The ‘Swiss model’ – a special relationship to the European Union

Astrid Epiney explains how the agreements that underpin Switzerland’s relationship with the European Union work, as well as the advantages and tradeoffs.

Switzerland is not a member state of the European Union. However, it is deeply connected to the Union and its member states, especially those neighbouring it. So, economically speaking, Switzerland is one of the states most “integrated” into the internal market, and the EU is by far Switzerland’s most important economic partner.

The basis for this special relationship is about 140 international treaties between Switzerland and the EU, the so-called “Bilateral Agreements” being of special importance. While the “Bilaterales I” (entered in force in 2002) mainly concern the participation of Switzerland in parts of the internal market (including free movement of persons), the “Bilaterales II” (signed in 2004) deal also with other topics, in particular the Schengen/Dublin-association on migration and police cooperation. Since these important treaties provide for participation of Switzerland in parts of the EU acquis, they also contain mechanisms for their updating when the relevant EU law is modified. However, the treaties do not contain a dispute settlement mechanism, and as far as the agreements concerning participation in the internal market are concerned, updating is possible (and has happened hundreds of times in the past around 25 years) but is not dynamic; in the sense that the parties may decide not to update an agreement.

The current package of agreements being negotiated between Switzerland and the European Union (“Bilaterales III”), signed on 2 March 2026, modifies the institutional aspects of four agreements covering trade, land and air transport and free movement of persons. These aspects are very important for the European Union, which considers that participation in parts of the internal market must be accompanied by an alignment with the concerned EU law and its developments, and by a mechanism for dispute settlement. However, these aspects are also of a certain interest for Switzerland, since there are advantages for the smaller partner if the relationship is shaped by law rather than by politics.

The new package now provides for dynamic alignment of the agreements with the development of EU law, accompanied by safeguards that reflect Swiss realities, such as labour market needs, public service obligations, special provisions for land transport or high standards in areas like animal welfare.

Specifically, every time a legal act integrated into an agreement with Switzerland is about to be modified, Switzerland is informed and Swiss experts participate in the preparation of such modification (‘decision-shaping’). After the adoption of the act at EU level, the joint committee (composed of the representatives of the parties) takes a decision to update the agreement as fast as possible in order to align it with the development of EU law. This highlights that the alignment is not ‘automatic’, since a decision of the joint committee is necessary in any case.

From the point of view of Swiss law, every decision of the joint committee is viewed as a new international treaty. So, the Swiss representative may approve such a decision only if the requirements of national law are fulfilled. This is a serious limitation: the national Parliament may have to adopt – before deciding on the alignment – a new national law which may also be subject to a referendum. But it is also possible that the government may have already decided not to allow the Swiss representative to approve a certain alignment in the joint committee, which may constitute a breach of the obligations laid down in the agreements. The agreements address this possibility explicitly: in the case that Switzerland refuses to update an agreement and an arbitral tribunal has stated that this refusal constitutes a breach of Switzerland’s relevant obligation, the European Union may take – only in the scope of the agreements on the internal market – ‘compensatory measures’, which have to be proportionate.

In addition to this principle of dynamic alignment, the agreements provide for dispute settlement by an arbitral tribunal which must refer a question to the European Court of Justice (CJEU) if the decision of the dispute depends on the interpretation of a notion of EU law integrated into one of the agreements. The CJEU, however, is competent only to interpret EU law; the final decision on the dispute has to be rendered by the arbitral tribunal (the parallels to the preliminary rulings of the ECJ are evident).

To sum up: the relationship between Switzerland and the EU is a very special one. It has not emerged overnight but is the result of more than 50 years of pragmatic cooperation, beginning with the Free Trade Agreement of 1972, and shaped afterwards following the Swiss people and cantons’ rejection of membership in the European Economic Area. The Bilateral Agreements in general and the agreements providing for integration into parts of the internal market especially have to be seen in this context. Switzerland and the European Union agreed on a package of treaties which now shall be developed and stabilised by the “Bilaterales III”, which took around ten years of negotiations.

For both sides, it has advantages and trade-offs. But in my view the most important aspect is that it shows that participation of a third country in parts of the internal market is possible but demands certain institutional arrangements. At the same time, the agreements with Switzerland also illustrate that special provisions (e.g. concerning the ‘refusal’ of dynamic alignment or the numerous safeguards) can be negotiated. The ‘Swiss model’ may be of a certain interest for other third countries, bearing always in mind the special relationship and history of the agreements and the necessity of agreeing with the European Union on the concrete setting.

But there remains a significant hurdle: will bilaterales III be accepted by the Swiss people? There will be a referendum on the agreements, and the challenge will be to explain the advantages and – given the important relationship with the EU – the necessity of adhering to the compromise found.

By Astrid Epiney, Professor of European Law and Director of the Institute for European Law, the University of Fribourg.