The ‘Norway’ model for the UK after Brexit

Mads Andenas and Carl Baudenbacher

Could the EEA be a model for EU-British relations after Brexit? Would the EEA/EFTA States accept the UK? What are the advantages and disadvantages?

Both the Icelandic and the Norwegian governments have signalled their openness to the UK joining the EEA/EFTA. Iceland did so from the outset and Norway after some reluctance. Liechtenstein will not disagree.

Of the seven EFTA countries which took part in the EEA negotiations 1989-1991, Norway, Austria, Finland and Sweden went on to apply for EU membership. Austria, Finland and Sweden joined the EU after a year in EEA/EFTA. As a consequence of a negative referendum in late 1994, Norway remained in the EEA/EFTA, together with Iceland and Liechtenstein. In Switzerland, participation in the EEA on the EFTA side was rejected in a referendum in 1992. The Swiss then decided to negotiate bilateral arrangements with the EU, without institutions and with only limited access to the Single Market.

Norway comfortable in the EEA

After some difficulties, Norway is quite comfortable in the EFTA pillar of the EEA. In the first 25 years of its existence, the EFTA pillar (like the whole EEA) has functioned well. After the gradual completion of the Single Market, the principles and key rules are established; the reasons for political strain on the EEA few.

UK entry would change the current balance. Including the UK on the EFTA side of the EEA may not be in the narrow short-term self-interest of the current EEA/EFTA states. But if the UK and the EU side were to agree, the EEA/EFTA states would be unlikely to stand in the way of a new EU-UK institutional solution. UK membership would also add bargaining power.

Mum’s the word

Theresa May’s government has not so far wished to draw any attention to the EEA. The EU team was initially quite favourable, but now seems to have much else to address and didn’t want to complicate things for Mrs May. The same applies to the Norwegian government; it, too, has wished not to interfere in domestic British politics. The Icelanders were more outspoken.

Advantages for the UK

The benefits of EEA/EFTA membership are plain.

The EEA Agreement is a trade agreement and does not aim at an ‘ever-closer union’. British industry, including the City of London, would have access to the Single Market.
Britain would win back its sovereignty (‘take back control’) in foreign policy and foreign trade, agriculture and fisheries. It could strike its own trade deals. The EEA could provide the framework for cooperation that the UK wants in the fields of Justice and Home Affairs and Security and Defence.

Britain would no longer be subject to the jurisdiction of the ECJ, but of the EFTA Court with one or two British judges. The EFTA Court is a Single Market court distinguished by its market orientation and its reluctance to succumb to neo-mercantilist temptations.

The co-decision problem

The EEA/EFTA States have a ‘co-determination’ right in the enactment of new legislation; they do not have a ‘co-decision’ right. With the Single Market much closer to completion today than in the beginning of the 1990s this may, however, be less important than it once was. The ‘rule taker’ mantra doesn’t stand up to closer scrutiny. Britain’s heft could count for more as a member of the EEA/EFTA than it has in the past in the EU.

At all events, this ‘co-determination’ could be modified. When the EEA project was launched in 1989, Commission President Jacques Delors offered the EFTA States more than ‘co-determination’. He spoke of ‘common decision-making and administrative institutions’. With the exception of Switzerland, most of the EFTA States did not have strong feelings about this. They saw the EEA as a short transitional phase on their way to EU membership. Delors withdrew the offer; but, in the context of UK participation, it could be put back on the table. In fact the Brussels based Bruegel think tank made such proposals in August 2016.

Free movement of persons

In the EEA/EFTA there is currently free movement, but no European citizenship.
There is a safeguard clause, and to have its own court in the EFTA pillar provides another guarantee for British sovereignty.

EFTA Court preferable to “arbitration”

The arbitration mechanism in the current text of the withdrawal agreement is highly unusual. It is a mechanism for complete and formal subjugation to the ECJ, which has been taken from the EU’s association agreements with the former Soviet Republics Georgia, Moldova and Ukraine. Hardly any important question will be for the arbitration panel to decide without the interference of the ECJ. In today’s language, it is a fake arbitration court. The only negotiation victory from the point of view of the UK is that the proceedings will be in held in the language of Shakespeare.

The EFTA Court, on the other hand, is tried and tested. It is well established, works well, and the UK will know what it signs up to. It is under no obligation whatever to refer questions to the ECJ. Differences in case law have in the past 25 years been resolved by judicial dialogue, the EFTA Court in many cases influencing the ECJ.

The UK must want it

Until the vote in Parliament on the withdrawal agreement, the EU and the EEA/EFTA governments will lend no active support to the EEA and the Norway model. Nor will they be pressed upon the UK at any later stage.

The UK must want it – as the best, second best, or the only realistic way to go. It remains there as a viable alternative. A second structure in Europe consisting of friendly countries interested in economic integration which leave political questions to intergovernmental cooperation should also be acceptable to the EU. At the end of the day this could even be the solution to the Swiss conundrum.

Mads Andenas is a Professor at the University of Oslo and the former Director of the Centre of European Law, King’s College, London, and of the British Institute of international and Comparative Law. He is a door tenant at Brick Court Chambers, London.

Carl Baudenbacher was a Judge of the EFTA Court 1995-2018 and its President 2003-2017. He is now an independent arbitrator and consultant and a door tenant at Monckton Chambers, London.