From the Schengen Agreement to the Schengen Convention
The Schengen Agreement, named after a small town in Luxembourg, is the fundamental act for the gradual abolition of checks at common borders signed in 1985, independently of the EU, between the following Member States of the European Union: Germany, Belgium, France, Luxembourg and the Netherlands.
Other countries that joined subsequently through accession protocols, are Italy, Spain, Portugal, Greece, Austria, Denmark, Finland and Sweden.
The Schengen Agreement, which dates from 1990, is a treaty that provided for cessation of inspections at internal borders of the signatory states and established common rules for perimeter border security.
The Schengen Agreement came into force in 1995 and was integrated under the European Union by Treaty of Amsterdam that came into force in May 1999. Since that date, the Schengen Acquis is implemented and is still developing within the legal and institutional framework of the European Union.
The Schengen Acquis
The Schengen Acquis includes a detailed series of measures designed to compensate for the abolition of internal border controls by enhancing security at the external borders of the Union.
From the moment a person is within the Schengen area, they are indeed free to move wherever he wants for a short period. It is therefore essential that controls carried out at the borders of the European Union are strict enough to stop illegal immigration, drug trafficking and other illegal activities.
Note that in case of a serious threat to public order or national security, a protection clause allows a Member State to temporarily reinstate border controls within the European Community.