Last week, six years of tortuous negotiations between the EU and Switzerland over the country’s future relationship with its largest trading partner collapsed when Bern abruptly pulled out. For UK pundits on either side of the Brexit divide, there was great temptation to draw lessons for the UK’s own tortuous negotiations and uncertainty about future relations. But given that Bern and London have chosen completely different paths for their relationship with their enormous neighbour, the only lesson to draw is this: it’s complicated.
To understand Switzerland’s complex relationship with the EU, we have to go back to the early 1990s. The Maastricht Treaty converting the European Community (a trade bloc) into the European Union (a supranational confederation) had just been agreed. The EU was preparing for a major wave of expansion, both to western hold-outs that had until then been sceptical (like Sweden and Austria) and to eastern countries that had just been freed from Communism.
The plan was for all of western Europe to join. But in 1992, Switzerland rejected joining the European Economic Area (EEA) — at the time considered a precursor to EU membership — by a razor-thin vote of 50.3 per cent. Norway then voted against joining the EU in 1994 by a margin of — wait for it — 52 to 48 per cent. The governments of these countries, which had urged people to vote yes to EU membership, were then faced with a problem: with everyone else joining, how could they survive outside of the EU single market? As a result, they set out to design pseudo-EU-member relationships that would make them part of the single market but in a way that would be palatable to the public and give the illusion of independence.
For Norway, Iceland and tiny Liechtenstein, the solution was to transform the EEA from a membership staging ground into a framework for countries to be part of the single market and follow EU law while not being members. For the past two decades the EU has been content with this because it provides clear obligations, along with remedies to determine when obligations aren’t being met.
For Switzerland, it wasn’t so easy. The population had already rejected EEA membership and the government was afraid to put it to them again. So a terrible solution was found: a series of bilateral accords between Bern and Brussels that recreated EU membership sector by sector, with no framework for determining expectations and obligations. Ever since, it has been a mess. In theory, if Switzerland violates any one of these accords the country is immediately cut off from its neighbours. In practice, this has been impossible to use as a credible threat when, as has happened on occasion, Switzerland violates the rules. Today the European Commission and national capitals generally rue the day these accords were signed.
“The EU that signed these accords 25 years ago is not the same EU as today,” says Jordan Davis, a journalist with the Francophone Swiss public broadcaster RTS. “The common market is now much more developed, and you have far more countries that don’t have borders with Switzerland that frankly don’t understand why we seem to get special treatment.”
Even the big western countries with close ties to Switzerland that dominated the much smaller EU 25 years ago, including the UK, all signed off, from 2008, on unanimous EU statements saying that the arrangement was no longer working. That’s why, after the Brexit referendum, one of the first things the Commission made clear was that another Swiss-style bespoke arrangement was not on offer for the UK.
Davis says it would be “huge” if Switzerland were to suddenly lose EU market access. “Switzerland does more business with Baden-Württemberg than it does with China; it’s very integrated into the European market. Its citizens live in the EU without any second thought, and vice versa. I think there are very few Swiss people who would say ‘We can do without the EU’.”
There has been much criticism, Davis notes, that the government allowed the recent negotiations to collapse without holding a referendum. “In a country where we’ve had votes on whether or not cows can have their horns, they didn’t even put the rejection of a framework accord with our most important economic partner to a popular vote, or even to the parliament.” Davis says many in Switzerland believe the national government never had any intention of signing up to the framework and were simply buying time, because they prefer the bespoke arrangement.
In the meantime, Bern knows that expelling Switzerland from the common market has never been a credible threat. “It would seem very vindictive for the EU to do so, and also counter-productive. Swiss voters have never sent any democratic signal that they wanted to leave the EU common market.”
But even if the collapse of this framework doesn’t mean the existing accords are all torn up, it already has consequences for the short term. The Commission must decide soon whether medical equipment produced in Switzerland can be given equivalence. If not, Swiss companies will have to move production into the EU. Decisions on university funding will follow, as well as on electricity. So while existing accords will likely remain, it’s now unlikely there will be new ones. “Without this agreement, this modernisation of our relationship will not be possible and our bilateral agreements will inevitably age,” the European Commission said following Bern’s announcement.
Given that Switzerland has chosen to be in the EU single market while the UK has chosen to be out of it, there are few lessons to be drawn from the collapse of these talks for the future place of the UK in Europe. But it is an illustration of why the ‘have your cake and eat it’ promises in the Brexit referendum campaign were never on the table. The EU has only ever tried bespoke market access with one country — and watching six years of negotiations dissolve last week was a reminder that it is something no EU capital wants to replicate.
[See also: How the EU’s naivety led to its vaccine debacle]
Dave Keating is a Brussels-based journalist covering EU politics (@davekeating)