EU Neighbourhood Watch – Monitoring EU relations with the UK and Switzerland – November 2021

"Neighbourhood Watch" by exfordy is licensed under CC BY 2.0

Every month, Brussels Report’s editor-in-chief Pieter Cleppe provides an update on how EU interactions with its economically most important neighbours, the United Kingdom and Switzerland, have been going.     

EU – Swiss relations

On the EU-Swiss front, there was the EU barking at Switzerland at a joint summit on 15 November, with EU Commissioner Maros Sefcovic urging the Swiss to set out a clear timetable for resolving the profound disagreement over how to reform EU-Swiss relations, following the collapse of negotiations in Spring.

Meanwhile, however, the Swiss government has extended the measures it adopted in 2019 to protect Swiss stock exchanges, following the EU’s refusal to certify Swiss trading regulations.

Interestingly, a new poll revealed that 56% of Swiss support accession to the European Economic Area. That’s probably until the Swiss realise that this means copy pasting all relevant EU regulation, something that would turn Switzerland in the “fax democracy” Norway has become as a result of this model – according to its former PM and current NATO secretary-general Jens Stoltenberg. This is also why the Norwegian Centre Party, now in government, calls EEA a “straitjacket”.

Perhaps Swiss popular support for EEA may however form the basis of a compromise on how an arbiter should look like in EU-Swiss relations. For a long time, the EU has suggested its own top court to fulfil this role but back in 2013, it suggested the EFTA Court, which really should be called “EFTA-EEA Court”, as it serves as the arbiter between Norway, Liechtenstein and Iceland on the one hand, and the EU and the other.

Writing for Brussels Report, Swiss Professor Carl Baudenbacher, a former EFTA Court President, recalls how Switzerland rejected the offer, which would have involved Swiss judges sitting at the EFTA Court whenever cases related to Swiss-EU relations would be heard. Instead, the Commission then pushed the arbitration model accepted by Ukraine, amongst others, whereby there is a pretty standard arbitration panel, but whereby the EU top court serves as the final arbiter. This really amounts to bringing in the ECJ “through the backdoor”, as Baudenbacher writes, as the ECJ would be competent to rule on aspects of EU law, which is of course all the time.

EU – UK relations

This brings us to EU-UK relations.

The “ECJ through the backdoor” thing didn’t fly with the Swiss but it also didn’t fly with the British Parliament after British PM Theresa May had agreed this sovereignty disrespecting model in 2018 with the EU. In the end, her successor Boris Johnson did close a deal with the EU whereby any dispute is submitted to a classic arbitration panel, with representatives from both sides. Specifically for Northern Ireland, however, he did concede that the ECJ would remain the competent arbiter.

Johnson’s UK government is now trying to renegotiate this, and a possible compromise, considered by the EU, would be the Ukraine model, with the ECJ remaining as the arbiter but in a somewhat hidden way.

At the same time, the UK and the EU are negotiating on how to minimize checks in the Irish Sea, between Great Britain and Northern Ireland. The UK had conceded to this as it was also agreed that Northern Ireland would stay in the EU’s single market – like Norway – but outside of the EU’s customs union – also like Norway. Because both sides wanted to avoid checks between Northern Ireland and the Republic of Ireland, for the sake of the peace process, checks had to be agreed inside UK territory. The UK has been dragging its feet to implement these checks, and even if the EU has made a number of material concessions on the matter, pledging flexibility, there still is no deal.

Boris Johnson’s government may ultimately suspend the Brexit deal provisions covering Northern Ireland over the standoff – by triggering the now well-known “article 16” of the Northern Irish protocal, as a means to put pressure. In response to this possibility, the EU has warned that this may put the whole of the EU-UK deal in jeopardy. The EU has already drafted a retaliation package that would allow it to impose tariffs on U.K. exports within a month. This would be very damaging for EU-UK trade, which has already been badly hampered by the extra regulatory and customs bureaucracy introduced following Brexit.

Furthermore, the European Commission granted EU market participants the right to continue clearing euro denominated derivatives in London beyond June 2022, when that permission was set to expire.

Royal Dutch Shell also announced it will move its global headquarters and tax residency from the Netherlands to the UK, while dropping “Royal Dutch” from its name. This also follows a widely publicized Dutch court case condemning Shell to engage in more radical “climate” case.

Ongoing problems with the detailed implemention of the EU-UK trade deal also continue. One issue is that British pies would be banned from the EU unless ingredients come from EU-approved farms. This due to a new EU food safety regulation which will coming into force next March. 

EU regulators have furthermore warned the UK that new UK rules on Libor, which underpins trillions of dollars in contracts, is not compatible with EU law.

Yet another issue is that from 1 October 2021, most EU, EEA and Swiss citizens require a passport to enter the UK. This helped to cause a collapse in EU school trips to UK. That’s really unfortunate, given how it is possible to solve through an agreement with the UK recognizing IDs.

Over the last month, there were also ongoing tensions, mostly between the UK and France, over the fact that more than 23,000 migrants arrived in the UK this year after crossing the Channel in small boats, contributing to tragedies, as people have drowned. Only five migrants that made it to the UK were sent back to France this year, a lot less than the 289 in 2020 when the UK could still use the EUs “Dublin Regulation” to convince France – not that this was a big number.

Last but not least, there was of course the  fishing dispute, with France accusing the UK of not granting enough permits to French fishermen  to fish in UK waters, and France repeating threats to cut off electricity to Jersey.

Originally published by Swiss magazine Nebelspalter