The list of positive effects of free trade is long: the division of labour and specialisation allows countries to produce what they are best at relative to their trading partners and import the rest; 2 unrestricted access to foreign markets facilitates more cost-effective production given the larger sales volumes; the availability of a broad array of foreign products increases choice for consumers with regard to end products and for producers with regard to primary and intermediate products; increased competition from foreign rivals promotes efficiency and innovation; the open exchange of goods and services also leads to the spread of knowledge and new technologies, and in so doing contributes to progress and growth as well. As a small open economy, Switzerland is well aware of the benefits of the freest possible trade in goods and services with the rest of the 1 2  Cf. Sachs and Warner (1995) as well as Frankel and Romer (1999), for example. Cf. Ricardo (1817). Page 2/9  world. Chart 2 clearly illustrates the extent to which our country is integrated in the international trading system. Switzerland profits tremendously from its openness. If the advantages of free trade are so strikingly obvious, then why is there any resistance at all? The answer is relatively simple: because not everyone is profiting from it to the same extent. Although all countries that engage in free trade benefit overall from the unrestricted exchange of goods and services, this is not necessarily the case for every household and every company.

Accelerated transformation of Asia For more than five decades Asia has sustained high economic growth. More important, however, is the significant economic transformation that has occurred during this recent decade, in response to the changing domestic and international environment. Asia now and Asia previously is therefore significantly different. Asia today contributes about one third of world output and 28% of world trade. Asia’s progress and development has lifted millions out of poverty, creating extensive employment and improving living conditions with better education and healthcare opportunities. The economic transformation has essentially resulted in more diversified sources of growth for Asia. From being export-led, domestic demand has now become an increasingly important source of growth. This is also reinforced by the shift from the public sector to the private sector as the main driver of growth. While Asia is highly diverse, a common feature prevailing is the tremendous economic flexibility of the Asian economies. Institutional development, the large skilled workforce, the shift to greater market orientation and the general macroeconomic stability have allowed resources to continuously shift to new areas of comparative advantage and for the Asian economies to remain competitive. Being highly diverse, Asia has also been able to leverage on the complementarities that exist in the different economies. This has generated an expansion in intra-regional trade, intra-regional investment activities and an increase in financial linkages between the economies in Asia. The Asian financial crisis was a defining moment for Asia.