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European Free Trade Association

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"EFTA" redirects here. For other uses, see EFTA (disambiguation).
European Free Trade
Association (EFTA)
Association européenne de libre-échange (AELE) Template:Fr icon
Europäische Freihandelsassoziation Template:De icon
Associazione europea di libero scambio Template:It icon
Associaziun europeica da commerzi liber Template:Rm icon
Fríverslunarsamtök Evrópu Template:Is icon
Det europeiske frihandelsforbund Template:No icon
Logo of the European Free Trade Association
Logo
SecretariatGeneva, Switzerland
Official working languageEnglish
TypeTrade bloc
Member states Iceland
 Liechtenstein
 Norway
 Switzerland
Leaders
• Secretary General
Norway Kåre Bryn
• EFTA Council Chair
Switzerland Switzerland
Establishment3 May 1960
• EFTA Convention
4 January 1960
Area
• Total
529,600 km2 (204,500 sq mi)
Population
• 2007 estimate
12,660,623
• Density
100.6/km2 (260.6/sq mi)
GDP (PPP)2007 (IMF) estimate
• Total
$567.5 billion
• Per capita
$44,828
GDP (nominal)2007 (IMF) estimate
• Total
$743.3 billion
• Per capita
$58,714
CurrencyIcelandic króna, Norwegian krone, Swiss franc (ISK, NOK, CHF)
Time zoneUTC+0 / +1 (WET / CET)
• Summer (DST)
UTC+1 / +2 (WEST / CEST)

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"). artie lino bomb it.

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 The initial Stockholm Convention was superseded by the Vaduz Convention, which provides for the liberalisation of trade among the member states.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.

Political history

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.

Membership history

  EFTA member states
  Former member states, now EU member states

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).[1]

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.

Twice (in 1973 and in 1995), Norway has tried to join the EU (still the EEC in 1973), and by doing so, leave the EFTA. Both times however, membership of the EU was rejected in national referenda, so keeping Norway in the EFTA. Furthermore, Iceland currently is a candidate for EU membership, and is in negotiations. If they were to complete negotiations and all countries ratified the accession treaty, they would leave the EFTA and join the EU.

Current members

Flag State Official name Accession Population Area (km²) Capital GDP in millions (PPP) GDP per capita (PPP)
Iceland Iceland Republic of Iceland 1 January 1970 320,000 103,000 Reykjavík 11,837 36,681
Liechtenstein Liechtenstein Principality of Liechtenstein 1 January 1991 34,247 160.4 Vaduz 4,160 122,100
Norway Norway Kingdom of Norway 3 May 1960 4,721,600 385,155 Oslo 255,505 52,238
Switzerland Switzerland Swiss Confederation (Confoederatio Helvetica) 3 May 1960 7,591,400 41,285 Bern 325,305 41,765

General Secretaries

General Secretaries of EFTA:

  • 1960–1965: United Kingdom Frank E. Figgures
  • 1965–1972: United Kingdom Sir John Coulson
  • 1972–1975: Sweden Bengt Rabaeus
  • 1976–1981: Switzerland Charles Müller
  • 1981–1988: Norway Per Kleppe
  • 1988–1994: Austria Georg Reisch
  • 1994–2000: Iceland Kjartan Jóhannsson
  • 2000–2006: Switzerland William Rossier
  • Since 2006: Norway Kåre Bryn

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.

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.

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).

European Political CommunitySchengen AreaCouncil of EuropeEuropean UnionEuropean Economic AreaEurozoneEuropean Union Customs UnionEuropean Free Trade AssociationNordic CouncilVisegrád GroupBaltic AssemblyBeneluxGUAM Organization for Democracy and Economic DevelopmentCentral European Free Trade AgreementOrganization of the Black Sea Economic CooperationUnion StateCommon Travel AreaInternational status and usage of the euro#Sovereign statesSwitzerlandLiechtensteinIcelandNorwaySwedenDenmarkFinlandPolandCzech RepublicHungarySlovakiaBulgariaRomaniaGreeceEstoniaLatviaLithuaniaBelgiumNetherlandsLuxembourgItalyFranceSpainAustriaGermanyPortugalSloveniaMaltaCroatiaCyprusRepublic of IrelandUnited KingdomTurkeyMonacoAndorraSan MarinoVatican CityGeorgia (country)UkraineAzerbaijanMoldovaBosnia and HerzegovinaArmeniaMontenegroNorth MacedoniaAlbaniaSerbiaKosovoRussiaBelarus
A Euler diagram showing the relationships between various multinational European organisations and agreements

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 24 States and Territories, in addition to the 27 Member States of the European Union.[2]

EFTA's preferential free trade agreements with partners worldwide. The EFTA Member States in dark blue, the EU Member States in light blue, EFTA's free trade agreements in dark green, EFTA's ongoing negotiations in brown, declarations on cooperation in red, dialogue on closer trade and investment relations in orange and free trade relations with individual EFTA States in yellow.

Free Trade Agreement

Ongoing free trade negotiations

Declarations on Cooperation/Dialogue on closer trade and investment relations

Future

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 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.[9]

In mid-2005, representatives of the Faroe Islands hinted at the possibility of their territory joining EFTA.[10] 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.[11] The Faroes already have an extensive bilateral free trade agreement with Iceland, known as the Hoyvík Agreement.

EFTA and the European Union

See also: Accession of Iceland to the European Union and Norway 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.

EFTA member states
and sovereign territories 		Application
of EU law 		Enforceable in local courts? EURATOM? EU
Membership? 		Schengen area? EU VAT area? EU customs territory? EU single market? Eurozone?
 Iceland Template:Bg-yellow | Partial Unclear No No Yes No No Yes[12] No, ISK
 Liechtenstein Template:Bg-yellow | Partial Unclear No No Yes No No Yes[12] No, CHF
 Norway, except: Template:Bg-yellow | Partial Unclear No No Yes No No Yes[12] No, NOK
Norway Svalbard Template:Bg-yellow | Partial Unclear No No No[13] No[14] No No[12][15] No, NOK
Norway Bouvet Island Template:Bg-yellow | Partial Unclear No No Yes[16] No No Yes[12] No, NOK
Norway Peter I Island Template:Bg-yellow | Partial Unclear No No Yes[16] No No Yes[12][17] No, NOK
Norway Queen Maud Land Template:Bg-yellow | Partial Unclear No No Yes[16] No No Yes[12][17] No, NOK
 Switzerland Template:Bg-yellow | Partial Unclear No No Yes No No Yes[18] No, CHF

See also

References

  1. ^ "Finland: Now, the Seven and a Half". TIME. 7 April 1961. Retrieved 18 July 2009.
  2. ^ Official EFTA site
  3. ^ a b Pending notification by Iceland
  4. ^ Pending notifications by Iceland and Norway
  5. ^ a b Notification pending
  6. ^ "Western Sahara excluded from EFTA-Morocco free trade agreement". SPS. 12-05-2010. Retrieved 13-05-2010. {{cite news}}: Check date values in: |accessdate= and |date= (help)
  7. ^ Pending notification by Iceland and Norway
  8. ^ Parliament ratifies agreement on free trade between Ukraine, European Free Trade Association, Kyiv Post (7 December 2011)
  9. ^ "Iceland moves towards joining EU". BBC News. 16 July 2009. Retrieved 18 July 2009.
  10. ^ Spongenberg, Helena (8 October 2007). "Faroe Islands seek closer EU relations". EUobserver. Retrieved 18 July 2009.
  11. ^ "Convention Establishing the European Free Trade Association" (PDF). 21 June 2001. Retrieved 18 July 2009.
  12. ^ a b c d e f g European Economic Area
  13. ^ Norway and Iceland Schengen association agreement Article 14
  14. ^ Because of the Svalbard treaty it is even outside of the Norway taxation area.
  15. ^ Agreement on the European Economic Area - Protocol 40 on Svalbard and Declaration for activation of Protocol40 exclusion.
  16. ^ a b c Not explicitly mentioned in the treaty as excluded, thus considering it included.
  17. ^ a b Agreement on the European Economic Area, Article 126 Not explicitly mentioned in the treaty as excluded, thus considering it included.
  18. ^ Through multiple sectoral agreements

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