EU ratchets up pressure on Swiss to clinch new treaty

ZURICH (Reuters) - The European Union heaped more pressure on Switzerland to clinch a new bilateral treaty cementing ties, threatening to cut off cross-border stock trading by year's end if no deal emerges.

European Commissioner Johannes Hahn, who has been liaising with the Swiss foreign minister, told the Neue Zuercher Zeitung newspaper that time was running out to clinch an accord that Brussels has been seeking for a decade.

"In the interest of both sides we have to get results soon. Negotiations cannot become a never-ending story," Hahn said. "I expect that by the end of October at the latest we see clearly whether we can put something together or not."

The Commission last year agreed to recognise Swiss bourse trading rules only until the end of 2018, linking any extension to progress on a treaty with non-EU member Switzerland.

Asked what would happen to stock trading if no treaty deal emerged by the end of October, Hahn said: "I honestly cannot imagine...that we would extend the exception by another year."

Trading volume on Swiss stock exchanges could plunge by 70 to 80 percent should the EU refuse to recognise Swiss exchange rules as equivalent to EU norms, prompting the Swiss government in June to draw up contingency plans that could ban trading of Swiss shares on EU bourses in a retaliatory move.

European Commission President Jean-Claude Juncker last week also urged Bern to wrap up negotiations quickly, saying time was short as attention turns to the crunch phase of Brexit talks.

The Swiss government has been wrestling with its approach toward treaty talks, which have run aground because of opposition from both the anti-EU far right and the usually pro-Europe centre left.

The left is refusing to budge on safeguards to protect Swiss wages and working conditions, while the far right opposes any deal that would impinge on Swiss sovereignty. The four-party cabinet is due to decide its strategy on Friday .

Unlike Britain in its messy divorce from the EU, Switzerland has a patchwork of around 120 sectoral accords that govern ties with its most important trading partner and that will remain in effect even if treaty talks fail.

But Brussels has been pushing for a treaty that would sit atop those accords and have the Swiss routinely adopt changes to single market rules. It would also provide a more effective platform to resolve disputes.

Failure to strike a deal would means no increase in Swiss access to the single market, dashing hopes for a new electricity union. It could also endanger unfettered EU market access for Swiss makers of products such as medical devices.

(Reporting by Michael Shields; Editing by Mark Heinrich)