Third-country economic relationships with the European Union

The European Free Trade Association (EFTA) was created to allow European countries to partake in a free trade area with less integration as within the European Communities (later European Union). Most of the countries initially in EFTA have since joined the EU itself, so only four remain outside, Norway, Iceland, Liechtenstein and Switzerland.

The European Economic Area (EEA) agreement allows Norway, Iceland and Liechtenstein to have access to the EU's internal market and vice versa. The four basic freedoms (goods, services, people, and capital) apply. However, some restrictions on fisheries and agriculture take place.

There are four European microstates which are neither EU member-states nor full eurozone members, but nevertheless use and mint the euro as their legal currency under official agreements with the EU. All of them previously used the national currencies of their larger neighbours, Italy, France and Spain, which have since all become eurozone-members.

•  San Marino: San Marino is not a member state of the EU, but had a special agreement with Italy to mint a limited number of its own lira coins. There is an agreement to mint its own euro coins (limited) which are legal tender in the eurozone.
•   Vatican City: The Vatican City is not part of the EU, but had a special agreement with Italy to mint a limited number of its own lira coins. There is an agreement to mint its own euro coins (limited) which are legal tender in the eurozone.
•  Monaco: Monaco is not a member state of the EU, it had a special agreement with France to mint its own franc coins. There is an agreement to mint its own euro coins (limited), which are legal tender in the eurozone.
•  Andorra: Andorra is not part of the EU. In the 20th century, both the French franc and Spanish peseta were used and accepted in Andorra, but the peseta was more widespread[2] There is an agreement to mint its own euro coins (limited) which are legal tender in the eurozone.[3]

In addition, two dependent territories outside of the EU use the euro as their currency under agreements with the EU, though without minting their own euro coins:

•  Saint Barthélemy is not a part of the EU, but there is an agreement with the EU to use euro as its currency, though without minting own euro coins. The French franc was used there before.
•  Akrotiri and Dhekelia is not a part of the EU, but there is an agreement between the United Kingdom and the EU to use euro as its currency, though without minting own euro coins. The Cypriot pound was used there before.

Some other countries unilaterally decided to use the euro as their de facto currency without having currently a formal agreement with the EU.

Certain countries and territories are in customs union with the EU. These are:

•  Monaco: relations between the Principality of Monaco and the EU are primarily conducted through France. Through that relationship Monaco directly participates in certain EU policies, including being an integral part of the EU customs territory and VAT area.[4]
•  Turkey (excluding agricultural products; since 1996)
•  Andorra (excluding agricultural products; since 1991)
•  San Marino (signed in 1991 and in force since 2002)
•  Akrotiri and Dhekelia are partially part of the European Union Customs Union in three domains: VAT, agriculture and fisheries.

EU Free trade agreements

The EU has concluded free trade agreements with many countries in the world, and is negotiating with more through the Stabilisation and Association Process, Eastern Partnership, Association Agreements and Economic Partnership Agreements.

EU European Neighbourhood Policy

  EU member states

  EU enlargement agenda

  Eastern Partnership ENP countries

  Other ENP countries (all but Libya are UfM members)

  UfM members, which are not an ENP country, part of the EU or its enlargement agenda)

Covers Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Lebanon, Syria, Israel, Palestinian Authority, Moldova, Ukraine, Georgia, Armenia, Azerbaijan, Belarus, and Russia (through the formation of common spaces).

According to the European Union's official site, the objective of the European Neighbourhood Policy (ENP) is to share the benefits of the EU's 2004 enlargement with neighbouring countries. It is also designed to prevent the emergence of new dividing lines between the enlarged EU and its neighbours. The vision is that of a ring of countries, drawn into further integration, but without necessarily becoming full members of the European Union. The policy was first outlined by the European Commission in March 2003. The countries covered include all of the Mediterranean shores of Africa and Asia, as well as the European CIS states (with the exception of Russia and Kazakhstan) in the Caucasus and eastern Europe. Russia insisted on the creation of the four EU–Russia Common Spaces instead of ENP participation. Kazakhstan's Foreign Ministry has expressed interest in the ENP . Some MEPs also discussed Kazakhstan's inclusion in the ENP.[5]

The European Neighbourhood Instrument (ENI), came into force in 2014. It is the financial arm of the European Neighbourhood Policy, the EU's foreign policy towards its neighbours to the East and to the South. It has a budget of €15.4 billion and provides the bulk of funding through a number of programmes. The ENI, effective from 2014 to 2020, replaces the European Neighbourhood and Partnership Instrument – known as the ENPI.

The Euro-Mediterranean Partnership or Barcelona Process is a wide framework of political, economic and social relations between member states of the EU and countries of the Southern Mediterranean. It was initiated on 27–28 November 1995 through a conference of Ministers of Foreign Affairs, held in Barcelona. Besides the 27 member states of the European Union, the remaining "Mediterranean Partners" are all other Mediterranean countries without Libya (which has had 'observer status' since 1999). Since the establishment of the European Neighbourhood and Partnership Instrument in 2007 (see below) the Euro-Mediterranean Partnership initiative will become fully a part of the wider European Neighbourhood Policy. The Association Agreements signed with the Mediterranean states aim at establishing of a Euro-Mediterranean free trade area.

Below is a table and three graphs showing, respectively, the GDP (PPP), the GDP (PPP) per capita and the GDP (nominal) per capita for some of the third countries that the European Union has relations with. This can be used as a rough gauge to the relative standards of living among member states.

The table is sorted by GDP (PPP) per capita to show the relative economic development level of the different countries. Reference values for the EU average, highest and lowest are included.

Third country	GDP (PPP) millions of int. dollars	GDP (PPP) per capita int. dollars	GDP (nominal) per capita int. dollars
European Economic Area:
Luxembourg (EU highest)	38,808	78,395	104,512
European Union (EU average)	14,793,000	29,729	33,052
Bulgaria (EU lowest)	90,869	12,067	6,722
Iceland	12,148	38,022	37,976
Liechtenstein	4,160	122,100	113,210
Norway	259,054	52,964	88,590
European Free Trade Association:
Switzerland	314,869	43,007	69,838
European Microstates:
Vatican City unique noncommercial economy	252	273,615	no data
San Marino	1,170	35,928	44,208
Monaco	4,888	65,928	88,761
Andorra	4,220	44,900	34,240
Current Enlargement Agenda:
Albania	40,151	13,991	5,373
Bosnia and Herzegovina	49,794	14,220	5,742
Kosovo (under UNSCR 1244)	23,524	13,017	4,649
Montenegro	12,516	20,074	8,749
North Macedonia	34,267	16,486	6,096
Serbia	137,126	19,767	7,992
Turkey	2,346,000	28,264	8,958
European Neighbourhood Policy:
Israel	158,350	23,416	18,266
Libya	67,244	11,630	6,699
Russia	1,575,561	11,041	5,369
Tunisia	83,673	8,255	2,978
Belarus	75,217	7,711	3,031
Algeria	237,684	7,189	3,086
Ukraine	338,486	7,156	1,727
Lebanon	24,420	6,681	6,033
Jordan	27,960	4,825	2,219
Azerbaijan	38,708	4,601	1,493
Morocco	135,742	4,503	1,725
Egypt	305,255	4,317	1,316
Armenia	14,167	4,270	1,137
Syria	71,736	3,847	1,418
Georgia	15,498	3,616	1,493
Moldova	8,563	2,374	825
Palestinian Authority	2,568	660	no data

Source: CIA World Factbook , IMF

• List of the largest trading partners of the European Union
• European Association for Evolutionary and Political Economy
• European Union Association Agreement
• European Union free trade agreements
• EU-Russia Common Spaces
• Free trade areas in Europe
• Special member state territories and the European Union
• Yugoslavia and the European Economic Community
• Southeast Europe Transport Community
• EU Neighbourhood Info Centre Archived 9 June 2021 at the Wayback Machine
• EU Neighbourhood Library

• The European Economic Area (EEA) – Overview
• European Neighbourhood Policy
• EU External Relations
• EU Neighbourhood Info Centre