SwissBanking
The online magazine of the Swiss Bankers Association
December 13, 2019

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2020: the year that will decide the destiny of the bilateral agreements

2020: the year that will decide the destiny of the bilateral agreements

Next year, the Swiss electorate will decide on the future of the bilateral agreements with the European Union. Should they be further developed or terminated? Clearly defined relations with our neighbours are of crucial importance for the Swiss financial centre.

The electorate has a decisive influence on foreign policy in Switzerland. No dossier more clearly reflects this than our country’s European policy. Over the past two decades, Swiss voters have voted to endorse the establishment and expansion of the bilateral agreements with the European Union on numerous occasions. But this “bilateral approach” with our European neighbours will soon be facing an uncertain future.

2020: a year of important decisions

This is firstly because the SVP wants to end the free movement of persons with the EU through its “Begrenzungsinitiative” (limitation initiative). A vote on this matter is expected in May 2020. If this popular initiative were to be accepted, it would in effect result in the termination of all the bilateral agreements (see Box 1). It is therefore actually a “termination initiative”, which, if accepted, would mean that Switzerland would lose the benefits of the bilateral agreements virtually overnight and would have to restructure its relationship with the EU. At the same time, the European Union has been pushing for the further development of the bilateral approach for years. To this end, an institutional agreement is to be reached between the EU and Switzerland (see Box 2). Without such an agreement, the conclusion of new agreements and the updating of existing agreements with the EU will remain blocked (e.g. the Agreement on mutual recognition in relation to conformity assessment (MRA)).

Banking is an export business

Around half of the assets managed cross-border in Switzerland come from European clients. There is currently no market access agreement with the European Union for financial services, even though the bilateral agreements are also important for the Swiss financial centre. For example, they allow the recruitment of qualified employees across the EU/EFTA region without red tape, from which Swiss financial services providers benefit directly. The bilateral agreements also enhance the attractiveness of Switzerland as a business location by enabling export-oriented industries to gain access to the European single market. These are important corporate customers of Swiss banks. Gradually further developing these relations is therefore also key from the point of view of the financial centre. Ending the free movement of persons would, by contrast, initiate a continuous erosion of the bilateral approach. This would not improve the framework conditions for Swiss banks’ contact with European customers and would instead significantly increase uncertainty.

Further developing bilateral agreements in a targeted manner

The Swiss Bankers Association (SBA) strongly advocates worldwide market access for Swiss financial services providers. For the SBA, it is therefore clear that, in a time of rising protectionism, access for Swiss companies to the European single market must be secured. The industry's ideas and expectations in this regard have already been summarised in a background paper. The SBA is also involved in the “stark + vernetzt” (strong + interconnected) alliance for clearly defined relations with the European Union (see Box 3). The SBA firmly rejects the “termination initiative” and calls on politicians to quickly take the necessary steps to constructively further develop relations with the European Union. A standstill in European policy quickly translates into a step backwards, and this harms both the Swiss economy and population. The SBA is committed to further developing the bilateral approach with the European Union and thus securing added value, jobs and tax revenues in the Swiss financial centre.

Bilateral agreements with the European Union

Switzerland enjoys close relations with the European Union (EU) at the political, economic and cultural levels. These relations are governed by a set of bilateral agreements. The term “bilateral agreements” refers to the two packages of bilateral agreements that were concluded in 1999 and 2004 respectively and cover numerous areas of policy (e.g. the free movement of persons, overland transport, civil aviation and Schengen membership). The first package – also known as “Bilateral Agreements I” – is linked in legal terms to a so-called guillotine clause: if one of the agreements is terminated unilaterally, the entire package ceases to have effect within six months. More information on this matter can be found here.

Institutional agreement

Switzerland and the European Union have negotiated an institutional agreement with the aim of consolidating mutual market access and making it viable for the future. The agreement comprises the five existing and future market access agreements. The aim is to strengthen legal certainty for companies and secure Switzerland’s long-term access to the EU market. Consultation is currently taking place among the social partners in Switzerland. More information can be found here.

stark + vernetzt

“stark + vernetzt” (strong + interconnected) is the European policy platform for a constructive Swiss European policy. The aim of “stark + vernetzt” is to sensitise Swiss people to the advantages of an internationally interlinked Switzerland. The initiative is supported by business associations, civil society organisations and parties spanning the entire spectrum from left to right, which are committed to an internationally interconnected Switzerland. The Swiss Bankers Association (SBA) is a founding member of “stark + vernetzt” and regularly participates in the platform’s activities. More information on this matter can be found here.