by N. Peter Kramer
Deepening key trade and investment links beyond Brexit will be even more vital against a backdrop of COVID-19 to support economic recovery, according to TheCityUK and economiesuisse. The two organisations collaborated on behalf of the financial and related professional services industries of the UK and Switzerland, the first and third largest net exporters of financial services globally.(The US is second.) The new trade relationship should seek to be a template for the next generation of trade and investment deals by covering 21st century policy issues such as data and cyber security.
In their paper, ‘Future-proofing the UK-Swiss financial and related professional services relationship’, TheCityUK and economiesuisse call for a trading relationship based on the mutual recognition of regulation and not the EU principles of equivalence. It urges the UK and Switzerland, as hosts to Europe’s largest financial centres, build closer strategic ties, building on their shared approach and outlook to financial regulation, to better coordinate shared objectives in global regulatory standard setting.
As soon as possible, and before the UK transition period with the EU ends, the UK and Switzerland should sign a Memorandum of Understanding which includes a commitment to support and uphold global financial regulatory standards and a joint approach to support increased liberalisation in trade in services at the global level. The understanding should also include a roadmap towards a bespoke bilateral agreement, or set of agreements, on financial and related services, outlining a mandate and timeframe for the supervisory authorities to deliver such an agreement.
Mutual recognition of regulation should be an important objective. Given the comparability of the Swiss and UK approach to financial market regulation and overall supervisory frameworks, the principle of financial services equivalence as applied by the EU would not be suitable for a bilateral arrangement between Switzerland and the UK. Instead, market access to allow the cross-border provision of financial services should be expanded based on the principle of mutual recognition of each other’s relevant regulations, using home-country rules and based on comparable outcomes rather than on line-by-line regulation.
Given the shared interests of Switzerland and the UK and the profile of bilateral trade and investment, this agreement could be achieved swiftly and be a win-win for both countries.
