Switzerland in the EU

The relations of the European Union with the outside world were the subject of an opinion piece in The Sunday Times of May 29. It was pointed out that because of the cumbersome mechanism by which the EU conducts its foreign relations, "one cannot rule out that sometimes it is not possible to develop a common EU position".

The recent row on Chinese textiles is a case in point. The Solomonic solution, found after bridging a bitter divide among the members, does not auger well for future harmonious foreign relations with China or with other important strategic partners, whether in the area of trade or any other area of foreign affairs.

The EU mechanism of consultation with the outside was also tested, albeit more successfully, closer to home, in the negotiations between the EU and Switzerland. If it were not for the recent EU enlargement, which included Malta, the seven bilateral agreements between Switzerland and the EU would have been concluded earlier without a hitch, even without the need of holding a referendum later this month.

The island of Switzerland

I have been told many times that Switzerland, like Malta, is an island. Malta is surrounded by the Mediterranean and Switzerland by the EU.

As Malta depends on the Mediterranean for its livelihood and prosperity, Switzerland also depends on the EU to maintain its position as one of the world's richest countries.

Bilateral agreements with EU

In this respect the bilateral agreements with the EU, in place since June 1, 2002, are indispensable. These agreements (known as Bilateral Agreements I) cover seven specific areas: the free movement of persons (complementing the Free Trade Agreement of 1972, which essentially covered the free movement of goods), the elimination of technical barriers to trade, public procurement markets, civil aviation, overland transport, agriculture and research.

The agreements have not posed any major problem to Switzerland and the experience since 2002 has been positive overall. Fears of uncontrolled immigration - the same fears that we heard about in Malta during the referendum debate - have not materialised.

Although the agreement on the free movement of persons has not caused any problems so far, it continues to remain controversial and foremost in the minds of the Swiss. The safeguards negotiated by the Swiss seem to be working.

The latest statistics show that the annual quota for long-term residence permits (up to five years) mainly from Germany, France, Italy, Austria and Portugal, is fully subscribed to. On the other hand the quota for the short-term permits (less than a year) is not.

Free movements of persons - a phased approach

The quotas will remain in force until May 31, 2007. They may be extended until May 31, 2014, in case of large-scale immigration. Switzerland has until May 31, 2009, to decide whether this agreement should continue. This safeguard is particularly crucial for the Swiss, more particularly in light of the recent EU enlargement.

Of the seven agreements, only the agreement on free movement became subject to new negotiations. The other six agreements (as well as the 1972 free trade agreement) were extended automatically to the new EU member states that had adopted the acquis communautaire in its entirety, including the agreements that bind the EU to third party states, like Switzerland.

How does the agreement on free movement affect new member states?

For Malta and the other new member states a separate transitional system has been agreed upon which allows Switzerland to maintain restrictions of access to its labour market until April 30, 2011, by gradually increasing quotas on an annual basis for short- and long-term permits.

More specifically, the quota for permanent residents (up to five years) will be increased gradually from 1,300 in 2005/6 to 3,000 in 2010/11, and for short-term residents (up to one year) from 12,400 in 2005/6 to 29,000 in 2010/11.

The referendum - a way of life for the Swiss

Although late in 2004 the Swiss Parliament approved the protocol on extending the free movement of persons to the new EU member states, the matter is still subject to a referendum scheduled for next Sunday.

If this extension is rejected, there is a risk that Switzerland will cancel the free movement agreement, which could, in turn, also jeopardise the other six agreements.

It is therefore not surprising that the Swiss government is leaving no stone unturned to ensure a 'yes' on Sunday. Every household in Switzerland has received a special brochure that warns them that a 'no' will launch a period of crisis with the EU.

It is being made clear that the EU would not accept that Switzerland treat the citizens of the new member states differently from those of the original 15 (i.e., that they would consider them second class).

The Swiss have already accepted a certain degree of free movement of persons, when the Schengen/Dublin agreement was approved in a referendum last June 5. This agreement on co-operation in fields including the police, justice, asylum and migration was not part of the original seven bilateral agreements (Bilateral Agreements I), but one of ten other agreements that came later, known as Bilateral Agreements II.

Bilateral Agreements II

The second group of agreements - ten in all - follow up on the first seven, and in addition to Schengen/Dublin, also include liberalisation of services, taxation of savings, fight against fraud, processed agricultural products, environment, statistics, media, education, occupational training, youth, and pensions. The Bilateral Agreements II came as a result of the rejection of Switzerland's accession to the European Economic Area in 1992.

Europe à la carte

The Bilateral Agreements I and II consisted of a rather comprehensive à la carte menu. Once negotiations on the first seven bilateral agreements were finalised, negotiations on the other ten areas were conducted more or less simultaneously. By last May agreement was reached on all questions and ratification is expected later on this year.

If, as indications are now, the protocol on the free movement of persons is accepted on Sunday, Europe for all intents and purposes will be bigger in size and scope. The Maltese will also reap the resulting benefits of a larger Europe, whether in the area of free movement of persons or goods, or in any other area included in the 18-odd agreements that form the basis of Switzerland's EU membership for some time to come.