The Swiss cabinet on Monday rejected a motion that would force mining companies and private commodity trading houses to declare payments made to resource-rich countries.
The decision puts the traditionally neutral country at odds with the United States and the European Union, both of which are pursuing tough new rules for oil, gas and mining companies aimed at reducing corruption.
The Swiss government said it dismissed the motion, backed by a group of 30 mostly left-wing politicians, because it went beyond measures passed by other Western countries by including the activities of private traders such as Vitol and Gunvor.
Geneva alone is responsible for over a third of daily crude oil volumes and about 35% of grains.
"The cabinet believes that the scope of the European and U.S. transparency measures is not sufficiently clear and that commodity trading outside of the country of origin is unlikely to be included. We therefore reject the motion," the government said in a statement on Monday.
The cabinet's decision comes despite efforts by Arlene McCarthy, who led the discussions in Brussels ahead of a September transparency vote, to persuade Switzerland to follow suit.
In a letter addressed to Swiss President Eveline Widmer-Schlumpf on Nov. 20 and seen by Reuters, McCarthy said there was a need for a "level playing field" in the sector and called Swiss legislation an "essential step towards a global transparency standard."
A Norwegian non-governmental organisation, the Extractive Industries Transparency Initiative, is also seeking to forge new disclosure rules for oil traders buying from state oil companies, although no concrete measures have been agreed.
SCRUTINY
The cabinet's decision comes as a blow to campaigners and politicians who have stepped up pressure on Swiss authorities to increase transparency in this traditionally secretive sector.
Such pressure has prompted the government to launch a six-month inquiry into the Swiss commodities industry, which also includes listed companies such as Glencore. The results are due to be published before the end of the year.
"There is concern that our country attracts more and more companies looking to bypass rules and exposes itself more to international criticism," said left-wing politician Hildegard Fassler-Osterwalder, who originally proposed the transparency motion in September.
Politician Carlo Sommaruga, who also backed the proposal, said on Monday that Switzerland had become a "hostage" to multinational companies such as commodity traders because of their high contribution to state revenues.
"They pay very low tax and they pose problems for transparency and the state doesn't dare doing anything as they are afraid they will leave," he said.
Switzerland has also come under pressure from Brussels to match EU sanctions against Iran, including an oil embargo.
Switzerland's foreign minister has said the EU measures go too far towards "regime change."
