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.

EU relations with Switzerland: End of the road for bilateral model

The blog post 'Liechtenstein under EU pressure on taxation' (28 December 2010) only scratched the surface, but let us go into more depth regarding taxation issues when readers and I feel like it.

Instead, we turn to Switzerland, the only European Free Trade Association (EFTA) country not to have joined the internal market through the European Economic Area (EEA).

The General Affairs Council (GAC) recently outlined the relations with the four EFTA countries:

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


Financial contributions

There is a marked contrast between the EU's appreciaiton of the financial contributions by the the three EEA EFTA states Iceland, Liechtenstein and Norway and the expectations regarding Switzerland (paragraph 2):

2. The Council appreciates the financial contributions of the EFTA countries to the economic and social cohesion in the European Economic Area (EEA). Norway, Liechtenstein and Iceland (the "EEA EFTA States") recently committed themselves to a substantial increase of their continued contributions. The EU is looking forward to a constructive dialogue with Switzerland on the review of the current mechanism, expiring in June 2012. The Council hopes that a mutually acceptable solution will be found with the aim of reducing economic and social disparities in the EU.

End of the road for bilateral model

The EU Treaties Office Database records 179 agreements between the European Union and Switzerland.

It would be an exaggeration to say that the model of bilateral treaties is ”kaputt”, but according to the EU the system has reached the end of the road (paragraph 6):

6. Since Switzerland is not a member of the European Economic Area, it has chosen to take a sector-based approach to its agreements in view of a possible long-term rapprochement with the EU. 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 challenge of the coming years will be to go beyond this complex system, which is creating legal uncertainty and has become unwieldy to manage and has clearly reached its limits. In order to create a sound basis for future relations, mutually acceptable solutions to a number of horizontal issues, set out below, will need to be found.

EU acquis

The European Union wants to guarantee a more level playing-field between businesses through the scope and implementation of the EU acquis (paragraph 7):

7. Though EU relations with the EFTA countries were extended over the years to many areas not covered by the internal market, these relations are mainly based on the progressive integration of the EFTA countries' economies into the EU internal market. In view of the need for a level playing field for all economic operators of the parties concerned and the continued development of internal market relevant acquis, the EU and the EFTA States should ensure homogeneity in the implementation of the acquis and the good functioning of the institutions.

The observations concern all the EFTA countries, but the procedures with the EEA members are more streamlined than with regard to Switzerland.

We look at specific remarks about Switzerland in a later blog post.



Ralf Grahn



P.S. Social Europe Journal (SEJ) is an important forum for political cross-border discussion, as presented by themselves: Debating politics in Europe and beyond. - Not to miss, if you are interested in EU level politics.

Switzerland: European Union playing seek

Yesterday we looked at some issues between the European Union and Switzerland, but especially for useful information about where the relationship is going. On this count, the own-initiative resolution from the European Parliament was almost the only thing with real informational value unearthed by a quick search: Can’t live with them, can’t live without them: European Union and Switzerland (20 October 2010).

Almost, I said, because I left the public statements by president Herman Van Rompuy and president José Manuel Barroso to this post.

Herman Van Rompuy

Among older news on the EEAS country page for Switzerland we find what president Van Rompuy uttered in public after meeting the president of Switzerland in July:

Remarks by Herman VAN ROMPUY, President of the European Council, following his meeting with Doris LEUTHARD, President of the Swiss confederation; Brussels, 19 July 2010 PCE 169/10

This is what Van Rompuy told the citizens of the European Union after a ‘very fruitful discussion’:

We cover[ed] a lot of ground today. We examined the state of our bilateral relations. More specifically, we have discussed the perspectives for Switzerland’s European integration policy. We have examined the functioning of our relations based on a set of bilateral agreements (more than 120) that unite us. I've expressed [to] the President the importance for these agreements to work well and to be implemented by both sides properly.

We have also discussed how to improve our relations for the future. The EU is convinced on the need to develop the relations with Switzerland on sound legal and political foundations. The EU Council Conclusions of December 2008 laid down the criteria and conditions which must be fulfilled by future negotiations allowing the participation of Switzerland in our internal market and policies.

Such criteria and conditions refer in particular to the acceptance of the evolution of the acquis and its homogeneous interpretation and application.

I know that an important political debate in this regard is taking place in Switzerland, as well as in [the] EU. I've expressed the EU readiness to explore jointly possible solutions to address these questions.

Besides the commonplaces, Van Rompuy left one interesting clue; not to the mandates for ongoing negotiation processes, but a historical reference to Council conclusions from December 2008.

The obvious reference should be the conclusions of the External Relations Council 8 to 9 December 2008, but we come up empty. We fare no better if we check the GAERC General Affairs press release of 8 December 2008. Perhaps it meant the presidency conclusions from the European Council 11 to 12 December 2008? No luck.

'Switzerland' is mentioned in the context of limited issues by the Ecofin Council, the Epsco configuration and the Agriculture and Fisheries formation during December 2008, but I failed to find anything resembling a reset of EU and Swiss relations in general.

The conclusions from the Foreign Affairs Council (FAC) 22 February 2010, available through the EEAS country page news, mentioned Lybia’s conflict with Switzerland and the participation of Switzerland in the Media 2007 programme.

I decided not to trawl through the whole ocean of Council documents in order to find something of value about the future relationship between the European Union and Switzerland.

I think I did enough to reach the following conclusion: The EEAS and Council websites are not particularly helpful. Naturally, there are guidelines and mandates, as well as minute records of how the negotiations are going, but not readily accessible.

José Manuel Barroso

Let us look, instead, how matters have advanced in three months. In a speech in Geneva, Commission president José Manuel Barroso gave some indications of what the European Union wishes for the future (in French): Déclaration du Président Barroso au point de presse avec la Conseillère fédérale suisse Micheline Calmy-Rey (14 October 2010, SPEECH/10/558).

We see the will to streamline procedures, and to improve the adoption and application of EU legislation, but how the changes should be brought about is expressed in public with diplomatic lack of precision:

J’ai surtout encouragé l’ouverture continue de la Suisse pour améliorer l’encadrement institutionnel de nos relations.

J’ai signalé à Mme Calmy-Rey l'importance de rendre nos relations et surtout l'application du droit plus dynamiques et plus uniformes pour une meilleure sécurité juridique. Ceci est dans l'intérêt de nos citoyens et de nos entreprises.

Notamment nous devons progresser sur les aspects horizontaux et institutionnels suivants:
• adoption de nouveau acquis et sa mise à jour dynamique
• mise en œuvre uniforme et harmonieuse; surveillance de l'application de l'acquis dans un cadre institutionnel
• adoption de la jurisprudence européenne
• règlement des différends

C'est sur ces questions que nous devons travailler .C'est essentiel pour permettre aux négociations en cours de progresser.

Le marché intérieur est un ensemble cohérent qui ne peut pas être fractionné. Une participation accrue à notre marché intérieur et à nos politiques demande donc l’acceptation par la Suisse de nos règles communes.

Evidemment, ceci doit se faire dans le respect de la souveraineté du peuple suisse. Nous sommes prêts à explorer comment il est possible de réconcilier nos règles du jeu avec la souveraineté suisse et nous pensons que c'est possible, avec imagination, de trouver cette solution.

Barroso’s public comments itemise the issues concerning the adoption of the EU body of (new) law (acquis) and its homogeneous interpretation and application, but they bring little new to light, when we compare them with what Herman Van Rompuy, the president of the European Council had said three months earlier, in July 2010.

Comment

Switzerland is surrounded by the European Union, so good and ordered relations are a must, or at least highly desirable for both sides. But the EU has hinted that it is tired of the laborious processes entailed by negotiating one bilateral agreement at a time and then administering and adapting each of the 120 treaties bilaterally every time a legal act is amended or the CJEU has given a new interpretation.

However the information on offer from the European External Action Service (EEAS) and the Council of the European Union is neither easily accessible nor particularly illuminating, given the importance of the EU-Swiss relations. The European Union is seeking something, but what exactly?

The gap between existing knowledge and readily accessible quality facts is plainly too wide. The public has been left blindfolded.




Ralf Grahn



P.S. Paolo Maria Grossholz runs a special kind of blog, called A 12 Stelle (evoking the twelve stars of Europe). It is listed on blogger, but instead of traditional blog posts written by the author it functions by highlighting and linking to practically all press releases from the EU institutions which are of interest to enterprises. For the Milan based blogger Italian is the primary language, but otherwise the English version is chosen. In the end, it works like a useful news ticker for corporations and SMEs.

Since I mentioned Bloggingportal.eu the last time, the multilingual aggregator for Euroblogs has added one to its numbers. There are now 676 blogs related to European Union and Council of Europe affairs listed. There is still a need for a few voluntary editors to tag blog posts according to subject. Join the team!