Introduction to European Union law
Introduction to European Union law

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Introduction to European Union law

2.1 What the EU is not

The EU is not a federal state. However, it has the trappings of nationhood: an anthem, citizens and governance. It is not the European Economic Area (but belongs to it); it is not the European Free Trade Area. Are you following? Then we can continue the list!

The European Convention on Human Rights (ECHR) is separate from the EU. The ECHR, however, has horizontal application on EU law as its member states are all parties to, and bound by, ECHR and the EU is seeking to become a member in of itself.

European Economic Area (EEA) and European Free Trade Association (EFTA)

Watch the video below. It explains the EEA and EFTA and the relationship between them and EU.

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Transcript: The EEA and the EFTA

ANNOUNCER
European Economic Area
NARRATOR
The European Economic Area comprises three member states of the European Free Trade Association and 27 member states of the European Union, with Croatia provisionally applying the agreement pending its ratification by all EEA countries. It was established on January 1, 1994, following an agreement with the European community.
It allows the EFTA-EEA states to participate in the EU's internal market without being members of the EU. They adopt almost all EU legislation related to the single market, except laws on agriculture and fisheries. However, they also contribute to and influence the formation of new EEA-relevant policies and legislation at an early stage as part of a formal Decision-shaping process. In addition, independents and direct membership of international bodies in their own right means the countries are able to participate in and become signatories to various conventions, such as the Basel Convention of 1992, that are only adopted by the EU many years later. One EFTA member, Switzerland, has not joined the EEA but has a series of bilateral agreements, including a free trade agreement, with the EU.
ANNOUNCER
Origins
NARRATOR
In the late 1980s, the EFTA member states, led by Sweden, began looking at options to join the then-European communities. The reasons identified for this are manifold. Many authors cite the economic downturn in the beginning of the 1980s and the subsequent adoption by the European Union of the Europe 1992 agenda as a primary reason. Arguing from a liberal intergovernmentalist perspective, these authors argue that large multinational corporations in EFTA countries, especially Sweden, pressed for EEC membership under threat of relocating their production abroad. Other authors point to the end of the Cold War, which made joining the EU less politically controversial for neutral countries.
Meanwhile, Jacques Delors, who was President of the European Commission at the time, did not like the idea of the EEC enlarging with more member states, as he feared that it would impede the ability of the community to complete the internal market reform and establish the monetary union. Delors proposed a European Economic Space, EES, in January 1989, which was later renamed the European Economic Area, as it is known today.
By the time the EEA was established, however, several developments hampered its credibility. First of all, Switzerland rejected the EEA agreement in a national referendum on December 6, 1992, obstructing full EU-EFTA integration within the EEA. Furthermore, Austria had applied for full EEC membership in 1989 and was followed by Finland, Norway, Sweden, and Switzerland between 1991 and 1992.
Norway's EU accession was rejected in a referendum. Switzerland froze its EU application after the EEA agreement was rejected. The fall of the Iron Curtain made the EU less hesitant to accept these highly developed countries as member states, since that would relieve the pressure on the EU's budget when the former Communist countries of central Europe were to join.
ANNOUNCER
Membership
NARRATOR
The EEA agreement was signed in Porto on May 2, 1992 by the then seven states of the European Free Trade Association, EFTA; the European Community, EC; and its then 12 member states. On December 6, 1992, Switzerland's voters rejected the ratification of the agreement in a constitutionally mandated referendum, effectively freezing the application for EC membership submitted earlier in the year. Switzerland is instead linked to the EU by a series of bilateral agreements.
On January 1, 1995, three erstwhile members of EFTA, Austria, Finland, and Sweden, acceded to the European Union, which superseded the European Community upon the entry into force of the Maastricht Treaty on November 1, 1993. Lichtenstein's participation in the EEA was delayed until May 1, 1995.
As of 2014, the contracting parties to the EEA are three of the four EFTA member states and 27 of the 28 EU member states. The 28th and newest EU member, Croatia, finished negotiating their accession to the EEA in November 2013, and since April 12, 2014 is provisionally applying the agreement pending its ratification by all EEA member states. The following EFTA countries are included: Iceland, Liechtenstein, Norway. The following EU countries are included: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom. The following EU country is provisionally applying the EEA agreement: Croatia.
ANNOUNCER
Future enlargement
NARRATOR
Croatia acceded to the EU in July 2013, which obliged them to apply for EEA membership. After Slovenia, Croatia has recovered best from the break-up of the former Yugoslavia and is the second former Yugoslav state to join the EU. According to Eurostat, Croatia has a stable market economy and its GDP per capita in 2010 was 61% of EU average, exceeding that of four other EU member states.
EU accession negotiations were concluded on June 30, 2011, and the Treaty of Accession was signed on December 9, 2011 in Brussels. The Croatian government decided to submit their EEA membership application on September 13, 2012, and negotiations started March 15, 2013 in Brussels, with the aim of achieving simultaneous accession to both the EU and the EEA on July 1, 2013.
However, this was not achieved. Accession negotiations were expected to be completed by the autumn of 2013. And on November 20, 2013, it was announced that an enlargement agreement was reached. The text was initialled on December 20, 2013. And following its signature in April 2014, the agreement is being provisionally applied pending ratification by all EEA countries.
By comparison, following the 2007 enlargement of the EU which saw Bulgaria and Romania acceding to the EU on January 1, 2007, an EEA enlargement agreement was not signed until July 25, 2007 and only provisionally entered into force on August 1, 2007. The agreement did not fully enter into force until November 9, 2011. On the other hand, the EEA agreement was applied on a provisional basis to the 10 acceding countries in May 2004 is from the date of their accession to the EU.
There are four recognised candidates for EU membership that are not already EEA members. Macedonia applied 2004. Montenegro applied 2008, negotiating since June 2012. Serbia applied 2009, negotiating since January 2014. And Turkey applied 1987, negotiating since October 2005.
Serbia started accession negotiations in January 2014. Macedonia has not yet started negotiations to join, nor has the European Union set any negotiation start date for Macedonia. The other states, in the Western Balkans, Albania, and Bosnia and Herzegovina, have signed Stabilisation and Association Agreements, SAA, with the EU, which generally precede the lodging of membership applications.
Albania applied for membership in April 2009, but the European Commission has delayed its Decision until June 2014 due to ongoing opposition of some members. Kosovo, whose independence is unrecognized by five EU member states, is considered a potential candidate for membership. EEA integration, either through EFTA membership or an association agreement directly with the EEA, has been discussed with regard to the states of Andorra, San Marino, Monaco, Morocco, Turkey, Israel, the territories of Faroe Islands and Isle of Man, and other ENP partners.
In mid-2005, representatives of the Faroe Islands hinted at the possibility of their territory joining the EFTA. However, the ability of the Faroes to join is uncertain because, according to Article 56 of the EFTA Convention, only states may become members of the association. Though the Faroes are not a state, it is a constituent country of the Danish realm. It is possible that the kingdom of Denmark in respect of the Faroes could join the EFTA. The Danish government has stated that the Faroes cannot become an independent member of the EEA, as Denmark is already a party to the EEA agreement. The Faroes already have an extensive bilateral free trade agreement with Iceland, known as the Hoyvik Agreement.
ANNOUNCER
European microstates
NARRATOR
In November 2012, after the Council of the European Union had called for an evaluation of the EU's relations with the sovereign European microstates of Andorra, Monaco, and San Marino, which they described as fragmented, the European Commission published a report outlining options for their further integration into the EU. Unlike Liechtenstein, which is a member of the EEA via the EFTA and the Schengen Agreement, relations with these three states are based on a collection of agreements covering specific issues.
The report examined four alternatives to the current situation. One, a sectoral approach with separate agreements, with each state covering an entire policy area. Two, a comprehensive, multilateral Framework Association Agreement, FAA, with the three states. Three, EEA membership. And four, EU membership.
The commission argued that the sectoral approach did not address the major issues and was still needlessly complicated, while EU membership was dismissed in the near future, because the EU institutions are currently not adapted to the accession of such small-sized countries. The remaining options, EEA membership and an FAA with the states, were found to be viable and were recommended by the Commission.
In response, the Council requested that negotiations with the three microstates on further integration continue, and that a report be prepared by the end of 2013 detailing the implications of the two viable alternatives and recommendations on how to proceed. As EEA membership is currently only open to EFTA or EU members, the consent of existing EFTA member states is required for the microstates to join the EEA without becoming members of the EU.
In 2011, Jonas Gahr Støre, the then foreign minister of Norway, which is an EFTA member state, said that EFTA-EEA membership for the microstates was not the appropriate mechanism for their integration into the internal market due to their different requirements than large countries such as Norway, and suggested that a simplified association would be better suited for them. Espen Barth Eide, Støre's successor, responded to the Commission's report in late 2012 by questioning whether the microstates have sufficient administrative capabilities to meet the obligations of EEA membership. However, he stated that Norway was open to the possibility of EFTA membership for the microstates if they decide to submit an application, and that the country had not made a final Decision on the matter.
Pascal Schafhause, the counsellor of the Liechtenstein mission to the EU, said that Lichtenstein, another EFTA member state, was willing to discuss EEA membership for the microstates provided their joining did not impede the functioning of the organisation. However, he suggested that the option direct membership in the EEA for the microstates, outside both the EFTA and the EU, should be given consideration.
On November 18, 2013, the EU Commission concluded that the participation of the small-sized countries in the EEA is not judged to be a viable option at present due to the political and institutional reasons, and that association agreements were a more feasible mechanism to integrate the microstates into the internal market.
ANNOUNCER
Rights and obligations
NARRATOR
The EEA is based on the same four freedoms as the European Community: the free movement of goods, persons, services, and capital among the EEA countries. Thus, the EFTA countries that are part of the EU enjoy free trade with the European Union. As a counterpart, these countries have to adopt part of the law of the European Union. However, they also contribute to and influence the formation of new EEA relevant policies and legislation at an early stage as part of a formal decision-shaping process.
The EFTA countries that are part of the EEA do not bear the financial burdens associated with EU membership, although they contribute financially to the European single market. After the EU-EEA enlargement of 2004, there was a tenfold increase in the financial contribution of the EEA states, in particular Norway, to social and economic cohesion in the internal market: EU 1,167 million over five years. EFTA countries do not receive any funding from EEA policies and development funds.
ANNOUNCER
Legislation
NARRATOR
The non-EU members of the EEA, Iceland, Liechtenstein, and Norway, have agreed to enact legislation similar to that passed in the EU in the areas of social policy, consumer protection, environment, company law and statistics. These are some of the areas covered by the European Community, the first pillar of the European Union.
The non-EU members of the EEA have no representation in institutions of the European Union such as the European Parliament or European Commission. This situation has been described as a fax democracy, with Norway waiting for their latest legislation to be faxed from the Commission.
ANNOUNCER
Institutions
NARRATOR
A joint committee consisting of the EEA-EFTA states plus the European Commission, representing the EU, has the function of extending relevant EU law to the non-EU members. An EEA council meets twice yearly to govern the overall relationship between the EEA members. Rather than setting up an EEA institution, the activities of the EEA are regulated by the EFTA Surveillance Authority and the EFTA Court. The EFTA Surveillance Authority and the EFTA Court regulate the activities of the EFTA members in respect of their obligations in the European Economic Area, EEA.
The EFTA Surveillance Authority performs the European Commission's role as guardian of the Treaties for the EFTA countries, while the EFTA Court performs the European Court of Justice's role for those countries. The original plan for the EEA lacked the EFTA Court or the EFTA Surveillance Authority. The European Court of Justice and the European Commission were to exercise those roles. However, during the negotiations for the EEA agreement, the European Court of Justice informed the Council of the European Union by way of letter that they considered that giving the EU institutions powers with respect to non-EU member states would be a violation of the Treaties. And therefore the current arrangement was developed instead.
The EFTA secretariat is headquartered in Geneva, Switzerland. The EFTA Surveillance Authority has its headquarters in Brussels, Belgium, the same location as the headquarters of the European Commission, while the EFTA Court has its headquarters in Luxembourg, the same location as the headquarters of the European Court of Justice.
ANNOUNCER
EEA and Norway grants
NARRATOR
The EEA and Norway grants are the financial contributions of Iceland, Liechtenstein, and Norway to reduce social and economic disparities in Europe. In the period from 2004 to 2009, EU 1.3 billion of project funding is made available for project funding in the 15 beneficiary states in central and southern Europe. The EEA and Norway grants were established in conjunction with the 2004 enlargement of the European Economic Area, EEA, which brings together the EU, Iceland, Liechtenstein, and Norway in the internal market. The EEA and Norway grants are administered by the Financial Mechanism office, which is affiliated to the EFTA secretariat
End transcript: The EEA and the EFTA
The EEA and the EFTA
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The relationship between the EEA, EFTA and EU member states is complex: The EU is a member of the EEA. Each member state of the EU has membership of the EEA under that auspice, but not in its own right. Therefore, if an EU member state leaves the EU it also leaves the EEA. Also note there is an update, as since the extract was recorded Croatia has joined the EU.

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