Response to Rifkind

The disgraced former MP and former Foreign Secretary Sir Malcolm Rifkind has waded into the debate on Brexit. His comments have of course been welcomed by the Hard-Brexit fanzine Brexit Central:

The former MP (who you will recall was caught in a Channel Four Sting) has written an article for the FT in which he makes some strange arguments about the Single Market, Brexit, Norway and Switzerland.


Sir Malcolm begins his article by saying that during the EU referendum, he supported staying in the EU. He then praises the Single Market:

“Like many, my initial strong preference was that, if we are out of the EU, we should at least remain within the single market. 

Norway and Switzerland enjoy privileged participation in the single market Mrs Thatcher helped create. I hoped the UK could do the same. Sadly, I have concluded that this is not going to be possible for fundamental democratic reasons.”

He goes on to write:

“Nor is it because we would have to accept the continued jurisdiction of the European Court of Justice. I am sure we could negotiate some joint jurisdiction for the ECJ and our own British courts that would be acceptable to supporters of Brexit.”

Sir Malcolm might be surprised to know that none of the EFTA countries come under the ECJ.

When the EU and Switzerland have disputes they resolve them by means of Joint Committees (made up of Swiss and EU officials) which resolve disputes on a purely diplomatic level.

When legal problems arise between the EU and Norway they are either ruled on in the EFTA Court (where Norway provides a third of the judges) or escalated to the EEA Joint committee for further debate. 

Finally we get to the core of Sir Malcolm’s argument:

“The fundamental problem would be the insistence of the EU that we would have to incorporate into our domestic law all future regulations and directives, although we would play no role in the drafting of these new laws.

Both Norway and Switzerland accept that requirement. As smaller countries, they have concluded that in an EU of 28 countries they would have had little real power to influence the content of these laws even as members.

For Britain, such a requirement would be both humiliating and indefensible. As one of the three largest economies in the EU we, along with Germany and France, have the predominant influence on the content of all new laws. In future we will have little or none. It would be particularly unacceptable to the City of London that we would be unable to influence, much less veto, the content of new laws that might seriously damage their interests.”

As our followers will know, the EFTA states do indeed help draft new laws that will affect them. 

In addition, because they are not subject to the Common Foreign and Security Policy (CFSP) the EFTA countries can speak for themselves on international bodies such as the WTO and UNECE. The work of these bodies often ends up being transferred into the Single market Aquis (its collected body of rules)

So let us consider Sir Malcolm’s problem.

Imagine that the UK was in both the European Free Trade Association (EFTA) and the European Economic Area. Is it true that the UK would be helpless to stop any new EU financial services law that would be damaging to the City?

We would say most probably not

Since we would still be part of the European framework, we would be aware of any such legislation well before it was formally  drafted.

If the UK heard about such legislation we might first debate it with the EU at international bodies to try to nip it in the bud or make it more palatable. 

As the Change or Go report by the Eurosceptic group ‘Business for Britain’ stated:

“[After Brexit]The UK would remain a member of the key international organisations that deal with financial services, including the Basel Committee on Banking Supervision, the Financial Stability Board and the OECD. Outside the EU, the UK could well become one of the leading voices in the global harmonisation of financial regulation.

[Key international bodies
• Basel Committee on Banking Supervision
• Committee on the Global Financial System
• Committee on Payment and Settlement Systems
• Financial Action Task Force
• Financial Stability Board
• G7
• G20
• International Monetary Fund
• Organisation for Economic Co-operation and Development
• United Nations
• United Nations Conference on Trade and Development]

There is no doubt that, upon leaving the EU, the UK would continue to have a large voice in the global bodies that deal with financial affairs. These global bodies are fast becoming the most important institutions in deciding financial regulation.” 

But let us imagine that at this stage, the UK was unable to dissuade the EU from creating this new legislation which would be harmful to the City.

As an EEA state, experts from the UK would participate in committees when the legislation was being drafted, and UK reports and criticisms would shape the legislation further. 

But what if the legislation was still unpalatable to the UK? 

One option would be to contest the ‘EEA relevance’ of the new legislation, which basically would be the UK arguing that the new legislation should only apply to EU states, not EFTA states.

But what if that didn’t work?

Well, as the researcher Jonathan Lindsell said in his report for the Civitas Think Tank ‘The Norwegian Way’ the EFTA/EEA countries have a lot more of what he calls “wriggle room” than EU member states (see page 29):

“The ‘Wiggle Room’ section looks at the formal and non-institutional ways Norway can implement EU rules in the best way.

These include delaying implementation for as long as possible, implementing in the most amenable possible terms, appealing to the proportionality principle, negotiating for opt-outs and derogations, implementing with adaptations, and resisting EU rules through the EFTA Court. 

If all methods for predetermination, wiggling, derogating and delaying fail, the EEA agreement does actually have provisions for a veto, innocently called the Article 102 ‘reservation’.”

Finally, if none of this worked, the UK could adopt similar legislation (without the most objectionable elements)  and claim that it was equivalent, as described in Article 102(4) of the EEA Agreement. 

In summary then, when we balance the many and tangible benefits of continued membership of the Single Market against the small chance that the UK might have to adopt some unspecified legislation it doesn’t like at some future date, the choice is clear – rejoin EFTA and maintain EEA membership or adopt the closest alternative

Anything else would be a leap into the dark

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