6th Dec


Does UK Membership of the European Economic Area Provide a No Deal Parachute for Transition?

This is a reprint of an article written by George Dunn, TFA Chief Executive, for the Farmers Guardian’s online Brexit Hub in autumn 2018

 By any objective assessment, the negotiations between the UK and the EU attempting to reach an agreement on the terms of the UK’s exit under the provisions of Article 50 of the Lisbon Treaty on the European Union, are not going well.  Despite the economic need for the EU to do a good deal with the UK, politically it cannot be seen to be giving the UK market access terms which are as favourable as it would have if it remained a member of the EU.  Equally, despite the economic need for the UK to do a good deal with the EU, it does not want to be seen to deliver a Brexit in name only.

The die was most likely cast in creating the current impasse when the UK and EU published a joint report on negotiations in December of last year, particularly on what that report said about the Irish border.  With the expectation that the EU and UK would be able to put together the Valhalla of a frictionless free-trade agreement, it was confirmed that the future for Northern Ireland should be settled within that overarching agreement.  Failing that, and we do seem to be failing in that aspiration, the UK said it would look to propose a specific solution for the Island of Ireland.  If such a solution could not be found, the UK promised to maintain full alignment with the rules of the internal market and Customs Union which support North-South cooperation.  However, all these solutions are to have no impact on the economic and political position of Northern Ireland in respect of the remainder of the United Kingdom.  At the time the joint report was published, no one on either side could explain how this could be delivered within anything less than a frictionless free-trade agreement.  How can you have a solution only for the island of Ireland or continue to have full alignment with the rules of the internal market and customs union between the north and south of Ireland without it impacting on the position of Northern Ireland in respect of the rest of the UK?  It was a fudge at the time and it has sown the seeds for the whirlwind that now surrounds the negotiations.

We need to stop and consider a different way forward.  The one area of common ground that seems to exist between most Brexiters and Remainers is, if we are going to leave, it is a good idea to have a period of transition or implementation.  It is also widely accepted that this implementation period should run until the end of December 2020.  So why don’t we use our membership of the European Economic Area to achieve that?  The EU, the UK, all other EU Member States, Norway, Lichtenstein and Iceland are all individual, contracting parties to the 1994 agreement establishing the European Economic Area.  For all contracting parties the agreement guarantees equal rights and obligations within the Internal Market for individuals and businesses in the EEA. It provides for the inclusion of EU legislation covering the four freedoms — the free movement of goods, services, persons and capital — throughout all of the EEA States.  Crucially, EEA contracting parties do not fall within the Customs Union.  Although the UK has given notice of its intention to leave the EU, it does not appear to have given notice of its withdrawal from the EEA agreement which has its own withdrawal procedures for each contracting party, including the requirement to provide 12 months’ notice to the other contracting parties.

So, why don’t we agree to differ with the EU on our Article 50 negotiations and leave the EU without a deal.  We could then continue to operate within the EEA framework until the end of December 2020 to give us our transition period and serve our EEA withdrawal notice on the other contracting parties in December 2019.  So, by December 2020 we would be out of the EU, out of the EEA and crucially have 21 months from the time of our EU departure to negotiate a free-trade agreement with the EU as a non-member and look to agree what trade deals we can with other countries from outside the scope of the Customs Union.  Or am I missing something?

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