Doing deals

The EU is not the only European power seeking closer trade ties with the developing world – EFTA is busy at the negotiating table as well, says Kåre Bryn

The European Free Trade Association (EFTA) is continuing tobuild a network of free trade agreements (FTAs) with countries across theworld. In addition to our links with the EU, we have at present negotiated 16agreements with countries in North and South America, Asia, the Middle East andAfrica. Thus, EFTA with a membership of foursmall European countries - Iceland,Liechtenstein, Norway and Switzerland - has established oneof the world’s largest free trade networks covering so far 50 countries.

To some extent the limited size in population of the EFTAcountries is compensated by considerable economic strength. Counting the EU asone, EFTA has the world’s 10th largest foreign trade in goods and the fifthlargest in services. The EFTA states are highly competitive with open economiesand represent a sizeable market with strong per capita purchasing power.

Almost 80 per cent of EFTA’s foreign trade is now covered bypreferential free trade arrangements. It would be a misconception, however, toconclude that the EFTA states have abandoned the multilateral framework. Theremust be no doubt that the basis of the EFTA states’ trade policy is the WTOrules-based system. For EFTA it is self-evident that our bilateral agreementsmust be compatible with multilateral rules. Therefore, we see FTAs ascomplementary to the WTO – not an alternative. We also believe that bilateralagreements, designed in accordance with WTO disciplines, can be building blocksfor future multilateral negotiations.

Traditionally, a strong incentive for EFTA’s FTA has beenthe need to avoid less favourable market access conditions than competitors, inparticular the EU. This is still very important, but during the last few yearsEFTA has in some instances been ahead of the EU in negotiating preferentialagreements. This is for instance the case for our FTAs with Singapore, Korea,and most recently with Canada.

While volumes and structures of trade are, naturally,essential criteria for finding common ground in FTA negotiations, EFTA has alsothroughout its experience been sensitive to the interests of developingcountries. We have for instance an FTA with the Southern African Customs Union(SACU) comprising Botswana, Lesotho, Namibia,South Africa and Swaziland.Agreements have also been concluded with Lebanon,Jordanand the Palestinian Authority, to mention just a few examples. Furthermore,technical assistance is usually a component of EFTA agreements with developingcountries, notably for enhancing their capacity to benefit from preferentialaccess to our markets. We are also sensitive to development needs which may betaken account of by means of asymmetric tariff reduction schedules for certainproducts.

Over the years EFTA’s FTAs have developed in scope andcoverage. We have now four so-called second generation agreements (with Mexico,Chile, Singapore and Korea) which, in addition to the traditional areas ofindustrial goods including fish and agriculture, cover areas like services,investment, government procurement, competition rules and intellectual propertyrights.

EFTA’s trade network in Europe covers the 27 members of theEU through the European Economic Area Agreement and the bilateral agreementsbetween the EU and Switzerland.In addition, FTAs are in place with Croatia,Macedonia and Turkey. In theMiddle East and Africa, agreements have been reached with Egypt, Israel,Jordan, Lebanon, Morocco,the Palestinian Authority, the South African Customs Union and Tunisia. In theAmericas and Asia Pacific,the EFTA network comprises Canada,Chile, Mexico, the Republicof Korea and Singapore.

EFTA negotiators are this spring having a busy scheduleengaging in talks with future partners in different parts of the world.Negotiations on FTAs are at an advanced stage with Columbiaand Peru, as well as withthe Gulf Cooperation Council (Bahrain,Kuwait, Oman, Qatar,Saudi Arabia and the United Arab Emirates).Also our talks with Algeriaare progressing well. We expect to reach agreement with all these partners inthe course of this year.

The Asian region is of strong interest to EFTA, as is thecase for most countries engaged in free trade negotiations. India has seen tremendous economic growth inrecent years which is also reflected in EFTA’s trade with India. In early2008, EFTA and Indiaagreed to start negotiations for a broad trade and investment agreement.Furthermore, negotiations have been started with Thailand, but are not active forthe time being. There are also close contacts with other countries in the Asianregion which we hope will lead to negotiations of FTAs.

New partnerships are also being developed in Europe. An important development for EFTA is the launchof a feasibility study with Russiato examine the possibilities for closer trade and investment relations. The aimis to start negotiation of a trade agreement as soon as Russia, whichis EFTA’s fifth largest trading partner, has acceded to the WTO. Ukraine is alsoon the EFTA agenda and our trade has increased significantly since the late1990s. There is a broad understanding on both sides that talks should start inthe coming months.