By breaking off the negotiations, Switzerland is harming itself

Nestle in Switzerland

What threatens Switzerland is a gradual deterioration in the competitive conditions for Swiss companies, more bureaucratic effort and rising costs.

(Photo: dpa)

With folkloristic benevolence one could speak of federal stubbornness, of a sympathetic unswervingness. From an economic point of view, the verdict is much more negative: the Swiss government has miscalculated. With its decision to end the negotiations with the EU on modernizing economic and social relations, Switzerland is primarily harming itself.

The Swiss place great value on their independence, but they are not as independent as many Swiss would like to be. Switzerland is an export nation and a landlocked country; it is dependent on unrestricted access to the EU market that surrounds it. That is now at risk.

Of course: there are no threats of border closings like the last one in the pandemic, no truck traffic jams at border crossings like in post-Brexit Great Britain. Switzerland will in principle retain access to the market. What threatens, however, is a gradual deterioration in the competitive conditions for Swiss companies, more bureaucratic effort and rising costs.

For what? For the appearance of sovereignty? All those Swiss who have raised the mood against the negotiations with the EU in the past few months must now ask themselves this question. On the left the trade unions, on the right the Swiss People’s Party SVP. Slogans like “Self-determination beats external determination‚ÄúDisplaced rational economic arguments.

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From the simple fact that half of all Swiss goods exports go to the EU, one can quickly see the risk that the failure of the negotiations with Brussels means for Switzerland.

Bilateral contracts need an update

Central bilateral agreements on relations between Bern and Brussels are now up to 50 years old. An update is needed here to fill gaps that have opened up over the decades.

Instead of agreeing on a comprehensive regulation, Switzerland now wants to “dynamically” adopt EU law, so much for the subject of self-determination. The EU Commission, however, has its own ideas. It has made it clear that without a framework agreement, it does not want to conclude any new individual agreements with the government in Bern for the time being, such as those planned for the electricity market or health care. It is also uncertain whether older agreements will be adapted.

The first consequences can already be seen: Because the EU has issued new regulations for medical devices, but the corresponding agreement with Switzerland remained unadjusted, certain Swiss medical devices will in future have to undergo an approval process in the EU. A bureaucratic hurdle that companies would gladly have avoided.

Access to the European power grid will also become more complicated when regulations and standards diverge. Not good prospects for Switzerland, which imports 50 percent of its electricity needs in winter.

In the negotiations, the EU had demanded one thing above all else: that the same rules apply to all actors on its internal market, especially with regard to state aid. She also wanted to make it clear that the European Court of Justice has the last word on disputes. The Swiss government did not want to support that. That is their right. Only now the economy has to pay the price for it.

More: What the failure of the EU-Switzerland agreement means



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