The EU and Switzerland are on a collision course despite the free movement vote

On the surface, Swiss voters have given a resounding endorsement to continued close relations with the European Union. By rejecting the Swiss People’s Party proposal to end the free movement of people by 61.7 per cent, they have signalled their acceptance of the status quo of the last two decades.

The EU has taken encouragement from this positive message, but the reprieve may be short-lived. The United Kingdom is not the only country that urgently has to restructure its relationship with the EU.

Now that the free movement vote is safely out of the way, the real debate on the future relationship has taken off in Switzerland. In recent days, renewed objections to the government’s wider negotiated compromise with Brussels have been voiced right across the political spectrum.

At issue is the so-called institutional framework agreement, negotiated by the Swiss government with the EU between 2014 and 2018, and designed to streamline the existing set of agreements. Bogged down in a national consultation phase, it has yet to be ratified by the Swiss parliament.

Switzerland’s dealings with the EU are currently governed by a web of more than 20 main bilateral agreements and around 100 other agreements, under which Switzerland has agreed to incorporate certain aspects of EU legislation in exchange for preferential access to the single market.

The main bilateral accords were negotiated in two bundles between 1994 and 1999, and 2002 and 2004 respectively. Under the Swiss direct democracy system, the substantial issues were approved by popular vote.

These agreements are currently managed through a structure of 20 joint committees. The ongoing effect of the agreements obliges Switzerland to adopt EU legislation in the relevant sectors. But ensuring that Swiss law catches up takes a lot of manpower and time.

EU laws change constantly. Up to now, Switzerland has adopted these changes pretty much verbatim but only after putting them through its own legislative process.

This leads to a delay, during which Swiss companies have access to the single market without having to comply with all the rules—potentially a competitive advantage.

Under the new framework agreement, Switzerland would automatically adopt the latest version of EU law in the relevant sectors, cutting out this delay. The traditional anti-EU camp in Switzerland is crying foul at this perceived loss of sovereignty.

They also object to the structure for regulating disputes, which foresees courts of arbitration with equal representation from both sides but would ultimately fall under the jurisdiction of the European Court of Justice. These are all familiar issues to Brexit watchers. Currently, the general rule is that the committees themselves are in charge of dispute settlement.

As far as the EU is concerned, the deal was done and dusted at the end of 2018, and it has no intention of authorising the reopening of negotiations, especially as negotiations with the UK are taking up so much oxygen right now.

In its latest position paper on EU-Swiss relations, the European Council wrote that the conclusion of the institutional framework agreement “on the basis of the present text is a precondition for the EU for the conclusion of future agreements on Swiss participation in the EU's internal market.”

The sustainability and further development of the bilateral approach with Switzerland now hangs on this agreement, it added. This looks like a collision course when so many voices in Switzerland are saying the framework deal in its current form is dead in the water.

Inevitably the procedural bleeds into the substantial. The new framework includes the adoption of EU directives on wage protection which trade unions and employers’ associations are unhappy with.

Despite the affirmation of free movement, the directive on the rights of European citizens raises disquiet about the prospect of EU workers gaining unfair access to Swiss social welfare payments. Another complaint, in yet another echo of the Brexit debate, is that the Swiss will be subject to EU laws barring state subventions for banks or energy companies.

There are just so many unpalatable points in the framework from the Swiss point of view that it is highly unlikely to be ratified by parliament, let alone accepted by voters afterwards.

Yet the Swiss are acutely aware that the EU has little patience to deal with two troublesome third countries at the same time. The freedom of movement vote shows that they are careful not to destabilise the relationship with the country’s largest trading partner when the whole region is tipping headlong into a recession.

The Swiss know from long experience that access to the single market comes at a price. They haven’t agreed the price for the next phase yet but the majority want to keep close to the EU. After all, daily trade between the two partners amounts to almost a billion Swiss francs, more than 450,000 Swiss live in EU countries and 1.4m EU citizens call Switzerland home.

Since Swiss voters rejected the government’s plan to join the European Economic Area in 1992, the country has managed to strike a delicate balance between protecting its sense of sovereignty and accessing the single market. It’s anyone’s guess how that can still be achieved under this new set of pressures.

 

Clare O’Dea is the author of “The Naked Swiss: A Nation Behind 10 Myths” (Bergli Books)