# 04 / 2018
22.03.2018

Brexit: a “moving target” for the Swiss business sector too

The Brexit clock is ticking ever louder, and ever faster. The United Kingdom will be officially leaving the European Union in about a year’s time. On 23 March 2018, the EU Council debated major issues relating to the exit negotiations and the future relationship. A two-year transition period had already been agreed in the run-up to the EU summit, but it is still not clear how future relations between the EU and the UK will look. The negotiations are at a critical juncture. Time is running out, and the political stakes and economic relevance are high. The outcome of the negotiations will also have an impact on the Swiss economy. The UK is among Switzerland’s top five trade partners. Clearly defined and smoothly functioning relations with the UK are therefore essential.

 

Executive summary

Brexit continues to dominate the media and the political agenda in both London and Brussels. With just one year to go before the UK leaves the EU (on 29 March 2019), negotiations have reached a critical point. Time is running out, the political stakes are high and a mutually acceptable solution for future relations still appears to be a long way off. The EU Council adopted important decisions on 23 March 2018. However, unless these are also ratified there will still be no binding solution. The risk that companies in the UK and elsewhere in Europe could suffer economic harm is therefore growing – even though the majority of them in both the EU and the UK were against Brexit.

This is also affecting the Swiss business sector, which has always maintained close trade relations with both the EU and the UK and is highly invested in both markets. The future relations between the EU and the UK, as well as the bilateral relations between Switzerland and the UK, need to be clearly defined as soon as possible. Many companies are already confronted with legal uncertainties due to Brexit, and this means they are having to take strategic decisions in an increasingly uncertain environment.

It is not only short-term profits, the integrity of the European single market, the struggle for votes or the desire for autonomy that are at stake here – Europe’s competitiveness in general is also at risk. Thanks to the increased integration of its markets in the past few years, Europe’s competitive capacity at the international level has decisively fostered prosperity, stability and security throughout the continent – and Switzerland, too, has benefited from and significantly contributed to this.

economiesuisse has established a central point of contact for questions specifically relating to Brexit: brexit@economiesuisse.ch

Positions of economiesuisse

Immediate action: negotiation and synchronisation of an interim solution

  • Bilateral relations between Switzerland and the UK have to meet two conditions: (1) They must not give rise to a deterioration of reciprocal market access, and (2) they must not be less favourable than the arrangements agreed between the EU and the UK. In the future, Swiss companies must also be able to benefit from the same conditions as their competitors in Europe.
     
  • Even though the regulations governing the transitional period will primarily apply between the UK and the EU, any binding ratified agreement for a transitional period must also encompass relations with non-member states. This would give Switzerland more time for regulating its bilateral relations with the UK. The agreements between Switzerland and the UK that are necessary for this should therefore be concluded as quickly as possible.
     
  • With regard to triangularity issues (three-way relations), “synchronising” the transitional period agreed between the EU and the UK with a bilateral solution between Switzerland and the UK is essential for the economy. In other words, Switzerland also needs an interim solution as of 29 March 2019. This is the only way a smooth transition and the seamless preservation of the status quo in relations between Switzerland and the UK can be secured immediately after Brexit.

After the expiry of the transitional period on 31 December 2020: creation of stability and utilisation of opportunities

  • The business sector needs clarity regarding the future economic relations and the status of companies in the UK after the expiry of the transitional period. Long-term stability creates legal and planning certainty for trade and investments.
     
  • Challenges associated with Triangularity (between the EU, the UK and Switzerland) have to be addressed as quickly as possible. However, binding rules for areas in which solutions can be found more speedily and at the bilateral level should not be unnecessarily delayed.
     
  • Opportunities for intensifying bilateral relations between Switzerland and the UK should be utilised wherever this is feasible and beneficial. This applies in particular to issues relating to reciprocal recognition in the financial services sector, as well as rules of origin and increased cooperation within the framework of international platforms and organisations. Evolutionary clauses should be used for securing the further development of negotiated agreements.
     
  • Regardless of the level of bilateral relations with the UK, the EU will remain Switzerland’s most important trade partner in the future. It is therefore in the interests of the business sector to maintain and continually develop profitable relations with both partners.