Union closes in on the Alps

Date: 13/02/1997

By Alexis P Lautenberg

As the EU and Switzerland move closer to agreement in several key sectors, the Swiss ambassador to the Union reflects on the purpose of the enterprise and singles out the last hurdles to be overcome in the land transport area.

THE negotiations under way between the EU and Switzerland will eventually lead to an ad hoc formula which contrasts somewhat with the standard type of relationship Brussels maintains with close partners.

After the showdown of 6 December 1992 when the Swiss voters turned down the opportunity of entering the European Economic Area together with the other EFTA members, the Union accepted the formula of a set of sectoral agreements.

In doing so, Switzerland's European partners seem to have admitted that its people just require more time. No doubt the fact that Switzerland remains the EU's second largest export market in absolute figures was a powerful argument in this respect. There was obviously the need for a type of relationship which would prevent any further marginalisation of the country.

The approach implied that the bilateral agenda would encompass a number of important areas in which regulatory convergence would be in the interests of both sides.

By suggesting negotiations on a set of bilateral and sectoral agreements, the Swiss government, at the beginning of 1993, went the only way that was - and still is - acceptable in principle to a majority of the Swiss population.

The degree to which this pragmatic approach has been accepted has, however, varied over time depending on the public's perception of the costs and benefits of the negotiations, the underlying institutional aspects and, of course, the preferred (or assumed) role of the bilateral phase in any hypothetical next step.

By the same token, the Swiss authorities decided to adopt, on an autonomous basis, the bulk of the legislative programme that had been drawn up in the context of the EEA.

Both the bilateral negotiations and the legislative schemes were aimed at securing a clear Euro-convergent orientation for the coming years. The latter was further underpinned when the Swiss government confirmed in November 1993 that EU membership remained the country's strategic objective.

The federal council identified a dozen subjects for negotiation which can be grouped into three broad areas:

trade policy related issues (ie public procurement, technical barriers to trade, processed agricultural goods); cooperative undertakings (such as research, educational programmes, statistics, etc); and market access in transport (land and air). On this last issue, incidentally, the EU had agreed in the transit agreement to further talks if the EEA failed.

The choice of subjects and the envisaged degree of liberalisation, as well as the format of the negotiations, clearly indicated that the Swiss authorities were not aiming at a reduced EEA-agreement but at a more modest scheme, more easily digestible from a domestic point of view.

Roughly six months after the Swiss requests were tabled, in November 1993, the Union's Council of Ministers chose five of the most important topics identified by Switzerland and added a further two: agricultural products (excluding processed ones) and the free movement of people.

Furthermore, the Council defined an important rule of the game by stating that the negotiations would have to comply with the notion of 'appropriate parallelism'.

Although this was never precisely defined, it was obviously intended to ensure that the areas of interest to the EU would not be lost in Switzerland's internal decision-making process.

It also became clear in the course of events that the Union intended to broaden the scope of the land transport chapter considerably.

Since the effective launch of the negotiations in December 1994, a lot of ground has been covered, both in terms of the material progress achieved and a change in the atmosphere.

There is virtual agreement in the areas of public procurement, agriculture, research and technical obstacles to trade. On the sensitive issue of freedom of movement of persons, the elements of a solution have been defined. What made things difficult was reconciling the EU's aim of getting Switzerland to accept the introduction of freedom of movement and the Swiss need to reserve its right to decide whether to proceed before the ultimate step was taken.

The formula considered matches both constraints in that it foresees two transitional steps and the possibility (for either side) to confirm the extension of the established scheme at the end of the formal validity of the treaty. A general safeguard clause would have to be considered at the end of the transition period.

In the area of air transport, Switzerland agreed to negotiate with a view to achieving a close integration following the EU model. This implied, in particular, the acceptance by Switzerland of the bulk of the Union's institutional acquis, including surveillance.

Against this background, it is somewhat surprising that the granting to Switzerland of equivalent air freedoms raises concern. It is fair to state that a balanced result in this area has been - and continues to be - one of the key parameters underlying the whole bilateral equation.

The situation in the area of land transport differs fundamentally from that in all the other sectors. In contrast to those others, the issue at stake is not the negotiation of a liberalisation modelled on the EU acquis, although the Swiss point of departure was to improve market access for its road and rail service providers.

By questioning the backbone of the present Swiss transport policy, namely the weight limits, the Union lifted the issue on to a new conceptual and thus policy level.

In spite of the fact that the Transport Agreement of 1992 actually enshrines that policy, the Swiss side came forward with a far-reaching concept which amounted to the sketching out of a completely new transport policy.

Drawing on the European Commission's 'Green Book', the new approach would allow a replacement of the present 28-tonne limit for lorries with market-based fiscal instruments, in two steps up to the year 2005.

The underlying challenge is threefold.

It calls, first, for a cost model based on an overall integration of both internal and external costs to be applied in an entirely non-discriminatory manner to domestic and foreign hauliers.

Secondly, the solution must effectively contribute to a maximum use of the rail capacities that Switzerland is committed to offering, and thereby allow for a progressive recapturing of traffic currently being diverted to other Alpine routes.

Thirdly, Switzerland intends to liberalise its rail services fully, thus helping to improve its rail offer dramatically.

The land transport negotiations are, beyond their technical intricacies, a particularly interesting case. For what Switzerland is defending is not an egoistic national interest, but a future-oriented global vision aimed at preserving the environment and securing a more efficient transport function in an integrated economy.

The difficulty clearly lies in the definition of the indispensable fiscal parameters and of their limits in the face of the considerable uncertainties which are inherent when addressing the period beyond 2005.

Therefore, the idea of fixing a fiscal ceiling at a given figure could create more problems than it solves. Any solution will have to be built on a set of common principles.

The current development of the European Union accentuates its continental vocation as well as its role as a centre of gravity.

For a country like Switzerland, this inevitably means that it will find itself not only increasingly in the gravitational zone of the Union, but that it will also tend to move closer to its centre.

This momentum, which was almost imperceptible at its start, is gaining in strength. By reducing important regulatory and other policy hurdles, and by relaxing some tensions among cemented constituencies on the home front, the present negotiations are playing an indispensable role in preparing the ground for any future integrational step.

As so often is the case in Swiss life, this will take time.

Alexis P Lautenberg has been Switzerland's ambassador to the European Union since October 1993. This is an abridged version of a paper to be published in the February 1997 issue of the 'CEPS Review', Brussels.