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EU Warns Switzerland: Restrict Migration, Lose Free Trade

by Ulrika Lomas, Lowtax.net, Brussels
13 February, 2014

Switzerland will introduce quotas for migrants at its own peril, the European Union (EU) has warned.

Reacting to Switzerland's February 9 vote in favor of annual quantitative limits on immigration, European Parliament President Martin Schultz said that "we have many negotiations ahead."

50.3 percent of those who polled in the referendum backed the call for quotas. The intended restrictions on cross-border commuters and asylum and job seekers call into question the 2002 EU-Swiss agreement on the free movement of persons.

The Swiss Federal Council has confirmed that it intends to enter into discussions with the EU and its member states "in order to discuss the next steps and open negotiations." The Council hopes that the country's relationship with the EU "can be put on a new footing."

These talks could continue for up to three years.

According to Schulz, "If Switzerland has to modify laws and limit free movement also for EU citizens, then we have to react, discuss and perhaps negotiate the agreements."

The EU and Switzerland are bound by more than one hundred bilateral deals, including a 1972 free trade agreement. The EU has already expressed concerns about Switzerland's re-introduction in 2012-13 of caps on long-term permits for nationals from a number of member states, via the so-called "safeguard clause." The EU claims that this is discriminatory and incompatible with the treaties in place.

Last year, the European Commission was given the mandate to re-negotiate the bloc's savings tax agreement with Switzerland, with a view to broadening its scope and reflecting international developments in the field of tax transparency. Talks were launched in January. The Commission has also been in a dialogue with Switzerland to promote EU principles of tax good governance and address cases of harmful tax competition.

Switzerland is the EU's third largest economic partner, after the US and China. The EU claims that it is by far Switzerland's most important partner, accounting for 78 percent of its imports and 57 percent of its exports in goods in 2011. More than a million EU citizens live in Switzerland, while another 230,000 cross the border daily for work. Roughly 430,000 Swiss live in the EU.

The Swiss Federal Council will set to work implementing the reforms "without delay," and present a draft to parliament as soon as possible. It has interpreted the referendum as "a reflection of unease with regard to population growth in recent years."

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