Cold cooperation: Switzerland's relationship with the EU explained

While Switzerland is surrounded by European Union member states - well, except for Liechtenstein - the country has never joined the organisation. Switzerland did however come close to joining the trade bloc back in 1992, but eventually made the decision not to. Now, with Switzerland’s relationship with the EU at somewhat of a low point, we look back at the country’s long history with the regional trade group. 

Is Switzerland in the EU?

Switzerland, despite being a European nation, has never joined the European Union, despite being socially, politically and economically similar to its neighbouring member states. Instead, the country has worked closely with the EU and cooperated in a number of areas, especially research and development, and justice. 

Officially, the EU and Switzerland share common objectives when it comes to tackling climate change, upholding human rights and combating poverty. Switzerland is also a signatory of several of the EU’s key treaties, despite not being a member state.

These include laws allowing for the free movement of persons (the Schengen Agreement among others), statutes dealing with asylum claims (such as the Dublin Agreement) and aspects of EU law that relate to the internal market, allowing Switzerland to take part in tariff-free trade with all 27 EU nations. 

This gives Switzerland access to the EU’s internal market, which is key for the country as the EU is Switzerland’s largest trading partner. The close relationship is not one-sided though. Switzerland is also key for the EU, as the bloc's fourth largest trading partner after China, the US and UK. 

Did Switzerland ever try to join the European Union?

Switzerland wasn’t always so set on not joining the union though: in 1991, the Swiss government decided to start accession proceedings to join the European Economic Area (EEA) - a watered-down version of the EU with only economic ties -  with the prospect of joining the EU at a later stage. 

Naturally, a decision of this magnitude in Switzerland led to an inevitable referendum. The Swiss government was also caught off guard, as many potential EEA members chose to join the EU instead, leading to concerns that Switzerland would be isolated within the EEA. These concerns were clearly felt by the general public, as citizens narrowly voted against joining the EEA in December 1992 - 50,3 percent against EEA membership to 49,7 percent for. The government then halted negotiations with the EU.

Why won’t Switzerland join the EU?

The reasons why Switzerland won't join the EU are dynamic and change as issues with the trade bloc arise. Initially, in the EEA negotiations, those wanting the country to remain outside the union feared a lack of sovereignty over their own laws as well as concerns over Switzerland's policy of neutrality. 

On the other side of the fence, many in Brussels saw Switzerland as a nation of “cherry-pickers”, sticking around for the good aspects of the European Union, while not contributing enough to more difficult policies such as immigration reform and agriculture regulations.

Arguably, Switzerland also doesn't need the EU in the way that other nations do. For example, while other countries have felt compelled to join the union as a matter of regional security (widely accepted as the case for Latvia, Lithuania, Estonia and other Eastern European countries), Switzerland doesn't have to as it is surrounded by largely friendly nations.

Switzerland is also not particularly interested in joining the EU for funding reasons either, especially since the alpine nation would likely be a contributing member, rather than a key recipient of the EU’s funding, making the prospect of membership less attractive. 

Switzerland and the EU’s relationship freezes over

The warm relations shared by the two trade partners have recently taken a trip downhill. In 2014, the EU proposed an Institutional Framework Agreement (IFA) that would set out principles or “ground rules” for deeper cooperation between Switzerland and the EU in a number of areas. 

Some of the proposals included in the framework agreement involved settling disputes between Switzerland and the EU in EU courts, creating common standards for products and services developed in Switzerland intended for sale in the EU and rules on how much state aid Switzerland is required to give.

The Swiss government rejected the proposed agreement in May 2021. In response, the EU issued a statement suggesting that existing treaties with Switzerland were “unbalanced” and underlined that negotiations were “unilaterally terminated” by Switzerland.

The EU claims that Swiss negotiators were unhappy with several aspects of the agreement, particularly the fact that Switzerland would have been legally bound to follow a specific EU directive on the free movement of people, as well as rules on state aid. Currently, Switzerland is not obliged to spend a set amount of funds on state aid, so the new agreement would have created significant new obligations for the Swiss government. 

What does the future hold for Switzerland and the EU?

The lack of a framework agreement does not mean that Switzerland and the EU will no longer cooperate, though. It simply means that new agreements between the pair will take longer to achieve and the EU could choose to stall new negotiations until a framework is established. 

While the EU and Switzerland seem to be at somewhat of a diplomatic stalemate at the moment, cooperation on issues such as human rights, climate change, and regional security continues as normal.  For now, Switzerland is focusing on other diplomatic pursuits, namely its new seat at the UN Security Council - exciting!