WHY SWITZERLAND DOES NOT JOIN THE EUROPEAN UNION?

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WHY SWITZERLAND DOES NOT JOIN THE EUROPEAN UNION?

Summary: Like Norway, Switzerland is not a member of the European Union. They (Switzerland and Norway) are parts of the Europe geographically and ideologically, but they are not members of the European Union. For Switzerland, this is because of its higher level of economic prosperity compare to many members of the European Union, and the perceptions of direct democracy, neutrality to every state and everyone, and incuriosity towards current socio-political global issues. This paper aims to explain why Switzerland is not interested in becoming a member of the European Union by clarifying the reasons mentioned above.

Keywords: Agreement on the Free Movement of Persons, Bilateral I and II, European Free Trade Association (EFTA), Free Trade Agreement, State Secretariat for Economics.

EU and Switzerland

The most important element in the EU-Swiss relations is the Free Trade Agreement signed in 1972. After that, despite the consequence of the rejection of the European Economic Area membership in 1992, the EU and Switzerland agreed on a package of seven sectorial agreements signed in 1999. This package of agreements is known as Bilaterals I, which include: free movement of persons, technical trade barriers, public procurement, agriculture and air and land transport.(1) A further set of sectorial agreements was signed in 2004. It is known as the Bilaterals II, which include Switzerland’s participation in Schengen area and agreements on taxation of savings, processed agricultural products, statistics, combating fraud, participation in the EU Media Programme, the Environment Agency, and Swiss financial contributions to economic and social cohesion in the new EU member states.(2) Today in overall, around 100 bilateral agreements currently exist between the EU and Switzerland and these bilateral agreements are currently managed through a structure of more than 15 joint committees.(3)

Reasons of why Switzerland is not a member of the EU

Economic reasons

The EU is Switzerland’s largest trading partner while Switzerland is the EU’s fourth largest trade partner.(4) Last year (2013), the EU’s import of goods from Switzerland was €94.3 billion while the EU’s export of goods to Switzerland was €169.6 billion; also in that year the EU’s import of services from Switzerland was €61.9 billion while the EU’s export of services to Switzerland was €82.5 billion.(5) This couple of information means that they are very important economic partners to each other. However, one of the reasons why Switzerland is not a member of the EU is that the Swiss have still economic dilemmas towards the membership because the Swiss economy is one of the prosperous economies in the world unlike many other member states of the EU. The remarkably stable currency (Franc), strong monetary discipline, the strong banking system, low rate of unemployment and position of no internal and external debt are typical examples of how the Swiss economy is strong.

As a first point, “Euro” as the common currency of the EU, was a strong example of very good achievement in the European integration process until the last economic crisis which has shown that it is not completely perfect at all. Unlike this, the Swiss currency “Franc” has not seen a strong crisis for many years. Although Euro is de-facto accepted in some parts of Switzerland(6), having this common currency forever and everywhere within the country, would mean a more difficult situation for Switzerland.

As a second point, Switzerland has a well-established taxation system. Obviously, it applies a very good example of taxation system in practice. Although it has changed some parts of its taxation policy regarding the EU rules, if it becomes a full member, it will have to change this policy more and more. This possibility causes an anxiety among the Swiss economists.

As a third point, as known, the main contributors of the Swiss economy are banking system, chemical-medical industry, tourism and the manufacture of precision instruments.(7) Especially, the secrecy of Swiss banking system is very crucial for its reputation among other states in the world. This makes Switzerland to be proud of its independent financial policy from the EU. So, if Switzerland becomes a member of the EU, it can lose this secrecy and reputation. And as a leading financial centre, the highly developed financial sector provides a wide range of financing instruments for foreign and domestic investors.(8) In that situation, Switzerland is not interested in losing this position and becoming an EU member.

As a fourth point, the unemployment rate of Switzerland is very low compared to many EU member states. The estimated rate is around 3 %, so the Swiss economists guess that if Switzerland becomes a member of the EU, this low rate might rise.

As a fifth and final point, there are very few states in the world that have no internal and external debt. Switzerland is one of them. The number of this type of states is very limited within the EU. This is another dilemma of the Swiss economists towards the membership.

To conclude this part, Switzerland’s fiscal and monetary policies are very well-established, so it has not too much things to gain from the EU membership economically.

Political and Socio-Cultural reasons

Geographically, Switzerland’s territory is located in the European continent. The society loves peace and is against all types of violence. The norms and values of “democracy, respect for minorities, rule of law, liberal democracy, human rights and liberal market economy” completely define Switzerland. These values are also the main norms and values of the EU as defined in Copenhagen Criteria. Furthermore, under the Swiss system of direct and true democracy, an actual application to join the EU requires a national referendum. Thus, it needs a majority of voters and cantons voting in favour of joining the EU.

As known, Switzerland has strong neutrality to all other states in the world. Due to the absolute neutrality, most of the international institutions including International Olympic Committee, FIFA, the International Rowing Federation, the International Committee of the Red Cross, the Nuclear Research Centre – CERN and many others have chosen the neutral and secure ground of Switzerland for their headquarters, as well as some 1.6 million foreigners living happily and peacefully here.(9) Also, the Swiss politicians are not interested in current political events happening in the world. They just watch the situations and respect the domestic policies of other states. Because of this “incuriosity” and strong neutrality, it became a member of the United Nations a very short time ago in 2002. Unlike Switzerland, the EU is an uprising global actor and tries to have a louder voice on current global issues. The EU’s member states have a common foreign policy, so they try to act with a single voice. From this point of view, it does not seem very rational for Switzerland to become interested in applying the common policies of the EU, especially the foreign policy.

Moreover, related to applying common policies, in 2004 Switzerland signed The Agreement on the Free Movement of Persons with the EU about immigration. At the beginning, it was estimated that it would not be too problematic for Switzerland. It is a fact that a net of 66.200 EU citizens emigrated to Switzerland last year, the highest number since a free movement of people pact came into force in 2002 according to SECO annual report.(10) Because of this, in the referendum on immigration on 9 February 2014, the Swiss voted to introduce a quota system to cap immigration from the EU countries. Thus, Switzerland tries to go back to isolation again.

To conclude this part, there is no moral obligation upon Switzerland to join the EU politically and socio-culturall,y because the country is a part of the European family for centuries, or in another sentence, it has the all values that EU member states share each other. In addition, as mentioned before, it applies direct democracy, so the decisions are taken by the citizens, not by politicians!..

Conclusion

To conclude the paper, we deduce that in theory and practice, Switzerland is a part of Europe, but not a member to EU. It is because of its high level of economic prosperity and the perceptions of direct democracy, neutrality to every state and everyone, as well as incuriosity towards current socio-political global issues. Thus, Switzerland wants to be a friend of the EU as usual, but it does not want to go on further in this friendship.

 Hacı Mehmet BOYRAZ

REFERENCES

  1. http://ec.europa.eu/trade/policy/countries-and-regions/countries/switzerland/, (14.12.2014).
  2. http://ec.europa.eu/trade/policy/countries-and-regions/countries/switzerland/, (14.12.2014).
  3. http://ec.europa.eu/trade/policy/countries-and-regions/countries/switzerland/, (14.12.2014).
  4. http://ec.europa.eu/trade/policy/countries-and-regions/countries/switzerland/, (14.12.2014).
  5. http://ec.europa.eu/trade/policy/countries-and-regions/countries/switzerland/, (14.12.2014).
  6. http://en.wikipedia.org/wiki/Switzerland%E2%80%93European_Union_relations, (14.12.2014).
  7. http://en.wikipedia.org/wiki/Economy_of_Switzerland, (14.12.2014).
  8. http://www.heritage.org/index/country/switzerland, (14.12.2014).
  9. http://www.swatchgroup.com/en/services/archive/n_g_hayek_s_speeches/nicolas_g_hayek_about_switzerland_and_the_european_union, (14.12.2014).
  10. http://www.reuters.com/article/2014/07/09/us-swiss-immigration-idUSKBN0FE0TF20140709, (14.12.2014).

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