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The Eea Review and Liechtenstein's Integration

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The Eea Review and Liechtenstein's Integration THE EEA REVIEW AND LIECHTENSTEIN’S INTEGRATION STRATEGY JACQUES PELKMANS AND PHILIPP BÖHLER CENTRE FOR EUROPEAN POLICY STUDIES (CEPS) BRUSSELS The Centre for European Policy Studies (CEPS) is an independent policy research institute in Brussels. Its mission is to produce sound policy research leading to constructive solutions to the challenges facing Europe. The views expressed in this book are entirely those of the authors and should not be attributed to CEPS or any other institution with which they are associated or to the European Union. Jacques Pelkmans is Senior Research Fellow at CEPS and Visiting Professor, College of Europe Bruges. Philipp Böhler is a PhD candidate, Law Department, University of Kent and former researcher at CEPS. ISBN 978-94-6138-287-0 © Copyright 2013, Centre for European Policy Studies and the authors. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the Centre for European Policy Studies. Centre for European Policy Studies Place du Congrès 1, B-1000 Brussels Tel: (32.2) 229.39.11 Fax: (32.2) 219.41.51 E-mail: info@ceps.eu Internet: www.ceps.eu TABLE OF CONTENTS Preface ............................................................................................................................. i Executive Summary ..................................................................................................... 1 1. Place, purpose and structure of the study ........................................................ 8 2. Liechtenstein: A short history and its move into the EEA ............................ 12 2.1 Liechtenstein’s aspirations before the EEA ............................................. 12 2.2 Liechtenstein’s way into the EEA ............................................................. 15 3. Liechtenstein’s deep and wide integration into Europe today .................... 18 3.1 The Swiss connection: A partnership with profound economic integration ................................................................................................... 19 3.2 Liechtenstein in the EEA: Joining the single-market-minus ................. 22 3.2.1 The EEA Agreement: Flexible and static at the same time ........ 26 3.2.2 Substantive Coverage of the EEA, with special regard to Liechtenstein .................................................................................... 30 3.2.3 The legal and institutional structure of the EEA ......................... 40 3.2.4 Joint EU and EFTA Organs ............................................................ 41 3.2.5 The Organs of the EFTA Pillar ....................................................... 44 3.2.6 The EFTA Court and EFTA Surveillance Authority ................... 46 3.2.7 The decision-making process of the EEA ..................................... 51 3.2.8 An assessment of Liechtenstein’s EEA membership .................. 54 3.3 Trilateralisation – linking Liechtenstein, Switzerland and the EU ...... 57 3.3.1 Trade in agricultural products ....................................................... 57 3.3.2 Schengen association – one agreement – three participants ...... 58 3.4 EFTA ............................................................................................................. 63 3.5 Agreements between Liechtenstein and the EU outside the EEA ....... 66 3.6 Bilateral relations with EU member states .............................................. 68 3.6.1 Tax agreements with EU member states ...................................... 68 4. The dynamism of Liechtenstein’s strategic environment ............................. 70 4.1 Introduction and overview ....................................................................... 70 4.2 The EEA review of the EU......................................................................... 74 4.3 Amending the EEA Agreement ................................................................ 81 4.4 Transforming Swiss-EU economic relations .......................................... 82 4.5 Icelandic EU membership application .................................................... 83 4.6 The AMS countries and European integration ...................................... 85 4.7 Turkey ......................................................................................................... 87 4.8 EEA membership for European neighbourhood countries?................ 89 4.9 EEA implications of the recent ‘inner dynamics’ of the EU ................. 90 5. Think strategy: Assessing alternative options for Liechtenstein ................. 95 5.1 Introduction ................................................................................................ 95 5.2 Status quo: If it ain’t broke, don’t fix it ................................................... 98 5.3 More EEA, via treaty revision of substance and institutions ............. 107 5.4 More EEA, via (non-EU) enlargement .................................................. 111 5.5 EEA-bis and EEA look-alikes ................................................................. 116 5.6 Less EEA, reducing scope or membership ........................................... 120 5.7 Bilateral routes to the single market-minus ......................................... 124 5.8 More EU, especially the single market.................................................. 129 5.9 Less EU, substance or membership ....................................................... 136 5.10 Joining the EU .......................................................................................... 138 6. Conclusions ....................................................................................................... 143 References ................................................................................................................. 149 Annexes ..................................................................................................................... 154 Annex I. Protocols to the EEA Agreement ................................................... 154 Annex II. Excerpt of Annex X – Services in General ................................... 158 Annex III. The Annexes to the EEA Agreement .......................................... 159 Annex IV. Liechtenstein’s Special Arrangement with regard to the Free Movement of Persons and the Right of Establishment ....................... 163 Annex V. EEA EFTA Countries’ Participation in EU agencies .................. 174 Annex VI. EU Programmes with EEA Participation ................................... 175 Annex VII. The EU-Swiss Bilateral Agreements – The Main Agreements176 Annex VIII. EEA Joint Committee Decision ................................................. 184 List of Figures Figure 1. Allocation of EEA grants, 2009-2014 ..................................................... 39 Figure 2. Allocation of Norway grants, 2009-2014 .............................................. 40 Figure 3. The two-pillar EEA structure ................................................................. 41 Figure 4. EEA Council meeting in Brussels November 2011 ............................. 42 Figure 5. Structure of the EFTA Standing Committee ........................................ 45 Figure 6. Expenditure incurred by Liechtenstein due to the EEA from 1995-2009 (Swiss francs) .......................................................................... 55 Figure 7. Share of total costs per field of expenditure since 1995 ...................... 56 Figure 8. Global trade blocs .................................................................................... 65 List of Tables Table 1. Similarities and differences between Liechtenstein and AMS countries .......................................................................................... 86 Table 2. Scenarios/options for Liechtenstein’s integration strategy ............... 97 PREFACE uropean integration continues to be ‘in flux’. Since the early 1990s, the dynamics have been almost breathtaking: three treaty revisions Ein the EU and no fewer than three enlargements, increasing its size from 12 to 27 members. In 1994, the European Economic Area (EEA) became operational, quietly extending the single market (except agriculture and fisheries) to Iceland, Liechtenstein and Norway. In addition, the euro was introduced and the eurozone enlarged from its initial 11 to 17 countries. The single market deepened steadily. There was and continues to be some turmoil in the domestic politics of some member states due to the financial and economic crisis and concerns about the deepening and the scope of the EU acquis. The dynamics are clearly not petering out: the crisis has prompted a rapid deepening of EMU, mostly for the eurozone but to some extent also for the EU as a whole, new EU members are likely to accede, a few EU countries want to enter the eurozone and market integration with a host of European countries (e.g. Andorra, San Marino, Monaco, Switzerland, Turkey and some European neighbourhood countries) may well be intensified and different approaches (including enlargement of the EEA) are under discussion. Last but not least, in the UK a major debate led by Prime Minister David Cameron has been unleashed about the terms of EU membership, with an option of an ‘in or out’ referendum in 2017. Given the overwhelming prominence of the EU, often mistakenly labelled ‘Europe’, it might have gone unnoticed that a new element in the European integration
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