Changes

Switzerland nevertheless expressed interest in reaching a third layer of bilateral agreements that would involve energy, the Galileo satellite navigation system, health, and agriculture. But recent harsh criticism by the European Commission against preferential cantonal tax treatment for foreign holdings cooled the political climate surrounding the EU. Unilateral trade retaliation—as threatened by the EU if the Swiss cantons do not change their cantonal tax regimes—has not occurred, but the political damage is done, including greater anti-EU feelings among the population. The pressure to negotiate with the EU could turn sour as the EU has already asked Switzerland to pay another SF 300-350 million ($240–280 million, on top of the SF 1 billion cohesion fund) to provide further financial aid to Romania and Bulgaria, which joined the EU on January 1, 2007. Unlike the November 2006 referendum, the newly enacted Eastern Europe Cooperation Act does not provide for an automatic referendum on further payments. The parliament will decide on the additional aid request.

Switzerland nevertheless expressed interest in reaching a third layer of bilateral agreements that would involve energy, the Galileo satellite navigation system, health, and agriculture. But recent harsh criticism by the European Commission against preferential cantonal tax treatment for foreign holdings cooled the political climate surrounding the EU. Unilateral trade retaliation—as threatened by the EU if the Swiss cantons do not change their cantonal tax regimes—has not occurred, but the political damage is done, including greater anti-EU feelings among the population. The pressure to negotiate with the EU could turn sour as the EU has already asked Switzerland to pay another SF 300-350 million ($240–280 million, on top of the SF 1 billion cohesion fund) to provide further financial aid to Romania and Bulgaria, which joined the EU on January 1, 2007. Unlike the November 2006 referendum, the newly enacted Eastern Europe Cooperation Act does not provide for an automatic referendum on further payments. The parliament will decide on the additional aid request.

The government also decided in November 2006 to once more consider adoption of the EU “Cassis-de-Dijon” principle for trade after a first setback in 2004. If adopted, EU products could be imported in Switzerland without having to go through the burdensome Swiss certification and Swiss language requirement process. Currently, Swiss retail prices are on average 20-40% higher than in the EU. If parallel imports are allowed under adoption of the Cassis-de-Dijion principle, prices could drop by 10%. Possible exceptions have been reduced from 129 products to 40, but hurdles remain on the labeling of alcohol contained in Alcopops, the Swiss ban of phosphates in washing machine powders, the real origin of “EU meat”, and on the stringent Swiss generic food production requirements. The “Cassis de Dijon principle” will not apply to the many farming and industrial products already covered by mutual recognition agreements (MRAs) under the EU-Swiss Bilaterals I and II; nor will it apply to other products such as pesticides, motor engines, and weapons that require an authorization. The impact, as a result, may not be as large as expected. Another issue is that Swiss and EU MRAs concluded with third countries may also benefit from adoption of the Cassis-de-Dijon principle (these goods would also have to receive WTO most favored nation status).  

The government also decided in November 2006 to once more consider adoption of the EU “Cassis-de-Dijon” principle for trade after a first setback in 2004. If adopted, EU products could be imported in Switzerland without having to go through the burdensome Swiss certification and Swiss language requirement process. Currently, Swiss retail prices are on average 20-40% higher than in the EU. If parallel imports are allowed under adoption of the Cassis-de-Dijion principle, prices could drop by 10%. Possible exceptions have been reduced from 129 products to 40, but hurdles remain on the labeling of alcohol contained in Alcopops, the Swiss ban of phosphates in washing machine powders, the real origin of “EU meat”, and on the stringent Swiss generic food production requirements. The “Cassis de Dijon principle” will not apply to the many farming and industrial products already covered by mutual recognition agreements (MRAs) under the EU-Swiss Bilaterals I and II; nor will it apply to other products such as pesticides, motor engines, and weapons that require an authorization. The impact, as a result, may not be as large as expected. Another issue is that Swiss and EU MRAs concluded with third countries may also benefit from adoption of the Cassis-de-Dijon principle (these goods would also have to receive WTO [[most favored nation]] status).  

The government has reaffirmed its wish to strengthen ties with other non-EU trading partners in Asia and America. Exploratory talks on a Free Trade Agreement between the U.S. and Switzerland failed to result in negotiations, due to Swiss problems with free trade in agriculture, but the two sides did agree to a new framework for economic, trade, and investment discussions. This new agreement is the Swiss-U.S. Trade and Investment Cooperation Forum (the “Forum”) and is currently assessing areas where the two governments could facilitate greater trade and investment flows.  

The government has reaffirmed its wish to strengthen ties with other non-EU trading partners in Asia and America. Exploratory talks on a Free Trade Agreement between the U.S. and Switzerland failed to result in negotiations, due to Swiss problems with free trade in agriculture, but the two sides did agree to a new framework for economic, trade, and investment discussions. This new agreement is the Swiss-U.S. Trade and Investment Cooperation Forum (the “Forum”) and is currently assessing areas where the two governments could facilitate greater trade and investment flows.