What about the FDP?
Foreign Minister Ignazio Cassis defended the institutional agreement for a long time, and then demanded a clear Plan B — in vain. The depressing realization that you don’t get very far riding a doomed horse may be one of the reasons why he, too, has recently joined the conservative alliance of the Swiss People’s Party (SVP) and the Liberal (FDP) representative in the Federal Council.
For supporters of the bilateral approach and a business-friendly institutional agreement in the FDP and beyond, however, this may raise the question of whether they would not be better served in future by a Green Liberal Party representative, as the Green Liberals were the only party on the right that unanimously supported the bilateral approach and the InstA. In addition, the Federal Councillors of The Centre and the Social Democratic Party had also reportedly pleaded for a further search for a compromise.
Since 2008, the EU has understandably been insistent on the need for uniform laws in a common internal market. It therefore requires a defined mechanism for the dynamic adoption of changing rules and regulations, and a dispute settlement mechanism, as prerequisites for the further development of its bilateral relations with Switzerland. Because it is only a question of ensuring that competition in goods and labor in the internal market remained as undistorted as possible, the EU was willing to limit this institutional agreement to the issues of market access. The dispute settlement mechanism, certainly, would have offered Switzerland definite advantages.
It remained unclear on Wednesday why and how the EU, which has been slapped in the face, is supposed to continue negotiating with Switzerland the way the Federal Council would like, even though the Federal Council no longer considers such an institutional agreement feasible. Obviously, the principle of hope reigns supreme: Both parties have a lot of economic interests in common, after all. But the EU’s 27 members are no longer made up mostly of Switzerland’s neighbors.
Overwhelming fear over freedom of movement
Interestingly, however, the framework agreement has now failed, at least officially, not because of differences over the adoption of laws and the settlement of disputes. Swiss trade unions dug in their heels over the treaty’s other measures, and had effectively claimed the right to veto the whole thing. But there had recently been signs of at least an openness to compromise on this issue, and on that of state subsidies. On the other hand, it was obviously once again the freedom of movement issue, which is so important for the Swiss economy but has been the subject of repeated debates, that tipped the scales.
The Federal Council argues that its decision was unavoidable because the EU lacked any willingness to compromise on freedom of movement, and that the EU Citizens Rights Directive (deliberately not mentioned in the InstA) represented a paradigm shift. That doesn’t seem entirely honest. As recently as the summer of 2019, the Federal Council stated in a letter to the EU that the details of any agreement would have to be worked out through subsequent negotiations between the parties. Then it turned around and asked for a whole series of perpetual exemptions – including to the right of permanent residence – explicitly granted up front.
The fact that Switzerland, as a non-member, does not want to grant any EU citizens political rights and that the free movement of persons must not be abused to get into the Swiss social security system is hardly controversial on the EU side either. And yet the idea that people who have worked regularly in a country for several years and paid taxes there should also be entitled to a genuine right to permanent residence cannot be dismissed so easily either. The rich non-EU member Norway, for example, has no problem with this setup so far.
Deteriorating framework conditions
Obviously, in rejecting the institutional agreement, the Federal Council was guided above all by what it did not want. This is probably also due to the fact that right now it lacks a common vision of what Switzerland’s relationship with the EU should look like in the future.
In any case, it’s not political dialogue that has been lacking all these years, but rather the will to creatively overcome existing differences. The compatibility of new laws with those of the EU is already checked regularly. On the other hand, the fact that from the point of view of the EU countries, Switzerland was too protectionist with regard to other parts of the agreement, such as state subsidies and the free movement of people, caused tensions for years. What the unilateral review of laws announced by Federal Councillor Karin Keller-Sutter is supposed to change, and how this move might persuade the EU to make concessions, remains a mystery.
The renunciation of the institutional agreement on the very day the Mutual Recognition Agreement for medical device standards was suspended, causing additional bureaucratic headaches and a weakening of the Swiss med-tech industry’s market position, is not without a certain symbolism. It shows frictions in the relationship with the EU are probably inevitable. They won’t immediately plunge the economy, science, and society into severe crisis, but it will noticeably worsen their situation.
So what remains to be done? Whining will not help, and a popular initiative can hardly fix the issue either. In order to make up for the looming disadvantages, Switzerland should courageously embark on a fitness program under its own steam. It is unclear, however, whether there is sufficient insight and will for that. Simply saying no and blocking is easier.
But Switzerland will not be able to avoid redefining its relationship with the EU and the rest of the world. In the future, how can and should it take its place in the heart of Europe economically and politically? What happens if the pragmatic compromise of the bilateral approach is no longer available? Then there remain the options of joining the EU or the European Economic Area (EEA) — or a deliberately independent third path. But to what extent can and does Switzerland want to be an island in economic and geopolitical terms?
After the experience of recent years and Wednesday’s decision, it must be a cause for concern that approaches to answering all these questions are largely in the hands of a Federal Council with weak leadership, guided primarily by party and domestic political considerations.
With the death of this InstA, there’s actually plenty of room for a new pony in the stable. But the Federal Council doesn’t look like it’ll be able to fill this particular stall any time soon.