European Economic Area The European Economic Area comprises three
member states of the European Free Trade Association , and 27 member states of the European Union
, with Croatia provisionally applying the agreement pending its ratification by all
EEA countries. It was established on 1 January 1994 following an agreement with the European
Community . It allows the EFTA-EEA states to participate in the EU's Internal Market
without being members of the EU. They adopt almost all EU legislation related to the single
market, except laws on agriculture and fisheries. However they also contribute to and influence
the formation of new EEA relevant policies and legislation at an early stage as part
of a formal decision-shaping process. In addition, independence and direct membership of international
bodies in their own right means the countries are able to participate in and become signatories
to various conventions, such as the Basel Convention of 1992, that are only adopted
by the EU many years later . One EFTA member, Switzerland, has not joined the EEA but has
a series of bilateral agreements, including a free trade agreement, with the EU.
Origins In the late 1980s, the EFTA member states,
led by Sweden, began looking at options to join the then European Communities. 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 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, which made joining the EU less politically controversial for
neutral countries. Meanwhile, Jacques Delors, who was president
of the European Commission 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 national referendum on December 6, 1992 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 Europe were to join.
Membership The EEA Agreement was signed in Porto on 2
May 1992 by the then seven states of the European Free Trade Association (EFTA), the European
Community (EC) and its then 12 member states. 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, which superseded the
European Community upon the entry into force of the Maastricht Treaty on 1 November 1993.
Liechtenstein's participation in the EEA was delayed until 1 May 1995.
As of 2014 the contracting parties to the EEA are 3 of the 4 EFTA member states and
27 of the 28 EU member states. The 28th and newest EU member, Croatia, finished negotiating
their accession to the EEA in November 2013, and since 12 April 2014 is provisionally applying
the agreement pending its ratification by all EEA member states.
The following EFTA countries are included: Iceland
Liechtenstein Norway
The following EU countries are included: Austria
Belgium Bulgaria
Cyprus Czech Republic
Denmark Estonia
Finland France
Germany Greece
Hungary Ireland
Italy Latvia
Lithuania Luxembourg
Malta Netherlands
Poland Portugal
Romania Slovakia
Slovenia Spain
Sweden United Kingdom
The following EU country is provisionally applying the EEA Agreement:
Croatia Future enlargement
Croatia acceded to the EU in July 2013, which obliged them to apply for EEA membership.
After Slovenia, Croatia has recovered best from the break-up of the former Yugoslavia
and is the second former Yugoslav state to join the EU. According to Eurostat, Croatia
has a stable market economy and its GDP per capita in 2010 was 61 per cent of the EU average,
exceeding that of four other EU member states. EU accession negotiations were concluded on
30 June 2011, and the Treaty of Accession was signed on 9 December 2011 in Brussels.
The Croatian government decided to submit their EEA membership application on 13 September
2012, and negotiations started 15 March 2013 in Brussels, with the aim of achieving simultaneous
accession to both the EU and the EEA on 1 July 2013. However, this was not achieved.
Accession negotiations were expected to be completed by the autumn of 2013, and on 20
November 2013 it was announced that an enlargement agreement was reached. The text was initialled
on 20 December 2013, and following its signature in April 2014 the agreement is being provisionally
applied pending ratification by all EEA countries. By comparison, following the 2007 enlargement
of the EU which saw Bulgaria and Romania acceding to the EU on 1 January 2007, an EEA Enlargement
Agreement was not signed until 25 July 2007 and only provisionally entered into force
on 1 August 2007. The agreement did not fully enter into force until 9 November 2011. On
the other hand, the EEA Agreement was applied on a provisional basis to the 10 acceding
countries in May 2004 as from the date of their accession to the EU.
There are four recognised candidates for EU membership that are not already EEA members:
Macedonia (applied 2004), Montenegro (applied 2008, negotiating since June 2012), Serbia
(applied 2009, negotiating since January 2014) and Turkey (applied 1987, negotiating since
Oct. 2005). Serbia started accession negotiations in January 2014. Macedonia has not yet started
negotiations to join, nor has the European union set any negotiations start date for
Macedonia. The other states in the Western Balkans — Albania and Bosnia and Herzegovina—have
signed Stabilisation and Association Agreements (SAA) with the EU, which generally precede
the lodging of membership applications. Albania applied for membership in April 2009, but
the European Commission has delayed its decision until June 2014 due to ongoing opposition
of some members. Kosovo, whose independence is unrecognised by 5 EU member states, is
considered a potential candidate for membership. EEA integration, either through EFTA membership
or an association agreement directly with the EEA, has been discussed with regard to
the states of Andorra, San Marino, Monaco, Morocco, Turkey, Israel, the territories of
Faroe Islands and Isle of Man, and other ENP partners.
In mid-2005, representatives of the Faroe Islands hinted at the possibility of their
territory joining the EFTA. However, the ability of the Faroes' to join is uncertain because,
according to Article 56 of the EFTA Convention, only states may become members of the Association.
Though the Faroes' are not a state (it is a constituent country of the Danish Realm),
it is possible that the "Kingdom of Denmark in respect of the Faroes" could join the EFTA.
The Danish Government has stated that the Faroes' cannot become an independent members
of the EEA as Denmark is already a party to the EEA Agreement. The Faroes already have
an extensive bilateral free trade agreement with Iceland, known as the Hoyvík Agreement.
European microstates In November 2012, after the Council of the
European Union had called for an evaluation of the EU's relations with the sovereign European
microstates of Andorra, Monaco and San Marino, which they described as "fragmented", the
European Commission published a report outlining options for their further integration into
the EU. Unlike Liechtenstein, which is a member of the EEA via the EFTA and the Schengen Agreement,
relations with these three states are based on a collection of agreements covering specific
issues. The report examined four alternatives to the current situation: 1) a Sectoral Approach
with separate agreements with each state covering an entire policy area, 2) a comprehensive,
multilateral Framework Association Agreement (FAA) with the three states, 3) EEA membership,
and 4) EU membership. The Commission argued that the sectoral approach did not address
the major issues and was still needlessly complicated, while EU membership was dismissed
in the near future because "the EU institutions are currently not adapted to the accession
of such small-sized countries." The remaining options, EEA membership and a FAA with the
states, were found to be viable and were recommended by the Commission. In response, the Council
requested that negotiations with the three microstates on further integration continue,
and that a report be prepared by the end of 2013 detailing the implications of the two
viable alternatives and recommendations on how to proceed.
As EEA membership is currently only open to EFTA or EU members, the consent of existing
EFTA member states is required for the microstates to join the EEA without becoming members of
the EU. In 2011, Jonas Gahr Støre, the then Foreign Minister of Norway which is an EFTA
member state, said that EFTA/EEA membership for the microstates was not the appropriate
mechanism for their integration into the internal market due to their different requirements
than large countries such as Norway, and suggested that a simplified association would be better
suited for them. Espen Barth Eide, Støre's successor, responded to the Commission's report
in late 2012 by questioning whether the microstates have sufficient administrative capabilities
to meet the obligations of EEA membership. However, he stated that Norway was open to
the possibility of EFTA membership for the microstates if they decide to submit an application,
and that the country had not made a final decision on the matter. Pascal Schafhauser,
the Counsellor of the Liechtenstein Mission to the EU, said that Liechtenstein, another
EFTA member state, was willing to discuss EEA membership for the microstates provided
their joining did not impede the functioning of the organization. However, he suggested
that the option direct membership in the EEA for the microstates, outside both the EFTA
and the EU, should be given consideration. On 18 November 2013 the EU Commission concluded
that "the participation of the small-sized countries in the EEA is not judged to be a
viable option at present due to the political and institutional reasons", and that Association
Agreements were a more feasible mechanism to integrate the microstates into the internal
market. Rights and obligations
The EEA is based on the same "four freedoms" 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.
However they also contribute to and influence the formation of new EEA relevant policies
and legislation at an early stage as part of a formal decision-shaping process.
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.
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, consumer protection, environment,
company law and statistics. These are some of the areas covered by the European Community
(the "first pillar" of the European Union). The non-EU members of the EEA have no representation
in Institutions of the European Union such as the European Parliament or European Commission.
This situation has been described as a “fax democracy”, with Norway waiting for their
latest legislation to be faxed from the Commission. Institutions
A Joint Committee consisting of the EEA-EFTA States plus the European Commission (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 and the EFTA Court. 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). 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,
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).
EEA and Norway Grants The EEA and Norway Grants are the financial
contributions of Iceland, Liechtenstein and Norway to reduce social and economic disparities
in Europe. In the period from 2004 to 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. The EEA and Norway Grants are administered by the Financial
Mechanism Office, which is affiliated to the EFTA Secretariat in Brussels.