Brussels is to offer Switzerland a temporary reprieve in a stand-off over the small Alpine country’s relations with the EU by allowing the bloc’s banks and brokers access to its stock market for another half year.
At a meeting of its college on Tuesday, the European Commission discussed the possibility of extending “equivalence” status for the Swiss exchange deal for a further six months, once an existing 12-month deal expires at the end of the year, according to a senior official.
The possibility of renewed market access comes after Brussels stepped up pressure on Bern by warning it could cut off Swiss stock market trading if the Alpine state did not explicitly accept an agreement overhauling its relationship with the EU.
Last Friday, Switzerland’s federal council, or cabinet, refused to endorse a deal that would align the country more closely with the bloc. Instead, Bern announced a public consultation over the plan lasting until next Spring.
A spokesman for the European Commission said Brussels had discussed “all the parameters” of the Swiss equivalence arrangement but no final decision had been taken on the length of the extension. An official said renewed market access would have to be signed off by EU member states by next Monday.
The dispute could have implications for the UK post Brexit because the use of an equivalence decision as a political weapon could set a worrying precedent for the UK’s financial sector, which is likely to face a similar regime once the country leaves the EU.
The proposed “institutional framework agreement” between Switzerland and the EU would mean Swiss rules being changed to fall in line with EU law and giving the European Court of Justice a role in resolving conflicts. But Bern has objected to measures that would weaken protection for high local wages and on the treatment of EU citizens in Switzerland.
A deal is likely to be opposed by the powerful Swiss People’s Party in a referendum which is almost certain to follow formal agreement between Bern and Brussels.
A six month reprieve would come as some comfort to Bern — but it is likely to argue that its stock exchange fulfils all the technical requirements for unlimited equivalence, and it could consider legal action on the grounds that Switzerland’s financial centre faces unfair discrimination by Brussels.
Despite being bordered by EU countries, Switzerland has refused to join the bloc ever since a 1992 referendum rejected joining the European Economic Area, which would have been a stepping stone towards membership. Instead, trading relations are based on more than 120 bilateral contacts.
The Swiss finance ministry and Six stock exchange had no comment ahead of an official announcement by Brussels.
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