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| Talacker 41, 8001 Zurich, Switzerland, Phone: +41 43 443 72 00, Fax +41 43 497 22 70, info@amcham.ch |
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| Site contribution |
| Date: |
April 2006 |
| Prepared by: |
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| Site history |
| Date: |
April 2006 |
| Prepared by: |
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Summary |
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Switzerland is not a Member State of the European Union. However, since the Member States of the European Union are its most important trading partners, the Swiss economy and Switzerland’s prosperity are closely connected with the economies of the EU-Member States. Nevertheless, the Swiss voters rejected its government’s proposal to join the European Economic Area in 1992. As a result, the relationship between Switzerland and the Member States of the European Union remained governed by the 1972 Free Trade Agreement.
In June 1999, however, bilateral agreements, which were long negotiated between Switzerland and the EU, were signed and thereafter approved by Swiss voters. These agreements, of which there are seven, entered into force on June 1, 2002, starting a new chapter in the relationship between Switzerland and the EU members.
In Spring 2001, Switzerland and the EU decided to open new negotiations on a number of other bilateral issues, such as co-operation in the fields of justice, police and refugee politics, the prevention of customs fraud and the issue of taxation of interest. These were, in part, leftovers from the first round of bilateral negotiations, which ended in 1999 with the signing of the seven agreements that entered into force on June 1, 2002.
The negotiations resulted in eight sector-specific agreements and a declaration of intent. The Bilateral Agreements II were initialled by the negotiating delegations in Brussels on June 25, 2004. The second series of Bilateral Agreements were signed in Luxembourg on October 26, 2004. The Federal Council submitted the agreements to Parliament for approval in Fall 2004. The Bilateral Agreements were approved by Parliament on December 17, 2004. Except for the agreement on processed agricultural products, which provisionally entered into force on February 2, 2005 and was not subject to referendum, the Bilateral Agreements II are individually subject to an optional referendum designated to be held between December 21, 2004 to March 31, 2005. Whether a popular vote on some or all agreements will take place is still open. |
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Applicable Law |
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Agreement on Air Transport (Official Compendium of Federal Laws, N°27, July 9, 2002, page 1705; RS 0.748.127.192.68) |
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Agreement on Overland Transport (Official Compendium of Federal Laws N°27, July 9, 2002, page 1649; RS 0.740.72) |
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Agreement on Free Movement of Persons (Official Compendium of Federal Laws, N°26, July 2, 2002, page 1529; RS 0.142.112.681). |
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Agreement on Research (Official Compendium of Federal Laws, N°29, July 23, 2002, page 1998; RS 0.420.513.1) |
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Agreement on Public Procurement Markets (Official Compendium of Federal Laws, N°29, July 23, 2002, page 1951; RS 0.172.052.68) |
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Agreement on Agriculture (Official Compendium of Federal Laws, N°30, July 30, 2002, page 2147; RS 0.916.026.81) |
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Agreement on Technical Barriers to Trade (Official Compendium of Federal Laws N°28, July 16, 2002, page 1803; RS 0.946.526.81) |
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Agreement on Taxation of Savings (Official Federal Gazette N°44, November 9, 2004; RS 0.642.026.81; more information) |
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Agreement on Fight against Fraud (Official Federal Gazette N°44, November 9, 2004; RS 0.351.926.81; more information) |
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Agreement on Cooperation in the Fields of Justice, Police, Asylum and Migration (Schengen/Dublin) (Official Federal Gazette N°44, November 9, 2004; RS 0.360.268.1; more information) |
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Agreement on Processed Agricultural Products (Official Federal Gazette N°44, November 9, 2004; RS 0.632.401.23; see more information) |
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Agreement on Environment (Official Federal Gazette N°44, November 9, 2004; RS 0.814.092.681; see www.europa.admin.ch/nbv/off/abkommen/f/index.htm) greement on Statistics (Official Federal Gazette N°44, November 9, 2004; RS 0.431.026.81; more information) |
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Agreement on Media (Official Federal Gazette N°44, November 9, 2004; RS 0.784.405.226.8; more information) |
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Agreement on Pensions (Official Federal Gazette N°44, November 9, 2004; RS 0.672.926.81; more information) |
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Declaration of Intent on Education, Occupational Training, Youth (see more information) |
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Detailed Information |
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1. Bilateral Agreements I |
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The Bilateral Agreements I between Switzerland and the European Union cover the following areas: civil aviation, overland transport, the free movement of persons, research, public procurement markets, agriculture and the elimination of technical barriers to trade. |
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The Agreement on Air Transport extends the so-called acquis communautaire to Swiss airlines which will gradually be allowed access to the deregulated European civil aviation market on a reciprocal basis. |
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The Overland Transport Agreement includes provisions for gradual opening by Switzerland and the European Union of their respective road and rail transport markets for both persons and goods on a reciprocal basis. |
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The Agreement on Free Movement of Persons gradually introduces freedom of movement between Switzerland and the EU. The agreement covers not only workers of all kinds but also the self-employed and persons without gainful employment, provided they have sufficient financial means of their own. |
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The Agreement on Research gives Swiss research institutes, universities and companies the right to full participation in all programs and activities of the EU Framework Research Program. |
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The Agreement on Public Procurement Markets applies to the federal government, the cantons and public sector companies active in the water, transport and energy sectors. Its scope further extends to local authorities in the area of telecommunications and rail transportation, as well as to private sector companies operating on the basis of concessions or of a special or exclusive right. |
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The Agreement on Agriculture provides for improved access to agricultural markets for certain products of particular interest (cheese, fruit and vegetables). |
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The Agreement on Technical Barriers to Trade calls for the mutual recognition of tests, certificates and similar proof of conformity to established quality standards for the vast majority of industrial products. |
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The seven agreements, limited to these specific areas, aim at enhancing the relations between Switzerland and the EU and at facilitating market access for both sides. The agreements were not self-executing and had to be incorporated into Swiss and EU law. They were concluded as a package to take effect simultaneously, and their implementation was individually supervised by joint committees within which each of the two parties made rulings on a unanimous basis. Each party was responsible for the implementation and application of the agreements in its own territory. Thus, Switzerland made legislative changes, amending many federal laws and ordinances and adopting new ones, which took effect on the same date as the agreements.
A revised EFTA Convention, extending the main provisions of the new bilateral agreements to the EFTA States, also entered into force on June 1, 2002. As with the bilateral agreements, various legal acts had to be amended or newly adopted in order to accommodate its implementation.The Swiss people first approved the Bilateral Agreements I and the corresponding implementation legislation in a national referendum on May 21, 2000. The ratification process of the agreements within several Member States of the EU delayed the originally planned schedule. However, since the agreements have come into force on June 1, 2002, it is firmly believed that they will strengthen Switzerland’s position as an economic centre and facilitate access to the EU’s integrated market.
The agreements were extended on May 1, 2004 to the ten new EU Member States, with the exception of the Agreement on the Free Movement of persons, which is the subject of new negotiations.
On October 26, 2004, the protocol to the Agreement on the Free Movement of Persons was signed; this protocol extends the scope of the agreement to the new EU Member States, envisaging separate transitional arrangements for these countries. |
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2. Bilateral Agreements II |
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The Bilateral Agreements II and the declaration of intent between Switzerland and the European Union cover the following areas: taxation of savings, fight against fraud, cooperation in the fields of justice, police, asylum and migration (Schengen/Dublin), processed agricultural products, environment, statistics, media, pensions and education, occupational training, youth. |
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The purpose of the Agreement on Taxation is to ensure that persons liable for taxation within the EU will not be able to evade the directive adopted by the EU for the taxation of savings by placing their savings in financial centres outside the EU. Under the agreement negotiated with the EU, Switzerland undertakes to impose a withholding tax on all income from savings originating abroad, which will be effective for natural persons with tax residency in an EU Member State. In addition, Switzerland undertakes to provide administrative assistance on request to the EU MemberStates in cases of tax fraud or similar serious offences. There will be no automatic exchange of information between tax authorities. With the withholding tax model, Switzerland is not attractive for attempts to avoid the EU directives for the taxation of savings, while the Swiss legal system and banking secrecy remain protected. |
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This bilateral agreement provides for an intensified collaboration between Switzerland and the EU in combating offences in the area of indirect taxes (customs duty, value added tax, consumer tax), subsidies and public procurement. Stronger cooperation against criminal activity is as much a benefit for the EU as it is for Switzerland. The EU benefits by being able toconduct the fight against cigarette smuggling and other fraudulent activity more efficiently, thereby avoiding revenue losses. Switzerland benefits as its financial centre has no desire to be abused as a hub for fraudulent business activities. |
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The Bilateral Agreement in the Fields of Justice, Police, Asylum and Migration (Schengen/Dublin) grants Switzerland access to the instruments for cooperation on security and asylum within the EU, i.e. the Schengen/Dublin security and asylum system, in which Norway and Iceland, non-Member States of the EU, have also been participating since 1999. By abolishing the controls of persons at the internal frontiers of the EU, the Schengen Agreements permit the free movement of persons between EU Member States. TheSchengen Agreements also introduce measures to improve security, such as stricter border controls at EU external borders and several cross-border cooperation mechanisms, such as the Schengen Information System (SIS). The Treaty of Dublin deals with asylum migration providing that asylum cases are handled only by one EU state that is responsible for conducting all the procedures in order to prevent repeated applications. |
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This bilateral agreement allows companies within the Swiss food industry to make duty-free exports of a wide range of products to the EU market. This enhanced competitiveness for the food processing industry opens up new opportunities for Swiss agriculture. For the consumer, prices will tend to fall as a result of a stronger competition. The Bilateral Agreement on Processed Agricultural Products results in improvements in two specific areas. The first one is the revision of the price compensation mechanism. As a part of a simplified price compensation mechanism, theEU undertakes to completely abolish its customs duties on Swiss products and also to waive export subsidies. For its part, Switzerland will reduce its customs duties and export subsidies or, in certain cases, will also abolish them completely. The second one is the extension and revision of the scope of application. The range of products covered by the agreement has been extended. |
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Switzerland has joined the European Environmental Agency (EEA), which is responsible for gathering and analysing data on the state of the environment in European countries and for ensuring that this data is comparable. EEA membership means that Switzerland will actively participate in organising projects and research at a European level, gain full access to the EEA’s pan-European comparable environmental data and will be able to submit comparable Swiss data as a basis for an effective environmental policy. |
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This bilateral agreement on cooperation in the area of statistics regulates the progressive harmonisation of statistical data collection between Switzerland and the EU. Comparability of Swiss and European data in such important areas as trade relations, the employment market, social security, transport and the environment is thus guaranteed in the medium term. Switzerland also gains prominence in Europe, in so far as greater quantities of Swiss data are published in statistics compiled by Eurostat, the Statistical Office of the European Union. |
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The EU has set up a group of programmes called MEDIA, which seeks to strengthen the competitiveness of the European film industry. The agreement grants full participation in the EU programmes – MEDIA Plus (promoting the creation and distribution of Community audio-visual works) and MEDIA Training programmes (training programmes for professionals in the EU audio-visual programme industry). |
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The EU institutions tax the pensions of their retired officials at source. The pensions of retired EU officials living in Switzerland are also subject to taxation in Switzerland. To avoid this double taxation, Switzerland agreed to grant an income tax exemption for the pensions of retired EU officials living in Switzerland. |
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The EU has established several programmes in the areas of education, vocational training and youth. They seek to promote the provision and quality of education and the cross-border mobility of pupils, trainees, students and teachers. Within the framework of the bilateral negotiations II, Switzerland and the EU have made a declaration of intent on the form of intensified cooperation in these programmes. |
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The ratification procedure for the Bilateral Agreements II is proceeding according to Swiss constitutional law. The Federal Council submitted the agreements to Parliament for approval on October 1, 2004, and they were approved by the Parliament on December 17, 2004.
Except for the Agreement on Processed Agricultural Products, which was not subject to a referendum (and provisionally entered into force on February 2, 2005),the Bilateral Agreements II are subject to an optional referendum designated to be held between December 21, 2004 to March 31, 2005.
On a global level, the Bilateral Agreements II are balanced and satisfy key interests of both parties, showing that the bilateral path is feasible for the time being. However, the future of the relationship between Switzerland and the EU will be a subject of continuing political debate. |
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Frequently Asked Questions |
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Will the Schengen Agreement bring about a security deficit because of the abolition of border controls within the Schengen area? |
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No. The Schengen States have adopted a number of compensatory measures that will enhance their cooperation and ensure that there is no security deficit. These measures are as folllows: |
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reinforcing the controls at the external frontiers; |
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improving and simplifying cross-border cooperation at the police and judicial levels; |
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applying a common visa policy for short stays; and |
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providing rules to combat the illegal use of small arms. |
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What will happen if Switzerland refuses to extend the Agreement on the Free Movement of Persons to the ten new EU Member States? |
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In case the Swiss people vote against extending the Agreement on the Freedom of Movement of Persons to the ten new EU Member States, this would result in an unequal treatment of EU citizens by Switzerland: While the citizens of the 15 “old” EU States would benefit from the freedom of movement, those in the new EU Member States would be deprived of it. It has to be assumed that the EU would not accept such an unequal treatment of EU citizens. The EU could renounce the Agreement on the Freedom of Movement of Persons concluded with Switzerland, which would also invalidate the six other agreements of the bilaterals I (the agreements on technical barriers to trade, on public procurement, on overland transport, on civil aviation, on agricultural produce and on research) because these agreements are legally linked (guillotine clause). Such a scenario would have important political and economical consequences: Switzerland would (in principle) lose the economic advantages and the positive impact it derives from the agreements. It would not be able to take full advantage of the opening up of the new markets in Eastern Europe. From a political point of view, the relations with the EU would be severely affected and the credibility of Switzerland as a partner would be weakened. |
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When does Switzerland intend to join the EU? |
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EU membership remains a long-term goal for Switzerland. For the time being, it is premature to consider initiating membership negotiations. However, in preparation of the future debate, the Swiss Government will submit a report in 2007 on the concrete consequences for the Swiss State, its federal system, the direct democracy, its tradition of neutrality and its foreign policy. The Swiss people will then be fully informed to be able to decide in due time. But at present, Switzerland intends to pursue its bilateral approach. |
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What is the bilateral approach? |
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In terms of European policy, Switzerland has adopted a “bilateral approach”. This means that Switzerland defends its national interests through bilateral negotiations with the EU and the conclusion of specific agreements in certain sectors. A package of such agreements, for instance on the free movement of persons and on the co-operation in the field of scientific research, has entered into force in June 2002. Another set of bilateral agreements has been concluded last year. The European Union is Switzerland’s principal partner, in political, cultural and in economic terms. |
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