Central European Free Trade Agreement

International trade agreement signed on 21 December 1992 by the former Czechoslovakia, Hungary, and Poland, and in force from March 1993 (by which time Czechoslovakia had become the Czech and Slovak republics). The main objective of the agreement was gradually to reduce and eliminate tariffs between CEFTA countries and to establish a free-trade zone by 1 January 2001, as a first step towards integrating these countries into Western Europe. Slovenia joined as a full member in 1996, Romania in 1997, and Bulgaria in 1999.

The objectives of CEFTA as outlined in 1992 were to promote the development of mutual economic relations between members through the expansion of trade; provide fair conditions of competition; and expand world trade by removing tariff and non-tariff barriers. The agreement provided for the staged removal of tariffs on raw materials, imports that did not compete with locally produced goods, agricultural products, and most industrial goods. It also planned, over time, to liberalize the flow of capital and services between member countries. CEFTA's creation was originally an attempt to boost trade among Central European nations after the collapse of the communist-era COMECON trading block. However, it was perceived as a testing ground for integration, considering that each member country's strategic aim was to join the European Union (EU). In 1999 CEFTA countries covered a common market of almost 100 million people and extended from the Baltic to the Adriatic and to the Black Sea.

The agreement eliminated duties on approximately 40% of industrial goods, rising to 50% of duty-free imports in mid-1994. By 1 January 1997, duties on industrial products were completely abolished, except for some ‘sensitive items’, while the gradual reduction of agricultural duties continued.

CEFTA was preceded in February 1991 by a meeting of the former Czechoslovakia, Hungary, and Poland in the Hungarian town of Visegrad, where a declaration of cooperation towards European integration was adopted. The purpose of the declaration was to mobilize joint efforts for integration into Western European institutions and European political, economic, security, and legal systems. Each country had previously signed association agreements with the EU.

In 1994 CEFTA member countries agreed to open membership to other countries. New signatories would have to receive the consent of the current members, have a commerical or political agreement or association with the EU, and be a member of the World Trade Organization (WTO). In order to join CEFTA, applicant countries would first have to negotiate bilateral agreements with all existing CEFTA members.