Switzerland ignores EU deadline for treaty

Switzerland stalled on a key trade and border deal with the European Union on Friday, ignoring a final deadline on the hard-fought agreement.

The EU had hoped to sign the deal by December, but Switzerland has now backtracked and wants to push back further negotiation until the spring of 2019.

Read more: Swiss feel Brussels' Brexit Bern

What the deal is: The deal is meant to provide a framework for the 120 bilateral accords the non-EU member holds with the bloc. The draft text focuses on five areas: free movement of people, aviation, land transport, mutual recognition of industrial standards and processed farm goods. Under the treaty, the Swiss would routinely adopt EU single market rules and provide a more effective system for resolving disputes. The deal has been negotiated over the past four years and Friday was the deadline to sign.

Why Switzerland won't sign: The Swiss said they have ongoing concerns about the deal. Unresolved issues mainly relate to protecting the Swiss labor market against cheap foreign labor. The deal has faced pressure from the nationalist People's Party and from trade unions, which are both worried the deal could lower Switzerland's high wage levels and grant EU citizens additional welfare rights in Switzerland.

What the EU says: "We would like to make crystal clear that the final agreement text published today, including annex and protocols, was agreed by the EU and Swiss negotiators and is the result of long, intense and constructive negotiations," the EU executive body said. The European Commission said it "respects the will of the Federal Council to consult all the parties concerned" but called for "speedy" negotiations. It said the draft treaty was the best deal possible.

Read more: EU Customs Union, Single Market, Brexit — What you need to know

What now: Brussels has warned it will take a hard line on economic links unless Bern agrees to its major demands.  The EU has threatened to not renew the "equivalence" status of the Swiss stock exchange, which allows EU-based trading platforms to buy and sell Swiss stocks. This would give the Swiss exchange a huge hit from trade volume losses. In retaliation, Switzerland has warned it will withdraw aid from eastern Europe and has made moves to bolster its exchanges. Apart from such moves, if talks fail, the current sectoral accords will stay in effect but relations would suffer badly and there will be no increase in Swiss access to the single market.

The Brexit curveball: The talks have been complicated by the EU's negotiations on Brexit, with the Commission wary of going easy on the Swiss for fear of providing ammunition to Brexiteers. Meanwhile, many Swiss are happy to wait and see what sort of deal the British can extract for themselves out of the EU.

aw/sms (dpa, AFP, Reuters)