21 September 2016

As Theresa May prepared to give her maiden speech to the UN yesterday covering, amongst other topics, mass migration, developments between Switzerland and the European Commission this week provided a taste of what Brexit negotiations on free movement and the single market might hold.

Picture the scene: Following a referendum, a non-EU country seeks to impose controls on EU migration, leading its government to seek a deal with the EU that would simultaneously protect access to an important export market. While this may sound familiar to some in the UK, it is in fact the ongoing situation in Switzerland.

As brief background, an extremely tight referendum result in February 2014 saw 50.33% of Swiss voters instruct their government to enact legislation to limit EU migration by February 2017. Switzerland is not a member of the EU or EEA, but instead conducts its business with the EU through a series of bilateral treaties. These agreements include Swiss participation in the EU’s rules on the free movement of people, which is part of a package that operates under a so-called ‘guillotine clause’. This is essentially an all-or-nothing arrangement which means that any attempt to restrict free movement would threaten market access in certain fields. Since the vote, Swiss officials have attempted to find a compromise that satisfies concerns about immigration while preserving EU-Swiss trade. Swiss officials are also conscious that, under their system of direct democracy, if they do not deliver they could face another referendum on the issue.

This is a challenging bind, and the June vote for Brexit has itself further complicated matters. The EU is all too aware that any sign of further flexibility on free movement in the Swiss deal would set an ‘interesting’ precedent for Britain’s negotiation. Michel Barnier, the European Commission’s Brexit negotiator, will be hounding colleagues working on the Swiss deal, if only to prevent an email arriving from David Davis containing the question: “If the Swiss can control migration and maintain their access the single market, why can’t the UK?”

This perhaps explains why the picture emerging from Swiss and EU officials is somewhat unclear so far. The Times reports today that Commission President Jean-Claude Juncker will approve a plan that gives Swiss citizens, including EU citizens with residency permits, first preference on job offers, while the Swiss Parliament is also due to discuss proposals that will encourage job posters to advertise domestically first. Digital job boards and cross-border internet access makes the latter idea seem somewhat antiquated, and what the former ‘local preference’ for workers would entail is unclear.

Despite President Juncker’s statements, it is difficult to see how schemes that genuinely prioritise Swiss citizens in a way that limits EU nationals’ entry into the labour market would be compatible with the EU’s closely guarded principles of non-discrimination. This is the issue on which David Cameron’s attempt to set limits on EU nationals’ access to the UK welfare system hinged, and the result was a technical fudge which only provided for phased access over a time-limited period. According to The Times, the proposal includes an ‘emergency brake’ whereby restrictions would be applied by the Swiss government to particular economic sectors if net immigration from the EU went above average levels in other European countries.

The devil here will be in the detail – what will the exact threshold be and would such a threshold work in practice for the UK? It’s worth noting that, on a per capita basis, Switzerland has been experiencing far higher levels of immigration from the EU than the UK has.

But there is perhaps a more fundamental sting in the tail of the proposed Swiss-EU deal. The European Commission is reportedly insisting that any Swiss deal is covered by a wider “institutional agreement” allowing the EU courts to enforce single market-related disputes between the two parties – this has historically been a ‘red line’ for Swiss governments keen to preserve sovereignty and autonomy from EU supranationalism. “There is only a deal if there is agreement on ‘mutual recognition’, meaning that measures are not taken unilaterally but jointly,” an EU source said.

So, even if the proposed limits to free movement amount to anything substantive (and we don’t yet know), any EU ‘give’ on free movement could come with an awful lot of ‘take’ when it comes to Swiss sovereignty. Whether this will be acceptable to the Swiss is far from clear. The same goes for Britain.

Update (22/09/16):

Further details are emerging as the Lower House of the Swiss Parliament held a series of votes backing a compromise along the lines described above. The changes are expected to make jobs more readily accessible to Swiss workers, but they can’t actively exclude EU workers. The Swiss Upper House is expected to discuss proposals in December, giving time for further talks with the EU.

But there are a couple of broader points to make. Depending on exact implementation, the final deal could actually be more stringent than what was offered to the UK during the renegotiation – both a bit galling for the previous government but also encouraging suggesting, maybe, that some lessons have been learnt. But more importantly, as suggested above, it could mean a step away from the view that the ‘four freedoms’ are absolute. Of course, the EU is pushing for the increased ECJ oversight (explained above), which the Swiss have so far rejected – highlighting that any deal could yet come at a price for the Swiss.