European Economic Area: Definition, Purpose, and Benefits

The European Economic Area is an offshoot of an international agreement which enables the extension of the European Union’s single market to member states of the European Free Trade.

Moreover, the European Economic Area (EEA) links the European Union (EU) member states and three European Free Trade Association (EFTA) states which are Iceland, Liechtenstein, and Norway into an internal market governed by the same basic rules.

These rules aim to enable the free movement of persons, goods, services, and capital within the European Single Market, including the freedom to choose a residence in any country within this area.

Furthermore, The European Economic Area Treaty is a commercial treaty. Its objective is to promote a continuous and balanced strengthening of trade and economic relations within the area. So this article will go further to explain the meaning of EEA, enumerate countries under it, and so on.

Where is the European Economic Area?

The European Economic Area (EEA) is made up of the countries that have agreed to the free movement of goods, persons, services, and capital with the other countries participating in the EEA. This Argument effectively created a single European market that includes the countries of the European Union (EU) as well as some countries that belong to the European Free Trade Association (EFTA).

Moreover, the European territory consists of 31 countries. The 31 countries are 28 European member states and 3 European Free Trade Association member states. The EEA was established as a result of the Treaty of 1992, signed between the member states.

EEA Member States

European territory consists of 31 countries which are 28 EU member states and the three other EFTA member states. The 31 member countries of the European Economic Area are:

Austria	Belgium	Bulgaria
Croatia	Czech Republic	Cyprus **
Denmark	Estonia	Finland
France	Germany	Greece
Hungary	Iceland #	Ireland
Italy	Latvia	Liechtenstein #
Lithuania	Luxembourg	Malta
Netherlands	Norway #	Poland
Portugal	Romania	Slovakia
Slovenia	Spain	Sweden
United Kingdom *

Those countries with # are Non-EU country while the one with * the EEA agreement is applied to Gibraltar as well. Moreover, the country with ** the agreement is not applied to Northern Cyprus

The purpose of European Economic Area – EEA

The agreement of the European Economic Area provides its member states with:

• free movement of:
• persons
• goods
• services
• capital within the European Single Market, including the freedom to choose a residence in any country within this area

Main EEA agreements

The main agreements signed between the states, that have made this zone, are as follows:

1. EEA agreement
2. Adjusting Protocol
3. Participation of ten new States
4. Participation of two new States
5. Participation in one new State

#1. EEA agreement

Nineteen states + EEC and ECSC originally signed it on May 2, 1992. The agreement entered into force on January 1, 1994, as adjusted by the 1993 Protocol.

#2. Adjusting Protocol

Eighteen states + EEC and ECSC originally signed the adjusting protocol on March 17, 1993. The protocol entered into force on January 1, 1994, without the signature of Switzerland.

#3. Participation of ten new States

The 28 states + EC signed an agreement on the participation of ten new states in the EEA on October 14, 2003. The agreement entered into force on December 6, 2005, following the enlargement of the European Union in 2004.

#4. Participation of two new States

The 30 states + EC signed an agreement on the participation of two new states in the EEA on July 25, 2007. The agreement entered into force on November 9, 2011, following the enlargement of the European Union in 2007.

#5. Participation in one new State

The 31 states + EU signed an agreement on the participation of one new state in the EEA on 11 April 2014 following the enlargement of the European Union in 2013. The agreement has not yet come into force.

Here’s a video detailing how EEA became a law guiding its member countries:

Differences between the EEA and EU

Though the two are closely related, the EEA and the EU are not the same. All EU members are automatically required to be EEA members, but not all EEA members are EU members. The EEA agreement is related to the single market and the laws relevant to it, while the EU is both an economic and political union. Over the years several EFTA members have transitioned to become EU members, including Austria, Finland, and Sweden.

Furthermore, the European Union is a political and economic union, while the European Economic Area is exclusively concerned with economic affairs. All 27 EU member states are also members of the EEA, but three of the EEA countries are not members of the European Union. These three countries enjoy freedom of trade and movement with the rest of the EEA countries, but they may not elect officials to the European Parliament and are not bound by some of the decisions of EU political institutions.

The difference in terms of membership is that the EEA consists of three more countries, which are:

• Iceland
• Liechtenstein
• Norway

The EEA is a Single Market of member states, which have to implement all EU legislation in the field of the Single Market. While the purpose of the EEA is to extend the EU’s internal market to countries in the European Free Trade Area (EFTA), the EEA members are not obliged to implement EU policies on:

• common agriculture and fisheries policies (although the EEA Agreement contains provisions on trade in agricultural and fish products)
• customs union
• common trade policy
• common foreign and security policy
• justice and home affairs (although the current EEA States are part of the Schengen area)
• direct and indirect taxation
• economic and monetary union

Differences between the EEA and EFTA

EFTA stands for the European Free Trade Association, which has four member states. These members are:

• Iceland
• Liechtenstein
• Norway
• Switzerland

Three of the four EFTA members participate in the European Economic Area. Only Switzerland is neither part of the EEA nor the EU.

The main difference between the two is that to join the EEA it is necessary first to join EFTA. However, a country does not need to be part of the EEA, to participate in the EFTA.

Moreover, EFTA itself does not have access to the Single Market because it has no trade relationship with the EU. This is the main reason why Switzerland has bilateral agreements outside of the EFTA framework.

Differences between the EEA and the Schengen Area

While the EEA is about the free movement of goods, services, capital, and people, the Schengen Area is about traveling without border controls with a unified visa regime for the whole area. Most EEA countries are part of the Schengen Area.

The following countries are part of the EEA, but not of the Schengen Zone:

• Bulgaria
• Croatia
• Cyprus
• Ireland
• Romania

On the other hand, the country of Switzerland is part of the Schengen Zone but not of the EEA. Still, due to special agreements, it can participate in internal markets.

Differences between the EEA and EUROZONE

The Eurozone is an EU subgroup of European Union member states that use the same currency, the Euro. These countries are as follows:

• Austria
• Belgium
• Cyprus
• Estonia
• Finland
• France
• Germany
• Greece
• Ireland
• Italy
• Latvia
• Lithuania
• Luxembourg
• Malta
• the Netherlands
• Portugal
• Slovakia
• Slovenia
• Spain

None of the EFTA member states have the Euro as their currency, while 19 of the EU or EEA member states use the Euro as their currency.

Benefits of Membership in European Economic Area (EEA)

The main advantage of EEA membership is a continued access for UK firms to the single market passports which allow banks, insurers, dealers, asset managers and others to conduct business across EEA borders without the need to obtain local licences or to establish a local subsidiary.

Moreover, the EEA offers many benefits for individuals, businesses and the economies of the countries that use it. These include:

• The ease with which prices can be compared between countries, which boosts competition between businesses, thereby benefiting consumers
• Price stability
• The euro makes it easier, cheaper and safer for businesses to buy and sell within the euro area and to trade with the rest of the world.
• Improved economic stability and growth
  better integrated and therefore more efficient financial markets.
• Greater influence in the global economy
  a tangible sign of a European identity.

FAQs

What is considered a European Economic Area?

The European Economic Area ( EEA ). The EEA includes EU countries and also Iceland, Liechtenstein, and Norway. It allows them to be part of the EU’s single market. Switzerland is not an EU or EEA member but is part of the single market

Is the UK in the European Economic Area?

You can find more information about the EU on its official website. The United Kingdom left the EEA when it left the EU on 31 January 2020. Iceland, Liechtenstein, and Norway are EEA member states, but they are not members of the European Union (EU). Switzerland is not a member of the EU or the EEA.

How many countries are in the European Economic Area?

Membership has grown to 30 states as of 2020: 27 EU member states, as well as three of the four-member states of the EFTA (Iceland, Liechtenstein, and Norway).

What is the difference between the EU and the European Economic Area?

The European Union is a political and economic union, while the European Economic Area is exclusively concerned with economic affairs. All 27 EU member states are also members of the EEA, but three of the EEA countries are not members of the European Union.

What is a non EEA country?

Non-EEA Countries AFGHANISTAN ALBANIA ALGERIA AMERICAN SAMOA ANDORRA ANGOLA ANGUILLA ANTARCTICA ANTIGUA AND BARBUDA ARGENTINA A.

Is Switzerland an EEA country?

The European Economic Area (EEA) was set up in 1994 to extend the EU’s provisions on its internal market to the European Free Trade Area (EFTA) countries. Norway, Iceland and Liechtenstein are parties to the EEA. Switzerland is a member of EFTA but does not take part in the EEA.

Why is Switzerland not in the EU?

Switzerland is not a member state of the European Union (EU). It is associated with the Union through a series of bilateral treaties in which Switzerland has adopted various provisions of European Union law in order to participate in the Union’s single market, without joining as a member state.

Is the EEA the same as Schengen?

While the EEA is about free movement of goods, services, capital and people, the Schengen Area is about traveling without border controls with a unified visa regime for the whole area. Most EEA countries are part of the Schengen Area. The following countries are part of the EEA, but not of the Schengen Zone: Bulgaria.

Is a UK citizen an EEA national?

EEA member states: Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden; Other (non-EEA) states: North Macedonia, Turkey, United Kingdom.

Is a British citizen an EU national?

As of 1 February 2020, UK nationals are considered ‘third-country nationals’ for the purposes of EU law. They retain their status as Union citizens if they also enjoy the nationality of a Member State (dual nationality), perhaps having acquired the nationality of the Member State of residence.

Who is next to join the EU?

As of 2022, accession negotiations are underway with Albania (since 2020), Montenegro (since 2012), North Macedonia (since 2020), Serbia (since 2014) and Turkey (since 2005).

Can Swiss citizens live in the EU?

Under the EU-Switzerland agreement on the free movement of persons, Swiss nationals are free to live and work in the EU.

Is the USA in Europe?

The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America.

Is Australia in Europe?

Seven continents; Many geographers and scientists now refer to six continents, in which Europe and Asia are combined (because they’re one solid landmass). These six continents are then Africa, Antarctica, Australia/Oceania, Eurasia, North America, and South America.

Will the UK leave the EEA when it leaves the EU?

The United Kingdom (UK) ceased to be a Contracting Party to the EEA Agreement after its withdrawal from the EU on 31 January 2020. This follows from the two-pillar structure and Article 126 of the EEA Agreement, which states that the EEA Agreement applies to the territory of the EU and the three EEA EFTA States.

Can I live in Europe with a British passport?

They can continue to live, work and travel (although these rights would cease after a leave of absence of more than five years). The same would apply to British citizens moving to the EU during the transition period, which is expected to end on 31 December 2020.

Is Israel a member of the EU?

Israel is however not included among the nine countries that are part of the EU agenda for future enlargement of the European Union.

Conclusion

We believe you now have a clear understanding of what the European Economic Area is and other member states that are included in the area. So do contact us at workstudyvisa.com for more information.