Switzerland and the European Union

Introduction

In keeping with its long tradition of sovereignty and neutrality, Switzerland is one of only a handful of western European nations that have not joined the European Union. Bordered on all sides by member states, the Swiss maintain a bilateral relationship with the EU. In 2001, Swiss citizens voted on a popular initiative to open membership negotiations, but nearly 77 percent of voters decided that Switzerland should remain separate from the European Union.

History

The history of Switzerland’s bilateral involvement with the European Community occurred in four main parts.

1.       The Free Trade Agreement of 1972 created a free trade zone for industrial products.

2.       The Insurance Agreement of 1989 partially liberalized the insurance market.

3.       The Bilateral Agreements I of 1999 pushed Switzerland in the direction of economic integration with the EU after their decision not to join the European Economic Area (EEA) in 1992.

4.       The Bilateral Agreements II of 2004 extended economic integration to industries not considered by Bilateral Agreements I and established cooperative political ties regarding security, asylum, the environment, and cultural affairs.

 

In 1992, Switzerland held a referendum on membership to the European Economic Area, which allows European Free Trade Association members to participate in the EU’s internal market. Swiss citizens voted against joining the EEA, choosing instead to continue taking the strictly bilateral approach to their relationship with the EU. Joining the EEA would have required Switzerland to adopt part of European Union law.

Bilateral Treaties

Engaging in bilateral treaties with the European Union allows Switzerland to work closely with the EU by solving concrete questions and problems using a step-by-step approach. By using specific contractual agreements, both the EU and Switzerland gain market access and work collaboratively on key issues. Unlike full EU integration, however, the bilateral approach does not require Switzerland to accept EU laws above its own.

Treaties signed with the EU have made possible the free movement of goods, services, capital, and people. They include, notably, the Free Trade Agreement (FTA) the Free Movement of Persons Agreement , and the Schengen/Dublin Agreement. Although Switzerland does not hold any official influence over the content of European Union law and policy and is not required to accept changes to EU law automatically, the so called Guillotine Clausestipulates that if one agreement is terminated, then the entire body of treaties will be null and void.

Controversy

Should Switzerland join the European Union? The Swiss Business Association, economiesuisse, says “no.” If Switzerland joins the EU, their report warns, there will be an increase in regulation and costs as well as less political autonomy. Because the EU has determined that Switzerland’s low cantonal tax rates to be uncompetitive, Switzerland may risk losing foreign enterprises that are attracted by these low rates if the country decides to become a full EU member. Furthermore, the Swiss economy outperformed all the countries in the Eurozone throughout the recent recession.

On the other hand, EU ambassador to Switzerland, Michael Reiterer, stated that the future for young Swiss citizens “lies in Europe” and British parliamentarian, Denis MacShane, worries that Switzerland will lose influence if it remains a non-member. The EU is also considering new laws that could lessen competition with non-member states, especially concerning alternative investments. Not only may the Swiss economy benefit from opening its market for financial services, but an integrated Swiss financial sector would also strengthen Europe’s competitiveness.

Controversy also arose over a 2008 referendum, in which Swiss citizens voted on whether to renew the existing Free Movement of People agreement and extend it to the newest members to the EU, Bulgaria and Romania. Opponents of the measure launched a campaign, which notoriously included a widely distributed image of three black ravens aggressively attacking a small map of Switzerland.

Voters overwhelmingly decided to renew the Free Movement of People agreement and extend the right to work in Switzerland to citizens of Bulgaria and Romania. If the agreement was not renewed, the Guillotine Clause may have taken effect and nullified all of Bilateral Agreements I.

Most recently, Switzerland voted to enact a “safeguard clause” that allows them to limit the amount of residence permits given to foreign citizens, in an attempt to stem the influx of immigrants into the country.  According to a statement, “[the Swiss government] came to the conclusion that the safeguard clause is one of several measures which can help to make immigration more acceptable to society."

Future

After the ratification of Bilateral Agreements II, the Swiss government downgraded its consideration of full EU membership from a “strategic goal” to an “option”, signaling the nation’s reluctance to take steps in the direction of EU membership. Switzerland and the European Union are now considering a third round of bilateral treaties, but disagreements have surfaced between the EU and Switzerland regarding further tailor-made treaties. Some EU officials have begun to reject Switzerland’s bilateral approach to relations with the EU, which they believe are too bureaucratic. The EU also wants a more comprehensive agreement and Switzerland to adopt EU law automatically, but Switzerland is insistent on continuing the bilateral trend.