The association agreement between Andorra and the European Union (EU) is a treaty that promises a paradigm shift for the Principality: it would enter into a trade union with the EU, which would imply the free movement of goods, people, services and capital. In return, Andorra would have to adopt various EU regulations in different sectors: 25 annexes in total! For some, this agreement is so far-reaching that they compare it to the creation of the Andorran state itself.
The Andorran government sees this partnership as a unique opportunity to diversify an economy heavily focused on tourism and trade. Without harmonization of Andorran laws with European laws, they say, the economy would be difficult to expand and diversify.
When will it happen?
In terms of timing, there are plans to hold a referendum in the first half of 2025 for Andorrans to decide whether they agree or not.
It all depends on whether the agreement needs only the approval of the European Commission or also the approval of the 27 parliaments of the EU member states. If it is the latter, the consultation will have to wait until all countries give their approval, a process that could take time.
What will happen?
As for the EU’s famous four freedoms, each will bring important changes for Andorra:
- Goods: the country will have 30 years to eliminate tariffs on tobacco in exchange for expanding trade with the EU.
- Services: Andorran companies will be able to establish themselves in the EU more easily, while Andorra will open its doors to service providers from all over Europe, which is a challenge for sectors such as telecommunications and professional associations.
- Individuals: the residence privileges currently enjoyed by Spanish and French nationals will be extended to all EU citizens.
- Capital: the free movement of capital is a further step in the economic opening that Andorra began a decade ago.
What does it imply?
The price to pay? Andorra will cede some of its sovereignty. If there are differences on how to apply the agreement, Andorran courts will have to respect European rules under the authority of the EU Court of Justice, with no say in EU legislative changes.
In short, this agreement is not about entering the EU, but it is a giant step towards deeper integration.
