What Is the European Economic Area (EEA) Agreement?
The European Economic Area (EEA) Agreement is an agreement made in 1992 that brings the European Union (EU) member countries and three of the European Free Trade Association (EFTA) states—Iceland, Liechtenstein, and Norway—into a single market. (The fourth EFTA state, Switzerland, chose not to join.) The purpose of the agreement is to strengthen trade and economic relations among the countries by removing trade barriers and imposing equal conditions of competition and compliance with the same rules.
- The European Economic Area (EEA) Agreement and the European Union (EU) are not the same thing.
- Only three of the four countries that belong to the European Free Trade Association (EFTA) signed the EEA.
- These three countries—Iceland, Lichtenstein, and Norway—are governed by the economic decisions of the EU relevant to its single market, but not to the EU's political decisions.
Understanding the European Economic Area (EEA) Agreement
The EEA agreement requires the inclusion of EU regulations covering the “four freedoms”—free movement of goods, services, persons, and capital—throughout the member states. It also covers cooperation in other areas, such as research and development, education, social policy, the environment, consumer protection, tourism, and culture, collectively known as “flanking and horizontal” policies.
The agreement does not require the inclusion of EU’s common agriculture and fisheries policies (although the agreement contains provisions on various aspects of trade in agricultural and fish products), customs union, common trade policy, common foreign and security policy, justice, and home affairs, or the European Economic and Monetary Union (EMU).
The three EEA/EFTA countries are not members of the EU.
The EEA vs. the EU
Although the two are closely related, the EEA and the EU are not the same. The EEA agreement is related to the single market and the laws relevant to it, while the EU is both economic and political. All regulation that EEA countries have to comply with is formed by the EU, which effectively means that the EEA/EFTA countries do not have a say in forming the laws they are required to implement. The EEA countries also have to make financial contributions to the EU, though smaller than the contributions of an EU member.
- United Kingdom**
*Countries only in the EEA, not the EU.
**In 2016 the U.K. voted to leave the EU and, effectively, the EEA agreement, a process known informally as Brexit, and a two-year window to negotiate the terms of that withdrawal was triggered. As of September 2019, however, Brexit still has not happened. Currently, a deadline of Oct. 31, 2019, looms for the U.K.’s exit from the EU, with or without a negotiated deal.