The Swiss-EU Institutional Agreement: An EEA Light? (1/2)

Darius Farman – On a cold Sunday of December 1992, the Swiss citizens took part in one of the most polarizing and tightest votes in the history of Swiss direct democracy. Asked whether their country should join the European Economic Area (EEA), Swiss citizens decided by a tiny margin to stay out of it.

Today, the debates surrounding the controversial Swiss–EU institutional agreement echo those on the EEA in the 1990s. But is this agreement comparable to the EEA? If it were accepted, would our relations with the EU become more similar to those of Iceland, Liechtenstein and Norway? If yes, how and to what extent? foraus has deciphered the two agreements for you.

 

Why a comparison with the EEA?

In 1992, Switzerland decided not to join the Agreement on the European Economic Area (hereafter EEA). Almost 80% of Swiss citizens participated in the vote (twice as many as usual), which was won by a tiny margin of 23'836 votes (50.3% vs. 49.7%).

This 'Black Sunday' in the history of Swiss–EU relations marked the beginning of the 'Bilateral way'. Following the rejection of the EEA, the Swiss government negotiated bilateral agreements with the EU as a basis for its cooperation with the EU.

Over time, the EU has increasingly supported an 'EEA approach' for its relationship with Switzerland. But considering the persisting unpopularity of the EEA in Switzerland, the EU has agreed to continue with a bilateral solution instead. The result, the draft institutional agreement (hereafter InstA), is currently under consultation in Switzerland. The agreement foresees similar mechanisms to the EEA, such as a judicial institution for dispute resolution as well as dynamic take over of EU law in the sectors of the Internal Market in which Switzerland participates.

Today, Switzerland is at a crossroads with respect to its European policy. A comparison between the agreement on the table and the EEA is much needed. Firstly, because of the similar purpose of both agreements (i.e. the economic integration of Western European non-EU countries with the EU). Secondly, because of the enduring taboo in Switzerland surrounding the EEA, despite the fact its rejection has been the very foundation upon which the bilateral way has been built. This blogpost and its follow-up methodically compare six dimensions of the two agreements.

  Swiss–EU Institutional Agreement Agreement on a European Economic Area
Material scope Sectoral & piecemeal approach Comprehensive approach
Takeover of EU law Broadly similar
Limited cooperation with the EU Extensive cooperation with the EU
Two-pillar relations Bilateral (1 to 28) Multilateral (3 to 28)
Surveillance Limited (competition policy)
National monitoring
Comprehensive
Supranational monitoring
Vertical dispute settlement Narrow scope (competition)
National courts
Wide scope
National and supranational courts
Horizontal dispute settlement Wide scope Narrow scope

Material scope – What economic sectors are concerned?

The InstA would establish a common framework for five economic sectors: free movement of persons (including the right of establishment and the posting of workers), industrial goods (elimination of technical barriers to trade), some agricultural goods as well as land and air transport. Several sectors of importance, such as energy or financial services, are not included.

On the other hand, the EEA wholly covers the EU's four freedoms (goods, services, capital and persons), meaning that Iceland, Liechtenstein and Norway (hereafter the EEA EFTA States) are fully participating in the EU's Internal Market. Only two sectors, fisheries and agriculture, are (partially) outside the scope of the EEA due to their political sensitivity in EEA EFTA States.

Both agreements have an evolutionary component and allow their Parties to extend the scope to new economic sectors. While such an extension is rather theoretical in the case of the EEA, future market access agreements between Switzerland and the EU are very likely to be concluded and integrated into the InstA framework (such as electricity).

Overall, whereas the InstA builds upon the Swiss sectoral approach to European integration (initiated with the bilateral agreements) with limited market integration, the EEA offers a comprehensive approach and full market integration.

Takeover of EU law – What processes are foreseen? 

With the InstA, Swiss mechanisms for the take over of EU law are significantly "EEA-ised". The engine at the core of both agreements is, indeed, strikingly similar. Comparable procedures are foreseen when new pieces of legislation falling in the areas covered by the agreements are prepared and adopted by the EU. This includes in particular policy shaping mechanisms (i.e. providing inputs to the negotiations on EU legislation), adaptation procedures of the relevant agreement and special procedures for legal acts whose entry into force require beforehand domestic legislative changes.

From an institutional perspective, both agreements establish a joint overarching body, known as the Joint Committee, in charge of the take over of relevant EU rules. Both also foresee democratic oversight in the form of joint parliamentary committees providing recommendations to ensure the good implementation of the agreements. The EEA goes further than the InstA in this regard with two additional joint bodies: the EEA Council at ministerial level for political impetus as well as the EEA Consultative Committee for the consultation of social partners. The lack of such institution for the InstA may come as a surprise considering the hostility of Swiss labour unions towards the social dimension of European integration (hence foraus's call for a similar platform in Swiss–EU relations).

Two-pillar system – How is cooperation with the EU concretely organised?

In practice, both agreements foresee two distinct groups of contracting parties. The first group includes the EU and its 28 Member States (all parties to the Agreement) while the second group includes Switzerland for the InstA and Iceland, Liechtenstein and Norway for the EEA. In the EEA, each group must "speak with one voice" in EFTA–EU joint institutions, meaning that the three EEA EFTA States must negotiate a common position before engaging with the EU (and the other way round for the Twenty-Eight). In that sense, the InstA offers more flexibility to Switzerland, which does not have to harmonise its position with other parties.

In the context of the EEA, these membership groups are known as "pillars". The concept of a "two-pillar" system further refers to the existence of separate institutions for EEA EFTA States that are distinct from EU institutions. The next blogpost will detail how Switzerland, which is "alone" in its pillar, negotiated a radically different institutional setup for the InstA than the one in place in the EEA.

Read the second part of "The Swiss-EU Institutional Agreement: An EEA Light?" now.

 

Image: AdobeStock

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Darius Farman

Darius Farman is co-head of the foraus Europe programme. He is a graduate of the ETH Zurich and the College of Europe. His research focuses on Swiss-EU relations, free movement of persons and EU agencies.

darius.farman@foraus.ch