Andorra–European Union relations

Andorran–European relations

European Union	Andorra

Andorran–European relations are based on a customs union between Andorra and the European Union (EU).

Customs Union [edit]

The "Agreement between the European Economic Community and the Principality of Andorra" (signed 28 June 1990, entered into force 1 July 1991) establishes a customs union with most favoured nation status between the Principality and the EU. Andorra is treated as an EU state where trade in manufactured goods is concerned, but not for agricultural produce.^[1]

There are full customs checks on the EU side of the border, as Andorra has low VAT and other indirect taxes, such as those for alcohol, tobacco and petrol, from which visitors might benefit.

Euro [edit]

Andorra has a monetary agreement with the EU allowing it make the euro its official currency, and permitting it issue euro coins as early as 1 July 2013. They plan to issue their first coins on 1 January 2014.^[2][3]

Background [edit]

Andorra did not have an official currency prior to adopting the euro, and unlike its two larger neighbours, France and Spain, which surround it, it is not a member of the EU. However it de facto used the EU's euro (the currency of the Eurozone states) as it had historically used the French franc and Spanish peseta. When those two currencies were replaced by the euro in 2002, the euro replaced the franc and peseta as the sole circulating currency in Andorra.

Three other European microstates outside of the EU, Monaco, San Marino and the Vatican City, also faced this situation but they, unlike Andorra, concluded agreements with the EU for the right to mint their own euro coins. Euro coins have a common design on one side, and a national-specific side on the other. Hence those three microstates could design their own national side, mint and distribute their own coins. As with coins minted in other eurozone states, the microstate coins are valid across the eurozone; however they do not gain representation on the euro's governing bodies, the European Central Bank (ECB) and the Eurogroup.

Currency agreements [edit]

In 2003, Andorra requested the right to mint its own coins and the following year the Council of the European Union adopted its negotiating position with Andorra. Following Andorra's agreement to abide by Council Directive 2003/48/EC on taxation of savings income in the form of interest payments, the Commission recommended opening negotiations.^[4] Negotiations were expected to be concluded by 2008,^[5][6] but were repeatedly stalled due in part been to poor relations stemming from Andorra's tax haven status. A monetary agreement was eventually agreed to by Andorra and the EU in February 2011,^[7] and the agreement was signed on 30 June 2011.^[8] After the agreement came into force on 1 April 2012,^[9] the euro became Andorra's official currency. Andorra will be permitted to issue up to 2.4 million euro coins from 1 July 2013 onwards provided that it complies with the agreement's terms.^[10][11] In October 2012, Jordi Cinca, Andorra's Minister of Finance, stated that 1 January 2014 was a more likely date to start issuing euros due to delays in adopting the legislation required by the monetary agreement.^[12] In February 2013, the Director of the Mint of Andorra Jordi Puigdenasa confirmed that Andorra would not begin issuing euros until 1 January 2014.^[2][3] A design competition for the national side of the euro coins was launched in March 2013, with a deadline of 16 April.^[2] A final decision on the designs is expected on 27 May.^[13]

Other agreements [edit]

Two other agreements were signed in 2003/4. The first is a cooperation agreement covering the environment, communications, information, culture, transport, regional and cross-border co-operation and social issues.^[1] However this has seen few operational results so far.^[14] There is also a taxation of savings agreement^[1] which was signed following pressure from the EU on offshore financial centres to conform to EU standards.^[14]

Schengen [edit]

Andorra has stayed outside the Schengen Agreement and maintains border controls with the EU. However as travellers to Andorra have to pass through the Schengen Area, and Andorra does not issue any visas, but accepts Schengen visas, Andorra is in practice a virtual part of the area. Third country nationals wishing to visit Andorra need a multi-entry Schengen visa, since to leave Andorra they must enter the Schengen area a second time.

Future integration [edit]

In November 2012, after the Council of the European Union had called for an evaluation of the EU's relations with the sovereign European microstates of Andorra, Monaco and San Marino, which they described as "fragmented",^[15] the European Commission published a report outlining options for their further integration into the EU.^[16] Unlike Liechtenstein, which is a member of the European Economic Area (EEA) via the European Free Trade Association (EFTA) and the Schengen Agreement, relations with these three states are based on a collection of agreements covering specific issues. The report examined four alternatives to the current situation: 1) a Sectoral Approach with separate agreements with each state covering an entire policy area, 2) a comprehensive, multilateral Framework Association Agreement (FAA) with the three states, 3) EEA membership, and 4) EU membership. The Commission argued that the sectoral approach did not address the major issues and was still needlessly complicated, while EU membership was dismissed in the near future because "the EU institutions are currently not adapted to the accession of such small-sized countries." The remaining options, EEA membership and a FAA with the states, were found to be viable and were recommended by the Commission. In response, the Council requested that negotiations with the three microstates on further integration continue, and that a report be prepared by the end of 2013 detailing the implications of the two viable alternatives and recommendations on how to proceed.^[17]

As EEA membership is currently only open to EFTA or EU members, the consent of existing EFTA member states is required for the microstates to join the EEA without becoming members of the EU. In 2011, Jonas Gahr Støre, the then Foreign Minister of Norway which is an EFTA member state, said that EFTA/EEA membership for the microstates was not the appropriate mechanism for their integration into the internal market due to their different requirements than large countries such as Norway, and suggested that a simplified association would be better suited for them.^[18] Espen Barth Eide, Støre's successor, responded to the Commission's report in late 2012 by questioning whether the microstates have sufficient administrative capabilities to meet the obligations of EEA membership. However, he stated that Norway was open to the possibility of EFTA membership for the microstates if they decide to submit an application, and that the country had not made a final decision on the matter.^{[19][20][21][22]} Pascal Schafhauser, the Counsellor of the Liechtenstein Mission to the EU, said that Liechtenstein, another EFTA member state, was willing to discuss EEA membership for the microstates provided their joining did not impede the functioning of the organization. However, he suggested that the option direct membership in the EEA for the microstates, outside of both the EFTA and the EU, should be given consideration.^[21]

Membership [edit]

Deepening Andorra's relationship with the EU generally requires compliance with the EU's four freedoms (only goods is achieved) together with fiscal and financial sector reforms to EU standards (removing its tax haven reputation).^[14] The government has said that "for the time being" there is no need to join the EU;^[23] however, the governing Social Democratic Party is in favour.^{[citation needed]}

See also [edit]

• Enlargement of the eurozone
• Microstates and the European Union

References [edit]

External links [edit]

• Andorran mission to the European Union
• Andorra Mint
• EU relations with the Principality of Andorra, European External Action Service
• Andorra : Customs Unions and preferential arrangements, European Commission DG Taxation & Customs Union
• EU-Andorra Customs Agreement, European Commission Treaties Database
• EU-Andorra Cooperation Agreement (PDF), Official Journal of the European Union
• EU-Andorra Taxation Agreement (PDF), Official Journal of the European Union
• Operational Programme "France-Spain-Andorra" 2007-2013, European Commission
• Agreements on monetary relations (Monaco, San Marino, the Vatican and Andorra), European Commission
• Emerson, Michael (2007) Andorra and the European Union, (PDF) Centre for European Policy Studies (CEPS)

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