Abstract
The aim of this paper is to investigate possibilities for closer EU-Faroe Islands trade relations. The Faroe Islands are an autonomous part of the Danish Kingdom which, due to a number of reasons, chose to remain outside of the European integration project when Denmark sought full membership in the 1960s-70s.
Today, the Faroes remain outside of the EU Single Market, as well as the Customs Union, trade relations with the EU being governed by a decades-old Free Trade Agreement. This poses significant impediments to the small and undiversified Faroese economy (though the structure of the economy evolves) and causes the Faroese to look for markets elsewhere- including, perhaps unexpectedly, in Russia.
Possibilities for closer trade relations with the EU include a modernized FTA, EFTA/EEA membership and full EU membership. Economic, legal and political aspects are taken into account using SWOT analysis.
It is argued that enhanced bilateral or multilateral preferential trade regime (free trade agreement) better corresponds to the Faroese specificity of size and political status, while EFTA membership provides added value mainly in symbolic terms.