European Free Trade Association (EFTA)

European Free Trade Association Latest News

The Union Minister of Commerce and Industry recently said the Free Trade Agreement (FTA) between India and the four-nation European bloc ‘European Free Trade Association’ (EFTA), will be implemented from 1st October.

About European Free Trade Association

• It is an intergovernmental organisation established in 1960 by the Stockholm Convention.
• Objective: Promotes free trade and economic integration between its members within Europe and globally.
• Member Countries: 
  • There were 7 founding countries: Austria, Denmark, Norway, Portugal, Sweden, Switzerland,  and the United Kingdom (UK). 
  • They were joined in 1970 by Iceland, in 1986 by Finland, and in 1991 by Liechtenstein. 
  • Meanwhile, in 1973, Denmark and the UK joined the European Union (EU); in 1986, Portugal joined the EU, and, in 1995, Austria, Finland, and Sweden joined the EU, consequently leaving EFTA.
  • EFTA currently has 4 member countries: Iceland, Liechtenstein, Norway, and Switzerland.
  • The four EFTA States are all open, competitive economies committed to the progressive liberalisation of trade in the multinational arena and in free trade agreements (FTAs). 
• The association is responsible for the management of:
  • the free trade between the EFTA countries;
  • EFTA’s participation in the European Economic Area (EEA), which includes the European Union and three EFTA countries (Iceland, Liechtenstein, and Norway, but not Switzerland);
  • EFTA’s worldwide network of FTAs.
• In contrast to the European Union (EU), EFTA is not a customs union. This means that the individual EFTA States are free to set their own customs tariffs and arrange other foreign trade measures vis-à-vis the non-EFTA States.
• The EFTA countries have developed one of the largest networks of FTAs. These FTAs span over 60 countries and territories, including the EU.

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European Free Trade Association Governance Structure

• Its highest governing body is the EFTA Council. It generally meets 8 times a year at the ambassadorial level and twice a year at the ministerial level.
• The headquarters of the EFTA Secretariat is located in Geneva. It assists the EFTA Council in the management of relations between the 4 EFTA States and deals with the negotiation and operation of EFTA’s FTAs.
• EFTA Surveillance Authority (ESA): It monitors compliance with EEA rules in Iceland, Liechtenstein, and Norway. 
• EFTA Court: It is based in Luxembourg and has the competence and authority to settle internal and external disputes regarding the implementation, application or interpretation of the EEA agreement.
  • Its jurisdiction corresponds to that of the Court of Justice of the European Union in matters relating to the EEA EFTA countries.

Source: NOA