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The European Free Trade Association ((EFTA); French: Association européenne de libre-échange (AELE)) was established on 3 May 1960 as a trade bloc-alternative for European states who were either unable to, or chose not to, join the then-European Economic Community (EEC) (now the European Union (EU)). The EFTA Convention was signed on 4 January 1960 in Stockholm by seven states. Today only Iceland, Norway, Switzerland, and Liechtenstein remain members of EFTA (of which only Norway and Switzerland are founding members). The Stockholm Convention was subsequently replaced by the Vaduz Convention. This Convention provides for the liberalisation of trade among the member states. 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 addition, the EFTA states have jointly concluded free trade agreements with a number of other countries. 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 them and with the rest of the world.
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. 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 European Communities in 1973 (together with Ireland), and hence ceased to be EFTA members. Portugal also left the 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 Union in 1995 and thus ceased to be EFTA members.
EFTA History at a glance
1960 The European Free Trade Association (EFTA) is founded by Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the UK 1961 Finland becomes an associate member of EFTA 1966 Full free trade achieved among the EFTA States in industrial products
Free Trade Agreements signed with Estonia. A new EEA Financial Instrument is established for the period 1999-2003 (EUR 119. Declarations on Co-operation signed with Jordan and Lebanon 1998 Interim Agreement signed with the Palestinian Liberation Organization.6 million for grant support) . the Southern Common Market (MERCOSUR) and Serbia and Montenegro. Agreement on free trade in fish between the EFTA States 1991 Liechtenstein becomes a member of EFTA. later to become the European Economic Area. Declarations on Co-operation signed with Croatia. on behalf of the Palestinian Authority. Poland and Romania. The remaining EFTA States sign bilateral Free Trade Agreements (FTAs) with the EEC 1977 Elimination of tariffs on industrial goods in trade between the EEC and the EFTA States 1979 Free Trade Agreement signed with Spain 1984 Luxembourg Declaration on broader co-operation between the EEC and EFTA 1985 Portugal leaves EFTA to become a member of the EEC 1986 Finland becomes a full member of EFTA 1989 Start of negotiations on a European Economic Space. Switzerland rejects participation in the EEA by referendum 1993 Free Trade Agreement signed with Bulgaria and Hungary. Declaration on Cooperation signed with Albania. Cyprus. Protocol on the succession of the Czech Republic and the Slovak Republic to the EFTA-Czechoslovakia Agreement signed 1994 The Agreement on the European Economic Area (EEA) enters into force. Free Trade Agreements signed with the former Czechoslovakia. Israel. The EEA Financial Mechanism is established for the period 1994-1998 (ECU 500 million for grant support and interest rebates in support of 1 500 million of loans) 1995 Austria. Latvia. the Gulf Cooperation Council. Ukraine. Declarations on Co-operation signed with Egypt. Finland and Sweden leave EFTA to join the European Union. Morocco and Tunisia 1996 Declarations on Co-operation signed with Macedonia and the Palestinian Liberation Organization (PLO) 1997 Free Trade Agreement signed with Morocco. Liechtenstein becomes a full participant in the EEA Agreement. Free Trade Agreement signed with Turkey 1992 The Agreement on a European Economic Area (EEA) is signed in Oporto. Formal negotiations on a free trade agreement started with Canada. Egypt and Jordan 1999 Free Trade Agreements with the PLO and with Morocco enter into force 2000 Free Trade Agreements signed with Macedonia and Mexico. Lithuania and Slovenia.1970 Iceland becomes a member of EFTA 1972 Denmark and the UK leave EFTA to join the European Economic Community (EEC). Portugal.
The two EFTA Alpine countries – Liechtenstein and Switzerland – are internationally renowned financial centres and hosts to major companies and multinationals. A new EEA Financial Mechanism as well as a bilateral Norwegian Financial Mechanism is established in support of social and economic cohesion for the period 2004-2009 (amounting together to EUR 1 167 million). Formal launch of free trade negotiations with Thailand. Location The EFTA Secretariat is headquartered in Geneva. stand out in fish production. Switzerland. they are world leaders in several sectors vital to the global economy. Peru and Algeria. Declaration on Co-operation signed with Mongolia. while the EFTA Court has its headquarters in Luxembourg (the same location as the headquarters of the European Court of Justice). Negotiations on an FTA with Egypt finalised. Norway and Switzerland*) are small. Application for EEA membership by ten countries acceding to the EU 2003 Launch of EEA enlargement negotiations on 9 January. The EFTA Surveillance Authority has its headquarters in Brussels. Free Trade Agreements signed with Croatia and Jordan 2002 Updated EFTA Convention (Vaduz Convention) entered into force on 1 June. the metal industry and maritime transport. FTA signed with the Southern African Customs Union (SACU). Two Mutual Recognition Agreements (MRAs) signed with the USA. Iceland and Norway.2001 Updated EFTA Convention signed at the EFTA Ministerial meeting in Vaduz. Liechtenstein on 21 June. 2007 Agreement on EEA enlargement of Bulgaria and Romania signed. Liechtenstein. 2005 FTA signed with the Republic of Korea. Agreement on enlargement of the EEA signed on 11 November. A Free Trade Agreement signed with Singapore and a Declaration on Co-operation signed with Algeria. Launch of Joint Study Group with Russia. FTA with the Republic of Korea enters into force. FTA with Egypt enters into force. Formal launch of free trade negotiations with the Gulf Co-operation Council (GCC). Negotiations on an FTA with Canada finalised. . 2006 Start of negotiations with Bulgaria and Romania on accession to the EEA. Members Although the EFTA countries (Iceland. Free Trade Agreement signed with Chile 2004 The European Economic Area (EEA) increased it membership to include 28 countries as ten countries join the European Union on 1 May. Start of negotiations on an FTA with Colombia. Belgium (the same location as the headquarters of the European Commission). Launch of Joint Study Group with India. Negotiations with the Southern African Customs Union (SACU) finalised. Free Trade Agreement signed with Lebanon and Tunisia. The two EFTA Nordic countries.
The Committee on Customs and Origin Matters oversees the cooperation in the customs field. The Council also manages relations between the EFTA States under the EFTA Convention. though decisions are usually reached through consensus. On matters related to the EFTA budget the Budget Committee assists the Council. particularly in relation to the free trade agreements. especially relating to the development of EFTA relations with third-countries and the management of the free trade agreements. The Committee on Technical Barriers to Trade advises the Council on standardisation policy. The Consultative Committee provides a forum for representatives of industry and labour in the EFTA States to exchange views among themselves and with the Council. . the Delegations consult each other. The EFTA Board of Auditors acts as the supreme auditing authority for the EFTA Secretariat. It has a broad mandate to consider possible policies to promote the overall objectives of the Association and to facilitate the development of links with other states. it also functions as a contact point with the European Court of Auditors regarding the control and auditing of EEA EFTA contributions to the Community budget. while the Parliamentary Committee provides a forum in which MPs of the EFTA States can discuss issues of concern among themselves and. conformity assessment policy. and keeps under general review relations with the EU third-country policy and administration. relations with other European quality infrastructure organisations and international aspects of the technical regulatory work. In these meetings.Structure of the EFTA Council The EFTA Council is the highest governing body of EFTA. usually in June and December. Member States usually meet once a month. In addition. The Committee on Third Country Relations oversees the functioning and development of free trade and cooperation agreements with third countries. at Ambassadorial level (Heads of Permanent Delegations to EFTA) in Geneva. a substructure of Committees has evolved to deal with special issues (see figure). The management and development of the Free Trade Agreements and Declarations on Co-operation are carried out through Joint Committees with each of EFTA’s third country partners. unions of states or international organisations. negotiate and decide on policy issues regarding EFTA. Each Member State is represented and has one vote. The Council discusses substantive matters. The Council also meets twice a year at Ministerial level. with EFTA Ministers. the EFTA Surveillance Authority and the EFTA Court. The Committee Structure under the Council Under the Council. on occasion. Questions relating to the EEA are dealt with by the Standing Committee in Brussels.
The free trade agreement has been functional for just over a year and provides for reciprocal preferential market access between EFTA and SACU states.The EFTA Council noted at its meeting in Geneva on 8 December 2000 that the Member States had decided to set up an informal group in order to increase transparency and facilitate the exchange of information regarding personnel policy and administrative matters in the EFTA Secretariat. several Committees in specialised fields are set up under the EFTA Convention. Using EFTA. Since the late 1990s the EFTA States have ‘gone global’ to maintain their competitive position in the world. EFTA Trade Agreement Showcased In 2005 the South African Customs Union (SACU) and the European Free Trade Association (EFTA) concluded an agreement to establish a Free Trade Agreement (the Agreement). namely industrial products. It should be noted that while the EFTA countries pursue a policy of concluding free trade agreements. The Agreement entered into force on 1 May 2008 and provides for local businesses to take advantage of trade opportunities offered by the agreement. Politically it also consolidates relations with Western Europe in its wider sense. The informal group. the Member States have created one of the world's largest networks of free trade partners. The Agreement also provides for non-binding future engagements on issues of intellectual property. This oddity arose mainly due to the highly protectionist stance that the EFTA countries maintain on agriculture. trade in services and government procurement. Additionally. are mutually supportive. The two approaches. as a trade grouping. known as the Transparency Group. Iceland. Liechtenstein. this does not deter them from giving priority to a well-functioning multilateral trade system under the auspices of the WTO. bilateral and multilateral. One of the initial aims of the Agreement was to align South Africa’s relationship with the EFTA States with those it had concluded with European Union under the 1999 Trade Development and Cooperation Agreement (TDCA). the EFTA Surveillance Authority and the EFTA Court. The main reason why Iceland. The EFTA free trade agreement (FTA) network secures economic operators free access to markets of around 440 million consumers. Liechtenstein. Norway and Switzerland use EFTA as their common vehicle for free trade negotiations is that. as evidenced by their close alignment with the G-10 configuration in the WTO. The FTA only covers commitments in trade in goods. and processed agricultural products. Norway and Switzerland make up the EFTA configuration. investment. . is composed of the Chairperson of Deputies in Geneva and the Chairperson of Deputies in Brussels. the EFTA countries carry more weight as economic players and are thus more interesting for potential trade partners. Basic agricultural products are dealt with in bilateral agricultural agreements agreed to between SACU and each individual EFTA State. Representatives from the Administration of the three EFTA institutions and the EFTA missions in Geneva and Brussels assist the group. Trade Relations EFTA’s trade strategy has progressively evolved beyond the confines of the European continent. including fish and other marine products.
A seminar to disseminate information about the SACU-EFTA Free Trade Agreement will be presented by the South African Customs Union (SACU) and the European Free Trade Association (EFTA) Secretariats in Cape Town on 17 and 18 July 2009. Readers who are interested in attending can download the programme here. which has particularly affected the local economy. referenda on EU membership have been initiated.The FTA brings about a number of benefits to economic operators. the government formally applied for EU membership. Conclusion The Norwegian electorate has rejected treaties of accession to the EU in two referenda. as they have both been coalition governments consisting of proponents and opponents. on the other hand. These bilateral agreements form part of the instruments establishing the free trade area between EFTA and SACU. Trade Law Chambers is particularly well placed to advise clients on this Agreement due to our presence both in SACU (Cape Town) and in Switzerland (Geneva). . representatives of the Faroe Islands hinted at the possibility of their territory joining EFTA. EFTA and SACU exchanged limited trade concessions that are captured in the separate bilateral agricultural agreements between SACU and Norway. according to Article 56 of the EFTA Convention. Iceland and Switzerland/Liechtenstein respectively. On basic agricultural products. that include duty free and quota free market access for SACU industrial products into EFTA markets on entry into force of the Agreement. The last two governments of Norway have been unable and unwilling to advance the question. Enquiries on EFTA trade matters can be directed to Hilton Zunckel. following the global financial crisis of 2008. The second time (1994) two other Nordic neighbours. At the time of the first referendum (1972) their neighbour the Kingdom of Denmark joined. These were rejected by clear majorities. is very likely to join the EU in the near future. Sweden and Finland. joined the EU. On 16 July 2009. Since Switzerland rejected the EEA in 1992. Iceland. However. the chances of the Faroes' bid for membership are uncertain because.  In mid-2005. only states may become members of the Association. the last time in 2001.
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