3 August 2018

EEA membership does not solve Britain’s Brexit dilemma


Brexit issues appear to be tidal. Proposals that have previously disappeared re-emerge from the mist like policy Brigadoons.

On the same day that Professor Yarrow’s thoughtful piece on the Norway option appeared on CapX, the Financial Times reports that Michael Gove, a Leave-supporting Cabinet Minister, also recently mooted the EEA as a respectable way forward.

The logic of Gove’s thought experiment and temporary EEA advocates such a George Trefgarne is that the Norway Option is a safe harbour in which Britain can park itself, collect its thoughts and have another go at negotiating with the EU.

There is unfortunately a fundamental flaw to this approach: the laws of political kinetics. Once in such an arrangement, the impetus to do anything further will, in all probability, ebb and we will stay there.

So it is of no use as a transitional step. Worse, the growing gravitational pull of the EU itself will over time drag us back. This, indeed, is the aspiration of some who pursue this approach.

Even if the EEA represented the ideal model at present, it won’t be where the UK ends up. For the EEA itself is slowly being drawn closer to the EU’s orbit. A reluctant, hesitant, bipolar UK joining it will not inject it with the ambitious reforming spirit that can halt that change. It will merely confirm that there is only one model of trade for the continent of Europe: one that is based on a federalising EU, and not on cooperating free-trading nation states.

That’s not all. In two papers for the Red Cell, Eurosceptic campaigners from Norway and Iceland have set out their views on EEA membership as it stands. They both see the EEA as an improvement on the EU, yet also consider a free trade deal as superior to both. I think that should be reason enough for us, and for Mr Gove, to take pause.

Some of the reasons set out in these papers will be familiar to EU analysts and campaigners. Others are only relatively recently becoming evident as acquis and case law develop.

There have been regulatory hurdles that have got in the way of major contracts with the United States. There have been controversial cases blocking Government attempts at interventions on public health grounds.

There is clear evidence of policy creep, involving a number of sectors originally considered to be outside of the EEA’s remit. There is the principle of Loyal Compliance that requires the EEA state parties to adhere to the decisions and judgements reached, but where the nature of the review system inherently leans towards the EU side.

I might add that in the marvellously esoteric case cited in the CapX article involving the Svalbard Snow Crab, the governing treaty dates from 1920, while fisheries as a competence is excluded from the EEA Agreement. So it’s no surprise the EU side got short shrift. But let’s see how the EFTA Court reacts when health and safety or ECHR rights start to get raised.

The EEA route is no panacea. One of the big issues raised in the referendum was taking back control of the UK’s borders. The EEA fails to do that. Eurosceptics who previously pointed to Article 112 as a limiting mechanism have underestimated the legal force of the clauses mitigating its application, as now clarified in law. EEA membership does mean continued free movement of people. The Commission itself has persistently made it clear it considers this an indivisible element of the Single Market (whence indeed David Cameron’s negotiating failure).

Nor does the EEA model address the issue of the Irish border, because the EEA is not a Customs Union.

The issues it does offer solutions to can be solved or mitigated in bilateral and intergovernmental ways. One can have a decent debate about how extensively, and how this compares with the EEA membership cost. Cost, of course, also comes in those membership fee terms that were also an element of the referendum.

Even if we put all these issues to one side, there’s still the question over even becoming an EEA member in the first place. Some, such as Professor Yarrow, claim the UK has not declared it intends to leave the EEA, and therefore it can remain a member. It has to be said that this is not the legal view of the UK Government, which has expended some effort on reviewing it.

Let us be open-minded and accept for a moment that there may be an element of uncertainty on the issue. Yet uncertainty is precisely the commodity that the EEA route seeks to avoid.

The prospect of an uncertain transition actively encourages any party to the agreement, of which there are many, to put an item on the table over which it expects the UK to yield. The threat levied is that unless the UK concedes some point, the recalcitrant capital will challenge its legality, and perhaps even organise its trade administration accordingly. The threat alone is enough to introduce business uncertainty. What price then is too high for Whitehall to yield? Gibraltar? UK fisheries? Defence cooperation? The role of the European Courts? The very uncertainty makes the EEA route a parlous hostage to fortune.

Where I would agree with Professor Yarrow, and where I believe his argument is very useful, is in his interpretation over the safeguards. To paraphrase him I hope not too unjustly, the EEA contains a number of elements that, while they are not perfect, do act as speedbumps to any egregious Commission ambition. They are imperfectly mimicked in the Chequers proposals.

Both the EEA and Chequers contain the opportunity for a party to decline to implement an EU rule; this though carries the consequence of suspending the operation of the EEA Single Market in that area. Quite what those boundaries are remain subjective until tested, and of course could end up potentially being quite large, especially if the Commission seeks to be vindictive to dissuade further repetition.

Meanwhile, what the Chequers draft does not appear to do is provide the same level of institutional injection and oversight that even the Norway model includes. In other words, the Chequers model itself risks turning into what Cameron’s Downing Street long called the Norway deal – a Fax Democracy.

Where I part from Professor Yarrow is on the corollary. Because something is better does not make it optimal. Both models, the Chequers and the Norway model, include an inbuilt structural default. The nature of the arrangement in both cases is such that it is inherently unlikely that the vexed state will diverge in any area, even where it is palpably harmful to its interests.

We have long been able to observe how difficult it is to stimulate and nurture a civil service to fight the administrative tide of Ever Closer Union. To this we can now add the risk of political uncertainty, fuelled by powerful lobbies, that would hound any thought of diverging from a burdensome EU policy. It will take brave ministers to take advantage of any such opportunity, even if it the prerequisite of a major international free trade deal.

Effectively, I fear our timorous establishment will psychologically remain prisoners of a new Shadow EEA. This is not only a dismal prospect. It would be a pathetic one.

Dr Lee Rotherham is director of The Red Cell, a Brexit think tank.