UPDATED: EU, Swiss talks on future ties stuck over Swiss carve-out demand

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Talks on future ties between the European Union and Switzerland were stuck on Friday over Swiss demands that state aid, labour rules and citizens rights be carved out of a draft agreement both sides struck in 2018.

The 27-member EU wants an overarching treaty to bind non-EU member Switzerland more closely to single market rules, including free movement of people, and provide a more effective way to resolve disputes.

EU-Swiss economic ties are now governed by more than 100 bilateral agreements stretching back to 1972.

Swiss President Guy Parmelin travelled to Brussels on Friday for a meeting with European Commission President Ursula von der Leyen, but there was no sign of a breakthrough.

“The draft agreement of 2018 is good and it is what we need. We did hear the reservations from Switzerland on the three well-known subjects,” a Commission spokesman told a news conference.

The Swiss have concerns over state aid rules, foreign workers who could undercut Swiss pay and EU citizens’ access to Swiss social benefits.

Bern has suggested these should be “carved out” of the agreement, an EU spokesman said, which was “simply not acceptable to the EU side”.

The EU’s door remained open, the spokesman said.

Parmelin was set to give a media briefing later on Friday.

Failure to strike a deal would block Switzerland from any new access to the single market, such as an electricity union. Existing accords will also erode over time, such as on cross-border trade in medical products. 

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Main issues in Swiss-EU treaty standoff

Switzerland and the European Union have been wrangling for years over a draft treaty produced in 2018 that would formalise ties now governed by a patchwork of bilateral accords and create a more effective platform to resolve disputes.

WHAT WOULD IT COVER?

The treaty focuses on five areas: free movement of people, civil aviation, land transport, mutual recognition of industrial standards and processed farm goods. Bern would routinely, but not automatically, adopt EU single market rules in these areas and any future accords, such as an electricity union.

WHO SETTLES DISPUTES?

The EU originally wanted its European Court of Justice (ECJ) to act as the referee, but has since agreed to let arbitration panels address differences, albeit using ECJ guidance on how to interpret EU law.

If either party fails to comply with the panel’s decision, the other party can take compensatory measures. The panel could then decide whether such measures are proportionate

WHAT ISSUES ARE UNRESOLVED?

There are two main ones:

LABOUR RULES

The Swiss system of “flanking measures” – adopted in 2004 to ensure foreign workers on temporary assignments do not undercut high Swiss pay — is seen as a non-negotiable red line for Swiss labour unions but upsets many EU members

CITIZENS’ RIGHTS

Swiss officials baulk at giving EU citizens the same access to social benefits as the Swiss get.

Photo: EC – Audiovisual Service