Swiss Justice Minister Simonetta Sommaruga called Croatian Foreign Minister Vesna Pusic to inform her that Bern would not be able to sign a bilateral accord extending the right of free access to Switzerland for EU citizens to the bloc's newest member state "in its current form," a ministry spokesman said.
Sommaruga had also informed Brussels that the deal would need to be re-examined, spokesman Philippe Schwander told AFP, adding that the minister had stressed she was seeking a "solution" to ensure Croatians were not discriminated against.
The move came after the Swiss voters last Sunday narrowly approved curbing immigration from the European Union, with 50.3 percent of voters deciding to void a pact giving equal footing to EU citizens in the Swiss labour market.
Switzerland is not a member of the EU, but counts the bloc as its main trading partner.
Croatia, which only joined the EU in July last year, had reached an agreement with Switzerland a month later that would have allowed its citizens free access to work places in the wealthy Alpine nation within a decade.
But the February 9th referendum has created a "new constitutional disposition . . . (and) Switzerland cannot sign the accord in its current form," Schwander explained.
The EU voiced outrage at the referendum result, insisting Switzerland cannot pick and choose which accords to implement and pledging to review "relations as a whole."
The EU's ambassador to Switzerland, Richard Jones, warned this week that if Switzerland ripped up the Croatia deal Brussels might, for instance, put popular education and research exchange deals with the country on ice, the ATS news agency reported.
The referendum binds Bern to renegotiate the entire EU labour market deal within three years. The current rules stay in force in the meantime.
The Swiss government meanwhile indicated this week it would not drag its feet and aimed to present a plan on how to implement the Swiss people's will on the issue before July, and would present a proposed law by the end of the year.