President, Honourable Members,
On 26 May, the Swiss Federal Council took the decision to terminate the negotiations on an Institutional Framework Agreement between the EU and Switzerland. We regret this decision. The conclusion of this Agreement was a priority for the EU. Let me start by putting things in perspective. This may help to better grasp the issue and the challenge ahead of us.
The EU and Switzerland are more than just neighbours. Switzerland is an important partner, both economically - as our fourth largest trading partner - and politically, given our shared values. On a daily basis, the free movement of people and goods, in particular, nurtures a privileged relationship between us.
Let me give you a few figures in that respect: In 2020, about 1.5 million EU citizens were living in Switzerland and around 400 000 Swiss were living in the EU. Out of Switzerland's total workforce of around 5 million people, some 25% were EU citizens. 350 000 of our citizens crossed the border daily to work in Switzerland.
In parallel, our economic relationships are flourishing: The EU is Switzerland's largest trading partner by far. Switzerland trades more with the neighboring regions in Austria, Germany, France and Italy (around €80 billion per year) than with the BRICS countries (around €63 billion per year). Switzerland trades more with Grand Est/Bourgogne-Franche-Comté/Auvergne-Rhône-Alpes than with Japan. And Switzerland trades more with Baden-Württemberg and Bavaria than with China.
These figures underline how much Switzerland benefits from this privileged access: according to its own data, Switzerland gains an estimated 18 to 27 billion euros per year from its bilateral relations with the EU. But despite this deep economic and social integration, there is no overarching framework governing Swiss participation in the internal market. There are no provisions to ensure a level playing field: there are for example no common provisions for state aid rules.
Beyond that, there is no satisfactory dispute settlement mechanism ensuring an adequate implementation of our 120 bilateral agreements. Also, contrary to the example of the states that are part of both EEA and EFTA - Norway, Iceland and Liechtenstein - there is no compulsory and regular financial contribution from Switzerland to the EU cohesion policy. The last- and so far, only financial contribution from Switzerland dates back to 2012; a whole EU financial framework cycle ago.
Moreover, as time passes, our bilateral agreements are ageing: The EU and Switzerland Free Trade Agreement was concluded 50 years ago and the package of “bilateral I and II” agreements was concluded almost 20 years ago. Hence, without any modernisation of these agreements, our relations are inevitably eroding over time.
It is precisely for all these reasons that the conclusion of an Institutional Agreement was considered a priority. This was about establishing a level playing field. This is a matter of fairness and the integrity of our Single Market: anyone operating on the EU Single Market must face the same rules and obligations. Against this background, our commitment has been irreproachable: President Juncker and President von der Leyen have spoken more than 25 times to six Swiss Presidents.
The EU has demonstrated a high level of understanding for the political constraints in Switzerland and showed willingness to compromise. The list is long, from a dispute settlement mechanism based on an arbitral tribunal - and not on the European Court of Justice only - through a 2-pillar system for State Aid and not only the EU's rules, to a protocol dedicated to the protection of the Swiss labour market. Allow me to emphasise here that high levels of social protection and full respect of the principle of “equal pay for equal work” are as important for the EU as they are for Switzerland.
We also agreed: To limit the scope of the Agreement to five existing agreements although there are 120. And we agreed not to enshrine in the Agreement itself legally binding provisions on the Swiss financial contribution to the EU cohesion policy, only a joint political declaration, but still recalling that this contribution is the natural and fair consequence of participating in the Single Market.
In November 2018, we thought we had found a balanced solution for both parties.
However, the Swiss Government, in June 2019, announced that it needed “clarifications” on three issues: On state aid, on the protection of wages in Switzerland, and on the free movement of persons. We had immediately offered to work on these issues but our Swiss friends needed some time. In January this year, discussions restarted and we re-engaged constructively by making concrete and robust proposals to address these concerns.
On 23 April, when meeting the Swiss President M. Guy Parmelin, President von der Leyen was of the firm opinion that a deal was possible, provided that both sides show flexibility. But our offers were not picked-up and finally, on 26 May, the Swiss Federal Council took the decision to terminate the negotiations on an Institutional Framework Agreement with us. This is not our choice and we can only regret this decision. The solution to the difficulties is gone, but the problems remain.
We therefore need to reflect, collectively, on how we can move forward and ensure that our bilateral relationship continues to flourish while ensuring a fair balance of rights and obligations. For this, we need time to carefully review our agreements with Switzerland. We should identify the problems precisely and find solutions. We are determined to find the best way possible for the bilateral relationship with Switzerland to work most effectively.
President, Honourable Members,
Let me thank you for this very fruitful debate. I take from this exchange that we all concurred that our precious relationship with Switzerland deserves better than a lack of prospects. We should aim for ambition and future development. At the same time, ensuring a level playing field is essential. Privileged access to the Single Market must mean abiding by the same rules and obligations. We are determined to find the way for our bilateral relationship to work best.
To answer the concrete question on the rights of Croatian citizens, I would like to reassure you that we of course are following the issue extremely closely. We have raised this issue several times in the relevant Joint Committee. However, due to the absence of dispute settlement mechanisms, the legal avenues at our disposal remain very limited. Still, this will be part of the audit the Commission services have been tasked to complete.
And to conclude I would like to say that I absolutely agree with all of you; that we must uphold the rights of workers and citizens but I would add, on both sides. On the EU and the Swiss side, and that would be our priority for the audit, and in looking for the best way possible to find solutions to this now very complex problem. Thank you.