The EU's shift towards protectionist industrial policies, driven by competition from China and the US, is causing tension with its closest economic partners, Switzerland and Norway. These nations, despite integrating deeply with the EU's single market and contributing billions to European programs, are concerned that measures designed to protect EU industry are inadvertently impacting their economies and supply chains. Switzerland's State Secretariat for Economic Affairs has emphasized that new EU initiatives should consider "the entire European value chains, including Switzerland" to strengthen the continent's resilience and competitiveness.
Specific examples highlight these challenges. Switzerland has had to intervene to ensure waste treatment policies allow cross-border processing to the nearest facility, even if it's outside the EU. The country also protested after proposed EU steel safeguards treated it less favorably than European Economic Area members like Norway. Swiss officials argue that excluding their country from some measures intended to bolster European industry could ultimately make EU supply chains less competitive, especially given the EU is Switzerland's largest trading partner. Bern is committed to paying annually SFr130 million (approximately $161 million) to EU cohesion programs, increasing to SFr350 million, and new trade disputes could complicate parliamentary approval and a future referendum on closer EU ties.
Norway, another closely aligned country, has also been caught by the EU's more assertive trade policies. Last year, Oslo unexpectedly faced EU trade restrictions on certain steel alloys, exposing the vulnerability of being outside the bloc. This incident prompted debate within Norway about the sufficiency of the EEA agreement and even led to trade policy responsibility shifting back to the foreign ministry. Both Swiss and Norwegian officials privately acknowledge that many economic decisions are being made in areas where their countries have no voice, as the US, China, and the EU increasingly use tariffs, subsidies, and industrial policy to pursue their goals. This environment is leading to fears among European business leaders that more sectors will be identified as national security priorities, fostering protectionist tendencies globally.
