December 2, 2005

Liberalisation of the European services market and its impact on Switzerland

The European Commission's 2004 proposals for a Services Directive consists of measures to reduce or eliminate the obstacles of cross-border trade of services by introducing the 'country of origin' principle. It implies that regulation of the country of origin is relevant, and that the country of destination has no right to impose new regulation.

Our results indicate that the introduction of the 2004 EU services directive in Switzerland would very much intensify the economic relations between the service industries of Switzerland and the European Union. We have investigated the direct effects of mutual liberalisation of services markets. These are positive, both for Switzerland and the EU. Swiss exports of commercial services to the EU could increase by 40 to 84 per cent, while Swiss foreign direct investment stocks in EU services industries could increase by 20 to 41 per cent. EU services exports to Switzerland may rise by 41 to 85 per cent, while EU direct investment stocks in Swiss service markets could rise by 29 to 55 per cent.

This report estimates the quantitative economic implications of a possible decision by the Swiss government to fully adopt the European Commission proposals for a services directive.