Swiss stock exchanges have had a special relationship with the EU for some time; they are allowed to operate within the EU even though their policies and practices differ.
However, the formal agreement between Switzerland and the EU will expire at the end of this year and the EU wants to bring the Swiss arrangement into line, under the jurisdiction of the CJEU. (Switzerland is in the EU’s Single Market and the Schengen Area but is not a member of the EU or the European Economic Area (EEA).)
Reuters reported, last December, that the “European Union executive will offer Swiss stock exchanges a two-year extension of their right to operate in the bloc if the Swiss government approves an overall deal on future relations… If Switzerland does not back the draft pact, however, the European Commission will not extend the recognition of the SIX Swiss Exchange – the country’s main stock exchange – and other trading venues beyond this year…”
As with the Brexit negotiations, the EU’s ‘offer’ is a mandate and is not open to any change, “It’s deal time. Playing for time wouldn’t change anything. The draft will not be changed any more,” in their words.
In another comparison with Brexit, the present arrangement with Switzerland works economically for both parties but does not take forward the political agenda of the EU: Ever Closer Union. The EU wishes to extend its jurisdiction as widely and deeply as it can; this is central to the goal of imposing a federal government on as much of Europe as they can.
As with the draft Withdrawal Agreement, under the ‘deal’ the Swiss are expected to agree to set up an arbitration arrangement that will give the CJEU the final say in all matters that relate to the application of EU law (i.e. the full acquis communautaire). And no doubt some issues will be excluded from arbitration and will be handed directly to the Court if they are particular sensitive for EU politics.
The Swiss must accept the sweeping jurisdiction of the ECJ and “dynamic alignment” of EU legislation over migration, social security rules, and other key areas of policy. It has been pointed out that cross-clauses in the text of the EU mandate allow the ECJ to muscle into sensitive areas covering tax codes, farming, healthcare, and cantonal state-aid policies. Punishment starts with the loss of recognition for the SIX Swiss Exchange and other bourses. It then ratchets up sector by sector as old bilateral accords expire until the country is shut out of the EU’s economic system. It amounts to a sanctions regime.
Again in a mixed parallel with Britain and Brexit, Switzerland’s business elites are mostly pushing for an EU deal whatever the implications for sovereignty. So is the Swiss government. But the twin councils of parliament are proving stubborn. Big businesses in Britain also want a deal, regardless of any damage to Parliamentary sovereignty. The non-parallel is that the British government is pusillanimous and appears to want to give in to the EU bullying, perhaps because it really wants the country to stay in the EU. Certainly the government is pressing Parliament to approve the Withdrawal Agreement, which would keep the UK as an unprivileged, semi-member of the EU, obeying the acauis but having no rights to participate in its development.
In his usual dense but convincing style, Ambrose Evans-Pritchard analyses the issue (Daily Telegraph, 19 March 2019). “Switzerland is facing an excruciating squeeze. Its old bilateral accords with the EU are no longer deemed acceptable. Brussels wants to shut down the idiosyncratic “Swiss model” once and for all.” He draws the conclusion that this “is risky statecraft for the Brussels [sic]. Much friendship is being sacrificed on the altar of the EU acquis”. However, “The Swiss lower house may reject the deal. Four of the five biggest parties are opposed.”
It may be that Switzerland will reject the EU proposal, as the British Parliament has rejected the Withdrawal Agreement. On the other hand, the EU’s bullying tactics will surely hasten the end of the unsound, ideology-driven EU Project and so perhaps we should just let them get on with their suicidal pacts.