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.…