The state government scuttles the framework agreement with the EU, negotiations are no longer pursued (cf. Federal Council press release here). However, the existing bilateral agreements between Switzerland and the EU remain in force. Whether further agreements are possible in the future is more than questionable, at least in the medium term, as the Chamber of Commerce Germany-Switzerland writes in its press release. In addition, there is a risk that existing bilateral agreements will be eroded, as in many cases it will no longer be possible to carry out the necessary updates. The lack of mutual recognition of conformity assessments would lead to a relatively rapid decline in the equivalence of standards. The danger is more than great that many unresolved dossiers concerning the framework conditions for market access, such as the updating of the Medical Devices Ordinance (cf. here). the updating of the Machinery Directive (cf. Swissmem statement below) or the equivalence recognition in the Data protection, the conclusion of a Electricity Agreement and much more, some of which had been blocked for years, would remain stuck in a transformation stage in the coming years.

Market access could become more burdensome

For companies in Switzerland, but also for those in the EU, market access threatens to become significantly more complex and expensive, as products will, for example, have to be re-certified for the respective markets and legal representatives will have to be appointed, as the German-Swiss Chamber of Commerce points out. Furthermore, disruptions in the supply chain could also arise, as exporting products from the EU to Switzerland could no longer be worthwhile, warns the Chamber of Commerce.

Economy needs open market access

"Both the Swiss and the German economy need mutually open market access and reliable rules of the game," said Ralf Bopp, Director of the German-Swiss Chamber of Commerce. The Chamber of Commerce is therefore appealing to both sides that the current step backwards in integration relations between Switzerland and the EU should not lead to a reversal of the liberalisation steps in market access that have been painstakingly achieved over the years and to additional new problems in economic trade. In addition, the burden on foreign trade must be kept as low as possible while remaining open to the development of future joint integration steps between Switzerland and the EU.

The challenges and concerns addressed in connection with the now failed framework agreement for the further development of the bilateral path between Switzerland and the EU are still relevant and continue to call for a reliable solution, the Chamber of Commerce writes in conclusion.

Information from the EU:

• Statement of the EU Commission on the decision of the Federal Council
• Factsheet "What happens if there is no institutional framework agreement".

Swissmem: Secure access to the domestic market

Also the industry association Swissmem is disappointed with the Federal Council's decision to end negotiations on the framework agreement. In doing so, the Federal Council is jeopardising in the medium term Switzerland's bilateral path, which has so far been repeatedly confirmed by the people and has been successful. 

Swissmem points out that barrier-free access to the European single market is essential for companies in the MEM industries, as they export 80% of their products abroad, around 55% of which go to the EU. What's more, the industry is just as dependent on cross-border workers as it is on the results of European research cooperation.

According to the industry association, the qualitative erosion of the bilateral agreements is progressing rapidly. Another domino fell on 26 May 2021, the day the new EU legislation on medical devices came into force. Because the EU is not updating the existing Mutual Recognition Agreement (MRA) due to the lack of a framework agreement, Swiss medical devices will no longer be able to be sold on the EU market without obstacles.

The MEM industries would face similar problems in two to three years with the updating of the Machinery Directive. Switzerland would also no longer be able to participate to the same extent in the EU's Horizon Europe research programme. This would reduce the attractiveness of Swiss universities, making it more difficult for Swiss companies to access talent and research.

In its press release, Swissmem calls on the Federal Council to quickly mitigate the negative consequences of its decision through internal reforms and a diplomatic offensive towards the EU and its member states.

Source: Swissmem