Economy /
The Significant Implications of a Swiss-EU Trade Deal
For those who believe the EU are being inflexible in its negotiations with the UK over a post-Brexit trade deal, Switzerland is no exception. Since 1973, the Swiss have entered into a series of bilateral treaties designed to ensure the Swiss Confederation adopts a series of EU provisions into law in order to participate in the Single Market, without signing up as a member state. From 1992 onwards, when the Alpine state rejected joining the European Economic Area, 120 separate bilateral accords have been agreed between Brussels and Bern. However, that arrangement has reached a crossroads and the outcome is likely to have significant implications on the EU’s ability to trade.
Following a public consultation, Foreign Minister Ignazio Cassis declared that the Swiss Government will not sign a framework agreement designed to simplify future ties with the EU, as it wants certain points clarified. This statement was reinforced by Justice Minister Karin Keller-Sutter, who said the Confederation expected Brussels to renew Switzerland’s access to the EU stock market. The right-wing Swiss People’s Party called this process a partial success and credited themselves for causing the Government to deliberate on the treaty’s signing.
The Confederation’s three concerns include maintaining the current level of wage and worker protection, state subsidies and citizens’ rights. Swissinfo.ch reported the Government sent a letter to the European Commission, declaring its readiness to “engage in dialogue” with the EU on these issues before it can sign the deal and present it to the Swiss Parliament. The letter also stressed that Brussels must “respect internal procedures” and ensure that there is “strong support for an agreement”, thereby asking the public to ratify the treaty through a referendum.
The Swiss business federation Economiesuisse welcomed the treaty alongside the Trade Union Federation and Travail Suisse, who were pleased to see that workers’ wages will be protected. But a poll for SonntagsZeitung showed that 41 percent of respondents want changes to the treaty. Without support from the Swiss People’s Party, who claim the agreement could affect Swiss independence, and the Social Democrats, who claim the treaty fails to protect Europe’s highest wages from cross-border competition, the deal looks unlikely to pass through parliament.
Jean-Claude Juncker, the European Commission’s President, stated his intention to settle these concerns and ensure the Commission approves of the treaty by June 18th. The agreement was drafted on November 2018 and Juncker was clear that this draft “will not be renegotiated.” Yahoo News reported that Brussels is being equally tough to the Swiss to prevent the British from thinking the EU will provide the latter with Brexit concessions.
If Switzerland rejects the treaty, this would demonstrate how incapable the EU is in renegotiating existing trade deals, let alone ratify new ones. It would make the EU an unattractive organisation to do trade with and prove to other nations they dither on this issue. Like with Britain, if they fail to offer concessions, they will lose a significant trading partner in the Swiss. Since 2008, EU exports to the Confederation have been worth 67 billion euros. If the public rejects the treaty, it will disrupt commerce and cross-border stock trading, which is a position Brussels cannot afford to be in.
A new British prime minister has the opportunity to offer a fresh perspective to the Brexit talks, and it would be wise for the EU to listen. EU exports to the UK are worth £341 billion. Brussels is fighting a war on two fronts that will cause them to lose in the longer term. With the German, Greek and French economies in trouble or on the verge of a recession, and Italy close to quitting the euro, a loss in British and Swiss trade would hinder the EU’s economy and accelerate its likely collapse. This is a time wherein Brussels needs to retain trading partners, not lose them. Given that they are led by Juncker, this trend is only set to continue. The end of this decade has witnessed the beginning of the EU’s demise, which will have major consequences for Europe’s future.
