BERN (Reuters) - The Swiss government said on Wednesday it will draw up a draft law to limit immigration by the end of the year, after Swiss voters narrowly backed proposals to curtail the number of migrants from the European Union.
Switzerland risks losing its privileged access to the European single market following the successful vote spearheaded by the right-wing Swiss People's Party (SVP) to reintroduce quotas, which has also unsettled businesses.
After its first meeting since Sunday's vote result, the coalition government - which opposed the quotas - said it would draw up an implementation plan by the end of June. It also plans to hold exploratory talks with the 28-member EU over the future of the free movement of people and other bilateral agreements.
Sunday's vote sent Swiss officials and diplomats scrambling to contain the damage in Brussels. The foreign ministry will contact EU partners immediately and also keep them informed of developments in Switzerland, with a view to opening formal negotiations, the government said.
"It is a difficult situation that we have to live with. We knew that," foreign minister and current Swiss president Didier Burkhalter told a news conference after the seven-member cabinet met.
He said the government had discussed whether to make concessions to the EU in other pending negotiations, which include the sharing of bank client data and corporate taxation, where the EU wants Swiss reforms, but did not elaborate.
The Swiss government is in the tricky position of having to write the result of the referendum into law while limiting the backlash from Brussels and without angering big neighbors like Germany and France. It has up to three years to translate the vote into law, and how strictly it does so is being closely watched by the EU, Switzerland's biggest trading partner.
Free movement of people and jobs within its borders is one of the fundamental policies of the EU, and Switzerland, while not a member, has participated under a pact with Brussels.
Since 2002, Swiss and EU citizens have been able to cross the border freely and work on either side as long as they have a contract or are self-employed.
European Commission President Jose Manuel Barroso said on Wednesday that the referendum vote would have "serious consequences" for relations between Switzerland and the EU.
While he did not spell out any specific sanctions, Barroso implied that Swiss people could lose the right to live and work in the bloc, and that Swiss companies might also face obstacles.
EU officials have made clear that free movement is part of a package of seven treaties that stand or fall together. The accords also cover economic and technological cooperation, public procurement, mutual acceptance of diplomas and licences, agricultural trade, aviation, and road and rail traffic.
The Swiss government also said it would clarify how to handle plans to grant citizens from new EU member Croatia entrance to Switzerland from July 1, which Sunday's vote has complicated.
Reporting By Katharina Bart; Editing by Catherine Evans