The EFTA and the EEA

Before discussing the sources of law in the European Union, we give a short presentation of another European cooperation organisation with strong links to the EU, namely the European Free Trade Association (EFTA). EFTA was established through a convention concluded in Stockholm in 1960 and amended in Vaduz in 2001.26 The original members were Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and the UK. These States were in principle in support of closer economic cooperation between the European States, but they were not prepared to go as far as EC members, namely towards a federal structure. Later on, Finland, Iceland, and Liechtenstein also joined EFTA. Most of these States have since left EFTA to join the EU.

The EC and EFTA cooperated successfully in many areas. As a new step towards further cooperation, an ambitious agreement was signed in May 1992 between the EC and its Member States on the one hand and the EFTA States (except Switzerland) on the other. The agreement created what was called the European Economic Area (EEA).

The EEA Agreement is a hybrid between a traditional intergovernmental agreement and the supranationality of Union law. EFTA States have not transferred any power of decision to EEA joint institutions. Decisions are made by consensus, which means that a State cannot be formally bound against its will. Meanwhile, there are certain principles in the Agreement that in case of conflict give EEA rules, at least to some extent, priority over national rules in EFTA States. EU legislation in the fields covered by the EEA Agreement and adopted before the entry into force of the EEA Agreement in 1994 were incorporated into the EEA Agreement ^[1]

(including its annexes and protocols) and became applicable in the EFTA States. The EEA Agreement includes free movement of goods (with the exception of fish and agricultural goods), services, persons, and capital, and cooperation on, inter alia, environmental protection, consumer protection, and research. EU legal acts adopted after the entry into force of the EEA Agreement become a part of EEA law through a unanimous decision of the EEA Committee. The latter is composed of the EU States and the EFTA States.2⁷ Since most former EFTA States have become members of the EU, the EEA Agreement today exists between the EU on the one hand and Norway, Iceland, and Liechtenstein on the other.

• [1] Convention Establishing the European Free Trade Association (Stockholm, 4 January 1960) 370 UNTS 3.