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23 March 1994
Doc. 7047
1403-21/3/94-2-E
REPORT
on EFTA activities in 1991 and 1992
(in reply to the 31st and 32nd annual reports of the
European Free Trade Association (EFTA)1
(Rapporteur: Mr TOWNEND,
United Kingdom, European Democratic Group)
Summary
The European Free Trade Association (EFTA) and its member countries face two main challenges. Firstly, that of achieving far-reaching economic integration within the European Economic Area (EEA) concluded between the European Union and all EFTA member countries except Switzerland. The EEA also facilitates the accession of certain EFTA countries to the Union. A second challenge is that of helping to secure democracy and market economy in the countries of central and eastern Europe, by fostering trade and economic co-operation between these countries and EFTA.
Increasing economic integration in Europe calls for greater co-operation also among parliamentarians, with a view to strengthening democratic control of decisions taken at international level. The report also proposes that the European Economic Area be used as a stepping-stone to a continent-wide multilateral trading framework which is respectful of GATT principles and which could eventually lead to a "pan-European internal market".
I. Draft resolution
1. The Assembly has examined the 31st and the 32nd annual reports of the European Free Trade Organisation (EFTA) (Docs. 6729 and 6961), and the report of its Committee of Economic Affairs and Development in reply thereto (Doc 7047).
2. The Assembly recognises the essential contribution made by EFTA since its foundation to enhanced and more open trade in Europe and the world.
3. The Agreement on a European Economic Area (EEA) — which entered into force on 1 January 1994 among the member states of the European Union and the EFTA member countries Austria, Finland, Iceland, Liechtenstein, Norway and Sweden — is a milestone on the road to further European economic integration, creating as it does the world's largest internal market. It is vital that it be allowed to contribute to overall European and world economic development, in agreement with GATT principles.
4. The Assembly welcomes EFTA's intensified co-operation with other countries and regions, and in particular hails its recently concluded free-trade agreements with several central and east European countries, as well as with Turkey and Israel.
5. These agreements will, along with the association agreements concluded between six central and east European countries and the European Union ("Europe Agreements"), play an important role in supporting political and economic reform in post-communist central and eastern Europe, and in integrating the latter into the world economy.
6. The Assembly strongly supports the EFTA Co-operation declarations with Estonia, Latvia and Lithuania, Slovenia and Albania, and encourages EFTA to pursue these agreements so as to facilitate the integration of these countries into the European economic mainstream.
7. Increased economic integration in Europe requires intensified co-operation also at parliamentary level, with a view to strengthening democratic control, ensuring faithful and equitable implementation of agreements, and safeguarding the legitimate interests of European or other countries not party to these agreements but affected by them.
8. The Assembly in this context welcomes the progress made towards ensuring the smooth functioning of EEA bodies, including its Joint Parliamentary Committee and reiterates its earlier proposal made in Resolution 965 (1991) that the Assembly should have observer status with the latter body, in view of its increasingly pan-European membership and its longstanding concern for European integration.
9. The Assembly also welcomes the creation of a consumer's consultative committee within EFTA, and the efforts of the EFTA Environment Group to promote co-operation in this field among EFTA member states.
10. The Assembly, in conclusion, asks the member states of EFTA and the European Union:
i. to do their utmost to enhance access to their markets for exports from the new democracies in central and eastern Europe — including agricultural and other "sensitive" products — so as to allow these countries to profit from their comparative advantages such as the low cost of labour;
ii. to ensure that the EEA retains a maximum degree of openness vis-ā-vis the rest of Europe and the world, thus offering the prospect of joining the EEA to other European countries which wish to pursue economic integration but which may not be in a position to join the European Union;
iii. to use the EEA as a stepping-stone to a continent-wide multilateral trading framework respectful of GATT principles, eventually leading to a "pan-European internal market";
iv. to consider, more immediately, the creation of a free-trade system based on common rules of origin for the purpose of cumulation, comprising the European Union, the EFTA member states and central and east European countries concerned — the absence of which has considerable negative consequences for intra-European trade;
v. toward this end, to make full use of the Council of Europe as a privileged joint forum for political, legal, social and cultural co-operation — and to consider providing within it a political framework for pan-European co-operation on economic issues.
II. Explanatory memorandum
by Mr TOWNEND
Page
Table of contents
I. Introduction 5
II. An important new step towards European integration: the European
Economic Area (EEA) Agreement 5
III. EFTA's new partners: relations with post-communist central and
eastern Europe, and with other regions 10
i. Free-trade agreements with Bulgaria, the Czech Republic, Hungary,
Poland, Romania and the Slovak Republic 10
ii. Declarations on co-operation with the three Baltic states (1991),
Slovenia (May 1992) and Albania (December 1992) 12
iii. Free-trade agreements with Turkey (December 1991) and Israel
(September 1992) 12
IV. Concluding remarks: a changing EFTA 12
Appendix: Fact sheet on EFTA's relations with third countries 14
I. Introduction
1. Few intergovernmental organisations have shown more flexibility than EFTA in its over thirty years of existence — from its changing membership as certain countries left to join the then European Community and other countries in turn joined EFTA, to its 1972 free-trade agreements with the Union, to the 1984 so-called "Luxembourg Programme" of pragmatic and selective co-operation with the European Union.
2. In part, EFTA's adaptability reflects the fact that its current members — Austria, Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland — are open and highly advanced economies. Given their relatively modest size they rely heavily on trade, and have traditionally been strong supporters of free-trade. While their populations amount to only about 0,7% of that of the world, they account for approximately 7% of world trade.
3. Through the signature of the Agreement on the European Economic Area (EEA) on 2 May 1992 in Porto, the EFTA states and the European Union reached a milestone on the road to further European integration in the economic field. Less than two months later, the European Council meeting in Lisbon considered that "the EEA Agreement has paved the way for opening enlargement negotiations with a view to an early conclusion with EFTA countries seeking membership of the European Union".
4. The Association has thus entered a crucial period of its evolution considering
not only the conclusion, in March 1994, of membership negotiations in the European Union on the part of Austria, Finland, Norway and Sweden but also the uncertainty surrounding the European Union-EFTA European Economic Area agreement following its rejection in the Swiss referendum in December 1992. To this should be added the effects on EFTA and the European economy as a whole following from the changes in central and eastern Europe.
5. The present report draws on a series of consultations with EFTA in the course of 1993, including a visit by the Sub-Committee on International Economic Relations to EFTA headquarters in Geneva in December 1993, on which occasion an extensive exchange of views was held with Mr B.O. Johansson, Deputy Secretary General, and senior officials of the Association.
II. An important new step towards European integration: The European Economic Area (EEA) Agreement
6. The European Economic Area (EEA) is the term used to describe the new economic context that will result from the Oporto Agreement. Together, the eighteen European Union and EFTA member countries concerned have a population of about 370 million and account for over 40% of world trade. The EEA represents the world's largest and most comprehensive trading area — founded on the ideas of far-reaching economic integration and non-discrimination between economic actors.
7. The EEA Agreement was supposed to enter into force at the beginning of 1993, but this was rendered impossible due to the previously mentioned Swiss rejection. (A protocol had to be added to the Agreement, modifying, for example, its financial provisions, and it had been submitted for renewed ratification by the parliaments of the participating states.)
8. Following ratification of the EEA Agreement by all parties concerned, it eventually entered into force on 1 January 1994. At a time of serious economic problems in Europe, it is hoped that it can provide a stimulus to economic growth and employment. Continuous consultation and policy co-ordination among EFTA and European Union (EU) countries are expected to enhance the coherence of economic and social policies within the wider Europe.
9. The EEA will permit EFTA countries for the first time directly to influence European Union developments and to define among them a joint strategy to deal with them. The EEA's origin, it will be recalled, was the proposal in 1989 by Jacques Delors, President of the Commission of the European Union, to develop with the EFTA states a "new, more structured partnership with common decision-making and administrative institutions". The proposal was welcomed by the EFTA countries.
10. Though not a "customs union" (a single customs territory), the EEA was proposed to be more than just an extension of a free-trade area. Its aim was to show that the European Union and EFTA were able to "contribute together to the vitality of Europe". The EEA Agreement has been heralded as being a model for a wider Europe, and is meant to provide a "stable and mutually beneficial alternative to full European Union membership". This has been particularly the case for countries with no immediate prospect of joining the European Union.
11. The EEA Agreement enables EFTA states to participate more or less fully (excluding areas such as agriculture) in the European Union single market without becoming European Union members. Through the Agreement, about two-thirds of the Union rules developed over thirty years will be incorporated in the national laws of EFTA countries. These include regulations concerning the free movement of industrial goods, services, capital and persons, and the relevant provisions on competition policy. In addition, EFTA countries will participate in certain so-called "horizontal" policies (for example, company law, statistics, consumer protection and environment) and flanking policies (programmes such as Erasmus). In short, the EEA could be described as the "1992" single market minus taxation and agriculture.
12. To understand the economic benefits of the EEA Agreement, it is important to remember that there are few systemic differences in trade patterns among EEA nations, and that their economies are all highly intertwined. A large percentage of EFTA trade is in manufactured goods. In industrial products and to some extent services EFTA countries are virtually as integrated into the European Union as are European Union member states themselves, but in the past considerations of neutrality and sovereignty prevented them from applying for European Union membership. EFTA was their preferred institution, with its decision-making mechanism based on consensus, trade autonomy vis-ā-vis third countries, and integration essentially limited to free-trade in industrial goods, leaving political issues aside.
13. Two economic effects normally result from a free-trade area. These are trade diversion and trade creation. Trade diversion will not be a major factor in the EEA, as imports are mainly from other EEA countries (about 67% for the European Union and 73% for EFTA). Moreover, since tariffs on non-EEA imports are relatively low, the loss of tariff revenue as a result of the extension of the free-trade area will be negligible. (It is important to keep in mind that the EEA does not require EFTA countries to adopt the European Union's common external tariffs.)
14. Trade creation in the EEA will not follow the common pattern. While the European Union and EFTA already constitute a virtually free-trade area in manufactured goods, firms cannot treat the European Union and EFTA as a unified market — owing to the long list of trade-inhibiting barriers such as differing technical standards and regulations, public procurement favouring domestic companies, etc. The EEA Agreement, is meant to remedy such shortcomings and should therefore have a positive impact on the competition among firms within the area. The dropping of even relatively low invisible barriers to trade can have a profound effect on competitivity. This in turn should lead to lower prices and better resource allocation.
15. If EFTA countries realised the benefits to be had from joining the EEA, they were also aware of the drawbacks associated with not adhering. The economic rationale — the desire to avoid the losses incurred from not being part of the European Union's "1992" project (the completion, of the internal market) — is to try to avoid a strategic disadvantage. Non-membership in the single market would lead to a fall in sales and profits for EFTA firms in their major export market, the European Union.
16. Indeed, the establishment of equal conditions of competition within the EEA is a priority objective of the Agreement. This objective will be attained through the introduction of an effective surveillance system, under which EFTA countries will establish a structure similar to that of the Union, namely an EFTA Surveillance Authority, to be responsible for the application of EEA rules in the EFTA countries, and an EFTA Court which will be responsible for judicial control.
17. Special solutions have been found for agriculture and fisheries through bilateral agreements. In addition, a "future-development" clause commits the parties to continuing their efforts to achieve progressive liberalisation of trade in these sectors.
18. Another factor which makes the EEA stand out from other free-trade agreements is the settlement of a financial contribution by EFTA countries to the European Union, through the so-called Cohesion Fund. This will be used to pay for European Union projects in the environmental field, co-operation policies in areas such as research and technological development, education and training, and will also contribute to poorer areas in Europe for development and structural adjustment. (The assistance will take the form of "soft loans" totalling Ecu 1 500 million and grants amounting to Ecu 500 million.) Since none of the eligible regions are in EFTA countries, these contributions are clearly net contributions from the latter and in particular finance the "horizontal" or "flanking" policies of the European Union.
19. The Cohesion Fund was not without controversy during the EEA negotiations. EFTA countries did not readily see the link between EEA membership on the one hand, and the need to provide financial support to in particular poorer European Union members on the other. The European Union countries concerned argued, on the other hand, that such assistance was justified through the commercial losses that could be expected following the opening of their markets to competition from EFTA-based companies.
20. The institutional provisions of the Agreement give EFTA countries limited participation in the management of the acquis communautaire, and in the development of new Union legislation. At the sub-committee's December 1993 meeting with EFTA in Geneva the organisation nevertheless maintained that it will be able to participate rather fully in "decision-shaping", if not in "decision-making". Environment protection and research and development were said to be areas where co-operation functions well already.
21. The possibility of exerting effective influence over legislation that will ultimately bind them can only be obtained by the EFTA countries concerned if they become full members of the Union. Thus, the EEA Agreement yielded a result quite opposite to that originally thought, for it convinced most EFTA states that there is no better alternative than that of applying for full membership. In addition, the political constraints that had prevented neutral EFTA countries from applying for membership had loosened after the fall of the Berlin wall.
22. As has been mentioned earlier, Austria, Finland, Norway and Sweden concluded membership negotiations with the European Union in March 1994, and will hold popular referenda on the matter in the near future. Switzerland has not pursued membership negotiations following the rejection of the country's membership in the European Economic Area in December 1992. Assuming that all the four countries mentioned become European Union members in the near future, this will of course not only render the EEA agreement near-redundant but will also deprive EFTA of most of its members.
23. It is interesting at this point to quote the reasons given by Sweden in its application for membership, as they seem generally to reflect the views of other EFTA applicant countries. As the application document stated: "While the Union and Sweden were negotiating the EEA Agreement, the world in general and Europe in particular were changing very fast. Full membership of the Union came to be considered in Sweden as no longer incompatible with the Swedish policy of freedom from alliances. Realising also the large extent of the Union acquis already taken on board, [Sweden] initiated a reflection about the advantages and disadvantages of requesting membership of the Union... Recognising that the Union was regarded as a major driving force for co-operation and development in Europe, Sweden believed that, as a member, her possibilities of influencing this future co-operation — in political, economic and social terms — would be improved...".
24. The EEA Agreement has thus become a transitory, and possibly quite short-lived, transitory stage for certain EFTA countries on the road to full European Union membership — although the latter would entail some costs (notably the participation in the Common Agricultural Policy), implying the liberalisation of subsidised agricultural trade in the EFTA countries concerned but also sharing in the high costs of the CAP (which may in certain cases be higher than that associated with EFTA countries' current agricultural policies).
25. From an European Union perspective, the EEA Agreement means primarily political gains, while the Union could expect considerable economic benefits by embracing the wealthy EFTA countries as full members. Moreover, the Union's enlargement through EFTA may be important to some member states for political reasons, for instance so as to reduce the federalist implications of the Maastricht Treaty by including countries that may harbour similar reservations against them.
26. There are, thus, several reasons why the different parties to the EEA Agreement are now opting for full European Union membership. One is the "No" in the Swiss referendum of December 1992. Following this Switzerland no longer participated in talks with the European Union on the EEA implementation. The joint diplomacy of the EFTA countries — as formulated in the Oslo Declaration of 1989 — is now overtaken by events. (However, after the referendum in Liechtenstein which showed a majority in favour of the EEA, arrangements were made at the ministerial meeting of the EFTA Council on 10 and 11 December 1992 to complete ratification of the EEA Agreement.)
27. The different votes in Switzerland and Liechtenstein complicated the trade relations between the two countries, which practise free-trade with one another since 1923. At a meeting in June 1993 they agreed to continue their mutual trade agreement, dating from 1923, and to ask their EEA partners to accept this even though it may mean indirect access by Swiss exports on EEA terms to the European Union market via Liechtenstein. Your Rapporteur would surely hope that this can be accepted, since it can be in nobody's interest to see long-established trade relations ruptured for the sake of a technicality. Regarding the relations between Switzerland and other EFTA countries on the one hand, and the European Union and Switzerland on the other, it would seem that all parties are trying to be as pragmatic as possible, and to restrict as far as possible any damage to existing economic relations. A Swiss member of the Committee on Economic Affairs and Development assured us that the Swiss Parliament has in the meantime legislated the large majority of EEA provisions anyhow, making formal EEA membership less necessary.
28. Following the Swiss vote a protocol adapting the Agreement to this new reality was signed by the remaining EFTA states and representatives of the European Union in March 1993. In the Protocol, the remaining EFTA countries agreed to increase their contributions to the Cohesion Fund for the European Union's poorer regions, to make up in part the gap left by Switzerland. This was not without controversy either, as various EFTA countries felt that the already weak logic behind the Cohesion Fund was undermined even further if they would have to "pay extra" due to the exclusion of Switzerland from the EEA. The two sides also agreed to move forward the implementation of bilateral agreements on expanded access to EFTA markets for agricultural products from the European Union Mediterranean countries.
29. The joint EFTA-European Union ministerial meeting, held in Vienna in December 1993, noted with satisfaction that preparations for joint EEA and internal EFTA institutions were proceeding adequately. The EEA Council, the EEA Joint Committee, the EEA Joint Parliamentary Committee and the EEA Consultative Committee all held their first meetings in early 1994, and one of their first tasks was to approve an additional package of more recent European Union legislation for incorporation into the EEA agreement.
30. The Parliamentary Assembly, in its Resolution 965 (1991), proposed that it should be granted observer status on the above-mentioned Joint Parliamentary Committee. Two important reasons are the Council of Europe's long-standing concern for European integration, and its increasingly pan-European membership. EFTA representatives have replied that this concern is well noted, and that a decision can be expected in 1994.
III. EFTA's new partners: relations with post-communist central and eastern Europe, and with other regions
31. EFTA is reaching out towards new countries and regions, and has recently concluded trade agreements with several central and east European countries, as well as with Turkey and Israel (see Appendix on EFTA's relations with non-European Union third countries).
i. Free-trade agreements with Bulgaria, the Czech Republic, Hungary, Poland, Romania and the Slovak Republic
32. The revolutions of 1989 in central and eastern Europe prompted the EFTA countries to rapid action. The "Gothenburg Declarations" of June 1990 recognised the need for co-operation between the so-called "Visegrad countries" (Poland, Hungary and the then Czechoslovakia) and EFTA on trade, economic, industrial and scientific issues — with a view to supporting political and economic reform in post-communist central and eastern Europe. Free-trade negotiations between EFTA and Hungary, the former CSFR and Poland began in the autumn of 1990, following on from co-operation declarations signed earlier that year. Bulgaria and Romania signed declarations on co-operation with EFTA states in December 1991 and free-trade agreements a year later.
33. The free-trade agreements contain both traditional and newer elements. Many articles are based on similar clauses in earlier EFTA-European Union free-trade agreements and the EFTA-Spain Agreement of 1979, while others take their inspiration from the EEA Agreement. However, they differ from traditional free-trade agreements in several important respects, for example in their being "asymmetric" in nature (that is ensuring greater protection for central and east European countries than for EFTA countries). This feature was dictated by the perceived need to weave these countries into the political and economic fabric of western Europe as quickly as possible, without causing undue damage to their economic restructuring.
34. The agreements also include provisions reflecting today's economic realities and developments in the Uruguay Round. Among the distinguishing features are: (a) articles on intellectual property rights and access to public procurement markets; (b) rules of competition restricting state monopolies, state aid and restrictive practices distorting free-trade; (c) an evolutionary clause on investments and trade in services.
35. The agreements, together with the Association Agreements linking these countries with the European Union (the so-called "Europe Agreements") will play an important role in integrating central and east European countries into the world economy. The aim is to establish free-trade in industrial products among European nations. (With this in mind, EFTA countries have tried to co-ordinate their activities with those of the European Union. Regular meetings are being held between EFTA and European Union experts to ensure that rules laid down by the agreements can function efficiently and coherently in a future free-trade area.)
36. In December 1992 the by that time four Visegrad countries — the Czech Republic, Hungary, Poland, and the Slovak Republic — took an important step in liberalising trade among themselves by concluding an Agreement on the Central and East European Free Trade Area (CEFTA). This agreement, which became operational on 1 March 1993, inter alia contains state aid, competition and public procurement rules that are similar to those found in the free-trade agreements with EFTA countries and the European Union.
37. The "Second Parliamentary Colloquium of Members of Parliament of the EFTA Countries and Members of the Parliaments of Central and East European Countries" was organised by EFTA in Geneva in April 1993. Parliamentary delegations from Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia attended. All these countries have signed free-trade agreements with EFTA countries. The participants stressed the importance of parliamentary co-operation for the implementation of free-trade agreements, as well as the opportunities offered by EFTA countries in enhancing reform towards a market economy and a strengthened parliamentary democracy.
38. Mr Nic Grönvall, Chairman of the Committee of Members of Parliament of the EFTA countries, asked whether the best course for central and east European countries would really be to seek as speedy an accession to the European Union as possible — instead of exploring alternatives such as joining EFTA and the EEA.
39. Speaking about relations between EFTA and central and east European countries, Mr Georg Reisch, Secretary-General of EFTA, emphasised the opportunities offered by asymmetrical free-trade agreements and urged the members of parliament to promote their fullest use in order to enhance economic and trade relations. Mr Reisch said that in order to reap the full benefits offered by the free-trade agreements, significant structural changes in central and east European countries would be required.
40. Several speakers pointed to the long-term potential for trade growth between the EEA and central and east European countries. Once they are through the transition period the Visegrad countries are expected to reach the income level of even some European Union member countries, creating a huge potential market for EEA exporters.
41. However, the export potential from the EEA cannot be realised unless CEEC (Central and East European Countries) are able to reciprocate with exports to the west. A short-term trade deficit is possible due to foreign capital inflows, but eventually the level of imports should be matched by the level of exports. Only through a functioning two-way trade can hard currency be earned so as to service debts, and prosperous economies have a chance of emerging in central and eastern Europe.
42. A number of other conclusions can be drawn from the colloquy. In order to allow economic operators to benefit fully from reduced trade barriers it would be preferable to combine the various European free-trade zones — EFTA-European Union, EFTA-CEEC (Central and East European Countries) and European Union-CEEC — into a coherent pan-European system. In this regard, a "multilateralisation" of "rules of origin" provisions in the various free-trade agreements was perceived as an urgent task. Furthermore, agriculture is a vital sector in all the transition economies, but its present treatment in the free-trade agreements falls short of their expectations of these countries. It would seem important to arrive at solutions within a global trading framework also in this domain.
ii. Declarations on co-operation with the three Baltic states (1991), Slovenia (May 1992) and Albania (December 1992)
43. The declarations on co-operation with the three Baltic states of Estonia, Latvia and Lithuania adopted in 1991, and with Slovenia and Albania in 1992, will favour the expansion and liberalisation of these countries' trade relations with EFTA member countries (concentrating on areas like co-operation on customs and tariff matters, and the removal of technical barriers to trade). An important part of EFTA co-operation with these countries is the organisation of trade policy seminars and scholarship schemes.
44. With a view to enhancing political dialogue with these countries, "The Third Parliamentary Colloquium of Members of Parliament of the EFTA Countries and Members of the Parliaments of Central and East European Countries" was held in Geneva in October 1993. Guest parliamentary delegations from Albania, Estonia, Latvia, Lithuania and Slovenia attended. The guest delegations outlined the new political and economic goals of their countries, stressing in particular the need for foreign capital investment and technical assistance, stabilisation of financial institutions, establishment of infrastructure, enhanced privatisation and better market access for their exports. Several EFTA speakers emphasised the need for a more coherent and co-ordinated approach by both the European Union and EFTA, in order to derive maximum benefit from the various sources of international assistance during the transition.
iii. Free-trade agreements with Turkey (December 1991) and Israel (September 1992)
45. Contacts with Turkey on the possibility of a free-trade agreement began in 1989. One aim on the part of EFTA was to ensure that EFTA goods be given the same access as European Union goods on the Turkish market. More generally the objective of the Agreement, which entered into force in October 1992, is to promote the enormous trade potential between the dynamic Turkish economy (with a population of almost double that of the EFTA countries combined) and The Seven. The EFTA-Turkey Agreement also contains an "evolutionary clause" allowing both sides to develop their relations further in areas such as services and foreign direct investment.
46. A decision to start free-trade negotiations with Israel was taken in June 1991, principally for the same reasons as in the case of Turkey. The EFTA-Israel free-trade agreement entered into force in January 1993. It is an agreement based on reciprocity and symmetry, and will allow EFTA exporters the same access to the Israeli market as that enjoyed by their European Union counterparts.
IV. Concluding remarks: a changing EFTA
47. The Association faces two main challenges. The first one is to achieve far-reaching multilateral integration within the framework of the EEA, possibly leading, to full European Union membership for EFTA members Austria, Finland, Norway and Sweden whose governments have all concluded negotiations toward this end. A second challenge is to help secure democracy and market economy in central and eastern Europe by fostering trade with EFTA countries.
48. Increasing economic integration in Europe calls for greater co-operation also among parliamentarians, with a view to establishing democratic decision-making at international level and ensuring smooth implementation of various agreements. The Parliamentary Assembly should continue its contribution to this process.
49. There may be those who feel that EFTA will have completed its mission when a greater or smaller number of its current member states join the European Union. We shall see. It is not certain that all the applicant countries will in the end join. This will depend on the outcome of popular consultations. For those which may not, the closest possible economic co-operation with the European Union will be necessary, for their own and European Union countries' economic health as well as for the world economy. The EEA Agreement, which some see as having only a short life expectancy, may in such an event be of continued value.
50. Furthermore, certain countries in central and eastern Europe may for various reasons and for a shorter or longer time, apply to join EFTA, in the knowledge that membership there is as demanding from the viewpoints of economic performance and market access as is that of the European Union. Mr Delors, President of the European Commission, in a November 1993 speech, also suggested that various central and east European countries would be well advised to try to join the EEA, not least because doing so is likely to facilitate subsequent European Union membership. This would also "prolong the useful life" of the EEA agreement.
51. EFTA would in that event be able to continue to furnish its unique contribution to Europe's economic wellbeing — welcoming any new members prepared to play by its rules, and wishing success to those joining the "other club".
52. EFTA's purpose has always been and continues to be economic rather than political. Its founding convention makes clear that it is there to "promote in the Area of the Association and in each member state a sustained expansion of economic activity... [and] to contribute to the harmonious development and expansion of world trade and to the progressive removal of barriers to it" (Article 2). Surely, in a Europe which has such difficulties in uniting politically there must be a place for an institution of this kind, especially since an economic growing-together is increasingly recognised as having to precede the political one.
APPENDIX
Reporting committee: Committee on Economic Affairs and Development.
Budgetary implications for the Assembly: none.
Reference to committee: Doc. 6729 and Reference No. 1838 of 1 February 1993; Doc. 6961 and Reference No. 1907 of 4 November 1993.
Draft resolution unanimously adopted by the committee on 23 February 1994.
Members of the committee: Mr Holtz (Chairman), Dame Peggy Fenner, Mr Lotz (Vice-Chairmen), MM. Andreoli, Gudmundur Bjarnason, Bloetzer, Bonnici, Borderas, Mrs Burbiené, MM. Buzatu, Colombo, Davis, Demiralp, Draguiev, Mrs Durrieu, MM. Fabra, Figel, Flückiger, Gjellerod, Goerens, Goop, Gregory, Hagård, Hellström, Kempinaire, Kilic, Kittelmann, Kolár, Albrecht Konecny, Le Grand (Alternate: Mignon), Leers, Malinowski, Mändmets, Mautner-Markhof (Alternate: Gusenbauer), Mesoraca (Alternate: Covi), Novak, Pahor, Paire (Alternate: Liberatori), Pavlides, Pinto, Pirinski, Radulescu Botica, Rehn, Rodrigues, Mrs Solberg, Mrs von Teichman, MM. Townend, Uczkiewicz, Valleix (Alternate: Hunault), Mrs Verspaget, MM. Vrettos, Wintgens.
N.B. The names of those members present at the meeting are printed in italics.
Secretaries to the committee: MM. Torbiörn and Mezei.