Thank you very much for inviting us. We are very pleased to be able to be here—it is a pleasure.
In introducing ourselves, I underline that, as you have just mentioned, we represent the EFTA secretariat. Both of us are Norwegian nationals, like your previous two witnesses, and I have a background from the Norwegian foreign service, but in our present capacity we are speaking on behalf of the EFTA secretariat and definitely not on behalf of any of the EFTA member states. I will say a few words later about the role of the EFTA secretariat, just to set out where we are coming from and what we are representing.
In these brief introductory remarks, I will say a few words about the European Free Trade Association and the EEA agreement. Although you may be well aware of most of it, you may find it useful to situate both EFTA and the agreement in a broader historical and political context. As you know very well, EFTA was established in 1960, with a focus on free trade and based on a traditional intergovernmental co-operation model. The UK was a founding member of EFTA, together with six other European countries: the three Scandinavian countries—Norway, Sweden and Denmark—Austria, Switzerland and Portugal.
The founding of EFTA was a response to the development of the European Communities of the six continental European countries, which had existed for some years, albeit based on a different model of co-operation. Throughout the history of EFTA, we have had a shift in membership. Finland was part of EFTA from the beginning, but only as an associated member to start with. Iceland joined in 1970, and Liechtenstein somewhat later. Then, members of EFTA left to join the European Communities, as you know. Today, the membership consists of Iceland, Liechtenstein, Norway and Switzerland.
The EEA agreement was the result of an initiative taken by the EU side in 1989 against the background of the new and increased focus on integration and the realisation of the internal market of the European Communities. As Dr Sverdrup mentioned, at the time EFTA was the most important trading partner of the European Communities, with seven member states. That was a very important background for the negotiations that took place between the two groups of countries. Switzerland rejected that agreement in a referendum in 1992, and the agreement entered into force in 1994. Three other EFTA states that were part of the EEA agreement on the EFTA side at the beginning left EFTA to join the European Union in 1995: Austria, Finland and Sweden. That left us, on the EFTA side, with only three relatively small countries: Norway, Iceland and the very small state of Liechtenstein.
I will say a few sentences about the basic objective and principles of the EEA agreement, which are important, although they have been touched upon already. The basic objective was to extend the single market to the participating EFTA states and, by doing so, apply the four freedoms to those countries. The previous speaker said that that was more than access, and that it was full membership. Personally I would nuance that somewhat, because full membership of the single market would normally also imply being part of the customs union, but as you have been discussing already, the EEA-EFTA states are not part of the customs union, although we have access to the single market.
There are also other exceptions, as has been mentioned. The agriculture sector is not part of the EEA, which means that there is a limit to the free movement of goods within the single market as far as the EEA and EFTA states are concerned.
The basic principle of the extension of the single market to the participating EFTA states is homogeneity of legislation. All legislation that is relevant to the single market, or for the areas that are covered by the agreement, was incorporated into that agreement when it was concluded in 1992 and 1994. The agreement itself has set up a system for the further incorporation of new relevant legislation into the agreement, along with adoption of such legislation on the EU side. My colleague Marius Vahl will speak a little bit about that in his introductory remarks.
The main principle of the homogeneity of legislation and institutional set-up is based on the two pillar system. That is quite an innovative and creative set-up that tries to bring together two systems of co-operation among states that are based on different legal principles. You are familiar with the EU side, which has the supranationality principles and the whole structure of decision making. On the EFTA side, we have more traditional intergovernmental co-operation based on the traditional consensus principle.
How can those two systems be brought together? We have a system, and my colleague will give you its main features. In concluding the agreement, we had to find a solution to meet the requirement of the EU side to have a system for surveillance and judicial settlement of disagreements or disputes. As the EFTA side is based on traditional intergovernmental co-operation, it could not accept submission to EU jurisdiction or the EU system of surveillance so we had to establish a separate set of institutions for that purpose. That was why we established our own EFTA Surveillance Authority, which is an independent authority that surveys the implementation of regulations on the EFTA side. We also have a separate EFTA Court, which has the last word on the interpretation of the agreement and regulations on the EFTA side. Those institutions mirror the Commission with its responsibility for surveillance and the European Court of Justice.
The EFTA secretariat is, as the word suggests, a secretariat. It is not an independent institution as the Commission is. It services the member states. We have different roles in the sense that we also serve the four member states, including Switzerland, and the member states work on free trade agreements with third parties. The part of the secretariat that is based in Brussels, where we are based, mainly provides services to member states on the management of the EEA agreement.
The headquarters of EFTA is still in Geneva, although the secretariat in Geneva is the smaller part of the EFTA secretariat. The larger part is the one in Brussels, which has responsibilities for servicing member states on the management of the EEA agreement. My colleague Marius Vahl will say a few words about the decision-making principles and procedures.
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