Swiss Review 2/2019

Swiss Review / March 2019 / No.2 13 Politics The moment of truth is at hand Switzerland must act fast to clarify the nature of its relationship with the European Union. However, the Federal Council wants to consult with the main domestic actors before adopting a position on the framework agreement awaiting signature. They have some major reservations. The framework agreement would help foreign firms to operate in Switzerland – on local construc- tion sites, for example. This has caused concern among the unions who fear it will jeopardise wage levels. Photo: Keystone THEODORA PETER After five years, the negotiations on an institutional frame- work agreement to regulate future bilateral relations be- tween Switzerland and the European Union (EU) were fi- nally concluded in December 2018. A draft agreement has been awaiting signature ever since. However, to the amazement of Brussels, a response of any kind has yet to materialise. The Federal Council has simply “taken note” of the long anticipated outcome of these negotiations as it wants to consult the main actors at home to gauge the mood before adopting a position on the pros and cons of the agreement in the spring. Federal Councillors have been busy holding discussions with the cantons, political parties, social partners, the business community and ac- ademia. One thing is clear: the stakes are high. One in every three francs generated by Switzerland stems from the country’s ties to the EU. The bilateral agreements facili- tate trade worth 1 billion francs every day. The Swiss economy requires free access to the EU market. The in- stitutional framework agreement is designed to secure the extension of the five current bilateral agreements (free movement of persons, land transport, air traffic, mutual recognition of industrial standards and agricul- tural products) and facilitate new ones (electricity mar- ket). This consultation process shows that there are at least three obstacles to furthering bilateral relations. 1. Wage protection Switzerland would have to adopt almost all the EU rules on wage protection, which would weaken its flanking measures against wage dumping. Foreign companies are currently obliged to give eight days’ notice if they wish to operate in Switzerland. This protectionist practice is a thorn in the EU’s side, which is why it wants to reduce the period to four working days. However, this conces- sion crosses a red line in the eyes of the Swiss unions and Swiss Social Democratic Party (SP). They are not prepared to compromise on the eight-day rule. They see it as the only way to maintain effective protection against wage dumping.