Is the Swiss way the right way? Shutterstock/mato. All rights reserved.

In recent years, there has been increased debate about the issue of the United Kingdom leaving the European Union. Some Eurosceptics grab at two halfway options: the European Economic Area (EEA) and the Swiss-EU bilateral model.

For instance, the mayor of London, Boris Johnson, called for the creation of a new place called "Britzerland" in the Swiss weekly Die Weltwoche. He expressed his hope for the UK and Switzerland to become founding members of a new outer tier of the European Union, which will enjoy free trade with the EU, while opting out of all other policies drawn up in Brussels.

British newspapers reacted with traditional cliches about Switzerland, mentioning once again the famous quip by Orson Welles playing Harry Lime in The Third Man: "In Italy for 30 years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland, they had brotherly love, they had 500 years of democracy and peace – and what did that produce? The cuckoo clock." The Economist published a more substantial analysis but without being seemingly aware of the current institutional disputes between the EU and Switzerland.

In this article, we will focus on the Swiss option and not analyse in detail the European Economic Area (EEA) although keeping it as a benchmark.

The European Economic Area (EEA) comprises Norway, Iceland, Liechtenstein and the European Union (EU). It allows these three countries to participate in the EU's Internal Market without being members of the EU. They are obliged to adopt the evolution of all EU legislation related to the single market (except on agriculture and fisheries), while being unable to take part in the making of decisions. In 2012, a Norwegian panel of experts argued that their government could not be held accountable for most of its European policy. Thus, according to these experts the main shortcomings of EEA membership are related to a problem of ‘democratic deficit’. (The European Free Trade Association (EFTA) comprises the three non-EU members of the EEA, plus Switzerland.)

The Swiss option

These problems linked to the EEA explain the interest in the Swiss option. By means of a popular referendum, Swiss voters widely rejected EEA membership in 1992, a clear message that made the Swiss government indefinitely freeze EU accession talks - and pursue negotiations with the EU on a bilateral basis.

Prima facie, the Swiss example attracts many British Eurosceptics because it provides an example of a relatively flexible arrangement through sectorial bilateral agreements which may better preserve sovereignty. 

In comparison with the EEA, the Bilateral Agreements enable a third-party country (in this case Switzerland) to negotiate with the EU on an individual basis. This freedom of action is in part limited by the multilateral structure of the EEA, which obliges the EFTA-pillar countries (Norway, Iceland and Liechtenstein) to speak with one voice. In contrast, Switzerland is not obliged to harmonize its position with its EFTA partners before dealing with the European Union.

The structure of the Bilateral Agreements is relatively light as it did not create any new institutions but only small joint and mixed committees to manage the many agreements that have already been signed and implemented. This distinguishes it from the EEA, which is based on a somehow heavy two-pillar system relying on several institutions, of which some are supranational or partly supranational. 

The vast majority of the Bilateral agreements are not governed by a Community or para-Community justice mechanisms akin to the Court of Justice of the EU or the EFTA Court. Similarly, there are no strict monitoring procedures from supranational institutions such as the EFTA Surveillance Authority. Instead, these agreements are based on a "balanced" political mechanism which preserves, at least formally, Switzerland's sovereignty: the Joint Committees that are composed of experts from both parties.

This framework is reinforced by the fact that these agreements do not include mandatory adoption of new relevant Community legislation. Instead, they allow for renegotiation on a case-by-case basis depending on the political will of the parties. This stands in sharp contrast with the EEA regime in which EFTA-pillar countries are de facto obliged to rapidly integrate developments of the relevant acquis without the possibility of engaging in real negotiations, considerable amendments or feasible opt-outs. There are, however, exceptions concerning air transport competition and Schengen legislation.

As a result, the homogeneity that is established as a basic principle within the EEA, along with the Community pillar and the EFTA-states pillar, is not comparable to the mostly flexible agreements negotiated between Switzerland and the EU. 

Finally, unlike the EEA, the Bilateral Agreements flexible framework allows both parties to freely choose their areas of co-operation. Nonetheless, it is important to note that demands of Switzerland regarding the opening of negotiations in new areas were not always met by the European Commission.

The bilateral approach - largely deadlocked since 2008

Although those bilateral agreements enabled Switzerland to benefit from interesting aspects of EU integration without suffering most of its drawbacks, one should not underestimate the many difficulties that this bilateral approach has also encountered.

Since 2008 there have been no new significant agreements concluded. This stalemate can be attributed to the EU’s demand that it reconsiders the approach taken by Switzerland to participate in EU policies and programmes through sectorial agreements in the absence of any horizontal institutional framework.

The EU wants to ensure the homogeneous interpretation and application of the Internal Market rules. In particular, the EU deems it necessary to establish a suitable framework applicable to all existing and future agreements. This framework should, inter alia, provide for a legally binding mechanism as regards the adaptation of the agreements to the evolving EU acquis.

The EU has called on Switzerland to adopt an institutional framework that would enable a dynamic adaptation of the accords to the constantly evolving European legislation – as well as a uniform interpretation of these accords.

Brussels is also keen on an independent mechanism for monitoring and carrying out legal decisions in addition to a mechanism for settling disputes.

Furthermore, it should include international mechanisms for surveillance and judicial control. All in all, this institutional framework should present a level of legal certainty and independence equivalent to the mechanisms created under the EEA Agreement.

Last summer, former Swiss President Eveline Widmer-Schlumpf sent a letter to Brussels with the following principles that would serve as the basis for future negotiations with the EU on the institutional issues:

First, Switzerland made an important concession to recognize that the principle of homogeneity, a principle that requires dynamic adaptation to the evolving EU acquis, should be at the core of the EU-Switzerland relationship. 

• Dynamic adoption of laws: the adoption of new laws should be dynamic but not automatic. When adjusting to a new law, the provisions of the Swiss constitution, including the possibility to carry our referendums, must be ensured at all times. With new developments in legislation concerning the agreements, Switzerland shall participate in the form of «decision-shaping».

• National surveillance authority: in reference to the competences of the European Commission, Switzerland proposes an independent national surveillance authority to oversee the implementation of the bilateral agreements in Switzerland.

• Complaints about contractual violations: in the event of a violation of the terms of agreement, the Swiss supervisory authority could open a court procedure. An institutionalised dialogue between Swiss and EU highest courts would be established to ensure homogeneity in jurisprudence.

• Compensatory measures: differences of opinion between the parties should be dealt with primarily in the mixed committees. If a mixed committee cannot reach an agreement within a set period of time, the disadvantaged party may resort to appropriate and proportional compensatory measures.

• An arbitration court can review the scope, duration and proportionality of a particular compensatory measure.

In conclusion, the Swiss model might have set an example for Britain if it was not challenged by the European Union. But this model no longer exists because the EU wants its relationship with Switzerland to move closer to the EEA benchmark. 

The bilateral approach will, however, continue, even if it will not preserve as much as in the past of Swiss sovereignty. But the Swiss option will remain more attractive to the British sovereignists than EEA membership - because it will stay bilateral (and not multilateral) and sectorial – after all, what they want is an EU à la carte.