EU to Switzerland: 'Where are we going with this relationship?'

The long-soured relationship between the two sides has "clearly reached its limits," they said in a report, and hinted that Bern's intransigence threatened access to the EU market.

Fed up with the sectoral approach, the bloc is demanding a robust, overarching agreement between the two sides.

In essence, they suggested that it is time for Switzerland to decide whether it wants closer integration with the bloc or to be cast out into the market-access wilderness.

Stressing that they still respected Switzerland's sovereignty, the ministers nevertheless said that they have "come to the conclusion that while the present system of bilateral agreements has worked well in the past, the challenge of the coming years will be to go beyond this complex system, which is creating legal uncertainty and has become unwieldy to manage and has clearly reached its limits."

The ministers said that coming up with agreements covering different sectors on an ad hoc basis had been of "mutual interest" initially, but had over the years "turned into ... a highly complex set of multiple agreements."

Without "efficient arrangements" to ensure Switzerland adopts EU law, including case law set down by European Court of Justice rulings, and enforcement of this law, the European single market, which Switzerland has access to, lacks the "necessary homogeneity," said the ministers.

In other words, some Swiss law is more favourable to Swiss companies or individuals than it is to other Europeans.

Specifically, the ministers said they were "very concerned" about Switzerland's cantonal tax systems that they say amount to subsidies that favour domestic firms and encourage firms to set up shop in the country rather than elsewhere. They want such preferential rules abolished.

The bloc wants the country to crack down on tax evasion and fraud.

The EU is also concerned that Switzerland is not consistently applying rules on the free movement of people, particularly rules that require individuals to provide prior notification before arriving and an eight-day waiting period.

The European Commission on behalf of the bloc is currently engaged in talks with Bern over many of these concerns, but it is understood they are not proceeding well.

In September, the Swiss Federal Council insisted that the bilateral, sectoral approach remain the limit of relations between the two sides.