The View from the Alps

By Sophie Goodrich

Ne me quitte pas

The debate on the UK’s membership to the EU has been raging this week prompted by indications from Prime Minister David Cameron that he would allow a public referendum on the issue and an opinion poll claiming a majority of Britons would support a withdrawal from the EU. Being a Brit living in Switzerland, effectively an island surrounded by the EU, the Alps provide an ideal place to briefly consider the types of issues which the UK may face if it chooses to withdraw from the EU.

Swiss – EU relations

Switzerland is immensely proud of its direct democracy; public referendums are held on a regular basis to decide on many issues of both local and national significance. In 1992 the nation narrowly rejected a proposal to join the European Economic Area (50.3% against) and again in 2001 a proposal to begin negotiations to join the EU was rejected by 76.8% of the voters. Instead the country has chosen to follow the so-called bilateral route, meaning that specific issues and problems are agreed and regulated by way of individual agreements between Switzerland and the EU. According to the Swiss authorities, this policy allows for step-by-step pragmatic solutions to be agreed through tailor-made contractual solutions. The government’s policy allows for further referendums to opine on new significant agreements with the EU. There have been four such referendums since 2001 on issues such as the Schengen agreement and the freedom of movement of persons. Currently the legal basis of Swiss–EU relations are mainly based around Switzerland’s membership of the European Free Trade Association and two packets of bilateral agreements known as Bilateral I, which includes regulation of the freedom of movement of persons, and Bilateral II, which amongst other things covers the Schengen agreement as well as Swiss contributions to development of the new EU member states. These two packets of agreements along with numerous other bilateral treaties mean that EU legislation is very significant and influential within Switzerland. Furthermore, the Swiss federal court has also declared that it will decide relevant court cases in line with EU law unless there is a compelling reason not to do so, effectively binding Switzerland to voluntarily and unilaterally impose EU legal principles.

A small island surrounded by the EU

So what’s in it for Switzerland?

This is a question which many Brits may also ask themselves about the UK’s relations with the EU.

One of the main arguments for cooperating with the EU are the benefits for trade and businesses. The Swiss government calculates that every third franc earned by Switzerland is a product of trade with the EU; the EU is naturally Switzerland’s largest trading partner, but the country is also the fourth largest trading partner for the EU (only the USA, China and Russia are larger) accounting for around 5% of the EU’s imports. The UK would of course be a larger and even more significant trading partner for the EU. Switzerland is home to many large international corporations including some truly global players – Glencore, Nestle and Zurich Insurance to name a few. The economies of the UK and Switzerland are comparable to a large extent, with the financial sector accounting for around 10% of the GDP of each and the pharmaceutical industry also playing an important role both financially and in terms of mapping policy. The importance of harmonisation of laws across Europe for international corporations basically means that doing business is made cheaper, simpler and market access is opened up for companies to grow and compete on a wider scale. Switzerland wants to access the single market, enabling important international businesses to remain Swiss-domiciled, however as a compromise it has also had to obligate itself under EU legislation – there’s no such thing as a free lunch after all! It is clear in such international negotiations that for a state to obtain the benefits of the single market it is also exposed to political pressures and must find a compromise, giving something in return to achieve those benefits. In Switzerland’s case not only must it accept a certain amount of EU legislation, but also as mentioned above is expected to make some economic contributions to the EU. These arguments would apply to the UK in the same way. Large UK-based businesses have an interest in being able to easily access the European market and the UK would be required to make concessions to retain such advantages.

So where’s the problem?

The issue lies therein that through bilateral negotiation and rejection of full membership Switzerland has effectively taken over legislation made by an organisation in which it has no influence. While the country retains the ultimate decision whether to take over EU law or not, it is very much a take it or leave it approach and the law will be taken over as it has been created by a foreign entity and interpreted by a foreign court without any policy input from the Swiss state to shape it.

If the UK does decide to change the way it works together with the EU, this is a decision that it will face. Many large and economically important UK-domiciled businesses have an interest in gaining from the single market; business is (whether we like it or not) a major driver of the UK’s economy and provides employment to its residents. The UK will still want to retain the benefits the EU offers and as a compromise will surely have to participate to some extent in financing the EU and meeting obligations under EU law anyway. Is it then not a case of “if you can’t beat ‘em join ‘em” by remaining a member and retaining some democratic influence in the EU’s decision making and legislative processes?

[Statistics available under http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/switzerland/ ]

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