Swiss EU immigration – unfortunately there is no plan B, says president in interview

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Switzerland’s plan to solve an immigration dilemma with the European Union could avoid being held up by another referendum if it gets strong support in parliament next week, according to Swiss President Johann Schneider-Ammann.

A clear result in a final vote on Dec. 16 with the Swiss People’s Party, or SVP, in the minority could make it “delicate” for the group to push for another plebiscite, he said in an interview with Bloomberg Television’s Guy Johnson.

A new vote would further extend Switzerland’s long-running attempts to secure an agreement with the EU on immigration after a 2014 plebiscite, initiated by the SVP, backed quotas on foreign workers. Such a move would contravene a set of treaties with the bloc and nullify crucial trade deals.

“In this particular question — free movement of persons to our country — they will not want to get a defeat, they want to stay the winners,” Schneider-Amman said. “The situation will be extremely delicate for them. I do not speculate.”

Parliament in Bern is trying to bridge the divide with the bloc by sidestepping formal numerical limits and simply requiring employers to register vacancies at local job centers. Schneider-Ammann said that he believes parliament’s plan is “compatible” with EU rules.

Strong Franc

Quotas for EU newcomers, who under current laws may take up jobs and residence in Switzerland without special permission, would contravene an economically important set of treaties. Their loss could stunt economic growth, which is already suffering due to the strong franc.

The State Secretariat for Economic Affairs in Bern’s most recent forecast is for economic growth of 1.5 percent in 2016 and 1.8 percent in 2017. It will update that prediction next week. The central bank is using negative interest rates plus a pledge to intervene in currency markets to stem the francs appreciation.

“As far as the Swiss franc is concerned, it’s strong, it will stay strong and we handle the strength of the Swiss franc by investing into education, into research, into innovation,” Schneider-Ammann said. “Based on that, we can allow for a certain period of time to be confronted by our overvalued Swiss franc.”

Heightened political risk in neighboring countries, following Britain’s vote to leave the EU earlier this year and Italy’s recent constitutional referendum, could once again lead to an increased appetite among investors for the franc, making Swiss goods more expensive to foreign buyers. The EU is the top destination for Swiss exports and Schneider-Ammann said that if growth in the bloc suffers, Switzerland will be affected as well.

Tax Reform

Another item on the government’s to-do list for 2017 is a reform of the corporate tax code. Under pressure from abroad, the Swiss will have to do away with the special tax breaks they give multinationals, and cantons will lower the headline rate they charge other companies. The reform, already passed by parliament, will come up for a national vote in February.

Opponents of the plan say it’s too costly, while the government argues it’s necessary to keep Switzerland attractive internationally as a place for doing business.

“I assume there’s a fair possibility for the Swiss government to persuade our population to follow the government,” Schneider-Ammann said. “We have a good offer,” he also said, adding there was “no plan B.”