Article 50 receives far more attention—but a clause from a different treaty could prove the sticking point in the Brexit processby Jonathan Lis / August 16, 2017 / Leave a comment
Recent weeks have seen a number of high-profile comebacks—and to the list of Bananarama, Shania Twain and Steps, we can now add Article 127 of the 1994 European Economic Area (EEA) Agreement. Not as glamorous or radio-friendly, and currently popular only with Brexit anoraks, it is potentially far more significant for the future of Britain’s economy.
The EEA Agreement is the treaty which extends membership of the single market beyond the borders of the EU. It was signed by the EU and three members of the European Free Trade Association (EFTA): Norway, Iceland and Liechtenstein. (Switzerland, the fourth EFTA member, declined to join after a narrow referendum defeat.) It establishes membership of the single market in almost all sectors except agriculture and fisheries, and signatory countries honour the free movement of goods, services, capital and people. (Liechtenstein, with a population of just 37,000, is permitted to apply a quota on people, and other limited safeguards are possible.) The EEA is distinct from the customs union—back in the headlines this week—which, for example, allowed Iceland to sign an individual free trade agreement with China. Non-EU EEA members also use the EFTA Court rather than the prime minister’s red-lined European Court of Justice (ECJ), preserve full legal sovereignty, and do not pay directly into the EU budget.
Article 127 states that a contracting party who wishes to leave the EEA must give 12 months’ notice of its departure. The EEA has 32 contracting parties—the 28 EU member states, three EEA EFTA states, and the EU itself. Arguably, then, should the UK wish to leave the EEA and thus the single market, it needs to trigger the clause. Accordingly, in the absence of invocation, Britain may still consider itself a member of the single market.
“Article 127 has proved perhaps the only issue on which the UK government and EU have found agreement”
When I first became aware of Article 127 last year, its potential bargaining power was the feature that most strongly leapt out. If the UK was independently a contracting party, it could simply decline to trigger the clause and therefore stay in the single market even if the EU wanted it out. It was a golden negotiating tool. We genuinely believed the government might seize such a tool and deploy it after triggering Article 50. That they flatly rejected it indicated even then that the prime minister simply didn’t want to stay in the single market.
Article 127 has, in fact, proved perhaps the only issue on which the UK government and EU have found agreement. Both contend that Britain will leave the EEA automatically when we leave the EU. They principally point to Article 126 of the agreement which they say limits EEA membership to only current EU states and named EFTA states. Opponents also point to other problems, such as how the UK would access the EEA’s courts without being a member of either the EU or EFTA. Political motivations of course remain central: the EU does not want the UK to be able to outmanoeuvre it, and the UK government wishes to end free movement at apparently any cost, and with seemingly minimal scrutiny.
Only the ECJ is competent to adjudicate on such a fundamental matter of EU and EEA law, but a national court must first make a reference to it. My colleague Peter Wilding, and soft Brexiter Adrian Yalland, duly petitioned for a judicial review into the government’s stated intention to treat Britain’s withdrawal from the EEA as an automatic consequence of Brexit. Was Article 127, which includes non-EU states, in effect subordinate to the EU’s Article 50, or separate from it? The petition reached the High Court in February, but failed: not because of the substance of the claim, which the judges did not test, but because the government claimed that it had not yet reached a final decision on how it might leave the EEA—and so there was at that point nothing technically to challenge.
Article 127’s comeback has emerged as a result of the European Union (Withdrawal) Bill—formerly known as the Great Repeal Bill. And so to the second part of the original legal case: the role of parliament. Specifically, the proposed judicial review intended to clarify that only parliament, as opposed to the prime minister, could choose to trigger Article 127. In this sense it was an echo of the Miller case, which established that only parliament could authorise the invocation of Article 50.
“This is not just a question of dry legal formality—it is also one of rights”
So what will be parliament’s role? So far Article 127 is not on the agenda—and if the government does decide to trigger it, it will not have to do so until March 2018, 12 months before Brexit. The government has, however, published its plan to amend the EEA Act 1993, previously enacted by parliament, in order to terminate the EEA Agreement’s application in British law. Some lawyers believe that if parliament does so, it will render Article 127 a formality, as the EEA will no longer have domestic implementation. Failure to invoke it could nonetheless create further legal problems—akin to repealing the European Communities Act, which enables our EU membership, without also triggering Article 50.
This is not just a question of dry legal formality, or even of the future of our economy which so depends on our membership of the single market. It is also a matter of rights, and the very concept of parliamentary sovereignty. The EEA grants rights separately from the EU—specifically, the rights for the EFTA state citizens to live, work and trade freely in the EU on a reciprocal basis. Free movement is key. Norway is not in the EU and will not be around the Brexit negotiating table, so what will be the legal status of its citizens who are currently exercising free movement in Britain or who wish to do so in the future? What about British citizens doing the same in Norway? As Miller established, only parliament can remove such rights, not the prime minister under royal prerogative. If MPs vote to remove the EEA’s application in UK law, they must also vote to trigger Article 127, with explicit awareness of the full implications of both moves.
Like 2017’s reformed pop acts, Article 127 and the EEA have been out of the spotlight for a while, but never actually went away. If the government wants to eliminate them for good, removing rights and damaging the economy, it needs to explain why. It must then convince MPs that the cost to their constituents, and to British and EEA citizens without representation, will be worth it.