Everything is different – or old wine in new bottles?

After two and a half years of the Swiss people being free of EU, on 15 December 2023 the Federal Council posted a whole load of documents online aimed at making an agreement with Brussels popular. This time, however, everything is completely different, as the Federal Council asserted: “Compared with the institutional agreement (…) the package allows greater flexibility and scope for action to safeguard Switzerland’s interest during the negotiations.”¹
  The entrepreneurs’ association “Kompass/Europa” is not impressed by this rhetoric: “As you can easily see, the Federal Council wants a Framework Agreement 2.0. This doesn’t represent progress, but a step backwards, because the basic concept with the dynamic adoption of law and the jurisdiction of the ECJ remains the same. Kompass/Europa considers the now known results of the exploratory talks not to be a favourable development for Switzerland.”²

Let’s take a look at how much “flexibility and scope for action” the Brussels bureaucracy will grant  Switzerland.

“Common Understanding” –
in English only

It was quite difficult to track down the central document. Attached to the press release of 15 December there are some dozen “fact sheets” from the Federal Administration. Searching for first-hand information, I finally found with increased interest a 13-page document “in English only” entitled “Common Understanding”.³ There you can find out: “The European Commission and Switzerland share the view that a broad package should be negotiated.” What follows are 20 items to be included in this package: a mixture of existing and future agreements, EU programmes in which Switzerland could (re)participate, various Swiss financial contributions of an undisclosed amount and the well-known institutional principles of the EU, which are inserted as if at random between and partly into the individual agreements. Each item begins with the words “The European Commission and Switzerland share the view that …”, or with “The European Commission and Switzerland share the common objective …” The term “Switzerland” does not refer to the Swiss people, but to “the representatives of the Swiss Federal Council”. (Common Understanding, p. 1)
  It is nothing new that the EU will only deal with the executives of states: Switzerland simply does not fit in with this undemocratic entity. For the Federal Council, this bureaucratic creation from Brussels – presented in a foreign language! – should be a red flag.

Agreements concluded (item 1)

• the five existing Bilateral I agreements in the fields related to the internal market (Agreement on Air Transport, Agreement on the Carriage of Goods and Passengers by Rail and Road, Agreement on the Free Movement of Persons, Agreement on Mutual Recognition in Relation to Conformity Assessment, Agreement on Trade in Agricultural Products)
• three new agreements under planning (electricity, food safety and health)
• Switzerland’s participation in Union programmes (Education, research and others)
• Switzerland’s financial contribution

To avoid too much at once, this time we will concentrate on the three planned new agreements and the institutional “elephants in the room”, which differ from those of the Institutional Framework Agreement in only a few minor respects. The “state aid” elephant (item 17) is referred to here just in connection with the electricity agreement.

New agreements under planning:
important questions in a nutshell

Agreement on electricity (item 2)
According to the EU Commission and the Federal Council, “Switzerland should be part of the EU’s internal electricity market”. Should it? Although the proponents of a “free market” have forced through a partial “opening of the electricity market” against the will of the sovereign, they cannot so easily demolish the principle of public service, which is deeply rooted in the population as an expression of the cooperative idea. It is still the case that our hydroelectric power plants and other electricity production companies are largely in the hands of the cantons and municipalities. By contrast, the EU Commission will only authorise a state-protected basic supply for households and SMEs to the extent that this is “in line with EU law”.
  It is up to Federal Councillor and head of the Swiss Federal Department of Environment, Transport, Energy and Communications (DETEC) Albert Rösti⁴ to remind both the staff in Brussels and his own team that the EU member states need the Swiss electricity grid, especially the north-south transit lines, just as much as we need EU electricity supplies. It is absolutely absurd to read how the EU ban on state aid would affect our electricity industry: “To the extent that they are compatible with EU law, it should be possible to adopt necessary, proportionate and non-distortive national measures to preserve security of supply at all times, including through national generation reserves.” (emphasis mw) It’s our electricity, our security of supply, our national reserves they’re talking about!
  It goes without saying that Switzerland is also prepared to help out its neighbours with electricity from our storage power plants in an emergency without any red tape (which has already been the case in recent winters). This does not require an electricity agreement, as even the EU Commission admits: “In the field of electricity, both sides should commit to take all necessary steps to preserve operational security also in the absence of an electricity agreement.” And further: “Switzerland should continue to be able to participate in the Electricity Coordination Group on an ad hoc basis where appropriate.” (Common Understanding, point 20. Modus vivendi, emphasis mw). So it can be done without a bureaucratic agreement!

New Agreement on Food Safety (Point 3)
The EU Commission, seconded by the Federal Council, wants to create a common “EU-Switzerland food safety area” in order to “strengthen consumer protection” and “improve market access”. Here too, “Switzerland should dynamically harmonise its legislation”. The Federal Council asserts that it is possible to “negotiate exceptions in important areas in order to avoid a weakening of Swiss standards (including animal welfare, new technologies in food production including genetically modified organisms).”⁵ Wait a minute: Switzerland has the stricter standards set by the sovereign and consequently higher food prices, and the EU states want to improve their access to the Swiss market with mass products – every Swiss green, organic farmer, GMO opponent and every farm shop customer should be crying out!

New Agreement on Health (point 4)
A very brief preliminary comment: The non-medical person is already dizzy about the many EU rules and programmes that are to be imposed on Switzerland, “in accordance with the rights and obligations contained in the relevant EU legal acts, including a financial contribution”. And then pay for it too?

The elephants in the room:
“Dynamic” alignment of EU law
explained simply (point 9)

This summarised presentation of the three planned agreements already gives us an impression of the institutional elephants that are to be imposed on Switzerland. Everything as before, just organised a little differently.
  “Static” adoption would mean that only the EU law in force at the time the agreement was concluded would be incorporated into a particular agreement. “Dynamic” incorporation means that currently unknown law created by the EU in the future must be incorporated on an ongoing basis. This applies to all agreements mentioned in point 1: “All relevant EU legal acts should be as quickly as possible after their adoption incorporated in all bilateral agreements in the fields related to the internal market in which Switzerland participates, […]”. This method is called buying a pig in a poke.
  The “room for manoeuvre” emphasised by the Federal Council in the negotiations with the EU consists of a few “exceptions”, for example in the land transport agreement or the free movement of persons, some of which would first have to be negotiated. It should be noted that we would only have room for manoeuvre within the narrow framework set by the EU Commission. Isn’t that rather modest for Switzerland as a flourishing business location?

Arbitration court as a “camouflage”
of the sole rule of the ECJ (points 8 and 10)

Once again, there is a huge fuss about the arbitration tribunal that is supposed to resolve disputes between the EU Commission and Switzerland. It is well known that disputes between EU member states and the EU Commission are always decided by the ECJ, usually in favour of the Commission. Why should the EU give preferential treatment to non-member Switzerland of all countries? An arbitral tribunal “where both parties are represented” is indeed envisaged. One can vividly imagine which Swiss EU turbo lawyers would sit on it to “represent” Switzerland. The arbitration tribunal would have to refer any disagreement “concerning concepts of Union law” (which is practically always the case) to the ECJ for a ruling “that would be binding on the arbitral tribunal.” The ECJ would ensure that all of Switzerland’s bilateral agreements mentioned in point 1 are interpreted in accordance with its case law “before and after the signing of those agreements”.
  Carl Baudenbacher, long-standing President of the EFTA Court and a profound expert on the EU legal system, pointed out years ago that the ECJ “as a court of one side lacks impartiality, which is only camouflaged in a makeshift manner by the introduction of a pro forma arbitration tribunal”.⁶ With regard to today’s proposal, Baudenbacher also concludes: “But anyone who analyses things soberly realises that the ‘package approach’ is nothing more than a masked InstA II [Institutional Framework Agreement II].” And he adds: “The Federal Council is thus remaining true to the camouflage approach that has characterised its European policy since 2013. The addressee of the camouflage is not the other side; the camouflage is still aimed at the people and the cantons. Will these supreme constitutional bodies honour this in a referendum?”⁷ Let’s prepare ourselves and our fellow citizens for this referendum!

“Package approach” –
also a camouflage (points 11/12)

As described at the beginning, the Federal Council asserts that the many individual packages of the planned agreement would allow more flexibility in the negotiation of exceptions tailored to Switzerland. Perhaps our head of the FDFA has not read points 11 and 12 of the “Common Understanding” (in English only) produced in Brussels carefully? It states that “all existing and future agreements in the fields related to the internal market in which Switzerland participates between the EU and Switzerland should be considered as a coherent whole […]” (point 12). And: “that the institutional solutions that would be agreed as a result of these new negotiations should be identical across all existing and future bilateral agreements […] (point 11), emphasis mw).
  So nothing new. The few exceptions that may be negotiated for the Electricity Agreement, the Agreement on Overland Transport and the Agreement on the Free Movement of Persons (AFMP) do little to change this: if the EU introduces fundamentally new regulations for an area in a few years’ time, it will become clear what the Swiss exceptions are worth. Example: The Bilateral Agreements I were approved by the people in 2000 and have been in force since 2002. The EU Citizens Directive, which goes far beyond the AFMP, has only applied to EU member states since 2004. A few years ago, Federal Councillor Ignazio Cassis described it as a “red line” for Switzerland; today, the EU Commission intends to impose the directive on the AFMP in principle.

“Appropriate compensatory measures” –
 when the Swiss people say no …

We already have some experience with “compensatory measures” à la Brussels. In its report of 15 December 2023, the Federal Council characterises the EU’s previous measures contrary to the treaty “in which Switzerland is confronted with irrelevant links by the EU” in unusually clear terms.⁸ The Federal Council cites the following events: Withdrawal of stock exchange equivalence (recognition of the Swiss stock exchange as equivalent to the EU stock exchanges) in June 2019 “in order to exert pressure on Switzerland with regard to institutional issues”/“Since the end of 2018, the EU has refused to update the applicable internal market agreements unless this is in the overriding interest of the EU in individual cases.”/refusal to “enter into talks on Switzerland’s association with the current framework programmes of the Horizon package and Erasmus+.” So much for the Federal Council.
  Addendum: Switzerland’s participation in the Erasmus+ student exchange programme was cut by the EU after the Swiss people voted in favour of mass immigration on 9 February 2014 (which was never implemented due to pressure from Brussels), and Switzerland was kicked out of the Horizon Europe research programmes as “punishment” for the Federal Council’s breakdown in negotiations in June 2021. “Zleidwärche” (deliberately harming someone) is what they call this in Switzerland.

And how should the “equalisation measures
 be regulated in future?

According to the EU Commission, the “dynamic” adoption of EU law “must take due account of Switzerland’s constitutional procedures (including referendums).” (Common Understanding, point 9) This does not mean that the EU would “take into account” a “no” vote by the Swiss sovereign, but merely that the deadline for the adoption of EU law would be extended until after the referendum vote. And if the people say no? Then Switzerland would be in breach of the agreement in question.
  The procedure according to the Common Understanding (point 12, 2^nd paragraph): “If an arbitral tribunal finds that a party has violated one of these agreements”, the other party could “take a number of appropriate compensatory measures in the agreement in question or in another agreement [...]”. “The party affected by the compensatory measures should have the possibility to submit the question of the proportionality of these measures to the arbitral tribunal.” The EU Commission could therefore act in the same style as before (“a series” of harassment measures in an agreement of its choice), with one small difference: what was previously contrary to the treaty and arbitrary would presumably be declared “proportionate” by the arbitration tribunal – which is also rather soft on the EU on the Swiss side.
  Conclusion: Let’s stick to the free Swiss way. So far, we have been able to cope with even the roughest pinpricks from Brussels – thanks to clever, genuinely Swiss “Plans B”. And let’s not forget: Switzerland is just as important to the EU as the other way round, as a strong trading partner, as a north-south transit route for road and rail transport and for electricity and gas pipelines, and as a country of immigration for the many workers and their families who find jobs, training places and good social benefits here.  •

¹ Federal Department of Foreign Affairs FDFA. “Der Bundesrat genehmigt den Entwurf eines Mandats für Verhandlungen mit der Europäischen Union (EU)”. (The Federal Council approves the draft mandate for negotiations with the European Union (EU)) Media release of 15 December 2023
² https://kompasseuropa.ch/der-bundesrat-will-einen-rahmenvertrag-2/
³ https://www.eda.admin.ch/eda/en/fdfa/fdfa/aktuell/newsuebersicht/2023/europa.html
⁴ DETEC: Federal Department of the Environment, Transport, Energy and Communications
⁵ Federal Council. “Bericht zu den exploratorischen Gesprächen zwischen der Schweiz und der EU zur Stabilisierung und Weiterentwicklung ihrer Beziehungen” (Report on the exploratory talks between Switzerland and the EU on stabilising and developing their relations) of 15 December 2023, p. 16
⁶ Andenas, Mads und Baudenbacher, Carl. “Das InstA – ein ‘EWR des armen Mannes’” (The InstA – an ‘EEA of the poor man’”. In: Neue Zürcher Zeitung of 12 October 2020)
⁷ Baudenbacher, Carl. “Im Tarnanzug in die EU”. (In a camouflage suit to the EU). In: Schweizer Monat of March 2023
⁸ Federal Council. “Bericht zu den exploratorischen Gesprächen zwischen der Schweiz und der EU zur Stabilisierung und Weiterentwicklung ihrer Beziehungen” (Report on the exploratory talks between Switzerland and the EU on stabilising and developing their relations) of 15 December 2023.