Switzerland: government delays ultimatum send by EU

The Swiss Federal Council decided on Friday not to approve the draft framework agreement with the EU. Instead, it has opened a consultation phase with the cantons, political parties and unions that could last until spring, but does not plan to organize a referendum. The chances of a consultation approving the text are minimal, as the two largest parties (UDC and PS) are opposed to the text and the unions also seem to be against it.

The EU said last week that if the Federal Council accepted the deal then the stock exchange equivalence would be renewed for two years. Without the agreement of the Federal Council, stock exchange equivalence would not be extended beyond December 2018. The deadline imposed by the EU for Switzerland to accept the agreement was this December 7. As the agreement has not been approved, stock exchange equivalence is threatened.

However, the President of the Swiss Confederation said that he has had discussions with Jean-Claude Juncker, the President of the European Commission. He insisted that there has been significant progress over recent months and that he wanted to cool things down. It seems, therefore, that the Swiss authorities hope that the progress achieved will enable them to obtain an extension of the equivalence of the exchange, at least temporarily.

Equivalence is necessary for European traders to carry out Swiss securities transactions directly on the Swiss market. Without equivalence, European traders would be forced to trade Swiss securities on European platforms rather than on Swiss stock exchanges. For the Zurich Stock Exchange, this would be a real problem because currently the majority of trading of the main Swiss shares is carried out by brokers based in the EU. In practice, a large part of the liquidity of Swiss shares would be migrated to the European stock exchanges and the Swiss stock market would see its volume of transactions drop drastically.

The relationship between the EU and Switzerland are governed by the approximately 100 bilateral agreements, which Brussels wants to replace one contract. The agreement, which would be more closely linked neutral country with its largest trade partner, was to be signed at the beginning of this year, but the Swiss authorities said that the Treaty could undermine high salaries and working conditions in the country. The project, Switzerland will automatically adjust its rules of migration and social welfare to EU legislation.

Recall that in 2016, Switzerland refused to join the EU. The application of Switzerland was filed in 1992, however, the Upper house of Parliament voted for the withdrawal of the application. Against the country’s membership in the EU 27 deputies voted for the continuation of the application spoke of 13 parliamentarians. Thus, the upper chamber confirmed a decision taken previously by the National Council of Switzerland.