Title

CONVENTION ESTABLISHING THE EUROPEAN FREE TRADE ASSOCIATION

Preamble

The Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation (hereinafter referred to as the Member States);

Having regard to the conclusion on 4 January 1960, between the Republic of Austria, the Kingdom of Denmark, the Kingdom of Norway, the Portuguese Republic, the Kingdom of Sweden, the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland, of the Convention establishing the European Free Trade Association (hereinafter referred to as the Convention);

Having regard to the association with the Republic of Finland and its subsequent accession on 1 January 1986, and to the accessions by the Republic of Iceland on 1 March 1970 and by the Principality of Liechtenstein on 1 September 1991;

Having regard to the successive withdrawals from the Convention by the Kingdom of Denmark and the United Kingdom on 1 January 1973; the Republic of Portugal on 1 January 1986; the Republic of Austria, the Republic of Finland and the Kingdom of Sweden on 1 January 1995;

Having regard to the free trade agreements between the Member States on the one hand and third parties on the other;

Reaffirming the high priority they attach to the privileged relationship between the Member States and to the facilitation of continuity in their respective good relations with the European Union, which are based on proximity, long-standing common values and European identity;

Resolved to deepen the co-operation instituted within the European Free Trade Association, further facilitating the free movement of goods, aiming at the progressive attainment of free movement of persons and the progressive liberalisation of trade in services and investment, further opening up the public procurement markets in the EFTA States, and providing for the appropriate protection of intellectual property rights, under fair conditions of competition;

Building on their respective rights and obligations under the Agreement establishing the World Trade Organization and other multilateral and bilateral instruments of co-operation;

Recognising the need for mutually supportive trade and environmental policies in order to achieve the objective of sustainable development;

Affirming their commitment to the observance of recognised core labour standards, noting their endeavours to promote such standards in the appropriate multilateral fora and expressing their belief that economic growth and development fostered by increased trade and further trade liberalisation contribute to the promotion of these standards;

Have agreed as follows:

Body

Chapter I. Objectives

Article 1. The Association

An international organisation to be known as the European Free Trade Association, hereinafter referred to as "the Association", is hereby established.

Article 2. Objectives

The objectives of the Association shall be

(a) to promote a continued and balanced strengthening of trade and economic relations between the Member States with fair conditions of competition, and the respect of equivalent rules, within the area of the Association;

(b) the free trade in goods;

(c) to progressively liberalise the free movement of persons;

(d) the progressive liberalisation of trade in services and of investment;

(e) to provide fair conditions of competition affecting trade between the Member States;

(f) to open the public procurement markets of the Member States;

(g) to provide appropriate protection of intellectual property rights, in accordance with the highest international standards.

Chapter II. Free Movement of Goods

Article 3. Customs Duties on Imports and Exports, and Charges Having Equivalent Effect

Customs duties on imports and exports, and any charges having equivalent effect, shall be prohibited between the Member States. This shall also apply to customs duties of a fiscal nature.

Article 4. Internal Taxation

1. No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.

2. Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.

3. Where products are exported to the territory of any Member State, any repayment of internal taxation shall not exceed the internal taxation imposed on them whether directly or indirectly.

Article 5. Rules of Origin

The rules of origin and methods of administrative cooperation in customs administration are set out in Annex A.

Article 6. Mutual Assistance In Customs Matters

1. Member States shall assist each other in customs matters in general in accordance with the provisions of Annex B in order to ensure that their customs legislation is correctly applied. 2

2. Annex B shall apply to all products whether or not covered by the provisions of this Convention.

Article 7. Quantitative Restrictions on Imports and Exports, and Measures Having Equivalent Effect

Quantitative restrictions on imports and exports, and all measures having equivalent effect, shall be prohibited between the Member States.

Article 8. Agricultural Goods

1. In view of the special considerations affecting agriculture, the basic agricultural goods and the goods processed from agricultural raw materials listed in Annex C shall be subject to the following rules:

(a) In relation to the goods listed in Part I of Annex C, the provisions of this Convention shall apply, with due regard to the arrangements provided for in Article 9.

(b) In relation to goods listed in Part II or in Part III of Annex C, and with due regard to the arrangements provided for in Article 9, Articles 2, 3, 4 and 7 shall not apply.

(c) In relation to the goods listed in Part III of Annex C, the Member States declare their readiness to foster, in so far as their agricultural policies allow, the harmonious development of trade. In pursuance of this objective, Iceland shall grant tariff concessions to agricultural products originating in Norway and Switzerland 3 as specified in Table 1 of Annex D, Norway shall grant tariff concessions to agricultural products originating in Iceland and Switzerland 4 as specified in Table 2 of Annex D, and Switzerland 5 shall grant tariff concessions to agricultural products originating in Iceland and Norway as specified in Table 3 of Annex D. Article 15 of Annex A shall not apply to goods listed in Part III of Annex C.

2. Chapter IV on State aid, Chapter VI on competition and Chapter XII on public procurement shall not apply to agricultural goods.

3. Also applies to the Principality of Liechtenstein as long as its Customs Union Treaty of 29 March 1923 with Switzerland remains in force.

4. Also applies to the Principality of Liechtenstein as long as its Customs Union Treaty of 29 March 1923 with Switzerland remains in force.

5. Also applies to the Principality of Liechtenstein as long as its Customs Union Treaty of 29 March 1923 with Switzerland remains in force.

Article 9. Parts I and II - Goods of Annex C (processed Agricultural Goods)

1. In order to take account of differences in the cost of the agricultural raw materials incorporated in the goods specified in Part I of Annex C referred to in subparagraph (a) of Article 8, the Convention does not preclude, in respect of such goods:

(a) the levying, upon import, of a fixed duty;

(b) the application of internal price compensation measures;

(c) the application of measures adopted upon export.

2. The fixed duties, levied upon import of goods listed in Part I of Annex C, shall be based on, but not exceed, the differences between the domestic price and the world market price of the agricultural raw materials incorporated into the goods concerned.

3. With due regard to the provisions in paragraph 2, no Member State shall accord to imports of goods listed in Part I or in Part II of Annex C from the territory of another Member State a treatment less favourable than it accords to imports from the territory of the European Community or any other free trade partner.

4. The Member States shall notify each other of all changes in the treatment for products listed in Part I or in Part II of Annex C accorded to the European Community or any other free trade partner.

Article 10. Fish and other Marine Products

The provisions of this Convention shall apply in relation to fish and other marine products.

Article 11. Seeds and Organic Agriculture

1. Specific rules on seeds are set out in Annex E.

2. Specific rules on organic agriculture are set out in Annex F.

Article 12. Sanitary and Phytosanitary Measures

The rights and obligations of the Member States in respect of sanitary and phytosanitary measures shall be governed by Annex G.

Article 13. Exceptions

The provisions of Article 7 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality; public policy or public security; the protection of health and life of humans, animals or plants and of the environment; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Member States.

Chapter III. Technical Barriers to Trade

Article 14. Notification of Draft Technical Regulations

1. Member States shall notify to the Council at the earliest practicable stage all draft technical regulations or amendments thereto.

2. The provisions on the notification procedure are set out in Annex H.

Article 15. Mutual Recognition of Conformity Assessment

Without prejudice to Article 7, Switzerland, on the one hand, and Iceland, Liechtenstein and Norway, on the other, grant mutual acceptance of reports, certificates, authorisations, conformity marks and manufacturers declarations of conformity in accordance with Annex I.

Chapter IV. State Aid

Article 16. State Aid

1. The rights and obligations of the Member States relating to State aid shall be based on Article XVI of the GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures, which are incorporated and made part of the Convention, except as otherwise provided for in Annex Q.

2. Member States shall not apply countervailing measures as provided for under Part V of the WTO Agreement on Subsidies and Countervailing Measures in relation to any other Member State in accordance with Article 36.

3. The Member States shall review the scope of application of this Chapter with a view to extending the disciplines with respect to State aid to the field of services, taking into account international developments in the sector. The reviews shall take place at yearly intervals.

Chapter V. Public Undertakings and Monopolies

1. Member States shall ensure that public undertakings refrain from applying

(a) measures the effect of which is to afford protection to domestic production which would be inconsistent with this Convention if achieved by means of a duty or charge with equivalent effect, quantitative restriction or government aid, or

(b) trade discrimination on grounds of nationality in so far as it frustrates the benefits expected from the removal or absence of duties and quantitative restrictions on trade between Member States.

2. For the purposes of this Article, public undertakings means central, regional, or local government authorities, public enterprises and any other organisation by means of which a Member State, by law or in practice, controls or appreciably influences imports from, or exports to, the territory of a Member State.

3. The provisions of paragraph 1 of Article 18 shall also apply to the activities of public undertakings, and undertakings for which the Member States grant special or exclusive rights, in so far as the application of these provisions does not obstruct the performance, in law or in fact, of the particular public tasks assigned to them.

4. Paragraph 3 shall apply to Annex Q. The Member States shall review the scope of application of this Chapter with a view to extending the disciplines to other services, taking into account international developments in the sector. The reviews shall take place at yearly intervals.

5. Member States shall ensure that new practices of the kind described in paragraph 1 of this Article are not introduced.

6. Where Member States do not have the necessary legal powers to control the activities of regional or local government authorities or enterprises under their control in these matters, they shall nevertheless endeavour to ensure that those authorities or enterprises comply with the provisions of this Article.

Chapter VI. Rules of Competition

Article 18. Competition

1. Member States recognise that the following practices are incompatible with this Convention in so far as they frustrate the benefits arising from this Convention:

(a) agreements between enterprises, decisions by associations of enterprises and concerted practices between enterprises which have as their object or result the prevention, restriction or distortion of competition;

(b) abuse by one or more undertakings of a dominant position in the territories of the Member States as a whole or in a substantial part thereof.

2. Should a Member State consider that a given practice is incompatible with this Article, it may ask for consultations in accordance with the procedures set out in Article 47 and take appropriate measures under the conditions set out in paragraph 2 of Article 40 to deal with the difficulties resulting from the practice in question.

Chapter VII. Protection of Intellectual Property

Article 19.

1. Member States shall grant and ensure adequate and effective protection of intellectual property rights, and provide for measures for the enforcement of such rights against infringement thereof, counterfeiting and piracy, in accordance with the provisions of this Article, Annex J and the international agreements referred to therein.

2. Member States shall accord to each others nationals treatment no less favourable than that they accord to their own nationals. Exemptions from this obligation must be in accordance with the substantive provisions of Article 3 of the TRIPS Agreement.

3. Member States shall grant to each others nationals treatment no less favourable than that accorded to nationals of any other State. Exemptions from this obligation must be in accordance with the substantive provisions of the TRIPS Agreement, in particular Articles 4 and 5 thereof.

4. Member States agree, upon request of any Member State, to review the provisions on the protection of intellectual property rights contained in the present Article and in Annex J, with a view to further improve levels of protection and to avoid or remedy trade distortions caused by actual levels of protection of intellectual property rights.

Chapter VIII. Free Movement of Persons

Article 20. Movement of Persons

1. Freedom of movement of persons shall be secured among Member States in accordance with the provisions set out in Annex K and in the Protocol to Annex K on the free movement of persons between Liechtenstein and Switzerland.

2. The objective of this Article for the benefit of the nationals of the Member States shall be:

(a) to accord a right of entry, residence, access to work as employed persons, establishment on a self-employed basis and the right to stay in the territory of the Member States;

(b) to facilitate the provision of services in the territory of the Member States, and in particular to liberalise the provision of services of brief duration;

(c) to accord a right of entry into, and residence in, the territory of the Member States to persons without an economic activity in the host State;

(d) to accord the same living, employment and working conditions as those accorded to nationals.

Article 21. Coordination of Social Security Systems

In order to provide freedom of movement of persons, the Member States shall make provision, in accordance with Appendix 2 of Annex K and with the Protocol to Annex K on the free movement of persons between Liechtenstein and Switzerland, for the coordination of social security systems with the aim in particular of:

(a) securing equality of treatment;

(b) determining the legislation applicable;

(c) aggregating, for the purpose of acquiring and retaining the right to benefit and of calculating the amount of benefit, of all periods taken into consideration by the national legislation of the States concerned;

(d) paying benefits to persons resident in the territories of the Member States;

(e) fostering mutual administrative assistance and cooperation between authorities and institutions.

Article 22. Mutual Recognition of Professional Qualifications

In order to make it easier for nationals of the Member States to take up and pursue activities as workers and self-employed persons, the Member States shall take the necessary measures, as contained in Appendix 3 to Annex K and in the Protocol to Annex K on the free movement of persons between Liechtenstein and Switzerland, concerning the mutual recognition of diplomas, certificates and other evidence of formal qualifications, and the coordination of the provisions laid down by law, regulation or administrative action in the Member States concerning the taking up and pursuit of activities by workers and self-employed persons.

Chapter IX. Investment

Section I. Establishment

Article 23. Principles and Scope

1. Within the framework of, and subject to, the provisions of this Convention, there shall be no restrictions on the right of establishment of companies or firms, formed in accordance with the law of a Member State and having their registered office, central

Administration or principal place of business in the territory of the Member States. This shall also apply to the setting up of agencies, branches or subsidiaries by companies or firms of any Member State established in the territory of any other Member State.

The right of establishment shall include the right to set up, acquire and manage undertakings, in particular companies or firms within the meaning of paragraph 2, under the conditions laid down for its own undertakings by the law of the Member State where such establishment is effected, subject to the provisions set out hereafter.

2. For the purposes of this Chapter:

(a) subsidiary of a company shall mean a company which is effectively controlled by the first company;

(b) companies or firms shall mean companies or firms constituted under civil or commercial law, including cooperative societies, and other legal persons governed by public or private law, save for those which are nonprofit-making; in order to be considered as a company or firm of a Member State, the company or firm shall have a real and continuous link with the economy in that Member State.

3. Annexes L to O contain specific provisions and exemptions regarding the right of establishment. The Member States shall endeavour to eliminate gradually remaining discriminations, which they may maintain in accordance with Annexes L to O. The Member States agree to review the present provision, including its Annexes, within two years after the entry into force of the Agreement amending the Convention establishing the European Free Trade Association of 21 June 2001 with a view to reducing, and ultimately eliminating, the remaining restrictions.

4. From the date of entry into force of the Agreement amending the Convention establishing the European Free Trade Association of 21 June 2001, neither Member State shall adopt new, or more, discriminatory measures as regards the establishment and operation of companies or firms of another Member State, in comparison with the treatment accorded to its own companies or firms.

5. In sectors covered by an exemption as contained in Annexes L to O, each Member State shall accord to companies or firms of another Member State treatment no less favourable than that accorded to companies or firms of third parties other than the European Community. As regards any new agreements concluded between any Member State and the European Community, the Member States further undertake to extend to each other, on the basis of reciprocity, the benefits of such agreements, subject to a decision by the Council.

6. The right of establishment in the field of road, rail and air transport shall be governed by the provisions of Article 35 and Annexes P and Q, subject to the specific provisions and exemptions set out in Annexes L and M.

7. The right of establishment of natural persons shall be governed by the provisions of Article 20, Annexes K and the Protocol to Annex K on movement of persons between Liechtenstein and Switzerland.

Article 24. National Treatment

1. Within the scope of application of this Chapter, and without prejudice to any special provisions contained herein:

(a) Member States shall grant treatment no less favourable than that accorded to their own companies or firms;

(b) each Member State may regulate the establishment and operation of companies or firms on its territory, in so far as these regulations do not discriminate against companies or firms of the other Member States in comparison to its own companies or firms.

2. The provisions of this Article do not preclude the application by a Member State of particular rules concerning the establishment and operation in its territory of branches and agencies of companies of another Member State not incorporated in the territory of the first Member State, which are justified by legal or technical differences between such branches and agencies as compared to branches and agencies of companies incorporated in its territory. The difference in treatment shall not go beyond what is strictly necessary as a result of such legal or technical differences.

Article 25. Financial Market Regulation

1. In respect of financial services, this Chapter does not prejudice the right of the Member States to adopt measures necessary for prudential grounds in order to ensure the protection of investors, depositors, policy holders, or persons to whom a fiduciary duty is owed, or to ensure the integrity and stability of the financial system. These measures shall not discriminate against companies or firms of the other Member States in comparison to its own companies or firms.

2. Nothing in this Chapter shall be construed to require a Member State to disclose information relating to the affairs and accounts of individual customers or any confidential or proprietary information in the possession of public entities.

Article 25. Recognition

1. A Member State may enter into an agreement or arrangement with a particular State providing for the recognition of standards, criteria for authorization, licensing or certification of service suppliers, in which case it shall offer adequate opportunity for

Any other Member State to negotiate its accession to such an agreement or arrangement or to negotiate comparable ones with it.

2. Where a Member State accords recognition as provided for in paragraph 1 autonomously, it shall afford adequate opportunity for any other Member State to demonstrate that experience, licences or certifications obtained or requirements met in that other Member States territory should be recognised.

3. A Member State shall not accord recognition in a manner which would constitute a means of discrimination between countries in the application of its standards or criteria for the authorisation, licensing or certification of service suppliers, or a disguised restriction to establishment in the services sector.

Article 27. Exceptions

1. The provisions of this Chapter shall not apply, so far as any given Member State is concerned, to activities which in that Member State are connected, even occasionally, with the exercise of official authority.

2. The provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign companies or firms on grounds of public policy, public security, public health or the environment.

3. Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between States where like conditions prevail, or a disguised restriction on trade in services, nothing in this Convention shall be construed to prevent the adoption or enforcement by any Member State of measures:

(a) inconsistent with Article 24, provided that the difference in treatment is aimed at ensuring the equitable or effective (4) imposition or collection of direct taxes in respect of services or service suppliers of other Member States;

(b) inconsistent with paragraph 5 of Article 23, provided that the difference in treatment is the result of an agreement on the avoidance of double taxation or provisions on the avoidance of double taxation in any other international agreement or arrangement by which the Member State is bound.