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Maps: Cover, worldwide network and background to EFTA in Figures: Orangemetalic

Printed March 2013

Cover picture: Built on the campus of the Ecole Polytechnique Fédérale de Lausanne (EPFL), Switzerland, the Rolex Learning Centre functions as a laboratory for learning, a library and an international cultural hub, open to both students and the public. Photo: © Alain Herzog, EPFL.

Further copies of this issue are available free of charge by contacting webmaster@efta.int

This is EFTA 2013

Editor’s Note:

“This is EFTA” is an overview of EFTA’s activities and institutional framework. For a description of the more specific activities that took place last year, please consult EFTA’s Annual Report, available on our website: www.efta.int/publications. The latest updates from Eurostat can be accessed via its homepage:www.epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home.

Foreword

Since its establishment over 50 years ago, the European Free Trade Association has played an important role in Europe’s political and economic development. EFTA’s present membership and structure must therefore be seen in the context of the wider quest for European economic integration and the development of a global trading system.

In the post-war years, it was widely recognised that free trade was vital for European economic growth and reconstruction. Countries were determined not to return to the chaotic trading situation of the pre-war period, and so the General Agreement on Tariffs and Trade was born. In Western Europe, free trade and economic integration were seen as important steps in the political process aimed at averting future conflicts. In 1957, six European states signed the Treaty of Rome, creating the European Economic Community, a customs union with close economic cooperation in key areas. Three years later, seven other European states signed the EFTA Convention, forming their own free trade area.

Over the ensuing decades, EFTA’s membership changed several times as political integration in Europe gathered pace. The “new EFTA” as we know it today came into existence in 1995 with its present membership of Iceland, Liechtenstein, Norway and Switzerland.

Today, the liberalisation of intra-EFTA trade relations has been achieved in most areas through the EFTA Convention. In addition, the Association has two substantive tasks: to assist the EFTA States in negotiating and maintaining free trade agreements (FTAs) with non-EU countries; and to assist Iceland, Liechtenstein and Norway in the operation and development of the Agreement on the European Economic Area (EEA). Work on FTAs is carried out in EFTA’s headquarters in Geneva, while EEA matters are managed in Brussels.

The results achieved by EFTA are considerable.

Within the framework of EFTA, its Member States have at present concluded 24 FTAs with 33 countries globally. Negotiations with several large emerging economies are ongoing and exploratory discussions are taking place with a number of other states on possible future agreements. At the same time, EFTA’s Member States maintain their strong commitment to the multilateral rule-based trading system embodied by the World Trade Organization, and EFTA’s FTAs are based on and seek to promote this system.

The EEA Agreement forms the legal basis for economic cooperation between the three EEA EFTA States and the European Union. As parties to the EEA Agreement, they are full participants in the EU’s Internal Market, which is based on the principle of the free movement of goods, services, capital and persons, with uniform and homogeneous rules governing state aid and competition. Switzerland, though not a member of the EEA, benefits from its active observer status in the EEA EFTA structure.

In 2011, EFTA represented the world’s 12th largest trader in merchandise goods and seventh largest trader in commercial services, with the EFTA States maintaining their positions as important markets for both outward and inward investment. Levels of gross domestic product per capita were among the highest globally.

Over the past 50 years, EFTA has shown a remarkable ability to adapt to new political and economic realities. EFTA has contributed significantly to the economic development of its Member States and to the promotion of free trade. I remain confident that the Association will continue to be an indispensable instrument for our countries.

Kristinn F. Árnason

Secretary-General

The European Free Trade Association

The European Free Trade Association is an intergovernmental organisation set up for the promotion of free trade and economic integration to the benefit of its four Member States: Iceland, Liechtenstein, Norway and Switzerland. The Association is responsible for the management of:

• The EFTA Convention, which forms the legal basis of the organisation and governs free trade relations between the EFTA States;

• EFTA’s worldwide network of free trade and partnership agreements; and

• The Agreement on the European Economic Area (EEA), which enables three of the four EFTA Member States (Iceland, Liechtenstein and Norway) to participate in the Internal Market of the European Union.

Representatives of the EFTA States initialling the EFTA Convention in Stockholm in November 1959

The EFTA Convention

Originally signed in Stockholm in 1960 and covering trade in goods, a new and more comprehensive EFTA Convention was signed in Vaduz in 2001. The present convention, frequently referred to as the Vaduz Convention, covers all important aspects of modern trade, including provisions on the free movement of persons, trade in services, movement of capital and protection of intellectual property. It has led to a strengthening of economic relations between the EFTA Member States and also provides an enhanced common platform for developing relations with trade partners around the world.

The EFTA Convention effectively applies to relations between Switzerland and the EEA EFTA States, as trade relations between Iceland, Liechtenstein and Norway are governed by the EEA Agreement. It is updated regularly by the EFTA Council to reflect common developments under both the EEA Agreement and Swiss Bilateral Agreements, ensuring that the EFTA States benefit from virtually the same privileged relationship between themselves as they do with the EU.

EFTA: the Organisation

The EFTA Council

The EFTA Council manages relations between the EFTA States under the EFTA Convention. It is the forum in which the Member States consult each other, negotiate and act together. The Council’s policy-making mandate is broad. The policies are designed to promote the overall objectives of the Association and to facilitate the development of links with other states and international organisations. The Council is also responsible for administrative and budgetary matters within EFTA.

The Council normally meets twice a year at ministerial level to provide direct political guidance to EFTA’s work. At their summer meeting, the EFTA Ministers discuss free trade relations and developments under the EEA Agreement. If required, an additional meeting devoted to free trade relations is held at the end of the year. Between the ministerial meetings the Council meets at ambassadorial level.

A number of specialised committees assist and report directly to the Council. The Committee on Third-Country Relations, for instance, oversees the functioning and development of free trade and cooperation agreements with countries outside the European Union. The Committee of Origin and Customs Experts deals with cooperation in the field of customs. The EFTA Board of Auditors is the auditing authority for the EFTA Secretariat. The Budget Committee assists the Council in EFTA budgetary matters. Finally, a number of committees manage the updating of the EFTA Convention.

The Standing Committee of the EFTA States

The Standing Committee of the EFTA States serves as a forum in which the EEA EFTA States consult each other and arrive at a common position before meeting with the European Union in the EEA Joint Committee (for further details on the Standing Committee, click here.)

EFTA Advisory Bodies

The EFTA Consultative Committee (made up of social partner representatives) and the EFTA Parliamentary Committee (comprising members of EFTA’s national parliaments) advise the Council and the Standing Committee on current EFTA matters. Both committees have formal links with their EU colleagues (see the two-pillar EEA structure). They also meet occasionally with their counterparts in countries with which EFTA has free trade relations. (Click for details of the EEA EFTA Forum of Elected Representatives.)

The EFTA Secretariat

The day-to-day running of the Secretariat is headed by the Secretary-General, who is assisted by two Deputy Secretaries-General based in Geneva and Brussels and an Assistant Secretary-General in Brussels. The Secretariat employs approximately 80 staff members, a quarter of whom are based in Geneva, a small team in Luxembourg and the remainder in Brussels. All staff members are employed on three-year contracts, renewable once. Whilst working at the Secretariat, staff members are servants of the Association and are therefore not responsible to their national governments.

The structure of the Secretariat reflects the different fields of EFTA’s activities. Staff at EFTA’s headquarters in Geneva deal with the management and negotiation of free trade and partnership agreements with non-EU countries, and assist the EFTA Council.

The Secretariat in Brussels provides support for the management of the EEA Agreement and assists the Member States in preparing new legislation for integration into the Agreement. The Secretariat also supports the Member States in the elaboration of input into EU decision making.

These two duty stations work together closely to implement the EFTA Convention as regards the intra-EFTA free trade area.

The EFTA Statistical Office in Luxembourg contributes to the development of a broad and integrated European Statistical System.

EFTA Statistical Office

The EFTA Statistical Office (ESO) was created in 1991 as a liaison office between Eurostat (the statistical office of the European Union) and the EFTA national statistical institutes (NSIs), and is located on the premises of Eurostat in Luxembourg. ESO’s main objective is to sustain the integration of the EFTA States into the evolving European Statistical System, providing harmonised and comparable statistics to support the general cooperation process between EFTA and the EU. This cooperation is governed by the EEA Agreement and the Swiss-EU Agreement in the field of statistics. It has extended progressively to EFTA cooperation with the EU in statistical assistance projects for third countries and in the European Statistical Training Programme.

ESO is supported by the Working Group of the Heads of the NSIs of all EFTA countries. For EEA matters, Switzerland is an observer.

Georges Baur, Assistant Secretary-General in Brussels; Kristinn F. Árnason, Secretary-General; Ivo Kaufmann, Deputy Secretary-General in Geneva; and Helge Skaara, Deputy Secretary-General in Brussels.

European Standardisation

The EFTA States and the European Commission cooperate closely to create and implement a European standardisation policy. This includes the parallel financing of standards-related work carried out by CEN, the European Committee for Standardization; CENELEC, the European Committee for Electrotechnical Standardization; and ETSI, the European Telecommunications Standards Institute. EFTA also cofinances the activities of ANEC, the European association for the coordination of consumer representation in standardisation; ECOS, the European Environmental Citizens Organisation for Standardisation; and EOTA, the European Organisation for Technical Approvals. NORMAPME, the European Office of Crafts, Trades and Small and Medium-sized Enterprises for Standardisation, is cofinanced by the EEA EFTA States through the Competitiveness and Innovation Programme. EFTA is a partner in cofinancing and contributing to projects with seconded European standardisation experts in China and India, and also to CESIP, the Europe-China Standards Information Platform. This platform is an information tool that aims at strengthening mutual trade and investment flow between Europe and China by making standards and related technical regulations more accessible.

European Accreditation

The EFTA States and the European Commission have been working together since 2010 on implementing a European accreditation policy. This includes the cofinancing of activities carried out by EA, the European co-operation for Accreditation.

The EFTA Ministerial meeting in November 2012: Kristinn F. Árnason, Secretary-General, EFTA; Aurelia Frick, Minister of Foreign Affairs, Liechtenstein; Össur Skarphéðinsson (Chair), Minister for Foreign Affairs and External Trade, Iceland; Roger Ingebrigtsen, State Secretary, Ministry of Trade and Industry, Norway; and Johann N. Schneider-Ammann, Federal Councillor, Head of the Federal Department of Economic Affairs, Switzerland.

EFTA Through the Years

1960 The European Free Trade Association (EFTA) is founded by Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom, to promote closer economic cooperation and free trade in Europe.

1961 Finland becomes an associate member of EFTA. The EFTA Consultative Committee is established (representatives of trade unions and employers’ organisations).

1966 Full free trade in industrial products is achieved between the EFTA States.

1970 Iceland becomes a member of EFTA.

1973 Denmark and the United Kingdom leave EFTA to join the European Economic Community (EEC). The remaining EFTA States sign bilateral free trade agreements (FTAs) with the EEC during the 1970s.

1977 The EFTA Parliamentary Committee is established. Tariffs on industrial goods in trade are eliminated between the EEC and the EFTA States.

1979 EFTA’s first FTA is signed with Spain.

1984 The Luxembourg Declaration on broader cooperation between the EEC and EFTA is signed.

1985 Portugal leaves EFTA to become a member of the EEC.

1986 Finland becomes a full member of EFTA.

1989 Negotiations start on a European Economic Space, later to become the European Economic Area (EEA). The EFTA States sign an agreement on free trade in fish.

1991 Liechtenstein becomes a member of EFTA. An FTA is signed with Turkey, EFTA’s oldest agreement still in force. A further 12 FTAs are signed in the 1990s, of which three are still in force (Israel, Morocco and the Palestinian Authority). The others, all of which are with Central and Eastern European countries, lapse when those countries join the European Union (EU).

1992 The Agreement on the European Economic Area is signed in Porto, Portugal. Switzerland rejects participation in the EEA by referendum.

1994 The EEA Agreement enters into force between the EU and five EFTA States. An EEA financial mechanism for the reduction of economic and social disparities in the EEA is established for the period 1994-1998.

1995 Austria, Finland and Sweden leave EFTA to join the EU. Liechtenstein becomes a full participant in the EEA Agreement together with Iceland and Norway.

2000 A new EEA financial instrument is established for the period 1999-2003. Eight FTAs are signed between 2000 and 2004 (in chronological order: Macedonia, Mexico, Croatia, Jordan, Singapore, Chile, Lebanon and Tunisia).

2001 The updated EFTA Convention is signed in Vaduz, Liechtenstein, entering into force a year later.

2003 An agreement on EEA enlargement in 2004 is signed as ten Central and Southern European countries join the EU. New EEA and Norwegian financial mechanisms are established for the period 2004-2009.

2005 Eight FTAs are signed between 2005 and 2009 (in chronological order: Republic of Korea, Southern African Customs Union, Egypt, Canada, Colombia, Albania, the Gulf Cooperation Council and Serbia).

2007 An agreement on EEA enlargement is signed as Bulgaria and Romania join the EU.

2009 Iceland applies for EU membership. New financial mechanisms are agreed for the period 2009-2014.

2010 The EEA EFTA Forum of Elected Representatives of Local and Regional Authorities is established. FTAs are signed with Peru and Ukraine.

2011 FTAs are signed with Hong Kong China and Montenegro.

2012 Member States agree on further liberalisation of trade in agricultural products under the EFTA Convention.

Free Trade Agreements

EFTA’s trade strategy has evolved progressively to reach beyond the confines of Europe. Since the late 1990s, the EFTA States have “gone global” with the objective of maintaining and strengthening their competitive position worldwide.

Through EFTA, the Member States have created one of the world’s largest networks of preferential trade relations, which they continue to extend and upgrade. EFTA’s current free trade agreement (FTA) network secures economic operators preferential access to markets of around 680 million consumers outside the European Union.

The main reason why Iceland, Liechtenstein, Norway and Switzerland use EFTA as their common vehicle for preferential trade relations is that, as a group, they carry more economic and political weight, thus being more attractive to trade partners.

At the time of writing, EFTA has concluded 24 FTAs with a total of 33 partner countries and territories outside the EU: Albania, Canada, Chile, Colombia, Croatia, Egypt, the Gulf Cooperation Council (GCC; comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), Hong Kong China, Israel, Jordan, Republic of Korea, Lebanon, Macedonia, Mexico, Montenegro, Morocco, the Palestinian Authority, Peru, Serbia, Singapore, the Southern African Customs Union (SACU; comprising Botswana, Lesotho, Namibia, South Africa and Swaziland), Tunisia, Turkey and Ukraine.

Negotiations are in progress with Bosnia and Herzegovina, Central American States, India, Indonesia, Malaysia and Vietnam, as well as with the Russian Federation, Belarus and Kazakhstan. The resumption of negotiations with Algeria and Thailand is pending.

In addition, the EFTA States have concluded joint declarations on cooperation (JDCs) with Georgia, Mauritius, MERCOSUR (comprising Argentina, Brazil, Paraguay and Uruguay), Mongolia and Pakistan. These instruments provide for a framework of dialogue and cooperation towards closer trade and investment relations. For a full overview of EFTA’s trade relations, see the map and legend

While the EFTA States are pursuing a policy of strengthening and expanding preferential trade relations worldwide, they continue to attach the highest priority to a well-functioning multilateral trade system under the auspices of the World Trade Organization (WTO). In EFTA’s view, the multilateral and bilateral approaches are mutually supportive.

Industrial Products

The EFTA States have a highly developed and diversified industrial base. Their FTAs normally grant total elimination of import duties for all industrial products.

Fishery Products

In EFTA’s free trade agreements, fish and other marine products are dealt with as industrial goods, in accordance with the framework of the WTO. As the fisheries sector is of major importance to both Iceland and Norway, free trade in these products constitutes an essential element of EFTA FTAs.

Agricultural Products

EFTA, like the EU, distinguishes in its FTAs between basic agricultural products (such as grain, milk and sugar) and processed agricultural products (such as bread, chocolate and soup). In principle, EFTA grants free trade in processed products. However, certain measures are maintained to compensate for higher costs of raw materials used by EFTA’s food processing industry. Basic agricultural products are negotiated bilaterally between each EFTA State and the partner country, taking into account the fact that the EFTA States do not have a common agricultural policy.

Rules of Origin

With production processes increasingly spread over several economies, rules of origin play a key role in the functioning of FTAs. These rules determine which products may benefit from preferential conditions. In order to qualify as “originating” under an FTA, products (both industrial and agricultural) need to be either “wholly obtained” or “sufficiently worked or processed” in the territory of an FTA partner. EFTA promotes liberal and user-friendly rules of origin reflecting the needs of globalised value chains.

Trade Facilitation

In recent years, EFTA has started to include disciplines on trade facilitation in its free trade agreements. These provisions aim at simplifying and accelerating the import and export of goods, thereby enhancing predictability and reducing costs for the business community.

SPS/TBT

Sanitary and phytosanitary measures (SPS) and technical regulations and standards that may lead to technical barriers to trade (TBT) have the potential to hamper international trade significantly. Building on the relevant agreements of the WTO, EFTA FTAs feature additional elements aimed at avoiding these barriers.

Trade Remedies

Trade remedies are policy tools that allow for remedial action in exceptional cases when imports cause, or threaten to cause, serious injury to a domestic industry. EFTA FTAs normally include provisions on subsidies and countervailing duties, actions taken against selling at an unfairly low price (anti-dumping) and emergency measures to limit imports temporarily. Building on WTO law, these provisions seek to reflect the special relationship established between free trade partners.

Intellectual Property Rights

The effective protection of intellectual property rights (IPR) is essential for innovation and international trade. EFTA FTAs provide for high standards of IPR protection and contain measures to enforce such rights against infringement, including through counterfeiting and piracy. The provisions build on the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), as well as other international treaties in the area of IPR.

Services and Investment

EFTA FTAs that are concluded with European and Mediterranean countries normally contain evolutionary clauses in the area of services and investment. Other agreements liberalise trade in services, based on the WTO General Agreement on Trade in Services (GATS), and contain enhanced provisions in areas of mutual interest to the parties. The services chapter is accompanied by annexes covering specific services sectors, such as financial, telecommunications and maritime transport services.

With respect to investment, FTAs concluded by the EFTA States follow different patterns. Substantive provisions have notably been included in the FTAs with Chile, Colombia, Hong Kong China, Peru, Singapore and Ukraine. These agreements liberalise the establishment of businesses and may extend to other aspects such as the promotion of capital movements and investments.

Competition

EFTA FTAs contain rules on competition in recognition of the fact that the liberalisation of trade may be undermined by business practices that prevent, restrict or distort competition between economic actors in the free trade area. These provisions also apply to activities of public enterprises and monopolies.

Shahid Bashir, Ambassador of Pakistan to the WTO, and Össur Skarphéðinsson (Chair of the EFTA Council), Minister for Foreign Affairs and External Trade, Iceland, at the signing of the Joint Declaration on Cooperation between the EFTA States and Pakistan on 12 November 2012 in Geneva.

Public Procurement

Open public procurement markets reduce public expenditure, ensure fair competition and provide for transparency, thereby preventing corruption and other illicit purchasing practices. Chapters on public procurement have been included in several of EFTA’s recent FTAs on the basis of reciprocity, non-discrimination and transparency. The WTO’s revised Government Procurement Agreement (2012) provides the main reference for EFTA’s negotiations in this field.

Sustainable Development

Since 2010, EFTA has been seeking to include provisions on trade and sustainable development in all free trade agreements. EFTA’s model chapter on sustainable development does not aim to introduce new environmental or labour standards but to give recognition to existing instruments in the context of the FTA. EFTA’s first agreements containing such provisions were concluded with Hong Kong China and Montenegro.

Joint Committee

A joint committee, composed of representatives of the EFTA States and the partner country, supervises the implementation of each FTA. Its work is typically facilitated by a subcommittee dealing with customs and origin matters. Meetings are normally held every two years.

Dispute Settlement

EFTA FTAs provide for consultations as the principal means of settling any differences that may arise with a partner country. In the unlikely event that an amicable solution cannot be found, arbitration mechanisms included in all recent agreements allow for a judicial review of the matter.

Different Levels of Economic Development

EFTA FTAs take into account the partner country’s level of economic development. For instance, the EFTA States normally abolish all tariffs and other restrictions on industrial products upon entry into force of an FTA, while a less economically developed country may benefit from transitional periods to adapt to free trade conditions.

Vera Kobalia, Minister of Economy and Sustainable Development of Georgia, signing the Joint Declaration on Cooperation between the EFTA States and Georgia on 28 June 2012 in Gstaad.

EFTA Joint Declarations on Cooperation

• Cover cooperation on trade-related issues such as technical and other barriers to trade, customs and origin matters, and intellectual property rights.

• Aim to improve conditions for projects in the private sector.

• Establish a joint committee to review cooperation between the partners, to examine ways and means to liberalise trade and investment between the parties, and to discuss other issues of mutual interest.

• May prepare the ground for free trade relations between the partners.

EFTA has signed JDCs with the following partners, the majority of which have gone on to become free trade partners: Albania, Algeria, Colombia, Croatia, Egypt, Georgia, the Gulf Cooperation Council, Jordan, Lebanon, Malaysia, Mauritius, MERCOSUR, Mongolia, Montenegro, Morocco, Pakistan, the Palestinian Authority, Panama, Peru, Serbia, Tunisia and Ukraine.

Technical Cooperation

Technical cooperation is foreseen under some of EFTA’s free trade agreements, with the objective of assisting partner countries in their implementation of the FTAs and of strengthening their capacity to benefit from preferential access to the EFTA markets.

To make the best use of the available resources, EFTA’s technical cooperation focuses on areas where special expertise may be provided, such as on technical standards, rules of origin and general customs procedures, fisheries, trade in services and intellectual property rights.

The Eea Agreement

The Agreement on the European Economic Area (EEA), which entered into force on 1 January 1994, brings together the 27 EU Member States and three of the EFTA countries — Iceland, Liechtenstein and Norway (the EEA EFTA States) — in an internal market, also referred to as the “Single Market”.

The EEA Agreement provides for the application of EU legislation covering the four freedoms — the free movement of goods, services, capital and persons — and common rules on competition and state aid, throughout the 30 EEA States. In addition, the Agreement covers cooperation in other important areas such as research and development, education, social policy, environment, consumer protection, tourism and culture, collectively known as “flanking and horizontal” policies. The Agreement guarantees equal rights and obligations within the Single Market for citizens and economic operators in the EEA.

What Does the EEA Not Cover?

The EEA Agreement does not include the following EU policies:

• Common Agriculture and Fisheries Policies

• Customs Union

• Common Trade Policy

• Common Foreign and Security Policy

• Justice and Home Affairs (the EFTA States are part of the Schengen area)

• Economic and Monetary Union (EMU)

Decision Making

Whenever the European Union adopts or amends an act related to the Single Market, the contracting parties assess its EEA relevance with a view to amending the applicable annex to the EEA Agreement, in order to bring the Agreement as close as possible to EU legislation. This permits the harmonious development of law in the EEA, i.e. both within the EU and in the EEA EFTA States. Both sides to the EEA Agreement can request consultation on matters of concern and negotiate adaptations to the EU legislation in question.

The EEA Agreement does not transfer legislative powers from any of the contracting parties and therefore does not impose any direct effect of EU legislation on the EEA EFTA States. Following the adoption of EEA rules by the EEA Joint Committee, established by the Agreement, the EEA EFTA States implement them at national level.

Decision Shaping

The EEA EFTA States do not have the right to participate in the political decision making within the EU institutions. The EEA Agreement does, however, provide the EEA EFTA State experts with the opportunity to contribute to the shaping of EU legislation at the preparatory stage by participating in the European Commission’s expert groups and comitology committees. These expert groups advise and assist the Commission with the drafting of new laws, which the EU Council of Ministers and the European Parliament subsequently adopt. The participation of EEA EFTA experts and representatives in over 500 of these committees and expert groups is a valuable and much appreciated opportunity for acquiring information and contributing to new legislative proposals at the earliest stages of policy formation.

Participation in Programmes

Every year, more than 1 500 organisations, public bodies and entities in the EEA EFTA States participate in the numerous EU programmes available to them. These programmes, projects and networks range from youth exchange and research programmes to public health and the development of digital content. More than 15 000 students from the EEA EFTA States have studied abroad through the Erasmus Programme, and many cultural institutions have participated in film, theatre or music projects through the Media and Culture Programmes. The EEA EFTA States’ participation in these programmes has proven to be beneficial for both sides, enabling EFTA participants to find partners across the European Union, and EU participants to take advantage of the expertise and best practices that exist in the EEA EFTA States. In addition, the EEA EFTA States’ financial contribution to these programmes increases their budgets significantly.

Through the EEA Agreement, the EEA EFTA States currently participate in the following EU programmes and activities (in order of decreasing budgets):

• Seventh Research Framework Programme (FP7)

• Competitiveness and Innovation Programme

• Lifelong Learning Programme

• Galileo Programme (Norway only)

• Youth in Action

• MEDIA Programme

• Erasmus Mundus II (Actions 1 and 3)

• Employment and Social Solidarity (PROGRESS)

• Culture Programme

• European Statistical Programme

• Programme of Community Action in the Field of Health

• European Institute of Innovation and Technology

• Intermodal Transport (Marco Polo II)

• Civil Protection Financial Instrument

• Implementation and Development of the Internal Market

• Consumer Programme

• European Employment Service (EURES)

• Fight Against Violence (Daphne III)

• Interoperable Delivery of European eGovernment Services to Public Administrations, Businesses and Citizens (IDABC)

• Safer Internet Plus Programme

• MEDIA Mundus Programme

• Drugs Prevention and Information Programme

• Modernisation of EU Enterprise and Trade Statistics (MEETS)

• Marco Polo Programme

A detailed overview of EU programmes can be found in the EFTA Bulletin: Issue 1-2010 and the EU programmes section of the EFTA website: www.efta.int/eea/eu-programmes.

Participation in EU Agencies

A number of EU agencies, mainly regulatory, have been set up in recent years to implement and execute EU regulations. The EEA EFTA States participate in several of these EU agencies, namely:

• European Agency for Safety and Health at Work

• European Aviation Safety Agency

• European Centre for Disease Prevention and Control

• European Centre for the Development of Vocational Training

• European Chemicals Agency

• European Environment Agency

• European Food Safety Authority

• European Foundation for the Improvement of Living and Working Conditions

• European GNSS Agency

• European Maritime Safety Agency

• European Medicines Agency

• European Network and Information Security Agency

• European Railway Agency

Several executive agencies, whose tasks are limited to the implementation of EU programmes, have also been established.

EEA EFTA Bodies

The Standing Committee of the EFTA States

The Standing Committee consists of the ambassadors to the EU of Iceland, Liechtenstein and Norway, and observers from Switzerland and the EFTA Surveillance Authority. The Committee’s substructure consists of five subcommittees, under which there are several working groups.

The EFTA Surveillance Authority

Located in Brussels, the EFTA Surveillance Authority (ESA) ensures that Iceland, Liechtenstein and Norway respect their obligations under the EEA Agreement, in the same way that the EU Member States are supervised by the European Commission. It also ensures that enterprises in these countries abide by the rules relating to effective competition. ESA can investigate possible infringements of EEA provisions, either on its own initiative, or on the basis of complaints. ESA maintains close contact and cooperates frequently with the Commission.

The EFTA Court

The EFTA Court, based in Luxembourg, corresponds to the Court of Justice of the European Union in matters relating to the EEA EFTA States. The Court deals with infringement actions brought by ESA against an EEA EFTA State with regard to the implementation, application or interpretation of an EEA rule. The Court also handles the settlement of disputes between two or more EEA EFTA States. It hears appeals against decisions taken by ESA and gives advisory opinions to courts in the EEA EFTA States on the interpretation of EEA rules.

EEA EFTA Forum of Elected Representatives of Local and Regional Authorities

The EEA EFTA Forum is an informal body of elected representatives from local and regional authorities. The Forum expresses opinions on EEA matters of particular concern to local government, and has links with the Committee of the Regions of the EU.

Joint EEA Bodies

The EEA Council

The EEA Council meets twice a year and provides the political impetus for the development of the EEA Agreement. The EEA EFTA States are represented in the EEA Council by their respective foreign ministers. Before the Lisbon Treaty, the European Union was represented by the so-called “Troika”, which was led by the foreign minister of the rotating EU Council presidency, the European Commissioner for External Relations and the High Representative for the EU’s Common Foreign and Security Policy. When the two latter positions were merged under the Lisbon Treaty, the EU Council decided that the EEA Council would continue to be chaired on the EU side by the rotating presidency.

The EEA Joint Committee

The EEA Joint Committee (EEA JC) is responsible for the management of the EEA Agreement and typically meets six to eight times a year. It is a forum in which views are exchanged and decisions are taken by consensus to incorporate EU legislation into the EEA Agreement. Before the Lisbon Treaty, the EEA JC comprised the ambassadors of the EEA EFTA States and representatives of the European Commission. In accordance with the Treaty of Lisbon, responsibility for coordinating EEA matters on the EU side was moved from the European Commission to the European External Action Service following its launch on 1 December 2010.

The EEA Joint Parliamentary Committee

The EEA Joint Parliamentary Committee is an advisory body that comprises members of the national parliaments of the EEA EFTA States and Members of the European Parliament (MEPs). It is not directly involved in the EEA decision-making process, but through reports and resolutions it aims to scrutinise and influence EEA-relevant EU policies and decisions in the EEA JC.

The EEA Consultative Committee

The EEA Consultative Committee is an advisory body made up of members of the EFTA Consultative Committee and the European Economic and Social Committee. The Committee works to strengthen contacts between social partners on both sides and to cooperate in an organised and regular manner to enhance awareness of and provide input on the economic and social aspects of the EEA.

EEA and Norway Grants

The EEA and Norway Grants contribute to reducing economic and social disparities in the European Economic Area and to strengthening bilateral relations between the three EEA EFTA States and the 15 beneficiary countries in Central and Southern Europe.

Results

The five-year funding schemes under the EEA and Norway Grants have been in place since 1994. For the 2004-2009 period, EUR 1.3 billion was allocated to 1 250 projects and funds, with the Grants focusing on areas where support was most needed by the beneficiary countries, in line with wider European interests and goals. Available funding was committed in all of these countries and the implementation rate was very high. About 97% of the projects were completed by April 2012.

EFTA Seminar on the EEA

EFTA organises a biannual EEA seminar in Brussels. The aim of this seminar is to provide professionals, from both the public and private sectors, with an overview of how the EEA Agreement works in practice, including its structure and procedures.

More information regarding the EEA seminar is available on the EFTA website: www.efta.int/eea/seminars.

Chair of the Norwegian EEA Review Committee, Professor Fredrik Sejersted, speaking at the EFTA seminar on the EEA in January 2012.

The EEA and Norway Grants give special attention to the needs of vulnerable groups, such as children and youth at risk (pictured) and the Roma. Photo: © Christophe Vander Eecken.

Objectives

Under the 2009-2014 Grants, funding has increased to EUR 1.79 billion, with about 97% of the total amount being provided by Norway. The establishment of programmes began in 2011 and by the end of 2012 around 40% of the 146 programmes had been approved. There are 15 beneficiary countries: Bulgaria, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain. Programmes may be implemented until 2016.

Grants are available for non-governmental organisations (NGOs), research and academic institutions, and the public and private sectors. Special attention is given to the needs of vulnerable groups, such as the Roma and children and youth at risk.

There are ten priority sectors supported by the EEA and Norway Grants 2009-2014:

• Environmental protection and management aims to implement sustainable water management, halt the loss of biodiversity, improve compliance with environmental legislation and prevent adverse environmental effects.

• Climate change mitigation and promotion of renewable energy fosters reduced emissions of greenhouse gases and air pollutants, increased use of renewable energy, reduced human and ecosystem vulnerability to climate change, and climate change-related research and technology.

• Civil society development is being strengthened to enhance its contribution to social justice, democracy and sustainable development.

• Human and social development supports the well-being of children and youth at risk, local and regional initiatives reducing national inequalities and promoting social inclusion, public health initiatives, gender equality and work-life balance, and migrants and unaccompanied asylum-seeking children. The Norway Grants finance capacity-building and institutional cooperation, as well as cross-border cooperation.

• Protection of cultural and natural heritage through conservation, revitalisation and the promotion of diversity in culture and arts, preserves national heritage, increases cultural dialogue and fosters local communities.

• Research and scholarship aims to promote cooperation and mobility in research and education between the donor and beneficiary countries, and enhance the development of human capital and knowledge.

• Carbon capture and storage allows the safe capture and storage of carbon dioxide, contributing to climate change mitigation.

• Green industry innovation increases the competitiveness of green enterprises, strengthens green innovation and entrepreneurship, and creates green jobs.

• Promotion of decent work and tripartite dialogue improves social dialogue and cooperation between employers’ organisations, trade unions and public authorities.

• Justice and home affairs aims to reduce gender-based violence, combat cross-border and organised crime, and support the reforms of judicial systems and correctional services.

Strengthening Bilateral Ties

The EEA and Norway Grants benefit both the donors and the beneficiaries. In more than half of the programmes, public bodies from Iceland, Liechtenstein and Norway are involved as partners to the programme operators.

The role of the donor programme partners is to advise the programme operators and contribute with their expertise in both programme planning and implementation. They also provide advice on the selection of projects to be awarded funding under the programmes, and inform potential project partners in the donor states about cooperation possibilities.

Partnerships between entities in the beneficiary and donor states are also encouraged at project level. In some programmes, project partnerships with entities from the donor states are mandatory. A partnership project is a joint project where input from both partners is necessary to achieve its objectives.

Bilateral funds

To strengthen bilateral ties in all programme areas, 1.5% of each programme’s allocation is set aside to promote such cooperation in the relevant areas. At national level, a further 0.5% of the beneficiary country’s allocation is earmarked for strengthening bilateral relations. Networks developed through the Grants are expected to create sustainable partnerships in the political, institutional, cultural and academic fields.

The Efta States

The four EFTA States are world leaders in several sectors vital to the global economy. EFTA’s two Alpine States, Liechtenstein and Switzerland, are internationally renowned financial centres and hosts to major companies and multinationals.

The Swiss economy is based on high quality products that are competitive in world markets. Switzerland is a world leader in pharmaceuticals, biotechnology, machinery, watchmaking, banking and insurance.

Liechtenstein, despite its small size and limited national resources, is highly industrialised and specialised in capital-intensive and R&D-intensive high technology products.

EFTA’s two Nordic States, Iceland and Norway, stand out in fish production, the metals industry and maritime transport.

The Icelandic economy benefits from renewable natural resources, in particular rich fishing grounds and hydro and geothermal power. While still relying heavily on fishing and fish processing, the Icelandic economy has increasingly diversified into the aluminium and services industries.

Abundant natural resources also contribute significantly to Norway’s economic strength. Key activities are related to petroleum exploration and production, hydroelectric power and fisheries. Important services sectors include maritime transport, telecommunications and energy-related services.

In 2011, the combined gross domestic product (GDP) of the EFTA States amounted to USD 1 160 billion (figure 22). In terms of purchasing power, the EFTA States represented a sizeable market, ranking alongside countries with the highest GDP per capita in the world (figure 23). The EFTA economies perform consistently well with regard to competitiveness, according to the Institute for Management Development’s World Competitiveness Scoreboard 2012 and the World Economic Forum’s Global Competitiveness Index 2012 (figures 29 and 30), and EFTA citizens enjoy a high quality of life (figures 31 and 32).

The EFTA States are traditionally dependent on, and open to, international trade. As a consequence, trade accounts for a significant share of their economic activity (figure 8). In spite of their modest size, in 2011 the EFTA States together constituted the world’s 12th largest merchandise trader (figure 14) and seventh largest trader in commercial services (figure 15), when counting the EU as one.

The EU is EFTA’s main trading partner, accounting for 72.8 % of EFTA’s merchandise imports and 67.3% of its exports in 2011 (figure 5). EFTA is the EU’s third largest trading partner, placing it before the Russian Federation (figure 9). EFTA also ranked second in trade in services in 2011, after the United States and before China, the Russian Federation and Japan (figure 10).

The EFTA States are significant investors abroad, both in terms of direct investment and portfolio investment. Their combined stock of outward foreign direct investment (FDI) in 2011 amounted to USD 1 245 billion (figures 24 to 27). The EFTA States are hosts to a significant number of major multinational companies such as Nestlé, Novartis, Roche, Statoil, UBS and ABB (figure 28).

Efta in figures

Leaders in world merchandise trade: 2011 (in billion USD and as %)

Rank

Country

Total

Share (as %) of world total

Exports

Imports

1

European Union

12 185

33.21%

6 039

6 146

2

United States

3 746

10.21%

1 480

2 266

3

China

3 642

9.93%

1 898

1 743

4

Japan

1 678

4.57%

823

855

5

Republic of Korea

1 080

2.94%

555

524

6

Hong Kong China1

967

2.63%

456

511

7

Canada

915

2.49%

452

463

8

Russian Federation

846

2.31%

522

324

9

Singapore1

775

2.11%

410

366

10

India

767

2.09%

305

463

11

Mexico

711

1.94%

350

361

12

EFTA

703

1.92%

399

304

13

Chinese Taipei

590

1.61%

308

281

14

Australia

514

1.40%

270

244

15

Saudi Arabia

496

1.35%

365

132

16

Brazil

493

1.34%

256

237

17

United Arab Emirates

490

1.34%

285

205

18

Thailand

457

1.25%

229

228

19

Malaysia

455

1.24%

227

228

20

Indonesia

377

1.03%

201

177

21

Turkey

376

1.02%

135

241

22

South Africa

218

0.60%

97

122

23

Vietnam

204

0.56%

97

107

24

Islamic Republic of Iran

194

0.53%

132

62

25

Nigeria

171

0.47%

116

55

Total of above1

33 050

90.07%

16 405

16 644

World1 2

36 693

100.00%

18 255

18 438

Source: WTO Secretariat

1 Includes significant re-exports or imports for re-export.

2 Excluding intra-EU27 trade.

Fig. 14

Leaders in world commercial services trade: 2011 (in billion USD and as %)

Rank

Country

Total

Share (as %) of world total

Exports

Imports

1

European Union

3 269

40.25%

1 776

1 493

2

United States

976

12.02%

581

395

3

China

419

5.16%

182

237

4

Japan

308

3.80%

142

166

5

India

260

3.20%

137

124

6

Singapore

243

2.99%

129

114

7

EFTA

233

2.87%

139

94

8

Republic of Korea

192

2.36%

94

98

10

Hong Kong China

177

2.18%

121

56

9

Canada

174

2.15%

75

100

11

Russian Federation

141

1.74%

53

88

12

Australia

110

1.36%

51

60

13

Brazil

110

1.35%

37

73

14

Thailand

92

1.13%

41

51

15

Chinese Taipei

87

1.08%

46

41

16

Malaysia

72

0.89%

35

37

17

Saudi Arabia

66

0.81%

11

55

18

United Arab Emirates

61

0.75%

12

49

19

Turkey

58

0.71%

38

20

20

Indonesia

52

0.64%

20

32

24

Macao, China

49

0.61%

40

10

21

Israel

46

0.57%

27

20

22

Mexico

40

0.50%

15

25

25

South Africa

34

0.41%

14

19

23

Ukraine

33

0.41%

19

14

24

Egypt

32

0.39%

19

13

25

Argentina

30

0.37%

14

16

Total of above

7 366

89.93%

3 867

3 498

World*

8 122

100.00%

4 169

3 953

Source: WTO Secretariat

* Excluding intra-EU27 trade.

Fig. 15

The European Free Trade Association (EFTA) is an intergovernmental organisation for the promotion of free trade and economic integration to the benefit of its four Member States: Iceland, Liechtenstein, Norway and Switzerland.

The Association is responsible for the management of:

• The EFTA Convention, which forms the legal basis of the organisation and governs free trade relations between the EFTA States;

• EFTA’s worldwide network of free trade and partnership agreements; and

• The Agreement on the European Economic Area (EEA), which enables three of the four EFTA States (Iceland, Liechtenstein and Norway) to participate fully in the Internal Market of the European Union.

EFTA Secretariat, Geneva (Headquarters)

9-11, rue de Varembé

1211 Geneva 20

Switzerland

Tel. +41 22 33 22 600

Fax: +41 22 33 22 677

Email: mail.gva@efta.int

www.efta.int

EFTA Secretariat, Brussels

Rue Joseph II, 12-16

1000 Brussels

Belgium

Tel. +32 2 286 17 11

Fax: +32 2 286 17 50

Email: mail@efta.int

www.efta.int

EFTA Statistical Office, Luxembourg

Bâtiment Bech

Office F2/908

5 Rue Alphonse Weicker

2721 Luxembourg

Tel. +352 4301 37775

Fax: +352 4301 32145

Email: efta-lux@ec.europa.eu

www.efta.int