Switzerland is lovely but do we all want to live there?
It was helpful that Michael Gove put a tiny bit of flesh on the what-the-UK-will-look-like-after-Brexit bone in his 19th April speech. Gove said the UK would be part of a free trade area which stretched from Iceland to Turkey, outside the single market and without freedom of movement requirements. It’s difficult to understand exactly what he has in mind because there are no other European countries in this position. But it rules out Norway’s single market model. The nearest to his description is probably Switzerland.
Norway and Iceland joined the single market with the creation of the European Economic Area in 1992. The Swiss part in the agreement had to go in the bin after the population said non, nein, no, in one of their ubiquitous referenda. Instead, over the following twenty years - yes, twenty years - they negotiated over one hundred sector-specific trade agreements with the EU. These agreements only partially cover services and do not cover financial services at all (that’s why their banks have branches in London - to access the single market through the back door). And for this privilege, Switzerland pays a hefty financial contribution to the EU budget and is part of the Schengen free movement area – which is where they part company with the Gove fantasy model.
An empty border crossing point between Switzerland and France
It just so happens I have a bit of experience of life in Switzerland, having recently moved there. We live very near the French border and my nearest shopping area is in France which is also, incidentally (or actually perhaps not incidentally), much cheaper than the Swiss options. But there are complications.
My husband’s birthday was two weeks ago – we also had a family of five coming to stay for the weekend so I was frazzled. Between making the beds and searching for Ottolenghi ingredients in unfamiliar territory, I rushed to France and bought him a bike. Because it was over my €300 tax-free allowance, import tax was due to bring it the 700 meters into Switzerland. But, the bike shop explained I could at least reclaim the French VAT as I was exporting it. A stop at the French customs office at the border was required to get the invoice registered, then on to the Swiss customs office one hundred meters on the Swiss side to pay the Swiss tax. Not finished yet – I would still have to return to the French shop where they would refund the French VAT - minus an administration charge. Really?
After five minutes waiting at the French customs office, weighing up the money I would save against the time I had left to race home, hide the bike in the shed before my husband got back, and make supper for the guests, I cut and ran. But not home – I still had to pay the import tax on the Swiss side. Of course there was a queue there too – a large family in front explained that they had all come so they could multiply their €300 tax free allowance to cover the garden table they had bought. The official became agitated - Non! Complètement interdit! Apparently you can only multiply tax allowances if you have different items which can be shared between the parties. Zut Alors – c’est compliqué! I nearly volunteered that they were going to share the table at home but didn’t want to delay my turn - and arguing with Swiss officials is a dead end. Happily, the family knew this too, and they coughed up without a word. Finally, I got home with my bike, doubly frazzled, and with very little time to cook the supper - and having paid tax in both France and Switzerland.
We have also ordered things online from other countries – a laptop from Sweden, some light fittings from Kent. Each time the goods have arrived promptly (no complaints about the Swiss post then) and have been followed by a bill covering the import tax.
Think of the administration for business and government involved in this– and the scope for evading or avoiding. Is this really what we want?
Yes, Switzerland is rich. There will be lots of opinions about why that is, but their neutrality in the last century’s wars has certainly contributed – and on the darker side a manufacturing industry developed to sell arms two ways and a banking system to launder money on all sides also set them up for peacetime trading.
The UK’s position is different. After 600 years of war with our neighbours, we finally hitched our economy to our adversaries’, which has given us peace and prosperity ever since. Our economy has developed over half a century alongside the emerging single market. We do not only trade with our EU partners though, but also benefit from the EU’s trade deals with much of the rest of the world. Every competent economic body is warning of the economic shock Brexit would cause. We simply cannot compare what the UK economy might look like after such a shock, while we struggle to develop new markets, with what the Swiss economy is like now after years of stability and careful market development. It is paradoxical to say we’re going to throw everything we’ve developed up in the air and become rich like the Swiss. That’s not how they did it. Even in good times, such an experiment would be folly, but when the world economy is teetering on the edge and political stability compromised, it would be suicidal.
And Mr Gove does not seem to understand that the single market is a package deal which includes the so-called four freedoms for goods, services, capital and – yes – labour or people. You do not get the first three to any degree without the last one – and millions of UK citizens living all over the EU benefit from this. In order to get their limited access to the single market, the Swiss have had to accept freedom of movement. Yes, the boarders are open and some of them even totally unmanned.
By being outside the Schengen zone whilst inside the single market, the UK has already got as near as possible to Gove’s fantasy. True, we cannot stop law-abiding EU citizen from entering the UK (and we should not want to) – but passports have to be shown by all, and those on terrorist watch lists or wanted for other criminal activity can - and are - stopped. Like this – and unlike the Swiss - we can track who enters the UK. They could only dream of such a system when, after the Paris attacks, connected individuals were sighted in Geneva. We also maintain total control over those coming from countries outside the EU – that’s why the Syrians and Eritreans are gathered in Calais, because - whilst they can travel from Greece or Italy to France without once showing their papers - to get into the UK they must. Sure – there will always be some who manage to smuggle their way into the UK on false papers or in the back of trucks – but how would leaving the EU change that?
Hovering at the checkout of a French supermarket the other day, I swept a few packs of Panini football stickers into my trolley for my son’s euro 2016 album. I thought he would be pleased, but on opening them, he found they were incompatible with his Swiss-bought Panini album… Come on Switzerland! Placing non-tariff barriers on kids’ football stickers so they can’t save on their pocket money…. Really? Please, let’s just leave the Swiss to count their piles of money and polish their cuckoo clocks and steer clear of the fantasists who think we can ever, ever be like them.
