Trade with the EU is Liechtenstein’s main focus, and it has a customs union with Switzerland. The Swiss franc (CHF) is the official currency of the country. Exports to the EU outnumber those to the US. Liechtenstein’s top bilateral trade partner in 2021 was Germany.
The United Kingdom’s Free Trade Agreement with Iceland, Liechtenstein, and Norway
On July 8, 2021, the United Kingdom signed a free trade agreement (FTA) with Iceland, Liechtenstein, and Norway. Following the UK’s exit from the EU, the government has drafted new bilateral agreements “that replicate, as far as feasible, the benefits of the UK’s existing trade arrangements with existing partners,” according to the government.
The FTA hasn’t taken effect yet. Until then, goods trade between the United Kingdom and Iceland, and Norway is governed by the terms of the Agreement on Trade in Goods between the United Kingdom, Northern Ireland, Iceland, and Norway, which took effect on January 1, 2021.
The FTA includes provisions on:
- International trade in commodities and services, including tariff rate quotas, customs, and origin restrictions
- Hygiene and phytosanitary precautions
- Technical trade impediments
- Commercial cures
EFTA
Iceland, Liechtenstein, Norway, and Switzerland make up the European Free Trade Association (EFTA), which is a regional trade organization and free trade zone. The organization runs alongside the European Union (EU), and all four member nations are members of the European Single Market and the Schengen Area. However, they are not a member of the European Union’s Customs Union.
EFTA used to be one of the two major western European trade blocs, but it is now much smaller and more closely affiliated with its former rival, the European Union. It was founded on May 3, 1960, as an alternative trade grouping for European countries that were unable or unable to join the European Economic Community (EEC), the EU’s forerunner. Seven countries signed the Stockholm Convention (1960) in the Swedish capital on January 4, 1960, to establish the European Free Trade Association (known as the “outer seven”: Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and the United Kingdom). The Vaduz Convention, a revised version of the Convention, was signed on June 21, 2001, and went into effect on June 1, 2002.
Liechtenstein and USA
In 1926, the United States and Liechtenstein signed their first pact. In 1997, diplomatic relations were established. The two countries’ relations have remained stable since then. In 2002, representatives from both nations signed a treaty on mutual legal assistance aimed primarily at countering money laundering and other criminal banking operations.
Although the United States does not have an embassy in Liechtenstein, Liechtenstein is represented by the ambassador to Switzerland, who is based in Bern. Ambassador Suzan G. LeVine previously served as the United States ambassador to Switzerland and Liechtenstein, however, she resigned on January 20, 2017, leaving the office empty. However, Liechtenstein has an embassy in the United States, which is located in Washington, D.C.
Liechtenstein–Switzerland
Switzerland and Liechtenstein have long had close diplomatic and economic ties, with Switzerland accepting the role of safeguarding the interests of its smaller neighbor. In Bern, Liechtenstein has an embassy. Switzerland has an honorary consulate in Vaduz and is accredited to Liechtenstein through the Federal Department of Foreign Affairs in Bern.
Switzerland protects Liechtenstein’s interests and nationals abroad at the request of the Liechtenstein government in 1919. The two countries have joined forces to construct a unified economic and monetary zone. Since 1920, Liechtenstein has used the Swiss franc, and the two nations have had an open border and customs union since 1924. Both countries have now joined the Schengen Agreement. A common patent system exists amongst the countries as well. If Liechtenstein is not represented at treaty negotiations, Switzerland has the authority to enter into treaties on its behalf; this capacity has been used most frequently in treaties governing customs taxes or procedures.
