European Union and Switzerland Terminate Trade Deal Negotiations
Seven years ago, negotiation about a single trade agreement between Switzerland and the European Union started. The Swiss have now decided to end these negotiations. They will no longer seek a single trade agreement with the European Union.
The Switzerland - European Union Relationship
While Switzerland is smack dab in the middle of the European Union, it is not a Member State. Over the past decades, countless small bilateral agreements have been negotiated, approved, and ratified. These agreements range from medical devices to agricultural products. There are over 120 separate agreements between the European Union and Switzerland, some of which are more than 50 years old.
The goal of the negotiations was to replace the extensive number of agreements into one single free trade agreement. Sadly, these negotiations have now come to an end.
What Went Wrong?
With the single agreement off the table, both parties will have to continue based on the agreements already in place. The problem is that not everything is adequately covered in these agreements, whether that’s because some grounds were never agreed on or because it didn’t apply when both parties signed the deal. For example, the new agreement would have covered access to the internal market and the financial markets.
One of the most significant issues in the negotiation was Switzerland's demands for exemptions in three crucial areas: state aid rules, the ability for EU citizens to access the Swiss welfare system and the protection of the higher Swiss wages. The EU to this day is not willing to grant these exemptions considering that this would give Switzerland an unfair advantage over the European Union Member States.
What Happens Now?
Things may get worse before they get better. Some of the agreements that are in place between the two are outdated, and others are soon expiring or have already recently expired. An example of this is a mutual recognition agreement for medical devices that have recently expired. The consequence of this is that it will be more difficult for companies to trade medical devices between Switzerland and the European Union.
The European Commission has told Switzerland that for now, there will be no new alternative trade deals or updates to existing ones. According to the bilateral German-Swiss Chamber of Commerce, this could mean increased cost, and market access could become significantly more complex and expensive.
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