European Free Trade Association

From Academic Kids

The European Free Trade Association (EFTA) was established on May 3, 1960 as an alternative for European states that were not allowed or did not wish to join the European Community (now the European Union).

The treaty was signed on January 4, 1960 in Stockholm. Today only Iceland, Norway, Switzerland and Liechtenstein remain members of EFTA.

In addition, the EFTA States have jointly concluded free trade agreements with a number of countries worldwide.


Membership History

Its original membership was United Kingdom, Denmark, Norway, Sweden, Austria, Switzerland and Portugal.

Finland became an associate member in 1961 (it later became a full member in 1986), and Iceland joined in 1970. The United Kingdom, Denmark and Ireland joined the European Community in 1973, and hence ceased to be EFTA members. Portugal also left EFTA for the European Community in 1986. Liechtenstein joined in 1991 (previously its interests in EFTA had been represented by Switzerland). Finally, Austria, Sweden and Finland joined the European Community in 1995 and hence ceased to be EFTA members.


EFTA has the following institutions: the Secretariat, the EFTA Council, the EFTA Surveillance Authority, and the EFTA Court.

EEA Related Institutions

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, and instead had 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 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

EFTA also manages the 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 end of the fascist dictatorship. When Portugal left EFTA in 1985, 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.

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).

Future EFTA Membership

Norwegians have rejected in a vote to join the EU on two occasions, at the time of the first referendum (1972) their historical and geographical neighbours the Danes joined. The second time (1994) the other Nordic countries (Sweden and Finland) except Norway and Iceland joined the EU.

Iceland is not likely to join the EU in the near future as its government's stance on fishery policy differs significantly from that of the EU. Polls have shown, however, that a majority of the public either wants to join the EU or sees no problems with doing so. Political parties that wish to join are also gaining substantial support.


Britain thought it could take advantage of the absence of any common external tariff between EFTA members by importing cheap goods from the Commonwealth and then selling them freely within the EFTA. It was also said that if the EEC and EFTA were to joined forces at the time, "the Common Market would dissolve as a lump of sugar in an English cup of tea".

But Britain soon realized that the EEC was more successful, and that it itself traded more with the EEC than with the EFTA. Moreover, the two pillars of the British power (its "special" relationship with the US, and the Commonwealth) seemed to be weakening. Britain also feared that the Franco-German rapprochement could isolate it from the rest of Europe. That's why Britain applied for the first time for the EEC membership in 1961.

See Also

External links

European Free Trade Association (EFTA) EFTA logo
Iceland | Liechtenstein | Norway | Switzerland
cs:Evropské sdružení volného obchodu

de:European Free Trade Association es:Asociacin Europea de Libre Comercio fr:Association europenne de libre-change it:Associazione europea di libero scambio nl:Europese Vrijhandels Associatie no:EFTA pl:Europejskie Stowarzyszenie Wolnego Handlu sv:EFTA zh:欧洲自由贸易联盟


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