The United Kingdom is an important economic partner for Switzerland. In 2018, the United Kingdom was the sixth largest destination for Swiss goods (CHF 8.8bn) and the eighth largest source market for goods imported to Switzerland (CHF 7.7bn). At present, relations between Switzerland and the United Kingdom are predominantly governed by the bilateral agreements with the European Union (EU), which will cease to apply to the United Kingdom after it leaves the EU. Switzerland wants to ensure that the existing mutual rights and obligations in its relationship with the United Kingdom continue to apply as far as possible after the United Kingdom leaves the EU, and to expand them if appropriate (‘Mind the gap’ strategy). Switzerland has concluded a trade agreement with the United Kingdom to this end.
The trade agreement signed on 11 February 2019 in Bern ensures the continuation of the economic and commercial rights and obligations between Switzerland and the United Kingdom arising from the agreements between Switzerland and the EU. It lays the foundations for future economic and trade relations between Switzerland and the United Kingdom, both in the event of a ‘disorderly Brexit’ (‘no-deal’) and in the event of an orderly withdrawal (‘deal’).
The Agreement on the withdrawal of the United Kingdom from the EU (‘Withdrawal Agreement’), negotiated between the United Kingdom and the EU, envisages a transition period set to run from the day the United Kingdom exits the EU until at least 31 December 2020 (‘deal scenario’). During this period, the United Kingdom will continue to be part of the single market and the customs union. Under this scenario, the existing terms of the Swiss-EU bilateral agreements will continue to apply between Switzerland and the United Kingdom, with no changes to the current status quo. In this case, the trade agreement would enter into force after the end of the transition period.
However, given the uncertainty surrounding the ratification of the Withdrawal Agreement, the possibility of a ‘disorderly Brexit’, without a transition period in place, cannot be ruled out (‘no-deal scenario’). In the event of a no-deal, the trade agreement between Switzerland and the United Kingdom will be applied provisionally from the day the United Kingdom leaves the EU. The withdrawal date, initially set for 29 March 2019, has been extended by the European Council to 31 October 2019 at the latest.
The trade agreement replicates the vast majority of the trade agreements currently governing relations between Switzerland and the United Kingdom: the 1972 Free Trade Agreement, the Agreement on Public Procurement, the Agreement on the Fight against Fraud, part of the Agreement on Mutual Recognition in relation to Conformity Assessment and the 1999 Agricultural Agreement. Some agreements between Switzerland and the EU are based on the harmonisation or recognition of equivalence of rules between Switzerland and the EU (2009 Agreement on Customs Facilitation and Security, certain sections of the Agricultural Agreement including the ‘Veterinary Agreement’ Annex, and certain sections of the Agreement on Mutual Recognition in relation to Conformity Assessment) and cannot be fully replicated at this stage.
The implications of these scenarios for economic actors are explained in detail in the following document: Economic relations between Switzerland and the United Kingdom after Brexit (as of 29.03.2019) (PDF, 225 kB, 29.03.2019).
On 15 May 2019, the Federal Council opened consultation proceedings on the trade agreement. The consultation will end on 5 September 2019. The Federal Council will then submit the dispatch on approving the agreement to Parliament.