Switzerland and the EU’s mutual but rocky relationship

Geneva - Nestled in the heart of Europe, Switzerland has chosen to remain outside the EU, but has maintained tight, if sometimes fraught ties with the bloc through a patchwork of agreements.

After Switzerland on Wednesday rejected signing a long-delayed "framework agreement" rejigging some of the most important deals and putting ties on a new footing, here is an overview of the unique relationship:

 

- Mutual relationship -

 

Barring tiny Liechtenstein, Switzerland is surrounded by EU member states -- namely Italy, France, Germany and Austria.

The European Union is by far Switzerland's biggest trading partner, not only because of its economic and political might but also its cultural and geographic closeness.

One in every three Swiss francs is earned via the country's trade exchanges with the EU.

About half of Swiss exports go to the EU, while two-thirds of Switzerland's imports come from the bloc.

Trade between the two amounts to around one billion Swiss francs ($1.1 billion, 910 million euros) per working day.

And the relationship is mutual. Switzerland counts as the EU's third largest trading partner, after the United States and China.

Some 450,000 Swiss nationals live in the EU, while around 1.4 million EU citizens live in Switzerland, population 8.6 million.

Meanwhile some 340,000 people living in the EU cross into Switzerland every day to work, while Switzerland counts around 1.5 million jobs directly linked to its relations with the bloc.

 

- More than 120 bilateral deals -

 

Recent decades have been marked by a torrent of mixed messages on what kind of relationship Switzerland wants with the EU.

An initial free-trade agreement, reached by Switzerland and the EU's European Economic Community predecessor in 1972, created a free trade area for industrial goods and regulated trade in processed agricultural products.

It was followed in 1990 by an agreement simplifying customs controls and trade formalities.

In May 1992, Switzerland submitted a request to open negotiations with a view to joining the EEC.

But in December that year, Swiss voters rejected joining the European Economic Area.

Since then, Switzerland has dealt with the EU bit by bit with more than 120 agreements covering sectors including air transport, agriculture and police cooperation.

A first package of agreements was signed in 1999, with a second in 2014.

They provide broad reciprocal access to markets and allow for close collaboration in other areas.

These agreements are automatically extended to new member states when they join the EU.

Only the agreement on the free movement of people is renegotiated with each new member state. The last to join was Croatia in 2013.

For more than a decade, the EU had been pushing for Switzerland to conclude an overarching framework agreement rejigging some of the most important bilateral deals, and has said no new bilateral deals will be signed before it does.

Those talks came to a juddering halt on Wednesday.

 

- Banking secrecy and immigration -

 

Certain thorny issues have complicated relations between Switzerland and the EU -- notably banking secrecy, the long-standing cornerstone of the powerful Swiss financial system.

But under international pressure, notably from Europe, Switzerland ended up letting in some daylight.

In 2015, Bern and Brussels signed an agreement on the automatic exchange of taxation information.

From 2018, Switzerland and each EU member state started automatically exchanging banking data.

Immigration is another flashpoint between the Swiss and their neighbours.

In 2014, Swiss voters narrowly accepted an initiative to slap quotas on immigration by EU citizens, which while never fully implemented threw relations with the bloc into years of disarray.

The vote infuriated Brussels, which then froze bilateral research and education programmes.

Switzerland ended up softening the text implementing the vote, in order to keep the EU onside.

Adopted by the Swiss parliament in 2016, it gives the Swiss priority in the jobs market and establishes additional formalities for Swiss employers wishing to bring in employees from the EU.