The
European Free Trade Association (
EFTA) is a
free trade organisation between four
European countries that operates parallel, and is linked to, the
European Union (EU).
EFTA was established on 3 May 1960 as a
trade bloc-alternative for European states who were either unable to, or chose not to, join the then-
European Economic Community (EEC) which has now become the
European Union (EU). The Stockholm Convention, establishing EFTA, was signed on 4 January 1960 in
Stockholm by
seven countries.
Today, only
Iceland,
Norway,
Switzerland, and
Liechtenstein remain members of EFTA (of which only
Norway and
Switzerland are the only remaining founding members). The
Stockholm Convention was subsequently replaced by the
Vaduz Convention. This Convention provides for the liberalisation of trade among the member states.
Three of the EFTA countries are part of the European Union Internal Market through the Agreement on a
European Economic Area (EEA), which took effect in 1994; the fourth, Switzerland, opted to conclude bilateral agreements with the EU. In addition, the EFTA states have jointly concluded free trade agreements with a number of other countries.
In 1999 Switzerland concluded a set of bilateral agreements with the European Union covering a wide range of areas, including movement of persons, transport and technical barriers to trade. This development prompted the EFTA States to modernise their Convention to ensure that it will continue to provide a successful framework for the expansion and liberalization of trade among them and with the rest of the world.
Political History
British reaction to the creation of the
EEC was mixed and complex. Consequently France vetoed British membership fearing that the Anglo-Saxons planned a federal super-state modeled on the USA. Britain was also preoccupied with the
British Commonwealth, which was in a critical period. The UK brought together several countries (including some bordering the EEC) and decided to form the European Free Trade Association in about 1959, soon after the establishment of the 6-nation EEC. (
France,
Germany,
Italy,
Belgium,
Luxembourg and the
Netherlands. These last three are also known as the
Benelux Union)
On January 4, 1960 the Treaty on European Free Trade Association was initialed in the Golden Hall of the Prince's Palace of
Stockholm. This established the progressive elimination of customs duties on industrial products, but did not affect agricultural products or maritime trade.
The main difference between the early EEC and the EFTA was the absence of a common external customs tariff, and therefore each EFTA member was free to establish individual customs duties against trade with non EFTA countries.
Despite this modest initiative, the financial results were excellent, as it stimulated an increase of foreign trade volume among its members from 3 522 to 8 172 million US dollars between 1959 and 1967. This was however rather less than the increase enjoyed by countries inside the EEC.
After the
accession of Denmark and the UK to the EEC EFTA began to falter. For this reason most countries eased or eliminated their trade tariffs in preparation to join the EEC, but experienced declining revenue which reduced the importance of EFTA. Currently there are only 4 members remaining:
Switzerland,
Norway and
Liechtenstein and
Iceland. Iceland
applied for EC membership in 2009 following the
2008–2009 Icelandic financial crisis.
Membership history
thumb|right|
The founding members of EFTA were
Austria,
Denmark,
Norway,
Portugal,
Sweden,
Switzerland and the
United Kingdom. During the 1960s these countries were often referred to as the
Outer Seven, as opposed to the
Inner Six of the then-
European Economic Community.
Finland became an associate member in 1961 (becoming a full member in 1986) and
Iceland joined in 1970. The United Kingdom and Denmark joined the European Communities in 1973 (together with Ireland), and hence ceased to be EFTA members. Portugal also left the EFTA for the European Community in 1986.
Liechtenstein joined in 1991 (previously its interests in EFTA had been represented by Switzerland). Finally, Austria, Sweden and Finland joined the
European Union in 1995 and thus ceased to be EFTA members.
Current members
General Secretaries
General Secretaries of EFTA:
Institutions
EFTA is governed by the EFTA Council and serviced by the EFTA Secretariat. In addition, in connection with the EEA Agreement of 1992, two other EFTA organisations were established, the EFTA Surveillance Authority and the EFTA Court.
EEA-related institutions
The
EFTA Surveillance Authority and the
EFTA Court regulate the activities of the EFTA members in respect of their obligations in the
European Economic Area (EEA). Since Switzerland is not an EEA member, it does not participate in these institutions.
The EFTA Surveillance Authority performs the
European Commission's role as "guardian of the treaties" for the EFTA countries, while the EFTA Court performs the
European Court of Justice's role for those countries.
The original plan for the EEA lacked the EFTA Court or the EFTA Surveillance Authority, and instead had the European Court of Justice and the European Commission were to exercise those roles. However, during the negotiations for the EEA agreement, the European Court of Justice informed the
Council of the European Union by way of letter that they considered that giving the EU institutions powers with respect to non-EU member states would be a violation of the treaties, and therefore the current arrangement was developed instead.
The
EEA and Norway Grants are administered by the Financial Mechanism Office, which is affiliated to the EFTA Secretariat in Brussels.
Locations
The EFTA Secretariat is headquartered in
Geneva,
Switzerland. The EFTA Surveillance Authority has its headquarters in
Brussels,
Belgium (the same location as the headquarters of the European Commission), while the EFTA Court has its headquarters in Luxembourg (the same location as the headquarters of the European Court of Justice).
Portugal Fund
The Portugal Fund was established in 1975 when
Portugal was still a member of EFTA, to provide funding for the development and reconstruction of Portugal after the
Carnation Revolution. When Portugal left EFTA in 1985 to join the EEC, the remaining EFTA members decided to nonetheless continue the Portugal Fund, so Portugal would continue to benefit from it. The Fund originally took the form of a low-interest loan from the EFTA member states to Portugal, to the value of 100 million
US dollars. Repayment was originally to commence in 1988, but EFTA then decided to postpone the start of repayments until 1998. The Portugal Fund has now been dissolved by the Member States.
International conventions
EFTA also originated the
Hallmarking Convention and the
Pharmaceutical Inspection Convention, both of which are open to non-EFTA states.
Relationship to the European Economic Area
The EFTA members, except for
Switzerland, are also members of the
European Economic Area (EEA).
International relationships
EFTA has several free trade agreements with non-EU countries as well as declarations on cooperation and joint workgroups to improve trade. Currently, the EFTA States have established preferential trade relations with 20 States and Territories, in addition to the 27 Member States of the European Union.
Free Trade Agreement
Signed agreement 2008, not yet ratified
thumb|400px|Nations the EFTA has an FTA with in dark blue, negotiating an FTA with in dark cyan, has a declaration on cooperation with in purple, and is in a "joint workgroup" with in dark red; the EFTA is light green.Signed agreement 2009, not yet ratified
Finalised negotiations 2008
Currently negotiating agreements
Declarations on Cooperation
Joint workgroups
Future
thumb|250px|The European Union (blue)
and EFTA countries (green)The Norwegian electorate has rejected treaties of accession to the EU in two referenda. At the time of the first referendum (1972) their neighbour the
Kingdom of Denmark joined. The second time (1994) two other
Nordic neighbours,
Sweden and
Finland, joined the EU. The last two
governments of Norway have been unable and unwilling to advance the question, as they have both been coalition governments consisting of proponents and opponents.
Since Switzerland rejected the EEA in 1992, referenda on
EU membership have been initiated, the last time in 2001. These were rejected by clear majorities.
Iceland, on the other hand, may join the EU in the near future, following the
global financial crisis of 2008, which has particularly affected the local economy. On 16 July 2009, the government formally applied for EU membership.
In mid-2005, representatives of the
Faroe Islands hinted at the possibility of their territory joining EFTA. However, the chances of the Faroes' bid for membership are uncertain because, according to Article 56 of the EFTA Convention, only states may become members of the Association. The Faroes already have an extensive bilateral free trade agreement with Iceland, known as the
Hoyvík Agreement.
EFTA and the European Union
This table summarises the various components of EU laws applied in the EFTA countries and their sovereign territories. Some territories of EU member states also have a
special status in regard to EU laws applied as is the case with some
European microstates.
See also
