Free trade areas in Europe

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"European Free Trade Area" redirects here. For Association of Norway, Iceland, Switzerland and Liechtenstein, see European Free Trade Association.
  EU member states
  EFTA member states
  CEFTA member states
  EFTA (current)
  EFTA (now in EU)
  CEFTA (current)
  CEFTA (now in EU)
  BAFTA (now in EU)

At present, there are three multi-lateral free trade areas (FTAs) in Europe, plus the European Union (EU) which has a single market, and one former-FTA in recent history. Note that there are also many bilateral free trade agreements.


The European Free Trade Association (EFTA) was created in 1960 by the outer seven (as a looser alternative to the then-European Communities) but most of its membership has since joined the Communities/EU leaving only four countries (Iceland, Norway, Switzerland and Liechtenstein) still party to the treaty.


Following the fall of the Iron Curtain, two FTAs were created in Central Europe, the Baltic Free Trade Area (BAFTA) and the Central European Free Trade Agreement (CEFTA), in order to stabilise these countries for membership of the EU. With the 2004 EU enlargement, the original members of both of these have left these agreements and joined the EU.

CEFTA has expanded into southern Europe with members from the Western Balkans and Moldova. All of the new CEFTA countries, except for Moldova, are prospective members of the EU and hence EFTA is the only FTA with a long-term future, as there are no immediate plans for these countries to change their present status. However, CEFTA may gain new members in the form of countries neighbouring the present EU.[1][2]


The Baltic Free Trade Area was a free trade agreement between Estonia, Latvia and Lithuania that existed between 1994 and 2004.

BAFTA was created to help prepare the countries for their accession to the EU. Hence, BAFTA was created more as an initiative of the EU than out of a desire Baltic states to trade between themselves: they were more interested in gaining access to the rest of the European markets.[3]

BAFTA's agreement was signed by the three states on 13 September 1993 and came into force on 1 April 1994. On 1 January 1997 the agreement was extended to cover trade in agricultural produce. On 1 May 2004, all three states joined the European Union, and BAFTA ceased to exist.

BAFTA was part of general co-operation between the three countries, modelled on Nordic co-operation (see Nordic Council). Leaders met regularly and, as well as a free trade area, they formed a common visa area and started military co-operation due to the proximity of Russia.[4]


Free trade areas in Europe

The Commonwealth of Independent States had been negotiating a CIS free trade area since 1994 and in 2011 eight countries agreed to create a free trade area. These are; Russia, Ukraine, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Armenia and Moldova. Belarus, Kazakhstan and Russia form a customs union.


The European Union (EU) has always operated as more than a free trade area with its predecessor, the European Economic Community (EEC) being founded as a customs union. The EU shares its single market with three EFTA members via the European Economic Area and has a free trade agreement of some level with most other European countries.

European Union Customs Union[edit]

The European Union Customs Union is a customs union which consists of all the Member States of the European Union (EU), Turkey and three European microstates: San Marino, Monaco and Andorra. No customs are levied on goods travelling within the customs union and members of the customs union impose a common external tariff on all goods entering the union. One of the consequences of the customs union is that the European Union has to negotiate as a single entity in international trade deals such as the World Trade Organisation.

See also[edit]