The Champion Brand | Global is Local | Know Whats Next | Integrated Insights | Return on Reputation

A Critical Moment in Swiss History?

O
n 9 F e b ru a ry 2014, S wi tz e rl a nd vo te d b y 50.3 p e rc e n t i n f a vor o f t h e Ag a i n s t M a s s Immi g ra t i o n re f e re n d u m p ro p o s a l to l i mi t a n n u a l mi g ra t i o n f ro m t h e Eu ro p e a n U n i o n , re f l e c t i n g S w i ss f e a rs o ve r i mmi g ra t i o n p re s s u re o n i n f ra s tru c tu re , re n ts , s o c i a l s e c u ri t y a n d u n e mp l o yme n t. A re f e re n d u m n e ed s b o t h a ma j o ri ty o f c a n to n s a n d a s i mp l e m a j o r i t y o f t h e p o p u l a r vo te to p a s s . De s pi t e b e i n g l e s s a ff e c te d b y i mmi g ra t i o n , c e n t r a l a n d ru ra l c a n to n s we re p ri ma ry s u p p o r t e r s o f t h e p ro p o s a l . Al l c o mme n ta to rs a re n o w a wa i t i n g t h e e n d o f Ju n e , wh e n S w i t ze r l a n d w i l l re l e a s e t h e i mp l e me n ta t i o n p la n o f t h e p ro p o s a l . >>
Institutional, Economic, Trade and Demographic Consequences In 2013, 800,000 immigrants entered Switzerland (population: eight million), whilst just 430,000 Swiss currently live in the EU. Even if nothing changes for them in the short term, the vote will open a long period of uncertainty in relations with the EU and the future of Switzerlands access to the European internal market will be questioned. In the meantime, a pending deal to let Switzerland participate in Horizon 2020 (the EUs framework program for research and innovation, worth $80 billion) may be suspended; and discussions on a new institutional agreement between Switzerland and the EU are frozen, along with ongoing negotiations on the automatic exchange of tax information and electricity. Switzerland may also suspend the talks on a reciprocal free movement agreement scheduled to be signed with Croatia on 1 July. In the long run, some commentators predict that the initiative could hurt an economy that relies on foreign workers in IT, healthcare and financial sectors, not only limiting their numbers but by

creating additional administrative burden for business. This in turn may lead to Switzerland becoming less attractive for foreign investment. Existing EU-Switzerland Bilateral Agreements Since a referendum rejected EEA membership in 1992, Switzerland has been at arms length from the EU. However, the Bilateral I pact, signed in 1999, has nonetheless ensured mutual free movement of citizens since 2002. This pact included seven agreements on: free movement of persons, trade barriers, public procurement, agriculture, research, air and land transport. All, except research, are linked by a guillotine clause that ends the whole package if just one agreement is jettisoned. In fact, the recent referendum could unravel 120 existing EU-Swiss bilateral agreements. Reintroduction of Immigration Quotas This popular initiative, introduced by the nationalist Swiss Peoples Party (SVP), ends the 2002 policy of free movement, sets up ceilings and annual quotas for foreigners permits and requires companies to prove that roles cannot be filled from the Swiss labor market. It also limits the right of permanent residence, family reunification and social benefits. The referendum does not specify how these measures will be implemented; there will be a three year period before the vote becomes law, which should allow for the adaptation of existing international agreements incompatible with quotas. Reactions From the EU The European Commission has stated that it will examine the initiatives implications for EU-Swiss relations, taking into account the Swiss Federal Councils position on the matter. In the Commissions view, freedom of movement is a fundamental right and the vote last Sunday will inevitably lead to consequences for EU-Switzerland bilateral agreements. Next Steps Any EU-Swiss dispute will therefore depend on the Federal Councils interpretation of the vote and the legislative wording of the transposed referendum. The EU is already engaging with the Swiss regarding what they will do on 1 July, when the Croatia-Switzerland freedom of movement agreement is due to be signed off. Beyond this, the Federal Council must somehow propose a text to the EU that takes into account both the referendum result and Bilateral I. The Federal Council announced on 12 February that the Swiss Departments of Foreign Affairs, Economic Affairs, Education and Research, along with the Federal Department of Justice and Police will draw up an implementation plan of the proposal by the end of June. A bill would be presented by the end of the year. In the meantime, the Federal Council will hold exploratory talks with the EU to discuss next steps with regard to the several ongoing bilateral negotiations. On 10 February, Swiss Foreign Minister Didier Burkhalter started a tour des capitales to reassure EU partners. Any new bilateral agreement would need to be renegotiated

and ratified by the parliaments of the 28 EU Member States, Switzerland and the European Parliament. Negotiations with Brussels and the other EU capitals will, in effect, start now. Remaining Open Questions As 2014 brings the European elections, the recent Swiss political developments will most certainly impact the electoral campaign and feed Eurosceptic arguments in a variety of Member States. The new European Commissioners will take office in November and their management of the issue will be under scrutiny. Finally, and without drawing any parallel, Sundays vote may also add ammunition to the debate on EU-UK relations and the long-debated proposed referendum on United Kingdom membership of the EU.
For more information about these issues, or to learn about APCO Worldwides capabilities in Brussels and across EU member states, please contact: Theo Moore senior director (t) +32 (0)2 645 9811

tmoore@apcoworldwide.com

Alphonse Daudr-Vignier project consultant (t) +32 (0)2 645 9854

advignier@apcoworldwide.com

APCO Worldwide 47 Rue Montoyer 5th Floor 1000 Brussels Belgium +32 (0)2 645 9811

Driving Global Dialogue

2014 APCO Worldwide Inc. All rights reserved.