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What Brexiting Britain can learn from Bern

Article by Dr Ed Turner and Anna Wartmann

July 26, 2018

What Brexiting Britain can learn from Bern

At first sight, EU relations with Switzerland might seem a ‘niche’ topic for a British observer.  But in fact current developments are rather important in understanding potential models for the UK’s post-Brexit relationship with the EU, as well as providing insights into some of the difficulties in structuring bilateral relations.

After all, both countries are already highly integrated economically with the EU; at the same time they also grapple with a balance between this and national sovereignty. The Swiss rejected an initiative to begin EU accession negotiations in 2001 by a large majority in a referendum, having earlier rejected (by a hair’s breadth) membership of the European Economic Area in 1992 – issues of national sovereignty are strongly emphasised by Swiss voters and politicians alike, with a strong tendency for discussion of technical matters to become issues of principle. At the heart of the complications in the Swiss relationship are the constitutional provisions for referendums on legislative proposals – allowing the Swiss to retain the sovereignty to conduct such referendums is clearly at odds with the EU’s desire for a common legislative and regulatory framework where single market access is desired. It is easy to see parallels with the UK’s expressed desire for the ability to make its own laws and avoid direct European Court of Justice jurisdiction, while at the same time wishing to maintain the benefits of single market access. Swiss negotiators, too, have noticed that Brexit has heightened interest in whatever deal they are able to strike.

We should not downplay the extent to which Switzerland already co-operates with the EU.  It is a member of the Schengen agreement (although that is not without its challenges), allowing free movement without border checks with EU countries. Unlike other members of the European Free Trade Association (EFTA), Switzerland does not enjoy full access to the Single Market (in return for full acceptance of EU law), and instead there is a series of bilateral agreements governing Swiss-EU trade relations. There are two areas in which these are perceived to be inadequate at present.  From the Swiss perspective, first, there are areas in which Switzerland would like to see integration with the EU go further (for instance, around equity markets). Secondly, seven Swiss bilateral agreements with the EU are currently affected by a ‘guillotine’, under which if one agreement falls, then, like a house of cards, all agreements cease to apply within six months. This is extremely risky for both parties in a circumstance where Swiss domestic politics may assert itself through a referendum. The EU, too, wants to see change: ever since the Swiss rejected EU accession, EU leaders have urged them to reach an agreement on institutional questions, such as how to update bilateral agreements according to the evolution of EU law (to what extent changes are automatically adopted, for example), and how disputes can be resolved.

The FDP, a centre-right, pro-market political party, which is part of the government and whose member Ignazio Cassis heads the Foreign Ministry, has put forward proposals to break the deadlock that have now been broadly endorsed by the national government. Specifically, Switzerland would agree, in principle, to adopt new EU law provided it had greater influence on EU legislative decisions. These would need to be adopted domestically in Switzerland (with such provisions still having the potential to be defeated by a referendum). If that happened, then there would be a negotiation on compensatory measures between the two countries, and if agreement could not be reached there, an independent court of arbitration would take the final decision. These proposals have received a cautious welcome from Brussels – if adopted, they could perhaps provide a way through the UK’s conundrum of how to reconcile sufficient regulatory alignment to allow an acceptable measure of co-operation and single market access, with ‘red lines’ around national sovereignty and ECJ jurisdiction.

There are further lessons that can be learned from recent Swiss interactions with the EU. First, Brussels has a tendency to become impatient and intolerant of the peculiarities of domestic political processes. A perception of heavy-handedness was generated when it only granted a year’s mutual recognition to Swiss equity traders, rather than the expected ongoing agreement.

Secondly, in both Switzerland and the UK (but increasingly beyond), domestic and foreign policy are become intertwined. This can lead to a certain volatility – for instance, Switzerland’s membership of the Schengen zone has been placed in jeopardy by proposed new measures on handguns (the country might face a referendum on this issue from shooting clubs, and failure to adopt the new Schengen rules would force it out of the zone).

Thirdly, Brexit has complicated the picture for the EU’s relations with third countries. Cassis, when appointed Foreign Minister, decided to spend his first hundred days ‘taking stock’ of the situation. That posed a dilemma for Switzerland – whether to seek to conclude a new agreement with the EU before Brexit or to delay: by going early the Swiss would potentially miss out on concessions that might flow by precedent from a bespoke EU-UK deal and shaped by the UK market’s greater significance; equally, they might avoid unwelcome precedents if the UK ends up with a ‘hard Brexit’. In the end, the country has opted to try to get an institutional agreement with the EU in advance of Brexit (which says something about Bern’s perception of progress on the Brexit negotiations).

Fourth, the Swiss and indeed the UK’s situations are an important reminder that the relations of both EU member states and third countries are driven very much by issues of principle, not just hard economic interests. If only the latter were relevant, Brexit would not have happened, and Switzerland would have compromised on issues of its sovereignty a long time ago.

So we contend that it is important for London’s negotiators to keep looking towards Bern and its dealings with Brussels – there could well be some important tips in how to handle thorny issues of regulatory convergence in areas where single market access is being sought. At the same time, dealings with Switzerland should perhaps give the EU pause for thought about whether it is sometimes rather high-handed in its rejection of concerns about national sovereignty. And both cases prompt us to consider domestic foibles, as well as economic rationalities, when looking to understand relationships with the EU.

Ed Turner is Senior Lecturer in Politics at Aston University and a Research Fellow of the Foreign Policy Centre. Anna Wartmann works for the FDP in Bern. Both write in a personal capacity and the contents of this piece represent their own views.

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