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What Brexit means for Swiss exporters

What underlying conditions will apply to trade between Great Britain and Switzerland once Great Britain has left the EU?

Clouds over the London skyline
Uncertain future for the trade relationship with Great Britain

At present, legal relations between Switzerland and the UK are largely based on bilateral agreements between Switzerland and the EU. Following the withdrawal of the United Kingdom (UK) on 29 March 2019, these treaties will no longer apply to the UK, and there is a risk of loopholes in areas such as trade, migration or transport.

In order to prevent such gaps, the Swiss Federal Council adopted a strategy ("Mind the Gap" strategy) following the British referendum in 2016 and set up a steering group to coordinate the work of the individual departments. Switzerland intends to secure and, if necessary, expand, the existing mutual rights and obligations in its relationship with the UK beyond the date of the UK's withdrawal from the EU.

Current status

In mid-November 2018, the EU and the United Kingdom agreed on a draft of a withdrawal agreement and issued a brief declaration on future relations. The deal defines a 21-month transition period before the withdrawal becomes effective.

The British Cabinet approved the draft on November 14. An EU Council summit will be held at the end of the month for the EU to reach its decision on the matter. It will then be up to the British Parliament and the European member states to ratify the draft.

We will inform you here as soon as any developments become known.

Forecast on the consequences of the withdrawal

It is not yet possible to predict how relations between Switzerland and the UK will ultimately develop, despite the imminent withdrawal date. In certain areas, the result largely depends on the outcome of the exit negotiations between the UK and the EU. Although a draft of the treaty is now available, it has not yet been approved by all of the necessary bodies. It is still uncertain to which extent it will be possible to maintain the stipulated rights and obligations between Switzerland and the UK. Switzerland is holding regular, in-depth talks with both parties.

Scenario 1: EU-UK agreement and inception of transitional arrangements

In the spring, the UK and the EU agreed in principle on a transition period that would run from the date of withdrawal until the end of 2020. Such a 21-month period is also included in the draft of the withdrawal agreement. During this period, although the UK would no longer formally be a member of the EU, it would remain part of the EU internal market and the EU Customs Union and would therefore continue to have most of the rights and obligations of an EU member. The bilateral agreements between Switzerland and the EU would remain applicable to the UK until the end of 2020. In all probability, this would allow business activities of Swiss companies in and with the UK to continue in their current form.

Scenario 2: No agreement between EU and UK – "disorderly withdrawal"

There is still a possibility that the ratifications of the withdrawal agreement between the UK and the EU will fail.

In order to avoid breaches and legal uncertainty in the bilateral relationship, Switzerland is preparing fall-back solutions for a scenario where there is no transition period and it is not possible to maintain the status quo. However, it would only be possible to gauge the effectiveness of these solutions once such a scenario unfolded. Switzerland is taking all possible steps to minimize legal uncertainty and, as far as possible, to prevent trade barriers for economic operators when the UK withdraws from the EU.

Would you like to clarify your individual risks and opportunities in the British market? Our export consultant NADJA KOLB is at your disposal at all times.

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