In a recent article on the POLITICO.EU website it was reported that:
“Brussels is contemplating another way to keep U.K. trade going with the EU after Brexit that would also keep Britain under the EU umbrella — go the way of Norway.
Brussels now has a plan B: The U.K. could temporarily become a member of the European Free Trade Association (EFTA) while both sides transition into their future relationship, a senior Commission official told POLITICO.
The option — often dubbed the “Norway model” — would preserve current trade ties with the EU and spare the U.K. from negative economic consequences until future trade relations with the EU are sorted out, the official said. It would also retain ties in the area of services.
“It’s an interim solution that causes the smallest possible disturbance for business on both sides of the Channel,” one European diplomat added. Like Norway, the U.K. would not be part of the customs union, which means it could strike its own trade deals with countries around the world.”
To read the whole article please click here: http://www.politico.eu/article/eu-brussels-suggests-norway-model-for-uk-after-brexit-talks-negotiations/
We are of course glad that this possibility is being discussed, although we would prefer a more bespoke ‘EFTA/EEA-Lite‘ deal (for more details read THIS).
However, the article contained a few half-truths and popular misconceptions about ‘the Norway option’ that we would like to address.
The article says that:
“Britain would also have to continue paying Brussels in exchange for access to the EU market.” – which is not precisely true.
Norway ‘pays’ for two sets of things. The first set relates to participation in Europe-wide mutually beneficial programmes such as reciprocal healthcare arrangements, science programme funding, student exchanges etc. Participation is voluntary, but of course participants must make a contribution and so the more programmes they sign up to, the more they have to pay.
The second set of expenditure come in the form of grants to poorer European Countries. The EEA and Norway grants are effectively a form of targeted foreign aid to help countries on the European continent. The EEA agreement obliges them to make these kinds of contributions, but the EEA countries negotiate the exact amounts and guide what it should be spent on. For the EEA and Norway Grants 2014-2021, a total contribution of €2.8 billion from Iceland, Liechtenstein and Norway to 15 beneficiary countries has been agreed.
For more details about this system, watch the below video:
The POLITICO report next says that “The U.K. also would have to fully implement EU laws and regulations — while losing any say in drafting or vetoing them.” – again, this is untrue.
As an EFTA/EEA member Norway is not bound by the following EU policies:
– Common Agriculture and Fisheries Policies;
– Customs Union;
– Common Trade Policy (can make its own trade deals);
– Common Foreign and Security Policy;
– Justice and Home Affairs;
– Monetary Union (EMU).
Aside from these exemptions, Norway is entitled to help shape and influence EU rules (but admittedly doesn’t get a final vote on them like EU member states do.) EFTA/EEA states have regular dialogue with the EU via the joint EEA Council and the EEA Joint Committee, they also submit reports and experts to EU working groups and committees.
When presented with EU rules they disagree with, they can also make an argument that it is not ‘EEA relevant’ and should not be included in the EEA Agreement. Norway also has a largely unused veto which it could use if it found a new piece of legislation particularly galling.
As Norway is not subject EU’s common foreign and security policy; it is free to exercise its influence and vote on global bodies like the World Trade Organisation (Norway represents itself there, the UK is currently represented by the European Commission), ISO and UNECE to shape international norms and standards which increasingly shape European rules.
So in this manner, they can influence EU rules in their embryonic stage, before they even reach Brussels.
The POLITICO article also features some quotes about whether in EFTA, the UK would be subject to the European Court of Justice (ECJ )
“It still means accepting supranational jurisdiction,” said Guntram Wolff, director of Bruegel, an influential Brussels-based think tank. Although EFTA’s members are not directly bound by the European Court of Justice, the Luxembourg-based EFTA court, which largely follows the jurisdiction of the ECJ, does have oversight.
“The EFTA court judges on the basis of EU law, so it’s not as if you were really leaving the realms of EU jurisdiction,” said Andrés Delgado, a trade lawyer from the Max Planck Institute Luxembourg, a state-financed research institution located near the ECJ.”
Norway has its own EFTA Surveillance Authority (ESA) College Member (in some ways analogous to a European Commissioner) and an EFTA Court Judge.
On this issue, we defer to the expert authority – Professor Carl Baudenbacher of the EFTA court has said that his court is less intrusive than the ECJ:
“Our setup is more sovereignty friendly than the EU’s. There is no written obligation on any court of last resort to make a reference to us, and our rulings in these reference cases are strictly speaking advisory.
There is no direct effect and no primacy of EEA law, and if you do not implement an infringement judgment there is no possibility to impose a penalty payment. That shows greater flexibility. European citizenship is not, as such, part of our setup. There is a difference in that regard.”
In addition to what Professor Baudenbacher has stated above, while he EFTA Court is legally bound to follow relevant pre-EEA Agreement ECJ case-law (i.e. pre 2 May 1992).
The EFTA Court is only required to pay ‘due account’ to any subsequent relevant ECJ jurisprudence.
In summary then, the ‘deal’ that Norway got is in many ways better than the deal the UK currently has as a full EU member – but as our most recent blog post outlines – we believe the UK can get bespoke deal which would be even better.