The European Economic Area (EEA) was created having as a scope the expansion of EU internal market in the European Free Trade Area (EFTA) countries. The EEA is based on the four freedoms on which it is based as well as the European Union: the free movement of goods, people, capital and services among the countries of the EEA. The aim of the EEA is to promote the continuous and balanced strengthening of trade and economic relations between the countries members of the EEA. For this purpose, the countries of the European Free Trade Area incorporate relevant legislation of the European Union in their national legislation, through the EEA Agreement, ensuring the four fundamental freedoms in the EEA.
The initial agreement for the creation of the EEA was signed on 2 May 1992, entered into force on 1 January 1994 including 12 EU Member States and seven EFTA States. However, the members of EFTA/EEA soon reduced: Switzerland, after the negative result of the relevant referendum, decided not to apply the agreement while Austria, Sweden and Finland joined the European Union in 1995. In the EEA remained only Iceland, Norway and Liechtenstein. After the historic enlargement of the European Union and the European Economic Area on 1 May 2004, the European Union Member States increased to 27 and the European Free Trade Area countries established the EEA and Norway Grants. More specifically, Iceland, Liechtenstein and Norway established the EEA Grants, while Norway created in addition to the Norwegian Grants.
The grants provided through the two financial mechanisms constitute the contribution of the three countries (Iceland, Liechtenstein, Norway) in reducing the economic and social disparities in Europe, in strengthening bilateral relations, in promoting the exchange of knowledge and expertise in thematic areas of high interest and more generally in supporting the new Member States, including Greece, Portugal and Spain, in their efforts to participate in the enlarged internal market.
Within this framework, each beneficiary State shall conclude a Memorandum of Understanding with the donor countries, specifying:
•    The specialized areas that would receive funding
•    The forms of finance
•    The applied management and control system
•    The institutional framework for the implementation the financial mechanism