The major area of a robust formal agreement between the Principality of Andorra and the European Union is a customs union (EU). Andorra shares borders with two European Union member states France and Spain.
The “Agreement between the European Economic Community and the Principality of Andorra” (signed on June 28, 1990, and effective July 1, 1991) established a customs union between the Principality and the EU. Andorra is treated as an EU member in terms of trade in manufactured goods, but not in terms of agricultural products.
On the EU side of the border, full customs procedures are in place due to Andorra’s low VAT and other indirect taxes, such as those on alcohol, cigarettes, and gasoline, which visitors may benefit from.
Euro
Andorra has a monetary agreement with the European Union that allows it to adopt the euro as its official currency and issue euro coins as early as July 1, 2013. On January 1, 2014, they planned to release their first coins. However, EU approval did not come until December 2013, and the first Andorran euro coins were not issued until January 2015.
Other Agreements
In 2003/4, two more agreements were struck. The first is a collaboration agreement that covers environmental, communications, information, culture, transportation, regional and cross-border cooperation, and social issues. However, so far, there have been few operational results. A taxation of savings agreement was also inked in response to EU pressure on offshore financial centers to conform to EU regulations.
An agreement regulating the movement and residence of people of other countries in Andorra was reached in 2003 by France, Spain, and Andorra. It states that the three nations must coordinate their visa procedures (in practice, Andorra follows the Schengen visa standards) and that Andorra must only accept individuals with Spanish or French admission rights.
Andorra is authorized to enable anyone to stay for an extended time.
Border Controls
Andorra has refused to join the Schengen Area and retains border controls with the European Union. However, because visitors to Andorra must pass via the Schengen Area, and Andorra does not require or issue visas, the entry criteria are essentially the same as those in the Schengen Area. Visitors to Andorra who need a visa to enter the Schengen region will need a multi-entry Schengen visa because they will need to enter the Schengen area again to leave.
Only two official land border crossing sites exist La Seu d’Urgell in Spain and Pas de la Casa on the French side of the border. Helicopters are also permitted to fly to airports with border controls in neighboring countries, but not to other locations outside of Andorra.
Future Integration
The European Commission published a report outlining options for further integration into the EU in November 2012, after the Council of the European Union called for an evaluation of the EU’s relations with the sovereign European microstates of Andorra, Monaco, and San Marino, which they described as “fragmented.” Unlike Liechtenstein, which is a member of the European Economic Area (EEA) through the European Free Trade Association (EFTA) and the Schengen Agreement, these three countries’ relations are based on a series of accords covering specific topics. The research looked at four potential solutions to the current situation: 1) a Sectoral Approach with individual agreements with each state covering an entire policy area, 2) a comprehensive, multilateral Framework Association Agreement (FAA) with the three states, 3) EEA membership, and 4) EU membership The Commission said that the sectoral approach failed to solve the major challenges and remained overly complicated, while EU membership was ruled out soon because “EU institutions are now not equipped to the accession of such small-sized countries.” The Commission judged the other options, EEA membership and an FAA with the states, to be viable and recommended them. In response, the Council recommended that additional integration negotiations with the three microstates continue and that a report describing the ramifications of the two possible possibilities, as well as recommendations on how to proceed, be prepared by the end of 2013.
