Thursday, April 26, 2018

Article 127 of the EEA Agreement

A lot of fairly hopeful Remainers continue to hope that Article 127 of the European Economic Area (EEA) Agreement could keep them in the single market after Brexit. The UK is a signatory to the EEA Agreement which extends the single market to the Iceland, Liechtenstein and Norway.
Article 127 provides that:
“Each Contracting Party may withdraw from this Agreement provided it gives at least twelve months’ notice in writing to the other Contracting Parties.
Immediately after the notification of the intended withdrawal, the other Contracting Parties shall convene a diplomatic conference in order to envisage the necessary modifications to bring to the Agreement.”
The UK has not invoked this provision which leads many to think that the EEA Agreement would still apply to the UK after Brexit. Unfortunately this isn't how it works!
Context is everything. Article 2 of the Agreement provides that:
“The term ‘Contracting Parties’ means, concerning the Community and the EC Member States, the Community and the EC Member States, or the Community, or the EC Member States. The meaning to be attributed to this expression in each case is to be deduced from the relevant provisions of this Agreement and from the respective competences of the Community and the EC Member States as they follow from the Treaty establishing the European Economic Community.”
Iceland, Liechtenstein and Norway clearly are contracting parties but regarding the EU (the legal successor to the European Community) and its member states, contracting parties could mean:
a.           the EU and the EU member states (acting together),
b.          the EU (on its own), or
c.           the EU member states.
Right, everybody clear now? Well no, but other aspects of the Agreement are less open to interpretation.
Article 2 contains the following further definition:
“the term ‘EFTA States’ means the Iceland, the Principality of Liechtenstein and the Kingdom of Norway;”
Article 28(1) provides that:
“Freedom of movement for workers shall be secured among EC Member States and EFTA States.”
Article 126(1) provides that:
“The Agreement shall apply to the territories to which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty, and to the territories of Iceland, the Principality of Liechtenstein and the Kingdom of Norway.”
Together these mean that:
First, even if the UK were to join the European Free Trade Association, it would not automatically become an EFTA State for the purposes of the EEA Agreement.
Second, when the EU treaties cease to apply to the UK, the EEA Agreement will also cease to apply. The UK will be neither a "EC Member State" or a "EFTA State" so the free movement of workers provisions will also cease to apply. A transitional deal between the EU and the UK won't help, the UK will need a separate transitional deal with the EFTA states.
In follows that that the phrase "Contracting Party" in Article 127 doesn't refer to a single EU member state, but to the EU in its entirety. The EU could withdraw from the EEA as could Iceland, Liechtenstein and Norway, but an individual EU member state couldn't withdraw in its own right.
There might be an argument to say that the UK remains a contracting party in the Vienna Convention sense, as it signed and ratified the EEA Agreement, but it would be a hollow position without the application of any substantive provisions.
The EEA Agreement is not unique. Pretty much all the agreements the EU signs contain territorial provisions similar to Article 126 of the EEA Agreement. Trade deals with Canada and Japan will cease to apply to the UK from Brexit day unless those countries agree to continue to apply them to the UK after Brexit day.