Guy Parmelin talks about crisis in steel industry in interview

Federal Councilor Guy Parmelin confirmed that 130 jobs will be cut at the Emmen steel plant. Do not pursue industrial policy. In the interview, he explained what further measures the Federal Council has taken for the crisis-stricken industry.

Stefan Bühler / ch media

From a liberal perspective, a good economics minister is one who interferes as little as possible in the economy. However, given the crisis in the steel industry, concerns after the election of Donald Trump, and China's power politics, demands are coming from many quarters for Senior Deputy Federal Councilor Guy Parmelin. In an interview at the Federal Palace, the Economy Minister expressed how he hopes to guide the Swiss economy through the storm.

Do you like November?
Guy Parmelin: Yeah, it's been a good month for me. I celebrated my 65th birthday on November 9th and am now an active retiree.

Does retirement appeal to you?
No, I still have two or three years. At least until the end of this legislative period.​

It's been a rough November for others, and not just because of the fog. The existence of the Grafingen steel plant is under threat; Swiss Steel in Emmen announced on Friday that it would lay off 130 people. Other countries subsidize struggling industries and businesses, which is called industrial policy. The Federal Council fundamentally rejected this. Why?
Job cuts at Swiss steel companies illustrate the problem. We have excess steel capacity around the world, including in Europe. Swiss Steel is not just cutting 130 jobs in Switzerland. The company had to cut an additional 670 jobs in Europe due to weak demand. This comes in a country that heavily supports its own steel companies through industrial policy and subsidies. This is why Switzerland does not develop industrial policy for individual companies or sectors.

And has it always been like this?
The federal government cannot prevent structural change through subsidies, especially if there is global overcapacity or technology development underway. We have neither the financial resources nor the skills to do this. The federal government, on the other hand, supports the economy through business-friendly framework conditions and programs, such as decarbonization in which all companies can participate. We will provide more than a billion dollars in funding over the next few years to phase out fossil fuels.

But in the EU, steel plants are directly subsidized. Isn’t it negligent to watch your industry decline?
Again: despite subsidies, many factories in the EU are closing or laying off workers. The Federal Council is not sitting idly by either. My colleague Albert Rösti and I had several conversations with the director of the Gerafingen steelworks. We use our range of legal actions, for example in the area of ​​short-term work or the mentioned funding schemes. But we must also consider the consequences of possible further measures: What if another industry falls into crisis – will we pay the price too?

The parliamentary economics committee called on the Federal Council to save the Swiss steel industry and pass an emergency law if necessary. What do you think about this?
As I said, the Federal Council is exhausting its legal options. Parliament, as legislators, is now looking for new solutions. This is a good thing. It is very important for the Federal Council to take into account the above-mentioned framework conditions.

But hundreds of jobs are now at risk. If it wasn't a steelworker family, but a farmer's family, you'd be all over it, wouldn't you?
It's always a tragedy when you lose your job. As for farm families, I would like to remind everyone that the number of farms is also decreasing. It’s a silent process that can also cause harm.

The election of Donald Trump has also hurt many Swiss people. What do you think of this sentiment?
The response I received was conflicting. On the one hand, I've noticed a certain goodwill toward President Trump in the business community. But there is also uncertainty due to higher tariffs and increased protectionism he announced during his campaign. I sense there is a level of concern. As a federal councilor, I can say that we were able to work well with the Trump administration between 2017 and 2021. I am cautiously optimistic about economic and technological cooperation during President Trump’s second term.

During Trump's first term, Switzerland came close to a free trade agreement with the United States. Do you hope this project can now be taken further?
I'm wary of free trade agreements. At that time, we had discussions with the United States and finally found that the conditions of both parties were not consistent enough. Almost five years later, we look again and the situation is similar. From a US perspective, things are already going well in Switzerland, why should anything change…

…and in any case it would be difficult to win a deal that also affects agriculture in a referendum in Switzerland.
There will be a lot of resistance. Our strategy is to reach agreements with the United States in every area, just like the agreement we reached with the pharmaceutical industry last year.

Currently, there is great uncertainty around the world. The possibility of an economic war between the United States and China cannot be ruled out. The German economy was stagnant and the government had just collapsed. The war in Ukraine and the Middle East continues. Are we facing a global economic crisis?
The signals here are also inconsistent. The dynamism of China and the United States has weakened considerably. On the other hand, the situation in Europe is expected to improve. But the uncertainty is huge. For example, if there were a blockade of the Red Sea due to a war in the Middle East, this would also have a significant impact on our supply chain. Switzerland will also feel the impact of economic tensions between the United States, China and the European Union. My experts see signs of a slight uptick, but there is a lot of uncertainty.

The German auto industry, an important customer of Swiss companies, is currently in crisis. How serious is Volkswagen's decline in Switzerland?
As you say, Germany is in trouble and is an important customer of Switzerland. However, our company has reduced its dependence on German customers. Still, individual companies in Switzerland could get into trouble. To what extent is difficult to assess at this time.

Free trade agreements with countries around the world are closer to your heart than industrial policy. Is this your secret to boosting the Swiss economy?
Yes, although as a farmer I should actually be cautious because the hard currency of free trade negotiations is agricultural concessions and we have very little room for that. But to me this seems to be the best opportunity for Switzerland to open up new markets. We have successfully reached an agreement with India and the treaty is now before Parliament.

And probably in front of people. Although India is a democratic country, its economy is controlled by a few oligarchs and its government shows authoritarian tendencies. India is reminiscent of Russia fifteen years ago – it will be a tough vote.
India is a democracy and this year's elections were conducted correctly. We are negotiating with several rapidly developing countries, including South America. They are aware of the issues, including those related to climate change and rainforest deforestation. But what they won’t tolerate is us telling them what to do. On the other hand, they are happy to work with us when there is a lot of expertise in our economy.

We just do business and don’t speak out on issues of human rights and environmental damage – isn’t this Switzerland shirking its responsibility?
No, we have provisions for these issues in the treaty. We also clearly adhere to international agreements such as the Paris Climate Agreement.

China is definitely not a democratic country. It leads a group of authoritarian states including Russia, North Korea and Iran, and even federal intelligence agencies are warning about it. Beijing provided Putin with supplies for the war in Ukraine. Nonetheless, you are negotiating the further development of the free trade agreement. As Switzerland reduces its economic dependence on China, shouldn't the opposite happen?
Dependence on China will not increase. The purpose of the negotiations is to improve our ten-year-old contract as well as sustainability issues.

In Switzerland, economic, security and human rights policies are pursued separately: they negotiate free trade with China, the state secretary of the Ministry of Foreign Affairs conducts human rights dialogues, and the intelligence service warns of the dangers posed by the Chinese regime. This seems incoherent to me.
Human rights dialogue has existed for 30 years and we are the only country that has this form with China.

Some say it is pure fig leaf.
No, that's not true. But this is a conversation that cannot be had publicly.

How did intelligence community concerns affect negotiations?
You can't be naive, but you can't be afraid either. You see, Switzerland is not the only European country willing to cooperate with China. The European Union officially distanced itself from Beijing and issued a warning. But here I have a list of EU countries that have concluded scientific or economic agreements with China this year – it doesn't fit on an A4 sheet of paper. These include countries such as Germany, France and Italy, whose heads of state are in China. Everyone criticizes China on the outside, but behind the scenes the contract is signed.

We haven't even discussed the all-important contract yet.
Which?

Say it!
We are working on a package contract with the EU, negotiations are currently in full swing and the Federal Council hopes to decide in due course whether the results are satisfactory so that we can adopt the message to Parliament. But most importantly, it depends on the quality of the outcome of the negotiations.

If you had a choice today: all the free trade agreements you want are already in place, or Bilateral III has been negotiated – which one would you choose?
You can't fight one on one. Diversity is important for Switzerland – we need both. (aargauerzeitung.ch/lyn)