European Economic Area

European Economic Area Европейска икономическа зона (Bulgarian) Evropský hospodářský prostor  (Czech) Europæisk Økonomisk Samarbejdsområde  (Danish) Europese Economische Ruimte  (Dutch) Euroopa Majanduspiirkond  (Estonian) Euroopan talousalue  (Finnish) Espace économique européen  (French) Europäischer Wirtschaftsraum  (German) Ευρωπαϊκός Οικονομικός Χώρος  (Greek) Európai Gazdasági Térség  (Hungarian) Evrópska efnahagssvæðið  (Icelandic) Limistéar Eorpach Eacnamaíoch  (Irish) Spazio economico europeo  (Italian) Eiropas Ekonomikas zonas  (Latvian) Europos ekonominės erdvės  (Lithuanian) Żona Ekonomika Ewropea  (Maltese) Europeiske økonomiske samarbeidsområde  (Norwegian) Europejski Obszar Gospodarczy  (Polish) Espaço Económico Europeu  (Portuguese) Spaţiul Economic European  (Romanian) Európsky hospodársky priestor  (Slovak) Evropski gospodarski prostor  (Slovene) Espacio Económico Europeo  (Spanish) Europeiska ekonomiska samarbetsområdet  (Swedish)
EFTA member countries excluding Switzerland   European Union member-states
Union type	Economic market
Established	1994
Members	30 full members Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Iceland Ireland Italy Liechtenstein Latvia Lithuania Luxembourg Malta Norway Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom
Currency	Euro and others  Eurozone  (17 countries) Euro € EUR Other currencies Lev лв BGN Koruna Kč CZK Krone kr DKK Forint Ft HUF Króna kr ISK Lats Ls LVL Franc Fr. CHF Litas Lt LTL Krone kr NOK Złoty zł PLN Leu RON Krona kr SEK Franc Fr. CHF Pound £ GBP Pound £ GIP
Governance
Basis	EEA Agreement
Institutions	EEA Council EU Commission EFTA SA ECJ EFTA Court
Affiliated with	European Union European Free Trade Association
Statistics
Population(2012)	508,833,961
Area	4,944,753 km2
GDP (2011)	€13 trillion $18 trillion

The European Economic Area (EEA) comprises the countries of the European Union (EU), plus Iceland, Liechtenstein and Norway. It was established on 1 January 1994 following an agreement between the member states of the European Free Trade Association (EFTA) and the European Community (which became the EU). 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 (2007). One EFTA member, Switzerland, has not joined the EEA, but has a similar agreement with the EU.

Origins

See also: 1995 enlargement of the European Union, 2004 enlargement of the European Union, and 2007 enlargement of the European Union

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 2012 the contracting parties to the EEA are the EU and its 27 member States (Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom), and three EFTA states, Iceland, Liechtenstein and Norway.

Future enlargment

See also: Future enlargement of the European Union

Croatia is set to accede to the EU in 2013, after which they are obliged to apply for EEA membership. After Slovenia, Croatia has recovered best from the break-up of the former Yugoslavia and will be the second former Yugoslav state to join EU. According to the 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 current 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. As of 20 February 2013, the treaty has been ratified by 20 out of 27 EU member states and Croatia. Negotiations on Croatia's membership of the EEA started March 15, 2013 in Brussels, with the aim to enlarge both the EU and the EEA on the same date, July 1, 2013.

There are five other recognized EU candidates for membership: EFTA state Iceland (applied 2009), Macedonia (applied 2004), Montenegro (applied 2008), Serbia (applied 2009) and Turkey (applied 1987). Serbia and Macedonia have not yet started negotiations to join. 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 yet to respond. Kosovo, whose independence is unrecognized 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 regarding Andorra, San Marino, Monaco, Faroe Islands, Isle of Man, Morocco, Turkey, Israel and other ENP partners.

In mid-2005, representatives of the Faroe Islands hinted at the possibility of their territory joining EFTA. However, the chances of the Faroes' bid for membership are uncertain because, according to Article 56 of the EFTA Convention, only states may become members of the Association. 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 of both the EFTA and the EU, should be given consideration.

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. These states have little influence on decision-making processes in Brussels.

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

A clickable Euler diagram showing the relationships between various multinational European organisations.v • d • e

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

See also: European Free Trade Association

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.

See also

• EudraVigilance
• Free trade areas in Europe
  • EFTA
  • Central European Free Trade Agreement
• EU enlargement to EFTA states
  • Accession of Iceland to the European Union
  • Liechtenstein–European Union relations
  • Norway–European Union relations
  • Switzerland–European Union relations
• Parallel importation
• Schengen Agreement
• Trade bloc
• European integration
• Passports of the European Economic Area
• National identity cards in the European Economic Area

External links

• More about the EEA on the website of the Mission of Norway to the EU
• EFTA Secretariat
• EEA Grants and Norway Grants
• EFTA Surveillance Authority
• The EU and the European Economic Area Europa (web portal): External Relations
• The Austerity Zone: Life in the New Europe – videos by The New York Times