The Norway option would capture the true essence of Brexit

Hardliners are wrong to dismiss the model out of hand

January 03, 2019
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The EEA option, i.e. continuing participation in the European Economic Area Agreement (EEAA) on terms equivalent to those of Norway, is frequently dismissed as a “second best” Brexit option. As the nearest competitor to the favoured “first-best” options of enthusiasts for hard Brexit or for Remain it naturally gets trashed from both ends of the spectrum. It does though have very considerable merits, which for me make it first-best by a significant margin. Here’s why.

First, it directly addresses the underlying problem in all this: a widespread domestic aversion to the process of political integration to which the EU is, and always has been, committed. It does so in a highly focused way that avoids major collateral damage to the economy. Taken together, these characteristics mean that it’s the only Brexit option that is well aligned with best-practice policy-making principles.

The EEA option holds on to the economic parts of the EU acquis that sustain the single market—the aspect of the EU that is widely regarded as its most successful feature—whilst dispensing with the more political parts. Wheat and chaff are separated and the former is retained. Retained is the right word here, because the UK is already a contracting party to the EEAA.

In short, there is no need to abandon an existing trade and economic cooperation agreement (the EEAA), which meets the prime minister’s “deep and special” criteria, in order to resolve a problematic divergence in political aims and priorities.

The EEAA is an international Treaty and, as the Attorney General explained to the cabinet in relation to the infamous Irish “backstop,” such Treaties endure indefinitely, until terminated by actions in conformity with international law. No such terminating steps having been taken, the Agreement will now necessarily live on post-Brexit, for the “transition period” at least. The EU-UK withdrawal agreement anticipates this—it is implicit, though unadvertised, in the footnote to the WA’s Article129(1)—but it leaves most powers of decision with the EU institutions. That is a deviation from Norwegian terms of EEA membership and represents an unnecessary surrender of sovereignty. It could be remedied by a simple amendment to the WA.

In responding to the underlying issue (divergence in attitudes to political integration), the EEA option is almost, but not quite,a bull’s eye: the UK would probably like also to hang on to tariff-free trade in agri-foods and fisheries, i.e. to products that are not covered by the EEAA. That could however be remedied by a 21-month standstill agreement in these areas (as currently envisaged in the WA) whilst a new EU-UK protocol to the EEAA was negotiated. A similar approach could also be applied to customs arrangements, if required.

The main criticisms of the EEA Option are that (a) it’s BRINO or “Brexit in name only,” (b) it would entail large contributions to the EU budget,(c) the UK would be a “rule-taker” (a “vassal state”), and (d) it does nothing to change the position on free movement of workers/persons. All are mendacious.

In relation to BRINO, cessation of UK participation in the EU political integration project is, quite manifestly, a big step to take. It is the very heart of Brexit.

Concerning financial contributions, the mandatory contribution to the EU budget would be zero. The EU has no power to tax a fully sovereign Norway, though the countrypaysfor participation in certain EU programmesof its own choosing.

In relation to rule-taking, the EEA option would sustain the UK position as one of the three, rule-making superpowers in Europe. It is the WA (in its existing form) that would create “vassalage,” for an indefinite period.

The rationale for the first of these statements lies in the rule-making structure. The centre of rule-making power is the European Commission and EEA status provides for direct Norwegian participation in its work (“decision shaping”). It’s true that voting rights are lost (as they will be under all Brexit options), but in reality voting settles very little. In compensation for the loss Norway et al get three, privileged channels of influence not available to EU member states: (i) they can declare EU legislation to be not EEA-relevant, (ii) they can seek adjustments and amendments to EU legislation, up to replacing it with “equivalent” regulation (see EEAA Art 102) and (iii) ultimately, each can decline to legislate to make new EEA directives and regulations applicable in its own jurisdiction (“rights of reservation”). That is reasonable compensation for a modest loss.

Finally, the EEA option would see decision-making responsibilities for limitations on free movement transferred from the EU to the UK. Currently the EU is the ultimate arbiter on this point, and decides which limitations are permissible and which are not. In the EEA, the general principle of free movement would remain in force. But British scope for limitations in certain circumstances would be increased, reflecting the fact that the EEAA is a trade and economic cooperation agreement, not a quasi-constitutional document like the Treaty of Lisbon.

The government’s approach to the EEA option is therefore something of a mystery. Until 23rd June 2016, no UK government enjoyed the possibility of unbundling the economic policy aspects of the EU Treaties (something most would have dearly liked to be able to do), yet, when the opportunity came in consequence of the referendum result, a red-line was quickly put through the EEA without any serious thought whatsoever.

That was a mistake, but it can still be corrected, potentially very quickly, by a declaration that the UK reserves its EEAA Treaty rights and intends to continue to be a fully participating member of the EEA on terms that, from Brexit Day onwards, will respect its status as a non-EU contracting party. For its part, parliament can assist by withholding its consent to any proposals that do not reflect such an intention.

For more on the legal aspects of “EEA Continuity,” see Richard Aikens, George Yarrow, and Guglielmo Verdirame, “The EEA Agreement: the key to a simplified Brexit process?