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The flag is the Swiss flag. It is white on red, which is why the case is red.

Swiss Army Knives are made by two manufacturers: Victorinox and Wenger.

Victorinox is located in Ibach, canton Schwyz; and Wenger is located in Delémont, canton Jura.

These two companies have been manufacturing knives for the Swiss Army, and for retail sale, since 1891. The model currently supplied to the Swiss Army is called "Soldatenmesser 08".

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Q: What does the white flag on the Swiss army knife represent?
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