STRASBOURG (Reuters) - The European Commission decided on Tuesday to offer Switzerland six additional months to agree on a new treaty that will govern the country’s future relations with the European Union, two EU sources told Reuters.

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The political decision, to be formalized after talks with EU leaders in Brussels this week, would allow Swiss stock exchanges to maintain access to EU clients until the end of June under a temporary extension of the “equivalence” regime that permits foreign financial firms to operate in the 28-nation bloc.

The move marks a retreat from the more belligerent stance Brussels had previously adopted. Last week it threatened to prevent EU-based banks and brokers from trading on Swiss stock exchanges from 2019 if Bern failed to clearly back a draft pact on future relations.

But despite the Commission’s pressure and the economic risks, the Swiss government on Friday dodged the EU deadline and said it would revisit the subject in spring 2019 after political consultations.

The dispute with Bern gives a glimpse of the Commission’s negotiating strategy on sensitive equivalence decisions, which will also be crucial for London-based financial operators after Britain leaves the EU next year.

No decision will be announced on Tuesday, a Commission spokeswoman said.

LAST OFFER

But the two senior officials, who participated in Tuesday’s Commission meeting, said the political decision had been made.

“It is a last gesture of goodwill from our side accompanying their consultation, which runs into spring,” one told Reuters.

The Commission will informally broach the issue with EU leaders at a summit in Brussels on Thursday and Friday, officials said.

A spokesman for the Swiss government declined to comment.

The Commission told EU diplomats last week it would not have extended the equivalence regime for Swiss exchanges after it expires in December, if they did not agree on a new treaty by the end of the year, minutes of an EU meeting show.

Talks on a new treaty, which would replace more than 120 sectoral pacts regulating EU-Swiss relations, have been continuing for more than four years.

A draft treaty agreed by EU and Swiss negotiators, but not yet endorsed by Switzerland, would establish a mechanism for Bern to adapt more smoothly new EU rules and would give the EU Court of Justice a final say on the application of EU laws in the Alpine country.

Switzerland, closely integrated economically with the EU but not a member of the bloc, would also have to contribute to the EU budget and provide funds to poorer EU regions.

But both the traditionally pro-EU left and anti-EU far-right say the draft deal infringes too much on Swiss sovereignty, leaving the four-party coalition government short of a majority to approve it before elections next year.