MEMORANDUM FOR PROFESSOR S. CHARUSHEELA
For immediate release; 6 November, 2011
From Freddie Hensen, Student at the University of Washington Bothell
SUBJECT: Swedish Trade Policy: A Market Overview and Analysis of Constituency Influences on Policy
MARKET OVERVIEW: Relative to other European Union (EU) nations participating in the European Free-Trade
Association (EFTA) and within the European Economic Accord (EEA) area, Sweden is not a member of the European
Economic and Monetary Union (EMU), which has been a benefit to the Swedish economy in recent years.
Simultaneously benefitting from networked EU trade policy while avoiding economic vagaries of the EU related to
flawed currency structure, paired with few restrictions or even distinctions between domestic and foreign business
ownership has positioned Sweden to be highly attractive to foreign direct investment (FDI)(EIU Trade). Certain
characteristics such as a highly educated workforce, advanced technological production capacity, and sophisticated
industrial infrastructure further attract foreign investors to Sweden (EIU Commerce 4). The multitude of business
capital, both foreign and domestic, and resulting level of production has made Sweden one of the strongest per capita
export markets in Europe at roughly one trillion Swedish Kronor (152 billion USD, 110 billion Euro) in 2010, about
54% of Gross Domestic Product (GDP), see Figure 1 (Statistics). Major exports include: motor vehicles, military
aircraft and components, high-technology goods and forestry products, as well as clothing retailers (EIU Commerce 70).
Foreign investment, domestic skilled labor, and technologically advanced infrastructure greatly emphasizes the export
market for highly advanced technologies, equipment, and components. However, while Swedish government does not
particularly discriminate between foreign from domestic business with trade policy, it does prevent out-competition
from foreign investors through extensive economic state ownership—approximately 23% of total domestic economy,
thus the largest single business owner in Sweden (EIU Commerce 8), and further guides which types of businesses can
compete well through general policy. The Swedish Trade Council, formerly the Swedish Export Council (a further
illustration of the export dominant market) and the National Board of Trade oversee trade regulation and ensure
corporations comply with domestic policy (EIU Commerce 46). For example, strict environmental regulations
(generally more strict than EU policy: emissions, pollution, transportation of chemicals and toxic waste, etc.) and
government subsidies for research and development of environmental technology has made environmental technology a
huge export (EIU Trade). There are no taxes, tariffs, levies or fees on any exports (EIU Commerce 71).
In 2010, Swedish imports totaled 972 billion kronor. As member of the EFTA and in the EEA area, Sweden must
follow established EU tariff policy on imports of 0-20% based on the International Convention of Harmonised
Commodity Description and Coding System and ad valorem, or according to value, of each import. Agricultural
products have the greatest tariffs in place, in addition to luxuries such as confectioneries, alcohol, soft drinks, tobacco,
fuels, and cars, whereas chemical products, industrial goods, and tropical farm products are duty free (EIU Commerce
69-70).
Figure 1: From EIU, a comparison between import and export proportion of GDP, and Inward Direct Investment.
CONSTITUENCIES INFLUENCE: Strong collective bargaining rights and highly organized unions, labor unions in
particular, give the people of Sweden via their constituency organizations and unions extensive negotiating power in
Riksdag policy reform especially concerning trade. Umbrella organizations such as the Swedish Trade Union
Confederation (LO) typically represent several unions together in negotiating collective agreements. For example, the
Swedish Building Workers Union protested cheap Latvian labor, with the help of the LO, ultimately influence the
Riksdag to change labor laws in 2009 ordering foreign companies who hire workers from foreign countries to sign
collective agreements with all employees, not just domestic (EIU Commerce 30-31).
About 97% of Sweden’s workforce is unionized largely into three powerful labor organizations of both blue and white
collar employees: the Swedish Trade Union Confederation (Landsorganisationen, LO), the Swedish Confederation of
Professional Employees (Tjanstemannens Centraloganisation, TCO), and the Confederation of Professional Associations
(Sveriges AkademikersCentralorganisation, SACO)(EIU Commerce 32). The most prominent policy victory influenced
by these unions was the 2003 referendum on the EMU’s single currency Euro; political parties in favor of passing the
Euro could not compete with the lobbying power of the Unions and the referendum failed to ratify single currency
(Domstol). Unions also have a profound influence in Swedish Judiciary; any dispute arising between employee union
and employer are heard in Sweden’s Labour Court, which can be escalated through 6 appellate courts and to the Hogsta
Domstolen, Supreme Court (Domstol), and: “A business owner has the support of the Confederation of Swedish
Enterprise (the largest employers’ organization in Sweden), which estimates that in as many as 80% of the cases brought
to the Labour Court, rulings favour workers and unions” (EIU Commerce 33). An example of this influence effecting
policy is a 2010 referendum to extend a 400 million Euro loan from the European Investment Bank (EIB) to Saab; a
similar loan was extended to Volvo; both companies have experience recent losses in profit and the LO won influence in
the Ridsdag decision to bolster the two companies’ capital (EIU Commerce 44). Another example of trade policy is the
LO’s contribution to success in having Brazilian biofuels classified as a chemical import and not an agricultural one, so
that it received fewer tariffs (EIU Commerce 30).
REFERENCES
Central Intelligence Agency (CIA). 2011. World Factbook: Sweden. https://www.cia.gov/library/publications/the-worldfactbook/geos/sw.html#top
Economist Intelligence Unit (EIU). 2008. Country Commerce: Sweden. London, UK. www.eiu.com
Economist Intelligence Unit (EIU). 2011. Sweden: Trade Policy: Overview.
http://country.eiu.com.offcampus.lib.washington.edu/article.aspx?articleid=467857031&Country=Sweden&topic=Regulat
ion&subtopic=Trade+policy&subsubtopic=Trade+policy%3a+Overview
Statistics Sweden. 2008. http://www.scb.se/default____2154.aspx
Sveriges Domstolar. 2010. The Swedish Courts. http://www.domstol.se/Funktioner/English/