The Swiss-EU bilateral treaty updates, explained

Finally a deal: Swiss President Viola Amherd (right) with EU Commission boss Ursula von der Leyen in Bern, December 2024. Keystone / Alessandro Della Valle

Switzerland has negotiated a new agreement with the European Union. It marks a new chapter in the history of a complex relationship. SWI swissinfo.ch takes a look at the current status of the bilateral treaties.

Over the years, Switzerland has regulated its relationship with the EU in about 20 bilateral treaties and over 100 side agreementsExternal link. The first treaty package was negotiated in 1994 with the newly-constituted European Union. It contained agreements about free movement of people and rules for resolving trade disputes, agriculture, transport and scientific research.

History of the bilaterals

The EU granted Switzerland what were unique exceptions, expecting that it might later join the bloc. These  agreements became known as the bilateral treaties.

Ten years later, in 2004, came the “Bilaterals II”, an additional treaty package, which mainly harmonised the handling of migration and asylum issues with the Schengen and Dublin agreements.

The whole relationship seemed to be on a solid footing. But from day to day and over a period of years new needs emerged – for example, an agreement on electric power.

It also became apparent that the treaties were too static. The EU member states were harmonising their legislation at a rapid pace, and the EU was developing its common basis of law as a result.

Joint committees had been established to oversee the day-to-day functioning of the bilateral treaties. These panels had more and more work to do, interpreting the established agreements in the changing legislative environment. The two legal systems seemed to be gradually drifting apart.

After 2008, the EU therefore wanted its relationship with Switzerland to be enshrined in a framework agreement. This would allow for institutional issuess be decided on in an uniform manner, and legislative developments automatically adjusted. Negotiations on this started in 2014. They turned out to be a longer haul than anyone had imagined.

Switzerland did not find the EU receptive to its particular interests. Brussels was no longer keen on granting exceptions. In early 2016, the EU was already negotiating with Britain over Brexit. Exceptions granted to Switzerland would have made an already sticky situation with the British even worse. It might even have given some EU member states ideas about demanding exceptions for themselves.

Disappointed in the process, the Swiss federal government broke off negotiations unilaterally in 2021. The EU reacted somewhat petulantly, excluding Switzerland from its scientific research programme known as Horizon.

What did Switzerland want?

By 2022, Switzerland was making fresh proposals about updating the five existing internal market agreements: free movement of people, air travel, land transport, trade issues and agriculture. Two further agreements in the areas of electric power and food security were also on the Swiss wish list. Finally, the country wanted an end to its exclusion from Horizon.

In 2021, when negotiations on a framework deal broke down, some distance appeared between the partners: here, Swiss Foreign Minister Ignazio Cassis (left) and EU Commissioner Maros Sefcovic (right). Keystone

The federal government was always clear on one thing: whatever the Swiss delegation was able to negotiate in Brussels had to stand up to a referendum vote at home. Politicians both left and right had been brandishing the threat of referendums if they didn’t like what they saw. The sovereignty of Switzerland has been the main crux of the European question since the people said no to joining the European Economic Area in 1992.

What are the red lines for Switzerland?

From a Swiss point of view, to get enough support within the country, an agreement with the EU needs to contain several key features. The first is an explicit rule to protect high Swiss earning levels from “wage dumping”, the payment of wages below the market level to foreign workers which imposes unfair competition on local employees. Another would be a guarantee that the people be able to vote on adopting legislation, or at least a veto. No EU court acting as a supreme court and passing judgement on Swiss citizens and affairs. With these aims, Swiss delegations made over 200 trips to Brussels.

What has Switzerland been able to get?

After the first unsuccessful round of negotiations in 2014 and the following years of zero progress, it seemed at times that a solution would never be found. So any agreement counts as a success.

Switzerland has won the concession that institutional powers are now dealt with in the sectoral agreements. They are not valid overall, as would have been the case with the framework agreement. Accordingly, automatic adoption of EU legislation by this country is no longer an issue for the most part. EU law is instead to be adopted by Switzerland “dynamically”. That means that the country may say no. Switzerland retains its independence, as it wished. It is not politically integrated with the EU, at least no more than is economically advantageous.

Media and political figures here have been admitting that the Swiss delegation got all it possibly could in Brussels. The agreement has been called ” tailormade to the maximum” by the newspaper Neue Zürcher Zeitung. A key selling-point of the package is that, in the matter of free movement of people, Switzerland was to a great extent able to restrict immigration to workers.

Finally, Switzerland can keep building on its tradition of bilateralism. Media and politicians have dubbed the set of agreements “Bilaterals III”.

What issues have been cleared up?

The Swiss government has issued a summary of the result of the negotiations in point form. The actual treaty wording has not yet been released. Switzerland has clearly managed to get a few concessions from the EU. Notably, the country may take part in the Horizon research scheme again, on a provisional basis.

The country has also secured a concession that if “serious economic or social problems” arise, a “notwithstanding” clause can be activated to limit immigration. How much bite this clause would have is a matter for debate. Switzerland would have to prove that immigration was really causing economic problems. Yet immigration here has always been high when the economy was flourishing, not the opposite.

Happy end? Viola Amherd (left) and Ursula von der Leyen (right) in Bern. Keystone / Alessandro Della Valle

The previous bilateral treaties consisted of five sectoral agreements, and now there are three more – on electric power, health and food safety. There is also agreement on the price tag for being part of the EU market. From 2030 on it will come to CHF350 million ($370 million) annually. Until then Switzerland will have to kick in just CHF130 million annually.

Which issues remain unresolved?

The main point still at issue is protection for high Swiss pay rates. Unions in Switzerland have been insisting that they will only say yes to the package if this is guaranteed. Switzerland was in fact able to maintain the level of wage protection it already had against any future decline in wages within the EU. It was compelled, however, to accept the EU’s point of view on employment expenses. Expenses for employees working in Switzerland are to conform to the rules in their countries of origin. The unions eye that suspiciously as a back door for wage and price dumping.

Since the EU successfully held the line on this issue, it’s now up to Switzerland to deal with the problem internally. The social partners will have to find ways to compensate for any wage decline, according to the federal government’s  appeal to the employers and the unions. There is not much give and take going on at the moment. The unions know their consent is key to getting the whole package passed. In the power play regarding advantageous industry-wide wage agreements, they know they can use this as leverage.

It is also an open question what issues may arise in interpreting the small print of the agreement, such as, how long Swiss involvement in EU programmes is guaranteed. Another moot point would be the issue of penalties where Switzerland fails to adopt EU legislation.

Also still outstanding is the antipathy to “foreign judges”, which in Switzerland has become a political slogan. Under the new agreement, a mutually constituted arbitration panel is to decide on any disputes. But if it is a matter of EU law, it will be referred to the European Court of Justice.

How are the Swiss political parties reacting to all of this?

Because of this last issue alone, the right-wing conservative Swiss People’s Party has already come out against the package. If the parties of the left, taking their cue from the unions, also reject it, the nation’s voters as a whole are unlikely to give it their blessing.

As of January 2025, the Social Democratic Party is playing a waiting game. The other main parties are no more than cautiously optimistic. They all agree, at least, that the idea of the bilateral treaties should be maintained and pursued, and that Swiss pay rates need to be protected.

What comes next?

The next federal general elections are scheduled for October 2027. Before then, observers say, a nationwide vote on the agreement is unlikely.

The package of agreements between Switzerland and the EU will be officially signed off by both sides this spring. By 2026 it will be time for the parliament in Bern to debate it. The federal government wants to submit the three new agreements separately for approval. So there may end up being several referenda put to nationwide votes.

Edited by Samuel Jaber, with additional material by Matthias Strasser; adapted from German by Terence MacNamee/ds