The European Commission announced on Monday (17 December) its intention to conclude a new treaty with Switzerland by June and will in the meantime allow Swiss stock exchanges to retain access to the EU market.
The decision, which will take effect after consultations with member states, temporarily extends the existing “equivalence” regime that permits Swiss financial firms to operate in the 28-nation bloc after it expires at the end of this year.
“We have decided to extend this equivalence for share trading venues for another six months,” Johannes Hahn, the EU commissioner in charge of relations with neighbouring countries, told the press.
The move is meant to give the Swiss government more time to endorse a new treaty that would govern its relations with the EU. The draft treaty agreed with Brussels is subject to public consultation until “the spring”.
Switzerland has been integrated into the EU market for decades but is not a member of the bloc.
For more than four years the two sides have been negotiating a new general treaty that would clarify bilateral relations, which are currently governed by more than 120 sectorial pacts.
In a bid to hasten the talks the Commission had decided to link the extension of the equivalence regime for Swiss exchanges to the endorsement of the new treaty by the Swiss government.
It had even threatened to prevent the SIX Swiss Exchange – the country’s main stock exchange – and other trading venues from servicing their EU clients after December if Bern refused to back the new general treaty.
But after the Swiss cabinet effectively asked for more time, Brussels offered a six-month reprieve, in a move that looms large on sensitive equivalence decisions, which will also be crucial for London-based financial operators after Britain leaves the EU next year.
Hahn, who led the EU negotiating team in talks with Bern, said the Commission now expects the Swiss cabinet to “endorse” the draft pact by mid-2019 so that the equivalence regime for its exchanges could be further extended.
The draft treaty would establish a mechanism for Switzerland to adopt new EU rules more smoothly and would give the EU Court of Justice a final say on the application of EU laws in the country.
But both the traditionally pro-EU left and anti-EU far-right say the draft deal infringes too much on Swiss sovereignty, leaving the four-party coalition government short of a majority to approve it before elections next year.
“Putting an expiry date on the equivalence decision is neither justified nor helpful,” said Markus Ferber, member of the European People’s group in the Parliament.
Ferber said Switzerland already fulfils all criteria for equivalence, adding that its companies’ access to the EU market should not be linked to political negotiations.