ZURICH, Dec 20 (Reuters) - Switzerland may retaliate if the European Union does not give Swiss stock exchanges the same regulatory status as exchanges in other countries, the government said on Wednesday, exacerbating a row over the future of bilateral ties.
The remarks by Swiss government spokesman Andre Simonazzi came as the EU was set to grant Swiss exchanges access to the bloc's internal market for just one year, putting pressure on Bern to make an overall deal on relations.
Switzerland was blindsided by the move after agreeing last month to contribute an extra 1.3 billion Swiss francs ($1.32 billion) in support for newer EU members on the assumption -- now shown wrong -- that a deal on full "equivalency" for its market was settled.
Simonazzi told a news conference after the weekly cabinet meeting that the Swiss financial centre met international standards and must not be discriminated against in what was essentially a technical matter that should not be politicised.
"If the EU should nevertheless decide upon this discrimination, the government reserves the right to consider appropriate measures to react to the situation," he said, declining to go into further details.
EU states will vote on Wednesday on the proposal by the European Commission, the EU's executive arm, on how to treat Swiss exchanges.
If they back the proposal, as EU officials expect, the Commission will temporarily allow EU investors to access the Swiss exchanges and vice-versa. That will avoid disruption after new MiFID II market rules come into force on Jan. 3.
The Commission had initially proposed open-ended adoption of equivalence for the Swiss exchanges, in line with a deal on U.S. trading venues .
Switzerland's reluctance to sign an overall deal on its relations with the EU, of which it is a close partner but not a member, pushed the Commission to review the offer on trading venues, EU sources said.
Brussels wants a full treaty to replace the patchwork of bilateral accords that now govern ties with Switzerland, and both sides seemed to have made progress when Commission President Jean-Claude Juncker visited last month. The row over exchange access may threaten that progress.
Bilateral ties suffered when Swiss voters in 2014 demanded quotas on EU immigration, then thawed after parliament a year ago adopted a system giving people registered as unemployed in Switzerland first crack at open jobs.
$1 = 0.9843 Swiss francs Reporting by Silke Koltrowitz and Michael Shields, editing by Larry King