The Swiss government did not sign on to the long-stalled Swiss-EU Institutional Agreement (InstA) treaty with the European Union on Wednesday amid domestic opposition to a pact that would have simplified and strengthened ties with the country's largest trading partner.

The government, also known as the Federal Council, said it "concluded that there remain substantial differences between Switzerland and the EU on key aspects of the agreement. The conditions are thus not met for the signing of the agreement," after a cabinet meeting.

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

The negotiations largely fell apart over EU demands for full access to the Swiss labor market for EU citizens. Swiss Foreign Minister Ignazio Cassis said that could have lead to a "paradigm shift" which could mean non-Swiss citizens receiving social security rights in Switzerland.

The European Commission said it regretted the decision. The commission added that decades-old EU-Swiss agreements were "not up to speed" for modern bilateral ties.

"Without this agreement, this modernization of our relationship will not be possible and our bilateral agreements will inevitably age: 50 years have passed since the entry into force of the Free Trade Agreement, 20 years since the bilateral I and II agreements," the Commission said. "We will now analyze carefully the impact of this announcement."

Potential effects

EU-Swiss economic ties are governed by over 100 agreements dating back to 1972, and fleshed out after Swiss people rejected joining the European Economic Area in 1992. The draft that Switzerland rejected was drawn up in 2018.

Cassis said Switzerland hoped to remain a close partner of the bloc's, but suggested that his country was not being respected by the EU.

"We want Switzerland to be treated on an equal footing compared to other third-party states (outside the EU), whether it's a question of cooperation or the recognition of equal standards," Cassis said.

Some 1.4 million EU citizens live in Switzerland among the 8.5 million residents and citizens. About 340,000 people commute across the border from EU nations that surround Switzerland to work.

kbd/aw (Reuters, AP, AFP)