Will there be an EFTA renaissance?

What happens now that negotiations on the Framework Agreement have been abandoned?

by Dr rer. publ. Werner Wüthrich

History does not repeat itself. But there are parallels, the knowledge of which is helpful and which today can provide suggestions and answers to the question “What next?”.

In the second half of the 1950s, two very different economic organisations were founded in Europe. In 1957, the Federal Republic of Germany, France, Italy, the Netherlands, Belgium and Luxembourg founded the European Economic Community (EEC). The preamble to its statutes already contained the political goal of forming an “ever closer union” in the longer term. In 1960, Great Britain, Denmark, Austria, Sweden, Norway, Portugal and Switzerland joined together to form EFTA (European Free Trade Association). These countries set themselves the goal of reducing customs duties in the industrial sector and cooperating with each other in a liberal way – in contrast to the EEC without a political superstructure. Western Europe was divided. The chances were good, however, that the two different organisations would dismantle customs duties in step and form a large, common free trade area. – Things turned out differently.

The USA sets the tariff

Soon after its foundation, Great Britain informed its contracting parties that it wanted to leave EFTA in order to join the EEC. What prompted the government in London to change its political course so fundamentally? There are documents that shed light on the background. For example: On 14 July 1961, the US Secretary of State George Ball visited the Federal Council. Minister Albert Weitnauer was present at the conversation and summarised it in a memo that can be accessed today via dodis.ch (historical document collection). From it the following passage: “The Americans consider negotiations between the EEC and EFTA as a group with a view to a purely economic agreement to be undesirable and, moreover, hopeless from the outset. For them, it is primarily a question of Great Britain and the other NATO allies in EFTA subscribing to its political objective by joining the EEC” (dodis.ch/30116, p. 2) [Translation of all dodis-documents: Current Concerns]. The political union should largely coincide with Nato. The neutral countries in EFTA, Switzerland, Austria and Sweden, would conclude an association treaty with the EEC. Preparations began in the Federal Parliament with numerous working groups (dodis.ch/30134, 34186). That would probably have been the end of EFTA.

Veto from Charles de Gaulle

It did not come to pass. France’s President Charles de Gaulle vetoed the accession of Great Britain in January 1963, and the project initiated by the USA was put on hold. What prompted de Gaulle to take this step? He sought a closer relationship with Germany. On 22 January 1963, France concluded the Elysée Treaty (Agreement on Franco-German Cooperation) with the Federal Republic of Germany. This treaty was to determine the policy of the two countries until today. De Gaulle feared that with the accession of Great Britain, Anglo-American influence in the EEC/NATO would become even more dominant and Europe even more dependent. A little later – in July 1963 – Minister Paul Jolles, the head of the Integration Office, reported to the Federal Council on his conversation with the head of the Policy Planning Board in the American State Department: “My interlocutor unreservedly holds the well-known American view that nation-statehood in Europe is historically obsolete and that political unification seems inevitable if Europe wants to continue to play a role in world politics. The French President de Gaulle is seen as an isolated phenomenon. [...] The conversation left me with the impression that one has lost one’s footing in the braintrust of the State Department with regard to Europe.” (dodis.ch/30356)
  Federal Councillor Schaffner later commented: De Gaulle favoured an equal partnership between Europe and the United States – and not “une Europe intégrée, donc diminué” [an integrated and therefore weakened Europe] (dodis.ch/30358).

EFTA continues to exist

For EFTA, de Gaulle was a stroke of luck. His veto gave it breathing space and the necessary calm to build itself up – and always with an eye on the EEC. The EEC countries dismantled customs duties in several steps – and the EFTA countries followed in step, so that after a few years it was relatively easy to conclude a joint free trade agreement, initially in the industrial sector, between the countries of the EEC and EFTA – a project that the Americans had prevented ten years earlier.

Free Trade Agreement of 1972

The President of the Swiss Confederation Brugger gave an impressive speech at the signing of the Free Trade Agreement on 22 July 1972, in which he set out Switzerland’s fundamental values and the guidelines for Switzerland’s future relationship with the Community:
  “The agreement between Switzerland and the European Community, which on behalf of the Federal Council I have the honour to sign today, represents a decisive step in our traditional endeavour to cooperate in the integration of our continent, insofar as we are able to do so while respecting direct democracy, parliamentary powers and neutral foreign policy.” (dodis.ch/36209)
  In 1974 – after the death of Charles de Gaulle – Great Britain joined the EC, and later other EFTA members followed.
  The Swiss parliament submitted the free trade treaty to the sovereign on 3 December 1972, and it was approved by a majority of 72.5 percent and by all cantons. Switzerland was united. In the years that followed, EFTA concluded over a hundred additional treaties with the EC and later the EU. The exchange of goods and later also the exchange of services multiplied. In the meantime, EFTA has concluded around 40 tailor-made free trade agreements with many countries around the world. These include countries such as China, Japan and recently, following a referendum, Indonesia. In addition, there are numerous trade agreements. It is a success story. This would not have been possible with the association treaty with the EEC demanded by the USA, as it was debated in the 1960s.

What can we learn from this?

Cooperation and talks with the EU on an equal footing within the framework of the existing treaties are a matter of course. Switzerland and the EU belong to Europe. Both are dependent on each other for many reasons and can cooperate in a tried and tested way. What can Switzerland do today without, as expressed by Federal Councillor Brugger, putting the country’s characteristics at risk?
  Much like in the 1960s, Swiss laws and trade regulations can be harmonised with today’s EU – to the extent that it is necessary and makes sense – even autonomously without negotiations. This approach also proved its worth in the years following the popular “no” to the EEA in 1992. The cohesion billion as a contribution to the economic and social development of poorer countries is part of this. Should the Free Trade Agreement ever be “modernized”, the conditions as formulated by Federal Councillor Brugger in his 1972 speech would have to be observed: Cooperation yes, “insofar as we are able to do so while preserving direct democracy, parliamentary powers and neutral foreign policy.” It is possible that the UK, a founding member of EFTA, which has since left the EU, will rejoin, and that there will be a renaissance of the soon to be fifty-year-old treaty.  •

Detailed presentation of the events in: Wüthrich, Werner. Wirtschaft und direkte Demokratie in der Schweiz; Geschichte der freiheitlich-demokratischen Wirtschaftsverfassung der Schweiz (Economy and direct democracy in Switzerland; history of the liberal-democratic economic constitution of Switzerland), Zürich 2020, cf. chapter 24, pp. 293–318

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