The European Free Trade Association
The European Free Trade Association (EFTA) is an intergovernmental organisation set up for the promotion of free trade and economic integration to the benefit of its four Member States -Iceland, Liechtenstein, Norway and Switzerland.
EFTA was founded January 4, 1960 in Stockholm, Sweden by signing the Stockholm Agreement. EFTA is a legal framework for liberalization of trade in industrial goods, processed agricultural products, fish and seafood among its Members. Since its creation, EFTA established close trade relations with the EU and other states of Central and Eastern Europe, Mediterranean, Asia, North and South America, Middle East and Africa.
The three EFTA Member countries (Iceland, Liechtenstein and Norway) are also members of the European Economic Area (EEA). It integrates markets of 27 UE Members and 3 EFTA Members in a common market with about 470 million consumers, making it the largest regional integrated community in the world. Switzerlanddid not join the EEA (this being the result of the national referendum held in 1992), but Switzerland is developing trade and economic cooperation with the EU through bilateral agreements.
Currently, the EFTA States have 22 free trade agreements (covering 31 countries) with the following partners: Albania, Canada, Chile, Colombia, Croatia, Egypt, Gulf Co-operation Council (GCC), Israel, Jordan, Korea, Lebanon, Macedonia, Mexico, Morocco, Palestinian Authority, Peru, Serbia, Singapore, Southern African Customs Union (SACU), Tunisia, Turkey, Ukraine.
Development of preferential trade relations with the EU, other countries and regional groupings allowed EFTA access markets of countries whose total population is about 850 million consumers.
The development of trade relations with other countries and regional groupings has led to the need to review the Stockholm Agreement EFTA. Renewed Agreement was signed on June 21, 2001 in Vaduz, Liechtenstein, and came into force on 1 June 2002, simultaneously with the entry into force of a package of bilateral agreements between Switzerland and the EU. The provisions of the revised Agreement EFTA (Vaduz Convention) include the development of trade relations of EFTA Members, who are also the EU Members and other trading partners. Vaduz Convention covers trade in goods and services, competition and investment policy, economic and monetary policy, intellectual property rights and some other areas.
Structure of the EFTA Council
The EFTA Council is the highest governing body of EFTA. Member States usually meet once a month, at Ambassadorial level (Heads of Permanent Delegations to EFTA) in Geneva. In these meetings, the Delegations consult each other, negotiate and decide on policy issues regarding EFTA. Each Member State is represented and has one vote, though decisions are usually reached by consensus. The Council also meets twice a year at the Ministerial level, usually in June and December.
The Council discusses substantive matters, especially relating to the development of EFTA relations with third countries and the management of the free trade agreements, and keeps under general review relations with the EU third-country policy. It has a broad mandate to consider possible policies to promote the overall objectives of the Association and to facilitate the development of links with other states, unions of states or international organisations. The Council also manages relations between the EFTA States under the EFTA Convention. Questions relating to the EEA are dealt with by the Standing Committee in Brussels.
The Committee Structure under the Council
Under the Council, a substructure of Committees has evolved to deal with special issues.
- The Committee on Third Country Relations oversees the functioning and development of free trade and co-operation agreements with third countries.
- The Committee on Customs and Origin Matters oversees the co-operation in the customs field, particularly in relation to the free trade agreements.
- The Committee on Technical Barriers to Trade advises the Council on standardisation policy, conformity assessment policy, relations with other European quality infrastructure organisations and international aspects of the technical regulatory work.
- On matters related to the EFTA budget the Budget Committee assists the Council.
- The EFTA Board of Auditors acts as the supreme auditing authority for the EFTA Secretariat, the EFTA Surveillance Authority and the EFTA Court. In addition, it also functions as a contact point with the European Court of Auditors regarding the control and auditing of EEA EFTA contributions to the Community budget.
The Consultative Committee provides a forum for representatives of industry and labour in the EFTA States to exchange views among themselves and with the Council, while the Parliamentary Committee provides a forum in which MPs of the EFTA States can discuss issues of concern among themselves and, twice yearly, with EFTA Ministers. The management and development of the Free Trade Agreements and Declarations on Co-operation are carried out through Joint Committees with each of EFTA’s third country partners.
Additionally, several specialised Committees are set up under the EFTA Convention.
The day-to-day running of the Secretariat is headed by the Secretary-General, who is assisted by two Deputy Secretaries-General, one located in Geneva and the other in Brussels. The three posts are shared between the Member States.
The division of the Secretariat reflects the division of EFTA’s activities. The Secretariat employs approximately 100 staff members, of whom one third are based in Geneva and two thirds in Brussels and Luxembourg.
The Headquarters in Geneva deal with the management and negotiation of free trade agreements with non-EU countries, and provide support to the EFTA Council.
In Brussels, the Secretariat provides support for the management of the EEA Agreement and assists the Member States in the preparation of new legislation for integration into the EEA Agreement. The Secretariat also assists the Member States in the elaboration of input to EU decision-making.
The EFTA Statistical Office in Luxembourg contributes to the development of a broad and integrated European Statistical System.
Economic Relations Between EFTA and Ukraine
With a combined population of about 13 million, the EFTA States are the world’s tenth largest merchandise trader, as well as significant actors in the areas of trade in services and foreign direct investment.
For Ukraine it is a potential market of about 13 million consumers with total GDP of about 664 bln Euros with high purchasing power.
The EFTA States and Ukraine signed a Joint Declaration on Cooperation in 2000. Negotiations on a broad-based Free Trade Agreement between the four EFTA States (Iceland, Liechtenstein, Norway and Switzerland) and Ukraine were launched in Kyiv on 21 April 2009.
Free trade negotiations were concluded June 24, 2010 during the Ministerial Conference EFTA in Reykjavik (Iceland). Agreement came in force June 1, 2012.
The EFTA-Ukraine Free Trade Agreement was signed by Kostyantyn Gryshchenko, Minister of Foreign Affairs of Ukraine, Össur Skarphéðinsson, Minister for Foreign Affairs and External Trade of Iceland; Aurelia Frick, Minister of Foreign Affairs of Liechtenstein; Trond Giske, Minister of Trade and Industry of Norway; Doris Leuthard, President of the Swiss Confederation and Head of the Federal Department of Economic Affairs.
The EFTA-Ukraine Free Trade Agreement has a comprehensive coverage, including trade in goods (industrial and processed agricultural goods, fish and other marine products), trade in services, investment, trade facilitation, competition, protection of intellectual property rights and government procurement. Bilateral arrangements on agricultural products concluded between the individual EFTA States and Ukraine also form part of the instruments establishing the free-trade area between both sides. A Joint Committee will supervise the functioning of the Agreement, which will enter into force after parliamentary approval in the EFTA States and in Ukraine.
This is the first free trade agreement after Ukraine joining the World Trade Organization in 2008. It was concluded in a short period of time, given the examples of such negotiations. This happened due to the qualitative approach the parties in negotiations, willingness to achieve the ultimate goal and considerable preparatory work done by experts before the official round of talks.
The Agreement will further enhance the economic ties and promote trade and investment between both sides.
The Verkhovna Rada of Ukraine at its meeting on 7th December 2012 ratified an agreement on free trade between Ukraine and the member states of the European Free Trade Association (EFTA), as well as agreements on agriculture between Ukraine and Norway, Ukraine and Iceland, and Ukraine and Switzerland.