CCC Director Michael Keating examines whether joining the EFTA and thereby the EEA could work for the UK in the way that it does for Norway.
When the Brexit debate started back in 2016, one of the options briefly mooted was that the UK could join the European Free Trade Association (EFTA) and thereby the European Economic Area (EEA). It was quickly rejected by supporters of both Leave and Remain as the worst of both worlds.
The EEA was set up in the 1990s after Norway had voted against membership of the European Union. EU opponents, strongest in northern Norway, were concerned about agriculture and fisheries and public spending support for the north. Supporters, stronger in the south, wanted access to the European Single Market. Under the EEA, Norway, Iceland and Liechtenstein are in the Single Market (except for agriculture and fisheries) but not the EU. This means that they have to accept EU rules without having a vote in making those rules. They are only consulted. They are not in the customs union and so can make their own trade deals, individually or as an EFTA block. They must accept EU freedom of movement rules, subject to an ‘emergency brake’, which has not been invoked except in tiny Liechtenstein. Indeed, any effort to restrict freedom of movement Could put other elements of the arrangement in danger.
Norwegian politicians, officials and academics accept that this may be illogical, but it represents a national compromise, which has gained a wide consensus. There is no significant support for moving closer to, or further from, the EU.
Given the deadlock in the UK over Brexit, this option has now resurfaced as Norway Plus or Common Market 2.0, which would mean joining the EEA. In addition, the UK would remain in the EU customs union. Could this work in the way that Norway’s EEA membership does?
The EEA was designed for small countries. While small EU member states can influence policies by being well briefed and forging alliances, they do not have the clout of large countries. By opting for EEA they are not giving up the kind of influence that the UK, France or Germany wield.
Norway is characterized by consensus politics. Where consensus is not available, as over Europe, Norwegians agree to disagree and move on. There is also a broad degree of acceptance of the kind of regulatory policies coming from Europe. Indeed Norway has adopted much more of EU law and regulation than it is obliged to, notably in agriculture. It is unlikely that this would be the case in the UK, where EU regulations could provide an opportunity to run the Brexit debate constantly. The EEA countries themselves would not welcome the import of the divisive and toxic UK debates into their consensual system. Brexiters would not easily accept European freedom of movement provisions and there could be constant demands to use the emergency brake. EEA countries are not directly subject to the Court of Justice of the European Union (CJEU), but the EFTA court has a similar role and does rely on the CJEU’s interpretation of EU single market law. Norwegians can live with this, but could British Eurosceptics?
Being in the customs union, as all as the Single Market, could resolve the Irish border question, as there would be no barriers, physical or virtual, between the two parts of Ireland or in the Irish Sea. It would, however, represent a further loss of sovereignty to the EU - as opposed to sharing sovereignty as a member state. It would also make it impossible for the UK to negotiate its own trade deals. Like Turkey, the UK would be obliged to accept tariff-free access from countries with which the EU has free trade agreements, without necessarily getting tariff-free access to those countries in return.
EEA has also been suggested as the place for an independent Scotland to be. Even Leave supporters like Jim Sillars have supported it. Such an arrangement would raise the same central issue as for the UK, that Scotland would be a rule-taker without a say. On the other hand, as a small country it would not be a big player in the European Council anyway. Scotland’s politics are in many ways close to the Norwegian and European social models and less resistant to regulation and intervention than the UK has been. It is less likely, then, that neo-liberal or Eurosceptic objections would constantly be raised against European rules. Scotland’s political parties have also supported migration and freedom of movement as an economic and demographic necessity, while in England the issue was allowed to become toxic during the Brexit debate – although public concern has now abated.
Few people back in 2016 argued for the Norway option but, in various ways, it has already crept back in. The Prime Minister’s ‘Chequers’ proposal included alignment with EU rules on manufactured goods. The Labour Party seems to favour ‘a’ customs union, although it is not clear how this would differ from ‘the’ customs union. The Political Statement accompanying the Draft Withdrawal Agreement proposes an overarching framework and the possibility of harmonizing tariffs and regulations. We might end up with Norway Plus by default.
Michael Keating is Professor of Politics at the University of Aberdeen and Director of the Centre on Constitutional Change.