A standoff between the European Union and Switzerland has led to disruption of share trading between the two. In a recent interview, Swiss foreign minister Ignazio Cassis told Blick newspaper that an agreement with the current Commission would need a ‘miracle’, while things could change with the change in tone of EU with the new head.
Jean-Claude Juncker is the outgoing President of the European Commission. He would be replaced by German Defense Minister Ursula von der Leyen in three months as his tenure would end on October 31. Juncker has urged Bern to conclude the treaty with EU before he steps down, while the Swiss officials have a different take on the scenario.
In the interview published on Sunday, Cassis said, “An agreement with the current Commission would be a miracle…I don’t know where Ms von der Leyen stands on the treaty. The EU’s position will probably stay the same, but the tone could change. And with a bit of serenity it will be easier to agree.”
Due to the ongoing tiff between Brussels and Switzerland, the former blocked EU-based investors from trading on Swiss exchange on July 1. The stock market equivalence granted to Switzerland by the EU got expired on 30 June. EU, which is the largest trading venue, stopped allowing trading for 230 Swiss companies including UBS and Novartis, after June. EU said to resume the cross-border trading, the two need to sign an agreement. The Swiss opposed and retaliated in the similar tone by withdrawing recognition for EU trading venues, prohibiting them from holding Swiss stock trading.
The key reason of dispute was that Brussels wanted to incorporate about 120 bilateral treaties into ‘institutional framework’, which would require Switzerland to automatically follow some EU laws, a proposal which Bern rejects. Also, Switzerland, a non-EU nation was asked to follow EU single market rules.
Swiss government issued a statement which said, “Activating the protective measure with regard to trading venues in the EU serves solely to protect the functioning of the Swiss stock exchange infrastructure.”
Though its visible that Swiss has more to lose from the straining relations, as Switzerland cannot compete with EU which is a much bigger economic entity. Things turned more political than economic with populist forces taking over to benefit from anti-EU sentiment. But for longer run the deal might be a wise call for Bern. Swiss officials seems to be waiting for change in the ‘tone’ of EU for carrying things forward.