March 28, 2018 / 2:53 PM / a year ago

UPDATE 1-Swiss revive plan to support newer EU members as ties thaw

(Adds comment from European Commission)

By Michael Shields

ZURICH, March 28 (Reuters) - Switzerland revived plans on Wednesday to contribute an extra 1.3 billion Swiss francs ($1.4 billion) for newer European Union members as relations with its biggest trading partner began improving after a spat at the end of last year.

Non-EU Switzerland contributes to a wide range of projects in the 13 mostly ex-communist countries that have joined the bloc since 2004, payments that help guarantee its own continued access to the EU's single market.

Bern had suggested it might not pay out a second 10-year package after a row erupted in December over Swiss stock exchanges' access to the EU single market.

But its cabinet on Wednesday agreed to move ahead with domestic political consultations on the plan which will need parliamentary approval.

The government tied the payment to "the status and progress of overall relations between Switzerland and the EU, in particular developments with respect to the EU's recognition of the regulatory equivalence of the Swiss stock exchange".

Switzerland had accused the EU of trying to undermine its financial centre by granting its stock exchanges only temporary access to the bloc.

Diplomats say the mood has brightened since Bern laid out its negotiating position this month on a new treaty Brussels wants that would formalise ties now governed by a patchwork of bilateral sectoral accords.

It was the first time that the seven cabinet members from four parties have agreed on a unified platform for talks, a major step forward after their squabbling hampered years of negotiations and frustrated the EU.

A European Commission spokeswoman said the Swiss contribution was "the natural consequence of Switzerland's access to the internal market".

Asked about the potential impact on stock exchanges, she said: "We will consider the situation in the course of this year, notably with regards to progress made on the institutional framework agreement."

That treaty would see the Swiss adopt EU laws governing the single market, with the European Court of Justice giving its opinion on disputes on how to interpret single-market rules.

This is opposed by the anti-immigration Swiss People's Party, the largest in parliament, which has two cabinet seats.

Many Swiss conservatives are wary of giving "foreign judges" such power, and both sides are now talking about setting up arbitration panels to help break the impasse.

$1 = 0.9506 Swiss francs Additional reporting by Francesco Guarascio in Brussels Editing by Gareth Jones and Robin Pomeroy

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