Federal Council compares comprehensive free trade agreement with the EU bilaterals

Bern, 05.06.2015 - In response to the postulate of Council of States member, Karin Keller-Sutter, the Federal Council has adopted a report concluding that a comprehensive free trade agreement, by definition limited to market access, would clearly constitute a step backwards from Switzerland's bilateral agreements which are a factor of the country's economic success. Departing from the bilateral approach would also have an uncertain outcome, as renegotiating a comprehensive free trade agreement must be in the interests of both sides and would not necessarily provide the same legal certainty as the bilateral agreements.

The bilateral agreements have created conditions for Swiss suppliers in a number of areas that are similar to those of an internal market, with all that implies in terms of legal security. They have also extended cooperation beyond this into key policy areas, neither of which could be achieved with a free trade agreement alone. The report contrasts the idea of a comprehensive free trade agreement with the current bilateral agreements between Switzerland and the EU in accordance with the postulate of Council of States member, Karin Keller-Sutter.

The "comprehensive free trade agreement" scenario under consideration is based on easier market access that is feasible without harmonising legislation, i.e. without incorporating EU law or having contractually agreed and supervised equivalence of regulations. An example of this is tariff dismantling at the borders. This is in line with more recent existing free trade agreements. The report shows how this would clearly constitute a step backwards from the current bilateral agreements which grant Switzerland contractually regulated access to the European internal market.

For example, a free trade agreement without harmonising legislation would rule out certain areas of market access such as technical barriers to trade for industrial goods or in the agricultural sector, customs security, free movement of persons, mutual facilitation of market access in certain service sectors e.g. land and air transport.

Furthermore, renegotiating the inclusion of each element of the bilateral agreements that could theoretically fall within the scope of a comprehensive free trade agreement depends on the willingness of both parties and must meet the interests of the two sides, i.e. also the EU. 

Lastly, the goal of greater regulatory autonomy within the framework of a comprehensive free trade agreement would only be  formally guaranteed at the utmost. Due to close economic ties with its neighbouring states, Switzerland in any case has an interest in ensuring a certain harmonisation of legislation with its European environment. Avoiding unnecessary divergences is crucial for a small, export-dependent national economy such as Switzerland in order to maintain competitiveness. Without the bilateral agreements, however, the disadvantages of having no contractual recognition of harmonised legislation would be significant.

That is why the bilateral agreements serve Switzerland's interests to a far greater extent than a comprehensive free trade agreement would be able to. They constitute a tailor-made legal framework that takes account of the close economic and political ties between Switzerland and the EU as well as the country's geographical location in the heart of Europe. They are the result of a constantly renewed balancing of interests. The Federal Council considers that the interests at stake and the result of the weighing-up of these interests have not changed since the bilateral way began.

The Federal Council submits this report in response to the Keller-Sutter postulate 13.4022 "Free trade agreement with the EU in place of the bilateral agreements". The postulate mandated the Federal Council to analyse the pros and cons of a comprehensive free trade agreement between Switzerland and the EU in depth, and to compare this to the current bilateral agreements. As this is an issue of broad public concern, the objective was to gather the widest possible support for the report. In addition to several services of the Federal Administration, Prof Astrid Epiney from the University of Fribourg and Prof Reto Föllmi from the University of St Gallen were involved in the drafting of the report as external specialists.

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