Friday, 31 December 2010

EU conclusions regarding Switzerland

Through legislation and jurisprudence the body of European Union law is in constant movement, but with Switzerland each relevant change has to be negotiated separately and every one of the 179 bilateral treaties administered. This is more cumbersome than the European Union is willing to accept for the future: EU relations with Switzerland: End of the road for bilateral model (30 December 2010).

Publicly, the the European Union has described its aims in vague terms, and voters in Switzerland have earlier rejected EU membership and even joining the European Economic Area (EEA). Surrounded by EU member states, Switzerland needs smooth relations, but until now only the piecemeal approach embodied by the concept ”bilateral” has been able to satisfy sovereignist electors.

There are, perhaps, many ways to skin a cat, but it becomes more complicated if you have to get the agreement not only of the cat, but of all (Swiss) felines.

In states affected by referendumitis anything can happen, so do not count your blessings until the referendum results are in.


Specific conclusions


After the general remarks in yesterday's blog entry, the main purpose of this blog post is to present the specific conclusions of the EU General Affairs Council (GAC) with regard to EFTA country Switzerland:

Council conclusions on EU relations with EFTA countries; 3060th GENERAL AFFAIRS Council meeting Brussels, 14 December 2010

There are a number of issues the GAC wanted to comment on, and the EU seems set to drive a bargain (paragraphs 37 to 50):


SWISS CONFEDERATION

37. Relations between the EU and Switzerland are good, intensive and broad. Situated in the very heart of the European territory, Switzerland is one of the EU's major trading and investment partners and EU and Swiss economies are closely interlinked. In the past two years, relations have intensified even further.

38. In this context, the Council welcomes in particular the full participation of Switzerland in the Schengen area, as well as the extension of the Free Movement of Persons Agreement to Bulgaria and Romania. It congratulates Switzerland on the breakthrough of the Gotthard base tunnel, an important step in the realization of this impressive infrastructure project, which will contribute significantly to the development of efficient and environmentally sustainable transport in Europe.

39. The Council welcomes the existing cooperation with Switzerland in the area of Common Foreign and Security Policy, in particular in civilian crisis management operations, and stands ready to further strengthen cooperation in this area. It pays careful attention to the Swiss interest in holding a formal political dialogue and wishes to express its similar aim to augment our cooperation and explore together the appropriate format.

40. EU-Switzerland relations include a contribution to reduce economic and social disparities in the EU. The EU believes that such support contributes to enriching overall relations between the parties and reinforces mutual solidarity. The Council is therefore confident that Switzerland's contribution will continue in the future, on the basis of the review of the existing mechanisms.

41. Following Switzerland’s rejection of the EEA in 1992, the EU and Switzerland decided to deepen their relations through the conclusion of agreements in chosen sectors. The Council takes note of the European Policy Report of the Swiss Federal Council of September 2010, reaffirming this choice.

42. The Council notes that this sectorial approach has allowed closer cooperation in a few areas of mutual interest but has turned in the course of the years into a highly complex set of multiple agreements. Due to a lack of efficient arrangements for the take-over of new EU acquis including ECJ case-law, and for ensuring the supervision and enforcement of the existing agreements, this approach does not ensure the necessary homogeneity in the parts of the internal market and of the EU policies in which Switzerland participates. This has resulted in legal uncertainty for authorities, operators and individual citizens.

43. In this context, the Council is concerned by an incoherent application of certain agreements and the introduction by Switzerland of subsequent legislative measures and practices incompatible with those agreements, in particular the Agreement on the Free Movement of Persons. The Council calls upon Switzerland to abrogate such restrictions (for instance, the obligation in force in Switzerland to provide prior notification with an 8-day waiting period) and to refrain from adopting new measures incompatible with the Agreement.

44. The Council remains very concerned regarding certain cantonal company tax regimes of Switzerland creating an unacceptable distortion of competition, and reaffirms its position on this matter. It regrets that the lengthy dialogue on this issue has not yet led to an abolition of the state aid aspects of these regimes. The Council reiterates its call on Switzerland to abolish these tax incentives and to avoid taking internal measures, such as certain aspects of the New Swiss Regional Policy, which would be incompatible with the Agreement and may have the effect of distorting competition between EU border regions and Switzerland. Other difficulties in the implementation of Protocol II of the Free Trade Agreement and in the application of the Agreement on Trade in Agricultural Products remain a matter of concern.

45. With regard to harmful business tax practices, the Council encourages Switzerland to continue discussions with the EU on the application of the principles and criteria of the EU Code of Conduct on business taxation.

46. Concerning the taxation of savings, the Council welcomes the readiness of Switzerland to consider an extension of the scope of the savings taxation agreement, once the EU has finalised its work on the revision of the savings taxation directive.

47. Regarding cooperation and information exchange in tax matters and the fight against fraud and evasion in tax matters, the Council welcomes the commitment taken by Switzerland in spring 2009 to implement OECD standards on transparency and tax information exchange. It expects a quick and consistent implementation of these standards in the relationship between Switzerland and the EU and all its Member States.

48. In full respect of the Swiss sovereignty and choices, the Council has come to the conclusion that while the present system of bilateral agreements has worked well in the past, the key challenge for the coming years will be to go beyond that system, which has become complex and unwieldy to manage and has clearly reached its limits. As a consequence, horizontal issues related to the dynamic adaptation of agreements to the evolving acquis, the homogeneous interpretation of the agreements, an independent surveillance and judicial enforcement mechanisms and a dispute settlement mechanism need to be reflected in EU-Switzerland agreements.

49. In addition to making the existing agreements more efficient and solving the outstanding problems in their implementation, the Council recognises that cooperation should be developed in certain areas of mutual interest. However, as regards agreements providing for Switzerland’s participation in individual sectors of the internal market and policies of the EU (a status normally only granted to members of the European Economic Area (EEA)), the Council recalls its conclusions of 2008, that the requirement of a homogeneous and simultaneous application and interpretation of the evolving acquis - an indispensable prerequisite for a functioning internal market - has to be ensured as well as supervision, enforcement and conflict resolution mechanisms. In this context, the Council welcomes the setting-up of an informal Working Group of the Commission and Swiss authorities.

50. Furthermore, the Council reiterates its conclusion of 2008 that in assessing the balance of interests in concluding additional agreements, it will have in mind the need to ensure parallel progress in all areas of cooperation, including those areas, which cause difficulties to EU companies and citizens.
As we see, EU-Swiss relations are more complex than with the EEA EFTA states Iceland, Liechtenstein and Norway, although in matters of taxation the ambitions of the European Union are expressed in practically identical terms with regard to Liechtenstein and Switzerland.

Salud, amor y dinero in 2011 to all my readers!



Ralf Grahn



P.S. If you are active in social media, you should know something about the legal issues involved. One place to look is the Social Media Recht Blog, written (in German) by the attorney Nina Diercks.