Brexit: Agreement also positive for Switzerland

The Christmas miracle of Brexit is also positive for Switzerland

Good news for Switzerland too: EU and UK negotiators reached a trade deal on Thursday.

The negotiated deal is now expected to take effect on January 1, 2021, and member states have yet to give their consent. However, for the EU Parliament, a timely ratification is no longer sufficient, so the agreement can only enter into force provisionally.

In any case, Switzerland is poised for Britain’s exit from the EU. A few months after the British Brexit vote in June 2016, the Federal Council adopted its ‘Watch the gap’ strategy, aiming to ‘safeguard existing mutual rights and obligations as much as possible,’ writes the Federal Department of foreign affairs (EDA) in a fact sheet on Brexit.

This has now paid off, even if the Brussels-London deal broke out at the last minute. Agreements are on the table in the areas of air and road transport, insurance, civil rights, migration and trade between Switzerland and Great Britain, which can enter into force on January 1, 2021.

In mid-December, Bern and London also signed a fixed-term agreement on service provider mobility, regulating mutual access and temporary residence for service providers such as management consultants, IT experts and engineers.

Regardless of Brexit, a police cooperation agreement was recently signed to combat crime and terrorism.

It is also clear that as of January 1, 2021, the conditions for importing animals and animal products from Great Britain will apply both to Switzerland and to countries outside the EU. For example, the importation of meat or cheese is no longer allowed. Other products, such as honey, can only be imported to a limited extent.

Points open when trading

However, the coordination of social security has not yet been definitively clarified. Talks are currently underway with the UK, writes the FDFA at the request of the Keystone-SDA news agency.

There are also unregulated points in the trade. The economic and trade agreement negotiated with London allows “essentially the adoption of a large part of the agreements with the EU” in these areas.

However, as Switzerland has harmonized some regulations with those of the EU, for example in agriculture and technical barriers to trade, Bern and London could not regulate all points until the relationship between the EU and Great Britain was clarified.

Possibly a more expensive trade

If the painstakingly negotiated Brussels-London deal falls victim to an EU state veto, trade between Switzerland and the UK should also become more expensive, despite the two countries having concluded a trade deal.

Because it seems that the British would be expelled from the pan-Euro-Mediterranean zone due to the no-deal, a network of free trade agreements with identical rules of origin that simplify trade. Rules of origin determine, so to speak, the “nationality” of goods: for example, whether a product is considered Swiss even though “foreign” elements have also been processed.

Often times, Swiss-made products also contain parts from abroad. However, only products that have the “nationality” of the contractual partner benefit from tariff relief in free trade agreements.

Expansion of relationships

Switzerland now needs to close the existing gaps and further develop its relationship with London. Because the kingdom was “in 2018 the sixth largest sales market for exports of Swiss goods worth CHF 8.8 billion,” according to the 2019 foreign economic policy report. According to the EDA, the kingdom was “the third most important target country “for Swiss services exports in 2017.

Talks are currently under way with the British on an agreement in the financial services sector, based on a “joint statement” signed by Federal Councilor Ueli Maurer and British Chancellor of the Exchequer Rishi Sunak in late June. An intermediate balance should be established by the end of 2020.

It was also agreed that relations between the two countries should be expanded after Brexit. “There is a mutual interest in a long-term deepening of economic and trade relations,” says the FDFA fact sheet. The conversations take place on “different levels”. Deeper cooperation in education and research should also be of mutual interest. (sda)