March Issue

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Focus of the Month:

Decision Time for Switzerland

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Other Highlights:

Reinstating a Basic Right is not a Privilege

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Security of Supply through Economic Openness

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Digital Advances for a Crisis-proof Democracy

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Latest Publications:

Corporate Life Cycles

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Trade-offs in Pandemic Response

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Democracy and Federalism Derailed by the Coronavirus?

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Decision Time for Switzerland

Revising relations with the European Union cannot be postponed forever

by Haig Simonian, our external editor

Discussions about Bern’s future relations with Brussels have been maturing longer than the average Swiss cheese. But the process may finally be reaching a conclusion as debate intensifies on both sides of the argument.

Opponents of the deal, officially entitled the “Agreement on Easing Bilateral Relations between the EU and the Confederation” argue the accord – hammered out almost 900 days ago – infringes Swiss sovereignty, encourages wage dumping and offers unprecedented rights to EU citizens.

Concentrated initially among the right-wing Swiss People’s Party and the Social Democrats and trade unions, hostility has in recent months swollen to include some more middle of the road forces and even a new lobby created by three self-made Swiss private equity billionaires. Decision making responsibility, meanwhile, has shifted between government, parliament, and lobby groups, with Swiss official negotiators coming and going, so hot has been the political potato.

Not a lost cause

Support, meanwhile, from liberal, pro market and pro business groups, remains solid. Although no longer quite so vocal, comment on the chances of securing an accord remains upbeat. In March, Livia Leu, the top Swiss negotiator, told a Swiss business magazine agreement could still be reached.

Most recently, Peter Grünenfelder, Director of Avenir Suisse, splashed with a full page guest article in the prestigious Neue Zürcher Zeitung explaining the urgency of a decision.

He reminded readers that the initiative for a new, more dynamic, arrangement with Brussels had originated on the Swiss side – countering today’s perception that the EU is trying to “impose” an accord on Bern. And he noted the value to the Swiss economy of access to the EU’s single market. In 1992 Swiss voters rejected participation in the European Economic Area, which would have been a sort of halfway house to EU membership. They embarked instead on the complex mesh of bilateral treaties Brussels is now trying to simplify. In the interests of fairness, Grünenfelder also noted Switzerland’s importance to the EU given its strategic position at the heart of Europe.

On sovereignty – the strongest of the three Swiss objections to the new deal – he observed Switzerland’s customs union with tiny neighboring Liechtenstein allows for independent arbitration – a proposal Swiss opponents of the new arrangement with Brussels deem a risk to hard earned Swiss independence.

Moreover, suggestions that Bern has been unable to improve the terms of the deal were wrong, Grünenfelder argued, pointing to concessions by the European Commission in recognition of Swiss direct democracy in the course of the arduous talks.

Market access crucial

Grünenfelder stressed the priority of maintaining access to the EU single market, a source of at least 800,000 Swiss jobs, and even more indirectly. He also noted the status quo already implied some transfer of sovereignty.

The EU has warned that failure to strike a deal would mean freezing any further agreements or updates to the existing arrangements. That would exclude Swiss companies from all manner of future potential markets. The Swiss medical technology sector, for example, which faces the imminent need to update current arrangements with the EU on eliminating technical trade barriers, covers 1,400 companies and 60,000 jobs alone. Other sectors would, in time, also face handicaps.

Inevitably, Brexit has influenced Swiss thinking. But Grünenfelder dismisses suggestions Switzerland could somehow emulate the UK and potentially base its future relations with Brussels on a long standing 1972 free trade deal, as some opponents of the new arrangements have claimed. That would lead to all manner of extra problems and red tape for Switzerland’s crucial export sector, he observes.

One argument, sometimes overlooked by critics of a new deal with Brussels, is more broadly geostrategic. Switzerland is rich and highly competitive. But, with just 8.5 million inhabitants, it is a relative minnow geo-strategically. With China on the rise, and global diplomacy turning increasingly into a matter of discussion between blocs, Bern would be well advised to cozy up ever closer to its European neighbors. Ultimately, the government should take the issue by the horns, and, in the best Swiss tradition, let the people decide.

Our Latest Publications

Corporate Life Cycles

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Trade-offs in Pandemic Response

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Democracy and

Federalism Derailed by the Coronavirus?

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Do you have any suggestions?

Please send your feedback to [email protected]

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Avenir Suisse is the leading Swiss think tank which promotes open-market ideas in economics, politics and society at large. Although continuing to publish on Switzerland’s domestic politics, the think tank aims to address Switzerland’s growing importance in the international community and global economy. Avenir Suisse’s English-language monthly newsletter aims to reunite people and institutions interested in obtaining regular valuable insights on Switzerland, useful in international discussions and as a source of comparisons.

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