Legal experts appeared before the Committee for Exiting the European Union and I asked them about the notion that being a non-EU member of the European Economic Area would make us rule takers.
Stephen Kinnock: Thank you to our panel. I just want to unpack this notion that being a non-EU member of the European Economic Area makes a country a rule-taker. I suppose the first point would be that most single market legislation is passed by qualified majority voting, so the United Kingdom, as a member state, does not have a veto on single market legislation and therefore, by definition, is a rule-taker. If there is a piece of legislation that it is supposed to take up but does not, it is not able to form a blocking minority.
As a non-EU member of the European Economic Area, the United Kingdom would have an independent voice on global standards bodies. We would no longer be represented by the EU on those global standards bodies. Of course, as you have said, many of the EU’s positions flow from those positions on global standards bodies, so there would be an influencing opportunity for the United Kingdom far greater than we currently have through membership of the European Union.
Only about 30% of EU rules apply to non-EU members of the European Economic Area because, of course, there is no common agriculture policy and no common fisheries policy, which generate vast amounts of legislation. There is no direct effect when you are in the EEA and not in the EU. The EFTA Court is not obliged to follow European Court of Justice decisions. New EEA law is only incorporated with the unanimous agreement of the EEA/EFTA member states. Norway has obtained derogations from 55 legal Acts up until June 2011, and Iceland 349. These include the third energy package, the third postal service directive and the hygiene package, just to give some examples. Each country has a right of reservation so, if the United Kingdom were out of the EU but in the EEA, the British Parliament would have to pass all new EEA legislation based on debating and voting in the normal way in this Parliament.
Given all of that, would you agree that it is quite a lazy description that being in the EEA but not the EU would mean we are a rule-taker? Perhaps I could ask Mr Cleppe to comment on that.
Pieter Cleppe: Sure, thank you. These are arguments that you often hear. I do not think there is any doubt that there are some advantages in EFTA/EEA, in terms of sovereignty as compared to the EU, for example in terms of the right of reservation. However, the right of reservation is really only a right to delay. For example, Norway managed to delay the implementation of the postal liberalisation directive, but ultimately it had to fold. I am sure you know the quote from the current NATO Secretary General, Jens Stoltenberg. He has been saying that, when he was Prime Minister of Norway, his own country was a “fax democracy”. Now, again, you are right that at the moment, if you are a member of the EU, there is QMV so you do not have a veto. However, what is very important in this is that, as an EFTA/EEA member state, one is obliged to take up 100% of the relevant legislation. It is true that many of the European Union rules are not relevant to countries like Iceland or Norway, and there is often a bit of haggling about the question whether a piece of legislation is actually relevant or not. Fundamentally, if regulations are relevant, an EFTA/EEA member state has to apply it.
What you often hear is that, if the UK were in EFTA/EEA, it would have more power to shape global standards, which is true. Those global standards often inspire EU regulations. However, I often respond with the argument that, in Geneva, you do not have 30,000 lobbyists. The industry finds that ultimately where you need to be to shape legislation is in Brussels, not in Geneva or other places where you have these global standards. I may be wrong, but ultimately I do not see this model being a sustainable fit as a transition for a country the size of the UK. Ultimately, it would be very complicated.
Sara Ogilvie: I did not make the rule-taker comment, and it is not how the TUC thinks about things, but it is clear that we live in a globalised world and no country gets its own way on things at all. In addition, there is strength in numbers. The way we see it is, essentially, whose gang do you want to be in? You have Trump’s America, you have China and you have the EU. There can be different forms of relationship but in terms of history, shared values and proximity, a close relationship with the EU seems to us to be one that will much better serve our country than one of those other alliances.
George Peretz: I do not disagree with anything you said in your list of points about how the EEA agreement works. It is worth working out why there is a difference of view about this where you get such different perspectives with some people describing it as being a rule-taker and some people not. Part of the reason for that is simply that, because at the moment the EEA three are two very small countries indeed and one quite small country, large parts of the EEA agreement have simply not been tested. There is an open question about how large parts of it would actually work with a very large member state as opposed to three very small ones.
It is worth remembering that when the EEA was originally set up it was designed not to deal with one quite small state and two very small states but to deal with quite a large number of medium-sized states. It was envisaged that Sweden, Austria, Switzerland and Finland would all be in it and, for various reasons, they disappeared off in different directions, leaving just the three quite unusual economies. There are large areas in which those countries are simply not interested at all. When one looks at large parts of the EEA agreement and one asks a fundamental question of, “What would happen if…?” the answer is that we do not really know because it has never happened. That is one point.
The second point is that it is important, when thinking about the EEA, to understand that it will be a comparative exercise in the end, rather than an absolute one. You have to measure that model against other models that may or may not be available. In any regime where we are in level playing field territory and dynamic alignment, the UK will be the smaller party vis-à-vis the EU. The EU is bigger and has legal difficulties of its own in agreeing ever to be influenced by a third country because of the principle of autonomy of EU law. In any model of dynamic alignment aligning to the single market, whatever that means, whatever one is thinking of, there will be a relationship where the UK is reacting to EU developments and under some form of obligation to follow, which may be qualified and limited in various ways.
The question one has to ask is whether that model that one comes up with is better or worse than the EEA model. In the end, that is a political question, but that is the right question to ask, rather than whether the EEA will turn the UK into a rule-taker.
Stephen Kinnock: I completely agree with that last point because this is not an absolutist debate; it is a relative debate. It is not that one option will be the perfect world for everybody. It is much more about, compared to the other options, whether this is the one that most people could live with. I specifically just wanted to follow that up with the issue of jurisdiction and the role of the European Court of Justice vis-à-vis the EFTA Court. There is no direct effect in the EFTA/EEA countries. Given the legal expertise that we have on the panel, it would be interesting to unpack that a little bit more. Could you say a bit more about how you see the dynamics of the relationship between the European Court of Justice and the EFTA Court?
I know it is a bit difficult to do crystal ball gazing, but imagine for a moment that the United Kingdom were a member of the EFTA Court but not a member state of the European Union. What effect do you think that might have on the relative relationship between the two jurisdictions? Who would like to answer that?
George Peretz: It is a question about courts. I have been in front of them, so I suppose it falls to me. One feature of the UK being in the EEA arrangement would be that there would be a UK judge on the EFTA Court. It also deals with a problem that one hits in negotiating other forms of arrangement with the EU, which is the principle that, when it comes to questions of EU constitutional law, the ECJ has to be the final arbiter. The EFTA Court is a very clever way through that, which has received the approval of the European Court of Justice as a mechanism that allows another court to apply EEA law—effectively EU law—in parallel with the ECJ. There are attractions to that mechanism, particularly if one is concerned by an arrangement that leaves the UK subject to what might be characterised as a foreign court with no UK presence at all. If the EFTA Court had a UK judge on it, it would be an international court rather than a foreign court.
Also, because the EFTA Court hears far fewer cases than the ECJ and always sits with three judges, there would be a UK judge in every case, which is not the case in the ECJ where there is a UK judge only in a minority of cases because the ECJ hardly ever sits in a court of 28 for very obvious reasons. One might argue that the UK influence would be maintained and possibly increased under an arrangement where it was playing full part in the EFTA Court.
We always have to be careful about this sort of thing because it is wrong in principle to assume that a UK judge will decide things in the interests of the UK. That is entirely wrong. Judges are very independent. It is very difficult to comment on particular judges because the ECJ and the EFTA Court deliver all their judgments collectively, so the fingerprints of an individual judge are never on the judgments and therefore one is indulging in a bit of guesswork here rather than anything else. One must avoid stereotypes about what particular judges decide. One could broadly maintain the point—it is quite a political comfort at least—that there would be a UK judge sitting on a court taking important decisions.