On November 20, 1959, Ministers from seven West European countries that were not members of the European Economic Community (Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and the United Kingdom) approved in Stockholm the text of a Convention establishing the European Free Trade Association (EFTA), which entered into force on May 3, 1960. The Association's goal was: (a) to remove import duties, quotas and other obstacles to trade in Western Europe and (b) to uphold liberal, non-discriminatory practices in world trade. Iceland joined EFTA in 1970 while Finland became an associate member in 1961 and a full member in 1986. Liechtenstein became a member in 1991.

The membership of the EFTA has undergone significant changes since the inception of the organization. Of the original members, six have left to join the European Union (EU): the United Kingdom and Denmark in 1973; Portugal in 1986; and Austria, Finland, and Sweden in 1995. Norway, however, decided against membership of the EU in a referendum in November 1994, after completing negotiations for accession to the EU along with the other three EFTA countries. The present members of EFTA are: Iceland, Liechtenstein, Norway, and Switzerland.

The activities of EFTA can be divided into three broad areas: (a) monitoring and management of relationships between the EFTA States on the basis of the Stockholm Convention; (b) management of the EEA Agreement on behalf of the EFTA side of the Agreement; and (c) coordination of third country relations.

EFTA unites in one free trade area the markets of these countries and also constitutes a platform for three of its members, namely, Iceland, Norway, and Liechtenstein, to participate in the European Economic Area (EEA) with the 15 Member States of the European Union. Switzerland decided against EEA membership in a referendum in December 1992. Together, these 18 countries represent a single market in services, capital, and manufactured goods for over 380 million people. The EEA also resulted in the creation of a single labor market and provides for participation by the EFTA countries in various European Community (EC) programs, funds, and projects in fields not directly related to trade such as research and development, the environment, education, and training, to name a few. From May 1, 2004 the EEA will count 28 Member States, namely the EU25 and the three EEA EFTA States. The EEA Enlargement Agreement was signed on November 11, 2003 and will need to be ratified by all contracting parties before entering into force.

EFTA has formal relations with a number of states outside the European Union. Free trade agreements have been signed with 20 partners: Turkey (December 1991), the CSFR (March 1992 - with protocols on succession with the Czech Republic and Slovakia in April 1993), Israel (September 1992), Poland and Romania (December 1992), Bulgaria and Hungary (March 1993), Slovenia (July 1995), Estonia, Latvia and Lithuania (December 1995), Morocco (June 1997), the Palestine Liberation Organization (November 1998), Macedonia (June 2000), Mexico (November 2000), Jordan and Croatia (June 2001), Singapore (June 2002), and Chile (June 2003). Moreover, declarations on cooperation, often the first step towards a free trade agreement, have been established between EFTA and the following partners: Albania (December 1992), Egypt and Tunisia (December 1995), Lebanon (June 1997), Ukraine and the GCC (June 2000), Mercosur and Serbia and Montenegro (December 2000), and Algeria (December 2001). Negotiations on a free trade agreement is ongoing between EFTA and the following partners: Egypt, Tunisia, Lebanon, Canada, and South Africa.

COMPOSITION

4 member countries: Iceland, Liechtenstein, Norway, Switzerland

STRUCTURE

The governing body of the EFTA is the EFTA Council, which meets twice a month at the level of officials (Heads of Permanent Delegations to EFTA) and twice a year at ministerial level. Each member country is represented and has one vote, though decisions tend to be by consensus. The Council is assisted by a number of committees, including the Committee of Origin and Custom Experts, Committee of Trade Experts, Economic Committee, Committee on Technical Barriers to Trade, and Committee on Third Country Relations.