The EEA option: Saving Britain from hard Brexit

"Even though soft Brexit is probably the most viable course available to Britain at this juncture, it is also full of pitfalls, uncertainties and dangers"
"Even though soft Brexit is probably the most viable course available to Britain at this juncture, it is also full of pitfalls, uncertainties and dangers"
Ian Dunt By

Soft Brexit is back in fashion. Labour's official policy is now to stay in the single market and customs union for a transition period - a position backed by trade unions, business bodies and all opposition parties apart from the DUP. Even Theresa May's government is starting to slowly get closer towards it.

But no-one really talks about what this would mean on a practical level. It is hardly ever acknowledged, for instance, that you have to leave the single market and customs union in order to stay in them. No-one talks about Article 50's little brother, Article 127, which we would need to trigger to leave the single market, and the potential for a Commons showdown over it. No-one talks about the extra controls over immigration that might - or might not - be available under soft Brexit. No-one talks about the Efta court, which we would come under the jurisdiction of, or whether it really is independent of the European Court of Justice.

This series of three articles, published over three days, will answer all these questions. It is a quick and dirty guide to what soft Brexit would look like. This is the true roadmap of what you need to do to secure it, based on conversations with experts at the very top of their field, including several people who helped write the agreements it discusses and worked right at the top of the institutions it mentions. There are no other accounts like it.

It reveals that even though soft Brexit is probably the most viable course available to Britain at this juncture, it is also full of pitfalls, uncertainties and dangers. Mapping it out is like trying to set a route through the desert during a sand storm.

A quick history of the EEA

Soft Brexit is only possible because of a decision taken in 1960, when Britain formed Efta as a club for countries outside the EU (it wasn't called that at the time, but let's keep things simple). Eventually, states started drifting into the main European project. Now, just four are left in Efta – small, stubborn countries which aren't comfortable with the EU but want its economic benefits. Yes that's right, it's almost like a club designed specifically for us. These countries are:

Iceland
Liechtenstein
Norway
Switzerland

A few years later, the single market was formed, creating true frictionless trade on the continent. Everyone wanted a part of that, but they didn't necessarily want to come under the control of a supranational institution centred in Brussels. So they set up an incredibly strange twin structure whereby they could share the single market with the EU, like two fishermen in a lake. That structure is called the European Economic Area (EEA) agreement, which includes all the members of the EU and Efta, minus Switzerland. In the end, the Swiss couldn't accept the agreement, so they stitched up a series of bilateral treaties which basically did the same thing. But when we talk about Efta in this context, we're basically talking about those three other countries. The Swiss have got their own weird thing going on.

Ultimately, the EEA agreement is just a treaty – an agreement between sets of countries. But it created two remarkable demands on the Efta states: uniformity and dynamism. The first meant that they needed to conform completely with EU law in the areas covered by the treaty – which was almost all of their economic structure, minus agriculture and fisheries. The second meant that as the EU updated those laws, they had to update theirs too. They weren't just promising to abide by the rules as they were at the time. They were promising to abide by them in the future too.

This was the price of entry into the single market. It sounds a very high price, but in truth there wasn't much else the EU could offer. The single market allows frictionless movement of goods, services, capital and people because all those countries have the exact same standards. If they pass a rule on the minimum level of recyclable material in paper packaging or a requirement to stop a car's electrical systems from interfering with pacemakers, they need everyone to follow it so that goods can go between countries without being checked. That's what the single market does: it melds economies together so they can trade as if they're in the same country.



However, it wasn't a complete replication of EU membership. The Efta countries got opt-outs on agriculture and fisheries and excused themselves from all the other aspects of EU membership, like justice and home affairs. But the really important historical distinction was political, not economic. They were to have no part of any of this ever-closer-union stuff the EU went on about. And they refused to come under the control of a supranational institution. This was a treaty and they would abide by it. But no organisation controlled them. They would create their own infrastructure to check they were complying. It wouldn't be up to the EU to make that call.

The EEA governance system is complicated but there are three bodies which really count: the joint committee, the surveillance authority and the Efta court.

The first is composed of representatives from the EU and Efta who meet up eight times a year to decide which new EU laws come under the EEA agreement and therefore have to be accepted by Efta states.

They're pretty reasonable about this. Iceland doesn't have any railways, for instance, so when the demand came down to form a railway regulator they were sensible enough to recognise that it shouldn't have to.

These laws are then slowly passed down to the Efta states. They have to take the EU standard and get to the same level, through domestic legislation. They have quite a bit of flexibility in how they do that. Efta states send experts to sit on technical committees to consult on implementation. It's all very gentlemanly and collegiate, although the EU undeniably has the upper hand.

The surveillance authority then checks that all the member states in the agreement are living up to it. If they suspect they aren't, they pass the case on to the Efta court, which rules on it. And that's how the system works.

Article 127

The EEA agreement is signed by all Efta and EU states. The UK is therefore a member of it by virtue of its EU membership. It can only leave if it triggers Article 127. This basically demands that a state gives other members one year's notice before leaving. So if we really plan to leave the EEA agreement in March 2019, as the government says, we need to trigger Article 127 in March 2018. So far we have shown little indication of doing that.

This has outraged many of those who worked at Efta, with one senior figure branding it "arrogant and offensive". The reason that one year requirement is there is to give the remaining EEA signatories time to correct and change their legal documents. Failure to do so turns countries against us just when we really need them on side.

Quite why the government has made no announcement on Article 127 is not clear. Some believe it's because it has too much on its plate and doesn't have time to think about all this EEA stuff. Others say that some figures inside the Brexit department are trying to keep the Efta option on the table. More pessimistic observers just think UK ministers are so arrogant they can't be bothered to satisfy their legal obligations towards a bunch European countries. Or it could simply be that ministers do plan to trigger it in March and haven't bothered telling anyone yet. After all, most journalists and MPs would have no idea what they were talking about.

But there is one final, more interesting theory. Some believe that the government is scared an announcement on Article 127 would trigger a legal battle which would end with them having to hold a vote on single market membership in the Commons. And they could easily lose that vote.




How would this happen? Well the logic of the Gina Miller case, which found that the government needed to give parliament a vote before triggering Article 50, suggests that parliament should also be given a vote on whether to trigger Article 127 and leave the EEA. Some campaigners against hard Brexit are considering dragging this to court and establishing that once and for all. If they won, we would get a replay of the Article 50 vote.

This time, it is not so clear who would win. MPs who were critical of Brexit may no longer feel they had to support the government in order to respect the referendum result. After all, we'd still be leaving the EU regardless of what goes on with the EEA. This would be about the kind of Brexit we do – not whether it would take place.

Labour has now committed to staying in the single market during transition, so they may whip their MPs into opposing it (although with Jeremy Corbyn in charge it's hard to tell). Some Labour MPs would probably back the government anyway, while some Tory MPs would probably oppose it. It's hard to tell how the vote would go, but it would probably be tight.

It's also not clear what would happen if the government lost the vote. The EEA agreement is between the EU and Efta. Come March 2019, Britain would be neither. So where would that leave us, given we couldn't technically leave the EEA? We'd be in some kind of definitional limbo, like someone forced to draw a square with no corners.

Government lawyers are apparently split on this. Some believe we'd stay a member of the EEA by default, others that we wouldn't because we'd be outside the definition of a EEA membership. Look deeper at the treaty and you can see why. Some bits of it refer to the 'contracting parties', which could be anyone. Some refer specifically to the EU and Efta. It's a mess.

This is one of those areas where political reality clashes with legal reality. In legal reality, there's no viable EEA membership available to Britain outside of EU or Efta membership. It's like ordering an omelette without the eggs. But a Commons vote against leaving the EEA - especially on the back of a court case demanding the government consult parliament - would have an irresistible moral force. It might force the government to find ways of staying in the single market. Certainly it's hard to see how a prime minister could ignore it without triggering a constitutional crisis.

Tomorrow, we'll look at the voting process Britain would need to survive to get into Efta and the powers it would have to control free movement if it succeeded.

Ian Dunt is the editor of Politics.co.uk. His book - Brexit: What The Hell Happens Now? - is available now.

The opinions in politics.co.uk's Comment and Analysis section are those of the author and are no reflection of the views of the website or its owners.

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