Breytingar á Evrópusambandinu og áhrif þeirra á Evrópska efnahagssvæðið og EFTA ríkin

First I would like to use the opportunity to thank Mr. Peter Cullen and his people at ERA along with the Confederation of Industries and the University of Reykjavík for organizing this Seminar in Reykjavík. The Academy of European Law in Trier is a very highly respected institute when it comes to EU law. It stimulates debate on European law throughout Europe. The forum that has been established between ERA and Iceland is very important for the constantly ongoing debate on Iceland's relations to the EU.
I think it is safe to say that the Progressive Party has paved the way for a fair and balanced European debate in Iceland. Therefore I very much welcome a Seminar of this kind and I am in no doubt that it is of great benefit, not only to lawyers, but to everyone interested in EU and EEA matters.

EEA Enlargement – A Common Project
As all of you probably know, the EFTA States recently concluded difficult negotiations with EU on EEA enlargement. It can certainly be said that the EFTA States were astonished when the EU side asked them to pay between thirty and forty times the present contribution to the Social Cohesion Funds. I think the European Commission made the mistake of looking at the EFTA States as a third country opponent rather than a partner in a common project. As soon as the EFTA States started lobbying in capitals of the Member States but not discussing solely with the Commission, things finally started moving in the right direction and when the Member States had fully brought the Commission on the right track, the negotiations were concluded on more moderate notes.

It is one of the main duties of the European Commission to act as a guardian of the EC legal order, thereby the EEA Agreement which is an integral part of the very same legal order. Keeping that in mind, the attitude and approach of the Commission in the EEA Enlargement negotiations worried Icelandic authorities.

However, the end results of the negotiations have to be borne in mind. They entailed a clear rejection of the Commission's tactics and the Member States showed a constructive and clear will to maintain a strong and coherent EEA. I hope this positive signal towards the EEA will prevail in our future partnership with the EU.

Threatening of homogeneity
The main aim of the EEA Agreement is the establishment and maintaining of a homogenous EEA. A prerequisite for such a homogeneous economic area is that the same rules apply equally to all players on the common EEA market. The main tool in maintaining a legal homogeneity is the EEA Joint Committee which incorporates around thirty legal acts into the EEA legal order every month.

Unfortunately this does not suffice. A legal homogeneity is threatened every time when the European Union amends its fundamental treaties. Since the EEA negotiations were concluded the EU has signed the Treaty of Maastricht, Amsterdam and Nice. However, the main part of the EEA Agreement, which was to a large extent copied from the "at-that time" Treaty of Rome, remains unchanged. This causes a legal gap between EEA rules, on the one hand, and EU rules, on the other, which again undermines the fundament of the EEA, that is to say homogeneity.

Some are more equal than others
In my Ministry we have been dealing with a concrete problem stemming from this legal gap. When the EEA Agreement was negotiated two kinds of discriminations were banned in the EU, that is to say discrimination based on sex and nationality. That situation was copied into the EEA framework. However, in Amsterdam a new Article 13 on discrimination was born. It allows the Council to take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.

In the year 2000 the EU adopted three legal acts on the basis of the aforementioned Article 13. These acts comprehensively touch upon participation of individuals on the labour market. Due to lack of legal basis in the EEA Agreement these important acts will unfortunately not be taken on board the EEA Agreement.

I know that George Orwell did not think of the EEA Agreement when he wrote that all animals should be equal ... but some more equal than others. However, I must admit that these famous words cross my mind when I think of this state of affairs in our common EEA market. This situation not only undermines the homogeneity of the EEA Agreement but also the credibility and trust people, economic operators and not least investors have in the EEA.

The role of regions and municipalities in future of European cooperation
Under my portfolio, as a Minister of Social Affairs, fall among other things issues concerning the organisation and structure of the municipalities and local authorities in Iceland. Since EU legislation has comprehensive effects on these authorities I found it my duty to get myself a little bit more acquainted with these issues. Indeed I just arrived from a very informative trip to Brussels last week where I learnt more about these important issues.

It is impossible to consider the future of European cooperation without a discussion on the role of local authorities which has been high on the agenda over the last years. It has been argued that over 70% of all EU measures are put into effect by regions and local authorities. Due to this these authorities have put an increasing pressure on the EU institutions to respond to the claim of a greater participation of regions and local authorities in the decision-making process of the EU. The Union has tried to accommodate these wishes in various ways. In this context it can be mentioned that in the preparation phase of the new EU constitution, representatives of regional and local administrations have strongly called for a greater power within the Union.

In our close relationship with the EU we have to be fully aware of this development which has particularly been evident since Maastricht Treaty. The Maastricht Treaty introduced greater influence of regions, municipalities and local authorities within the Union; firstly by establishing an advisory body, Committee of the Regions, consisting of 222 members. It is one of the youngest of EU institutions and has the purpose of giving local and regional authorities a voice within the Union. The Committee of the Regions gives its opinion on all legislative proposals that has effect on local authorities for instance in the field of environmental and social issues. Secondly, the manifestation of the subsidiarity principle in the Maastricht Treaty, to take decisions as close to the citizens as possible, undoubtedly calls for greater involvement of local authorities in the decision making-process.

The issue of regions and local authorities also touches upon other fundamental questions with regard to the future of the European cooperation. The growing gap between the European Union and its citizens has been apparent and solutions are sought for on how to bridge that gap. Since local authorities are closest to the citizens the claim for more involvement of regions and municipalities is logical. Moreover, it serves the purpose of strengthening the democracy within the Union which is an ongoing issue.

This is also reflected in last year's White Paper on European governance which is aimed at making the European governance more democratic by means of more coherency and involvement of the citizen in the policy making. As such the White Paper looks promising for regions and local authorities since democratic institutions and elected representatives are considered to be of crucial importance for that purposes.

The latest development within the EU in this field entails a significant step forward for local authorities in the EU. According to the current draft EU constitution, the principle of subsidiarity is no longer limited to the relations between EU institutions and States. For the first time the principle of subsidiarity is extended to local authorities which undoubtedly gives them a much greater role in an enlarged EU.

The EEA Agreement and Local Authorities
The role of local authorities and municipalities under the EEA Agreement can be described in short: The EEA Agreement does not mention national, regional or local government. It neither provides for a cooperation of local authorities and their democratically elected representatives in the EFTA EEA states with the EU nor with the Committee of the Regions.

In the light of the development within the EU it has never been as important to discuss the issue of local governments and the EEA Agreement. I have expressed my concerns about the fact that local authorities and its elected representatives in Iceland do not have a say on European matters according to the EEA agreement and they only have limited access to information on legislation in process. The current state of affairs can not be considered to be satisfactory and actions are needed to protect and enhance the independence of the local government in Iceland.

We are facing a challenge in such way that while EU decisions are brought closer to the EU citizens they are increasingly becoming more distant as regards the public and democratically elected representatives in Iceland.

Upgrade of the EEA Agreement – A Big Challenge
I have now described how the constant development of the EU reflect upon the EEA Agreement. It seems to me that we both need to upgrade the agreement and obtain seats at the table where the decisions are taken.

You can look at this situation from three perspectives. Firstly you can take a rather formalistic point of view. Look at the EEA Agreement regardless to the fact that the development inside the EU has a bearing on the EEA co-operation and on the position of the EFTA States, at all. Secondly you can adopt a pessimistic approach and predict the EEA will slowly but surely be watered down from an upgraded integration agreement into a mere free trade agreement.

I, however, look at this as a challenge. We both need to and have to work hard on upgrading the EEA Agreement and adopting it as closely as possible to the EU internal market legal framework.

How can we close the legal gap between the EU and EEA markets and how can we improve the current status of the EEA and local authorities in the EFTA States? Have made any attempts in order to improve this state of affairs?

Firstly, it ought to be mentioned that the EFTA States have sought for an update of the EEA Agreement but our wish was turned down last year because the EU side did not want to mix enlargement and upgrade and thereby endangering the enlargement process. Once enlargement has taken off the question on an upgrade of the EEA will surely re-surface.

Secondly, the Government in Iceland has also made efforts to facilitate the access of municipalities to the EU legislation in process and access to information on EEA matters. At the initiative of the Ministry for Foreign Affairs the central and local authorities in Iceland formed a committee of cooperation in the year of 2001. At the moment a report is awaited from this group that will include proposals on future cooperation of the local and central government.

Another way is to give the elected representatives of local authorities in the EFTA states a platform within the EFTA-pillar by establishing a Committee, formal or informal, parallel to the Committee of the Regions. Such EFTA Committee would be represented by elected members of local authorities. This idea has been put forward by the Association of Local Authorities. The Ministry for Foreign Affairs supports the idea and is working on how to gain support from the other EFTA countries. This is not as easy as it seems since the establishment of a formal platform for local authorities within the EFTA pillar would entail amendments of the EEA Agreement. Again, that is in my opinion, a further argument for upgrading the EEA Agreement in line with Maastricht and Amsterdam.

Ladies and Gentlemen
In 2001 the Progressive Party adopted the position that Iceland's relations to the EU should be based on the EEA Agreement if it can live up to its initial aims. If it fails in doing so an upgrade of the Agreement has to be sought and if that effort will not be successful Iceland should consider seeking membership.

It is my view that the legal gap between EU rules and EEA rules undermine and erode the foundations of the EEA Agreement. Furthermore I find it difficult to explain to local authorities in Iceland that the costly EEA decisions having great impact on them need less of a democratic legitimacy and justification in the EEA than can be tolerated within the EU. This has sometimes been called the EEA democratic deficit and has in my view to be one of the top priorities in the upgrading exercise.

Indeed, I think the question of upgrading the EEA Agreement will be the biggest challenge of Iceland's foreign policy in the years to come.

I hope you will find this Seminar fruitful and informative and wish the foreign guests a pleasant stay in Iceland.