Brexit and the Swiss Model

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Like one of those ineradicable bindweeds which, however much you cut it back, re-emerges with infuriating persistence, the ‘Swiss Model’ appears to be making another comeback in the ever-unfolding Brexit debate. Its purveyors, claiming it offers an easy path to the sunlit uplands of a comfortable and advantageous relationship with the EU, are like the frequently killed peasant in an English panto: jeered by the audience as he is first felled only to be cheered when he reappears in the second scene, and the fourth and…

So what is this model which, we are told, holds such promise? To understand it we need to look at both context and contents. It is a complex and fragile construct, currently under considerable stress and difficult, if indeed at all possible, to replicate elsewhere. Ironically, the Swiss wondered in the run-up to the Withdrawal Agreement whether Brexit could offer them some advantage, too. Most analysts thought no, but in the end the government decided to do what it does best: wait and see. Thus Swiss relations with the EU are in flux just as much as those of the UK, and since even longer.

First the context: Switzerland and the EU are held together by a fine mesh of around 120 agreements, about a dozen or so of which are systemically significant. Some of these, like the 1972 Free Trade Agreement, are old, almost superannuated. Others, like the land and air transport agreements and the one on free movement of people, are more recent and key to Swiss access to the four freedoms of the Internal Market. They were developed as an alternative to Swiss participation in the European Economic Area, rejected by popular vote in 1992, and viewed officially as building blocks in the preparation for future accession to the EU which the government had also applied for.

This supposedly transitory nature of the agreements, awaiting future EU membership, is important: it explains the relatively light procedural provisions for managing the relationship and the open-ended nature of many cooperation clauses. As time wore on, it became clear that Switzerland was not on a path to accession, nor headed back into the fold of the EEA. Thus the EU made clear that the relationship needed a stronger overall frame as well as effective mechanisms to supervise implementation and handle disagreements over rights and obligations. After talks ended inconclusively and the Swiss government formally withdrew the dormant membership application in 2021 the EU has reaffirmed that any further extension of Swiss participation in the Internal Market or indeed other EU programmes will be contingent on the conclusion of an ‘institutional framework’ (in reality a set of procedural rules to ensure smooth operation of the many sectoral agreements).

That brings us to the substance: Switzerland is unique outside the small circle of EEA countries[1] in having access to significant parts of the EU’s Internal Market including free movement of persons in the Schengen area. The counterpart to this is the expectation of full respect of the relevant EU rules and regulations, including regular adjustments to stay in line with the evolving acquis in these areas. And here is the crux: this process has stumbled repeatedly over the years either because of the absence of corresponding Swiss rules, as for example to regulate state aid, or because it has run up against contradictory pressures in domestic politics, which has been the case repeatedly on free movement of people.

For the Union it is clear that, in cases like this, EU law must prevail (within the limits set out in each sectoral agreement). This is, after all, about regulating the Internal Market, not some common area outside it. The relationship is not equal; it offers Swiss actors very substantial benefits but comes with the expectation of alignment. And the ultimate arbiter of this should be the European Court of Justice, a hard nut to swallow for a country founded on the myth of William Tell’s opposition to foreign judges.

In reality, the day-to-day relationship works well. Switzerland adjusts to the bulk of EU legislation of its own initiative, trade and cooperation is vigorous, people move freely and frequently across borders. But disputes arise regularly – normal in a deep and complex relationship – and in the absence of effective dispute settlement mechanisms they accumulate over time and begin to cast a shadow across the relations overall. The challenge is to codify alignment, build new rules e.g. on state aid and create an effective dispute settlement mechanism. And until this is done the relationship is going nowhere.

These issues are well known in the context of Brexit. But it is important to recognise that they present themselves almost as a mirror image of the Swiss conundrum: Switzerland is outside the EU but wants to be inside as much of the Internal Market as it can, and is, up to a point, prepared to make the necessary adjustments and alignments. The UK was in but now wants to be outside, with few adjustments and no alignment – or even selective de-alignment, as now threatened by the disingenuously named Retained EU Law Bill.

So unless the UK is ready to reverse policy, forget about the bonfire of regulations and accept alignment and other strictures that come with continued close engagement with the EU and its Internal Market there is little that the Swiss model could offer Britain in its quest for a new paradigm for its European policy. And if it were ready to take these steps, why stop at the fragmented Swiss model rather than going the whole hog and joining the EEA – if it will have them?!

 

[1] Iceland, Liechtenstein and Norway