The cabinet said in a statement ahead of a news conference that much of the draft -- negotiated over more than four years -- was in Swiss interests but it would refrain from initialling the pact for now given some differences that remain.
It would revisit the subject in spring 2019 after political consultations that would help it analyse whether signing the pact would be in the national interest, it said.
EU sources have said Brussels will ban EU-based banks and brokers from trading on Swiss stock exchanges beyond the end of 2018 as a punitive measure should Bern not clearly back the deal by Friday. That would prompt Swiss retaliation.
The draft treaty would have the Swiss routinely adopt single market rules and provide a more effective system for resolving disputes. The EU has also sought to water down Swiss labour rules protecting high local wages, drawing the ire of unions.
Both the traditionally pro-Europe left and the anti-EU far right say the deal infringes too much on Swiss sovereignty. leaving the four-party coalition that makes up the government short of a majority to approve the political hot potato before elections next year.
The talks are complicated by Britain's own tortuous negotiations on EU divorce terms, with the European Commission loath to be soft on the Swiss for fear of providing ammunition to Brexiteers. Some Swiss also want to see what Britain can wrangle for itself before striking Bern's own EU deal.
For a TAKE A LOOK on related stories see (Reporting by Michael Shields)
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