Why the Swiss sovereign would hardly agree to an institutional framework agreement with the EU

by Dr iur Marianne Wüthrich

No wonder, the Federal Council has delayed for years now telling the people the truth over the ominous framework agreement with Brussels. Since as soon as small snippets of information leak through, it becomes clear: Switzerland’s obligation to adopt EU laws would affect so many sensitive legal fields – and thus practically all interest groups – that the sovereign would for sure vote “no” in a referendum. This is implicitly confirmed by the Federal Council in its media release of 21 February 2018: “The normalisation of relations with the EU remained fragmentary in the last year. It is still the Federal Council’s strategic goal to secure the bilateral approach in the long term. […] With regard to the clarification of institutional issues, an unemotional discussion of the benefits and costs of such an agreement is needed, including economic, foreign policy and state policy aspects”1.
Recently, the “Schweizerische Gewerkschaftsbund (SGB, Swiss Federation of Trade Unions) expressed its opposition to imposed EU law by the European Court of Justice (ECJ). Since the Agreement on the Free Movement of Persons (AFMP) was accepted by the trade unions in 1999, only on the condition that it would be combined with effective accompanying measures of worker protection. However, law concerning free movement of persons is one of the legal fields in which Brussels claims regulatory and interpretative sovereignty. But, according to the SGB chief economist Daniel Lampart, the ECJ has decided against worker protection on several occasions in recent years and the SGB does not, under any circumstances, want the highest EU court to decide on the admissibility of the accompanying measures in Switzerland.

The accompanying measures to the (AFMP) have been in force since 1 June 2004 and essentially include a Law on the Posting of Workers which obliges foreign employers to comply with minimum wage and working conditions in accordance with the applicable Swiss regulations. In particular, to protect against wage dumping is of central importance for workers living in Switzerland. The law is enforced by frequent checks, especially in the hotels, restaurants and construction industries and by sanctions against employers who violate mandatory regulations, as well as by declaring a general applicability of collective labour agreements for the relevant sectors.2

Independent service providers are using loopholes to by-pass the laws

Do you remember the modest little cars with a foreign license plates and inscriptions such as “electrician’s services” or “paintwork” that appeared in Swiss cities after the summer of 2004? Those who offer their services as independent contractors do not have to adhere to maximum working hours or minimum wages. Companies and individuals, entering Switzerland for a short time and offering their services at dumping prices took advantage of these circumstances. By the time the inspectors showed up, they had already disappeared.
Then some cantons at the border took countermeasures. They requested a registration with the cantonal authorities prior to work and proof of actually being an independent company. Brussels immediately protested against this indispensable and quite soft measure, aimed to protect domestic workers, saying that this was a violation of the Agreement on the Free Movement of Persons. According to the daily press, this dispute has been left unresolved for years in the Mixed Committee of the AFMP. (“St. Galler Tagblatt” of 21.2.2018) Nevertheless, this practice became established in Switzerland and has meanwhile been declared a rule by the Confederation. Thus the State Secretariat for Migration (SEM) demands in its notification procedure for short term-stayers: “Self-employed service providers must provide proof of their independence to the supervisory authorities at their request. […] The notification must be made no later than 8 days before the employment starts.”3
Understandably, this requirement to notify in advance is not negotiable for the trade unions, because without it the local working conditions could not be enforced in foreign companies.

SGB chief economist Daniel Lampart: Switzerland needs neither a framework agreement nor an electricity agreement

In an interview with “Blick” journalist René Lüchinger, Daniel Lampart, head of the secretariat and chief economist of the Swiss Federation of Trade Unions (SGB), puts it plainly: “From our point of view, Switzerland doesn’t need a framework agreement. It’s the EU Commission wanting it, and not the Member States. From an economic point of view, there is no urgent need for action”4 A remarkable statement – as the Federal Council and its negotiating team have been trying for years to make the citizens believe that there is no alternative to a framework agreement with the EU for the Swiss economy. It goes without saying, that the EU Commission is pressing to incorporate Switzerland into its monumental body of rules and jurisdiction by means of a control and monitoring instrument that encompasses all bilateral relations.
The SGB is one of the most important Swiss interest groups that do not want such incorporation. As the association’s responsible economist, Daniel Lampart monitors the case law of the European Court of Justice (ECJ) and states that it has decided on several occasions against workers protection in recent years. The SGB therefore does not want the ECJ to legally assess the accompanying measures to the agreement on the free movement of persons under any circumstances. The SGB had already requested that the Federal Council excludes the accompanying measures from the negotiations even after the negotiating mandate was established, which was promised at that time.
However, it is unlikely that EU leaders will be willing to leave entire areas of law, such as the accompanying measures, to Swiss legislation and case law, as they are already opposed to minor measures such as a registration deadline for self-employed service providers, as previously mentioned.
In contrast to Federal Councillor Doris Leuthard, head of the Federal Department of the Environment, Transport, Energy and Communications (DETEC), the SGB does not see that there is no alternative to the electricity agreement with the EU: “An electricity agreement in return for a framework agreement is certainly not an issue for us. This would be linked to a fully liberalised domestic electricity market, which we reject.” (see box “Comment: SGB against electricity market liberalisation”) The statements already established by Leuthard years ago vanished into thin air, namely that the next bilateral treaty that Switzerland urgently needed, was the electricity agreement, and this could only be reached in connection with the framework agreement.

Hardly any European country is as open to foreign companies and workers as Switzerland

Daniel Lampart resolutely opposes the pressure to further simplify access to work in Switzerland for providers from the EU, thereby implicitly confirming that the agreement on the free movement of persons is of great benefit mainly to the EU: “Many foreign companies are already coming to Switzerland to provide services here today. Conversely, it is hardly the case. Considering the size of the population, there is no other country in Europe apart from Luxembourg that is as open to foreign companies as Switzerland”.
It needs to be added: Switzerland is not only open to companies like no other European country, but also to an enormous influx of individual people from the EU area seeking to work here. Therefore, there was the sovereign’s decision four years ago to have federal immigration control. As is well known, the National Council and the Council of the States have, under massive pressure from Brussels, practically waived its constitutional implementation.

EU-supporters in the federal administration assisting the EU Commission

Daniel Lampart explains why we cannot rely on the Swiss negotiators to represent the interests of the country and the population to Brussels, including the legitimate concerns of the workers’ organisations: “There are even people in the federal administration, for example, who would disclose part of the accompanying measures if they were able to carry their framework agreement home and put this trophy in the cabinet […]. It is those, who want to have as few conflicts as possible with the EU Commission and therefore seek to reach a framework agreement.”
As It has already been noted on several occasions in Current Concerns, there are mainly two motives that concern the EU-supporters in the federal administration: On the one hand, there is the personal ambition, the career aspirations of individual civil servants who want to make a name for themselves in Brussels and secure a place in the bureaucracy bubble. On the other hand, for the executive’s striving for power it’s extremely annoying that the swiss voters are entitled to decide on important issues at the ballot box – unfortunately partly for politian’s in direct democratic Switzerland. With a framework agreement, and even more so with Switzerland’s accession to the EU, which a part of the federal administration is striving for, its influence and power would increase even more. We Swiss people are able and willing to counteract it by the direct democratic approach.    •

1    Federal Council press release of 21 February 2018 when passing its Foreign Policy Report
2    Swiss Confederation. Free movement of persons FZA. Accompanying measures
3    Federal Department of Justice and Police (FDJP). State Secretariat for Migration SEM. Notification procedure for short-term work in Switzerland. User’s Handbook. 6.3 Declaring short-term stays for self-employed service providers, p. 34/35
4    Lüchinger, René. “We don’t need a framework agreement!” Interview with SGB chief economist Daniel Lampart. Blick 20.1.2018

Which EU law for Switzerland? An example

mw. According to the daily press, the discussion on the scope of the “dynamic adoption of law” has not quite begun yet. This means that Switzerland would also have to adopt future EU law that is not yet known in the areas agreed with Brussels. In fact, this opens up a wide field of open questions about which citizens want to be kept fully informed.

“Red Line”: EU Citizenship Directive

In the area of the Agreement on the Free Movement of Persons (AFMP) alone, there are disagreements on a large scale. For example, EU Citizenship Directive 2004/38/EU is part of the free movement of persons for the EU. For Switzerland, on the other hand, the Federal Council declared it years ago as a “red line” in the context of the institutional agreement. For example, under this directive, social benefits could be obtained without previous gainful employment in the host country. Or border crossers should in future no longer receive unemployment benefits in their country of residence, but in the state where they last worked.1 For Switzerland, with its more than 300,000 cross-border workers, this latter regulation alone would mean additional costs of several hundred million francs. (“St. Galler Tagblatt” from 21.2.2018)
The EU negotiators responsible for Switzerland, Richard Szotak and Martin Selmayr, two close collaborators of Commission President Jean-Claude Juncker, alone on this question will probably not agree with the Federal Council – whether the EU citizenship directive applies or not.

1    Prof Dr Christa Tobler, University of Basel and Leiden. Impact of adoption of the EU Citizenship Directive for Switzerland. Free movement of persons and access to state benefits. May 6, 2014, University of Fribourg.

Comment: SGB against electricity market liberalisation

mw. It is delectable that the Swiss Trade Union Confederation (SGB) remains resolute in its resistance to the deregulation of the electricity market. Already more than 15 years ago it was the SGB, which seized the referendum against the electricity market law, which would expose the Swiss hydropower to free competition and thus pave the way for a power agreement with the EU. This request was rejected by the sovereign on 22.9.2002 with 52.6 percent no votes. A few years later, contrary to this referendum, the Federal Council and the parliamentary majority agreed to a similar bill limiting the market opening to companies. No one had the momentum to take a second referendum after this blatant evasion of popular will. The consequence of this we see today: many Swiss companies buy their electricity abroad, because it is cheaper, which pushes our hydroelectric power plants to the edge of their viability. The circles that are pushing for a power agreement with the EU are accepting that we will sacrifice our high level of self-sufficiency and will be forced to buy nuclear power from France and coal power from Germany. The voice of the SGB is very important here.