Single market legal challenge puts spanner in May’s Brexit

by Hugo Dixon | 28.11.2016

The latest legal challenge to Theresa May’s Brexit plans threatens to put a cat among her pigeons. It is based on the argument that leaving the EU does not automatically mean that we quit the single market because we are a member of that by virtue of a completely separate treaty – the Agreement on the European Economic Area. The EEA treaty creates a single market encompassing EU states and three non-EU ones – Norway, Iceland and Liechtenstein.

If it’s true that leaving EU doesn’t mean we quit EEA too, the prime minister may struggle to take us out of single market. A successful legal challenge could even scupper plans to take us out of EU – as people may conclude they would prefer to stay in the bloc when they compare full membership of the EU with being in the EEA.

The nub of the legal challenge, being launched by the think-tank British Influence, is that the UK is a contracting party to the EEA treaty. This is clearly stated at the top of the treaty. As such, the UK can only leave the EEA – and hence the single market – if it follows the divorce process set out in that treaty. It’s not enough to trigger Article 50 of the EU treaty. It needs to trigger Article 127 of the EEA one, which reads: “Each Contracting Party may withdraw from this Agreement provided it gives at least twelve months’ notice in writing to the other Contracting Parties.”

The government disputes this legal reasoning. A spokesman was quoted by the BBC as saying: “As the UK is party to the EEA Agreement only in its capacity as an EU Member State, once we leave the European Union we will automatically cease to be a member of the EEA.”

But the government’s confident statements about legal matters have already been shown wanting. Earlier this month, the high court ruled that it doesn’t have the right under the royal prerogative to trigger Article 50. Unless it can convince the supreme court that it is correct, it will have to ask parliament for permission.

British Influence plans to seek judicial review of the government’s position on the EEA. Such a challenge, which would probably start in the high court, could conceivably be referred to the European Court of Justice – and take a long time to come to a conclusion.

May can of course short-circuit the process by triggering Article 127 of the EEA treaty. But unless she wins the Article 50 case, she will presumably have to ask parliament’s permission in this situation too. And that won’t be nearly as easy given that there probably isn’t a majority in the parliament or in the country to quit the single market – as this could badly damage our economy.

Hard-line Brexiters argue that the latest legal challenge is a wheeze to try and frustrate the will of the people. Conservative MP Dominic Raab told the BBC: “The public have spoken; we should respect the result and get on with it, not try to find new hurdles that undermine the democratic process.”

But this is misleading. The people voted for Brexit, but not to quit the single market. MPs may therefore feel emboldened to vote against a bill authorising May to trigger Article 127 of the EEA treaty while they won’t have the courage to stop her invoking Article 50 of the EU treaty.

There’s even a possibility that the government may come round to the idea of staying in the EEA, at least for a few years after we quit the EU. This is because it would stop the economy falling off a cliff. While staying in the EEA is not the only way of achieving this, negotiating an alternative transitional agreement will be tricky. John Kerr, the former head of the foreign office who was responsible for drafting Article 50, thinks the chance of agreeing one is less than 50/50.

However, staying in the EEA is not a magic potion. Brexiters would rile at the fact that we would still have to allow free movement of people and follow the EU’s single market rules. We would also probably have to pay money towards EU projects – though it’s unclear how that would be negotiated if we never left the EEA in the first place.

But the real problem is that we would be following the EU’s regulations without a vote on them – moving from being a rule-maker to a rule-taker. That’s hardly taking back control. In other words, EEA membership is clearly inferior to full EU membership. If the voters realised that, they might wonder what’s the point in quitting the EU in the first place.

Hugo Dixon is co-founder of CommonGround as well as editor-in-chief of InFacts. You can sign up as a supporter here.

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    4 Responses to “Single market legal challenge puts spanner in May’s Brexit”

    • This has prompted me to re-read the paper published by the government in March entitled “Alternatives to Membership: Possible Models for the United Kingdom outside the European Union”. Two things seem clear from this. First, in voting to “Leave the EU”, the 52% cannot be said to have had any one outcome in mind. The government paper canvasses five different possibilities. So what exactly is “the will of the people” that we are supposed to respect when negotiating our exit? Second, membership of the EEA (the Norway model) is put forward as one of these possibilities. So being, or continuing to be, an EEA member cannot be said to be beyond what was envisaged by way of life outside the EU. Interestingly for the court case, the paper states that: “All EU Member States are signatories to the EEA Treaty” (footnote 11 on page 14). It does not, however, mention the possible need to submit a separate termination notice in order to leave the EEA Treaty.

    • “But the real problem is that we would be following the EU’s regulations without a vote on them – moving from being a rule-maker to a rule-taker. That’s hardly taking back control. In other words, EEA membership is clearly inferior to full EU membership. If the voters realised that, they might wonder what’s the point in quitting the EU in the first place.”

      This is, baldly stated, the hard brexiters argument, that half measures in leaving the EU are all clearly worse than staying in, so any move to implement the referendum outcome must involve a hard brexit. Their logic is flawed, however, in that they claim a strong mandate for leaving the EU when the campaign was muddled, full of lies, half-truths and misunderstandings amongst those making the case for leaving, let alone those voting. It’s also why the brexiters are terrified of delays and clear knowledge of the outcomes. Lots of people seem to have voted “Leave” on the lies or half-truths, others seem to have voted on the basis of kicking the elite, and still others on a racist attitude (regarding a vote to “Leave” as meaning all immigrants must leave the UK, whether EU nationals or not. The Brexiters understand how weak this coalition is, particularly given the narrow margin and the age profile (if we had another vote in 2019, just the demographic change might switch the result if it’s people’s life experience rather than age per se which causes the age disparity in older=leave, younger=remain). So, for those who believe in Brexit for whatever reason they want hard Brexit (nothing else makes any kind of sense, and would almost certainly lead to a quick successful campaign to re-enter within less than a decade) and want nothing to get in the way of a steamrollered exit as quickly as possible. They’ll then continue to blame any negative outcomes on the non-compliance of “remoaners” such as those potentially taking up an EU associate membership option being seriously considered by EU27 reps.

      • You can guarantee our rebate won’t be available if we apply for re-entry. In fact, it will almost certainly be on worse terms. Why should it be otherwise? Not least as a “pour decourager les autres” effect. This is assuming that we’d be allowed a quick entry too, the EU is currently discouraging new entrants, even if we stuck to their rules to ensure a quick entry, so that harmonisation would be effortless.