52nd Annual Report of the European Free Trade Association

Editor: Tore Grønningsæter

Copy Editor: Juliet Reynolds

Layout: INSPIRIT International Communication sprl

Worldwide network map: Orangemetalic

Published March 2013

Cover picture: Vennesla Library and Cultural Centre in Vennesla, Norway, designed by Helen & Hard. Photo: © Hufton + Crow/VIEW/Corbis

Foreword

In 2012, EFTA celebrated the 20th anniversary of the signing of the Agreement on the European Economic Area (EEA), which in 1992 represented a major step towards the realisation of a genuine Internal Market encompassing a large part of Europe’s economy.

Today, the EEA Agreement remains of fundamental importance for the three EEA EFTA States’ cooperation with the European Union. It integrates them into the Internal Market and is efficient in ensuring its homogeneity. With a population of over 500 million, the EEA constitutes the world’s biggest common market, and the Agreement has proved to be a durable instrument of cooperation and a reference for European integration.

In 2012, a particularly high number of EU legal acts were incorporated into the EEA Agreement following a joint effort by the EU and the EEA EFTA States to streamline the relevant decision-making procedures. Among them were the New Legislative Framework for Goods, the Temporary Agency Workers Directive and the Regulation on Roaming on Public Communications Networks. Decisions were also taken to secure the continued participation of the EEA EFTA States in the EU Emissions Trading System from 2013.

Through the EEA Grants and Norway Grants, Iceland, Liechtenstein and Norway continue to contribute to reducing economic and social disparities in the EEA and strengthening bilateral relations between EFTA and the 15 beneficiary countries in Central and Southern Europe. Key areas of support include environment and climate change, civil society, human and social development, cultural heritage, research and scholarships, and justice and home affairs.

The EFTA States have preferential free trade relations with 60 countries in Europe and across the world, as well as between themselves. This means that 80% of EFTA’s merchandise trade is now covered by preferential trading arrangements. Other important economic activities such as trade in services, cross-border investment and access to government procurement markets also benefit from favourable provisions in EFTA agreements.

In 2012, new free trade agreements entered into force with Hong Kong China, Montenegro and Ukraine. Furthermore, EFTA broadened the range of its free trade activities in terms of both geographical and substantive coverage, with negotiations taking place with several countries in Europe, Asia and Central America. EFTA Ministers also signed joint declarations on cooperation with Georgia and Pakistan.

EFTA’s free trade agreements are fully compatible with the multilateral trading regime and are complementary to the system. The EFTA States thus continue to demonstrate their full commitment to a robust multilateral framework and remain strong supporters of the World Trade Organization.

Looking ahead, the senior management of the Association will strive to ensure that the EFTA Secretariat continues to provide a high level of services to our Member States and to our partner countries worldwide.

Kristinn F. Árnason

Secretary-General

EFTA COUNCIL

EFTA Ministerial Meetings

The EFTA Council met twice at Ministerial level in 2012, on 28 June in Gstaad, Switzerland and on 12 November in Geneva. The Council was chaired by Switzerland in the first half of 2012 and by Iceland in the second.

The EFTA Ministers discussed the state of the global economy and the prospects for international trade, expressing concern over weakening international economic activity and the projected slowdown in global trade. They underlined the importance of policies to support economic and financial stability and job creation, while at the same time preventing protectionism and ensuring open, competitive markets.

Ministers signed joint declarations on cooperation (JDCs) with Georgia and Pakistan. They reviewed developments in EFTA’s ongoing trade negotiation processes with partners worldwide, including Bosnia and Herzegovina; the Central American States of Costa Rica, Guatemala, Honduras and Panama; the Customs Union of the Russian Federation, Belarus and Kazakhstan; India; Indonesia; Malaysia and Vietnam. Ministers decided to examine further the possibilities of developing closer trade relations with potential partners in the Sub-Saharan African region. They also emphasised the importance of revising and updating existing free trade agreements in the light of global developments in this area.

At their June meeting in Gstaad, EEA EFTA Ministers welcomed the 20th anniversary of the signing of the EEA Agreement, and highlighted that the Agreement was continuing to function well in accordance with the original objectives. Ministers welcomed the recent progress made with regard to the processing of acquis into the Agreement, noting that the amount of Single Market legislation awaiting incorporation had been substantially reduced since the beginning of 2012. Ministers noted with concern the difficulties encountered with regard to EEA EFTA participation in certain EU programmes and agencies and called on all parties to look for pragmatic solutions in order to resolve these challenges.

The communiqués from the 2012 Ministerial meetings can be found in the appendices to this report.

New Secretary-General

On 1 September, Kristinn F. Árnason of Iceland took up his duties as Secretary-General of EFTA. As outgoing Ambassador and Permanent Representative to EFTA, the World Trade Organization and other international organisations in Geneva, as well as former Ambassador to Norway, he joined the Secretariat with a wealth of experience in EFTA affairs. His predecessor, Kåre Bryn, stepped down on 31 August, along with Bergdís Ellertsdóttir, Deputy Secretary-General in Brussels. At their meeting in Gstaad, the EFTA Ministers thanked them for their excellent service to the organisation and to its members.

The EFTA Council

The EFTA Council met eight times in 2012 at the level of heads of permanent delegations to EFTA in Geneva. Delegates discussed EFTA’s relations with countries outside the European Union, including free trade negotiations and the management of existing free trade agreements. They also approved a number of technical cooperation projects and dealt with administrative and budgetary matters.

Iceland chaired the EFTA Council during the second half of 2012. Ambassador Martin Eyjólfsson of Iceland chairing a meeting of the Council in Geneva.

The EFTA Convention

The Council is responsible for the Vaduz Convention, which is updated regularly to reflect legislative developments in the EEA Agreement and the Swiss-EU Agreements. In 2012, the Council adopted amendments to Annex E on Seeds and Annex Q on Air Transport. The Council further adopted substantial amendments to the Convention’s provisions regarding agriculture, including the restructuring and renaming of affected annexes. The entry into force of that Decision is pending ratification by the Member States.

Further amendments to the Convention were made by two decisions of the Committee on Mutual Recognition in relation to conformity assessment under Annex I.

Annual Meeting of EFTA and EU Finance Ministers

The annual meeting of EFTA and EU Finance Ministers took place on 13 November under the topic “Financial market integration and economic growth”. The meeting was chaired by Vassos Shiarly, Minister of Finance, representing the Cyprus Presidency of the EU Council. EFTA was represented by Sigbjørn Johnsen, Minister of Finance of Norway, as EFTA Chair; Klaus Tschütscher, Prime Minister and Minister of Finance of Liechtenstein; Katrín Júlíusdόttir, Minister of Finance and Economic Affairs, Iceland; and Didier Burkhalter, Swiss Federal Councillor and Minister of Foreign Affairs.

EFTA held its summer Ministerial meeting in Gstaad under the chairmanship of Switzerland. Kåre Bryn, Secretary-General; Össur Skarphéðinsson, Minister for Foreign Affairs and External Trade, Iceland; Aurelia Frick, Minister of Foreign Affairs, Liechtenstein; Johann Schneider-Ammann (Chair), Federal Councillor, Head of the Federal Department of Economic Affairs, Switzerland; and Trond Giske, Minister of Trade and Industry, Norway.

FREE TRADE RELATIONS

EFTA pursued its ambitious free trade agenda in 2012, aimed at further expanding and deepening preferential trade relations worldwide. Three free trade agreements (FTAs) entered into force, bringing the total number of operational FTAs to 23, covering 27 countries. Another FTA was awaiting its entry into force.

By the end of the year, EFTA’s formal engagement with countries outside the EU had extended to 53 partners at the following levels of cooperation:

Free Trade Agreements

In 2012, EFTA had operational FTAs with 27 partner countries: Albania, Canada, Chile, Colombia, Croatia, Egypt, Hong Kong China, Israel, Jordan, Republic of Korea, Lebanon, Macedonia, Mexico, Montenegro, Morocco, Palestinian Authority, Peru, Serbia, Singapore, the Southern African Customs Union (SACU; comprising Botswana, Lesotho, Namibia, South Africa and Swaziland), Tunisia, Turkey and Ukraine.

Signed Free Trade Agreements

The FTA signed in 2009 with the six members of the Gulf Cooperation Council (GCC; comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) was pending ratification by some parties.

Free Trade Negotiations

In 2012, EFTA was engaged in negotiation processes with 11 countries (Bosnia and Herzegovina; the Central American States of Costa Rica, Guatemala, Honduras and Panama; India; Indonesia; Vietnam; and the Russian Federation, Belarus and Kazakhstan). Negotiations with Algeria and Thailand remained on hold.

Joint Declarations on Cooperation

Joint declarations on cooperation were operational with Georgia, Mauritius, Mongolia, MERCOSUR (comprising Argentina, Brazil, Paraguay and Uruguay) and Pakistan.

EFTA and Georgia signed a joint declaration on cooperation at the EFTA Ministerial meeting in Gstaad in June. Vera Kobalia, Minister of Economy and Sustainable Development of Georgia, and Swiss Federal Councillor, Johann N. Schneider-Ammann (EFTA Chair)

Main Developments

Broadened Negotiation Agenda

EFTA further expanded its negotiation activities with non-EU partner countries by opening new processes with Central American States and Vietnam, and by jointly announcing the start of negotiations with Malaysia.

Negotiations on a broad-based agreement with India, commenced in 2008, were pursued through one full round and several additional meetings at head and expert level. While further headway was made, a number of questions remained open at the end of 2012.

With the Russian Federation, along with its Customs Union partners Belarus and Kazakhstan, three comprehensive rounds of negotiations were conductedin the course of the year. The Russian Federation’s accession to the World Trade Organization (WTO), which became effective in August 2012, provided further impetus to the talks and considerable progress was achieved in several areas.

The second year of negotiations towards a “comprehensive economic partnership agreement” with Indonesia saw two full rounds and a series of dedicated expert meetings. Strengthening the understanding of each side’s approaches and exploring possible outcomes remained at the centre of the work undertaken.

New negotiations were started in February with the Central American States of Costa Rica, Guatemala, Honduras and Panama. By the end of the year, five rounds had been conducted and talks had been substantially completed with two partners. The overall negotiations are expected to be finalised in the first half of 2013.

Another new negotiation process was commenced with Vietnam in the spring, followed by two comprehensive rounds. A solid foundation was laid for the continuation of discussions in 2013.

With Bosnia and Herzegovina, the EFTA States pursued efforts to settle the last issues outstanding in the negotiations, which had started in 2011.

Further Processes

In Europe, the FTAs with Montenegro and Ukraine entered into force, bringing the number of operational agreements with European partners outside the EU to eight. While the emphasis of the FTA with Montenegro is on trade in goods and the protection of intellectual property rights, the agreement with Ukraine also covers trade in services, investment, government procurement, competition and trade facilitation. With a population of 45 million, Ukraine represents an important export destination for EFTA in Europe. With Georgia, a new basis for closer ties was laid by a joint declaration on cooperation signed in June.

In Asia, the FTA signed in 2011 with Hong Kong China became EFTA’s third operational agreement after those with Singapore and the Republic of Korea.

Ambassadors Muhammed Saleemg and Shahid Bashir signing the EFTA-Pakistan Joint Declaration on Cooperation in Geneva in November.

In addition to the ongoing negotiation processes with India and two ASEAN countries (Indonesia and Vietnam), EFTA jointly announced in November the launch of negotiations with Malaysia, and confirmed its willingness to resume the negotiation process with Thailand when conditions permitted. Furthermore, a framework for closer ties in the areas of trade and investment was established with Pakistan through the signing of a JDC in November.

In the Americas, possible updates and extensions to existing FTAs were discussed, notably with Canada and Chile. With Canada, EFTA’s sixth largest trading partner, it was agreed to explore the possibility of including trade in services, investment, government procurement and sustainable development in the agreement which had entered into force in 2009. EFTA Ministers also expressed their readiness to continue exploring options for increasing trade, investment and cooperation with the MERCOSUR States.

In Africa, negotiations with Algeria remained suspended during the reporting year, and EFTA Ministers called for a joint assessment of the situation. They also agreed to further seek possibilities to deepen trade relations with countries in Sub-Saharan Africa in addition to the existing FTA with the Southern African Customs Union (SACU).

Management of EFTA’s Free Trade Agreements and Joint Declarations on Cooperation

In 2012, the EFTA States held joint committee meetings with six free trade partners (Canada, Egypt, Republic of Korea, Palestinian Authority, Serbia and Turkey). On these occasions, EFTA and its partner countries reviewed the functioning of their respective FTAs. They made several decisions to update existing rules and agreed on work plans in view of further revisions.

Experts also convened in preparation for amendments to agreements with other partners, including Chile, Jordan and SACU.

Technical Cooperation

Within the framework of EFTA’s technical cooperation policy (see box), activities in 2012 included:

• Export promotion seminars in Montenegro and Ukraine;

• A seminar on government procurement in Indonesia; and

• A one-week training course for Palestinian officials on trade policy.

Relations with the WTO

Under the World Trade Organization’s transparency mechanism for bilateral and regional trade agreements, EFTA notified all new free trade negotiations in 2012, as well as the ratification and entry into force of FTAs. EFTA also submitted notifications to the WTO Secretariat regarding decisions adopted by joint committees under existing agreements. In October, EFTA’s FTA with Serbia was examined by the WTO’s Committee on Regional Trade Agreements.

EFTA’s Technical Cooperation

EFTA’s technical cooperation projects cover a range of trade-related areas and are primarily directed at developing countries and economies in transition. They are funded by the Association and organised by the EFTA Secretariat.

EFTA’s projects normally involve experts from EFTA Member States and partner countries, notwithstanding the EFTA countries’ own technical cooperation programmes and initiatives. The main objectives of EFTA’s technical cooperation activities are to support prospective partner countries in preparing for free trade negotiations and to assist existing partners in the implementation and promotion of FTAs. To this effect, EFTA arranges training, seminars, workshops and study visits adapted to the particular needs of the partner countries.

Areas in which EFTA provides assistance include trade facilitation and promotion, customs and origin matters, technical barriers to trade, sanitary and phytosanitary measures, intellectual property rights, government procurement, competition, services and statistics. EFTA also participates in EU technical cooperation programmes and projects aimed at third countries, especially in relation to customs matters, standardisation and statistics.

Efta’s Worldwide Network

THE EEA AGREEMENT

20th Anniversary of the Signing of the EEA Agreement

To commemorate the 20th anniversary of the signing of the EEA Agreement in May 1992 in Porto, Portugal, EFTA issued a special Bulletin in September on “The European Economic Area and the Single Market – 20 years on”. In this publication, authors from each of the three EEA EFTA States reflect on the developments that have taken place in the European Economic Area over the years, assess the current functioning of the Agreement and discuss the future challenges faced by its signatories. In addition, the second of EFTA’s biannual seminars on the EEA focused on “The evolution of the Single Market and the EEA Agreement – 20 years on”. Presentations included an analysis of the design and purpose of the Single Market, and how it has developed over the last 20 years. Elsewhere, the EEA Consultative Committee and EEA Joint Parliamentary Committee organised a joint commemorative event in Iceland (see Advisory Bodies).

The EEA Council

The EEA Council was chaired by the EU in the first half of 2012 and by EFTA in the second half of the year. The EEA Council met on 14 May and 26 November to review the ongoing work in EEA cooperation and to note the progress reports of the EEA Joint Committee. The Ministers confirmed the positive overall functioning and development of the EEA Agreement and appreciated the fact that new acts were being incorporated quickly into the Agreement. They also discussed the current financial crisis and its implications for the EEA, including regulation of the financial system, the EEA Financial Mechanisms, decision making and shaping, and energy and climate change. In addition, the EEA Council held orientation debates on strategies for growth in Europe and trade and regulatory cooperation with EEA neighbours. The conclusions from these meetings can be found in the appendices to this report.

Aurelia Frick, Minister of Foreign Affairs, Liechtenstein, and Espen Barth Eide, Minister of Foreign Affairs, Norway, at an EEA Council meeting in Brussels.

Ambassador Atle Leikvoll, Mission of Norway to the EU, chairing the meeting of the EEA Joint Committee in October.

The EEA Joint Committee

The EEA Joint Committee met eight times in 2012 and adopted 223 decisions incorporating 486 legal acts.

Among the more significant decisions adopted by the Joint Committee were those concerning the incorporation of legal acts regarding consumer rights, roaming, the revised Emissions Trading System (ETS), the Eurovignette, the new legislative framework for goods, audiovisual media services and maritime safety. Discussions in the Joint Committee focused on how to further improve the processing of acquis and reduce the number of outstanding legal acts.

Over the year, the European Commission provided the Joint Committee with briefings on the Single Market Act II and a blueprint for a deep and genuine economic and monetary union.

The Standing Committee of the EFTA States

The Standing Committee was chaired by Iceland in the first half of 2012 and by Norway in the second half of the year. The agendas and conclusions of the Standing Committee meetings are available on the EFTA website. On 26 November, the EFTA Standing Committee held a joint meeting at Ministerial level in Brussels with the Committee of Members of Parliament of the EFTA States and the Consultative Committee, to discuss developments in the EEA.

Legal and Institutional Matters

Subcommittee V on Legal and Institutional Questions met five times in 2012. The Subcommittee devoted considerable efforts to making general information about the EEA Agreement more available. The revision of the comitology system in the EFTA pillar was completed and criminal law sanctions in Internal Market legislation remained on the agenda. The Subcommittee also discussed the status of the coal and steel sectors under the EEA Agreement and the territorial scope of the EEA Agreement. Finally, the Subcommittee continued to monitor two-pillar issues in the EEA Agreement, as well as case law developments in the EEA.

Free Movement of Goods

A substantial part of EU legislation concerns the free movement of goods, a principle that is applied throughout the Single Market. Today, about 75% of trade in the Single Market is in goods, but this does not imply that all products can circulate freely. They must conform to requirements set for the protection of legitimate interests such as health, safety and the environment. Additionally, in order to ensure a fair and efficient market, a wide range of legislative measures have been established in the fields of competition, state aid and public procurement.

Subcommittee I prepares for the integration into the EEA Agreement of legislation relating to all aspects of the free movement of goods – competition, state aid, public procurement, intellectual property rights and energy matters. Subcommittee I is assisted by 11 working groups and 27 expert groups.

Three committees deal with issues related to goods under the EFTA Council: the Committee on Technical Barriers to Trade (TBT), the Committee of Origin and Customs Experts (COCE) and the Committee on Trade Facilitation (TF).

Veterinary, Food and Agricultural Issues

Veterinary and food legislation in the EEA Agreement apply to Iceland and Norway only. Since 2007, Liechtenstein has been subject to the Swiss-EU Agricultural Agreement pertaining to legislation in these areas.

Veterinary issues

Veterinary legislation covers animal and public health requirements for the production, trade and imports of live animals and animal products, as well as issues related to the control of these products. Arrangements for animal welfare and the control and prevention of animal diseases are also included.

In 2012, the EEA Joint Committee incorporated 47 acts in the veterinary area into the EEA Agreement. In addition, a number of legal acts were implemented by means of simplified procedure (see box).

Animal feed

Legislation in the area of animal feed concerns marketing and labelling, undesirable substances in feed, the authorisation of feed additives and the monitoring of feed-producing establishments.

In 2012, 42 legal acts related to animal feed were incorporated into the EEA Agreement.

Food

The Food Law Package ensures that the EEA EFTA States participate fully in the European Food Safety Authority (EFSA), including the possibility of employment for EEA EFTA nationals.

The EEA EFTA States continued to discuss the Novel Foods Regulation, as well as regulations on genetically modified food and feed, and on the traceability and labelling of genetically modified organisms (GMOs). These have not yet been incorporated into the EEA Agreement.

Preparation continued for the incorporation of the new legal framework on organic production.

In 2012, 36 legal acts were incorporated into the EEA Agreement in the foodstuffs area. A number of legal acts were also implemented by means of simplified procedure.

Simplified Procedure

The simplified procedure is a derogation from the normal procedure for the incorporation of acts into the EEA Agreement. Until the introduction of the simplified procedure in 2001, acts were only incorporated by EEA Joint Committee Decisions, which in many cases took more than half a year.

It is essential that many of the measures in the veterinary field are implemented and applied shortly after their adoption in the EU. This is of particular importance when it is necessary to put safeguard and protective measures in place urgently. The simplified procedure requires EEA EFTA States to “simultaneously with the EU Member States take measures corresponding to those taken by the latter”.

The following acts in the veterinary field are subject to simplified procedure:

• Texts of application concerning imports from third countries;

• List of establishments in third countries;

• Safeguard and protective measures concerning the EU territory or imports from third countries; and

• Safeguard measures and listing of countries and territories concerning the non-commercial movement of pet animals.

In addition, the Food Law Regulation introduced the simplified procedure in the foodstuffs area for acts related to emergency measures concerning the EU territory or imports from third countries.

Trade in agricultural products

In October 2012, Iceland, Norway and the European Commission carried out their annual review of trade in processed agricultural products in accordance with Article 2(2) of Protocol 3 to the EEA Agreement. The parties exchanged information on developments in their respective agricultural policies, and on trade statistics. They also discussed the principles of Protocol 3 and concluded that the Protocol was functioning well.

Technical Barriers to Trade

EFTA deals with the removal of technical barriers to trade in two forums: the TBT Committee, which reports to the EFTA Council, and the Working Group on TBT, which coordinates the assessment of EEA relevance and acceptability of new EU legislation to the three EEA EFTA States. Switzerland is an observer in the Working Group on TBT.

In 2012, the TBT Committee gave written input to the European Parliament on the Regulation on European Standardisation, which was adopted on 14 November 2012. The Regulation constitutes a new legal basis for cooperation between the three European standardisation organisations (ESOs) and the European Commission and EFTA. The Committee discussed policy and financial issues in relation to standardisation and accreditation, as well as horizontal TBT issues such as the revision of the Blue Guide (the guide to EU legislation on industrial products), the alignment of the New Approach Directives with the New Legislative Framework for Goods, the newly established multi-stakeholder platform for ICT standardisation policy, market surveillance of goods, certification and CE marking, and technical barriers to trade in the Single Market. The Committee also worked on keeping the Vaduz Convention updated and continued to follow the two-year EU quality infrastructure project, IPA 2011.

The Working Group on TBT discussed the Goods Package, the alignment of the New Approach Directives with the New Legislative Framework for Goods, the incorporation of the Standardisation Regulation and mutual recognition agreements. It also submitted an EEA EFTA Comment on the Commission’s initiative to update the Blue Guide.

Motor vehicles

In 2012, 32 technical acts on motor vehicles were incorporated into the EEA Agreement, including the Framework Directive for the approval of motor vehicles and trailers.

Medicinal products

The EEA EFTA States continued their discussions with the EU on the incorporation of the Paediatric Regulation.

Dangerous substances

Trade in and use of dangerous substances are strictly regulated in order to protect consumers, workers and the environment. The EEA Agreement contains both general chemicals legislation and product-specific legislation. In total, 30 acts concerning dangerous substances were incorporated into the EEA Agreement in 2012.

Mutual recognition agreements

Mutual recognition agreements (MRAs) facilitate market access by reducing the costs and time associated with obtaining product certification. Protocol 12 EEA ensures the smooth functioning of the EEA market with regard to MRAs. In this respect, the EEA EFTA States discussed ongoing EU negotiations and discussions on new and revised MRAs, and assessed possible EEA EFTA follow-up.

Market surveillance and consumer product safety

The EFTA States are fully committed to the enhanced application of market surveillance under the terms of the new legislative framework for the marketing of products. In 2012, the EFTA States participated in meetings conducted by the Senior Officials Group for Standardisation and Conformity Assessment Policy (SOGS) and the SOGS Market Surveillance Group.

In 2012, the European Commission worked on the preparation of a new legislative package on product safety and market surveillance. The EFTA States are actively contributing to the development of this package and will continue to support the EU in improving product safety and market surveillance.

European Standardisation

The EFTA States and the European Commission give financial support to the following three European standardisation organisations: the European Committee for Standardization (CEN), the European Committee for Electrotechnical Standardization (CENELEC) and the European Telecommunications Standards Institute (ETSI). Like the European Commission, EFTA has the formal status of counsellor to CEN and ETSI and participates in the administrative boards of these organisations, as well as in the general assemblies of the three ESOs.

In 2012, EFTA dealt with 36 mandates for new standardisation activities covering a wide range of sectors. In addition, EFTA signed 57 agreements in the standardisation area.

EFTA continued its financial support to the European Cooperation for Accreditation (EA), the European Association for the Coordination of Consumer Representation in Standardisation (ANEC), the European Environmental Citizens Organisation for Standardisation (ECOS) and the European Organisation for Technical Approvals (EOTA). Through the Competitiveness and Innovation Programme, the EEA EFTA States also provided financial support to the European Office of Crafts, Trades and Small and Medium-sized Enterprises for Standardisation (NORMAPME), which promotes the interests of SMEs in standardisation.

Furthermore, the EFTA States cofinance and contribute to projects with seconded European standardisation experts in China and India, as well as to the Europe-China Standards Information Platform (CESIP). This platform is an information tool that aims to strengthen mutual trade and investment flow between Europe and China by making standards and related technical regulations more accessible.

Energy

In 2012, 12 acts in the field of energy were incorporated into the EEA Agreement, half of which concern the labelling of energy-related products, including the Energy Labelling Framework Directive. Other acts incorporated relate to ecodesign requirements for energy-related products and the labelling of tyres, as well as renewable energy action plans under the Renewable Energy Directive, which was incorporated in 2011.

The EEA EFTA States closely monitored the EU decision-making process concerning the Energy Infrastructure Package, as well as the new Energy Efficiency Directive. They also moved closer towards incorporating the Third Package for the Internal Energy Market into the EEA Agreement.

Competition Policy

The EEA EFTA States initiated a review of the acts that had been incorporated into the EEA Agreement in relation to the former European Coal and Steel Community.

State Aid

The EEA EFTA States incorporated one decision and one regulation with regard to the state aid rules applicable to Services of General Economic Interest (SGEI) compensation.

In addition, they participated in several multilateral state aid meetings related to the Commission’s State Aid Modernisation (SAM) initiative, which was launched on 8 May 2012 and aims to fully reform and update the European state aid framework by the end of 2013.

Public Procurement

Two acts were incorporated into the EEA Agreement in the field of public procurement: one regulation updating the public procurement thresholds and another related to standard notification forms.

The EEA EFTA States followed the EU decision-making process related to the reform of the public procurement legislative framework, following the presentation in December 2011 of a reform package consisting of proposals for three directives. Two of the proposals will replace the existing procurement directives (the “Utilities” Procurement Directive and the “Classical” Procurement Directive) and the third is for a new directive concerning service concession contracts. The reform focuses on simplifying existing rules; facilitating SME access to public contracts; promoting green, social and innovation procurement; and increasing the use of electronic procurement. In relation to a hearing in the European Parliament’s Internal Market and Consumer Protection (IMCO) Committee in March 2012, the EEA EFTA States submitted an EEA EFTA Comment to the EU institutions on the proposed reform package. The Comment was discussed with representatives of the European Commission, the Parliament and the Council.

Intellectual Property

In October 2012, a directive for certain permitted uses of orphan works was adopted on the EU side. Orphan works are works that are still in copyright but whose owners cannot be identified or located. The EEA EFTA States are currently scrutinising the directive with the aim of incorporating it into the EEA Agreement.

The EU Council has agreed to a general approach to a unitary patent for Europe. In addition, discussions are currently taking place in the European Parliament on the establishment of what is now known as the “Unified Patent Court”. The EEA EFTA States are following this issue closely.

In April 2012, the EU entrusted the Office for Harmonization in the Internal Market with the responsibility for the European Observatory on Infringements of Intellectual Property Rights. The EEA EFTA States participated in the first plenary meeting of the observatory in September 2012.

In November 2012, the European Commission presented a proposal for a directive on collective rights management and multi-territorial licensing of rights in musical works for online uses. The EEA EFTA States are following this issue closely.

Customs Matters, Safety and Security Matters and Trade Facilitation

The Regional Convention on Pan-Euro-Mediterranean Preferential Rules of Origin (PEM Convention), which will replace the current network of origin protocols in the various agreements of the PEM free trade zone, entered into force in 2012 in all EFTA States and the EU, while most of the Mediterranean countries have yet to sign it.

In their day-to-day work, the EFTA Committee of Origin and Customs Experts (COCE) and the EEA EFTA Working Group on Customs Matters addressed other customs and origin matters related to FTAs with third-country partners, and other technical customs issues among EFTA States to guarantee good relations between customs administrations and the smooth functioning of preferential trade relations. Among others, the COCE is working towards the swift inclusion of the Western Balkan countries in the PEM cumulation system.

Safety and security matters

With the conclusion of bilateral agreements by Norway and Switzerland with the EU, these two countries were integrated into the EU’s safety and security system, with the result that traders do not have to submit prearrival/predeparture declarations when trading with the EU. The Norwegian bilateral agreement was implemented in Protocol 10 EEA, and a joint working group responsible for the implementation and monitoring of the safety and security measures addressed under the bilateral agreement was set up and began its work in October 2012.

Trade Facilitation

Trade facilitation seeks to improve procedures and controls in merchandise trade across national borders by reducing associated cost burdens and maximising efficiency, while safeguarding legitimate regulatory objectives. Recent developments, such as the challenge of bringing trade facilitation in line with growing safety and security concerns, as well as rising concerns about the (mis)use of trade procedures as trade policy tools, have heightened the political profile of trade facilitation. The EFTA Committee on Trade Facilitation follows EFTA’s trade negotiations and is continuously analysing the developments of trade facilitation within other international organisations such as the World Trade Organization, the United Nations Economic Commission for Europe, the Organisation for Economic Co-operation and Development and the World Customs Organization, which have all added trade facilitation to their agendas.

Free Movement of Capital and Services

Subcommittee II on the Free Movement of Capital and Services coordinates matters of financial services, company law, electronic communications, audiovisual services, information society and data privacy, postal services and transport. Five working groups report to Subcommittee II.

Financial Services

The EEA EFTA States are assessing the significant number of legislative acts issued by the EU in response to the 2008 financial crisis, in particular the regulations creating a European architecture of financial supervision. In addition to the European Systemic Risk Board, responsible for macro-prudential supervision, the EU established three new supervisory bodies at micro-prudential level:

• European Banking Authority;

• European Insurance and Occupational Pensions Authority; and

• European Securities and Markets Authority.

Discussions are ongoing between the EEA EFTA States and the EU side on adequate EEA EFTA participation in these authorities. In January 2012, the EEA EFTA side submitted an EEA EFTA Comment on two Commission proposals concerning credit institutions and investment firms.

Company Law

In 2012, the EU adopted the Directive on the interconnection of central, commercial and company registers. The EEA EFTA States are currently deliberating on the incorporation of the Directive into the EEA Agreement.

Electronic Communications, Audiovisual Services, Information Society and Data Privacy

In electronic communications, experts from the EEA EFTA States continued to work on the incorporation of the Telecom Package into the EEA Agreement, notably the role of the EEA EFTA States in the Body of European Regulators in Electronic Communications (BEREC).

Postal Services

Deliberations took place regarding the incorporation of the Third Postal Services Directive into the EEA Agreement.

Transport

The EEA EFTA States considered a significant number of proposals for new EU acts and discussed these in depth with the EU. An important development was the incorporation into the EEA Agreement of the Eurovignette Directive on the charging of heavy goods vehicles.

Other important issues on the transport agenda were the proposals for the revision of the guidelines for the development of a trans-European transport network and the Roadworthiness Package. For the latter issue, an EEA EFTA Comment was submitted to the EU side.

In the rail sector, high priority was given to the Regulation concerning a European rail network for competitive freight, legislation on interoperability and the proposal to establish a Single European Railway Market.

In maritime transport, the EEA EFTA States prioritised the proposal for amendments to the Regulation on the Establishment of the European Maritime Agency and the Regulation on Passenger Rights.

The main items on the agenda in the field of air transport were the Second Single European Sky Package and legislation linked to aviation security.

Free Movement of Persons

Subcommittee III on the Free Movement of Persons coordinates matters related to all aspects of the free movement of persons, including social security and the recognition of professional qualifications. Three working groups report to Subcommittee III.

Free Movement of Persons, Employment and Social Policy

In the area of free movement, the EEA EFTA States monitored developments on the EU side related to proposals for third-country nationals legally residing in the EU. They also followed a potential initiative on the enforcement of rights of EU migrant workers and members of their families in relation to the fundamental principle of free movement of workers. They discussed participation in the European Year of Citizenship 2013, concluding that the EEA EFTA States would not participate. With regard to employment, EEA EFTA experts were invited to the informal meetings of the EU Employment Committee (EMCO), where they submitted a report on the labour market situation in each of the EEA EFTA States. They participated in EURES, a cooperation network between the European Commission and the public employment services of the EEA Member States providing information and assistance to workers and employers, and monitored the planned reforms of this network.

As regards social policy, the EEA EFTA States continued their informal dialogue with the EU’s Social Protection Committee. They participated actively in both the employment and social protection sections of the PROGRESS Programme, which supports the implementation of the European Employment Strategy and underpins the EU’s coordination activities in the fight against poverty and social exclusion, and also monitored the proposed successor instrument to the PROGRESS Programme, the Programme for Social Change and Innovation (2014-2020).

Social Security

New social security coordination rules were applied in Switzerland on 1 April and in Iceland, Liechtenstein and Norway on 1 June. These new rules completely replace Annex VI to the EEA Agreement on the coordination of social security schemes. Their aim is to modernise and simplify social security coordination within the EU and EEA.

Recognition of Professional Qualifications

The EEA EFTA States closely monitored the Commission’s adopted proposal to revise the Professional Qualifications Directive. In this respect, an EEA EFTA Comment on the Commission’s proposal on modernising the Professional Qualifications Directive was sent to the EU side in September.

Flanking and Horizontal Policies

Subcommittee IV on Flanking and Horizontal Policies coordinates matters related to all aspects of the horizontal provisions of the EEA Agreement, as well as cooperation outside the four freedoms. 13 working groups report to Subcommittee IV.

Research and Development

The EEA EFTA States continued to follow the implementation of the Seventh Framework Programme on Research, the Europe 2020 Strategy and its flagship initiatives in the area of research and innovation, as well as the EU’s ongoing work on new European Research Area (ERA) initiatives. They also followed the Commission’s preparation of its proposal for a new framework programme in the field of research and innovation – Horizon 2020, the Commission’s proposal to amend the Regulation establishing the European Innovation and Technology Institute (EIT) and the Commission’s proposal for a decision on the EIT’s Strategic Innovation Agenda.

The EEA EFTA States are negotiating with the Commission on the possibility of incorporating the Council Regulation on the Community legal framework for a European Research Infrastructure Consortium (ERIC) into the EEA Agreement.

Environment

The EEA Joint Committee adopted several decisions in the field of environment in 2012, namely on the inclusion of the revised EU Emissions Trading System (ETS) Package, the Carbon Capture and Storage Directive, the recast Regulation on substances depleting the ozone layer, the Directive on public participation in drawing up plans and programmes relating to the environment, the new Ecolabel Regulation and related decisions, the Eco-Management and Audit Scheme (EMAS) and various acts linked to the Infrastructure for Spatial Information in the European Community (INSPIRE).

One of the main priorities for 2012 was to finalise preparation for the third ETS trading period, which starts on 1 January 2013. In this context, after several years of discussion, the revised EU ETS Package was adopted in July 2012. Since then, EEA EFTA environmental experts have been concentrating on the incorporation of the amended ETS Union Registry Regulation into the EEA Agreement, as well as on the ETS Monitoring and Reporting Regulation and ETS Verification and Accreditation Regulation.

The EEA EFTA States also submitted an EEA EFTA Comment to DG Clima’s consultation on the review of the auction time profile for the EU ETS.

Experts focused on areas such as the mercury export ban, fuel quality, the obligations of operators who place timber and timber products on the market and the European Earth Monitoring Programme (GMES).

Other initiatives followed by the EEA EFTA States in 2012 included a proposal to cut sulphur dioxide emissions from shipping, a proposal establishing a programme for environment and climate action – LIFE (2014-2020), a proposal foreseeing accounting rules and action plans on greenhouse gas emissions and removals from activities related to land use, land-use change and forestry (LULUCF).

Topics discussed with the Commission included EU air quality policy, EU waste management policy and the latest developments regarding the roadmap on a resource-efficient Europe.

Education, Training and Youth

The EEA EFTA States continued to monitor the implementation of the Lifelong Learning Programme (2007-2013) and the Youth in Action Programme (2007-2013). They followed discussions in Council and in the Parliament on the Commission’s proposal for a new programme in the field of education, training and youth – Erasmus for All (2014-2020), and submitted an EEA EFTA Comment on this subject to the EU.

Experts followed the 2012 Youth Report adopted by Council on 27 November 2012. The report includes a summary of how the EU Youth Strategy has been implemented at national and EU level since 2010, and a comprehensive analysis of the situation faced by young people. It draws on input from Member States, government agencies and ministries as well as consultations with young people. Candidate countries and EFTA countries also participated in the reporting exercise.

Gender Equality, Anti-Discrimination and Family Policy

The EEA EFTA States continued to participate in the gender equality strand of the PROGRESS Programme and in the Daphne III Programme on Community action to prevent violence against children, young people and women, and to protect victims and groups at risk (2007-2013). Experts also focused on relevant proposals for new programmes within the Multiannual Financial Framework (2014-2020), and particular attention was given to the Rights and Citizenship Programme. Experts also monitored plans for an accessibility act and the proposal to increase the representation of women on company boards.

Consumer Affairs

The EEA EFTA States followed the revision of consumer acquis and incorporated the Directive on Consumer Rights into the EEA Agreement. EEA EFTA experts also closely monitored the proposal on a common European sales law, submitting an EEA EFTA Comment to the EU. EEA EFTA Comments were also submitted on the Commission’s proposals on alternative dispute resolution and online dispute resolution, which were main points of interest in 2012.

The EEA EFTA States were included in both editions of the Consumer Market Scoreboard published in 2012.

Two further priorities for 2012 were the proposal for a Consumer Programme (2014-2020) and the new European Consumer Agenda.

Enterprise Policy and Internal Market Affairs

The main issue monitored by the EEA EFTA States in enterprise policy and Internal Market affairs was the proposal for the Programme on Competitiveness of Enterprises and SMEs (COSME), on which they submitted an EEA EFTA Comment. Linked to this is the Horizon 2020 Programme, in particular the aspects related to innovation, growth and competitiveness. The EEA EFTA States also followed the implementation of the Services Directive, particularly the packages on services and governance, issued by the Commission in June 2012.

An EEA EFTA Comment on the Commission’s Communication on “A coherent framework to build trust in the Digital Single Market for e-commerce and online services” was also submitted to the EU.

The Internal Market Information (IMI) system, which provides a multilingual database to support the implementation of Internal Market legislation, was a main focus for 2012, in particular the IMI Regulation issued in November. The EEA EFTA States submitted an EEA EFTA Comment to the EU in March on the proposal for a regulation of the European Parliament and of the Council on administrative cooperation through the IMI System.

Civil Protection

The EEA EFTA States continued to participate actively in the Community Mechanism for Civil Protection and the Civil Protection Financial Instrument (2007-2013). Particular attention was given to the ongoing revision of the legal instruments in this area and the Commission’s proposals for a revised mechanism and financial instrument.

Cultural Affairs

The EEA EFTA States’ main priorities in the field of culture and sport were to follow the new proposal on Creative Europe (2014-2020) and to stay informed of the activities of the Commission’s “open method of coordination” (OMC) working groups.

Health and Safety at Work and Labour Law

In the area of health and safety at work, the EEA EFTA States followed the proposed revision of the Electromagnetic Fields Directive and the proposal for a directive concerning flag state responsibilities. They also monitored the Commission strategy on health and safety at work (2013-2020).

In the area of labour law, experts followed developments related to the planned revision of the Working Time Directive. They also paid particular attention to the proposal for a directive on the enforcement of the Directive on Posting of Workers. The EEA EFTA States also followed relevant issues in the social dialogue, i.e. discussions, consultations, negotiations and joint actions involving organisations representing employers and workers.

Public Health

The EEA EFTA States prepared for the incorporation of the Patient Mobility Directive into the EEA Agreement and experts attended the meetings of the new Comitology Committee on Cross-border Healthcare on the EU side. Particular attention was given to pandemic preparedness and health security, including the possible joint procurement of vaccines, developments at EU level with regard to the possible revision of the Tobacco Products Directive, challenges facing Europe’s health workforce and health inequalities overall. The Working Group also focused on the proposal for a new Health for Growth Programme (2014-2020) and a new Justice Programme, including drugs prevention and information.

Following the launch by the Commission of a public consultation on measures for improving the recognition of medical prescriptions, the EEA EFTA States submitted their views in an EEA EFTA Comment to the EU side.

EEA EFTA Comments in 2012

One of the ways in which the EEA EFTA States participate in shaping EU legislation is by submitting comments to the EU side on important policy issues. In 2012, 14 EEA EFTA Comments were sent to the Commission, the European Parliament and the Council on:

• The Commission’s proposal for periodic roadworthiness tests for motor vehicles and their trailers – COM(2012) 382;

• The Commission’s revision of the Blue Guide on EU Legislation on Industrial Products;

• The  Commission’s draft proposal for amendments to the Regulation on the Auction Time Profile for the EU Emissions Trading System;

• The Commission’s proposal for a regulation on a common European sales law – COM (2011) 635;

• The Council’s partial general approach on the Commission’s proposal for the Programme for the Competitiveness of Enterprises and SMEs (COSME) 2014-2020;

• The Commission’s proposal for amendments to the Directive on the Recognition of Professional Qualifications – COM(2011) 883;

• The  Commission’s communication on a coherent framework to build trust in the Digital Single Market for e-Commerce and Online Services – COM(2011) 942;

• The Commission’s proposals for a directive on alternative dispute resolution – COM(2011) 793 – and a regulation on online dispute resolution – COM(2011) 794;

• The Commission’s proposals for two new directives on public procurement – COM(2011) 895 and COM(2011) 896;

• The Commission’s proposal for a regulation on administrative cooperation through the Internal Market Information System (IMI) – COM (2011) 522;

• The Commission’s proposal for a regulation establishing Horizon 2020 – the Framework Programme for Research and Innovation (2014-2020) – COM(2011) 809;

• The Commission’s public consultation on measures for improving the recognition of prescriptions issued in another Member State;

• The Commission’s proposal for a regulation establishing “Erasmus for All” – the Union Programme for Education, Youth and Sport – COM(2011) 788; and

• The Commission’s proposals for regulations on prudential requirements for credit institutions and investment firms – COM(2011) 452 – and on the access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms – COM(2011) 453.

The full list of EEA EFTA Comments can be found here: http://www.efta.int/eea/eea-efta-comments.aspx

Budgetary Matters

The annual EEA EFTA Budget covers the EEA EFTA countries’ contribution to the EU Budget and allows for EEA EFTA participation in EU programmes, actions and agencies.

Of particular interest in 2012 were the estimated budgetary implications of the proposal for the Multiannual Financial Framework (2014-2020), adopted by the Commission in 2011. The EEA EFTA States’ commitment to EU operational costs in 2012 was EUR 312 million, an increase of EUR 50 million from 2011. EEA EFTA contributions in 2012 amounted to EUR 241 million, adjusted for the 2010 credits.

The EEA EFTA States also contribute to the administrative costs of the European Commission, an important part of which is the contribution in kind of seconded national experts. In 2012, 34 EEA EFTA national experts were seconded to the various directorates within the European Commission dealing with EEA-relevant programmes and activities.

EFTA-EU Cooperation in Statistics

The EFTA Statistical Office (ESO) was created in the context of the EEA Agreement to liaise between Eurostat and the EFTA National Statistical Institutes (NSIs). It is located at the premises of Eurostat in Luxembourg.

Priorities for 2012 in the field of statistics were:

• Development of the 2012 EEA Annual Statistical Programme based on the European Statistical Work Programme of the European Commission;

• Preparation for the incorporation of the European Statistical Programme 2013-2017 into the EEA Agreement;

• Amendment of Regulation (EC) No 223/2009, the “Statistical law”; and

• EFTA’s participation in the streamlining of the organisational structure of the European Statistical System (ESS).

Integration of EFTA Statistics into the European Statistical System

In addition to their core activities, ESO and the EFTA NSIs ensured EFTA’s presence in the ESS by:

• Monitoring the inclusion of EFTA data in Eurostat’s databases and publications;

• Ensuring EFTA’s and the EFTA NSIs’ active involvement in EU technical cooperation programmes in the field of statistics with European and non-European third countries; and

• Contributing substantially to the European Statistical Training Programme (ESTP).

Production and Dissemination of EFTA Statistics

Protocol 30 to the EEA Agreement and the Swiss-EU Agreement in the field of statistics provide for statistical information from all EFTA States to be transmitted to Eurostat for storage, processing and dissemination. ESO continues to strive for the regular inclusion of EFTA data in Eurostat databases and publications. The tangible result of this joint initiative between ESO, the EFTA NSIs and Eurostat is that the inclusion of EFTA data in Eurostat databases and publications was at a good level in 2012.

Special attention was given to the inclusion of EFTA data in the indicator sets, which measure the performance of European countries with regard to key policy issues such as the Europe 2020 Strategy or the Sustainable Development Strategy. The EFTA countries’ coverage of these very visible and much in demand indicators is high. EU policy targets do not apply to the EFTA States and the two strategies mentioned above are not part of the EEA Agreement or the Swiss-EU Agreement. However, the EFTA States agree with the general goals of the initiatives and participate in several of the programmes and actions that have come out of these strategies. There is strong demand to provide users both within and outside EFTA with comparable data on the performance of as many European countries as possible regarding key European issues.

EFTA Participation in Eurostat Working Groups and Committees

Eurostat organised around 120 meetings in 2012 to prepare and implement new legislation, exchange and develop methodologies and follow up on data collection. The EFTA States participated actively in the relevant meetings on an equal footing with colleagues from the EU Member States.

ESO took part in the “table ronde” of the Swiss Days of Official Statistics, hosted in September by Liechtenstein. ESO also contributed to the annual DGINS Conference, which is attended by the directors-general of all national statistical institutes in Europe and the heads of the statistics divisions of UN bodies, the Organisation for Economic Co-operation and Development (OECD), the International Monetary Fund (IMF), Worldbank and the European Central Bank (ECB).

Technical Cooperation in the Field of Statistics

EFTA works closely with Eurostat on technical cooperation in the field of statistics. This is based on a Memorandum of Understanding that has the general objective of ensuring close collaboration between the EFTA States and Eurostat in a number of programmes. Cooperation may also take the form of joint undertakings with international organisations such as the United Nations Economic Commission for Europe (UNECE) and the IMF.

EFTA’s involvement gives priority to countries that have concluded joint declarations on cooperation or free trade agreements with EFTA. Support is granted mainly to countries covered by the European Neighbourhood Policy (ENP East and South), to the Western Balkans and to Turkey, but can also include current and prospective free trade partners of EFTA in other regions of the world.

Technical Cooperation Activities and Projects

In 2012, the main activities and projects in this field were:

• Continuation of the global assessments/peer reviews of third countries’ national statistical systems. EFTA support was granted through the funding of experts from EFTA countries and ESO in the assessments of Belarus, Moldova, the Palestine Territories and Tajikistan;

• Launch event of the programme “Implementation of the 2008 System of National Accounts” at UNECE in Geneva and the Special Programme for the Economies of Central Asia (SPECA) Project Working Group on Statistics in Issyk Kul, Kyrgyzstan, dedicated to this topic. EFTA assisted with this event through logistical support as well as the funding of experts from EFTA countries and participants from targeted third countries;

• Organisation and financing of a training course on price statistics for experts from the NSIs of ENP East and selected countries from Eastern Europe, the Caucasus and Central Asia (EECCA countries), conducted jointly by Norway and Switzerland;

• Organisation and financing of a training course for experts from the NSIs of the Western Balkans and ENP South countries on survey methodology and sampling techniques, conducted by Switzerland; and

• Funding of experts’ participation in international and regional events in the field of statistics.

EFTA Seconded National Experts at Eurostat

At the end of 2012, four experts from Statistics Norway and three experts from the Swiss Federal Statistical Institute were seconded to Eurostat within the framework of the EEA Agreement and the Swiss-EU Agreement respectively. Two Norwegian experts were seconded to Eurostat as a contribution in kind within the framework of EFTA/EU technical cooperation in order to ensure continuity of support and EFTA visibility in the overall programming and management of EFTA/EU activities.

European Statistical Training Programme

An exchange of letters between the EFTA Secretariat and Eurostat stipulates that the EFTA Secretariat must finance at least two ESTP courses per year in return for EFTA statisticians having the right to participate in all courses.

In 2012, the EFTA Secretariat financed three of the 30 ESTP courses held: two organised by Statistics Norway on the use of geographic information systems for making statistics and the user-friendly dissemination of statistics; and one by the Swiss Federal Statistical Office on data analysis and data modelling.

EEA GRANTS AND NORWAY GRANTS

Biodiversity and ecosystem services in Cyprus have been allocated EUR 1.2 million for the 2009-2014 Grants period.

Through the EEA Grants and Norway Grants, Iceland, Liechtenstein and Norway contribute to reducing disparities in the European Economic Area and to strengthening bilateral relations with 15 EU countries in Central and Southern Europe: Bulgaria, Cyprus, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain.

Around EUR 1.789 billion in funding has been agreed for the period 2009-2014. The EEA Grants amount to EUR 988.5 million, of which Norway provides around 94%, Iceland close to 5% and Liechtenstein just above 1%. The Norway Grants amount to EUR 800 million and are funded by Norway alone. The Financial Mechanism Office (FMO) of the EFTA Secretariat in Brussels administers the grant schemes on behalf of Iceland, Liechtenstein and Norway.

Reducing Disparities and Strengthening Bilateral Relations

Since funding from the EEA EFTA States to the less wealthy countries of the EU started in 1994, the Grants have contributed to areas such as reducing greenhouse gas emissions, protecting biodiversity, improving health services, promoting social inclusion, strengthening civil society, strengthening the rule of law and preserving cultural heritage. An end review of projects implemented during the last funding period concluded that they had contributed to reducing social and economic disparities at local level.

The Grants have increasingly contributed to developing mutual cooperation and strengthening bilateral relations. Under the Grants 2004-2009, more than one in five projects were implemented in partnership with entities from Iceland, Liechtenstein and Norway. Under the Grants 2009-2014, over half of the expected 146 programmes are being planned and implemented in cooperation with public entities from the donor states.

Bilateral funds at national and programme level also stimulate bilateral contacts, networking and project cooperation. Networks and partnerships that build up through the Grants are expected to create sustainable cooperation in the political, institutional, cultural and academic fields, as the programmes developed are in areas of special interest to both the beneficiaries and donors.

International Partnerships

Partnerships are also established with international organisations to ensure that funding is allocated with maximum efficiency and transparency. In the 2009-2014 period, the Council of Europe is contributing with expertise on human rights, democracy and rule of law. The global anti-corruption organisation Transparency International is collaborating with the EEA Grants and Norway Grants in identifying and addressing corruption risks in the implementation of the grant schemes.

2012: High Completion Rate with Positive Results

The five-year funding schemes were first established in 1994. For the 2004-2009 period, EUR 1.307 billion was made available for projects, and funding was allocated to 1 250 projects and funds, of which the last were closed on 30 April 2012.

The Grants focused on areas of need and common interest, in line with wider European interests and goals. All available funding was committed in all beneficiary countries and the implementation rate was very high. About 97% of the projects had been completed by the end of April 2012.

Ex-post monitoring of 40 projects produced positive findings, with most activities implemented as planned, targets largely met and high value for money achieved. A number of evaluations and reviews provided important lessons and guidance for the next funding period.

2012: New Funding Available

The EEA Grants and Norway Grants 2009-2014 are providing funding to larger programmes with clearer objectives and more strategic partnerships, thereby strengthening their results-oriented approach. Emphasis is being laid on results, as well as on risk management. Strategic partnerships are being established to contribute to strengthening bilateral cooperation and relations between the donor and beneficiary countries.

At least 30% of the funds have been earmarked for “green programmes”: environmental protection, climate change and renewable energy, carbon capture and storage, and green industry innovation. Funding is also targeting vulnerable groups such as minorities, including the Roma, and children and youth at risk. Particular emphasis is being placed on gender issues.

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

With the current economic crisis giving rise to intolerance and hate speech in Europe, the Grants are also contributing to combating racism and xenophobia. This is not only achieved by promoting the values of democracy, tolerance and rule of law, but also by helping to reduce social and economic disparities.

By the end of 2012, around one third of the programmes had been approved, several calls for projects had been launched and the first projects had started. Programmes and projects may in general be implemented until 2016.

In the 2009-2014 period, the EEA Grants and Norway Grants are financing programmes in the following sectors:

EEA Grants

• Environmental protection and management;

• Climate change and renewable energy;

• Civil society;

• Human and social development;

• Protecting cultural heritage; and

• Research and scholarship.

Norway Grants

• Carbon capture and storage;

• Green industry innovation;

• Decent work and tripartite dialogue;

• Research and scholarship;

• Human and social development; and

• Justice and home affairs.

Allocation per country, 2009-2014.

ADVISORY BODIES

The Parliamentary Committee

The EFTA Parliamentary Committee continued its active involvement in issues of relevance to EFTA cooperation in free trade relations with countries outside the European Union and matters pertaining to the EEA Agreement. The Chair of the Committee on third-country issues was Kathy Riklin (Switzerland), while Harry Quaderer (Liechtenstein) chaired the Committee on EEA matters.

Third-Country Relations

In February 2012, representatives of the Parliamentary Committee visited Indonesia to support the ongoing free trade negotiations by strengthening ties with stakeholders in the country and exchanging views on the merits of free trade. Together with an observer from the Consultative Committee, they met with the Vice Speaker and relevant committees of the House of Representatives, government officials and business representatives.

The Parliamentary Committee met with EFTA Ministers in Gstaad in June and in Geneva in November, receiving updates on third-country relations and raising points of interest. Among other issues, the Committee discussed the FTA negotiations with the Customs Union of the Russian Federation, Belarus and Kazakhstan, the management of the FTA with Palestine, and the linkages between EFTA and EU free trade negotiations. The Committee continued its active engagement with respect to sustainable development provisions in FTAs, particularly in relation to negotiations in South-East Asia. Furthermore, a delegation participated in the Annual Conference on the WTO organised jointly by the Inter-Parliamentary Union and the European Parliament.

The EFTA Parliamentary Committee at a meeting in Geneva in November.

EEA and European Affairs

The EEA Joint Parliamentary Committee met twice in 2012, in Akureyri, Iceland, in May and in Brussels in November. The Committee took a highly active role in the reflections on the EEA Agreement, and adopted a report and resolution on the EEA review process at its meeting in May. As in previous meetings, the members engaged in a fruitful dialogue with the EEA Council, the EEA Joint Committee and the EFTA Surveillance Authority (ESA) on the functioning of the EEA. The Committee adopted a resolution on the EEA Joint Committee’s Annual Report on the Functioning of the EEA, and sought to increase its influence on future reports by asking the Joint Committee to provide it with the draft rather than adopted texts. In 2012, the Committee also adopted resolutions on:

• The White Paper on Transport;

• The reform of the common fishery policy;

• EU energy policy and its implications for the EEA;

• EEA EFTA participation in EU agencies; and

• EU programmes 2014-2020 and the participation of the EEA EFTA States.

The EFTA parliamentarians continued their active dialogue with the EFTA Ministers on EEA affairs, and met with the Standing Committee at Ministerial level for the fourth time in Brussels in November, on the margins of the EEA Council meeting. These joint meetings include the EFTA Consultative Committee and constitute an increasingly important dialogue between Ministers and advisory bodies on developments in the EEA.

EFTA Consultative Committee

In 2012, the EFTA Consultative Committee* continued its work on international trade developments, focusing especially on EFTA’s third-country relations. As regards European affairs, the Committee focused on the various reviews of the EEA Agreement; developments in the Internal Market with specific emphasis on the free movement of persons, professional qualifications, labour law issues and the Single Market Act II; Schengen cooperation; and responses to the economic and financial crisis. The Chair of the Committee in 2012 was Halldór Grönvold (Iceland).

The Committee met with the Standing Committee of the EFTA States in March, the EFTA Ministers and EFTA Parliamentary Committee in June, and the Ministerial Chair of the Council in November. Concerning the EEA, the Committee invited the Vice President of ESA to give a briefing in June on ESA’s most recent activities, and met with the EFTA Standing Committee at Ministerial level in November in Brussels. The Consultative Committee members firmly believe in the importance of holding such joint meetings, which contribute to enhancing dialogue with the relevant EFTA authorities at political, parliamentary and diplomatic level in the four EFTA countries.

Under the Presidency of Mr Pat the Cope Gallagher (MEP, ALDE, Ireland) and acting Vice President Mr Skúli Helgason (MP, Social Democratic Alliance, Iceland), the 39th meeting of the EEA Joint Parliamentary Committee took place in November.

In March, the Committee discussed the Norwegian EEA Review, and a member of the Review Committee presented its key findings with a particular focus on the chapters on the economy, business policy and the labour market. The EEA reviews were one of the main topics of the EFTA social partners’ annual meeting with the EFTA Ambassadors. The Committee also discussed Schengen cooperation with representatives of the four EFTA States.

The Chairs of the EFTA Parliamentary and Consultative Committees at a joint meeting with EEA EFTA Ministers in Brussels. Mr Halldór Grönvold, Consultative Committee, and Mr Harry Quaderer, Parliamentary Committee.

Cooperation continued with the EFTA authorities at working group level, and in March the Consultative Committee and the EFTA Working Group on Free Movement of Persons, Working Life and Social Inclusion met to discuss current labour law issues, including working time and the Temporary Agency Work Directive. The Committee also exchanged views with EU experts on corporate social responsibility and labour market trends in the context of the current economic crisis.

Joint Work with the EU

At its meeting in May in Akureyri, Iceland, the EEA Consultative Committee adopted two resolutions on:

• The EEA review; and

• The enterprise dimension of the Single Market.

The Committee also focused on recent developments in the EEA and Iceland’s EU accession negotiations, and organised a panel discussion on wealth inequalities and social justice in light of the present economic crisis, receiving presentations on the Nordic model and Icelandic experience. The EEA Consultative Committee and the EEA Joint Parliamentary Committee marked the 20th anniversary of the signing of the EEA Agreement by organising a joint event in Akureyri.

Cooperation between social partners in the EEA was further reinforced in 2012 through the so-called “osmosis” procedure, which allows representatives of the EFTA side to participate in the work of the European Economic and Social Committee and vice versa. Cooperation in 2012 included EFTA participation in various activities, such as meetings with Croatia, Iceland, Macedonia, Montenegro and Turkey; the Steering Committee on Europe 2020; and the Single Market Observatory.

* Representatives of the the social partners’ organisations in the EFTA countries.

The EEA EFTA Forum

The EEA EFTA Forum of elected representatives of local and regional authorities was established by the EFTA Standing Committee in 2009 as an informal body to involve elected representatives from local authorities and regions in EEA matters. It currently has 12 members – six from Iceland and six from Norway. Halldór Halldórsson (Iceland) chaired the Forum in the first half of 2012, while the Chair in the second half of the year was Hilde Onarheim (Norway).

The Forum held two meetings in 2012, in June in Ísafjörður, Iceland, and in November in Brussels. The Forum adopted opinions on:

• The review of the EEA Agreement;

• European rules on environmental impact assessment;

• Labour migration within the EEA and impact on the local and regional level;

• EU programmes 2014-2020 and the participation of the EEA EFTA States; and

• The Commission proposal for a general data protection regulation.

The Forum continued its dialogue on relevant issues with the Committee of Regions of the European Union, and discussed topics of common interest with the EFTA Parliamentary Committee in a joint meeting in November.

The EEA EFTA Forum of Local and Regional Authorities at its sixth meeting, which took place in Brussels in November.

INFORMATION ACTIVITIES

EFTA informs its stakeholders and the general public about its activities through a website, seminars and various publications. Members of the public can access or order EFTA documents through a link on the site. Presentations are also given to visitors to the Secretariat offices in Geneva, Brussels and Luxembourg. In Brussels alone, approximately 80 groups (nearly 1 500 people) visited EFTA in 012.

Website

The website contains news and general information on EFTA’s work, as well as legal texts related to EFTA’s FTAs and the EEA Agreement. The site has approximately 800 visitors per day.

Seminars

EFTA held numerous seminars and workshops in 2012, including:

• In January and September, EFTA held its biannual seminar on the EEA Agreement. At the January seminar, the Chair and Secretary of the Norwegian EEA Review Committee presented their report “Inside and Outside” to more than 120 participants; and

• In March, the Brussels Secretariat hosted a seminar on the role of certification linked to standardisation.

Publications

The latest editions of all of EFTA’s brochures are available on the website. Paper copies can be ordered free of charge, subject to availability. The following were released in 2012:

• This is EFTA 2012: An annual publication providing an overview of EFTA and its activities, together with useful trade and economic statistics; and

• The EFTA Bulletin: The European Economic Area and the Single Market 20 Years on.

In addition, the fact sheet “EFTA at a Glance” provides a brief introduction to the organisation and its activities.

The EEA Supplement

The EEA Supplement to the Official Journal of the European Union is a translation into Icelandic and Norwegian of EEA-relevant texts. The EEA Supplement contains material from:

• The EEA Joint Committee;

• The Standing Committee of the EFTA States;

• The EFTA Surveillance Authority;

• The EFTA Court; and

• The European Commission.

The EEA Supplement is published on the EFTA website once a week. Since 2008, the Icelandic and Norwegian versions of the EEA Supplement have not been synchronised with regard to content.

In 2012, the EFTA Secretariat published 71 issues of the EEA Supplement. The publication of acts incorporated into the EEA Agreement increased in 2012 compared to the previous year for the Icelandic version, whilst the Norwegian version saw a decrease in the number of acts published in 2012.

ADMINISTRATION

At the end of 2012 there were 22 fixed-term and short-term staff based in Geneva, and 60 in Brussels and Luxembourg. The Financial Mechanism Office in Brussels employed 62 staff. All figures are on a full-time equivalent basis and include trainees.

The Secretariat’s budget is prepared according to the framework budgeting principle used by the Member States’ public administrations. This approach aims to increase awareness of budgetary spending at all levels. The budget is accompanied by a performance plan in which the activities of the Secretariat are divided into projects. The plan and subsequent reports keep the Member States informed of the costs and outcomes of the Secretariat’s various activities.

EFTA’s budget is prepared in two currencies: Swiss francs (CHF) and euros (EUR). The total budget for 2012 was equivalent to CHF 22 066 000.

The EFTA Board of Auditors

The EFTA Board of Auditors (EBOA), established in May 1992, is the auditing authority of EFTA. It is a permanent committee which, in cooperation with external auditors, performs an annual audit of the three EFTA institutions: The EFTA Secretariat, ESA and the EFTA Court. For matters related to the Secretariat, EBOA meets “at four” (one representative from each EFTA State) and reports directly to the EFTA Council. For matters related to the EEA Agreement (ESA and the EFTA Court), EBOA meets “at three” (Iceland, Liechtenstein and Norway) and reports to the ESA/Court Committee. EBOA also works in cooperation with the European Court of Auditors. EBOA met three times in 2012.

EBOA’s annual audit report is made available on the EFTA Secretariat’s website once the relevant Council procedures for the year in question have been finalised.

EFTA Ministerial Communiqués and EEA Council Conclusions

EFTA Ministerial Meeting, Gstaad, 28 June 2012

Communiqué

On 28 June 2012, the European Free Trade Association (EFTA) held its summer Ministerial meeting in Gstaad, Switzerland under the Chairmanship of Mr Johann N. Schneider-Ammann, Federal Councillor and Head of the Federal Department of Economic Affairs of Switzerland. Ministers of the four EFTA States (Iceland, Liechtenstein, Norway and Switzerland) signed a joint declaration on cooperation with Georgia, represented by Ms Vera Kobalia, Minister of Economy and Sustainable Development.

The international economic and trade environment

The EFTA Ministers discussed the state of the global economy and the prospects for international trade, noting the important challenges currently faced by policy makers and economic operators. They underscored the importance of policies in support of economic and financial stability as well as to foster growth and job creation. EFTA Ministers recalled the essential role of open markets in achieving sustainable growth and reiterated their commitment to a strong, rules-based trading system under the framework of the World Trade Organisation (WTO).

Preferential trade relations

The EFTA Ministers noted that EFTA’s network of free trade agreements with partners outside the European Union currently comprises 24 agreements with 33 countries worldwide. Five joint declarations on cooperation further complement this network. In this context, Ministers welcomed the entry into force on 1 June 2012 of the free trade agreement with Ukraine and the signing of a joint declaration on cooperation with Georgia. Ministers also emphasised the need to further develop EFTA’s existing FTAs, e.g. the agreements with Canada and the Republic of Korea.

Ministers discussed EFTA’s ongoing negotiating processes. They called for a swift conclusion of negotiations with Bosnia and Herzegovina. They noted with satisfaction the progress achieved to date in the negotiations with the Members of the Customs Union of Russia, Belarus and Kazakhstan.

Recalling the priority accorded to enhancing trade relations with partners in Asia, Ministers acknowledged the progress achieved in the negotiating process with India and expressed their wish to move towards a conclusion. They welcomed the good momentum achieved in the negotiations with Indonesia and reiterated their interest in resuming negotiations with Thailand. Ministers expressed their satisfaction about the start of a negotiating process with Vietnam. In the context of the official launch of these negotiations foreseen in July 2012, the EFTA States will recognize Vietnam’s market economy status.

Ministers expressed their satisfaction with the second round of negotiations with the Central American States of Costa Rica, Honduras and Panama in June 2012 and expressed the wish to move forward speedily with this process.

Ministers also discussed current and future initiatives to expand EFTA’s free trade network. In this context, they welcomed the ongoing exploratory work with Malaysia and expressed their wish to begin free trade negotiations at the earliest suitable opportunity. Ministers confirmed their interest in exploring deeper trade relations with the Philippines. They decided to consider the development of closer trade relations with Pakistan and to propose the signing of a joint declaration on cooperation to this effect.

Ministers agreed to continue exploring possible options for increasing trade, investment and cooperation with the MERCOSUR States (Argentina, Brazil, Paraguay and Uruguay). They also agreed to further examine the possibilities of developing closer trade relations with potential partners in the Sub-Saharan African region.

Relations with the European Union

The EEA EFTA Ministers welcomed the 20th anniversary of the signing of the EEA Agreement, and highlighted that the Agreement continues to function well in accordance with the original objectives. They discussed the general operation of the EEA Agreement in the context of the financial and economic crisis in Europe and underlined the need for coordinated and comprehensive action at the European level.

Ministers welcomed the recent progress made with regard to the processing of acquis in the EEA Agreement. They noted with satisfaction that the amount of Single Market legislation awaiting incorporation in the EEA Agreement had been substantially reduced since the beginning of the year.

Ministers noted with concern the difficulties encountered with regard to EEA EFTA participation in certain EU programmes and agencies, in particular with regard to the European Supervisory Authorities for financial markets and the European Research Area, and called on all parties to look for pragmatic solutions in order to resolve these challenges. They reiterated the importance of close cooperation with the European Union on energy and climate change and noted the urgency of completing the necessary measures on the EEA EFTA side to allow for the continued participation of the EEA EFTA States in the common European Emissions Trading Scheme.

With regard to the EEA Financial Mechanism and the Norwegian Financial Mechanism 2009-2014, Ministers welcomed the conclusion of the Memoranda of Understanding with all beneficiary states.

Finally, Ministers were informed on the state and the perspectives of the relations between Switzerland and the European Union, especially on the institutional proposals made by Switzerland.

Advisory bodies

Ministers held meetings with EFTA’s two advisory bodies, the Parliamentary Committee and the Consultative Committees. They discussed a range of issues with committee members, including recent developments in EFTA third-country relations and the latest developments in the EEA and in Swiss-EU relations.

Change of Secretary-General

Recalling that Mr Kåre Bryn’s term as Secretary-General would come to an end on 31 August 2012, Ministers expressed their gratitude to him for his significant contribution to EFTA over the last six years. They also thanked the outgoing Deputy Secretary-General, Ms Bergdís Ellertsdόttir, and the former Deputy Secretary-General, Mr Didier Chambovey, who left his post in August 2011, for their valuable contribution to the Association. Mr Bryn’s successor will be Mr Kristinn F. Árnason of Iceland.

Attending

• Switzerland: Mr Johann N. Schneider-Ammann, Federal Councillor, Head of the Federal Department of Economic Affairs (Chair)

• Iceland: Mr Össur Skarphéðinsson, Minister for Foreign Affairs and External Trade

• Liechtenstein: Ms Aurelia Frick, Minister of Foreign Affairs

• Norway: Mr Trond Giske, Minister of Trade and Industry

• EFTA: Mr Kåre Bryn, Secretary-General

EFTA Ministerial Meeting, Geneva, 12 November 2012

Communiqué

On 12 November 2012, the European Free Trade Association (EFTA) held a Ministerial Meeting in Geneva under the Chairmanship of Mr Össur Skarphéðinsson, Minister for Foreign Affairs and External Trade of Iceland. The EFTA Ministers signed a Joint Declaration on Cooperation with Pakistan, represented by Mr Shahid Bashir, Ambassador and Permanent Representative to the World Trade Organisation in Geneva.

Ministers expressed concern over weakening international economic activity and the projected slowdown in global trade this year. They underlined the importance, in such a context, of pursuing trade and investment policies that prevent protectionism and ensure open, competitive markets.

In this context, Ministers reviewed EFTA’s activities in the area of free trade agreements. EFTA’s network of preferential trade relations outside the European Union currently comprises 24 free trade agreements with 33 countries. This network is complemented by 6 joint declarations on cooperation globally. In this respect, Ministers welcomed the signing of a Declaration with Pakistan which will serve to strengthen economic cooperation and bilateral trade relations. Ministers also emphasised the importance of revising and updating existing free trade agreements in the light of global developments in this area.

Ministers welcomed the swift progress in the free trade negotiations with the Central American States of Costa Rica, Guatemala, Honduras and Panama and looked forward to their early conclusion. They took stock of progress made in the negotiations with the Customs Union of Russia, Belarus and Kazakhstan and called for continued momentum with a view to moving closer to a conclusion. Ministers emphasised their strong interest in remaining fully engaged with India. They noted the advances made in the negotiating processes with, respectively, Indonesia and Vietnam, and expressed their wish to see these move further forward in a timely manner. They reiterated their call for a conclusion of negotiations with Bosnia and Herzegovina.

Ministers welcomed the recent announcement of the start of negotiations on a free trade agreement with Malaysia. An agreement with that partner would considerably strengthen EFTA’s network in the dynamic Asian region. They expressed their readiness to re-engage with Thailand at the earliest suitable opportunity. They agreed to further seek possibilities to deepen trade relations with countries in Sub-Saharan Africa. They called for a joint assessment of recent developments with Algeria.

Ministers also discussed issues related to the unresolved mackerel negotiations.

Ministers met with the EFTA Parliamentary Committee to discuss recent developments and priorities in EFTA’s trade relations with the world.

Attending

• Iceland: Mr Össur Skarphéðinsson, Minister for Foreign Affairs and External Trade (Chair)

• Liechtenstein: Ms Aurelia Frick, Minister of Foreign Affairs

• Norway: Mr Roger Ingebrigtsen, State Secretary, Ministry of Trade and Industry

• Switzerland: Mr Johann N. Schneider-Ammann, Federal Councillor, Head of the Federal Department of Economic Affairs

• EFTA: Mr Kristinn F. Árnason, Secretary-General

Conclusions of the 37th meeting of the EEA Council, Brussels, 14 May 2012

The thirty-seventh meeting of the EEA Council took place in Brussels on 14 May 2012 under the Presidency of Mr Villy Søvndal, Minister for Foreign Affairs of Denmark, representing the Presidency of the Council of the European Union. The meeting was attended by Mr Össur Skarphéðinsson, Minister for Foreign Affairs of Iceland, Mr Martin Meyer, Deputy Prime Minister and Acting Minister for Foreign Affairs of Liechtenstein, and Mr Jonas Gahr Støre, Minister of Foreign Affairs of Norway, as well as by Members of the Council of the European Union and Representatives of the European Commission and the European External Action Service.

1. The EEA Council noted that within the framework of the Political Dialogue the Ministers discussed North Africa / ‘Arab Spring’, Iran and Afghanistan/Pakistan.

2. The EEA Council held an orientation debate on Strategies for Growth in Europe.

3. The EEA Council noted the 20th anniversary of the signing of the EEA Agreement on 2 May, and recognised with satisfaction that the Agreement has been a durable instrument in ensuring the smooth functioning of the European Economic Area. The EEA Council looked forward to the 20th anniversary celebrations of the Single Market later in the year.

4. The EEA Council recognised that the current economic crisis was a common concern, and reaffirmed the need for responsibility and solidarity among the nations of Europe in tackling the challenges ahead. The EEA Council stressed that it was in the common interest of all countries of the European Economic Area to restore confidence and put the economies on the path towards renewed and sustainable growth, and underlined the need to take into account budgetary discipline and shared social objectives in the measures taken to combat the crisis. In this context, the EEA Council welcomed the signing of the Treaty establishing the European Stability Mechanism on 2 February 2012, and of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union on 2 March 2012.

5. The EEA Council welcomed the signing of the Treaty concerning the Accession of Croatia to the EU on 9 December 2011. The EEA Council recalled that all European States becoming a member of the European Union shall apply to become a Party to the Agreement on the European Economic Area, in accordance with Article 128 of the Agreement.

6. The EEA Council welcomed the progress being made towards Iceland’s accession to the European Union following the fifth Intergovernmental Conference in March 2012.

7. The EEA Council welcomed the progress made on the seven flagship initiatives of the Europe 2020 Strategy. With many of the proposals contained in these initiatives being EEA relevant, the EEA Council welcomed the EEA EFTA States’ contribution to the Strategy.

8. The EEA Council reiterated its commitment to the social objectives of the Europe 2020 Strategy with its inclusive growth initiatives aimed at combating poverty and social exclusion, encouraging youth mobility and matching skills with jobs, and underlined the importance of finding innovative responses to the social impact of the current crisis.

9. The EEA Council welcomed the progress made on the Single Market Act, notably the timely presentation of the key actions of the Act, including EEA-relevant legislative proposals. The EEA EFTA States will continue to be actively involved in the development of the Single Market and will follow up on the proposals resulting from the Act.

10. The EEA Council noted the urgency to continue discussions between the EU and EFTA sides on how to ensure that the significant volume of legislation being adopted in the EU in the financial services field is dealt with and included in the EEA Agreement. The EEA Council emphasised the need to ensure the timely incorporation of such legislation, including the Regulations establishing the European Supervisory Authorities, on which, to date, limited progress has been noted. The EEA Council furthermore expressed the hope that an understanding could be reached soon on the appropriate form of participation by the EEA EFTA States’ relevant authorities in the European Systemic Risk Board (ESRB).

11. The EEA Council reiterated the importance of maintaining close cooperation between the EU and the EEA EFTA States in environment, energy and climate change polices, in particular in the areas of emissions trading, the promotion of competitive, safe and sustainable low carbon economy, resource efficiency, energy efficiency and renewable energy resources, as well as in carbon capture and storage (CCS).

12. The EEA Council recognised the importance of cooperation for the development of future-oriented energy technologies, among others by means of advocating and supporting common research & development projects, enhancing and developing a framework allowing cross-border exchanges of knowledge and scientific cooperation, and advocating a free flow of intellectual capital.

13. The EEA Council noted the importance of the Third Package for the Internal Energy Market and that important work on derived legislation was currently ongoing in the new bodies, the Agency for the Cooperation of Energy Regulators (ACER) and the European Network(s) for Transmission System Operators (ENTSOs). Since the EEA EFTA States were already well integrated in the Internal Energy Market, the EEA Council underlined the importance of ensuring appropriate EEA EFTA participation in the new bodies in line with the Third package and the EEA Agreement.

14. The EEA Council welcomed the recent incorporation of the Renewables Directive into the EEA Agreement, and also took note of the ongoing work on a European Renewable Energy Strategy post-2020. In this context, the EEA Council took note of the EEA EFTA States’ already large shares of renewable energy sources and acknowledged the EEA EFTA States’ commitment to attaining targets for their shares of renewable energy by 2020.

15. The EEA Council took note of the ongoing work in the EU on a new Energy Efficiency Directive and a new Regulation on Energy Infrastructure and agreed on the importance of energy efficiency and infrastructure as a means of realising energy and climate goals.

16. The EEA Council urged for the swift incorporation of the revised Emissions Trading Scheme into the EEA Agreement and underlined that all parties to the Agreement needed to complete various tasks this year in order to ensure that the system would be operational throughout the entire EEA as of 1 January 2013.

17. The EEA Council recalled its orientation debate on commodity markets and raw materials in May 2011 and welcomed the Commission’s proposal of 29 February 2012 for a European Innovation Partnership (EIP) on Raw Materials with a holistic approach regarding access, processing, resource efficiency, innovation and technical development for the whole value from extraction of minerals to recirculation.

18. The EEA Council furthermore emphasized the key importance of SMEs for promoting economic growth and employment and shared the engagement in implementing the Small Business Act, simplifying rules and regulations and facilitating SMEs access to the public procurement market, the green market and the international market.

19. The EEA Council noted the Progress Report of the EEA Joint Committee and, in particular:

• The EEA Council underlined the importance of timely incorporation of legal acts in the EEA Agreement, to ensure a homogenous Internal Market. In this regard, the EEA Council welcomed the joint efforts of the EEA EFTA States and the European External Action Service to further improve the process of preparation and incorporation of EEA relevant EU acquis into the EEA Agreement, including through the timely fulfilment of constitutional requirements when applicable, and took note of the steady progress already achieved in reducing the relatively high number of legal acts not yet in force in the whole of the EEA;

• Welcomed the final agreement reached for a Directive on Consumer Rights, and noted in this context that EEA EFTA concerns had been taken into account;

• Noted that the Agreement on the further liberalisation of trade in agricultural products between the European Union and Norway based on Article 19 of the EEA Agreement had entered into force on 1 January 2012. The EEA Council acknowledged that the Contracting Parties to the EEA Agreement, as set out in Article 19 of the Agreement, have undertaken to continue their efforts with a view to achieving progressive liberalization of agricultural trade within the framework of their respective agricultural policies and on a mutually beneficial basis. To this end, it looked forward to the upcoming review of the conditions of trade in agricultural products;

• Agreed to continue the dialogue on the review of the trade regime for processed agricultural products within the framework of Article 2(2) of Protocol 3 to the EEA Agreement;

• Welcomed the participation by the EEA EFTA States in EEA-relevant EU programmes, noting that these were co-financed by the EEA EFTA States. It emphasised the importance of including the EEA EFTA States in appropriate programmes, thus contributing to building a more competitive, innovative and social Europe;

• Took note of the adoption of the Integrated Maritime Policy Work Programme for 2011-2012 and welcomed the active involvement of the EEA EFTA States in preparatory actions for a European marine observation and data network. It noted that the EEA EFTA States were currently looking into possible participation in activities under the new programme for the further development of the Integrated Maritime Policy; the adoption of the European Commission Communication on a Maritime Strategy for the Atlantic Area was also noted;

• Welcomed the incorporation of the European Aviation Safety Agency Regulation into the EEA Agreement;

• Noted that the Audiovisual Media Services Directive, the Temporary Agency Work Directive and the Directive on charging heavy goods vehicles are to be incorporated into the Agreement as quickly as possible;

• Noted that the outstanding issues concerning the processing of the Data Retention Directive, the Directive on Deposit Guarantee Schemes, the Regulation on Novel Foods and Novel Food Ingredients, the remaining part of the TELECOM package (including the BEREC regulation), the Third Postal Directive and the Regulation on medicinal products for paediatric use had not yet been solved and reiterated the expectation for a conclusion of this process in the coming months;

20. The EEA Council welcomed the EEA EFTA States’ contributions to the decision-shaping process of EEA-relevant EU legislation and programmes through their participation in relevant committees, expert groups and agencies, and through the submission of EEA EFTA comments.

21. The EEA Council reiterated that it was in the common interest of all Contracting Parties that the EEA Agreement was well known throughout the European Economic Area, and urged them to ensure that appropriate information on the Agreement is available.

22. The EEA Council welcomed the publication of the Norwegian EEA Review, and looked forward to the results of the review commissioned by the Government of Liechtenstein and the ongoing review being undertaken by the European Union.

23. The EEA Council underlined the importance of inviting EEA EFTA Ministers to relevant informal EU ministerial meetings and ministerial conferences on the basis of EEA EFTA participation in the Internal Market, and expressed its appreciation to the incoming Cypriot Presidency for the continuation of this practice.

24. The EEA Council recalled that the EU side had continued the practice of inviting the EEA EFTA States — at the level of officials — to political dialogue meetings at the level of relevant Council working parties, and supported further continuation of this practice.

25. Implementation of projects under the EEA and Norwegian Financial Mechanism 2004-09 closed on 31 April 2012, and the EEA Council welcomed the high overall implementation and absorption ratio for these funds.

26. With regard to the EEA and Norwegian Financial Mechanism 2009-14, the EEA Council welcomed the high level of bilateral cooperation agreed through the Memoranda of Understanding between the EEA EFTA States and the 15 beneficiary countries.

27. The EEA Council noted the Resolutions of the EEA Joint Parliamentary Committee adopted at its 38th meeting in Akureyri, Iceland, on 3 and 4 May 2012 on the Annual Report on the Functioning of the EEA Agreement in 2011, the Review of the EEA and the White Paper on a Single European Transport Area, and the Resolutions of the EEA Consultative Committee adopted at its 20th meeting in Akureyri, Iceland, on 3 and 4 May 2012 on the Enterprise Dimension of the Internal Market and the EEA Reviews.

Conclusions of the 38th meeting of the EEA Council, Brussels, 26 November 2012

The thirty-eighth meeting of the EEA Council took place in Brussels on 26 November 2012 under the Presidency of Mr Espen Barth Eide, Minister of Foreign Affairs of Norway. The meeting was attended by Mr Össur Skarphéðinsson, Minister for Foreign Affairs of Iceland, Ms Aurelia Frick, Minister for Foreign Affairs of Liechtenstein, and Mr Andreas D. Mavroyiannis, Deputy Minister to the President of Cyprus for European Affairs, representing the Presidency of the Council of the European Union, as well as by Members of the Council of the European Union and Representatives of the European Commission and the European External Action Service.

1. The EEA Council noted that within the framework of the Political Dialogue the Ministers discussed Israel/Palestine/MEPP, Syria, Iran and Myanmar.

2. The EEA Council underlined the importance of inviting EEA EFTA Ministers to informal EU ministerial meetings and ministerial conferences relevant for EEA EFTA participation in the Internal Market, and expressed its appreciation to the present Cyprus and the incoming Irish presidencies for the continuation of this practice.

3. The EEA Council recalled that the EU side had continued the practice of inviting the EEA EFTA States — at the level of officials — to political dialogue meetings at the level of relevant Council working parties, and underlined the importance of continuation of this practice.

4. The EEA Council held an orientation debate on Trade and Regulatory Cooperation with EEA Neighbours.

5. In light of the 20th anniversary of the Single Market at the end of this year, the EEA Council recognised with satisfaction that the EEA Agreement has been a durable instrument in ensuring the smooth functioning of the European Economic Area.

6. The EEA Council recognised that the current economic crisis was a common concern, and reaffirmed the need for responsibility and solidarity among the countries of Europe in tackling the challenges ahead. The EEA Council recalled in this context the orientation debates held in previous EEA Councils on the crisis and stressed that it was in the common interest of all countries of the European Economic Area to restore confidence and put the economies on the path towards renewed and sustainable growth. The EEA Council underlined the need to take into account budgetary discipline and shared social objectives in the measures taken to combat the crisis. The EEA Council underlined its full support for the calls by the G20 to avoid a repetition of the historic mistakes of protectionism of previous eras, and voiced its intention to resist all forms of protectionism in order to help safeguard the global economic recovery.

7. The EEA Council looked forward to the accession of Croatia to the EU, which is expected on 1 July 2013. The EEA Council welcomed the application of Croatia to become a Party to the Agreement on the European Economic Area, as required by Article 128 of the Agreement.

8. The EEA Council welcomed the progress being made towards Iceland’s accession to the European Union following the seventh Intergovernmental Conference in October 2012.

9. The EEA Council welcomed the progress made on the seven flagship initiatives of the Europe 2020 Strategy and the Single Market Act and the publication of the Single Market Act II. With many of the proposals contained in these initiatives being EEA relevant, the EEA Council welcomed the contribution of the EEA EFTA States towards their development. The EEA Council welcomed the initiatives of better governance in the Single Market as well as the Services Package which both aim at reducing barriers and ensuring a timely and correct transposition and implementation of EU legislation, thereby boosting the full development of the Single Market. The EEA EFTA States will continue to be actively involved in the developments of the Single Market.

10. The EEA Council noted the Progress Report of the EEA Joint Committee and expressed its appreciation for the work of the EEA Joint Committee in ensuring the smooth functioning of the EEA.

11. The EEA Council welcomed the incorporation of the revised Emissions Trading Scheme, the Audiovisual Media Services Directive, the Temporary Agency Work Directive and the Directive on charging heavy goods vehicles into the EEA Agreement.

12. As on the occasion of its 37th meeting in May 2012, the EEA Council again welcomed the joint efforts to further improve the process of preparation and incorporation of EEA relevant EU acquis into the EEA Agreement. The EEA Council underlined the importance of timely incorporation of legal acts into the EEA Agreement, to ensure a homogenous Internal Market and fair competition for all operators.

13. In this regard, the EEA Council noted the remaining important number of legal acts, which had already entered into force in the EU but not yet in the entire EEA. The EEA Council also took note that EEA EFTA notifications for a number of Joint Committee decisions, for which the constitutional requirements have exceeded the six month period stipulated in the EEA Agreement, remained pending. The EEA Council encouraged the parties to continue efforts to reduce the number of outstanding legal acts.

14. The EEA Council noted that the outstanding issues concerning the processing of the Data Retention Directive, the Directive on Deposit Guarantee Schemes, the Regulation on Novel Foods and Novel Food Ingredients, the remaining part of the TELECOM package (including the BEREC regulation), the Third Postal Directive and the Regulation on Medicinal Products for Paediatric Use had not yet been solved and reiterated the need for a conclusion of this process in the coming months.

15. The EEA Council noted the urgency to continue discussions between the EU and EFTA sides on how to ensure that the significant volume of legislation being adopted in the EU in the financial services field is dealt with and included in the EEA Agreement. The EEA Council emphasised the need to ensure the timely incorporation of such legislation, including the Regulations establishing the EU supervisory framework for financial markets, on which, to date, limited progress has been noted. The EEA Council recognised the complexity of the issues and the constitutional challenges for the EEA EFTA States raised by the specific role and powers these Authorities are vested with. It encouraged all sides to actively and without delay engage in a constructive and result oriented dialogue to find a mutually acceptable solution allowing for the incorporation of the relevant acts into the EEA Agreement.

16. The EEA Council reiterated the importance of maintaining close cooperation between the EU and the EEA EFTA States in environment, energy and climate change polices, in particular in the areas of emissions trading, the promotion of competitive, safe and sustainable low carbon economy, energy efficiency, renewable energy resources, carbon capture and storage (CCS), as well as in the development of the internal energy market.

17. The EEA Council recognised the importance of cooperation for the development of future-oriented energy technologies, among others by means of advocating and supporting common research and development projects, enhancing and developing a framework allowing cross-border exchanges of knowledge and scientific cooperation, and advocating a free flow of intellectual capital while fully respecting the rights of respective property rights holders in accordance with European and international legislation on intellectual property protection.

18. The EEA Council noted the importance of the Third Package for the Internal Energy Market and that important work on derived legislation was currently ongoing in the new bodies, the Agency for the Cooperation of Energy Regulators (ACER) and the European Network(s) for Transmission System Operators (ENTSOs). Since the EEA EFTA States were already well integrated in the Internal Energy Market, the EEA Council underlined the importance of ensuring appropriate EEA EFTA participation in the new bodies in line with the Third package and the EEA Agreement. The EEA Council welcomed that the work on incorporating the Third Package into the EEA Agreement was well under way.

19. The EEA Council took note of the new Energy Efficiency Directive, as well as the ongoing work in the EU on a new Regulation on Energy Infrastructure, and agreed on the importance of energy efficiency and infrastructure as a means of realising energy and climate goals.

20. The EEA Council welcomed the new programme for business competitiveness and SMEs (COSME 2014-2020) and emphasized the key importance of SMEs for promoting economic growth and employment. The EEA Council shared the engagement in implementing the Small Business Act, simplifying rules and regulations and facilitating SMEs access to the green market, the international market and, in particular, the European public procurement market. The ongoing revision of public procurement policy in the EU was particularly important in this regard. The EEA Council welcomed the EEA EFTA States’ participation in the consultation preceding the publication of the revision proposals, as well as the subsequent EEA EFTA Comment on the revision package.

21. The EEA Council took note of the adoption of the Integrated Maritime Policy Work Programme for 2011-2012 and welcomed the active involvement of the EEA EFTA States in preparatory actions for a European marine observation and data network. It noted that the EEA EFTA States were currently looking into possible participation in activities under the new programme for the further development of the Integrated Maritime Policy. The adoption of the European Commission Communication on a Maritime Strategy for the Atlantic Area was also noted.

22. The EEA Council acknowledged that the Contracting Parties to the EEA Agreement, as set out in Article 19 of the Agreement, have undertaken to continue their efforts with a view to achieving progressive liberalization of agricultural trade. To this end, it welcomed the negotiations on further liberalisation of agricultural trade between the EU and Iceland launched in 2012. The EEA Council looked forward to the upcoming review in 2013/14 of the conditions of trade in agricultural products between Norway and the EU with a view to open negotiations within the framework of Article 19. Furthermore, the EEA Council took note that the EU deeply regrets the proposal by the Norwegian Government to increase customs duties by switching from currently applied specific duties to ad valorem duties for some agricultural products and that the EU strongly encourages Norway to reverse its decision.

23. The EEA Council welcomed the discussions in the EEA Joint meeting on processed agricultural products that took place on 16 October 2012, and agreed to continue the dialogue on the review of the trade regime for processed agricultural products within the framework of Article 2(2) and Article 6 of Protocol 3 to the EEA Agreement.

24. The EEA Council welcomed the participation by the EEA EFTA States in EEA-relevant EU programmes to which they contribute financially. It emphasised the importance of including the EEA EFTA States in appropriate programmes, thus contributing to building a more competitive, innovative and social Europe.

25. The EEA Council welcomed the EEA EFTA States’ contributions to the decision-shaping process of EEA-relevant EU legislation and programmes through their participation in relevant committees, expert groups and agencies, and through the submission of EEA EFTA comments.

26. The EEA Council reiterated that it was in the common interest of all Contracting Parties that the EEA Agreement was well known throughout the European Economic Area, and urged them to ensure that appropriate information on the Agreement is available.

27. The EEA Council looked forward to the findings of the independent Eea Review commissioned by the Government of Liechtenstein as well as the results of the ongoing review being undertaken by the European Union.

28. The EEA Council emphasised the importance of the financial contributions from the EEA EFTA States through the EEA and Norwegian Financial Mechanisms 2009-2014.

29. The EEA Council underlined the importance of achieving the bilateral objective of these two Financial Mechanisms, and to use the supported programmes actively to develop closer cooperation and relations between the three EEA EFTA States and the 15 beneficiary countries.

30. The EEA Council recognised the contribution of the EEA Joint Parliamentary Committee and the EEA Consultative Committee to the functioning and development of the EEA Agreement, and looked forward to the outcome of the 39th meeting of the EEA Joint Parliamentary Committee on 27 November 2012.

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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.

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