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European Free Trade Association

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European Free Trade Association

The European Free Trade Association (EFTA) is a regional trade organization and free trade area consisting of four European countries: Iceland, Liechtenstein, Norway, and Switzerland. Established on May 3, 1960, EFTA was created as an alternative for countries that were not part of the European Economic Community, which later evolved into the European Union (EU).

History and Formation

EFTA was established by the Stockholm Convention in 1960 by the United Kingdom, Sweden, Portugal, Norway, Denmark, Switzerland, Austria, and Iceland. The formation of EFTA was motivated by a desire to promote free trade and economic integration between its member states, especially those who were not part of the European Economic Community at that time. Over the years, various countries left EFTA to join the European Union, including the United Kingdom, Denmark, and Austria.

Objectives

The main objective of EFTA is to promote free trade and economic integration between its member states and globally. It aims to achieve this by:

  • Ensuring the free movement of goods, services, capital, and persons among the member states.
  • Maintaining and developing a comprehensive network of free trade agreements with non-EU countries.
  • Facilitating member states' participation in the European Economic Area (EEA), allowing them access to the EU’s single market.

EFTA and the European Economic Area

EFTA's relationship with the EU is primarily through the European Economic Area (EEA) Agreement, signed in 1992. The EEA unites the EU member states and the three EFTA countries: Norway, Iceland, and Liechtenstein, in a single market governed by the same basic rules. However, Switzerland is not part of the EEA but has a series of bilateral agreements with the EU that provide similar market access.

Trade Agreements

EFTA has one of the most comprehensive networks of free trade agreements globally, covering over 60 countries outside the EU. This extensive network of trade agreements includes major economies and regions such as Canada, Mexico, and the Central European Free Trade Agreement (CEFTA). These agreements help ensure access to markets, promote competitive exports, and foster economic growth for member states.

Governance and Structure

EFTA operates through several key institutions including:

  • The EFTA Council: Responsible for managing the organization and making decisions on policy.
  • The EFTA Secretariat: Located in Geneva, responsible for the day-to-day administration.
  • The EFTA Surveillance Authority and EFTA Court: Ensure compliance with EEA laws for Norway, Iceland, and Liechtenstein.

Related Topics

The European Free Trade Association remains a pivotal player in promoting economic cooperation and free trade in Europe and beyond, balancing relationships with the EU and countries worldwide through its adept network of agreements.