SwissBanking
The online magazine of the Swiss Bankers Association
December 10, 2020

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The SBA’s overall assessment of the institutional agreement is positive

The SBA’s overall assessment of the institutional agreement is positive

Following the clear rejection of the “termination initiative”, courageous steps must now be taken by the Federal Council and the right signals sent to Brussels to ensure that the talks regarding the framework agreement continue. However, the Swiss population also needs to be convinced of this approach. The public debate is giving a voice primarily to sceptics. Their arguments, some of which are presented in a very sensationalist manner, especially on the issue of sovereignty, should be placed in the proper context. If this is done, the advantages of the agreement outweigh the disadvantages.

The SBA is of the opinion that the matters identified as requiring further clarification in the Federal Council’s letter to the EU of 9 June 2019 (wage protection, state subsidies, Citizens’ Rights Directive) can be resolved. This, however, requires a firm political commitment. But putting aside the three matters mentioned above, the current public and political debate is increasingly revolving around certain topics that were not explicitly addressed in the letter from the Federal Council to the President of the European Commission dated 9 June 2019. In particular, these are questions relating to sovereignty and to the proposed role of the CJEU in dispute settlements. Unfortunately, the public debate on these matters has served almost exclusively as a platform for the opinions of sceptics, some of whom are putting forward sensationalist and (overly) simplistic arguments.

Focusing more on the advantages

Objectively robust arguments exist when it comes to placing the question of limiting Switzerland's sovereignty in the correct context, justifying the approaches negotiated in the draft framework agreement, and putting the associated concerns into perspective, to name a few examples. As a third country, Switzerland is, to some extent, already involved in the EU’s legal system through the current bilateral agreements, which are viewed positively by a majority of the population and industry. The difference between the “autonomous” adoption practiced today and the foreseen “dynamic” adoption is likely to be less significant than is sometimes propagated by sceptics. Also, the fact that the obligation to adopt EU law only concerns the limited range of bilateral agreements that fall within the scope of the institutional agreement either now or in the future, is often overlooked. In these areas, the obligation to adopt EU law is also desirable from a Swiss perspective and should bring more advantages than disadvantages. In addition, the framework agreement now also provides for Swiss participation in the drafting of EU legislation. Realistically, Switzerland will not carry enormous weight in this context, but it will nonetheless give the country a stronger voice than it has had to date. These are only a few examples that highlight why in the overall discussion, greater focus should be placed on the advantages rather than the effective and potential restrictions. And irrespective thereof, concessions must be made in any agreement. Were this not the case, there would be no need to conclude agreements. Without a framework agreement, the EU will not want to continue the bilateral agreements, putting this successful model at risk of being eroded.

Explaining the arguments in favour of the agreement is challenging. It is to be hoped that credible exponents from the world of politics, business and academia will soon become more involved in convincing the public of the merits of this approach.

SBA continues to support the framework agreement in the interests of the banking sector

The SBA’s assessment of the overall draft framework agreement remains positive. Bank-specific concerns regarding market access are not directly linked to the framework agreement. However, without such an agreement, it will likely be difficult to successfully address such concerns with Brussels at the appropriate time. As the voice of the banking sector, the SBA therefore continues to support the conclusion of a framework agreement.

Improvements in market access are key for a very important, export-oriented segment of Swiss banks. There is a lot at stake:

  • Switzerland's “leading position” as an internationally oriented financial centre and provider of cross-border banking and securities-related services, especially in private banking (currently no. 1, with approximately CHF 1,000 billion in assets under management attributable to EU clients being managed by Swiss banks).
  • Approximately 20,000 jobs at Swiss banks which operate in this industry
  • CHF 1.5 billion in taxes and levies generated from this line of business.

For further details on this topic from an industry perspective, please refer to the SBA’s background paper on market access for Swiss banks dated June 2019.