European Economic Area

European Economic Area (EEA), association formed to establish a single market and free-trade area among countries of the European Union (EU) and the European Free Trade Association (EFTA). The EEA is the largest free-trade zone in the world. It has 30 members, comprising the 27 EU countries plus Iceland, Liechtenstein, and Norway. Switzerland, the only member of EFTA that did not join the EEA, maintains observer status.

After the creation of the European Economic Community (EEC, now the EU) in 1957, several Western European countries became concerned about the EEC’s requirement that they relinquish some control over their economic policies. As an alternative, these countries created EFTA, which was based purely on cooperation among governments. With the growing success of the EEC (which by that time was called the European Community, or EC) in the 1970s and 1980s, the EFTA nations began to worry that their economies would be negatively affected by not having access to the internal market of the EC. Negotiations began in 1990 to establish a common market for the EC members and EFTA. The result was the treaty that created the European Economic Area.

The treaty forming the EEA was signed in Porto (Oporto), Portugal, in 1992 and went into effect in 1994. The main provisions of the treaty are (1) the free movement of people, services, capital, and goods within the EEA; (2) the adoption by the EFTA of EU rulings relating to consumer protection, the environment, business law, education, research, and social policy; (3) the gradual liberalization of the EFTA’s agricultural policy; and (4) the establishment of an EFTA surveillance authority, a body that oversees the implementation of EEA policies in the EFTA states that joined the EEA.

The two major bodies in the EEA administrative structure are the EEA Council and the EEA Joint Committee. The EEA Council sets general policy goals for the EEA. It is made up of the Council of the European Union and representatives of the governments of the EFTA states that joined the EEA. The Joint Committee is primarily responsible for extending the scope of relevant EU legislation to include the EFTA members. The committee is composed of representatives from the EFTA states, the EU member states, and the European Commission (the EU’s primary administrative body).