How Bern and Brussels could approach an interim deal

Despite a new Swiss parliament being elected, relations between Switzerland and the European Union are likely to remain stalled. An interim deal could prevent damaging what has already been achieved.

In the first week of its December session, the newly elected parliament debated whether Switzerland should pay a second so-called cohesion contribution for EU member states in eastern Europe. The allocated CHF1.3 billion ($1.3 billion) aims to support these countries in reducing economic and social inequalities and co-finance migration policies.

Both chambers, the House of Representatives and the Senate, agreed to pay this contribution on the one condition that the EU would no longer discriminate against Switzerland like it did in the case of stock exchange equivalence.

Preventing failure

This is a first sign of how the newly elected parliament feels about the EU. The parliamentary debate clearly indicates that Switzerland does not want negotiations on the new framework agreement with Europe to fail. But it also indicates that the present draft agreement is not yet quite balanced enough for Switzerland. Switzerland feels that there is still some room for improvement on several points (see box).

So far, the EU has not been open for re-negotiations, a position which, at least officially, will not change in the near future. As long as it is trying to find a solution for Brexit with Britain it is unlikely that the EU will make any generous concessions to Switzerland.

Brexit has shown that the EU is willing to talk if the negotiation partner, like the British Prime Minister Boris Johnson, comes up with a proposal that makes sense for both sides.

Switzerland can demand exceptions

The EU does not want to take the risk of the Swiss people rejecting the deal, or the negotiations to fail completely. Bilateral relations may not be as important to the EU as they are to Switzerland but it certainly benefits from them. It now sells more goods and services to Switzerland than vice versa, and the number of EU citizens living in Switzerland is higher than the number of Swiss living in the EU.

In addition, around 315,000 frontier workers come to work in Switzerland every single day.

The fact that the EU is the more powerful negotiating partner does not mean Switzerland has to give in to all its demands; it can ask for exceptions on issues vital to it. This is even laid down in the agreement.

Some observers have rightly warned Switzerland not to overestimate its own importance and reject all EU demands categorically.

Saving what can be saved?

If the EU continues to give Switzerland the cold shoulder, Switzerland should not kill the bilateral treaties on its own initiative, but propose an interim agreement to the EU, Michael Ambühl writes in an opinion piece in the German-speaking Neue Zürcher Zeitung (NZZ) newspaper. The former Swiss diplomat and professor at Zurich’s Federal Institute of Technology was the Swiss chief negotiator for the second set of bilateral agreements from 2001 to 2004.

Neither side is interested in harming existing relations. An interim deal could cushion any negative development and negotiations on an institutional agreement could be resumed at a later date, he argues.

The public will not find out before spring 2020, if and when the former Swiss diplomat’s recommendation will be heard in Bern and Brussels. In May 2020, the Swiss are likely to vote on the initiative by the right-wing Swiss People’s Party aimed at abandoning the free movement of people accord with the EU.

If accepted, this initiative would probably mean a “Swexit” for the bilaterals. If rejected, the government could continue and strengthen its dialogue with the EU. One can only hope that it will then be able to negotiate a solution with Brussels which would also be accepted by the Swiss people.

Switzerland-EU: a brief timeline

As a non-EU member state, Switzerland’s relations with the EU are governed by 120 bilateral treaties. In an effort to simplify these ties, it has been negotiating to clarify institutional issues. This should secure mutual market access in the future.

The results of years of negotiations between EU and Swiss diplomats have been waiting approval for more than a year. Some Swiss interest groups, however, are not at all happy with some of the points and are demanding re-negotiations.

The EU has no interest in this. With a few pricks, such as not renewing the equivalence of the Swiss stock exchange, it is trying to push Switzerland into signing the deal that has been negotiated so far.

In the meantime, the Swiss parliament has asked the government to conduct re-negotiations in Brussels in order to achieve improvements in wage protection, state aid and the EU Citizenship Directive.