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Not United, but Linked in Negotiations with the EU: Switzerland and the UK

Not United, but Linked in Negotiations with the EU: Switzerland and the UK

Charlotte Sieber-Gasser (DCU Brexit Institute)

Since its decision not to join the EEA in 1992, Switzerland has been continuously negotiating with the EU on various aspects of cooperation, participation and integration. Most recent negotiations about an institutional framework to some of the existing and to future agreements with the EUofficially started in 2014. The outcome of the negotiations is summarised in a previous article on our blog by Cenni Najy here.

The original idea of complementing the various individual treaties between Switzerland and the EU with a common framework treaty dates back to a report by the Swiss foreign affairs committee of the council of states in 2002. In the subsequent parliamentary debate, the idea was generally welcomed. In 2005, after the successful people’s vote about the extension of the “free movement of persons”-agreement to the new EU member states, the Swiss government addressed the possibility of negotiating a framework treaty with the EU for the first time (quickly termed “EU-membership light” by the press). The EU generally reacted positively, but it took another 7 years until the EU started to push for negotiations to begin. Until then, Switzerland, while continuing to work on proposals, was unable agree on the exact mandate for such negotiations. Despite their origins in a Swiss proposal, the negotiations are widely perceived in Switzerland to be the result of giving in to pressure from the EU. Consequentially, the political fate of the framework treaty was already uncertain when negotiations started in 2014 (for more details, see Christa Tobler, “One of many challenges after ‘Brexit’: The institutional framework of an alternative agreement – lessons from Switzerland”).

In contrast to Brexit negotiations between the UK and the EU, the Swiss negotiations aim at deepening bilateral relations. Why? Because the current web of over 120 independent bilateral treaties between Switzerland and the EU, for the most part lacking binding dispute settlement proceedings, lead to an increasing number of disagreements over the exact scope and interpretation of mutual obligations. Unfruitful negotiations over the interpretation of the various treaties in the respective mixed committees continue to cause legal uncertainty in bilateral relations between Switzerland and the EU, as do regulatory gaps, which have emerged over time due to the fact that most bilateral treaties are static while EU law evolves quickly.

Overtaken by Brexit

When negotiations between Switzerland and the EU started, no one expected Brexit. However, after the Brexit vote it became immediately clear in Switzerland that Brexit would complicate negotiations with the EU substantially: whatever the EU was prepared to offer to Switzerland as an alternative route to participation in the common market without EU membership, would now become a potential blueprint for Brexit negotiations. In consequence, the EU had less room for flexibility and there was a risk that negotiations with Switzerland – since Switzerland is not a member of the EU – would be used also as a case to demonstrate to the UK how difficult it would be to be outside of the EU.

Unsurprisingly, negotiations between Switzerland and the EU proceeded at an even slower pace once Brexit negotiations had started. The resulting so-called institutional framework treaty for dispute settlement proceedings and interpretation of scope of obligations in Swiss-EU relations shares remarkable similarity with dispute settlement proceedings proposed in the EU-UK Withdrawal Agreement (and with dispute settlement proceedings in the EU-Ukraine Agreement).

Rather unhappy with the framework treaty, Switzerland was relieved to be overtaken by Brexit when the EU agreed to negotiate additional clarifications in the Withdrawal Agreement – despite clearly communicating before, that there will be no further negotiations. Now, it was suggested, Switzerland could observe the reaction of the EU and learn from Brexit-negotiations for its own negotiations.

(Unexpectedly?) Steep Learning Curve on the EU-side of the Negotiating Table

When Switzerland consequentially – and similar to the UK in March 2019 – demanded additional negotiations over clarifications in the framework treaty in June 2019, the EU agreed. However, evidently the EU had already learned from how negotiations over clarifications had turned out with the UK, and it substantially increased political pressure on Switzerland in a number of ways:

  • The EU terminated Swiss stock market equivalence a few days after agreeing to additional negotiations when it became clear that those negotiations were unlikely to be concluded within a week’s time.
  • A rather nasty letter by Johannes Hahn, Commissioner for European Neighbourhood Policy & Enlargement Negotiations, became public, complaining about the Swiss procrastinating.
  • Further political measures, such as not updating the MRA or excluding Switzerland from EU research funding schemes, are considered possible.
  • The EU declared already in February this year, that it will only exempt EEA-member states from current and future safeguard measures necessary in reaction to geopolitical developments (see previous article on our blog here).

On the other hand, as had been suggested early on in negotiations, the suddenly hardening of the position of the EU in dealing with the Swiss special case was also to be understood by the UK as an indicator of how easy (or not) bilateral negotiations are going to be once it has left the EU. Unlike the UK, which continues to be protected by EU membership, in its negotiations with the EU, Switzerland is not protected by EU law. Power politics and various instruments of political pressure therewith become legally available and much more likely. In particular the very strict – and from a GATS perspective legally questionable – position on stock market equivalence is interpreted by many as a warning to the financial sector in London.

United in Structure

That both Switzerland and the UK have to simultaneously negotiate with domestic actors and the EU further complicates and substantially weakens their position vis-à-vis the EU. Quite to the contrary, the EU quickly found a common voice in negotiations with European neighboring states since 2014 and is about to develop a template for partial market integration of European non-members.

Both Switzerland and the UK negotiate from a position with uncertain majorities in domestic politics, and without a plan for a long-term perspective in their respective relations with the EU. Switzerland currently focuses most of the political debate on the institutional framework treaty while it remains quite unclear where EU-Swiss relations are supposed to head in the future. This has been undermining the very negotiations over the framework treaty from the start – since why negotiate and ratify a framework treaty when there is substantial disagreement over the actual purpose of such an agreement? Parallels can be observed in the UK where much of the focus still lies on the Withdrawal Agreement while there is no political consensus discernible with regard to the long-term future relationship with the EU.

Learning from the “Best”?

Given unequal economic and political power and considering that the respective institutional framework for negotiations clearly favors the EU, European non-EU member states are well advised to learn from the best: the EU. A long-term goal and domestic support are obviously key to successful negotiations with the EU. Trust in the competence of the people sitting at the negotiating table certainly helps. And keeping a plan B and C ready, just in case, appears to work, too.

However, whether power politics as can be witnessed vis-à-vis Switzerland right now will be fruitful for the EU in the long-term, remains to be seen. Political pressure and escalation will need to come in a fine dosage, given the political system of Switzerland and sensitivities of the Swiss people: otherwise the necessary majority for any future agreement with the EU may be off the table for quite some time altogether. As recent referendums have demonstrated impressively around the world – but also in Switzerland: no longer does the economic argument alone secure a majority. Finally, were bilateral relations between Switzerland and the EU to fall apart, the message to the UK could shift from being a “competent, strict, but mostly fair negotiator and partner”, to simply being a “bully” – which can’t possibly help either party.

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