Since its inception, one of EFTA's main objectives was to regulate relations between the European Union (at that time the European Economic Community, EEC) and the EFTA States. A first important step in this regard was taken in 1972, when the EFTA States concluded individual FTAs with the EEC.
From the mid-1980s, the level of economic integration substantially increased within the EU, in particular due to the implementation of the internal market programme (introduction of the "four freedoms": free movement of persons, goods, services and capital). In order to facilitate the participation of the EFTA States in the EU's internal market, the EFTA States and the EU negotiated the Agreement on the European Economic Area (EEA). With the exception of Switzerland, all EFTA States ratified the EEA Agreement. Finland, Austria and Sweden became EU members shortly afterwards. Switzerland's accession to the EEA Agreement was rejected in a referendum in 1992. As a consequence, Switzerland has negotiated a series of bilateral sectorial agreements with the EU. The EEA Agreement's membership currently includes the 27 EU Member States on the one hand, and Norway, Iceland and Liechtenstein (the so-called EEA-EFTA States) on the other.
The EEA Agreement is regularly revised in order to bring it in line with developments in the relevant EU law (the so-called "acquis communautaire"). As a member of EFTA, Switzerland benefits from an observer status in the EFTA pillar of the EEA. This allows Switzerland to closely monitor and follow developments both of the EEA and the EU's "acquis communautaire".