Guest article Allnews: Director Stephan Mumenthaler

The "Bilaterals III" enable sustainable relations with the most important trading partner as well as legal and planning security for Swiss companies 

Since its foundation, the European Union (EU) has been Switzerland's most important economic partner. This is mainly thanks to the EU's internal market, which comprises over 450 million consumers and more than 20 million companies. However, since the failure of negotiations on an institutional framework agreement in 2021, relations between Switzerland and the EU have cooled noticeably. With the draft negotiating mandate recently presented by the Federal Council, normalization now appears to be within reach. 

EU as the most important trading partner for the Swiss export industry 
With a share of over 49 percent of total exports, the chemical and pharmaceutical industry forms the backbone of the Swiss economy. Half of these exports find their way to the EU market, making the EU the most important customer region. At the same time, three quarters of all imports of chemical-pharmaceutical products come from the EU. This makes the EU not only the most important export market, but also the most important supplier of raw materials, semi-finished and finished products. 

In view of this fact, the removal of technical barriers to trade, particularly through the mutual recognition of conformity assessments (Mutual Recognition Agreement, MRA), is of crucial importance for Swiss companies. It facilitates market access, lowers costs and reduces the administrative burden. Regular updating of the MRA is crucial for the export industries. 

Research and development benefit from networking with Europe 
Switzerland is also dependent on cooperation with the EU in the areas of education, research and innovation. Exclusion from Horizon Europe and downgraded participation in research programs are detrimental to our innovative strength. This not only impairs research and innovation, but also makes attracting top international researchers more difficult. Full association with EU research programs as quickly as possible is therefore important for Swiss research, economic innovation and the attractiveness of Switzerland as a business location. 

The free movement of persons plays a decisive role for research-intensive industries. The shortage of skilled labour in the STEM fields requires highly qualified workers from the EU. A collapse of the free movement of persons would not only exacerbate the shortage of skilled labour, but would also have a drastic impact on the research and innovation sector. Foreign labour is strongly represented among employees with university degrees and in research and development. The Agreement on the Free Movement of Persons must therefore be continued at all costs. 

New electricity agreement strengthens security of supply 
Finally, the planned electricity agreement between Switzerland and the EU is also crucial for the chemical, pharmaceutical and life sciences industries, particularly in view of the experiences during the energy crisis last winter. The close links between the electricity markets and neighbouring countries not only guarantee the implementation of Switzerland's environmental and energy policy goals, but also ensure a stable supply of electricity. 

Switzerland strives for a secure, economical and environmentally friendly energy supply, which is supported by integration into the European electricity market. In addition, extended grid stability and the possibility of Swiss participation in the relevant EU bodies are of great importance. 

Conclusion of negotiations creates planning and legal certainty 
Barrier-free market access, full association with European research agreements, appropriate free movement of persons and the electricity agreement are of central importance for Switzerland as a business location in its relations with the EU. A rapid consolidation of long-term sustainable relations is essential to prevent a further erosion process and avert lasting negative effects on the Swiss economy and society. 

The EU parliamentary elections will take place in June 2024, which could also change the composition of the EU Commission and close the window of opportunity. However, if the Federal Council adopts the negotiating mandate and negotiations begin before this window closes, there is still a chance that the "Bilaterals III" will be finalized this year. A solution with our most important trading partner is more urgent than ever.