# 15 / 2016

Brexit and Switzerland

Safeguard Market Access, Ensure Legal Certainty, Seize Opportunities!

In the short term, Brexit hardly affects the relationship between Switzerland and the UK. Existing rules continue to apply for citizens and businesses. In the medium and long term, however, the bilateral treaties of Switzerland with the EU will no longer apply to Great Britain. Ensuring legal certainty while maintaining — and improving as needed — the good bilateral framework of today is paramount for Swiss business.

Because of the complex opening situation confronting the British Government as it prepares to leave the EU, the UK will now primarily focus on the withdrawal talks with the EU, its most important trading partner. The activation of article 50 of the Treaty of Lisbon has been announced for the end of March. However, the ratification of the referendum by the British Parliament as required by the High Court may cause further delays. Beyond these negotiations, Great Britain will have only limited capacities to engage with third countries over economic relations and will concentrate on its most important trading partners. As an important trading partner Switzerland is in a good position. Nevertheless, political leaders will need to stay alert and proactive.

Switzerland Is Clearly Part of the "Inner Circle" of Most Important Trading Partners

Switzerland must continually raise awareness among its British partners about the importance and benefits of Swiss-British economic relations and intensify its contacts. As a core trading partner of Great Britain and leading investor, Switzerland clearly belongs to the inner circle of countries with which the UK will want to re-negotiate economic relations right away. A memorandum of understanding to this effect should be pursued quickly. The business sector will support the policy makers as best it can.

Status Quo+ for Mutual Market Access and Safeguarding Legal Certainty

After Brexit the preservation of legal certainty is the top concern for Swiss business. A draft for a bilateral treaty solution between the UK and Switzerland should be ready by the time Great Britain completes its exit from the EU. Its main focus will be on the material preservation of bilaterals I & II as well as the free trade agreement between Switzerland and the EU. As a temporary solution some form of grandfathering might have to be pursued. Regulatory divergences should be avoided. Swiss business wants to secure full mutual market access through a comprehensive free trade agreement of the latest generation, which also includes a liberalization of the service trade and deeper regulatory cooperation between the two countries (status quo+). Additional accords for individual sectors should be negotiated as needed. Full access to highly qualified personnel from the partner country must be assured in the future as well.

Seize the Opportunity to Expand Market Access 

Great changes always create opportunities to strike out in a new direction and improve the status quo in everyone's interest. In the wake of Brexit, Swiss business sees an opportunity to engage Great Britain in a discussion about broadening mutual market access. Beyond the existing contracts with the EU, the individual sectors of the Swiss economy already see a potential for harmonization and equivalence of regulations (e.g. financial services) or the liberalization of rules of origin. In close collaboration between policy makers and economic leaders of both countries the close ties to Great Britain should be used to identify and exploit opportunities to deepen the bilateral economic ties.

Switzerland Is Open for Discussions about EFTA Membership 

Britain's accession to EFTA would seem to be a medium or long term option at best. Swiss business is basically open to talks but believes the time for an in-depth debate and final verdict is premature. First of all, Great Britain would need to express an interest in joining EFTA, which it has not done so far. A final verdict will depend on a thorough analysis by all parties involved of common goals, institutional questions, possible EU reform efforts, and the future dynamic within the free trade association.