The EFTA-Hungary free trade agreement

I-The European Union (EU)

The European Union (EU) is a union of twenty-seven independent states based on the European Communities and founded to enhance political, economic and social co-operation. The EU has developed a single market through a standardised system of laws which apply in all member states. Within the Schengen Area  passport controls have been abolished. The free movement of services and of establishment allows self-employed persons to move between member states to provide services on a temporary or permanent basis. A monetary union, the eurozone, was established and is composed of 17 member states. The EU is represented at the WTO.

Two of the core objectives of the European Economic Community were the development of a common market, subsequently renamed the single market, and a customs union between its member states. The single market involves the free circulation of goods, capital, people and services within the EU,[131] and the customs union involves the application of a common external tariff on all goods entering the market.

The non-EU member states of Iceland, Norway, Liechtenstein and Switzerland participate in the single market but not in the customs union.

II-The European Free Trade Association (EFTA)

The European Free Trade Association is an intergovernmental organisation set up for the promotion of free trade and economic integration to the benefit of its four Member States: Iceland, Liechtenstein, Norway and Switzerland. It provides a framework for free trade between member states, and for Free Trade Agreements (FTAs) to be made with other nations - notably the EU's 27 member states.

EFTA Free Trade Agreements (FTAs) establish a free trade area between the partner countries by:

• Providing for free trade in industrial goods, including fish and other marine products
• Liberalising trade in processed agricultural products
• Including trade disciplines
• Establishing rules on customs and origin matters as well as trade facilitation

Trade in basic agricultural products is covered by bilateral agreements between the individual EFTA States and the partner country, which form part of the instruments establishing the free trade area.

III-The EFTA-Hungary free trade agreement

The EFTA-Hungary free trade agreement was signed in Geneva, Switzerland on 29 March 1993. It entered into force on 1 October 1993.

      1-Objectives of the agreement

• To develop economic relations between EFTA countries and Hungary via the expansion of reciprocal trade, so as to pursue the improvement of macroeconomic performance such as living and employment conditions and financial stability
• To provide fair conditions of competition for trade between two parties
•  To contribute to the development and extension of world trade through eliminating trade barriers

      2-Effects of the agreement

• As far as industrial products are concerned, the agreement created a zone of absolute free trade between the community and Hungary.
• The Agreement regulated trade in some industrial products through customs quotas and customs ceilings.
• The Agreement opened up an exceedingly wide scope of co-operation for Hungary to catch up with the quality requirements of Western markets (e.g. in standardisation, technological and scientific research and development, co-operation in the energy sector, education and training).
• The Agreement also created the set of association institutions, including the Association Council, the Association Committee and the Parliamentary Committee for Association.
• The Agreement gave rise to regular political dialogue and co-operation between the parties including issues of foreign and security policy.
• The Agreement on association envisaged important steps in the direction of integration in the field of the other three basic freedoms, the free movement of capital, labor and services as well as establishment. In relation to the movement of labor, the Agreement enabled the improvement of the employment and social conditions of those legally employed abroad and the enabling of the transfer of pensions among the member countries.