There is a good reason countries are not lining up to seek an EEA-style deal from the EU

There is a good reason countries are not lining up to seek an EEA-style deal from the EU

What the European Union is attempting to do in its current dealings with Switzerland is to force the country to accept a political agreement fundamentally similar to the European Economic Area (EEA) Agreement which Swiss voters rejected in a referendum back in 1992. Just like the EEA Agreement, the proposed EU-Swiss agreement would mean an obligation to adopt EU laws, a role for the European Court of Justice (ECJ) and free movement of people from the bloc.

Furthermore, as for example the Financial Times reported last December, seen from Brussels the underlying objective of the agreement the EU wants Switzerland to accept is that it will eventually result in the Swiss joining the bloc. In other words, the agreement is meant to be a gateway into the EU which also happens to be how the EEA Agreement was designed and has worked ever since it was created as I explain among other things in my 2017 paper The EEA is not the way.

There is a reason why countries are not exactly lining up and asking the EU for agreements similar to the EEA Agreement and why, quite on the contrary, countries such as Switzerland and the UK have rejected that arrangement. After the Swiss rejected the EEA Agreement in 1992, their government negotiated dozens of bilateral accords which govern Switzerland’s relations with the EU today. This is the arrangement Brussels wants the proposed political agreement to replace.

Former senior politicians in Iceland, who took the country into the EEA Agreement 25 years ago, have said that they did not do that to see it develop the way it has, referring to more and more powers being transferred to the EU through the large and increasing number of EU laws the EFTA/EEA countries Norway, Iceland and Liechtenstein are expected to adopt through the agreement and growing demands from Brussels that they accept direct authority from EU institutions.

The growing scepticism in both Iceland and Norway towards the EEA Agreement, which has been defined by Norwegian academics as the “lowest common denominator” that no Norwegian political party really favours, strongly suggesting that if the countries were not already part of the EEA and were offered such an agreement today, their politicians would reject it – just like the Swiss politicians have rejected the agreement Brussels is currently trying to pressure them into accepting.

The EEA Agreement is quite simply a product of the past. When the agreement was negotiated over a quarter of a century ago, the sole alternative was a first generation free trade agreement which only covered trade in goods. Modern comprehensive free trade agreements, which also include trade in services, technical standards, public procurement, intellectual property rights etc. and which are being negotiated around the world today including by the EU, simply did not exist.

There has been a tendency in Iceland to consider the EEA Agreement mainly a trade agreement, somewhat akin to when many in Britain used to think the EU was simply a common market. The EU, however, does not define the EEA Agreement as a free trade deal, but an association agreement where trade is first and foremost seen as a tool to reach political objectives which, in the case of European countries outside the EU, is mainly to prepare them for joining the bloc.

What the EEA Agreement does, after all, is following EU integration in the Single Market which is constantly both expanding and deepening based on Brussels’ decisions. Consequently the EU is in the driver’s seat when it comes to the development of the agreement. When the EU takes a step towards more integration which it considers a subject to the Single Market, it has to be incorporated into the EEA Agreement in accordance with the its fundamental principle of homogeneity.

The EEA Agreement is therefore simply a part of the EU integration process. Or as for example Martin Selmayr, Secretary-General of the European Commission, described it on Twitter on 22nd March this year: “The European Economic Area Agreement – the Treaty of Oporto – entered into force 25 years ago. It brings together the EU countries + Iceland, Liechtenstein [and] Norway. A well-tested, successful model for close economic integration between the EU and its neighbours.”

The modern way of trading internationally is through comprehensive free trade agreements and if they are not available for some reason, or have not yet been negotiated, through the World Trade Organisation. Most international trade today is carried out in that way, not the least by the largest economic powerhouses of the world, for a good reason. There is also a reason why Brussels finds itself in the position of trying to force an EEA-style agreement upon the Swiss.

Historically the EU has not been too interested in negotiating free trade agreements. Brussels has  rather reluctantly put more emphasis on doing so in recent years, mainly as an attempt to promote growth and create jobs in the wake of the international financial crisis. After all, the bloc is primarily a customs unions which has the core purpose of shielding domestic production from competition from third countries and as such represents by its nature the very opposite of the idea of free trade.

While being a part of the EEA without being formally in the EU does not include the customs union, it nevertheless means being subject to a vast and growing number of EU regulations. In others words, it does mean being in the EU’s sort of “regulatory union” which is not much better. After all, red tape has become an even more popular tool to maintain protectionist policies than tariffs, of which have seen a significant reduction in recent years, mainly following the establishment of the WTO.

What the UK therefore needs to avoid is not only the EEA Agreement itself, which has repeatedly been voted down by the House of Commons, but also signing up to a deal along similar lines. This is, as I mentioned at the start, what the EU is trying to get the Swiss to accept, despite the fact that they have already rejected that kind of arrangement in a referendum. But then again, since when has Brussels been bothered by the democratic will of the electorate in referendums?