Switzerland is among 60 countries named by the US for not doing enough to end forced labour. The move might be a tactic to impose additional tariffs but is there any truth to the accusation?
On March 12, the US announced an investigation against Switzerland under Section 301 of the US Trade Act that addresses unfair or discriminatory trade practices. The investigation aimed to find out if Switzerland was doing enough to prevent the import of products made with forced labour.
The International Labour Organisation (ILO) defines forced labour as “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily”. Penalties can include violence or intimidation or coercive tactics like withholding wages or confiscating passports.
The results of the US investigationExternal link were announced on June 2 and Switzerland found itself among a list of 60 countries that were deemed to have failed to impose or effectively enforce a prohibition on the importation of goods produced with forced labour. The US trade representative warned that by allegedly failing to tackle forced labour, Switzerland and other countries on the list were subjecting US producers to unfair competition.
On July 23, the US announced that it will levy a flat-rate additional tariff of 12.5%External link on countries like Switzerland that do not have an import ban on goods produced using forced labour.
Swiss response
Forced labour is prohibited in Switzerland and the country has ratified international labour and human rights conventions. However, unlike the European Union, Switzerland does not have legislation that explicitly prohibits the import of goods made with forced labour. A draft lawExternal link is currently in the works, but this will only apply to around 30 large companies. This is why Switzerland is being targeted for an additional 12.5% US tariff compared to 10% for the EU that already has an import ban legislation.
The Swiss government has denied the allegations that Switzerland has a forced labour loophole and said that its approach combines government regulation, mandatory risk assessments initiated by the private sector, and international cooperation.
“This approach focuses on efforts to prevent and tackle the root causes within supply chains. These approaches differ in method [from an import ban], but not in their aim or effectiveness. Switzerland’s approach does not harm US industry,” said the government in a press releaseExternal link.
The Swiss business association Economiesuisse also chimed in on the private sector’s obligationsExternal link to prevent forced labour in companies’ supply chains.
“In line with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, Switzerland has adopted a risk-based approach instead of a blanket ban on imports. Swiss companies are subject to comprehensive non-financial reporting obligations, which also include due diligence on human rights risks in the supply chain,” stated Economiesuisse.
Despite the best efforts of the Swiss government and corporate sector, it is impossible to guarantee that Swiss supply chains have zero forced labour.
“I think there are forced labour risks in almost all global supply chains,” says Dorothée Baumann-Pauly, professor at the University of Geneva’s School of Economics and Management.
Her top three risky imports for Switzerland are seafood, critical battery minerals and gold, and all agriculture goods that rely on migrant workers that paid recruitment fees to get seasonal jobs. For consumers these products could include supermarket fish or pet food, hazelnuts or rose petals from Turkey, jasmine from Egypt, or sugar from India.
