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European Free Trade Association

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The European Free Trade Association (EFTA) was established on May 3, 1960 as an alternative for European states that did not wish to join the European Community. The treaty was signed on January 4, 1960 in Stockholm and is known as the Stockholm Convention.

Its original membership was United Kingdom, Denmark, Norway, Sweden, Austria, Switzerland and Portugal. Finland became an associate member in 1961 (it later became a full member in 1986), and Iceland joined in 1970. The United Kingdom, Denmark and Ireland joined the European Community in 1973, and hence ceased to be EFTA members. Portugal also left EFTA for the European Community in 1986. Liechtenstein joined in 1991 (previously its interests in EFTA had been represented by Switzerland). Finally, Austria, Sweden and Finland joined the European Community in 1995 and hence ceased to be EFTA members. Thus, today only Iceland, Norway, Switzerland and Liechtenstein remain members of EFTA.

All of its members today except for Switzerland are members of the European Economic Area (EEA). The Swiss electorate voted against Switzerland joining the EEA, but it remains a member of EFTA, and is linked to the European Union by bilateral agreements similar in content to the EEA agreement.

EFTA has the following instititutions: the Secretariat, the EFTA Surveillance Authority, the EFTA Council and the EFTA Court.

The EFTA Surveillance Authority and the EFTA Court are EEA institutions, and hence Switzerland does not participate in them. The EFTA Surveillance Authority performs the European Commission's role as "guardian of the treaties" for the non-EU EEA countries, while the EFTA Court performs the European Court of Justice's role for those countries. The original plan for the EEA lacked the EFTA Court or the EFTA Surveillance Authority, and instead had the European Court of Justice and the European Commission exercise those roles. However, during the negotiations for the EEA agreement, the European Court of Justice informed the Council of the European Union by way of letter that they considered that giving the EU institutions powers with respect to non-EU member states would be a violation of the treaties, and therefore the current arrangement was developed instead.

EFTA also manages the Portugal Fund. The Portugal Fund was established in 1975 when Portugal was still a member of EFTA, to provide funding for the development and reconstruction of Portugal after the end of the fascist dictatorship. When Portugal left EFTA in 1985, the remaining EFTA members decided to nonetheless continue the Portugal Fund, so Portugal would continue to benefit from it. The Fund originally took the form of a low-interest loan from the EFTA member states to Portugal, to the value of 100 million US dollars. Repayment was originally to commence in 1988, but EFTA then decided to postpone the start of repayments until 1998.

EFTA also originated the Hallmarking Convention[?] and the Pharmaceutical Inspection Convention[?], both of which are open to non-EFTA states.

The EFTA Secretariat is headquartered in Geneva, Switzerland. The EFTA Surveillance Authority has its headquarters in Brussels, Belgium (the same location as the headquarters of the European Commission), while the EFTA Court has its headquarters in Luxembourg (the same location as the headquarters of the European Court of Justice).

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