Britain dreams of a Swiss-style relationship with the EU

The bilateral agreement between Switzerland and the European Union is just what British Eurosceptics have been asking for. But would Brussels offer such favourable terms if the United Kingdom wanted to renegotiate its membership? PublicServiceEurope.com has its doubts

Those unhappy with Brussels suggest Britain should model its future relationship with the European Union on the Swiss approach. It is easy to see why. Switzerland has a close relationship with the EU but is under no obligation to accept any of the laws Brussels churns out. If there is an unpopular proposal - one that gives rights to the families of foreign criminals, for example, the Swiss government is well within its rights to say 'no'.

This opt-out applies to economic sectors too. There are around 120 agreements between the EU and Switzerland covering topics from market access to media, education and research. But there is no general agreement on services. Britain, like Switzerland, could keep its cherished finance industry far from rapacious Brussels eyes if London took a similar bilateral approach.

The Swiss, unlike the Norwegians, decided to stay out of both the EU and the European Economic Area. Oslo, under the EEA, has to apply almost all common market legislation without having any real say as to how laws are drawn up. The Swiss, on the other hand, rejected the EEA agreement in 1992 and are therefore not bound by economic legislation either.

In an achievement that no doubt makes British Eurosceptics salivate at the mouth, Switzerland has until now managed to avoid making any direct contribution to the EU budget. Instead, the Swiss agreed to contribute one billion Swiss francs over five years to the "cohesion" countries that joined the EU in 2004. Another 250 million Swiss francs will be paid to Bulgaria and Romania. This money goes to projects on the ground, rather than to Brussels, which means the Swiss retain much more control. To make the arrangement sweeter still, there is no external court passing judgment on Switzerland. There is no equivalent of the European Court of Justice capable of telling the sovereign state what it must do or, worse still, of imposing fines.

Bilateral agreements do not evolve dynamically as EU laws do, but they can in many cases be revised easily without parliamentary approval - especially if modifications are minor. Swiss diplomats can lobby their European counterparts directly at the informal Council of Ministers meetings they are allowed to attend.

"This pragmatic step-by-step approach has made it possible to devise tailor-made contractual solutions to a wide range of economic and political questions," said Daniel Klingele, spokesman for the Swiss Mission to the EU. "The agreements not only provide both parties with extensive market access, they are also a basis for close cooperation in such key policy areas as research, security, the environment and cultural affairs while our sovereignty remains respected."

This privileged position is in part the result of Switzerland's importance as a trading partner; Switzerland is number two after the United States and is still more important than both Russia and China. It is also, in part, a recognition of Switzerland's tradition of neutrality. Swiss schoolchildren were for decades taught that neutrality kept the country out of the Second World War, though this claim has more recently been subject to revisionism.

Could Britain negotiate such an eye-wateringly good agreement? Is this not exactly what the UK is looking for: the economic ties without the mindless bureaucracy? Is this not the perfect pragmatic partnership without the interfering Brussels' busybodies? The answer is of course never quite that simple. First and foremost, Swiss industry has no guaranteed access to the EU market. While the Swiss government can say 'no', so can the EU.
In the chemicals industry, for example, there is currently no bilateral agreement covering the REACH legislation - a fact that could hamper the export capabilities of small and medium sized Swiss companies. "EU legislation is constantly undergoing further development," Klingele tells PublicServiceEurope.com. "Switzerland therefore runs the risk of new barriers to market access even in areas where we have concluded a bilateral agreement. Hence we have to update existing agreements or negotiate new agreements, if we want to avoid such barriers."

Second, Switzerland accepted the entire EU acquis communautaire or body of laws, up until its agreements were signed. Veto powers were granted for new laws, not pre-existing ones. Third, and perhaps crucially, there are those who say the EU-Switzerland agreement is not working. There is currently disagreement between the two sides over laws on workers' wages and conditions. Measures adopted by the Swiss parliament are not compatible with EU legislation, the European Commission believes. Brussels is putting pressure on the Swiss government to accept some form of supranational dispute-settlement mechanism. If the country does not, it may have trouble negotiating deals in sectors it considers of strategic importance in the future.

There are those who say that the commission has toughened up its negotiating position with the Swiss over the past year. The Brussels executive wants to make it clear that it is not all that easy to maintain a bilateral agreement with the EU. Could this message be aimed at UK leaders, who hanker after a better deal?

If the British people decided they no longer wanted to remain in the EU, as they might well do, the UK government could seek to replace full membership with Swiss-style bilateral agreements. Would a UK administration be capable of pulling this off? On one hand, the British economy is too big for the EU to ignore. On the other hand, if Brussels were to let a big member state withdraw but retain many of the privileges of membership - a dangerous and potentially ruinous precedent would have been set. Would it be in Britain's interest to strike up a Swiss-style deal? Almost definitely, yes. Would the EU give Britain Swiss-style membership benefits if the country withdrew? Probably not. And therein lies the rub.