DBRS Releases Commentary: Do the Swiss and Norwegian Models Provide Lessons for the UK?

DBRS, Inc published a commentary revisiting the idea that the UK (rated AAA, Stable) can look to several examples of bilateral relationships with the European Union. Switzerland and Norway (both also rated AAA, Stable) are not in the EU, but each have access to the EU’s single market but through different routes.

The European Economic Area (EEA) Agreement is the cornerstone of relations between Norway and the EU, and guarantees the EU Single Market's four freedoms (goods, persons, services, and capital) on the same terms as the EU member states. Consequently, Norwegian companies participate in the Single Market almost under the same conditions as Member States, and vice‐versa. EU Single Market rules are dynamically integrated into Norwegian law through the EEA agreement.

Switzerland is not a member of the EEA, but is a member of EFTA (European Free Trade Association). Switzerland’s relations with the EU are based on a network of agreements made up of 20 main bilateral agreements (Bilaterals 1 and II) and 100 other agreements that ensure access for Swiss companies to the EU single market and govern a number of areas of cooperation between Switzerland and the EU. While Switzerland respects the four freedoms central to the Single Market, each change in treaty status with the EU must be approved by referendum and there is no mechanism to engage in EU law-making on an ongoing basis.

“Three years on from the referendum, all possibilities are available to the UK in terms of its future relationship with the EU, but in reality there is just one option - good working arrangements that safeguard competitiveness,” said Nichola James, Co-Head of Sovereign Ratings.

“The Swiss and Norwegian models are interesting examples of alternative relationships but both countries have border infrastructure that is not possible between Northern Ireland and the Republic of Ireland. The message from Switzerland and Norway is that arrangements take time to develop and fine-tune, and this is likely to be the case for the UK when it leaves the EU." said Rohini Malkani, Senior Vice President, Global Sovereign Ratings.

For more information on the UK, Switzerland and Norway, visit www.dbrs.com or contact us at info@dbrs.com.

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