Britain should not be taken in by the EEA option – its existing members increasingly want to leave

Britain should not be taken in by the EEA option – its existing members increasingly want to leave

While some of the MPs sitting on the British Parliament’s Exiting the European Union Select Committee, and others who want Britain to remain in the EU, are demanding that the so-called Norway option will be considered as an alternative after leaving the EU, should trade talks fail, opposition to that arrangement is on the rise in countries that already have it.

The interest of those MPs in the Norway option, which means being in the European Economic Area (EEA) through membership of the European Free Trade Association (EFTA) like Norway, Iceland and Liechtenstein, is understandable in the light of the fact that this arrangement was originally designed by Brussels to prepare countries for becoming part of the EU – not the other way around.

The EEA Agreement was therefore in fact the predecessor to the pre-accession program which Brussels later mainly designed for countries in Eastern and Southern Europe. In fact the EU floated the idea in the 90s to use the EEA Agreement not only to prepare EFTA/EEA countries for joining the bloc but those countries as well. That was, however, rejected by the EFTA countries.

What EEA membership consequently means for countries outside the EU is becoming more and more tangled in Brussels’ web of institutions and regulations in the area which the EEA Agreement covers, that is the Single Market, which in turn is constantly deepening through following the EU integration process in that area and furthermore expanding to more and more sectors.

The so-called two pillar system of the EEA Agreement, according to which the EFTA/EEA countries are only supposed to be subject to institutions run by EFTA and not the EU, has never actually worked in that way. Its design suggests it was mainly supposed to appear for constitutional purposes as if the EFTA/EEA countries were not following decisions made by EU institutions.

The EFTA/EEA arrangement would for example, as I explain in a paper I wrote last year for the Red Cell think tank, keep Britain under the authority of not only the European Court of Justice (ECJ), which is defined in the EEA Agreement as superior to the EFTA Court, but also and increasingly so the direct and indirect authority of various EU institutions holding executive powers.

The EFTA Court for example has a legal obligation according to the EEA Agreement to follow judicial decisions made by the ECJ but not the other way around. Should there be a conflict between the two courts then decisions made to solve that cannot affect the case law of the ECJ. Furthermore the ECJ can be used as a court of arbitration to settle disputes over interpretation.

Recent years have seen this escalate following increased pressure from Brussels on the EFTA/EEA countries to officially accept direct authority from EU institutions. This had led to growing calls in Norway and Iceland to reconsider the countries’ membership of the EEA Agreement and looking into alternatives reaching, especially in Iceland, the highest political levels.

The Norwegian Foreign Ministry has confirmed that the EFTA/EEA countries have already accepted direct EU authority in certain areas in addition to indirect EU authority through the EFTA Surveillance Authority (ESA). As Iceland’s Finance Minister Bjarni Benediktsson pointed out recently, Brussels is constantly pressuring the EFTA/EEA countries to go further down that road.

Benediktsson furthermore said to the Daily Telegraph on 23 April that the EU’s repeated attempts to undermine the two pillar system were outrageous. This had left Iceland “struggling to assert its independence even though it is not an EU member state.” The EU’s desire for deeper integration was making it more difficult for Iceland to defend its national interests within the EEA.

The Foreign Minister of Iceland, Guðlaugur Þór Þórðarson, also criticized the EU recently for being reluctant to respect the two pillar system. Senior legal experts in Iceland have furthermore warned that executive powers, for example in the area of financial supervision, which have formally been transferred to ESA have in reality been put in the hands of EU institutions.

Meanwhile opinion polls in Norway have suggested that more Norwegian people would like to replace the EEA Agreement with a comprehensive free trade agreement than those who would like to remain in the EEA. The Norwegians have also had opinion polls showing far more people in favour of holding a referendum on Norway’s EEA membership than those against it.

The Norway option would also mean free movement of people from the EU and make Britain a subject to a large and rapidly growing part of the EU’s rule book. While the EFTA/EEA option would not prevent Britain from negotiating its own free trade deals the EU laws and standards would make that increasingly more difficult, especially in the case of the United States.

The primary reason for that is the fact that regulations and standards are often very different particularly between the EU and the US. On many cases, especially on the EU side, for protectionist reasons. Britain would not be able to change the EU rules, it would have to adopt through the EEA Agreement, in order to conclude free trade deals with other countries.

The British MPs in question, and others in Britain sharing the same approach, therefore without much doubt see the Norway option, or staying in the Single Market in some other way and/or a customs union with the EU, as a bridgehead back into the EU. Similar to how proponents of EU membership in Norway and Iceland see the EEA Agreement as a way to get their countries into the EU.

This has even been openly suggested. For example rather recently by the writer David Allen Green in the Financial Times where he said that while legal paths to prevent Britain from leaving the EU were blocked, the path to rejoining the EU under article 49 of the Lisbon Treaty, after making sure the country continued to be in the Single Market and a customs union, was open.

What Britain needs to do is on the contrary to refrain from signing up to any deal similar to the EEA Agreement which will make the country a subject to growing EU legislative and executive power in the area it covers. Not to mention the idea of remaining in a customs union with the EU. Doing so would evidently not deliver what was voted for in the 2016 referendum.