Framework Agreement Switzerland–EU

Solution to the squaring of the circle not in sight – and elections just round the corner

by Dr iur. Marianne Wüthrich

A few months before the federal elections on 20 October, Federal Berne is all over the shop: the Federal Council would prefer to sign the unloved treaty with the EU as quickly as possible, and definitely before the summer recess – but the strong objections from all sides are lowering the boom on them.
In the meanwhile, the Council of States and the National Council are calling for renegotiations on the biggest chunks – knowing full well that the “framework” that Brussels intends to impose on Switzerland will precisely not allow any such exception clauses. In addition, the question of whether to approve a further 1.3 billion cohesion payments is still being debated in Parliament, now that the EU no longer recognises the Swiss stock exchange as equivalent, as of 1 July. An unpleasant situation for those members of the Parliament who dream of a contractual harmony with Brussels that will guarantee Switzerland lasting legal security and smooth economic cooperation (quite unrealistic, if you ask me) and who would, at the same time, like to be re-elected in autumn …

In the meantime it should be clear to every federal politican that a will nation does not consist of the government’s will but of that of the citizens. Only they express the vitality of the nation. (picture mt)

In the meantime this fact should be clear to every federal politician: The treaty that the EU wants to impose on us is not compatible with Switzerland’s constitutional cornerstones and therefore has little chance in the inevitable referendum. But if you follow proceedings in the Federal Parliament Building, you can only shake your head in bewilderment.

Internal consultation resulted in strong headwind against the Framework Agreement

The Federal Council is in a dilemma. EU Commission President Juncker is urging them ever more vociferously to finally sign the agreement. Therefore, on 7 June, they informed him of their fundamental willingness to do so – saying that there were “only three points left” (wage protection, Union Citizens Directive, and state aid) to “clarify” with Brussels. However, this is downplaying and does not do any justice whatever to the extent of domestic dissent. The Federal Council’s “internal consultation” with cantons, parliamentary groups and social partners of this spring did not result in the hoped-for unanimous support of the Framework Agreement – quite the contrary is true. Let me briefly sum up again the main serious objections raised during the consultation.1

  • The trade unions (Swiss Trade Union Confederation SGB and Travail.Suisse) as well as parts of the Social Democrats understandably insist on the continuation of the previously negotiated accompanying measures on the free movement of persons FlaM (see article below “Save bilateral agreements, but not at any price”).
  • The cantons reject the EU ban on state aid, as support for public service institutions, company start-ups and the like has always been part of the federalist freedom of cantons and communes.
  • There is hardly anyone in our country who supports the Union Citizens Directive, because it would entail a lot of obligations and costs, some of which are even not yet assessable (for example, the question of the right of foreigners to vote at communal level).
  • There are more and more voices heard which reject the Framework Agreement in principle, because the de facto automatic adoption of EU law and judgments is a flagrant violation of Switzerland’s sovereignty and of the freedom of the Swiss to manage their own affairs (see also SGB President Pierre Yves Maillard below).
  • And the icing on the cake: In the summer session, the Council of States and the National Council clearly adopted two motions instructing the Federal Council to demand renegotiations with the EU in these areas (see below for more details).

Only the top functionaries of a few trade associations and the heads of global companies with little grounding in Switzerland continue their sedulous claims that without a Framework Agreement, the Swiss export industry would be in danger of collapse. Of course we have heard this before, before the vote on the EEA in 1992 – none of the gloomy prophecies proved true after the sovereign’s vote of nay …

Federal Council and EU Commission are playing a game of cat and mouse

In view of these clear results of the consultation, the Federal Council should long ago have informed Mr Juncker that the Framework Agreement desired by Brussels is not qualified to obtain a majority in Switzerland and will most probably be rejected already in Parliament, or at least in the referendum. Instead, they played down the serious domestic differences in their letter of 7 June to the EU Commission. Commission President Juncker was initially accommodating, but a few days later he set the unrealistic deadline of 18 June for the “clarifications”.
Commission President Juncker’s being in a hurry is not surprising: the end of October will end his not particularly successful time at EU headquarters, and so he wants at least a signature from Berne, even if he fails in getting one from London. Of course, he knows full well that nothing will happen in Switzerland within ten days, because such central questions are certainly not decided by the executive branch. Even if the Federal Council were to sign the draft treaty (which we hope they won’t!), this would still have to be ratified in order to be valid. This would require the approval of the National Council, the Council of States and finally that of the sovereign.
At the same time, it is rumoured that Brussels and Berne have already “agreed” under the counter: according to the daily press, there are concrete ideas “on a technical level” “how this could be achieved” (“Neue Zürcher Zeitung” of 21 June).
Well, well! – when Jean-Claude Juncker only recently described the Union Citizens Directive and the Posting of Workers Directive (i.e. the erosion of Swiss flanking measures) as “further development of the free movement of persons”, which Switzerland would have to adopt par for par, and the ban on state aid as inviolable. There is nothing to “achieve” here! We do not want further evasive manoeuvres and dishonest games, but a Federal Council that is open and honest with Brussels as well as with us, its – Swiss – citizens.

EU lets Switzerland’s exchange equivalence expire – now Plan B comes into force

Now the non-extension of Swiss exchange equivalence threatened several times by Brussels is becoming a reality: on 27 June the EU announced that it would no longer recognise the Swiss exchange as equivalent from 1 July. Shares of Swiss companies will then no longer be allowed to be traded on stock exchanges in the EU. However, this does not upset us, because Federal President Ueli Maurer, head of the Federal Department of Finance, has had a Plan B in his bag for some time now. According to a Federal Council decree of 30 November 2018, Swiss shares may only be traded on foreign stock exchanges that have been recognised by the Swiss Financial Market Supervisory Authority (Finma), as of 1 January 2019. However, this recognition will only be granted to exchanges that grant reciprocal rights.2
Clever, isn’t it? Now all stock traders in the EU must buy or sell shares of Swiss companies on the Swiss stock exchange and thus withdraw part of their trading from their own stock exchanges. In any case, Radio SRF dedicated only a short report to this topic in its programme “Echo der Zeit” of 27 June, with the comment that some stock exchange experts even expect an upturn in Swiss stock trading thanks to the new regulation ...

National Council and Council of States make Head of Department of Foreign Affairs (FDFA) Ignazio Cassis sweat

In the summer session, both Councils each approved a binding initiative instructing the Federal Council to conduct additional negotiations with the EU on several controversial points.3
On 12 June, the Council of States demanded a “better” result of the negotiations by 22 votes to 14 (6 abstentions), and on 20 June, the National Council made the same claim by 122 votes to 38 (24 abstentions).
In the Council of States, for example, Social Democrat party president Christian Levrat (FR) and the Ticino Christian Democrat politician Filippo Lombardi stood up for additional negotiations. In the National Council a majority from the Swiss People’s Party, the Christian Democrats, the Social Democrats and the Greens supported the motion, whereas the councillors belonging to the Free Democrats and the Green Liberals voted against it, and many Social Democrats abstained from voting.
Since the EU rejects any changes to the text of the treaty, FDFA Head Ignazio Cassis got well tangled up in his attempt to talk away the fundamental differences between parliament and the Federal Council. In their letter of 7 June to the EU Commission, the Federal Council had “confirmed that the outcome of the negotiations was largely in Switzerland’s interest”, but had called for clarifications on the same three points (wage protection, Union Citizens Directive, state aid) that were also at the forefront of the parliamentary motions: “The Federal Council’s main thrust or line of approach is more or less congruent with these first three points. So one can legitimately ask oneself why these three points still need to be included, if developments have gone in this direction anyway.“4 Fortunately, the majority of the Council of States could not be deterred by this tongue-in-cheekery.
In the National Council, Ignazio Cassis then nolens volens confirmed what he had concocted with the EU Commission. National Councillor Thomas Matter (Swiss People’s Party, Zurich) stated more than that he asked: “Why on earth does the EU not want to accept our wish to explicitly exclude the Citizens of the Union Directive and set this down in writing in the Framework Agreement? That we exclude state aid and also ensure wage protection? Why does the EU not want to have this mentioned explicitly in this treaty? From my point of view, that stinks to high heaven.” To this, Federal Councillor Cassis replied: “[...] We wanted to exclude this from our agreement. The EU wanted to include it. For this reason the draft institutional agreement does not say a word about it today.“5
So National Councillor Matter hit the nail on the head with his final sentence! And Federal Councillor Cassis was given his lesson to learn by the large majority of the National Council.

Election day is payday

On 20 October, we, the citizens, will elect the National Councillors and, in most cantons, also the Councillors of States (elections to the Council of States are cantonal elections). Until then, we want to know from each and every candidate whether they are honest and aboveboard in rejecting the treaty dictated by Brussels, because it contradicts Switzerland’s basic constitutional principles, or whether they just want to postpone the delicate matter because of their wish to be re-elected.
By the way, this also applies to the question of whether parliament will consistently refrain from approving a further 1.3 billion euros as a contribution to cohesion, as the EU no longer recognises the Swiss stock exchange as being of equal value. This was decided by the Council of States in its winter session and by the National Council in the spring. To postpone the final decision to the December session – when the elections are over! – because Parliament would otherwise be “trapped”, as an unconditionally EU-friendly National Councillor remarked (“St. Galler Tagblatt” of 20 June), is not the democratic way. We, the voters, would like to know before the elections who is on Switzerland’s side in the cat-and-mouse game.    •

1    See also “Framework Agreement Switzerland-EU – Union Citizens’ Directive and ban on state aid as next heavy load “. in: Current Concerns No 1 from 11 January
2    “Ordinance on the Recognition of Foreign Trading Venues for the Trading of Equity Securities of Companies with Registered Office in Switzerland” from 30 November 2018, Art. 1
3    Texts of the motions in “Squaring the Circle.” Current Concerns No 13 from 12 June
4    Council of States debate on motion No 19.3416 “Additional negotiations on the Institutional Agreement with the EU” from 12 June
5    National Council debate on motion 19.3420. “Additional negotiations on the Institutional Agreement with the EU” from 20 June; [emphasis mw]