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Switzerland's economic and trade relations with the EU are mainly governed through a free trade agreement and through a series of bilateral agreements, where Switzerland has agreed to take over certain aspects of EU legislation in exchange for accessing part of the EU's single market.
- The EU is Switzerland's main trading partner, whereas Switzerland is the EU's fourth-biggest trading partner after the United States, China, and the UK. In 2022, our bilateral trade in goods reached €333 billion, accounting for 6% of the EU’s total trade in goods.
- Swiss merchandise exports to the EU are concentrated in a few sectors, particularly chemicals/pharma and medical products (€58.2 billion, 40%), pearls and precious metals (€17.9 billion, 12.3%), machinery and appliances (€17.3 billion, 11.9%), and optical and photographic instruments (€13.5 billion, 9.3%).
- Switzerland is a very important partner of the EU for trade in services, in particular for commercial services. In 2021, total bilateral trade in services reached €180.1 billion, accounting for 8.9% of the EU’s total trade in services.
Both the EU and Switzerland are among each other's top destinations for foreign investment.
The EU and Switzerland
The cornerstone of EU-Swiss trade relations is the Free Trade Agreement of 1972.
As a consequence of the rejection by Switzerland of membership of the European Economic Area (EEA) in 1992, Switzerland and the EU agreed on a package of seven sectoral agreements signed in 1999 (known in Switzerland as 'Bilaterals I'). Some of these are relevant from a trade perspective:
- The Free Movement of Persons Agreement allows for the provision of services, limited in time.
- The Mutual Recognition Agreement in relation to conformity assessment ensures that, in twenty regulated sectors, the conformity assessment provided by one party is recognised by the other, which facilitates trade between the parties.
- The Public Procurement Agreement builds on the WTO Government Procurement Agreement.
- The Agreement on trade in agricultural products includes sanitary and phytosanitary rules, as well as tariffs and tariff rate quotas for agricultural products, except for cheese that is fully liberalised.
- A protocol on processed agricultural products (protocol 2), which was added to the Free Trade Agreement in 2004. It includes a mechanism whereby in practice Switzerland receives compensation for the very significant price differential of basic agricultural products – which serve as inputs to processed agricultural products – between the EU and Switzerland.
A further set of sectoral agreements was signed in 2004 (known as 'Bilaterals II'), covering, inter alia, Switzerland's participation in the Schengen area and Dublin asylum system, and agreements on taxation of savings, processed agricultural products, statistics, combating fraud, participation in the EU Media Programme and the European Environment Agency.
Overall, more than 100 bilateral agreements currently exist between the EU and Switzerland.
In some of the agreements, Switzerland commits to taking over relevant EU legislation in the covered sectors.
These bilateral agreements between the EU and Switzerland are currently managed through approximately 20 joint committees.
Between 2014 and 2021, the EU and Switzerland negotiated an Institutional Framework Agreement (IFA) to streamline the operation of the following five bilateral agreements between the two sides: the Agreement on the Free Movement of Persons; the Agreement on Air Transport; the Land Transport Agreement; the Agreement on Trade in Agricultural Products; and the Mutual Recognition Agreement related to Conformity Assessment. The IFA aimed to restructure EU-Swiss trade relations, notably by providing crucial rules and procedures for the dynamic takeover and homogenous application of internal market law, for enforcement of state aid rules, and dispute settlement.
However, on 26 May 2021, the Swiss Federal Council took the decision to unilaterally terminate negotiations on the IFA.
Currently, both sides are exploring possible ways to address the structural issues across the various agreements covered by the IFA, as well as any other internal market-related agreements that the EU and Switzerland may negotiate in future. The Commission aims to place EU-Switzerland relations on a better footing and to develop a robust legal framework that ensures a balance of rights and obligations on both sides. Such a framework should also increase legal certainty and help deliver a level playing field for EU citizens and economic operators in areas where Switzerland has access to the EU Single Market.
Committees and Dialogues
The EU and Switzerland meet regularly to discuss issues and best practices and oversee the proper functioning of the Agreement.
Trading with Switzerland
- Importing into the EU from Switzerland
- EU trade defence measures on imports from Switzerland
- Exporting from the EU to Switzerland
- Trade relations are part of the EU's overall political and economic relations with Switzerland
- Switzerland is a member of the World Trade Organization
Today, the EU and other WTO members have formally notified the ‘Multi-party interim appeal arbitration arrangement’ (MPIA) to the World Trade Organization (WTO). This notification marks the start of the application of the MPIA to disputes arising between the participating WTO members.