History and Future of EFTA Membership (1960-2012)

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History and Future of EFTA Membership


The world history is full of the examples of various associations and unions which were aimed at achieving the same purposes and working for the same result. The establishment of the European Union has caused a number of organizations to appear. One of them is going to be depicted in the paper.

Established in 1960, currently, the European Free Trade Association (which is generally abbreviated to EFTA) consists of four countries: Switzerland, Norway, Lichtenstein, and Iceland. The key aim of the organization lies in the close collaboration with the European Union in questions of trade and products and goods distribution. Originally, the Association had been created in order to unite and help the European states which were not members of the EU trade.

The outcomes of the EFTA functioning have led to a number of benefits for the countries-members of the Association (Kaitila, 2014). These advantages have been caused with the active work and successful collaboration of the states in achieving the aim of economic growth and safety.

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As a consequence, the purpose of the paper consists in determining the history of the EFTA membership and the possible further ways the organization can follow in the future. In addition, the information used is characterized as the newest, since the sources which are used are the most recent. Along with this, the paper provides a short analysis of the outcomes of the EFTA activities. To understand better the future tendencies of its development, it is necessary to go through the history of the Association.

What is a Material Breach?

As it has been mentioned before, the history of EFTA traces back to the May of 1960, when there was an official opening of the Association. Primarily, the organization comprised of the larger number of countries. Initially, such states as the United Kingdom of Great Britain, Switzerland, Portugal, Austria, Norway and Denmark were a part of the Association and played an active role in its formation and establishment. The essential areas of functioning, rules and purposes were proposed, discussed and approved by these countries.

In the course of time, several states joined and disaffiliated with EFTA. The countries which became the members of the Association were, for instance, Finland and Austria. Then, with the establishment of EEA, the major and the most prosperous states disaffiliated with EFTA having changed it for several other organizations that gave more benefits.

The constant shortening of the number of the Association’s members negatively impacted on its work. For instance, Denmark and the United Kingdom quitted EFTA in 1973, Portugal stopped its membership in 1987, Sweden, Austria and Finland left EFTA in 1995 (Robertson, 2014). The countries which stayed within the organization’s membership are now collaborating in order to change the Association’s format and enlist the larger number of partners who would be interested in engaging in the free trade.

A set of contrasts between the eastern augmentation and the EU’s expansion is obvious. At the point, when joining the European Union approximately at the beginning of 1995, Sweden, Finland and Austria were European Economic Area participants and active members, and they had the greater part of the inner business sector set up within the area in question (Robertson, 2014). Under the threat of underestimation, most countries which composed the EFTA organization had executed deliberately the Single Market enactment with a specific end goal to remain globally focused. The EFTA states also met all the participation criteria and, from the EU’s perspective, delighted in expectations of having sound and performing business sector economies and, in addition, uncommon ‘European’ social and political affinities. The three EEA-EFTA’s participants could, hence, join the Union with shorter preparation periods than the former members had to wait before.

Additional attention is frequently paid to the reasons and conditions EFTA had been formed in. On the one hand, the scholars claim that fashion that began with establishing of the United Nations Organization in the postwar period contributed to the formation of EFTA. On the other hand, this sort of organization was the only way to prevent the economy’s crisis which was forecast.

Another factor that contributed to the EFTA formation consisted in the necessity of integration between Western Europe and European Economic Community (generally abbreviated to EEC). This fact strengthened Britain’s desire to create a separate free trade organization instead of joining EEC on the useless and unbeneficial conditions.

Finally, in accordance with Cogen (2015), “some European states do not wish to become an EU member states or some Europe states do not meet the EU criteria for EU membership” (Cogen, 2015, p. 6). This means that EFTA organization has always served as means to overcome the challenge connectd with EU membership and trade conditions.

The Effects and Consequences of a Material Breach

The newly created association had to stimulate free trade between all the parties which signed up the Convention of EFTA. The main idea of the document was to promote the free trade between the states. This, in the countries’ governments’ opinion, was called to shorten the expenses on fees and taxes, on the one hand. On the other hand, it had to stimulate the process of market enrichment.

As a part of membership responsibilities, the countries had to elaborate the aims which, as a consequence, had to be included into the Convention and followed as obligatory. Thus, the objectives presupposed the increase of employment (both full and part-time); rational usage of the resources by the states; development of supply of raw materials that had been produced within the Area of Free Trade.

During the 1970s and 1980s, one of the most essential tasks for the EFTA organization was to attract more countries (Dinwoodie & Janis, 2008). The Association has been effectively evolving the monetary communication with Central and Eastern Europe and the Mediterranean region in the previous decade. Eighteen unhindered commerce-based documents and eight cooperation agreements have been signed up in this period. A few more contracts are currently being discussed. In addition to this, EFTA upgrades and develops relations with the third nations with the purpose of expanding its financial transactions, supporting the process of European and interregional coordination and, in addition, changing the world trade (Hoibraaten & Hille, 2012). As a result of the numerous agreements and documents which have been signed up within the Association, the contacts of the trade character were established with such countries as Peru, Canada, Chile, Tunisia, Israel, Ukraine, Lebanon, Serbia, Korea, and others (Wilson, 1990). This is generally recognized as positive outcomes of the organization’s activity.


Discussions on the future of EFTA (and other European economy-based associations) bear a dual character. By this it is meant that, on the one hand, the scholars like, for instance, Brooker & Ni Chonaill (2015) believe that EFTA has to quit rivalry with EU and start working on the areas which are not covered by the European Union. It will provide the extra benefits and attract other countries. Furthermore, it is possible for the Association to create more beneficial conditions of trade for the EU states in order to contribute to the EFTA development, but not to the EU evolving.

On the other hand, Kreinin & Plummer (2012) and Heydon & Woolcock (2014) have a conviction that the future of the trade belongs to the Association and, in case of the properly made decisions, EFTA is able to attract a large number of countries annually. It will ensure the increase of the trading network and shorten the expenses on the taxes and currency rates changes.

In addition to this, many scholars and investigators advise to continue the change of EFTA into a political union, which would represent various types of relations’ regulations. It will result in a number of benefits that would increase the members-countries economy level and contribute to the political, social and economic prosperity of Europe in general. In the light of the recent events following the cooperation with states from other continents, EFTA will be able to create a unique and collaborating network of safe and free trade among the continents.

This approach will help supply the regions with the lacking goods and bring financial benefits to the countries-traders. Moreover, in accordance with Corbet & Robertson (2014), due to the conditions, laws and rules of globalization which saturated the world, it seems to be possible to introduce a universal model of the trading methods in order to sustain the balance of goods and products that might not be popular in one state, but extremely necessary in a range of others.

Some investigators as, for example, Piekutowska & Dubowski (2014) went much further in forecasting the future of EFTA. They claim that the free trade zone, which, in their opinion, will have been increased by the year 2020, will contribute to the improvement of the environmental situation (Hoibraaten & Hille, 2012). They explain their point of view with the idea that it will be possible to take over and regulate the production and flow of products, and it will prevent the companies from manufacturing unnecessary amount of goods. This process is known to need a large number of energy and resources spent (or frequently wasted).

Furthermore, it will provide the manufacturers with an opportunity to foresee more precisely the amount of products to be produced and consumed. In other words, the united and integrated EFTA model of worldwide free trade will contribute to balancing the demand and supply.

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The economic history is full of the examples of various associations institutions the aim of which is or/and was to create the best conditions for trade, since this is the pushing mechanism of any economy. European society comprises of many organizations that bear political and economic character. They are intended to unite several countries for the mutual collaboration in order to achieve special goals.

EFTA is an organization, which is expected to have a great future in case of the fruitful expansion all over Europe and other continents. Providing the large monopolies with a chance to move to a further level of trade – the international one – EFTA tries to contribute to the fruitful functioning of the countries-members’ economies.

Under conditions of globalization, the EFTA’s principles seem to be the most innovative and serve as a powerful tool to establish the firm and stable relations between states in the questions of trade. In case if the authorities of EFTA decide on the extension of their functions (adding political and social responsibilities and interests), the organization will occupy a new level. It will stimulate the stability in the international relations and contribute to decrease of the conflicts based on the economic, political and social disagreements.

The history of the EFTA’s membership regarded in the paper demonstrates the goals of the countries-participants. Furthermore, the idea of the EFTA creation contributes to understanding of the key basis of the trade development. The benefits, which can be achieved from the successful collaboration of different countries, follow from the same idea – the economic and political prosperity.