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Bilateral Agreements II

The second round of agreements, Bilateral Agreements II, considers further economic interests such as the food industry, tourism, and the financial centre, and extends cooperation between Switzerland and the EU beyond economic affairs to important new political areas including security, asylum, the environment and cultural affairs.

Despite mutual declarations of intent to continue negotiations contained in the final acts of Bilateral Agreements I in 1999, the European Commission was in fact sceptical about further negotiations of this kind. However, two new matters of particular concern to the EU provided Brussels with a reason for considering a new round of negotiations with Switzerland. In the first place the EU hoped to include Switzerland in a planned system of cross-border taxation of savings. Secondly, Brussels wished to cooperate with Switzerland in stepped-up efforts to combat fraud in relation to indirect taxes, notably with regard to cigarette smuggling.

Switzerland agreed to negotiations in these areas under the following conditions: the negotiations would also have to include areas of special interest to Switzerland in addition to the two requested by Brussels, including cooperation in the areas of security and asylum, with Swiss participation in the Schengen/Dublin arrangements (cooperation in police and justice, asylum and migration matters). Switzerland also wanted negotiations in areas mentioned in the joint declaration of intent to Bilateral Agreements I: processed agricultural products, statistics, the environment, MEDIA, education, pensions and services. Furthermore Switzerland wanted to protect the interests of its financial centre, beginning with banking secrecy.

Negotiations between Switzerland and the EU began in June 2002 in the 10 separate areas of the Bilateral Agreements II. In March 2003, both parties agreed to suspend negotiations on the liberalisation of services, due to the large number of questions that remained unresolved. Agreement at the political level on the taxation of savings in June 2003 was a major milestone in the negotiations. On 19 ay 2004 at a Switzerland-EU summit meeting, agreement was announced on the remaining politically sensitive areas concerned with the question of exchanging information on tax-related offences in the framework of judicial and administrative cooperation:

  • With regard to Schengen/Dublin, Switzerland receives an open-ended opt-out for the event that a future Schengen regulation gives rise to an obligation on Switzerland to provide legal assistance also in cases of tax evasion.
  • Insofar as efforts to combat fraud are concerned, Switzerland extends cooperation in the area of indirect taxes to tax evasion offences (national treatment).

Throughout the entire period of the negotiations Switzerland observed the principle of parallelism: as far as Bern was concerned the package of agreements had to be accepted as a whole. Among other things this approach ensured that a balanced overall result would be achieved that would take into account both the essential interests of Switzerland and the major concerns of the EU. As Switzerland desired, all the agreements including Schengen/Dublin were approved as a package. Switzerland has also agreed to cooperate with the EU in the area of cross-border taxation of savings and extended cooperation to efforts to combat fraud in relation to indirect taxes.

The Bilateral Agreements II were signed on 26 October 2004 and approved by the Swiss federal parliament on 17 December 2004 in the form of individual federal decrees. Although seven of the agreements were subject to an optional referendum, only one was held - on the Schengen/Dublin Association Agreement. This was approved by 54.6 % of the Swiss electorate on 5 June 2005. In contrast to Bilateral Agreements I, Bilateral Agreements II are not legally linked to each other; each can take effect independently in accordance with the relevant provisions. All but the Agreement on combating fraud are now in force. On 1 March 2008, the Schengen/Dublin Association Agreements formally came into effect. Participation at the operational level in the Schengen/Dublin security and asylum cooperation began on 12 December 2008 following completion of an evaluation process by teams of Schengen experts to ensure that Swiss standards met Schengen criteria in the areas of external border protection, connection with the Europe-wide computer database (Schengen Information System), data protection, visas, and police cooperation. The association process was completed on 29 March 2009 with the introduction of the Schengen regime at Swiss airports together with the new flight schedule.

The Bilateral Agreements II extend Switzerland's cooperation with the EU to other key political areas:

Schengen/Dublin: The elimination of the systematic control of individual movements facilitates cross-border traffic. At the same time, controls at the Schengen external borders and international cooperation between police authorities and justice systems are strengthened in efforts to combat crime. The Dublin rules on jurisdiction and the Eurodac fingerprint database help to avoid multiple requests for asylum, lessening the burden on the national asylum systems.

Taxation of savings income: Switzerland collects a withholding tax on interest on behalf of the EU states on natural persons whose residency for tax purposes is in the EU.

Combating fraud: Cooperation is extended to combat smuggling and other offences in the area of indirect tax (customs duties, value added tax, tax on consumption), in the area of subsidies and in public procurement markets.

Processed agricultural products: Tariffs and export subsidies are abolished for a large number of food industry products.

Environment: Switzerland becomes a member of the European Environment Agency, an important instrument of European cooperation in the environmental field.

Statistics: The collection of statistical data is harmonised between the partners, thus ensuring access to a wide range of comparable data of considerable importance for political and economic decision-making.

MEDIA: Swiss filmmakers have full and equal access to EU promotional programmes.

Pensions: Retired EU officials living in Switzerland will no longer be subject to double taxation.

Education: Bilaterals II merely contain a political declaration of intent on Switzerland's participation in the EU's education programmes 2007-2013. The corresponding agreement was signed on 15 February 2010.

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