From the outset, the European Union (EU) emerged as Switzerland's most important partner – not only on account of the geographical and cultural proximity but also because of the EU's political and economic weight. All of Switzerland's neighbouring countries except Liechtenstein are EU members. Without close cooperation with the EU, tackling the issues involved in asylum, security, the environment and cross-border transport would be inconceivable. Bilateral agreements form the basis for Swiss-EU relations. The bilateral approach has its origins in the 1972 Free Trade Agreement and has been steadily expanded since the 1990s.
After the Second World War, the EU's predecessors created an economic community designed to ensure lasting peace in Europe. Switzerland also focused its foreign policy at that time on closer economic cooperation within Europe. In 1948 it joined with other countries to launch the Organisation for Economic Cooperation and Development (OECD).
As a counterweight to the EU but also as a means of promoting growth and prosperity, Switzerland and six other European countries set up the European Free Trade Association (EFTA) in 1960 to abolish all customs duties between them on industrial products. Several EFTA members left to join the EU, which then became Switzerland's most important trading partner. To develop and secure their trade relations on a contractual basis, Switzerland entered into a free trade agreement with the EU in 1972, abolishing customs duties on industrial goods. This agreement still forms the basis for Swiss-EU economic relations to this day.
In 1989 the EU proposed the concept of a European Economic Area (EEA) to give the EFTA countries that did not wish to join the EU extensive access to the European internal market. The Swiss government signed the EEA agreement in 1992 but EEA accession was rejected by 50.3% of the Swiss electorate and by 18 of the 26 cantons. Switzerland subsequently opted for a bilateral approach to its EU relations, based on a series of sector-specific agreements. The bilateral path was laid down in two decisive steps, Bilaterals I and II, in 1999 and 2004 respectively. These agreements provide for extensive reciprocal market access and form the basis for close cooperation in many sectors. Switzerland and the EU have now concluded some 20 core agreements and more than 100 additional agreements.