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Switzerland’s Federal Council today (26 May) announced that it was bringing to an end its discussions with the EU on a new EU-Swiss Institutional Agreement. The main difficulties have been over state aid, free movement and the related issue of the wages of posted workers.
Switzerland has reached the conclusion that the differences between Switzerland and the EU are too great and that the conditions necessary for its conclusion have not been met.
In a statement the European Commission said that it had taken note of this unilateral decision of the Swiss Government and that it regretted this decision given progress made over the last years.
The EU-Swiss Institutional Framework Agreement was intended as a way to overhaul the 120 bilateral agreements that had become unmanageable and out of date and to replace it with a single framework aimed at a more workable, and modern arrangement for future EU-Swiss bilateral relations.
The EU stated: “Its core purpose was to ensure that anyone operating in the EU Single Market, to which Switzerland has significant access, faces the same conditions. That is fundamentally a matter of fairness and legal certainty. Privileged access to the Single Market must mean abiding by the same rules and obligations.”
The Swiss side has said that in order to limit the negative consequences of the end of the negotiations, the Federal Council has already started to plan and implement various mitigation measures.
In an accompanying factsheet the EU outlines areas that may be effected by today’s decision of Switzerland not to agree to a new framework, including areas such as health, medical devices, agriculture, electricity and labour markets.
Consequences include:
Switzerland would have to leave EU electricity trading platforms and cooperative platforms for grid operators or regulators, and would gradually lose its privileged connection with the EU electricity system.
A public health agreement cannot be contemplated without the conclusion of the Institutional Framework Agreement). Without it, Switzerland cannot participate in: – The European Centre for Disease Prevention and Control, which provides scientific support, experts, analysis of variants, and assessment of the situation in the EU/EEA; Joint Procurements for purchase of protective equipment, treatments, diagnostics; An e-health network that gives, for example, technical specifications for the interoperability of COVID-19 tracing apps (no participation possible in the technical work); The EU4Health Programme that will finance many of the preparedness and response activities to COVID-19; The future European Health Emergency Preparedness and Response Authority (HERA), which will enable rapid availability, access and distribution of countermeasures.
Without the extension of the scope of the Trade in Agricultural Products Agreement to the whole food chain, issues such as food labelling will remain not harmonised, which discourages Small and Medium Enterprises from exporting from Switzerland into EU Member States and reciprocally. Not upgrading the agreement towards further liberalisation will deprive Switzerland of the opportunity to negotiate better market access for some agricultural products, notably meat and dairy, where access is today limited.
Some figures on EU-Swiss relations
More than 1.4 million EU citizens reside in Switzerland and around 400,000 Swiss nationals in the EU. This represents 4.6% of Swiss citizens, compared to 0.3% of EU citizens. 19% of the working age population in Switzerland have EU citizenship. In addition there are around 350,000 cross-border commuters who work in Switzerland. Switzerland has become more and more dependent on posted service workers from neighbouring countries, a remarkable 37.4% of doctors working in Switzerland come from abroad, with the majority coming from nearby EU countries. The figures for other sectors, show a remarkably heavy dependence on non-Swiss workers: gastronomy (45%) construction (35%), manufacturing industries (30%) and information and communication (30%).
The EU is Switzerland’s most important trading partner accounting for almost 50% or about €126 billion of its imports of goods and about 42% or some €114 billion of its exports of goods. • Switzerland is the EU’s fourth largest trading partner after China, the U.S. and the UK. The Swiss market represents about 7% of EU exports and 6% of its imports.
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