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|European Free Trade
Association européenne de libre-échange (AELE) (French)
Europäische Freihandelsassoziation (German)
Associazione europea di libero scambio (Italian)
Associaziun europeica da commerzi liber (Romansh)
Fríverslunarsamtök Evrópu (Icelandic)
Det europeiske frihandelsforbund (Norwegian)
|Official working language||English|
|Member states|| Iceland
|-||Secretary General||Kåre Bryn|
|-||EFTA Council Chair||Switzerland|
|Establishment||3 May 1960|
|-||EFTA Convention||4 January 1960|
204,518 sq mi
|GDP (PPP)||2007 (IMF) estimate|
|GDP (nominal)||2007 (IMF) estimate|
|Currency||Icelandic króna, Norwegian krone, Swiss franc (
|Time zone||WET / CET (UTC+0 / +1)|
|-||Summer (DST)||WEST / CEST (UTC+1 / +2)|
The European Free Trade Association (or EFTA) is a free trade organisation between four European countries that operates parallel to, and is linked to, the European Union (EU). The EFTA was established on 3 May 1960 as a trade bloc-alternative for European states who were either unable or unwilling to join the then-European Economic Community (EEC) which has now become the EU. The Stockholm Convention, establishing the EFTA, was signed on 4 January 1960 in the Swedish capital by seven countries (known as the "outer seven").
Today's EFTA members are Liechtenstein, Iceland, Norway, and Switzerland—the latter two being founding members. The initial Stockholm Convention was superseded by the Vaduz Convention, which provides for the liberalisation of trade among the member states.
EFTA states have jointly concluded free trade agreements with a number of other countries. 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 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 themselves and with the rest of the world.
British reaction to the creation of the EEC was mixed and complex. Britain was also preoccupied with the 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).
On 4 January 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 3.5 to 8.2 billion 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. Four members remain: Switzerland, Norway, Liechtenstein and Iceland. Iceland applied for EU membership in 2009 due to the 2008–2012 Icelandic financial crisis.
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 (EEC).
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 EEC in 1973 (together with Ireland), and hence ceased to be EFTA members. Portugal also left EFTA for the European Community in 1986. (Spain, never an EFTA member, joined the European Community in the same year.) Liechtenstein joined in 1991 (previously its interests in EFTA had been represented by Switzerland). Finally, Austria, Sweden and Finland joined the EU in 1995 and thus ceased to be EFTA members.
|Flag||State||Official name||Accession||Population||Area (km²)||Capital||GDP in millions (PPP)||GDP per capita (PPP)|
|Iceland||Republic of Iceland||1 January 1970||320,000||103,000||Reykjavík||11,837||36,681|
|Liechtenstein||Principality of Liechtenstein||1 January 1991||34,247||160.4||Vaduz||4,160||122,100|
|Norway||Kingdom of Norway||3 May 1960||4,721,600||385,155||Oslo||255,505||52,238|
|Switzerland||Swiss Confederation (Confoederatio Helvetica)||3 May 1960||7,591,400||41,285||Bern||325,305||41,765|
General Secretaries of EFTA:
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.
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, 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.
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).
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.
EFTA also originated the Hallmarking Convention and the Pharmaceutical Inspection Convention, both of which are open to non-EFTA states.
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 24 States and Territories, in addition to the 27 Member States of the European Union.
The Norwegian electorate has rejected treaties of accession to the EU in two referenda. At the time of the first referendum (1972) their neighbour 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.
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.
|EFTA member states
and sovereign territories
of EU law
|Enforceable in local courts?||EURATOM?||EU
|Schengen area?||EU VAT area?||EU customs territory?||EU single market?||Eurozone?|
|Norway, except:||Partial||Unclear||No||No||Yes||No||No||Yes||No, NOK|
|Bouvet Island||Partial||Unclear||No||No||Yes||No||No||Yes||No, NOK|
|Peter I Island||Partial||Unclear||No||No||Yes||No||No||Yes||No, NOK|
|Queen Maud Land||Partial||Unclear||No||No||Yes||No||No||Yes||No, NOK|
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