Tuesday 26 July 2016

Beyond Brexit ~ EFTA and EEA?

Sunrise Scarborough 26/07/16
Alternatives to membership of the EU are under active consideration.  As a member of the EU, the UK is also a member of the European Economic Area (EEA) but is not a member of the European Free Trade Association (EFTA).   This post takes a brief look at the EEA and EFTA.   

Whatever alternative to EU membership comes about it is perhaps worth reflecting that the government (any government) can only do its best to juggle the various balls including the possibility of considerable difficulty with Scotland and Northern Ireland.  There is going to be no silver bullet solution and any solution is bound to disappoint some people.

One alternative to EU membership may be for the UK to continue its EEA membership and join EFTA.  This post does not discuss whether this is possible politically but readers will find this article by Aidan O'Neill QC * interesting as well as looking back at the information published by the government during the referendum campaign on alternatives to EU membership.  

European Free Trade Association (EFTA):

In 1960, the European Free Trade Association (EFTA) was founded by the following seven countries: Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom. Finland joined in 1961, Iceland in 1970 and Liechtenstein in 1991. In 1973, the United Kingdom and Denmark left EFTA to join the EC. They were followed by Portugal in 1986 and by Austria, Finland and Sweden in 1995. Today the EFTA Member States are Iceland, Liechtenstein, Norway and Switzerland.

The immediate aim of the Association was to provide a framework for the liberalisation of trade in goods amongst its Member States. At the same time, EFTA was established as an economic counterbalance to the more politically driven European Economic Community (EEC). Relations with the EEC, later the European Community (EC) and the European Union (EU), have been at the core of EFTA activities from the beginning. In the 1970s, the EFTA States concluded free trade agreements with the EC; in 1994 the EEA Agreement entered into force. Since the beginning of the 1990s, EFTA has actively pursued trade relations with third countries in and beyond Europe. The first partners were the Central and Eastern European countries, followed by the countries in the Mediterranean area. In recent years, EFTA's network of free trade agreements has reached across the Atlantic as well as into Asia.

EFTA today maintains the management of the EFTA Convention (intra-EFTA trade), the European Economic Area (EEA) Agreement (EFTA-EU relations), and the EFTA Free Trade Agreements (third country relations). The EFTA Convention and EFTA free trade agreements are managed by the Geneva office, and the EEA Agreement by the Brussels office.

European Economic Area (EEA):

The EFTA website contains a wealth of information about the European Economic Area (EEA) which comprises EU member states and also Iceland, Liechtenstein and Norway.  The EEA came into being on 1st January 1994 as a result of the 1992 Oporto agreement.  Switzerland is not part of the EEA Agreement, but has a bilateral agreement with the EU.

The EEA Agreement provides for the inclusion of EU legislation covering the four freedoms — the free movement of goods, services, persons and capital — throughout the 31 EEA States. In addition, the Agreement covers cooperation in other important areas such as research and development, education, social policy, the environment, consumer protection, tourism and culture, collectively known as “flanking and horizontal” policies. The Agreement guarantees equal rights and obligations within the Internal Market for citizens and economic operators in the EEA.

Free movement of persons is likely to be a sticking point given the role played by immigration in the referendum campaign.  On this, see EU Law Analysis - Freedom of movement of persons in the EEA - different from the EU?

The EEA Agreement does not cover the following EU policies:
  • Common Agriculture and Fisheries Policies (although the Agreement contains provisions on various aspects of trade in agricultural and fish products);
  • Customs Union;
  • Common Trade Policy;
  • Common Foreign and Security Policy;
  • Justice and Home Affairs (even though the EFTA countries are part of the Schengen area); or
  • Monetary Union (EMU). 
* Re article by Aidan O'Neill - see make up of the Scottish Parliament

Further reading - Ana Bobic and Josephine van Zeben - Negotiating Brexit: Can the UK have its cake and eat it?  (UK Constitutional Law Group blog).

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