The cherry-picking dream of disintegrating states : an exploration of the friction between economic interest vs identity-based concerns as the two predominant drivers of disintegration negotiation

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THE CHERRY-PICKING

DREAM OF

DISINTEGRATING STATES

An exploration of the friction between economic interest vs identity-based

concerns as the two predominant drivers of disintegration negotiation

SUPERVISOR: DR. S. KRAPOHL

SECOND READER: DR. R. SANCHEZ SALGADO JUNE 2018

20 290 WORDS STUDENT ID 11773057

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Table of Figures

Figure 1: Differentiated Disintegration... 13

Figure 2 Theoretical Framework Illustration ... 24

Figure 3: European Commission Graph on Sequencing of Negotiations ... 55

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Abbreviations

DExEU Department for Exiting the European Union DIT Department for International Trade

EC European Commission ECJ European Court of Justice EEA European Economic Area

EEAS European External Action Service EMU European Monetary Union EU European Union

FDJP Federal Department of Justice and Police FMOPA Free Movement of People Agreement FTA Free Trade Agreement

HR / VP High Representative of the Union for Foreign Affairs and Security Policy / Vice President of the European Commission

LIG Liberal Intergovernmentalism

MRA Mutual Recognition Concerning Conformity Assessment NSN New Settlement Negotiations

PES Public Employment Service TEU Treaty of the European Union

TTIP Transatlantic Trade and Investment Partnership UK United Kingdom

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Introduction

„We understand and respect your position that the four freedoms of the single market are indivisible and there can be no ‘cherry-picking’”, declared British Prime Minister Theresa May, in her letter to European Council President Donald Tusk requesting the withdrawal of the United Kingdom (UK) from the European Union (EU), after a majority of the British population voted to leave the EU in a referendum on 23 June 2016 (May 2017a, 4).

‘Take back control’ was the slogan which motivated voters to cast their ballot for Leave (Hobolt 2016, 1262). The Leave campaign had mobilised deep-seated Euroscepticism based on national sovereignty concerns and fears of immigration (Hobolt 2016, 1262). Prime Minister Theresa May had interpreted the referendum as a vote to restore sovereignty (May 2017a). In response to pressure inside her Conservative party, and to honour the result of the referendum, immigration control was considered crucial (Gamble 2018, 1221). Having officially recognized the EU’s position of the integrity of the four freedoms of the single market, May therefore committed herself to leave the single market to restore sovereignty over British borders and control EU / European Economic Area (EEA) migration to the UK (May 2017a, 1, Katwala 2017,4).

The Remain side had warned of the economic risk of taking the UK out of the EU (Hobolt 2016, 1262). A plethora of studies from before and after the referendum have tried to calculate the enormous cost of the UK`s departure from the EU and especially the single market (among many others HM Treasury 2016, Belke and Gros 2017, Dhingra et al 2016, Dhingra et al 2018, Los et al 2017). Numbers differ, but it is widely agreed that leaving the single market and EU customs union comes at a significant cost. The UK is among the largest, economically strongest and most globally oriented Member States of the EU but no regional market nor the global market can compensate the single market membership (Schimmelfenning 2018, 1160). “In 2014, the United States was the country with the single largest share of UK exports of goods and services, but seven of the UK's main trading partners are from within the EU (Germany, Netherlands, France, Ireland,

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Belgium and Luxembourg (combined), Italy and Spain)” (Office for National Statistics, 2016). Over 50 per cent of UK imports originate from the EU Member States and in 2015 44 per cent of UK exports of goods and services went to the EU in return (ibid.). Realizing the economic risk of leaving the single market while still wanting to restore sovereignty over laws and borders, May’s Conservative party colleague and face of the Leave campaign, Foreign Secretary Boris Johnson famously stated UK’s Brexit policy is “having our cake and eating it” (Newton Dunn 2016). He thereby reflected how most British people felt (The Economist 2016). “Large majorities of Leavers and Remainers back policies that seem soft” while at the same time, “large majorities also support things that look hard” (The Economist, 2016).

May has also occasionally been flirting with the ‘have a cake and eat it approach’, a way to satisfy Remainers and Leavers, despite her official ‘no cherry-picking policy’ (Gamble 2018, 1221-1223). Her hope to negotiate “a bold and ambitious Free Trade Agreement” (…) “of greater scope and ambition than any agreement before”(…) in that it (…)“covers sectors crucial to our linked economies such as financial services and network industries” is just one example that her preference would be to square the circle, regain control over borders and have fuller access to the single market (May, 2017a, 5). However, the EU has taken a firm position since the outset “Preserving the integrity of the Single Market excludes participation based on a sector-by-sector approach” (European Council 2017). In this light, May faces a trade-off between preserving the economic interest of the country and satisfying national sovereignty concerns of the Leave voters. She initially opted for the latter by backing the ‘hard Brexit’ option of leaving the single market and customs union. Her occasional flirting with a cherry-cake and the fact that business and several other important domestic constituencies prefer market access over immigration control give rise to the following question:

What drives the outcome of disintegration negotiations?

At the time of writing, spring 2018, the process of the UK negotiating disintegration with the EU is in full swing. However, the question is of paramount importance now.

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Even though the UK is the first country to withdraw from the EU there are precedents in which countries have tried to negotiate sectorial disintegration. Former Prime Minister David Cameron hoped for sectorial disintegration in the field of immigration with his promise to negotiate a New Settlement for the UK within the EU.

Furthermore, in Switzerland, the Federal Council was tasked to limit immigration by means of quotas and ceiling following a popular initiative on 9 February 2014 (European Parliament 2014). The aim of the initiative was to task the Federal Council to negotiate external sectorial disintegration from the Free Movement of People. Ceilings and quotas are not compatible with the Swiss-EU Free Movement of People Agreement (FMOPA), which in turn is linked to several other Swiss-EU bilateral agreements (ibid.). As European Parliament MP Hannes Swoboda explained it "This is a fundamental decision by the Swiss people, beyond immigration issues: to maintain a tight relationship with the EU or not. (…) Switzerland wants our money – including money from tax evasion – but not our workers. This is not acceptable for us” (European Parliament 2014). MP Daniel Cohn-Bendit added that the Swiss "can't have their cake and eat it too" (ibid.). In brief, the Swiss executive faced a similar situation as the British executive. In this light, I will analyse the two predominant contrasting drivers of the Brexit negotiations, economic interest or the ‘identity-based’ national sovereignty concerns by means of comparison.

My thesis will be structured as following: After having outlined the relevance of my work and the pertinent literature, I delineate the theoretical framework. The empirical analysis will be conducted based on Putnam’s (1988) two-level games approach. My theoretical starting point is to describe the demand for disintegration following the postfunctional ‘identity logic’. In contrast, Moravcsik’s Liberal Intergovernmentalism (LIG) explains the rational economic argument of preferential access or membership of the single market. After having described the methodology, availability of data and procedure I turn to the analysis of the first empirical case: the Swiss case of sectorial disintegration. What was the driver of the disintegration demand, the initial bargaining position and how has the position changed over time? Put differently, what drivers defined the final outcome of the Swiss negotiations with the EU? In the same light, I analyse Cameron’s New Settlement negotiations in order to investigate how he managed to deal with the trade-off and to lay

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the grounds for the Brexit analysis thereafter. I finally conclude that the country demanding disintegration cannot balance both contradicting demands. A choice has to be made and in the Swiss case the choice has been for economic interest.

Relevance

The relevance of researching the drivers of disintegration negotiations throughout the negotiation process is twofold, academic and social. The UK is the first EU Member State to withdraw from the EU and until the positive referendum, only very few scholars have written on the possibility of disintegration. As the literature review will outline, the last two years have produced some highly relevant academic articles. However, as Brexit negotiations are still ongoing the focus has mostly been on the causes not the process nor outcome of disintegration negotiations. The apparent gap in literature outlines the difficulty of researching a moving target. Beyond doubt, scholars will be able to produce a more detailed and precise analysis in retrospect perspective; however, research is needed now. Many people will be directly or indirectly affected by Brexit (Lehnert et al 2007). As a result, the topic is of great social relevance. Businesses around the world try to imagine and speculate the outcome of the negotiations in order to plan for possible trade frictions. I will be careful not to fall in the trap and give a detailed prediction for the future. By the same token, my research will be helpful for those who are eager to make guesstimates. Citizens, politicians and scholars have been vividly discussing whether the Brexit is only a commencement of a disintegration process of the entire EU. My thesis will nicely feed into this debate as well.

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Literature Review

The European case of political unification and regional institutional building has long puzzled intellectuals (Rosamond 2016, 865). A plethora of scholars have discussed the nature of European integration, trying to understand why, how and when sovereign national actors agree to integrate economic and political state powers. However, none of the grand EU integration theories, meaning neither, Neofunctionalism, LIG nor Social Constructivism, have spent much ink on the possibility that the EU integration process might reverse (Rosamond 2016, Trondal et al. 2017). Schmitter and Lefkofridi (2016), the first being one of the early scholars of Neofunctionalism, have recently tried to picture Neofunctionalism as a theory for disintegration but they came to realise that empirics do not seem conform with the majority of neofunctionalist’ hypotheses. Moravcsik, the father of the LIG theory, outlined his opinion on Brexit in a Financial Times article (2016). Convinced that the British citizenry would vote to Remain, he speculated that if the UK were to withdraw from the EU than only to “re-establish its current economic status outside the EU” (2016, 2). His conclusion is based on the assumption that rational economic reasoning motivates key actors. Looking at Brexit from a pure political economy perspective appears insufficient because, as Moravcsik suggested, rational economic reasoning does not produce the demand for Brexit and indeed May’s bargaining stance.

In point of fact, the causes of Brexit are vividly debated across various fields of social sciences (among many others Hobolt 2016, Ingelhart and Norris 2016, Owen and Walters 2017, Starmans et al 2017). It is widely agreed by now that populist politicians successfully mobilised along the ethno-national / cultural cleavages (among others Rodrik 2017; Hobolt 2016; Owen and Walters, 2017). Their slogan ‘Take back control’, implied above all the demand to regain control over British borders to curb immigration (Hobolt 2016, 1262). In the same vein as the ‘Project Hate’ by the Leave side, the Remain side aimed at provoking fear by threating with the economic risk of Brexit under the slogan ‘A leap in the dark’ (Hobolt 2016, 1262). Those are important insights, especially since populism is on the rise across the continent. The insights are also relevant for my

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research, however, not far-reaching enough since I am going beyond an analysis of the causes.

The most relevant articles for this research project are the recently published articles by Schimmelfenning (2018) Dennison and Geddes (2018), Gamble (2018) and the article by Bulmer and Quaglia (2018). Their research is not only au courant but also expands over simply analysing the causes of Brexit. Bulmer and Quaglia’s (2018) short introductory essay published 31 May 2018, gives a good sketch of the most recent academic debate on Brexit. Their article first provides background information on Brexit, briefly analyse the dynamics of the Brexit negotiations and then gives an overview of the most recent literature on the politics and economics of Brexit. Gamble (2018) does not deploy a specific theory either but gives a rather detailed account of the political implications of Brexit. He assesses the changes the Brexit caused in the field of governance, political economy, and the UK’s role in the world and inquires the lasting impact the Brexit is likely to cause on British politics and government (Gamble 2018). Gamble (2018) concludes that the long-term impact of Brexit on British politics will be both paradoxical and intriguing since it is highly likely that the UK will restore legal but not political sovereignty. Leavers will realise that the single market has been a helpful lock of the economic liberalism they endorse (ibid.).

Although, no disintegration theory has been defined yet, few scholars (Schimmelfenning 2018, Dennison and Geddes 2018) have tried to explain the demand for disintegration on the basis of postfunctionalism, an EU integration theory developed by Hooghe and Marks (2009). The theoretical founders of postfunctionalism argue that identity is decisive for regional integration (Hooghe and Marks 2009, 2). In this vein, following the postfunctional logic, Brexit was enabled by: “identity-challenging feedback effects of integration (Dennison and Geddes 2018), a non-mainstream party seizing on these effects and mobilizing voters, and the creation of an institutional (referendum) venue” (Schimmelfennning 2018, 1163).

In more detail, Dennison and Geddes (2018, 1138) focus their research on migration governance in the context of Brexit. Dennison and Geddes (2018) not only research the

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influence of the immigration debate on Brexit and but also try to envisage likely parameters for a British post-Brexit migration regime. Their research does therefore exceed an analysis of the demand side. They conclude that the result of Brexit “will test the extent to which electorates and governments are willing to put these concerns above ‘bread and butter’ functional concerns”, indirectly referring to my question of the drivers of disintegration negotiation outcomes (Dennison and Geddes 2018, 1151)

Schimmelfenning, a differentiated integration scholar, explains Brexit negotiations as a process of differentiated disintegration: “the selective reduction of a member state’s level and scope of integration” (2018, 1154). The central aim of his article is to explore whether Brexit can also be explained by the established differentiated integration approach (Schimmelfenning 2018, 1155). As outlined above he makes use of the established postfunctionalist EU integration theory to explains the demand for differentiated disintegration (2018, 1154). Schimmelfenning delineates how the postfunctionalist explanation applies to the differentiated integration of the UK prior to Brexit as well as the differentiated disintegration demand (Schimmelfenning 2018, 1155). In point of fact, Schimmelfenning compares Brexit negotiations with previous differentiated integration negotiations as well as differentiated sectorial disintegration negotiations. He especially looks at Cameron’s bargaining power in the New Settlement negotiations but also briefly touches upon the Swiss negotiations to implement restrictions on the free movement of people. The graph below visualises Schimmelfenning’s logic and situates the two comparative cases.

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Schimmelfenning (2018) observes a change in the constellation of intergovernmental bargaining as he compares differentiated integration negotiations, Cameron’s New Settlement negotiations and Brexit. May negotiates differentiated disintegration from a weak position (Schimmelfenning 2018, 1159). The reason is that the institutional bargaining power of status quo actors is in favour of the EU, in contrast to differentiated integration negotiations (Schimmelfenning 2018, 1159). Moreover, due to the asymmetrical interdependence, material bargaining power is in the EU’s favour too (ibid.). Theresa May’s weak institutional and material bargaining position and the comparison to other preceding differentiated disintegration negotiations let Schimmelfenning conclude that the UK will moderate demands and makes concessions in the course of the negotiations (Schimmelfenning 2018, 1154).

My research of the drivers of disintegration will follow the same logic as Schimmelfenning (2018) and Dennison and Geddes (2018) by arguing that the demand of disintegration can be explained by postfunctionalism. However, I aim to go further and want to contribute to the small circle of scholars debating the outcome of disintegration negotiations. Even though Schimmelfenning (2018) does not examine the drivers of disintegration negotiation outcomes his comparison with other differentiated disintegration negotiations helped him to test the differentiated integration approach for

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disintegration cases. In the same vein, I will tackle the research question by means of a comprehensive comparative case study of Switzerland’s external sectorial disintegration backed up by the Cameron’s internal sectorial disintegration as a shadow case. The analysis will be based on a solid theoretical framework as outlined below. I do not base my research on Schimmelfenning’s differentiated integration theory. Therefore, I deploy the term sectorial disintegration instead of differentiated disintegration, but with a similar meaning: disintegration in selected areas only.

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Theoretical Framework: European

Integration Two-Level Games Approach

“The politics of many international negotiations can usefully be conceived as a two-level game”

(Putnam 1988, 434).

In order to crystallise the drivers of disintegration negotiations outcomes, it is helpful to consider negotiations as two-level games. Domestic factors influence international negotiations and vice versa’ (Putnam 1988, 433). Putnam’s two-level games approach serves to move beyond the sheer observation and allows for a systematic analysis (ibid.). As outlined above, I aim to base my analysis on a solid theoretical framework. Since no theory for disintegration is yet constructed and the scope of this project is not adequate for the formulation of a new theory, I combine several theories in order to formulate a reliable scientific argument. Putnam’s two-level game theory is my overarching framework.

The two-level games approach is a metaphor for domestic-international interactions (Putnam 1988, 433). As the name suggests, Putnam breaks negotiations down into two level: Level I refers to the bargaining between the negotiators in the international area and Level II to refers to domestic discussions within each group of constituents about whether to endorse, ratify or implement a potential Level I agreement (Putnam 1988, 436). To be able to analyse the preferences and power of major Level II actors I marry the two-level conceptual framework with postfunctionalism and LIG. As previously identified by Schimmelfenning (2018) and Dennison and Geddes (2018) the demand for disintegration can well be explained by following the postfunctionalist logic. On the contrary, the Remain side’s choice of the economy as their overriding concern and their demand to stay as close as possible to the EU single market can be explained following Moravcsik’s LIG (1993a) and Putnam’s (1988) logic. To be clear and precise, whereas LIG assumes that domestic constituents form their preferences around the economic interest, which cannot

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explain the demand for disintegration, the theory is helpful in analysing the demand of Remain voters and those constituents advocating a soft Brexit since their arguments are based on rational economic reasoning (Hobolt 2016, 1263).

In point of fact, in the introduction to the book ‘Double-edged diplomacy: International bargaining and domestic politics’ by Peter, Jacobsen and Putnam, Moravcsik delineates the great utility of the two-levels game approach himself (Moravcsik 1993b, 15). Moravciks’ LIG is formed on the basis that states are not “black boxes with fixed preferences” but that governments act in the international arena based on goals defined domestically (Moravcik 1993a, 481). As a result of their similar take of international negotiations, LIG can efficiently be combined with the two-level games theory. In fact, they mutually reinforce each other. However, in order to be able to understand the demand from both sides, Remain and Leave, postfunctionalism has to be added to the puzzle.

I start by taking a closer look at Level II preference formation from Moravcsik and Putnam’s perspective followed by a postfunctional approach to national preference formation.

A Liberal Approach to National Preference Formation

Moravcsik’s LIG is based on a liberal theory of state preference formation according to which (issue-specific) domestic socio-economic interests shape state preferences (Moravcsik 1993a, 1998). Put differently, foreign policy goals of national governments vary in response to shifting pressure from domestic constituencies (Moravcsik 1993, 481). More precisely, foreign policy is expected to be most fundamentally influenced by “identity of important societal groups, the nature of their interests, and their relative influence on domestic policy” which differs “across time, place and, especially issue-area” (Moravcsik 1993a, 483). Depending on the issue and the level of politicisation different domestic socio-economic actors mobilise and try to influence the government either by direct means, also known as lobbying, or through indirect pressure (Moravcsik 1993a, 484, Putnam 1988, 445). It is important to keep in mind that especially in democracies, governments depend on the support of a myriad of domestic constituents; parties,

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bureaucratic agencies, interested groups and voters (Moravcsik 1993a, 483, Putnam 1988, 436).

Moravcsik formulates a demand and supply function in which “governments first define a set of interest, then bargain among themselves in an effort to realise those interest” (Moravcsik 1993a, 481). Putnam decomposes negotiations sequential too (Putnam 1988, 436). He focuses on Level II dynamics in relation to the ratification process of any final Level I deal (ibid.). However, Putnam adds that there “are likely to be prior consultations and bargaining at Level II to hammer out an initial position for Level I negotiations” (Putnam 1988, 436). The sequential decomposition is “useful for purpose of exposition” but not accurate as in reality as moves by either side affect the other throughout the negotiation process (Putnam 1988, 436). In this light, I especially focus on the initial bargaining position and the ratification procedure but will also consider the shift of domestic preferences over time and how Level II influences Level I vice versa’.

As stated at an earlier point, for Moravcsik and Putnam, actors are motivated by a calculation of possible economic gains and losses. In Moravcsik’s own words, “costs and benefits of economic interdependence are the primary determinants of national preferences” (Moravcsik 1993a, 482). Putnam specifies that “what counts at Level II is not total national costs and benefits, but their incidence, relative to existing coalitions and proto-coalitions” (Putnam 1988, 450). The latter gives already an indication why economically irrational behaviour – prime minister May`s threat to leave the single market and customs union - can currently be observed. Adding postfunctionalism to the picture further improves the understanding of May’s negotiation position.

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Postfunctionalist Approach to Domestic Preference Formation

Hooghe and Marks claim that identity and cost and benefit calculations of economic interdependence are decisive for regional integration - and hence the argument goes, disintegration (2009, 2). Based on postfunctionalism negotiators’ bargaining positions are influenced by economic interest on the one hand and identity-based concerns on the other. In the following sections, I outline the postfunctional ‘identity logic’ of politics. The ‘identity logic’ of politics became important for EU integration from the 1990s onwards (Hooghe and Marks 2009 7, Dennison and Geddes 2018, 1138). With the treaty of Maastricht, the EU gradually moved into areas of core state powers (such as currency, public administration, police and justice system) (Hooghe and Marks 2009, 7; Schimmelfenning 2018, 3). The increase in scope and depth of EU integration has been magnified by the broader trend of decreasing importance of national barriers (Hooghe and Marks 2009, 13). In a highly globalised world economic competition has intensified and migration flows have increased (ibid.). Public opinion towards the EU did not necessarily change but has suddenly “become a field of strategic interaction among party elites in their contest for political power” (Hooghe and Marks 2009, 9). In line with Moravcsik’s (1993a) logic that for interests to matter they have to be aggregated by political actors, Hooghe and Marks (2009) point to the importance of political parties. Parties mobilise the tensions by connecting cultural and economic insecurity with national identity and the EU (Hooghe and Marks 2009, 13, Moravcsik 1993a, 483). As the masses are mobilised there is a shift from an elite-enabling ‘permissive consensus’ to a ‘constraining dissensus’ in which the scepticism of the public further constrains integration by the elites (Hooghe and Marks 2009, 5).

According to theory, the constraining dissensus is most restraining in countries in which a majority of the people have exclusive national identities since they “are predisposed to Euroscepticism if they are cued to believe that love of their country and its institutions are incompatible with European integration” (2009, 13). As a matter of fact, both the UK and Switzerland have historically been ‘reluctant Europeans’ with strong exclusive national identities and indeed they are the countries negotiating (sectorial) disintegration (Lavenex and Schwok 2009, 37, Schimmelfenning 2018, 1158). In my empirical findings, I describe

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in more detail the demand for disintegration following the postfunctional logic for both Switzerland and the UK. Generally speaking, Hooghe and Marks conclude that “exclusive identity infuses preferences and to the extent that European issues are politicized, so we expect to see downward pressure on the level and scope of integration”, predicting the possibility of disintegration due to ‘identity-based concerns’ (2009, 21). The higher availability of referendums on EU integration which disarm party elites and shift the initiative to the ‘masses’ increases the likelihood of disintegration (Hooghe and Marks

2009, 20). Summing up the above, Hooghe and Marks propose a number of factors that may drive the demand for disintegration: exclusive national identities, the increase in scope and depth of EU integration, mobilisation of tensions by parties and last but not least EU referendums as the flashpoint (Schimmelfenning 2018, 1159, Hooghe and Marks 2009, 20).

In a nutshell, anti-European political entrepreneurs mobilise exclusive national identities. Established theories are no longer au courant by leaving politicisation aside (Hooghe and Marks 2009, 6). While some individuals, domestic constituents and, hence, political actors still encourage European integration because of “pressure to cooperate for mutual beneficial economic gains in an expanding and 'globalizing' international economy”, an increasingly significant share of domestic actors and voters are driven by another logic (Schimmelfenning and Rittberger 2011, 82). Indeed, fully-informed economically rational actors would refrain from disintegration in the first place but if ‘identity-driven’ citizens whose concerns are mobilised by a Eurosceptic party get a say in a referendum they will request disintegration (Schimmelfenning 2018, 1161). In explicit terms postfunctionalism explains well the demand for disintegration by the ‘losers’ of European integration – “the working class, less educated and the older” - whereas the “young, well-educated professionals in urban centres” are less motivated by the ‘identity-logic’ and favour integration based on rational economic reasoning (Hobolt 2016, 1265). Hobolt (2016) analysed this split for the British society but the picture is similar in Switzerland (Rennwald and Zimmermann 2016).

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To sum up the first chapter on national preference formation, negotiators bargaining disintegration of the EU have to deal on the one hand with ‘identity-concerned’ constituents favouring disintegration and on the other hand domestic constituents favouring the status quo or integration for economic reasons. With the EU being increasingly politicised, elites traditionally in favour of integration are now forced to take ‘identitiy-concerns’ of the masses into account and ultimately embark on disintegration negotiations (Hooghe and Marks 2009, 5). In other words, today’s ‘constraining dissensus’ does no longer allow insulate elites to cut deals without “looking over the shoulder when negotiating” (Hooghe and Marks 2009, 5). Is this truly the case? It directly links to my research question on the drivers of disintegration negotiations outcomes. In order to answer the question, this section has delineated the importance of domestic socio-economic actors for the international negotiations table. Domestic actors significantly influence the size of the win-set, meaning the range of all potential agreements (Putnam 1988, 448). They are important for the definition of the initial bargaining position, the negotiation process and the outcome. The next section is dedicated to a more careful analysis of the international bargaining.

International Bargaining

Level II constituencies as well as negotiation tactics and strategies on Level I can influences the size of the win-set and hence the likelihood to reach agreement.

Negotiation strategies can either target the opponent’s win-set or the own, they can be deployed to narrow as well as to expand it (Putnam 1988, 454). Indeed, negotiators often face a tactical dilemma in regard to the size of the win-set (Putnam 1988, 450). Governments always seek to expand the other side’s win-set while their motives in regard to their own win-set are mixed (Putnam 1988, 450,454). A bigger win-set facilitates the reaching of an agreement but also weakens one’s bargaining power (Putnam 1988, 454). In this chapter, I turn to Level I dynamics or Moravcsik’s intergovernmental theory of state bargaining (1993a, 1998). The assumption that intergovernmental negotiations between Member States drives integration forms the core of LIG. The negotiations analysed in this thesis are not intergovernmental but take place between one nation state and a supranational institution. This is an important difference to keep in mind. In this light, not

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all negotiation strategies proposed by Putnam or Moravcsik are relevant and only the most important and most relevant ones are outlined below.

First, to begin with, side-payments are a negotiations tactic often used in international negotiations (Putnam 1988, 450). The strategy is not used to increase the overall value of an agreement, but side-payments most commonly target ‘swing-voters’ essential for the final ratification of the agreement (Putnam 1988, 450-451). They are calculated in terms of marginal contribution to the likelihood of ratification (Putnam 1988, 450). In a two-level game, side-payments can either originate from the Level I negotiation table as a form of concession by the opponent or they may originate from an unrelated domestic source (ibid.). Second, negotiators usually try to reinforce the domestic standing of their counterpart (Putnam 1988, 451). A popular opponent with a high domestic standing increases the likelihood to win a ratification of a final agreement (ibid.). Moreover, negotiators with a higher status dispose more means to deploy side-payments (idem: 452). Third, alternative policies and coalitions or in other words best alternatives to negotiated agreements (BATNAs) have a significant influence on the win-set (Moravcsik 1993a, 500). The attractiveness of alternative agreements increases or reduces the tolerance of concessions (ibid.). To be more precise, a negotiator with unattractive alternatives will see a benefit in cooperation even though the opponent shows no willingness to give concessions himself (ibid.). The ‘threat of non-agreement’ has to be seen in this light as well. The party which has more or less to lose from non-agreement is expected to be more willing to compromise respectively (ibid.). In turn, this means that constituents or countries who have little to lose from no-agreement will be more sceptical towards any proposed deal (Putnam 1988, 442). BATNAs and the ‘threat of non-agreement’ are especially vital if a no agreement does not merely mean status quo but a potential worsening of the current situation, as is the case for disintegration negotiations. Fourth, an often-observed strategy for (dis)integration negotiations are linkages. By deploying linkages, marginal gains in one issue area X, significant to country A, are exchanged for marginal gains in issue area Y important to country B (Moravcsik 1993a, 505). This technique is especially valuable in negotiations where both parties have very asymmetrical preferences across issues (ibid.). The aim of so-called ‘package deals’ is to

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increase the likelihood of domestic ratification (ibid.). Linkages can be a politically risky strategy since ‘package deals’ will always create winners and losers in both countries and losers are more likely to generate political pressure afterwards (Moravcsik 1993a, 506). If agreements impose significant losses on dominant domestic constituencies, they are either not ratified or will not last (ibid.). Therefore, linkages are often deployed in less sensible, less salient areas – but not always as my empirical findings will show. The empirical analysis will also delineate how linkages can be deployed as a means of pressure.

Last but not least, some remarks on uncertainty as either a bargaining chip or a stumbling block (Putnam 1988, 452). Negotiators often have the incentive to withhold information to understate their own win-set in order to win a more generous offer (Putnam 1988, 453). At the same time, uncertainty about the likelihood of ratification decreases the potential value of the agreement and more importantly reduces the potential to find creative solutions “that expand the scope for joint gain and improve the odds of ratification” (Putnam 1988, 453). Politicisation activates usually silent Level II constituencies and decreases the win-set (Putnam 1988, 455). Disintegration negotiations are a consequence of politicisation. The win-set is already relatively small.

In sum, there are a number of strategies negotiators can use to improve their bargaining position. As the empirical analysis will delineate, their impact is however strongly hampered by the important asymmetry between the disintegrating state and the EU. In the next section I briefly outline how the size of the win-set is impacted by the ratification procedure.

The Institutional Apparatus and the Ratification Procedure

The ratification of the final agreement at Level II is the most crucial link theoretical link between Level I and Level II (Putnam 1988, 436). The institutional set-up and, hence, the formal ratification procedures significantly influences the size of the win-set (Putnam 1988, 448). The veto power of a small domestic constituent can block final agreement but also increase the bargaining power (ibid.). At the same time, the likelihood for involuntary defection increases the higher the institutional threshold for ratification and the

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more numerous the ratification bodies (ibid.). In addition to the formal ratification procedure informal ratification practices are of great importance. Disagreement of critical socio-economic actors such as trade unions, interest groups or, ultimately, opinion polls, can also lead to the failure of the agreement even though the parliament would potentially accept the deal (Putnam 198, 436). Especially in democracies, where the government has to secure electoral majorities to remain in power, it is essential that the government wins both the formal and informal endorsement of any Level I agreement (Putnam 1988, 436). Put differently, the negotiator only strikes a Level I deal if he can assure the ratification by the institutional apparatus, the key socio-economic actors and as the next section delineates his own approval.

The Role of the Chief Negotiator

Last but not least, the negotiator himself significantly influences the size of the win-set too (Putnam 1988). The two-level games approach emphasizes the importance of the chief negotiator as the only formal link between Level I and II (Putnam 1988, 456). Negotiators are rarely ‘honest brokers’ but they have personal priorities which often differ from the constituents’ interest (ibid.). Putnam singles out three crucial motives of the chief negotiator: 1. “Enhancing his standing in the Level II game by increasing his political resources or by minimizing potential losses”; 2. “Shifting the balance of power at Level II in favour of domestic policies that he prefers to exogenous reasons”; 3. “To pursue his own conception of national interest in the international context” (Putnam 1988, 457). Moreover, as the “incumbency of the chief negotiator often depends on his standing at Level II” he will normally “give primacy to his domestic calculus” (Putnam 1988, 457). In the same vein, to assure incumbency, the chief negotiator prioritises existing domestic coalitions (Putnam 1988, 458). The more of his traditional supporters potentially lose from an international agreement, the more reluctantly he proposes the deal for ratification (Putnam 1988, 458). “Relaxing the assumption that the chief negotiator is merely an honest broker, negotiating on behalf of his constituents, opens the possibility that the constituents may be more eager for an agreement (or more worried about "no-agreement") than he is” (Putnam 1988, 458). Put differently, the chief negotiator’s actions may deviate from the preferences of key socio-economic actors because of a selfish

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calculus of power. In sum, the chief negotiator has the position and power to veto possible agreements; the real win-set is therefore much smaller than the Level II win-set overlap (Putnam 1988, 457). As outlined above, a small win-set can be utilised to win concession but my empirical analysis details that it depends on the setting.

To sum up and simplify the theoretical framework, the figure below visualizes the logic I follow. Negotiators negotiating disintegration nowadays do not only have to consider the post-materialist economic interest of their constituencies but also the pre-materialist identity politics especially if they come to light through referendums. The chief negotiator of the country demanding disintegrating therefore has to harmonise both positions throughout the negotiation process in the best way possible. Several negotiations tactics may be used by the chief negotiators to increase the likelihood of ratification, of which he is the most crucial veto player himself.

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Hypotheses

States dealing with referenda demanding disintegration from the EU, have to balance economic interest and postfunctional ‘identity-based concerns’.

In this light, having outlined the theoretical foundations and relating it back to the research question at hand I formulate the following contrasting hypotheses:

The outcome of disintegration negotiation is driven by economic reasoning and identity-based concerns, yet the former will overtake the latter in the course of the negotiations due to Level II dynamics.

The outcome of disintegration negotiation is driven by economic reasoning and identity-based concerns, yet the latter will prevail over the former throughout the negotiation process due to Level II dynamics.

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Methodological Approach

“Being a natural and elementary function of human mind, the act of comparing like and unlike phenomena is one of the most profound and generative perceptual processes on which much of our reasoning rests. Comparison is so fundamental to our cognition that thinking without comparison is almost unthinkable” (Azarian 2011, 115). Yet, in order to achieve methodological rigour, case studies have to be constructed in a persuasive way (Azarian 2011, 115, Hancke 2009, 83-84). I aim to do precisely the latter in this part. The withdrawal from the EU represents a historical singularity. The process is still ongoing. Scholarly work on the topic is limited and no theory for the disintegration process has been defined yet. In this light, in order to produce a socially and academically relevant analysis, I largely rely on the methodology of a comparative case study, backed up by a shadow case. Even though no EU Member State has negotiated the disintegration from this supranational institution, sectorial disintegration negotiations have taken place before. Following the method of agreement, the dissimilar case study of Swiss-EU negotiations over the implementation of the Anti-Mass-Migration-Initiative (AMMI) based on broad concepts and theories attempts to establish a pattern or process to understand Brexit (Hancke 2009, 74, Azarian 2011, 121). In brief, in February 2014 a slight majority of voters accepted the AMMI, proposed by the Swiss populist party (Blatter 2015, 68). The popular initiative requested the Swiss government to limit the inflow of people by imposing ceilings and quotas which violate Free Movement of People Agreement (FMOPA) between Switzerland and the EU (ibid.). FMOPA is legally bound to other market access agreements. Unilateral termination of the FMOPA would ultimately cost Switzerland it’s highly valuable preferential access to the EU single market (European Parliament 2014). Swiss-EU negotiations were therefore centred around the same independent variables as Brexit, namely: the Eurosceptic ‘identity-based’ demand to limit immigration and the desire and need to have preferential access to the EU market. At the same time both cases lead to some form of disintegration – the dependent variable. The precise form of disintegration is indeed the topic of my research.

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By the same token, almost every potentially relevant dimension besides the dependent and independent variable, differs. To be more precise, since every comparison is a construction of social reality, I carefully select and abstract the particular units from the context they are embedded (Azarian 2011, 123). Both countries favour economic integration and strictly oppose political integration, but they are in an inherently different position vis-á-vis the EU. To state the obvious, Switzerland negotiated as a third country external sectorial integration whereas the UK has negotiated internal sectorial integration and is currently negotiating the withdrawal from the EU as a Member State. Moreover, the political system, geography, language and history differs, to name only few more potentially relevant dimensions.

The aim of the dissimilar case study is to create an ordered perception of the social reality of Brexit (Azarian 2011, 123). The validity of the comparison will be strengthened by the inclusion of a shadow case study (Hancke 2009, 75). The shadow case is a historical comparison with Prime Minister Cameron`s internal sectorial disintegration negotiations on a New Settlement within the EU taking place between November 2015 and February 2016 (Schimmelfenning 2018).

Norway would be an interesting case to study as well. In 1994, the people voted in a referendum against EU membership motivated by ‘identity-based concerns’ while the elite favoured integration for economic reasons (Eriksen 2015, 77). Since then, the “truism of all governments, regardless of how many anti-EU membership parties have featured governing coalitions” has been a close relationship with the EU (Eriksen 2015, 77). Norwegian governments are arguably specialists in balancing economic interest and ‘identity-based concerns’. Even though “additional case studies increase the number of observations and thus may help avoid indeterminacy” (…) “to increase the number of cases is not always appropriate” (Lehnert et al 2007, 192). As the critical criteria for the case selection has been preceding (sectorial) disintegration negotiations Norway has been intentionally left open for further research.

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There are obvious limitations to the methodology of case study. First of all, I was not able to freely choose and consciously embrace a small number of cases, but the absence of myriad disintegration negotiation precedents restrained me from using conventional statistical methods (Azarian 2011, 121). In the same vein, “intentional selection is generally more prone to bias than random selection” and thus the validity of inference might be reduced (Lehnert et al 2007, 220). Consequently, my findings are less generalizable (ibid.). However, by including a shadow I aim to increase the validity of my findings and narrow the limitations to nevertheless produce a relevant analysis of the process currently at play.

The research will be conducted qualitatively by empirically drawing on existing academic literature from various online and physical libraries. In addition, used the powerful research method of interviews to uncover information not yet available to the public (Alshenqeeti 2014, 42). A more detailed account of the sources and procedures follows in the next chapter.

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Sample and Procedure

As outlined above, my research relies on both primary and secondary sources. In regard to the secondary sources, civil society reports, documents and working papers from the British government, the Swiss government, the European Council, the European Parliament and the European Commission will be used. Moreover, and especially for the analysis of Brexit negotiations, I rely to a large extent on journalistic sources since, as outlined above, only few scholars have tried to analyse EU disintegration negotiations. Only news outlets widely considered as reliable have been consulted, or otherwise, the data has been double-checked. However, it has to be taken into consideration that most journalistic reporting is subjective and, therefore, biased.

In addition, five semi-structured interviews have been conducted in the scope of this thesis. The first two interviews were with officials from the European External Action Service (EEAS) in Brussels. Informant number one is a specialist on Swiss-EU relations. He holds the position of EU Secretary to the EU-Swiss Joint Committee on Free Movement of Persons. The second informant is an experienced negotiator as well as expert on Swiss relations. Both could therefore give important insights into both EU-Swiss as well as Brexit negotiations. The third informant explicitly wished to remain anonymous, I therefore am only allowed to say that she is a senior official of the European Commission (EC) taskforce 50 negotiating Brexit. Informant number four is a senior diplomat at the EU delegation to Switzerland and the Principality to Liechtenstein in Bern. He also is an experienced negotiator and expert in EU-Swiss relations. He could share valuable information on EU-Swiss negotiations as well as the UK’s negotiations with the EU. Informant number five is political assistant at the EU delegation to Switzerland and the Principality to Liechtenstein and a Swiss national. She was especially important in understanding the Level II dynamics in EU-Swiss negotiations. All discussions have been off-record, partially on request of the information, partially with the aim to gather insight exceeding formal statements. I prepared around 15 questions for each informant. Depending on their expertise the focus was on EU-Swiss negotiations, Brexit or Cameron’s New Settlement negotiations. Interviews took around one hour.

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The information obtained has been of outmost importance for the nitty gritty of the Swiss-EU negotiations and especially for the analysis of the Brexit as research of the moving target is limited. Yet, my research bears the risk of a two-fold bias. First, interviews are always a potential source of bias, since informants reveal information selectively and subjectively (Alshenqeeti 2014, 43). Second, my interviews have been limited to EU officials even though background discussion has taken place with Swiss academics. I was not able to interview representatives of the UK. The outreach to a British journalist in Brussel was unsuccessful and a visit to the UK was not possible in the scope of the thesis. However, by using more data collection instruments, namely the various secondary sources outlined above, I believe to be able to validate my research findings and make a sound argument in this thesis (Alshenqeeti 2014, 43). This brings me to the empirical analysis.

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Empirical Analysis Part I: Swiss Sectorial

Disintegration Negotiations from the EU

My empirical analysis is split in three parts. I start by examining the Swiss-EU negotiations over the AMMI. The second part is dedicated to the shadow case of Cameron’s New Settlement negotiations and in the third part I finally turn to Brexit.

I start my empirical analysis of the Swiss-EU negotiations with a sketch of the Swiss-EU sectorial bilateral path. To recall, Schimmelfenning describes Swiss-EU negotiations over the AMMI as external differentiated disintegration negotiations. I do not use the differentiated integration framework therefore call the same phenomena sectorial disintegration. To make sense of the term, the next section will briefly describe the unique relationship between Switzerland and the EU. In the following parts of this chapter, I describe the demand for disintegration following the postfunctional logic. The initial bargaining position of the Swiss executive is oriented towards these concerns as the following part outlines. After a brief outline of the EU position, I analyse how dynamics on Level I and Level II influenced the softening of the Swiss bargaining position.

Last but not least, I carefully analyse if Switzerland was able to square the circle or whether the final agreement accommodates ‘identitiy-concerns’ over the economic interest of the country and contrariwise.

Swiss-EU Relations in a Nutshell

The Swiss have historically been reluctant ‘Europeans’, supporting economic integration while strongly opposing political integration (Lavenex and Schwok 2009, 37). The Free Trade Agreement (FTA) of 1972 was the first attempt to safeguard privileged market access without membership (Lavenex and Schwok 2009, 37). The fear of marginalisation as Switzerland’s neighbours and main trading partners joined the European Community and aimed to complete the internal market with the 1986’ Single European Act motivated Switzerland and the other member countries of the European Free Trade Agreement

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(EFTA) to request privileged market access by the creation of a the ‘European Economic Space’ between the European Community and EFTA (ibid.). However, as EFTA countries realised that they would not have a role in the internal decision-making process, most EFTA-states including Switzerland, submitted a formal membership application (Lavenex and Schwok 2015, 38). A referendum on the European Economic Area (EEA) was rejected in 1992 clearly signalling the Swiss government that the people were not willing to give up on sovereignty (ibid.). Concerned about their export-driven economy, the Swiss government asked for bilateral market access negotiations (ibid.). The EU accepted the demand and thereby initiated today’s sectorial bilateral path, a compromise between the economic interest of the country and ‘identity concerns’.

Swiss-EU relations are today governed by around 100 secondary and 20 main agreements (Gstöhl 2015, 860). The latter form the core of the relations. As outlined in the theoretical framework, ‘package deals’ increase the likelihood of domestic ratification. In point of fact, the 20 main agreements between Switzerland and the EU were linked, regrouped in ‘packages’ and negotiated in two different rounds (ibid.). Approval by Eurosceptic Swiss voters was successfully facilitated as the first ‘Bilaterals I’ package was signed in 1999 and the second ‘Bilaterals II’ package was signed in 2004 respectively (Lavenex and Schwok 2015, 38). Importantly, the first ‘Bilaterals I’ package contains a legal specificity, the so-called guillotine clause, stipulating that if any party terminates one of the agreements the other party has the legal right to terminate all others (Lavenex and Schwok 2015, 39). This clause was introduced by the EU to assure Switzerland could not benefit from preferential market access, if the people decided to reject the more salient FMOPA in a referendum (ibid.). The linkage is of great importance for the AMMI negotiations and is an early indication of the EU’s position that preferential market access comes at ‘a cost.’

To sum up the most important, Switzerland is not part of the EU nor EEA as the other EFTA states, but the numerous sectorial bilateral agreements grant Switzerland preferential access to the single market, which in turn is linked to the FMOPA.

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The Postfunctional ‘Identity-Based’ Disintegration Demand

This chapter describes how deep-seated national anxieties have been mobilised by a strong Eurosceptic party, leading to the adoption of a popular vote requesting sectorial disintegration (Schimmelfenning 2018, 1170, Kriesi 2007, 104). In other words, it describes the Swiss demand of disintegration following the postfunctional logic.

Switzerland is the country with “the strongest institutionalisation - and the most extensive use of direct - democratic instruments in the world” (Blatter 2015, 53). No other European country has had as many popular votes on European integration as Switzerland (Blatter 2015, 57). At the same time, even though referendums “facilitate the shift of an issue from interest group politics to mass politics”, the shift only takes place if a political party mobilises the latter (Hooghe and Marks 2009, 18).

The majority of EU referendums and popular votes can be related back to Christoph Blocher, long-time president of the populist Eurosceptic Swiss Peoples Party (Schweizer Volksparty (SVP)) who strategically instrumentalised direct democracy instruments to increase salience of EU issues and win more seats for his party (Blatter 2015, 68). Since the 1990s, the populist Eurosceptic party has successfully mobilised ‘identity’ concerns of many Swiss historically reluctant to hand over power (Kriesi 2007, 89). Opposition against European integration has long been linked with support for tougher immigration policies by the SVP (Kriesi 2007, 103). However, the explicit link of ‘identity concerns’ and the salient issue of immigration was made with the AMMI.

Switzerland’s population consists of almost one quarter of foreigners (Gries 2014). In 2008, one year after the FMOPA was fully implemented, net-migration to Switzerland reached a peak and the majority of migrants originate from EU Member States (SRF 2018, Gries 2014). However, to recall, an issue does not enter mass politics on its intrinsic importance, but a political party has to mobilise the tension (Hooghe and Marks 2009, 13, 18). The SVP’s AMMI campaign was efficient in precisely the latter.

The popular initiative was skilfully drafted to target immigration “which has been salient for many years given the high numbers of people who have moved to Switzerland during

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the last 10 years” (Blatter 2015, 68). At the same time, the implicit target was the sectorial bilateral relationship with the EU (ibid.). The initiative requested the limitation of immigration by ceilings and quotes, clearly violating the FMOPA and thereby endangering the entire ‘Bilaterals I’ (ibid.).

The Eurosceptic party clearly dominated the political discourse in the run up of the popular vote. None of mainstream parties, not the Christian Democrats (Christlichdemokratische Volkspartei, CVP), the Liberals (Freisinnig-Demokratische Partei, FDP), the Social Democrats (Sozialdemokratische Partei der Schweiz, SPS) nor the Greens (Grüne Partei der Schweiz) campaigned vehemently against the popular initiative (Vatter 2014, 131, Swissinfo 2015, Kriesi 2007, 93). The Federal Council, Switzerland’s executive, and the Swiss parliament published a report suggesting the rejection of the popular initiative because of its incompatibility with the FMOPA (BK 2012, BK 2018, SEM 2017). They pointed to the great economic risk for the Swiss economy were they to disintegrate from specific sectorial bilateral treaties (ibid.). As a matter of fact, the EU is by far Switzerland’s most important trading partner (FDFA 2016). In 2014, about 55% of Swiss goods went to the EU, and almost three quarters of Swiss imports steamed from EU Member States (ibid.). The ‘Bilaterals I’ cover important agreements and are central to the Swiss export driven economy.

However, on 9 February 2014, a slight majority of 50.3 percent of the people and cantons voted for the adoption of the AMMI (SEM 2017). The Article 121a of the Federal Constitution obliges the Federal Council and Parliament to introduce a new migration system to enable Switzerland to control immigration by means of ceilings and quotas (SEM 2017). The new Constitutional Article 121a proposed by the AMMI foresaw a three-year time frame for the implementation process (ibid.). In sum, the majority of the Swiss were motivated by the postfunctional concern to restore sovereignty and limit immigration, leaving rational economic reasoning aside.

The focus of the Swiss case study will be on the negotiation process and its outcome. To start, I describe the initial bargaining position of Switzerland.

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Switzerland’s Initial Bargaining Position

Following the vote, the Federal Council immediately took up work to implement the new constitutional Article on immigration (SEM 2017). After four months of domestic negotiations, the Federal Council defined the initial win-set and submitted a draft legislation of the new Article 121a for consultations (Federal Council 2015).

At the press conference of 11 February 2015, Swiss chief negotiator, head of the responsible Federal Department of Justice and Police (FDJP) and Federal Councillor, Simonetta Sommaruga, explicitly stated the executives twofold goal: the ‘strict’ implementation of the AMMI and the preservation of the bilateral treaties with the EU (Federal Council 2015).

Regarding the first goal, the Federal Council’s passed a draft legislation closely aligned with the SVP’s initiative (Flückiger 2015). The proposal targeted the ‘identity concerns’ of the voters and included ceilings and quotas (ibid.). It was not compatible with the FMOPA. Regarding the second goal, the Swiss government hoped to preserve the bilateral treaties by negotiating a compromise with the EU (Federal Council 2015).

In point of fact, the Federal Council submitted a request to renegotiate the FMOPA already several months earlier (SEM 2017). Catherine Ashton, High Representative of the Union for Foreign Affairs and Security Policy / Vice President of the European Commission (HR/VP) replied on behalf of the 28 Member States (Ashton 2014). She made clear that: “The principle of non-discrimination, including equal treatment of all EU Member States, the right to exercise an economic activity and reside on the territory of the other party and standstill clause constitute the essential basis of the consent of the European Union to be bound by the agreement. Re-negotiation of these principles with the objective of introducing quantitative limits and quotas, combined with a preference for Swiss nationals would be in fundamental contradiction to the objective of the Agreement on the free movement of persons” (Ashton 2014). The EU offered talks on technicalities but rejected the request to enter into negotiations (Ashton 2014). In January 2015 the Swiss met with the president of the European Parliament Martin Schulz, president with the European Council Donald Tusk and president with the European Commission Jean-Claude Juncker

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(Federal Council 2015). Meetings resulted in the agreement that intense consultations would take place in order to tackle Switzerland’s problem with Article 121a (ibid.). The small but significant step by the EU to commit to regular high-level discussions motivated the Swiss to finally adopt a unilateral negotiation mandate on 11 February 2015 (Federal Council 2015). Indeed, at the press conference on 11 February 2015, the Federal Council demonstrated optimism that the EU would make concessions for Switzerland to be able to square the circle between the voters motivated by the ‘identity logic’ of politics and the country’s economic interest. Was the EU to allow cherry picking in the end?

The next chapter is dedicated to a more detailed analysis of the EU position in the AMMI negotiation process.

Brief EU Position

HR / VP Ashton’s swift and clear response was an early indicator that re-negotiating the FMOPA was interpreted as a break with its fundamental principle: the integrity of the four market freedoms. The EU’s position has remained the same throughout the entire negotiation process: There would be no cherry-picking for Switzerland, preferential access to the single market has to come with the free movement of people (Interview 4 2018). The EU was open for consultations but never passed a negotiation mandate, the message being: the integrity of the four freedoms is non-negotiable (Interview 2 2018, Interview 4 2018, Interview 5 2018).

Despite the lack of an official negotiation mandate by the EU, formal discussions took place on three levels, similar to EU negotiations with other third countries (Interview 4 2018). On the technical level, EU Chair of the Joint Committee Claude Maerten and his colleagues held regular discussions with Swiss technocrats (Interview 2 2018, Interview 4 2018). The most crucial talks were between Szostak, the diplomatic adviser in Juncker's cabinet and Director Mario Gattiker, Swiss State Secretary for Migration (Flückiger 2015, Interview 4 2018). At the same time, as outlined above, high level talks between the Swiss government and the EC, European Council and European Parliament presidents took place occasionally.

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The EU made heavily use of negotiation tactics and strategies despite the lack of an officially negotiation mandate. The Swiss announced that the popular vote of 9 February 2014 would not allow them to sign the Croatia protocol extending the FMOPA to the newest EU Member State Croatia (SEM 2017, Interview 4 2018). In response, the EU created a legal link between the Croatia protocol, the adoption of an EU compatible application law for the Article 121a and the Swiss participation in Horizon 2020 (Interview 4 2018, SBFI 2018). The EU rejected full Swiss involvement in Horizon 2020, only partial association running until the end of 2016 was accepted (SBFI 2018). Switzerland and the EU have a long tradition of cooperation in research and innovation dating back to the end of the 1980s (SBFI 2018). Switzerland’s competitiveness heavily relies on a high level of innovation, the link was therefore painful and as outlined later, successful in influencing crucial domestic constituencies in Switzerland. Moreover, the deadline of the association agreement increased the time pressure on the Swiss government.

In addition, the EU created a highly important political link between the adoption of an EU compatible application law for the Article 121a of the Swiss constitution and the agreement on mutual recognition concerning conformity assessment (MRA) (SECO 2018). The MRA, one of the seven agreements concluded as part of the package known as the ‘Bilaterals I’, removes technical barriers to the trade of industrial goods from the essential product sectors, hence, is of extreme importance for the export-driven Swiss economy (ibid.). Indeed, the MRA covers over a third of all EU imports to Switzerland and over a quarter of the value of all exports from Switzerland to the EU (SECO 2018). The MRA is not dynamic but needs to be updated regularly. Without an update of the agreement the continued unbureaucratic exchange of goods could no longer be ensured (Economiesuisse 2017). The Swiss economy became increasingly discriminated as the EU revised numerous rules in several product sectors between 2014 and the end of 2016 (Economiesuisse 2017). The EU’s economic hard power, namely access to the single market, successfully created domestic pressure on the Swiss government (Interview 2 2018, Interview 4 2018). Indeed, the blockage by the EU mobilized socio-economic actors to lobby the Swiss government to assure a compatible application law for the Article 121a (ibid.). As the next paragraph outlines, efforts have been successful.

The cherry-picking dream of disintegrating states : an exploration of the friction between economic interest vs identity-based concerns as the two predominant drivers of disintegration negotiation