Switzerland to sign trade deal with UK for post-Brexit era17 December 2018
Switzerland and United Kingdom agreed on a draft of the new agreement on trade and economic relations between two countries for post-Brexit times. On Friday, December 15th, the Swiss government announced the text of agreement has been signed off.
Under the radar negotiations
As on Friday the Swiss government revealed the agreement with the UK, it has confirmed suspicions swirling around for months. The text of the agreement has been signed off by both parties. Swiss Federal Council said in a statement that the agreement is supposed to guarantee the continuation of commercial, economic rights and obligations arising from agreements between the country and the European Union. When the UK leaves the EU, these agreements will no longer be valid in relation to these two countries trade rights, thus a new treaty has to be introduced. Especially since trade between the UK and Switzerland is quite valuable – last year alone it was worth CHF17.5 billion or EUR15.5 billion, making the UK the sixth biggest export market for Switzerland in 2017. In 2016 the UK was sixth largest direct investor in Switzerland.
Exact text of the agreement is not known yet, as officially the UK is not able to negotiate with third countries until Brexit comes to life. With ongoing Brexit negotiations and lack of decision whether there will be a transition period or not, is it also difficult to state when the Swiss-UK agreement will be applicable. If the EU decides on a transition phase, it will end on December 31st, 2020. Only after that date any agreements between the UK and non-EU countries may come into force. What will happen if there is no transition period? The Swiss government has scenario for that as well. The new agreement will make it possible to replicate majority of now applicable agreements between the UK and Switzerland, that are part of treaties with the EU, so that there are some rights and obligations in terms of trade and other economic areas. On the other hand, lack of a deal due to non-existence of transition period would result in a situation when not full continuation of current level of relations, as there are between the UK and Switzerland on basis of EU treaties, is guaranteed. Especially these harmonized economic areas might be hurt by no-deal scenario.
Another agreement is on its way
The trade agreement is not the only one that Switzerland and the UK has been working on lately. There are also talks to implement a new free movement of persons agreements. Such deal should protect rights of British permanent residents in Switzerland and Swiss people living in the UK. In Switzerland there are plenty of cross-border workers, foreigners living permanently as the country is popular immigration spot. Also, many British expats live in Switzerland and many Swiss deiced to move to the UK. Rights of both groups are now protected on basis of 1999 agreement between the EU and Switzerland that will cease to be applicable once the UK leaves the EU.
Just week before the news broke that Switzerland singed off text of agreement with the UK, the EU-Switzerland new deal drat has been published. After four years of difficult and sometimes very turbulent negotiating a bilateral treaty has finally got its shape. It will replace current 20 main agreements and 100 secondary agreements that are basis for relations between the union and Switzerland ever since the country voted against joining the EU in 1992.
It is still unclear what consequences an uncontrolled Brexit could have on the euro-franc exchange rate. With a relatively high probability the EUR CHF exchange rate would fall, and that would mean a good EUR CHF exchange rates for all frontaliers in Switzerland. For the Swiss export industry however, that would be bad news, as a good swiss franc exchange rate affects export revenues. We will keep track of these topics and keep you updated regarding to new developments. To compare the current exchange rates please use our currency converter. You can easily find the best exchange rate in Switzerland for any amount you would like to change.