Swiss Cheesed Off

The Swiss have had enough and pulled the plug on almost eight years of negotiations with the EU, aimed at simplifying over a hundred bilateral agreements and combining them into a single framework. The EU insisted on regulatory alignment and the supremacy of CJEU judgements. It has overplayed its hand – again.

A benign organisation would try to get on with its neighbours and trust its superior organisation and methods to prove them wrong not to join the project. The EU doesn’t seem to have the self-confidence to rely on persuasion by example, which is hardly surprising in view of its actual performance. Instead it offers threats. Switzerland looks like getting something approaching the Brexit-bashing the UK is suffering.

Professor Carl Baudenbacher has provided some background to this [1], he was a judge of the EFTA Court from 1995 to 2018 and president from 2003 to 2018 so he knows it well.

EFTA comprises four countries with close ties to the Single Market: Iceland, Liechtenstein, Norway, and Switzerland. Three of these states are in the EEA, which means they are not EU states but are by treaty fully part of Single Market, which means accepting all its rules and staying in ‘dynamic alignment’ [2] with any changes or extensions, including not only free trade but freedom of movement and the final judgements of the CJEU on all issues relevant to them. Both EFTA and the EEA have their own courts whose decisions may be accepted by Brussels but ultimately they can be overruled by the CJEU. The EEA has a voice in agreeing rules but no vote – not “pay but no say” as is often stated but more like ‘noted but not voted’, though paid for of course.

This is crucial for ‘odd man out’ Switzerland whose citizen’s have consistently voted not to be ruled by Brussels overlords, despite the manipulative endeavours of their own politicians. [3] They have far more influence on policy than their UK counterparts because constitutional changes are always subject to people’s referendums; how could that ever be accommodated or tolerated within the Union? Actually some of the 27 member states do have referendums but whenever they have gone against Commission policy they have been ignored, avoided or repeated so that ‘progress’ is not interrupted; the most recent example was when a region of Belgium voted against the EU-Canada FTA, until it was forced into line.

In 1992 a clear majority of Swiss cantons rejected accession to the EEA Agreement so Switzerland is free not to automatically align its laws with the EU’s. In 1999 the parties concluded two packages of bilateral agreements covering technical barriers to trade, free movement of persons, air and land transport (only air transport is dynamically aligned) [4]. There are now at least 120 bilateral agreements.

The FDFA (Swiss foreign office) wanted to achieve EU membership by stealth and ran a “bullshit campaign”. As the professor puts it:

The two biggest deceits were first that if the EFTA Court ruled in favour of Switzerland in an infringement case brought by ESA, the EU would not be bound by the ruling. The second major deceit was that the ECJ would, if required, merely issue ”advisory opinions” for the attention of the Joint Committee. Surprisingly, this met with the approval of the foreign policy commissions of parliament, the cantons and the trade associations. Negotiations were conducted on this basis from 2014.

In the spring of 2017, however, it became clear that the non-party-neutral ECJ would not be able to command a majority in Switzerland.

The EU’s insistence on certain issues could not be reconciled with the public’s view. For example, free movement of workers across the border has not been a problem: “343,809 EU citizens cross the border daily to work in Switzerland. Out of a total workforce of 5.1 million persons, some 25% – amounting to more than 1.28 million persons – are EU citizens (of which 343,809 are cross-border workers). (2020 figures)”. [5] However the EU Citizen’s Directive, which the EU wished to add, requires the same protections and benefits; Swiss wages are double the EU average and the benefits correspondingly generous but paid for largely by the locals. Then there are the rules on state aid and much else which the EU was demanding be included in the new framework agreement. The Swiss Federal Council accepted this, published a draft text and tried to persuade the public.

The text included an independent arbitration tribunal based on the “Ukrainian model” but this still required a binding ruling from the CJEU wherever EU law or treaty law was at stake, which of course amounts to practically everything these days. Theresa May accepted a Ukrainian-model tribunal but Boris Johnson’s government avoided it in the 2020 Trade and Cooperation Agreement, which rather upset the Swiss apple cart.

Switzerland’s political parties and companies are split on the issue of EU membership, or something very close to it. Switzerland’s neutrality [6] and sovereignty is crucial to all its foreign policy debates, the separation of economic cooperation and political integration is deeply rooted in social opinion. This is similar to the UK but their citizens have far greater influence than the UK’s due to the power of popular referenda whenever a constitutional change is suggested. With the collusion of the FDFA the EU attempted to reach a “point of no return” – so close that there would be no escape – entry by the back door, like a black hole ripping apart what binds the entity that is Switzerland, a country with four official languages and 26 cantons, each with its own constitution, legislature, government and courts.

This is the The EU’s view of its objectives in negotiating the new framework agreement:

There are currently more than 120 agreements between Switzerland and the European Union. And yet, there are no common provisions ensuring a level playing field and proper dispute settlement, in this extraordinarily deep relationship. This gradually leads to a lack of legal homogeneity and uncertainty and ultimately to an unequal treatment of economic operators. Ensuring a level playing field between the EU and Switzerland, with common rules and a referee, is the only way to protect and develop this mutually beneficial EU-Swiss relationship.” [3]

The document quoted adds: “What cannot be considered though, is a full “immunization” of the current – and future – Swiss system from future developments of EU law and European Court of Justice Jurisdiction.”

Here is Professor Baudenbacher’s summary:

The European Commission has for some years practised a policy of punishment that is difficult to reconcile with good faith and out of place towards an old friend like Switzerland:

the discriminatory refusal of stock exchange equivalence from 1 July 2019;

  • the exclusion of Switzerland from the European system of COVID apps;
  • discrimination against Switzerland with regard to the control of trade in COVID-19 vaccines;
  • the threat to exclude Switzerland from the Horizon 2020 research programme, expressed contrary to explicit commitments;
  • the threat, issued contrary to explicit commitments, to no longer update the existing bilateral agreements, in particular the Agreement on Technical Barriers to Trade, if the Framework Agreement were not concluded.
  • The refusal to agree to the UK’s accession to the Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters is an unfriendly act towards the EFTA States of Switzerland, Iceland and Norway which all agreed to allow the UK in.

In all of these cases, the EU is also harming itself. In refusing to accept the Swiss COVID app, the EU even endangers the lives of its own citizens.

Switzerland would probably only be left with a path similar to that of Great Britain: leaving the Single Market with dynamic adoption of law, supranational surveillance and supranational judicial control, and retreating to a mere free trade model.

The parallels with Brexit are striking in several ways: the political and commercial divides, majority popular opinion, the attitude of the respective foreign offices (and May’s government), the overreach of the EU’s negotiators, the attempted bullying of the smaller partner by the supposedly benign monolith and good neighbour.

[1] www.brusselsreport.eu/2021/05/27/why-did-eu-swiss-negotiations-on-a-framework-agreement-fail/

[2] Dynamic Compliance – Endlessly Trapped

[3] Will the Swiss Roll?

[4] https://www.europarl.europa.eu/meetdocs/2009_2014/documents/deea/dv/2203_07/2203_07en.pdf

[5] https://eeas.europa.eu/sites/default/files/str_ifa_eu-switzerlandrelations_factsheet_2_1.pdf

although offering the EU’s opinion this document is a clear and concise summary of the current bilateral agreements.

[6] The Swiss army last fought (and lost) a military battle in 1511, against the French. The Treaty of Paris, signed in 1783, acknowledged Switzerland as a neutral state. In 1920 the League of Nations formally recognized its neutrality. It remained neutral in both the first and second world wars.


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