What does the EFTA Convention say about new member states?
According to Article 56 of the EFTA Convention, “any State may accede to the Convention provided that the EFTA Council decides to approve its accession. As regards further formal requirements, any new member state would have to apply to become a party to existing EFTA free trade agreements (Article 56(3)).”
The EFTA Council is the highest governing body of EFTA, where the four EFTA States – Iceland, Liechtenstein, Norway and Switzerland – meet at ambassadorial or ministerial level. Each Member State is represented and decisions are taken by consensus.
What is EFTA and how is it different from the EU?
The European Free Trade Association (EFTA) is an intergovernmental organisation, established in 1960 by the EFTA Convention for the promotion of free trade and economic integration between its Member States (today Iceland, Liechtenstein, Norway and Switzerland), within Europe and globally.
EFTA does not envisage political integration. It does not issue legislation, nor does it establish a customs union.
EFTA’s first objective was to liberalise trade between its Member States. In 1972, each EFTA State negotiated bilateral free trade agreements (FTAs) with the EEC. Currently, the EFTA States have 26 FTAs in force or awaiting ratification covering 36 partner countries worldwide.
Since 1994, the EFTA Secretariat has assisted Iceland, Liechtenstein and Norway in the management of the EEA Agreement.
The EFTA Secretariat is not involved in the management of the bilateral agreements between Switzerland and the EU. Since 2001, the EFTA Convention has been updated on a continuous basis in order to align its content with the Swiss-EU bilateral agreements and the EEA Agreement. This includes, for example, provisions on the free movement of persons between all of the EFTA States.
What characterises EFTA’s free trade agreements?
EFTA’s FTAs typically foresee the elimination of import duties on industrial goods and fish. Increasingly, the EFTA States have added substantive rules and commitments on services, investment and/or public procurement to their FTAs, responding more broadly to opportunities and challenges in today’s globalised economic environment. Since 2010, EFTA has begun to introduce provisions on sustainable development in its negotiating processes and reviews of existing FTAs. These address environmental and labour standards insofar as they relate to trade and investment.
Can the EFTA Member States also sign bilateral free trade agreements?
Yes, the EFTA States are not obliged by the EFTA Convention to conclude preferential trade agreements as a group. They maintain the full right to enter into bilateral third-country arrangements.
What is the European Economic Area?
The European Economic Area (EEA) was established by the EEA Agreement, which entered into force in 1994. Its objective is to extend the Internal Market of the EU to the three participating EFTA States, creating a homogeneous European Economic Area. Currently, the EEA comprises the 28 EU Member States and the three EEA EFTA States – Iceland, Liechtenstein and Norway.
Is it possible to become a party to the EEA Agreement without being a member of the EU or EFTA?
Article 126 of the Agreement on the EEA makes it clear that the EEA Agreement only applies to the territories of the EU, in addition to Iceland, Liechtenstein and Norway. Under the present wording of the EEA Agreement, it is therefore impossible to be a party to the EEA Agreement without being a member of either the EU or EFTA.
According to Article 128 of the EEA Agreement, “any European State becoming a member of the Community shall, and the Swiss Confederation or any European State becoming a member of EFTA may, apply to become a party to this Agreement. It shall address its application to the EEA Council.”
The EEA Council takes political decisions leading to the amendment of the EEA Agreement, including the possible enlargement of the EEA. Decisions by the EEA Council are taken by consensus between the EU on the one hand and the three EEA EFTA States - Iceland, Liechtenstein and Norway - on the other.
What is covered by the EEA Agreement?
All relevant Internal Market legislation is integrated into the EEA Agreement so that it applies throughout the whole of the EEA. The core of these rules relate to the free movement of goods, capital, services and persons. In addition, the EEA Agreement covers horizontal areas such as social policy, consumer protection, environment, company law and statistics. In order to ensure equal conditions of competition throughout the EEA, the EEA Agreement mirrors the competition and state aid rules of the EU Treaties. It also provides for participation in EU programmes such as those for research and education.
What is not covered by the EEA Agreement?
The EEA Agreement does not cover EU common agriculture and fisheries policies, although it contains provisions on trade in agricultural and fish products. It does not entail a customs union, nor does it include a common trade policy, common foreign and security policy, justice and home affairs, harmonised taxation or the economic and monetary union.
Schengen is not a part of the EEA Agreement. However, all of the four EFTA States participate in Schengen and Dublin through bilateral agreements and they all apply the provisions of the relevant Acquis.
What is unique about the “EEA model”?
The EEA Agreement has a unique institutional set-up for decision making, surveillance and judicial review, often referred to as the “two-pillar structure”. To ensure unified application of the EEA rules, the EEA EFTA States established the EFTA Surveillance Authority and the EFTA Court, which respectively mirror the surveillance functions of the European Commission and the competences of the Court of Justice of the European Union.
How do the EEA EFTA States contribute financially to the EU?
The financial contributions of the EEA EFTA States to the EU related to the EEA Agreement are twofold.
First, the EEA EFTA States contribute towards reducing economic and social disparities in the EEA through the EEA Grants. Currently the beneficiary states include Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia and Slovenia. In addition to the EEA Grants, Norway has funded a parallel scheme since 2004 – the Norway Grants. The funding period covering 2014-2021 has a total financial envelope of approximately EUR 400 million per year. These contributions are not managed by the EU, but by the EFTA Financial Mechanism Office in collaboration with the beneficiary countries.
Second, the EEA EFTA States contribute towards the EU programmes and agencies that they participate in on the basis of the EEA Agreement. These contributions are added to the EU budget, increasing the total financial envelopes of the programmes and agencies in question. For the current 2014-2020 EU multiannual budget period, the total EEA EFTA contribution to EU programmes and agencies is approximately EUR 460 million per year.