When you read news from the European Union, it is important to keep in mind that not all European countries are part of the EU. Norway, Iceland and Switzerland are three notable examples of countries without membership, although this does not necessarily mean that these nations are not involved in trade relations with EU members. Changes in the European landscape have brought new nations to the EU over the years, and negotiations with members and non-members work to ensure fair trade agreements for all involved.
The European Economic Area agreement connecting three members of the European Free Trade Association (EFTA) with the European Union was established in 1994 with the purpose of allowing all the countries involved to freely trade products and services. The EFTA states are treated as a single market, or “internal market”, and although they work with the rest of Europe to promote continental tourism and environmental issues, they do not use the euro or observe certain policies related to agricultural trade.
EFTA member states affected by the EEA principles include:
Iceland – Given the nation’s geographic location and the continent’s isolation, Icelanders are highly dependent on the export of fish and fishery products. While more than half of total exports come from fisheries, Iceland also produces manufactured aluminum to ship to major trading partners. Less than five percent of its production is marketed outside of Europe.
Liechtenstein: While geographically small, Liechtenstein exports roughly $ 3 billion in goods a year, aside from its economic alliance with Switzerland. Machinery and audio / video components are major exports.
Norway: Like its Scandinavian neighbors, Norway’s export industry is primarily focused on maritime products and natural resources: shipbuilding, seafood and petroleum. Like Iceland, a small percentage of the trade is exported outside of Europe.
While Switzerland is also a member of EFTA, the country is not part of the European Economic Area agreement. This country has an agreement with EU nations exclusive to the EEA.
EUCZ participation
Regardless of activities with EFTA, the European Union Customs Union maintains that tariffs are levied on goods traded across EU borders, and the specific nations signed by the agreement. During international trade negotiations, this union allows the EU to act as a single entity.
The Customs Union of the European Union is made up of all members of the EU and the following nations:
Andorra: Andorra depends more on tourism than on trade to maintain a stable economy. What they do offer for export (tobacco, for example) is sold almost exclusively with France and Spain.
San Marino: San Marino has perhaps one of the most unusual but sought-after exports: commemorative stamps and coins, which contribute to its tourism boom.
Monaco – Known more as a luxury tourist destination on the French Riviera, this principality relies solely on tourism and its tax haven status to generate income.
Turkey: Turkish textiles and clothing are coveted the world over, as are exotic food products. Turkey, the largest economy of the four non-EU countries in this agreement, trades exports mainly with Western European countries.
As non-member countries join the EU, they will also apply to join the EEA agreement and, in turn, will be subject to the policies of the customs union. With only a handful of countries, most of them located in Eastern Europe, time will tell how new members benefit from inclusion.