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Federal Council ditches framework agreement – what now for Swiss-EU relations?

05.08.2021 – THEODORA PETER

The framework agreement between Switzerland and the European Union is history. But the Federal Council wants to maintain the bilateral approach. A risky plan fraught with uncertainty.

A black day, an error of judgement, or an act of liberation? It remains to be seen how historians will look back on 26 May 2021 and its implications for Swiss-EU relations. On a cool, rainy Wednesday, three stony-faced members of the Swiss government appeared before the media in Berne to announce the abandonment of talks with Brussels. President of the Swiss Confederation Guy Parmelin (SVP) – flanked by Foreign Minister Ignazio Cassis (FDP) and Justice Minister Karin Keller-Sutter (FDP) – put it like this: “The talks have failed to produce the requisite results.” An unspectacular sentence with explosive implications. After seven years of arduous negotiations, Switzerland has walked out and slammed the door shut.

The framework agreement was meant to govern all aspects of the relationship between non-EU Switzerland and the EU – and it matters, not least because the EU is Switzerland’s main trading partner. What is more, the framework agreement would have replaced all the existing bilateral agreements. The draft framework agreement had been on the table since 2018, when the EU unilaterally declared the negotiations over. However, Switzerland wanted further “clarifications” on contentious points, such as wage protection and the free movement of EU citizens in Switzerland (see edition 2/2019 of “Swiss Review”). Ultimately, the two sides failed to bridge their differences. The Federal Council’s only recently appointed new negotiator in Brussels, Livia Leu, was also unable to clear these stumbling blocks. She had no alternative but to deliver the government’s rejection letter to the EU headquarters. Cue considerable annoyance in Brussels. Apparently, European Commission President Ursula von der Leyen had “no time” to take a telephone call from Guy Parmelin.

Electorate not consulted

The collapse of negotiations also caused consternation in Switzerland, not least because the Federal Council had taken such a significant decision without consulting parliament or the electorate. Political commentators like historian Thomas Maissen accused the government of lacking guts in cancelling any domestic debate on the draft treaty and choosing the “path of least resistance”. Indeed, the framework agreement had been a hard sell for the Federal Council. Besides the SVP, which had flatly rejected what it called the “subjugation treaty”, the trade unions also voiced opposition. With the exception of the GLP, there was a great deal of scepticism among the other political parties. Brussels showing little willingness to compromise during the talks did little to help either.

What will happen now? The Federal Council had no real plan B up its sleeve and hopes to continue with the existing bilateral deals with the EU – despite the EU having made clear that it will not agree any new treaties with Switzerland, nor renew existing treaties, without a framework agreement in place. The Federal Council has suggested to the European Commission that the two parties “begin political dialogue on developing a common agenda”, as Foreign Minister Ignazio Cassis put it – the understanding in Berne being that the existing bilateral agreements will “continue to be applied consistently and without any difficulty”. Ensuring freedom of movement in this context is a key concern for the Swiss Abroad. The Organisation of the Swiss Abroad (OSA) fears that the breakdown of talks will jeopardise the residency rights of the 434,000 or so Swiss living in EU countries.

Brussels tightens the screw

Of its own accord, the Federal Council wants to align Swiss legislation with EU law to maintain the bilateral approach. The idea is that this will prevent a backlash and preserve Switzerland’s interests. The government also intends to make its outstanding Cohesion Fund payment to Brussels, intended to help poorer EU member states. According to Cassis, this is “the admission fee for access to the single market”. It is also meant as an olive branch to the EU. In September, parliament will decide whether to approve the payment worth 1.3 billion Swiss francs. Politicians had already sanctioned the payment in December 2019, albeit on the proviso that the EU refrain from taking punitive measures against Switzerland.

Brussels has already started to tighten the screw. Since the end of May, companies that export medical technology have faced significant administrative hurdles to getting their products certified in the EU. This is a direct consequence of the collapse of the framework agreement, raising fears that unfettered access to the EU single market will now be eroded further. Trouble also looms regarding access to the Horizon Europe research programme. If the EU restricts access or goes as far as barring Switzerland from the programme altogether, this would hinder mobility particularly among the student and academic community.

New bilateral agreements on areas such as electricity trading are completely off the table for now. A blackout is unlikely in Switzerland, even without an electricity treaty. Yet the risk of critical situations occurring on the power grid will increase if the network operators are excluded from the EU’s cooperation platform.

Not everyone is pessimistic about the future. Economic historian Tobias Straumann believes that Brussels will settle for a pragmatic course sooner or later – as it did during negotiations with the now-departed UK. “The EU and its member states are used to handling variations, granting exceptions and making pragmatic decisions,” he wrote in the “NZZ am Sonntag”.

For more information on Swiss-EU relations, see the “Swiss Review” online dossier. This dossier also contains relevant position papers prepared by the Organisation of the Swiss Abroad (in French and German).