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.
Note: This blog originally appeared on LSE EUROPP. Featured image credit: Tom Evans / Crown Copyright
Gavin Barrett is Jean Monnet Professor of European Constitutional and Economic Law in UCD Sutherland School of Law.
I asked the commission about this, in fact I used the Europe Direct service to allege that the remaining member states had failed to call the diplomatic convention. I got a reply.
Hi. good article. I was thinking as I live in Iceland as we want to get out of EAA but it is nothing but burden as they have all kind of laws we can not keep up to due we are small nation of 300.000 plus and we are taking in all-kinds of people from lands beyond you know what through EU. Shengen is also our burden.
My question is how can nation like Iceland get out of EAA contract.
By the way we wait to see GB get out of EU and get new contract with you.
Here we are, with the anti-Brexit brigade moaning as if there no tomorrow, but by going back to the status quo ante.Europe is like a village.The EEC was built on the BeNeLux model, which was bolted on to a base of Western European coal and iron works and built out on the right side of the railway tracks.It was turned into a Coop as it was hijacked by an elitist crowd who had an agenda of their own.The poor part of the village on the wrong side of the railway tracks also joined the Coop.That was after some corruptly-run companies on the southern littoral joined the Coop.Some households in the village never joined, or become associate members.
Now the people of the UK household have decided to withdraw from the Coop.If a nation-state such as the UK cannot thrive as a sovereign country, what an indictment of its people.Of course, the anti-democratic faction in the remaining anti-Brexit moaners is a minority.They are wilfully blind to economic facts and sociopolitical reality.That’s fine.It is in fact a democratic right to be so.If a Coop is past its use-by date due to it having been taken over by internationally organised crime, it is better to get out.If the sovereign nation-states in Europe cannot find a way to peaceably work together, the result will not be another European war, but a fight for survival by the peoples who are determined to survive and chaos, civil war and invasion from without Europe for the nation-states which are not fit to survive.It has been remarked that the EU has been the reason for peace in Europe since WWII.In fact, war has been exported by Europe and kept going since the so-called end of WWII.The EU Commission, over the years, has not been the peacemaker some people have made it out to be.In fact, blind Freddie can see that the EU autocrats have set Europe up for wide-spread civil war.Brexit!
It matters not whether it is feasible or not. May is a politician thirsting for power and is a Tory biased person. Politicians never take the blame for anything because there’s always a clever way around it. No one cares about blame, which is meaningless anyway. The people of the nation pay the price always and the people have to live with it. There’s no “sharing society” because it’s every man for himself, I’m alright, Jack. Brexit proved that no one cares about the young, the children or future generations. We got our country back and sovereignty belongs to us, but no sovereignty belongs to parliament. May and her unelected government says so and dictates so. No blame there. Welcome to”train crash Brexit”.
“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.”
The implication seems to be that before the referendum Farage and many other Brexiters favoured having a status equivalent to Norway’s, but that after the referendum they changed their minds and favoured a clean Brexit. If this is what you mean then I wonder if you would give some examples, since I have been unable to find any, although it has not been difficult to find material that tends to contradict it:
E.g. 1: In a Youtube video that was uploaded in 2011 Farage extolls Norway’s EEA-based status, but he does not favour it. Instead he favours using EEA membership merely as a “holding position” from which to negotiate:
E.g. 2: a newspaper article published on 14 June 2016 quotes Farage as saying, “The people of Norway, Switzerland and Iceland are happy – but I don’t want a Norwegian deal or an or Icelandic one.
“I believe in a Britain outside of the EU with an exciting future. I believe in a new British deal that suits the needs of our own country.” http://www.express.co.uk/news/uk/679499/Brexit-Norway-EEA-EU-European-Union-referendum-YouGov
This is all a bit tendentious. The EEA in practice has freedom of movement – with a so far never used and probably unworkable emergency brake. The EEA comes under its own court, but that must follow ECJ precedents. The EEA members make budget contributions to the EU.
Fundamentally, there is no point in a soft brexit. For Leavers, it does not “take back control” – in some ways it would be worse, accepting EU rules with no say over what they should be. Immigration continues essentially as now, no £350m for the NHS.
For true Remainers, it means leaving the European peace project. It also means accepting the Leavers’ argument that the EU is a free trade area with ideas above its station. It never was and I would not wish it to be.
Sure, great to get out of the CAP – if we follow New Zealand’s example and set up a free market model for agriculture. If in practice we just bung in a new massive subsidy regime nothing of value has been gained.
The EEA point is really just a trivial legal issue about whether we need to write one or two letters saying “We are leaving”
The choice is Hard Brexit, or Remain. We should stop fooling ourselves that there is some nice middle way that satisfies everyone. Instead, those who wish to remain in the single market should realise that it means remaining in the EU. They need to end wishful thinking and work to reverse the June result.
That means obtaining and winning a referendum on the agreed terms of Brexit.
Key to that will be deserving to win by making June’s Leave voters enthusiastically vote remain in their own best interests. That will mean looking at economic and public services failures – which were not the cause of the vote but which do lead people to look for scapegoats.
But also addressing immigration directly, by highlighting the assimilation message. Look at Eric Kaufmann’s articles on this site.
More on my Facebook page: Campaign for the Real Referendum – on the Terms of Brexit
Those of us who voted leave knew exactly what we were voting for and that was to leave the eu entirely inclusive of the single market, it is only remoaners who pretend that we didn’t know, it had been made abundantly clear by cameron with his project fear campaign that leaving the eu would mean leaving the single market, he didn’t scare us because that is what leave voters wanted and voted for.
No-one doubts that you knew what you were voting for.
But you did not know what you were going to get – Leave had no plan. Indeed, six months on, you still do not know what you are going to get – although you do now know what colour it will be.
That shows that the decision in June and the decision to act on the exit terms when these have finally been agreed with the EU will be two quite different decisions. Hence the need for a referendum on the terms.
But May has put her hard core Brexit supporters in charge of delivery!
Do you still think it’s feasible? And if not, who’ll get the blame?