American Swiss Foundation

Building Bridges Leadership Conference 2018, Washington, DC

The American Swiss Foundation held its triennial Building Bridges conference on September 27 and 28, 2018. The conference featured alumni of the annual Young Leaders Conferences and U.S. and Swiss leaders in business, government, media, and public policy. Six panel discussions were held at The Heritage Foundation and the Center for Strategic and International Studies (CSIS).

By Karina Rollins (YL 2003)

Swiss Ambassador Martin Dahinden and his wife Anita hosted the opening dinner at the ambassador’s official residence at which Swiss Advisory Council Chairman Markus Diethelm delivered welcome remarks. The following evening, more than 300 guests attended the special gala dinner at the Smithsonian’s National Portrait Gallery dedicated to the memory of the late Ambassador Faith Whittlesey, the former Chairman of the American Swiss Foundation. U.S. Treasury Secretary Steven Mnuchin gave the keynote address, and the U.S. Surgeon General, Dr.Jerome Adams (YL 2015), received the American-Swiss Leadership Award from Board member Patrick Heymann (YL 2014). See the video of his acceptance speech here. Chairman Robert Giuffra (YL 1996) served as Master of Ceremonies. AmbassadorWhittlesey’s legacy was honored in a video tribute featuring testimonies by friends and leaders from both countries introduced by Christopher Ruddy (YL 2001) of Newsmax Media.

A visit with Justice Samuel Alito at the U.S. Supreme Court, and a presentation on the value of space exploration by NASA’s Associate Administrator for Science, Dr. Thomas Zurbuchen, rounded out the multifaceted and memorable conference.

For conference photos, please click here.

U.S.-Swiss Trade and Investment

In his welcome remarks to conference attendees on the first day of panel discussions, Heritage Foundationexecutive vice president Kim Holmes observed that the shared values of Switzerland and the United States make the two countries “natural partners.”

Martin Naville, CEO of the Swiss-American Chamber of Commerce, speaks of a “U.S.-Swiss love affair with occasional flawed politics.”Referring to the two countries, Naville states that, “We are both world changers—we are both in the top five in global competition and innovation.” The already strong foreign direct investments between the U.S. and Switzerland are growing in both directions. Switzerland spends more on research and development than other countries, and pays the highest average salary in its companies abroad. Swiss investment in the U.S. is higher than that of Germany. “The time is now,” says Naville, for both countries to build on their extraordinary partnership and enact a U.S.-Swiss Free Trade Agreement.

ASF board member Kimberly Reed (YL 2001), nominated as chairman of the U.S. Import-Export Bank, brings up a figure who personally embodied the partnership between the two countries—Swiss-American Albert Gallatin, the fourth Secretary of the Treasury. Generally a free trader, Gallatin believed that Congress does have a role to play in regulating trade. 

Time for a U.S.-Swiss Free Trade Agreement. The U.S. and Switzerland have “uniquely shared values,” and “this is a great time to discuss the U.S.-Swiss partnership,” maintains Anthony Kim, editor of The Heritage Foundation’s Index of Economic Freedom. Under the Trump Administration, says Kim, “the U.S. is willing to pursue new and bilateral trade deals, especially with likeminded partners.” It is time to “notch up the U.S. Swiss love affair in a practical way.”

In 2005, free-trade negotiations at the World Trade Organization (WTO) fell flat between the U.S. and Switzerland. In early 2006, Heritage Foundation trade analysts wrote a paper describing the difficulty of reducing trade barriers through multilateral negotiations—and suggested bilateral free trade agreements instead. That is precisely what is being called for by many free traders today—a bilateral U.S.-Swiss free trade agreement. Again, in 2018, Heritage is at the forefront, with top Heritage figures, including Kim, writing a paper on how “It’s Time for a Free Trade Agreement with Switzerland.”

Kim believes that today is a very different situation from 13 years ago. “Both sides are more practical and business-minded,” he says, and “the baseline is forward looking; construction of a free trade agreement is value added.” The agriculture sector could require extra negotiation, but Kim believes that agricultural concerns can be realistically addressed in a “good quality trade deal” that is “about more than just market access.” And, as Naville points out, there is more flexibility on both sides today—the U.S., for instance, is no longer expecting total market access.

Free Trade, Pharma, and Investing for the Future. Secretary general of Interpharma (the association of research-based pharmaceutical companies in Switzerland) René Buholzer (YL 2003) notes that nearly 50 percent of Swiss exports to the United States are pharmaceuticals or chemicals. Swiss companies in the U.S. make the largest investments in R&D of all foreign companies in America, and employ hundreds of thousands of people. Of course, U.S. companies have a strong presence in Switzerland as well, such as Johnson & Johnson, with 24 locations in the alpine country.

While Buholzer sees a WTO deal as the preferred option, a U.S.-Swiss free trade agreement, he says, would prevent unnecessary distractions—and yes, it would be “good for both countries.”

Molly Fogarty, senior vice president of corporate and government affairs at Nestle USA, describes Nestle—the largest food company in the world—as “a visible source of investment in the U.S.” The United States is Nestle’s largest market—about one third of the total—and Nestle employs around 48,000 people, and has 87 factories, in America. Fogarty says that the Swiss company takes “the long-term view and is not just bottom-line driven.” Nestle would welcome a free trade agreement between Switzerland and the United States, but Fogarty recognizes potential stumbling blocks—“politics are tricky,” and “the agriculture sector is often tricky.”

Despite all acknowledged trickiness, however, Kim urges, “let’s be more strategic and more proactive.” And, has he points out: “Switzerland has bilateral trade deals with China and Japan—so why not with the United States?”

Tax and Regulatory Reform

Moderator Romina Boccia (YL 2016), director of The Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, takes a look back at the “severe global shock” of 2008, and how, ever since, “governments have been trying to prevent another such crisis” through regulatory mechanisms (such as the Dodd-Frank Wall Street Reform and Consumer Protection Act) and designations (such as “too big to fail”).

The Trump Factor. What is most important now, stresses Grover Norquist (YL 1993), president of Americans for Tax Reform, are two immense improvements to America’s economic health since the Trump Administration took office in January 2017: (1) improvement due to what has not happened—“no gazillion new regulations,” and (2) improvement due to what did happen—passage of the Tax Cuts and Jobs Act (TCJA).

Norquist, an architect of the TCJA, praises the Supreme Court’s decision in Janusv. AFCME, which ended compulsory union dues for public employees, affecting about 5 million people, as well as U.S. energy expansion, such as drilling in the Artic, for helping the labor market and the economy.

International Cooperation. Chairman of ASF’s Swiss Advisory Council Markus Diethelm, Group General Counsel at UBS, shares that he joined UBS just seven days before the global market crash on September 16, 2008. He believes that a decade later, banks and financial systems are much more resilient, but that there is a “lack of international focus” in countries and a “trend of trapping capital in local jurisdictions,” which “is not good.” In order to weather any future crisis, financial institutions will “need financial fungibility.”

While learning from the past is important, Diethelm urges the financial world and policymakers: “Don’t look back, but forward” to other challenges, such as shadow banking—unregulated lending and other financial transactions. He stresses the importance of “look[ing] at the global picture and cooperation among regulators.” Especially when it comes to regulating uncharted territory, such as cryptocurrencies, he says, “it will not be helpful to have another 500 people monitoring money laundering.” It is a “false comfort zone to believe that international criminal money can be dealt with instance by instance.” The world will “need much more international cooperation.”

The Wildcard. General Counsel at the Department of the Treasury Brent McIntosh says that the U.S. is “acutely aware of the need for international cooperation.” The Treasury is “technology neutral,” but wants to make sure that crypto assets do not facilitate crime. “We care about consumer protection,” says McIntosh, and acknowledges that “there is work to be done in technological spaces.”

McIntosh lists three main aspects under the Trump Administration that affected the U.S. economy positively: (1) tax cuts, (2) free and fair trade, and (3) regulatory reform. McIntosh notes that regulators also need to be held accountable, not just those whom they regulate. Looking ahead, he describes FinTech as “a huge wildcard,” stating that “the federal government needs to wrap its head around it.”

“Just keeping track of regulations [in general] is a huge accomplishment,” states McIntosh.

Misplaced Power. The U.S. Constitution designates three branches of government—the legislative branch, the executive branch, and the judicial branch. ASF Chairman Robert Giuffra (YL 1996), partner at Sullivan & Cromwell, issues a reminder that the legislative branch—Congress—is intended to be the preeminent power. “Yet Congress has delegated power to the administrative state,” laments Giuffra, so much so that there is a “tendency in the United States to legislate by crisis.” The Sarbanes-Oxley Act of 2002, enacted in reaction to multiple corporate accounting scandals in the previous two years, is such an example, says Giuffra. While it did address the widespread fraud at Enron, otherwise it “just created more work for accountants.”

Norquist agrees, pointing out that after every crisis, “politicians feel the need to ‘do something,’” and that “crises always lead to bad governance.” The Dodd-Frank Act was another law enacted after a crisis, and now there are efforts to undo the law. Legislating is “always on a retrospective basis,” says Giuffra. In 2018, congressional legislation “must make sense for the year 2018”—and the best way to do that, Giuffra points out, is for members of Congress to remind themselves of the 1789 Constitution.

Apprenticeship and Workforce Development

Bettina Schaller(YL 2011), head of Group Public Affairs at the Adecco Group, and member of the board of the Young Leaders Alumni Foundation, describes vocational training—time split between learning on the job and learning in a classroom—as “the hottest topic in town.” (In American towns.) The value of apprenticeship is a matter of rare bipartisan agreement in the United States these days, having received strong interest and support from officials in the Obama Administration, from Democratic and Republican politicians, and from President Trump himself. More and more states are implementing pilot apprenticeship programs, such as one started under Governor John Hickenlooper in Colorado, and they are often modeled, at least in part, on the Swiss system.

Competitive Advantage and Flexibility.Moderator Kent Anker (YL 1994) is executive vice president of Democracy Prep Public Schools, which runs 23 charter schools in six states. He describes Martin Hirzel (YL 2006), now CEO of Autoneum Holding, as “a living product of the Swiss dual education system.” The word “dual” refers to the two parts of vocational training—time in a classroom, and hands-on time at a business as a paid apprentice learning specific job skills. Hirzel decided at age 15 to take on a so-called commercial apprenticeship (learning about business, administration, and finance). Hirzel says that being part of a corporate culture as a teen, and being “exposed to different leadership styles” gave him “a competitive advantage over university graduates in the labor market.” Hirzel did later attend university, too—the advantage of the Swiss system being that it allows such flexibility (unlike, for instance, Germany’s system, which is similar but does not have this degree of flexibility).

The Future of Work? She was U.S. ambassador to Switzerland under the Obama Administration, and is now commissioner of Washington State’s Employment SecurityDepartment: Suzi LeVine has studied the Swiss apprenticeship system intensively, and is an enthusiastic proponent. Due to their version of the dual-education system, “the Swiss are the most future-ready country in the world,” she believes. In the U.S., a country-wide, socially accepted apprenticeship system still seems fantastical, and operationally, it would be “really, really hard.” Businesses in the U.S., she says, “have been consumers, not creators of talent.” Another hurdle to an apprenticeship system in the U.S. is that labor law is quite restrictive when it comes to teen work.

But difficult does not mean impossible, and individual apprenticeship programs in the U.S. are attracting interest. Unions in Washington State, for instance, LeVine points out, are “champions of apprenticeship and diversification.” Anker believes that apprenticeships are an “options multiplier.”

Eric LeVine, CEO of CellarTracker and board member of Careerwise Colorado, says that the apprenticeship program in Colorado championed by Governor Hickenlooper “is the closest” the United States has “to what Switzerland is doing.” Today, Careerwise has 250 students, with 70 participating companies and several school districts across the state. Instead of the “college track,” students who participate in Careerwise choose from five career paths, and starting as a junior in high school, attend traditional school three days a week, and work at a company two days a week. Colorado’s ambitious goal is—by 2027—to have one of every 10 high school students enrolled in an apprenticeship program.  By comparison, 70 percent of Swiss high school students choose to pursue an apprenticeship path over the traditional college route.

Getting the Message Out. “Inspired by the Swiss model,” Connecticut State Senator Art Linares (YL 2016) introduced a bill to study how Connecticut could benefit from an apprenticeship program. Linares knows that “you cannot just cut and paste,” and that preparation and changes will be necessary for apprenticeship programs in the U.S. context. A major hurdle that remains is the misconception that apprenticeships only prepare individuals for manual labor jobs. In fact, many jobs in technology, IT, health care, and business do not require expensive college degrees and are perfect opportunities for apprenticeship. “Gubernatorial leadership is crucial,” says Linares, as are public-private partnerships and coalitions with unions.

Autoneum, Switzerland’s largest automotive supplier, has 56 plants in 25 countries and employs 30,000 people. Hirzel, the CEO, points out that in so many places, there is a “dry labor market and a war for talent.” Apprenticeship programs are a proven way to provide such talent. Recognizing the over-focus on college degrees in the U.S.—with students crushed by student-loan debt who then have trouble finding work—Hirzel says that the focus of high schools should be to make students “career ready,” not “college ready.”

Linares agrees, and points out the sectors of the economy with jobs that go unfilled. For instance, “there is a huge demand for welding in the U.S.—a job that would pay six figures in Connecticut.” But there is no comprehensive system to train welders while educating them at the same time. “Connecticut has 30,000 jobs to fill over the next ten years” for a whole array of careers, “yet has no trained workforce,” Linares laments. An apprenticeship “lets you understand why you want to go to college in the first place. It’s good to get your hands dirty first,” says Linares. In order to appeal to millennials, he is spreading his message on Instagram. But popular and well-known companies must be on board. “If big companies get on board, parents and kids will be on board.” And, as Schaller points out, human resources professionals in the U.S. must recognize the value of an apprenticeship certification. Eric LeVine says that, despite bipartisan political support for apprenticeships in the U.S., politicians think in two-year and four-year cycles, and thus often do not stay focused on the long-term process.

Hirzel recognizes that when choosing between the “college track” and a “career track” in high school, “there is a compromise.” But, apprentices—like others—can decide to return to school and get a college degree later.

U.S. Foreign and Security Policy

ASF president Patricia Schramm (YL 1999) welcomesthe conference attendees to the second day, at CSIS. Manuel Rybach (YL 2008), global head of Public Affairs and Policy at Credit Suisse, references President Trump’s “unprecedented actions—on the Paris [climate] agreement, NATO, tariffs, and his unpredictable, more bilateral style of foreign policy.” President Trump is also “more assertive toward China.” Rybach asks: “Is U.S. global leadership at stake?” And what are the implications for U.S. alliances?

Style and Substance. A former senior fellow at CSIS, where he led the Transnational Threats Project,Thomas Sanderson (YL 2013) now runs Tom Sanderson Consulting. He describes President Trump’s foreign policy actions as “disruption without design.” But, with the U.S. being in “relative decline,” Sanderson believes that “future presidents will do the same as Trump, just with better style.” Sanderson does believe that President Trump deserves to be congratulated “for his overall effort to call China to the carpet” for its bad behavior, such as intellectual-property theft, and that China has generally been “coddled” by others. “But style counts,” Sanderson maintains.

Sanderson also gives the President points for his counter-ISIS strategy—praising the “smooth hand-off from Obama to Trump,” and how President Trump “gradually…turned up the heat [on ISIS] to great effect.” ISIS lost much of its captured territory, which was critical to its image. So, the U.S. succeeded in “taking some of the bloom off” the Islamic State, with the result that fewer jihadists are joining ISIS. Sanderson also lists as a positive that the Trump Administration “took some restrictions off the Pentagon,” but laments that the U.S. is “not pursuing durable solutions to what is happening—sectarianism, no economic development, religious radicalism…that’s all still there.”

There is no end to the difficulties. “Qatar has embraced political Islam as its foreign policy.” Warning of Turkey’s “creeping authoritarianism,” Sanderson says that “Turkey is nothing short of a migraine, a headache for the United States.” There are about 30 Westerners, mostly journalists, jailed in Turkey on terrorism charges.

China. Author of What the U.S. Can Learn from China, Ann Lee (YL 2012) believes that “2018 will be seen as a pivotal year for U.S.-China relations” and that there will be “a fundamental shift.” Since the 1970s, “the U.S.-China relationship was becoming increasingly interdependent.” Now, says Lee, “the U.S. sees China as a strategic competitor”—and she fears the beginning of a new Cold war. “Foreign policy is a lot like pool,” she says. “After the opening shot, balls go in all different directions, and there are unintended consequences.” She urges the U.S. to “see China as a friend, not an enemy,” stressing that “the U.S. can shape this relationship.” She did not address China’s role in shaping the relationship.

Innovation and Entrepreneurship

A new and quickly growing part of innovation and entrepreneurship today involves blockchain technology and crypto markets. President of the Young Leaders Alumni Foundation Gabriela Lippe-Holst (YL 2005) is founder of Acqupart Holding and Acqufin. She speaks of the growing employment of blockchain technology around the world, for cryptocurrencies and the crypto market in general. Switzerland plays a leading role in the crypto space. Around 40 percent of the largest initial coin offerings (ICOs) have happened in Switzerland, and Switzerland is the first country in the world that has issued a regulatory framework for crypto tokens, categorizing them into three main types: (1) payment tokens (cryptocurrencies, such as bitcoin), (2) utility tokens (they provide digital access to a product or service), and (3) asset/security tokens (they represent participation in physical companies, earnings streams, or dividends).

On the other side of the Atlantic, the Securities and Exchange Commission “is also following the development of crypto markets.” As of September 2018, there had already been 400 ICOs and Lippe-Holst underscores that “serious due diligence is an absolute must.”

What Is Innovation? As moderator Michael Stucky (YL 2003), entrepreneur and business coach at ETH Zurich, points out, “there are countless definitions of innovation.” Erik Fyrwald, CEO of Syngenta—a Chinese-owned Swiss-based company with an American CEO—defines innovation as doing what it takes to “to meet customer needs.” Syngenta spends $1.3 billion a year on research, he says, “and we keep coming back to what the customer needs, and how to [meet that need] better than the competition.” Tamur Goudarzi Pour, vice president of Airline Sales for the Americas at Lufthansa Group Airlines, says that “innovation is very much a state of mind” and agrees that the focus is the customer. Nathan George (YL 2010), entrepreneur and founder of NDG Consulting, has started more than 12 companies. Entrepreneurship, he says, requires much innovation and plugging of holes—like life generally.

These days, explains Fyrwald, innovation must include environmental sustainability. “We need to stop deforestation. We need to reforest and produce more food on less land.” Yes, part of that is GMOs (genetically modified organisms), also called GM foods. The airline industry is also under constant pressure to innovate: As Goudarzi Pour points out, “the number of people who fly will be 4 billion this year. That number will double in 20 years.” Airport infrastructure must be renewed and expanded, as do security measures, such as biometric passenger identification. All that will require innovation.

While both large and small companies are under enormous pressure to innovate, George notes that smaller companies face an additional burden—they are the ones to suffer most from often-onerous regulations. Fyrwald knows that big companies should care if small companies suffer—since big companies often benefit from technological innovations created by small companies. He shares the example of an app created by a small startup using satellite images of farms to spot weeds or diseased crops. Innovative technologies can solve many problems for agricultural companies—which, in turn, “help farmers around the world feed and protect the world.”

Stucky points to the biggest difference between Switzerland the United States when it comes to entrepreneurship and innovation—the willingness that Americans have to take personal risks, to accept—even embrace—failure, and to come back the next day to start again. The Swiss societal aversion to risk and failure “won’t change overnight,” says Stucky, “but it is starting to change.”

A Preview of the U.S. 2018 Midterm Elections

So close to the November 6 elections—will they be a referendum on the Trump presidency?—no conference would be complete without some input on U.S. politics. What Amy Holmes (YL 2014), co-host of PBS’s In Principle, finds “most striking about the midterm elections is how the media report on the issues as national policy,” despite the fact that many issues are very localized. Charlie Gerow (YL 1998), political strategist and CEO of Quantum Communications, says that the oft-referenced “blue wave is driven largely by hot air in the media,” not by specific evidence that foretells a Democratic takeover of the House, Senate, or both.

Reid Wilson(YL 2014) national correspondent at The Hill, sees the “enthusiasm and excitement by partisans on both sides,” with a huge expected voter turnout not generally seen during midterm elections. “Voters don’t usually care” about the midterms, he explains, “but this time they do—they’re angry with the other side.” In every governor’s race, says Wilson, when people were polled, they always mentioned a person not on the ballot—President Trump – as critical to their vote. Voters are either for or against him, but “Donald Trump is on everyone’s mind,” says Wilson. “He’s ever present—you don’t need to feature him in ads.” Differing with Gerow’s take on a Democratic victory, Wilson says, “we are starting to see evidence for a blue wave.”

Gerow agrees that President Trump is a “defining force” for the November elections, but adds that “that is not atypical.” In fact, the first midterm elections during a new Administration have usually been seen as a referendum on the still-new President, no matter to which party he belongs. Still rejecting the “blue wave” predictions, Gerow points out that the economy is still doing well, unemployment is down, markets are up, and that the country is having a “growing feel-good moment.” He believes the congressional hearings on (nominated and now-confirmed) Supreme Court Justice Brett Kavanaugh will work in the Republicans’ favor.

The panelists make various tentative predictions and historic references, but there is consensus that this election will be different from other midterms, and the reason for this difference is the man in the White House.

Ronald Abegglen (YL 2017), senior manager of Political Affairs and Environment at Swiss International Airlines, had the, perhaps unenviable, task of supervising a discussion of a divisive election in divisive times. One must wonder—what do the Swiss think of the state of their currently divided sister republic? What one must not wonder about is the continuing strength of the U.S.-Swiss relationship—regardless of the outcomes on November 6.

 
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