Stephen Hammond is a member of the Treasury Select Committee and MP for Wimbledon, and is a former Transport Minister.
Last Wednesday, Suella Fernandes, the Department for Exiting the European Union Minister, responded to Antoinette Sandbach’s excellent debate on alternatives to a no deal Brexit. The Minister acknowledged that many colleagues had raised joining EFTA/EEA as a Brexit option, but gave four reasons why the Government will not pursue this, as below
- EFTA itself does not give any EU market access, and EEA membership will not deliver direct control over decisions affecting the UK.
- “Our ambition as a global trading nation goes beyond the scope of EFTA’s existing free trade agreements with third countries”.
- EFTA membership means accepting free movement between EFTA countries and it is difficult to see how any derogations from this can apply to the UK
- “The UK’s participation in EFTA would fundamentally change the nature of that group”.
EFTA is currently subject to a project fear from supporters of a hard Brexit, with misconceptions repeated by DExEU Ministers. The reality is that EFTA membership allows for, but does not automatically entail, membership of the Single Market. EFTA does not envisage political integration, is economically motivated, does not issue legislation, does not establish a customs union – and decisions are made by unanimity.
EFTA, market access to the EU and control.
The Minister’s response suggested that joining EFTA alone would prevent the Government from negotiating a deep and special bespoke relationship with the EU.
However, on the contrary, it should greatly assist this goal by framing it within an institutional set-up that the EU is familiar with. The EFTA Court, Surveillance Authority, Council and Secretariat are all institutions understood and trusted by the EU, with well-established systems for information access, consultation and arbitration. They could be used as part of the UK/EU deal to strengthen our commitments and avoid having to create new institutions. This is called docking, and has been publically mooted as a possibility by the former President of the EFTA Court, Carl Baudenbacher.
Furthermore, EFTA provides a great deal of flexibility. Most proponents of EFTA would suggest the UK joins the EEA as well, since the EFTA/EEA arrangement keeps open the option of retaining access benefits to the Single Market. The EEA Agreement does not cover the controversial Common Agricultural Policy, the Common Fisheries Policy, or Justice and Home Affairs laws – meaning that from the outset the UK would have control over these key areas.
Yes, the UK would be subject to EEA law, but this is mostly regulatory and, regardless of whatever deal with the EU we achieve, any domestic business hoping to trade with the EU will need to be comply with these laws post-Brexit. Furthermore, there is no principle of direct effect with EEA/EFTA membership – meaning all laws must be approved by domestic legislatures. As Vicky Ford perfectly explained during the debate, Norway does have a say on rules and regulations, sitting on various standard-making bodies and contributing to the drawing up of proposed EEA legislation. EFTA would certainly have more of an influence collectively over this process with the UK as a member.
By being a member of EFTA/EEA, we would regain our seats on global regulatory standard setting organisations too, which much of EEA law is based upon, and ultimately EFTA/EEA countries retain control through a “right of reservation” – an ability to veto any EEA rules they do not believe are appropriate.
Free Trade Agreements with Third Countries
EFTA has 27 Free Trade Agreements, covering 38 countries and 900 million customers. Many of these are more modern than the EU’s deals with third countries, and indeed some analysis suggests EFTA’s existing free trade agreements actually fit the UK economy more than the EU’s and are more comprehensive. For example, EFTA has FTAs with Singapore, the Gulf Cooperation Council and Hong Kong, important markets for the UK which are without a completed EU deal.
There is no guarantee that the EU’s trade agreements with third countries will still apply to the UK in the same way post-Brexit, and there may be complex negotiations ahead. Whilst the Minister was right that there would be necessary adjustments needed before EFTA’s FTAs can apply to the UK, these are all minor and involve considerable fewer issues to be resolved. Surely, then, it is sensible that the UK attempts to take advantage of the best of the existing EU FTAs, and the best of EFTA FTAs, to ensure that trading relationships can continue as closely as possible as they did before we left the EU.
EFTA membership would not stop the UK from negotiating its own Free Trade Agreements. In fact, it would bring much needed assistance in negotiating and concluding these new arrangements. The UK currently lacks experienced international trade negotiators and so any support from the EFTA secretariat, which has the necessary negotiating experience, can only be extremely beneficial. The evidence refutes the Minister’s claim.
EFTA/EEA members have the option to unilaterally suspend the free movement of people under Articles 112 and 113 of the EEA Agreement if it is causing “economic, societal or environmental difficulties”. These are the exact problems that those concerned about immigration cite.
On joining EFTA, a transitional period to limit immigration under Protocol 15 can be established. This option was also offered to Switzerland had they joined the EEA. At the end of a transition, the EEA Agreement precedent confirms the possibility of having an immigration quota system.
While of course the UK is not the same as Liechtenstein, the flexibility and border controls permitted within the system are obvious. When it comes to the potential for the UK to use these controls, we must remember that during the pre-referendum renegotiation it was agreed by the EU that the UK would be justified in applying the proposed emergency brake for similar reasons. This would give the UK a very strong case to activate some of these controls.
Would EFTA want us?
A new, bigger EFTA is more likely to be renewed and revitalised, with better prospects and new aspirations for arrangements with other countries. The indications I have had is that we would be welcomed into EFTA for this reason. Indeed, Oda Helen Sletnes, Norway’s former ambassador to the EU, said last year: “we would maintain an open-minded stance in the event of an application for EFTA membership” from the UK. All the contacts I have had with the EFTA countries confirm they would welcome our membership, and the Government appears out of touch when it claims that this is not the case.
By joining EFTA, the UK could be at the forefront of creating a new common market between European nations without the controversial CFP, CAP and justice and home affairs policies. It would be a grouping dedicated to free trade and economic prosperity, while respecting national sovereignty.
Let’s be clear: we all want the Prime Minister to achieve a deep and special relationship and a soft Brexit in the negotiations with our former partners. However, to shut off consideration of realistic and achievable alternatives would be irresponsible.
From the contributions during my Westminster Hall debate on EFTA earlier in the month, and conversations with colleagues afterwards, MPs on both sides of the House are interested in EFTA, want to hear more and want a greater debate on the topic. That is why I will be tabling amendments to the Trade Bill on EFTA, so that this topic can be debate on the floor of the House, and both front benches can have the chance to listen and respond.