Inside or outside the EU Single Market?
Disclaimer: This document provides guidance and is not a legally binding interpretation and shall therefore not be relied upon as legal advice.
The EU Single Market consists of the Member States of the European Union. The objective is that within the EU Single Market, products, capital, services and people can flow freely from one Member State to another Member State. This is also called ‘the four freedoms’. With regards to goods, the goal is ‘to ensure the free movement of goods within the market, and to set high safety standards for consumers and the protection of the environment’.
The EU currently has 27 member states. It is (therefore) also referred to as ‘EU-27’. The EU-27 are (in alphabetical order): Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. There are also territories outside of Europe (link) that are a part of the EU, or enjoy a special status. But what is the status of ‘countries’ within Europe, that are not a member of the EU? Examples are Andorra, San Marino, Switzerland and Vatican City.
Part of the EU Single Market?
The countries Iceland, Liechtenstein, Norway and Switzerland have together founded the organization ‘EFTA’ (European Free Trade Association). The goal of EFTA is ‘the promotion of free trade and economic integration and the benefit of their trading partners around the world’.
The EU Single Market are 30 countries
Three of the EFTA-states (namely Iceland, Liechtenstein and Norway), have signed the EEA Agreement. Together with the EU-27, these form the ‘EU Single Market’. Thus: the EU-27 + Iceland, Liechtenstein and Norway. Switzerland did not sign the EEA-agreement and is not part of the EU Single Market. Switzerland does however adopt a lot of EU-legislation. Read more on Switzerland here. Because Iceland, Liechtenstein and Norway are not EU Member States, the EU legislation is not automatically in effect in these countries.
Which EU-legislation applies to Iceland, Liechtenstein and Norway?
EU legislation is created and adopted by the bodies of the EU. Every Member State has a vote in the process. The legislation is ‘of’ the EU-27, it is therefore not directed at the three countries Iceland, Liechtenstein and Norway. As mentioned, Iceland, Liechtenstein and Norway have signed the EEA agreement and are not part of the EU.
Under the EEA-agreement Iceland, Liechtenstein and Norway have the obligation to incorporate the EU-legislation in their own legislation. If you want to be sure if EU-legislation has been adopted by Iceland, Liechtenstein and Norway, check the legislation via this link.
Conclusion: the EEA agreement creates economic integration, common competition rules, rules for state aid and government procurement between Iceland, Liechtenstein and Norway on one side and the EU on the other side.
Note: The EFTA-countries are free to negotiate free trade agreements with ‘third countries’ through EFTA.
Andorra, Monaco and San Marino
Andorra has one of the four freedoms. With regards to manufactured goods, Andorra is treated in the same manner as an EU-Member State. Products can travel freely in the EU (customs codes 25 to 97). Like EFTA, agricultural products are exempted. The relation between Andorra and the EU is based upon the 'agreement between the EEC and the Principality of Andorra’. This Agreement has been in force since 1 July 1991. Since then several other agreements have been signed, which cover subjects such as environment, transport, culture and information, education, social issues, health, energy and telecom networks, regional policy, combating counterfeiting, money laundering and terrorist financing.
In 1963, France and the municipality of Monaco held a Customs Conventions. As of 1968, Monaco has been integrated through France in the Community Customs territory. The French authorities are responsible for customs inspections and clearance. Goods originating or being in free circulation in Monaco benefit from the free movement of goods inside the EU.
However, Monaco is not a part of the EU. The costs for membership would be too high. Goods originating in Monaco may thus encounter obstacles, specifically where harmonisation of product legislation is concerned. This is why a bilateral agreement was signed on the application of certain harmonisation legislation on the territory of the EU. This mainly applies to medicinal products, cosmetics and medical devices. Examples of obstacles that may be encountered are that REACH registrations are not possible for Monégasque companies. Also the WEEE-legislation creates difficulties when exporting electronic and electrical waste for France.
In 1991, the EU and San Marino concluded an agreement on a customs union and mutual cooperation for industrial and agricultural goods (customs codes 1 to 97, with the exception of products falling within the scope of the Treaty establishing the European Coal and Steel Community). With regards to harmonisation legislation, exporters operating from San Marino must rely on representatives established in the EU.
Like Monaco, San Marino is not part of the EU and may also encounter similar obstacles. Products originating in San Marino cannot benefit from Mutual Recognition, claiming the application of national product standards. San Marino does not participate in CEN, CENELEC. Therefore products from San Marino face additional preliminary controls.
Since 2015, Andorra, Monaco and San Marino are in negotiation with EU for an Association Agreement. This is a very comprehensive agreement, with far-reaching implications. Up until today, no association agreement has been signed, we will thus not go into this subject further.
Candidate EU Member States
Albania, Montenegro, North Macedonia, Serbia and Turkey are all candidate countries for EU membership. Negotiations with these countries are ongoing. Depending on each country, the negotiations are in a different state of the procedure. Part of the negotiations is that countries have to fully transpose and implement the EU legislation by the time of accession. These countries are currently not an EU Member State and cannot benefit from the EU Single Market.
Albania applied for EU membership in April 2009. It has received candidate status in June 2014. In March 2020 the decision was made to open accession negotiations. In July 2020 the draft negotiating framework was presented to the Member States.
Montenegro applied for EU membership in December 2008. It has received candidate status in December 2010. The opening of accession negotiations took place in June 2012. The accession negotiations are currently still ongoing.
The Republic of North Macedonia applied for EU membership in March 2004. It has received candidate status in December 2005. In March 2020 the decision was made to open accession negotiations. In July 2020 the draft negotiating framework was presented to the Member States.
Serbia applied for EU membership in December 2009. It has received the candidate status in March 2012. The accession negotiations are currently still ongoing.
Turkey applied for membership (of what was then the EEC) in 1987. Turkey and the EU agreed on a Customs Union in 1995, with regards to manufactured products and processed agricultural products. As a result, the Turkish and EU-legislation for these products are fully aligned. The objective of the agreement is ‘to ensure the free movement of manufactured products and processed agricultural products between the EU and Turkey, by eliminating import controls at the EU-Turkey border on such products’.
EU product legislation on manufactured goods applies to Turkey. In the sectors for which Turkey has aligned its product harmonisation legislation with that of the EU, a product manufactured by and/or marketed in Turkey, is to be considered as placed on the EU Single Market. This also applies to non-harmonised goods where Turkey has aligned its legislation with the EU.
Note: Where the EU has REACH for chemical legislation, Turkey has KKDIK.
Turkey is required to adopt EU legislation on products and on quality infrastructure (CE marking requirements, notified bodies, market surveillance, accreditation, standardisation, metrology and mutual recognition in the non-harmonised area). In 2006 the EU and Turkey further agreed that Turkish Notified Bodies, recognition of test reports and certificates, issued in Turkey are fully valid on the Single Market. Turkey is also a full member of CEN and CENELEC.
The opening of accession negotiations took place in 2005. The accession negotiations are formally currently still ongoing. However, according to the European Commission, Turkey has been backsliding in the areas of democracy, rule of law and fundamental rights. In response, it was decided, in June 2018, that accession negotiations with Turkey will be effectively frozen.
Vatican City is a different ‘country’ than San Marino or Monaco. On contrary to other ‘micro-states’, membership of the EU is not possible. Membership is not possible because the Vatican does not have a free economy or democracy (it is a theocracy, a state-run by the pope). In 1929 Italy and the Holy See recognised Vatican City as an independent state. Italy is its only neighbor. Goods arriving from abroad for destinations within the Vatican City, or without it boundaries for institutions or offices of the Holy See, shall invariably be allowed transit over Italian territory, free of payment of any customs or octroi dues. In other words: products for Vatican City must travel through Italy. The conclusion is then that the products must comply with Italian product legislation.
Potential candidate states
There are other countries than the candidate member states. There are also the ‘potential candidate states’. These countries have a prospect of joining the EU in the future. They however have not been granted the status of candidate country. These countries are not a part of the EU Single Market. Bosnia and Herzegovina and Kosovo are potential candidate states. This process is still ongoing.
United Kingdom (UK)
The UK was (along with its overseas territory Gibraltar), a Member State of, first the EEC and EC, and later the EU. As of 31 January 2020, the United Kingdom has resigned from membership, also referred to as ‘Brexit’.
The EU and UK have signed a Trade and Cooperation Agreement. The EU-UK Trade and Cooperation Agreement sets out preferential arrangements in areas such as:
- trade in goods and in services,
- digital trade;
- public procurement;
- aviation and road transport;
- social security coordination;
- law enforcement and judicial cooperation in criminal matters;
- Thematic cooperation and participation in Union programmes;
- Provisions ensuring a level playing field and respect for fundamental rights.
Read more on Brexit and the impact for product compliance here.