1. Where Next on Brexit? Lessons from the Swiss Model
Policy Exchange, London
19 April, 2018
Prof. Dr. Michael Ambühl, ETH Zürich
Prof. Michael Ambühl

2. Content The Swiss Model in a Nutshell
Customs Union and Single Market Access
Lessons Learnt
Prof. Michael Ambühl

3. Free Trade Agreement (1973)
The Swiss Model
Goal: legal certainty and market access
Free Trade Agreement (1973)
Trade
Bil 0 1 FTA
Prof. Michael Ambühl

4. The Swiss Model Economy Trade Goal: legal certainty and market access
Bilateral I (2002)
7 sectoral agreements (linked)
Free movement of persons
Technical barriers to trade (MRA)
Public procurement markets
Agriculture
Land transport
Air transport
Research
Goal: legal certainty and market access
Economy
Bil I 7 Agreements
Trade
Bil 0 1 FTA
Prof. Michael Ambühl

5. The Swiss Model Politics Economy Trade
Bilateral II (since 2005)
9 sectoral agreements (not linked)
Schengen/Dublin (2009)
Taxation of savings
Combating fraud
Processed agricultural products
Environment
Statistics
MEDIA
Education
Pensions
Goal: legal certainty and market access
Politics
Bil II 9 Agreements
Economy
Bil I 7 Agreements
Trade
Bil 0 1 FTA
Prof. Michael Ambühl

6. Bil III (?) other Agreements
The Swiss Model
Goal: legal certainty and market access
Institutional
Bil III (?) other Agreements
Politics
Bil II 9 Agreements
Economy
Bil I 7 Agreements
Trade
Bil 0 1 FTA
Dynamisation (?)
«Static» Agreements (except «Air Transport», «Schengen/Dublin»)
Prof. Michael Ambühl

7. Legal certainty and better market access
Advantages:
Legal certainty and better market access
Only relevant for selected policy sectors
Certain level of freedom regarding legislation and politics that are not selected
economic policy
foreign trade policy
monetary policy
taxation and finance
Disadvantages:
No full participation in selected policy sectors
No participation at all in the other sectors
Unsatisfied market access demands
EU seems to regret it (“mistake”) – true?
social policy
foreign policy
agriculture
main advantage for staying outside
Prof. Michael Ambühl

8. Customs Union
Swiss-EU broder crossings per day 2.2 mio persons; 23’000 lorries; 1bn goods (costs: 0.1% of trade); computerized declarations in advance; 1% physical controls Switzerland is not member of the Customs Union Advantage: Conclusion of Free Trade Agreements on its own e.g. with China (in force since 2015) or India (in negotiations) Disadvantage: Border controls (however: noticeability can be reduced by new technology; IRL and UK as non Schengen are free to determine density of controls)
Prof. Michael Ambühl

9. Single Market Access Sectoral access only in selected policy sectors
Something in between the Canadian FTA and the Norwegian Model
More Single Market access than Canadian FTA
More flexibility than in the Norwegian Model (à la carte instead of full menu)
Prof. Michael Ambühl

10. Lessons Learnt In negotiations with the EU, one has a good chance if:
You do not question fundamental EU-principles  hopeless Focus on flexibility in the implementation for which the EU is renowned (e.g. Maastricht Criteria, Stability Pact, refuges): UK could ask for safeguard clause in migration*
* See Ambühl, M. and Scherer, D. (2018). Free Movement of Persons – Is Regulation Possible?. In: A. Kellerhals and T. Baumgartner, ed., New Dynamics in the European Integration Process—Europe Post Brexit. Schulthess, pp
Prof. Michael Ambühl

11. Examples of existing safeguard clauses
Article 10
Safeguard measures
1. Where, in connection with the application of Annexes 1, 2 and 3 to this Agreement and having regard to the special sensitivity of the agricultural markets of the Parties, imports of products originating in one Party cause or threaten to cause a serious disturbance on the markets of the other, the Parties shall immediately hold consultations to seek a suitable solution. Pending such a solution, the Party concerned may take any measures it deems necessary.
2. Where safeguard measures as provided for in paragraph 1 or in the other Annexes hereto are taken:
(a) the following procedures shall apply in the absence of specific provisions:
- where either Party intends to implement safeguard measures with respect to part or all of the territory of the other, it shall inform the latter in advance, stating its reasons,
- where either Party takes safeguard measures in respect of part or all of its own territory or that of a third country, it shall inform the other as soon as possible,
- without prejudice to the possibility of putting the planned measures into force immediately, consultations shall be held between the two Parties as soon as possible with a view to finding suitable solutions,
- where safeguard measures are taken by a Member State of the Community with respect to Switzerland, another Member State or a third country, the Community shall duly inform Switzerland as soon as possible;
(b) measures which least disrupt the way this Agreement operates must be given priority.
Examples of existing safeguard clauses
Art.10, Swiss-EU Agriculture Agreement,
Art. 7(5a), Swiss-EU Schengen Association Agreement
Art.10(4), Swiss-EU FMP Agreement,
Art 112, EEA Agreement,
Prof. Michael Ambühl

12. Possible UK-Safeguard Clause for Migration
Current foreign population of MSFMPA
Current foreign population of third countries
Macroeconomic parameters of the job market
m average of the net migration rate
σ standard deviations of the distribution
n multiply of standard deviation (normally n = 1, 2, or 3)
αi factor of current pop. of MSFMPA
βi factor of current pop. of third countries γi factor of job market
di = m + (αi ∙ βi ∙ γi )∙ n ∙ σ
e.g., n=2
Prof. Michael Ambühl

13. Examples of «technical» solutions1) 2) 3) 4)
1) Regulation (EU) No 253/2014 of the European Parliament of 26 February 2014
2) Commission Delegated Regulation (EU) No 134/2014 of 16 December 2014
3) Proposal for a Regulation , , Distribution Key for Refugees
4) Implementation Regulation (EU) Nr. 602/2014 of the Comission, 4 June 2014
Prof. Michael Ambühl

14. Lessons Learnt In negotiations with the EU, one has a good chance if:
You do not question fundamental EU-principles  hopeless Focus on flexibility in the implementation for which the EU is renowned (e.g. Maastricht Criteria, Stability Pact, refuges): UK could ask for safeguard clause in migration*
You have a certain nuisance value In the Swiss case: transportation, electricity, financial market
You do not only use the nuisance value but also contribute in a constructive way to the solution
See Ambühl, M. and Scherer, D. (2018). Free Movement of Persons – Is Regulation Possible?. In: A. Kellerhals and T. Baumgartner, ed., New Dynamics in the European Integration Process—Europe Post Brexit. Schulthess, pp
Prof. Michael Ambühl

15. Thank you

16. CH-UK: A Comparison CH UK Population: 8.5m
1.3m EU/EFTA citizens live in Switzerland  16% of its population
440’000 Swiss citizens live in the EU
CH - EU: ~250 bn € export/import of goods (2014)
2’200’000 persons and 23’000 lorries cross the Swiss border per day
Population: 65m
3m EU/EFTA citizens live in the UK  % of its population
1.2m people born in the UK live in the EU
UK - EU: ~500 bn € export/import of goods (2014)
GB-NIR ~30’000 persons per day
Prof. Michael Ambühl

17. 2.4. Exemplification of the model: UK case
Preliminary estimate for UK*
Assumptions:
EU-25 area
parameters included for current foreign population of MSFMPA
current foreign population of third countries
job market not considerd (γi =1)
number of standard deviations n=2
note again: the migration numbers of the different countries are not weighted by the countries population size
small and big countries have the same influence
Prof. Michael Ambühl
* Data taken from EUROSTAT

18. Calculation for an 1-year period, 2015
 net migration EU-25 per 1000 inhabitants:
UK: 2,83
m: 1,02
σ: 1,27
αUK : 0,52
βUK : 1*
 What does that exactly mean for the UK?
dUK = m + (αUK ∙ βUK )∙ 2 ∙ σ
= 1,02 + 0,52 ∙ 2 ∙ 1,27 =
Prof. Michael Ambühl
* βUK set to 1

19. The difference of 183’618 – 151’129 = 32’489 (≙ 17,7%)
dUK = m + (αUK ∙ βUK )∙ 2 ∙ σ
= 1,02 + 0,52 ∙ 2 ∙ 1,27 =
The UK net migration 2015 was 183’618, corresponding to a migration rate of 2.83.
With a UK threshold dUK = 2.33, the threshold in absolute numbers for the UK in 2015 would have been (2.33/2.83) x 183’618 = 151’129.
With the application of this threshold, UK would have had the possibility to limit the immigration for the upcoming year to 151’129 persons
The difference of 183’618 – 151’129 = 32’489 (≙ 17,7%)
Prof. Michael Ambühl

20. Net migration EU-25 per 1000 inhabitants (2015 / EUROSTAT):
Results for 2015
dUK
m σ 1.27 m
dUK dUK,abs 151’129
αUK
βUK * σ σ
frequency
UK 2.83 UK
Net migration
* βUK set to 1
Prof. Michael Ambühl

21. Calculation for a 3-year period, 2013 – 2015
In order to have well smoothed thresholds: take a 3-years period
Results for 2015
Results for 2014
Results for 2013
m σ 1.27
m σ 1.31
m σ 1.26
dUK dUK,abs 151’129
αUK
βUK *
dUK dUK,abs 153’303
αUK
βUK *
dUK dUK,abs 141’773
αUK
βUK
UK 2.83
UK 2.71
UK 1.93
Average
m σ 1.28
dUK dUK,abs 148’735
αUK
βUK
UK 2.49
Prof. Michael Ambühl
* βUK set to 1

22. Net migration EU-25 per 1000 inhabitants (2013 - 2015 / EUROSTAT):
dUK m
Average σ σ
m σ 1.28
dUK dUK,abs 148’735
αUK
βUK 22
UK 2.49 UK
The average absolute net migration 2013/14/15 was 160’421 corresponding to a migration rate of With a UK threshold dUK = 2.31, the threshold in absolute numbers for the UK in 2013/14/15 would have been (2.31/2.49) x 160’421 = 148’824.
Prof. Michael Ambühl