Switzerland–European Union relations

Relations between Switzerland and the European Union (EU) are framed by a series of bilateral treaties whereby Switzerland adopts EU law in order to participate in the EU's single market.

Trade

The EU is Switzerland's largest trading partner, and Switzerland is the EU's fourth largest. Switzerland accounts for 5.2% of the EU's imports; mainly chemicals, medicinal products, machinery, instruments and time pieces. In terms of services, the EU's exports to Switzerland amounted to €67.0 billion in 2008 while imports from Switzerland stood at €47.2 billion.^[1]

Treaties

Switzerland is a member of the European Free Trade Association (EFTA). It took part in negotiating the European Economic Area (EEA) agreement with the European Union. It signed the agreement on 2 May 1992, and submitted an application for accession to the EU on 20 May 1992. However, a Swiss referendum held on 6 December 1992 rejected EEA membership. As a consequence, the Swiss government decided to suspend negotiations for EU membership until further notice. Its application remains open.

In 1994, Switzerland and the EU started negotiations about a special relationship outside the EEA or full membership framework. Switzerland wanted to safeguard the economic integration with the EU that the EEA treaty would have permitted, while purging the relationship of the points of contention that had led to the people rejecting the referendum. Swiss politicians stressed the bilateral nature of these negotiations, where negotiations were conducted between two equal partners and not between 16 or 28, as is the case for EU treaty negotiations.

These negotiations resulted in a total of ten treaties, negotiated in two phases, the sum of which makes a large share of EU law applicable to Switzerland. The treaties are:

First treaty

1. Free movement of people
2. Air traffic
3. Road traffic
4. Agriculture
5. Technical trade barriers
6. Public procurement
7. Science

Later treaties

1. Security and asylum/Schengen membership
2. Cooperation in fraud pursuits
3. Final stipulations in open questions about agriculture, environment, media, education, care of the elderly, statistics and services.

The bilateral approach, as it is called in Switzerland, was consistently supported by the people in various referenda. It allows the Swiss to keep a sense of sovereignty, due to arrangements when changes in EU law will only apply after a joint bilateral commission decides so in consensus.

The commission can never discuss or change contents, i.e. unlike full EU members, Switzerland has no influence over the contents of EU law that will apply. And while the bilateral approach officially safeguards the right to refuse application of new EU law to Switzerland, in practice this right is severely restricted by the so-called Guillotine Clause, giving both parties a right to cancellation of the entire body of treaties when one new treaty or stipulation cannot be made applicable in Switzerland.

From the perspective of the EU, the treaties largely contain the same content as the EEA treaties, making Switzerland a virtual member of the EEA. Most EU law applies universally throughout the EU, the EEA and Switzerland, providing most of the conditions of the free movement of people, goods, services and capital that apply to full member states. Switzerland pays into the EU budget and extended the bilateral treaties to the new EU member states, just like full members did, yet people had to decide upon this in a referendum.

The bilateral approach has superseded Swiss enthusiasm for full membership. The popular initiative "Yes to Europe!", calling for the opening of immediate negotiations for EU membership, was rejected in a 4 March 2001 referendum when voters rejected the proposal by 76.8%.^[2][3] The Swiss Federal Council, which is in favour of EU membership, had advised the population to vote against this referendum since the preconditions for the opening of negotiations had not been met.

In a referendum on 5 June 2005, Swiss voters agreed, by a 55% majority, to join the Schengen treaty, a result that was regarded by EU commentators as a sign of support by Switzerland, a country that is traditionally perceived, for better or worse, as isolationist. The agreement came into effect on 12 December 2008.^[4]

With the ratification of the second round of bilateral treaties, the Swiss Federal Council downgraded their characterisation of a full EU membership of Switzerland from a "strategic goal" to an "option" in 2006.

The decisively positive result of the referendum on extending the freedom of movement for workers to Bulgaria and Romania, who joined the EU on 1 January 2007 caused the left-wing Green Party and the Social Democratic Party to state that they would renew their push for EU membership for Switzerland.^[5] The above mentioned Guillotine Clause was generally held as the reason this referendum result was positive despite the previously generally negative polls.^[6] The EU (through its ambassador Reiterer) did threaten to use this clause.^[7]

By 2010 Switzerland has amassed around 210 trade treaties with the EU. Following the institutional changes in the EU (particularly regarding foreign policy and the increased role of the European Parliament) European Council President Herman Van Rompuy and Swiss President Doris Leuthard expressed a desire to "reset" EU-Swiss relations with an easier and cleaner way of applying EU law in Switzerland.^[8]

Foreign Policy

In the field of foreign- and security policy, Switzerland and the EU have no overarching agreements. But in its Security Report 2000, the Swiss Federal Council announced the importance of contributing to stability and peace beyond Switzerland’s borders and of building an international community of common values. Subsequently, Switzerland started to collaborate in projects of EU's Common Foreign and Security Policy (CFSP). In the field of peace support operations, Switzerland has, until today, contributed staff or material to the following seven (out of 23) CSDP-Missions: EU Police Mission (EUPM) and EU Military Operation in Bosnia and Herzegovina (EUFOR-Althea), EUPOL RD mission in the Democratic Republic of Congo, European Union Rule of Law Mission in Kosovo (EULEX KOSOVO), EU Police Mission in the former Yugoslav Republic of Macedonia (Proxima), Aceh Monitoring Mission (AMM) in Indonesia and EUFOR RD Mission in the Democratic Republic of Congo. Close cooperation has also been established in the area of international sanctions. Until today, Switzerland has adopted five EU sanctions that were installed outside the UN. Those affected the former Republic of Yugoslavia (1998), Myanmar (2000), Zimbabwe(2002), Uzbekistan (2006) and Belarus (2006).^[9]

Use of the euro in Switzerland

The currency of Switzerland is the Swiss franc. Switzerland (with Liechtenstein) is in the unique position of being surrounded by countries which use the euro. As a result, de facto, the euro is accepted in many places, especially near borders and in tourist regions. Swiss Railways accept euros, both at ticket counters and in automatic ticket machines.^[10] Also many public phones, vending machines or ticket machines accept euro coins. Many shops and smaller businesses that accept euros take notes only, and give change in Swiss Francs, usually at a less favourable exchange rate than banks. Many bank cash machines issue euros at the traded exchange rate as well as Swiss francs.

On 6 August 2011 The Swiss Franc effectively switched to a euro peg: The Franc had always floated independently until its currency appreciation became unsustainable during the Eurozone debt crisis. The peg involves a minimum exchange rate of 1.20 francs to the euro, currently there is no upper bound in place. It is important to note that Switzerland is not officially a member of Exchange Rate Mechanism (ERM II) as it is not an EU member and expresses no ambitions to become an EU member. However ERM II is the only existing mechanism for Euro pegging therefore Switzerland is said to be an unofficial member. The Swiss National Bank (SNB) has committed to maintaining the exchange rate to ensure stability.

Swiss relations to individual EU members

See also

• Enlargement of the European Union
• Foreign relations of Switzerland
• German immigration to Switzerland
• Italian immigration to Switzerland
• Exchange Rate Mechanism

Notes and references