EU looking to reset relations with Switzerland

Mr Van Rompuy said the reset had to be based on Bern accepting the "evolution" of EU law, in contrast to the current situation, when nothing is adopted automatically by the Swiss side.

"The EU position is that this is not the way to continue. With 120 bilateral agreements in place, imagine the whole bureaucracy when you need to change one paragraph," one EU official familiar with the talks told this website.

Some 60 "working groups" on specific issues covered by these agreements – ranging from the wrist watch industry to transport, border control and fight against fraud – currently meet twice a year, separately and with little exchange amongst each other.

Ms Leuthard, switching from English into German and French, said that Switzerland too recognises the need to simplify the complex architecture of bilateral agreements. She stressed, however, that the new legal basis had to be "clean, but in respect of our sovereignty."

One offer made to the Swiss is a "European Economic Area Lite", alluding to the current agreement with Norway, also a non-EU member who is fully integrated into the bloc's internal market and border-free Schengen area, but who unlike Bern automatically adopts any change to the EU laws.

Yet in a country where direct democracy is so deeply rooted that almost every decision is taken by referendum, the idea to adopt such legal "automatism" is unacceptable.

Swiss voters already rejected in 1992 the country's accession to the EEA, precisely out of fear of losing sovereignty to Brussels, which is often criticised for its democratic deficit.

"Switzerland is against adopting EU laws automatically, using the argument that it is a sovereign country. But the EU says that as long as we are part of the internal market, we have to play by the book," Jean Russotto, a Brussels-based Swiss lawyer specialised in EU law and regulatory compliance told Euobserver.

Another taboo subject for the Swiss public is the jurisdiction of the European Court of Justice, which has the ultimate say if a country infringes EU law. If Switzerland adopted the legislation automatically, it could, in theory be taken to the Luxembourg court by the European Commission in cases of non-compliance.

"This would be a problem," says Mr Russotto. "The no-vote in 1992 was strongly influenced by the perspective of 'foreign judges' having a say in the country. The situation has not changed very much since, although we've adopted a lot of EU aquis (legislation), but it was done by our own parliament, not automatically."

A compromise solution could be found, however, as it is the case for Norway, Liechtenstein and Iceland – which form the EEA. In their case, there is a special court based in Luxembourg and confusingly named the EFTA court after the European Free Trade Agreement which also includes Switzerland. The EFTA court, however, has no jurisdiction over the Alpine country. In an odd twist, the chief judge of the EFTA court, Carl Baudenbacher, is Swiss, but representing Liechtenstein.

Parliament

On top of the existing differences over a potential over-arching agreement, a new actor on the EU side is likely to complicate negotiations: the European Parliament.

Following the entry into force of the Lisbon Treaty, the EU legislature has the power to strike down any international agreements negotiated by the EU commission.

It already put EU-US relations on freeze for while when it vetoed a deal on bank data transfers for anti-terrorism purposes, citing privacy concerns.

"We want to deepen our relationship with the European Parliament," Ms Leuthard said. "It is very important to involve parliaments, because they decide ultimately on the agreements and their content," she added.