Much of the discussion around Brexit has focused on when the UK will formally trigger Article 50 of the Lisbon Treaty and begin the process for leaving the EU. As Gavin Barrett writes, however, the procedure for leaving the single market is potentially more complex due to the UK’s participation in the European Economic Area, which has its own process for withdrawal.
How many international organisations has it taken to create Europe’s single market? Just one? Answer: no, Europe’s single market is the product of two organisations and their rules. Arguments are now raging first as to what rules the UK leaves behind if Brexit happens. One set of single market rules? Or both? And secondly, as to whether UK voters said anything in any case about single markets in the June referendum.
Let’s explain. On the one hand, there are the rules of the European Union (EU), signed up to by 28 member states. These rules created not just a single market, but a customs union, a common agricultural policy, a common fisheries policy and much more besides.
On the other hand, there are the rules of the European Economic Area (EEA), signed up to, once again, by 28 EU member states – but this time also by Norway, Liechtenstein and Iceland. Thanks to the EEA Agreement, these three states share Europe’s single market with the 28 EU states. But little else. The EEA involves no customs union, or common agriculture or fisheries policies.
The EEA owes its 1994 creation to erstwhile Commission President Jacques Delors. His idea was that the EEA would be a kind of economic space absorbing European states into the single market, but without allowing them into what is now the EU – thereby allowing the 12 members in the then ‘Community’ (now EU) to continue with EMU, and internal market reform.
The EEA worked out, but somewhat differently than anticipated. First, we have been left with only three non-EU participant states rather than the large number Delors envisaged. Some other potential non-EU members (Finland, Austria and Sweden) ended up joining the EU itself. One, Switzerland, opted out of the EEA entirely.
Secondly, the EEA has effectively become a ‘fax union’ as far as the non-EU participants are concerned. Norway, Liechtenstein and Iceland (although they are consulted under decision-shaping processes) basically sit at the end of a fax machine waiting for the EU to send them single market rules to implement.
So what did UK voters say about these sets of single market rules in the June referendum? Awkwardly, the UK electorate were not asked if they wanted to reject the single market, but merely the EU. A 52 per cent majority voted to leave that. Before the referendum, many Brexiters (including Nigel Farage) extolled Norway’s EEA-based status. Now, however, many assert that respect for the June vote requires rejecting all single market codes (including EEA rules). They say voters sought to end contributions, restrict migration, and avoid the application of Court of Justice decisions and that these aims would be frustrated by staying in the EEA.
Single market Remainers counter that there was no majority to leave the single market: many reasons for voting for Brexit had nothing to do with the single market (such as a belief that money would be saved, or opposition by farmers to the CAP or fishermen to fisheries policy) or even Labour voter opposition to austerity. They note future UK contributions will be required in any case to gain market access (as Brexit minister David Davies has now conceded), and that restrictions on migration (albeit admittedly limited ones) are possible under Article 112 of the EEA Treaty.
What does the law say will happen if the UK leaves the EU? This is unclear. The UK Government asserts that the UK is party to the EEA Agreement only in its capacity as an EU member state. Thus once the UK leaves the EU, it will automatically cease to be a member of the EEA. The point is arguable. Article 126 of the EEA Agreement, for example, does say the agreement shall apply to the territories of the now EU as well as Iceland, Liechtenstein and Norway. Provisions like that could be argued to bring in Article 62 of the Vienna Convention in the event of Brexit (which allows unforeseen “fundamental changes of circumstances” as grounds for terminating a treaty) or perhaps Article 60, (which allows “material breaches” to justify terminating the EEA Treaty’s application to the UK).
The point is not clear though – because Article 127 of the EEA Agreement expressly provides only one way of withdrawing – by giving 12 months’ notice to other parties. If that provision applies, then just quitting the EU won’t be enough for the UK to leave the EEA’s single market. The UK will have to give express notice to leave the EEA as well.
We may soon find out. Think-tank British Influence plans to seek judicial review of the Government’s EEA position. The question could even end up being referred to the European Court of Justice. There are UK law issues here, too. And political issues. As we all know, the Supreme Court decision in Miller will determine if parliament’s consent is needed under UK law to trigger Brexit.
If the Supreme Court say ‘no’, then parliamentary consent will not be needed to trigger Article 127 either. That would be the end of the Article 127 story. The Government will simply give the Article 127 notice: it would then be farewell to the EEA. If the Supreme Court say ‘yes’, then parliament’s consent will be needed for EEA exit too. But here is the catch: parliamentarians may not give it, claiming there has been no referendum on that.
Getting thus ‘stuck’ in the EEA either temporarily or even permanently would be great news for British business – much preferable to the mere customs union, or worse, WTO rules they will be left with if Britain leaves the single market. The Courts, and potentially parliament too, thus have crucial decisions ahead of them – decisions which could affect British economic wellbeing for generations.
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Note: This article gives the views of the author, and not the position of EUROPP – European Politics and Policy, nor of the London School of Economics.
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Gavin Barrett – University College Dublin
Gavin Barrett is Jean Monnet Professor of European Constitutional and Economic Law in UCD Sutherland School of Law.
Semantics, we voted to leave the EU and that means ending a range of issues, including no EU laws, no freedom of movement and no financial contributions.
Whatever the “official title” of the arrangement, we need to leave and if that means just walking away, fine.
Yep, the actual arrangements that govern everything from trade and immigration to our very rights as citizens are all “semantics”. Just “leave now” (or something) and above all try not to think about anything in detail for more than five minutes.
Another brilliant comment. Well done.
Karl, please stop using the Royal “We”. You may well have voted for all those things, but neither you nor I have any way of knowing what the other millions of Leavers voted for precisely. If, of their 52%, just 2% would prefer to stay with the EEA rather than suffer the chaos we are otherwise heading for with the present government disarray (and I personally have no doubt that far more than that would do so), then that makes it a thoroughly acceptable option. Decisions on what is best for the country should be determined by Parliament as a whole, and not by either a clique in the Conservative party or an aggressive mob.
Its a royal prerogative and I will continue to use it as I please. Parliament made a decision to ask the voters if they wanted to remain in the EU or leave, the majority voted to leave and that is what we expect to happen.
“the majority voted to leave and that is what we expect to happen”
Another amazing nugget of wisdom there. The question is what type of Brexit the people want: typing inane soundbites over and over again isn’t an answer.
Richard made the very good point that if 51.9% voted to leave the EU, it wouldn’t take many leave voters backing EEA membership (something numerous high profile Eurosceptics like Daniel Hannan explicitly argued for again and again during the campaign) to make that the majority option. Your suggestion that every single one of them backed a hard Brexit is frankly nonsense and in typical fashion you’ve done nothing to back it up when your views have been questioned.
I voted to leave because I didn’t think we would and just wanted to poke David Cameron in the eye. Horrified at how it turned out. My own fault but as a leave voter, I’ll have a soft Brexit please and 350m a week for the NHS to make me feel better about the way I voted.
Then you should have abstained, we didn’t vote on an endless array of soft, hard or squishy ways of leaving.
To try to entangle the public in speculations of this kind is an aberration. Therese May has already stated that EU immigration will be controlled, (hence no single market). And likewise has supported policies which automatically would mean UK will not remain in the customs union. If UK abandons both, as is what Brexit really means, then the EU will suffer a lot too, unless they come up with arrangements that are acceptable to UK. The superstate is pretty much a paper tiger in that it is disunited over so many issues and its states have so many economic and security interests to protect.
What else could one expect from the leftist, ‘elitist’ LSE whose students, incidentally, once voted over whether to have as their Honorary President either Carlos the Jackal or Mick Jagger.
Robert, you say the EU is disunited about many issues, but the one thing that has united it is Brexit
I have never seen so much unity and clarity of message, basically the EU agrees that it is hard Brexit or no Brexit, your wishful thinking won’t change that.
I thought we’d done this one?
Under the EEA agreement, the only mechanism for leaving is giving 12 months notice under Article 127. The only consequence of that is that a diplomatic conference is then convened to discuss what to do. If we do not leave, we remain technically an EEA member, except that almost all the provisions would no longer apply to us, because clause after clause is written around the EU and the named countries (not forgetting the exclusion of the Åland islands), and the UK would not be covered. The agreement has been modified on several occasions to accommodate EU expansion. That has been relatively uncontroversial. However, the agreement would require root and branch modification to incorporate the UK post Brexit as a substantive party, and it would require unanimous agreement – including that of the EU in its own right as a signatory. That would be no easy process.
To be slightly more specific: freedom of movement of goods and tariff free trade apply to all Contracting Parties. Freedom of movement of workers only applies to EC Member States and EFTA States – which would exclude the UK (Article 28). Services are similarly constrained – so no passport for the UK is implicit. There is however freedom of movement of capital so long as it belongs to residents of the EU or EFTA States (so we can secure inward investment or cash deposits in London) – but UK owners of capital have no reciprocal right to free movement.
Now, do you really think the EU would concede that? It knocks a coach and four through their “four freedoms” negotiating position.
The UK will of course probably wish to conclude its own agreements with Iceland, Norway and Lichtenstein to cover for deficiencies in the EEA agreement post Brexit. I’m sure the issues will be broached at diplomatic level before too long.