By now the unthinkable has happened twice: not only have the British voted to leave the European Union, but their vote has been set aside to open the negotiation of a new UK-EU deal.
Paradoxically this might be less favourable to British interests than the renegotiation agreement that would have governed UK-EU relationship in case of a Remain vote. Despite the clear outcome of the EU referendum, few people in the UK seem ready to transform the popular vote into action by triggering the procedure of withdrawal foreseen by the Treaty. Amid the first severe economic, financial and monetary consequences of the vote, there is little appetite to pursue a British exit of the European Union.
Virtually all proposals currently circulating lack a basic understanding of both the hows and whats of a new UK-EU agreement.
First, “no notification no negotiation”, said President Juncker before the European Parliament in the post-Brexit debate, and this principle was confirmed by the Britainless EU Council on 29 June. In other words, unless the UK triggers Article 50 TEU, entailing its withdrawal from the EU, the EU and its member states won’t open the negotiations.
Indeed, even after the triggering of the withdrawal procedure, there is no legal obligation for the remaining EU to either amend the Treaty under Article 48 to accommodate UK new demands or to sign a new trade agreement with the UK. But let’s assume (as does Article 50 itself) that the withdrawal of the UK from the EU will entail the conclusion of a “framework for its future relationship with the Union”.
A panoply of models of economic integration have been invoked thus far. Should a Norway, Norway-plus, a Turkey Custom Union model or the “bilaterals” with Switzerland be followed? Even the recent EU trade agreements with Canada and Singapore have been invoked as possible sources of inspiration.
The truth is that there is only a limited number of models for the UK to follow. Among those, the only one that could meet the Brexiters’ demand – to benefit from access to the internal market while being outside the EU – is that provided by the European Economic Area, also referred to as the Norway model. This 1994 international agreement, which today binds the EU and its members, including the UK, to three EFTA countries – Iceland, Liechtenstein and Norway – creates an internal market for the resulting 31 countries.
The entry ticket into the EEA is, however, pricey. First, the UK would be required to systematically accept EU legislations, without having the chance to take part in their policy formulation. Second, the UK would have to continue paying into the EU budget (as Norway, Iceland and Liechtenstein do). Third, the UK would remain subject to the jurisdiction of a supranational court, the EFTA Court, which – by virtue of the principle of homogeneity – is bound to the case law developed by the EU court.
Last but not least, the UK would have to guarantee not only the free movement of goods, services and capital but also that of people, throughout the 31 EEA states.
Given the negative sentiment towards free movement among supporters of the Leave campaign, one may wonder how the UK will be able to depart from those rules within the EEA. While it is true that the EEA – unlike the EU – provides a safeguard clause allowing its members to suspend some obligations, the very same clause permits the other parties to retaliate.
So, should the UK suspend the free movement of EU citizens, the EU could remove tariff preferences for UK products, such as cars, to the EU or limit EU market access for its financial services. This explains why today’s calls refer to a “Norway plus” model. Although largely unqualified, this new arrangement, by renegotiating the “free movement of persons” chapter (as the Swiss tried to in the past), would aim to further the margin of manoeuvre of the UK within the EEA.
Paradoxically, by entailing the loss of voting rights in the EU, such a “Norway plus” model would represent a worse deal than the one negotiated by UK Prime Minister David Cameron last February. While Cameron’s renegotiation deal would preserve full access to the internal market and voting rights, the one pursued by the Brexiters would free the UK from the Brussels bureaucracy and perhaps allow them to partly control EU migration. That is the trade-off ahead of the forthcoming UK-EU deal.
But that’s not all. The Norway option is not a given for the UK. Following its withdrawal from the EU, the UK membership to the EEA would cease to exist. Indeed, when Austria joined the EU in 1995, it lost EFTA membership, but became an EEA member again because of its newly acquired EU membership. This explains why for the UK to join the EEA does not only presuppose withdrawing from the EU, but also joining the EFTA, which requires the unanimity vote of its existing four countries, including Switzerland. Only then could the UK become part of the EEA again, but for that it will need to obtain not only the unanimity vote of its 30 relevant countries but also that of the European Parliament.
As the Norway model won’t meet the UK requests, the renegotiation deal struck by David Cameron last February appears today a more plausible avenue for the future UK-EU relationship. Yet that was the deal to be implemented in the case of a Remain vote. No surprise then that no one seems ready to explain it to the 52% of British leave voters.