The European Free Trade Association (EFTA) is an intergovernmental organization and a free trade area, not a customs union, currently comprising four member states: Iceland, Liechtenstein, Norway, and Switzerland. It was founded in 1960 in Stockholm by the Stockholm Convention as an alternative to the European Economic Communities (EEC). The organization's original purpose was to facilitate trade by eliminating customs duties on industrial products between its members.
EFTA works based on the EFTA Convention, which was renewed in 2001 to include provisions for the free movement of goods, progressive liberalisation of the free movement of persons, trade in services, investment, and protection of intellectual property. A key mechanism is that EFTA is not a customs union, meaning each member state retains the right to set its own customs tariffs and foreign trade policies with non-EFTA countries.
EFTA is closely connected to the European Economic Area (EEA). Three EFTA members—Iceland, Liechtenstein, and Norway—are parties to the EEA Agreement, which extends the EU's Single Market's "four freedoms" (goods, persons, services, and capital) to them. The EFTA Surveillance Authority and the EFTA Court were established to ensure these three states comply with their EEA obligations. Switzerland is the only EFTA member that is not part of the EEA.
The most significant recent change is the activation of the Trade and Economic Partnership Agreement (TEPA) with India, which came into effect on October 1, 2025. This agreement is a major new free trade pact that secures a commitment from the EFTA bloc to invest $100 billion in India over 15 years. The EFTA States also signed a modernised free trade agreement with Ukraine on April 8, 2025.