Igor MALIKIN
Negotiations between Switzerland and the EU had been under way since 2000. The agreements reached are important for both sides. Switzerland has in effect become an enclave within the European Union, which accounts for 69% of Switzerland's foreign trade. On the other hand, Switzerland is the EU's second economic partner after the United States. Although the President of the European Commission and the President of the Swiss Confederation solemnly signed the official political statement on reaching agreement on May 19, the formal preparation of the documents dragged on for another month and a half.
The sharpest disputes were caused by the taxation of income from bank deposits and the fight against tax evasion. This is extremely important for EU countries suffering from budget deficits, while Swiss banks hide huge sums from taxes. Therefore, when Switzerland expressed its desire to join the Schengen Agreement, Brussels was able to demand that Bern tighten its banking policy.
EU legislation provides for the exchange of information on all cases of tax evasion. However, Bern upheld the principle of double criminality - Switzerland will help Brussels only when the offense is treated the same way by both sides. In Switzerland, non-residents' evasion of taxes in their home countries is not considered a criminal offense. But now, residents of EU member states (this will not affect non-Europeans) who have deposits in Swiss banks will be subject to a so-called "withholding tax", which has long been levied in Switzerland on interest accrued on deposits in Swiss francs. Over five years it will be raised from 15% to 35%. 75% of the amount collected will be transferred to the European Union, but without disclosing information about specific accounts, unless it concerns legal assistance in cases of tax fraud.
By insisting on its position, Switzerland saved the institution of banking secrecy throughout Europe. Austria, Belgium and Luxembourg, which are EU members, immediately told the European Union that exchanging information on deposits would damage their economies, which are heavily dependent on banking. But for the sake of joining the Schengen Convention, which also provides for cooperation between authorities and the exchange of information, Switzerland agreed to provide legal and administrative assistance in the fight against smuggling and other crimes related to evasion of indirect taxes (customs duties, VAT, excise duties on alcohol and tobacco), subsidies and public procurement, as well as money laundering. At the same time, Switzerland retained freedom in the exchange of information on matters relating to the direct taxation of individuals and legal entities (income tax, corporate tax and profit tax). Any new EU legal measures in this area will not apply to Switzerland without a separate agreement.
Nor will the EU directive on imposing duties on the re-export of products manufactured in any EU country apply to Switzerland. The fact is that Switzerland, the geographical center of Europe, is home to the distribution centers of many large European companies.
The package of agreements includes an agreement on exempting processed agricultural products (instant coffee, chocolate, biscuits, sauces, soups, pasta products) from customs duties, opening free access to the European market primarily for Nestlé. Under other agreements, Switzerland is joining the European Environment Agency, the Eurostat statistical service, and is allowed to participate in the Media project (creation and distribution of audiovisual products) and in educational programs. Finally, another agreement provides for the exemption from income tax in Switzerland of several dozen former EU employees who have retired.
Switzerland is also joining the Dublin Convention on cooperation in the field of asylum, which allows it not to consider applications from persons who have already filed one in any other participating country.
But there is still a long way to go before these agreements take effect. On the EU side, only the agreement on the fight against tax fraud must be approved by all 25 member states. Brussels had hoped to introduce the taxation of deposits as early as January 1, 2005. But in Switzerland, with its direct democracy, everything is much more complicated. Every issue is put to a referendum after being considered by parliament, and all this will not be completed before next spring.
The government has already announced that it will put the agreements to a so-called "optional referendum", in which only the number of voters' votes is counted. However, nationalist organizations intend to start collecting signatures for a so-called "mandatory referendum", in which, in addition to a majority of votes, it is also necessary to obtain the support of a majority of the country's 26 cantons.
Under the Swiss constitution, such a plebiscite is held if an international agreement provides for accession to a collective security organization or to a supranational community. The government assures that none of the agreements falls under this requirement. However, the influential People's Party and the mass organization "Action for an Independent and Neutral Switzerland" (AINS) see it differently. As the director of AINS, parliamentarian Hans Fehr, said, "joining the Schengen Convention is tantamount to joining a supranational organization", and the government is trying to "drag the country into the EU by deception", encroaching on Switzerland's sovereignty. According to him, the agreement must be put to a mandatory referendum, "as the constitution requires". The road to the entry into force of the agreements between the EU and Switzerland may prove no less difficult than the negotiations that preceded their conclusion.