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Swiss stand firm over free movement

10 December 2018

Switzerland’s SIX stock exchange, Zurich. The EU is threatening to cut off much of its trade. Photo Ikiwaner (CC BY-SA 3.0).

You’d think the European Commission had its hands full with Brexit, the Italian budget, Greek’s debt-laden banks and the imminent fall of the Belgian government. Not to mention yellow vests in France. Or the Polish justice system. Now it has opened up a new front by attempting to strong-arm Switzerland into obeying its diktats.

Swiss voters rejected stronger ties with the European Union in 1992 when they turned down membership of the European Economic Area (where, like Norway, the country would be subject to all the laws around the single market). Instead, over the years relations between Switzerland and the EU have come to be governed by 120 bilateral treaties.

The European Union has been trying for years to negotiate a “framework” agreement to stand over those bilateral treaties and tie Switzerland more strongly into the single market and the decisions of the European Court of Justice. Unhappy with progress, it declared in December 2017 that it would no longer grant the Swiss stock exchange long-term access to the EU market.

Free movement

The key sticking point has been the free movement of labour, and in particular Switzerland’s insistence that it be notified five days before EU workers are “posted” (sent) into the country so that it can check that they are not undermining Swiss conditions. To Brussels, that’s unacceptable.

Faced with the threat, the Swiss government buckled, and its negotiators agreed terms with the EU – much like Theresa May’s “agreement” over Brexit – despite Switzerland’s stance on free movement having previously been declared a “red line” (ligne rouge) by its governing Federal Council.

But Swiss resistance is strong. And on Friday 7 December its Federal Council decided to send the agreement out to political parties, cantons, parliament and other bodies for consultation. That consultation will extend well into 2019.

Press reports quote sources in Brussels as saying that unless agreement is reached by the end of 2018, the EU will implement sanctions against Switzerland, including not only banning EU companies from trading shares on the Swiss stock exchange (SIX) but also excluding the country from a planned agreement on electricity generation which would guarantee its power supplies.

‘Switzerland’s negotiators may have crumbled, but opposition is too widespread for the government to go ahead.’

Switzerland’s negotiators may have crumbled, but opposition is too widespread for the government to go ahead and sign an agreement widely seen as a step too far in diluting the country’s sovereignty. Various political parties from right to left are opposed, and there is particularly strong opposition from the Swiss Trade Union Federation (USS/SGB).

In a statement on Friday 7 December the Swiss unions said their “worst fears were confirmed”. The agreement would “substantially dismantle” Swiss wage protection and prevent any improvement. They will fight “vigorously” against the proposal – a position confirmed unanimously at its annual congress at the end of November.

ECJ rules against Austria

The Swiss unions also point also to the European Court of Justice ruling on 13 November that parts of Austria’s laws to prevent cross-border labour undermining terms and conditions are illegal.

In what the Austrian Trade Union Federation called “a black Tuesday for social Europe” the court ruled in favour of Slovenian employers posting staff across the border to work mainly on building sites.

Figures from the unions suggest that in the first six months of 2018 almost half the foreign companies posting building workers were undercutting Austrian rates, against around 1 per cent of local companies.

Austria’s crime, according to the European Court, was to demand deposits from companies, or freeze their funds where there was “reasonable doubt” that they planned to abide by Austrian pay and conditions.

Switzerland has now made clear that it will put in place provisions to counteract the expected EU sanctions. The ball is now in the EU’s court.