Free Trade: the European Union and Switzerland - Term Paper Example

Free Trade: the European union and Switzerland Introduction Free trade is an international policy followed in international markets in which government allows imports or exports without any restriction. European Economic Area or European Union and the North American Free Trade Agreement are good examples of free trade. These areas have established open markets. Free trade over the world is governed by world trade organization. Most of the nations in the world are members of this organization. This organization has multi lateral agreement between its member countries. But there is certain country that does not follow free trade in their country. Some of the country believes in restricted free trade. Here in this essay a detailed discussion will be done about free trade relationship between Switzerland and European Union. This essay will help to understand economic and trade relationship between Switzerland and EU. There is a bilateral agreement between Switzerland and EU where Switzerland has agreed upon to abide by some legislations of EU. In exchange of that the country has been allowed to get the access of single market of EU. The country shares a very close relationship with EU. Culturally, economically and socially these two entities are very close to each other. Both entities share their relationship from since 1972. It shows that they have very strong relationships between them. This essay will discuss different angels of free trades between these two entities. European Union is an organization consisting of different countries from the Europe. Switzerland being a European country but it is not a member state of EU. Discussion EU is the main trading partner of Switzerland. On the contrary Switzerland holds 4th rank in the list of EU trading partners. Switzerland exports their products in EU market. They mainly exports medicinal products, instruments, chemicals, machinery and watches. The country is very important partner for EU in terms of service sectors. EU is highly dependent on Swiss commercial services. In the year 1972 EU and Switzerland started their free trade relationship by signing a bilateral agreement. In 1992 Switzerland was denied a place in EEA. In the year 1999 these two partners agreed to sign an agreement related to seven sectors. It was known as Bilateral I. free movement of people, public procurement, barriers of technical trade, agriculture and transport both by air and land. The country has also signed an agreement related to scientific research which was designed according to the framework of European Union. In 2004 Bilateral II was signed between these two partners. This agreement has enhances the scope of free trade between these two states. This agreement covers savings in taxation, statistical exchanges, fraud preventing measures, agricultural products, and programs related to media and environmental agencies. This was a significant agreement for these two partners. These two partners signed an agreement involving educations, youth development programs and personal training. Currently these two partners share almost 100 bilateral agreements between them. There are almost 15 committees are there. All these committees are having joint representation of these two partners. These committees play important role to govern all these agreements signed between them. In the year 1972 when these two partners signed Free Trade Agreement it created a free trade zone between them. As two partners share free trade zone between them it need not to pay any customs duty when industrial products are exported or imported. There is no upper limit regarding the volume of products which can be exported or imported. In the year 2013 it has been noticed that Switzerland has done 55% export with EU only. On the other hand 73% of total Swiss import was from EU. It clearly shows that these two partners are enjoying free trade significantly between them. In 1989 these two partners signed insurance related agreement between them. It allows both EU and Swiss insurance companies to set up their establishments in EU and Swiss market. This agreement also allowed taking over or acquiring any Swiss or EU company. These two partners share very simplified customs formalities between them. EU and Switzerland is having very good cooperation in terms of security. The country is having such close relationship with EU that almost 20000 trucks crosses border of Switzerland each and every day. In the year 1999 these two partners signed Mutual Recognition Agreement. This agreement helps both the partners immensely. According to this agreement only one conformity test is enough for Switzerland and EU to launch a new product in the market. Conformity test ensures whether a product is good for launching in the market. It was a revolutionary agreement which helped business man from both this partnering countries immensely. It saved lots of time and money. In the same year these two partners signed an agreement related to their public procurements. This agreement fixes certain criterion according to which these two partners have to come up with international tenders for their all public sector procurements. In 1999 an agricultural agreement was signed between these two partners. This agreement was signed for more facilities among these two countries regarding different agricultural products. It was achieved by reducing tariffs and customs duty of agricultural products. The agreement creates huge opportunities for both partners and they have grabbed it with both hands. In 2013 Switzerland has exported 62% of their total agricultural products to EU member states. On the other hand Switzerland has imported 73% of their total imported agricultural products from EU. It clearly shows that how significantly these two partners are utilizing their agreements. These two partners’ shares very close relationship in research field also. In 1999 two partners entered in to an agreement which allowed Switzerland to take part in the EU research field. But at that point of time participation was partly allowed. In the year 2004 and later in 2007 Switzerland was fully allowed to take part in the research field of EU. This agreement allowed two partners to do research in the field of energy, communication technologies, environment, nanotechnology and health. This agreement was very much fruitful for Swiss technical and economic scenario. It helps the country to conduct more and more advanced research in the sector of Telecommunication technology, environmental degradation and health sectors. It opened a sea of opportunities for the country. It was very cost effective for the country. EU is having a very liberal civil aviation market. It is a great opportunity for each and every airline companies. In the year 1999 an agreement was signed between two partners. It allowed Swiss airline companies to enter into EU market. It gave equal rights to all Swiss civil aviation companies to compete with their EU counterparts. It gave them a free hand for fixing fares and choosing destinations. This competition made air fare very low in that zone and Airlines companies were coming up with different new destinations. These two partners have an agreement in terms road transport also. This agreement between two countries allowed transport of products and persons by railways and roads. In this agreement there is concept of Heavy Vehicle Tax. These taxes are to be given for the transportation of goods through rail or road. This taxing system has helped Switzerland immensely to create more and more infrastructure. In this transport agreement EU abide by Swiss taxing policy in return of that Switzerland accepts EU’s increasing weight of trucks. Prosecution of criminals is also a very important part of free trade. These two partners have very categorical and effective agreement in this aspect also. In 2004 an agreement was signed between them. It helps two partners to fight against international crimes and terrorism. It also creates great coordination between police forces of two partners. This agreement allowed Switzerland and EU to exchange different strategies and expertise among them to combat any criminal offences. It is an important agreement for these two partners. It helps them to investigate jointly if required. Switzerland is having its liaison office in Hague. Schengen and Dublin agreements are also very important agreements between Switzerland and EU related with international justice and asylum. Judicial component is also very important part of Free trade. Switzerland and EU has an agreement in this aspect also. In the year 2008 one agreement was signed between Switzerland and Euro Just. Euro just is unit in EU looks after all judicial matter collectively for EU. This agreement helps both the partners for investigations and prosecutions. This bilateral agreement has great influence as far as extradition request between two partners are concerned (Peers, 67-73). A bilateral agreement was signed in 2010 between these two partners regarding vocational training, education and youth development programs. This agreement has enabled Switzerland to take part fully in the EU education market. It gave equal access to all Swiss citizens to do projects in EU. It helps different universities of both partners to exchange their ideas. It increased the scope of education and youth development for both partners immensely. Universities of Switzerland and EU universities have come together with the help of this agreement. Media plays very important role in free trade. In 2004 these two partners signed an agreement related to media. The agreement was concerned with distribution, development and promotion of European films. This bilateral agreement helps Swiss film makers to get same kind of support from all European media. It helps Swiss film makers to get success out of their films. It also creates a huge international opportunity for Swiss movies. In the year 2004 these two partners signed an agreement called Taxation of savings. With the help of this agreement Swiss agent of paying like banks or asset managers withholds tax on income generated from savings in Switzerland of a person who is liable for tax in an EU country. Environment is also a very important factor for international free trade. In 2004 Switzerland became a member of European Environment Agency. This organization is responsible for collecting and analyzing all the environmental data in Europe. As Switzerland became a full member of this organization it gives the country to participate fully in their every activities and the country has to abide by all rules and regulations sated by the organization (Berglund, 28-34). Consistent data and statistics play very important role for free trade. In the year 2004 these two partners signed a bilateral agreement relating to statistics. It brought compatibility between Swiss statistic and EU statistic. This agreement brought Swiss data compilation at par with EU norms and techniques. It helped these two partners to reduce all statistical confusions between them. Statistics and data are very important for international business and decision making. This agreement gave two partners improved quality of data which are very compatible with each other. International free trade has a serious threat from fraudulent activities. To negate this threat these two partners signed an agreement in 2004. It helped both Switzerland and EU to fight against smuggling and other fraudulent activities related with indirect taxation. Indirect taxations are value added tax, consumer tax and customs duties. It helped both partners to combat different fraudulent activities related with public procurement and subsidies (Vooren, Ramses and Ramses, 56-63). International free trade relates lots of complex aspects of taxations. These two countries signed an agreement to avoid those complexities. Both partners came to a pension related agreement in 2004. It helps retired EU employee to avoid double taxation when they are living in Switzerland. Before this agreement pensions use to tax twice for EU employee living in Switzerland. It has simplified the whole tax structure and saved lots of money for pension holders (Church, 101-106). Recently these two partners signed an agreement related to defense sector. This agreement was signed in 2012 between Switzerland and European Defense Agency. It gives a very good coordination between two partners. This cooperation is free from any legal bindings. In the year 2013 two partners signed an agreement for the creation of cross border competition rules. This agreement will ensure that All EU member states and Switzerland follows same rule in terms of cross border business competitions (Trampusch and André, 78-81). All the above factors are clearly showing that these two partners over the years have enjoyed a very close and successful free trade relationship between them. But recently that relationship has been struck badly. In February 2014 the country has undergone a voting or referendum. The voting was for deciding whether free immigration should be stopped or not. The result of the election was marginally favorable for anti immigrations. The result of the voting was not at all good for the bilateral relationship of these two long time partners. The country is having very high number of immigrants almost 50% of total population (Vahl and Nina, 123-126). The country was facing a conflicting voice between immigrations and anti immigrations over long period of time. Recent results of election shows that country has marginally tilted towards imposing quotas to new comers in the country. After this result EU started reconsidering their relationship with Switzerland. This result would prevent free movement of EU people to Switzerland. This referendum has threatened all agreements present of Bilateral I very seriously. The election result has very bitter effects on the relationship between two partners. EU has stopped doing negotiation for Switzerland. Before this election result EU was negotiating for Switzerland to include them in the EU scientific agenda. EU has downgraded Switzerland as third country in their horizon 2020 program. In 2014 relationship between Switzerland and EU has worsen. These two partners presently not enjoying good relationship at all like past glory days (Schwok, 90-96). Conclusion This essay is clearly showing that Switzerland and EU was very close partner in terms of free trade. Although Switzerland is not a member nation of EU but it enjoys almost all the facilities like other EU states enjoy. These two partners are having very high interdependency between them. Switzerland is having little more dependency on EU. Over the years these two partners has maintained very supportive and close relationship between them. They have very specific agreements for different aspects of free trade. All those agreement are very detailed and effective in nature. These two partners over the years have enjoyed very deep rooted cooperation and co ordination from each other. They have very compatible relationship between them. Over the years their relationship has been tasted. Recently the relationship between them has lowered a lot. Maximum people of Switzerland are against free immigrations from different EU countries. Recent election hold in Switzerland gave a very narrow marginal verdict in favor of anti immigration. This referendum has shaken the base of the relationship between two long time partners. It is creating a barrier between two partners. Free trade relationship between Switzerland and EU is facing a serious threat of distrust and hostile economic atmosphere. It is very difficult for two partners to restore normalcy in their relationship. It would have a very serious effect in both Swiss and EU economy. Works Cited Berglund, Mikael. Cross-border Enforcement of Claims in the EU: History, Present Time and Future. London: Kluwer Law International. 2009. Print. Church, Clive. Switzerland and the European Union: A Close, Contradictory and Misunderstood Relationship (Google eBook). Zurich: Routledge. 2007. Print. Peers, Steve. EU Justice and Home Affairs Law. London: Oxford University Press. 2011. Print. Schwok, René. Switzerland - European Union: An Impossible Membership?. Berlin: Peter Lang. 2009. Print. Trampusch, Christine. and André Mach. Switzerland in Europe: Continuity and Change in the Swiss Political Economy. Toranto: Taylor & Francis. 2011. Print. Vahl, Marius. and Nina Grolimund. Integration Without Membership: Switzerlands Bilateral Agreements with the European Union. Zurich: CEPS. 2006. Print. Vooren, Bart., Ramses Wessel. and Ramses Wessel. EU External Relations Law: Text, Cases and Materials. New York: Cambridge University Press. 2014. Print. Read More