Should Switzerland protect its technology sector more?
In economic circles, ‘protectionism’ is a real nightmare. But it has blurry boundaries. Rika Koch and Lukas Schmid debate solutions to safeguard the Swiss tech sector.
Photo: Provided by subject
Photo: Provided by subject
Protection is a double-edged sword. To be sure, safeguarding critical infrastructure is a core duty of the state. But when it comes to supporting a whole sector of the economy, the line between protection and protectionism is quickly crossed. Andy Yen, the head of the Swiss e-mail service Proton, recently called on the federal government to give priority to domestic providers in the field of digital technologies. This, he argued, would strengthen Swiss sovereignty. But there are three reasons for us to doubt whether promoting ‘homeland security’ in this manner would actually result in our being more secure:
First: resilience isn’t achieved through isolating ourselves, but through diversification. Switzerland isn’t resilient because it does everything on its own, but because it has alternatives in place that can enable it to mitigate outages, supply bottlenecks and political risks. If political reasons lead you to rely on a small number of Swiss providers, this can create an unhealthy dependence on just a few domestic firms.
Secondly, doing this would weaken the urge to innovate. Companies don’t improve by being shielded from their competitors, but by having to hold their own against the best in the world, time and again. Then there’s the risk that Swiss companies, or the Swiss public sector, would ultimately have to resort to solutions that are either more expensive, or technologically less sophisticated.
Thirdly, Switzerland has been active on the international stage for years, advocating for open markets and for dismantling protectionist measures. If it now began to place hurdles before foreign providers, it would put its own reputation at risk and would have to reckon with retaliatory measures. Our access to foreign markets would be placed in jeopardy.
Faced with a world where countries are increasingly isolating themselves, the correct response wouldn’t be protectionism, but the very opposite. Instead, the state ought to conclude free-trade deals with other countries so as to diversify its supply sources. It should avoid rushing to impose regulations on new technologies, and it should strengthen basic research in STEM and life sciences, because this allows start-ups to emerge. Openness and innovation can make Switzerland resilient in a chaotic world.
Lukas Schmid is Senior Fellow at Avenir Suisse, where his work focuses on innovation policy and competitiveness.
It’s essential for Switzerland, as a trading nation, to respect the rules of the World Trade Organization (WTO). But these rules also allow sovereign states to assess whether there are grounds for refusing imports in individual cases. Protectionism for its own sake is not legitimate under WTO law – in other words, not if it’s undertaken just to protect a specific sector of the economy. But environmental protection, animal welfare, public safety or public morality can indeed count as grounds for enacting restrictions.
It is these protection goals that ought to be foregrounded when it comes to the fastest-growing trade sector: services relating to digital technologies. Government bodies are buying these services on a large scale. This can lead to efficiency savings, but also carries risks with it. The first such potential risk is to our fundamental rights: can Switzerland protect the personal data of its citizens when it’s processing that data with technology from a country whose own laws allow access to it?
A further risk is spiralling costs. The state is required to act in a cost-efficient manner, but is defenceless against ever-rising licence fees. Finally, by depending on a small number of providers, the state opens itself up to a cluster risk. Cyber-attacks are just one potential scenario here; in fact, the provider itself could simply ‘pull the plug’ on Switzerland. This is also incompatible with the fundamental principle of democracy, namely that the state should maintain the capability to act, and should remain accountable and responsive to its citizens.
The solution is to break free from the narrow paths dictated by big tech and to make conscious changes in direction. And we should reclaim our digital sovereignty. Not by means of pure protectionism or isolationism. Not through expensive innovation programmes or subsidies. But by utilising the legal scope available for us to achieve legitimate protection goals, including strategic IT procurement. This would enable Switzerland to regain its capacity to act, and empower it to guarantee the security and fundamental rights of its citizens.
Rika Koch is a professor in public procurement law at the Bern University of Applied Sciences BFH.
Photo: ZVG
Protection is a double-edged sword. To be sure, safeguarding critical infrastructure is a core duty of the state. But when it comes to supporting a whole sector of the economy, the line between protection and protectionism is quickly crossed.
Andy Yen, the head of the Swiss e-mail service Proton, recently called on the federal government to give priority to domestic providers in the field of digital technologies. This, he argued, would strengthen Swiss sovereignty. But there are three reasons for us to doubt whether promoting ‘homeland security’ in this manner would actually result in our being more secure:
First: resilience isn’t achieved through isolating ourselves, but through diversification. Switzerland isn’t resilient because it does everything on its own, but because it has alternatives in place that can enable it to mitigate outages, supply bottlenecks and political risks. If political reasons lead you to rely on a small number of Swiss providers, this can create an unhealthy dependence on just a few domestic firms.
Secondly, doing this would weaken the urge to innovate. Companies don’t improve by being shielded from their competitors, but by having to hold their own against the best in the world, time and again. Then there’s the risk that Swiss companies, or the Swiss public sector, would ultimately have to resort to solutions that are either more expensive, or technologically less sophisticated.
Thirdly, Switzerland has been active on the international stage for years, advocating for open markets and for dismantling protectionist measures. If it now began to place hurdles before foreign providers, it would put its own reputation at risk and would have to reckon with retaliatory measures. Our access to foreign markets would be placed in jeopardy.
Faced with a world where countries are increasingly isolating themselves, the correct response wouldn’t be protectionism, but the very opposite. Instead, the state ought to conclude free-trade deals with other countries so as to diversify its supply sources. It should avoid rushing to impose regulations on new technologies, and it should strengthen basic research in STEM and life sciences, because this allows start-ups to emerge. Openness and innovation can make Switzerland resilient in a chaotic world.
Lukas Schmid is Senior Fellow at Avenir Suisse, where his work focuses on innovation policy and competitiveness.
Photo: ZVG
It’s essential for Switzerland, as a trading nation, to respect the rules of the World Trade Organization (WTO). But these rules also allow sovereign states to assess whether there are grounds for refusing imports in individual cases. Protectionism for its own sake is not legitimate under WTO law – in other words, not if it’s undertaken just to protect a specific sector of the economy. But environmental protection, animal welfare, public safety or public morality can indeed count as grounds for enacting restrictions. It is these protection goals that ought to be foregrounded when it comes to the fastest-growing trade sector: services relating to digital technologies.
Government bodies are buying these services on a large scale. This can lead to efficiency savings, but also carries risks with it. The first such potential risk is to our fundamental rights: can Switzerland protect the personal data of its citizens when it’s processing that data with technology from a country whose own laws allow to access it? A further risk is spiralling costs. The state is required to act in a cost-efficient manner, but is defenceless against ever-rising licence fees. Finally, by depending on a small number of providers, the state opens itself up to a cluster risk. Cyber-attacks are just one potential scenario here; in fact, the provider itself could simply ‘pull the plug’ on Switzerland. This is also incompatible with the fundamental principle of democracy, namely that the state should maintain the capability to act, and should remain accountable and responsive to its citizens.
The solution is to break free from the narrow paths dictated by big tech and to make conscious changes in direction. And we should reclaim our digital sovereignty. Not by means of pure protectionism or isolationism. Not through expensive innovation programmes or subsidies. But by utilising the legal scope available for us to achieve legitimate protection goals, including strategic IT procurement. This would enable Switzerland to regain its capacity to act, and empower it to guarantee the security and fundamental rights of its citizens.
Rika Koch is a professor in public procurement law at the Bern University of Applied Sciences BFH.
