The Day after Brexit: the EEA Option

This is an old piece from October 2016, posted on the second anniversary of the Brexit referendum. It stills seems relevant.

The UK will formally withdraw from the EU Treaty on Brexit Day (BD) and an obvious question to ask is: what realistically possible circumstances does the UK wish to find itself in the day after Brexit (BD+1)?

Most discussion has focused on the UK’s longer term aspirations, as if it were possible to pick from a menu of future end states of the world, to the relative neglect of what are called ‘policy sequencing’ issues. Major policy adjustments are typically protracted processes entailing the development of strategies, with each step along the way best taken with an eye on what that step will imply for subsequent movement. Will it, for example, foreclose future options, or will it open up future options?

In thinking about sequencing it is highly relevant to recognise that the EEA Agreement is distinct from the EU Treaty. The UK is a Contracting Party to the EEA Agreement, which it signed and ratified in its own name in the early 1990s. Withdrawal from the EU Treaty does not entail withdrawal from the EEA Agreement and, contrary to an increasingly asserted falsehood that seeks to conflate the two, the contents of the two documents differ in a number of very major respects, as can be confirmed even by a cursory reading of them.

The only withdrawal mechanism specified in the EAA Agreement is voluntary, unilateral, simple and quick: it requires 12 months’ written notice. Given this it can be asked: is there any obvious benefit to UK withdrawal from the EEA Agreement on or before (or even shortly after) BD? I can see no clear basis for an affirmative answer to that question.

Continued UK membership of the EEA would see a substantial repatriation of powers on BD, across a wide range of areas that includes immigration as well as agriculture, fisheries, trade policy, the customs union, foreign and security policy, justice and home affairs, and taxation. These policy areas would no longer fall within the remit of the European Commission and the European Court of Justice (ECJ) and nor would supervision of the enactment (in national law) and enforcement of Single Market legislation.

Repatriation of control over immigration might appear a surprising inclusion in this list, but the text of the Agreement is clear enough for anyone who would read it. The particular aspects of the concept of free movement that are potentially problematic for the UK are stated to be “… subject to limitations justified on grounds of public policy …” (see Article 28(3)). A clear immigration or residency policy would provide just such grounds in the EEA context.

Given these points, it might be asked why there is so much contention surrounding the free movement issues. The problem lies, I think, in a failure to link the words ‘free movement’ to the specific context in which they are used and hence to link them to the particular features of the context that should govern their appropriate interpretation and meaning. To illustrate, it is obvious that the words ‘free movement’ are to be interpreted differently as between (a) the Universal Declaration of Human Rights (UDHR) and (b) the EU Treaty, because these are two different documents developed to serve two different sets of purposes. What is less immediately obvious, but, as already noted, is simply the case, is that the EEA Agreement and the EU Treaty are two different documents developed to serve two different, sets of purposes.

The differences in purposes is particularly significant because the European Court of Justice inclines toward what is referred to as teleological interpretation, i.e. interpreting the law according to intended purpose(s). The linkage between purpose and interpretation is therefore well established in EU law and policy.

To see the implications of the differences in purposes, consider the EU Treaty’s creation of a common citizenship, which puts Member States closer to being part of the same ‘State’ (a shared citizenship being one, albeit not the only, typical characteristic of a ‘State’). According to Article 13(1) of the UDHR: “Everyone has the right to freedom of movement and residence within the borders of each State”. In contrast, non-EU Contracting Parties to the EEA Agreement do not share a common citizenship, and Article 13(2) of the UDHR says only that “Anyone has the right to leave any country, including his own, and to return to his country.”

The EEA Agreement obviously implies rather more rights in relation to cross-border movements than does the UDHR, but the question of what those increments amount to is, under a teleological approach to interpretation, to be settled by references to the purposes of the EEAAgreement, not the purposes of the EU Treaty. Given that the purposes of the Agreement are considerably narrower than those of the Treaty, the interpretive gap is potentially quite large, particularly in relation to the compatibility of non-discriminatory residency policies with the Agreement’s stated aims/purposes.

In practical terms, what these comments suggest is that it would be feasible for the UK to revisit the existing EU free movement directive (Directive 2004/38/EC) and transpose it into national law in way that is consistent with both the provisions of EEA Agreement and its own, newly formulated residency policy (replacing the existing Immigration (European Economic Area) Regulations 2006, which were drawn up in a context in which the UK was part of the EU and therefore subject to the common citizenship provisions of the EU Treaty, i.e. drawn up when the policy purposes were different).

Turning to the other (than immigration) two, commonly expressed objections to the EEA option, budget contributions, it can be noted that the Agreement as it stands requires no such contributions from the UK (and the specific ‘Norway payments’ are themselves an historical idiosyncrasy). If the EU seeks such payments, contributions would need to be ‘negotiated in’ and, if agreed, the UK could reasonably expect a proportionate quid pro quo.

In relation to the second, frequently made objection to the EEA Agreement, a lack of influence over market rule-making, it can be noted that (a) non-EU Contracting Parties to the Agreement have co-determination rights in the preparation of Single Market legislation: it is only at the voting stage that rights are absent, and (b) this voting stage is itself followed by processes of transposition and enforcement where a national government is in the driver’s seat. As an EEA member the UK could therefore expect to continue to enjoy a significant, albeit diminished, influence on Single Market rule-making. Such influence would, of course, be more substantially diminished by withdrawal from the EEA.

It might also be remembered that the original Delors vision for the EEA contemplated full participation at all legislative stages, including voting, by non-EU members: only in the high politics of the period after the fall of the Berlin Wall did this principle get set aside. It would, therefore, not be novel for the UK to argue for the principle, which has manifest rationales in terms of both equity and effectiveness (of market governance), and one possibility is that it be part of the quid pro quo associated with any UK budget contributions.

Finally, to make the EEA Agreement workable in the new circumstances it would be necessary for the UK to accede to the administrative pillar established to supervise the operation of the EEA Agreement as it applies to non-EU members. This would not necessarily entail membership of EFTA (although that might be a Good Thing to Seek anyway), but it would require the consent of the governments of Iceland, Liechtenstein and Norway for the UK to become a participant in their inter-governmental Surveillance and Court Agreement. Early discussions with these governments would therefore be advisable.

In summary, the EEA option would potentially allow for a relatively straightforward process of exit from the EU Treaty, over which the UK would retain a substantial degree of influence throughout, followed by good faith efforts to make the EEA Agreement work and to improve it over time, including in relation to rule-making processes. If those efforts failed, that would then be the time to consider leaving the EEA, but that moment, if it does come, can be expected to arrive significantly later than BD+1.

George Yarrow, 15 October 2016

Author: gypoliticaleconomyblog

Lifetime student of political economy, retired academic and regulator.

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