October 23, 2018 / 3:33 PM / 22 days ago

Swiss-EU treaty deal unlikely this year - Austrian minister

ZURICH, Oct 23 (Reuters) - Switzerland and the European Union are unlikely to strike a deal this year on a new treaty streamlining their relations, current EU president Austria said on Tuesday, suggesting some kind of transitional regime could help matters as talks go on.

Unlike Britain with its messy divorce from the EU, Switzerland has a network of 120 sectoral accords with its biggest trading partner that it can fall back on should stalled treaty talks fail to progress.

But Brussels has said it could take punitive measures - including refusing to extend beyond this year recognition of Swiss bourse rules that allows cross-border stock trading - should the treaty talks fail.

Austrian Economy Minister Margarete Schramboeck, whose country holds the rotating EU presidency until year’s end, played down prospects for a quick deal.

“We want to lend support and would also like to see (the treaty talks) progress although if we are realistic...we won’t get there during the Austrian presidency,” she told reporters after economy ministers from German-speaking countries met.

“Our wish would be to find a solution before the European Parliament dissolves (next year) and then forms again, because then it could take a long time.”

Schramboeck said she was optimistic a deal was within reach, but also said unspecified “transition arrangements” could help bridge the gap while final details are worked out.

Brussels has been pressing Switzerland to agree a pact that would sit atop the existing patchwork of sectoral accords and have the Swiss routinely adopt changes to single market rules.

It would focus on five areas linked to the single market: the free movement of people, civil aviation, land transport, mutual recognition of industrial standards and processed farm goods. The treaty would also provide a more effective platform to resolve disputes.

Schramboeck cited disagreements about the free movement of people as a stumbling block in talks with the Swiss, whose rules to protect high pay against competition from cross-border skilled labour have long been a thorn in the side of neighbours.

Elections in Switzerland next year are also injecting politics into the treaty talks, already complicated by separate EU negotiations with Britain on terms of its EU departure, scheduled for March 29, 2019.

The EU is loath to show too much flexibility with the Swiss for fear of handing ammunition to British negotiators.

Reporting by Michael Shields Editing by Mark Heinrich

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