Switzerland’s European Union Policy

Abstract

Switzerland is not a European Union (EU) member state. However, located in the heart of Europe, the EU accounts for 54.9% of its total exports, 74.4% of imports, and 42.7% of Swiss investment abroad, while 79.1% of international investment in Switzerland comes from EU member states. Under the circumstances, a harmonious relationship with the EU is vital for Switzerland’s political and economic survival.

Switzerland’s application to join the EU has been put on hold, as it declined to join the European Economic Area (EEA) through a national referendum in 1992. To support the Swiss economy, Switzerland’s government launched so-called “Swisslex” to bring Swiss law into line with that of the EU. In 1999, it further strengthened the links with the EU’s economy through signing seven bilateral agreements to negotiate with the EU (Bilateral I). In 2004, it concluded a number of bilateral agreements (Bilateral II). Further, in 2014, it entered negotiations over certain structural issues (Bilateral III). Thus, the Swiss government has been exploring a third way to survive, as neither a member of the EU, nor a member of the EEA, signing over 120 bilateral agreements with the EU.

However, on 9 February 2014, a citizens’ initiative to make mass immigration restrictions a constitutional provision was passed, requiring Switzerland to enact immigration regulation by 2017. This makes renegotiations essential, as the enactment of immigration regulation will contradict the ‘EU-Swiss Agreement on the Free Movement of Persons’. However, the EU argues that there is no room for a renegotiation. This is a critical issue for Switzerland because if this bilateral agreement is annulled, the other six Bilateral I agreements would be simultaneously revoked in view of the ‘Guillotine Clause’.

This study analyses how its unique political system of direct democracy and federalism has influenced the process by which Switzerland utilises bilateral agreements as a means of survival in the vast market of the EU. The study also discusses some of the challenges to Switzerland’s EU policy, which remain little known in Japan.