Marca Andorra Observatory: the Reason for the Association Agreement with the EU

As we announced weeks ago, the Andorra Brand Observatory aims to develop a series of articles intended to explore with a constructive critical spirit the negotiations for a future Association Agreement of Andorra with the EU and the different areas in which it may have an impact.

Probably, this is one of the topics that in the coming years can most affect our country, its citizens, and its companies and that can shape the economic and social course of the coming decades. Precisely for this reason, and because it will greatly affect Andorra’s international projection, it is a topic that deserves to be analyzed from the perspective of “country brand.”

The big question to ask is whether Andorra and its citizens need the Association Agreement that has been negotiated with the EU since 2015 or, on the contrary, we do not need it and it does not bring us anything that can help us improve the current strategic positioning of our country. For those who pay attention to the media, they will surely have noticed that there are opinions for all tastes, from those who strongly defend the future agreement, to those who believe that, without closing the door to it, it should be negotiated with much more caution and without haste, to those who outright reject the agreement and believe we are already well off as we are.

The first observation in this regard is that the process has been very long, too long, so long that we have gone from a broad political and ideological consensus of the hegemonic and majority political parties at the beginning and during the negotiations, and we are talking about the 2009-2011, 2011-2015, 2015-2019 legislatures or even, with exceptions, to the 2019-2023, to the emergence of a series of political parties, with clearly innovative and disruptive ideas and especially more critical of the negotiations with the EU, parties that, by the way, have obtained the support of a significant portion of the electorate and have prompted a debate that, from its undeniable legitimacy, raises enough doubts to question whether the mentioned agreement under current negotiation conditions is sufficiently convenient for the interests of our country.

Perhaps we are at the climax of the negotiation, and the proximity of the eventual signing of the agreement alters the moods of some and others while they finish discussing what seem to be the final details, but it is evident that some statements by representatives of the main European regulators or even the European Commission, generally critical, without foundation it must be said, regarding banking practices or our country’s low taxation, have not contributed to generating a climate in favor of the agreement, when we have a Monetary Agreement signed and incorporated into our financial system since 2011 and a tax system approved and endorsed by the EU and the OECD.

And it is clear, while one of the negotiating parties marks territory and shows its claws with a certain arrogance unbecoming of those who negotiate for the benefit of a more united Europe, the Principality of Monaco goes and, although very diplomatically, but clearly and forcefully, abandons the negotiation and leaves Andorra and San Marino alone, arguing that a study by experts advises not to sign the agreement since, as predicted, in the first years there would be a negative impact on the economy of the Principality although after five or six years it would have a positive impact on the country’s economic diversification, among other issues. And it is clear, then the critical voices resurface that consider that if Monaco is not clear about it, imagine Andorra!, and therefore it is better to stop the negotiations and let us be the ones to mark territory to the European Union.

And what do the Andorran negotiators say to all these circumstances and statements? Well, that the negotiation is at its climax and that there are few issues, although important, left to define, but the advantages that the future agreement can bring to Andorra are evident, and for coherence and electoral commitment, they must go all the way in the negotiation and sign the best possible agreement for our country, leaving the final decision in the hands of the citizens through a binding referendum.

And to all this, what do I think? Well, if the agreement has been negotiated as they explain to us and respects the specificities of Andorra, especially regarding security and public order and the freedom of movement of people is limited by quotas similar to the current ones, and if we maintain border control and fiscal sovereignty is not questioned, perhaps we do have to trust our negotiating rulers and allow them to finish the work that, as I said, began many years ago and has represented a significant deployment of resources and personal efforts, all well spent if the agreement finally meets expectations.

We cannot forget where we come from and the international pressure that forced us to react in 2007, having to start the most important transformation process in our history and which has led us to align ourselves with the EU and implement a series of economic and fiscal changes that have precisely allowed us to earn the respect of the international community.

Precisely, in this process of change and alignment is where this negotiation with the EU must be framed, and in fact, it is one more step in the process of liberalizing foreign investments in search of the long-awaited economic diversification. The opportunities that open up for Andorra with a good agreement, not just any agreement, are truly remarkable, both for the country’s companies and for those from the rest of the Member States, and even from outside Europe that through Andorra intend to access the European Internal Market. In this way, we could finally attract quality foreign investment, with value-added companies, and not the speculative foreign investment that we have attracted so far.

Therefore, if the agreement has been well negotiated, if it respects our specificities, if it allows us to maintain border control and does not question our fiscal sovereignty, if it allows us to access the European Internal Market under advantageous conditions, if it allows us to attract quality foreign investment and if it allows us to diversify our economy, then, and only then, we should trust our rulers and allow them to finish the work that, as I said, began many years ago and has represented a significant deployment of resources and personal efforts.

By Pere Augé, CEO and Founding Partner of Augé Holding Group


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