Rhein on Energy and Climate

For 35 years the EU and its two direct neighbour countries – Norway and Switzerland – have been linked by free trade areas. Since 1973, the contractual relations with these two countries have deepened into ever new areas, mostly related to the single market. Norway has gone further than Switzerland in that direction to the point that it has become a quasi-EU member country. The latest spectacular progress on this path has been the inclusion of both countries into the Schengen space, allowing for unrestricted movement of persons.

But trade relations have hardly evolved. Goods moving between the EU and either country still require certificates of origin and customs checks at the border, which constitutes a bureaucratic handicap causing extra costs. Certificates of origin are necessary as both countries keep pursuing their own external trade policies and protect agricultural products against EU imports.

Considering the very close economic relationship with both countries a mere free trade relationship seems outdated. The EU should therefore explore with both Norway and Switzerland the chances for replacing it by the simpler and more cohesive customs union.
The Common Agricultural Policy has ceased to be an obstacle since the EU has replaced its cumbersome market regulations by direct income payments to farmers, similar to the agricultural support in Norway and Switzerland.
Nor should external trade policy continue to be a major impediment. Neither country should find it difficult to align on the EU common customs tariff. Both would benefit from EU antidumping policy.

The example of Turkey shows that a customs union is perfectly conceivable with non-EU members, though in this case the EU has insisted on maintaining rules of origin.

So why not explore the possibility of negotiating a customs union with Norway and Switzerland, which should not prejudge future membership perspectives any more than free movement of people and workers! Both sides should profit from it, if only by reducing unnecessary red tape and incentives for customs fraud.

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