EU-Switzerland relations

Limits on immigration are widely opposed by Swiss businesses, as they rely heavily on foreign labour in all areas of the economy.

Switzerland is the third largest economic partner of the EU, after the USA and China. Switzerland is able to participate in the EU's single market thanks to a series of bilateral agreements. This approach suits the Swiss confederation, but its complexity has become problematic for the EU and attempts are now under way to simplify the relationship.

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Switzerland is surrounded by the EU – it borders Germany to the north, France to the west, Italy to the south and Austria to the east. A federal republic, it comprises German, French and Italian lingo-cultural regions and a small Romansh-speaking community.

It is one of the richest countries in the world, with a GDP per capita of more than €53,000 and low unemployment among its 7.6 million citizens. The country has a long tradition of direct democracy and neutrality, staying out of both World Wars.

According to the European Commission, over 900,000 EU citizens live and work in Switzerland and many more travel through its borders on a regular basis.

The EU is the country's most important trading partner, accounting for around 60% of its exports and 80% of imports. For its part, the Union only exports more to the United States than it does to Switzerland.

The establishment of the Economic Free Trade Association (EFTA) in 1960 and the signing of the Free Trade Agreement in 1972 between the European Economic Community (EEC) and Switzerland form the basis of its relations with the EU.

The country appeared to move towards EU accession in May 1992: it negotiated the European Economic Area (EEA) agreement – which allows EFTA states to participate in the Union's single market – and then submitted an application for EU membership.

However, Swiss citizens voted against joining the EEA on 6 December 1992 and EU membership talks were consequently suspended. The referendum was a major defeat for the government and marked the rise of the Swiss People's Party (SVP), a right-wing political force headed by Christoph Blocher.

Since then, Switzerland's dealings with the EU have taken a decidedly bilateral track. Two series of sectoral agreements, negotiated in 1999 and 2004, resulted in ten treaties that align a large portion of Swiss law with that of the EU (see 'Issues').

The 'Bilateral I' and 'Bilateral II' agreements effectively mean that Switzerland enjoys the benefits of EU member states and EEA countries on free movement of people, goods, services and capital – but without having lost any sovereignty or decision-making power.

The country's scepticism about joining the EU was confirmed in a March 2001 referendum, when 76.8% of citizens voted against a popular initiative called 'Yes to Europe!' aimed at opening membership negotiations.

Since December 2008, Switzerland has participated in the EU's Schengen area, which facilitates travel in the participating states by removing identity controls at common borders. It also partakes in the EU’s Dublin agreement on dealing with asylum seekers.

The Swiss confederation was close to crisis in its relations with the EU in February 2009 due to a referendum on opening its labour market to Bulgarian and Romanian workers. A 'no' result would have suspended a number of trade agreements, but 59.6% of citizens ultimately approved.

In March 2012, Switzerland signed an agreement initialising cooperation with the European Defence Agency. The same month the Swiss parliament suspended negotiations on agricultural free trade, food safety, product safety and public health that were opened in 2008.