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10 Basic facts about the European Economic Area

Last updated: 08.06.2009 // The European Economic Area – the EEA – consists today of the 25 Member States of the European Union and the three EFTA States Norway, Iceland and Liechtenstein. The EEA was established through the EEA-Agreement in 1992 and the purpose has been to expand the functioning Internal Market of the EU to the three participating EFTA States, without them having to obtain full membership of the Union.

1. How did it start? On the initiative of former Commission President Jacques Delors around 1990, the Internal Market was extended to the EFTA States, to create the world’s largest Internal Market – named the European Economic Area (EEA). Today the EEA unites the 25 EU Member States and the three EEA EFTA States Iceland, Liechtenstein and Norway.


2. What is it? The four basic principles of the Internal Market also apply for the EEA, notably free movement of goods, services, capital and persons. In addition, the EFTA States participate in EU programmes in areas such as research, education and the environment. The EEA does not cover the Common Agricultural Policy and the Common Fisheries Policy, nor the common trade policy and indirect taxation. The EEA is static in scope (no additional areas are foreseen to be included in the agreement), but dynamic in character (it is continuously updated by adding new EU legislation in areas already covered by the agreement). The EEA is mutually beneficial for all contracting parties, providing common rules, simplification and predictability for business and other relevant operators.


3. Keeping the EEA up-to-date – the four stages  
The EEA agreement is continuously updated, to maintain common rules in the EU and EEA EFTA States when new EU legislation on the Internal Market is produced. The process has four stages, from the Commission takes an initiative to develop new legislation - to its entry into force in the EEA. This process is partly integrated into, and partly "shadows", the EU process. 
- The preparatory stage (Commission stage/pre-pipeline): The Commission consults EU Member States in expert committees when developing new legislation for the Internal Market. Experts from the EEA EFTA States take part in these committees as equal partners. The rationale is that this legislation will, in turn, become incorporated into the EEA. This gives EEA EFTA experts an opportunity to influence the draft legislation. EEA EFTA experts take part in around 300 committees.

- The decision-making stage (Council and European Parliament): When the Commission proposal for new legislation is submitted to the Council and the European Parliament (EP) for discussion and approval, the EEA EFTA States may give joint comments to the draft legislation.

- The incorporation stage: Once the Council and the EP have adopted new legislation, it is passed on to the EEA decision-making structures, with a view to incorporating it into the EEA. The majority of new legislation is incorporated into the EEA without any substantial adaptations. However, if the legislation contains problematic or politically sensitive aspects, the Commission – representing the EU side – and the EEA EFTA States will discuss possible adaptations (i.a. transition periods or derogations). Substantial adaptations will have to be approved by the Council, and thereafter agreed and formally decided by the EEA Joint Committee, where the Commission and the EEA EFTA States meet on a monthly basis.

- The implementation stage: Once new legislation is adopted by the EEA Joint Committee, the aim to ensure simultaneous application in the EU and EEA EFTA States, to ensure common rules at any given time. The EEA EFTA States have a good record for implementing new legislation within the set deadline, and Norway has for some time had among the lowest "transposition deficits" among EEA 28 (less than 1 percent).


4. Surveillance and enforcement: Whereas the Commission and the European Court of Justice are responsible for surveillance and enforcement of EEA commitments among the EU Member States, these tasks are dealt with by the EFTA Surveillance Authority and the EFTA Court towards the EEA EFTA States. The number of infringement cases against the EEA EFTA States is roughly comparable to those initiated against EU Member States. 


5. Participation in EU agencies: During the last years an increasing number of EU agencies have been established, assisting the Commission and the EU Member States in the management of the internal market in specific sectors. The EEA EFTA States participate in most of these agencies on an equal basis, but normally without voting rights in the governing bodies.


6. What happens to the EEA when the EU is enlarged with new member states? When the EU enlarges with new member states, as with EU10 in May 2004, these countries will also need to become parties to the EEA agreement, to maintain common rules within the whole of the EEA. The terms for enlargement of the EEA are negotiated between the EEA EFTA States and the EU side.


7. Do issues such as the Lisbon Strategy, the EU Constitution, the European Neighbourhood Policy, Better Regulation and Financial Perspectives have an impact on the EEA? In addition to the development of new EU legislation for the Internal Market, there are also key horizontal developments in the EU that are likely to have an impact on the EEA:

· The implementation of the EU Constitutional Treaty, if ratified, will erase the formal distinction between the pillars of the EU. This is a consolidation of a trend whereby the EU seems gradually to be focusing more on cross-sector initiatives and processes. As a consequence, it may become less clear what new legislation should be incorporated in the EEA.    

· The outcome of the negotiations on the EU Financial Perspectives is of relevance to the EEA, because it will define the base for how much the EEA EFTA side will pay to take part in EEA related activities and programmes. 

· The Lisbon Strategy - and especially its focus on improved competitiveness and the important role of the Internal Market in that respect - does also have a bearing on the EEA EFTA States. Norway closely observes the measures taken to achieve the Lisbon objectives, and takes - if deemed necessary - corresponding national action. 

· The project to ensure Better Regulation is of great importance to the EEA EFTA States, being members of the Internal Market. Norway fully supports the efforts of making new and existing legislation for the Internal Market simpler and better.

· A possible extension of parts of the Internal Market to third countries, such as the Western Balkans , will have an impact on the EEA. If the EEA EFTA States do not become part of such extensions, this may undermine the uniformity of the Internal Market and endanger the well functioning of the EEA. Norway also follows with great interest the development of the European Neighbourhood Policy, including co-operation linked to the Internal Market.    


8. Financial implications for Norway: Norway’s total financial contribution linked to the EEA agreement is roughly around 340 million euro pr. year. Roughly 110 million euro are contributions related to the participation in various EU programmes, whereas close to 230 million euro are made available to development projects for reducing social and economic disparities in the EU, primarily in EU 10.


9. What are the main differences between the EEA agreement and the Swiss bilaterals? The EEA agreement is dynamic in character, covers the big bulk of the Internal Market and establishes separate institutions for surveillance and enforcement on the EEA EFTA side. The Swiss bilateral, sector agreements with the EU are more static in character, in sum cover less of the Internal Market, and do not have separate institutions for surveillance and enforcement.


10. Issues outside the scope of the EEA: There is a range of issues on the EU agenda that fall, partly or fully, outside the scope of the EEA agreement. One is the Schengen co-operation, where Norway and Iceland are associated, through a separate agreement, with important elements in the EU co-operation on justice and home affairs. Another is the on-going co-operation within the area of foreign and security policy. A third is matters related to the fishery sector, such as resource management and trade in marine products.

 


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