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New$Year,$New$Treaties?$!
Emerging(Post-Brexit'Relations'of'Switzerland'with'Europe'"
Blog,&DCU& Brexit&Institute,&January&24&2019:&http://dcubrexitinstitute.eu/2019/01/emerging-post-
brexit-relations-of-switzerland-with-the-eu-and-the-uk/&
!
Charlotte!Sieber-Gasser!
!
!
In! its! relations! with! Europe,! Switzerland! relies! on! more! than! 120! treaties!regulating!
partial! integration! and! sectoral! market! access! in! the! EU! and! in! the! EFTA.! The! centre-
piece!of!market!access!and!partial!integration!treaties,!the! so-called!Bilaterals,!was!ne-
gotiated!in!the!late!1990s!and!early!2000s!as!a!reaction!of!Switzerland’s!decision!to!re-
main!outside!of!the!EEA!and!the!EU.!Together!with!the!Free!Trade!Agreement!negotiat-
ed! in!1972,! they! define! to! date! the! scope! of! market! integration! between! the! EU! and!
Switzerland.!
Increasing"Legal"Uncertainty"in"EU-Swiss"Relations"
To!large!parts,!the!Bilaterals!and!the!Free!Trade!Agreement!are!static!treaties,!determin-
ing! a! set! of! binding! rules! and! commitments! relevant! at! the! time! of! negotiation.! With!
regard! to! market! access! provisions,! these! static! rules! and! commitments! are!partially!
outrun!by!market!realities!and!regulatory!dynamism!within!the!EU!in!the!meantime.!For!
instance,! provisions! in! the! bilateral! agreement! on! the! free! movement! of! persons! be-
tween!Switzerland!and!EU!did,!for!a!while,!refer!to!and!incorporate!EU!legislation,!which!
was!no!longer!in!place.!With!time,!regulatory!incoherencies!in!previously!static!agree-
ments! therefore! rendered! regular! revision!of! the! existing! bilateral! obligations! neces-
sary.!
!
The!treaties!between! Switzerland! and!the!EU!did,! however,! also!incorporate!dynamic,!
regulatory!harmonisation!from!the!start.!Dynamic!elements!in!the!Bilaterals!come!in!the!
form!of!an!obligation!of!Switzerland!to!incorporate!relevant!EU!legislation,!including!any!
of!its! revisions,!in!order! to!maintain!regulatory!equivalence.!Given! that!the! two!parties!
not! always! agree! on! the! scope! of! “relevant! EU! legislation”! and! of! “regulatory! equiva-
lence”,!even!the!dynamic!parts!of!the!Bilaterals!were!not!always!able!to!prevent!regula-
tory!incoherencies!from!emerging.!!
The"End"of"the"Consensus-Rule"in"EU-Swiss"Dispute"Resolution"
Supervision! is! currently! predominantly! in! the! hands! of! mixed! committees! established!
by!the!various!treaties!between!Switzerland!and!the!EU.!Decision-taking!in!these!mixed!
committees!is!based!on!consensus,!additional!options!to!initiate!dispute!settlement!pro-
ceedings!do!not! exist.!Given!unresolved!disagreement! on!various!regulatory! issues!be-
tween!Switzerland!and!the!EU,!legal!uncertainty!in!EU-Swiss!relations!increases!contin-
uously.!Hence,!in!2013! both!parties!entered!into!negotiations!over!a!new!treaty,!which!
would!provide! the!necessary!institutional!framework!for!the!supervision,! enforcement!
and! dispute! settlement! for! the! bilateral! relationship!between! Switzerland! and! the! EU.!
The!main!goal!was!to!re-establish!legal!certainty!in!EU-Swiss!relations.!
A"New"Institutional"Framework"Treaty"
The! draft! treaty!published! in! January! 2019!on! a! new! institutional! framework! for! EU-
Swiss!relations!is!limited!in!its!scope!to!future!market!access!agreements!and!to!five!of!
the!existing!bilateral!agreements:!1)!free!movement!of!persons,!2)!civil!aviation,!3)!over-
land! transport,! 4)! agriculture! and! 5)! technical! barriers! to! trade! (Art.! 2).! References!
made!to!EU!law!in!bilateral!treaties!will!be!interpreted!and!enforced!in!line!with!judicial!
practice!of!the! ECJ!(Art.! 4).! The! draft!framework!treaty! introduces! a!new!approach!to!
the!supervision!of! state!aid,!an! issue!that!continues!to!be!a!cause! for!disagreement!be-
tween!the!EU!and!Switzerland!(Chapter!2).!Relevant!provisions!would!only!apply!to!civil!
aviation!and!any!future!market!access!agreements.!!
!
Chapter!3!complements!the!existing!market!access!treaties!between!Switzerland!and!the!
EU!with!a!new!dispute!settlement!mechanism,!including!the!option!to!request!the!estab-
lishment!of!an!arbitration!panel.!Arbitration!proceedings!in!the!draft!framework!agree-
ment!are!similar,!if!not!identical,!to!dispute!resolution!in!EU!association!agreements!and!
in!the!proposed!Brexit!withdrawal!agreement.!Chapter!4!requires!from!the!EU!to!consult!
with!Switzerland!in!any!legislative!process!falling!within!the!scope!of!the!EU-Swiss!mar-
ket! access! agreements.!Switzerland! is! given! two! years! (three!in! the! case! of! a! referen-
dum)!to!implement! any!changes!to! the!agreements.!The! draft!framework!treaty!estab-
lishes!two!new!committees:!the!horizontal!mixed!committee!(Art.!15)!charged!with!the!
overall!supervision!of!EU-Swiss!relations,!and!the!mixed!parliamentary!committee!(Art.!
16),!which!may!issue!reports!and!resolutions!regarding!aspects!falling!within!the!scope!
of!existing!EU-Swiss!agreements.!
At"an"Impasse,"Again"
The!Swiss!government!did!not!yet!sign! the!draft!framework! treaty,!but!initiated!public!
consultations!instead.!The!fate!of!the!draft!framework!treaty!in!Switzerland!is!therefore!
rather!uncertain:!with!heavy!opposition!from!both! ends!of! the!political!spectrum!and!a!
lack!of!commitment!from!the!government,!those!supporting!the!treaty!are!currently!in!
the!minority.!!
!
Much!like!the!British!in!the!case!of!the!Brexit!withdrawal!agreement,!the!Swiss!are!con-
cerned! over! the! role! of! the! ECJ! in! the! supervision! of! the! bilateral! relations.! However,!
given! sectoral! integration!of! third! states!in! the! common!market,! the! EU! indeed! has! a!
legitimate! regulatory! interest! in ! securing! uniform! interpretation!of! applicable! EU! law.!
Needless!to!say!that!given!the!history!of!the!bilateral!relations!between!Switzerland!and!
the!EU,!some!sort!of!dispute!settlement!mechanism!is!also!in!the!interest!of!third!states.!
Thus,!those!in!support!of!the!draft!framework!agreement!focus!on!the!fact!that!the!sug-
gested! dispute! resolution! is! likely! to! increase! legal! certainty! and! is! therewith! an! im-
provement!of!the!current!situation.!
!
Linked!with!this!is!the!fact!that!sectoral!integration!is!bound!to!collide!with!sectors!not!
currently! integrated! in! the! bilateral! agreements.! In! the! case! of! Switzerland,! these! are!
most!prominently!services,!state! aid!and! competition.!All!of!which! are!tied! with!the! ex-
isting!integration,!but!remain!outside!of!the!scope! of! the! treaties!between! Switzerland!
and!the!EU.!Not!having!to!play!by!EU-rules!gives!Swiss!industries!a!sectoral!competitive!
advantage!in!the!common!market!and!enables!Switzerland!to!protect!its!internal!market!
to! a! certain! extent! against! EU! competition.!However,! services! trade! is,! for! example,!
closely! linked! with!free! movement! of! persons.! Regulating! one,! but! not! the! other! may!
therefore!likely!result!in!regulatory!incoherence.!State!aid!and!competition,!on!the!other!
hand,!is!linked!with!all!of!the!sectoral!integration!agreements:!playing!by!the!same!rules!
can!be!considered! a!necessary!prerequisite!for!the! abolishment!of! all!barriers!to! trade!
between!Switzerland!and!the!EU!in!any!given!sector.!The!EU!therefore!insists!on!at!least!
partial!regulatory!alignment!in!services,!state!aid!and!competition!as!a!pre-condition!to!
negotiate!new!market!access!agreements.!Partial!regulatory!alignment,!however,!is!con-
sidered! a! red! line! in! Switzerland,! given!that! it!would!bring!Switzerland!ever!closer! to!
being!a!de&facto!member!of!the!EEA.!!
Squaring"the"Circle"
The!draft!framework!treaty,!while!resolving!the!issue!of!dispute! resolution,!fails!to! ad-
dress! the! underlying! regulatory! discrepancies! following! partial! market! integration! of!
third!states.!As!long!as!the!EU!is!not!prepared!to!further!pursue!the!idea!of!a!multi-speed!
Europe,! partial! market! integration! of! third! states! is! likely! to! continue! to! come! at! the!
prize!of!constant! renegotiation,!power!politics! and!a!considerable!level!of! legal! uncer-
tainty.!Abandoning!the!idea!of! sectoral!market!integration!of!third! states,! on!the!other!
hand,!will!come!at!an!economic!prize!–!for!both!sides.!
Post-Brexit"Relations"between"Switzerland"and"the"UK"
In!parallel!with!negotiations! over! the!draft!framework!treaty!with! the! EU,!Switzerland!
and!the!UK! have! been!busy!negotiating! their!post-Brexit!relationship.! The! draft!agree-
ments!have!been!made!public!this!week.!In!essence,!current!agreements!will!continue!to!
apply!during! the!transition!period!in!the!case!of!an!orderly!Brexit.!Switzerland!and!the!
UK!will!have!time!to!negotiate!further!their!relationship!during!that!period.!In!the!case!
of!a!no-deal!Brexit,!the!following!applies:!!
- Free$Trade$ Agreement:!with!the!exception!of!rules!of!origin,!the!rights!and!ob-
ligations! established! in! the! free! tr ade! agreement! between! the! EU! and! Sw itzer-
land!will!be!maintained!bilaterally!between!the!UK!and!Switzerland!!
- Rules$of$ origin:!both!parties!agree!to!maintain,!as!far!as!possible,!existing!rules!
of!origin.!With!the!EU!as!a!third!state,!cumulation!rules!will!need!to!be!revised!
and!direct!transport!will!become!more!important.!
- Customs$facilitation$and$security:!third!state!treatment!will!apply.!
- Fight$against$fraud:!existing!rights!and!obligations!will!be!maintained.!
- Mutual$recognition:!existing! rights!and! obligations!with!regard!to!motor!vehi-
cles,!good!laboratory!practice,!and!GMP!inspection!and!batch!certification!will!be!
maintained.!Additional!mutual!recognition!will!have!to!be!negotiated.!
- Agriculture:! existing!rights! and! obligations!independent! from! regulatory! har-
monisation! will! be! maintained! (tariffs,! cheese,! geographical! indications,! wine!
and!liquors,!fresh! fruits!and!vegetables).!Rights!and!obligations!related!to!non-
tariff! barriers! to! trade! will! cease! to! apply! (plant! pro tection/pesticides,! animal!
feed,!seeds!and!organic!food!and!production).!
- Veterinary$agreement:!third!state!treatment!will!apply.!
- Public$procurement:!rights!and!obligations!of!the!plurilateral!WTO-Agreement!
on! Public! Procurement! (GPA)! will! apply! as! soon! as! the! UK! becomes! an! inde-
pendent!member!to!the!GPA.!!
- Free$movement$of$persons:!with!the!exception!of!the!treatment!of!criminal!of-
fences,!reunification!of!spouses!and!person-related!service!provisions,!rights!ac-
quired!before!no-deal!Brexit!are!protected.!Third!state!treatment!applies!to!im-
migration! after!both! a!no-deal! Brexit! and! an! orderly! Brexit,! unless! otherwise!
agreed!in!a!future!treaty!between!the!UK!and!Switzerland.!
!
Despite!the!fact!that!a!no-deal!Brexit!would!thus!burden!economic!ties!between!Switzer-
land! and! the! UK! with! technical!barriers!and! legal! uncertainty,! the! post-Brexit! draft!
agreements!have!not!been!met!by!opposition!in!Switzerland.!Moving!beyond!the!transi-
tional!status!of!post-Brexit!relations!between!Switzerland!and!the!UK!will!require!clari-
fication!of!the!nature!of!UK’s!relationship!with!the!EU.!