Swiss upper house advances new package of agreements with EU

After roughly 24 hours of debate, the Council of States has moved Bilaterals III to the next stage of scrutiny. Switzerland’s upper house broadly accepted the new package of agreements with the European Union, while adding conditions on direct democracy, immigration and the future status of EU nationals.

The decision matters because Switzerland’s access to the European single market rests on a network of bilateral agreements rather than EU membership. The existing system covers areas including free movement, trade and transport. As EU rules have developed, Brussels has pressed Bern to establish clearer arrangements for updating agreements, resolving disputes and monitoring state aid.

The package follows the collapse of an earlier institutional framework agreement in 2021, when Switzerland ended negotiations. Bilaterals III seeks to stabilise the relationship while responding to Swiss concerns over wages, migration and sovereignty.

The upper house has not completed the parliamentary process. The National Council, parliament’s larger chamber, is expected to debate the package during the winter session. The electricity agreement, one of its most consequential elements, remains outside the current decision and will come before senators in December.

A mandatory referendum would give Switzerland’s cantons a decisive role in approving the EU package. Senators backed legislation requiring a popular vote and also supported a separate constitutional amendment to secure that requirement.

Under the upper house position, Bilaterals III would need two majorities: a majority of Swiss voters and a majority of the cantons. The Federal Council had supported an optional referendum, which would require only a nationwide majority. The change raises the political threshold for ratification and places the package firmly within Switzerland’s federal system of direct democracy.

The referendum debate reflects the sensitivity of the agreements. The package would shape how Switzerland updates parts of its relationship with the EU, including arrangements linked to market access and regulatory oversight. It would also commit public funds over several years.

The constitutional route could add another layer to the process. Parliament must agree on the final text before voters and cantons can decide. The National Council will therefore examine both the substance of the agreements and the upper house’s approach to the referendum during the winter session.

The upper house approved CHF 3.3 billion in commitment credits for Switzerland’s future contribution to European cohesion. Payments would be made between 2030 and 2036 if the package enters into force.

The largest share, CHF 2 billion, would support efforts to reduce economic and social disparities. A further CHF 273.4 million would fund migration-related projects. Senators also approved an additional one-off commitment of roughly CHF 1 billion. The total creates a substantial financial component to the agreement alongside the regulatory provisions governing Switzerland’s relationship with the EU.

The commitments would connect Switzerland to European cohesion measures while preserving parliamentary control over the approved credits. Their inclusion gives the National Council another major issue to assess when it takes up the package.

The financial plan also helps explain why the agreement will face a public test if the mandatory referendum provision survives. Swiss voters would be asked to consider a package that combines market access, institutional rules, immigration safeguards and a long-term contribution to European development. The electricity agreement, which could affect the country’s energy market and cross-border power cooperation, remains pending.

Immigration produced the clearest break between the Council of States and the Federal Council. Senators endorsed the possibility of an immigration levy if EU migration creates “serious economic or social problems”, using thresholds that the Federal Council would apply when deciding whether to activate the safeguard clause.

The upper house also voted to require EU nationals arriving in Switzerland to provide criminal-record information as part of the admission process. That measure would add a new condition to the movement of people arrangement negotiated with Brussels.

Senators went further on permanent residence. The package foresees a new status linked to the partial adoption of the EU Citizens’ Rights Directive. Under the Council of States position, EU nationals who are unemployed or receiving social assistance could not apply. Their five-year qualifying period would restart.

The Federal Council argued that a blanket exclusion of people receiving welfare would conflict with the agreement on the free movement of people. That disagreement will return in the National Council and could become a central issue in any referendum campaign.

The package now heads toward a wider parliamentary fight, with the National Council and the electorate still to come. The upper house largely preserved the wage-protection compromise negotiated with the EU and backed by the Federal Council and social partners.

Under that compromise, foreign firms posting workers to Switzerland would no longer have to provide a security deposit in every case. Authorities could demand one from a company that had already failed to meet its obligations. Senators also supported an accompanying measure intended to strengthen protection against dismissal.

The Council of States separately completed work on legislation creating a Swiss body to monitor state aid. The body would examine government subsidies and other forms of public support in sectors covered by the bilateral agreements, with the aim of preventing distortions of competition. Land transport and electricity are among the areas affected.

The National Council will now test the balance struck by the upper house. Its decisions will determine whether the referendum requirement, immigration amendments, cohesion credits and state-aid rules remain in the final package. The electricity agreement will receive separate attention in December, leaving a significant part of the bilateral settlement unresolved.