Institutional framework agreement as an instrument of European state-building

Prominent Swiss figures on the framework agreement

by Dr iur. Marianne Wüthrich

Recently, the draft for a framework agreement between Switzerland and the EU has finally been published in German1 (original text in French), which has obviously triggered a reading boom among the German-speaking majority of the Swiss population – at any rate, the number of critical statements is increasing and the objections are becoming more concrete.
    While the Federal Council has been carrying out an “internal consultation” with cantons, political parties and social partners since the beginning of December, voices can also be heard from unusual quarters, and they have raised a number of serious concerns from the standpoints of constitutional law, democracy, federalism and sovereignty policy. These would be reason enough to end the project.
    I will here put forward some clear statements concerning various contents and some questions of constitutional law, sorted by topic for the readers’ easier orientation.

The Swiss model is strong enough to withstand the ravages of time, international pressures and global challenges. (picture mt)

“Anyone who says that the treaty is tailor-made, has not read the text”

The statement by Hans Hess, President of the leading association for SMEs and large companies in Switzerland’s mechanical and electrical engineering industries and related technology-oriented sectors (Swissmem), that the framework agreement (InstA) was “tailor-made for the needs of Switzerland”,2 went through all the Swiss media and met with sharply-worded objections. Particularly gratifying is the statement by Hans-Ulrich Bigler, FDP National Councillor and director of the “Schweizerischer Gewerbeverband” (SGV) (Swiss Trade Association), which represents the vast majority of Swiss companies, the SMEs: “Anyone who says that the treaty is tailor-made has not read the text, or is not good enough at French.”3 He indicated some unacceptable weak points, such as the intended imposition of the Citizens‘ Rights Directive or the problematic settlement of disputes and announced that the SGV would deal with the text in detail by the end of January and then issue an initial positioning. This was then done by Hans-Ulrich Bigler on 2 February in the “Echo der Zeit” (Radio SRF), where he stated that the executive committee of the Swiss Trade Association rejected the framework agreement in its current form.
Another positive surprise was granted us by Carl Baudenbacher, former President of the EFTA Court for many years and Professor Emeritus of the HSG (University of St Gallen). He had repeatedly reprimanded the Swiss for not wanting to join the EEA and thus submit to his court. In his statement on the treaty draft, Baudenbacher now openly and honestly changed sides. In the hearing of the National Council Foreign Affairs Commitee (FAC-N)4 broadcast by SRF television, he stated that the arbitral tribunal was “not tailor-made, but off the shelf”, as it was not created at Switzerland’s insistence, as the Federal Council claims. On the contrary, it was brought into play by EU Commission President Juncker in autumn 2018, following the example of the EU’s association agreements with Moldova, Ukraine and Georgia, so that the EU could interpret all four treaties uniformly.
After reading the German draft with its bureaucratic language and its many pitfalls, one can only agree with Hans-Ulrich Bigler: Those who describe this construct as “tailor-made” have not read it.

“The social partnership is a Swiss institution which we do not want to surrender under pressure from the EU”

The director of the Trade Association, Hans-Ulrich Bigler, responded to the interviewer’s comment that, according to the think tank Avenir Suisse, posted workers5 from EU countries play only a very minor role in the Swiss labour market: “I am afraid this is faulty reasoning on the part of Avenir Suisse. The deposit obligation and the accompanying measures are the result of social partnership negotiations, without which the Bilateral Agreements would not have been able to achieve a majority in Switzerland. I do not want to deny that the accompanying measures have a certain protectionist character. However, the strong social partnership as it is known in Switzerland has guaranteed us peaceful industrial relations for almost 100 years.” And he continued: “The question is not whether the registration period for foreign companies can be reduced from eight to four days. The question is whether Switzerland will have to dynamically adopt the EU’s posting and enforcement directives in future. This is out of the question for the trade unions as well as the employers.”
The provocative statement of his interviewers, “Walking arm in arm with the trade union confederation must be unusual for you”, was answered by Bigler as follows: “No, that is not the case. As the director of the Trade Association, I am involved in interest-driven politics for SMEs. Being able to forge coalitions is inherent in the system. [...] The social partnership is a Swiss institution that we don’t want to surrender under pressure from the EU.”6
Here Hans-Ulrich Bigler showed most beautifully that the Swiss social structure is based on cooperative principles: In all areas, including the relationship between employee and employer associations, dialogue and, whenever possible, consensus should be sought. We must not allow yet another monumental construct of a great power to disrupt this cohesion among all sections of the population, which had been alive until the EEA referendum in 1992.

“This Court of Arbitration is essentially a fig leaf”

On the issue of dispute resolution and monitoring the application of the law, we leave the floor to Professor Carl Baudenbacher, before all others. He has 22 years of practical experience in EU case law and, as president of the so-called “EFTA Court”, he has had to pass on the rulings of the ECJ to the EEA states of Norway, Iceland and Liechtenstein. At the FAC-N hearing of 15 January, he commented on the question of dispute settlement as follows: “As far as the application of the law is concerned, I am of the opinion that this arbitral tribunal is essentially a fig leaf. [...] In my opinion, it is crystal-clear that the arbitral tribunal was set up to hide the fact that a unilateral dependence on the ECJ is being created here.” And further: “I do not at all share these academic considerations [of the three law professors Christa Tobler, Astrid Epiney, and Matthias Oesch, present at the hearing] that the arbitral tribunal would have the practical freedom of referral [i.e. could decide for itself whether or not to consult the ECJ for interpretation], and that there would even then still be room for manoeuvre in the implementation of the ruling of the ECJ.”7
On surveillance: “Surveillance by Switzerland itself is of course a bit of a self-deception, because if the EU can unilaterally appeal to the arbitral tribunal, i.e. the ECJ, at any time, it is the de facto surveillance authority for Switzerland”.
One of the “academic considerations”of Professor Matthias Oesch: “The composition of the arbitral tribunal [...] is impartial; the European Court of Justice is a respected court that decides on the basis of an internal logic. Switzerland does not have to be afraid of the European Court of Justice, if one day, in the few cases that are to be expected, it will be referred to by an arbitral tribunal”. Baudenbacher in reply: “Nobody denies, Mr Oesch, that the ECJ is a very much respected court. We have worked very well together for 22 years. But the point is: the ECJ is the court of the opposing side, and the court of the opposing side is not neutral to the parties. This may be immaterial when it is a matter of any normal legal problem. But when it comes to big things, where politics also play a role, the prior understanding comes into play. And there it makes a difference whether I am the court of one side or not.“
In the same programme, former ambassador Paul Widmer said on the subject of the Arbitration Court: “We Swiss have enormous experience with arbitration courts [...]; in the OSCE no country has been as active as Switzerland in the settlement of disputes. But when you see that this arbitral tribunal [...] has to get the rules of interpretation from someone who is a party himself, it is clear that this is no longer an independent arbitral tribunal. We cannot say yes to that.”
Andreas Glaser, Professor of Constitutional, Administrative and European Law at the University of Zurich, expresses his appraisal of the “impartial composition”of the arbitral tribunal: “The problem lies in the fact that the arbitral tribunal would ultimately decide whether Switzerland would, for example, have to adopt the the Citizens‘ Rights Directive, which would have enormous repercussions right up to the introduction of voting rights for foreigners at communal level. For Switzerland, everything would depend on who sits on this three-member body and who represents Switzerland – whether the person in question is cautious in his decisions or rather willing to integrate. All experiences with the ECJ, the Human Rights Court, or the EFTA Court, suggest that it should not be left to [...] the Swiss judge [...] to become the guardian of Switzerland”.8

Less legal certainty for citizens and SMEs – more economic freedom for large corporations

In recent years, Brussels has repeatedly punished Switzerland with sanctions which were contrary to contract and unrelated to subject matter, in cases where the voters did not make their decisions according to EU ideas. We have seen the expulsion from the Erasmus+ student exchange programme, the delay in updating the agreement on technical barriers to trade, the only provisional extension of stock exchange equivalence (recognition of Swiss stock exchange regulation as equivalent), which is still in limbo. Such disruptive manoeuvres are unpleasant for the Swiss business location with its cosmopolitan orientation – although they can be mastered by a sovereign and innovative country under its own steam, as remains to be shown.
The leaders of economiesuisse – which represents above all the larger corporations – now claim that the application of the framework agreement would finally bring the hoped-for legal certainty to Swiss companies. Hans Hess, Vice-President of economiesuisse: “If we had a framework agreement, the EU would no longer be able to take punitive measures just like that”. Monika Rühl, Director of economiesuisse: “Legal certainty would be created for companies and market access secured” (media release of 31 January 2019).
In the same spirit, Professor Matthias Oesch said in the live broadcast from the Federal Palace on 15 January: “The transfer of rights will now take place within a clear framework. This will provide legal certainty for all those involved. [...] The experience we repeatedly made in recent years, of being blocked out by the EU, sometimes on the basis of unrelated issues not even covered by an agreement, will no longer be possible in the future. […]”
Not true! With the framework ggreement, the EU would now explicitly have the right “to take compensatory measures up to and including the partial or complete suspension of the agreements concerned”.9 The expert Andreas Glaser voices his opinion that many of the provisions which are difficult to read are also hardly comprehensible in terms of content: “The framework agreement means a risk for Switzerland – not as great as in the case of EEA or EU accession, yet a risk. Unlike the previous Bilateral Agreements, the content of which is regulated in detail, the framework agreement is formulated in a ‘rubbery’ fashion, and one does not really know what to expect.
So if we cannot know what to expect, why do most large corporations and university professors speak of “more legal certainty”? Professor Andreas Glaser clarifies this question: “The argument about legal certainty amazes me. The opposite is true, there will be more uncertainty, but at the same time more economic freedom, from which the strong will benefit – that is why the trade unions are opposed to the framework agreement. EU procedings are dynamic; the EU Commission and the ECJ have a lot of political leeway which they can use in one way or another” (Weltwoche of 31 January 2019).
In a nutshell: More free access to the EU internal market for large corporations, but more uncertainty for SMEs, for the citizens and for our directdemocratic rights. This view, purged of fog, is confirmed by a call for support for the framework agreement from the chairmen of the boards of directors of the two globalised major banks based in Switzerland: “An integrated financial market is equally important to Switzerland and Europe for their future success as a globally competitive economic area”. The proposed framework agreement would create a “solid and reliable legal basis” for “open and integrated financial markets”, while “isolation and denial of market access” would only create losers. As the article progresses, it is less and less a question of Switzerland and more and more a question of a “clear EU commitment to open markets” in order to “strengthen Europe’s competitive edge in comparison with the US and China”.10
In Professor Glaser’s words: More economic freedom, from which the strong will benefit ... From the point of view of UBS and CS the Federal Council’s task is “to present an agreement with majority appeal in Switzerland and the EU”. No matter how contrary the whole construct may be to the Swiss climate – the main thing is to get it approved in the referendum. The financially strong supporters of the next referendum campaign are ready and willing.

Serious consequences for direct democratic rights

Provisional application of EU law – but not without parliament and the people!

The supporters of the framework agreement “reassure” us: The right of initiative and referendum would be respected. Formally that is true. According to Article 14 of the draft, Switzerland would have two years time to implement an EU legal act through parliament, and three years in the case of a referendum. But even before the parliamentary debate, Switzerland would have to provisionally apply the EU amendment. Should parliament wish to try and prevent this provisional application, a complicated procedure would be needed.11 To put it very strongly: If our referendum right is not to degenerate into a mere alibi exercise, the provisional implementation of an EU legal act before the end of the referendum period is completely out of the question.

Right of initiative – to continue as before?

Andreas Glaser: “There shouldn’t be any major changes in the right of initiative. Even today, Parliament does not implement popular initiatives that contradict the Bilateral Agreements, or implements them only ostensibly; this has been seen in the case of mass immigration or Alpine protection. This should remain the same under the framework agreement.” It should, however, be noted here, that the non-implementation of popular initiatives is unconstitutional. It was in order to gloss over these factual violations of the law by parliament, that the EU turbos put so much effort into bringing down the self-determination initiative. But even if it has now not been explicitly written into the Federal Constitution that its provisions are superior to the treaties: Accepted initiatives are and remain constitutional law and must be applied.

Referendum right: gross drafting defect in framework contract

Professor Andreas Glaser: “This is the crucial point: the dynamic adoption of the law leaves the referendum formally untouched, but in effect it will only be the last possible veto to refuse the adoption of new EU law just only in the nick of time. One has to ask oneself whether this is still a worthy framework showing respect for the freedom to vote. In my opinion, this is a gross error in the drafting of the treaty” (Weltwoche, 31 January 2019). We as the voters can only draw the consequence that the Mixed Committees of the Bilateral Agreements with their often flexible solutions would be preferable to a new treaty that dilutes our people’s rights.
In view of the clear statements of experts on the subject quoted here, the best way for us will be to take a stand for ensuring that there will be no referendum at all, but that the framework agreement is kicked into the long grass beforehand. If our politicians and association leaders really do read the draft text, this will surely be the case after the consultation at the end of March 2019 or in parliament at the latest.    •

1    Federal Department of Foreign Affairs (FDFA). Swiss European policy. Institutional issues. https://www.eda.admin.ch/dea/en/home/verhandlungen-offene-themen/verhandlungen
2    Interview with Swissmem President Hans Hess “Neue Zürcher Zeitung” of 27 December 2018 Authors: Christina Neuhaus and Michael Schoenenberger (in German)
3    “Dieses Resultat muss man weiterverhandeln” (This result must be further negotiated). Interview with SGV director Hans-Ulrich Bigler. “Neue Zürcher Zeitung” of 21 January 2019. Authors: Christina Neuhaus and Michael Schoenenberger (in German)
4    “Umstrittenes Rahmenabkommen – Ja oder Nein zum Abkommen mit der EU? Experten sind sich uneinig” (Controversial framework agreement – Yes or No to the Agreement with the EU? Experts are in disagreement). Public hearing of the National Council Foreign Affairs Commitee. Television SRF of 15 January 2019
5    Employees temporarily carrying out an assignment in another country by order and on account of their employer
6     “Dieses Resultat muss man weiterverhandeln” (This result must be further negotiated). Interview with SGV director Hans-Ulrich Bigler. “Neue Zürcher Zeitung” of 21 January 2019. Authors: Christina Neuhaus and Michael Schoenenberger (in German)
7    Controversial framework agreement” Public hearing of the Foreign Affairs Commitee of the National Council. Television SRF of 15 January 2019
8    “Ein Kulturschock” (A culture shock). Interview with Zurich professor of constitutional law Andreas Glaser. Weltwoche No. 5 of 31 January 2019. Author: Katharina Fontana
9    Article 10 Procedure for disputes concerning interpretation or application, paragraph 6
10    “Für einen engen Dialog mit der EU auf Augenhöhe” (For a close dialogue with the EU at eye level). Guest commentary by Lukas Gähwiler (Chairman of the Board UBS Switzerland AG) and Alexandre Zeller (Chairman of the Board Credit Suisse Schweiz) AG. “Neue Zürcher Zeitung” of 25 January 2019
11    “Ein Kulturschock (A culture shock).“ Interview with Zurich professor of constitutional law Andreas Glaser. Weltwoche No. 5 of 31 January 2019. Author: Katharina Fontana

The Citizens’ Rights Directive

mw. The Citizens’ Rights Directive extends the right of citizens of the EU Member States and their family members to residence and social assistance far beyond the rules in the Switzerland-EU Agreement on the Free Movement of Persons: permanent right of residence after five years of residence for the Union citizen and his family members (Art. 16), right of residence for social assistance recipients “as long as they do not unreasonably claim the social assistance benefits of the host member state” (Art. 14), expulsion “only for serious reasons of public order or public security” (Art. 28).1

1 Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States [...].