Talacker 41, 8001 Zurich, Switzerland, Phone: +41 43 443 72 00, Fax: +41 43 497 22 70, [email protected], www.amcham.ch, October 2019 / No. 395 The world at the edge of a precipice? Dear members and friends Today’s media are full of crises. Brexit, impeachment, trade wars, currency wars, capital wars, recession, environmental disasters! Nothing seems to go right; everything goes down the drain. How much do we wish for some facts to be used inspite of the imperatives of de- mocracy and the necessities of 24 hours breaking news. This demand needs to be addressed to all sides of the political spectrum! Global business does well, despite some Zurich, September 12: Fireside Chat with Ginni Rometty. Silvio Napoli, Chairman, Schindler Holding slow down. We are far away from a trade & Chairman, Swiss Amcham; Ginni Rometty, Chairman, President & CEO, IBM Corp.; Christian Keller, war: for example, US exports to China General Manager, IBM Switzerland represent 0.6% of the US GDP, Chinese exports to the USA 3.9% of China’s GDP. Corporate taxes: Certain tariffs on these volumes will not A story with many episodes create a war! Recession might be an With a positive vote by the Swiss population increasing risk, but certainly not a fact. on May 19 and with final cantonal votes (es- Time for scenario planning, not panic! pecially in the largest canton Zurich), Episode 1 The Swiss-US business continues to do in the saga of corporate tax reform has been very well. In the first half of 2019, Swiss successfully completed – after more than 12 exports to the USA grew 3.9%. In June, years! But as in successful TV series, Episode 2 Swiss exports to the USA were larger than is right ahead of us: OECD plans to undertake exports to Germany: first time ever! Not a massive shift in the principles of corporate bad considering the fact that 15 years taxation. Spurred by many countries’ efforts to ago, exports to the USA were one third tax (US) digital companies and their revenues, of the exports to Germany! The relation- the OECD targets a shift of taxation from the ship between the Sister Republics is at place of value creation to the place of sales. Geneva, Sept. 26: Edward T. McMullen, U.S. a historical high mark with - in the last Ambassador to Switzerland and Liechtenstein This is clearly favoured by countries with large 6 months - half a dozen top level visits markets and will go to the clear detriment of between US and Swiss ministers, topped Switzerland with its R&D centers and management HQs. Consequences for the Swiss by the first reception of a Swiss President economy and the many international companies based in Switzerland are still vague. by the US President in the White House. The Swiss Finance Minister (and this year’s President of Switzerland) has spoken about With the relationship between Switzer- a tax shortfall of CHF 5-10 billion. Clearly, Episode 2: “The Global Tax Reform” has been land and the EU in dire straits, it is time launched! for an even closer cooperation between Switzerland and the USA. We both need Corporate Tax Symposium 2019: November 26 in Zurich a Free trade Agreement! With the implementation of the historic U.S. Tax Reform, strong developments in the We are not at the edge of a precipice. OECD Project BEPS, the new OECD program “Inclusive Framework”, Digital Services We are at the start of an interesting Taxation, many changes in tax legislation around the world, the fiscal environment looks mountain hike. Let’s pack the rain gear erratic and unplannable. Who will win, who will lose? What are the macro-economic and let’s go. consequences for involved countries? And what surprises lurk just beyond the horizon? Wishing you a great fall season In this unique symposium, we will try to bring some answers to these tough questions. The top speakers list includes Barbara Angus, EY, former Chief Tax Counsel, House of Martin Naville Representatives; Bob Stack, Deloitte, former Assistant Secretary for Int. Tax Affairs at US CEO Treasury; Andrian Hug, Director Federal Tax Administration; and many more. Program and registration: www.amcham.ch/events/ The latest events Content (more pictures on pages 4/5/8) Business News from the United States ...2 The Chamber & You...........................6/7 Business News from Switzerland ............3 Masthead ..............................................7 Chamber Events ...................................4/5 Chamber Events Plan ..........................8 Celebrate the future With KLM’s 100th birthday, we proudly look forward to a bright future, ready for the exciting challenges and opportunities ahead. Business News from the United States Solid U.S. retail sales calm demand, a move aimed at derisking the lowest first-half performance for 13 years. some worries about economy government’s USD 22 trillion of debt and Revenues fell across the board, with the U.S. retail sales increased more than ex- locking in low interest rates. In an interview deepest decline in equities trading, down pected in August, pointing to solid consumer with New York Times he stated that they 17% to USD 22.1 billion. Fixed income, spending that should continue to support were going to start with 50 years, and if currencies and commodities revenues fell a moderate pace of economic growth. The they are successful, they would consider 9%, while investment bank advisory was report from the Commerce Department in 100-year bonds. The longest-dated U.S. down 8%. The banks’ profitability also mid-September could further allay financial Treasury currently is 30 years. Fed Chair suffered, with operating margins sliding 500 market concerns of a recession, which have Jerome Powell and other policymakers see basis points to 31%, their lowest level for been fueled by year-long trade tensions U.S. economic conditions as still generally four years. between the United States and China as favorable despite a global slowdown and a well as slowing global growth. Retail sales still-unresolved U.S.-China trade war. U.S. imposes duties on rose 0.4% in August, lifted by spending on structural steel from China and Mexico motor vehicles, building materials, health- U.S. to allow drivers to choose The U.S. Commerce Department said care and hobbies. quiet car alert sounds in early September it imposed duties on The National Highway Traffic Safety Ad- Chinese and Mexican structural steel after Trump says he will unveil ministration proposed in September allow- making a preliminary determination that “middle-income” tax plan in 2020 ing automakers to offer a variety of sound producers in both countries had dumped In mid-September, U.S. President Donald choices for electric vehicles and other “quiet fabricated structural steel on the U.S. Trump said his administration would unveil cars” to choose from to alert pedestrians. market at prices below fair market value. a tax overhaul plan aimed at middle-income The agency in February 2018 finalized The department said it imposed duties households next year, amid the 2020 presi- rules requiring EVs and hybrids to emit of up to 141% on Chinese structural steel dential election. According to the President, alert sounds to warn pedestrians of their and up to 31% on Mexican structural steel the administration is considering potential approach, extending to 2020 the deadline and will begin collecting cash deposits for tax cuts, seeking to play down market anxie- for full compliance. The long-delayed rules imports based on those rates. Commerce ties over a possible recession. At the end of require automakers like Tesla, Nissan and said it had found that imports of Canadian 2017, Trump passed a tax overhaul passed General Motors to add sounds to vehicles fabricated structural steel did not violate by the Republican-led Congress. when they are moving at speeds of up to U.S. anti-dumping laws. The Commerce 18.6 miles per hour (30km/h) to help prevent Department is scheduled to release final U.S. farmers receive USD 4.07 billion injuries among pedestrians, cyclists and anti-dumping duties in its fabricated struc- of latest government trade aid the blind. At higher speeds, tire noise, wind tural steel investigation in late January 2020. resistance, and other factors eliminate the The U.S. International Trade Commission The U.S. Department of Agriculture has paid need for a separate alert sound, according needs to find that American steel fabricators USD 4.07 billion of its latest round of com- to regulators. NHTSA has said the rules suffered injury from Chinese and Mexican pensation for farmers suffering from the trade will cost the auto industry about USD 40 imports for the duties to be locked in place tensions with China as of mid-September. million annually because automakers will for a five-year period. The Trump administration in July announced need to add an external waterproof speaker USD 16 billion to compensate farmers for to comply. The benefits of the reduced U.S. manufacturing shrinks - lost sales due to China’s retaliatory tariffs injuries are estimated at USD 250 million 10-year bond yield hits three-year low on U.S. agricultural products, on top of to USD 320 million annually. USD 12 billion pledged in last year’s aid U.S. Treasury yields fell in early September, package. The aid program got off to a rocky with the benchmark 10-year yield hitting its Big investment banks have start with farmers complaining of difficulty lowest since July 2016, after U.S. manufac- worst start to year since 2006 signing up and confusion over payment turing data showed the first contraction since rates. The world’s largest investment banks have 2016 on worries about a weakening global had their worst start to a year since 2006, economy and U.S.-China trade tensions.