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Framework Agreement: Switzerland and the EU break off negotiations

Swiss President Guy Parmelin announced on 26 May 2021 the end of negotiations with the European Union. This followed a summit in Brussels on 23 May 2021, where Parmelin and the President of the European Commission, Ms Von der Leyen, met. None of the discussions were able to bring satisfactory results to the points of disagreement.

At present, there are five bilateral agreements between Switzerland and the European Union, notably concerning the free movement of persons, land and air transport, and agriculture.

The framework agreement between Switzerland and the European Union, which has been discussed since 2002, is the solution for keeping the bilateral path up to date and harmoniously applied. Discussions had been underway since 2014 on a potential institutional agreement bringing the Swiss and European legal frameworks closer together. This would have made it possible to homogenise the regulations concerning Switzerland's participation in the European single market, but also concerning questions of salaries or the free movement of persons.

This text also provided for a dispute settlement procedure in the event of disagreement between Switzerland and the EU. Today, if a problem arises between the two parties, no external entity can intervene to move the negotiations forward.

Switzerland has been cautious because such a framework agreement with the EU would undoubtedly have led to legal changes through the adoption of EU law. However, it was mainly due to profound disagreements that it was not able to sign the agreement, as the EU and Switzerland do not have the same interpretation of the free movement of persons, which is more liberal for the EU. With this text, Switzerland should have transposed the directive on citizenship of the European Union. If so, Europeans settling in Switzerland would have had easier access to the Swiss social system than they do today.

In these negotiations, Switzerland also wanted to protect its wages through the accompanying measures. Today, if a European company wants to send a posted worker to Switzerland, it has to notify the administration eight days in advance. With the framework agreement, this period would be reduced to four days. Switzerland considers that this period is too short to allow time for labour inspectors to check that there is no wage dumping. This change could have led to a weakening of the level of protection for workers in Switzerland.

One of the repercussions of the end of these negotiations concerns the medical technology industry. Having lost its free access to the EU internal market and as a result of the new EU regulation on medical devices, this branch of Swiss industry is now a third country.

This means that stricter requirements for the export of medical devices by Swiss companies will be introduced. As a third country, the administrative burden on companies is greater and they have to incur additional costs or appoint representatives in each member state. The lack of access to the European market makes exporting more costly and procedural.

Other sectors would be affected, such as agriculture, food safety and electricity trading.

The abandonment of this draft agreement risks damaging relations between Switzerland and the EU, as the EU had made any other bilateral market access agreement conditional on the signing of this framework agreement. The latter was intended to govern aspects of the single market in Switzerland, which from a trade perspective is necessary. As the European Union is Switzerland's main economic partner, import and export relations with Switzerland, if not facilitated, risk being weakened in the long term.

The entire team of European Legal Consultancy is at your disposal for any questions or requests for assistance on this subject.