The number one priority in managing the transition of our secession from the EU must be protecting the economy. When we invoke Article 50 we have two years to negotiate a settlement. It is very unlikely that we can tie up every loose end in that time and that is why we should adopt a transitional arrangement that allows us to leave in stages; thereby ending our political and judicial union, but retaining certain elements of our current relationship for a set time period and remaining in the Single Market.
The complexity of our two year time limited Article 50 negotiations cannot be overstated, but we absolutely must secure trade continuity or else our economy and that of the eurozone will take a very severe hit. The EU has never negotiated a trade agreement in under four years which makes the prospect of concluding a bespoke trade agreement in two years very unlikely. The EEA option is the answer.
The EEA option a.k.a The “Norway option” involves joining the European Free Trade Association (EFTA) and trading with the EU via the European Economic Area (EEA) as a means of achieving an economically secure, de-risked Brexit. It greatly simplifies our time limited negotiations, protects our economy, answers the Northern Irish and Gibraltar question and greatly eases the concerns of Scotland. A bespoke trade agreement that adequately replicates our current trading relationship cannot be achieved in two years and that is why being part of the EEA as stage one in the long and complex process of leaving the EU is by far the most viable, sensible and achievable option.
There is an assumption that we would have to accept freedom of movement as it is, however, it must be known that the Commission officials were not telling the truth about freedom of movement being non negotiable. The EU has been quite willing to negotiate with little Liechtenstein on freedom of movement; coming to an amicable solution which has allowed it to secure an amendment to the treaty giving it a permanent opt-out to freedom of movement.
Liechtenstein is a Contracting Party to the EEA Agreement. It has assumed exactly the same rights and responsibilities as any other EFTA state. It now operates a quota system little different in principle to the Australian points system. Iceland has used exactly the same provisions to suspend free movement of capital following the 2008 financial crisis, demonstrating that there is a real and effective option within the EEA Agreement which could be available to the UK, and solve a lot of problems.
Liechtenstein joined the EEA on 1 May 1995. On the 10th March 1995 the EEA Council – part of the formal consultation structure set up under the agreement – looked at the situation dominating Liechtenstein’s entry. The Council recognised that Liechtenstein had “a very small inhabitable area of rural character with an unusually high percentage of non-national residents and employees” and it decided that unrestricted free movement of workers would be detrimental to the country.
Like the UK, but at the opposite end of the scale, the country was not able to absorb unlimited numbers. Moreover, the Council acknowledged “the vital interest of Liechtenstein to maintain its own national identity”. It thus concluded that the situation “might justify the taking of safeguard measures by Liechtenstein as provided for in Article 112 of the EEA Agreement“.
Article 112 is part of the “safeguard measures” – popularly known as the “emergency brake”. Where serious economic, societal or environmental difficulties of a sectoral (sic) or regional nature arise, which are liable to persist, it allows EFTA states (but not EU Member States) unilaterally to take appropriate measures to resolve them. EU Member States have to rely on the Commission to take action.
In 1995, transitional arrangements were adopted which allowed Liechtenstein to impose “quantitative limitations” on immigration until 1 January 1998. These were incorporated into Protocol 15, appended to the Agreement. By 1997, just before the planned end of the transitional period, there had been no long-term solution found so Liechtenstein unilaterally invoked the Article 112 safeguard measures and thus kept the existing immigration restrictions in place.
On 17 December 1999 after a further review, the EEA Joint Committee (another of the formal EEA bodies that mysteriously have “no influence” or “no say”) decided that the “specific geographical situation of Liechtenstein” still justified “the maintenance of certain conditions on the right of taking up residence in that country”.
The Joint Committee came up with a proposal for a longer-term solution. Liechtenstein was to be allowed to introduce a quota system controlling the number of workers allowed to enter the country. This was given formal status by an amendment to Annex VIII of the EEA Agreement, setting out what were called “sectoral adaptations”, cross-referred to Annex V on the free movement of workers.
As a formal amendment to the EEA Agreement, the decision provided for a new transitional period until 31 December 2006, and allowed for the new measures to apply subject to a review “every five years, for the first time before May 2009”.
After reviews in 2009 and in 2015, it was concluded that there was no need to make any change to the current rules. The provisions on the “sectoral adaptations” could remain unchanged. Under the current arrangement, Liechtenstein issues 56 residence permits for economically active and 16 permits to economically non-active persons each year. Half of the totally available permits are decided by lottery, held twice a year.
Yes, I know, this is just little old Liechtenstein ; but what matters is the precedent. Within the framework of the EEA Agreement, an EFTA state has suspended freedom of movement and replaced it with a quota system indefinitely. Whatever the EU might declare in terms of freedom of movement being “non-negotiable”, it is undeniable that it is negotiable within the framework of the EEA Agreement, as it applies to EFTA states.
Therefore, if the UK chooses to follow the EFTA/EEA option as an interim solution to expedite the Article 50 settlement, once the agreement is adopted it can follow the procedural steps pioneered by Liechtenstein. And by this means, it can impose limits on immigration from EEA states. This should help us reach an amicable settlement with the EU, while keeping us in the Single Market.
The views expressed in this article are that of the author and do not necessarily reflect the views of Conservatives for Liberty