The European Free Trade Association/European Economic Area?
Description
This article is from the European Union FAQ, by Roland Siebelink & Bart Schelfhout with numerous contributions by others.
The European Free Trade Association/European Economic Area?
The European Free Trade Association or EFTA was founded in 1960 as an
intergovernmental alternative to the supranational aspirations of the EEC.
The EFTA was not intended as a customs union: member countries did not have
common custom tariffs but just abolished custom tariffs between them. There
was no common external tarriff, a number of commodities and products were
excluded from free trade.
Austria, Denmark, Finland, Iceland, Liechtenstein, Norway, Portugal, Sweden
and the UK were all members of EFTA once, but many of these countries joined
or applied for the EC/EU afterwards. After the last EU enlargement of 1995,
EFTA just consists of Iceland, Norway, Liechtenstein and Switzerland.
To complicate matters even more, EFTA members have signed a far-reaching
agreement with the EU in 1992, to create a common European Economic Area.
This confers upon EFTA members that ratify it the four freedoms of traffic
of the EU (of products, services, persons and capital); without
decision-making power but with guaranteed consulting.
Unfortunately for the designers of this Treaty, the Swiss rejected the EEA
in a referendum. This may have been a boost for the attempts to join the EU
for other EFTA member countries. Iceland, Norway and Liechtenstein did
approve of the EEA, but the remaining EFTA members seem to have chosen full
EU membership instead (as did the Norwegian government, apparently against
the will of a majority of Norwegians). For both EFTA and the EEA, it remains
to be seen what they will actually account to, in practice, over the next
couple of years.
Note: as Jozef van Brabant[4] notes, Liechtenstein got into a particularly
messy situation when the Swiss rejected the EEA Treaty that Liechtenstein
itself had already approved, since Liechtenstein was in a customs union with
Switzerland. Because of this, Liechtenstein will the EEA only on May 1st.,
1995.
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