The EU Commission said on Monday (17 December) it would allow another six-month period for the Swiss stock exchange to maintain access to the EU market – but by then it wants Switzerland to endorse a new treaty with the bloc.
The move extends until the end of June the existing “equivalence” regime, that permits Swiss financial firms to operate in the EU, after it expires by the end of 2018.
Stopping the regime would have meant that companies could not sell financial products based on Swiss stocks.
That extension is designed to give the Swiss government more time to endorse a new framework treaty governing the relations between the non-EU member Switzerland and the EU.
The extension of the regime was made politically conditional to progress on the new deal.
Switzerland has for decades had a range of bilateral agreements – more than 120 sectorial pacts – with the EU that regulates access to parts of the bloc’s single market.
The EU wants to combine those agreements together under a single framework agreement, that would also guarantee that new or amended EU rules are adopted in Switzerland.
The EU argued it would help create legal certainty, and make the agreements between Switzerland and the EU more streamlined.
One of the key results of the EU-Swiss talks is so-called ‘dynamic adjustment’ of the EU rules into Swiss law in sectors where the country has access to the internal market, meaning more streamlined transposition of EU rules into national regulations.
Another key element of the agreement is ‘dispute resolution’, where it creates a joint arbitration tribunal – which would nevertheless have to follow the European Court of Justice’s interpretation when it comes to EU law.
The EU is also keen for framework agreement to provide a level playing field for other EU members, making sure that the Swiss do not undercut EU competitors, and that Switzerland follows EU state aid rules.
“We wanted to avoid having dozens of different agreements, all about internal market, constantly having to renew them, because we made a change in our ‘acquis’ [the sum body of EU law] to avoid proliferation,” enlargement commissioner Johannes Hahn, who handling the negotiations, told journalists on Monday.
Negotiations have been going on for four years, and the EU has said it sees the political agreement as complete.
The reluctant Swiss federal council is attempting to buy time, and decided earlier in December to put the deal for public consultation in the spring before it would sign it.
While critics say the EU commission’s linking of the equivalence regime to the progress on the framework agreement is arbitrary, the EU argues it has given enough time to Bern to digest the agreement.
“Negotiations have been finished, there would be no renegotiations. It is up to Switzerland to tell us now, how their consultation process is coming along, and whether it is included or not, That is what expect to happen in the next four months,” Hahn said.
“It looks like pressure, but believe me, this is not pressure,” he said, referring to the EU’s decision to link the equivalence regime to the framework talks.
He said the EU is effectively “front-loading trust” to Bern, by extending the equivalence regime until the end of June of 2019.
In Switzerland, both the traditionally pro-EU left and anti-EU far-right argue that the framework agreement infringes Swiss sovereignty, and the governing coalition country would have a hard time securing a majority for the deal.