Updated: Feb 6
Artwork by Julia Jarzyna
The Boris Johnson Government have been heavily criticised for breaching international law, appearing to move further in ensuring a No-Deal Brexit becomes a reality. I thought it relevant to then present a fascinating research piece I originally submitted to King's College London. It attempts to further understand what sort of relationship exists with the EU from the perspective of a non-EU state. Switzerland is a perfect example to do so, particularly when considering the following reasons.
Firstly, Switzerland is known as a “sonderfall” or special case as a very close partner of the EU despite not being a member of the European Economic Area (EEA) (Gstohl, 2002; Lavenex & Schwok, 2015, p. 34). Secondly, the “Swiss model” of EU bilateralism has been widely cited as a viable way forward for the UK government in its future relationship with the EU, particularly by ensuring EU benefits despite not being a member (Jenni, 2016; Stephens, 2018). To apply Switzerland effectively requires “theoretical propositions” be tested, hence integration theories, specifically neo-functionalism and LI, are now defined and justified (Eckstein, 1975, p. 76).
Integration theories, such as neo-functionalism and LI all offer different perspectives on the three stages of demand, supply and outcome. Conceptually their relationship can be viewed in Figure 1 below. The first stage in integration, demand, refers to the “needs and preferences of actors” regarding the extent of integration they desire pursuing Figure 1 (Leuffen, 2012, p. 34). The second stage, supply, refers to the “resources and power” of actors enabling them to eventually lead to an outcome of integration or indeed differentiation (Ibid., pp. 34 – 35).
Figure 1: (Leuffen, 2012, p. 36)
The dual theoretical approach this essay considers refers to two rationalist approaches to the integration stages mentioned above. These are LI and neo-functionalism, with LI stemming from intergovernmentalism and neo-functionalism stemming from supranationalism. For intergovernmentalism the state as a unitary actor which with “governments” and “domestic society” being key drivers of integration, their demands are therefore dependent on external/exogenous or origins (Portsmouth, 2018; Leuffen, 2012, p. 38; Pierson, 1998, p. 29). In contrast, supranationalism reject the significance of state actors, identifying “supranational organisations” and the transnational class as the drivers of the integration stages, who demand within themselves – hence “endogenous” (Portsmouth, 2018; Leuffen, 2012, p. 38). Yet the “kind” of integration preferences each makes are both materialists in nature, reflecting the shared rationalist basis they originate from (Ibid). This is summarised below in Figure 2.
Figure 2: (Ibid., p. 37)
Figure 3: (Ibid.)
During the supply/negotiation stage, see Figure 1, intergovernmentalism and supranationalism diverge slightly in their methods of bargaining (Figure 3). For intergovernmentalism, the means by which negotiations occur is “intergovernmental” with the state being the unitary actor (Ibid). Bargaining per intergovernmentalism is considered “hard bargaining” where “individual goals” take precedent and may include “threats to veto” (Ibid). In contrast, the supranationalism approach is via supranational institutions or “embedded” actors who “soft” bargain, “foregoing exit or veto threats” due to the “collective goals and common interest” which “actors pursue” (Leuffen, 2012, p. 36; Pierson, 1998, p. 41).
For supranationalism, this means bargaining power is “institutionally constrained” due to the collective modes of integration negotiations, while for intergovernmentalism bargaining power is prominent, due to hard bargaining which may result in premature/successful endings to negotiations (Leuffen, 2012, p. 35). There are of course further nuanced variations between neo-functionalism and LI regarding the integration stage, which require mentioning.
Figure 4: (Portsmouth, 2014)
In contrast to neo-functionalism and its emphasis on supranational institutions, intergovernmentalism argues how integration is controlled by state actors per the “rational actions of governments” (Moravcsik, 1993, p. 474; Moravcsik, 1998, p. 5; Dirk Leuffen, 2012, p. 35). (Moravcsik, 1993, p. 474; Moravcsik, 1998, p. 5). At the domestic level, state actors encounter multiple decisions concerning domestic desires from constituents such as businesses or lobbyists, to either reject or accept international policy agreements (Moravcsik, 1993, p. 478). These are then aggregated by actors into national policy preferences which are then the basis of negotiations within/with the EU (Ibid). Beyond the nation level, states then engage in preference formation through bargaining based on their national policy preferences rather the secede to the influence of supranational institutions, state actors collaborate alongside them, reinforcing the notion that they are the key driver of integration (Ibid., 481).
As noted, there are key areas of disagreement between each theory and, although both rationalist, offer entirely different perspectives on European integration. The notion of the neo-functionalism spill over concept, for instance, is rejected by LI which implies states have no control over integration occurring (Eilstrup-Sangiovanni, 2006, p. 98). Instead, they argue how supranationalism is easily contained by state actors who ultimately engage or reject integration choices. (Eilstrup-Sangiovanni, 2006, p. 97). Conversely, neo-functionalism suggest LI agrees with neo-functionalism theory as they also view the supranational institution as mediators and facilitators during bargaining processes (Rosamond, 2000, p. 145).
Moreover, these two theories offer alternative explanations regarding the bargaining power constraints of actors due to their designation of contrasting central actors, which will further illustrate the ability of neo-functionalism, rather than liberal intergovernmentalism, how the bargaining power of Switzerland is decreased despite being a non-EU member. After all, since integration processes/stages are true “… either overlapping or “diverg[ing] … why shouldn’t it do the same for the scholarship that accompanies [its analysis]?”. (Schmitter, 2004, p. 58). The theoretical approach applied is thereby justified.
The focus of this research concerns the implications of the 2014 referendum on the Free Movements of People agreement with the EU and the guillotine clause. For context below is a brief history of EU-Swiss relations.
Switzerland and the EU have engaged in three bilateral agreement areas, Bilateral I, II and III with the I & II being successful while III being less so. The Swiss Government approached the EU following the 1992 rejection of the European Economic Agreement (EEA), let alone EU membership, in 1993 to commence bilateral collaboration (Freiburghaus, 2009, p. 278). This meant Switzerland could still profit in full of economic integration but could not “influence the development” of the EU integration process/acquis communautaire(Linder, 2011, p. 45). The Bilateral I agreement of 1999 covered seven areas including, research, barriers to trade and agriculture, and freedom of movement, while the Bilateral II agreements occurred between 2001-2004 covered an additional nine areas particularly Schengen and Dublin (Linder, 2011, p. 46; Kriesi & Trechsel, 2008, pp. 177-178). This led to further agreements between 2005 - 2009 of extending the agreement “to include” new EU-member states (Schwok & Lavenex, 2015, pp. 37-38; Linder, 2011, p. 36).
Such agreements neo-functionalism would discern as an example of the spillover effect because the agreements of 2005-2009 were in effect a continuation of the 2004 agreement demonstrating how integration occurred as an inevitable process from one agreement to another. This underlines the succumbing to supranational institutionalism by the Swiss Government certainly decreasing its bargaining power, despite being a non-EU member, as a result. In contrast, this phase of agreements may be perceived by LI analysis as simply the decisions of the Swiss Government in rationally deciding it appropriate to include these additional member states as this would increase the EU market – Switzerland’s main export market.
However, as will be seen, the guillotine clause, severely undermines the latter’s argument favouring instead the neofunctionalist perspective and ultimately demonstrates the decline in Swiss bargaining power by being outside the EU. This is further demonstrated when analysing the impact of the guillotine clause on Swiss-EU relations with regard to the stalling of Bilateral III.
The words of Swiss diplomat Franz Blankart “be capable of becoming a member of the EU – in order not to be forced to do so” best capture the implications of the guillotine clause on Swiss bargaining power as a non-EU state (Freiburghaus, 2009, p. 190) The guillotine clause/Article 25.4 of the Agreement for Movement of People (AFMP), refers to Bilateral I signed in 1999. The clause reads that any area of agreement completed between both parties will be void was Switzerland to reject only one aspect of an agreement with the EU (Law, 1999).
This significantly constrains swiss bargaining power, highlighting the decline of the non-EU member state’s bargaining power. LI analysis would be unable to argue how Switzerland can reject the supranational integration processes its relationship with the EU has created, without risking the clause being enacted. LI integration as choice-controlled by state actors is nonapplicable, perhaps explaining Switzerland agreeing to extend Bilateral II in 2005-2009. In contrast, neo-functionalism would note how as a consequence of the legally binding guillotine clause, integration as a process can be reinforced. Hence despite being outside the EU, Switzerland is unable to effectively reject any proposals of an established agreement down the line with the EU, severely constraining its bargaining power, thus capturing the nature of Swiss-EU relations to the present day.
Since the completion of Bilateral II, bilateral relations have stalled specifically between 2014-2018 as Bilateral III is yet to be completed. The agreement covers eight additional areas including “free trade in agricultural goods … electricity ... and an agreement European Security and Defence Policy” (Schwok & Lavenex, 2015, p. 39; SwissInfo, 2018). Stalling is likely a consequence of the results of the Swiss referendum in February 2014 when Switzerland held a referendum on introducing “annual quotas on immigration” (Carrera, et al., 2015, p. 2). The outcome was a majority of 50.3 per cent voting in favour of these quotas to be subsequently implemented into Swiss law (Ibid.).
This “undermines” the Swiss - EU AFMP agreement of 1999 because the EU rejected this demand in July of 2014 stating how the quotas are in contradiction to right of free movement per AFMP (Ibid pp. 2-3). Because of the guillotine clause, Switzerland cannot afford to terminate its “participation in the free movement regime” as this “would terminate” its other economic agreements, binding Switzerland to supranational institutions – particularly the EU (Carrera, et al., 2015, p. 6; Law, 1999; Schmitter, 2004, p. 43). LI analysis would, however, highlight the 2014 referendum as an incident of domestic pressure for the government to regain control/sovereignty in integration decisions with the EU given the referendum subject directly conflicted with a core EU agreement (Carrera, et al., 2015, p. 6; Leuffen, 2012, p. 36).
Yet LI fails to explain the supranational nature of Swiss-EU integration areas, without Switzerland activating the guillotine clause, economically detrimental for the non-EU member (Moravcsik, 1998, p. 43; Carrera, et al., 2015, p. 15). For LI, integration is choice-controlled by state actors but, because of the guillotine clause, Swiss actors are bound to their current bilateral, indeed in some areas supranational, obligations thereby undermining the LI argument (Niemann & Ioannou, 2015, p. 205; Leuffen, 2012, p. 36). This explains why Switzerland continued extending Bilateral II in 2005-2009 (Linder, 2011, p. 46).
Alternatively, however, neo-functionalism can explain how as a consequence of the legally binding guillotine clause, integration as a process, not a choice-driven process controlled by actors, can be accepted. Already stated, the series of agreements from, and within, Bilateral I and II saw closer cooperation between the two and the conferment of swiss power to supranational institutions (Schwok & Lavenex, 2015, p. 39). Additionally, neo-functionalism would add how rather than hard bargaining power, soft power is the only viable option for actors making demands, as this adheres to supranational institutions, something Switzerland are essentially forced to do unless an end to prior economic agreements is desired. Thus, the ability of Switzerland to act effectively as a non-EU state is significantly constrained, only explained by neo-functionalism and not LI, thereby demonstrating how its bargaining power has decreased.
The impact of the guillotine clause on Switzerland has shown a decline in its bargaining power as a result of being a non-EU state via neofunctionalist analysis. This is because, due to the guillotine clause, a process of integration has occurred through soft bargaining with Switzerland adhering to supranational bodies, despite protests over migration quotas, because of economic factors. LI could not defend its argument of state actors being central to the integration process, because of the guillotine clause. Though it noted attempts of Switzerland regaining its bargaining power and control via referendums, LI could not explain whether Swiss bargaining power increased/decreased. Therefore neo-functionalism, because of the guillotine clause, accounts for the decline in Swiss bargaining power as a non-EU member. Sciarini best summarises Article 25.4’s significance of Switzerland’s declining bargaining power:
“While the temptation to regain control over immigration was strong, the feeling that it is necessary to preserve Switzerland’s economic advantages is arguably even stronger”(Sciarini, 2018).
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