European Economic Area

The EEA, which became effective in January 1994, consists of Austria,
Finland, Iceland, Norway, Sweden and the 12 member nations of the European
Union. The EEA, encompassing an area inhabited by 370 million people,
allows for the free movement of goods, persons, services and capital
throughout all 17 countries. It also opens cooperation possibilities in
many areas, including research and development, environment, promotion of
tourism, social, and consumer policy.

Following the negative result of the Swiss referendum in December 1992, the
remaining six countries of the European Free Trade Association (Austria,
Finland, Iceland, Liechtenstein, Norway, and Sweden) signed an Adjusting
Protocol in March 1993 with the intent to proceed without Switzerland. The
Adjusting Protocol contains provisions which allow Switzerland to
participate in the EEA at a later stage if it so wishes. Liechtenstein
will remain a Contracting Party to the European Economic Area Agreement,
but it will not be part of the EEA until the EEA Council decides that the
accord's good functioning will not be impaired. Liechtenstein's status in
the EEA accord was reviewed following Switzerland's negative



vote on the EEA in a December 1992 referendum. In particular,
Liechtenstein's customs union with Switzerland requires renegotiation.

Significant differences exist between the EEA and full membership in the
European Economic Community (EEC). The EEA is a free trade area, not a
customs union. Border controls between the EEC and EFTA, while relaxed,
are expected to continue. EFTA will not adopt the EEC's Common Customs
Tariff nor participate in the Common Commercial Policy or Common
Agricultural Policy. EFTA nations will continue to set their own tariffs
for third countries subject to GATT and OECD agreements. Further change is
anticipated with Austria, Finland, Norway, and Sweden expected to join the
European Economic Community by January 1995 or shortly afterwards.