Outside
Switzerland is not a member of the European Union. If and when a majority of Swiss become convinced that the EU is there to stay, the chances for membership will rise.
In 1992 Swiss voters narrowly turned down the European Economic Area (EEA) or single market. The three other members of the European Free Trade Agreement (EFTA) - Iceland, Liechtenstein and Norway - did choose to join the EEA, although EFTA still exists.
Joining the EU remains the cabinet’s aim. A Swiss application for membership has been lodged in Brussels but remains dormant.
Under the Swiss system of direct democracy, a concrete application to join the EU would entail a national referendum, and a majority of voters and cantons in favour of joining.
At present, the best the government could hope for would be a 50-50 outcome, effectively putting the issue on ice for at least five years.
The lukewarm attitude to the EU is based on a number of factors. The union is perceived as falling short in democratic institutions. Switzerland’s frequently used system of initiatives and referenda would need drastic reform and curtailment to comply with EU rules.
There is also a concern about the cost: Switzerland would be a net contributor to the EU coffers (probably the last); and there are doubts about whether neutrality would be compatible with EU membership.
Trade
Swiss trade and industry is not convinced of the benefits of EU membership. Switzerland has traditionally traded with the whole world, with every second franc being earned through exports.
General Swiss scepticism about the EU was underlined by a national vote in 2001, which turned down a proposal on opening membership negotiations.
The pragmatic response of the Swiss government since 1992 has been to engage in long and difficult talks with the EU on a series of bilateral accords.
A first set of bilateral treaties between Switzerland and the EU, mainly on trade, labour and transport issues, came into force in 2002.
A second series of treaties, signed in October 2004, has been approved by parliament and the people.
The rightwing Swiss People's Party successfully challenged the Schengen/Dublin accords on closer security cooperation to a nationwide vote. But the electorate approved of the treaties when they went to the polls in June 2005.
A separate vote, on whether to extend an existing labour accord to include the ten new EU member states, was approved by voters in September 2005.
Despite a campaign led by the far-right Swiss Democrats and parts of the far Left, voters accepted the extension of the treaty.
To ensure Switzerland does not suffer discrimination as a non-member, Swiss legislation in many fields, including trade, has been brought into line with that of the EU.
But the clearest indication of how matters are on hold is that EU membership no longer figures as a government goal in the plans for the present legislature 2003-2007 - EU membership is now termed "an option".
