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Showdown over the bilateral agreements

03.04.2020 – Theodora Peter

Should Switzerland abandon the Swiss-EU agreement on the free movement of persons? It should, according to an SVP initiative that will be put to the people on 17 May. The outcome of this vote will decide the future direction of Swiss-EU relations.

The aim of the SVP’s popular initiative, “For moderate immigration”, is for Switzerland to have full control over immigration. This is something that “any independent and economically successful country should take as a given”, according to the SVP, which believes that “mass” immigration is pushing Swiss out of the job market, reducing living space and putting a strain on social security.

If the SVP initiative is successful, Switzerland will either have to renegotiate or terminate the Swiss-EU agreement on the free movement of persons. An end to free movement would result in around 450 million EU citizens losing the right to live and work in Switzerland without any formal restrictions. But, in turn, it would also affect Swiss who want to live and work in the EU.

The SVP launched the initiative in 2018 in reaction to what they view as the non-implementation of the “Stop mass immigration” initiative, which saw 50.3 per cent voting in February 2014 to introduce immigration curbs and quotas. Parliament found it hard to agree to anything other than a watered-down version of the 2014 initiative, because implementing it to the letter and restricting immigration is legally at odds with the bilateral agreements. In the end, parliament merely agreed on an arrangement that obliges employers to advertise vacant positions to job centres and invite Swiss job seekers for interview. The SVP accused parliament of violating the constitution.

Crucial question on Europe

Handshake between EU commissioner Johannes Hahn (left) and Federal Council Ignazio Cassis at the WEF in Davos. Cassis’ reading of the meeting: the EU demonstrates understanding of the Swiss government’s wait-and-see approach. Photo: Keystone

How should Switzerland fundamentally interact with the EU? This was and still is the key question. In both 2000 and 2009, voters decisively put their weight behind the bilateral agreements with the EU. With its latest attack on free movement, the SVP is politically isolated. All the other political parties including industry groups have called it the “termination initiative” and warned that adopting it would jeopardise the bilateral relationship between Switzerland and the EU. This is down to a “guillotine clause” stipulating that if just one agreement is not extended or is cancelled, all seven bilateral agreements cease to apply.

According to economiesuisse CEO Monika Rühl, Brexit has emphatically shown that, from the EU’s point of view, participation in the European single market is inextricably linked to freedom of movement. Unfettered access to the EU market is the life blood of the Swiss economy, given that 50 per cent of Swiss exports go to the EU.

Waiting on a framework deal

However, Switzerland is going to have to reboot its relationship with the EU regardless. The draft institutional framework agreement designed to replace the existing bilateral agreements has been on the table for 15 months. Certain aspects of the text remain controversial: wage protection, state subsidies, and the Citizens’ Rights Directive (see also “Swiss Review” 5/2019). Since last summer, the Confederation, the cantons, and employer and employee organisations have been working behind closed doors to find appropriate solutions.

The Federal Council now wants to wait until the outcome of the popular vote on 17 May before commenting on these outstanding issues. At the beginning of the year, a government delegation met European Commission President Ursula von der Leyen as well as the EU commissioner responsible for Switzerland, Johannes Hahn, at the World Economic Forum (WEF) in Davos. Hahn was very understanding of Switzerland’s wait-and-see stance, said Federal Councillor Ignacio Cassis (FDP) after the meeting. There was no time limit for completing the negotiations as far as the EU was concerned. “Nevertheless, we obviously need to start moving forward after 17 May,” he added.

Time is particularly of the essence for the medical technology sector, which could lose unrestricted access to the EU market as early as the end of May. As long as the framework deal remains on hold, the EU will not be prepared to update the agreements on the mutual recognition of conformity assessment. That is the technical situation at least, what it means in practice is serious complications and significant additional costs for day-to-day business. Switzerland will no longer be treated the same as EU member states, meaning that medtech companies will have to get their products certified in the EU. The business federation economiesuisse is therefore urging the Federal Council to sign the framework agreement as soon as possible.