Switzerland’s decision to end seven years of laborious negotiations with Brussels, which aimed to forge a closer and more stable trade relationship with the EU, is nothing like the drama of Brexit. But this could harm the Swiss economy in the long run, which has benefited enormously from almost full access to the EU’s internal market. Inevitably, he also underlines the difficulties the EU seems to have in coping with its neighbors. Losing your biggest European trading partner, Great Britain, can be considered a disaster. Losing your second biggest, Switzerland, can feel like recklessness.
Swexit is like Brexit in that two old democracies, plagued by price and market access conditions, have chosen a looser and more distant relationship, the costs of which have been grossly underestimated by their political elites. Britain bet on the trade interests of other EU countries, pushing Brussels to preserve the terms of trade. Switzerland has fallen into the same illusion.
There are also differences. Switzerland wants closer links with the EU, in the fields of energy or health, for example. British trade with the EU has collapsed this year. The consequences of Berne’s decision to negotiate talks with the EU will be a gradual deterioration of its market access: a slow-motion Swexit.
In 1992, Swiss voters decided not to turn their two-decade free trade agreement into full membership of the single market. But in the years since this historic decision, Switzerland has joined many aspects of the market and other areas of cooperation under a patchwork of bilateral agreements. The country benefits from, among other things, frictionless trade in goods, trade in services, travel without border controls, the right to live and study across the EU, mutual recognition of qualifications professional development and access to EU research and education programs.
When the EU was fed up with interminable negotiations and haggling from Bern – like withholding budget contributions as a bargaining chip – it insisted on a framework agreement. This would have improved and updated Switzerland’s market access agreements while establishing new governance arrangements, forcing Switzerland to align its rules whenever the EU updated its regulations. There would have been a dispute settlement mechanism.
The Swiss government signed this agreement but failed to sell it at home. Critics began to separate him, saying it would undermine Switzerland’s immigration policy and wage protections. Brussels has made special concessions to address Swiss concerns, including a 90-day limit for foreign companies providing services to protect Swiss labor markets. But the Swiss nationalist right and the union that supports the left have actually joined forces to kill her.
Some Swiss opponents of the framework agreement have argued that the EU’s insistence on dynamic rule alignment would have overthrown Switzerland’s cherished system of local and direct democracy. But the country has been an EU rule-taker for decades. And unlike the UK, which has ensured greater flexibility in its trade agreement with the EU, Switzerland enjoys virtually full integration into the single market. According to a study, it benefits more per capita than any country in the EU.
These advantages will erode as the EU updates its rules and Switzerland loses its equivalent status. He has already lost it in purses and medical instruments. Swiss companies are resilient. A strong currency is probably a bigger puzzle than a regulatory disruption. One of the richest countries in the world will become a little less rich. This is the sovereign decision of Switzerland. But he can no longer expect special treatment.