Is there a European free trade zone?

Michael Gove claimed this week that there exists a European free trade zone. He said:

There is a free trade zone stretching from Iceland to Turkey that all European nations have access to, regardless of whether they are in or out of the euro or EU. [his footnote n. 26] After we vote to leave we will remain in this zone. The suggestion that Bosnia, Serbia, Albania and the Ukraine would remain part of this free trade area – and Britain would be on the outside with just Belarus – is as credible as Jean-Claude Juncker joining UKIP.

His only supporting reference for this claim, as given in the above document, is this map from the EU:

EU trade map tradoc_149622

What is in view here is the EU’s trade relations with other nations. Most of these are bilateral. And in Europe, with the partial exception of Switzerland, they all involve the one-way adoption of the EU’s trade acquis communautaire. A free trade zone, on the other hand, as normally understood, is a multilateral arrangement, in which all the participating nations have free trade one with another, on a mutual basis. ‘Free trade’, it may be added, may be better referred to as preferential trade, but this does typically include tariff-free trade in industrial goods at least.

So far as I have been able to ascertain, it is true to say that the EU does have free trade relations with the nations from Iceland to Turkey, with the exception of Belarus.  They may be divided into five main categories:

  1. EFTA-EEA, governed by the EEA Agreement: Norway, Iceland and Liechtenstein
  2. Switzerland (sui generis), governed by 100+ bilateral agreements, built upon the 1972 Switzerland-EEC FTA.
  3. Turkey. EU Customs Union.
  4. Stabilisation and Association Agreements (SAAs): Albania, Bosnia and Herzegovina, Kosovo, Republic of Macedonia, Montenegro, Serbia.
  5. Deep and Comprehensive Free Trade Agreements (DCFTAs): Ukraine and Moldova.

There are four free main trade areas, which have European states among their members:

  1. The European Union
  2. EFTA
  3. CEFTA (Central European Free Trade Agreement): Albania, Bosnia and Herzegovina, Kosovo (via the UN), Republic of Macedonia, Montenegro, Serbia, and Moldova.
  4. CISFTA (Commonwealth of Independent States Free Trade Area), which includes Ukraine and Moldova.

Moldova is the only nation that is part of more than one of these free trade areas. Turkey has free trade with the EU by virtue of its membership of the EU Customs Union, but is not a party to the EU’s agreements with other nations. The Customs Union and the EEA could both be considered free trade areas in their own right, but I have not listed them separately because of the degree of overlap with the above four.

Clearly, within each of these four free trade areas, the member states have free trade one with another, at least in principle. And we have already established that the EU nations are party to agreements of various types, all of which include a form of so-called free trade, with all the nations concerned. But what about the all the other criss-crossing trade relationships? Does Turkey have free trade with Switzerland, for example, or Ukraine with Albania? Here is what I have been able to find out so far (I am including Kosovo as a nation state, rightly or wrongly, on the basis that it is recognised by the UK, and by a majority of other nations; and I have omitted Andorra, Monaco, San Marino, Malta and Vatican City, for the sake of simplicity):

The EFTA nations have free trade with Turkey, Albania, Bosnia and Herzegovina, Republic of Macedonia, Montenegro, Serbia and Ukraine; but not with Moldova, apparently, or Kosovo.

Moldova has FTAs with Albania, Bosnia and Herzegovina, Republic of Macedonia, Montenegro, and Serbia 1; and with Turkey; but not with Kosovo, I think, or EFTA.

Ukraine has FTAs with EFTA, Macedonia and Montenegro, but not with Albania, Bosnia and Herzegovina, Kosovo, Serbia or Turkey.

Turkey has FTAs with EFTA, Albania, Bosnia and Herzegovina, Republic of Macedonia, Montenegro, Serbia, and Moldova; but not Kosovo or Ukraine. 2 An FTA with Ukraine was under negotiation in 2013, according to the same source. An FTA with Kosovo is signed, but not yet ratified by Kosovo, according to the Turkish Ministry of Foreign Affairs.

What remains is to list those pairings of countries in which I have been unable so far to find evidence of a free trade arrangement. These are:

The EFTA states (Norway, Switzerland, Iceland and Liechtenstein) with Moldova, and with Kosovo;

Moldova with Kosovo;

Ukraine with: Albania, Bosnia and Herzegovina, Kosovo, Serbia and Turkey;

Turkey with Kosovo;

making a total of 15 pairings in which free trade appears to be lacking. That’s not so many, out of what I reckon are (41×40/2 = ) 820 pairs of countries, but 15 is still maybe enough to cast doubt on the appropriateness of using the expression ‘European Free Trade Zone’.

Andrew

Notes:

  1. Oxana Gutu, Moldova’s Convergence with the acquis, (Centre for European Policy Studies Working Document No. 238, March 2006) p.16
  2. Nail Ersoy, General Directorate of the EU, Free Trade Agreements of Turkey (Slide presentation, Ankara, September 2013) Slides 14-15

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