Dossiers - Relations with the EU
What happens after the failed negotiations on the (InstA)?
scienceindustries is pleased that Parliament has now released the overdue enlargement contribution in the autumn session. This is specifically in the interests of Switzerland as a centre of research and innovation and a first step towards full association with Horizon Europe. Following Switzerland’s termination of negotiations for an institutional framework agreement with the EU, this is an important signal from Switzerland that it wants to maintain its bilateral relationship with the EU. The Federal Council must now develop a coherent strategy for the expansion of bilateral relations and market access and also drive forward internal economic reforms.
With a share of exports of around 50%, the chemical and pharmaceutical industry is Switzerland’s largest export industry and thus an essential cornerstone of our economy and prosperity. With a share of around 50% of total exports and around 70% of imports, the EU is by far the most important trading partner of Chemistry Pharma Life Sciences (2021). The bilateral agreements are a prerequisite for regulated access to the EU internal market and therefore an important locational factor for international companies in Switzerland. It is often wrongly claimed that Switzerland can be satisfied with the existing EU free trade agreement and that therefore no institutional agreement (InstA) is required. But this is not the case. While free trade agreements ensure that direct trade barriers – such as tariffs – are eliminated, such an agreement does not yet ensure that products, services or even people have access to the other market without further hurdles. This requires standardisation of regulations, which is possible through an internal market agreement such as the InstA.
scienceindustries believes that the negotiated institutional framework agreement could have secured access to the EU common market and thus safeguarded Switzerland’s attractiveness as a business location. However, the termination of the negotiations calls into question the non-discriminatory access to the European single market. This may pose a challenge in the medium term, particularly for SMEs that do not have a branch in the EU. At the same time it should be pointed out that other advantages of Switzerland as a location are also under threat, for example in the area of corporate taxes. If the OECD were to introduce minimum taxation and Switzerland had to fully support it, another advantage would be lost in addition to the loss of privileged access to the EU market.
scienceindustries considers immediate measures on the part of the Federal Council to be urgently needed in order to maintain the bilateral approach that is important for industry, to further promote the expansion of market access and to prevent the erosion of existing market access agreements and other locational advantages. In addition to foreign trade measures to mitigate the difficulties of accessing the EU market, domestic reforms are particularly needed. This should ensure that the decline in competitiveness can be absorbed by domestic policies.
Good relations with the EU should be continued and negotiations should be started or continued in individual areas. In addition to the free trade agreement of 1972, the treaties on technical barriers to trade, the free movement of persons and research in day-to-day business play a key role.