In a significant move to enhance bilateral trade relations, the United States, Switzerland, and Liechtenstein have entered into a new framework agreement aimed at providing U.S. corporations with greater access to public procurement markets and addressing the growing need for more robust investment screening mechanisms. Announced by the United States Trade Representative (USTR) alongside representatives from Switzerland and Liechtenstein, the deal signals a strengthening of trade relations and an effort to close procurement-market loopholes that have historically been exploited by non-FTA (Free Trade Agreement) parties.
The framework is designed to create a more balanced and reciprocal trade environment between the U.S. and these two countries, which, while small in size, are influential in global finance, technology, and innovation sectors. At the heart of the agreement is a commitment by Switzerland and Liechtenstein to offer U.S. companies better access to their public procurement markets. This move is particularly notable as both countries have traditionally had restrictions or competitive advantages that have limited U.S. companies’ ability to participate fully in these markets.
The announcement also addresses the ongoing issue of the U.S. goods trade deficit with Switzerland and Liechtenstein. In 2024, this trade deficit was approximately $38.5 billion, and the new pact aims to reduce this gap by 2028 through enhanced market access, improved investment opportunities, and tighter regulation of foreign competition in sensitive sectors.
One of the key elements of the agreement is the intention to tighten investment screening, especially in areas deemed critical to national security or economic stability. This will include sectors such as aerospace, technology, and critical infrastructure, where both Switzerland and Liechtenstein have high-value assets and where the U.S. is keen to ensure that foreign investments do not compromise security interests. U.S. companies wishing to invest in these countries will now need to navigate new investment screening regimes, which are expected to be more stringent and comprehensive than before.
The deal also enhances cooperation between the U.S. and its European counterparts on export controls, sanctions, and investment screening. This integration of trade and national security concerns comes at a time when many global economies are becoming increasingly cautious about foreign investments in sensitive industries, especially in the tech and defense sectors. As such, this framework is not only about trade access but also about ensuring that investments and procurements in critical areas adhere to security and compliance standards.
From a corporate governance perspective, U.S. companies that are seeking to participate in public procurement contracts or invest in Switzerland and Liechtenstein will need to be particularly vigilant about the evolving regulatory landscape. The procurement market access in the deal could be a useful lever for U.S. businesses in securing government contracts in these countries, but it also comes with new layers of compliance and screening obligations that companies must monitor carefully. Legal and corporate counsel must be prepared to advise on how these changes in procurement practices may tie into broader investment-control requirements.
Moreover, the agreement signals a broader trend where public procurement access, ESG (Environmental, Social, and Governance) compliance, and investment screening are becoming increasingly interconnected. Companies operating in global markets will likely find that procurement obligations, particularly with key trading partners, will have more nuanced compliance requirements linked to their broader trade and investment activities. Legal teams must now ensure that their strategies for procurement, mergers and acquisitions (M&A), and compliance all align with these new frameworks, particularly as they relate to sensitive sectors.
The shift reflects an ongoing recalibration of global trade agreements, where nations increasingly use procurement access as a strategic tool in broader investment policy. This trend could potentially influence other trade negotiations and lead to new models of international cooperation, where procurement markets are treated as part of a larger strategic framework involving national security, economic growth, and environmental considerations.
For U.S. corporations, this new framework agreement provides opportunities for enhanced access to key markets, but it also presents the challenge of navigating more complex legal and regulatory landscapes. Companies involved in aerospace, technology, and critical infrastructure sectors, in particular, must be prepared to adjust their strategies to account for new screening and compliance requirements that could impact their ability to secure contracts or make investments.
This historic trade deal between the United States, Switzerland, and Liechtenstein sets a new precedent for how trade, investment, and national security concerns are increasingly intertwined. U.S. companies are now presented with a pivotal moment to capitalize on enhanced procurement access, but also need to be acutely aware of the shifting legal and regulatory dynamics in these critical markets. Legal teams across industries must stay ahead of the curve to navigate these changes effectively and capitalize on the opportunities this new framework provides.
