The Norway option would be even worse than Chequers

The Norway option would be even worse than Chequers

Following the publication of Theresa May’s Chequers proposal, there have been some suggestions that the only way to “save Brexit” is now the so-called Norway option. The argument goes that the UK is already part of the European Economic Area (EEA) and should use it as a temporary fallback or for a transition period until a free trade deal with the EU has been negotiated.

The EEA has of course been debated over and over again and always ended with the same evident conclusion: that the Norway option would neither be in the interests of the UK nor be what was voted for in the 2016 referendum. The reason the EEA has now been brought up again is not because there is some new information about it. I’m afraid this is simply a capitulation.

First of all, the UK cannot remain in the EEA after Brexit as if nothing has happened, as was explained in my paper The EEA is not the way published by the Red Cell think-tank last year. Article 126 of the EEA Agreement clearly states that it only applies to territories which are subject to the EU treaties and those of the EFTA/EEA countries Iceland, Liechtenstein and Norway.

This is not only clear from the text of the EEA Agreement, the function of which on multiple occasions relies on references to the three EFTA countries and the EU, but it is also the standpoint of both the EU and EFTA. When the UK leaves the EU, which is set to happen on 29th March next year, it will also leave the EEA as the EU treaties will then no longer apply to the country.

Even those who claim the UK can be part of the EEA in the absence of membership of either EFTA or the EU admit that for this to happen the option would have to be added to the EEA Agreement, an alteration which again would require the consent of all the members of the two clubs. In other words, they recognise the simple fact that the EEA Agreement simply doesn’t permit this.

Therefore, being in the EEA after Brexit would require the UK to formally leave the EU and negotiate a return to EFTA (which Britain belonged to between 1960 and 1973) plus, according to Article 56 of the EFTA Convention, the dozens of free trade deals the EFTA countries have concluded jointly, and then of course negotiate a return to the EEA Agreement from the EFTA side.

Moreover, as for example Jean-Claude Piris, former Director General of the Legal Service of the Council of the EU, has pointed out, an EFTA/EEA accession treaty cannot be signed before Brexit and would require ratification by all the remaining 30 EEA members. In the meantime, WTO rules would have to be applied which those in favour of this idea say is their aim to avoid.

This procedure would naturally take quite some time, even years, assuming of course that the current EFTA members would accept a British application. The Norwegian government has been reluctant to say it would and Prime Minister Erna Solberg has repeatedly warned Britain, both before and after the 2016 referendum, that the EEA Agreement would not serve British interests.

Prime Minister Solberg and others in Norway who wish to join the EU – as opposed to most of their countrymen – primarily see the EEA Agreement as a waiting room for their actual goal. After all, the EEA Agreement was originally designed as such by Brussels and still operates in that way by constantly making the EFTA/EEA countries subjects to more EU regulations and authority.

While the Icelandic government has said it would welcome British membership of EFTA, it has refrained from mentioning the EEA in that context. Membership of EFTA after all does not require a country to join the EEA as well. This stance is very understandable in the light of the harsh criticism of the EEA arrangement put forward by Icelandic government ministers in recent months.

Finance Minister Bjarni Benediktsson and leader of Iceland’s conservative Independence Party has, for example, repeatedly criticised the EU harshly for constantly pressuring the EFTA/EEA countries to accept direct EU authority through the EEA Agreement, while Foreign Minister Guðlaugur Þór Þórðarson has echoed his criticism along with a number of other Icelandic politicians.

What rejoining the EEA would mean for the UK, as has been repeatedly pointed out, would in short be to “accept EU legislation, payments to the EU and the jurisdiction of the Court of Justice of the European Union,” to quote the EU itself – including free movement of people from the bloc. Obviously this would not mean taking back control of your money, borders and laws.

The three EFTA/EEA countries – Iceland, Norway and Liechtenstein – have to accept a significant and constantly growing number of EU laws and must furthermore issue large payments to fund cohesion projects within the EU which would otherwise have to be financed by the EU budget and which Brussels considers an absolute condition for their EEA membership.

While EFTA/EEA membership doesn’t prevent EFTA members from negotiating free trade agreements (as they are not part of the EU’s Customs Union), the EU legislation – which they have to adopt onto their statute books through the EEA Agreement and then implement – significantly limits their scope for dialogue with other countries. Therefore the EEA Agreement works in a way as a customs union.

Because of the EEA Agreement, trade between Iceland and the United States has become increasingly difficult and expensive as the growing number of EU rules adopted in the country are very often entirely incompatible with those used in the US. This arguably prevents an Iceland-US free trade deal as the Icelandic government is unable to negotiate those EU rules.

When it comes to free movement of people, there have been claims that under the terms of the EEA Agreement the British government could limit how many people from the EU could come to the UK. The fact is, however, that this is not possible as is also explained in my paper since the measures referred to are only meant to be used temporarily during absolute emergencies.

The only EFTA/EEA country which has been able to introduce such measures is Liechtenstein in accordance with an EEA Council decision from 1995. The primary reason is the principality’s “very small inhabitable area of rural character” and “an unusually high percentage of non-national residents and employees” out of a population of only about 38,000 people.

Moreover, the European Court of Justice has a far more senior role than the EFTA Court. While the EFTA Court is required to follow the ECJ’s case law according to Article 6 of the EEA Agreement and Article 3 of the EFTA Surveillance Authority and EFTA Court agreementthere is no such obligation the other way around (although the EU court occasionally chooses to take note of EFTA Court’s case law).

Furthermore, in case of a conflict of interpretation of EU rules, including between the two EEA courts, a political solution in the joint EEA committee cannot go against the case law of the ECJ according to Protocol 48 to the EEA Agreement. No such reference is made, however, to the EFTA Court. The ECJ can moreover be used as a court of arbitration (Article 111) in this situation.

The biggest problem with the EEA Agreement is, after all, that it follows the EU integration process in the area it covers, the Single Market. That area is not only constantly becoming deeper but also wider as more and more areas are taken into the agreement. When the EU takes a decision to increase integration among its members, the same must apply to the entire EEA.

Coming back to the idea that the UK should use the EEA as a temporary fallback, disregarding the serious consequences it would have for British interests, it’s hard to see why the EFTA/EEA countries should be willing to renegotiate the EEA Agreement – plus the EFTA Convention and all their dozens of joint free trade deals – only for temporary British membership of a few years.

The idea that the UK should join the EEA without being part of either the EU or EFTA also raises the question as to why on earth the two clubs should accept altering the EEA Agreement in a way that would no longer make it exclusive to them. There is a reason why the EEA Agreement was designed in that way and why its function is dependent on membership of either of those two clubs.

Finally, it is worth keeping in mind that the Norway option is Brussels’ favoured outcome for the negotiations with the British government as senior EU representatives, such as Michel Barnier, have admitted on several occasions. After all, as I have made clear above, it would mean the UK carrying on being a subject to the EU’s ongoing integration process.

There is, as many have observed, only one outcome which would honour the 2016 EU referendum result of taking back the British people’s control over their money, borders and laws apart from a World Trade Brexit – a comprehensive free trade agreement along the lines of the one Canada has negotiated with the EU. The time has come to take that option.