PETRE IONUT

ALEXANUDRU
Marketing,3rd year,
group 1751
petreionut95@gmail
.com

[ The European Free Trade Association (EFTA) ]

The European Free Trade Association (EFTA)

1. Year of establishment

The EFTA was established on 3 May 1960 as an alternative trade bloc for European states who
were unable or unwilling to join the then European Economic Community (EEC) (which
subsequently became the EU). The Stockholm Convention, establishing EFTA, was signed on 4
January 1960 in the Swedish capital by seven countries (known as the "outer seven"). Today only
two founding members remain: Norway and Switzerland. The other five were Austria, Denmark,
Portugal, Sweden and the United Kingdom. The initial Stockholm Convention was superseded
by the Vaduz Convention, with the aim of providing a successful framework for continued
expansion and liberalization of trade among the organizations member states and with the rest of
the world.

EFTA was founded by the following seven countries: Austria, Denmark, Norway, Portugal,
Sweden, Switzerland and the United Kingdom. Finland joined in 1961, Iceland in 1970 and
Liechtenstein in 1991. In 1973, the United Kingdom and Denmark left EFTA to join the EC.
They were followed by Portugal in 1986 and by Austria, Finland and Sweden in 1995. Today the
EFTA Member States are Iceland, Liechtenstein, Norway and Switzerland.

2. Background

The European Free Trade Association (EFTA) is a regional trade organization and free trade
area consisting of four European states: Iceland, Liechtenstein, Norway, and Switzerland. The
organization operates in parallel with the European Union (EU), and all four member states
participate in the EU's single market.

British reaction to the creation of the European Economic Community was mixed and complex.
Britain was also preoccupied with the Commonwealth, which, at the time of EFTA's formation,
was in transition. Britain therefore brought together several countries, including some bordering
the EEC, to form the European Free Trade Association soon after the establishment of the six-
nation EEC (France, West Germany, Italy, Belgium, Luxembourg, and the Netherlands).
 On 12 January 1960, the Treaty on European Free Trade Association was initialed in the Golden
Hall of the Prince's Palace of Stockholm. This established the progressive elimination of customs
duties on industrial products, but did not affect agricultural products or maritime trade.

The main difference between the early EEC and the EFTA was the absence of a common external
customs tariff, and therefore each EFTA member was free to establish individual customs duties
against, or individual free trade agreements with, non-EFTA countries. Despite this modest
initiative, the financial results were excellent, as it stimulated an increase of foreign trade volume
among its members from 3.5 to 8.2 billion US dollars between 1959 and 1967. This was rather
less than the increase enjoyed by countries inside the EEC.

After the accession of Denmark, Ireland and the UK to the EEC in January 1973, EFTA began to
falter. For this reason most countries eased or eliminated their trade tariffs in preparation to join
the EEC, but experienced declining revenue which reduced the importance of EFTA. Four
members remain: Switzerland, Norway, Liechtenstein and Iceland.

3. Main objective of activity

The Association is responsible for the management of:

The EFTA Convention, which forms the legal basis of the organisation and governs free
trade relations between the EFTA States;
EFTAs worldwide network of free trade and partnership agreements; and
The European Economic Area (EEA) Agreement, which enables three of the four EFTA
Member States (Iceland, Liechtenstein and Norway) to participate in the EUs Internal Market.
EFTA was founded in 1960 on the premise of free trade as a means of achieving growth and
prosperity amongst its Member States as well as promoting closer economic cooperation
between the Western European countries. Furthermore, the EFTA countries wished to contribute
to the expansion of trade
4. Members

Norway and Switzerland were among the founding Member States of EFTA in 1960. Iceland
joined EFTA in 1970, followed by Liechtenstein in 1991. Norway, Iceland (from 1994) and
Liechtenstein (from 1995) are also parties to the European Economic Area (EEA) Agreement
with the European Union, while Switzerland has signed a set of bilateral agreements with the
EU.

The EFTA countries are highly competitive, open economies representing a sizeable market with
strong per capita purchasing power. The two Alpine members Liechtenstein and Switzerland
are established international financial centers and leaders in several industrial sectors including
machinery, pharmaceuticals and chemicals. The two Nordic countries Iceland and Norway
excel in industries related to their abundant natural resources, including oil, gas, electricity and
fish, and are active in various service sectors.
Republic of Iceland

Government: Parliamentary Government

Capital: Reykjavik
Area: 103 000 km2
Population: 321 857 (1 January 2013)
Currency: Icelandic krna (ISK)
GDP: 10 628 (2012, in million EUR)

Principality of Liechtenstein

Government: Constitutional Monarchy

Capital: Vaduz
Area: 160 km2
Population: 36 842 (1 January 2013)
Currency: Swiss franc (CHF)
GDP: 4 383 (2011, in million EUR)

Kingdom of Norway

Government: Constitutional Monarchy

Capital: Oslo
Area: 384 802 km2
Population: 5 051 275 (1 January 2013)
Currency: Norwegian krone (NOK)
GDP: 388 866 (2012, in million EUR)

Swiss Confederation
 Government: Federal Republic
Capital: Bern
Area: 41 285 km2
Population: 8 036 917 (1 January 2013)
Currency: Swiss franc (CHF)
GDP: 490 424 (2012, in million EUR)
5. Positive and negative aspects of the activity

A positive part may be that a citizen of an EFTA country can live and work in all other EFTA
countries and in all EU countries and a citizen of an EU country can live and work in all EFTA
countries.

Providing for free trade in industrial goods, including fish and other marine products;
- Improved market access for agricultural products;
- Including trade disciplines;

EFTAs trade strategy has evolved progressively to reach beyond the confines of Europe. Since
the late 1990s, the EFTA States have gone global with the objective of maintaining and
strengthening their competitive position worldwide.

A negative one since each EFTA and EU country can make its own citizenship laws, dual
citizenship is not always possible. Of the EFTA countries, Iceland and Switzerland allow it.