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COMMENTARY

The Swiss have been collateral victims of Brexit since 1992

Davos

AMID all the Brexit excitement in London, no one seems to have noticed that Switzerland is as much embroiled in a row with the European Union as the UK is.

Switzerland has been engaged in perpetual, on-off negotiations with Brussels since a referendum in 1992, when the Swiss rejected the same European Economic Area status as other European Free Trade Association countries such as Norway.

Swiss banks and other businesses had to open major affiliates in London and other EU capitals to maintain trade access. Switzerland is not in the EU customs union, and woe betide anyone who drives from France or Germany with a kilo of cheaper EU beef as eagle-eyed Swiss customs officers come down with heavy fines.

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The EU and Switzerland have signed more than 120 bilateral agreements since the 1992 referendum, which hints towards the complexity of negotiations that the UK may face. The EU would now prefer that all these agreements be put into a single framework agreement.

In 2014, Switzerland held a referendum against freedom of movement. The electorate was split, with 50.3 per cent voting in favour of curtailing mass immigration and 49.7 per cent opposing the proposal. The Swiss Parliament overrode the referendum result and, with a little tweaking of its labour market rules, permitted freedom of movement to continue.

But the Swiss baulk at allowing European Court of Justice rulings to be followed in the event of a dispute over disagreements in interpreting the framework agreement.

Moreover, the left-wing Swiss trade unions have forged an unlikely alliance with the right-wing, eurosceptic and anti-immigrant Swiss People's Party (SVP) in opposing an EU demand that Switzerland abolish an eight-day waiting period before a firm can hire EU workers in order to give more time for Swiss citizens to apply for the jobs. The SVP wins 30 per cent of votes in most elections and is represented on the Federal Council (the Swiss Cabinet) and in the cantonal government.

The EU is adding pressure by saying the Swiss stock market cannot deal in EU capitals. Berne replied by saying EU listings would in turn be banned in Switzerland.

Brussels feels it has been endlessly patient with Switzerland. Swiss politicians, however, have to live in a permanent minefield of referendums that can be called via easily organised petitions.

There is a general election for the Swiss Parliament in October of this year, and the SVP lost a referendum in November 2018 proposing that no outside judge or tribunal should have any say in Swiss affairs. Since Switzerland hosts innumerable international organisations whose laws and conventions have supranational effect, the referendum was easily defeated.

Also over-shadowing any Swiss-EU deal is the Brexit imbroglio. Echoing UK Prime Minister Theresa May, Johannes Hahn, the European commissioner for neighbourhood policy and enlargement negotiations, has told the Swiss: "Negotiations have been finished, there will be no renegotiations." Brussels repeated that message early in the new year.

The EU cannot offer a special deal that allows Switzerland access to the single market but without respecting its rules, as this would set a precedent for the UK. Equally, the Swiss government and its Members of Parliament find it hard to agree on a deal with Brussels that risks being repudiated in a referendum.

Both Britain and Switzerland are discovering hard truths. Plebiscites, Parliament and participation in the EU is a three-card trick few can play successfully. OMFIF

  • The writer is the UK former Minister of Europe and a member of the Official Monetary and Financial Institutions Forum advisory council. His latest book is Brexit, No Exit. Why (in the End) Britain Won't Leave Europe.