Brings together all the member states of the European Union (EU) and three of the four European Free Trade Association (EFTA) member states (namely, Iceland, Liechtenstein and Norway, but not Switzerland) in a single economic market, known as the internal market.

Established by the EEA Agreement, which entered into force on 1 January 1994, it extends the key EU provisions of the internal market (free movement of goods, people, services and capital, as well as competition and state aid rules) to Iceland, Liechtenstein and Norway without the full privileges and responsibilities of EU membership. It also guarantees equal rights and obligations within the single market for citizens and businesses throughout the EEA.

EU legislation relating to the internal market becomes part of the legislation of the EEA countries once they have agreed to incorporate it. Implementation and enforcement are then monitored by the EFTA Surveillance Authority and the EFTA Court, as well as the EEA Joint Parliamentary Committee of the European Parliament.

The EEA Agreement also covers co-operation in areas such as research and development, education, social policy, the environment, consumer protection, tourism and culture. It does not cover the EU's Common Agriculture and Fisheries Policies, the customs union, Common Trade Policy, Common Foreign and Security Policy, Justice and Home Affairs (even though the EFTA countries are part of the Schengen area) or European Monetary Union (EMU).