Switzerland braces for EU cold after dropping market access negotiations

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In Brussels, there was shock and anger. In Switzerland, quiet celebration and relief – but, for some, doubts about what will follow.

On Wednesday, Berne announced that it was formally withdrawing from negotiations to codify future relations with the EU into one comprehensive “framework agreement” – a back-and-forth exchange that dominates an increasingly strained relationship with the EU. Brussels since 2014.

“You would never sign such a contract in business,” said Philip Erzinger, head of Kompass Europe, an anti-framework agreement campaign group. “It was one-sided. This forced us to adopt European law without any mechanism to say no. This would have been a direct interference in our system of direct democracy and the cantons in Switzerland.

For opponents of the process, the time was akin to the British referendum to end its membership in the bloc – a Swexit, in a way.

There are parallels. Switzerland has never been part of the EU and rejected membership of the European Economic Area in a referendum in 1992.

Yet, thanks to 120 bilateral agreements, it enjoys almost full access to the EU’s internal market and is a member of its passport-free travel zone. He is also closely aligned with the bloc that surrounds him on a wide range of economic and legal issues.

Even so, without a framework agreement, the EU will not update or improve bilateral agreements when it changes its own rules. As a result, the Swiss will gradually lose access, creating uncertainty for businesses and residents.

Switzerland is the EU’s fourth largest trading partner. Over 1.4 million EU and UK nationals live in Switzerland. And around 330,000 people cross the Swiss land border every day, according to customs authorities.

The move was a huge victory for the Swiss right-wing populist party, the SVP, which has long campaigned against Switzerland by ceding ground to Brussels.

For the most part, however, in Switzerland on Thursday morning, unlike Britain on June 27 five years ago, there was little feeling that a political earthquake had just occurred.

“To be honest, I don’t yet have an idea of ​​the direct consequences for our business,” said Hugo Roppel, managing director of Geneva Logistics Group, a Swiss carrier in Geneva. “The most rational would be to say that we need Europe and that Europe needs Switzerland. . . I think it is necessary for everyone to take a moment to calm down and then maybe the negotiations can start again. “

According to Martin Janssen, managing director of Zurich-based financial software company Ecofin, Switzerland must be “allowed to be different”. The framework agreement did not provide for this, he said.

After seven years of diplomatic frustration, many Swiss are simply happy with the opportunity to move on.

The country’s largest newspapers offered lukewarm support for the Federal Council’s decision. “Despite all the sympathy [one might have] to overcome the narrow national borders which have led to many wars in Europe, it is not necessary to sign whatever Brussels wants, ”the left-wing newspaper Tages-Anzeiger wrote in an editorial.

Lukas Golder, chairman of leading Swiss pollster GFS Bern, said such an attitude was likely typical of most Swiss people.

There was broad support for close relations with the EU, he said, but the belief that too much was being given. Many Swiss are also optimistic that Brussels will adopt Bern’s Plan B – known as the “bilateral route” – under which existing agreements can be renewed individually.

“People think Switzerland was too weak in its position vis-à-vis the EU. But there are also probably too high expectations about the alternatives, ”said Golder.

Erzinger, the activist against the framework agreement, said the EU would eventually return to the negotiating table. In the meantime, Switzerland is expected to experience a “period of freezing, when you feel the cold in Brussels,” he said. But unlike Brexit, it could fall back on “existing agreements that allow us to breathe and not to panic”.

Diplomats warn that such optimism is misplaced. The general intention of the EU in seeking a single “framework agreement” with Switzerland was to restrict the country’s privileges as much as possible, or to obtain concessions to maintain them.

Already, some crucial agreements face imminent collapse, as the guillotine clauses come into force. As a sign of the seriousness of this situation, the Swiss Federal Council said in its statement on Thursday that it had already started to take precautionary measures, such as the storage of medical equipment.

Avenir Suisse, a pro-EU think tank in Zurich, calculated that the expiration of the Switzerland-EU agreements on medical equipment, industrial machinery, and chemicals and pharmaceuticals would impose one-off costs of 1.7 billion francs ($ 1.9 billion) and annual recurring costs of 1, 3 billion francs to Swiss companies in these sectors alone.

Teresa Hug Alonso, researcher at Avenir Suisse, said the Federal Council, which operates by consensus, has not presented the Swiss people with the potential drawbacks of abandoning the framework agreement.

She ended the negotiations for partisan political reasons rather than a lack of public support, she said. Yet recent polls suggest that a referendum on the framework agreement would have passed with 60% support.

The SVP is the only overtly anti-EU political party, but others are equivocal at best about Europe. The Social Democrats, for example, were strongly opposed to measures that would erode the wage protections of Swiss workers and the issue became a red line.

Switzerland now faces the prospect of a gradual deterioration in its economic ties with the EU. But it would not be a disaster for one of the richest countries in the world, conceded Hug Alonso.

“We are not talking about massive changes. It is erosion. It is a problem. This does not create momentum in Switzerland to start new negotiations with the EU. “



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