Source: EURLEX
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23 7 90 Official]ournal of the European communities ^ o C 1 ^ 3 3

Opinion on EC^EETArelations

(90BC1^2B12)

OnlEebruaryl990, the Economic and Social Committee, acting under the fourth paragraph of
Article 20 ofits Rules ofProcedure, decided to issue an opinion and report on E^EETArelations,

The Section for External Relations,Trade and Development Pohcy,which was responsible for
preparing the Committee^sworl^ on the subject, adopted its Opinion and Report o n l ^ May 1990.
The rapporteur was MrVascoCal

At its 277thplenary session (meetingof 30May 1990), theEconomic and SocialCommittee
adopted byama^onty in favour with^abstentions the following Opinion

n Recent developments in EC^BEETA relations

1.1. Until the beginning of 1 9 ^, ECeEETA relations
wereconfmed to agreements on tarifP and quotaDfree trade
in industrial products.

In April 1 9 ^, EC and EETAMimsters adopted the ^oint
Luxembourg Declaration expressing satisfaction at the
results achieved andundertal^ingto ^strengthencooper
ation, with the aim of creating a dynamic European
economic space of benefit to their countries.

EC EETAcooperation was put onapragmatic footing by
2^ working groups of Commission appointees and EETA
experts. Thegroups achieved positive results on such issues
as rules of origin, elimination of export restrictions, and
EETAparticipation in specific EC research and develop

ment programmes.

1.2. Despite the progress made, EC^EETAcooperation
was becoming increasingly removed from the new
dynamism created bythe Community in its programme for
1992, altering its ^ o ^ o ^ r ^ ^ and its approach to
integration.

lndeed,while the Community^smternal decisionmaking
procedures had changed, relations with EETAwere still
based on the Luxembourg Declaration and onlycovered
industrial goods^whoseshareofinternationaltradewas on
the decline).

1.3. The need for more structured and comprehensive
relations with the EETAnations was identified by President

Delors when he addressed the European Parliament in
]anuaryl9^9.TheEETAldeadsofC^overnmentresponded
positively in the Oslo declaration of l^i March 19^9, and
undertook to open negotiations ^with the aim of creatinga
dynamic and homogeneous European Economic Spaced

The Ideads of government confirmed their willingness to
discuss all aspects relating to the free movement of goods,
services, capital and persons, and to extend cooperation in
the fields of research, education, and the environment,
^iderconsultationsoneconomicand monetary policies
were also envisaged.

1mA Eollowing the ^oint Ministerial meeting of
20 March, five working groups were set up tolook into
areas of agreementAiisagreement with regard to the free
movementof (l)goods, (2) services andcapital and (3)
persons^and to deal with (^) accompanying measures and
(e^) legal and institutional aspects.

In its final report of 20 October 19^9, the high-level
steennggroup concluded, in the light ofthe contacts it had
made, that there wasasufficiently clear understanding of
the positions of both sides on the content and form ofa
possible future agreement.

Inacommumcation to the Council on 22 November, the
Commission took the view that sufficient common ground
had been identified to envisage the possibility of comD
prehensive negotiations, and that exploratory talks should
first clarify the matters outstandmg.Once these talks had
been concluded satisfactorily and the council had
approved the Commissions negotiating brief, the com
prehensive negotiations could commence.

No C 182/34 Official Journal of the European Communities 23. 7. 90

1.5. The EC-EFTA joint Ministerial meeting of 19 December 1989 decided that formal negotiations should be
launched in the first half of 1990 and should be concluded

as rapidly as possible.

Up to the end of March 1990 the exploratory talks did not
seriously alter the position of either side. The Commission
has prepared a negotiating proposal which the Council is
due to discuss in June, so that the formal negotiations could
still begin in the first half of 1990.

2. The concept of a European Economic Space

2.1. At the time of the 1984 Luxembourg Declaration,
the Concept of a European Economic Space (EES) was
largely confined to the conditions needed to improve the
free movement of industrial products.

The Luxembourg Declaration was a first attempt to extend
the scope of cooperation to other areas where it was felt
necessary: harmonization of technical standards and
regulations; elimination of technical barriers; simplification of customs formalities and rules of origin; and
elimination of unfair trading practices, distortionary State
aids, and discriminatory public procurement practices.

The Declaration also favoured greater cooperation in
research and development, and wider consultations in such
sectors as transport, agriculture, fisheries and energy.
Exchanges of information were also envisaged with regard
to working conditions, social protection, culture, consumer
protection, tourism, and intellectual property.

2.2. The Joint Declaration of December 1989 takes a

wider view of the EES by seeking to give relations 'a new
dimension as part of a common European outlook'.
Ministers agreed to 'seek jointly to define a more structured
framework for cooperation between the EC and all of
the EFTA countries together'. The following objectives

were set:

'— to achieve the free movement of goods, services,
capital and persons, on the basis of the relevant
acquis communautaire, to be identified jointly;
exceptions, justified by considerations of funda

mental interests, as well as transitional arrangements, could be matters for negotiation; equal
conditions of competition should be ensured,

— to strengthen and to broaden cooperation in the
context of the Community's actions in other areas
such as research and development, the environment, education, working conditions and social
welfare, consumer protection, programmes for
small and medium-sized enterprises and tourism,

— to reduce economic and social disparities between
their regions.'

2.3. The concept of a European Economic Space (EES)
has thus evolved to take into account the effects of the EC

internal market on EFTA.

However, it would be wrong to see the EES as the extension
of the EC to EFTA. On the contrary: at the present stage in
the process, the success of the EES negotiations is
important if the Community is to achieve its own
fundamental goals, as enshrined in the Single Act, and to
secure lasting and dynamic relations with its main trading
partner.

Nor should the EES be seen as an extension of the internal

market to 18 countries. The completion of the internal
market involves a number of factors which some EFTA

nations are either unwilling or unable to contemplate
(customs union; common trade, agricultural, and fisheries
policies; approximation of indirect taxation; free movement of workers and other citizens; free movement of
capital and free establishment of services).

2.4. The EES will have to be a _sui generis_ entity, and
certain points have already been agreed. Firstly, the basis
for achieving the four freedoms (See Section 6 below)
should be the relevant 'acquis communautaire', backed by
accompanying policies. Secondly, the importance of
reducing regional economic and social disparities has been
recognized, and the EFTA nations have stated their
readiness to begin negotiations on cooperation in this area.
Thirdly, the best instrument for the EES would be a treaty
covering both substance and legal and institutional aspects,
and laying down administrative and supervisory structures.
Fourthly, common rules are needed to ensure equal
conditions of competition throughout the EES.

Negotiations between the two parties would work out
arrangements for extending the bulk of the Community's
internal market programme to the EFTA countries; these
talks would take place in parallel with the decisions still to

23. 7. 90 Official Journal of the European Communities No C 182/35

be taken by the Community in its capacity as an
autonomous decision-making entity and in line with its
timetable. Furthermore, as confirmed by the conclusions of
the Dublin Summit held in late April 1990, the Community
will continue to push ahead with economic, monetary and
political integration.

3. Establishment of the European Economic Space

3.1. In terms of the economic integration of the Twelve,
the main effects of the internal market are likely to be
greater production specialization as a result of comparative
advantages; greater efficiency resulting from economies of
scale; and greater competitiveness following the removal of
trade barriers. A more rapid increase in intra-Community
trade is also expected to be a general consequence. In order
to avoid a deterioration in regional disparities, the
strengthening of economic and social cohesion was made
an aim of the Single Act and the structural funds were also
reformed.

3.2. EFTA countries would have a great deal to lose if
they were excluded from this process, and much to gain if
they could participate in it. The EC is EFTA's main trading
partner. The removal of barriers to intra-Community trade
and the effects of economies of scale will cause processing
industries to step up their investments in the EC, thereby
reducing the current competitiveness of EFTA countries
(just as they have also tended to reduce EFTA's share of
international and intra-European trade).

3.3. The overall gains which the Community can obtain
from the establishment of a European Economic Space
must also be taken into account. Despite the size of their
individual economies, the EFTA nations as a whole
constitute the EC's main trading partner. In addition,
extending some of the rules of the internal market to
18 countries would reduce the risks of distortions resulting
from the liberalization process. In both political and
economic terms, the establishment of a wider European
Economic Space would strengthen Europe's competitiveness and negotiating position in relation to the rest of
the world.

3.4. The dramatic developments still under way in
Eastern Europe point to rapid changes, in both political and
more especially economic and trade terms, in the EC's
relations with these countries as a group and as individual
sovereign States.

Although (at least for the moment) this does not necessarily
mean radically altering plans for construction of the ECEFTA European Economic Space, account must be taken of
the fact that the balance and structures of European
markets and trade haVe changed.

3.5. The European Economic Space has not yet been
clearly defined, and the negotiations to establish its scope
have not yet begun.

The ESC wishes to analyze the results of these negotiations
in order to check that due account is taken of European
integration interests. When making this analysis, the ESC
will give its conclusions on the scope of the European
Space, more particularly with regard to the achievement of
a fair balance of benefits and obligations between the
participants.

In the ESC's view, under no circumstances would it be
acceptable for certain countries to draw clear benefits from
the EES process without the necessary political and
economic _quid pro quos._

4. Institutional questions

4.1. The negotiating process will aim to draw up a treaty
covering the substance and the necessary legal and
institutional aspects of a European Economic Space.

The Treaty will include subjects relating to the relevant
'acquis communautaire', a large part of which has already
been identified. It will also lay down the procedure for
drawing up EES legislation and putting it into effect.

For obvious reasons of principle, and not for reasons of
time or efficiency, the Community's decision-making
procedure cannot involve the EFTA nations on the same
terms as the EC Member States. However, a commitment
could be made to provide appropriate information in good
time and examine any response.

4.2. EFTA countries view the decision-making process
as the key to relations between both sides, and therefore a
matter for priority consideration.

Both sides accept the more general principle of a balance
between rights and obligations. The process of framing and
adopting the relevant new EES legislation must guarantee
that drafts are communicated in good time and that the
other side's positions are taken into account, without

No C 182/36 Official Journal of the European Communities 23. 7. 90

prejudice to either side's autonomy in decision-making or
to subsequent ratification by the appropriate joint body.

Bearing in mind that Community decision-making procedures are relatively slow, it should be fairly easy to ensure
that drafts are communicated to EFTA partners in good
time. Their views could then be taken into consideration at

various EC levels — ESC, European Parliament, and
directly by the Commission. A similar system should be
guaranteed in cases where the new EES legislation comes
from EFTA.

Legislation would thus be formulated within a system
providing osmosis at various levels. The form taken by this
legislation must ensure the direct applicability and primacy
of EES decisions.

4.3. The EC has only been able to develop to its present
stage of achievements, and will only be able to advance
further in the future, because it is not a traditional
intergovernmental international organization. The EC
rests on an institutional organization which is constantly
developing, and it is thus a forward-moving federation.

The agreement envisaged with EFTA must include
provision for a surveillance procedure linked to a legal
mechanism. This mechanism should be based on the Court

of Justice in Luxembourg; but judges from the EFTA
nations would also assist the Court.

5. The role of the social partners

5.1. The joint meetings of the EC's Economic and Social
Committee and the EFTA Consultative Committee which

began in 1975 have helped to increase awareness among the
social partners in the 18 participating countries of the
common problems involved in creating a European
Economic Space.

Cooperation between the two Committees which represent
the social partners has developed in a pragmatic way, and
in recent years has moved on from the mere exchange of
information to the analysis of subjects of common interest
and the adoption of joint conclusions or recommendations.

The two Committees have thus played an important part in
the new, more dynamic relationship between the EC and
EFTA, clearly reflecting the economic and social partners'
interest in promoting the free movement of goods, services,
capital and persons, as well as the strengthening and
broadening of cooperation (in the fields of research and
development, environment, education, working conditions, social protection, consumer protection, program

mes to promote small and medium-sized enterprises, and
tourism) and the reduction of economic and social
disparities between regions.

5.2. Despite broad consensus on objectives, the members of the two Committees have expressed differing views
on the negotiation process at the joint meetings.

This is partly due to differences in the working methods,
workloads and size of the two Committees, as well as to
institutional differences.

While the ESC has to be consulted by the Council of
Ministers and by the Commission in the cases laid down in
the Treaties, the EFTA Consultative Committee acts only
on its own initiative, and no voting procedure is provided
for in its Rules of Procedure.

_5.3._ The brief for the forthcoming negotiations must
include provisions for the two Committees to present the
negotiators with their proposals on cooperation between
EFTA and EC socio-economic groups.

The negotiations will be extremely complex, but EFTA
members' participation in the decision-shaping process is
unlikely to give rise to the same problems as their possible
participation in decision-taking.

The ESC plays a consultative part in shaping decisions, but
no part in decision-taking. It could envisage the possibility
of inviting members of the Consultative Committee to be
present during work on questions relating to the European
Economic Space. This would enable ESC members to take
into account the special interests of their EFTA partners,
without slowing down the Community decision-making
process or jeopardizing its autonomous decision-making
role.

The ESC hopes that the position of the Consultative
Committee will be brought in line with that of the ESC as
swiftly as possible (and at a preliminary stage), so that it
can then issue Opinions on economic and social matters
relevant to EFTA, particularly the proposed Treaty
establishing the EES.

For Consultative Committee members, the advantage of
taking part in the consultation process and of keeping
themselves fully informed of Community initiatives would
help to create a kind of osmosis in the shaping of decisions
affecting the future EES, thereby facilitating their sub

23. 7. 90 Official Journal of the European Communities No C 182/37

sequent formal approval by the body which will provide a
platform for social partners from both EFTA and the EC.

5.4. The EES Treaty between the Communities and
EFTA should include provision for a consultative body
made up of ESC and EFTA Consultative Committee
representatives and with the right of initiative.

6. The four freedoms

6.1. Free movement of goods, capital, services and
persons are four objectives already mentioned in the Treaty
of Rome. However, as pointed out in the _White Paper,_
these objectives cannot be achieved simply by deepening
what may be termed the 'old approach', i.e. a detailed set of
Community rules laboriously negotiated among representatives of the 12 Member States, often granting
derogations and transition periods to the economies which
face greater difficulties.

The 'new approach' is based more on the mutual
recognition of technical standards and regulations, the
opening of markets, and the right of establishment. This in
practice prevents Member States from resorting to the
traditional tool of 'non-tariff barriers to intra-Community
trade.

This new approach has only been possible thanks to the
action of the EC Court of Justice. Unless the Court's terms

of reference are extended to cover the EES, the EES will not

be a success.

The completion of the internal market forms part of the
wider process of national economic deregulation and
liberalization, to be brought about partly by the transfer of
sovereignty to Community decision-making bodies.

6.2. These developments at Community level in the
implementation of its wider plans have not all met with the
approval of the EFTA negotiating partners.

EFTA has never supported transfers of sovereignty (at least
without a guarantee of the countervailing powers needed to
ensure democratic control).

EFTA countries have attained a high profile on world
markets and on the Community market in particular. Their
economies are open to external trade and their industrial
sectors are well-established in the EEC. In spite of this,
EFTA countries are still not giving Community industrial
products and services full access to their markets; they are
also continuing to make it difficult for EC firms to

consolidate their position in EFTA countries. This matter
must be solved as quickly as possible so as to maintain a fair
balance between rights and obligations when the Treaty is
being negotiated.

6.3. It is a welcome sign that the EFTA countries have
recognized that it is also in their interest to limit exceptions
to a minimum, and that they have agreed on the direct
applicability of the joint legislation, the joint legal process,
and the proper operation of the Treaty.

With the 'acquis communautaire' as a basis, the forthcoming negotiating process will define any exceptions. These
negotiations will not be easy, since each EFTA Member
State has its own exceptions to propose.

7. Flanking policies

7.1. The package of measures for completing the
internal market has involved a complex negotiating process
including parallel decisions on flanking policies, economic
and social cohesion, budgetary matters, reform of the
Common Agricultural Policy, and amendments to the
Community decision-taking process following the Single
Act.

A full guarantee of the four freedoms throughout the EES
will call for a fair balance between rights and obligations,
and will also mean the negotiation of a package of
measures to take account of the regional effects of the EES.

Economic cohesion and the social dimension should be

central aspects of the EES Treaty.

7.2. Discussions on flanking policies and other related
questions have been based on the EFTA countries' desire to
increase cooperation in the fields of environmental and
consumer protection, education, civil protection, research
and development, and tourism. The EFTA nations also
wish to participate in Community programmes, and play a
part in their drafting.

7.3. As yet, there have been no concrete proposals for
action to reduce economic and social disparities.

The EFTA nations recognize that they must make a
positive contribution towards economic and social cohesion. However, the exploratory talks have not yet tackled

No C 182/38 Official Journal of the European Communities 23. 7. 90

this subject of crucial importance for the EC's less
developed regions.

On regional policy in particular, EFTA countries are in a
position to assist the less developed regions (as the EFTA
fund for the industrialization of Portugal set up in 1975
continues to do). As the present ERDF cannot be altered, an
EES Treaty could perhaps include provisions for the
establishment of a fund aimed at reducing disparities in
regional development, focusing on the problems of the
regions most affected by the creation of the EES.

7.4. EFTA's socio-economic representatives are also
proving highly responsive to the social dimension; this has
been clearly demonstrated in work carried out in
preparation for the joint meeting scheduled for June 1990.

With higher social and environmental protection standards
in some areas, the EFTA nations can help ensure that the
Treaty also gives full weight to employment policies,
education and training programmes, social dialogue, social
issues in general, and the free movement of workers in
particular.

8. Conclusions

The concept of the European Economic Space defined in
the joint declaration of December 1989 is ambiguous. The

forthcoming round of EC-EFTA negotiations, for which
the Commission has already drawn up a mandate to be
submitted to the Council of Ministers, should clarify those
objectives which appear contradictory.

Clearly the most important thing is for the EFTA countries
to reach a consensus, enabling them to speak with a single
voice, and for them to accept the relevant 'acquis
communautaire'.

The ESC feels that there is a danger that the European
Economic Space could in fact delay acceptance of the
accession applications of EFTA countries which have
already applied for membership or plan to do so. These
countries are fellow Europeans, and have democratic
governments.

The ESC is aware of the difficulties involved in setting up
an EES. However, it calls for coordination of policies
throughout the EES area, in order to reinforce their
effectiveness with regard to Europe's main competitors.

Done at Brussels, 30 May 1990.

_The Chairman_

_of the Economic and Social_ _Committee_

Alberto MASPRONE

Opinion on the Community initiative programme to assist the most remote regions of the

Community (REGIS)

(90/C 182/13)

On 4 April 1990, the Commission decided to consult the Economic and Social Committee, under
Article 198 of the Treaty establishing the European Economic Community, on the Community
initiative programme to assist the most remote regions of the Community (REGIS).

The Section for Regional Development, Town and Country Planning, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 22 May 1990. The
rapporteur was Mr Delia Croce.

At its 277th plenary session (meeting of 30 May 1990) the Economic and Social Committee
unanimously adopted the following opinion: