Blog Carsten Brzeski

Swiss lessons for Brexiteers

The difficult task of balancing tighter immigration rules with free access to the EU’s single market
Balancing tighter immigration rules with the advantages of free trade and access to the world’s largest single market…this is causing headaches not only in the UK. Swiss politicians have already been chewing on this issue for almost three years, with interesting lessons for Brexiteers.

Back in 2014, after almost 12 years of open borders for EU expatriates, the Swiss voted for tighter immigration rules at a referendum, by way of introducing quotas. The vote was passed with a very slim majority and there were also no specifics on how high quotas should be. Nevertheless, the government now has until early 2017 to impose new rules. However, designing these new rules is anything but easy, as tighter rules threaten to backfire on the Swiss economy in at least two ways: firstly, accounting for almost a quarter of Switzerland’s population of eight million, foreigners are an important growth driver. More than a million of those foreigners are EU citizens. Secondly, imposing tighter immigration rules could trigger retaliatory trade practices from the rest of the EU.

Immigration rules are part of a bigger package of treaties and agreements between Switzerland and the EU. Besides, the free movement of EU citizens, the ‘Bilateral I’ agreement, regulates mutual patent recognition rules, public-markets access to Swiss and EU companies, agricultural trade, limitations on truck transport in Swiss territory, the integration of Swiss air transport with European air transportation rules and the participation of Switzerland in the EU’s multi-year scientific research programmes. These agreements contain a so-called ‘guillotine’ clause that would nullify all treaties if one is struck down…a measure to preclude ‘cherry-picking’. Well, have we not heard this before?

The Swiss government is in a difficult position. While it has to follow up on the outcome of the referendum and implement the will of the Swiss people, there is little motivation from the EU to allow tighter immigration rules. The Brexit vote has clearly not helped the Swiss government. One possible solution for a deal with the EU, which has been brought forward by the Swiss government, is the introduction of a so-called ‘safeguard’ clause. Under such a clause, Switzerland could limit immigration affecting specific industries and regions if the influx of foreigners prevents Swiss nationals from finding jobs. The Swiss government is following this path and has already adopted a bill that would require companies to demonstrate that Swiss workers do not qualify for a job, before applying for work permits for foreign nationals to fill the post. In theory, Switzerland could enact a law limiting immigration. It is legally unclear whether the so-called ‘guillotine’ clause will be triggered automatically or whether it will have to be triggered by the EU. Needless to say, such a move would be more than only a diplomatic affront.

Up to now, the EU has not been very open to any proposals from the Swiss government. The official EU position is that there is still no room for negotiations. Cherry-picking is not an option. Obviously, the Brexit vote will make it very difficult for Switzerland to reach a deal with the EU before February 2017. The EU will not have any interest in providing the UK any precedent on how a new balance between tighter immigration and access to the single market could look like. The most important lesson the British government should draw from the Swiss experiences is that the EU can play hardball and does not easily bow to national interests or outcomes of referenda.