The European Union Association Agreements

This week I had planned to write about something else, but I ended up analysing association agreements and, necessarily, had to recycle that study into an opinion article.

The well-known EU Monitor platform defines them, paraphrasing, as a legally binding agreement between the European Union and third countries —non-EU members—, with the general objective of fostering trade relations across a wide range of matters.

This specific instrument, integrated as a category of trade agreements, is regulated in Articles 216 to 219 of the Treaty on the Functioning of the European Union, under the title “International Agreements”. Articles 216 and 217 provide a definition compatible with that of the platform; and Articles 218 and 219 detail the procedures to follow for the negotiation and conclusion of these agreements. They are a tool that was first introduced in the Treaty of Rome (Title V) and have become fundamental for European foreign policy. In fact, they can be considered in some cases as the first steps towards integration as a member state.

To date, the Union has signed more than 40 agreements —for those familiar with the matter, they will recognise, among others, the Cotonou Agreement—, with purposes that, generally speaking, have been fulfilled.

It would be from here where the practical and interesting question begins; what happens when these AA are breached.

The first step would be to identify a conflict, and we will use the case of Algeria as an example. Without going into the background, the obstacles —political and legal— to exports that Algeria recently adopted have their genesis in a diplomatic conflict and detonated with the change in Spanish foreign policy in its relations with Morocco and the sovereignty of Western Sahara.

The string of impediments to Spanish and European business people led a group of those affected to create the Association of Companies Affected by the Algerian Crisis (AECA) to try to articulate the necessary legal mechanisms and obtain compensation from the Spanish State for the damages suffered.

These lines do not allow me, nor do I think it appropriate to assess the requirements of State liability —or any other national action—, but rather I will limit myself to the issue of AA. What is noteworthy is that the actions of the Spanish administration and the non-observance of the provisions in the AA would be causing Spanish businesses to lose contracts that other European States would be winning.

Having identified the problem and its nature, we must turn to the Association Agreement ratified by the European Union with Algeria.

The first and most appropriate reference appears to be Title VI, concerning provisions for administrative cooperation, with an obligation of mutual assistance between customs authorities, whose breach could be grounds for initiating a “dispute settlement”, but more specifically we need to look at Article 100, which states:

«1. Each of the Parties may refer to the Association Council any dispute relating to the application or interpretation of this Agreement»

But why does the European Union intervene here? For this, we must refer, among other legal bases, to Article 102 of the AA, which states:

«The arrangements applied by Algeria in respect of the Community shall not give rise to any discrimination between the Member States, their nationals or their companies or firms».

Returning to Article 100, paragraph 2 indicates that it will be the “Association Council” that will have the responsibility to resolve the conflict through a decision, and, continuing in the same provision, paragraph 3, the parties will be obliged to take appropriate measures to ensure compliance with that decision. If even then —now in paragraph 4— it is not possible to reach a point of understanding, arbitrators will be appointed, whose decision must exceed the majority of votes and, necessarily, the countries in conflict will have to accept the measures proposed by those arbitrators.

If we move forward, Article 104 is even more specific, and from it can be inferred —along with the joint declaration that we will see in a moment—, the initiation of a dispute settlement:

«1. The Parties shall take any general or specific measures required to fulfil their obligations under this Agreement. They shall see to it that the objectives set out in the Agreement are attained.»

From a general interpretation, it appears that paragraph 2 configures an exception to the usual procedure of countries in relation to the EU, as it is expressed as follows:

«2.   If either Party considers that the other Party has failed to fulfil an obligation under the Agreement, it may take appropriate measures. Before so doing, except in cases of special urgency, it shall supply the Association Council with all the relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties.

In the selection of measures, priority must be given to those which least disturb the functioning of the Agreement. These measures shall be notified immediately to the Association Council and shall be the subject of consultations within the Association Council if the other Party so requests.»

Any measure must be carried out in accordance with International Law, and if even with what is provided for in the AA the issue is not resolved, the matter would be avocated to return to the diplomatic sphere, for example, through international sanctions.

The joint declaration that I pointed out above contains the grounds on which material breach of the Agreement will be considered, which are fundamentally: i) a rejection of its application not provided for by the rules of International Law; or ii) an essential breach of the provisions of Article 2, which seems to fit what has happened in the case of Algeria.

Having seen the theoretical question, what has happened to date?

Before Algeria’s reprisals against Spanish companies, the Spanish exports plummeted. The European Union is aware of the conflict, as it has been informed through numerous channels. Also, it is not the first time it has occurred —it also happened between 2020 and 2021—, but in this specific case it was not until June 2024 when it formally initiated the dispute settlement procedure against Algeria, for this case and for the drag of restrictive measures. The first step has been the call for (diplomatic) consultations.

For all the above to happen, or so I interpret it with the available regulations, the European Union cannot act ex officio, on its own initiative. Therefore, in the absence of this information, it is understood that one of the parties invoked the convening of the Association Council for dispute resolution.

Although Algeria seems to have shown some sign of opening, such as the banking blockade in November 2024, I have not had access to more recent information about the development of the procedure. As we saw at the beginning and following the rule, if this first phase does not yield the expected results, it will be the turn of the arbitration panel.

Regardless of what comes out of this European procedure, in my opinion, it is not an obstacle for State liability claims to continue, although great care must be taken with the statute of limitations for the action.

This concludes my brief explanation about the conflict with Algeria which, inevitably, reminds us of the conflict that is taking place in Melilla with the unilateral closure of the commercial customs by the Kingdom of Morocco; it seems that it would also fall within a breach of the Association Agreement. A country with which, regardless of the October 2024 rulings of the Court of Justice of the European Union, that Association Agreement remains in force.