European Economic Area

European Economic Area

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The European Economic Area (EEA) was established on 1 January 1994 following an agreement between the member states of the European Free Trade Association
European Free Trade Association
The European Free Trade Association or EFTA is a free trade organisation between four European countries that operates parallel to, and is linked to, the European Union . EFTA was established on 3 May 1960 as a trade bloc-alternative for European states who were either unable to, or chose not to,...

 (EFTA) and the European Community
European Communities
The European Communities were three international organisations that were governed by the same set of institutions...

, later the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 (EU). Specifically, it allows Iceland, Liechtenstein and Norway to participate in the EU's Internal Market
Internal Market (European Union)
The European Union's Internal Market seeks to guarantee the free movement of goods, capital, services, and people – the EU's four freedoms – within the EU's 27 member states.The Internal Market is intended to be conducive to increased competition, increased specialisation, larger...

 without a conventional EU membership
Member State of the European Union
A member state of the European Union is a state that is party to treaties of the European Union and has thereby undertaken the privileges and obligations that EU membership entails. Unlike membership of an international organisation, being an EU member state places a country under binding laws in...

. In exchange, they are obliged to adopt all EU legislation related to the single market, except laws on agriculture and fisheries. One EFTA member, Switzerland, has not joined the EEA.

Origins



In the late 1980s, the EFTA
EFTA
EFTA may refer to:* European Family Therapy Association, an NGO.* European Fair Trade Association, an association of eleven Fair Trade importers in nine European countries....

 member states, led by Sweden, began looking at options to join the then European Communities
European Communities
The European Communities were three international organisations that were governed by the same set of institutions...

. The reasons identified for this are manifold. Many authors cite the economic downturn in the beginning of the 1980s, and the subsequent adoption by the European Union of the Europe 1992 agenda as a primary reason. Arguing from a liberal intergovernmentalist
Liberal intergovernmentalism
Liberal intergovernmentalism is a political theory developed by Andrew Moravcsik in 1993 to explain European integration.-Background:The theory is a reaction against intergovernmentalism theory, which argues that...

 perspective, these authors argue that large multinational corporations in EFTA countries, especially Sweden, pressed for EEC membership under threat of relocating their production abroad. Other authors point to the end of the Cold War
Cold War
The Cold War was the continuing state from roughly 1946 to 1991 of political conflict, military tension, proxy wars, and economic competition between the Communist World—primarily the Soviet Union and its satellite states and allies—and the powers of the Western world, primarily the United States...

, which made joining the EU less politically controversial for neutral countries.

Meanwhile, Jacques Delors
Jacques Delors
Jacques Lucien Jean Delors is a French economist and politician, the eighth President of the European Commission and the first person to serve three terms in that office .-French Politics:...

, who was president of the European Commission
President of the European Commission
The President of the European Commission is the head of the European Commission ― the executive branch of the :European Union ― the most powerful officeholder in the EU. The President is responsible for allocating portfolios to members of the Commission and can reshuffle or dismiss them if needed...

 at the time, did not like the idea of the EEC enlarging with more member states, as he feared that it would impede the ability of the Community to complete the internal market reform and establish the monetary union. Delors proposed a European Economic Space (EES) in January 1989, which was later renamed to European Economic Area, as it is known today.

By the time the EEA was established, however, several developments hampered its credibility. First of all, Switzerland rejected the EEA agreement in a referendum, obstructing full EU-EFTA integration within the EEA. Furthermore, Austria had applied for full EEC membership in 1989, and was followed by Finland, Norway, Sweden, and Switzerland between 1991 and 1992 (Norway's EU accession was rejected in a referendum, Switzerland froze its EU application after the EEA agreement was rejected). The fall of the Iron Curtain made the EU less hesitant to accept these highly developed countries as member states, since that would relieve the pressure on the EU's budget when the former communist countries of Central and Eastern Europe were to join.

Membership



The EEA Agreement was signed in Porto
Porto
Porto , also known as Oporto in English, is the second largest city in Portugal and one of the major urban areas in the Iberian Peninsula. Its administrative limits include a population of 237,559 inhabitants distributed within 15 civil parishes...

 on 2 May 1992 by the then seven states of the European Free Trade Association
European Free Trade Association
The European Free Trade Association or EFTA is a free trade organisation between four European countries that operates parallel to, and is linked to, the European Union . EFTA was established on 3 May 1960 as a trade bloc-alternative for European states who were either unable to, or chose not to,...

 (EFTA), the European Community
European Communities
The European Communities were three international organisations that were governed by the same set of institutions...

 (EC) and its then 12 member states
Member State of the European Union
A member state of the European Union is a state that is party to treaties of the European Union and has thereby undertaken the privileges and obligations that EU membership entails. Unlike membership of an international organisation, being an EU member state places a country under binding laws in...

. On 6 December 1992, Switzerland's voters rejected the ratification of the agreement in a constitutionally-mandated referendum, effectively freezing the application for EC membership submitted earlier in the year. Switzerland is instead linked to the EU by a series of bilateral agreements. On 1 January 1995, three erstwhile members of EFTA—Austria, Finland and Sweden—acceded to the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

, which superseded the European Community upon the entry into force of the Maastricht Treaty
Maastricht Treaty
The Maastricht Treaty was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands. On 9–10 December 1991, the same city hosted the European Council which drafted the treaty...

 on 1 November 1993. Liechtenstein's participation in the EEA was delayed until 1 May 1995.

At present, the contracting parties to the EEA Agreement are the EU and its 27 members plus Iceland, Liechtenstein and Norway. Turkey and Ukraine could join the EEA immediately, due to there being fewer obstacles to membership of the EEA than to full EU membership.

Rights and obligations


The EEA is based on the same "four freedoms"
Four Freedoms (European Union)
The European Union's Internal Market seeks to guarantee the free movement of goods, capital, services, and people – the EU's four freedoms – within the EU's 27 member states.The Internal Market is intended to be conducive to increased competition, increased specialisation, larger...


as the European Community: the free movement of goods, persons, services, and capital among the EEA countries. Thus, the EFTA countries that are part of the EEA enjoy free trade with the European Union.

As a counterpart, these countries have to adopt part of the Law of the European Union.
These states have little influence on decision-making processes in Brussels
Brussels
Brussels , officially the Brussels Region or Brussels-Capital Region , is the capital of Belgium and the de facto capital of the European Union...

.

The EFTA countries that are part of the EEA do not bear the financial burdens associated with EU membership, although they contribute financially to the European single market
Single market
A single market is a type of trade bloc which is composed of a free trade area with common policies on product regulation, and freedom of movement of the factors of production and of enterprise and services. The goal is that the movement of capital, labour, goods, and services between the members...

. After the EU/EEA enlargement of 2004, there was a tenfold increase in the financial contribution of the EEA States, in particular Norway, to social and economic cohesion in the Internal Market (€1167 million over five years).

EFTA countries do not receive any funding from EU policies and development funds

Legislation



The non EU members of the EEA (Iceland, Liechtenstein and Norway) have agreed to enact legislation similar to that passed in the EU in the areas of social policy
Social policy
Social policy primarily refers to guidelines, principles, legislation and activities that affect the living conditions conducive to human welfare. Thus, social policy is that part of public policy that has to do with social issues...

, consumer protection
Consumer protection
Consumer protection laws designed to ensure fair trade competition and the free flow of truthful information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors and may provide additional...

, environment
Natural environment
The natural environment encompasses all living and non-living things occurring naturally on Earth or some region thereof. It is an environment that encompasses the interaction of all living species....

, company law and statistics. These are some of the areas covered by the European Community (the "first pillar" of the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

).

The non-EU members of the EEA have no representation in Institutions of the European Union
Institutions of the European Union
The European Union is governed by seven institutions. Article 13 of Treaty on European Union lists them in the following order: the European Parliament, the European Council, the Council of the European Union, the European Commission, the Court of Justice of the European Union, the European...

 such as the European Parliament
European Parliament
The European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...

 or European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....

. This situation has been described as a “fax democracy”, with Norway waiting for their latest legislation to be fax
Fax
Fax , sometimes called telecopying, is the telephonic transmission of scanned printed material , normally to a telephone number connected to a printer or other output device...

ed from the Commission.

Institutions


A Joint Committee consisting of the EEA-EFTA States plus the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....

 (representing the EU) has the function of extending relevant EU law to the non EU members. An EEA Council meets twice yearly to govern the overall relationship between the EEA members.

Rather than setting up pan-EEA institutions, the activities of the EEA are regulated by the EFTA Surveillance Authority
EFTA Surveillance Authority
The European Free Trade Association Surveillance Authority performs the executive role of the European Commission in the countries of the European Free Trade Association which are part of the European Economic Area ....

 and the EFTA Court
EFTA Court
The Court of Justice of the European Free Trade Association States is a supranational judicial body responsible for the three EFTA members who are also members of the European Economic Area : Iceland, Liechtenstein and Norway.As members of the EEA, the three countries have access to the internal...

, which parallel the work of the EU's European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....

 and European Court of Justice
European Court of Justice
The Court can sit in plenary session, as a Grand Chamber of 13 judges, or in chambers of three or five judges. Plenary sitting are now very rare, and the court mostly sits in chambers of three or five judges...

. See EEA institutions for further information.

EEA and Norway Grants


The EEA and Norway Grants
EEA and Norway Grants
The EEA Grants and Norway Grants are the financial contributions of Norway, Iceland and Liechtenstein towards the reduction of economic and social disparities in the European Economic Area and to strengthen bilateral relations with 15 EU and EEA Member States in Central and Southern Europe.-...

 are the financial contributions of Iceland, Liechtenstein and Norway to reduce social and economic disparities in Europe. In the period 2004– 2009, €1.3 billion of project funding is made available for project funding in the 15 beneficiary states in Central and Southern Europe.

The EEA and Norway Grants were established in conjunction with the 2004 enlargement of the European Economic Area (EEA), which brings together the EU, Iceland, Liechtenstein and Norway in the Internal Market.

See also

  • EudraVigilance
    EudraVigilance
    EudraVigilance is the European data processing network and management system for reporting and evaluation of suspected adverse reactions during the development of new drugs and for following the marketing authorisation of medicinal products in the European Economic Area .The European...

  • Free trade areas in Europe
    • Central European Free Trade Agreement
      Central European Free Trade Agreement
      The Central European Free Trade Agreement is a trade agreement between non-EU countries in Southeast Europe.-Members:As of 1 May 2007, the parties of the CEFTA agreement are: Albania, Bosnia and Herzegovina, Croatia, Macedonia, Moldova, Montenegro, Serbia and UNMIK on behalf of Kosovo.Former...

  • EU enlargement to EFTA states
    • Accession of Iceland to the European Union
    • Liechtenstein and the European Union
    • Norway - European Union relations
    • Switzerland – European Union relations
  • Parallel importation
  • Schengen Agreement
    Schengen Agreement
    The Schengen Agreement is a treaty signed on 14 June 1985 near the town of Schengen in Luxembourg, between five of the ten member states of the European Economic Community. It was supplemented by the Convention implementing the Schengen Agreement 5 years later...

  • Trade bloc
    Trade bloc
    A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, are reduced or eliminated among the participating states.-Description:...


External links