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Wolfgang Schäuble is wrong – Discussions on EEA membership are inevitable if we vote leave

Tom Adamson-Green, 16 June 2016

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As the old adage has it, ‘better late than never’. After months of obstinate refusal to entertain the idea of Brexit, pro-Remain MP’s have finally started to discuss their response should the unthinkable happen. Last week the polls narrowed significantly, with some even putting ‘Leave’ at seven points clear. Pro-Remain MPs have reacted by suggesting that in the event of a leave vote, they will initiate a ‘reverse Maastricht’ process, using their Commons majority to ensure Britain retains as much access to the single market as possible. The best means for this, in their eyes, would be to secure EEA membership.

The idea was swiftly quashed across the channel. In a widely publicised interview with the magazine Der Spiegel, influential German finance minister Wolfgang Schäuble unilaterally ruled out the possibility of the UK gaining EEA access to the single market without being an EU member – telling the magazine:

“That won’t work; it would require the country to abide by the rules of a club from which it currently wants to withdraw. If the majority in Britain opts for Brexit, that would be a decision against the single market. In is in. Out is out. One has to respect the sovereignty of the British people.”

Despite the eminence of those expressing them, these views are little more than political preferences – not definitive statements as to how things will play out in reality. Ultimately the dispute turns on the thorny legal situation surrounding membership of the EEA. Is membership standalone from the EU, allowing MPs to lower Britain gently into the EEA; or are the two entwined such that the EU could unilaterally block the move?  This is a briar patch which needs untangling.

Is EEA membership standalone from the EU?

EEA membership is covered by a separate agreement between all members of the EU and three of the EFTA states, which governs their internal market which grants free movement of persons, goods, services and capital.

However, the relationship is not evenly balanced. The EEA and EU are heavily integrated in many respects. This is most famously the case in terms of legislative procedure – all EEA members must comply with single market regulations adopted at EU level. Yet the close connection is also clear in terms of membership, for instance all EEA members make a contribution through a system of grants to some areas of the EU budget. Most crucially, all EU members and prospective EU members must become members of the EEA.

The UK is a contracting party to both agreements but it is not as simple as it appears. The question of whether the UK can simply drop down into the EEA from the EU is very unclear from a legal perspective. Given that the two are so interconnected, combined with the fact that the UK joined the EEA in 1994 as an EU member, it is possible that the UK’s EEA membership is deemed to be only a supplement to its EU membership – a case of piggybacking off it.

Indeed, the interrelation of the two statuses has never been fully fleshed out. Both the EEA agreement (Article 127) and the Treaty on the European Union (Article 50) include sections on member withdrawal. Yet neither is clear about how withdrawal from one affects membership of the other. Due to this uncertainty, the one clear thing is that the process will not simply be automatic.

If it is deemed that the UK’s EEA membership merely piggy backs on EU membership, the UK’s withdrawal from the EU could mean that it has automatically withdrawn from the EEA. As a result, UK entry into the EEA would require negotiations with the whole EEA. In order for a country to join the EEA all parties to the agreement (both EU and EFTA) must ratify the agreement and therefore cannot be decided exclusively by the EU.

However, this would only be the case if there is an automatic full withdrawal from the EEA after the Article 50 process begins and before the new agreement is reached. This is very unlikely to happen because full membership rights and obligations are retained throughout the negotiation under Article 50 – including the EEA agreement. A new arrangement will be sought and probably found without the UK needing to go through the process of first withdrawing from and then reapplying to the EEA.

One of the more concrete requirements, in both Article 127 and Article 50, is for there to be a comprehensive negotiation of what form the new relationship will take. Any UK withdrawal would clearly require a full assessment of the UK’s position in both the EU and the EEA. As such, however ardent the wishes of pro-Remain MPs, the UK cannot unilaterally declare itself to be bound only by the EEA agreement; this must be agreed in tandem with the other contracting members as they break into new legal ground.

 

Will the EU be able to dictate what happens to UK- EEA membership?

The question as to whether, as Herr Schäuble implies, the EU can unilaterally decide this issue on behalf of the other contracting members is also complex. There are a number of factors to consider that will affect the process of these negotiations and the likely outcome. Indeed, this is new legal territory for both agreements, so it becomes a case of who leads the negotiation of the new settlement. The answer is not clear but there are some key parts of the EEA agreement which might give a clue:

  1. Any decisions that might be issued by the ECJ during the Article 50 negotiation will be binding on the EEA. This is to uphold the principles of conformity (Article 6) and homogeneity (Chapter 3 Section 1) with relevant rulings from the Court of Justice.
  2. The withdrawal article (127) of the EEA agreement says nothing about the process of exiting other than that there shall be a diplomatic conference in order to modify the agreement. However, one can look to the context of the withdrawal article to better understand the general principles at work. The immediately preceding section (Article 126 (1)) discusses the issue of membership and who the agreement does and does not apply to. It states that:

The Agreement shall apply to the territories to which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty‘.

This last part is crucial and suggests that the question of the UK’s future EEA membership (as an EU member) will be factored into the Article 50 negotiation.  What is clear, then, is that in both judicial decisions and in diplomacy, the whole renegotiation of EEA membership will take the lead of the EU’s Article 50 and therefore be conducted by and broadly decided by the EU.

So the EU would lead things, but how would it be decided within the EU?

Article 50 provides that this new agreement with the UK must be agreed by a majority vote by the national representatives in the council, it is then subject to a majority vote in the European Parliament. Then, because the agreement would include some provision relating to services/transport/investment it would bring it under the definition of a mixed agreement and would therefore also need ratification by each national parliament in the EU. The consequence of this ultimately is that any EU member state could block the agreement should they want to.

 

But what of the reality?

All of this is simply an estimation of what would happen to membership based on a strict reading of the treaties and agreements in their current form. The reality is that the issue will depend on what happens in the negotiations following a vote to leave, where political pragmatism is likely to win out.

Given the unique nature and scale of these negotiations, it is likely that a completely new set of arrangements would be implemented. The creation of a fundamentally new system is far more likely than a smooth transition. Both the EU and the EEA would be very different creatures with the loss or the addition of the UK. Clearly the rest of the EEA will take the lead from the EU on the new arrangement, and whatever is concluded under the Article 50 negotiations will take precedence in the EEA agreement. This could even mean an agreement by the parties involved as well as consultation to allow the UK unique access to the EEA without being an EU or EFTA member. It is simply not possible to tell

Though one thing is clear – no one can claim that anything is off the table. The shift may be complex to negotiate but where there is political will there can be a legal way.

 

Photo: Wolfgang Schauble debating Europe at the EUI

Credit: European University Institute

2 comments on “Wolfgang Schäuble is wrong – Discussions on EEA membership are inevitable if we vote leave”

  1. It may well be that Schauble was trying to be helpful to David Cameron, with whom his comments appear to have been co-ordinated. Maybe he wanted to “head is off at the pass” lest UK voters thought there was a version of Brexit they could vote for without damaging our trading relationships. Now that Brexit is a done deal (subject to A 50 notice being served) he might be more helpful, not least because land would welcome mutual tariff free access to markets if this could be done without long and tortuous negotiations, probably with Michael Gove responsible for the UK position.
    The EU27 would not do anything which migh suggest that leaving can be a cost free option. But access to single market via EA so so evidently a worse deal for the UK (same rules, similar budget contribution, no influence) than the EU membership we will be giving up that they might allow it. The French and others would welcome that UK would mainly be present as observers in council meetings, it would prevent us from holding up progress towards closer integration.

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