Relations between Switzerland and the European Union (EU) are governed, inter alia, by “bilateral agreements”, a network of agreements with 120 individual agreements. To ensure a more uniform and effective application of existing and future agreements, Switzerland and the EU have negotiated an Institutional Agreement (InstA) since 2014. In May 2021, Switzerland unilaterally informed the EU that it had terminated negotiations. The EU declared then that without InstA, no new agreements would be concluded with Switzerland, and the existing agreements could no longer be updated, which from the perspective of spring 2022 would mean that relations would be weakened over time in the absence of modernization of existing agreements.
How they can be pursued in the future and whether this scenario of erosion of sectoral agreements will actually be implemented so rigorously in reality is not certain. The potential for damage is significant for both sides and is the worst possible option for the German-Swiss economy. However, the challenges and concerns posed by the unsuccessful framework agreement regarding the further development of the relationship between Switzerland and the EU remain valid and still require a reliable solution.
Meanwhile, existing bilateral agreements are already eroding as medical device manufacturers on both sides of the border are now experiencing great suffering. As the EU no longer recognized mutually recognized conformity assessments in May 2021, Swiss and EU medtech manufacturers now have to check their market consent when exporting to each other, appoint an authorized legal representative and comply with the country’s labeling regulations. Loss for companies on both sides of the border.
Other contracts will become obsolete in the next few years, for example due to the update of the EU Machinery Directive in the next 2 years; or recognition of equivalence in data protection and many more, some of which have been blocked for years. Finally, the vague association of Switzerland as a third country in the EU’s Horizon Europe research framework program is already having a negative impact on innovation and research centers on both sides of the border.
In view of this potential for damage, which will only have a really negative impact in the coming years, Switzerland and the EU have generally declared their intention to ensure a prosperous future for this relationship. Following Switzerland’s unilateral break-up, the EU expects to show potential ways to further develop the relationship for mutual benefit and acceptance. Following the closed session at the end of February 2022, the Swiss government announced that, in principle, it wanted to pursue the bilateral path and adopt a vertical approach in negotiations to separately anchor institutional elements to individual internal market agreements. On this basis, preliminary talks with the EU are to be launched. It is currently unknown whether this is also an option for the EU.
For the German-Swiss Chamber of Commerce, the future development of relations between Switzerland and the EU is of particular importance as there is a very intense exchange with Germany, Switzerland’s most important economic partner, and economic ties are particularly close. Currently, value chains of goods and services in cross-border trade play an increasing role and deepen the interdependence of business in international trade. This would not be possible without the free exchange of products, the elimination of tariff and non-tariff barriers to trade, the free movement of persons and the mutual recognition of test certificates and professional qualifications.
Maintaining and extending reciprocal market access and sound rules of the game are essential. It is important not to create new bureaucratic burdens for foreign trade, on the contrary, to further reduce the existing ones.
In this context, the German-Swiss Chamber of Commerce calls on both sides, Switzerland and the EU, that the current regression in relations cannot lead to a reversal of liberalization steps in market access, which have been achieved with great difficulty over the years, and new contracts blocked for years. It is much more important to engage in mutual dialogue now and to remain open to the further development of the future relationship between Switzerland and the EU.