Source: Dispatch 26.023, Chapter 1.2 (pp. 38--42)
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After the end of the InstA negotiations, the Federal Council examined four fundamental options for Switzerland's future relationship with the EU. It concluded that continuing the bilateral path is the most suitable option -- offering the most balanced ratio between economic benefit and political room for manoeuvre.
Remaining passive does not mean maintaining the status quo. As the EU no longer updates existing internal market agreements, these would lose value in the medium and long term. The current edifice of bilateral agreements would eventually be reduced to a mere rump -- with the 1972 Free Trade Agreement at its centre.
Switzerland would reduce its economic integration with the EU to a lower level. Essentially, only the removal of tariff barriers to trade (customs duties and quotas) would remain. Without legal harmonisation, the Swiss economy would face new non-tariff barriers to trade. The gain in political room for manoeuvre would be comparatively modest.
The approach pursued since the 1990s: creating conditions similar to the internal market in selected areas and cooperating in further fields. Gaps remain, but the essential needs of the Swiss economy are met. Switzerland has been able to preserve its political room for manoeuvre.
Switzerland would participate not only in selected areas but in the majority of EU internal market law, including horizontal policies such as state aid. In the EEA, the obligations regarding the dynamic adoption of law are significantly more extensive than in the bilateral path, and the rights to participate in shaping the law are more limited.
Switzerland would gain full internal market participation and access to all EU cooperations. However, the limitation of the framework for autonomous decision-making would be considerable. Direct democracy and federalism would be de facto weakened.
On 23 February 2022, the Federal Council decided to address the open issues with the EU on the basis of a broad package approach: