LAST WEEKEND, Swiss voters approved a referendum reinstating quotas for immigrants, including those coming from EU countries – in violation of its agreements with the EU. The narrow vote, at just over 50 per cent in favour, overturns the bilateral agreement between Switzerland and the EU allowing for Swiss nationals to work in the EU and vice versa.
Switzerland has always had a half-in, half-out approach to the EU. It has rejected joining the EU outright in 1992, in an identically razor thin 50.3 per cent to 49.7 per cent vote. However, given that the country is almost entirely surrounded by EU states, it has clearly opted for some additional integration into the EU. Having adopted free movement of people, it has also voted to join the Schengen zone, effectively dismantling the borders between Switzerland and the rest of Europe.
Embraced by some Eurosceptics
The Swiss model of Europe a la carte has been embraced by some Eurosceptics, particularly in the UK, as a way of maintaining economic links to the EU, while retaining as many social and judicial powers as possible. The UK has been pushing for changes to the EU treaties allowing the repatriation of powers to London in advance of a referendum on EU membership.
Immigration has long been at the heart of the UK’s complaints in the EU. Along with Ireland, the UK did not put on any restrictions on migrants from the new accession states in Central and Eastern Europe in 2004, and received many immigrants from those countries. However, the current UK government is not pleased with the levels of immigration and Theresa May, the UK Home Secretary, has even suggested a cap on EU migrants, which would be in violation of its agreements.
The Alpine nation has more than just immigrant concerns in common with Blighty. Both counties have kept the EU at arm’s length, staying away from the euro. They also have strong banking sectors, highly mobile capital deeply invested in the Common Market, and are (or have territories such as Jersey which are considered) tax havens. Both, therefore, want to keep business ties with the EU while loosening other parts of the EU contract. Several UK politicians have even cited Switzerland as an ideal model for the UK: all the economic ties, with none of the social or political ties and with their own passport designs as a bonus.
The Four Freedoms
The problem with this idea is that it does not live up to the “Four Freedoms” that underpin the EU Common Market: freedom of movement for goods, services, capital, and people. Each freedom complements and underpins the others. Trade between the Northern EU members and the Club Med countries in the South is already heavily imbalanced, but trade barriers within the Common Market would slow growth for the entire EU. Likewise, as the economies Germany and elsewhere have proven stronger, young and under- or unemployed workers have been able to work in Germany, Austria or Switzerland, helping to marginally offset the staggeringly high levels of unemployment in Greece, Spain, and Portugal.
Likewise, those immigrants have often revitalised institutions in their host countries with lower birth rates and church attendance. Their labour adds value and tax revenue to their host economies while diminishing dole claims in their home countries. They often do work in schools or in ski resorts that would not displace local workers.
Without the freedom of movement for people, it is difficult if not impossible to maintain the same freedoms for capital, goods, or services. What is the point of German capital building a factory in Spain if the goods cannot be exported back to Germany? Without the freedom of movement for people, it would be harder for a German boss to be moved to that same factor to oversee operations. These freedoms are linked and the restriction of one should require the restriction of the others. Therefore the EU should immediately restrict Swiss access to the Common Market entirely, curtailing the other Freedoms (for goods, services, and credit).
What would life outside the EU could look like?
All eyes in the UK will look to the Swiss example to see what life outside the EU could look like. The UK has been equally vocal within the EU about curbing EU migrants and are currently mulling over an exit. But the UK would ideally like to keep full access to the EU Common Market, where it still accounts for more than half of all UK imports and exports. If the Swiss can remain in the Common Market while outside the EU and without the free movement of people, then there is little incentive for the UK to remain – it can have its cake and eat it too.
Conversely, if the EU forces Switzerland out of the Common Market, the UK should realise that it will likely find itself out of the Common Market (and it’s major export markets) if it chooses to leave the EU. The case of Switzerland, without the euro, outside the EU, and with migrant quotas will inevitably be quoted in the run up to the UK referendum. If it gets on fine and remains connected to the Common Market, most voters will think that the UK can get on fine outside the EU. If it sinks, it will be cited as a cautionary tale of nationalism overcoming common sense.
Therefore, almost perversely, the EU has every incentive to penalise Switzerland for ending this agreement. Switzerland is not an EU state. At 8 million people, it is much more susceptible to EU pressure. The loss of the UK, with its 64 million people, Europe’s most advanced military, and the continent’s financial centre, will be a much greater loss to the EU than relatively tiny Switzerland. The more unappealing the EU can make a Swiss exit from the Common Market, the greater and more apparent the warning will be for the UK in its own referendum.
It should also be a strong reminder to David Cameron and the UK business community that no matter how hard they campaign, referendums do not always turn out how they would like – and how easily it may be for the UK to fall out of the EU accidentally. The EU should show them what the damage will look like.
John O’Donnell is a recent MSc. International Politics student from Trinity College, Dublin. He lives in Dublin and focuses on US-EU relations.