A NEW RELATIONSHIP BETWEEN ANDORRA AND THE EUROPEAN UNION
No. As it is an association and not an accession, Andorra will remain a third state in the EU. Unlike the Member States, it will not have to participate in the financing of the EU's annual budget, nor will it have to contribute with human resources to the EU institutions. The Principality will retain its sovereignty as a state and preserve its independence in fiscal, foreign policy and border control matters.
The concept of European citizenship goes beyond what Andorra wants to achieve with this Agreement. Andorrans will not become citizens of the European Union and will not have the right to vote in European institutions. However, we will have equivalent treatment to EU Member State nationals in almost every way, as currently applied within the European Economic Area Agreement.
The European internal market is an area with no internal economic borders in which goods, persons, services and capital move freely.
In order for it to function, the participating countries must have equivalent legislation across a multitude of areas. In the case of Andorra, as it is a small country, the European Union Treaty provides conditions for this equivalence of legislation to be achieved, while respecting the Principality’s particular situation.
The acquis communautaire is the set of European rules in force that the states must respect and apply.
With the Agreement, Andorra will incorporate into its legal system an important part of European rules in many areas. It will not be all European legislation, since some matters are excluded from the Association Agreement, and in some cases Andorra is negotiating adaptations of European legislation that will allow it to respect the country's specific characteristics.
The scope of the Association Agreement under negotiation is very broad and covers rules on the four freedoms of movement of the EU single market (goods, persons, services and capital), horizontal and accompanying policies and cooperation outside the four freedoms.
Foreign policy, defense, the common agricultural policy and taxation are outside the scope of the Association Agreement.
Andorra will not have to participate in the European Union budget since it is not a Member State but an associated one. However, as the Principality will incorporate a large part of the acquis communautaire, it will need to modify existing structures or even, in some cases, create new ones. This entails an economic and human cost that Andorra is structuring while analyzing the European regulations that will have to be incorporated. Andorra Research + Innovation is responsible for carrying out this study as precisely as possible.
By way of example, Liechtenstein has calculated that it costs the country between €1.4 and €2 million per year to participate in the European Economic Area (EEA) but says the benefits obtained far outweigh the costs. Furthermore, Liechtenstein has concluded that engaging in the EEA has provided an opportunity to improve the efficiency and professionalisation of the administration.
A tall d’exemple, Liechtenstein ha calculat que el seu cost de participació en l’Espai Econòmic Europeu (EEE) se situa entre 1,4 i 2 milions d’euros per any. Cal remarcar que els beneficis obtinguts superen de lluny els costos. A més, Liechtenstein ha conclòs que la participació en l’EEE ha estat una oportunitat per millorar l’eficiència i la professionalització de l’Administració.
No. Andorra has the euro and will continue to have it in the future. The conditions for the circulation of the euro in the Principality were laid down in the 2011 Monetary Agreement and will not change with the Association Agreement.
The Schengen Area is an area made up of European countries that have agreed to lift internal border controls. Not all EU members, nor all countries within Europe, are part of the Schengen Area. Andorra is not a member of the Schengen Area and will therefore maintain border controls.
Andorra will retain its sovereignty on key issues such as taxation, security and foreign policy. In all other areas, Andorra will certainly adopt European regulations in accordance with the Association Agreement. It is fair to say that Andorra has been drafting its laws in recent years with Europe in mind. The reality of the country’s geographical, political and economic context means that the Principality's legislation is closely aligned with European legislation without, however, being equivalent to it or having had the opportunity to participate actively in the European legislative process. In this sense, the Association Agreement will bring reinforced sovereignty, since it allows Andorra to take part in the drafting of European Union rules and to sit, at the same level as the EU, on the Joint Committee established by the Agreement.
When an act is being drafted, the European Commission informs the associated states and informally consults experts from these countries under the same deadlines and conditions as for EU Member States.
Once the proposal has been submitted, the Commission sends a copy to the associated states. If they wish to do so, the associated states may request a prior exchange through the Joint Committee before the adoption of the act.
The European Commission ensures a broad participation of experts from the associated states in the preparation of delegated or implementing acts, as well as in the work of committees that do not constitute delegated or implementing acts.
The Association Agreement that Andorra is negotiating is based on the European Economic Area Agreement of the European Free Trade Association (EFTA) states. Indeed, Liechtenstein, Iceland and Norway are deriving significant benefits from their participation in the internal market.
In particular, Liechtenstein's existing agreement with the EU is a success story that has served as a model and a basis for the parties in the ongoing negotiations, and has made it possible to identify the line to follow, despite the countries' differences. For example, in 2012, after twenty years of participation in the internal market, Liechtenstein launched consultations to gather the opinion of its citizens. The population gave it the thumbs-up. Seventy-seven percent of the business sector said they had enjoyed new business opportunities and took a favorable stand. Companies highlighted the advantage of being able to enter into development and innovation programs. Ninety percent of the institutions said they had been strengthened and professionalized and had pivoted to the new situation.
The growth resulting from Liechtenstein's participation in the internal market is therefore undeniable after 25 years of partnership.
THE DETAILS OF THE NEGOTIATION
The EU Treaty, signed in Lisbon in 2007, includes a point stating that the Union shall consider the special situation of small territorial units which maintain relations of proximity with it. This declaration allows the European Union to accept that Andorra can incorporate European legislation in a way that is "adapted" to its reality.
There are two types of transitional adaptations, with different objectives. On the one hand, there are transitional periods with a defined duration that allow for more time to adapt to EU laws. This makes possible, for example, to modify the pace of incorporation of the acquis communautaire into the Andorran administrative structure or to maintain a status quo for as long as the sector needs it. On the other hand, there are other transitional periods established for a period of time but able to be extended. These adaptations are almost always associated with a monitoring mechanism that enables the transitional period to be renewed as long as the conditions that allowed an exemption to be obtained continue to be met.
In the negotiation on the free movement of persons, Andorra's position is very clear. Andorra wants to preserve its high level of citizen security and guarantee sustainability and free access to social security and social and health care. To make this possible, the border and border controls will be maintained. It is also proposed to maintain the current migration system, which allows control of the flow of people entering the country in order to continue regulating the Andorran labour market.
With regards to the free movement of services, the establishment of companies from other Member States in Andorran territory is provided for. This opening-up must be progressive and sequential. Finally, Andorra has stated that it wishes to maintain single public operators in the telecommunications and energy sectors.
Regarding this point, Andorra has identified that the application of the acquis communautaire of the EU, which includes market liberalisation, would put the viability of the two public companies at immediate risk. Thus, in both the energy and telecommunications sectors, Andorra is calling for the maintenance of single public operators and therefore no liberalisation of the markets. In electricity, the same EU regulation includes exemptions applicable to small territories with compact electricity grids. In the telecommunications sector, the rationale that should enable this demand to be defended is currently being developed.
Negotiations around the Association Agreement began in March 2015. In recent years, changes in the negotiating teams, as well as the UK's exit from the EU and the health crisis, have had an obvious impact on the timeframe. In 2022, the EU transferred the negotiation from the European External Action Service (which had led the talks since 2015) to the Secretariat-General of the European Commission, a change that allows for more political dialogue. In addition to this change, the fact that France holds the rotating presidency of the Council of the European Union in the first half of 2022, and that Spain's turn will come at the end of 2023, has allowed the negotiating delegations to agree on a timeframe that makes the second half of 2023 the ideal time to initial the Agreement.
During the pandemic, Andorra and the European Union were able to hold a similar number of rounds of negotiations as before the pandemic. However, at Andorra's request, since the negotiation sessions were virtual, progress was made on the more technical aspects and it was decided to postpone the more sensitive questions, such as the debate on the free movement of persons and single public operators, until the face-to-face meetings could be resumed. Progress was thus made on 10 of the 25 annexes during 2020 and 2021. The free movement of persons is scheduled for May 2022.
The war in Ukraine has led the European Union to accelerate the modification of regulations in certain areas. As Andorra is to implement the acquis communautaire, this new regulation will in part be taken over by Andorra going forwards.
On the other hand, the conflict has stepped up the EU’s awareness of the importance of a united and strong European territory and therefore of the need to make progress in integration projects, including the Association Agreement with Andorra, Monaco and San Marino.
The current government is committed to submitting the final text of the Association Agreement to a referendum and to act in accordance with the outcome.
The Catalan language is one of the important issues when working on the preparation of the implementation of the Agreement. Catalan is not an official language of the European Union and it would therefore be necessary to translate EU rules into Catalan in order to incorporate them into the national legal system. The cost of these translation tasks needs to be assessed. This issue will be the subject of political and public debate.
The negotiations concern an association, not an accession. It is therefore not possible to consider Catalan as an official language of the European Union.
Andorran legislation does not require a referendum for this Agreement. It is the will of the current government to organize a consultative referendum, in line with the provisions of the Law on the electoral regime and referendum. Although it is a consultative referendum, the head of government has undertaken to make the result binding.
The current government's position, which follows the line of previous governments, has been not to consult the public beforehand, as it would mean asking the citizens to give their opinion on an agreement whose definitive content is not known.
The Association Agreement has certain points requiring specific adaptations to Andorra’s particular situation and it would have been difficult to give an opinion without knowing how the free movement of people or the maintenance of single public operators, for example, would be agreed.
The current timetable, shared by Andorra and the European Union, foresees the conclusion of the negotiations in the second half of 2023 and a referendum being held once the final text is available.
The government is determined to submit the draft Association Agreement to a binding referendum. Article 1 of the Law on the Electoral Regime and Referendum stipulates that Andorrans of legal age have the right to vote.
If the outcome is positive, Andorra will complete its internal legislative procedure, i.e., obtain the approval of the General Council. Similarly, the European Union will also have to complete its internal legislative procedure. Once these procedures are completed, the agreement will be ratified and enter into force within the timeframe established by the same understanding.
In the event of a negative referendum outcome, the General Council will not ratify the Association Agreement. The Government considers that Andorra would find itself in a very delicate situation, because participation in the internal market would have been rejected and there would be no alignment of Andorran standards with European standards in such important areas as trade, environment, product safety or transport.
This would usher in a scenario of great uncertainty in which it would be unreasonable to think of reopening new negotiations and where Andorra would lack the tools to diversify its economy, open up to foreign investment and fit in with its immediate geographical environment.
For this reason, the current Secretary of State for European Affairs is working to: 1) negotiate the best possible agreement, 2) ensure that the public can adequately follow the progress of the negotiations and be duly informed in order to be able to vote in the referendum, and 3) create the necessary structures so that, in the event of ratification, Andorra will be ready to implement the Association Agreement.
The current Government is fully aware that the Association Agreement would have an impact on the entire population residing in Andorra, no matter their nationality. For this reason, it intends to gather the opinion of all citizens on this issue, although the binding consultation by means of a referendum will be carried out in accordance with the terms established by law.
IMPLEMENTATION OF THE ASSOCIATION AGREEMENT IN ANDORRA
One of the main concerns the public has in relation to the Association Agreement is the economic and human cost that implementation and operation will entail for the Andorran administration and society. The ongoing regulatory development of the EU internal market represents a considerable challenge. Existing structures will have to be modified and, in some cases, new ones created. The challenge is to transform this difficulty into an opportunity to improve the efficiency and professionalisation of the Andorran administration and business sector. Moreover, it should be noted that examples of small countries with similar agreements show that the benefits far outweigh the costs.
The Association Agreement is an instrument that will be available to the citizens and the business and social sectors of Andorra, allowing them to leverage it in the widest possible way for their own and collective benefit.
The Liechtenstein example: Liechtenstein has calculated that it costs the country between €1.4 and €2 million per year to participate in the European Economic Area but says the return obtained significantly exceeds the cost. In 2015, this EEA member state conducted a survey to tap the opinion of the population, entrepreneurs and institutions on the then twenty years of participation in the EEA. The population was clearly satisfied with the country’s engagement in the EU's internal market: 77% of entrepreneurs gave a very favourable reading and highlighted the new business opportunities, while the institutions emphasised that it had provided an opportunity to modernise and professionalise the public service. The positive effects therefore far outweighed the initial disappointments or costs of implementation.
Taxation is not included in the Association Agreement with the European Union and so Andorra will maintain its sovereignty in this matter. A variation of the tax rate would be a decision of the Andorran state and not a result of the Association Agreement.
The Association Agreement does not include the issue of taxation. The Agreement does not remove physical borders, nor does it remove fiscal borders, so Andorra and the EU remain two different territories regarding taxes, with each sovereignly defining and applying its own taxation.
The Andorran labour market is already one of the most open in the world, with more than 50% foreign workers. The free movement of persons will therefore not affect the development and welfare of Andorra's current population, although adaptations are being negotiated to make it possible to maintain mechanisms to regulate the flow of people into and out of the country.
Andorran citizens will be able to work and live in any country of the European Union under the same conditions as nationals. The Agreement represents a window of opportunity for young Andorrans, who will have the entire single market of the European Union as a potential work space.
The free movement of services includes two aspects: that professionals can establish themselves in another Member State (right of establishment) or offer their services in another Member State from their country of origin. This freedom of movement eliminates any discriminatory or unjustified requirements (legal or arising from administrative practice) that may hinder the exercise of the freedom of establishment or the freedom to provide services.
This freedom of movement is key to being able to welcome new sectors of activity with high added value to Andorra, along with activities that may in turn lead to the creation of jobs or new synergies with existing sectors, and will have a positive impact on the Andorran economy as a whole.
In order to guarantee the quality and smooth running of the services offered in Andorra, the negotiation position has been designed by working closely with the country's economic and social stakeholders..
Free movement of capital and the regulation of financial services are elements still to be negotiated in the Agreement. We will have to wait for the analysis of European legislation in these areas to be finalised in order to be able to report in detail on the possible impacts.
The free movement of goods means that products can move freely from one country to another. This is achieved through the creation of a customs union (elimination of customs duties, quantitative restrictions and measures having equivalent effect), on the one hand, and through the harmonisation of regulations (establishing essential health and safety requirements for products) or mutual recognition between states (on national technical standards), on the other.
The negotiation of this freedom of movement is almost complete and covers three elements:
The content of the Commercial Agreement of 1990, its protocols and decisions, including the existing duty-free allowances.
The other agricultural products, not included in the Commercial Agreement of 1990, are added to the customs union regime.
A specific solution for tobacco.
Following Andorra’s will to keep its tax policy, the Agreement does not provide for Andorra to become a customs territory of the European Union, nor does it therefore have to harmonise its taxation with that of the EU. This means that physical customs will be maintained.
The Association Agreement does not include taxation issues. The Agreement does not remove physical borders, nor does it remove fiscal borders, so Andorra and the EU remain two different tax territories, each sovereignly defining and applying its own tax policy. For this reason, tax residents in Andorra will be able to continue to claim VAT refunds from Spain, the TVA from France or the equivalent tax from other Member States.
The free movement of goods does not mean the lifting of borders but the removal of technical barriers or limitations. Through the Association Agreement, goods moving between Andorra and the EU single market will have to comply with the EU technical standard and will be able to circulate without requiring an additional certificate of conformity for the products.
Borders and customs controls are maintained because, among other reasons, taxation is not part of the Association Agreement, so Andorra and the EU remain two different tax territories, each sovereignly defining and implementing its own tax policy. This is particularly important for the Principality to remain an attractive and competitive territory in this area. However, it will be necessary to improve the customs administrative procedures companies need to go through to export or import goods.
The draft Association Agreement provides for three elements. First, it maintains the content of the still-in-force 1990 Trade Agreement, known as the Customs Agreement, including travelers’ allowances, but extends the customs union regime to agricultural products and aims for a specific solution for tobacco. Secondly, it provides the technical equivalence needed to be able to trade with EU countries. Thirdly, the draft Association Agreement incorporates complementary policies required to ensure equal conditions between economic operators (on competition, state aid and public procurement).
The negotiated solution for tobacco initially provides for a transition period of thirty years. Andorra and the EU have agreed on a timetable for the gradual reduction of customs duties applicable to all Chapter 24 (tobacco products) of the Harmonised System, starting in the seventh year of implementation of the Association Agreement and ending with the Principality's inclusion in the customs union regime at the end of the thirty-year transition period.
Secondly, a monitoring mechanism is planned to assess the impact for Andorra of the gradual evolution towards the free movement of tobacco products and a special safeguard clause that can be invoked by both Andorra and the EU.
Thirdly, it includes Andorra's commitment to accede to the WHO Framework Convention on Tobacco Control and Protocol to Eliminate Illicit Trade in Tobacco Products, before finalising the negotiation of the Association Agreement. Andorra has already acceded to this Convention, which entered into force on 9 August 2020.
And finally, it envisages Andorra's commitment to strengthen the prevention and fight against fraud and smuggling.
The Agreement includes a chapter on social policies, since the proper development of the internal market includes a social dimension. It should be stressed that this is an area of shared competence between the EU and the Member States, meaning that the EU establishes the minimum conditions to be guaranteed throughout the single market and the Member States develop their national policies on the basis of their reality and the minimum conditions set by the EU.
EU social security regulations do not harmonise social benefits but coordinate national systems to avoid any discrimination against foreign workers. The states are therefore sovereign in defining the benefits and the conditions under which they are granted.
No. European law allows the system of involuntary unemployment benefit in force in Andorra to be maintained as a welfare-type benefit. In fact, European law applies to social security benefits and not to social assistance. Moreover, it does not require the creation of new benefits, but rather the coordination of existing ones. It should be noted that some European Union countries currently have systems similar to the Andorran system.
One of the drawbacks of the Agreement is its operating cost. The challenge is to transform it into an opportunity to improve the efficiency and professionalisation of the administration.
We can assume that there will be some undesired effects for citizens or sectors, but we have to look at countries like Norway, Iceland or Liechtenstein, which have had an association agreement with the EU for 25 years. All the surveys they have concluded underline the positive effects far outweighing the fears and negative effects. The Association Agreement is an instrument that the government will put at the service of citizens and train them in how to use it and make the most of it.
The Agreement provides for the setting up of a joint committee comprising representatives of Andorra and the European Union. The Principality will have a privileged space for dialogue with the EU that does not exist at present, except in the sectoral areas of the current agreements.
An operator or private individual could always have recourse to national, administrative or judicial resort if they believe their rights have been infringed. Similarly, and in the event of a dispute concerning the interpretation or application of the Agreement or of a legal act it refers to, Andorra or the European Union could refer the matter to the Joint Committee. If the Joint Committee were unable to find a solution, either party could refer the matter to the EU Court of Justice.
In regards to precedents in the Court of Justice of the European Union (CJEU), the Agreement specifies the need to take them into account when interpreting and applying the EU understanding and rules that Andorra accepts with the Association Agreement.
The Association Agreement does not regulate the acquisition of nationality. However, the fact that it allows citizens with an Andorran passport to study, work, live and retire outside the country under the same conditions as Community nationals, means that the debate on whether there should be dual nationality for a question of comfort lose relevance.
Far far away, behind the word mountains, far from the countries Vokalia and Consonantia, there live the blind texts. Separated they live in Bookmarksgrove right at the coast
The Association Agreement does not regulate the acquisition of nationality. However, the fact that it allows citizens with Andorran passports to study, work, live and retire outside the country under the same conditions as EU nationals means that the debate on whether there should be dual nationality as a matter of convenience is no longer relevant.
The Solvit mechanism is a free service offered by the national administrations of the Member States and which Andorra will also implement. It is very useful for citizens, as it efficiently and quickly resolves problems with the application of EU law by a public administration. Citizens can raise their problems on the Solvit website or directly with their national Solvit service, which has given very good results in matters directly affecting individuals, such as the recognition of professional qualifications, the right of residence, right to work, etc.
More information at: https://ec.europa.eu/solvit/index_es.htm.
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