Countdown to Brexit: 81 days – If the ‘deal’ is rejected, is ‘Norway-plus’ an option?

Parliament is forecast to reject the negotiated Brexit ‘deal’ on 15 January.  Meanwhile opposition to leaving with ‘no-deal’ is growing – 200 MPs of all persuasions have signed a letter to Theresa May, urging her to rule out a ‘no-deal’ Brexit – a sentiment that is shared by an overwhelming proportion of UK industry and commerce. 

As Parliament returns to resume discussion on the Withdrawal Agreement – there have been calls to look again at ‘Norway-plus’. Cabinet Minister, Amber Rudd, suggested in November that a it could be a “Plan B” if the Government’s Brexit deal is rejected by MPs next week.

The political debate would be whether or not Norway-plus delivers on the expectations and promises made before and after the 2016 referendum.

The idea is supported by a cross-party group of MPs including Tory Nick Boles and Labour's Stephen Kinnock who see it as a way of delivering Brexit - the UK will leave the European Union - while maintaining the closest possible relationship with the bloc and the remaining EU27 states.  Kinnock claimed that at least 10 Cabinet ministers would back it over no-deal.

Scotland’s First Minister, Nicola Sturgeon, has committed her Scottish National party MPs to supporting ‘Norway-plus’ as a compromise on Brexit if no second referendum is to be allowed.

 ‘Norway-plus’ is based on the country’s relationship with the European Union as a member of the European Free Trade Association (Efta) and European Economic Area (EEA).  For the UK, remaining in the EEA post-Brexit would mean part of the single market - meaning goods, services and people could continue to move within the bloc in the same way as before and limiting disruption to the economy.

On top of that, the "plus" bit of Norway-plus would involve a customs union with the EU, which, combined with the single market elements, would avoid a hard border with Ireland.

At the time of resuming the Brexit debate the Government has ruled out Norway-plus as an option – leaving the binary choice of the ‘deal on the table’ or ‘no-deal’ in 81 days time.

Constitutionally, ‘Norway Plus’ would involve EEA membership and a UK-EU customs union.  A customs union requires all member states to implement the same import tariff and quota regime with third countries - as well as removing tariffs and quotas on trade between the members of the custom union.  If the UK negotiated a customs union agreement with the EU, it would still be able to negotiate agreements covering other aspects of trade, including in services.

Background

A Parliamentary briefing paper describes the main features of the EEA, its institutional structure, pros and cons of EEA membership, the arguments around the process of withdrawing from the EEA and suggestions for other bespoke future relations with the EEA.

  • The European Economic Area (EEA): comprises the 28 EU Member States and three countries which are not in the EU: Norway, Iceland and Liechtenstein.

  • It extends the EU Single Market to the three non-EU countries.

  • EEA membership involves a range of obligations, including free movement of people, financial contributions to the EU and accepting EU rules with no direct say over them.

  • Those in favour of the EEA option argue that continued membership of the single market would bring economic benefits as a result of favourable access to the EU market.

  • EEA states have greater scope to restrict free movement of persons than EU Member States.  This is a reference to the general ‘safeguard clauses’ in the EEA Agreement.  These enable the Contracting Parties to suspend parts of the Agreement in response to “serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist”.  Such measures could potentially include temporary restrictions on immigration, although there is limited precedent for this.  Liechtenstein has secured an amendment to the EEA Agreement which has enabled it to continue to apply certain restrictions on free movement of people. 

    Note:  “Many commentators are sceptical of whether the UK would be able to use the safeguard clauses or secure a bespoke agreement similar to Liechtenstein’s, in the event that it joined the EEA after exiting the EU, in order to restrict free movement of people rights, or of what difference this would make in practice.”

  • The EEA is structured in a two-pillar system where the European Free Trade Association (EFTA) recreates a mirror image of the EU institutions including, on the one side, the EFTA Supervisory Authority and the EFTA Court, and on the other the EU Commission and Court of Justice.

Could UK withdraw from the EEA at a later date?

Article 127 of the EEA Agreement sets out a basic rule for withdrawing from the Agreement.  It requires a ‘contracting party’ (of which the UK is one) to provide 12 months’ notification of withdrawal, in order to give the remaining parties time to modify the Agreement.

However, the prevailing legal opinion and that of the UK Government is that when the UK leaves the EU, the whole EEA Agreement will automatically cease to apply to the UK; the UK is a member of the EEA only by virtue of its membership of the EU.  The UK has given no explicit notice under Article 127 and the Government believes that sending the Article 50 letter on 29 March 2017 also amounted to implicit notice of leaving the EEA.

The European Union (Withdrawal) Act 2018 repealed the domestic effect of the EEA Agreement. Several amendments to the Bill were tabled relating to Article 127, but these were not passed.

Future relations with EEA/EFTA

The UK has reached agreement with the three EEA EFTA States to address separation issues following Brexit, including protecting the rights of UK citizens living in these countries and citizens of these countries living in the UK, as well as an agreement with Switzerland – which is in EFTA but not EEA - covering citizens’ rights.

Variations on EFTA and EEA membership, such as associate, temporary, transition period only and partial membership, are among suggestions for future UK relations with the EEA.

 
John ShuttleworthComment