Switzerland after the Brexit and before another showdown with Brussels

Attempt at an analysis of the current situation

by Dr. iur. Marianne Wüthrich

Great Britain left the EU on 31 January 2020. For the member states, but also for us Swiss, this is an important stake in the ground – for European states there is also life outside the EU. With regard to Switzerland, this must be supplemented: It is an advantage for the sovereign small democratic state to be able to regulate its relations with other states independently, and the Swiss economy has also proved to be strong and inventive enough to cope with difficulties of all kinds.

Where do we stand? And how does the Swiss road go from here?

On 17 May 2020, we will vote on the federal “Limitation initiative”, which makes a further attempt to manage immigration from the EU area independently. The plan of Brussels and the EU lobby in Federal Bern is to ground this initiative with a similar disinformation campaign as the self-determination initiative, which was rejected by the sovereign on 25 November 2018 – because this second initiative would also prevent greater political integration into the EU. The EU then wants to go ahead with force in order to impose the Institutional Framework Agreement on Switzerland, which hardly any Swiss can want if they have their wits about them and understand what is in it.

An ultimatum from Brussels? An incentive for shrewd minds in Bern

By 26 May 2020, the Federal Council should be ready, according to the will of the EU states, to “initiate the ratification of the Framework Agreement”. This means that the draft is to be submitted to parliament and subsequently to the people for a decision, without taking into account the changes desired by the cantons, several social partners and parties. Renegotiations are still rejected by Brussels.

Nine days after the voting Sunday on 17 May – an unfriendly act by Brussels. The agreement on technical barriers to trade (Mutual Recognition Agreement MRA) in the medical technology sector expires on 26 May. (This sector comprises 1,400 enterprises and 58,500 employees, generates a turnover of 15.8 billion Swiss francs and reaches an export volume of 11.3 billion). If Switzerland does not knuckle under, the EU threatens that the agreement will not be updated. “The linkage is in the interest of the EU, the leverage is necessary to persuade Switzerland to ratify the Framework Agreement”, the EU Commission “justifies” its action.1 In reality, this linkage is illegal and contrary to the Treaty, as the MRA is part of Bilaterals I and must be complied with by the EU. In this sense, Luca De Carli, editor of the national news part of the Tages-Anzeiger, says: “This pinprick by the EU [...] is just as unjustified as the termination of the stock exchange agreement a few months ago. For political reasons Brussels is linking decisions that actually have nothing to do with each other. But complaining about this is not helping Switzerland. It should therefore not allow itself to be impressed by the EU ultimatum.”2 

Well, the inventive hedgehog Switzerland has already shown itself to be superior several times in competition with the EU hare and has conjured up a plan B out of a hat.3 We can be curious to see what the Federal Council will come up with this time.

Coercive nature of the EU framework at odds with the Swiss model

According to the proponents of closer political integration into the EU, Switzerland would not lose its sovereignty with the institutional agreement (instA), because “Swiss legislative powers would remain untouched even under the instA”.4 This clearly stands in need of contradiction: Of course, Switzerland’s sovereignty would be massively restricted. The debate on content is about much more than “clarifying” the three areas of wage protection, the citizens of the Union directive and the ban on state aid, as some media and the Federal Council are constantly claiming – although simply adopting these three areas from EU law would be hard enough. Rather, it is about the fundamental adoption of EU legislation and the case law of the European Court of Justice by Switzerland, without any ifs and buts. This “dynamic” (a euphemism for “forced”) adoption is the main purpose of the agreement for the EU, and there is consequently nothing to renegotiate, otherwise Brussels could just as easily dispense with the framework it has set.

Even the built-in right to a referendum would be of no use to us here, because if the people say “no”, the EU would be allowed to impose “proportionate” sanctions, an unworthy scenario for a sovereign and democratic country. According to Schneider-Schneiter, the “regulated paths of dispute settlement” consist in the fact that the European Court of Justice – the court of the other party! – would ultimately decide on disagreements between the EU Commission and Switzerland. According to Carl Baudenbacher, the long-standing president of the EFTA Court, the much-vaunted arbitration court serves merely as a fig leaf. In principle, this coercive nature of the EU framework contradicts the Swiss understanding of justice and freedom. Instead of making this clear, the Federal Council, with its cryptic phrases5, is using a smoke screen in order to “increase domestic political acceptance of the agreement”.

Anyone who wants to inform his fellow citizens about the true nature of the Framework Agreement must, from now on, put all his energies into it. This is because the text of the agreement is not easy to understand and requires expert “translation” into clear German, combined with a positioning from a constitutional law perspective.

Relations between Switzerland and the UK – yes, but on an equal footing

How the British government envisages repositioning Britain in the world must be critically monitored. For Switzerland, as a country that loves independence, another aspect is also important: States that wish to conclude agreements with us on an equal footing are welcome. For example, according to Jane Owen, the British ambassador to Switzerland and Liechtenstein, Great Britain wants to deepen its relations with Switzerland – not only, but also in economic terms: “Switzerland is our most important trading partner after the EU, the USA and China,” says Owen.6 Under her leadership, the British embassy in Bern was expanded to around 50 employees. According to the “Neue Zürcher Zeitung”, she sees potential in services, trade and research cooperation.

The eye level will probably not be quite the same with London, but certainly “more equal” than with Brussels. A central criterion for relations of equality is that Switzerland must be free to decide whether or not to conclude a treaty with another state, and that it can break off negotiations if necessary.

On a positive note, the UK and Switzerland have already concluded a number of post-EU agreements in recent years (Current Concerns has reported on this7). On 11 February 2019, for example, a trade agreement was signed under which the 1972 free trade agreement between Switzerland and the EU (excluding agricultural products) will continue to apply to relations between Switzerland and the UK. The residence rights of British and Swiss nationals living in the other country at the time of Brexit are also regulated (agreement of 25 February 2019), as is mutual visa exemption. The FDFA lists these and other agreements on its homepage and plans further: “As part of its ‘Mind the gap’ strategy, Switzerland has concluded a series of new agreements with the UK in the areas of trade, migration, road and air transport and insurance at an early stage. The aim of the ‘Mind the gap’ strategy is to safeguard existing mutual rights and obligations as far as possible. In a second step, Switzerland and the UK are also to extend their cooperation beyond the existing status quo where this is in their mutual interest (‘Mind the gap plus’).”8

We will closely monitor how mutual relations will evolve. •

Israel, Stephan; De Carli, Luca. “Die EU gibt der Schweiz neun Tage Zeit” (EU gives Switzerland nine days); in: Tages-Anzeiger from 1 February 2020

De Carli, Luca. “Die Schweiz sollte das EU-Ultimatum ignorieren” (Switzerland should ignore the EU-ultimatum); in: Tages-Anzeiger from 1 February 2020

Wüthrich, Marianne. “Institutional Framework Agreement as an instrument of European state-building” (Part 2) in: Current Concerns No. 5 from 5 March 2019

4  For example, Swiss National Councillor Schneider-Schneiter, Elisabeth. “EU-Rahmenabkommen: Die Schweiz verliert ihre Souveränität nicht” (Institutional Agreement: Switzerland doesn’t loose its sovereignty); in Neue Zürcher Zeitung from 31 January 2020

5  “As before, the objectives of Switzerland’s EU policy are to consolidate and develop the bilateral approach by means of an institutional agreement and to ensure a partnership that strikes an optimum balance between maximum access to the internal market, wide cooperation in other areas of common interest, and the broadest political autonomy possible.” (Federal Council sets out foreign policy priorities for 2020-23. Press release, 30 January 2020)

Gafafer, Tobias. “Die Britin, die nach dem Brexit die Beziehungen zur Schweiz ausbauen möchte” (The British who wants to expand the relations to Switzerland after Brexit); in Neue Zürcher Zeitung from 1 February 2020

Wüthrich, Marianne. “Brexit – Lessons to Switzerland”; in Current Concerns, 17 April 2019

8  The Federal Department of Foreign Affairs (FDFA). European policy. Brexit

  

Political affiliation is not a prerequisite for economic success

mw. In a newspaper interview in summer 2019, economic historian Tobias Straumann* pointed out in clear terms that Swiss economy doesn’t need any EU Framework Agreement to be able to trade successfully.

Asked whether the importance of the Framework Agreement for Switzerland’s economic success is being exaggerated, Straumann replied: “Yes, unequivocally. In connection with the Framework Agreement, there is always talk of it securing access to the EU internal market. But this is wrong. Doing without a Framework Agreement, will just mean more wrench in the works”. But without an agreement, so the interviewers, the business association economiesuisse fears that Brussels could use the instrument of technical barriers to trade to make it more difficult for Swiss companies to export to the EU area.

Tobias Straumann: “The decisive factor is whether our economy produces goods that are in demand. With technical barriers to trade it will be a little more expensive, but a way has always been found. I don’t understand how one can get the idea that Switzerland can only trade with the EU if it has very close ties to the EU. EU’s main trading partners are the USA and China, both countries that are neither EU members nor automatically adopt EU law”.

It is also worth noting that according to Straumann a tighter political framework from Brussels is useless for Switzerland on the one hand, but furthermore, the EU construct should be reconsidered for the whole of Europe: “Many people think that Europe is a prosperous continent only because of EU. This is completely wrong. Europe has been a rich continent for a long time, and it would be enough to have free trade and mutual recognition of technical regulations, as in East Asia. The rest, for example research, could be regulated by voluntary multilateral agreements.”

Source: App, Rolf and Müller, Patrik. “Die SVP-Themen haben sich durchgesetzt” (The SVP issues have prevailed).
Interview with Professor Tobias Straumann. “St. Galler Tagblatt” from 3.6.2019

* Prof. Dr Tobias Straumann teaches economic history at Zurich University

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