EUROPEAN COMMISSION

Brussels, 26.4.2024

COM(2024) 189 final

2024/0101(NLE)

Proposal for a

COUNCIL DECISION

on the conclusion, on behalf of the European Union, of the Agreement establishing an association between the European Union and the Principality of Andorra and the Republic of San Marino respectively

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

On the basis of the negotiating directives adopted by the Council in December 2014, the Commission has negotiated a far-reaching association agreement with Andorra and San Marino providing for the participation of these countries in the European Union’s internal market and for cooperation outside the four freedoms. In its conclusions adopted in June 2022, the Council called on the Commission to finalise the negotiations by the end of 2023. On 7 December 2023, the negotiations were completed and an Association Agreement was agreed at the level of the Chief Negotiators. The negotiations were conducted in consultation with the Council’s EFTA Working Party. The European Parliament has been informed about the outcome of the negotiations.

The attached proposal constitutes the legal instrument for authorising the conclusion of the Agreement establishing an association between the European Union (‘EU’) and the Principality of Andorra (‘Andorra’) and the Republic of San Marino (‘San Marino’), respectively (hereinafter referred to as ‘the Agreement’).

The Agreement provides for the participation of Andorra and San Marino, respectively, to a homogenous extended internal market under equal conditions of competition and respect of the same rules, and related horizontal and flanking policies, while also replacing the current customs unions between the EU and each of these countries.

In addition, the Agreement includes a framework for possible cooperation in policy areas outside the four freedoms such as research and development, education, social policy, the environment, consumer protection, culture and regional cooperation.

To ensure the effective functioning of the internal market, the Agreement foresees dynamic regulatory alignment. It also provides for the Commission as the responsible authority in charge of applying EU law on State aid in Andorra and San Marino. The Agreement further includes provisions establishing a dispute settlement mechanism with the Court of Justice of the European Union as arbiter for disputes on the interpretation and application of the Agreement.

Finally, the situation of Andorra and San Marino as small-sized States is taken into account, in accordance with Declaration 3 on Article 8 of the Treaty on European Union (TEU) 1 . This is reflected in a number of adaptations to the provisions of EU legal acts included in the annexes to the Agreement, as well as in several transitional periods for the implementation and application of parts of the EU acquis. Sectoral adaptations concern in particular the area of free movement of persons where quantitative limits regarding certain types of residence inspired by those agreed with Liechtenstein in the Agreement on the European Economic Area 2 are foreseen. Transitional periods are also provided for in areas such as telecommunications, transport or energy. Specific adaptations are also included concerning the absence of a certain industrial sector such as parts of the transport sector.

The Agreement also allows for a staggered access to the EU’s internal market for financial services, whereby Andorra and San Marino may decide not to seek access to the entire EU internal market for financial services. This possibility should not last longer than 15 years after the entry into force of the Agreement. In light of the specificities of Andorra and San Marino and the related specific rules and provisions introduced to cater for orderly and sound market integration, it was necessary to subject market access in the area of financial services to specific additional safeguards to those that govern relations between Member States in the internal market, in particular regarding the requirements on local provision of services and emergency powers of the European Supervisory Authorities.

•Consistency with existing policy provisions in the policy area

The Agreement is a significant milestone which responds directly, on the one hand, to the EU's objective to develop a special relationship with neighbouring countries as set out in Article 8 TEU and, on the other hand, to these two countries' stated interest in building closer relations with the EU.

The EU’s main interests, as stated in the 2012 Commission Communication 3 and 2013 report, 4 reflected in subsequent Council conclusions, and eventually in the Council’s negotiating directives, include the contribution that closer economic ties could make to greater employment, trade and investment activity in EU regions neighbouring these countries. Given the obstacles to the small countries’ access to the EU’s internal market and cooperation in other areas, there would be significant potential to develop relations further for mutual benefit by breaking down barriers to cross-border economic activity.

In addition, the Agreement establishes a coherent and efficient institutional framework for relations, including institutional provisions to ensure the preservation of the homogeneity and the good functioning of the internal market, the indivisibility of the four freedoms and legal certainty, while taking into account the particular situation of each these countries.

a) The EU and Andorra

The EU and Andorra have progressively established close links, inter alia, following the conclusion of several bilateral agreements.

The bilateral agreements listed below shall cease to have effect, and shall be replaced and superseded by the Agreement. The termination of those agreements shall take effect from the date of entry into force of the Agreement:

·Agreement in the form of an Exchange of Letters between the European Economic Community and Andorra of 28 June 1990 5 ; and

·Cooperation Agreement between the European Community and Andorra of 15 November 2004 6 .

The bilateral agreements listed below will remain in place after the entry into force of the Agreement:

·Monetary Agreement between the EU and Andorra of 30 June 2011 7 ; and

·Agreement between the European Community and Andorra providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income of 15 November 2004 8 . 

b) The EU and San Marino

The EU and San Marino have progressively established close links, inter alia, following the conclusion of several bilateral agreements.

The bilateral agreement listed below shall cease to have effect, and shall be replaced and superseded by the Agreement. The termination of this agreement shall take effect from the date of entry into force of the Agreement:

·Agreement on Cooperation and Customs Union between the European Economic Community and the Republic of San Marino of 16 December 1991 9 .

The bilateral agreements listed below will remain in place after the entry into force of the Agreement:

·Monetary Agreement between the EU and San Marino of 27 March 2012 10 ; and

·Agreement between the European Community and the Republic of San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments and the accompanying Memorandum of Understanding of 7 December 2004 11 .

•Consistency with other Union policies

The Agreement is fully consistent with EU policies and fully respects the Treaties, preserving the integrity and the autonomy of the EU legal order. The Agreement will not require the EU to amend its rules, regulations or standards in any regulated area. They promote the values, objectives, and interests of the EU, and ensure the consistency, effectiveness and continuity of its policies and actions.

2.LEGAL BASIS

The substantive legal basis for the proposed Council Decision on conclusion is Article 217 of the Treaty on the Functioning of the European Union (TFEU). This legal basis is the most appropriate given the broad scope of the envisaged Agreement.

The procedural legal basis is Articles 218(6) TFEU, Article 218(7) TFEU and the second subparagraph of Article 218(8) TFEU.

Article 218(6) TFEU provides for a conclusion pursuant to a decision of the Council, following the European Parliament’s consent.

The second subparagraph of Article 218(8) TFEU provides for unanimity voting in the Council.

In addition, Article 218(7) TFEU has been added as a legal basis as it is appropriate for the Council to authorise the Commission to approve on the EU’s behalf certain modifications to the Agreement that are to be adopted by a simplified procedure or by a body set up by the Agreement.

Thus, the legal basis for the proposed Council Decision is Article 217 TFEU, read in conjunction with Articles 218(6) TFEU, Article 218(7) TFEU and the second subparagraph of Article 218(8) TFEU.

3.OTHER ELEMENTS

•Implementation by bodies established under the Agreement 

The Agreement sets up an institutional framework composed of an Association Committee consisting of representatives of the EU, Andorra and San Marino, as well as a Joint Committee and several Subcommittees between the EU and each of the two countries. The Agreement provides for a mechanism to address failure by one of the Parties to fulfil obligations assumed under the Agreement.

•Implementation and application of the Agreement

In accordance with Article 216(2) TFEU, agreements concluded by the EU are binding upon the institutions of the Union and its Member States.

It is appropriate to authorise the Commission, pursuant to Article 218(7) TFEU, to approve on behalf of the Union certain modifications to the Agreement that are to be adopted by a simplified procedure or by a body set up by the Agreement. Such modifications relate to Article 108 of the Framework Agreement as regards amendments to the Associated State Protocols, excluding their Annexes.

The Commission should inform the Council of the above-mentioned proposed modifications in advance. The Council may object to those proposed modifications by a blocking minority of the Council in accordance with Article 16(4) TEU. In that case, the Commission has to reject the proposed modifications on behalf of the Union, without prejudice to the possibility of subsequently making a proposal to the Council in accordance with Article 218(9) TFEU.

It is also appropriate to authorise the Commission, pursuant to Article 218(7) TFEU, to approve on behalf of the Union the position regarding decisions by the Joint Committees that simply extend EU acts included in the Annexes to the Associated State Protocols to Andorra and San Marino respectively, subject to technical adaptations.

To guarantee compliance with the obligations under the Agreement, there are robust enforcement mechanisms. The Agreement also provides for the possibility for the Parties to take measures to protect their interests, such as compensatory measures for the incorrect application of the Agreement, safeguard measures in the event of serious economic, societal and environmental difficulties of a regional nature that are caused by the application of the Agreement or safeguard measures in the event of a terrorist attack or a natural or man-made disaster that affects one of the Parties. It is important for the EU to be fully able to deploy these measures rapidly and effectively. For this purpose, until a specific legislative act regulating the adoption of the above-mentioned measures enters into force in the EU, any decision of the EU to take such measures should be taken by the Commission in accordance with the conditions set out in the corresponding provisions of the Agreement.

•Detailed explanation of the specific provisions of the Agreement

The Agreement is formed of the following elements: a Framework Agreement; seven Framework Protocols; two Associated State protocols; and 25 technical Annexes to each Associated State protocol, containing all EU legal acts falling within the scope of the Agreement.

The main elements of the Agreement are the following:

a) The Framework Agreement

The Framework Agreement outlines the essential elements for the future association between the EU and Andorra and San Marino respectively, which ensures the participation of Andorra and San Marino to a homogenous extended internal market under equal conditions of competition and respect of the same rules, while at the same time establishing a framework to develop and promote dialogue and cooperation in other areas of common interest. The Framework Agreement foresees that the EU law principle of non-discrimination on grounds of nationality is respected by Andorra and San Marino.

The Framework Agreement also establishes a coherent, effective and efficient institutional framework with a view to ensuring the homogeneity of the internal market and legal certainty for (inter alia) economic operators and citizens.

The Agreement provides for the possibility of an application of the Agreement between the EU and one of the Associated States, pending the finalisation of the ratification procedure for the entry into force of the agreement between the three contracting parties.

b) Seven Framework Protocols

The Agreement contains seven Framework Protocols aimed at clarifying and detailing the provisions included in the Framework Agreement.

Among these Framework Protocols, Framework Protocol 1 (on horizontal adaptations) contains a number of general rules, including with regard to the functioning of specific adaptations, including transitional periods and certain derogations.

Framework Protocol 3 (on financial services) is organised on the basis of the following elements:

·access to the EU single market on financial services depends on a comprehensive evaluation on the full and effective implementation of the EU acquis for the financial sector and the robustness of the Associated States’ regulatory and supervisory frameworks.

·the Framework Protocol provides for a staggered approach, whereby the Associated States may decide not to seek access to the entire EU internal market for financial services; this possibility will not last longer than 15 years after the entry into force of the Agreement.

·market access requires the adoption by the Commission of a positive recommendation that all necessary conditions set out in the protocol have been fulfilled.

·in case the regulatory and supervisory frameworks of an Associated State show deficiencies, the EU has the possibility to suspend market access.

·local presence and provision of services in the Associated States are required;

·compliance with the anti-money laundering acquis is a pre-condition to access the EU market for financial services.

·the European Supervisory Authorities will be instrumental in the auditing process, in which competent authorities of EU Member States may also participate. Furthermore, they will be able to exercise their authority vis-à-vis the Associated States and their financial services sector.

The other Framework Protocols cover aspects such as: (a) implementation of competition rules applicable to undertakings; (b) organisation of cooperation in the field of statistics; (c) status of the parliamentary association committee; (d) arbitration procedures; and (e) existing agreements.

c) Two Associated State Protocols

The Associated State Protocols contain matters which are strictly bilateral (between the EU and one of the Associated States) such as provisions concerning customs cooperation.

d) 25 Annexes to each Associated State Protocol

Each Associated State Protocol is accompanied by 25 Annexes, containing the EU legal acts falling within the scope of the Agreement. The Annexes include several sectoral or specific adaptations to take account of the specificities of Andorra and San Marino arising from their specific relations of proximity with their neighbours, their size and their relatively small populations. The Annexes also include transitional periods for the take-over, implementation, and application of certain EU legal acts by the two countries.

ATTACHEMENTS:

Annex, Part 1: Framework Agreement, Framework Protocols

Annex, Part 2: Andorra Protocol

Annex, Part 3: Annex I to the Andorra Protocol

Annex, Part 4: Annex II to the Andorra Protocol

Annex, Part 5: Annexes III, IV, V, VI, VII, VIII, IX, X to the Andorra Protocol

Annex, Part 6: Annexes XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX to the Andorra Protocol

Annex, Part 7: Annexes XX, XXI, XXII, XXIII, XXIV, XXV to the Andorra Protocol

Annex, Part 8: San Marino Protocol

Annex, Part 9: Annex I to the San Marino Protocol

Annex, Part 10: Annex II to the San Marino Protocol

Annex, Part 11: Annexes III, IV, V, VI, VII, VIII, IX, X to the San Marino Protocol

Annex, Part 12: Annexes XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX to the San Marino Protocol

Annex, Part 13: Annexes XX, XXI, XXII, XXIII, XXIV, XXV to the San Marino Protocol

Annex, Part 14: Declarations

2024/0101 (NLE)

Proposal for a

COUNCIL DECISION

on the conclusion, on behalf of the European Union, of the Agreement establishing an association between the European Union and the Principality of Andorra and the Republic of San Marino respectively

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union (‘TFEU’), and in particular Article 217, in conjunction with Article 218(6), Article 218(7) and the second subparagraph of Article 218(8) thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament,

Whereas:

(1)On [DATE], the Council adopted Council Decision No (EU) …, regarding the signing, on behalf of the Union of the Agreement establishing an association between the European Union (the ‘Union’) and the Principality of Andorra (‘Andorra) and the Republic of San Marino (‘San Marino’) respectively (the ‘Agreement’).

(2)The Agreement provides for the participation of the two countries in the Union’s internal market and related horizontal and flanking policies, while also replacing the current customs unions between the Union and each of these countries. The Agreement also includes a framework for possible cooperation in policy areas outside the four freedoms such as research and development, education, social policy, the environment, consumer protection, culture and regional cooperation. 

(3)To ensure the effective functioning of the Union’s internal market, the Agreement foresees dynamic regulatory alignment. The Agreement further includes provisions establishing a dispute settlement mechanism with the Court of Justice of the European Union as arbiter for disputes on the interpretation and application of the Agreement.

(4)The situation of Andorra and San Marino as small-sized States is taken into account, in accordance with Declaration 3 on Article 8 of the Treaty on European Union (‘TEU’). This is reflected in a number of adaptations to the provisions of Union legal acts included in the annexes to the Agreement, as well as in several transitional periods for the implementation and application of parts of the Union’s acquis. 

(5)The Agreement allows for a staggered access to the Union’s internal market for financial services, whereby Andorra and San Marino may decide not to seek access to the entire EU internal market for financial services. This possibility should not last longer than 15 years after the entry into force of the Agreement. 

(6)In light of the specificities of Andorra and San Marino and the related specific rules and provisions introduced to cater for orderly and sound market integration, it was necessary to subject market access in the area of financial services to specific additional safeguards to those that govern relations between Member States in the internal market, in particular regarding the requirements on local provision of services and emergency powers of the European Supervisory Authorities.

(7)Access to the Union’s internal market on financial services should therefore depend on a comprehensive evaluation on the full and effective implementation of the Union’s acquis for the financial sector and the robustness of Andorra’s and San Marino’s regulatory and supervisory frameworks and will require the adoption by the European Commission of a positive recommendation that all necessary conditions set out in the Agreement have been fulfilled. The assessment of Andorra’s and San Marino’s regulatory and supervisory frameworks state should be based on rules that are foreseen in the Union’s regulatory framework.

(8)It is appropriate to define the modalities of the Union’s representation in the Association Committee and the Joint Committees established by the Agreement. The European Commission, as provided for in Article 17(1) TEU, is to represent the Union and to express the European Union’s positions in accordance with the Treaties. 

(9)It is appropriate to define the modalities for deciding on the positions to be taken on the Union’s behalf in the Joint Committees established by the Agreement in order to guarantee that the legal acts adopted by the Union in the fields covered by the Agreement are incorporated into the Agreement as soon as possible after their adoption and transmission to Andorra and San Marino with a view to ensuring, to the extent possible, the simultaneous application of those legal acts in the Union and in Andorra and San Marino respectively.

(10)It is appropriate to authorise the European Commission, pursuant to Article 218(7) TFEU, to approve on the Union’s behalf certain modifications to the Agreement that are to be adopted by a simplified procedure or by a body set up by the Agreement in accordance with the provisions of that agreement. The procedure of consultation of the Council regarding such modifications should be established.

(11)With a view to enabling the Union to take rapid and effective action to protect its interests in accordance with the Agreement, and until a specific legislative act regulating the adoption of remedial measures under the Agreement is adopted and enters into force in the Union, the European Commission should be empowered to take remedial measures, such as compensatory measures for the incorrect application of the Agreement, safeguard measures in the event of serious economic, societal and environmental difficulties of a regional nature that are caused by the application of the Agreement or safeguard measures in the event of a terrorist attack or a natural or man-made disaster that affects the Union.

(12)The Agreement was signed in Brussels on (…). The Agreement and the attached Declarations should be approved, on behalf of the Union. 

(13)The Commission should proceed, on behalf of the Union, to the deposit of the instrument of approval provided for in Article 112 of the Agreement, in order to express the consent of the European Union to be bound by the Agreement.

HAS ADOPTED THIS DECISION:

Article 1

The Agreement establishing an association between the Union and Andorra and San Marino, respectively is hereby approved on behalf of the Union.

The text of the Agreement is attached to this Decision.

Article 2

1.The European Commission shall represent the Union within the Association Committee, the Joint Committees, the Customs Cooperation Subcommittees, the Subcommittees on Food Safety and Veterinary and Phytosanitary Matters, the Subcommittees on Financial Services, the Statistical Subcommittees, as well as in any additional subcommittees and working groups that are established in accordance with paragraph 8 of Article 76 of the Framework Agreement. 

2.When the European Commission represents the Union in bodies created by the Agreement, it shall inform the Council in a timely manner about the discussions and the outcome of the meetings and of the acts adopted in those meetings. The European Commission shall also inform the European Parliament as appropriate. 

Article 3

1.When the European Commission submits a proposal to the Council which it considers to fall within an area covered by the Agreement, it shall indicate that, after its adoption, the future legal act shall be extended to Andorra and San Marino respectively. 

2.The European Commission shall be authorised to take, on behalf of the Union, any position in the Joint Committees set out by Article 76 of the Framework Agreement regarding decisions that simply extend Union legal acts to Andorra and San Marino respectively, subject to any technical adjustments needed.

3.For decisions adopted by the Joint Committees other than those referred to in paragraph 2 of this Article, the positions to be taken on the Union’s behalf shall be established in accordance with the procedure set out in Article 218(9) TFEU. 

Article 4

1.Without prejudice to Article 3, the Commission shall be authorised to approve, on behalf of the Union, modifications to the Associated State Protocols to the Agreement to be adopted by the Joint Committees in accordance with Article 108 of the Framework Agreement.

2.The Commission shall submit the proposed modifications specified in paragraph 1 to the Council before their approval. 

The Commission shall approve those proposed modifications on behalf of the Union unless, within one month after the Commission has submitted them to the Council, a number of Member States representing a blocking minority of the Council in accordance with Article 16(4) TEU object to them. If there is such an objection, the Commission shall reject the proposed modifications on behalf of the Union.

Article 5

The European Commission shall transmit and inform the Council of the draft assessment criteria and methodology received from the EU Supervisory Authorities in application of Article 10 of the Framework Protocol 3 (on financial services) to the Agreement prior to their adoption.

Article 6

Before adopting a decision in accordance with Article 15 of Framework Protocol 3 (on financial services) to the Agreement, the EU supervisory authorities shall inform the European Commission, who shall inform the Council.

Article 7

Until a specific legislative act regulating the adoption of the measures listed in points (a) to (c) of this Article enters into force in the Union, any decision of the Union to take such measures shall be taken by the Commission in accordance with the conditions set out in the corresponding provisions of the Agreement:

(a)compensatory measures for the incorrect application of the Agreement with a view to remedying imbalances in accordance with Article 90 of the Framework Agreement;

(b)safeguard measures in the event of serious economic, societal and environmental difficulties of a regional nature that are caused by the application of the Agreement and that are likely to persist in accordance with Article 97 of the Framework Agreement;

(c)safeguard measures in the event of a terrorist attack or a natural or man-made disaster that affects the Union in accordance with Article 98 of the Framework Agreement.

Article 9

This Decision shall enter into force on the date of its adoption.

Done at Brussels,

(1)    Declaration on Article 8 of the Treaty on European Union: “The Union will take into account the particular situation of small-sized countries which maintain specific relations of proximity with it.”

(2)    See Annex VIII to the EEA Agreement.

(3)    Commission Communication on EU relations with the Principality of Andorra, the Principality of Monaco and the Republic of San Marino — Options for closer integration with the EU (COM(2012) 680 final/2), Brussels 20.11.2012.

(4)

   Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – EU Relations with the Principality of Andorra, the Principality of Monaco and the Republic of San Marino: Options for their participation in the Internal Market (COM/2013/0793 final), Brussels, 18.11.2013.

(5)    OJ L 374, 31.12.1990, p. 16.

(6)    OJ L 135, 28.5.2005, p. 14.

(7)    OJ C 369, 17.12.2011, p. 1.

(8)    OJ C 359, 4.12.2004, p. 33.

(9)    OJ C 302, 22.11.1991, p. 12.

(10)    OJ C 121, 26.4.2012, p. 5.

(11)    OJ C 381, 28.12.2004, p. 33.

EUROPEAN COMMISSION

Brussels, 26.4.2024

COM(2024) 189 final

ANNEXES

to the

Proposal for a COUNCIL DECISION

on the conclusion, on behalf of the European Union, of the Agreement establishing an association between the European Union and the Principality of Andorra and the Republic of San Marino, respectively

ANNEX (PART 1/14)

PREAMBLE

RECALLING the close historical, geographical, cultural, political and economic links between the EU and each Associated State, including in the form of existing agreements, as well as the specific links of proximity between each Associated State and one or more EU Member States;

WHEREAS the links which have progressively been established between the EU and Andorra, inter alia, following the Agreement in the form of an Exchange of Letters between the European Economic Community and Andorra of 28 June 1990 1 , the Cooperation Agreement between the European Community and Andorra of 15 November 2004 2 , the Monetary Agreement between the EU and Andorra of 30 June 2011 3  and the Agreement between the European Community and Andorra providing for measures equivalent to those

laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments of 15 November 2004 and the accompanying Memorandum of Understanding of 15 November 2004 4 and its Amending Protocol of 12 February2016 5 ;

WHEREAS the links which have progressively been established between the EU and San Marino, inter alia, following the Agreement on Cooperation and Customs Union between the European Economic Community and the Republic of San Marino of 16 December 1991 6 , the Monetary Agreement between the EU and San Marino of 27 March 2012 7  and the Agreement between the European Community and the Republic of San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments and the accompanying Memorandum of Understanding of 7 December 2004 8 , and its Amending Protocol of 8 December 2015 9 ;

WHEREAS the Associated States have for centuries had close ties with their neighbouring countries, which are now EU Member States, and whereas their territories are surrounded by the territory of the EU;

RESOLVED to establish an Association in order to deepen, diversify and sustain their relations based on values common to the EU and the Associated States of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities, which constitute essential parts of this Agreement; 

COMMITTED to promoting those common values in a society characterised by pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men;

EMPHASISING the EU's willingness to develop a special relationship with its neighbouring countries, with a view to establishing an area of prosperity and good neighbourliness with reciprocal rights and obligations and the possibility of joint action and characterised by close and peaceful relations based on cooperation;

SEEKING to establish a comprehensive and coherent framework for relations between the EU and the Associated States, taking into account the particular situation of each of the Associated States, as set out in Declaration 3 on Article 8 of the Treaty on European Union (TEU);

DETERMINED to ensure the economic integration and respective participation of the Associated States in the EU's internal market, including, in particular, its four indivisible freedoms: the free movement of goods, persons, services and capital on the basis of common rules and a level playing field, while taking account of the particular situation of each of the Associated States and preserving their independence and that of their institutions;

RESOLVED to enhance, through the Association, economic and business opportunities for individuals and businesses in the Associated Parties;

DETERMINED to ensure, through the implementation of the Association, the homogeneity of the internal market, legal certainty, the uniform interpretation and application of this Agreement, and equal treatment for, inter alia, economic operators and citizens within the Association; 

RECOGNISING the necessity, in order to ensure the proper functioning of this Agreement and full respect of the EU law, of establishing an appropriate institutional framework, including in particular a forum for dialogue between the Associated Parties, procedures relating to oversight and dispute settlement, and the exclusive jurisdiction of the Court of Justice of the European Union in order to ensure the uniform interpretation and application of this Agreement;

SEEKING to contribute to enhancing the cooperation between members of the European Parliament and members of the parliaments of the Associated States, as well as between the social and economic partners of the EU and those of the Associated States;

NOTING the ambition of the EU and of the Associated States to base their Association on a high level of healthcare, safety and consumer protection;

DETERMINED to preserve, protect and improve the quality of the environment and to ensure the prudent and rational use of natural resources in accordance with the principles of sustainable development, and precautionary and preventive action, as well as to promote the welfare of humans and animals;

AWARE of the importance of sustainable development in its economic, environmental and social dimensions, and desiring to promote and contribute to the achievement of the United Nations' Agenda 2030 and its Sustainable Development Goals;

REAFFIRMING their commitment to the Charter of the United Nations, the Universal Declaration of Human Rights, the European Convention for the Protection of Human Rights and Fundamental Freedoms, and to the objectives and principles of the Council of Europe and the Organization for Security and Cooperation in Europe;

NOTING that the establishment of the Association strengthens bilateral relations between the Union and each of the Associated States, thereby encouraging the Associated Parties to achieve ever greater convergence of positions on bilateral, regional and international issues of common interest;

WHO, having exchanged their full powers, found in good and due form, have agreed as follows:

PART I

OBJECTIVES, VALUES AND PRINCIPLES

ARTICLE 1

Objectives

1.    This Agreement establishes an association between the EU and Andorra and San Marino, respectively (hereinafter referred to as "the Association").

2.    The aims of this Association are:

(a)    to ensure the respective participation of the Associated States in the internal market, which includes the free movement of persons, goods, services and capital and a level playing field between each of them and the EU in accordance with this Agreement, as well as their participation in the associated horizontal and accompanying policies, taking into account the specific situation of each Associated State; and

(b)    to establish an appropriate framework to develop and promote dialogue and cooperation between the EU and each Associated State in other areas of common interest.

ARTICLE 2

Definitions

For the purposes of this Agreement:

(a)    "Associated States" means Andorra and San Marino, respectively;

(b)    "Contracting Parties" means the EU, Andorra and San Marino;

(c)    "Associated Parties" means the EU, Associated Party of the one part, and either Andorra or San Marino, respectively, Associated Party of the other part;

(d)    "Agreement" means the Framework Agreement, Framework Protocols, Associated State Protocols and Annexes;

(e)    "Framework Agreement" means the Agreement without Protocols and Annexes;

(f)    "Associated State Protocols" means the Protocols by Associated State and their respective Annexes establishing the special conditions for the achievement of the objectives and the elements linked to the adoption of the acquis of the EU's internal market;

(g)    "Framework Protocols" means protocols common to the three Contracting Parties;

(h)    "Annexes to the Associated State Protocols" means the texts containing the legal acts of the EU falling within the scope of this Agreement, with any adaptations;

(i)    "Court of Justice of the EU" (hereinafter referred to as "CJEU") means the Court of Justice and the General Court of the EU.

ARTICLE 3

Values

This Agreement is based on the common values of the EU and the Associated States: respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. In a society characterised by pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men, these values are essential parts of this Agreement.

ARTICLE 4

Principles

In order to achieve the objectives set out in Article 1 of the Framework Agreement, the Associated Parties shall take all appropriate measures, whether general or specific, to ensure the fulfilment of the obligations arising under this Agreement in accordance with the following fundamental principles:

(a)    the proper functioning and homogeneity of the EU internal market on the basis of uniform rules;

(b)    legal certainty and equal treatment of economic operators and individuals;

(c)    consideration of the specific situation of each of the Associated States.

ARTICLE 5

Principle of non-discrimination

Within the scope of application of this Agreement, and without prejudice to any special provisions contained therein, any discrimination on the grounds of nationality shall be prohibited.

PART II

FREE MOVEMENT OF GOODS, PERSONS, SERVICES AND CAPITAL

CHAPTER 1

FREE MOVEMENT OF GOODS

ARTICLE 6

Free movement of goods

Free movement of goods between the Associated Parties shall be established in conformity with the provisions of this Agreement.

ARTICLE 7

Prohibition of customs duties

ARTICLE 8

Prohibition of quantitative restrictions

ARTICLE 9

Prohibitions or restrictions on imports, exports or transit

1.    This Agreement 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, the protection of national treasures possessing artistic, historic or archaeological value, or the protection of industrial or commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Associated Parties. 

2.    Measures which have the least impact on the free movement of goods between the Associated Parties should be preferred. The duration of such measures shall be limited to what is strictly necessary to achieve the objectives set out in paragraph 1. 

ARTICLE 10

Internal taxation

Neither Associated Party shall, directly or indirectly, impose on the products of the other Associated Party any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. Nor shall either Associated Party impose on the products of the other Associated Party any internal taxation of such a kind as to afford indirect protection to other products.

ARTICLE 11

Application of the EU's common customs tariff

In their relations with third countries, the Associated States shall apply the EU's common customs tariff in accordance with the provisions laid down in the respective Associated State Protocols.

ARTICLE 12

Application of the Common Commercial Policy of the EU

In their relations with third countries, the Associated States shall apply the Common Commercial Policy of the EU, including EU trade defence measures, as set out in Annex XXV to each Associated State Protocol.

ARTICLE 13

Other rules

1.    Specific provisions and arrangements are laid down in:

(a)    Annex I to each Associated State Protocol, as regards food safety and veterinary and phytosanitary matters;

(b)    Annex II to each Associated State Protocol, as regards technical regulations, standards, testing and certification;

(c)    Annex III to each Associated State Protocol, as regards product liability;

(d)    Annex IV to each Associated State Protocol, as regards energy;

(e)    Annex XXIII to each Associated State Protocol, as regards customs legislation;

(f)    Annex XXIV to each Associated State Protocol, as regards legislation on agriculture; and

(g)    Annex XXV to each Associated State Protocol, as regards aspects other than those covered by Article 12 of the Framework Agreement.

2.    The specific provisions and arrangements referred to in paragraph 1 shall apply to all products unless otherwise specified.

CHAPTER 2

FREE MOVEMENT OF PERSONS, WORKERS AND SELF-EMPLOYED PERSONS

ARTICLE 14

Free movement of workers

1.    Freedom of movement for workers shall be secured between the Associated Parties.

2.    Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of EU Member States and of the Associated State concerned as regards employment, remuneration and other conditions of work and employment.

3.    It shall entail the right, subject to limitations justified on grounds of public policy, public security or public health:

(a)    to accept offers of employment actually made;

(b)    to move freely within the territory of EU Member States and the Associated State concerned for that purpose;

(c)    to stay in the territory of an EU Member State or the Associated State concerned for the purpose of employment in accordance with the provisions governing the employment of nationals of that State laid down by law, regulation or administrative action;

(d)    to remain in the territory of an EU Member State or the Associated State concerned after having been employed there.

4.    The provisions of this Article shall not apply to employment in the public service.

5.    The Associated State Protocols and in particular Annex V to each Associated State Protocol thereto contain specific provisions on freedom of movement for workers.

ARTICLE 15

Social security for workers and self-employed persons

In order to provide freedom of movement for workers and self-employed persons, the Associated Parties shall, in the field of social security, secure, as provided for in Annex VI to each Associated State Protocol, for workers and self-employed persons and their dependants, in particular:

(a)    the aggregation, for the purpose of acquiring and retaining the right to benefit and of calculating the amount of benefit, of all periods taken into account under the laws of the several countries;

(b)    payment of benefits to persons resident in the territories of the Associated Parties.

ARTICLE 16

Mutual recognition of diplomas

In order to make it easier for persons to take up and pursue activities as workers and self-employed persons, the Associated Parties shall take the necessary measures, as contained in Annex VII to each Associated State Protocol, concerning the mutual recognition of diplomas and other evidence of formal qualifications, and the coordination of the provisions laid down by law, regulation or administrative action in the Associated Parties concerning the taking up and pursuit of activities by workers and self-employed persons.

CHAPTER 3

FREEDOM OF ESTABLISHMENT

ARTICLE 17

Freedom of establishment

1.    The freedom of establishment between the Associated Parties shall be ensured, in line with the provisions of this Agreement.

2.    Any restriction on the freedom of establishment of nationals of an EU Member State or the Associated State concerned in the territory of any other of these States shall be prohibited. This shall also apply to the setting-up of agencies, branches or subsidiaries by nationals of any EU Member States or the Associated State concerned established in the territory of any of these States.

3.    The freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 20 of the Framework Agreement, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of Chapter 5.

4.    Annexes VIII to XI and XXII to each Associated State Protocol, as well as Framework Protocol 3, contain specific provisions on the freedom of establishment.

ARTICLE 18

Exercise of public powers

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

ARTICLE 19

Special arrangements on the grounds of public policy,
public security and public health

The provisions of this Chapter and measures taken pursuant thereto shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for nationals of an EU Member State or Associated State concerned on the grounds of public policy, public security or public health.

ARTICLE 20

Scope and definition of companies

1.    Companies formed in accordance with the law of an EU Member State or Associated State concerned and having their registered office, central administration or principal place of business in the territory of that State shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of EU Member States or the Associated State concerned.

2.    "Companies" means 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 non-profit-making.

ARTICLE 21

Participation in the capital of companies

An EU Member State or the Associated State concerned shall accord nationals of the other State the same treatment as its own nationals as regards participation in the capital of companies as defined in Article 20, paragraph 2 of the Framework Agreement, without prejudice to the application of the other provisions of this Agreement.

ARTICLE 22

Mutual recognition of diplomas

Article 16 of the Framework Agreement applies to the matters covered by this Chapter.

ARTICLE 23

Specific provisions

CHAPTER 4

FREEDOM TO PROVIDE SERVICES

ARTICLE 24

Freedom to provide services

1.    Freedom to provide services between the Associated Parties shall be ensured in conformity with this Agreement.

2.    Any restriction on the freedom to provide services between the Associated Parties shall be prohibited in respect of nationals of the Associated State concerned or of an EU Member State established in a State other than that of the recipient of the service.

3.    Services shall be considered to be "services" where they are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons.

4.    "Services" shall in particular include activities of:

(a)    an industrial character;

(b)    a commercial character;

(c)    craftsmen;

(d)    the professions.

Without prejudice to the provisions of the Chapter 3, the person providing a service may, in order to do so, temporarily pursue his activity in the State where the service is provided, under the same conditions as are imposed by that State on its own nationals.

5.    Annexes IX to XI to each Associated State Protocol and Framework Protocol 3 contain specific provisions on the freedom to provide services. 

ARTICLE 25

Non-discrimination

As long as restrictions on freedom to provide services have not been abolished between the Associated Parties, the Parties shall apply such restrictions without distinction on grounds of nationality or of residence to all persons providing services within the meaning of Article 24(2) of the Framework Agreement.

ARTICLE 26

Specific provisions

1.    Freedom to provide services in the field of transport shall be governed by Chapter 6.

2.    Articles 16, 18, 19 and 20 of the Framework Agreement apply to the matters governed by this Chapter.

CHAPTER 5

FREE MOVEMENT OF CAPITAL

ARTICLE 27

Capital movements

1.    Within the framework of the provisions of this Agreement, restrictions on the movement of capital between the Associated Parties shall be prohibited.

2.    Within the framework of the provisions of this Agreement, restrictions on payments between the Associated Parties shall be prohibited.

3.    Annex XII to each Associated State Protocol contains specific provisions on the free movement of capital and payments.

ARTICLE 28

Measures compatible with the free movement of capital

1.    Article 27 shall be without prejudice to the right of the EU Member States and Associated States:

(a)    to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;

(b)    to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.

2.    The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with this Agreement.

3.    The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments.

ARTICLE 29

Restrictions in case of balance of payments difficulties

Where a Member State of the EU whose currency is not the euro or an Associated State is in difficulties, or is seriously threatened with difficulties as regards its balance of payments either as a result of an overall disequilibrium in its balance of payments, or as a result of the type of currency at its disposal, and where such difficulties are liable in particular to jeopardise the functioning of this Agreement, the Member State of the EU or the Associated State concerned may take protective measures.

ARTICLE 30

Safeguard measures with regard to capital movements or payments

In exceptional circumstances, serious difficulties, or threat thereof, for the operation of the economic and monetary union of the EU, the EU may adopt or maintain safeguard measures with regard to capital movements or payments for a period not exceeding six months, as long as such measures are strictly necessary.

ARTICLE 31

Implementation of protective measures

The EU, of the one part, and each Associated State, of the other, shall use their internal procedures for the implementation of the provisions of Article 29 of the Framework Agreement.

ARTICLE 32

Role of the Joint Committee in case of protective measures

1.    All measures provided for in Article 29 of the Framework Agreement shall be notified immediately to the Joint Committee set up by Article 76 of the Framework Agreement.

2.    All measures provided for in Article 29 of the Framework Agreement shall be the subject of consultations and an exchange of information within the Joint Committee in advance of and after their notification.

3.    In the situations referred to in Article 29 of the Framework Agreement, where a sudden crisis in the balance of payments occurs and the procedures set out in paragraph 2 of this Article cannot be followed, the Member State of the EU or Associated State concerned may, as a precaution, take the necessary protective measures. Such measures shall cause the least possible disturbance in the functioning of this Agreement and shall not be wider in scope than is strictly necessary to remedy the sudden difficulties which have arisen.

4.    When measures are taken as referred to in paragraph 3 of this Article, notice thereof shall be given at the latest by the day of their entry into force, and the exchange of information and consultations referred to in paragraph 2 of this Article shall then take place as soon as possible thereafter.

CHAPTER 6

TRANSPORT

ARTICLE 33

Scope of Chapter 6

1.    This Agreement covers combined, road, rail, inland waterway and maritime transport, including services related to those modes of transport.

2.    The transport objectives of this Agreement shall be pursued in accordance with Articles 34 to 37 of the Framework Agreement and the provisions of Annex XIII to each Associated State Protocol.

ARTICLE 34

Non-discriminatory application of domestic rules

The provisions of an Associated Party relative to combined, rail, road, inland waterway and maritime transport not covered by Annex XIII to each Associated State Protocol shall be no less favourable in their direct or indirect effect on carriers of the other Associated Party as compared with domestic carriers of that Associated Party.

ARTICLE 35

State aid in the transport sector

Aid to transport services shall be compatible with this Agreement if it meets the needs of coordination of transport or if it represents reimbursement for the discharge of certain obligations inherent in the concept of a public service.

ARTICLE 36

Prohibition of discriminatory rates or conditions

1.    In the case of transport within the territory of the Associated Parties, there shall be no discrimination which takes the form of carriers charging different rates and imposing different conditions for the carriage of the same goods over the same transport links on grounds of the country of origin or the destination of the goods in question.

2.    The Joint Committee shall examine, on its own initiative or at the request of an Associated Party, any cases of discrimination falling within the scope of this Article and take the necessary decisions within the framework of its own internal rules.

ARTICLE 37

Charges for crossing the frontiers

Charges or dues in respect of the crossing of frontiers which are charged by a carrier in addition to transport rates shall not exceed a reasonable level after taking the costs actually incurred thereby into account. The Associated Parties shall endeavour to reduce those costs progressively.

PART III

COMPETITION AND OTHER COMMON RULES

CHAPTER 1

RULES APPLICABLE TO UNDERTAKINGS

ARTICLE 38

Agreements, decisions and concerted practices

1.    The following shall be prohibited as incompatible with the functioning of this Agreement: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between the Associated Parties and which have as their object or effect the prevention, restriction or distortion of competition within the territory of the Associated Parties, and in particular those which:

(a)    directly or indirectly fix purchase or selling prices or any other trading conditions;

(b)    limit or control production, markets, technical development or investment;

(c)    divide up markets or sources of supply;

(d)    apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e)    make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

2.    Any agreements or decisions prohibited pursuant to this Article shall be automatically void.

3.    Paragraph 1 may, however, be declared inapplicable in the case of:

-any agreement or category of agreements between undertakings;

-- any decision or category of decisions by associations of undertakings; or

-- any concerted practice or category of concerted practices;

which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a)    impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b)    afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

ARTICLE 39

Abuse of a dominant position

Any abuse by one or more undertakings of a dominant position within the territory of the Associated Parties or in a substantial part thereof shall be prohibited as incompatible with the functioning of this Agreement in so far as it may affect trade between the Associated Parties.

Such abuse may, in particular, consist in:

(a)    directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b)    limiting production, markets or technical development to the prejudice of consumers;

(c)    applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d)    making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

ARTICLE 40

Competence of the European Commission

Where trade between EU Member States is likely to be affected, the European Commission alone is competent to apply the provisions of this Chapter.

ARTICLE 41

Assessment criteria for prohibited practices

Any practice prohibited by Articles 38 and 39 of this Framework Agreement must be assessed in accordance with the criteria resulting from the application of Articles 101 and 102 of the TFEU, as well as any secondary legislation in force in the EU. These provisions are set out in Annex XIV to each Associated State Protocol.

ARTICLE 42

Public undertakings and undertakings with special or exclusive rights or entrusted
with the operation of services of general economic interest

1.    In the case of public undertakings and undertakings to which either EU Member States or Associated States grant special or exclusive rights, the latter shall neither enact nor maintain in force any measure contrary to the rules contained in this Agreement, in particular to those rules provided for in this Chapter.

2.    Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to this Agreement, in particular its rules on competition, in so far as the application of those rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Associated Parties.

ARTICLE 43

Production of and trade in agricultural products

This Chapter shall apply to the production of and trade in agricultural products within the limits laid down by acts adopted pursuant to Article 42 TFEU for the application of Articles 101 and 102 of that Treaty to the production of and trade in agricultural products.

CHAPTER 2

STATE AID

ARTICLE 44

General principles

1.    Save as otherwise provided in this Agreement, any aid granted by the Associated States or EU Member States or through State resources in any form whatsoever, which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between the Associated Parties, be incompatible with the functioning of this Agreement.

2.    The following shall be considered to be compatible with this Agreement:

(a)    aid having a social character, granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned;

(b)    aid to make good the damage caused by natural disasters or exceptional occurrences.

3.    The following may be considered to be compatible with the functioning of this Agreement:

(a)    aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment;

(b)    aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State of the EU or an Associated State;

(c)    aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions between the Associated Parties to an extent contrary to the interests of any of them;

(d)    aid to promote culture and the conservation of heritage, including the preservation of natural or cultural values, where such aid does not adversely affect trading conditions between the Associated Parties to an extent contrary to the interests of any of them.

ARTICLE 45

Transparency

The Associated Parties shall ensure transparency with regard to State aid within the scope of this Agreement. To that end, each Associated Party shall ensure the publication of the following information on each individual aid award exceeding the amount established in the EU acquis:

(a)    the full text of the individual aid schemes or decisions granting aid and the implementing rules;

(b)    the identity of the granting authority;

(c)    the identity of the individual beneficiaries;

(d)    the form and amount of aid granted to each beneficiary,

(e)    the date of granting, the type of undertaking;

(f)    the region in which the beneficiary is located; and

(g)    the main economic sector of activity of the beneficiary. 

The European Commission may specify the details of those publication obligations.

ARTICLE 46

Review of State aid by the Commission

1.    The European Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans by the Associated States to grant or alter aid. If it considers that a project is not compatible with the internal market, it shall initiate the procedure provided for in paragraph 3 without delay. The Associated State concerned shall not put its proposed measures into effect until the procedure has resulted in a final decision.

2.    The European Commission shall, in cooperation with the Associated States, keep any systems of aid existing in those States under constant review. It shall propose to the latter any appropriate measures required by the progressive development or by the functioning of the internal market. Within one year of the entry into force of this Agreement, the Associated States shall carry out a comprehensive inventory of aid schemes established before the entry into force of this Agreement and adapt such aid schemes to the criteria referred to in Article 44 of the Framework Agreement within two years from the entry into force of this Agreement.

3.    If, after giving notice to the parties concerned to submit their comments, the European Commission finds that aid granted by an Associated State or through State resources is not compatible with the internal market or that such aid is being misused, it shall decide that the Associated State shall abolish or alter such aid within a period of time to be determined by the Commission.

4.    If the Associated State does not comply with that decision within the time limit set, the Commission may refer the matter directly to the Court of Justice of the EU.

ARTICLE 47

Interpretation and application of State aid rules

1.    By derogation from Article 81, the Associated Parties undertake to apply and interpret Articles 44, 45 and 46 of the Framework Agreement in accordance with the criteria on the application of the rules laid down in Articles 106, 107, 108 and 93 TFEU, as well as any secondary legislation in force in the EU. 

2.    The provisions referred to in paragraph 1 are set out in Annex XV to each Associated State Protocol.

3.    Without prejudice to paragraph 1, the Joint Committee may adopt decisions to amend Annex XV to each Associated State Protocol.

ARTICLE 48

Production of and trade in agricultural products

State aid rules do not apply to the production of and trade in agricultural products as listed in Annex I to the TFEU.

CHAPTER 3

OTHER COMMON RULES

ARTICLE 49

Procurement and intellectual, industrial and commercial property rights

1.    Annex XVI to each Associated State Protocol contains specific provisions and arrangements applicable to procurement. Unless otherwise provided, those provisions and arrangements shall apply to all the goods and services mentioned in that Annex.

2.    Annex XVII to each Associated State Protocol contains specific provisions and arrangements applicable to intellectual, industrial and commercial property. Unless otherwise provided, those provisions and arrangements apply to all goods and services.

PART IV

HORIZONTAL PROVISIONS RELATING TO THE FOUR FREEDOMS

CHAPTER 1

SOCIAL POLICY

ARTICLE 50

Improvement of working conditions

The Associated Parties agree upon the need to promote improved working conditions and an improved standard of living for workers.

ARTICLE 51

Health and safety of workers

1.    The Associated Parties shall pay particular attention to encouraging improvements, especially in the working environment, as regards the health and safety of workers. In order to help achieve that objective, minimum requirements shall be applied for gradual implementation, having regard to the conditions and technical rules applicable in the Associated Parties. Those minimum requirements shall not prevent any Associated Party from maintaining or introducing more stringent measures for the protection of working conditions compatible with this Agreement.

2.    The provisions containing the minimum requirements referred to in paragraph 1 are specified in Annex XVIII to each Associated State Protocol.

ARTICLE 52

Labour law

In the field of labour law, the Associated Parties shall introduce the measures necessary to ensure the good functioning of this Agreement. These measures are specified in Annex XVIII to each Associated State Protocol.

ARTICLE 53

Equal pay for equal work for men and women

1.    Each Associated Party shall ensure and maintain the application of the principle that men and women should receive equal pay for equal work.

For the purposes of this Article, "pay" means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which workers receive, directly or indirectly, in respect of their employment from their employer.

Equal pay without discrimination based on sex means:

(a)    that pay for the same work at piece rates shall be calculated on the basis of the same unit of measurement;

(b)    that pay for work at time rates shall be the same for the same job.

2.    Annex XVIII to each Associated State Protocol contains specific provisions for the implementation of paragraph 1.

ARTICLE 54

Equal treatment of men and women

The Associated Parties shall promote respect for the principle of equal treatment of men and women by implementing the provisions specified in Annex XVIII to each Associated State Protocol.

ARTICLE 55

Social dialogue

The Associated Parties shall endeavour to promote dialogue between management and labour, including at European level.

CHAPTER 2

CONSUMER PROTECTION

ARTICLE 56

Consumer protection

Annex XIX to each Associated State Protocol contains provisions on consumer protection.

CHAPTER 3

ENVIRONMENT AND CLIMATE

ARTICLE 57

Objectives relating to the environment and climate

1.    Action by the Associated Parties relating to the environment and climate shall have the following objectives:

(a)    to preserve, protect and improve the quality of the environment;

(b)    to contribute towards protecting human health;

(c)     to ensure a prudent and rational utilization of natural resources; and

(d)    to promote measures to combat climate change.

2.    Action by the Associated Parties relating to the environment and climate shall be based on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at its source, and that the polluter should pay. Environmental protection requirements and climate action shall be a component of the Associated Parties' other policies.

ARTICLE 58

Protective measures

Annex XX to each Associated State Protocol contains the specific provisions on protective measures which shall apply pursuant to Article 57 of the Framework Agreement.

ARTICLE 59

More stringent national measures

The protective measures referred to in Article 58 of the Framework Agreement shall not prevent any Associated Party from maintaining or introducing more stringent protective measures compatible with this Agreement.

CHAPTER 4

STATISTICS

ARTICLE 60

Cooperation in the field of statistics

1.    The Associated Parties shall ensure the production and dissemination of coherent and comparable statistical information for describing and monitoring all relevant economic, social and environmental aspects of the Associated States.

2.    To this end the Associated Parties shall develop and use harmonized methods, definitions and classifications as well as common programmes and procedures organising statistical work at appropriate administrative levels and duly observing the need for statistical confidentiality.

3.        Annex XXI to each Associated State Protocol contains specific provisions on statistics.

4.    Framework Protocol 5 contains specific provisions on the organisation of the cooperation in the field of statistics.

CHAPTER 5

COMPANY LAW

ARTICLE 61

Company law

Annex XXII to each Associated State Protocol contains specific provisions on company law.

PART V

COOPERATION

ARTICLE 62

Anti-fraud cooperation

1.    The Associated Parties undertake to fight effectively against fraud, corruption, smuggling and any other illegal activity affecting the financial interests of the EU.

To that end, the competent authorities of the Associated States, on the one hand, and the European Commission and the European Anti-Fraud Office (OLAF), on the other, shall cooperate closely, consult each other regularly and assist each other within their respective mandates. The competent authorities of the Associated States and OLAF may enter into administrative arrangements for their cooperation.

Those arrangements shall be entered into before an Associated State may receive EU funds in connection with its participation in programmes financed by the EU.

The Associated States shall cooperate with the EU in the fight against fraud and shall commit to gradually bringing their policies and legislation in line with EU anti-fraud provisions without, however, being required to harmonise them. Those provisions are listed in the Associated State Protocols.

2.    The Associated Parties may exchange evidence, analyses or other types of information, including personal data, for the purpose of preventing, detecting, investigating, prosecuting and punishing, administratively and criminally, fraud, corruption, smuggling and any other illegal activity affecting their respective financial interests.

The information and evidence transmitted or obtained pursuant to this Article, whatever its form, shall be subject to professional confidentiality and shall enjoy the protection enjoyed by comparable information, including of personal data, conferred by the domestic law of the Associated Party receiving it and by the corresponding provisions applicable to the institutions of the EU.

In particular, such information and evidence shall not be communicated to persons other than those, in the institutions of the EU or the authorities of the Associated States, whose functions require them to know it, nor may it be used for purposes other than those that fall within the scope of this Article.

3.    OLAF may carry out on-the-spot checks and inspections on economic operators on the territory of the Associated State concerned where that Associated State is in receipt of EU funds under programmes financed by the EU, where OLAF has been entrusted by the European Commission with budget implementation tasks under those programmes or where fraudulent activities in the Associated State are to the detriment of EU customs duties or other own resources identified by a Decision of the Joint Committee. The competent authorities of the Associated State concerned shall assist OLAF in this respect within the framework of the close cooperation referred to in paragraph 1.

Within the limits of its powers and on the basis of a duly substantiated request to the competent authorities of an Associated State, OLAF may carry out on-the-spot checks and inspections on economic operators on the territory of that Associated State in cases other than those provided for in the first point of this paragraph, provided that the competent authority does not object to that request.

ARTICLE 63

Cooperation on other matters

1.    The Associated Parties recognise and undertake to implement the principles of good governance in tax matters, including existing international standards on transparency and exchange of information, fair taxation and minimum standards against base erosion and profit shifting. The Associated Parties shall promote good governance in tax matters, improve international cooperation in the field of taxation and facilitate the protection of tax revenues.

2.    The Associated Parties undertake to amend, within a period of four years from the entry into force of this Agreement, the Associated State Protocol to include provisions on mutual assistance for the recovery of all tax claims.

PART VI

COOPERATION OUTSIDE THE FOUR FREEDOMS

ARTICLE 64

Fields of cooperation

The Associated Parties may strengthen or broaden their cooperation in the framework of the EU's activities in the fields of:

–    research and technological development;

–    information services;

–    environment;

–    climate action;

–    education, training and youth;

–    social policy;

–    consumer protection;

–    small and medium-sized enterprises;

–    tourism;

–    audiovisual policy;

–    civil protection;

–    judicial cooperation in civil matters;

–    culture;

–    communication;

–    trans-European networks;

–    regional policy; and

–    public health;

in so far as those matters are not regulated under the provisions of other Parts of this Agreement.

ARTICLE 65

Dialogue and consultation

1.    The Associated Parties may strengthen their dialogue by all appropriate means, in particular through the procedures provided for in Part VII, with a view to identifying areas and activities where closer cooperation could contribute to the attainment of their common objectives in the fields referred to in Article 64 of the Framework Agreement.

2.    In particular, the Associated Parties may exchange information and, at the request of one of them, hold consultations within the Joint Committee in respect of plans or proposals for the establishment or amendment of framework programmes, specific programmes, actions and projects in the fields referred to in Article 64 of the Framework Agreement.

3.    Part VII shall apply mutatis mutandis with regard to this Part whenever the latter or the Associated State Protocols specifically provide thereof. 

ARTICLE 66

Forms of cooperation

The cooperation provided for to in Article 64 of the Framework Agreement may take one of the following forms:

(a)    the participation of Associated States in EU framework programmes, specific programmes, projects or other actions;

(b)    the establishment of joint activities in specific areas, which may include concertation or coordination of activities, merging of existing activities and the establishment of ad hoc joint activities;

(c)    the formal and informal exchange or provision of information;

(d)    common efforts to encourage certain activities throughout the territory of the Associated Parties;

(e)    parallel legislation, where appropriate, of identical or similar content;

(f)    coordination, where this is of mutual interest, of efforts and activities via, or in the context of, international organisations, and of cooperation with third countries.

ARTICLE 67

Participation by Association States in EU programmes

(a)    the Associated States shall have access to all or some parts of the programme;

(b)    the status of the Associated States in the committees which assist the Commission in the management or development of an EU activity to which Associated States may be contributing financially by virtue of their participation shall fully reflect that contribution;

(c)    EU decisions, other than those relating to the EU general budget, which directly or indirectly affect a framework programme, specific programme, project or other action in which the Associated States participate by a decision under this Agreement, shall be subject to the provisions of Article 65(3) of the Framework Agreement; the terms and conditions of continued participation in the activity in question may be reviewed by the Joint Committee in accordance with Article 72 of the Framework Agreement;

(d)    at the project level, institutions, undertakings, organisations and nationals of the Associated States shall have the same rights and obligations in the EU programme or other action in question as those applicable to partner institutions, undertakings, organisations and nationals of EU Member States; the same shall apply mutatis mutandis to participants in exchanges between EU Member States and the Associated States under the activity in question;

(e)    Associated States, their institutions, undertakings, organisations and nationals shall have the same rights and obligations with regard to the dissemination, evaluation and exploitation of results as those applicable to EU Member States, their institutions, undertakings, organisations and nationals;

(f)    Associated Parties undertake, in accordance with their respective rules and regulations, to facilitate the movement of participants in programmes or other actions to the extent necessary.

ARTICLE 68

Financial participation by Associated States

1.    When the cooperation envisaged under this Part involves a financial participation by an Associated State, that participation shall take one of the following forms:

ARTICLE 69

Exchange of information between public authorities

Where cooperation takes the form of an exchange of information between public authorities, Associated States shall have the same rights to receive, and obligations to provide, information as EU Member States, subject to the requirements of confidentiality, which shall be fixed by the Joint Committee.

ARTICLE 70

Cooperation in specific fields

The cooperation arrangements are set out in the Associated State Protocols.

ARTICLE 71

Pre-existing cooperation

Unless otherwise provided for in an Associated State Protocol, cooperation already established between the Associated Parties in the fields set out in Article 64 of the Framework Agreement on the date of entry into force of this Agreement shall thereafter be governed by the relevant provisions of this Part and that Associated State Protocol.

ARTICLE 72

Role of the Joint Committees

The Joint Committees shall, in accordance with Part VI, take all decisions necessary for the implementation of Articles 64 to 71 of the Framework Agreement and measures derived therefrom, which may include, inter alia, drawing up, supplementing or amending the provisions of the Associated State Protocol on modalities for the implementation of Article 68 of the Framework Agreement, as well as adopting any transitional arrangements required by way of implementation of Article 71 of the Framework Agreement.

ARTICLE 73

New fields of cooperation

The Associated Parties shall take the necessary steps to develop, strengthen or broaden cooperation within the framework of EU activities in fields not listed in Article 64 of the Framework Agreement, where such cooperation is considered likely to contribute to the attainment of the objectives of this Agreement or otherwise deemed to be of mutual interest. Such steps may include the amendment of Article 64 of the Framework Agreement by the addition of new fields to those listed therein.

ARTICLE 74

National measures

Without prejudice to the provisions of other Parts of this Agreement, the provisions of this Part shall not preclude the possibility for any Associated Party to prepare, adopt and implement measures independently.

PART VII

INSTITUTIONAL PROVISIONS

CHAPTER 1

THE INSTITUTIONS OF THE ASSOCIATION

ARTICLE 75

Association Committee

ARTICLE 76

Joint Committees

ARTICLE 77

Decision-making by Joint Committees

ARTICLE 78

Parliamentary cooperation

ARTICLE 79

Cooperation between economic and social partners

CHAPTER 2

CONSULTATION IN CONNECTION WITH THE EUROPEAN UNION'S
DECISION-MAKING PROCEDURE

ARTICLE 80

Drawing up of an EU legal act

CHAPTER 3

HOMOGENEITY

ARTICLE 81

Amendment of the Annexes

ARTICLE 82

Constitutional requirements of the Associated States

ARTICLE 83

Automatic procedure

ARTICLE 84

Simplified procedure

ARTICLE 85

Uniform interpretation

CHAPTER 4

THE SURVEILLANCE PROCEDURE

ARTICLE 86

General surveillance

ARTICLE 87

Surveillance in specific sectors

Cooperation with the competent authorities of EU Member States and EU institutions

An Associated State may rely on the cooperation of one or several EU Member States or EU institutions to fulfil its obligations in terms of implementation and effective application of this Agreement. In such cases, the Associated State shall make arrangements laying down the details of such cooperation and inform the European Commission thereof within the relevant Joint Committee. Those arrangements shall not in any way affect the powers of the European Commission.

CHAPTER 5

DISPUTE SETTLEMENT AND JUDICIAL REVIEW

ARTICLE 89

Exclusivity principle

The Associated Parties shall not submit a dispute concerning the interpretation or application of this Agreement or EU legal acts referred to herein to any method of settlement other than those provided for in this Agreement.

ARTICLE 90

Settlement of disputes between Associated Parties

Where compensatory or suspension measures have been taken pursuant to paragraph 6 or 7, the rights of individuals by virtue of this Agreement on the date on which those measures come into effect shall be preserved, as shall the concomitant obligations under this Agreement.

ARTICLE 91

Judicial review

ARTICLE 92

Action for failure to act

ARTICLE 93

Appeal in the case of non-contractual liability

In cases of non-contractual liability and in accordance with this Agreement, an Associated State, as well as the natural or legal persons domiciled or established on its territory, may refer the case to the CJEU to obtain compensation for damages caused by the activities of the EU institutions, bodies or agencies or by their officials in the performance of their duties.

ARTICLE 94

Reference for a preliminary ruling

ARTICLE 95

Law applicable to proceedings before the CJEU

Where an action is brought before the CJEU pursuant to Articles 90 to 94 of the Framework Agreement, the procedure applicable before the CJEU shall be the same as the one provided for in EU law in respect of similar actions based on the TFEU.

ARTICLE 96

CJEU judgments

CHAPTER 6

SAFEGUARD MEASURES AND FORCE MAJEURE

ARTICLE 97

Safeguard measures

ARTICLE 98

Force majeure

ARTICLE 99

Decisions that impose pecuniary obligations

PART VIII

GENERAL AND FINAL PROVISIONS

ARTICLE 100

Implementation

The Associated Parties shall take any general or specific measures required to fulfil their obligations under this Agreement, the respective Protocols and the EU legal acts referred to herein, and shall abstain from any measure which could jeopardise the attainment of their objectives.

ARTICLE 101

System of property ownership

This Agreement shall in no way prejudice the rules of the Associated Parties governing the system of property ownership.

ARTICLE 102

Security exceptions

No provision in this Agreement shall preclude an Associated Party from taking measures that:

ARTICLE 103

EU restrictive measures

The Associated States shall take the necessary measures to ensure that the rights and obligations under this Agreement do not enable or permit in any way, within their jurisdiction, the circumvention of EU restrictive measures adopted pursuant to Article 29 of the Treaty on European Union ("TEU") and Article 215 TFEU.

ARTICLE 104

Territorial scope

1.    The Framework Agreement and the Framework Protocols shall apply to the territories in which the TEU and the TFEU apply, under the conditions laid down in those Treaties, and to the respective territories of the Andorra and San Marino.

2.    Each Associated State Protocol shall apply to the territories in which the TEU and the TFEU apply, under the conditions laid down in those Treaties, and to the territory of the Associated State concerned.

ARTICLE 105

Future accessions to the EU

1.    The EU shall notify the Associated States of any new request for accession to the EU by a third country. The Association Committee shall examine any effects of accession of a third country to the EU on this Agreement prior to the date of such accession.

2.    To the extent necessary, the Contracting Parties shall, before the entry into force of an agreement on the accession of a third country to the EU, amend this Agreement in accordance with their respective internal procedures.

3.    This Agreement shall apply in relation to any new EU Member State from the date of accession to the EU of that new Member State.

ARTICLE 106

Amendment of the Framework Agreement

Any Contracting Party may submit proposals for the amendment of this Framework Agreement to the other Contracting Parties. Proposals for amendment of this Framework Agreement shall be the subject of negotiations between the Contracting Parties within the Association Committee. Where the Contracting Parties agree on a revision of the Framework Agreement, it shall be signed and adopted by the Contracting Parties and enter into force upon notification by all the Contracting Parties of the completion of their respective internal procedures and upon deposit of the instruments of ratification.

ARTICLE 107

Amendment of the Framework Protocols

Any Contracting Party may submit proposals for the amendment of a Framework Protocol to the other Contracting Parties. Proposals for amendment of a Framework Protocol shall be the subject of negotiations between the Contracting Parties within the Association Committee. Where the Contracting Parties agree on an amendment of a Framework Protocol, it shall be signed and adopted by the Contracting Parties and enter into force upon notification by all the Contracting Parties of the completion of their respective internal procedures and upon deposit of the instruments of ratification.

ARTICLE 108

Amendment of the Associated State Protocols

The EU or the Associated State concerned may submit proposals for the amendment of the respective Associated State Protocol. Proposals for amendment of an Associated State Protocol shall be the subject of negotiations between the Associated Parties within the relevant Joint Committee. When the Associated Parties agree on the amendment of their Associated State Protocol, the Joint Committee shall adopt the amendment. Where, in accordance with paragraph 2 of Article 77, the Associated State Protocol provides that an amendment of all or part of it can only enter into force upon the completion of the Associated Parties' own internal procedures, the decision of the Joint Committee shall only take effect upon notification by all the Associated Parties of the completion of their respective internal procedures.

ARTICLE 109

Protocols and Annexes

The Framework Protocols, the Associated State Protocols, the Annexes and the acts referred to therein as adapted for the purposes of this Agreement shall form an integral part of this Agreement and shall have the same legal force.

ARTICLE 110

Existing agreements

1.    Unless provided otherwise in this Agreement and, in particular, in Framework Protocol 2 and in the Associated State Protocols, the application of the provisions of this Agreement shall prevail over provisions in existing bilateral agreements binding the EU, on the one hand, and one of the Associated States, on the other, to the extent that the same subject matter is governed by this Agreement.

2.    Unless provided otherwise in this Agreement, where bilateral agreements binding the EU, on the one hand, and one of the Associated States, on the other hand, are referred to in this Agreement, in whole or in part, they shall be understood to include amendments thereto and their successor agreements entering into force for both Associated Parties on or after the date of entry into force of this Agreement.

ARTICLE 111

Languages

1.    This Association Agreement is drawn up in single original, in the Bulgarian, Catalan, Croatian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages, each text being equally authentic.

2.    The texts of the EU legal acts referred to in this Association Agreement are equally authentic in the Bulgarian, Croatian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages as published in the Official Journal of the European Union, and those acts shall for the authentication thereof be drawn up in the Catalan language.

ARTICLE 112

Entry into force and termination

1.    The Contracting Parties shall ratify, conclude and approve this Agreement in accordance with their respective constitutional or institutional requirements. This Agreement shall enter into force between the three Contracting Parties on the first day of the second month following the last notification of deposit of the instruments of ratification, conclusion or approval with the General Secretariat of the Council of the EU, which shall act as the depositary of this Agreement.

2.    Pending the completion of the ratification, conclusion or approval procedures referred to in paragraph 1, the Contracting Parties shall provisionally apply this Agreement from the first day of the month following the month in which a Contracting Party deposited its instruments of ratification, conclusion or approval with the General Secretariat of the Council of the EU, unless another Contracting Party notifies that such a provisional application cannot take place.

3.    If the conditions for the provisional application between all three Contracting Parties in accordance with paragraph 2 are not met, this Agreement shall apply between the EU and one of the Associated States from the first day of the second month following the month in which either the EU or that Associated State deposited its instruments of ratification, conclusion or approval with the General Secretariat of the Council of the EU, unless either Party notifies that such a provisional application cannot take place. For the duration of the term of application of this Agreement pursuant to this paragraph, the references to "Association Committee" contained in Articles 75, 105, 106, 107 of the Framework Agreement are to be understood as references to the relevant "Joint Committee". For the same duration, that Joint Committee shall decide on any technical adaptations of the Association Agreement necessary to ensure its proper functioning.

4.    Each Associated Party may terminate this Agreement by notifying the other Associated Party of its decision in writing. This Agreement shall cease to apply between the respective Associated Parties six months after receipt of the notification, subject to the conditions set out in paragraph 5.

5.    This Agreement shall continue to apply between the EU and the remaining Associated State if the termination of this Agreement by one of the Associated States does not affect all the Contracting Parties.

6.    Where this Association Agreement ceases to apply, the rights and obligations that individuals and economic operators have already acquired under this Agreement shall remain. The EU and the Associated State(s) concerned shall decide by mutual agreement what action is to be taken in respect of rights in the process of acquiring. This paragraph shall be without prejudice to the specific provisions in 90 of the Framework Agreement.

7.    As from the date from which this Agreement is provisionally applied pursuant to paragraph 2, or applied between the EU and one of the Associated States pursuant to paragraph 3, references in this Agreement to "the date of entry into force of this Agreement" or to "the entry into force of this Agreement" shall be understood as references to the date from which this Agreement is provisionally applied pursuant to paragraph 2, or applied between the Union and one of the Associated States pursuant to paragraph 3.

IN WITNESS WHEREOF, the undersigned Plenipotentiaries, duly authorised to this effect, have signed this Agreement.

Done at … on …

For the European Union

For the Principality of Andorra

For the Republic of San Marino

FRAMEWORK PROTOCOL 1

ON HORIZONTAL ADAPTATIONS

ARTICLE 1

Application of the EU acquis and specific adaptations

The provisions of the legal acts referred to in Associated State Protocols shall be applicable in accordance with this Agreement and this Framework Protocol, unless otherwise provided in the respective Associated State Protocol. The specific adaptations necessary for EU legal acts are set out in the Annex to an Associated State Protocol in which the legal act concerned is listed.

ARTICLE 2

Recitals of legal acts

The recitals of the legal acts referred to are not adapted for the purposes of this Agreement. They are relevant to the extent necessary for the proper interpretation and application, within the framework of this Agreement, of the provisions contained in such legal acts.

ARTICLE 3

Transitional arrangements

1.    Where reference is made to this Article in an Annex to an Associated State Protocol with regard to an EU legal act, paragraphs 2 to 5 shall apply.

2.    The obligation for the Associated State concerned to implement and apply the EU legal act shall be suspended until the end of the period specified in the relevant Annex.

3.    The Associated State concerned may at any given time during the period referred to in paragraph 2, notify the Joint Committee of its intention to implement the EU legal act before the end of that period. In that case, the Associated State shall specify the date on which it intends to apply that act. The Joint Committee shall take a decision concerning the amendment of the relevant Annex.

4.    The application of a legal act between the EU and the Associated State concerned shall be suspended until the earlier of the following dates:

(a)    the first day following the end of the period referred to in paragraph 2; or

(b)    the date referred to in paragraph 3.

5.    During the suspension referred to in paragraph 2, the relations between the EU and the Associated State concerned in respect of the matters that fall within the scope of the EU legal act shall be governed by the specific provisions of the relevant Annex.

ARTICLE 4

Arrangements with no period of time specified in the Annex

1.    Where reference is made to this Article in an Annex to an Associated State Protocol with regard to an EU legal act, paragraphs 2 to 6 shall apply.

2.    The obligation for the Associated State concerned to implement and apply the EU legal act shall be suspended.

3.    The Associated State concerned may at any time notify the Joint Committee of its intention to implement the EU legal act. In that case, the Associated State shall specify the date on which it intends to apply that legal act. The Joint Committee shall take a decision concerning the amendment of the relevant Annex.

4.    The Joint Committee shall review the suspension provided for in paragraph 2 at any time and, at the latest, every five years, based on the necessity of addressing market developments as well as any other specific criteria that may be laid down in the relevant Annex. On the basis of such review, the Joint Committee may decide to amend the relevant Annex in order to set a time limit for the implementation and application of the legal act by the Associated State concerned. This is without prejudice to Article 90 of the Framework Agreement which shall apply if required to restore the integrity and homogeneity of the internal market.

5.    The application of a legal act between the EU and the Associated State concerned shall be suspended until the date on which the decision of the Joint Committee referred to in paragraph 3 enters into force or, as the case may be, the date on which the time limit referred to in paragraph 4 expires.

6.    During the suspension referred to in paragraph 2 the relations between the EU and the Associated State concerned in respect of the matters that fall within the scope of the EU legal act shall be governed by the specific provisions of the relevant Annex.

ARTICLE 5

Provisions on EU committees

Procedures, institutional arrangements and other provisions concerning EU committees contained in the legal acts referred to in Associated State Protocols are set out in Articles 67 and 80, paragraphs 5, 6 and 7 of the Framework Agreement and in the Associated State Protocols.

ARTICLE 6

Provisions setting up procedures for adapting or amending EU legal acts

Where a legal act referred to in an Associated State Protocol provides for EU procedures on its adaptation, extension or amendment or for the development of new EU policies, initiatives or acts, the relevant decision-making procedure provided for in the Framework Agreement shall apply.

ARTICLE 7

Exchange of information and notification procedures

1.    Where an EU Member State is to submit information to the European Commission, an Associated State shall also submit such information to the European Commission. The same shall apply where the transmission of information is to be carried out by the competent authorities.

2.    Where an EU Member State is to submit information to one or more other EU Member States, it shall also submit that information to the European Commission. The European Commission shall transmit that information to the Associated States.

An Associated State shall submit corresponding information to one or more EU Member States which shall transmit it to the European Commission for distribution to all EU Member States. The same shall apply when the information is to be submitted by the competent authorities.

3.    In areas where, for reasons of urgency, rapid transfer of information is called for, appropriate sectoral solutions providing for direct exchange of information shall apply.

4.    Unless otherwise provided for in the Association Agreement, the functions of the European Commission in the context of procedures for verification, information, notification or consultation and similar matters shall be carried out, mutatis mutandis, also in respect of the Associated States. This is without prejudice to Articles 5, 6 and 10 of this Framework Protocol.

5.    The European Commission and the corresponding Joint Committee shall exchange all information regarding these matters. Any issue arising in this context may be referred to the corresponding Joint Committee.

ARTICLE 8

Review and reporting procedures

Where, according to a legal act referred to in an Associated State Protocol, the European Commission or another EU institution is to prepare a report, a declaration or another similar document, it shall, unless otherwise agreed, concurrently prepare a corresponding report, declaration or similar document with regard to the Associated States, unless otherwise provided for in this Agreement. The European Commission and the Associated States shall consult each other and exchange information during the preparation of their respective reports, copies of which shall be sent to the corresponding Joint Committee.

ARTICLE 9

Publication of information

1.    Where, according to a legal act referred to in an Associated State Protocol, an EU Member State is to publish certain information on facts, procedures and the like, also the Associated States shall publish the relevant information in a corresponding manner.

2.    Where, according to a legal act referred to in an Associated State Protocol, facts, procedures, reports and the like are to be published in the Official Journal of the European Union, the corresponding information regarding the Associated States shall be published therein as well.

ARTICLE 10

Rights and obligations

Rights conferred and obligations imposed upon EU Member States or their public entities, undertakings or individuals in relations to each other, shall be understood to be conferred or imposed upon the Associated Parties, the latter also being understood, as the case may be, as their competent authorities, public entities, undertakings or individuals.

ARTICLE 11

References to territories

Whenever the EU legal acts referred to in Associated State Protocols contain references to the territory of the "European Union", "common market" or " internal market", the references shall for the purposes of this Agreement be understood to be references to the territories of the Contracting Parties as defined in Article 104 of the Framework Agreement.

ARTICLE 12

References to nationals of EU Member States

Whenever the legal acts referred to in Associated State Protocols contain references to nationals of EU Member States, the references shall for the purposes of this Agreement be understood to be references also to nationals of the Associated States.

ARTICLE 13

References to languages

Where a legal act referred to in an Associated State Protocol confers upon the EU Member States or their public entities, undertakings or individuals rights or imposes obligations regarding the use of any of the official languages of the EU, the corresponding rights and obligations regarding the use of any of the official languages of all Contracting Parties shall be understood to be conferred or imposed upon Contracting Parties, their competent authorities, public entities, undertakings or individuals.

ARTICLE 14

Entry into force and implementation of legal acts

Provisions on the entry into force or implementation of the legal acts referred to in Associated State Protocols are not relevant for the purposes of this Agreement. The time limits and dates for the Associated States for bringing into force and implementing legal acts referred to follow from Article 112 of the Framework Agreement, as well as from provisions on transitional arrangements.

ARTICLE 15

Addressees of the EU legal acts

Provisions indicating that an EU legal act is addressed to EU Member States are not relevant for the purposes of this Agreement.

FRAMEWORK PROTOCOL 2

ON EXISTING AGREEMENTS

As provided for in Article 110 of the Framework Agreement, the Contracting Parties have agreed that the following existing bilateral agreements binding the EU, on the one hand, and one of the Associated States, on the other hand, shall continue to apply after the entry into force this Agreement:

(a)    Agreement between the European Community and the Principality of Andorra providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments of 15 November 2004 and the accompanying Memorandum of Understanding 10 , as amended by Amending Protocol of 12 February 2016 11 ;

(b)    Agreement between the European Community and the Republic of San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments of 7 December 2004 and the accompanying Memorandum of Understanding  12 , as amended by Amending Protocol of 8 December 2015 13 ; 

(c)    Monetary Agreement between the European Union and the Principality of Andorra of 30 June 2011 14 ;

(d)    Monetary Agreement between the European Union and the Republic of San Marino of 27 March 2012 15 .

FRAMEWORK PROTOCOL 3

ON FINANCIAL SERVICES

PREAMBLE

The EU of the one part, and Andorra and San Marino respectively, of the other part,

Whereas:

(1)    This Framework Protocol takes into account the specificities of the Associated States and how their financial services markets would integrate within the EU internal market for financial services and its supervisory infrastructure. In light thereof, specific rules and provisions catering for a smooth market integration should be introduced.

(2)    The adoption of a staggered approach for the implementation and application of the EU acquis is envisaged to offer an Associated State the flexibility to prioritize specific segments of the EU acquis for which it intends to provide cross-border financial services first. Such approach allows the Associated State to gradually adopt the EU acquis and apply it in a phased manner, taking into account its particular circumstances and preferences.

(3)    The assessment of the supervisory infrastructure of the Associated State, through an assessment to access the EU internal market for financial services, and subsequent regular assessments, serves the purpose of evaluating its effectiveness, robustness, and suitability, taking into consideration the characteristics of the Associated State's financial sector, such as its nature, diversity, size and complexity. A robust supervisory framework is crucial for ensuring the integrity and stability of the EU internal market, promoting confidence among market participants and safeguarding the interests of consumers and investors. The EU supervisory authorities are entrusted with a pivotal role in conducting those assessments comprehensively requiring, where necessary, the active collaboration and cooperation from the competent authorities of EU Member States.

(4)    In order to avoid abuses of the right of establishment, it is necessary to require that financial operators based in the Associated State provide at least part of their services within that jurisdiction. The supervisory authorities of the Associated State will prevent the creation of legal entities with no or minimal substance that perform no or very little economic activities in their jurisdiction.

Have agreed as follows:

PART I

GENERAL PROVISIONS

ARTICLE 1

Objectives

The objectives of this Framework Protocol are:

(a)    to ensure the integrity of the enlarged EU internal market, market transparency, consumer and investor protection, and to address risks related to consumer fraud, money laundering and financial crime;

(b)    to promote the prevention of potential risks to financial stability;

(c)    to establish a framework for the gradual compliance of regulations and supervisory measures of the Associated State with the entire EU acquis in respect of financial services;

(d)    to facilitate the progressive extension of the EU internal market for financial services to the Associated State;

(e)    to promote regulatory and supervisory sincere cooperation in the field of financial services between the EU and the Associated State.

ARTICLE 2

Definitions

For the purposes of this Framework Protocol:

(a)    "financial services" mean the services regulated by acts listed in Annexes IX, XII and XXII to each Associated State Protocol;

(b)    "EU supervisory authorities" mean the European Banking Authority, the European Securities and Markets Authority, the European Insurance and Occupational Pensions Authority, and the Authority for Anti-Money Laundering and Countering the Financing of Terrorism.

ARTICLE 3

Conditions for access to the EU internal market

1.    An Associated State shall be granted access to the EU internal market for financial services if the following conditions have been fulfilled:

(a)    complete, full and effective implementation and application of all provisions applicable to the financial services sector as set out in Annexes IX, XII and XXII to the relevant Associated State Protocol;

(b)    the existence and proper functioning of supervisory capacity and arrangements for the financial services sector;

(c)    the conclusion of a memorandum of understanding between the competent authorities of the Associated State and the EU supervisory authorities on supervisory cooperation, information exchange and consultation.