Case Study

Andorra versus the European Community (EC)

Andorra

Summary

After five years of negotiations between Andorra and the European Community, Andorra succeeded in obtaining sovereignty in 1993.

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As a vestige of Charlemagne’s Empire, Andorra is a small land locked principality snuggled between France and Spain. Andorra is jointly governed by two co-princes, being the President of France and the Bishop of Ugrell of Spain. The co-princes hold sovereign power over the principality except on issues of economic and social matters. Andorra’s trade was ruled by two parallel agreements negotiated between France and Spain. When the EU negotiated to admit Spain into the European Community (EC) in 1979, the change also meant any future trade agreements renegotiated with Andorra would also have to be aligned to conform to EC regulations. It was not until Spain was admitted into the European Community in 1985 where negotiations concerning Andorra commenced, although pre-negotiations had been ongoing in the interim.

According to custom, the French government acting in conjunction with the French co-prince traditionally negotiated on behalf of Andorra, and until the 1980’s this raised very few problems. Internally, Andorran economic interests were negotiated by the Andorran Executive Council (AEC). The AEC desired to become especially active in external trade negotiations with the EC as they mistrusted the French mediators. At the time of negotiations, Andorra’s economy was based on shopping tourism as it was exempt from Value Added Tax (VAT) and custom’s duties. Needless to say, with the savings they offered, Andorra enjoyed a steady supply of shoppers from both Spain and France.

The AEC was not at the outset directly involved in negotiations with the European Community as the EC did not recognise the AEC. The Spanish representative, known as the Mitre, felt his office should have more involvement in the negotiation process with the EC and decided to collaborate with the AEC, who now had a limited voice in the negotiations. The government of Spain also sought greater presence in the Andorra negotiations when they obtained official admission in to the European Community. The negotiations would last for five years, ending in June 1990. The EC was uncertain which of the three parties would act as the official representative for Andorra, so they asked the parties to settle on a single representative.

Andorran representatives were eager to break free from the French government’s direct involvement. The French co-prince refused to sit down with the Spanish Mitre or the AEC. The AEC took the opportunity by adopting the attitude that Andorra was in fact a sovereign state, and appealed to its citizenry for support. The furore resulted in the European Community recognising that Andorra was a state, thereby raising its international status. The AEC could now dismiss France’s representation, but would still employ representation of the French co-prince and the Mitre from Spain in the negotiations.

The main issue was customs negotiations. Also, Spain wanted Andorra to change its legislation to create unions for its workers, the majority of whom were of Spanish origin. Andorra found this unacceptable, and negotiations were stalemated for one year. Spain finally relented on this issue and negotiations resumed. The European Commission drew up a draft agreement which was presented to the French co-prince, the Spanish Mitre and the AEC in December of 1987. The two co-princes chose the AEC to represent the three groups in the negotiations.

In April of 1989, the negotiations centred around which customs tariff would be administered by the European Community and which tariffs would be administered by Andorra. The two parties ended up stalemated on these issues, largely because the Andorran representatives did not really understand the future impact of the tax issues under negotiation. During the deadlock that followed, the Andorrans used the time to gain a better understanding of the issues and re-entered the negotiations in the first half of 1990. The treaty was successfully ratified in June of 1990. Andorra, which had no official standing as a principality in the initial negotiations, not only succeeded in joining the international business negotiations as a legitimate representative, the principality then went on to successfully become a recognised sovereign state in 1993.

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    Vincent Montenero on

    A very interesting case, well summarrized here. I am using it with my Master in European Affairs (MEA) students in Lille.

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