Professor Richard Whitman
Now, let me very briefly introduce our speakers. We’ve got an absolutely fantastic line up, in terms of experiencing in negotiating with the EU, and successfully negotiating with the EU, I would say, in terms of striking a deal in bilateral negotiations. And our first speaker will be Professor Calmy-Rey, who is a Former President of Switzerland, Former Minister of Foreign Affairs for Switzerland, and in the role of President and Foreign Minister of the Swiss Confederation, that she handled relationships between Switzerland and the EU. And in particular, during that time when Switzerland adopted the Bilateral II package, Schengen, also, and she is currently a Professor at the University of Geneva.
Our second speaker, in the middle, is Rudolf Dietrich, who is Former Director General of the Swiss Customs Office and he’s well aware the issues of customs and customs unions, in particular, are a hot topic here in the UK. But having worked at the coalface, with the EU, in striking agreements on customs and customs facilitation, he has some very interesting things to say about how you make that aspect of the relationship work. And our final speaker is Professor Michael Ambühl, who’s a Former State Secretary and Head, the Director of Political Affairs in the Federal Department, the Foreign Affairs of Switzerland. He was a negotiator of the Bilateral I package and also, Chief Negotiator on the Bilateral II package, and he’s also currently a Professor at ETH in Zurich. And you can see that you can successfully negotiate with the EU and still come out smiling. So, we will – Professor Calmy-Rey, thank you.
Micheline Calmy-Rey
Yes, can you please – yes, yeah. So, I have to thank you very much for your introduction and I have to thank you too, for this opportunity given to us to exchange with you on the Swiss experience. Well, I just say, we’re not here to give lessons. We’re just a small country in the heart of Europe, struggling a lot to keep our prosperity and our security, and we are coming to talk about just our experience.
But let me begin with a bit provocative question.
Professor Richard Whitman
They’re on the slides.
Micheline Calmy-Rey
Yeah, they’re on the slides. Oh, no, it’s not that.
Professor Richard Whitman
No?
Micheline Calmy-Rey
And the first one, please. No, et voila, it’s this one. A bit provocative question: is Brexit a copy of the Swiss access model? Switzerland and Great Britain are two exporting counties, are competitors on markets outside the European Union. And since 1992, the year where the Swiss refused to join the European Economic Area, the Norwegian model, the exportation towards India and China have shown an increase of 14.3% in Switzerland, for Switzerland, versus 6.5% for Great Britain. So, you see, we are, indeed, afraid that Great Britain be out of the European Union, because it will be for us, a harsh competitor.
But let’s stop here with my provocation. Based on a number of bilateral agreements that cover the EU ‘four freedoms’, the Swiss model comprises over 120 agreements, deals, arrangements. It is a relationship also secured by Switzerland’s participation to the European Free Trade area, the EFTA, and it’s rejecting membership of the EU’s Customs Union. Partial access to the single market, without participation to the Customs Union, allows for economic co-operation and preservation of national sovereignty. By saying that I mean that gives Switzerland the capacity to negotiate free trade agreements worldwide. For example, Switzerland has signed a free trade agreement with China, EU not.
The EU does not like the Swiss, what we call bilateral way, and the way of the sectorial access to the European market. The EU says, “It’s too complicated. It does not guarantee a uniform application of the European Law by Switzerland,” and therefore, the EU wants to conclude a so-called institutional agreement with Switzerland, designed to cement the Swiss sectorial participation to the EU internal market. But, curiously, the EU does not offer the Swiss solution to Great Britain. It’s true, Swiss EU abides by different logics. One, tending to reinforce partnership: Switzerland, and the other, looking for a divorce: Great Britain. However, this does not mean that there are no similarities or convergences between both situation.
First one: institutional. UK is drawing plans for a broad free trade, coupled with selective sector-by-sector regulatory alignment deals in attempt to get maximum access to EU markets, while allowing UK to diverge from EU rules and regulations in certain areas. Switzerland and Great Britain relations to the EU are therefore, based on the same institutional architecture, one or more bilateral agreements with the EU and are facing the same dilemma, how much of national sovereignties these two countries are ready to pay in order to get access to EU domestic markets. And at the end of the day, UK will be a second Switzerland, confronted to the same cherry picking critics. It’s already the case, I think.
Second convergence: the European Court of Justice. The reconciliation of different positions, regarding the role of the European Court of Justice has failed so far, be it in the negotiation between UK and EU, or between Switzerland and EU. Of interest, the British position, regarding the European Court of Justice, demonstrates a similarity with that promoted by Switzerland in the negotiation for an institutional agreement.
The Federal Council, that means the Swiss Government, seeks an independent arbitration court in the event of dispute between Brussels and Bern, regarding the interpretation of those agreements that regulate Swiss industry’s access to the single market. Brussels has agreed, last year, to speak about in an arbitration court. Dispute, it is how far reaching thy competencies should be, and this is not a minor question, a minor problem, because the European Court of Justice has made judgments in the area of wages and working conditions at the expense of employee protection and wages. And that’s why Bern accepts only a very limited role for the European Court of Justice, in which it will be restricted to certain areas, defined by an Independent Arbitration Court, as EU law.
Third question: Customs Union. On one day before the publishing of the governm – British Government’s paper on the EU – Irish question, a BBC Journalist called me and told me that he’s interested in how Swiss borders are being handled. He asked me if we have any trucks or car queues at our borders with the neighbouring country. I told him we do not have, but drew his attention on the fact that our situations are quite different, due to the Swiss association to Schengen and an agreement on the free movements of persons with the EU. As a result, only goods are subject to control at our border and as for the control of goods, efficient procedures allow for very little physical control, less – so, roughly, 1% you will – at the border. And relating to – you can put the second one, it’s a border between Switzerland and Lichtenstein, this is not a very significant picture, because between Switzerland and Lichtenstein, you have a Customs Union. But – and the second picture now, you have the border between Lichtenstein and Austria. Austria is a member of the European Economic Area, Switzerland not. Austria has the four liberties and Austria is – and this is the Lichtenstein/Austrian border. You have no queues, but the Austria border is controlled by Swiss Officers, yeah, so you see, and Professor – Mr Dietrich will speak about the Customs Union, just about border crossing of persons.
Schengen sets binding standards for the control of people from third countries. Since UK and Ireland are not a member of Schengen, they should be free to determine the quality and density of controls at the common – at that common border. So, what I say, you don’t need to stop at the border. Just the example of the border of Austria/Lichtenstein. But I will say something more, invisible border is possible. I won’t go into an example I have for you, if you want to have this demonstration, the case Georgia/Russian Federation and the case of South Ossetia and Abkhasia, where we couldn’t put any border on the ground because there was no understanding of what should be a border between South Ossetia, Abkhasia, Russian Federation and Georgia? And the end of the story is, our agreement couldn’t speak about checkpoints and we spoke about co-ordinates, about corridors, put no names. On the ground you can find no checkpoints and the monitoring of trade comprises three key elements: risk management of goods before they enter the corridor and at the end of the corridor, onsite monitoring and auditing of statistical data. So, at the end, no hard border at all, but trade corridors and electronic monitoring. I think it’s an interesting example, because there we couldn’t have any checkpoints on the ground, any physical border.
Fourth, if you allow me, very shortly: the free movement of persons is another parallel. After Brexit, 40% of the free movement of persons will be done with certainly Switzerland and Great Britain. 10% with Switzerland, 30% with UK. Switzerland concluded an agreement on the free movement of persons with the EU. After a popular vote in Switzerland, we’re crying for limitations on the free movement. The EU was conditioning access to the European market and free movement of persons. It froze on electricity supply talks with Switzerland. I – our Parliament worked out a solution that dropped the contentious quotas on EU immigrants, in favour of a national priority hiring system.
The Swiss experience suggests that the solution for problems related to free movements of person is achievable, even so, very difficult. With both sides, its achievable, if both sides avoid the all or nothing approach. If both sides do not put in question the principles, but only tackle like concrete implementation, by asking for more flexibility in the implementation.
Conclusion, ladies and gentlemen, the EU might be reluctant to agree to the Swiss model, which combines the advantages of both the Norwegian and the Canadian models. Pressure on Switzerland, in December Brussels mentioned EU Swiss equity bias could be a road to get admission to one another markets for just 12 months, snubbing those requests to grant that for the vast length. Pressure also, however, on Great Britain. Recently the President of the European Council threatened Britain to freeze discussions, including those have tried, if the issue of free movement at the Irish border was not settled in a way that ensured free movement of persons. So, it’s really, we are under the – not only we have some similarities in our discussions with the EU, but also, we endure, or I don’t know how do you say that really in English, but the same pressures from the inside of Brussels? So – but I would say, as a conclusion, despite pressure and reluctance, the Swiss model is in place and therefore, represent a precedent. Thank you for attention.
Professor Richard Whitman
Thank you. Thank you. So, we’ll move to Mr Dietrich, thank you.
Rudolf Dietrich
Thank you, Mr Chairman. Ladies and gentlemen, my objective is to describe how Switzerland handled its land borders and the customs procedures in the middle of EU countries. Well, this and what has been the challenge for Swiss Customs for many decades. We had to handle one of the very last customs land borders in Western and Central Europe. There has been, and is still, a huge traffic of goods and persons. There are 23 lorries coming into Switzerland every day and more than 500 persons crossing the border into Switzerland daily. The Swiss economy is extremely merged and interdependent with foreign countries, EU and worldwide. The border crossings, or border posts, are often situated in the middle of urban agglomerations, which means that there is absolutely no space to park vehicles.
Swiss companies and people insist on a non-noticeable border, not an invisible one, but a non-noticeable. They want to cross the border fluently. This meant that the first objective for the customs administration has been, over decades already, facilitation, acceleration of border crossing, every minute counts, or even every second counts. We have taken a lot of internal measures to meet with this challenge. We have, since the 1990s, implemented computerised declarations for the commercial booths. You could think the 90s declare 24 hours a day and seven days a week, electronically. We had put in place a system of authorised consigners, or authorised consignees, with defined duties, but on the other hand, privileges in the customs procedures.
The physical controls were normally made at the domicile of the companies and not at the border posts, in order to accelerate the border crossing and to avoid traffic congestion at the border. We had, or we hope we had, sophisticated and computer-based risk analysis and this allowed us to have, therefore, a very low percentage of physical controls for the commercial goods. Roughly, 1% of the goods are really physically controlled. We have also put in place a system of facilitated regimes for standardised goods, for example, in regional traffic, construction material, who did not declare every consignment, every single consignment, but only at the end of a month.
These were our internal measures. But in the handling of a land border, you always depend on the partner across the border. You can do nothing of your own. That means that international co-operation and consensus with the partner across the border is absolutely crucial. And that’s why I would like to mention three examples of agreements that we – Switzerland has concluded, in order, again, to facilitate border crossing. The first one is – are agreements on joint border offices. These agreements have already been concluded in the 1960s, with all our neighbouring countries. They have regularly been adapted since, when, for example, the infrastructure had to be renewed. The idea was that export and import procedures were executed at the same place, with both administrations at the same place, in the same infrastructure, which allowed to – the lorries to make one stop instead of two, as it was in the classical way. Practical problems are discussed and solved pragmatically on regional, or even local, level, between the concerned Customs Agents and only rarely, on political level.
Second example is the Convention on a Common Transit Procedure, also known as New Computerised Transit System, or NCTS. The Convention exists since the 1990s, has been concluded by all the EU and all the EFTA countries and includes, today, also Serbia, Macedonia and Turkey. It establishes a simple and cost-saving procedure for sending consignments through a multitude of countries, with only one and the same declaration and duties and taxes suspended, which is very important for the economy. This Convention, of course, is perfectly known by Her Majesty’s Revenue and Customs, since the beginning. They are applying it as a new member and the Convention is, in my opinion, absolutely crucian – crucial, in order to exonerate border crossings.
Third example is an agreement on simplification and security measures. This is the youngest one Switzerland has concluded. It is a bilateral agreement between the EU and Switzerland and operational since 2009. After the 9/11, the US, and then also, the EU, had required the pre-announcement of goods and special security checks of goods coming from third countries. Based on this agreement, Switzerland is not considered as a third country and therefore, exempted from the pre-announcement requirement in the exchange with EU countries. In return, Switzerland has to guarantee the same quality of control of goods coming into Switzerland from third countries through its airport.
Finally, I would like to say a word on the border crossing of persons. In fact, also, with persons we have the same very low percentage of physical controls at our borders. Roughly 1% again, in order to permit fluent traffic. We have every day 300,000 workers entering Switzerland in the morning and leaving Switzerland in the evening and it is, of course, of great importance that they arrive in time at their place of work and are not stopped at the border. So, the traffic is fluent. You can observe it daily. Before 2008, when Switzerland was not yet associated to the Schengen Agreement, there were no requirements for the density or quality of controls of border crossing persons. Schengen, as Mrs Calmy-Rey said, sets binding standards for the controls of people from third countries. Since UK and Ireland are non-members of Schengen, they should, in my opinion, be free to determine the quality and the intensity of controls at their common borders.
So, finally, I would like to draw the following conclusions. There is, in my opinion, a large room for manoeuvre in the design of border controls for independent countries. A lot depends on the co-operation with the neighbouring countries on the basis of a pragmatic and common approach and decisive is the spirit or the moto, “Borders may separate, but customs connect.” Thank you.
Professor Richard Whitman
Thank you very much. Thank you. Professor Ambühl.
Professor Michael Ambühl
Thank you very much, Chairman. Madam, ladies and gentlemen, dear friends and colleagues, I have the honour to summarise what the, so-called, Swiss model is and then I’ll do this, with the following slides. I call it the Swiss model for simplicity reasons, but mainly, basically, we should maybe call it the Swiss approach, or the Swiss process, because it’s not a model, which can be copied and pasted. And there is not the intention to try to sell you here, not one of us has the intention, but just to explain what this process is. And the process might be, it’s up to everybody, then, to decide an interesting way to handle good relations with our European Union friends.
So, how did it start, this Swiss approach? It started in 1973 with a bilateral free trade agreement. By the way, it was exactly on the day when the UK and Ireland and Denmark joined the European Union. That was not a coincidence. It was really on the point, because UK went out of EFTA. We, the other remainer in the EFTA, could then conclude the free trade agreement. So, that is what it started. We call it – I call it bilateral zero. Then comes the Bilateral I. There are, as you see, seven different agreements. They are linked together. They are all still in force and they are, let’s say together with bilateral zero, one very important pillar of our legal relationship. Then comes Bilateral II. There are nine agreements among them, very important among, like Schengen and Dublin. They are not linked together and now, as we are also in a process with, sort of, a constant negotiation, one is, as an outsider, but I think also, if you’re an insider, you’re also regularly negotiating. I mean, Brussels is a negotiating table, you’re negotiating with your European Union member country friends. Now comes the point, do we have the Swiss maybe Bilateral III? I think it would be logic if you look at the numbers and there the question is, is the institutional one, and our former Minister has just mentioned it. And these agreements are so-called static agreements, and only Schengen and Dublin and transport, is not. Now the question is, do we get a dynamization of them? If there are questions, we are happy to reply to this.
Now, we move on, just to say briefly, what are the advantages? We have legal certainty and better market access and we have then, an agreement only in the selected policy sectors. So, it’s not covering the whole spectre and then we have certainly, a level of freedom regarding legislation and politics that are not selected. But I insist it’s a certain level, you’re never independent and sovereign, except if you are a country on the moon. But otherwise, you always have to take care of your neighbours and the important factors and what is – what’s the other point? The economic policy, then foreign trade policy, we are not integrated. That is what we then would call the – a treaty making power remains with the Swiss. We have a monetary policy. We are free, and by the way, of course, the UK also, as not member of the Euro, taxation and finance. Then a social policy, foreign policy, agriculture, and I would say that is probably the main advantage, if there is one, of not being member of the European Union.
And there are, of course, also disadvantages. It’s never like it’s just black and white, and here comes the other part. We have no full participation in the selected policy sectors. We only have a decision-shaping right, not the decision-making. However, the decision-shaping seems to us very important and if you can use it, then you can have a lot of, also, influence, of course, within your normal limits and then you have no participation of all – at all, in all other sectors. I would say fair enough, as you’re not a member, you’re not allowed to try to decide, and then you have un – we have unsatisfied market access demands and, as has been mentioned already, the EU seems to regret it. They once said, “It’s a mistake.” I’m not so sure whether it’s true. I mean, as a negotiator, you’re always, of course, happy if they tell you, you have made – you have just taken the goodies and you made the cherry picking. I mean, for a negotiator, it’s very bad if you would – if somebody would say you didn’t pick the cherries. But to be honest, I don’t believe in it. I’m sure, if it’s a balanced approach, imagine these small tiny guys from the Alps could pull over the table the eight – 500 million club. It’s just, I think, a bit too much.
Anyway, a word to Customs Union, in the sense of summarising, because my colleague already has already done it, just to give you the name – numbers once again. The border crossing per day, yeah, please check, it’s per day, 2.2 million persons, 23,000 lorries, one billion goods per day and then the physical controls has been dealt with. Switzerland is not member, as you know. Advantage, we can conclude ourselves, as my former boss said, with China. We are in negotiation with India, and I do not want to sell you here that point that due to this we are very prosperous. But it is a good thing and then one can regre – argue about is this China free trade agreement of a big value? I think it is of a good value, but of course, it will never, ever compensate the importance of an access to the Single Market.
A disadvantage: the border control. However, as Rudi just said, the noticeability can be very much reduced. Single Market access, one word, and we have only sectorial access. It is something between the so-called Canadian and the Norwegian model. We have definitively, we – than the Canadian FDA give, but we also have more flexibility than the so-called Norwegian, which is nothing else than the EEA, which is the à la carte menu instead of a full menu.
And then, now, to conclude, what are the lessons learned? My lessons learned, as a negotiator, are the three – are – is the following point, consisting of three conditions, namely, when do you have, as an outsider, as a non-EU member country, as a third country, legally spoken, when do you have good chance? I say three conditions. Number one: if you do not – Madam Calmy-Rey already mentioned it, you do not question fundamental EU principles. It’s hopeless. It’s just hopeless, you should not go by it. As the – it was with Schengen [mother tongue] madam, as it was with Schengen, there was also the question, “Can we have the decision-making?” And they always said, “No way,” so we didn’t even ask for it, because it – but we said, “We want the good decision shaping,” which we got and which is absolutely perfect. So, you should fix – you should focus on the flexibility in the implementation of the principles, and I would say, from the outside, with a little smile, maybe, the European Union has a lot of flexibility when they implement themselves, their principles.
Take the Maastricht criteria, take the Stability Pact, you could also say the refugee distribution, there is a lot of flexibility to follow, or not exactly to follow at 100%, but only at 99% the principles. And here, you see, what I would like to say, you have to focus, for example, on the instrument of a safeguard clause, or an emergency clause, an emergency break, as it is debated, also, in your country. There are many examples of safeguard clause. I do not want to go into detail. I’ll show you, also, a possible safeguard clause we developed at ETH, especially, also, just to check once, would it be possible for the United Kingdom? And we published this, also. If somebody’s interested, we have it here, and we can give you – it’s published. It’s an article and there are example of it, and just to show you formulas are not something exotic, and then – it looks just like they are exotic, but they are used in Brussels many times, because it’s a very good instruments, if you don’t find a consensus, you can maybe hide it nicely in a formula.
Now, we go on. The second condition is, you have to have a certain nuisance value as an outsider. If you have no nuisance value at all, well, they don’t take it too seriously, yes, and in the Swiss case, it’s transportation, electricity, financial market.
And the third and last condition is, you should not only play the nuisance value, of course not. You have to contribute in a constructive way and that there are, of course, many areas for, let’s say, countries like us, or like the Europe – the UK, to contribute in security questions, in international corporation, and so on. This is it, thank you very much.
Micheline Calmy-Rey
Thank you.
Professor Richard Whitman
Wonderful, thank you very much [applause]. So, a set of wonderfully choreographed interventions, so thank you very much and a huge amount of detail there. Quite a number of wry smiles, I think, on some of the aspects that you were presenting, so thank you. So, we’ll open up for questions now, and if people could wait for the microphone to come to them and then, if they could introduce themselves. So, gentleman at the front here, please.
Michael Johnson
[Pause] Thank you very much. My name is Michael Johnson and I was, for many years, a British Government Trade Official, and I’m going to start by asking a thoroughly boring question, after those three extremely interesting introductions and that is, harking back to the agreement, of a free trade area agreement between Switzerland and the European community in 1973, and then, the tissue of supporting, or subsequent agreements, on a strictly sectoral basis, that we’ve talked about, how did Switzerland and, of course, the EC, EU at that stage, get that past the GAAT and then the WTO? Because there would be various issues in the free trade area agreement, which would come up against Article 24 of the GAAT, in other words, whether substantially, all the obstructions to trade between the parties were removed. And failing that, of course, there could be breaches of the MFN obligations of both sides, if there were preferential agreements on specific sectors, between them, which were not extended to other WTO members. So, as I say, that’s a very geeky question, but it’s one, which I’m sure that our successors, in the various departments in British Government that now deal with these things, must be scratching their heads over.
Professor Richard Whitman
Michael, are you willing to tackle that one?
Professor Michael Ambühl
Yes, I’ll try to do my best, and without going too much in detail, indeed, that was always the question when we enlarged after the free trade agreement of 1973, then the concept with bilateral sectoral agreements. But all-in-all, as you can see, there were never really problems and we always got the waiver from WTO. And then so, I would not dare to say to the colleagues who do this daily that there is not a real problem, because normally, officials don’t like to work on dossiers where one can say there are no problems, but all-in-all, I think it is easily – it was always easily solved. We – if we had problems, we had many and the Ministers know this much better, there are political questions that were in the centre. It’s the question of co-decision, decision-shaping, decision-making, question of sovereignty. That is always and still is, in the centre of the concern in the political debate.
Professor Richard Whitman
Do you just want to make a comment on that? No?
Micheline Calmy-Rey
No.
Professor Richard Whitman
No?
Micheline Calmy-Rey
I don’t. I have nothing to add. This is true, in Switzerland, the domestic debate is going on foreign Judges, sovereignty, how much have you to pay, in the political sense, in order to get the privilege access to the big European market? That’s always the question that makes the debate in Switzerland. But we always found solutions, for example, with the free movements of persons, that our Parliament found a solution. After popular initiative was accepted, who asked for very limited free movement of persons that was incompatible with the agreement we had with the EU, the Parliament found a solution, found a solution with this priority given to the people being already active in the – on the domestic market, Swiss domestic market and it was – and it is now okay. But we cannot say we have not such a lot of problems. Many problems we have are still in a mixed community, that means at the political level between EU, at an administrative level between EU and Switzerland. If you have – if you – the disputes continue, then the EU is saying now, we have to find a sustainable solution. We have to discuss about the influence in all of the European Court of Justice, etc., etc., because it’s not acceptable for the EU that in sector where we have an access to the big market, we don’t follow the same rules and standards as EU member states. That’s a problem we have now to solve.
But I mean, generally said, we have not such a lot of problems coming on the political big – on a level of the political debate.
Professor Richard Whitman
Thank you. Gentleman at the back.
Matthew Holehouse
Thank you very much, and my name is Matthew Holehouse. I’m a Journalist from MLex, the news agency. I’m very curious in the Swiss point of view of how you see the – these two parallel relationships interacting. Obviously, you’re going to have a Brexit negotiation, which will – and subsequent negotiations and you’ve got the EU/Swiss negotiations over the institutional dynamics. We saw, I think before Christmas, you mentioned the short one-year equivalence decision that Switzerland was granted specifically because of Brexit. How far do you see the Brexit question becoming a, sort of, obstacle for Switzerland and getting in the way of your negotiations, or to what extent could, actually, the UK and Switzerland co-operate and work to achieve their joint ends, which, you know, may well be very similar, in some cases?
Professor Richard Whitman
Excellent question.
Micheline Calmy-Rey
I can try to answer, because I’m not in the EU Heads, but I can try to answer. I mean, as I said, EU doesn’t like the Swiss model, doesn’t propose the Swiss solution to the – to Great Britain, but nevertheless, there are some similarities in the discussion, and some parallel in the discussion led between Switzerland and the EU and between UK and the EU and mention the domain, where you can find similarities.
It can be – it can have an advantage. These convergences can have an advantage, for Switzerland, for example, because it allows that the questions discussed are moving towards more flexibility between Switzerland and EU and between UK and EU. And for us, in some domain perhaps, it is an advantage to see Great Britain trying to get an access in some domain where we didn’t get it for now. But in – there is also a disadvantage, I would say, by the timing, because the EU can play against Switzerland in saying, we want you to conclude an institutional agreement very quickly and use it against us to – and to show you your first fate, so that’s what you will get, not more. What we gave to Switzerland, you will have and not more, and the reverse. So, now, the Swiss Government has made the – a suggestion that we go quick, with arrangement of disputes, with the question of settling disputes, and for the rest, for the things that are on the table to – for example, electricity agreement, we leave it for next time. We have a step-by-step approach now.
Professor Richard Whitman
Professor Ambühl?
Professor Michael Ambühl
Yes, it – briefly, and there is always the question to what degree can one compare these different countries: the UK and Switzerland? I would say there are three element, which make it difficult to compare. First, the size, UK is big, has more power, negotiating power. Second, has a totally different history, so has also, probably, a different self-understanding vis-à-vis question of sovereignty and with Brussels. And thirdly, you have the Article 50 deadline, which puts you under certain negotiating pow – pressure. We don’t have this. Three elements, however, are in common. I would say, first of all, I call it the sovereignty reflex is here and with us, quite similar. Secondly, a certain free trade spirit and thirdly, most importantly, you will be, sooner or later, if this divorce happens, if you’re going to realise Brexit, then you will be an outsider, as we and you want to have, as much as I understand, good relations with your most important partner. So, that makes us – that brings us in a fair – very similar situation and I could imagine that sooner or later, or already now, you debate the question, how do we have market access to the Single Market, and then out – being outside, taking – having to take over or not, pieces of the acquis, the body of EU law, or without being there? And then, of course, also, all the institutional questions with the Court of Justice and so on. So, there the similarities are obvious.
Professor Richard Whitman
Thank you. Robin?
Dr Robin Niblett CMG
I’m Robin Niblett, Director of Chatham House, and thank you very much for those very interesting remarks. I find the parallels fascinating. In a way, I suppose, I’m just keeping the same conversation going, rather than going at a new angle, ‘cause Professor Ambühl, you said, at the beginning, you know, “Little Switzerland, why could the EU regret giving it this combination of sectional agreements?” But, as I think you noted and as Micheline Calmy-Rey was indicating, regulations change. And we’re through a deep period of change and especially for the United Kingdom, we could have a nuisance value that won’t just be positive, but particularly powerful for the EU. So, you’ve both mentioned dispute settlement, in particular. But ultimately, as I understand it, the big problem for the EU is, how do you enforce it when something goes wrong? In other words, the EU changes the regulation, UK says, “Oh yes, we’ve changed ours too.” But then, when they look at the detail, we don’t quite interpret it the same way and then, how does the EU punish or retaliate? Does it retaliate just on the one sectoral issue? Maybe it takes two years to resolve it. You can see the EU, which is legalistic, being terrified, or worried, that the UK, like Switzerland, would be off the edge, not in sync, and yet, under a big structure that allows it a lot of flexibility.
So, could you say something about where you think dispute settlement might go, the scope of retaliation, should it just be in the sector, does it go beyond? This is a big proposal. And finally, some people have talked about an association agreement, that maybe you would need an umbrella structure, that the United Kingdom maybe should consider, maybe it’s something that Switzerland would consider as well. Maybe we need a different model that’s out there that would help us overcome these very sectoral problems and put them in a bigger pie.
Professor Michael Ambühl
This is, of course, let’s say, the most important question we face, probably, all outside the space, when they want to have a very close relationship, especially based on the EU arquis. If you just have a Canadian kind of agreement, then you can evacuate them, to a very large extent.
Now, I would think the solution could be inspired by what the EEA Office, the so-called Norwegian model, offers, meaning that in case there are divergence, there are differences, one could allow each side to have certain rebalancing measures, especially in case when you would not take over new pieces of arquis. As you very rightly said, this is something dynamic and we have, so far, static agreements, so they’re not dynamic, but the EU thinks, and I understand it very well, that they have really a point, that they should become dynamic. So, what do you do if you do not take over a piece of acquis, which is new? And there, then the balance between rights and obligations change and as they change, the other side, in this case the European Union, should be allowed to rebalance [mother tongue] in French, this is a – it shows nicely that this should be possible and then only they have to be proportionate. And the proportionality should be possible to be checked in arbitration. I think that would be fair. You could then ask the same institution to check whether their decision is proportionate. Then you should really – I mean, it’s just a question of fairness and logic, you should be – it should be possible to go to an arbitration.
Last point, the European Union, just to make this clear, has not offered the Swiss model, as I understand, I’m, of course, not there, but that’s as much I read, but maybe you did not answ – you did not ask for it.
Member
Yes.
Dr Robin Niblett CMG
Yes and that’s why you’re here.
Micheline Calmy-Rey
Just…
Professor Richard Whitman
Yes, please.
Micheline Calmy-Rey
…in addition, this is the central question and it is the question of the dispute settlement and the question is the one of the applicable law. You understand what I mean? It is legitim – normal to think that in the domain where we have bilateral agreements with the European Union and the sectorial access to the big market, that we are applying the same rules and standards as EU member states. It’s normal. We have an agreement and in this agreement the rule and standards are written. But it’s more difficult for us to accept that the EU and the European Court of Justice be the judge of all bilateral political relations between EU and Switzerland and that’s why this question is so essential question for the sovereignty of the country. And that’s why our Government said, “Okay, if there is sectoral agreements and the EU is – it is evident it’s an EU right that has to be applicable, then no problem. But if you have a dispute, then it goes, first of all, to what we call a committee mixed,” that means where you have EU and Swiss functional, or I don’t know how do you say that? If you cannot solve the dispute there, then it goes to an arbitration court, where you have a Swiss Judge in there and Swiss arbitration court should decide if it can – this arbitration court could decide if it – what is EU applicable. If it – EU applic – EU law or not. If there is not an agreement in the arbitration court, the arbitration court can, but must not demand the advice of the European Court of Justice. It’s a complicated system, but it preserve our sovereignty in the sense that the role of the European Court of Justice is very limited. And once more, it’s limited, also, on the substance, because it is concerning only five agreements out of the 120, only the agreement giving an access to the big European market, not the other ones. So, you have a really controlled system. It’s a proposition of system. It’s not accepted by the EU now, for the time being, but it’s what is – what we are trying to negotiate, I think, to get – to – it’s always a question, how do you preserve your capacity to decide and how do you balance it with the necessity – with your economic interests, because we have an interest to get an access.
Professor Richard Whitman
Thank you. Over here, please.
Alex Folkes
Thank you very much. My name’s Alex Folkes. I apologise for turning it to a political rather than a technical question. Switzerland is obviously a very devolved country, with immense powers for the different cantons. The UK is not the same with its asymmetric devolution. But I wonder if you could comment on the lessons that might be learnt for the UK in negotiating with the EU, based on the needs of the different cantons and the different parts of Switzerland, particularly where they may conflict with the national, or what is perceived to be the national, need?
Micheline Calmy-Rey
I’m laughing, because it means we are all the time negotiating, not only with the EU, but also with the Swiss canton and with the different services of the Swiss administration. But perhaps Michael Ambühl will answer this question.
Professor Michael Ambühl
Thank you very much. I think the less federal you are, the easier it is to get a mandate for you, so you have there a one plus point. However, if I’m – not to be cynical, I could imagine, just as a reader of your very good press and having a lot of respect for, especially also, the professionalism in – of your diplomacy, I must say there are a little similarities, in the sense that I have the feeling that you and we normally know very well what we do not want. It’s more difficult then to say what we really want, and this is when we watch our internal debate, I think sometimes it is this, we have different parties, as you also, and we have different circles and so, one has a lot of – one hears a lot what we do not real – what really, we cannot have. And there, I think, is the political challenge, I believe, at least in our country.
Professor Richard Whitman
Thank you. Gentleman here.
Roger Murray
My name’s Roger Murray and I’m an independent member and used to be a resident of Switzerland. I think you had a referendum on the subject of free movement of people and you rejected it completely. On the other hand, we hear that it’s hopeless to negotiate with the EU on their fundamental principles, and you said, I think, that your Parliament had fixed it. I think it’d be interesting to hear just how you did negotiate two pretty solid positions from one side or the other, between what the referendum said and what the EU presumably believe.
Micheline Calmy-Rey
Hmmm, well, I’m guessing it’s for me.
Roger Murray
No.
Micheline Calmy-Rey
That’s true. We had another referendum. We had the popular initiative in 2004, who was accepted by the Swiss people, on – and that was in complete contradiction with the principle of free movements of persons and that was really a huge question for us: what shall we do? It was a popular initiative, it’s automatically in our constitution and so, we had a new article in our constitution saying we had to adopt contingent, you say so, quotas, contingent?
Roger Murray
Yeah.
Micheline Calmy-Rey
In our practice, which was completely incompatible with the free movement of persons, and what did we do? It lasted a little bit. It lasted two years, I think, be – until we found a solution. It was 2014 the initiative was accepted and at the end, we found a solution, it was 2016, I think, or 17.
Professor Michael Ambühl
16.
Micheline Calmy-Rey
16, 16, two years and in two years of intense thinking what do we want, which balance we’re doing between the economic interests, which was free movements of persons, and the political interest, that means be conformed with our constitution, a really complete conformity with our constitution. At the end, we did what Professor Ambühl said, we showed a certain flexibility in the application of the constitutional article, and we said the companies in Switzerland have to give priority to the working – to the mother – to the workers being already active in the domestic Swiss market. That means not the national, but also, the cross-border workers, who come 330 – 330,000 workers coming every day in Switzerland to work, they will have a priority because they are active on the Swiss domestic market, as a worker. So, that was the solution. It was a creative solution, huh, in case there’s a lot of – it was hard, but the Parliament found that solution, the Parliament. It was the Parliament that, at the end, found the solution and agreed on that and we had no referendum until the decision of the Parliament. Because, you know, in Switzerland, you can have – the referendum is against the decision of the Government and of the Parliament and in that case, we had no referendum. That means nobody wanted to [mother tongue] this difficult compromise on the free movements of persons, and the EU said nothing.
Professor Richard Whitman
Thank you.
Micheline Calmy-Rey
That’s why we can say it, don’t tackle the principles, but the implementation.
Roger Murray
Exactly.
Professor Richard Whitman
One – if it’s a very quick question, please, gentleman at the back.
Daniel Arthur
Daniel Arthur, International Policy Dynamics. Critics of departing the Customs Union for Brexit discussions say that it’s impossible to achieve a customs arrangement between Northern Ireland and the Republic, because there’s no precedent for this whatsoever. From your experience, do you believe it’s possible to come to a customs arrangement at the Northern Ireland border, or impossible?
Micheline Calmy-Rey
That’s for you.
Professor Michael Ambühl
Rudi.
Rudolf Dietrich
That’s not for me, that’s highly – a highly political question. At – my firm opinion is, if there are two partners who want, it is. The question is, if they really want and at what price? That’s we’re all discussing the whole hour now.
Daniel Arthur
Hmmm hmm.
Micheline Calmy-Rey
If the two parties wants, it is possible, because you have the technology, you have the capacity to do it, you have the capacity don’t – to not – not to stop at the border, you have the capacity to have no physical border and nevertheless, controls. It is possible, but as Monsieur Dietrich said, you have to want it, not only UK, but also, Ireland.
Professor Richard Whitman
Wonderful, thank you, and that’s a great note to finish on. I think there – I know there are lots of people who have wanted to come in and I think it demonstrates very well that we need to do more on Switzerland here at Chatham House. So, we’ve had an absolutely fantastic set of presentations and a great set of questions, so let me, on your behalf, thank Professor Calmy-Rey, first of all, Professor Ambühl, and also, Mr Dietrich. Thank you very much [applause].
