the number of bankruptcies in Switzerland had been on the rise for four years, reaching alarming levels in 2005 (10,800), the rate dropped by 4.7% in 2006. Compared to other European countries, Switzerland's bankruptcy rates ranks fourth (1.35%) among the hardest hit countries, after Luxemburg (2.39%), Austria (1.9%) and France (1.49%).  

The recent economic upswing had some positive impact on the labor market. Unemployment decreased from 4.1% in December 2003 to 3.1% in March 2007. Swiss in the 15-25 age bracket continue to fight unemployment numbers with a rate of 5.4%, and hotel and restaurant industry workers with 10.4%. One-fourth of the country's full-time workers are unionized. In general, labor/management relations are good, mostly characterized by a willingness on both sides to settle disputes by negotiations rather than by labor action. About 600 collective bargaining agreements exist today in Switzerland and are regularly renewed without major problems. However, the mood is changing. The massive layoffs that resulted from both the global economic slowdown and major management scandals have strained the traditional Swiss "labor peace." Swiss trade unions encouraged strikes against several companies, including the national airline SWISS, Coca-Cola, and Orange (the French telecom operator), but total days lost to strikes remain among the lowest in the OECD. Uncertainties concerning the proper management of pension funds, and the prospect of a potential hike in the retirement age from 65 to 67 have stirred heated political debate.

The Swiss economy expanded by 2.7% in 2006, the fastest rate in six years, thus confirming sustained growth over the last four years. GDP growth was primarily due to the positive evolution of private consumption and expansion of investment in fixed assets and software. For once, all export industries benefited from increased demand from foreign markets. With a surplus of $9.6 billion (SF 11.7 billion), the Swiss trade balance reached unprecedented levels. On the inflation side, import prices increased more rapidly than exports.  

 

Switzerland was ranked as the most competitive economy in the World Economic Forum’s 2006 Global Competitiveness Report for the first time, reflecting the country’s sound institutional environment, excellent infrastructure, efficient markets, competent macroeconomic management, world-class educational attainment, and high levels of technological innovation, which boost Switzerland's competitiveness in the global economy. The country has a well-developed infrastructure for scientific research, companies spend generously on research and development, and intellectual property protection is strong. Business activity benefits from a well-developed institutional framework, characterized by the rule of law, an efficient judicial system, and high levels of transparency and accountability within public institutions. Higher education and training are rapidly growing in importance as engines of productivity growth.

Switzerland's machinery, metals, electronics, and chemicals sectors are world-renowned for precision and quality. Together they account for well over half of Swiss export revenues. In agriculture, Switzerland is about 60% self-sufficient. Only 7.5% of the remaining imports originated from the U.S. Swiss farmers are one of the most highly protected and subsidized producer group in the world. OECD estimates show that Switzerland is subsidizing more than 70% of its agriculture, compared to 35% in the EU. According to the newly adopted "2008-2011 Agricultural Program", Switzerland intends to reduce its subsidies from SF 14.1 billion (U.S. $11.6 billion) to SF 13.6 billion (U.S. $10.5 billion) over the next four years. In March 2007, the parliament increased the initial government bill by SF 150 million (U.S. $123 million) on the grounds that Swiss farm reforms were going too fast. The parliament also accepted international parallel imports for fertilizers and tractors. Swiss farmers will be allowed to import tractors produced in China or India and sold in the EU, and save up to $41 million (SF 50 million) annual in expenses. German fertilizer could save another $20 million (SF 25 million). A more general bill on parallel imports will be presented by the Justice Ministry to parliament by the end of 2007.

Being a nation that depends upon exports for economic growth, and due to the fact that it is so closely linked to the economies of Western Europe and the United States, Switzerland was not able to escape recent slowdowns experienced in these countries. During most of the 1990s, the Swiss economy was Western Europe's weakest, with annual GDP growth averaging 0% between 1991 and 1997. Beginning in late 1997, the economy steadily gained momentum until peaking in 2000 with 3% growth in real terms. The economy returned to lackluster growth during 2001-2003, but has been growing at or above potential since 2004--2.5% per annum. The Swiss Economic Ministry reports that strong global demand, particularly in the U.S. and Asia, and better Euro zone growth has helped Switzerland’s economic recovery. Long-run economic growth, however, is predicated on structural reforms. In order to maximize its economic potential, Switzerland will need to push through difficult agrarian and competition policy reforms. These are essential if the government is to reduce its budget deficits and meet its 3% growth target.  

Tourism, banking, engineering, and insurance are significant sectors of the economy and heavily influence the country's economic policies. Swiss trading companies have unique marketing expertise in many parts of the world, including Eastern Europe, the Far East, Africa, and the Middle East. Not only does Switzerland have a highly developed tourism infrastructure (making it a good market for tourism-related equipment and services), the Swiss also are intrepid travelers. Per capita, more Swiss visit the United States every year than from any other country. Tourism is the most important U.S. export to Switzerland (earning almost $1.5 billion). In 2004, more than 285,000 Swiss came to the United States as tourists.  

The recent economic upswing had some positive impact on the labor market. Unemployment decreased from 4.1% in December 2003 to 3.1% in March 2007. Swiss in the 15-25 age bracket continue to fight unemployment numbers with a rate of 5.4%, and hotel and restaurant industry workers with 10.4%. One-fourth of the country's full-time workers are unionized. In general, labor/management relations are good, mostly characterized by a willingness on both sides to settle disputes by negotiations rather than by labor action. About 600 collective bargaining agreements exist today in Switzerland and are regularly renewed without major problems. However, the mood is changing. The massive layoffs that resulted from both the global economic slowdown and major management scandals have strained the traditional Swiss "labor peace." Swiss trade unions encouraged strikes against several companies, including the national airline SWISS, Coca-Cola, and Orange (the French telecom operator), but total days lost to strikes remain among the lowest in the OECD. Uncertainties concerning the proper management of pension funds, and the prospect of a potential hike in the retirement age from 65 to 67 have stirred heated political debate.

The Swiss economy earns roughly half of its corporate earnings from the export industry, and 62% of Swiss exports are destined for the EU market. The EU is Switzerland's largest trading partner, and economic and trade barriers between them are minimal. In the wake of the Swiss voters' rejection of the European Economic Area Agreement in 1992, the Swiss Government set its sights on negotiating bilateral sectoral agreements with the EU. After more than 4 years of negotiations, an agreement covering seven sectors (research, public procurement, technical barriers to trade, agriculture, civil aviation, land transport, and the free movement of persons) was achieved at the end of 1998. Parliament officially endorsed the so-called "Bilaterals I" in 1999, and the Swiss people approved them in a referendum in May 2000. The agreements, which had to be ratified by the European Parliament as well as legislatures in all 15 EU member states, entered into force on June 1, 2002. Switzerland has so far attempted to mitigate possible adverse effects of non-membership by conforming many of its regulations, standards, and practices to EU directives and norms. Full access to the Swiss market for the original 15 EU member states entered into force in June 2004, ending as a result the “national preference”. The Swiss agreed to extend these preferences to the 10 new EU members on September 25, 2005.

The Swiss economy earns roughly half of its corporate earnings from the export industry, and 62% of Swiss exports are destined for the [[EU]] market. The EU is Switzerland's largest trading partner, and economic and trade barriers between them are minimal. In the wake of the Swiss voters' rejection of the European Economic Area Agreement in 1992, the Swiss Government set its sights on negotiating bilateral sectoral agreements with the EU. After more than 4 years of negotiations, an agreement covering seven sectors (research, public procurement, technical barriers to trade, agriculture, civil aviation, land transport, and the free movement of persons) was achieved at the end of 1998. Parliament officially endorsed the so-called "Bilaterals I" in 1999, and the Swiss people approved them in a referendum in May 2000. The agreements, which had to be ratified by the European Parliament as well as legislatures in all 15 EU member states, entered into force on June 1, 2002. Switzerland has so far attempted to mitigate possible adverse effects of non-membership by conforming many of its regulations, standards, and practices to EU directives and norms. Full access to the Swiss market for the original 15 EU member states entered into force in June 2004, ending as a result the “national preference”. The Swiss agreed to extend these preferences to the 10 new EU members on September 25, 2005.

The Swiss Government embarked in July 2001 on a second round of bilateral negotiations with the EU known as “Bilaterals II”. Talks focused on customs fraud, environment, statistics, trade in processed agricultural goods, media, the taxation of savings, and police/judicial cooperation (dubbed the Schengen-Dublin accords). Amid a fierce political debate over the essence of Swiss-EU relations and populist warnings against EU workers and criminals entering Switzerland, the Schengen-Dublin package was approved on June 5, 2005 by a referendum of 54.6%. Fears of cheap labor coming from new EU member states have prompted the government to provide for tripartite surveillance committees to ensure that decent wages are enforced. The EU has still to ratify the extension of Schengen to Switzerland, and implement the bilateral agreements on research and development and media cooperation.

The Swiss Government embarked in July 2001 on a second round of bilateral negotiations with the EU known as “Bilaterals II”. Talks focused on customs fraud, environment, statistics, trade in processed agricultural goods, media, the taxation of savings, and police/judicial cooperation (dubbed the Schengen-Dublin accords). Amid a fierce political debate over the essence of Swiss-EU relations and populist warnings against EU workers and criminals entering Switzerland, the Schengen-Dublin package was approved on June 5, 2005 by a referendum of 54.6%. Fears of cheap labor coming from new EU member states have prompted the government to provide for tripartite surveillance committees to ensure that decent wages are enforced. The EU has still to ratify the extension of Schengen to Switzerland, and implement the bilateral agreements on research and development and media cooperation.

On November 26, 2006, the Swiss electorate approved a government bill to contribute 1 billion Swiss francs (about $800 million) to the 10 new EU member states. In a nation-wide referendum, 53.4% of voters accepted the “Eastern Europe Cooperation Act,” which entitles the government to spend 1 billion Swiss francs on projects in primarily Central European states over the next 10 years. Switzerland had pledged this contribution to share the burden of the EU’s eastern expansion in order to facilitate the conclusion of the second set of bilateral negotiations with the EU. The right-populist Swiss People’s Party (SVP), which prompted the referendum, was disappointed, but pleased that it mobilized a 47% opposition. The Eastern Europe Cooperation Act gives a new legal basis for Swiss aid to countries in Eastern Europe. The act has a 10-year term and replaces the former federal Law on Aid to Eastern Europe, which came into force in 1995. Since the fall of the Berlin Wall, Switzerland has spent SF 3.5 billion on about 1,000 aid projects in Central and Eastern Europe to help countries in the region transform into market economies. Sixty percent of the SF 1 billion is to come from the budget of the departments of foreign and economic affairs, mainly from cuts in aid programs to other parts of the world. The remaining 40% will be taken from the regular budget of the federal administration. The funds are to be used on projects chosen by Switzerland and focused on education, trade promotion, environment, and internal security. The money is paid directly to the projects and does not go the EU cohesion fund in Brussels. Switzerland has no formal agreement with the European Union concerning these contributions. Instead, there is a Memorandum of Understanding (MOU) that sets out the general conditions of the Swiss commitment to the ten new EU member states. Under the MOU, almost half of the funding will go to Poland. Hungary's benefit will be SF 131 million, while the Czech Republic will receive SF 110 million.  

On November 26, 2006, the Swiss electorate approved a government bill to contribute 1 billion Swiss francs (about $800 million) to the 10 new EU member states. In a nation-wide referendum, 53.4% of voters accepted the “Eastern Europe Cooperation Act,” which entitles the government to spend 1 billion Swiss francs on projects in primarily Central European states over the next 10 years. Switzerland had pledged this contribution to share the burden of the EU’s eastern expansion in order to facilitate the conclusion of the second set of bilateral negotiations with the EU. The right-populist Swiss People’s Party (SVP), which prompted the referendum, was disappointed, but pleased that it mobilized a 47% opposition. The Eastern Europe Cooperation Act gives a new legal basis for Swiss aid to countries in Eastern Europe. The act has a 10-year term and replaces the former federal Law on Aid to Eastern Europe, which came into force in 1995. Since the fall of the Berlin Wall, Switzerland has spent SF 3.5 billion on about 1,000 aid projects in Central and Eastern Europe to help countries in the region transform into market economies. Sixty percent of the SF 1 billion is to come from the budget of the departments of foreign and economic affairs, mainly from cuts in aid programs to other parts of the world. The remaining 40% will be taken from the regular budget of the federal administration. The funds are to be used on projects chosen by Switzerland and focused on education, trade promotion, environment, and internal security. The money is paid directly to the projects and does not go the EU cohesion fund in Brussels. Switzerland has no formal agreement with the European Union concerning these contributions. Instead, there is a Memorandum of Understanding (MOU) that sets out the general conditions of the Swiss commitment to the ten new EU member states. Under the MOU, almost half of the funding will go to Poland. Hungary's benefit will be SF 131 million, while the Czech Republic will receive SF 110 million.  

The Swiss federal government remains deeply divided over EU membership as its long-term goal, and in a March 2001 referendum more than 70% of Swiss voters rejected rapid steps toward EU membership. The issue of EU membership is likely to be shelved for several years, if not a decade. In May 2005, the government said it could sign a framework agreement with the European Union, as an alternative to joining the organization, to encourage dialogue and create a platform for closer cooperation.

The Swiss federal government remains deeply divided over whether to eventually join the EU, and in a March 2001 referendum more than 70% of Swiss voters rejected rapid steps toward EU membership. The issue of EU membership is likely to be shelved for several years, if not a decade. In May 2005, the government said it could sign a framework agreement with the European Union, as an alternative to joining the organization, to encourage dialogue and create a platform for closer cooperation.

Switzerland nevertheless expressed interest in reaching a third layer of bilateral agreements that would involve energy, the Galileo satellite navigation system, health, and agriculture. But recent harsh criticism by the European Commission against preferential cantonal tax treatment for foreign holdings cooled the political climate surrounding the EU. Unilateral trade retaliation--as threatened by the EU if the Swiss cantons do not change their cantonal tax regimes--has not occurred, but the political damage is done, including greater anti-EU feelings among the population. The pressure to negotiate with the EU could turn sour as the EU has already asked Switzerland to pay another SF 300-350 million ($240-280 million, on top of the SF 1 billion cohesion fund) to provide further financial aid to Romania and Bulgaria, which joined the EU on January 1, 2007. Unlike the November 2006 referendum, the newly enacted Eastern Europe Cooperation Act does not provide for an automatic referendum on further payments. The parliament will decide on the additional aid request.

Switzerland nevertheless expressed interest in reaching a third layer of bilateral agreements that would involve energy, the Galileo satellite navigation system, health, and agriculture. But recent harsh criticism by the European Commission against preferential cantonal tax treatment for foreign holdings cooled the political climate surrounding the EU. Unilateral trade retaliation--as threatened by the EU if the Swiss cantons do not change their cantonal tax regimes--has not occurred, but the political damage is done, including greater anti-EU feelings among the population. The pressure to negotiate with the EU could turn sour as the EU has already asked Switzerland to pay another SF 300-350 million ($240-280 million, on top of the SF 1 billion cohesion fund) to provide further financial aid to Romania and Bulgaria, which joined the EU on January 1, 2007. Unlike the November 2006 referendum, the newly enacted Eastern Europe Cooperation Act does not provide for an automatic referendum on further payments. The parliament will decide on the additional aid request.

The government also decided in November 2006 to once more consider adoption of the EU “Cassis-de-Dijon” principle for trade after a first setback in 2004. If adopted, EU products could be imported in Switzerland without having to go through the burdensome Swiss certification and Swiss language requirement process. Currently, Swiss retail prices are on average 20-40% higher than in the EU. If parallel imports are allowed under adoption of the Cassis-de-Dijion principle, prices could drop by 10%. Possible exceptions have been reduced from 129 products to 40, but hurdles remain on the labeling of alcohol contained in Alcopops, the Swiss ban of phosphates in washing machine powders, the real origin of “EU meat”, and on the stringent Swiss generic food production requirements. The “Cassis de Dijon principle” will not apply to the many farming and industrial products already covered by mutual recognition agreements (MRAs) under the EU-Swiss Bilaterals I and II; nor will it apply to other products such as pesticides, motor engines, and weapons that require an authorization. The impact, as a result, may not be as large as expected. Another issue is that Swiss and EU MRAs concluded with third countries may also benefit from adoption of the Cassis-de-Dijon principle (these goods would also have to receive WTO most favored nation status).  

The government also decided in November 2006 to once more consider adoption of the EU “Cassis-de-Dijon” principle for trade after a first setback in 2004. If adopted, EU products could be imported in Switzerland without having to go through the burdensome Swiss certification and Swiss language requirement process. Currently, Swiss retail prices are on average 20-40% higher than in the EU. If parallel imports are allowed under adoption of the Cassis-de-Dijion principle, prices could drop by 10%. Possible exceptions have been reduced from 129 products to 40, but hurdles remain on the labeling of alcohol contained in Alcopops, the Swiss ban of phosphates in washing machine powders, the real origin of “EU meat”, and on the stringent Swiss generic food production requirements. The “Cassis de Dijon principle” will not apply to the many farming and industrial products already covered by mutual recognition agreements (MRAs) under the EU-Swiss Bilaterals I and II; nor will it apply to other products such as pesticides, motor engines, and weapons that require an authorization. The impact, as a result, may not be as large as expected. Another issue is that Swiss and EU MRAs concluded with third countries may also benefit from adoption of the Cassis-de-Dijon principle (these goods would also have to receive WTO most favored nation status).  

The government has reaffirmed its wish to strengthen ties with other non-EU trading partners in Asia and America. Exploratory talks on a Free Trade Agreement between the U.S. and Switzerland failed to result in negotiations, due to Swiss problems with free trade in agriculture, but the two sides did agree to a new framework for economic, trade, and investment discussions. This new agreement is the Swiss-U.S. Trade and Investment Cooperation Forum (the “Forum”) and is currently assessing areas where the two governments could facilitate greater trade and investment flows.  

The government has reaffirmed its wish to strengthen ties with other non-EU trading partners in Asia and America. Exploratory talks on a Free Trade Agreement between the U.S. and Switzerland failed to result in negotiations, due to Swiss problems with free trade in agriculture, but the two sides did agree to a new framework for economic, trade, and investment discussions. This new agreement is the Swiss-U.S. Trade and Investment Cooperation Forum (the “Forum”) and is currently assessing areas where the two governments could facilitate greater trade and investment flows.  

Switzerland ranks 17th among the main trading partners of the U.S. worldwide. The United States is the second-largest importer (11.5%) of Swiss goods after Germany (20%). The U.S. exports more to Switzerland each year than to all the countries of the former Soviet Union and Eastern Europe combined, and Switzerland imports more U.S. products and services than does Spain. In addition, the United States is the largest foreign investor in Switzerland, and conversely, the primary destination of Swiss foreign investment. It is estimated that 200,000 American jobs depend on Swiss foreign investments. Total U.S.-Swiss bilateral trade increased from $15.33 billion during 2003 to $16 billion in 2004.  

Switzerland ranks 17th among the main trading partners of the U.S. worldwide. The United States is the second-largest importer (11.5%) of Swiss goods after Germany (20%). The U.S. exports more to Switzerland each year than to all the countries of the former Soviet Union and Eastern Europe combined, and Switzerland imports more U.S. products and services than does Spain. In addition, the United States is the largest foreign investor in Switzerland, and conversely, the primary destination of Swiss foreign investment. It is estimated that 200,000 American jobs depend on Swiss foreign investments. Total U.S.-Swiss bilateral trade increased from $15.33 billion during 2003 to $16 billion in 2004.