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EUROPEAN UNION

‘Momentum’: Switzerland signals readiness to return to EU talks

Switzerland on Wednesday signalled readiness to resume talks with the EU towards a cooperation agreement, after shocking its largest trading partner in 2021 by suddenly cutting short years of negotiations.

'Momentum': Switzerland signals readiness to return to EU talks
Switzerland signals its ready to return to talks with the EU. Photo: François WALSCHAERTS / AFP / POOL

The Swiss government said it had given the green light during a closed session Wednesday to “draw up key parameters for a negotiating mandate” with the European Union.

It said in a statement the foreign and justice ministries, along with the ministry of economic affairs, education and research (EAER), had been asked to prepare such parameters by the end of June.

At the same time, “work will continue to clarify common ground with the EU in order to start negotiations”.

Ties between Brussels and Bern have been strained since Switzerland suddenly decided in May 2021 to end years of discussion towards a broad cooperation agreement with the bloc.

EU-Swiss ties are currently governed by a patchwork of agreements, and for more than a decade discussions were ongoing towards an overarching accord that would have harmonised the legal framework governing the relationship.

But the talks hit an impasse after the EU refused to budge on Swiss demands to exclude key issues relating to state aid, wage protections and freedom of movement.

Since then, Switzerland has been trying to pick up the pieces and establish common ground with Brussels through so-called exploratory discussions.

So far, eight rounds of such exploratory talks have been held, with the next such discussions due on April 20, Bern said, adding that technical talks were also taking place on a weekly basis.

“These have led to a detailed understanding of both sides’ positions and possible solutions in the individual dossiers,” it said.

‘Positive momentum’

Following an in-depth domestic and foreign policy assessment, the government said it had noted “positive momentum” in the discussions held at various levels.

“The task now is to work out solutions for the remaining outstanding issues, in order to establish common ground for the preparation of a negotiating mandate,” it said.

The government said it still wanted to see a “package approach” in the negotiations.

Rather than a single agreement regulating institutional issues by for instance requiring the adoption of EU law developments and supervision, it said it preferred seeing the development of a whole package of new specific agreements, focused on things like electricity, food safety and health.

“This approach enables a broad balance of interests and increases the chances of success in any subsequent negotiation,” the statement said.

On the contentious issue of wage protection, the government said it had instructed the EAER to work closely with Switzerland’s 26 cantons and social partners to draw up proposals towards supplementary measures securing current levels of protections on the domestic labour market.

It said the departments responsible had also been instructed to “clarify the outstanding issues relating to electricity, land transport and health”.

State secretary Livia Leu, Switzerland’s chief negotiator with the EU, had been tasked with “finalising the common basis for future negotiations”, it said.

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MONEY

What you should know about Switzerland’s banking secrecy

The mere mention of banking secrecy in Switzerland conjures up images of anonymous accounts and illicit cash hidden in vaults. But the reality is quite different.

What you should know about Switzerland's banking secrecy

Swiss bankers have a long reputation of being tight-lipped when it comes to divulging details about their clients’ accounts.

Over the years, however, this practice has become associated with illegal activities ranging from money laundering to tax evasion, which have tarnished Switzerland’s image, earning it the name of a ‘tax haven’ or ‘tax paradise’ where wealthy people stash their undeclared assets.

READ ALSO: Is Switzerland actually a tax haven?

However, under pressure from other countries, Switzerland adopted a tougher stance on foreign account holders in 2016, exchanging information with its foreign counterparts to ensure tax transparency.

This means that a foreign individual, whether residing in Switzerland or abroad, can no longer hide assets in a Swiss bank and hope their own country wouldn’t find out about it.

So, as far as foreigners are concerned, the days of bank secrecy are long gone.

But this practice is still intact for Swiss clients.

‘Client confidentiality’

Rather than calling this practice ‘banking secrecy’, the Swiss refer to it as ‘client confidentiality,” which has long-standing legal basis.

According to the government, this legislation “protects the financial privacy of citizens from unauthorised access by third parties or by the State.”

This is how the government explains it: “Banking secrecy arises from civil law, especially the contractual obligation of the banker to keep the personal information of his or her client confidential. The privacy of the client is also protected by the general provisions of the Swiss Civil Code concerning protection of personality and by the law on data protection. Moreover, under civil law, banking legislation considers the confidentiality of the banker to be a professional obligation, the violation of which is punishable.”

In other words, the bank not only must keep information about its Swiss accounts confidential, but could actually be punished if it divulges it.

OPINION: Switzerland’s respect for privacy has benefits but it also harms the country

Challenges to the law

Some Swiss politicians are speaking out against this long-standing practice.

“Now is the time to abolish banking secrecy in Switzerland,” according to Tobias Vögeli, president of the Young Green Liberals.

He argues that changing the law requiring banks to maintain confidentiality about their clients’ financial affairs would be “an effective instrument against tax evasion.”

His party will file a motion in the parliament to this effect in the near future.

However, this drastic change is not likely to happen — not only have some MPs already voiced their opposition to it — but the law provides for exemptions to bank secrecy.

“Numerous provisions of civil law, debt collection and bankruptcy law, criminal law, administrative criminal law, and mutual assistance in criminal matters provide for exceptions to banking secrecy,” the government says.

Accordingly, it can be lifted against the client’s will if ordered by court: “The Swiss financial center has comprehensive mechanisms at its disposal to defend against assets originating from criminal offenses. By international standards, the Swiss rules are very strict.»

In conclusion, if you are a Swiss citizen, your right to ‘financial privacy’ is guaranteed.

If, on the other hand you are a foreign national, your assets will be declared to your country of origin. 

READ ALSO: What can a Swiss bank demand of a foreign client?
 
 
 

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