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Policy Debates
Commodity Trading

Commodities and Switzerland: Development Policy Challenges and Policy Options

Les matières premières et la Suisse: défis pour les politique de développement et options stratégiques
Los productos básicos y Suiza: Desafíos de las políticas de desarrollo y las opciones de políticas
Werner Thut
p. 153-193



This paper, written in December 2012, is a contribution to the ‘Policy Debate’ section of the International Development Policy. In this section, academics, policy makers and practitioners engage in a dialogue on global development challenges. Papers are copy-edited but not peer-reviewed. Instead, an initial thematic contribution is followed by critical comments and reactions from different stakeholders. This paper by Werner Thut is followed by reactions and analysis from a non-profit policy institute (Alexandra Gillies, Revenue Watch Institute, New York, ‘Crafting a Strategic Response to the Commodity-Development Conundrum’), a Southern scholar (Prof. Humberto Campodonico, Universidad Nacional Mayor de San Marcos, Lima ‘Going Beyond Transparency and Good Governance’ | ‘Más allá de la transparencia y una buena gobernanza’) and a representative of the trading sector (Stéphane Graber, Secretary General of Geneva Trading & Shipping Association – Reassessing the Merchants’ Role in a Globalized Economy’).


Switzerland is one of the world’s largest commodity trading hub. The author, senior policy adviser at the Swiss Agency for Development and Cooperation (SDC), reviews experiences and policy options related to commodity trading from a development policy perspective. While this sector has become of strategic importance to Switzerland’s economy, it also entails a number of risks. On the other hand, Swiss development cooperation efforts focus on several resource-rich countries, whose mineral and agricultural commodities are traded via Switzerland. How can Switzerland assist these countries to reap the benefits of their natural resource wealth? This paper looks at development policy aspects of commodity trading in relation to Swiss foreign and domestic policy. It examines ongoing policy debates in Switzerland and discusses development policy options.

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Authors' notes

The author would like to thank various external readers for sharing information and comments, including San Bilal and Isabelle Ramdoo (European Centre for Development Policy Management – Maastricht), Philip Le Billon (University of British Columbia – Vancouver), Andreas Missbach (Berne Declaration - Zurich), Harald Tollan (Ministry of Foreign Affairs, Norway), Simon Parker (for translation and editing support) and various SDC and SECO colleagues, in particular Matthias Bachmann, Gabriella Spirli, and Cyrill Troxler. This contribution reflects the personal views of the author, and does not necessarily represent the official position of the Swiss Agency for Development Cooperation.

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1. Introduction

1The topic of commodities – understood as the result of both mining and agricultural activities – is a particularly diverse one, and includes the closely-related and globally-intertwined sub-processes of resource extraction, trade and usage. At each stage of the value chain and beyond, the issue presents development policy challenges. In resource-rich developing countries, there are implications for social, environmental and legal-institutional, as well as export revenue, tax and distributional, policies. In the resource-hungry countries of the Organisation for Economic Cooperation and Development (OECD) and in emerging economies, commodities issues include questions relating to the size of their ecological footprints and to the security of supply. Similarly, another hotly debated aspect is the role of corporations, and their share of revenues, in this industry.

2This document focuses on concerns, experiences and possible courses of action relating to commodities that are particularly relevant for Swiss international development cooperation. On the one hand, these courses of action arise from the mandate, potential and experience of Swiss international development cooperation. The Swiss Agency for Development and Cooperation (SDC) and the Economic Development Division of the State Secretariat for Economic Affairs (SECO) are active in many countries rich in mining resources, such as Afghanistan, Bolivia, Chad, Colombia, Ghana, Mongolia, Niger, Peru, South Africa and the Great Lakes region of Africa. In many of Swiss development cooperation’s priority countries, mining and agricultural production are incorporated in value chains that are traded via Switzerland. As a result, the question arises as to how Switzerland can assist these countries to fully reap the benefits of their natural resource wealth.

  • 2  The Boston Consulting Group(BCG) estimates the amount of capital held in Swiss banks at over USD 2 (...)

3On the other hand, with respect to policy coherence for development, this overview also considers the role played by commodity trading companies that are based in Switzerland and thus subject to Swiss law. Switzerland weighs heavily in the commodity trading industry, with Swiss-based companies or resident subsidiaries accounting for an estimated 15-25 per cent of global trade in (mining and agricultural) commodities. Furthermore, Switzerland is one of the world’s most successful centres of financial and other services, providing the commodity trading industry with vital financial and legal services, logistics, insurance, etc.2 Ultimately, the Swiss regulatory framework, with its structure of corporate and tax legislation, constitutes the overall environment that determines the scope for business operations. It is therefore no coincidence that Switzerland itself has become part of the current discussions at the international level regarding the more problematic aspects of resource extraction and commodity trading. A principal line of inquiry in these discussions focuses on the scale and nature of illicit financial flows (IFFs). From this perspective, questions arise as to the coherence for development of some components of Swiss policies, including those relating to trade and international taxation.

BOX 1: Switzerland’s Commodity Trading Industry in International Media

  • 3  There are different ways of measuring the size of a company. According to an Al Jazeeraarticle, Gl (...)

The announced merger, expected to be completed in 2013, of the commodities trading firm Glencore, situated in Baar, Switzerland, with the mining operator Xstrata, located in neighbouring Zug, will result in the largest merger ever witnessed in the commodities sector. In one stroke, the new company will become, in terms of annual revenue, both the second largest commodities trader and the fourth largest mining operator in the world.3 Analysts estimate that the combined turnover of all businesses within the new company will amount to USD 210 billion. After Glencore’s initial public offer in May 2011, this merger plan further propelled the Swiss-based commodity trading industry into the international spotlight, and not only for global investors, as the development and political dimensions of this industry became the focal point of international discussions and analyses.

4How do development policy aspects of the commodities trade relate to Swiss foreign and domestic policy more generally? As the Swiss Federal Council has prominently stated, the commodities trade is not only a sector of strategic economic importance to Switzerland, but is accompanied by a number of related risks (Federal Department of Foreign Affairs, 2012).Moreover, there are major challenges from the perspective of policy coherence for development, a priority of the Swiss, as well as the international, development debate. In this context, Swiss international development cooperation actively engages in inter-ministerial and domestic debates to argue in favour of a Swiss foreign and domestic policy that actively takes the interests of poor, resource-exporting developing countries into consideration. With this strategic approach, Swiss development policy ultimately contributes to the strengthening of Switzerland as an internationally respected and competitive economic centre, thus promoting sustainable growth over the long term.

  • 4  The topic of commodities touches upon many other areas of government policy, and most large Wester (...)

5This paper4 addresses commodity production and trade from a development policy standpoint. It reviews current debates and emerging policies in selected countries as well as major international initiatives. Ongoing debates in Switzerland and development policy options for Switzerland are then be examined.

6In conclusion, the paper advocates for a balanced approach, wherein Swiss development and foreign economic policies help ensure that (a) foreign investments respect internationally-agreed standards, (b) resource-rich developing countries retain a fair share of profits generated from this trade, and (c) the populations of these countries actually benefit from said profits, as they are to be invested in economic and social development, with the ultimate goal of eliminating poverty.

2. Commodities Production and Trade from a Development Policy Standpoint

7This paper divides the term commodity into the most common three categories: fossil fuels, ores and metals (minerals), and agricultural commodities (soft commodities). Fossil fuels include oil, gas, and coal. Minerals refer to metals such as iron, non-iron metals and precious metals. Agricultural commodities, in turn, refer to grains, luxury foodstuffs (such as coffee or tobacco), sugar, plant/vegetable oils and fibres for textile production.

8In the Swiss context, the commodity trade itself is a central feature of any discussion related to global resource use. We have therefore chosen a broad perspective that takes into consideration the entire value-added chain, from production, to trade, to consumption. Only from such a perspective is it possible to analyse the implications of the trade for development policy and identify possible courses of action.

9Accordingly, we will first examine the importance of the commodity trade for resource-exporting developing countries, including associated financial flows and the challenges they present. Secondly, the paper will consider the commodity trading industry in Switzerland.

2.1 Commodities Production and Trade – Challenges for Exporting Developing Countries

  • 5  For the numbers quoted in this chapter, see Le Billon, P. (2011); Berne Declaration (2011a);Federa (...)
  • 6  Estimates of the total value differ greatly. The cited numbers are drawn from the Bern Declaration (...)

10The following figures illustrate the importance of resource extraction and trade for developing countries:5the global trade in commodities, including fossil fuels, minerals and agricultural commodities, measured in commercial value, amounts to an estimated USD 3000 billion annually. The fossil fuel sector dwarfs all other extractive sectors, accounting for about 65 per cent of this overall figure. Non-fuel minerals and agricultural commodities account for 20 per cent each.6 59 per cent of metals and ores (71 per cent per cent in the case of copper), 63 per cent of coal and 64 per cent of oil consumed in the world originate in developing countries. 60 per cent (and rising) of global mining production comes from politically unstable and extremely unstable countries.

  • 7  Some papers point to a causal relationship between speculative trades and price increases. See for (...)

11Another dimension of the commodity problematic concerns the trade in agricultural, or soft, commodities. Their renewable nature makes these commodities unique in this analysis. In addition, according to some studies, this sector is characterised by the considerable market power of several large, vertically-integrated trading firms and, correspondingly, a  potentially negative impact upon markets. In this context, there is intensive debate as to whether, and to what degree, there exists a connection between the speculative business practices of certain market actors and the widely fluctuating (though generally rising) prices of agricultural commodities experienced over the last few decades. While evidence is not conclusive, some analyses have found a connection between the business practices of certain private actors in the financial markets and a trend towards speculative trades, large-scale land grabs and even human rights abuses.7

12Naturally, the economic and political conditions present in resource-exporting countries vary widely. This is particularly true with regard to tax regimes, and therefore to the structure of state revenues, and the nature, breadth, and quality of services each state is able to provide. While the contribution that resource extraction makes to state revenues in resource-rich developing countries can be significant, the contribution from minerals specifically is minimal – with the exception of a few countries like Botswana (over 40 per cent), Chile and Guinea (between 10 per cent and 20 per cent), this contribution is regularly less than 10 per cent of the state revenues. Tanzania’s mining sector, for example, has attracted USD 2.5 billion in investment over the last decade, accounting for 40 per cent of exports but only 3.6 per cent of state revenues. Some countries, such as Ghana and Tanzania, have made positive strides on this front, as their governments are reviewing old contractual arrangements with the mining industry in order to correct this unfavourable situation. The opposite, however, is often the case with oil, whose revenues generally contribute a substantial amount to national finances. These amounts, it should be noted, fluctuate considerably (from between 70-90 per cent in the case of the traditional oil-producing countries, to under 10 per cent in the case of new producers).

  • 8  See for example Collier, P. (2007).For an overview of economic studies, see van der Ploeg, F. (201 (...)
  • 9  Bern Declaration (2011b); Bergbau-Lizenzvergabe im Kongo (confidential background paper, also quot (...)
  • 10  For case studies of the specific aspects of these initiatives, see ECDPM, Extractive Industries an (...)

13Natural resources generally hold significant or even transformative potential to spur sustainable economic growth andovercome existing poverty. They can support raising public funds, foreign currency reserves and investments, generate employment and downstream economic activities, and also improve energy security. At the same time, many resource-rich countries do not take full advantage of their natural resources. In fact, there is considerable evidence that natural resource abundance often coexists with pervasive poverty – a phenomenon widely-known as the ’resource curse’.8 Numerous studies highlight the damage caused to human health, the environment and the forces fuelling expropriation and conflict, while others (including audits) document practices of corruption, illegal extraction and tax evasion.9 Other studies analyse and rate the local initiatives of international actors with regards to corporate social responsibility and social investment.10

14With regard to the use of natural resources, most resource-exporting countries in the developing world face a number of specific challenges, among them:

    • 11  A few examples are briefly mentioned in this paper. For a detailed description, see the below mark (...)

    Signing bad deals: Governments often fail to negotiate a fair share of potential revenues for their respective country due to weak capacities or the prevalence of short-sighted interests (including bribery). In these cases, companies pay what is owed, but the amount is far less than what the country would equitably receive under a fair contract.11

  • Revenues are collected but misallocated: Publicly-owned resources are diverted before they are incorporated in budgets of public entities. For example, national oil companies can collect revenues and then spend on behalf of officials, or invest in businesses controlled by political elites. Furthermore, revenues may be transferred to private accounts or spent on corrupt contracts.

  • Underpayment of revenues: Due to either tax avoidance or tax evasion, countries do not collect the revenues to which they are entitled. Avoidance occurs when companies (legally) minimize the tax burden through transfer pricing, such that profits are shifted to and reported in the subsidiary with lowest tax burden.

  • 12  The OECD defines IFFs as funds whose origin, transfer or use is contrary to international and/or n (...)

15Consistent with this reality, from a development perspective, both major financial flows, including IFFs/flows of capital flight12, and large-scale investments in agricultural land are significant features of commodity production and trade.

  • 13  Data on financial flows is often scant and aggregated, of highly differing quality, and unequally (...)

16While the reliability of specific figures remains quite limited (which correspondingly tempers their analytical value)13, data from an increasing number of sources illustrate the magnitude of such financial flows and their influence, as well as potential policy responses.

  • 14  For data from NGOs, see Kar, D. and D. Cartwright-Smith (2009) and Tax Justice Network, which incl (...)

17The Organisation for Economic Co-operation and Development (OECD) estimates that global illicit flows, including all illegal and illicit transfers from various sources and sectors in developing countries, amount to approximately USD 850 to 1000 billion per year, far exceeding inflows from Official Development Assistance (ODA), which, in 2011 reached only USD 133.5 billion), and Foreign Direct Investment (FDI). 60 per cent of this outflow is the result of tax evasion. A commission set up by the Norwegian government produced similar figures, estimating that in 2006 IFFs amounted to between USD 640 and 980 billion.14 A study by the African Development Bank (AfDB), OECD, United Nations Development Programme (UNDP) and the UN Economic Commission for Africa calculates that, as of 2011, the incurred net losses (in terms of stock) of Sub-Saharan African countries due to capital flight that occurred from 1970-2008 totalled USD 700 billion. For Switzerland, as a financial flow destination, the Berne Declaration and Alliance Sud – a consortium of NGOs – estimate that by the end of 2011, flows of capital flight from developing and middle-income countries may amount to USD 490 billion (stock). The interest on this capital alone would account for more than twice the amount of annual Swiss ODA (Alliance Sud, Berne Declaration, 2012).

18The 2012 edition of the African Economic Outlook illustrates the potential impact these funds could have on development (in terms of poverty reduction) were they to be invested in Africa:

‘If flight capital had been reinvested in Africa with the same level or productivity as that of actual investment, the rate of poverty reduction could have increased by 4-6 percentage points a year, on average, over the period from 2000 to 2008. African countries could then as a group have reached the Millennium Development Goal of halving the 1990 level of poverty by 2015.’ (AfDB et al., 2012, 73)

19Moreover, the study concludes that, since the actors involved in capital flight are both within and outside the resource-rich countries, international cooperation is crucial to reversing the flow of African capital back towards the continent.

  • 15  Reuter, P. (2012).For a detailed presentation of methods of Transfer-Pricing, see p. 288ff. and Pa (...)

20While it is impossible, at this point, to identify the share of capital flight or IFFs specifically related to extractive industries and the commodities trade, the figures provided above are an indication that a significant portion of the revenues derived from natural resources are not retained by resource-rich developing countries. This subject is the focus of debates within international organisations, resource-rich countries, regional economic communities, the finance and development ministries of donor countries, and civil society groups. A recent academic study facilitated by the World Bank estimates the minimal amount of this type of transaction by multinational enterprises across all sectors to be at least USD 160 billion annually. It furtherconcludes that transfer pricing is particularly common among multinational enterprises in extractive industries and commodity trade.15

21Ultimately, the debate revolves around the driving forces and institutional frameworks that constitute the operational context for IFFs at both the national and international levels:

  • The responsibilities of multinational corporations, their business models and practices

  • The role of governments in resource-rich developing countries (i.e. fiscal regimes, good governance, land tenure)

  • The role of countries that receive these financial flows (i.e. taxation laws, oversight of financial markets, international cooperation between tax authorities)

22In a path-breaking book, Paul Collier illustrates the development policy challenges posed by these financial flows to resource-rich developing countries, and the importance of sound institutions, through an interesting comparison. He writes, ‘for a newly resource-rich country to benefit from its newfound wealth, it must possess the governance levels and institutional quality equivalent to Portugal in the 1980s. In the alternative scenario, oil and mineral wealth increases the prospect of plunder and mismanagement.’ (Collier, 2007)

BOX 2: Resource-rich Developing Countries – Success Stories and Failures

  • 16  Alex Cobham´s (Christian Aid) presentation at ‘Trade Mispricing’ session, Task Force on Financial (...)
  • 17  President Festus Mogae, Botswana’s Development Experience, lecture given at the Institute of Devel (...)

In terms of the successful use of natural resources, one may find a number of positive as well as negative examples. Angola may be understood as a negative example. From 2007-2010, the International Monetary Fund (IMF) found USD 32 billion in unaccounted government funds, a sum equivalent to a quarter of Angola’s annual GDP (IMF, 2011). Similarly, copper-rich Zambia provides yet another example where the proportion of profits remaining in the country bears no resemblance whatsoever to the enormous earnings generated by its copper production. As shown in Grant Thornton’s audit of the Mopani copper mines (Counter Balance, 2011), Zambia has suffered from large-scale tax evasion manifest in inexplicable increases in certain operating costs, losses carried forward for 10 years to secure corporate tax exemptions and largely undervalued copper and cobalt exports to Switzerland (which are ’exported‘ on paper only, before being resold by Swiss-based companies). Were Zambia to actually receive the same price for its copper that Switzerland receives for the copper and intermediate goods derived from these exports, Zambia’s GDP would virtually double.16 A natural resource success story, in contrast, is that of Botswana and the exploitation of its diamond deposits. Between the late 1960s and 2000, Botswana has recorded an average growth rate of 7 per cent per annum,17 and life expectancy has risen by over 17 years. Ghana and Malaysia represent other positive examples.

2.2 The Commodity Trading Industry in Switzerland

  • 18  In May 2012, the Swiss Government tasked three ministries to elaborate a background report. The re (...)

23What is the significance of the Swiss-based commodity trading industry, its public perception, and its regulatory context?  With regard to a number of important aspects, the amount of data available on both individual firms and the industry overall is thin.18 Nevertheless, it is fair to state that, following the recent establishment of numerous large trading firms, the sector is on the rise. Although the simultaneous heterogeneity and opacity of this sector makes it difficult to put an exact figure on its significance, its contribution to Switzerland’s GDP is likely comparable to that of the machinery industry. Economists estimate that the rapid rise of transit trade alone was responsible for some 50 per cent of economic growth in 2010, with commodities accounting for 94 per cent of transit trade in the data assembled by the Swiss National Bank (Swiss National Bank, 2012, 37).

24A fundamental characteristic of the Swiss commodity-trading sector is its involvement in so-called transit or merchant trade. The volume of commodities financed, organised and taxed through Switzerland far exceeds Swiss consumption needs. Even though contracts are concluded, ships chartered and goods dispatched  by Swiss offices, with the notable exception of gold, which is imported to Switzerland in vast amounts, processed and re-exported. the goods never enter Swiss territory. In contrast to trade within national markets or between governments, trade on the ‘free’ commodity markets, which includes direct sales through commodity trading companies and commodity exchanges, is financed primarily by either publically-owned cantonal banks or specialised banks with offices in Switzerland.

  • 19  Glencore, Trafiguar, Xstrata, Vitol, Mercuria, Gunvor, Litasco, ADM, Bunge, Cargill, Dreyfus. For (...)

25Recent analyses, such as Commodities: Switzerland’s Most Dangerous Business, published by the Berne Declaration (2011a), present, for the first time, information on the scope of the commodity trading sector and the regulatory role played by the Swiss state, to a wider audience. The following facts are significant in this regard: Swiss-based firms control 15 – 25 per cent of the global trade in commodities, including fossil fuels, minerals and agricultural commodities. Measured in terms of commercial value, this business amounts to revenues of USD 3000 billion annually. The commodity trading industry has grown rapidly over the last 10 years. Due to the fact that the majority of commodities never physically enter Switzerland, this is not directly reflected in the country’s foreign trade figures. Transit trade, one portion of the business, is nevertheless recorded in the balance of payments data. In the last decade, the net income of transit trade has undergone an enormous fifteen-fold growth, primarily as a result of the growing commodity trading industry. About a dozen companies, headquartered around Lakes Zug and Geneva, make Switzerland a heavy weight in this industry.19 Several Swiss-based commodity-trading companies also rank among the largest mining firms, and are involved in oil and agricultural production. Xstrata, for example, is the world’s fourth largest operator of mines. Fossil fuels figure strongly in the commodity industry in Switzerland. Measured in terms of volume, companies resident in Switzerland control over 30 per cent of the market trade in petroleum. Companies situated on the shores of Lake Geneva control an even larger, at times dominant, share of the trade in agricultural commodities: 35 per cent in the case of grain and oilseeds and 50 per cent in the case of sugar and coffee.

26How do these trading companies impact governance and development outcomes in producer countries? These trading companies engage in high-level transactions, including the purchase of states’ shares of petroleum or mineral production, with the governments of developing countries. These deals directly affect the level of revenue received by producing countries. Some experts argue that the trading company industry in developing countries is subject to insufficient transparency and oversight (Gillies, 2012).

27It is questions such as the one above, in combination with concerns about the ability of large trading companies to influence commodity prices that have prompted the growing public interest in the commodity problematic in general and in the business practices of Swiss-based firms and the role of the Swiss regulatory framework more specifically.

3. International Discussions and Policies of Selected Countries

28There are currently more than a dozen international initiatives dealing with issues of resource extraction, agricultural production, and the commodities trade. Many countries and regional organisations, such as, for instance, Norway and the European Union, are formulating their own resource strategies.

29International debates and the positions of other countries with respect to improving the governance of commodity revenue are relevant for a number of reasons, thus raising the question as to if, and if so, in which processes and to what extent, Switzerland should get further involved. There is also the question, furthermore, of the effectiveness of existing initiatives. At the very least, the international debate facilitates the establishment of a best practices understanding of appropriate policies and concrete measures and may thus inform the formulation of Switzerland’s own development policy.

3.1. International Initiatives – A Growing Consensus as to How to Address Challenges

30A series of important international initiatives and processes have consistently demanded greater transparency and accountability in the commodity sector.

31Within the UN, the most relevant discussions take place in the context of macroeconomic policy issues (a mandate of the Second Committee of the General Assembly), where a Resolution on Transparency, Sustainable Development and Natural Resources is currently under discussion (Grynspan, 2012), and under the auspices of the Global Compact. Also of relevance is the much broader debate on development financing. With the overarching goal of mobilizing financial resources for development, this holistic agenda addresses domestic resource mobilization in developing countries, FDI, international trade, international financial and technical cooperation for development, as well as debt and other systemic issues. Among the central objectives are fiscal reform  – improving tax collection, combating tax evasion, strengthening technical assistance and enhancing international cooperation in addressing international tax matters such as double taxation –  combating the various factors that contribute to IFFs, and the promotion of corporate social responsibility. Commitments in this regard were formalized in the 2002 Monterrey Consensus of the International Conference on Financing for Development and later reaffirmed in the Doha Declaration, which has come to constitute a major reference point for contemporary international development cooperation. These positions have since been reaffirmed in several resolutions adopted by the UN General Assembly.

  • 20  For the most important initiatives, see list and description in annex.

32Specific initiatives often combine the enforcement of business principles with institutional capacity building in resource-rich developing countries. Other programmes and initiatives focus on the integrity of financial transactions, including the role of tax regimes in recipient and exporting countries. Existing initiatives can be grouped into the following four categories:20 (1) initiatives intended to promote contract and revenue transparency; (2) certification instruments (‘commodity-specific tracking regimes’); (3) instruments to promote broad governance standards; and (4) non-resource-specific initiatives aimed at promoting transparency and integrity in international financial transactions.

33Among the most important initiatives, which include the legislation of mandatory transparency rules for multinational enterprises and various efforts to promote transparency in international financial transactions, are:

  • US Dodd-Frank Wall Street Reform and Consumer Protection Act, Sections 1502 and 1504

  • EU Transparency Directive (2004/109/EC), Accounting Directives (78/660/EEC and 83/349/EEC) and Capital Requirement Directive (CRD IV)

  • Extractive Industries Transparency Initiative (EITI)

  • OECD Global Forum on Transparency and Exchange of Information for Tax Purposes

  • World Bank/UN Stolen Asset Recovery (StAR) Initiative

34These initiatives and actions demonstrate a growing consensus that global commodity markets influence the economic prospects of many developing countries and, correspondingly, must be addressed. Transparency, in particular, has risen to the forefront of global responses, and it appears that disclosure practices will be deepened and broadened in the near future, through the strengthening of EITI and the diffusion of mandatory reporting requirements within the US, EU and beyond.

3.2. Initiatives by Resource-rich Developing Countries: The Case of The African Mining Vision

35The Africa Mining Vision (AMV) was adopted by African heads of state at the February 2009 African Union summit. As a homegrown strategy to create a ‘transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development,’ the AMV represents Africa’s own response to the paradox of the ‘resource curse’ (ISG, 2011, 1). It challenges the mining sector’s habitual dominance of African economies, seeking to use Africa's natural resources to transform the continent's social and economic development process. Its central premise is the need for a shift from Africa’s historic ‘enclaved’ status as an exporter of cheap raw materials towards the development of manufacturing and knowledge-based service sectors.

36The AMV will serve as the framework for African states, regional organisations and the African Union for the efficient utilization and management of Africa's mineral resources. The AMV is founded on the following fundamental objectives:

  • Promoting good governance and improved transparency of the mineral sector, with increased benefits stemming from mineral assets for local communities and citizens;

  • Optimising revenues and mineral rents management, particularly through the reform of mining legislation, including the renegotiations of contracts and establishment of a framework to address tax avoidance, capital flight and tax havens, with a view toward maximising revenues from highly profitable industries during times of high commodity prices;

  • Promoting increased geological knowledge and corresponding benefits from mineral resources;

  • Developing a diversified and globally competitive mineral industry, which contributes to broad economic and social growth through the creation of companies with strong economic linkages;

  • Mobilising mining and infrastructure investment, with a view towards ‘dis-enclaving’ the mining industry and investing in inclusive infrastructure, creating opportunities for industrial linkages, notably through improving private-public collaboration and bolstering the capacity of financial systems and regional economic communities to facilitate cross border investment and establish regional capital and commodity markets;

  • Harnessing the potential of small-scale mining to improve living standards and integrate artisanal producers into the rural and national economy;

  • Promoting sustainable development, particularly environmentally and socially responsible mining, which includes communities and all other stakeholders;

  • Improving human and institutional capacities, with special emphasis on innovation, research and development.

37In September 2007, an International Study Group (ISG) was established to review Africa’s mineral regimes. The newest report of the ISG analyses in detail the local conditions and effects of resource extraction and trade, and makes suggestions for improvement (ISG, 2011).The report explores a number of important issues and concludes with a comprehensive list of key policy considerations, including: challenges emanating from the environmental, human and social effects of mining; the performance of regulation mechanisms in Africa; public sector management of mineral revenues; the need for public sector reform in support of mineral-based growth; and recent developments in international trade threaten to significantly constrain Africa’s capacity to realize these development objectives.

3.3. Setting the Agenda and Policy Standards: Norway and the European Union

38For years, Norway has played a prominent role in international discussions focusing on issues of governance and capacity building in developing countries. In 2008, the government established a broad-based, expert Commission on Capital Flight from Developing Countries, which produced a report on Tax Havens and Development in June 2009. Building on the report’s recommendations, many proposals aimed at improving transparency have since been implemented, while others remain under consideration.

39Among the programmes carried out by the Norwegian Ministry of Foreign Affairs or civil society groups (supported through official channels) are:

  • Oil for Development Programme: Innovative programme playing a pioneering role in matters concerning development finance, capacity building, environmental considerations, and technical cooperation.

  • Taxation for Development Programme:Programme of the Ministry for Development geared towards meeting the needs of developing countries.

  • Capital for Development:One-year dialogue project aimed at raising awareness of issues relating to capital flight and development through engagement with parliamentarians, the media and the general public.

  • Task Force on Financial Integrity & Economic Development: In coordination with the government of Spain, a Task Force funded by the Norwegian Agency for Development Cooperation (NORAD).

  • Extractive Industries Transparency Initiative (EITI): EITI Secretariat hosted by Norway, as its first OECD country-member.

  • Revenue Watch Institute and Global Financial Integrity: Long-term partnership with key civil society actors, focussed on tax and commodity issues.

40In a similar manner, the EU has also taken a leading role in addressing the commodity trade issue on a number of fronts,  such as the business activities of multinational firms, the promotion of good governance in developing countries – including the discussion onsmart conditionality(‘more for more’) – and the reform of trade and tax legislation and cooperation.

41Development policy aspects were addressed specifically in the Conclusions on Tackling the Challenges on Raw Materials and in Commodity Markets report published by the EU’s Competitiveness Council (Council of the European Union, 2011). Essential measures required to achieve development policy objectives were identified as:

  • Greater transparency in the resource sector through the implementation of EITI provisions, the launch of other initiatives, the publication of the financial figures of commodity-trading companies, the establishment of a country-by-country reporting mechanism for multinational companies, the creation of international financial reporting standards (IFRS) for the industry as a whole, and provision for the monitoring of third-country legislation.

  • The uniform application of higher business practice standards for companies active in developing countries and domiciled both in and outside the EU and the promotion of corporate social responsibility and other relevant codes of conduct.

    • 21 That said, in promoting trade policy reform, the Council simultaneously underlined the EU’s willing (...)

    A trade policy that works in conjunction with development policy such that development needs of individual countries, particularly the Least Developed Countries (LDC), are taken into consideration.21

  • 22  For a critical appraisal of this report from a Swiss and development policy perspective see Niggli (...)

42These recommendations22 were taken-up again, in part, by the EU Commission in October 2011, in conjunction with a path-breaking proposal to expand the EU Transparency, Accounting and Capital Requirement Directives. These proposals would require all EU-listed or large unlisted oil, gas, mining and logging companies to disclose their payments to all governments on a country-by-country and project-by-project basis. The proposed legislation would build on a similar law adopted in the United States in July 2010, the USDodd-Frank Wall Street Reform and Consumer Protection Act (see section 3.1).

4. Current Discussions in Switzerland

  • 23  Parliamentary requests are requests by individual members of the two chambers for action and infor (...)

43The commodity industry has attracted not only the attention of the Swiss media but also became a subject of federal political interest in 2011, when a great number of related parliamentary requests were issued.23 At its annual press conference in February 2012, moreover, the Swiss Small and Medium Entreprises Business Federation (Schweizerischer Gewerbeverband - SGV) called upon the Federal Council to develop an ‘interdisciplinary resource strategy.’ Their paper, entitled Strengthening of Commodity Policy Perspectives in Development Policy seeks to link Swiss development cooperation with privileged access to natural resources (SGV, 2012).

44The various 2011 parliamentary requests regarding the commodity trade are roughly arranged around the following issues: Access to strategic resources and a secure food supply, from the classical perspective of the provision of essential goods.24

45The role and reputation of Switzerland as a host of multinational enterprises and as an international trading centre,25 delving into sub-themes such as:

46In its report on the key aspects of its foreign policy agenda during the 2012-2015 legislative period, the Federal Council acknowledged the strategic importance of the commodity trade for Switzerland. At the same time, the Council identified several risks associated with the commodity trade: potential damage to the reputation of the country, speculation and price fluctuation, unlawful business practices, taxation issues, and access to strategic resources. To ensure that such potential risks are identified early on, the Federal Council recommended that Switzerland develop and implement a coherent foreign policy on this topic.

47In 2012, the wave of parliamentary requests massively increased.32 Mirroring this increase in interest, a petition entitled Corporate Justice – Rules for Business. Rights for People, signed by approximately 135,000 people, was submitted to Parliament and the Federal Council in June 2012.33

48In December 2011, the Federal Council declared its willingness to commission a comprehensive analysis of the Switzerland’s role as an international hub of commodity trading, issuing a mandate to draft a background report on existing knowledge and current policies. When complete, this comprehensive overview would also serve to frame the 2011 Raw Materials Strategy of the Federal Department of Economic Affairs and several Foreign Economic Policy Reports (in particular those issued in 2008) on the topic of strategic resources. Notably, these Economic Policy Reports consider neither the question of sustainability nor the equity of North-South relations. From a development policy perspective, the following activities are particularly worthy of mention:

  • Support, assistance and monitoring of various activities of the OECD via participation in the Informal Task Force on Tax and Development (in addition to a financial contribution to the OECD Programme on Tax and Development), membership in the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, and implementation of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

  • Swiss participation in the Extractive Industries Transparency Initiative (EITI).

  • Support of the IMF Managing Natural Resource Wealth Topical Trust Fund and the World Bank Extractive Industries Technical Advisory Facility (EITAF).34

  • Support of the World Bank Stolen Assets Recovery (StAR) initiative and the International Centre for Assets Recovery (ICAR) in Basel.

  • Implementation of the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security.

  • Support of the Roundtable of Sustainable Biofuels towards the development of voluntary standards for biofuel production.

  • Active involvement in, and support of, the UN Global Compact, which promotes  corporate social and environmental standards and responsibility.

  • Bilateral support to Burkina Faso, Ghana, Mozambique, and Peru on matters of tax reform.

5. Conclusions on Development Policy Options for and in Switzerland

49In contrast to the state of affairs even a decade ago, much is now being done to improve the governance of resource revenues. A plethora of measures have been adopted, most under the auspices of a broad good governance agenda, emphasizing transparency and accountability through voluntary participatory processes. Several major donors, such as Norway, the US and the EU, have played key roles in supporting the emergence and application of these measures, attempting to set norms that benefit local populations in resource-rich developing countries while avoiding harming the interests of their own companies. Most official development agencies, however, take the broader approach of building government capacity and (on a smaller scale) consolidating the input and participation of civil society organizations.

50With legislation under way in the EU and pending implementation in the US, 2013 may become a watershed year for revenue transparency in extractive industries and the commodities trade. The European Parliament is expected to vote in 2013 on a final text requiring country-by-country reporting from EU-listed (and also, potentially, large, private) oil, gas and mining companies. Similarly, the US Securities and Exchange Commission is also expected to complete its work on additional regulatory provisions related to the implementation of the Dodd-Frank Act in 2013. The G20, moreover, is actively addressing issues of transparency, anti-corruption and asset recovery, and further action by its Anti-Corruption Working Group is expected. Overall, these events are likely to draw the attention of policy makers and legislators to these issues, particularly with respect to the internationalization of these standards. Companies listed in the US and EU will, in all likelihood, seek to globalize these standards in order to reduce their competitive disadvantage. This will shift the spotlight to jurisdictions that lack reporting requirements.

  • 35  For more information, refer to the Extractive Industries Transparency Initiative (EITI) Strategy R (...)

51In addition, the EITI is currently undergoing a process of reform that will culminate in a significant strengthening of its rules in early 2013.35 This process was initiated following the recognition that the minimal levels of revenue transparency required by existing regulations have not sufficiently mitigated the governance and development challenges faced by many resource-rich countries.

52What are the implications of this changing international environment for Swiss international development cooperation? What, in this context, is its most effective contribution to the promotion of the sustainable use of natural resources?

53Switzerland possesses specific strengths and limitations that determine the design of coherent development policy and related targeted interventions in this field. These include:

  • Expertise in the commodity trade, characterised by: (a) limited technical knowledge about the extraction of fossil fuels and minerals; (b) some recognised expertise in specific areas of international agricultural research; and (c) international leadership in the ‘know-how’ of the trade of raw materials, due to the large number of Swiss-based companies specialising in this and related fields (logistics, finance and insurance matters).

  • The widespread local presence of Swiss international development cooperation in virtually all commodity-exporting developing countries. That said, however, it must be acknowledged that on the ground, Swiss development cooperation often possesses limited, if not actually minimal, independent leverage.

  • Swiss participation in selected international initiatives and processes , as well as its membership in multilateral development organizations, such as the UN, the OECD, the World Bank, the IMF and various regional development banks.

54Given these capacities, a logical overall Swiss international development cooperation natural resource strategy would be the promotion of public policies in developing and developed countries that require greater transparency and accountability at all levels, on the basis of basic international legal and business standards, as well as fundamental human rights.

55To be effective, Swiss international development cooperation should therefore:

  • Support poor, resource-exporting developing countries in improving their governance with respect to both public institutions and non-state actors.

  • Selectively but pro-actively participate in international initiatives to promote the sustainable use of natural resources.

  • Support the design and further refinement of the Swiss regulatory framework in so far as relevant to the nexus between commodity issues and the legitimate needs and interests of developing countries.

56Through a balanced approach of this nature, Swiss development and foreign economic policies can help ensure that poor, resource-exporting countries succeed in retaining a greater portion of the profits earned from resource extraction and the commodity trade and, in turn, use these profits to benefit their population. In doing so, Switzerland would expand its contribution to international efforts to address a truly global challenge.

57As such, the conditions required for good governance in the poor, resource-exporting partner countries of Swiss development cooperation should be promoted. This would notably include: (a) strengthening state institutions with the goal of achieving better mobilization of domestic resources and the professional management of the expenditure side; and (b) measures to advance transparency and accountability with regard to the conditions, arrangements and agreements related to resource extraction, processing and trade, including the origins and use of financial resources generated by commodity production and trade. Activities on the ground could include:

  • Technical support to governments (with respect, for instance, to drafting policy and legislation, contract negotiation, regulations and revenue management).

  • Elaboration and encouragement of good practices (to improve governance in resource-rich countries to multiply the efficacy and returns of natural resource exploitation).

  • Strengthening the demand for good governance by supporting accountability actors such as parliaments, the media and civil society in monitoring and demanding improvements in the governance of extractive sectors.

  • Work with communities to address environmental and social impacts and maximize economic and non-economic gains for locals.

58In terms of on-going international initiatives and multilateral negotiations, Swiss authorities would therefore need to clarify:

  • which initiatives are (a) most relevant, and (b) most likely to increase in effectiveness following Swiss support? It remains to be decided which, if any, additional standard-setting processes, technically oriented initiatives and key actors should receive support. This could include processes within the UN framework, the OECD, and Bretton Woods institutions, but also those carried out by civil society organisations, either alone or in concert with governments.

  • How to best reach the goal of ensuring unhindered and least-cost access to natural resources without compromising development policy objectives and legitimate interests of development countries? Isolated proposals to make development aid conditional upon the abolition of restrictions on access to natural resources are common today. From a development perspective, the imposition of conditionalities and the abolition of restrictions (including taxes) on the export of raw materials from resource-rich developing countries remains a matter of substantial debate and contestation.

59With regard to the regulatory framework of Switzerland, public policies would need to address issues of transparency and accountability, in addition to the business practices of multinational companies. Most controversially, the framework must determine the conditions under which legally binding standards, rather than  principles, guidelines, and arrangements, would be most effective. Correspondingly, specific concerns of this nature would be, among others:

  • Transparency in the activities of commodity companies doing business in and with developing countries.This refers to country-by-country and project-by-project level disclosure of payments to governments, in a manner similar to that currently implemented in the US and the EU.

  • The adherence to minimum standards of corporate social responsibility and respect for human rights by companies engaged in investment, trade and extraction, in developing countries. In concrete terms, this would mean either the national implementation of international standards issued by various UN bodies and the OECD or the implementation of provisions similar to those of states whose requirements exceed the average in this regard.

  • Improvement in the cooperation between OECD countries and developing countries in regards to the exchange of information with respect to taxation issues, such as the use of double taxation and tax information exchange agreements.

  • Combatting corruption, money laundering, tax evasion and tax avoidance. Related topics include transparency with respect to beneficial ownership, due diligence rules and the oversight of financial market actors.

60Against this background, the federal offices responsible for the policy formulation and implementation of Swiss international development cooperation should continue to actively participate in current discussions and efforts to address the challenges related to natural resource governance.

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AfDB, OECD, UNDP, UNECA (2012) African Economic Outlook 2012 (accessed on April 24, 2013).

Alliance Sud & Berne Declaration (2012) Steuern und Entwicklung: Wie die Steuerflucht die Entwicklung behindert – und was die Schweiz daran ändern kann, (Bern: Alliance Sud/Berne Declaration) (accessed on April 24, 2013).

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Bern Declaration (2011a), Commodities: Switzerland‘s Most Dangerous Business (Bern: Bern Declaration) published in September 2011 in German and French, and in April 2012 for the English version; (accessed on April 22, 2013).

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Collier, P. (2007) The Bottom Billion: Why the Poorest Countries are Failing and what Can be Done about it, (Oxford: Oxford University Press).

Council of the European Union (2011) Conclusions on tackling the challenges on raw materials and in commodity markets, Brussels, (accessed on 6 March 2013)

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Key International Initiatives and Legislative Efforts to Strengthen Resource Governance and Promote Sustainable Natural Resource Use36.

Contract and Revenue Transparency

  • Extractive Industries Transparency Initiative(EITI): Calls upon governments to publish payments received by extractive companies.

  • US Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1504: Requires all oil, mining and gas companies registered with the US Securities and Exchange Commission to report their payments to all governments on a country-by-country and project-by-project basis.

  • EU Transparency Directive (2004/109/EC), Accounting Directives (78/660/EEC and 83/349/EEC) and Capital Requirement Directive (CPD4): Expansion of current Directives proposed by the EU Commission in 2011, resulting in legislation similar to the USDodd-Frank Wall Street Reform and Consumer Protection Act that requires all EU-listed or large unlisted oil, gas, mining and logging companies to disclose their payments to all governments on a country-by-country and project-by-project basis.

  • International Financial Reporting Standards (International Accounting Standard Board): Establishes global disclosure and reporting standards, including specific measures, for the extractive industries.

  • International Financial Institutions (IFIs): The World Bank’s International Finance Corporation (IFC) requires its extractive industry clients to disclose key material payments made to host governments as a condition of its lending. Additionally, in 2011, the IFC revised its Sustainability Framework to require contract disclosures from all oil, gas and mining industry clients. Other IFIs, such as the European Bank for Reconstruction and Development, which released a new draft Mining Strategy in 2012, may implement similar transparency safeguards.

  • Reports on the Observance of Standards and Codes (IMF): Serves as quasi-audits for domestic authorities and risk assessment tools for investors and lenders.

  • Publish What You Pay: Campaign launched in 2002 by a coalition of 60 NGOs calling for better management of public revenues in order to address poverty and good governance in resource-rich countries. It now has over 650 member organizations. The campaign is supported by the Open Society Institute, which, in turn, supports the Revenue Watch Institute, a specialized organisation on extractive industries, also partially funded by governments.

  • IMF Managing Natural Resource Wealth Topical Trust Fund: Enables natural-resource-rich low and lower-middle income countries to derive the maximum benefit from their oil, gas and mineral resources by providing technical assistance to draft effective economic policy and build administrative capacities.

Certification Instruments (‘Commodity-specific Tracking Regimes’)

  • Kimberley Process Certification Scheme: Voluntary governance scheme created in 2002 wherein participant countries forego the trade conflict diamonds.

  • US Dodd-Frank Wall Street ReformandConsumer Protection Act, Section 1502: Seeks to end the illegal exploitation and trade of conflict minerals from the eastern Democratic Republic of the Congo (DRC) through the application of due diligence processes.

  • OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas: Provides management recommendations for responsible global mineral supply chains to help companies respect human rights and avoid contributing to conflict through their mineral or metal purchasing decisions and practices.

Broad Governance Standards

  • UN Guiding Principles on Business and Human Rights: Outlinesgeneral human rights due diligence obligations for companies and special due diligence for conflict zones.

  • Natural Resource Charter: Twelve principles, created by a group of academics led by Paul Collier, aimed at promoting accountable management, robust fiscal regimes and the sustainable use of resources.

  • UN Global Compact: Encourages businesses worldwide to adopt sustainable and socially responsible policies and to report on their implementation.

  • Committee on World Food Security: Endorsement of a set of far-reaching global guidelinesentitled the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security.

Other Non-resource-specific Intergovernmental Initiatives

  • Financial Action Task Force on Money Laundering: Inter-governmental body established in 1989 by the Ministers of its member jurisdictions.  The FATF’s objective is to set standards and promote the effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other threats related to the integrity of the international financial system.

  • Informal Task Force on Tax and Development: Contributes to the OECD Programme on Tax and Development, which aims to strengthen tax systems in developing countries, establish effective transfer price regimes, increase financial data transparency in multinational enterprise reporting and counter international tax evasion by improving transparency and the exchange of information.

  • OECD Global Forum on Transparency and Exchange of Information for Tax Purposes: Ensures that all jurisdictions implement relevant international standards through a peer review mechanism.

  • World Bank/UN Stolen Asset Recovery (StAR) Initiative: Supports international efforts to end safe havens for funds generated by criminal activities, including those generated in the extractive sectors in resource-dependent countries.

  • International Tax Compact: Initiative launched by the German Federal Ministry for Economic Cooperation and Development with the aim of strengthening international cooperation to fight tax evasion and avoidance.

  • World Bank/IFC Global Tax Simplification Programme: Provides technical assistance to developing countries on the issue of transfer pricing.

  • African Tax Administration Forum: OECD-sponsored forum seeking to develop best practices among African tax administrations, including a transfer pricing project aimed at a more effective application of the ‘arm’s length principle’.

  • Financial Accountability and Corporation Transparency Coalition (FACT): US-based coalition of civil society organisations focussing on the reporting obligations of US-listed companies, now turning its attention to the extractive sector.

  • Task Force on Financial Integrity & Economic Development: Global coalition of civil society and more than 50 governments working together to advocate for greatly improved transparency and accountability in the global financial system.

  • Open Government Partnership(OGP): International initiative aimed at securing concrete commitments from governments to promote transparency, increase civic participation, fight corruption, and harness new technologies in order to promote open, effective and accountable government.

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2  The Boston Consulting Group(BCG) estimates the amount of capital held in Swiss banks at over USD 2 trillion, or 27 per cent of all offshore wealth, quoted in an article published in The Economist on February 11, 2012; ‘Don’t ask, won’t tell - Amid a global squeeze on tax evasion, Switzerland is the prime target’: (accessed on April 22, 2013). Offshore wealth is defined by BCG as ‘assets booked in a country where the investor has no legal residence or tax domicile’. For more details see BCG Report (Becerra et al., 2001).

3  There are different ways of measuring the size of a company. According to an Al Jazeeraarticle, Glencore is ‘the world's biggest listed trader of commodities by capitalization’ (‘Glencore: Taking over the world?’ /2011/05/20115299504775782.html; accessed on April 22, 2013). Similarly, Foreign Policy magazine, in a May/June 2012 article, depicts Glencore as the ‘world’s biggest commodities brokerage firm with a financial valuation higher than Boeing or Ford Motors’, Silverstein, K. (2012) ‘A Giant Among Giants’,,5 (accessed on April 22, 2013).

4  The topic of commodities touches upon many other areas of government policy, and most large Western nations have developed fully-fledged resource strategies. Such strategies deal with a large number of issues, including the availability of, and access to, important strategic energy resources and environmental issues. This paper, however, will not seek to address these concerns.

5  For the numbers quoted in this chapter, see Le Billon, P. (2011); Berne Declaration (2011a);Federal Ministry of Economy, Family and Youth of the Republic of Austria (2011), pp. 26-27.

6  Estimates of the total value differ greatly. The cited numbers are drawn from the Bern Declaration 2011 (see footnote 6). According to Le Billon, extractive sectors alone currently generate about USD 3.5 trillion in annual gross revenue, corresponding to around 5 per cent of GDP.

7  Some papers point to a causal relationship between speculative trades and price increases. See for instance, Baffes, J. and T. Haniotis Timmer (2010) and Friends of the Earth (2012).

8  See for example Collier, P. (2007).For an overview of economic studies, see van der Ploeg, F. (2011).

9  Bern Declaration (2011b); Bergbau-Lizenzvergabe im Kongo (confidential background paper, also quoted in the TV programme ECO on SFDRS, 05.03.2012; (accessed on April 22, 2013). For the African context, these realities are well documented in the most recent report of International Study Group to Review Africa’s Mining Regimes (2011). For more details, see Chapter 3.1 of that report.

10  For case studies of the specific aspects of these initiatives, see ECDPM, Extractive Industries and Local Development. Annotated Bibliography, 2012 (internal document); and World Bank documents in its Extractive Industries for Development Series,,contentMDK:
(accessed on April 24, 2013).

11  A few examples are briefly mentioned in this paper. For a detailed description, see the below market price sale of assets in the DRC described in the Global Witness report (2012), Secrecy Surronding Glencore’s Business Deals in the Democratic Republic of Congo Risks Exposing Shareholders to Corrupt Practices,
(accessed on 6 May 2013)

12  The OECD defines IFFs as funds whose origin, transfer or use is contrary to international and/or national laws, including the movement of money that has been illegally earned. See OECD (2011). According to the OECD, illicit financial flows include flows from (a) licit sources, i.e. from abusive transfer pricing, from tax evasion, and (partly) from trade mispricing; and (b) from illicit sources, i.e. money laundering, bribery, and also (in part) from trade mispricing.

13  Data on financial flows is often scant and aggregated, of highly differing quality, and unequally covering the same aspects. Differing concepts and definitions, as well as methodologies and underlying assumptions in data processing, moreover, further complicate analytical work and dialogue as to the magnitude and primary features of IFFs. See, for example, AfDB, OECD, UNDP, UNECA (2012).

14  For data from NGOs, see Kar, D. and D. Cartwright-Smith (2009) and Tax Justice Network, which include older data on Switzerland. (accessed on 6 May 2013). The Swiss federal authorities have no estimates of likely (legal and illegal) international financial flows, according to the Federal Council in its answer to the parliamentary question 11.4096.

15  Reuter, P. (2012).For a detailed presentation of methods of Transfer-Pricing, see p. 288ff. and Part III.

16  Alex Cobham´s (Christian Aid) presentation at ‘Trade Mispricing’ session, Task Force on Financial Integrity and Economic Development Annual Conference 2011, Paris, France, 7 October 2011,

17  President Festus Mogae, Botswana’s Development Experience, lecture given at the Institute of Development Studies, Sussex University, 21st February 2005, p. 2, as reproduced at SARPN (accessed on April 24, 2013).

18  In May 2012, the Swiss Government tasked three ministries to elaborate a background report. The report has been completed in March 2013 (Editor’s Note : see and report on, accessed on September 15, 2013).

19  Glencore, Trafiguar, Xstrata, Vitol, Mercuria, Gunvor, Litasco, ADM, Bunge, Cargill, Dreyfus. For details of their business portfolios see Berne Declaration (2011a).

20  For the most important initiatives, see list and description in annex.

21 That said, in promoting trade policy reform, the Council simultaneously underlined the EU’s willingness to pursue ‘raw materials diplomacy’, meaning that the EU intends to reinforce its trade strategy with an open campaign against export restrictions, to the extent that it will work with other international institutions to foster dialogue for a better understanding of the impact of export restrictions.

22  For a critical appraisal of this report from a Swiss and development policy perspective see Niggli, P. (2011). The article examines the resource policies of the EU and draws a comparison with Switzerland’s resource policy. In Niggli’s view, the resource policy of the EU is a ‘blunt instrumentalisation of development aid with the aim of furthering its own economic self-interest.’

23  Parliamentary requests are requests by individual members of the two chambers for action and information on particular topics, and include so-called motions (for legislative action), postulates, interpellations, and questions. Details on (accessed on 6 May 2013)

24 Ip Germann 11.3929, Sicherung der Rohstoffversorgung für die Schweizer Industrie; Ip Füglistaller 11.3905, Sicherung der Rohstoffversorgung für die Schweizer Industrie; Bericht des Bundesrates, Nahrungsmittelkrise, Rohstoff- und Ressourcenknappheit, 2009.

25 Po Fässler-Osterwalder 11.3803, Die Rolle der Schweiz als Sitzstaat von Rohstoff-Handelsfirmen; Mo Leuenberger Oberholzer 11.3840, Rohstoffhandelsfirmen regulieren.

26 Mo Wyss 11.4161, Keine Geldwäsche im Handel mit Rohwaren auf eigene Rechnung; Mo Leutenegger Oberholzer 11.3118, Ausdehnung des Anwendungsbereiches des Geldwäschereigesetzes auf den Handel mit wertvollen Gütern; Ip Wyss 12.3138, Dubiose Vergabe von Minenlizenzen in Kongo. Rolle der Firma Glencore und des IWF.

27 Ip Fässler-Osterwalder 11.4096, Doppelbesteuerungsabkommen mit Entwicklungsländern; Mo Fässler-Osterwalder 11.4097, Doppelbesteuerungsabkommen und Verstärkung der guten Unternehmensführung; Mo Kiener Nellen 12.3612, Steuerinformationsabkommen mit Offshore-Finanzzentren; Ip Fehr 11.4065, Steuerhinterziehungsgelder aus Indien auf Schweizer Bankkonten; Po Fehr 11.3858, Reputationsrisiken der Unternehmensbesteuerung.

28 Mo Sommaruga 11.4167, Lutte contre la spéculation sur terres agricoles et les produits alimentaires de base; Ip Graf 11.3385,Landgrabbing. Was tut die Schweiz dagegen?;Ip Bourgeois 11.3822, Entwicklungszusammenarbeit. Mehr Hilfe für nachhaltige Landwirtschaft und Ernährungssicherheit; Ip Müller 11.3344, Anstieg der Nahrungsmittelpreise. Strategie.

29 Ip Sommaruga 11.4187, Ankauf- und Transportverbot für Erdöl aus Syrien wirksam durchsetzen.

30 Ip Sommaruga 11.4169, Principes directeurs de l'OCDE pour les multinationales. Quelle volonté politique?; Ip von Graffenried 11.4083, Responsabilité des entreprises en matière de droits de l'homme. Application des lignes directrices de l'ONU en Suisse?; Ip Bourgeois 11.3489, Transparence au niveau des placements alternatifs.

31 Ip Fehr 11.3859, Etablissement des comptes par pays. La Suisse accuse-t-elle un retard dans ce domaine?; Ip Simoneschi-Cortesi 10.3364, OECD-Leitsätze für multinationale Unternehmen. Country by Country.

32  Among them (unti mid-2012), see Ip Sommaruga 12.3517, Durch Tochterfirmen von multinationalen Unternehmen begangene Menschenrechts- und Umweltverletzungen; Ip Seydoux-Christe 12.3499, Durch ausländische Tochterfirmen von Schweizer Unternehmen begangene Menschenrechtsverletzungen. Zugang der Opfer zur Justiz; Ip Ingold 12.3449, Verantwortlichkeit von international tätigen Firmen mit Sitz in der Schweiz; Ip Moser 12.3520, Soziale und ökologische Unternehmensverantwortung. Selbstregulierung oder verpflichtende Regeln; Ip Haller Vannini 2.3456, Integration der ‘guiding principles’ von John Ruggie in die Bundesverwaltung; Po 12.3503; Ip Graffenried 12.3627, Eine Ruggie-Strategie für die Schweiz; Ip Wermuth 12.3442, Ein- und Ausfuhr von Gold. Offenlegung der Statistik.

33  Swiss Coorporate Justice Campaign website: (accessed on 6 May 2013)

34  World Bank, Oil, Gas and Mining Unit, webpage “Extractive Industries Technical Advisory Facility”,,,contentMDK:22366721~pagePK:148956~piPK:216618~theSitePK:336930,00.html (accessed on 6 May 2013).

35  For more information, refer to the Extractive Industries Transparency Initiative (EITI) Strategy Review, (accessed on April 29, 2013).

36  For a more detailed analysis see Le Billon (2011).

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Cite this article

Bibliographical reference

Werner Thut, “Commodities and Switzerland: Development Policy Challenges and Policy Options”International Development Policy | Revue internationale de politique de développement, 4.2 | -1, 153-193.

Electronic reference

Werner Thut, “Commodities and Switzerland: Development Policy Challenges and Policy Options”International Development Policy | Revue internationale de politique de développement [Online], 4.2 | 2013, Online since 16 September 2013, connection on 07 December 2023. URL:; DOI:

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About the author

Werner Thut

Werner Thut is Senior Policy Advisor  EU Development Affairs  at the Department of Foreign Affairs (FDFA), Swiss Agency for Development and Cooperation (SDC, Analysis & Policy Division). He holds a PhD in Economic History from the University of Berne. This contribution reflects the personal views of the author, and does not necessarily represent the official position of the SDC.

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