By Stephen Brown
BERLIN (Reuters) - German Chancellor Angela Merkel warned on Tuesday against rushing to retaliate against Switzerland for its vote to curb immigration, saying Europe's own interests were best served by waiting to see how the Swiss implement the referendum result.
"It can't be that because one side did something in one specific area that the other side says nothing works in other areas," Merkel said after talks with Swiss President Didier Burkhalter, who is also the country's foreign minister.
"First of all we need to see how Switzerland implements this vote over the coming three years. I would advise against deciding on consequences at the very beginning and not waiting for the implementation process in Switzerland," she said.
The Swiss narrowly backed curtailing immigration from the EU in a vote backed by the right-wing Swiss People's Party which tapped into concerns that the country's culture is being eroded by foreigners, who account for nearly a quarter of the population.
Since 2002, Switzerland has had a treaty with the European Union which allows for the free movement of labor. The recent vote threatens that pact, and with it a package of other accords that cover economic and technological cooperation, public procurement, and a host of other areas.
European Commission President Jose Manuel Barroso has warned the February 9 vote will have "serious consequences" for ties with the 28-member EU, which has already postponed talks with the Swiss on multibillion-dollar research and educational schemes.
Switzerland, in turn, has already said it cannot sign a labor market pact with new EU member Croatia.
Taking a more strident stance than the Germans, France's industry minister said the Swiss vote amounted to "collective suicide". Arnaud Montebourg said Swiss exports would be hit by retaliatory tariffs and "Switzerland will impoverish itself".
French Foreign Minister Laurent Fabius has said Paris would review diplomatic relations, without specifying how.
Swiss business leaders fear access to foreign professionals will be shackled by red tape and bilateral accords with the EU, the country's biggest trading partner, will be undermined.
Burkhalter, speaking at a news conference with Merkel, said trade between Switzerland and Germany, at 75 billion euros, was worth about half the volume of German trade with China and that about 350,000 Germans currently work in Switzerland.
"The challenge will now be that we deal with the results in a way that relations between the European Union and Switzerland remain as intense as possible with respect for the referendum," said Merkel, promising to work for a solution that respects the Swiss vote "but does not further damage the EU's own interests".
The Swiss president said his country had three years to work out how to implement the legally-binding referendum result in a way that was "non-discriminatory" to Croatia.
"There is no reason to stop everything because of a decision that is not yet in force," said Burkhalter, adding that it was in nobody's interests to suspend cooperation on areas like research or power generation that affected competitiveness.
The EU has stopped talks with Switzerland on a cross-border electricity agreement which had been aimed at closer power trading ties with the country.
(Additional reporting by Noah Barkin and Erik Kirschbaum; Reporting by Stephen Brown; Editing by Noah Barkin)