New European Trading Bloc Is Ushered In

The New Year ushered in a giant new trading bloc--the European Economic Area--linking the European Union and European Free Trade Assn. and setting the stage for an enlarged EU in a year’s time.

“The EEA . . . will create the biggest integrated economic zone in the world with their more than 370 million inhabitants,” the European Union’s external relations commissioner, Hans van den Broek, said recently.

“The EEA will give a most welcome impetus toward liberalization on a broader European scale,” he said.

The EEA upstages the North American Free Trade Agreement as the world’s biggest free-trade zone by extending the Union’s single market, celebrating its first birthday, to five out of seven of the EFTA countries--Austria, Finland, Iceland, Norway and Sweden.

While NAFTA is five times bigger than the EEA in terms of land mass, the EEA has 372 million consumers compared with 360 million in NAFTA and is two or three times bigger in terms of trade.

It is expected to bring economic benefits in an area stretching from the Arctic to the Mediterranean but is seen by four of the five EFTA states taking part as just a stepping stone to full EU membership.

The EEA will, in particular, provide more competition for public procurement contracts and in the banking and insurance sectors. Norway and Iceland also stand to gain from better access for their fish to the EU.

But aware of the market’s limitations, the EEA does not give the EFTA countries a say in the rules they will have to apply and leaves customs borders intact. Austria, Finland, Norway and Sweden all started negotiating Union membership in 1993.

They hope to spend the next New Year’s Eve crossing its threshold. If they do, that will leave only Iceland, and maybe Liechtenstein, which hopes to join shortly, in the EEA.

But European Commission President Jacques Delors has said he sees the EEA as a way of integrating Eastern European countries into the European trading scene.

The remaining EFTA country, Switzerland, will not take part in the EEA after its people voted against membership in a referendum. It is seeking to cut its losses by negotiating bilateral accords with the Union.