European Free Trade Association facts for kids

"EFTA" redirects here. For other uses, see EFTA (disambiguation).

Quick facts for kids European Free Trade Association Native names: Europäische Freihandelsassoziation (German) Fríverslunarsamtök Evrópu (Icelandic) Association européenne de libre-échange (French) Associazione europea di libero scambio (Italian) Det europeiske frihandelsforbund (Bokmål) Det europeiske frihandelsforbundet (Nynorsk) Associaziun europeica da commerzi liber (Romansh) Eurohppá friddjagávpelihttu (Northern Sami)
Logo
Location of the EFTA None at this time (green) on the European continent (green & dark grey)
Secretariat	Geneva 46°57′N 7°27′E / 46.950°N 7.450°E / 46.950; 7.450
Largest city	Oslo 59°56′N 10°41′E / 59.933°N 10.683°E / 59.933; 10.683
Official working language	English
Official languages of member states	7 languages French German Icelandic Italian Norwegian Romansh Sámi
Type	Regional organization, Free-trade area
Member states	Iceland Liechtenstein Norway Switzerland
Leaders

• Secretary General	Henri Gétaz
• Council Chair	Iceland

Establishment

• Convention signed	4 January 1960
• Established	3 May 1960

Area
• Total	529,600 km² (204,500 sq mi)
Population
• 2020 estimate	14,400,000
• Density	26.5/km² (68.6/sq mi)
GDP (PPP)	2020 estimate
• Total	$1.0 trillion
• Per capita	$70,000
GDP (nominal)	2020 estimate
• Total	$1.1 trillion
• Per capita	$79,000
Currency	Króna (ISK) Krone (NOK) Franc (CHF)
Time zone	WET (UTC) CET (UTC+1)
• Summer (DST)	UTC+2 (CEST)
	Note: Iceland observes WET all year, while Liechtenstein, Norway and Switzerland observe CET and CEST.

The European Free Trade Association (EFTA) is a group of four European countries that work together on trade. These countries are Iceland, Liechtenstein, Norway, and Switzerland. EFTA helps them trade freely with each other and with other countries around the world.

EFTA works alongside the European Union (EU). All four EFTA countries are part of the European Single Market, which means they can trade goods and services freely with EU countries. They are also part of the Schengen Area, allowing people to travel between these countries without passport checks. However, EFTA countries are not part of the European Union Customs Union. This means they can make their own trade deals with countries outside the EU.

EFTA was started on May 3, 1960. It was created for European countries that didn't want to join the European Economic Community (EEC), which later became the EU. Seven countries first signed the agreement in Stockholm, Sweden, in 1960. These were Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and the United Kingdom.

Who are the Members of EFTA?

How EFTA Started and Changed

EFTA member states Former members, which left to join the EU Rest of EU member states

The EFTA agreement was signed in Stockholm, Sweden, on January 12, 1960. This agreement aimed to remove taxes on industrial goods traded between member countries. However, it did not apply to farm products or fish.

A big difference between the early EEC and EFTA was about customs. The EEC had common customs taxes for all goods coming from outside its group. But each EFTA country could set its own customs taxes and make its own trade deals with countries outside EFTA.

The first countries to join EFTA were Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and the United Kingdom. People often called them the "Outer Seven". This was to show they were different from the "Inner Six" countries of the EEC.

Over time, some countries joined EFTA, and others left to join the EU.

Finland became a full member in 1986.
Iceland joined in 1970.
The United Kingdom and Denmark left EFTA in 1973 to join the EEC.
Portugal also left EFTA in 1986 to join the European Community.
Liechtenstein joined EFTA in 1991.
Austria, Sweden, and Finland joined the EU in 1995.

After 1995, only Norway and Switzerland remained from the original founding members.

Current Members of EFTA

EFTA House in Brussels, 2022

Today, EFTA has four member countries:

Country	Joined	Population (2020)	Area (km²)	Capital City	GDP per Person (PPP)
Iceland	January 1, 1970	336,713	103,000	Reykjavík	$39,223
Liechtenstein	September 1, 1991	37,910	160.4	Vaduz	$98,432
Norway	May 3, 1960	5,337,962	385,155	Oslo	$53,470
Switzerland	May 3, 1960	8,525,611	41,285	Bern	$45,417

Former Members of EFTA

Stamp 1967 - FINEFTA - Finland as an external member of EFTA

Finnish post stamp about the trade union concluded between Finland and EFTA, or the so-called FINEFTA agreement

Many countries have been part of EFTA in the past but later left to join the European Union.

Country	Joined EFTA	Left EFTA	Joined EU
Austria	May 3, 1960	December 31, 1994	January 1, 1995
Denmark	May 3, 1960	December 31, 1972	January 1, 1973
Finland	January 1, 1986	December 31, 1994	January 1, 1995
Portugal	May 3, 1960	December 31, 1985	January 1, 1986
Sweden	May 3, 1960	December 31, 1994	January 1, 1995
United Kingdom	May 3, 1960	December 31, 1972	January 1, 1973

Countries That Considered Joining EFTA

Members of the European Union (blue) and
EFTA (green)

Over the years, several other countries have thought about joining EFTA or getting closer trade ties with it.

Small European Countries

Countries like Andorra, San Marino, and Monaco have discussed closer ties with the EU. Since joining the EU is hard for very small countries, joining the European Economic Area (EEA) through EFTA was an idea. However, EFTA members like Norway and Liechtenstein have said that these small countries might need different types of agreements because of their size.

Norway's EU Referendums

Norway has voted twice (in 1972 and 1994) against joining the EU. This means Norway has stayed a member of EFTA.

Switzerland's Choice

Switzerland voted against joining the EEA in 1992. It also rejected joining the EU in 2001. Instead, Switzerland has many separate agreements with the EU to manage their trade and other relationships.

Iceland's EU Application

Iceland applied to join the EU in 2009 after a financial crisis. However, they later decided to stop their application in 2015.

Faroe Islands and EFTA

The Faroe Islands, which are part of Denmark, have also thought about rejoining EFTA. Denmark was a founding member of EFTA. However, EFTA rules say only independent countries can be members.

United Kingdom and Brexit

The United Kingdom left the EU in 2020 (this is called "Brexit"). After this, some people suggested the UK could rejoin EFTA to keep close trade links with Europe. However, some EFTA countries, like Norway, were not sure if a large country like the UK joining would be good for the balance of the group.

EFTA and the European Union: The European Economic Area

In 1992, the EU and most EFTA countries signed an agreement to create the European Economic Area (EEA). This agreement allows Iceland, Liechtenstein, and Norway to be part of the EU's European Single Market without being full EU members.

This means these EFTA countries follow most EU laws related to the single market. They don't follow laws about farming or fishing, though. They also help shape new laws that affect the EEA.

Switzerland is the only EFTA country that is not part of the EEA. Instead, Switzerland has many separate agreements with the EU. These agreements allow Switzerland to participate in the single market and the Schengen Agreement.

Here's a simple look at how EU laws apply in EFTA countries:

EFTA Countries	EU Law	Schengen area	EU Single Market	Currency
Iceland	Some	Yes	Yes (with some differences)	ISK
Liechtenstein	Some	Yes	Yes (with some differences)	CHF
Norway	Some	Yes	Yes (with some differences)	NOK
Switzerland	Some	Yes	Yes (through separate deals)	CHF

How the EEA Works

The EEA has a special committee called the EEA Joint Committee. This committee helps extend EU laws to the non-EU members of the EEA. There's also an EEA Council that meets twice a year to manage the relationship between all EEA members.

Instead of creating new big organizations, the EEA uses existing ones. The EFTA Surveillance Authority checks that EFTA members follow their EEA rules. The EFTA Court handles legal issues, similar to how the European Court of Justice works for the EU. Switzerland is not part of these EEA institutions because it's not an EEA member.

EEA and Norway Grants

Iceland, Liechtenstein, and Norway give money to help reduce money differences in Europe. These are called the EEA and Norway Grants. They were set up when the EEA expanded in 2004. This money helps projects in Central and Southern Europe.

EFTA's Trade Deals Around the World

Map of free trade agreements between EFTA and other countries EFTA Free trade agreement Ongoing free trade negotiation European Economic Area Declaration on cooperation or dialogue on closer trade relations

EFTA has many free trade agreements with countries outside the EU. These agreements help EFTA countries trade easily with 40 other countries and regions. EFTA also works with other countries to improve trade.

EFTA's Free Trade Agreements

Here are some of the countries EFTA has free trade agreements with:

Country or Group	Signed	Started	What it Covers
Albania	December 17, 2009	November 1, 2010	Goods
Canada	January 26, 2008	July 1, 2009	Goods
Central America (Costa Rica, Panama)	June 24, 2013	August 19, 2014	Goods & Services
Chile	June 26, 2003	December 1, 2004	Goods & Services
Colombia	November 25, 2008	July 1, 2011	Goods & Services
Egypt	January 27, 2007	August 1, 2007	Goods
Georgia	June 27, 2016	September 1, 2017	Goods & Services
Gulf Cooperation Council (6 countries)	June 22, 2009	July 1, 2014	Goods & Services
Hong Kong	June 21, 2011	October 1, 2012	Goods & Services
Israel	September 17, 1992	January 1, 1993	Goods
Mexico	November 27, 2000	July 1, 2001	Goods
Peru	June 24, 2010	July 1, 2011	Goods
Singapore	June 26, 2002	January 1, 2003	Goods & Services
South Korea	December 15, 2005	September 1, 2006	Goods & Services
Southern African Customs Union (5 countries)	June 26, 2006	May 1, 2008	Goods
Ukraine	June 24, 2010	June 1, 2012	Goods & Services

Ongoing Trade Talks

EFTA is always working on new trade deals. Some agreements have been signed but are not yet active, while others are still being discussed.

Signed:

* Central America (Guatemala) * India

Finished Talks:

* Mercosur (Argentina, Brazil, Paraguay, Uruguay) * Moldova

Ongoing Talks:

* Kosovo * Malaysia * Thailand * Vietnam

Travel and Movement Between EFTA and EU Countries

People from EFTA countries can live and work freely in other EFTA countries. They can also live and work in all EU countries. This is because of agreements like the Citizens' Rights Directive. This directive allows people from the European Economic Area (EEA) to move freely.

Switzerland, which is in EFTA but not the EEA, has its own separate agreement with the EU for free movement. This means that if you are a citizen of an EFTA or EU country, you can usually live and work in any of these countries.

Leaders of EFTA

The EFTA is led by a Secretary General. Here are the people who have held this important role:

#	Country	Name	Years in Office
1	United Kingdom	Frank Figgures	1960–1965
2	United Kingdom	John Coulson	1965–1972
3	Sweden	Bengt Rabaeus	1972–1975
4	Switzerland	Charles Müller	1976–1981
5	Norway	Per Kleppe	1981–1988
6	Austria	Georg Reisch	1988–1994
7	Iceland	Kjartan Jóhannsson	1994–2000
8	Switzerland	William Rossier	2000–2006
9	Norway	Kåre Bryn	2006–2012
10	Iceland	Kristinn F. Árnason	2012–2018
11	Switzerland	Henri Gétaz	2018–present

Images for kids

The official logo of EFTA.
A map showing EFTA member states in green.