The EFTA FTA Monitor provides information on the effective use of its Free Trade Agreements (FTAs). Two separate reports provide detailed overviews of preference utilisation – one on EFTA’s trade with FTA partner countries outside the EU and another one on intra-EFTA trade. Additionally, individual reports for Iceland, Norway, and a combined publication for Switzerland and Liechtenstein are made available.
EFTA FTA Monitor with partner countries
Bilateral FTA Monitors between the EFTA States and FTA partner countries
Norwegian Monitor with FTA partner countries
Icelandic Monitor with FTA partner countries
Swiss Monitor with FTA partner countries
The European Free Trade Association (EFTA) currently has signed 31 free trade agreements (FTAs) with 42 countries and territories outside the European Union (EU). The agreements have entered into force for 39 of these countries – coloured in blue in the map above. Developed over decades, FTAs represent a central element in EFTA Member States’ policies and complement their agreements with the EU and with other partner countries signed bilaterally.
FTAs provide many advantages, including for the importation and exportation of goods. Consumers and companies tend to enjoy lower prices while domestic companies can sell their products more easily in foreign markets. Furthermore, FTAs provide companies in the contracting parties with similar and sometimes even better market access than their competitors from third countries.
This privileged market access provides a competitive advantage in the form of lower or eliminated import duties (i.e., customs duties) agreed to during the negotiations of the FTA. However, these preferential customs duties do not automatically apply. Importers and exporters have to request preferential treatment during customs procedures. Moreover, products must fulfil specific conditions which were negotiated for each FTA to benefit from the tariff preference, such as providing a valid proof of origin.
Exporters and importers in EFTA States and partner countries do not always use the preferential tariffs provided by FTAs. This leads to untapped tariff savings that could be achieved thanks to an FTA.
Considering this situation, policymakers in the EFTA States have started to look more closely at how companies’ effective use of FTAs can be facilitated. For example, in August 2020, the Swiss State Secretariat for Economic Affairs (SECO) published a comprehensive data analysis on the preference utilisation of Switzerland’s FTAs. The study was designed to answer three key questions:
- To what extent do companies make use of FTAs and what is the amount of tariff savings achieved as a result thereof?
- Do the utilisation rates differ between imports and exports?
- How much do utilisation rates vary across partners, over time, across sectors, and product groups?
As part of this study, Switzerland published the Swiss FTA Monitor that provides valuable insights into the use of FTAs. The Swiss FTA Monitor is updated annually and is available in German, French and English on the website of SECO: FTA Monitor (admin.ch).
Based on positive reactions from both policymakers and the public in Switzerland, the EFTA States agreed to build on the work by Switzerland and expand the FTA Monitor to the EFTA level. In June 2022, the first version of the EFTA FTA Monitor focusing on trade with FTA partner countries was published and updated annually since then. As part of a continuous effort to further monitor preference utilisation, the EFTA States expanded the coverage of the EFTA FTA Monitor by including the analysis of trade covered by the EFTA Convention. This extension led to the publication of the EFTA-internal FTA Monitor covering intra-EFTA trade, which was released in October 2023. The latest versions of both reports cover the period 2018-2022 and are separately available at the top of this page.
In the report with FTA partner countries, all FTA partners under EFTA’s existing 31 FTAs (excl., India, Guatemala, and Moldova, as the relevant FTAs have not yet entered into force) are covered on the import side. For exports, the report with FTA partners relies on data provided by the importing FTA partners who have agreed to collaborate by providing the data required for this analysis. To date, the analysis on the export side covers Albania, Bosnia and Herzegovina, Canada, Chile, Colombia, Costa Rica, Ecuador (2021-2022), Georgia (2021), Hong Kong, Indonesia (2022), Mexico (2018-2020), Montenegro (2018-2020), Morocco (2022), North Macedonia, Panama (2021-2022), Peru (2019-2022), the Philippines (2019-2022), the Republic of Korea, Serbia, Singapore, and Türkiye. The output with partner countries is provided at the aggregated EFTA level, and for each individual EFTA State (where data has been provided by the FTA partner country).
The EFTA FTA Monitor only covers trade in goods and it does not cover other areas of trade, such as services and investment.
Additional information on the analysis is available in each Monitor. EFTA reserves the right to adjust and correct the existing output.
Click on the ribbon below for Questions and Answers.
Frequently asked Questions
1. What are the benefits from free trade agreements?
As developed economies with relatively small domestic markets, the EFTA States are highly integrated into international value chains and dependent on foreign markets for both imports and exports. Free trade agreements (FTAs) ensure predictable and preferential market access to foreign markets and improve the economic framework conditions with partner countries. Among many other aspects, an important feature of FTAs is that they eliminate or reduce customs duties on the importation and exportation of goods. Consequently, it is expected that consumers and companies will enjoy lower prices on their purchases while domestic companies can sell their products more easily in foreign markets. Furthermore, other provisions in the FTA, such as trade facilitating procedures or regulatory cooperation, contribute to further reducing frictions and facilitate exchanges between the partners. The European Free Trade Association (EFTA) currently has 31 FTAs with 42 countries and territories outside the European Union (EU) – 29 agreements covering 39 countries are in force. Developed over decades, FTAs represent a central element in EFTA Member States’ policies and complement their agreements with the EU and with other partner countries signed bilaterally.
2. How can free trade agreements be used?
FTA tariff preferences are not granted automatically. Companies may benefit from FTAs only if their products meet the preferential rules of origin laid down in the respective FTA. This means that a product must have been wholly obtained, manufactured, worked or processed to a significant extent in a Party to the relevant agreement to benefit from preferential duty exemption or duty reductions in FTA partner states.
For example, a Swiss company manufacturing watches in Switzerland or Liechtenstein can only export its watches into the Republic of Korea under the FTA with preferential tariff treatment if the value of the non-originating materials used in the production does not exceed the defined threshold. Similarly, Norwegian or Icelandic salmon exported to Chile under the FTA must originate or have been “sufficiently processed” (e.g., filleting, smoking, etc.) in Norway or Iceland.
Further information on preferential rules of origin is available on the EFTA website and on EFTA Member States’ customs websites:
- Iceland: Iceland Revenue and Customs
- Norway: Norwegian Customs
- Liechtenstein: Office of Economic Affairs
- Switzerland: Federal Office for Customs and Border Security
3. Why is the use of FTAs sometimes modest?
The utilisation rate of FTAs varies greatly depending on trading partners, product groups, time, firm, and delivery mode. This can have various reasons, such as:
- Type of products that are traded and their preferential rules of origin: For certain products produced in fragmented international value chains, it may be complex for companies to meet the requirements in the rules of origin (list rules) to achieve preferential origin.
- Administrative and financial burden: Companies must obtain information on the requirements related to the use of FTAs, document the production process and, if necessary, adapt it for their products to achieve preferential origin. Companies may, therefore, decide not to use FTAs if the costs of these adjustments exceed the potential benefits.
- Products transiting via non-parties to the FTA: Many products destined to EFTA States are transiting via non-parties to the FTA, especially major harbours in the European Union. If those products do not follow the requirements on transit and storage set out in the FTA, they lose the eligibility for FTA preferences
- Example: If a shipment of pineapples from Costa Rica destined to the Norwegian market transits through a storage and distribution hub in the European Union, it will not lose its preferential origin and still benefit from the FTA (provided that the pineapples remain under customs supervision). However, if the shipment is customs cleared for import in the European Union, the pineapples will lose their FTA benefits once reshipped to Norway and be subject to normal duties.
- Data limitations: The data on preference utilisation in the FTA Monitor is based on import data collected and processed by different parties. Thus, the existence of different sources for the import data might limit the accuracy and comparability of the output due to possible differences in data and methods applied. In addition, the calculations have not considered preferences within tariff rate quotas, variable tariffs (e.g., price band systems, input‐based tariffs or seasonal tariffs) and ex‐outs within tariff lines due to the difficulty of quantifying them through the available customs statistics. The trade picture shown by the FTA Monitor may therefore not always perfectly reflect the actual use of the FTA. This can be particularly relevant for FTA partners exporting primarily to EFTA States under such preferences. A comprehensive overview of data limitations can be found in the FTA Monitor.
- Other reasons not yet known: The FTA Monitor provides descriptive information on the use of existing FTAs. It thereby lays the foundation for future, detailed analyses of the factors that may explain the variation in the use of FTAs across trading partners, product groups, and time.
4. Why does only a small share of trade occur under the FTA for some countries?
This may happen because the applied non-preferential (most-favoured-nation, MFN) tariff for the products traded is already duty free or very low. Indeed, some countries grant duty-free market access to a wide range of products on an MFN basis. It is, for example, the case for Singapore and Hong Kong, China. As a result, EFTA companies exporting to these countries will not use the FTA, resulting in seemingly low preference utilisation under those FTAs. Similarly, some EFTA States do not apply import tariffs on industrial products, although they could do so according to their commitments to the WTO. This is especially the case for Norway and Iceland. In addition, some countries grant preferences on the basis of other international agreements, such as the Generalized System of Preferences (GSP) or the WTO Agreement on Trade in Civil Aircraft. Imports from FTA partners under those categories will therefore likely be registered under “MFN” or “other preferences” and not as FTA trade. For these reasons, the FTA Monitor provides additional information on the value and share of duty-free trade occurring under different trade regimes. Nonetheless, even for products with zero duties under other trade regimes, FTAs remain important since they prevent partner countries from increasing their tariffs (e.g., increase of an MFN applied tariff from 0% to the WTO bound rate of 10%). This provides predictability to business owners in the long term.
5. Why is the export data missing for some countries?
For imports from EFTA countries into FTA partner countries, the FTA Monitor relies on import data provided by FTA partner countries, which have agreed to provide the data required for this analysis. To date, the analysis on the export side covers Albania, Bosnia and Herzegovina, Canada, Chile, Colombia, Costa Rica, Ecuador, Georgia, Hong Kong, Indonesia, Mexico, Montenegro, Morocco, North Macedonia, Panama, Peru, the Philippines, the Republic of Korea, Serbia, Singapore, and Türkiye. Some years may also be missing due to the inability of the FTA partner to provide data or because the agreement’s entry into force was later than 2018. EFTA remains in contact with its FTA partner countries and expects to expand this coverage over time.
6. What further steps does EFTA plan to take?
Since the publication of the first results, the EFTA Secretariat and responsible authorities in EFTA States have already initiated further work to identify the factors that lead to incomplete use of free trade agreements, such as in-depth analysis, business surveys or dedicated discussions with FTA partners. The aim is to identify measures to increase the use of FTAs, especially for products with high tariff saving potential. Those works and dialogues with FTA partners and domestic stakeholders will continue to find mutually agreeable solutions to improve the use of FTAs by economic operators on both sides. In addition, the EFTA States organise a yearly workshop on preference utilisation with international experts.
