EFTA Free Trade Dashboard

As developed economies with relatively small domestic markets, the Member States of the European Free Trade Association are highly integrated in international value chains and dependent on foreign markets for both imports and exports. Free trade agreements (FTAs) ensure predictable and preferential market access to foreign markets and improve economic framework conditions with partner countries. Among many other aspects, an important feature of FTAs is that they eliminate or reduce customs duties on the importation and exportation of goods. Consequently, consumers and companies can expect lower prices on their purchases, while domestic companies can sell their products more easily in foreign markets. Furthermore, other provisions in FTAs, such as trade facilitation procedures and regulatory cooperation, contribute to further reducing trade frictions and facilitate exchanges between partners. EFTA currently has 35 FTAs with 49 countries and territories outside the European Union – 31 of which are in force. Developed over decades, EFTA's FTAs represent a central element in its Member States' policies and complement their bilateral agreements with the EU and other partner countries.

FTA tariff preferences are not granted automatically. Companies may benefit from an FTA only if their products meet the preferential rules of origin set out in the relevant agreement. This means that a product must have been wholly obtained, manufactured, worked or processed to a significant extent in a country that is party to the FTA, in order to benefit from preferential duty exemption or duty reductions in the partner states to that agreement.

For example, a Swiss company that manufactures watches in Switzerland or Liechtenstein can export its watches to the Republic of Korea with preferential tariff treatment under the EFTA–Korea FTA only if the value of the non-originating materials used in production does not exceed the defined threshold. Similarly, Norwegian or Icelandic salmon exported to Chile under the EFTA–Chile FTA must originate in Norway or Iceland, or have been "sufficiently processed" (e.g., filleted, smoked) in those countries.

Further information on preferential rules of origin is available on the EFTA website and on the EFTA States' Customs websites:

• Iceland: Iceland Revenue and Customs
• Liechtenstein: Office of Economic Affairs
• Norway: Norwegian Customs
• Switzerland: Federal Office for Customs and Border Security

The utilisation rate of FTAs varies widely by trading partner, product group, time, company size and delivery mode. This can be for numerous reasons, such as:

• Type of products traded and their preferential rules of origin: For certain products produced in fragmented international value chains, it may be complex for companies to meet the requirements in the rules of origin (list rules) to achieve preferential origin.
• Administrative and financial burden: Companies must obtain information on the requirements related to the use of an FTA, document the production process and, if necessary, adapt it for their products in order to achieve preferential origin. Companies may therefore decide against using an FTA if the costs of these adjustments exceed the potential benefits.
• Products transiting via non-parties to the FTA: Many products destined for the EFTA States transit via countries that are not party to the FTA in question, especially major harbours in the EU. If those products do not meet the requirements for transit and storage set out in the FTA, they lose eligibility for FTA preferences.
  Example: If a shipment of quinoa from Peru destined for the Norwegian market transits through a storage and distribution hub in the EU, it will not lose its preferential origin and will still benefit from the FTA (provided the product remains under customs supervision). However, if the shipment is customs-cleared for import into the EU, the quinoa will lose its FTA benefits upon reshipment to Norway and will be subject to normal duties.
• Data limitations: The data on preference utilisation in the Free Trade Dashboard is based on import data collected and processed by different parties. Thus, the existence of multiple sources of import data might limit the accuracy and comparability of the output due to differences in data collection and methodology. In addition, the calculations do not take into account preferences within tariff rate quotas, variable tariffs (e.g. price band systems or input-based tariffs) or ex-outs within tariff lines, due to the difficulty in quantifying them through the available customs statistics. The trade picture shown by the Free Trade Dashboard may therefore not always perfectly reflect actual use of the FTA. This is particularly relevant to FTA partners exporting primarily to the EFTA States under such preferences. A comprehensive overview of data limitations is available in the methodology section of the Free Trade Dashboard.
• Other reasons not yet known: The Free Trade Dashboard provides descriptive information on the use of existing FTAs, laying the foundation for future, detailed analyses of the factors that may explain variations in the use of FTAs across trading partners, product groups and time.

The EFTA States do not levy import tariffs on most of their industrial products, following the autonomous abolition of such duties by Iceland, Norway and, most recently (1 January 2024) Switzerland and Liechtenstein. Given this later unilateral liberalisation by Switzerland, a significant share of EFTA's import trade shifted to the category of most-favoured nation (MFN) zero tariffs in 2024. Preference utilisation rates are calculated only on a limited subset of trade where a positive preferential margin exists. Consequently, both achieved and unrealised tariff savings are markedly lower from 2024 onwards compared with previous years. At the same time, the share of duty-free imports has increased, highlighting the favourable market access conditions for partner state exporters stemming from the elimination of industrial duties.

Two of EFTA FTA's partners have likewise abolished industrial duties: Hong Kong (China) and Singapore.

The added value is illustrated in Graph 3 for Norway and Switzerland. For imports into Norway and Switzerland, activating the "WTO bound tariff margin" toggle displays an additional estimate of the added value of the legal certainty granted by the FTAs. This estimate is based on the difference between applied MFN tariff rates and MFN bound tariff rates at the WTO for each product, multiplied by the respective import values. Given the unilateral trade liberalisation implemented by the EFTA States, this feature illustrates the benefits granted to exporters in the FTA partner country through applied MFN tariff rates of zero.

For exports from the EFTA States to FTA partner countries, the Free Trade Dashboard relies on import data provided by those partners that have agreed to provide the data required for this analysis. In 2024, in addition to the EU Member States and the United Kingdom, the analysis on the export side covers Albania, Bosnia and Herzegovina, Canada, Chile, Colombia, Costa Rica, Ecuador, Georgia, Hong Kong (China), Indonesia, Mexico, Montenegro, Morocco, North Macedonia, Panama, Peru, the Philippines, the Republic of Korea, Serbia, Singapore, South Africa, Türkiye and Ukraine. Some years may be missing due to the inability of an FTA partner to provide data, or because the agreement in question entered into force after 2018 (the start of the assessment period). EFTA remains in contact with its FTA partner countries and expects to expand this coverage over time.

Since the publication of the first results, the EFTA Secretariat and the responsible authorities in the EFTA States have initiated further work to identify the factors that lead to the use of FTAs, such as in-depth analyses, business surveys or dedicated discussions with FTA partners. The aim is to identify and facilitate the use of FTA preferences, especially for products with high tariff-saving potential. These analyses and dialogues with FTA partners and domestic stakeholders are continuing, with a view to further improving the use of FTAs by economic operators both in the EFTA States and in the FTA partner countries. In addition, the EFTA States organise a yearly workshop on preference utilisation with international experts to discuss future avenues of work.

Trade between EFTA States and FTA partner countries outside the EU. Available as a combined EFTA report and as individual country reports.

Intra-EFTA trade covered by the EFTA Convention. Released in October 2023 and updated annually.

Bilateral trade of the EFTA States with the EU Member States, on import and export side.

Bilateral trade with the United Kingdom.