At its meeting on 26 May 2021, Switzerland’s Federal Council evaluated the results of Switzerland’s negotiations with the EU around the institutional framework agreement, an agreement aimed at replacing the country’s current patchwork of agreements with the bloc, and decided not to sign the document as it stands and communicated its decision to Brussels.
The Federal Council said that the conditions are not met for signing the agreement. At the same time, it said it considers it to be in the shared interest of Switzerland and the EU to safeguard their well-established cooperation and maintain the agreements already in force and wishes to launch a political dialogue with the EU on continued cooperation.
In addition, Swiss ministers said they had tasked the Federal Department of Justice and Police (FDJP) to consider amendments to Swiss legislation that might contribute to the stabilisation of Swiss–EU relations.
The key sticking points were wage protection, state aid and citizens’ rights in connection with the free movement of people, in particular the right of EU citizens working in Switzerland to claim Swiss welfare benefits. Demands submitted to the EU on these points had broad backing in Switzerland and were supported by the cantons, social partners and a majority of the political parties. However, the document in its current form would not find sufficient support, said the Federal Council.
The institutional framework agreement was intended to safeguard Switzerland’s access to the European single market and to provide a basis for expanding that access. It would have fundamentally changed Swiss–EU relations and introduced the automatic adoption of changes to EU law, a disputes arbitration panel and given the Court of Justice of the European Union the central role in interpreting EU law.
The Federal Council said that Switzerland always responded clearly to specific proposals put forward by the EU and that the parties’ had gained a better understanding of each other’s positions through these talks. However, the two sides did not succeed in reconciling their positions.
A press conference on the decision can be viewed in the video below.
The decision not to sign the agreement brings to a close seven years of negotiations.
The Swiss government hopes the EU will continue to honour the existing bilateral agreements, while pointing out that Switzerland is one of the EU’s most important trading partners, ranking 4th for exports of goods, 3rd for services and 2nd for investment. The EU has a trade surplus with Switzerland amounting to tens of billions of francs. In addition, around 1.4 million EU citizens live in Switzerland and roughly 340,000 people commute to Switzerland from the EU to work.
The Federal Council said it will engage with Parliament in order to release the funds for the second Swiss contribution to the EU as soon as possible, and will seek to finalise the memorandum of understanding with the EU without delay.
At the same time, the Federal Council said it had instructed the Federal Department of Justice and Police (FDJP) to assess the potential for amendments to Swiss legislation with the aim of stabilising Swiss–EU relations. The Federal Office of Justice will identify current discrepancies between EU and Swiss law and determine where alignment of the legislation might be appropriate and in the interest of both parties.
Economic links between Switzerland and the EU are governed by more than 100 bilateral agreements dating back as far as 1972. These are likely remain in place, but any changes to them are unlikely, and some have expiry dates. A deal related to medical devices expired on 26 May 2021.
“We regret this decision, given the progress that has been made over the last years to make the Institutional Framework Agreement a reality,” wrote the EU commission in a statement. “Without this agreement, this modernisation of our relationship will not be possible and our bilateral agreements will inevitably age: 50 years have passed since the entry into force of the Free Trade Agreement, 20 years since the bilateral I and II agreements. Already today, they are not up to speed for what the EU and Swiss relationship should and could be. We will now analyse carefully the impact of this announcement.”