EU-Switzerland Agreement on Air Transport
Guillotine clause
Outlook


Switzerland is not a member of the European Union, but a web of bilateral agreements binds Switzerland to the four freedoms underpinning the European Union's single market, including the free movement of persons. However, on February 9 2014 Swiss voters narrowly approved a referendum to reintroduce quotas on the number of foreigners allowed to live and work in Switzerland. This move may have far-reaching consequences for Switzerland's relations with the European Union – and could seriously harm business in the air transport sector.

EU-Switzerland Agreement on Air Transport

The most relevant legal basis in that regard is the 1999 EU-Switzerland Agreement on Air Transport,(1) which provides for market access and establishes competition, as well as other essential rules. By virtue of the agreement, Switzerland adopted most of the European Union's secondary aviation legislation – for example, EU Regulation 1008/2008 on common rules for the operation of air services.

Most observers agree that the trade and economic impacts of the agreement are positive and have led to:

  • a more open and competitive air transport sector;
  • the establishment of more businesses by EU carriers in Switzerland; and
  • diminishing air fares.

By liberalising cross-border investments in the air transport sector, the agreement has led to easier and more efficient refinancing possibilities. In the context of broader regional air transport networks, the transport routes available to Swiss travellers have been improved, as well as the attractiveness of Swiss airports.(2)

Guillotine clause

The agreement forms part of seven sectoral agreements (known in Switzerland as the Bilaterals I), which were negotiated and concluded as a package deal. The agreements are linked by a guillotine clause, stipulating that they can only remain effective together – if one of the seven agreements were to be terminated, all others would also cease to have effect six months after receipt of the termination notice.(3)

One of the agreements connected by the guillotine clause to the agreement is the 1999 EU-Switzerland Agreement on the Free Movement of Persons,(4) providing for the right of EU and Swiss citizens to freely choose their place of work and place of domicile in the territories of the contracting parties. If this agreement is terminated, the EU-Switzerland Agreement on Air Transport would also cease to apply.

Outlook

Following the February 9 2014 referendum, the Swiss government must draft implementing legislation within three years. A first proposal for the new law is expected later this year. The government has some flexibility, since the quotas have not been specified by the referendum. In theory, higher figures than existing immigration could be set. However, it is more likely that Switzerland will breach the EU-Switzerland Agreement on the Free Movement of Persons sooner rather than later, thereby risking the termination of all sectoral agreements made in 1999 (including the air transport agreement). The European Commission has already signalled a tough response, warning that Switzerland's access to the single market could be under threat.

Depending on how the European Union responds, the impact on the Swiss economy could be significant. This is particularly true in relation to the civil aviation sector, which would be seriously harmed if market access on the basis of the EU-Switzerland Agreement on Air Transport were no longer possible. Players involved in civil aviation are advised to ensure that their voices are heard in the forthcoming discussions in both the European Union and Switzerland.

For further information on this topic please contact Andreas Fankhauser at Baumgartner Mächler by telephone (+41 44 215 4477), fax (+41 44 215 4479) or email ([email protected]). The Baumgartner Mächler website can be accessed at www.bmlaw.ch.

Endnotes

(1) Agreement between the European Community and the Swiss Confederation on Air Transport, signed on June 21 1999, entered into force on June 1 2002.

(2) Christian Pauletto, Regulatory Framework and Trade Liberalisation in Bilateral Swiss-EU Transport Agreements, Page 7.

(3) For example, Article 36 of the EU-Switzerland Agreement on Air Transport:

"1. This Agreement (...) shall enter into force (...) following the final notification of the deposit of the instruments of ratification or approval of the following seven agreements: agreement on air transport, agreement on the free movement of persons, agreement on the carriage of goods and passengers by rail and road, agreement on trade in agricultural products, agreement on certain aspects of government procurement, agreement on mutual recognition in relation to conformity assessment, agreement on scientific and technological cooperation. (...) 3. The Community or Switzerland may terminate this Agreement by notifying its decision to the other Contracting Party. Where such notification is given, paragraph 4 shall apply. 4. The seven agreements referred to in paragraph 1 shall cease to be applicable six months after receipt of the notification of (...) termination, as referred to in paragraph 3."

Except for the agreement on scientific and technological cooperation, which has been renewed several times, the other sectoral agreements referred to in Article 36 of the EU-Switzerland Agreement on Air Transport also contain this guillotine clause.

(4) Agreement between the European Union and its member states and the Swiss Confederation on the Free Movement of Persons, signed on June 21 1999, entered into force on June 1 2002.