Countdown to Brexit: 75 days – Citizens rights and trade agreements with Switzerland in a no-deal Brexit

Trade and customs arrangements between the UK and the EU after 29 March with a no-deal Brexit will be conducted under the terms of the World Trade Organisation.  Tariffs on UK exports to the EU - and vice versa – are likely to be low, averaging around 3%.  For some goods, tariffs will be much higher.  Potentially more disruptive will be procedural barriers as additional paperwork, customs checks, technical requirements and regulatory standards slow things down.

At the moment of Brexit without a deal – 23:00 GMT on 29 March 2019 - the border between the UK and the EU becomes a customs border.   All goods will need to travel with updated paperwork carrying the appropriate tariff code number - there are over 100,000 in the list.

Meanwhile the Swiss government has confirmed that it has signed off on the draft text of the new agreement that will form the basis of business and trade relations between UK and Switzerland post-Brexit.

A statement the Swiss Federal Council says: “This agreement guarantees, as far as possible, the continuation of the economic and commercial rights and obligations arising from the agreements between Switzerland and the EU.”

In 2017, trade between Switzerland and the UK was worth 17.5 billion Swiss francs (£14 billion); the UK was Switzerland’s sixth biggest export market; and its sixth largest direct investor in 2016.

The text of the new agreement has to remain ‘under wraps’ for now because the UK is officially barred from negotiating with third countries until it leaves the EU.

At present, these trade relations between the UK and Switzerland are based on a package of agreements between Switzerland and the EU.  However, Brexit means an end to the wider agreement and will need to be replaced.

Alongside the trade agreement, Switzerland has been working with the UK towards a new free movement of persons agreement.

According to the Swiss government, this should protect the rights of British residents in Switzerland and Swiss citizens living in the UK post-Brexit.  The 1999 agreement between the EU and Switzerland on the free movement of persons (AFMP) ceases to apply after Brexit.

Background

Trade

The timing of the post-Brexit trade agreement depends on whether a ‘transition period’ between the UK and EU comes into force.  If this is the case, the treaty would be the basis for trade relations after the transition phase – 31 December 2020.

In a “no-deal scenario” with no transition period, the Swiss government has made plans for a new agreement that “makes it possible to replicate in substance the vast majority of trade agreements that currently regulate relations between Switzerland and the UK”.

The Swiss government has sounded a note of caution by saying that the “fall-back” solution triggered by a “no-deal” situation could not “guarantee the continuation of the current level of treaty relations, especially in the harmonised areas”.

The trade agreement between the UK and Switzerland - which still has to be approved by the parliaments of both countries – came a few days after the Swiss government published the text of a draft deal designed to govern bi-lateral relations between Switzerland and the EU in the years to come.

That draft deal is the result of years of negotiations.  The Swiss government hopes the parliament will approve the deal after a consultation process - but there is opposition from both left-wing and right-wing parties in the parliament.

The Swiss business federation ‘economiesuisse’ reacted positively to news of the agreement.

Citizens Rights

The British and Swiss governments have drafted an agreement that aims to protect the rights of UK nationals living in Switzerland and Swiss citizens living in the UK after Brexit.

The agreement - which will need to be ratified by the British and Swiss parliaments - affects around 43,000 UK citizens living in Switzerland and 34,500 Swiss nationals living in the UK.

It means that these two groups “will be able to continue enjoying broadly the same rights as they do now”, according to a statement from the UK’s Department for Exiting the European Union.  “This includes arrangements on residency, access to healthcare, pensions and education, social security coordination and mutual recognition of professional qualifications.”

Again, the timing of the agreement coming into force will depend on whether a ‘transition’ period comes into effect on 29 March – in which case there will be no immediate changes in current rules until 31 December 2020.

In the case of a no-deal Brexit, the new agreement would apply to any UK nationals living in Switzerland and Swiss nationals residing in the UK before 29 March 2019 – with Switzerland applying the agreement on a “provisional basis.”

Swiss–UK bilateral relations - including arrangements for the free movement of persons - are currently based on treaties between Switzerland and the EU.  The UK is no longer party to those agreements when it leaves the EU.

There is thought to be a separate, parallel, bi-lateral agreement under way with Liechtenstein - also aiming to protect the rights of UK citizens living in the principality - and Liechtensteiners residing in the UK.

 
John ShuttleworthComment