How to manage bilateral relations?

The economic benefits to be derived from having preferential access to the large EU market, as discussed above, have led Switzerland first and now the UK to seek an agreement with the EU that would grant them as much access as possible while sacrificing as little as possible of their political autonomy. As Schwok discussed in his chapter, Switzerland has done so via a bilateral and sectoral approach, consisting of individual agreements covering a wide range of areas, of which some are legally linked to each other. While on the whole this bilateral approach has served Switzerland well over the years, it is likely to have reached the limits of what it can achieve. The EU’s insistence on signing an IFA seems to indicate as much.

For the UK the bilateral approach pursued by Switzerland over the last 30 years appears to offer two main attractions. First, it would give it better access to the EU market than a free trade pact modelled on the EU-Canada agreement. Given the much greater importance of the EU as an export market for the UK, this would be a significant attraction. Second, unlike a customs union, it would leave the UK free to conclude trade agreements with other countries, as well as greater leeway to diverge from EU regulations and less of a financial burden than EEA membership. It would not address, however, two questions that have bedevilled Swiss-EU relations for a long time and that in all likelihood will prove equally contentious in the negotiations with the UK. The first is the question of regulatory alignment with the EU and how to maintain such alignment up to speed with evolving EU legislation. Throughout the history of bilateral agreements with Switzerland, the EU has always made clear that regulatory alignment is the essential quid pro quo for preferential access to its internal market. To maintain such alignment, Switzerland has been expected to adapt its legislation whenever the EU’s changed. This expectation of so-called “dynamic alignment” will be even more central in the negotiations with the UK given the higher competitive challenge the latter poses in the eyes of the EU. The second is the nature of the dispute resolution system adopted and the role the CJEU would play in such a system. On this issue, too, the EU’s demand that the agreements be policed by the CJEU has been difficult to accept for Switzerland and would be equally so for the UK. The fact that these two issues are the main stumbling block to a successful conclusion of the negotiations on a Switzerland-EU IFA underline the limitations of the “Swiss model”.

Nor does the Swiss model, of course, offer a solution to the question of free circulation and immigration. As Jenni shows in her chapter, the linkage between market access and free circulation has been an intimate and controversial one in Swiss-EU relations. Given the role played by immigration in the politics of Brexit, it is not surprising that both sides have implicitly agreed that any agreement between the UK and the EU would not include a Swiss-style free circulation provision. Nevertheless, this issue may rear its head again in UK-EU relations in the future.

Switzerland’s experience of bilateral agreements thus highlights some crucial aspects of negotiating relations with the EU but does not appear to provide a ready-made model that would be viable for the UK. Both sides, though, are likely to keep the Swiss experience in mind when negotiating their future relations, albeit for different reasons. The European Commission negotiating mandate of February 2020 appears to suggest that the EU envisages an arrangement that would be de facto fairly close to the Swiss bilateral and sectoral model, save for the free circulation provisions. The British government on the other hand, as Church discusses in his chapter, appears to regard the “Swiss model” as something to be avoided. The current focus of the UK government, as outlined in its negotiating mandate, is on some sort of “Canada plus” option, i.e. a free trade agreement limited to the abolition of customs duties, as opposed to the removal of non-tariff barriers, and granting the UK virtually unlimited freedom to diverge from EU regulations. Rather ironically, this would be quite similar to the agreement that Switzerland had concluded with the EEC in 1972, i.e. before the onset of the “Swiss model” as we have come to know it.

 
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