Recent Swiss press reports support what the majority of the Swiss public has known for a long time – i.e., negotiating individual deals with the EU is better than joining the EU as a member state.
The report highlights that signing individual deals still a allows access to the single European market and offers citizens freedom of movement. This in effect backs up many Brexiteer claims that EU membership is not a requirement for the signing of trade deals. The difference from an EU perspective vs the UK however, could be that Switzerland was never a fully-fledged member of the EU, whereas the UK was.
The EU and its member states are Switzerland’s main trading partners, and Switzerland is the EU’s 4th largest trading partner. One example is Germany – which has a 15% share (US$ 48’962 million) of the total Swiss Trade and is Switzerland’s second largest trading partner. In addition, there are now around 1.4 million EU citizens living in Switzerland from the total of 8.6 million inhabitants. This supports the theory that it is possible to negotiate individual deals, rather than sign as a permanent EU member.
Highlighted in the report was the fact that the Federal Council felt that EU membership would go beyond Switzerland’s economic needs. The consensus was that full participation in the European decision-making process by Switzerland would hardly compensate for the reduction in its negotiation position.
A functioning business relationship ?
Today, Switzerland does have access to the EU single market and is part of the visa-free Schengen zone – but it is not a fully fledged member of the bloc. Switzerland also makes billion-pound ‘cohesion’ payments to Brussels and participates in the freedom of movement of persons. So how did Switzerland and the EU reach this position?
- In 1992, Swiss voters rejected the prospect of joining the European Economic Area (EEA) – giving access to the European Union’s internal market. Switzerland still operates a system of direct democracy where important matters such as the EU vote, are decided by the public.
- 30 years later and Switzerland’s Federal Council government assessed all the current options with regards to the EU. The main criteria under focus were:
- Access to the single market
- Opportunities for cooperation
- Foreign policy.
- The Federal Council considered different merits for four options:
- A free trade relationship
- Continuation of the current bilateral approach
- EEA accession
- EU accession
The outcome was that the Federal Council concluded a Bi-lateral approach was the best option for the future. Secure and stable relationships between the EU and Switzerland were also noted of having high importance in the current geo-political climate. And the Federal Council also felt that a continuation of the current situation would help serve prosperity and stability for both the EU and Switzerland.
The not so good news is that relations between Brussels and Bern have been strained since May 2021, when Switzerland decided to end years of discussion towards a broader cooperation agreement with the EU. From a Swiss perspective, this was in part down to the fact that Switzerland could not accept EU demands for equal rights for EU workers as it would have meant an unwanted “paradigm shift” in Switzerland’s migration policy. The government also feared it could lead to higher social security costs. However it is also clear to many in Switzerland that such a framework agreement is a back door to effective EU membership, contrary to the original democratic decision. It would require the breakdown of the principle of local self determination: unlike the EU model, bottom-up democracy is at the heart of the centuries old Swiss federal constitution.
Swiss style deal for all?
The release of the Federal Council Report comes at the time as reports from the UK suggest that the Government there could also be considering aiming for a Swiss-Style deal with the EU. Given that Switzerland was never a fully-fledged member of the EU and Britain was, it is difficult to imagine how the EU would allow this in the current set up. Simply granting Britain access to an EU cherry picking deal (albeit at a cost) would most certainly open the flood gates to other member states wanting to do the same in the name of national sovereignty. A more likely scenario for the future of an EU with Britain as a trading partner could be under one of the European Political Community scenarios painted by President Macron. Whatever the future brings in this regard, the relationship between Switzerland and the EU is likely to continue along the current parameters – at least according to the Federal Council Report.
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Michael is a celebrated strategic Marketing and Business development expert with decades of experience and achievements under his belt. He has extensive commercial knowledge in the relocation and travel industry and has specialised in highly individual customer facing services.
As a Swiss national Michael has a broad experience of Switzerland.
