Third-country economic relationships with the European Union

For relationships between the European Union and candidate or official potential candidate countries, see Future enlargement of the European Union. For third-country relationships with the European Union in general, see Foreign relations of the European Union.

The European Union has a number of relationships with nations that are not formally part of the Union. According to the European Union's official site, and a statement by Commissioner Günter Verheugen, the aim is to have a ring of countries, sharing EU's democratic ideals and joining them in further integration without necessarily becoming full member states.

EFTA and EEA

The European Free Trade Association (EFTA) was created to allow European countries to partake in a free trade area with less integration as within the European Communities (later European Union). Most of the countries initially in EFTA have since joined the EU itself, so only four remain outside, Norway, Iceland, Liechtenstein and Switzerland.

The European Economic Area (EEA) agreement allows Norway, Iceland and Liechtenstein to have access to the EU single market. The four basic freedoms (goods, services, people and capital) apply. However, some restrictions on fisheries and agriculture take place.

Norway

Main article: Norway and the European Union

Norway is a member of the EEA, therefore it participates in the single market, and most EU laws are made part of Norwegian law. Norway has signed the Schengen treaty, which means border checks are no longer made.

Iceland

Main article: Accession of Iceland to the European Union

Like Norway, Iceland joined the EEA, and is considered part of the EU single market. Iceland has also signed the Schengen treaty. On 16 July 2009, Iceland applied to join the European Union.

Liechtenstein

Main article: Liechtenstein and the European Union

Liechtenstein joined the EEA in 1995 and participates in the EU single market.

Switzerland

Main article: Switzerland and the European Union

Switzerland referendum to join the EEA in 1992 failed, so Swiss products do not participate in the European single market. However the country recently negotiated two series of bilateral agreements with the Union. The first series, Bilateral Agreements I, consists of seven bilateral agreements and was signed in 1999 (entry into force in 2001), the main part being Free Movement of Persons (full text of the agreement). The second series, Bilateral Agreements II, relates to nine areas and was signed in 2004 (entered into full force on 30 March 2005) and includes the Schengen treaty and the Dublin Convention (full text of the agreement) (official press release). Joining the European Union is the objective of the Swiss government.

Eurozone-related

Main article: International status and usage of the euro

There are countries which, though not official members of the Eurozone, still use the euro as legal or de facto currency, through official agreements with the EU. These are European microstates which are largely economically dependent on their larger Eurozone-member neighbours.

• San Marino: San Marino is not a member of the EU, but had a special agreement with Italy to mint a limited number of Lira coins. With the passage to the Euro, the agreement was updated so that San Marino could mint specific Euro coins that can be used in all the Eurozone.

• Vatican City: The Vatican City State is not part of the EU, but like San Marino, there is an agreement to mint its own coins (limited) which are legal tender in the Eurozone.

• Monaco: Monaco is not a member of the EU, but French VAT applies. The Monegasque state had a special agreement with France (and now the EU) to mint its own coinage, which is legal tender in all the Eurozone.

Some other countries unilaterally decided to use the Euro without having currently a formal agreement with the EU.

Customs unions

Certain countries are in customs union with the EU. These are:

• Turkey (excluding agricultural products; since 1996)
• Andorra (excluding agricultural products; since 1991)
• San Marino (signed in 1991 and in force since 2002)

European Union free trade agreements

Main article: European Union free trade agreements

EU Free trade agreements

EU has concluded free trade agreements with many countries in the world, and negotiating with more through Stabilisation and Association Process, Association Agreements and Economic Partnership Agreements.

European Neighbourhood Policy

EU European Neighbourhood Policy

  EU member states

  Enlargement agenda

  ENP East

  Russia

  ENP South

  Other Union for the Mediterranean member states

Main article: European Neighbourhood Policy, Barcelona Process, Euro-Mediterranean free trade area

Covers Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Lebanon, Syria, Israel, Palestinian Authority, Moldova, Ukraine, Georgia, Armenia, Azerbaijan, Belarus, and Russia (through the formation of common spaces).

According to the European Union's official site, the objective of the European Neighbourhood Policy (ENP) is to share the benefits of the EU's 2004 enlargement with neighbouring countries. It is also designed to prevent the emergence of new dividing lines between the enlarged EU and its neighbours. The vision is that of a ring of countries, drawn into further integration, but without necessarily becoming full members of the European Union. The policy was first outlined by the European Commission on March 2003. The countries covered include all of the Mediterranean shores of Africa and Asia, as well as the European CIS states (with the exception of Russia and Kazakhstan) in the Caucasus and eastern Europe. Russia insisted on the creation of the four EU–Russia Common Spaces instead of ENP participation. Kazakhstan's Foreign Ministry has expressed interest in the ENP [1]. Some MEPs also discussed Kazakhstan's inclusion in the ENP.

The European Neighbourhood Instrument (ENI), came into force in 2014. It is the financial arm of the European Neighbourhood Policy, the EU’s foreign policy towards its neighbours to the East and to the South. It has a budget of €15.4 billion and provides the bulk of funding through a number of programmes. The ENI, effective from 2014 to 2020, replaces the European Neighbourhood and Partnership Instrument – known as the ENPI.

The Euro-Mediterranean Partnership or Barcelona Process is a wide framework of political, economic and social relations between member states of the EU and countries of the Southern Mediterranean. It was initiated on 27–28 November 1995 through a conference of Ministers of Foreign Affairs, held in Barcelona. Besides the 27 member states of the European Union, the remaining "Mediterranean Partners" are all other Mediterranean countries without Libya (which has had 'observer status' since 1999). Since the establishment of the European Neighbourhood and Partnership Instrument in 2007 (see below) the Euro-Mediterranean Partnership initiative will become fully a part of the wider European Neighbourhood Policy. The Association Agreements signed with the Mediterranean states aim at establishing of a Euro-Mediterranean free trade area.

Financial cooperation and assistance programmes

For the 2000–2006 budgetary period

CARDS programme

CARDS, short for "Community Assistance for Reconstruction, Development and Stabilisation", was established on 5 December 2000 through Council regulation Number 2666/2000.

Its scope is the Western Balkans countries (Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia). The programme's wider objective is to support those nations in the Stabilisation and Association Process.

TACIS programme

The TACIS programme, established in 1991, was a programme of technical assistance that supports the process of transition to market economies for the 11 CIS countries and Georgia. Until 2003, Mongolia was also included in the programme but is now covered by the ALA programme.

MEDA programme

The MEDA programme was the principal financial instrument for the implementation of the Euro-Mediterranean Partnership, offering technical and financial support measures to accompany the reform of economic and social structures in the Mediterranean partner countries.

The first MEDA programme was established for the period of 1995–1999. On November 2000, a new regulation established MEDA II for the period of 2000–2006.

ACP programme

Main article: ACP countries

ACP stands for "Africa, Caribbean and Pacific". The programme applies to 71 countries, among which are all African nations with the exception of the Mediterranean countries of northern Africa (covered by the MEDA programme above). The ACP is currently covered by the Cotonou Agreement, which replaces the Lomé Convention.

External links: ACP Countries at official EU site

ALA programme

ALA, standing for "Asia and Latin America" is a programme for financial aid and cooperation with those regions.

For the 2007–2013 budgetary period

• ENPI, standing for "European Neighbourhood and Partnership Instrument". This is a financial instrument that covers the ENP countries. Russia is also covered by ENPI (it chose not to participate in the European Neighbourhood Policy (ENP) and opted for the formally different, but practically similar EU–Russia Common Spaces. Because of this is the "Partnership" part of ENPI). ENPI therefore merges the former MEDA (as all of its current beneficiaries are ENP states) and the European part of the former TACIS structure. The ENPI Info Centre was launched in January 2009 by the European Commission to highlight the relationship between the EU and its Neighbours.

• The Pre Accession Instrument replaces the former Enlargement programmes Phare, SAPARD and ISPA and CARDS (current CARDS beneficent states were moved to the Enlargement policy segment as "potential candidate countries").
• The Development Cooperation and Economic Cooperation Instrument covers all countries, territories and regions that are not eligible for assistance under either the PAI or ENPI (Asia, including Central Asia, Latin America, Africa, Caribbean and Pacific). Thus it will replace ALA, ACP and the rest of TACIS.
• Horizontal instruments, that cover countries regardless of their region, are:
  • the Instrument for Stability, a new instrument to tackle crises and instability in third countries and address trans-border challenges including nuclear safety and non-proliferation, the fight against trafficking, organised crime and terrorism.
  • Food aid is added to the Humanitarian Aid instrument.
  • the Macro Financial Assistance will remain unchanged.

Economic variation

Below is a table and three graphs showing, respectively, the GDP (PPP), the GDP (PPP) per capita and the GDP (nominal) per capita for some of the third countries that the European Union has relations with. This can be used as a rough gauge to the relative standards of living among member states.

The table is sorted by GDP (PPP) per capita to show the relative economic development level of the different countries. Reference values for the EU average, highest and lowest are included.

Third country	GDP (PPP) millions of int. dollars	GDP (PPP) per capita int. dollars	GDP (nominal) per capita int. dollars
European Economic Area:
Luxembourg (EU highest)	38,808	78,395	104,512
European Union (EU average)	14,793,000	29,729	33,052
Bulgaria (EU lowest)	90,869	12,067	6,722
Iceland	12,148	38,022	37,976
Liechtenstein	4,160	122,100	113,210
Norway	259,054	52,964	88,590
European Free Trade Association:
Switzerland	314,869	43,007	69,838
European Microstates:
Vatican City unique noncommercial economy	252	273,615	no data
San Marino	1,170	35,928	44,208
Monaco	4,888	65,928	88,761
Andorra	4,220	44,900	34,240
Current Enlargement Agenda:
Albania	22,839	7,169	3,837
Bosnia and Herzegovina	29,804	7,634	4,365
Kosovo (under UNSCR 1244)	5,300	2,500	2,965
Macedonia	19,310	9,341	4,499
Montenegro	6,506	10,393	6,120
Serbia	80,602	10,897	5,898
Turkey	1,118,967	15,392	10,206
European Neighbourhood Policy:
Israel	158,350	23,416	18,266
Libya	67,244	11,630	6,699
Russia	1,575,561	11,041	5,369
Tunisia	83,673	8,255	2,978
Belarus	75,217	7,711	3,031
Algeria	237,684	7,189	3,086
Ukraine	338,486	7,156	1,727
Lebanon	24,420	6,681	6,033
Jordan	27,960	4,825	2,219
Azerbaijan	38,708	4,601	1,493
Morocco	135,742	4,503	1,725
Egypt	305,255	4,317	1,316
Armenia	14,167	4,270	1,137
Syria	71,736	3,847	1,418
Georgia	15,498	3,616	1,493
Moldova	8,563	2,374	825
Palestinian Authority	2,568	660	no data

Source: CIA World Factbook [2], IMF

See also

• List of the largest trading partners of the European Union
• European Association for Evolutionary and Political Economy
• European Union Association Agreement
• European Union free trade agreements
• EU-Russia Common Spaces
• Free trade areas in Europe
• Special member state territories and the European Union
• EU Neighbourhood Info Centre
• EU Neighbourhood Library

External links

• The European Economic Area (EEA) – Overview
• European Neighbourhood Policy
• EU External Relations
• EU Neighbourhood Info Centre