Special place

EU-Swiss talks on new accord stymied by Brexit worries

A referendum is their fallback. Source: Reuters

The European Union has been talking about a new treaty with Switzerland for years, but unfortunately for both sides pressure to finish is mounting as Brussels wants to be tough on an exiting Britain.

EU Commission President Jean-Claude Juncker doesn’t want to make too many concessions to the Swiss for fear of setting precedents for a post-Brexit treaty with Britain. Switzerland has a custom-tailored relationship with the EU whereby they cherry-pick EU rules. This is something Britain would like to emulate.

The skein of accords between Brussels and Bern includes Switzerland in the Schengen Agreement for passport-free movement within the EU, but excludes membership in the European Economic Area, an outer ring of the single market that Swiss voters rejected in a 1992 referendum. So a number of specific issues, ranging from cheese imports to controlled nuclear fusion, are regulated with more than 100 bilateral treaties.

Limiting free movement

Mr. Juncker sought during his tenure to bring all this under a framework treaty, setting out certain principles more in line with other EU treaties. The Swiss, who historically have been ambivalent about any alliances, remain ambivalent as ever about closer links to the EU.

But the commission president wants to complete the treaty before his term is up next year. The Swiss had better come up with a solution in the next few months or “it could really get bad,” Mr. Juncker warned in a Swiss television interview last week.

The biggest issue is a special clause limiting the free movement of peoples, an essential provision of all EU treaties. Switzerland recognizes free movement for its citizens and those of the EU, provided an EU citizen can prove employment or other financial means of support.

But so-called “flanking measures” require, for example, that EU companies give eight days’ notice if they are transferring workers or an order to Switzerland. This lets Swiss authorities verify those workers are not undercutting the Swiss minimum wage or other labor requirements.

Anxious about access

Swiss business urgently wants the EU treaty to be completed because its customers are largely in the EU. “In order to guarantee access to our customers, we need a framework agreement with the EU capable of winning majority support,” said Herbert Scheidt, head of the Swiss Banking Association. However, labor unions, a powerful force politically, are opposed to any tinkering with the flanking measures.

Brussels sees the flanking measures as simple harassment of EU firms and wants to enforce the principle of free movement of peoples as a condition for access to the single market, especially since Britain is seeking its own compromises in post-Brexit negotiations.

In Switzerland’s direct democracy, any accord made by the seven-member federal council — which functions collectively as head of state and government — could be overturned by a majority in a referendum. Another problem for the EU negotiators is that the federal council president rotates every year, so Brussels has now worked with five different people in that office during Mr. Juncker’s tenure. As a result, there hasn’t been much progress.

Mr. Juncker’s plea on Swiss television made it personal. “Talk with me, conclude the treaty with me,” he said. There is little indication, however, that issues will be settled before he leaves office next year.

Apparently, the bonds of friendship between Switzerland and the EU are not strong enough to base a whole treaty on.

Michael Brächer is the Zurich correspondent for Handelsblatt. Darrell Delamaide adapted this article into English. To contact the author: braecher@handelsblatt.com

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