European Union Details Switzerland-EU Relations

EU Details Switzerland-EU Relations

Negotiations continued with Switzerland on the accession of the ten new member states to the EU-Switzerland agreement on free movement of persons

The third round of the negotiations (launched last July) took place on Monday, 20 October in Brussels. The main issue at stake concerns the Swiss request for additional transition periods as Switzerland wants to maintain existing restrictions for nationals of the new member states during an additional transition period of seven years. The EU cannot accept any discrimination between old and new member states and deems sufficient the transitional arrangements of the 1999 agreement, which are based on annual quotas for short and long-term work permits. In case of massive influxes Switzerland can maintain quantitative restrictions until 2014.

The EU argues that in addition to increased quotas a unilateral safeguard clause could be granted in line with what has been agreed with Norway and Iceland in the European Economic Area. The quota regulation in combination with such a safeguard clause for quota-free periods would provide ample protection against unsustainable migration movements. In any case, judging from existing studies and earlier enlargements, no such movements are expected to happen.

An agreement should be reached in time to be applied as from 1 May 2004, the date scheduled for EU enlargement.

In parallel to these negotiations the EU expects soon to start negotiating on a financial contribution to social and economic cohesion, as Switzerland will benefit through a series of bilateral agreements from the enlarged Internal Market. The contribution could take the form of Swiss project financing comparable to what has been agreed with Norway. These negotiations should also be concluded in time for enlargement.

See Below further information on EU-Switzerland relations:

Current Status of EU/Swiss Relations

The EEA Agreement provides the participating parties with a structured mechanism for political dialogue at the highest level. Unfortunately, the refusal by Swiss referendum of such an agreement has deprived the EU and Switzerland of such a framework mechanism. As a consequence, there is no structured political dialogue between the EU and Swiss authorities. Although there is no Delegation of the European Commission in Bern, the Swiss have a Permanent Mission to the European Community in Brussels. All EU Member States are present in Bern, and some of them have consulates in other Swiss cities.

In order to minimise the negative consequences of the rejection of the EEA agreement, negotiations for agreements in seven sectors (Free Movement of Persons, Trade in Agricultural Products, Public Procurement, Conformity Assessments, Air Transport, Transport by Road and Rail, Swiss Participation in the 5th Framework Programme for Research) began in 1994. These were concluded and agreements signed on 21 June 1999. This time, the Swiss people, consulted by referendum on 6 May 2000, approved the agreements. Ratification in all EU Member States was concluded in early 2002 and the seven agreements entered into force on 1st June 2002 (OJ L114 of 10/04/2002 p. 1-480). These agreements are linked by a termination clause, which

means that all the agreements came into force together and will also come to an end together if any one of them is terminated.

Currently, there are negotiations at different stages of progress under way on:

Improved co-operation against fraud;

Participation in the European Environment Agency, EUROSTAT and on the MEDIA programme;

Participation in the 6th Framework Programme for Research and Development;

Liberalisation of trade in processed agricultural products;

Liberalisation of services;

Participation in of the Schengen and Dublin agreements on border control and asylum policy;

Savings taxation;

EUROPOL

ECURIE

Successor to the Lugano Convention

Impact of EU Enlargement

The forthcoming EU enlargement will have consequences for the existing agreements between the EC and the Swiss Confederation. The adaptation of the agreements is in principle a technical question. However, for the Agreement on Free Movement of Persons, a new round of formal negotiations will be conducted in early 2003 to undertake such an adaptation.

Economic Situation – Main Characteristics

The Swiss economy is highly internationally integrated, capitalising on an open trade regime for industrial products. Tariffs on manufactures are generally low, and in principle there are no quantitative restrictions, anti-dumping, countervailing or safeguard actions. However, in a number of sectors, the market entry has long suffered from "private" or "informal" barriers, which can be attributed to a legacy of weak anti-cartel legislation, specific and protective technical regulations, certain investment restrictions, and exclusive rights under intellectual property legislation.

Economic sectors

The agricultural sector is strongly protected and enjoys the world’s highest subsidies. This fact, together with weak internal competition for a range of goods and services, causes high consumer prices, which are well above the level in neighbouring countries.

The banking sector plays a predominant role, benefiting from tax advantages and special laws on bank secrecy and non-co-operation in the prosecution of fiscal crimes. Around one-third of the world’s offshore private banking market is controlled in Switzerland.

Recent reforms were introduced in the form of "autonomous adaptations to EU standards". Steps are being taken to liberalise service sectors such as telecommunications, railways and electricity. Efforts by the Federal Council to liberalise the electric sector have received a negative response from the Swiss people who, in a referendum held on 22 September 2002, rejected the corresponding law.

The coming into force in June 2002 of the bilateral agreements on public procurement, agricultural products and mutual recognition in relation to conformity assessment will further liberalise the trade with the Union.

Trade

Switzerland’s main trading partner is the EU, which absorbs 61% of its exports and supplies 79% of its imports. On the other hand, Switzerland is currently the fourth largest trading partner of the EU, (data for the year 2000 show that the trade figures were almost €60 billion Euro in imports and €70.7 billion in exports, just behind the US (€195.6 billion in imports and €240 billion in exports for the year 2001), Japan (€76.3 billion in imports and €44.9 billion in exports for the year 2001) and China (€75.9 billion in imports and €30 billion in export for 2001). Until recently, Switzerland was ranked second trading partner.

Swiss merchandise exports are concentrated in a few sectors, particularly machinery, instruments, watches, chemicals and medicinal products. Exports of commercial services are also important, with about one quarter originating in the financial sector.

Real economy

After a record growth of 3% in 2000, the Swiss economy did not escape the international slowdown in 2001, slowing substantially to a modest growth of 1.3%. Growth in 2002 is expected to slow further to 0.7%. A renewed expansion is projected for 2003 on the back of an improved export environment.

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