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Monaco–European Union relations

European Union-Monaco relations
Map indicating locations of European Union and Monaco

European Union

Monaco

Relations between Monaco and the European Union (EU) are primarily conducted through France. Through that relationship Monaco directly participates in certain EU policies. Monaco is an integral part of the EU customs territory and VAT area, and therefore applies most measures on excise duties and VAT.

However this relationship does not extend to external trade. Preferential trade agreements between the EU and third countries apply only to goods originating from the customs territory - Monaco may not claim EU origin in this respect.

Monaco is a de facto member of the Schengen area (its borders and customs territory are treated as part of France) and it officially uses the euro as its sole currency. It uses the euro via an agreement with the EU and France and is allowed by the EU to mint its own coins. Monaco uses the euro as it previously had its currency tied 1:1 with the French franc.

The two have also concluded agreements on the application of Community legislation to pharmaceuticals, cosmetic products and medical devices (this entered into force on 1 May 2004); and on savings taxation (in force since 1 July 2005).

In November 2012, after the Council of the European Union had 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", the European Commission published a report outlining options for their further integration into the EU. Unlike Liechtenstein, which is a member of the European Economic Area (EEA) via the European Free Trade Association (EFTA) and the Schengen Agreement, relations with these three states are based on a collection of agreements covering specific issues. The report examined four alternatives to the current situation: 1) a Sectoral Approach with separate 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 argued that the sectoral approach did not address the major issues and was still needlessly complicated, while EU membership was dismissed in the near future because "the EU institutions are currently not adapted to the accession of such small-sized countries." The remaining options, EEA membership and a FAA with the states, were found to be viable and were recommended by the Commission. In response, the Council requested that negotiations with the three microstates on further integration continue, and that a report be prepared by the end of 2013 detailing the implications of the two viable alternatives and recommendations on how to proceed.


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