By Ruben Sprich

BERNE (Reuters) - The Swiss government on Wednesday proposed a draft law to limit immigration from the European Union following a referendum, but said it was seeking talks with the EU in order not to violate other treaties including on the free movement of people.

The proposed law follows a successful referendum launched by the right-wing Swiss People's Party (SVP) to impose strict quotas on immigration. The measure was strongly opposed by the government as well as Swiss banks, drugmakers and other industries that rely heavily on skilled workers from the EU.

Switzerland risks violating bilateral treaties including on the free movement of labour between it and the EU.

The government plans to set yearly limits for the number of people allowed to move to Switzerland to work, President Simonetta Sommaruga said, without giving details.

Employers would be required to favour Swiss nationals when hiring staff, according to the draft, although there should be exceptions in certain jobs that have proved difficult to fill.

"The EU expects Switzerland to honour the obligations arising from this agreement (the free movement of persons)," EU spokeswoman Maja Kocijancic said.

Foreigners made up almost 24 percent of the Swiss population at the end of 2013, one of the highest proportions in any Western country, up from below 15 percent 30 years ago. Net immigration is about 1 percent a year, about twice that of Germany.

The government's proposals were criticised by the SVP.

"The government is also fundamentally questioning the implementation by making it contingent on the free movement pact (with the EU) being amended," it said.

Switzerland is not in the EU but has in effect accepted its principles of free movement of labour as part of seven treaties which stand or fall together, governing issues like economic and technological cooperation, agricultural trade, aviation and road and rail traffic.

Swiss industry lobby Swissmem linked the move to the Swiss National Bank's release of a franc cap last month, which sent the Swiss currency surging against the euro.

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The bilateral treaties between Switzerland and the EU are increasingly at risk, Swissmem said, jeopardizing EU access for Swiss firms at a time when they are struggling with a far stronger franc.

The Centrist BDP called for a renewed vote in which voters decide on relations with the European Union, an idea already floated by the Swiss government.

(Writing by Kirsti Knolle; additional reporting by Katharina Bart; Editing by Janet Lawrence)