Agriculture
Most EFTA FTAs contain protocols or annexes on processed agricultural products. The duties on these products reflect the difference between the domestic market price and the world market price of the basic agricultural component (raw material) of the product. Duties on the industrial (processing) component are eliminated. The EFTA States have their own lists of products for which they grant concessions to the partner country and vice versa.
Since the EFTA States do not have a common agricultural policy, basic agricultural products are dealt with in bilateral arrangements. Such bilateral agreements are concluded between each EFTA State and the partner country in parallel with the main agreement. These arrangements form part of the instruments that govern the free trade area.
Fish and Other Marine Products
The fisheries sector accounts for approximately two thirds of Iceland's total exports of goods and is one of the main contributors to Norway's GDP. The two countries export fish to more than 170 countries. Free trade in fish and other marine products is therefore a key element in all EFTA FTAs.
Rules of Origin
In an FTA, the country of origin of a product is determined on the basis of rules of origin. These rules indicate which goods qualify for preferential market access. They are fundamental to the functioning of a free trade area, as they tell the economic operator whether or not a given product can be traded under the FTA. Products (both industrial and agricultural) need to be either “wholly obtained” or “sufficiently worked or processed” in the country of a free trade partner in order to be considered as originating products. Globalisation of production processes has made the identification of the country of origin increasingly complex, as few products exist without input of foreign origin. Consequently, one of the main functions of rules of origin is to determine to what extent domestic products may contain imported materials from a country outside the free trade area concerned without losing their preferential status under the FTA.
Public Procurement
Effective liberalisation of public procurement markets is an integral objective of EFTA FTAs. In recent agreements, liberalisation obligations have been included on the basis of the principles of reciprocity, non-discrimination and transparency. Such provisions either build on the WTO Government Procurement Agreement or substantially replicate its structure and content.
Intellectual Property Rights
The protection of intellectual property rights (IPR) is very important in international trade because inadequate levels of protection can hamper commerce and impede the smooth running of a free trade area. EFTA’s FTAs provide for high standards of IPR protection. The provisions afford adequate, effective and non-discriminatory protection of intellectual property rights. They include measures to enforce the protection of such rights against infringement, counterfeiting and piracy. The provisions build on the principles of national treatment and most-favoured-nation (MFN) treatment as set out in the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
Competition Rules
EFTA FTAs also contain rules on competition. This is because removing traditional barriers to trade, such as tariffs and quantitative restrictions, is not necessarily sufficient. The rules on competition ensure that liberalisation of trade under an agreement is not hindered by new barriers in the form of agreements or practices between or by enterprises that can prevent, restrict or distort competition. The provisions on competition also apply to the activities of public enterprises and monopolies.
Services and Investment
EFTA FTAs with European and Mediterranean countries contain an evolutionary clause on services and investment with the aim of achieving gradual liberalisation and the mutual opening of markets for investments and trade in services.
In line with their active involvement in other international fora, the EFTA States now include provisions for the liberalisation of trade in services. In the more ambitious agreements, these cover all modes of service supply and contain separate sections or annexes relating to specific sectors, e.g. financial services and telecommunications. They build on the General Agreement on Trade in Services (GATS) and follow a similar approach, complemented by enhanced specific commitments.
On investment, FTAs concluded by the EFTA States to date follow different patterns as far as coverage is concerned. Provisions have been elaborated in connection with most recently concluded transcontinental FTAs (e.g. with Mexico, Singapore, Chile and with other partners through a related investment agreement). These rules liberalise investments between the parties and may cover promotion, establishment, transfers, capital movements and/or protection.
Joint Committee
A joint committee composed of representatives of the EFTA States and the partner country supervises the implementation of each FTA. To facilitate the work flow, a joint committee may establish subcommittees, e.g. in the field of customs and origin matters. A joint committee normally meets every two years.
Dispute Settlement
EFTA FTAs foresee that the resolution of any differences between parties arising from the interpretation and application of an agreement is conducted through direct and joint committee consultations. Diplomacy remains the fundamental principle of the settlement of disputes under international law. The same applies to disputes between the EFTA States and their FTA partners.
There has, however, been an increasing international trend over the last decade to establish dispute settlement mechanisms under free trade agreements for situations where diplomatic means fail. Accordingly, the EFTA States have been introducing arbitration mechanisms into their FTAs.