Swiss President Doris Leuthard told a newspaper on Sunday that a national referendum on Switzerland's relationship with the European Union would help clarify the country's relationship with the free-trade zone.

Tensions between Switzerland and the EU have increased in recent days after the EU granted Swiss stock exchanges access to EU markets for only one year. The Markets in Financial Instruments Directive and Regulation (called MiFID II/MiFIR), will come into force on January 3. Swiss officials slammed the decision to allow access for only a year, calling it discriminatory, and threatened to retaliate.

Switzerland is not a member of the EU but the current feud comes as Britain is negotiating its withdrawal from the EU. Those talks will include redefining their mutual trade relationship.

By contrast Switzerland and the EU have been engaged in "framework" treaty negotiations for some time as Brussels seeks to replace more than 100 bilateral trade agreements which regulate its relationship with Switzerland.

"The bilateral path is important," Leuthard told the Swiss newspaper Sonntags Blick. "We therefore have to clarify our relationship with Europe. We have to know in which direction to go. Therefore a fundamental referendum would be helpful."

Talks on the far-reaching agreement advanced last month after the Bern government agreed to increase its contribution to the EU budget.

Read more: Switzerland — The most stable place on earth

The deal

The deal was intended to ensure that Switzerland adopts relevant EU laws in exchange for enhanced access to the bloc's single market, which is crucial for Swiss exports.

But the deal faces opposition from the anti-EU Swiss People's Party (SVP), which is currently the largest voting bloc in parliament.

Leuthard, who steps down from the rotating presidency at the end of the year, said the latest row had not overshadowed her year in the rotating office.

"Of course, the differences with Brussels are now in focus," she said in the newspaper Blick. "Here our attitude is clear - for the EU to link such a technical thing like stock exchange equivalency with a political question like the framework treaty that is not possible."

"We do not accept such a power play!" she added. "But it's part of politics, we have to endure that."

Leuthard said she understood Swiss suspicion towards the EU, but said there is no alternative to reaching an agreement with the bloc that generates about 66 percent of Swiss trade.

"We can strengthen the cooperation with India and China, but the EU remains central," she said. "We need a mechanism and regulated relationship with the EU that would also prevent political games like we are having at the moment."

bik/aw (Reuters, AFP)