1.5 The EEA and Switzerland

The European Economic Area

At the beginning of the 1990s there was pressure from the remaining EFTA countries for greater economic ties with the EU. The first step was the establishment of the European Economic Area (EEA), including EU members, through the EEA Agreement. The EEA Agreement was signed in 1992 and came into force in 1994.

The EEA is a free trade area, though incorporating the obligations of the Single Market, which the non-EU members of the EEA have no influence on. Non-EU EEA members are, however, not committed to the CAP, the CFP, EMU, full budgetary demands, JHA cooperation or the CFSP, for example. In 1994 the EEA comprised the then 12 members of the EU plus Austria, Finland, Sweden, Norway and Iceland. Switzerland had signed the EEA Treaty but its independently minded electorate voted it down in a referendum in 1992. Liechtenstein's EEA membership was delayed until 1995 by the Swiss rejection of the EEA, which required certain adjustments to the Agreement and a subsequent, second, referendum.

Austria, Finland, Sweden and Norway pursued membership of the EU and, by 1992, had applications on the table: Austria (in 1989), Sweden (in 1991), Finland (in 1992) and Norway (in 1992). Referenda were held in all these countries, with the Norwegian electorate rejecting EU membership for the second time. Austria, Sweden and Finland became members of the EU in January 1995.

The EEA currently comprises the 27 members of the EU (EU27) plus Norway, Iceland and Liechtenstein.

Switzerland

Following the electorate's rejection of EEA membership, the Swiss Government withdrew its application. In common with other EFTA states, Switzerland already had free trade arrangements for manufactured goods within the European Community. The Swiss rejected closer ties with the EU in a second referendum in 2001. Switzerland's relationship with the EU is that of a free trade area, with mutually beneficial bilateral intergovernmental agreements.

Switzerland contributes to the EU budget. According Swiss official estimates, the EU will cost about SFr550m a year for the period 2007-13.¹ If Switzerland were a member of the European Economic Area (EEA), as Norway is and which involves membership of the Single Market, the annual costs could rise to well over SFr700m annually. If Switzerland joined the EU, the annual net contributions could increase to SFr3.4bn annually, with gross contributions of SFr4.9bn.

Switzerland has an extensive list of bilateral arrangements with the EU:²

Bilateral agreements I (1999) covered 7 specific areas:

The free movement of persons. Since June 2004, Swiss residents have had complete freedom of movement within EU countries. Quotas for EU workers in Switzerland are due to be lifted in May 2007, but a safeguard clause means that the Confederation would be able to reintroduce quotas, until 2014.
The elimination of technical barriers to trade.
Public procurement markets.
Civil Aviation.
Overland transport.
Agriculture.
Research.

Bilateral agreements II (by 2005) covered the following areas:

Cooperation in the fields of justice, police, asylum and immigration (Schengen/Dublin agreement). In a referendum (2005) the Swiss electorate voted for the adoption of Schengen, with nearly 55% of those voting in favour.
Taxation on savings.
Fight against fraud.
Processed agricultural products.
Environment.
Statistics, to encourage the harmonisation of data collection.
MEDIA, for the promotion of European film.
Education, occupational training, youth.
Pensions.

References

1. Swiss Federal Departments of Foreign and Economic Affairs, Europe 2006 Report, available on http://www.europa.admin.ch/.

2. Details on these bilateral agreements are available from http://www.europa.admin.ch/.

RL, February 2007