Brussels warned Switzerland on Monday that all their bilateral agreements will be revised, after the Swiss on Sunday narrowly backed a curb on EU immigration.
50.3% of Swiss nationals voted yes to reintroducing immigration quotas on EU citizens, in a referendum heavily opposed by Swiss business leaders and the federal government.
The European Commission heavily criticised the outcome of the vote, saying it goes against the principle of free movement of people.
“We expressed our regret about this initiative of introducing quotas and the fact that this was approved yesterday in the referendum and this does indeed run counter to the principle of free movement of persons between the EU and Switzerland. And as to our overall relations with Switzerland, the EU is going to look at the implications of this.” the EU executive said.
The Swiss deal on free movement of people came into force 12 years ago as part of a broader package of agreements with the EU, including access to the EU's internal market.
President of the European Parliament Martin Schulz said that Switzerland cannot cherry-pick which EU policies it wants to subscribe to.
'The impact of the limitations of the free movement of the EU citizens goes to other elements of the single market of the EU: free movement of goods and capitals , of services. We have to see. It is difficult to limit the free movements of citizens and not to limit the free movement of services for example. So a lot of negotiations ahead.' said European Parliament's president Martin Schulz.
The Swiss decision comes amid increasing debate on immigration and the impact of free movement of people in Europe.
British Prime Minister David Cameron recently spoke of introducing caps for immigrants from new EU members states. But the Commission warned the UK that the idea goes against EU rules and could have far-reaching consequences.
“But the message is very clear today. The free movement of persons is a sacred freedom of the European Union. It's one of the four freedoms we defend and that message remains valid here today. We are talking about Switzerland not the UK, but I do think the message remains the same for all member states.” said the EU executive.
Foreigners make up 23% of the Swiss population of 8 million. The EU is Switzerland's biggest trading partner, buying €90 billion worth of goods in 2013.