Switzerland prepares for EU cooling after halting market access talks

In Brussels there was shock and anger. In Switzerland, quiet celebration and comfort – but, for some, doubt what exactly is to come next.

On Wednesday, Bern announced it was formal withdraw from negotiations to determine the future relations of the EU in a more numerous “framework agreement”-a recurring exchange that has dominated Brussels ’more full-fledged relations since 2014.

“You never sign a contract like that in business,” said Philip Erzinger, head of a Kompass Europe, a counter-structured agreement campaign group. “It’s one side. We have been ordered to take EU law without any mechanism to say No. This is a direct interference in our system of direct democracy and cantons in Switzerland.”

For opponents of the process, the opportunity is here similar to the UK referendum to end bloc membership – a Swexit, which is different.

There are similarities. Switzerland has never been to the EU and rejected membership in the European Economic Area in a referendum in 1992.

Even through 120 bilateral agreements, it enjoys almost full access to the EU’s domestic market and is a member of the travel-free travel zone. It is also tightly aligned with the bloc that surrounds it on many economic and legal issues.

However, without a framework agreement the EU will not update or upgrade bilateral arrangements if it changes its own laws. As a result, the Swiss are slowly losing access, creating uncertainty for businesses and residents.

Switzerland is the fourth largest trading partner in the EU. More than 1.4m EU and UK nationals live in Switzerland. And an estimated 330,000 people cross the Swiss land border every day, according to customs authorities.

The decision was a huge victory for the right -wing Swiss People’s party, the SVP, which has long campaigned against Switzerland’s surrender of Brussels.

For the most part, however, in Switzerland on Thursday morning, unlike Britain on June 24 five years ago, there was little sense of a political earthquake that had just occurred.

“I really can’t think of direct consequences for our business yet,” said Hugo Roppel, chief executive of Geneva Logistics Group, a Swiss haakeer in Geneva. “The more reasonable thing is to say that we need Europe and that Europe needs Switzerland… I think everyone should take an hour to calm down and then negotiations can start again.”

According to Martin Janssen, chief executive of Zurich -based financial software company Ecofin, Switzerland should be “allowed to diverge”. The framework agreement does not provide for that, he said.

After seven years of diplomatic failure, many Swiss are happy with the opportunity to move on.

Most newspapers in the country offer strong support for the federal council’s move. “Despite all the sympathy [one might have] for overcoming the narrow national border that has caused many wars in Europe, it is not necessary to sign everything that Brussels wants, ”wrote the unreliable broadsheet Tages-Anzeiger in an editorial.

Lukas Golder, president of Switzerland’s leading pollster GFS Bern, says such behavior is probably common among most people in Switzerland.

There is widespread support for closer relations with the EU, he said, but a belief that too much is given. Many Swiss are also optimistic that Brussels will come to Bern’s plan B – called the “bilateral track” – where existing agreements can each be broken.

“People believe that Switzerland is very weak in its position against the EU. However there are also probably high expectations about alternatives,” Golder said.

Erzinger, who campaigned against the framework agreement, said the EU would later return to the negotiating table. Meanwhile, Switzerland has to endure a “freezing weather, if you feel the cold from Brussels”, he said. But unlike Brexit, it could go back to “there are already agreements that will allow us to breathe and not panic.”

Diplomats have warned that such optimism is not wrong. The EU’s overall aim is to seek a “framework agreement” with Switzerland to restrict most of the country’s privileges as much as possible, or to get concessions to keep them going.

Already, some key agreements are facing imminent collapse, as guillotine clauses begin to take effect. In a sign of how serious this is, Switzerland’s federal council said Thursday in its statement that it has already begun taking precautionary measures – such as storing medical equipment.

Avenir Suisse, a pro-EU think-tank in Zurich, calculated that breach of Swiss-EU agreements on medical devices, industrial machinery and chemicals and pharmaceuticals would impose an estimated cost of SFr1.7bn ($ 1.9bn) and recurring annual costs of SFr1.3bn on companies that Switzerland in sectors only.

Teresa Hug Alonso, a researcher at Avenir Suisse, says the federal council, which is running by consent, has failed to show the Swiss people the potential disadvantages before the framework agreement was known.

Negotiations are over for party political reasons rather than lack of public support, he said. Yet current surveys suggest a referendum on the framework agreement would have been passed with 60 per cent support.

The SVP is the only openly anti-EU political party, but some are the most credible about Europe. For example, the Social Democrats have strongly opposed measures that would have eliminated wage protection for Swiss workers and the issue has become a red line.

Switzerland is now facing a gradual deterioration in EU economic ties. But it’s not a disaster for one of the world’s richest countries, Hug Alonso admits.

“We’re not talking about a lot of changes. It’s an erosion. That’s a problem. It doesn’t cause Switzerland to be strong enough to enter into new EU negotiations.”

Further reporting by Domitille Alain in Paris

This article has been amended to correct the date of the outcome of the UK referendum in 2016

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