Brexit and the Swiss connection – a guide

As the uncertainty grows over whether British voters will decide on June 23 to take their country out of the European Union, Swiss politicians and the media are trying to work out what a vote to “leave” or to “remain” would mean for them. Here, swissinfo.ch explains a tortuous tale of three cities.

Switzerland isn’t a member of the European Union. Why does it care about Brexit?

The short answer is that the Swiss cabinet is pressed for time to reach an agreement with the EU on curbing immigration, and Brussels has said it won’t turn its attention to Bern before sorting out London.

The long answer?

It all goes back to February 9, 2014, when50.3% of Swiss voters approvedan initiative by the rightwing Swiss People’s Party to impose limits on the number of workers allowed into Switzerland from EU andEFTAcountries. Parliament then had three years to implement this – in other words, by February 9, 2017.

The problem, as Brussels was quick to point out, is that curbing immigration in Switzerland would violate an agreement on thefree movement of people, one of the EU’s central tenets that Switzerland signed on to in 2002 as part of a package of bilateral accords.

The Swiss cabinet thus found itself in the seemingly impossible position of implementing an initiative that demands limits on free movement while not jeopardising bilateral accords with the EU.

What was the cabinet’s solution?

It’s still working on it. But on March 4, the Swiss cabinet proposed a so-called unilateral safeguard clause to curb immigration that would take effect in 2017 if it couldn’t reach an agreement with the EU on limiting influxes of foreigners. Under the proposal to be submitted to parliament, Switzerland would claim the right to limit free access to the Swiss labour market due to serious economic or social problems.

On the same day, the cabinet announced it had agreed to a treaty with Brussels that would extend the accord on the free movement of people to Croatia.

It plans to curb immigration and extend the free movement of people at the same time?

It’s a kind of magic. Two days later, Foreign Minister Didier Burkhalter responded to criticism that the cabinet was sending mixed signals on Europe: “We are simply saying to the EU that with a bit of pragmatism and imagination, problems can be solved in steps. The signature of the protocol is one that brings us closer to the goal of better management of migration to Switzerland, while also preserving and developing the bilateral approach.”

What did Brussels make of that?

Not much. It’s standing firm that it won’t accept any limits to the free movement of people. Indeed no one, apart from the People’s Party, is keen on the unilateral option. Not least because it violates free movement and the situation is unclear regarding almost 300,000cross-border workers(not an issue for Britain). Swiss companies would suddenly have staffing problems and many EU workers living near the Swiss border would lose their jobs (in Switzerland). Brussels would definitely not be amused and would probably think up someunpleasant countermeasures.

In February, as part of negotiations with British Prime Minister David Cameron, the EU agreed to a sort of safeguard clause for Britain. What are the chances of it agreeing a similar one with Switzerland?

This is the big question, and it doesn’t appear that the chances are very good. Burkhalter himself admitted there was “no direct link” between the solution proposed in London and the talks conducted by Switzerland following the 2014 immigration vote.

While London is seeking to curb benefits for immigrants, Switzerland wants to re-introduce quotas for those coming from the 28-nation bloc as well as Norway, Iceland and Liechtenstein. “It doesn’t mean a general solution agreed [with Britain] is also a solution for Switzerland,” he said on February 2.

He also pointed out that the status of the two countries was totally different. “We’re not a member of the EU and we don’t want to become one, while Britain is a member and is debating whether it should remain one.”

Brussels is concerned that reaching a deal with non-member Switzerland – especially if it involves some sort of safeguard clause – could give some member states ideas and could influence British voters to leave the EU in the hope of negotiating a “Swiss deal”. As it is, some people in Britain look wistfully atSwitzerland’s free-trade agreement with China; as an EU member Britain can’t sign such agreements, but it could if it were outside the EU.

Economics Minister Johann Schneider-Ammann, who holds the rotating Swiss presidency this year, confirmed on February 4 he had “received indications that Switzerland could rejoin the table [to relaunch talks with Brussels] as soon as the main agreement is concluded between Britain and the EU”.

All this assumes British voters will decide to stay in the EU…

That would certainly be the less bad option for Switzerland. Brussels could then in theory turn from its London headache to its Bern headache, but even then there wouldn’t be much time to negotiate a solution that could be put to the Swiss parliament before February 2017. A multilateral solution is far from a done deal.

And in the event of Brexit?

Well, if Britain leaves the EU, Switzerland will be the least of Brussels’ worries for several years (the formal leaving process takes two years for starters). As the Swiss ambassador to Brussels noted: “The EU would then have less time to devote to us.” For his part, Schneider-Ammann said with considerable understatement: “Brexit would hardly strengthen stability in Europe, which in turn would have an effect on Switzerland.”

To be honest, no one knows what will happen. No member state has ever left the EU and everything depends on how bitter and drawn-out the post-Brexit divorce negotiations are. This uncertainty is already having an effect on the pound and the franc.

What is certain, however, is that whatever agreement is reached between the EU and Britain will determine whether Switzerland benefits from Brexit. Watch this space.