Sunday

19th Aug 2018

Opinion

Time for new relations between EFTA and the EU

  • Last year's EFTA summer ministerial meeting in Bern, Switzerland. (Photo: EFTA Secretariat)

For more than two decades the four member states of the European Free Trade Association (EFTA) have not taken a joint approach when it comes to their trade with the European Union.

Three EFTA members - Norway, Iceland and Liechtenstein - are also members of the European Economic Area (EEA), which gives them access to the EU's single market.

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But the fourth EFTA country, Switzerland, has instead opted to negotiate a number of bilateral agreements with the EU over the years, covering the country's various interests. The Swiss took this route after its voters rejected membership of the EEA in a referendum in 1992.

It has been well over twenty years since the EEA Agreement came into effect and the EFTA countries went on different paths in their trade relations with the EU. So now is a good time as any to review this cooperation between EFTA and the EU.

Action is needed mainly because the current arrangements, while still functioning, can and should be improved for the benefit of all the participants.

After all, the arrangements themselves can never be the objective, but instead the aim should be to secure the interests of those involved as well as possible.

The EU has been in favour of reviewing its trade ties with the EFTA countries by simplifying the situation and by getting them all under the same umbrella.

There have been suggestions from Brussels that Switzerland should join the EEA, but this point of view is far from receiving the necessary support among the country's voters and politicians.

Brussels has also talked about the EFTA/EEA countries accepting direct authority from the EU institutions in certain areas, which is yet another initiative that lacks support in the four countries.

Furthermore, none of the EFTA states look likely to become EU members in the foreseeable future.

Keeping it simple

The interests of the EFTA countries and the EU would be far better in the long-run with a reformed relationship, simplifying the situation for everyone involved.

The reforms could create a unified, stronger and clearer framework, in line with the most recent and modern EFTA and EU trade agreements with other countries around the world.

In recent years, both EFTA and the EU have emphasised the need for so-called comprehensive second generation free trade agreements.

For example, the EU has concluded a deal like that with South Korea and Canada, and has also been in such talks with the United States.

Meanwhile, EFTA has done the same in the case of Singapore and Hong Kong. Iceland and Switzerland have concluded deals as individual countries with China. EFTA is also working towards upgrading its older free trade deals to second generation ones.

Second generation free trade agreements differ from the more traditional type, as they not only cover trade in goods but also in areas such as: services plus investments, protection of intellectual property rights, public procurement, technical regulations, and many more.

In other words, almost all of the important areas currently covered both by the EEA Agreement and the Swiss bilateral accords.

When these two arrangements were originally put in place, second generation free trade deals simply did not exist.

Next generation

A second generation free trade agreement would greatly simplify the situation for both EFTA and the EU.

Instead of a double set of institutions, as in the case of the EU and the EFTA/EEA countries, and a large number of bilateral agreements between the EU and Switzerland, there would be only one joint comprehensive agreement.

Furthermore, this renewed document would be in line with the most modern global trade agreements, which have become the preference and are being negotiated internationally by both blocs.

It would mean that the EU would not be faced with the reality anymore that three EEA members do not belong to the EU, since the area would correspond fully with the EU's boundaries.

Relations with the EFTA countries would be governed by a modern comprehensive free trade arrangement which is obviously considered sufficient to cover the complex interests of the largest economies in the world.

The time has simply come for a new EFTA-EU relationship; one that would be a better way forwards for everyone concerned.

The author, Hjortur J. Gudmundsson, is a historian and MA in International Relations who lives in Reykjavík, Iceland.

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