What EEA is and how it works

The word the English dropped

On 17 January 1989 Jacques Delors put a proposal to the European Parliament: in place of the separate bilateral agreements then governing trade between the European Community and the countries of the European Free Trade Association, one structured association with shared rules and institutions of its own. In French the thing proposed was an espace, and the English of the negotiations that followed called it the European Economic Space. Area came later, and the older word stayed where it was. Article 129 of the finished agreement declares thirteen language versions equally authentic, and seven of them name a space: espace, Spazio, Espacio, Espaco, Ruimte, Raum and the Greek choros. English and the five Nordic texts name an area. Two of the thirteen, Icelandic and Norwegian, are not languages of the Union at all, which is the first indication of what the document is: the law of the Union's internal market set out in a treaty to which the Union is one party among many.

Porto, and the signatory that never ratified

The draft had to survive a court before it could be signed. The Court of Justice, in Opinion 1/91 of 14 December 1991, found the EEA court proposed in the first version incompatible with the Community treaties. The negotiators took the joint court out, Opinion 1/92 of 10 April 1992 cleared what was left, signature followed at Porto on 2 May 1992, and the agreement entered into force on 1 January 1994.

One signatory never brought it into force. The Swiss vote of 6 December 1992 returned 1,786,708 against and 1,762,872 in favour on a turnout of 78.7%, and the cantons went the same way, so a protocol signed at Brussels on 17 March 1993 adjusted the text to work without Switzerland. Liechtenstein had voted the other way a week after its neighbour, on 13 December 1992, and still did not enter with the rest: its customs and currency arrangements with Switzerland had to be rebuilt around a border that was now an external one, a second vote on 9 April 1995 approved the result, and the agreement took effect for Liechtenstein on 1 May 1995. Liechtenstein's money is still the Swiss franc, held under a currency treaty of 1980 with the state that signed the agreement and never ratified it.

Austria, Finland and Sweden sat on the EFTA side of the table at Porto and stood on the Union's side of it from 1 January 1995. The agreement did not change. The pillar they stood in did.

What crosses, and what stops

The association covers the movement of goods, persons, services and capital, with competition rules to match and cooperation in transport, energy, research, education, environment, consumer protection and social policy. What it leaves out is listed as plainly: the common agricultural and fisheries policies, the customs union, the common commercial policy, the common foreign and security policy, justice and home affairs, and economic and monetary union.

Those exclusions are visible at a crossing. With no common external tariff between the two pillars, goods still travel on proof of origin and clear customs formalities that no longer exist between two member states of the Union, so the frontier across which the market is single remains a customs frontier. Passport control is a separate instrument again, and the three EFTA members reached it separately: Iceland and Norway are associated to Schengen under an agreement of 18 May 1999, Liechtenstein from 19 December 2011.

Two pillars, and the six months in Article 102

Because the EFTA states sit outside the Union's institutions, the agreement builds them a second set. The EFTA Surveillance Authority does for them what the Commission does for member states, and the EFTA Court does what the Court of Justice does, each applying the same rules on its own side. New Union acts of EEA relevance reach the annexes through the EEA Joint Committee, which decides by consensus, and the EEA Council meets twice a year above it.

The EFTA states take part in shaping an act and do not vote on adopting it. Article 102 is where a refusal is priced: if the Joint Committee cannot agree on amending an annex within six months of the matter being referred to it, the affected part of that annex is regarded as provisionally suspended, and the suspension takes effect six months later. Norway entered a reservation against the third postal directive in 2011 and lifted it in 2013, the only occasion on which the article has been carried that far.

Whether shaping without a vote amounts to influence is the standing argument about the arrangement. The objection is that acts are taken in without being voted on; the answer offered is Article 99, which brings EFTA experts into the drafting at the same stage as experts from member states. A review published for the Norwegian government in 2012 set out both readings, and this catalogue records both without settling either.

What the arrangement is paid for with

The three EFTA members fund a financial mechanism aimed at economic and social disparities inside the area. For the period 2021 to 2028 the EEA Grants stand at 1.805 billion euros and the Norway Grants at 1.463 billion, 3.268 billion between them, with Norway providing the great bulk of the total. The beneficiaries are fifteen member states of the Union, Estonia, Greece, Hungary, Portugal and Slovakia among them, so the transfer runs from the states outside the Union towards states inside it.

Getting in, and getting out

Article 128 makes entry automatic in one direction. Any European state that becomes a member of the Union shall apply to become a party, and the terms are settled in an agreement of their own: Croatia's was signed on 11 April 2014 and applied provisionally from the following day. Article 127 sets the exit at twelve months of written notice. The departure that has happened took another route, the United Kingdom leaving the European Union on 31 January 2020, with the agreement ceasing to apply to it at the end of the transition period on 31 December 2020.

Norway is the case the arrangement was built around. A referendum held on 27 and 28 November 1994 declined membership of the Union, 52.2% against on a turnout close to nine in ten, and the EEA has been the standing relationship ever since.