- EFTA is an intergovernmental organization that was established in 1960 as an alternative trade bloc for those European states that were unable or unwilling to join the European Union (EU).
- EFTA comprises Iceland, Liechtenstein, Norway, and Switzerland, which are not part of the EU but have access to its single market through various agreements.
- EFTA is India’s 9th largest trading partner, accounting for about 2.5% of India’s total merchandise trade.
- The main items of India’s exports to EFTA are textiles, chemicals, gems, and jewelry, machinery, and pharmaceuticals.
- The main items of India’s imports from EFTA are machinery, chemicals, precious metals, and medical instruments.
- In contrast to the EU, EFTA is not a customs union. This means that the individual EFTA States are free to set their own customs tariffs and arrange other foreign trade measures vis-à-vis the non-EFTA States.
Governance Structure
- EFTA’s highest governing body is the EFTA Council. It generally meets 8 times a year at the ambassadorial level and twice a year at the ministerial level.
- The headquarters of the EFTA Secretariat is located in Geneva. It assists the EFTA Council in the management of relations between the 4 EFTA States and deals with the negotiation and operation of EFTA’s FTAs.
- EFTA Surveillance Authority (ESA): It monitors compliance with European Economic Area (EEA) rules in Iceland, Liechtenstein and Norway.
- EFTA Court: It is based in Luxembourg and has the competence and authority to settle internal and external disputes regarding the implementation, application or interpretation of the EEA agreement.
India and EFTA
- India’s exports to EFTA countries during 2022-23 stood at USD 1.92 billion, while imports were at USD 16.74 billion.
- The bilateral trade between India and EFTA stood at USD 18.65 billion in 2022-23.
- Switzerland is the largest trading partner of India followed by Norway.
- In fact, India has a trade deficit with Switzerland, largely due to gold imports.
- India-European Free Trade Association signed a Trade and Economic Partnership Agreement (TEPA) in March 2024.
Trade and Economic Partnership Agreement (TEPA)
Objectives:
- The TEPA aims to create opportunities for trade and investment between India and EFTA by eliminating/reducing tariffs and non-tariff barriers on a wide range of products.
- It aims to ensure fair and transparent market access conditions for service providers and investors and will enhance cooperation on intellectual property rights protection and enforcement.
- TEPA aims to facilitate trade procedures and customs cooperation along with effective mechanisms for dispute resolution.
Coverage:
The agreement has 14 chapters, including trade in goods, rules of origin, intellectual property rights (IPRs), trade in services, investment promotion and cooperation, government procurement, technical barriers to trade, and trade facilitation.
Key Highlights of the Agreement:
- EFTA has committed to promoting investments to increase the stock of foreign direct investments by USD 100 billion in India in the next 15 years, and to facilitate the generation of 1 million direct employment in India, through such investments.
- For the first ever time in the history of FTAs, a legal commitment is being made to promoting target-oriented investment and the creation of jobs.
- EFTA is offering 92.2% of its tariff lines which covers 99.6% of India’s exports.
- India is offering 82.7% of its tariff lines which covers 95.3% of EFTA exports of which more than 80% of imports is Gold. The effective duty of Gold remains untouched.
- The EFTA’s market access offer covers 100% of non-agri products and tariff concession on Processed Agricultural Products (PAP).
- India has offered 105 sub-sectors to the EFTA and secured commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.
- TEPA has provisions for Mutual Recognition Agreements in professional services like nursing, chartered accountants, architects, etc.
