Swiss cabinet ditches stalled treaty with EU

ZURICH- The Swiss government decided on Wednesday to ditch a stalled treaty with the European Union amid stiff domestic opposition to a pact that would have simplified and strengthened ties with the country's biggest trading partner.

The government concluded that substantial differences remained between Switzerland and the EU on key aspects of the agreement.

"The conditions are thus not met for the signing of the agreement," the government said after a cabinet meeting to plan the way forward in the long-running impasse with Brussels. 

"The Federal Council (government) today took the decision not to sign the agreement, and communicated this decision to the EU. This brings the negotiations on the draft of the InstA (treaty) to a close."

EU-Swiss economic ties are now governed by more than 100 bilateral agreements stretching back to 1972 and fleshed out after Swiss voters in 1992 rejected membership in the European Economic Area. They remain in effect.

But walking away from a deal could over time disrupt and ultimately jeopardise Switzerland's de facto membership of the EU common market.

Failure to clinch the treaty whose draft emerged in 2018 blocks Switzerland from any new access to the single market, such as an electricity union.

Existing accords will also erode over time, such as an agreement on cross-border trade in medical technology products that lapsed this week. 

Trouble became apparent last month, when talks at a summit ran aground and Swiss President Guy Parmelin cited "fundamental differences" that remained. 

Critics across the Swiss political spectrum say the pact infringed Swiss sovereignty to an unacceptable extent.

For its part, the 27-member EU wants an overarching treaty to bind non-EU member Switzerland more closely to single market rules, including free movement of people, and provide a more effective way to resolve disputes.

(Reporting by Michael Shields; editing by Carmel Crimmins and Angus MacSwan) ((Michael.Shields@thomsonreuters.com; +41 41 528 3630; Reuters Messaging: michael.shields.thomsonreuters.com@reuters.net))