Does Brexit really mean leaving the single market?


“Brexit means Brexit.” If there’s one soundbite that exemplifies Theresa May’s premiership thus far it’s that. Once a reassuring riposte to those that seek to subvert our democracy by ignoring the referendum result, or in true EU fashion, making us vote again until we get the ‘right’ answer, it has quickly become a source of frustration. Yes, Brexit must mean Brexit, but what exactly does that entail, besides an increasingly infuriating ouroborus-like argument?

Different leave voters checked that particular box for varying reasons, and varying priorities. Although Brexit does indeed mean different things to different people, there are a few broad areas almost all Brexiteers agree on. We wish to repatriate our trade policy and regain the freedom to strike trade deals with whomever may want one. We wish to see an end to the jurisdiction of the European Court of Justice over UK affairs. We wish to have far greater control over immigration than we currently enjoy, and we wish to see an end to obligatory EU budget contributions.

The main point of contention it seems is whether or not we can achieve these various goals by remaining in the single market, otherwise known as the European Economic Area (EEA). This debate is an incredibly important one and has been completely undermined by an unholy combination of hard-headed Brexiteers, Remainers in denial, and clueless politicians.

One point of confusion is the difference between the EEA and the customs union. Far too many politicians and commentators are either wilfully conflating the two or are completely unaware of the differences, or even who is involved in each one.

It’s now been five months since the referendum result, and over a year and a half since the Tories won the general election thus ensuring that a referendum was coming. Despite this, only last week the Guardian has incorrectly reported that Switzerland is a member of the EEA and the BBC erroneously asserted that members of the single market cannot strike their own trade deals. It is no wonder confusion is the order of the day when our media is so woefully uninformed.

Switzerland of course, whilst a member of the European Free Trade Area (EFTA) is not a member of the EEA, and instead has a series of bilateral trade deals with the EU. Meanwhile the remaining EFTA members, Norway, Iceland, and Lichtenstein, are also members of the EEA, yet remain outside the customs union. This gives them maneuverability in pursuing their own trade agreements with the rest of the world.

There is an assumption amongst some politicians that remaining in the customs union is essential to ensure that barriers to trade and customs checks are not erected between the UK and the EU. This too is wrong. The customs union, following the signing of the Treaty of Rome was fully established by 1968, yet internal border checks between member states were still commonplace until the 1980s.

It was the establishment of the single market, and the signing of the Single European Act in 1985, that eliminated these internal border checks, and thus continued EEA membership, not participation in the customs union, is what ensures smooth trade post-brexit.

Furthermore, it is not the customs union that limits our ability to pursue our own trade deals, but rather the EU’s common commercial policy. It is possible to remain in the former and outside the latter, as these areas are covered separately in the Treaty of the Functioning of the European Union (TFEU) by Articles 28 and 206/207 respectively, and therefore not reliant on each other.

Turkey of course has an arrangement of this nature, participating in the customs union whilst remaining outside the EU, and having the freedom to pursue it’s own trading arrangements with third parties. Rules Of Origin regulations mean that the duty is collected once the goods move to another member of the customs union.

But this scenario, post-Brexit, would merely serve to add further complications when negotiating trade deals elsewhere. With internal customs checks covered by the single market, there is no discernible advantage to remaining in the customs union, so leaving it must be a part of Brexit.

Turning to the EEA, much of the misinformation can ironically be traced back to Remain advocates trashing this option prior to the referendum. It was commonplace to hear Remainers, including David Cameron, preface their economic doom-mongering with ‘if we leave the single market…’. It was a cunning strawman argument, and a key part of Project Fear, but ultimately irrelevant.

The false conflation of the EU and EEA was the most erroneous aspect of the entire campaign and anyone who did so was rarely pulled up on it. This dishonesty (as well as the voices seeking to usurp the result) has of course now come back to haunt them as they try to make the case for continued membership of the EEA.

Given that the EEA agreement, to which the UK is a signatory, is separate from the EU treaties, it is entirely possible that even if we reached the end of Article 50 negotiations with no deal, we would still remain members of the EEA. Withdrawal could require the separate triggering of Article 127 of the EEA agreement, which can only be done unilaterally. There is no precedent for a country remaining a member of the EEA whilst not also a member of either EFTA or the EU, but it nevertheless remains somewhat of a legal grey area.

These issues would be best overcome by the UK applying to rejoin EFTA. Whilst a contracting party to the EEA agreement moving from the EU side of the two pillar structure to the EFTA side has yet to be done, Austria, Finland, and Sweden all moved in the opposite direction without the need to reapply to join the EEA. The UK could easily pull the same trick in reverse, assuming the other EFTA states were on board. We should be exploring this alongside Article 50 negotiations, and fortunately there has already been some encouragement from the other members.

EEA Two Pillar StructureImage credit:

On a related note, countries that have joined the EU do not automatically become members of the EEA. They must apply to the EEA to acquire contracting status and ratify the agreement accordingly. These differentiations alone technically means that leaving the EU doesn’t equate to leaving the EEA, but let’s explore it further.

Opposition to the EEA option is predicated, primarily, on the desire to limit immigration and the belief that this can’t be done whilst remaining a member. On the contrary, the precedent set by Lichtenstein demonstrates that members can have quantitative restrictions on freedom of movement whilst remaining party to the EEA agreement. By utilising the safeguard measures set out in Article 112, the principality has limited the number of migrants crossing it’s borders since it joined the EEA in 1995.

Moreover Iceland utilised the same safeguard measures in the wake of the 2008 financial crash to restrict the flow of capital. These instances give lie to the notion that the ‘four freedoms’ are non-negotiable, despite what Merkel and EU officials may assert.

Similarly, remaining in the EEA does not mean continued subordination to the ECJ. As the EFTA site points out: “the EEA EFTA States have not transferred any legislative competencies to the EEA institutions and they are unable, constitutionally, to accept direct decisions by the Commission or the European Court of Justice.” This could not be clearer and should be proof that EEA membership is perfectly compatible with the re-establishing of British sovereignty, the number one issue for Leave voters.

What’s more, arbitration for EEA/EFTA states is conducted by the EFTA Court, and unlike the ECJ, it’s rulings are advisory rather than binding, given the UK further flexibility when it comes to single market regulations.

The EFTA site also describes how EEA/EFTA states take decisions relating to EEA legislation by consensus, rather than by majority vote as in the EU, meaning the UK could have a greater say over single market regulations than it currently does, enjoying a de-facto veto at the EEA Joint Committee.

Coupled with regaining an independent voice and veto on global regulatory bodies such as the WTO, UNECE, Codex Alimentarius and a whole host of other industry specific institutions from which the EU increasingly takes it’s cues, the threat of having no say over the rules is an empty one.

This just leaves the matter of budgetary contributions. As well as having no say in the rules, it was often claimed by advocates of the EU that Norway still paid into the EU budget. Like the ‘no say’ assertion, the ‘still pay’ one is also wildly inaccurate.

Norway’s expenditure relating to the EEA consists of several factors. Firstly there is the ‘Norway Grants’, aid paid by Norway as a form economic rehabilitation of post-Communist countries. There are also the EEA grants, for which Norway currently provides 95% of the funding. Crucially, not a cent of these grants goes into EU coffers.

Norway does participate in several EU programmes, including Horizon 2020 and the Erasmus research programmes, and pays towards the specific budgets for these programmes. These costs though are essentially for services rendered, and nor is the funding one way.

A thorough breakdown of what Norway contributes, and what similar arrangements for the UK would be, can be found here, but scaled up, total UK expenditure with relation to single market participation would equate to around £8billion. This is still a substantial haircut on the £13bn we paid last year.

Hard Brexiteers may cry foul at this, but participation in any market does not come free.
Customs co-operation costs money and the various decentralised agencies that facilitate the free movement of goods across our continent and with our closest neighbours are essential. Any money saved by extracting ourselves from those arrangements would have to be spent on duplicating them here, as well as beefing up our own border and customs controls. This is as nonsensical as it is inefficient.

The point that the likes of Canada don’t pay for access to the market is also a red herring as they do not co-operate in these customs agencies. Both the US and Canada both spend huge amounts of money on customs co-operation with each other to smooth the movement of goods across their border. This is for exactly the same reason the EU does.

Article 50 gives us two years in which to negotiate our withdrawal settlement from the EU. Given the vast complications that have arisen after 40 years of political and economic integration, a bespoke deal cannot be constructed within that time frame. This is why an interim option, maintaining single market membership for the time being, is a sensible one.

The reticence from some Brexiteers for this option is based upon the fear that there would be attempts to keep us in the EU via the back door, rejoining fully further down the line. The egregious attempts to subvert the largest vote for anything in British history is incredibly troubling. The little faith the public has in it’s politicians, and politics in general, would be wiped out with lord knows what consequences, were the likes of David Lammy successful.

This is why we should have a longer term plan, perhaps based on the Swiss model, for our relations with the EU. The beauty of the EEA option is that it gives us the time and breathing room to evolve our position, whilst freeing us up to pursue trade with the rest of the world, reducing our budget contributions and repatriating multiple policy areas including home affairs, employment, justice, foreign, and defence, as well as ditching the appalling Common Agricultural and Common Fisheries policies, ditching ECJ jurisdiction in the process.

The main goals of Brexiteers of all stripes can be achieved whilst remaining in the single market. The confusion stems from the repeated false conflation of the EU and EEA during the referendum campaign by Remainers.

Those that called that nonsense out at the time, now find themselves making the exact same arguments to Brexiteers who are rightly sceptical. They see the same dishonest people who wanted us to remain in the EU, now make similar statements about leaving the single market, against a backdrop of anti-democratic MPs, commentators, petitions and demonstrations calling for the decision to be overturned.

But provided Theresa May’s government continues to honour the referendum decision, we can trigger article 50, leave the EU, and take back control whilst still remaining party to the EEA agreement. Leavers should not characterise this as a betrayal, but as proof positive that Project Fear’s central tenant – that the EU and the single market were one and the same – was as false as they always claimed it was.


  1. This:

    [blockquote]Turkey of course has an arrangement of this nature, participating in the customs union whilst remaining outside the EU, and having the freedom to pursue it’s own trading arrangements with third parties.”[/blockquote]

    is incorrect. Turkey can of course trade with third party countries; but (i) cannot enter into free (or reduced tariff) trade agreements with them without EU agreement (ii) must apply the Common External Tariff to goods (covered by the EU-Turkey) agreement and (iii) must accept all EU agreements with third party countries into its own law.

    It accepts large parts of the EU acquis into its own law – for example, state aid and competition law.

    The Agreement is here: .

    You also underestimate the cost of setting up and administering Rules of Origin. The cost has been estimated as equivalent to an additional 5% tariff on all exported goods.

    [blockquote]”…the precedent set by Lichtenstein…”[/blockquote]

    applies to all small Alpine countries largely composed of forested mountainside with little room left to build and with the foreign-born already exceeding one-third of their population. The UK doesn’t qualify on about six counts; even Switzerland doesn’t.

    As for the Iceland precedent; it’s nice to know that in the event of a financial collapse posing an existential threat to our economy we can impose controls on capital outflows. It’s not, one hopes, a “business as usual” measure.

    The four freedoms have been part of the EU’s law since its inception as the EEC; they were set out in the Treaty of Rome in 1957. The EU will not agree a deal that compromises them.

    [blockquote]”What’s more, arbitration for EEA/EFTA states is conducted by the EFTA Court, and unlike the ECJ, it’s rulings are advisory rather than binding, given the UK further flexibility when it comes to single market regulations.”[/blockquote]

    This is incomplete.

    Decisions in direct action cases – where a state or person applies direct to the EFTA Court for a decision – are final and binding.

    Decisions in preliminary ruling cases – where a state court refers a question of EEA law to the Court for a ruling – are technically not binding on the state court. The state courts do, however, owe duties of loyalty and reciprocity so it would be difficult for that court to depart from the ruling.

  2. There would not be enough time to negotiate an EEA-style deal even if all Leavers favoured it. Powerful voices like Redwood, Fox, Rees-Mogg and Duncan Smith plus the Daily Mail actively oppose it. The default option is trading on WTO terms (though even they will take a lot of haggling, esp on quotas) and realpolitik means that it what will now happen.
    People who voted Leave expecting sth like the EEA failed to look realistically at the blockages to its acceptance, both in UK politics and in the EU (esp given the stringencies of Art 50).
    Put another way, Redwood’s taken you for a mug. Sorry

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