EUROPEAN FREE TRADE
ASSOCIATION (EFTA)



The European Free Trade Association (EFTA) is a trading bloc that was established by the Convention of Stockholm. The treaty was signed on January 4, 1960, and became effective on May 3 of that year. Since its beginnings EFIA membership has fluctuated greatly. The original signers of the accord were: Austria, Denmark, the United Kingdom, Norway, Portugal, Sweden, and Switzerland. By 1997, however, EFTA had only four members: Norway, Switzerland, Iceland, and Liechtenstein. Iceland had joined in 1970, and Liechtenstein, which had joined as an associate member in 1960, became a full member in 1991. Denmark, the United Kingdom, and Portugal resigned to join the European Community (formerly the European Economic Community). Finland, formerly an associate member, became a full member in 1986 only to resign in 1994 to join the European Union (formerly the European Community.) Austria and Sweden also resigned in 1994 to join the European Union.

EFTA was established by its members because of their dissatisfaction with the social and political goals of the European Economic Community (EEC). The EEC was created by the Treaty of Rome for the purpose of gradually integrating its members' economies. Soon after its 1957 beginnings, however, the EEC's agenda began to gradually expand towards more social and political integration. To better reflect these broadened goals the EEC eventually became known as the European Community (EC). In 1992 its 12 members signed the Treaty on European Union in Maastricht, the Netherlands, and the European Community became the European Union. Also known as the Maastricht Treaty, this agreement called for the creation of an Economic and Monetary Union by the end of the 1990s.

The primary goal of EFTA was the creation of a single market which would, it was hoped, include all the nations of western Europe. By 1966 EFTA had reached its first target, free industrial trade between its members. By 1991 another goal—the removal of tariffs on all nonagricultural imports—was reached. Despite these successes EFTA's early years were dominated by negotiations with the European Community aiming towards the establishment of a European free-trade area. EFrA's bargaining position, however, has declined as several of its members have defected to the EC. Britain's original bid for membership was vetoed by France's Charles de Gaulle (1890-1970) but it managed to join, along with Denmark, in 1973. Portugal also joined the EC but not until 1983. Austria, Finland, and Sweden had left by the end of 1994.

In 1990 EFTA began negotiations with the European Community concerning the establishment of the European Economic Area (EEA) which eventually became effective in 1994. Austria, Finland, Iceland, Norway, Sweden, and the 12 members of the European Union belong to the EEA. The purpose of the EEA is to facilitate the free movement of goods, persons, services, and capital between its members. The EEA is, however, a free-trade area and not a customs union—although borders are relaxed, controls are still in effect. The EEA allows those EFrA countries that have joined to participate in economic integration while rejecting a common customs tariff, a common commercial and agricultural policy, and far-reaching social, financial, and political integration.

EFTA seeks for its members not only free trade but also continued national and monetary sovereignty. EFTA is not a common market. It does not seek deregulation allowing unrestricted movement of goods, services, and capital across national borders. Nor does it aspire to become a supranational state. The purpose of EFTA is to promote the nonagricultural economic development of its members by doing away with barriers to nonagricultural trade.

Headquartered in Geneva, Switzerland, EFrA is governed by a council chaired by each member country for a six-month term. All council decisions are binding but must be made unanimously. Day-to-day operations are handled by a secretariat, a secretary-general and two deputy secretaries-general. The council is assisted by a number of standing committees, such as the Committee on Customs and Origin Matters, the Committee of Trade Experts, and the Committee on Technical Barriers to Trade.

[ Michael Knes ]

FURTHER READING:

EFTA Secretariat. "European Economic Area." Geneva: EFTA Secretariat, 1997. Available from www.efta.int/docs/court/information/default.html .

EFTA Secretariat. "European Free Trade Association." Geneva: EFTA Secretariat, 1997. Available from www.efta.int/structure/main/index.html .

EFTA Secretariat. European Free Trade Association. 3rd ed. Geneva: EFTA Secretariat, 1987.

Ham, Harry. "From EEA to EU: Economic Consequences for the EFTA countries." European Economic Review 39 (April 1995): 457-66.

International Monetary Fund. "European Free Trade Association (EFTA)." Washington: International Monetary Fund, 1997. Available from www.imf.org/external/ .

Laffan, Brigid. Integration and Co-operation in Europe. London and New York: Routledge, 1992.

U.S. Information Service. "European Free Trade Association." Washington: U.S. Information Service, 1996. Available from www3.itu.ch/MISSIONSIUS/bb/efta.html .



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