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Although it is one of very few countries in Europe that has chosen to remain outside the EU, Switzerland is closely integrated with the Union. Two sets of recently negotiated bilateral sectoral agreements provide further integration. This study analyzes the functioning of the bilateral agreements between Switzerland and the EU, focusing on the agreements that entered into force in 2002. Particular attention is paid to the institutional arrangements and their ability to adapt to new legal and political developments in the EU, the impact on the functioning of Swiss democracy, and how the Swiss political system affects the implementation of the agreements. Comparison is also made with the experiences of the European Economic Area, the only arrangement for integration without membership that is more extensive than the Swiss model. The study concludes with an assessment of the prospects for EU-Swiss relations.