EFTA and the EU : A win-win relationship?

Abstract

Twenty years have passed since the milestone agreement in EU-EFTA relations, the European Economic Area Agreement, was signed on the 2nd May 1992. Thus it is opportune to review EFTA-EU relations to see who is gaining out of them. Consequently the main research questions for this study are: Are EFT A-EU relations a win-win relationship and if not, why does the side that gains less maintain the relationship? The literature review sets the stage for the analysis in that it describes the development of the 'EU model' and the 'EFTA Model' in turn, and the evolution of EFTA-EU relations, as well as how they were discussed in the literature. It is highlighted that there is a lack of comprehensive academic analysis on EFTA-EU relations. As a result this study aims to help to address this lacuna. The study is of a mixed-method nature, relying both on quantitative and qualitative data and the analysis is of a cost-benefit type, evaluating what both EFTA and the EU gain and lose out of their relationship. The third chapter analyses the economic dimension of EFTA-EU relations. First variables with a direct economic impact on EFTA-EU relations are discussed namely market access, free trade and rules of origin, as well as financial contributions and other costs. On the next level the indirect effects on the national economy, competition, prices, labour mobility and the business sector emanating from EFTA-EU relations are brought to light. Finally the effect of wider issues that is to say the EU' s Common External Tariff and trade with third countries, fisheries and agriculture, and the EU single currency are analysed so as to extend the cost-benefit analysis of EFTA-EU relations to a wider level. The political dimension is tackled in the fourth chapter. The chosen variables in the assessment of the direct costs and benefits of the rel<itionship for both parties are the power of decision-making versus decision-shaping, implementation and Europeanization. The indirect political effects related to ideology, national sovereignty, public opinion, democratic deficit, lobbying, and political clout, which are imp01iant in the assessment of who stands to gain from EFTA-EU relations, but which are particularly hard to quantify, are analysed. Finally costs and benefits of EFTA-EU relations are examined in the wider context in terms of the international standing of both parties, the EU' s CFSP and JHA areas as well as the choice of multilateralism over bilateralism in EFTA-EU relations. The study concludes that EFTA seems to gain mostly from the economic dimension of the relationship and the EU from the political one, which is very much in line with the institutional setup of the two. Consequently, since the term 'win-win' implies that both parties in the relationship gain in some way, it is argued that EFTA-EU relations are 'win-win' as the relationship is seen to be beneficial to both parties for different reasons. Ultimately venues for further research are pointed out namely due to the need to review EFTA-EU relations throughout the next twenty years.