The negotiations with the EU regarding the Citizens' Rights Directive (CRD), wage protection and state aid provisions did not produce the outcomes Switzerland needed to sign the agreement. Substantial differences remain, especially with regard to wage protection and the CRD (see annex 'Outcome of talks between Switzerland and the EU on Citizens' Rights Directive (CRD), wage protection and state aid issues').
These points were key concerns for Switzerland. Without the requested improvements, the agreement would not ensure that the protective effect of the current accompanying measures was maintained. For Switzerland to incorporate the CRD into the Agreement on the Free Movement of Persons, explicit exemptions would need to be granted. Without these exceptions, there is a risk that the rights enjoyed by persons accorded freedom of movement would be extended. The impact of this could include higher social security costs. Adopting the CRD in its entirety would effectively constitute a paradigm shift in Switzerland's migration policy – a policy which enjoys wide support among the Swiss population and cantons.
The Federal Council intends to defend these vital interests. Consequently, it considers that the conditions necessary for the signing of the agreement have not been met. It has taken the decision not to sign the InstA. The President of the Swiss Confederation, Guy Parmelin, has informed Ursula von der Leyen, President of the European Commission, of this decision in writing. This concludes the negotiations on the draft InstA.
Prior to taking this decision, the Federal Council consulted the foreign affairs committees of the National Council and Council of States. The social partners were also informed. The Federal Council's decision drew on the results of these discussions.
A clear need for clarifications
The institutional agreement was intended to safeguard Switzerland's access to the European single market and to provide a basis for expanding that access.
It would have fundamentally changed Swiss–EU relations. In relation to market access agreements, it would have introduced the dynamic adoption of developments in EU law. It would also have established a dispute settlement mechanism enabling both parties to refer disputes to an arbitration panel. The Court of Justice of the European Union would have been involved in all matters pertaining to the interpretation of EU law.
On the basis of its negotiating mandate from 2013, the Federal Council sought to safeguard the accompanying measures in the long term and rule out any obligation on the part of Switzerland to incorporate the CRD into the Agreement on the Free Movement of Persons. The draft InstA of November 2018 did not provide for or did not adequately cover these issues. The Federal Council therefore declined to sign this agreement, opting to undertake consultations with national policymakers and stakeholders. These consultations identified a clear need for clarifications on the two above-mentioned points and in the area of state aid. The demands submitted to the EU on these three points had broad backing in Switzerland and were supported by the cantons, the social partners and a majority of the political parties.
Substantive discussions with the EU
Drawing on input from the cantons and social partners, at its meeting on 11 November 2020 the Federal Council set out its position on the three points in need of clarification. Talks with the EU resumed on this basis. Since January 2021, six rounds of substantive negotiations and additional contacts have taken place between Switzerland's chief negotiator, State Secretary Livia Leu, and Stéphanie Riso, Deputy Head of Cabinet to the European Commission President Ursula von der Leyen.
Depending on the content of the talks, Livia Leu was accompanied by State Secretary Mario Gattiker (State Secretariat for Migration) and State Secretary Marie-Gabrielle Ineichen-Fleisch (State Secretariat for Economic Affairs). Switzerland submitted written proposals for the discussions detailing specific demands and also elucidated its positions verbally. Switzerland always responded clearly to specific proposals put forward by the EU.
The parties' gained a better understanding of each other's positions through these talks, but did not succeed in reconciling their stances in terms of content. To take stock at the political level, President Guy Parmelin and the President of the EU Commission met in Brussels on 23 April 2021.
The decision not to sign the institutional agreement brings to a close seven years of negotiations during which the Federal Council repeatedly assessed the situation and set out new measures where necessary.
The Federal Council is aware that the absence of an institutional agreement also has disadvantages. It has stated this repeatedly. For example, the EU has stated on several occasions that it is unwilling to conclude any new market access agreements without an institutional agreement.
However, the Federal Council considers it in both parties' interests to ensure that existing agreements (such as the Mutual Recognition Agreement, which covers medicinal products) continue to be updated and that there will be no undue political links established in other matters (such as research cooperation or stock market equivalence). The Federal Council also trusts that successful collaboration between Switzerland and the EU – for example in the healthcare and electricity sectors – will continue.
To counteract any negative consequences, the Federal Council began some time ago to plan and in some cases to apply mitigation measures. These include the measure concerning the ordinance to protect Switzerland's stock exchange infrastructure, which was activated in June 2019. Switzerland activated this measure in response to the EU's decision to revoke stock market equivalence.
In the area of medicinal products, the Federal Council has already adopted unilateral measures to ensure security of supply and market surveillance in the event that the relevant chapter of the MRA is not updated.
Pursuit of bilateral approach
In the view of the Federal Council, it is in the shared interest of Switzerland and the EU to continue with their proven bilateral approach even in the absence of the institutional agreement.
The foundations for this cooperation include over 100 bilateral agreements. With its 27 member states, the European Union is Switzerland's most important partner. Switzerland is also one of the most important trading partners for the EU, ranking 4th for exports of goods, 3rd for services and 2nd for investment. Moreover, the EU has a trade surplus with Switzerland in the order of tens of billions. 1.4 million EU citizens live in Switzerland. In addition, about 340,000 people commute to Switzerland from the EU, and well over 200,000 persons from the EU/EFTA area are subject to registration each year.
As part of the European community of values, Switzerland is committed to working with the EU in its efforts to address global challenges, in particular with regard to climate protection, promoting human rights, peace and security, and fighting poverty. Together with the EU, it is working to strengthen cooperation in the areas of health, environmental protection, regional development and digitalisation. It also shows solidarity with the EU on migration issues.
Political dialogue for a common agenda
Even without an institutional agreement, Switzerland remains a reliable and committed partner for the EU. It works constructively to ensure a well-functioning partnership, which remains in the interests of both parties.
The Federal Council will engage with Parliament in order to release the funds for the second Swiss contribution as soon as possible, and will seek to finalise the memorandum of understanding with the EU without delay.
In addition, the Federal Council wishes, where feasible and in the interests of both parties, to cultivate and develop Switzerland's partnership with the EU on the basis of the bilateral agreements. It therefore proposes to launch a political dialogue with the EU with the aim of setting and pursuing common priorities for future cooperation. It will also endeavour to find solutions with the EU to specific problems, to ensure the frictionless application of the bilateral agreements wherever possible.
Autonomous review of Swiss legislation to stabilise bilateral relations
At the same time, the Federal Council has instructed the Federal Department of Justice and Police (FDJP) to assess, in cooperation with the other federal departments, the potential for autonomous amendments to Swiss legislation with a view to stabilising Swiss–EU relations. The Federal Office of Justice will identify current discrepancies between EU and Swiss law and determine where alignment of the legislation might be appropriate and in the interest of both parties. This process must be carried out autonomously by Switzerland and include the social partners and the cantons.
Timeline of Swiss-EU relations since 2013 (aspects related to the institutional agreement)
Outcome of talks between Switzerland and the EU on Citizens' Rights Directive (CRD), wage protection and state aid issues
Prüfauftrag zum autonomen Abbau von Regelungsunterschieden zwischen dem Schweizer und dem EU-Recht (DE)
Bericht betreffend die Verhandlungen über ein institutionelles Abkommen zwischen der Schweiz und der EU, vom 26. Mai 2021 (DE)(pdf, 755kb)
Mandate to review options for the autonomous elimination of regulatory differences between Swiss and EU law(pdf, 195kb)
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