Political History
British reaction to the creation of the EEC was mixed and complex. Britain was also preoccupied with the Commonwealth, which was in a critical period. The UK brought together several countries (including some bordering the EEC) and decided to form the European Free Trade Association in about 1959, soon after the establishment of the 6-nation EEC (France, Germany, Italy, Belgium, Luxembourg, and the Netherlands).
On 4 January 1960, the Treaty on European Free Trade Association was initialed in the Golden Hall of the Prince's Palace of Stockholm. This established the progressive elimination of customs duties on industrial products, but did not affect agricultural products or maritime trade.
The main difference between the early EEC and the EFTA was the absence of a common external customs tariff, and therefore each EFTA member was free to establish individual customs duties against trade with non EFTA countries.
Despite this modest initiative, the financial results were excellent, as it stimulated an increase of foreign trade volume among its members from 3.5 to 8.2 billion US dollars between 1959 and 1967. This was, however, rather less than the increase enjoyed by countries inside the EEC.
After the accession of Denmark and the UK to the EEC, EFTA began to falter. For this reason most countries eased or eliminated their trade tariffs in preparation to join the EEC, but experienced declining revenue which reduced the importance of EFTA. Four members remain: Switzerland, Norway, Liechtenstein and Iceland. Iceland applied for EU membership in 2009 due to the 2008–2012 Icelandic financial crisis.
Read more about this topic: European Free Trade Association
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