Institutional framework agreement as an instrument of European state-building

Prominent Swiss personalities on the framework agreement with the EU (Part 2)

by Dr iur. Marianne Wüthrich

In the Current Concerns edition of 19 February, a number of personalities from the fields of science, economy and politics presented several serious concerns about the planned framework agreement between Switzerland and the EU, ranging from the lack of clarity, as to which treaties should be subject to the agreement, to the threat to our social partnership, that has been functioning for decades, and to the unsatisfactorily regulated settlement of disputes, and from the false assertion that legal certainty would be increased to the massive restriction of our direct democratic rights.
Part 2 is about awakening the forces of resistance that are present to a rich degree, not only in the Swiss economy, but also in our population and politics. Here, too, I will use a number of encouraging statements to remind us of what we stand to lose with a closer integration into the EU; and that Switzerland is best off if it cooperates with other countries on an equal footing.

We have always been able to hold our own if we only wanted to

The Swiss negotiators should not forget that they are dealing with a “partner” who starts flexing his muscles whenever something does not suit. The EU does the same with its member states if they do not toe the line: Hungary, Austria, Poland … And it is particularly rabid in its dealings with the UK, since this is willing to leave – so that other member states will not dare getting a taste for it, too! What kind of club is it that tries to keep its members and its contractual partners together by means of coercion and threats instead of awakening in them the joy that joint action and progress can give?
Switzerland, as a flexible and innovative small state, certainly does not need to stare at Brussels like a hypnotised little rabbit, because those gentlemen might once again come up with some means of harassing us. Is this not just this expectation which activates our powers of resistance? In this sense, Oliver Zimmer, Professor of Modern European History at Oxford University: “What the protagonists of the EU are striving for is no secret. Whether they will get it, remains uncertain. In this situation, it is not in Switzerland’s interest to place its faith in anticipatory obedience. Pressure and attempts at intimidation cannot be equated with coercion. You have to choose between legitimate alternatives.”1
Rudolf Strahm, who was price supervisor and SP National Councillor for many years, is convinced that the Swiss economy is not as weak and dependent as one might think in view of several association leaders’ agitation: “Somehow we have always been able to hold our own; we have exploited regulatory niches, and I think we still have room for manoeuvre there.” And he continues: “Contrary to the threats of decline, for example 26 years ago before and after the EEA referendum – when it was believed that Switzerland had really messed things up – the economy nevertheless proved to be extremely exportable, productive and networked and was able to maintain its high level of prosperity.”2
Even today, according to Strahm, the Swiss economy is in good shape, especially because of our strong dual vocational training system: “We are at the forefront of innovative countries in world production. In my opinion, this is due to a mixture of top scientists and top specialists, thanks to our vocational training system. Many major powers have engineers and university graduates. But many of them do not have skilled workers, who can quickly put their knowledge into practice, and develop marketable products. [...] I believe that competitiveness can survive, that it will survive. Quality work, niche production and specialisation are possible despite high wages. The Swiss economy is geared towards specialty production, not mass production but expensive products that are in demand because of their quality.”
(mw: However, this positive assessment only applies if we, as quickly as possible, ensure that we go back to learning something sensible in our schools, so that after nine school years the young people will again have mastered the basics of what enables them to become top specialists …).
Rudolf Strahm is therefore of the opinion that – today, as in 1992 – Switzerland should not accept an inadequate agreement in a hurry: “We need some time and also some equanimity, we need to know that we have to arrange ourselves. But we don’t have to get into fever attacks about this short-term draft treaty.”

“A plan B is needed for every area”

Finding niches and mobilising counterforces against possible harassment from Brussels or from elsewhere is part of our resilience, not only of Swiss companies, but of the Swiss model as a whole.
Rudolf Strahm: “The Federal Council must develop a Plan B for every area. This means that if we come under pressure at short notice, as a result of sanctions or retaliatory measures – or, one could say, as a result of pestering – we must be able to react and know what we are doing.”3

•    The example of Erasmus+

By means of an excellent Plan B, the federal administration has already overcome the exclusion from the Erasmus+ student exchange programme (after our “yes” to the Immigration Initiative in February 2014): with an independent, lean organisation, which is much cheaper than integrating into the monumental Brussels bureaucracy – so that the federal government has decided to continue holding the reins:4 “Since 2014, Switzerland has no longer been an Erasmus+ programme country, but a partner country. To ensure that Swiss institutions can continue to participate in cooperation and mobility activities with the Erasmus+ programme countries, the Federal Council has adopted an interim solution financed with Swiss funds […]”5 [emphasis added by mw]. Switzerland is faring far better as an autonomous “partner country”, and so a “transitional solution” is converted into a patent remedy!

• The example of temporary stock exchange equivalence

A great deal of unrest was triggered by the EU Commission’s announcement in December 2017 that it would only grant recognition of the equivalence of Swiss stock exchange regulation for the limited period of one more year, i.e. until the end of 2018. This meant that EU securities traders would no longer be allowed to trade Swiss shares on Swiss stock exchanges if they were also traded on EU stock exchanges. This applies to almost all shares of larger Swiss companies (the shares of smaller companies are not traded on stock exchanges).
The Swiss Bankers Association stated in June 2018: “Since the competent EU authorities have reviewed the Swiss stock exchange regulation and considered it to be equivalent, the decision of the EU Commission is purely political”6.
By treating Swiss companies less well than companies from other financial centres outside the EU – such as Singapore or Hong Kong – Brussels wanted to put Switzerland under pressure, so that the Federal Council would sign the framework agreement. Interestingly, the EU has now extended recognition of Swiss stock exchange regulation, although it is unlikely that the InstA will be signed in the near future. Because the Swiss hedgehog has extended its spines: There is also a Plan B for the stock exchange, which has already been legally anchored.
Federal Councillor Ueli Maurer, head of the Federal Department of Finance, has, so to speak, used the cunning of the small state against the force of the great power. According to an emergency ordinance of the Federal Council dated 30 November 2018, as of 1 January 2019 Swiss shares may only be traded on foreign stock exchanges recognised by the Swiss Financial Market Supervisory Authority (Finma). However, this recognition will only be granted to exchanges which grant reciprocal rights in turn.7 This means that Swiss shares will only be traded on Swiss stock exchanges – unless another country allows all traders to trade all shares in Switzerland.
The Swiss economy reacted with relief to this regulation, which is limited to three years: “Gasp of relief in the Swiss economy on Friday: The Federal Council’s emergency measures in stock trading would ensure the survival of the Swiss stock exchange – even if the EU were to make it more difficult for its stock traders to work in Switzerland.”8
Plan B is therefore also very promising in this case. It will not be difficult for Swiss authorities to find further similar regulations – as soon as they are prepared to extend their spines. In this sense, Hans-Ulrich Bigler, director of the Swiss Union of Small and Medium Sized Enterprises, answered the question what he expected from the Federal Council: “I expect them to consider at what level talks with the EU can be continued and how Switzerland can prepare itself for retaliatory measures. The Department of Finance has already set a good example by developing countermeasures to the withdrawal of stock market equivalence.”9

Removing the nebulousness from the concept of the Swiss model

“Which kind of state is it to be? …” The British-Swiss historian Oliver Zimmer, Professor of Modern European History at Oxford, asks this question, not only for Switzerland: “How should state action and state organisation legitimise themselves? What are their driving forces? Is it about the executive politicians in association with civil servants, who see European policy as a technical-legal balancing exercise? Or is it about the citizens in a tough dialogue with their democratically elected representatives? What kind of state-building should we participate in as citizens, with our commitment and our taxes? The question of the power, meaning and legitimacy of the state presents itself more relentlessly than ever in Europe today. When political scientists recommend politicians to replace the concept of sovereignty by the term ‘competence transfer’, we should not simply carry on with the agenda.”10

“… framework agreement as an instrument of European state-building”

With regard to the framework agreement between Switzerland and the EU, Oliver Zimmer comes to the following conclusion: “What was known at the latest since the Treaty of Lisbon became a certainty with the Brexit. The European state-building of the present time has as a prerequisite the dismantling of national statehood. It is obvious that this is achieved at the expense of democratic autonomy.
The framework agreement sought by the EU belongs in the same problem area. Anyone who calls the treaty a compromise is either engaging in window-dressing or has lost his democratic-political compass. From a formal point of view, the framework agreement is an agreement between equal states. But seen in a sober light, it is an instrument of European state-building.”
“A culture shock” (Zurich Professor of Constitutional Law Andreas Glaser)
“The framework agreement means a risk for Switzerland […]. We can see incredible opportunities in it, for example for economic liberalisation, for social opening, for lower consumer prices. But this imponderability strongly contradicts the Swiss political culture […]” – namely to negotiate compromises in changing coalitions – it would be a real “culture shock”.11
Ultimately, the question for us is whether we want to surrender ourselves to the EU or whether we want to continue to determine our own affairs.

“Result of the negotiations must be compared with the overarching values in Switzerland”

Walter Müller, National Councillor of the FDP and member of the Foreign Affairs Committee FAC-N: “If the so-called experts contradict each other, we must ultimately make a political decision, i.e. compare the outcome of the negotiations with the overarching values in Switzerland, in particular sovereignty and direct democracy.”12
“Freedom, the rule of law, direct democracy and federalism are indispensable qualities of our country and force us to keep sufficient sovereignty, even in a complex and interconnected world”. (Konrad Hummler and Tito Tettamanti)
(Konrad Hummler is former chairman of the board of the newspaper “Neue Zürcher Zeitung”, today partner of M1AG, a think tank for strategic current issues; Tito Tettamanti is former member of the cantonal government of Ticino, today lawyer and entrepreneur).
“It does exist, this Swiss substance, and it differs from the historically largely untested substance of the EU to such an extent that further integration would inevitably mean our self-abandonment of what is typically Swiss. We are a bottom-up state; the rest of Europe is of a more or less authoritarian nature. For Switzerland, the term “nation state” is not really apt; rather, it is a unique, subsidiarily intended form of organisation in which many tasks of societal, social and economic policy can obviously be solved very well. Switzerland has always made closeness to citizens, cost-efficiency and cultural diversity possible.
The prerequisite for this is sufficient differentiation and demarcation: Freedom, the rule of law, direct democracy and federalism are indispensable qualities of our country and force us to keep sufficient sovereignty, even in a complex and interconnected world.
We firmly believe that it is precisely these qualities – in the broadest sense the Swiss capital stock and our ability to preserve and accumulate it – that make us so attractive globally.”13     •

1    “Welcher Staat soll’s denn sein? – Which kind of state is it to be?” Guest commentary by Oliver Zimmer. NZZ-E-Paper of17 December 2018
2    ”A plan B is needed for every area”. Interview with Rudolf Strahm. SRF News, Echo der Zeit of 28 December 2018, by Samuel Wyss
3    ”A plan B is needed for every area”. Interview with Rudolf Strahm. SRF News, Echo der Zeit of 28 December 2018, by Samuel Wyss
4    cf. “Scrutinise your contract partners first! Or: What does “Erasmus” have to do with the mass immigration initiative? by Dr iur. Marianne Wüthrich Current Concerns No. 1 of 14 January 2015 [https://www.zeit-fragen.ch/en/editions/2015/n-1-12-janvier-2015/examinez-dabord-votre-contractant-a-la-loupe.html]
5    www.movetia.ch/programme/schweizer-programm-zu-erasmus/ (German text)
6    “Börsenäquivalenz: Der Schutz des Finanzplatzes (Stock market equivalence: The Protection of the Financial Centre”. insight of 28 June 2018, www.swissbanking.org/de/services/insight/insight-2.18/zum-schutz-der-schweizer-boerseninfrastruktur) (German text)
7    “Ordinance on the Recognition of Foreign Trading Venues for the Trading of Equity Securities of Companies with Registered Office in Switzerland” of 30 November 2018, Article 1
8    Börsenäquivalenz – Wirtschaft atmet auf (Stock market equivalence – economy breathes a sigh of relief)”. SRF-News 1 December 2018, Author: Philip Meyer
9    “Dieses Resultat muss man weiterverhandeln – This result must be further negotiated”. Interview with SGV Director Hans-Ulrich Bigler. “Neue Zürcher Zeitung”, 21 January 2019. Authors: Christina Neuhaus and Michael Schoenenberger
10    “Welcher Staat soll’s denn sein? (Which kind of state is it to be?)” Guest commentary by Oliver Zimmer. NZZ-E-Paper of 17 December 2018
11    “Ein Kulturschock (A culture shock).” Interview with Zurich professor of constitutional law Andreas Glaser. “Weltwoche” No. 05.19 of 31.1.2019, Author: Katharina Fontana
12    “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 disagree)”. Public hearing of the Foreign Affairs Committee of the National Council. Television SRF of 15 January 2019
13    “Die Schweiz und die EU: Substanz statt Performance – Switzerland and the EU: substance instead of performance”. Guest commentary. Konrad Hummler and Tito Tettamanti. “Neue Zürcher Zeitung” of 3 July 2018