Delegation of the European Union to Honduras


25th anniversary of the European Economic Area: Questions and Answers

Bruxelles, 22/03/2019 - 17:18, UNIQUE ID: 190322_21

The Prime Ministers of Iceland, Liechtenstein and Norway have been invited as guests to the European Council on 22 March to mark the 25th anniversary of the EEA.

1. What is the European Economic Area?

The European Economic Area (EEA) brings together the EU Member States and three of the EFTA States (Iceland, Liechtenstein and Norway). It was established by the EEA Agreement which enables these three EFTA States to participate fully in the EU's Single Market.

2. When did the EEA Agreement enter into force?

The EEA Agreement was signed in Porto on 2 May 1992 and entered into force on 1 January 1994. Liechtenstein joined on 1 May 1995.

3. Who are the Contracting Parties to the EEA Agreement? Who are EEA EFTA states?

Today the EEA covers 31 countries: the 28 EU Member States and Iceland, Liechtenstein and Norway. In everyday language the latter three go by the term EEA EFTA States in order to clarify that the other EFTA State, Switzerland, is not party to the EEA Agreement.

On 1 January 1994 there were 6 members of the EEA/EFTA side (the 3 present members as well as Austria, Finland and Sweden – who then joined the EU a year later) and 12 on the EU side. The EU and EEA then grew in size following successive enlargements of the EU.

4. Are EEA EFTA countries amongst the EU's main trade partners?

Yes. EEA EFTA countries are close trade partners to the EU, both in absolute terms but especially taking account of the small size of their populations. Trade relations are governed by three bilateral FTA's between the EU and respectively Norway, Iceland and Switzerland (covering Liechtenstein due to its customs union with Switzerland).

After USA, China, Switzerland, Russia and Turkey, Norway is the EU's 6th trade partner, total EU28 merchandise trade amounting to 138 billion euros in 2018.

Iceland is the EU's 54th trade partner (total trade = 7 billion euros), just after countries like Lebanon or the Ivory Coast.

Liechtenstein is the EU's 84th trade partner, with 2.4 billion total trade in 2018 (just after Ethiopia, Cuba or Uzbekistan).

The EU is the main trade partner of all three EEA EFTA countries (roughly 2/3 of total trade).

5. What is included in the EEA Agreement?

The EEA Agreement provides for the inclusion of all EU legislation linked to the Single Market. This covers the four freedoms, i.e. the free movement of goods, services, persons and capital, as well as competition and state aid rules, but also the following horizontal policies: consumer protection, company law, energy, environment, social policy and statistics. The EEA Agreement guarantees equal rights and obligations within the Single Market for citizens and economic operators in the EEA.

In addition, the EEA Agreement provides for cooperation in several flanking policies such as research and technological development, education, training and youth, employment, tourism, culture, civil protection, enterprise, entrepreneurship and small and medium-sized enterprises.

5. What are the benefits of the EEA/Single Market?

People, goods, services and capital can now move around the EEA almost as freely as within a single country. EEA citizens can study, live, shop, work and retire in any EEA country.

Hundreds of technical, legal and bureaucratic barriers to free trade and free movement between EEA countries have been removed. As a result, companies have expanded their operations and competition has brought prices down and given consumers more choice.

6. Examples of what the EEA/Single Market has done for its citizens

  • More than 17 million EEA-citizens live or work in a country other than their own
  • Right to cancel or return online purchases within 14 days (no reason required); Right to return faulty goods within 2 years at no extra cost.
  • The European Health Insurance Card gives access to medically necessary, state-provided healthcare during a temporary stay in any EEA-country
  • Claim compensation for an airline if arrival at final destination with a delay over 3 hours
  • EU/EEA product legislation imposes safety requirements that are amongst the strictest in the world
  • You can make an electronic payment in euro in the Single Market as easily as home
  • Cost of calls has fallen substantially, and you can call, text and use data in any EEA country just like at home

7. Milestones in the creation of the Single Market and the EEA

1957-1980s: The single market is one of the core objectives of the European Economic Community, but is difficult to implement in practice.

1985-1992: EU adopts the Single European Act, followed by adoption of common rules in many areas, and mutual recognition in other areas.

1992: Maastricht Treaty sets about to create an Economic and Monetary Union with a single currency to boost the Single Market. Signature of the EEA Agreement in Porto.

1993: The Single Market becomes a reality for 12 EU countries.

1994: The Single Market is enlarged to the European Economic Area, including 6 additional countries. Three of these become EU members in 1995.

1993-2014: The EU continuously improves the functioning of the Single Market by facilitating the provision of services, free movement of people and workers, developing transport, energy and telecommunications networks.

2014-now: The European Commission adopts initiatives to further unlock the potential of the Single Market and create new opportunities, including:

  • Make it easier to buy or sell goods and services from or in another EU/EEA country
  • Strengthen controls to prevent unsafe products from being sold to consumers
  • Ensure that intellectual property rights are well protected
  • Boost the Digital Single Market
  • Ensure that there are no second class EU/EEA citizens in our Single Market, based on the principle of the same pay for the same work in the same place
  • Create a Capital Markets Union to make it easier for companies – small and big – to raise money and make the EU/EEA a more attractive place to invest
  • Promote social fairness and equality

8. What is not covered by the EEA Agreement?

The EEA Agreement does not cover the following EU policies: common agriculture and fisheries policies (although the EEA Agreement contains provisions on trade in agricultural and fish products); customs union; common trade policy; common foreign and security policy; justice and home affairs (the three EEA EFTA States are however part of the Schengen area); direct and indirect taxation; economic and monetary union.

9. Who can join the EEA Agreement?

According to the EEA Agreement any European country becoming a member of EFTA may apply to become a party to the Agreement. It shall address its application to the EEA Council and the terms and conditions for its participation shall be subject to an agreement.

When a State becomes a member of the European Union, it also becomes party to the EEA Agreement. The Agreement now applies provisionally to Croatia, its latest member, while awaiting the completion of the ratification procedure.

10. Is Switzerland part of the EEA Agreement?

No. Switzerland is part of the European Free Trade Association (EFTA) but not of the EEA Agreement. EEA membership was rejected by 50.3% to 49.7%, by a referendum held on 6 December 1992.

Building on the 1972 Free Trade Area (FTA) agreement, the EU and Switzerland have since developed strong ties through a network of bilateral agreement involving around 20 main and 100 secondary agreements, mainly in the areas of the internal market (free movement, air and land transport, mutual recognition, trade in agricultural products), security and justice (Schengen and Dublin, Europol, Eurojust, Eurodac, Prüm, etc.) and other flanking policies (Research, Education, Cohesion, Taxation, Statistics, etc.).

However, the resulting relationship is less broad than the EEA Agreement, and Switzerland does not enjoy all freedoms in the internal market, and does not automatically get access to all EU programmes related to the internal market (e.g. education or research). It progressively became evident that an all-encompassing structure for the relationship was lacking, which would enable the parties more fundamental aspects of the partnership, such as dispute settlement, dynamic update of acquis in order to ensure a homogenous playing field on the internal market, or an overall institutional oversight structure.

Since 2008 the EU decided that any further market access were to be linked with first solving those key outstanding issues of the EU/Swiss relationship. Negotiations were opened in 2014 and concluded in 2018, and the EU is now waiting a formal decision by Switzerland to implement commitments taken. The institutional framework agreement will be key to consolidating and developing the existing relationship, ensuring that sectoral agreements keep pace with the developments in the EU's Single market acquis and that potential disputes can be resolved in an effective way. It will create legal certainty and predictability regarding the rights and the obligations of both Switzerland and the EU, their citizens and economic operators and hence boost the development of economic relations, investment and employment.

11. Is Liechtenstein a member of the EEA and also in a customs union with Switzerland?

Yes. This is possible as the EEA does not cover the common trade policy or the EU's customs union. Trade relations between the EU and Liechtenstein are governed by the EU/Swiss FTA of 1972. This implies that that some measures have been taken to cater for Liechtenstein's particular situation. An example is trade in agricultural products, which takes place within the framework of the EU/Switzerland agreement.

12. What is EFTA?

The European Free Trade Association (EFTA) is an intergovernmental organisation, established in 1960 by the EFTA Convention for the promotion of free trade and economic integration between its Member States (today Iceland, Liechtenstein, Norway and Switzerland), within Europe and globally. EFTA does not envisage political integration. It does not issue legislation, nor does it establish a customs union. In 1972, each EFTA State negotiated bilateral free trade agreements (FTAs) with the EEC.  EFTA States are not obliged by the EFTA Convention to conclude preferential trade agreements as a group. They maintain a full right to enter into bilateral third-country arrangements.

13. Who is responsible for the management of the EEA?

The administration and management of the EEA is shared between the EU and the EEA EFTA States in a two-pillar structure. Decisions are taken by joint EEA bodies established by the EEA Agreement and consisting of representatives both from the EU side and the EEA EFTA States. The daily management of the EEA lies with the individual states, which are responsible for implementing new legislation and adhering to the rights and obligations laid down by the EEA Agreement. To ensure uniform implementation and application of the common rules in all EEA States, there is a system of monitoring and judicial control, under which the EU institutions are responsible for the EU Member States and the EEA EFTA institutions are responsible for the EEA EFTA States. In addition, the EFTA Secretariat in Brussels plays an important role in the coordination and management of the EEA.

14. What is the two-pillar structure?

The EEA EFTA States have not transferred any legislative competences to the joint EEA bodies and they are also unable, constitutionally, to accept decisions made by the EU institutions directly. To cater for this situation, the EEA Agreement established EEA EFTA bodies to match those on the EU side. The EEA EFTA institutions and EU institutions form the two pillars, whereas the joint EEA bodies are situated in-between.

The two-pillar structure covers firstly the decision-making procedure. In the EEA EFTA pillar all decisions are taken by consensus, as opposed to the EU pillar where decisions related to EEA legislation are normally taken by majority vote. Secondly, the structure encompasses supervision and judicial control and, as parallels to the European Commission and the Court of Justice of the European Union, a Surveillance Authority and a Court were established by the EEA Agreement to ensure the monitoring of implementation and application of EEA law in the EEA EFTA States.

15. What are the main bodies and institutions, and what are their functions?

The EEA Joint Committee (the EU side is chaired by the European External Action Service (EEAS) and its services), the three EEA EFTA States (usually at ambassadorial level) and an observer from the EFTA Surveillance Authority (ESA)) meets regularly and is responsible for the ongoing management of the EEA Agreement and for decisions concerning the incorporation of EU legislation into the EEA Agreement. Its decisions are taken by consensus.

The EEA Council (members of the Council of the European Union, the European Commission and the European External Action Service (EEAS) and their services), and Foreign Ministers of the EEA EFTA States) meets twice a year and provides political impetus for the development of the EEA Agreement and guidelines for the EEA Joint Committee.

The EEA Joint Parliamentary Committee (Members of the European Parliament and Members of the national parliaments of the EEA EFTA States) contributes through dialogue and debate to a better understanding of the fields covered by the EEA Agreement.

The EEA Consultative Committee (the Economic and Social Committee of the EU and members of the EFTA Consultative Committee) is a forum for cooperation and consultation between the social partners in the EEA EFTA States and those in the EU.

The Standing Committee of the EFTA States (Ambassadors of Iceland, Liechtenstein and Norway, and observers from Switzerland and ESA) is a forum in which the EEA EFTA States consult each other and arrive at a common position before meeting with the EU in the EEA Joint Committee.

The EFTA Surveillance Authority (ESA) reflects the competences of the European Commission. Furthermore ad-hoc solutions have been found to transfer powers of certain EU agencies and bodies to ESA, in respect of the two-pillar structure of the EEA Agreement. ESA based in Brussels and ensures that the EEA EFTA States fulfil their obligations under the EEA Agreement. In addition to general surveillance of compliance, ESA has powers in relation to competition, state aid and public procurement. The EEA Agreement foresees close cooperation between ESA and the European Commission.

The EFTA Court, based in Luxembourg, deals with infringement actions brought against an EEA EFTA State with regard to the implementation, application or interpretation of EEA law, gives advisory opinions to courts in the EEA EFTA States on the interpretation of EEA rules, and is competent for the settlement of disputes between two or more EEA EFTA States. It also hears appeals concerning decisions taken by ESA.

The EFTA Secretariat assists the EEA EFTA States in the preparation of new EU legislation for incorporation into the EEA Agreement, and in their elaboration of input into EU decision making. To this end, the Secretariat in Brussels assists both the joint EEA bodies and the Standing Committee and its underlying bodies in administrative functions and the preparation of meetings and opinions. In addition, the Secretariat coordinates cooperation with the relevant actors on the EU side.

16. Which EU institutions take part in the management of the EEA Agreement?

The European External Action Service has the overall responsibility for the daily management of the EEA Agreement. It participates in the EEA Council and chairs the EEA Joint Committee. In the latter, it also holds the presidency in alternating periods of six months, i.e. January to June every year.

The European Commission is responsible for monitoring the EU Member States’ incorporation of and compliance with EEA law. When preparing legislation in areas covered by the EEA Agreement, it works with and takes into account the advice of EEA EFTA experts who participate in various expert groups and committees. It also plays an important role in deciding which EU acts are to be incorporated into the EEA Agreement and in drafting Joint Committee Decisions (JCDs).

The European Union Member State holding the Presidency of the Council of the EU participates in the EEA Council meetings and chairs the meeting once a year.

The Court of Justice of the European Union interprets and rules on the basis of EEA legislation in cases concerning the EU Member States.

17. How is new EU legislation incorporated into the EEA Agreement?

In order to be applicable in the EEA, EU acts have to be incorporated into the EEA Agreement, more concretely into one of its Annexes or Protocols. These amendments to the EEA Agreement are done by means of Joint Committee Decisions (JCDs).

After an EU act has been adopted, both the EU and EEA EFTA side jointly analyse whether the act is EEA relevant; and if so, whether any adaptations are required in the JCD for incorporation into the EEA Agreement and whether there are likely to be any constitutional requirements (see below). An act is considered EEA relevant when its content concerns an area covered by the EEA Agreement. Once the EFTA Secretariat has received feedback from all three EEA EFTA States concerning these issues, it drafts a JCD. When the draft JCD has been cleared both by the EFTA experts and by the relevant subcommittee, it is handed over to the EEAS, which initiates an inter-service consultation in the Commission. Once the Commission has agreed on the draft JCD, it is sent to the Council of the European Union for adoption if it contains substantial adaptations, otherwise the EU’s position is adopted by the Commission. The EFTA Secretariat and the EEAS then consult on the timing of adoption in the EEA Joint Committee, and when all Contracting Parties are in agreement the EEA Joint Committee adopts the JCD.

A central feature of the EEA Agreement is its dynamic aspect; the common rules of the EEA Agreement are updated continuously with new EU legislation.

18. What is a “constitutional requirement” and what does it entail?

The EEA EFTA States have not transferred any legislative powers to the EEA Joint Committee. Occasionally, due to the content of a Joint Committee Decision (JCD), the constitution of one or more of the EEA EFTA States requires the approval of the national parliament (i.e. the ratification process) in order for the JCD to be binding.

The need for parliamentary approval can affect the date of entry into force of the JCD, but the EEA EFTA States have introduced procedures to inform and consult with their parliaments at an early stage. When the constitutional requirements have been fulfilled in an EEA EFTA State, the EEA EFTA State notifies the EFTA Secretariat, which forwards this information to the EEAS and the other EEA EFTA States. Once the last EEA EFTA State to have constitutional requirements has notified the EFTA Secretariat that all constitutional requirements have been fulfilled, the JCD can enter into force according to its wording.

19. What is “decision shaping”?

The EEA Agreement does not grant the EEA EFTA States formal access to the decision-making process within the EU institutions. However, the EEA EFTA States can participate in shaping a decision at the early stages of preparing a legislative proposal. The EEA Agreement provides for input from the EEA EFTA side at various stages of the preparation of EEA-relevant legislation. First, representatives of the EEA EFTA States have the right to participate in expert groups and committees of the European Commission.  Second, the EEA EFTA States have the right to submit formal comments on upcoming legislation to the EEA Joint Committee. The EEA EFTA States have access to expert groups, comitology committees, programme committees, as well as other committees in specific areas.

20. What are the EEA/Norway grants?

EEA/Norway grants aim at reducing economic and social disparities in the EEA and strengthening bilateral relations with the beneficiary states.

The size of the funding scheme is not determined by any fixed formula, but through negotiations between the EU and the EFTA/EEA countries. In total, five rounds of negotiations were undertaken since 1994. They have determined each country's contributions, which have been channeled through the Financial Mechanism (1994–1998), the Financial Instrument (1999–2003), and the EEA and Norway Grants (2004-2009, 2009-2014 and 2014-2021). An amount of 2.8 billion euros is available for the present seven-year period running from 2014 to 2021.

21. Do the EEA EFTA States participate in EU programmes and agencies?

The EEA Agreement provides for the participation by the three EEA EFTA States in EU programmes and agencies.

Norway and Iceland both participate in more than 10 EU programmes, including Horizon 2020 (research), Erasmus + (education and training), Galileo and Copernicus (space), Creative Europe (culture), the Civil Protection Mechanism and the Rights, Equality and Citizenship Programme.

Despite its small size Liechtenstein's participation participates in three EU programmes (Horizon 2020, Erasmus+ and the Rights, Equality and Citizenship Programme).

For each programme, a participation fee proportional to the EEA EFTA states' GDP is paid to the EU's general budget.

All three countries have been very successful participata in EU programmes and their contribution is valued by EU partners.

22. Does the EU have other agreements with Norway, Iceland and Liechtenstein than the EEA?

The main pillar of the relationship is the EEA Agreement, but numerous additional bilateral agreements have been signed over the years, mainly in the areas of justice and home affairs (Schengen Agreement, Europol, Eurojust and Dublin Agreements, Lugano Convention, Prüm Treaty etc.), Foreign, Security and Defence Policy (ex. European Defence Agency, European Satellite Centre, EU Battle Groups, contributions to CSDP missions) and other (such as research, education, Interreg/regional cooperation, fisheries, agriculture, financial mechanisms).

Norway, Iceland and Liechtenstein have all adhered to some the mentioned agreements (ex. Schengen and Dublin agreements), while other have only been signed between the EU and one or two or the EEA EFTA states. Norway has more than 70 agreements with the EU at present. Arrangements in the areas of fisheries are regularly updated with Norway and Iceland.

There is a very close and regular dialogue between the EU and Norway, Iceland and Liechtenstein on many matters of common interest, incl. on foreign and security policy.