Four European nations—Iceland, Liechtenstein, Norway, and Switzerland—combine to form the European Free Trade Association (EFTA), a regional trade association and free trade zone. All four of the organization’s members are a part of the Schengen Area and the European Single Market, and it runs concurrently with the EU. However, they are not a member of the EU Customs Union. Although the EFTA is not a customs union and its members are free to negotiate trade deals with other countries on a bilateral basis, it does have a unified trade strategy. Thus, its member nations have jointly signed free trade agreements with the EU and some other nations. Iceland, Liechtenstein, and Norway are signatories to the Agreement on a European Economic Area (EEA). Their compliance with the EEA provisions is governed by the EFTA Surveillance Authority and the EFTA Court.
Historical background
EFTA, once one of the two major trading blocs in western Europe, is today much smaller and closely allied with its former rival, the European Union. It was founded on May 3rd, 1960, to act as an alternative trading group for those European nations that we’re unable to join the EEC, the forerunner of the EU. On January 4, 1960, seven nations gathered in the Swedish capital to sign the Stockholm Convention (1960), which established the EFTA. Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and the United Kingdom were referred to as the “outside seven.”. The Vaduz Convention, which had been updated, was signed on June 21, 2001, and it became effective on June 1, 2002. Since 1995, Norway and Switzerland are the only two founder members still in the EFTA. In the ensuing years, the other five countries—Austria, Denmark, Portugal, Sweden, and the United Kingdom—had all joined the EU. The Vaduz Convention succeeded the original Stockholm Convention. It sought to provide a successful framework for advancing the development and liberalization of trade, both inside the organization’s member nations and with the rest of the globe. Customs charges on industrial goods were designed to be gradually eliminated; however, this did not apply to agricultural or fisheries products.
Norway
In two referendums, the electorate of Norway rejected EU admission accords. Their neighbor, Denmark, joined at the time of the initial vote in 1972. Two other Nordic neighbors, Sweden and Finland, joined the EU after the second vote in 1994. The subject has not been addressed by Norway’s two most recent coalition governments, which included both supporters and opponents of EU membership.
Switzerland
More referendums on EU membership have been held since Switzerland rejected EEA membership in a vote in 1992; the most recent was in 2001. All of these were declined. Since 1924, Switzerland has shared a customs union with neighboring Liechtenstein, another EFTA member.
Iceland
Iceland’s government formally sought to join the EU on July 16, 2009, however, the negotiations were put on hold in the middle of 2013. The application was withdrawn by a letter from the foreign ministers in 2015.
United Kingdom
The UK was an EFTA co-founder in 1960, but it stopped being a member when it joined the European Economic Community. A referendum on leaving the EU, often referred to as “Brexit”, was held in the nation in 2016, with 51.9 percent of voters choosing to do so. In a 2013 research paper delivered to the British Parliament, some alternatives to EU membership were put forth that would still grant the UK access to the EU’s internal market. These alternatives included maintaining EEA membership as an EFTA member state or adopting the Swiss model of some bilateral treaties covering the single market’s provisions.
European Economic Area
The Agreement on the European Economic Area was signed in Oporto, Portugal, in 1992 by the EU, its member states, and the EFTA member states. The referendum to ratify Switzerland’s involvement was, however, defeated. Therefore, all EFTA members—aside from Switzerland—are also part of the European Economic Area (EEA). The European Economic Area (EEA) is made up of 27 European Union members as well as three EFTA members (EU). Following a deal with the European Community, it was founded on January 1st, 1994. Without being EU members, it enables the EFTA-EEA countries to take part in the EU’s internal market. Except for rules governing agriculture and fisheries, they embrace nearly all EU legislation of the single market. In a formal decision-shaping process, they also participate in and have an early impact on the development of new EEA-relevant policies and regulations.
Travel regulations
Following the EFTA convention, people of EFTA member states are allowed to travel throughout each other’s countries. In the European Union, EFTA nationals are also granted freedom of movement. Both EFTA nationals and EU residents do not require visas to enter or reside in each other’s countries. As a result, citizens of EFTA nations can live and work in all other EFTA nations as well as in all EU nations. Citizens of EU nations can do the same in all EFTA nations. But citizenship is frequently necessary for both voting and employment in sensitive professions, such as government, law enforcement, and the military. Citizens’ rights to welfare and unemployment benefits may also not apply to non-citizens.
