When the European Economic Area (EES in Icelandic) began functioning in January 1994, it created a vast common market that linked the European Union (EU) with three states of the European Free Trade Association: Iceland, Norway and Liechtenstein. Under this agreement, people, goods, services and capital can move freely between the participating countries. Icelandic citizens, for example, gained the right to live, work and travel without restrictions throughout this entire area.
The road to the EEA began after the economic challenges of the 1980s and the ambitions of European states to deepen economic ties. Pressure from large multinational firms for more open access and the changing political landscape after the Cold War contributed to EFTA countries looking outward. Early plans in the late 1980s proposed a European Economic Space, a concept eventually refined into the EEA we know today.
Icelandic debate and the EEA decision
In Iceland, the decision to join the EEA was highly controversial. The Alþingi (parliament) approved the agreement in January 1993 after intense political debate and a close vote: 33 supported, 23 opposed and 6 abstained. Most of the Social Democratic Party (Alþýðuflokkurinn) and the Independence Party (Sjálfstæðisflokkurinn) voted yes, while the People’s Alliance (Alþýðubandalagið), most Women’s List (Kvennalistinn), and about half of the Progressive Party (Framsóknarflokkurinn) rejected it. Dissenters voiced concerns about the potential consequences of greater economic integration, including fears of losing control over Icelandic resources or eroding national sovereignty. Some even argued that the agreement risked undermining the Icelandic constitution by ceding legislative or judicial power.
While the European Union includes policies like the Common Agricultural and Fisheries Policies, EFTA states in the EEA, including Iceland, remain outside those aspects. Iceland, therefore, participates in the European single market without being subject to the EU’s rules on agriculture and fisheries. EFTA’s participation is governed by commercial rather than political treaties, and EFTA itself sets no EU-style supranational laws or customs union.
A unique European arrangement
Of the original seven EFTA states, Switzerland stands apart, having rejected EEA membership in a national referendum in December 1992. As a result, Switzerland trades with the EU under a separate web of bilateral agreements. For the three EFTA signatories, the EEA allows influence over new policy and early input into the creation of internal market law, but without formal EU membership.
Today the EEA spans 30 European nations: all 27 EU states and three EFTA countries (Iceland, Norway and Liechtenstein). Its formation paved the way for cross-border cooperation on areas such as social policy, equality, environment, education, science and technology, domains that now shape daily life and international engagement for Icelanders.
Sources
- Wikipedia
- Wikipedia (Icelandic) in Icelandic
