The purpose of the European Economic Area (EEA) is to extend the internal market of the European Community to the countries of the European Free-Trade Association (EFTA) which do not wish or are not ready to enter the European Union (EU). The EEA therefore aims to remove barriers and create an area offering freedom of movement comparable to a national market.
As such, it includes :
- the four key freedoms of movement of the internal market: movement of persons, goods, services and capital ;
- the so-called "horizontal" EU policies, and mainly competition policy.
This agreement does have certain limits, however :
- Free trade is restricted: it does not cover certain sectors, such as agriculture and fisheries ;
- The extension of the internal market is not complete: the free movement of persons applies only to salaried workers (whereas it is total for everyone in the European Union), there are still border controls between the EU and the three EFTA countries, and there is no harmonization of taxation ;
- The EEA is not a Customs union (no common external tariffs) and does not have a common trade policy towards the rest of the world.
The EEA excludes the other aspects of European integration : economic and monetary union, common foreign and security policy, cooperation in justice and home affairs matters.
The agreement that created the European Economic Area was signed on 2 May 1992 and came into force on 1st January 1994. It bound the European Community (at the time made up of 12 members) and 6 of the 7 EFTA member states; Switzerland did not ratify the agreement.
Since early 1995 when three EFTA members (Austria, Finland and Sweden) joined the European Union (EU), the EEA has only concerned Iceland, Liechtenstein and Norway. The new states that have joined the European Union since the EEA was created have thereby joined the EAA. It therefore currently counts the 27 EU Member States and 3 EFTA members.