The Norwegian model. The Continental Partnership model is

The Continental Partnership model is
the only model suitable for the UK to adopt as an agreement for a future trade
relationship with the EU. This essay also argues that current EU membership
must be used as a transitional agreement to protect all stakeholders.

 

This essay seeks to advise the British
Parliament on adopting the Continental Partnership model. To do this, I will
first outline this model, the Swiss model and Norwegian model. The Continental
Partnership model is formed of three features which are participation in common
policies with access to the single market, participation in inter-government
decision making and contributing to the EU budget1.
Using these features, I will compare the model with the Switzerland and Norway
models to provide an effective analysis.

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It should be noted that a critique of
each trade agreement concluded or that is being concluded by the EU would take this
essay out the scope of the word count. Taking the statements of European Chief
Negotiator Michel Barnier who stated that the “Norway model best trade option
for UK post-Brexit”2
and McTagues reporting of one UK official stating “It’s Swiss model one of
the potential routes being discussed” make both these models are likely option.
Therefore, this essay will seek to critique the Switzerland and Norway models
only.

 

The second part of this essay will
discuss how the doctrine of Parliamentary sovereignty is reconciled with the
Court of Justice of the EU (CJEU) to resolve disputes arising from both
agreements.

 

This essay will conclude that the
Continental Partnership model should be adopted post-Brexit, EU membership must
remain whilst the transitional period is underway and a unique structure is
required to adjudicate upon resolving disputes from this agreement.

 

Continental Partnership model,
Switzerland model and Norway model outlined

This essay believes that the Continental
Partnership model should be adopted. Pisani-Ferry et al describe this model as
a way “to sustain deep economic integration, fully participating in goods,
services, capital mobility and some temporary labour mobility, but excluding
freedom of movement of workers and political integration”3.

 

The
“Norwegian model” refers to Norway’s relationship with the EU which is
comprised of membership of the European Free Trade Association (EFTA) and
European Economic Area (EEA). EFTA is a free trade area which consists of
Norway, Iceland, Lichtenstein and Switzerland. It does not have access to the
EU’s single market. The EEA is an agreement between the EFTA states (excluding
Switzerland) and the EU which gives the EFTA members access to the single market.
EFTA’s organisational structure is comprised of the EFTA Council (who decide on
policy issues), the Secretariat (who manage the day-to-day management), the
EFTA Surveillance Authority (monitors compliance with the EEA agreement) and
the EFTA Court (responsible for juridical oversight of the EEA Agreement, following
ECJ case law).

The “Swiss model” refers to
Switzerland’s relationship with the EU. Although Switzerland is an EFTA member
state, it isn’t part of the EEA and so does not have any “general right of
access to the EU Single market… however as an alternative, it has negotiated
numerous individual agreements covering various elements of market access”4.
The agreements are managed by joint committees who “serve as a platform for the
exchange of information, for advice and for consultation. They also play a key
role should differences of opinion arise”5.

 

Interim agreement

As interim agreements, the Continental
Partnership and Swiss models are unsuitable for adoption. This essay believes
that to prevent the most disruption, the current EU membership ‘model’ must
remain in place. Taking both models separately, this segment of the essay will
evaluate why this should be the case.

 

Adopting the Swiss model will result
in a complicated and lengthy negotiation procedure. Switzerland and the EU
began trade negotiations in 1994 after the Swiss electorate rejected joining
the EEA. These negotiations concluded in 1999 and compromised of ten bilateral
treaties. Since then, the model has evolved to include more than 120 separate
agreements6.
Although the agreements offer a “bespoke and flexible model”7,
it is unfeasible for Britain’s Brexit timeline. Article 50 stipulates that both
parties must negotiate an agreement within two years of the withdrawal
notification. Under the Swiss model “Negotiations took several years to
complete – more than the two years which the UK will have”8
underlying its complexities.

 

Moreover, the Swiss model does not
allow for the free movement of services which is a key freedom the UK requires
to exercise within the single market. This will be touched upon later in this
essay however such an interim agreement that contains such freedoms is
required. Overall, the lengthy procedure, lack of free movement of services
coupled with complexities mean that the Brexit timeline outlined in Article 50
will be unachievable and therefore, this essay holds that the Swiss model must
be ruled out.

 

It should be noted that the Norwegian
model is similar to the EU membership that this essay advocates for. Through
this adoption financial services and other industries will be able to
accommodate and make their plans for when the UK withdraws from the Union.
This, combined with the Continental Partnership model will ensure that a
“cliff-edge exit” is avoided9.

This essay advocates for the UK to be
an EU member throughout the interim period. Upon ‘Brexit day’, this essay
believes that the UK should then adopt a Continental Partnership model. There
is significant support for my argument that EU membership should remain during
this transitional period. Piris highlights the need for “a transition period”,
stopping the UK falling from into the rules of the WTO gap10.
Such an agreement, as supported by Piris may not appeal to those who voted for
Brexit as the EU has required the UK to continue on with its budgetary
contributions and remain under the regulation of the European Commission as
well as the CJEU.

 

“Participation in common policies
consistent with access to the Single Market”

In January 2017 British Prime Minister
Theresa May announced that the UK will leave the single market11
(a territory “without any internal borders or other regulatory obstacles to the
free movement of goods and services”)12.
A core feature of this is the ‘four freedoms’ which is the free movement of
goods, services, capital and labour.

 

Although May announced the UK’s
departure from the single market, this essay contends that this is something
that the UK may have to participate in. De Grauwe states “…the EU should not
allow itself to be dragged down into negotiations over a special cherry-picking
deal”13.
This is in close reference to Barnier’s statement which said “the EU would not
accept any arrangement that could undermine the single and its ‘four freedoms'”14.
As seen in the Swiss trade negotiations, the EU is committed to the four
freedoms which may be politically challenging for the UK. However, there is a
distinction in participating in the single market as a member state and as a Continental
Partner (where the free movement of workers would be limited). This is
justified through the UK adopting legislation from the other three freedoms and
so presents itself as a concession that the EU would have to make.

 

A counter-argument can be proposed to
the Continental Partnership model. German Chancellor Angela Merkel “dismissed
Boris Johnson’s proposal that Britain might enjoy access to the European single
market and restrict immigration at the same time”15.
Merkel drew a comparison with Norway stating that “Norway, for instance, is not
a member of the European Union but has access to the single market because it
accepts open migration from the European Union”16.
There is clout to this argument. In order for the European project to work, states
must make certain national concessions. From an EU perspective, a deal that
provides a cherry-pick of the four freedoms would decrease the importance of
the Union.

 

Although such a counter-argument is
valid at face-value, I do not feel that the limitation of free movement of
workers would rule this option out due to two reasons.

Firstly, the EU has shown precedence
of being flexible whilst not completely deviating away from its belief of the
four freedoms. Ambhül, Gutmann and Scherer clarify this point by offering the
example of Germany introducing a motor vehicle toll. The European Commission
negotiated an agreement that allowed for changes in the law but not the
scrapping of the law itself17.
Secondly, the adoption of a limitation of free movement of workers isn’t a
complete ruling out of this freedom. Wolff and Sapir offer a different
perspective on this argument which I agree with. They say “We argued deep
economic integration…without the full freedom of movement of workers, as long
as a single set of rules and laws were respected and enforced in the other
three dimensions of the EU single market”18.
It can therefore be concluded that the Continental Partnership model is a
political possibility for its effective response to the free movement of
workers

 

Looking at the free movement of
services, we see that the Switzerland model is not appropriate for the UK to
adopt. Switzerland’s lack of membership of the EU’s banking passport system may
be disastrous for Britain’s services dominated economy which contributes 78%19
to the national GDP. The complexities of securing a trade agreement for the UK
with, for example, free movement of services are highlighted by Dixon. He
states that “the Swiss have spent years trying to get a deal covering them
financial services”20
and “if we adopted the Swiss option, both domestic and foreign banks based in
the UK would shift parts of their operations across the Channel in order to
gain access to the single market”21.
The lack of freedom of services therefore presents a huge obstacle for the UK
if this model was adopted, its impact could lead to a “loss of £18.6bn in
economic output”22.

 

A possible counter-argument to the
Continental Partnership model may be seen through the Norwegian models
allowance of the free movement of services. As mentioned earlier, the model
allows for the four freedoms for the UK to participate in and replicates the
current relationship between the UK and EU to an extent. Support for this is
derived from Payne who states “it would allow Britain both to retain full
access to the single market” and “strike new trade deals around the world”23.
The Norway model’s flexibility and access into the EU markets could be adopted.
Despite this strength, it is my view that this is not suitable for the UK to
adopt politically. The Norway model, whilst still granting the UK access to the
single market would change little with the status quo. For example, as
articulated by the Vote Leave campaign, immigration was key concern for Brexit
voters. Adopting the Norwegian model would mean that the UK agrees to the unrestricted
free movement of labour, contravening the wishes of the electorate. Furthermore,
the Continental Partnership model remedies the lack of free movement of services
found in the Swiss model by allowing the free movement of services by adopting
European legislation and jurisprudence.

 

The Swiss and Norwegian models identify
two issues. Firstly, the Swiss model does not allow for the free movement of
services. The Continental Partnership rectifies this holding that the UK will
be allowed access to the single market but with “some labour mobility”24,
as said by Pisani-Ferry et al. This would allow the UK to protect its services
economy by retaining its existing arrangement with the EU. Secondly, the
Norwegian model does not present a significant change from the current
relationship with the EU therefore not reflecting the electorate’s’ wishes. Although
there is discussion present over the Continental Partnership models ability to
facilitate the free movement of labour and whether it would politically be
acceptable, this essay articulates that the UK would not be ruling out the free
movement of labour but merely imposing a restriction upon it. Therefore, for
the UK to access the single market and for the EU to retain its principle of
the four freedoms, concessions must be made by both.

 

Inter-Governmental decision making

A critique of the Swiss model is that
it would contravene the wishes of those who voted to leave. The Vote Leave
campaign, argued that EU authority over Britain must end and that the UK must
“hold our lawmakers to account” because “half our laws are made by unelected EU
bureaucrats in Brussels for whom we never voted”25.
In order to respect these demands, the UK would have to adopt a model that
allows it to retain its ‘sovereignty’. The Swiss model at face-value allows
this however a deeper analysis to this shows that Swiss autonomy is artificial.

 

Switzerland currently engages in “autonomous
adaptation” which absorbs EU law into domestic law. This method is used to adopt
the changing legislation from the EU in order to ease trade. Breidlid and Najy
support this analysis stating that “a central factor in the adaption to new EU
legislation is the need for Switzerland to keep its legislations as
EU-compatible as possible. Otherwise, the Swiss economy could end up losing
access to the internal market”26.
This concludes that for the UK to trade under the Swiss model, a concession of
sovereignty may be required. This would make the Swiss model is an unsuitable
model to adopt.

 

A possible counter-argument is offered
by the American Swiss Foundation who state that “…the bilateral approach does
not require Switzerland to accept EU laws above its own”27.
This counter-argument is in reference to the doctrines of supremacy of EU law and
direct effect (a principle established in Van
Gen den Loos holding that “it is not necessary for the EU country to adopt
the European act concerned into its legal system”28).
This instantly can be responded with the fact that both doctrines have no legal
effect on Switzerland as it is a non-EU member state thereby refuting the claim
that EU legislation is supreme over Swiss law.

 

This counter-argument however is weak.
Whilst de jure Switzerland isn’t
required to absorb EU law, the situation in fact is different. Epiney supports
my argument stating that although there is voluntary adoption of EU legislation
it is adopted to “avoid economic difficulties”29.
She goes on to say that “one must recognise that the ‘eurocompatiblity’ of
Swiss legislation is the rule…”30
indicating that although Switzerland retains its own sovereignty, with EU law
absorption, the practice of business with the Union may become difficult. Dixon
supports this analysis, stating that “Switzerland does have to adopt the same
or equivalent product regulations”31.

 

The Norwegian model follows a similar
critique. Although the Swiss model creates a situation where the adoption of EU
law is vague, the Norwegian model would entail the UK explicitly to be bound by
EU law. Rees and Doussin support this but advance my argument stating that “the
UK would have to agree to comply with all EU laws and regulations…but without
the ability to provide any input on their content”32.

De-Cecco adds further that “decisions
on competition and state aid, which affect businesses and public bodies in the
UK, would continue to be taken in Brussels by…the EFTA surveillance authority
which applies…EU competition law”33.

 

The Continental Partnership model
could be seen to fall foul of this point also. The model sets out that “the final
say would formally remain with the EU” and “non-EU CP members would then still
have to implement the single market legislation in their national legislation
or face restrictions on participation in the single market”34.
This essay however contends that although such supremacy is existent, it can be
justified. The reasoning behind this lies with the law-making process where the
UK would be able to debate legislation, allowing for amendments and inputs to
be made. This is far different from the Norway or Switzerland models where no
such discussion or debate is provided.

 

A thought should be reserved for the
lack of influence the UK would have if it adopts the Swiss or Norwegian model.
Both are not part of the EU and therefore are unable to give input into any EU
legislation, making them ‘rule-takers’. As discussed earlier, the Continental
Partnership model allows for British influence into the legislative process. A
danger of the Swiss or Norwegian models is if adopted, the EU may pass
legislation that increases regulation of the financial services industry which
may damage British economic interests. The Government would have no choice but
to implement it. In the case of Switzerland, a violation of the agreement may
invoke the ‘guillotine clause’ which is a legal principle that stipulates that
“they the trade agreements could only take effect together. If one of the
agreements was not renewed or if it were terminated, the others would also
cease…”35.
Lee explains that “the clause is very simple and instructive of clear EU
thinking – you undertake core legal relationships with the EU on the basis of
an unconditional recognition of all of the 4 freedoms – opt out of one and you
opt out of them all”36.

 

The Continental Partnership model
allows for British influence on EU legislation if this model is adopted. It
will allow the British Government to be aware of the debate and rhetoric of EU
legislation during the implementation phase and allow the UK to shape EU
legislation. This is unique as both the Swiss and Norwegian models do not offer
this. Pissani-Ferry et al state “We propose that CP countries would meet in a
CP council, in which EU institutions would participate”.37
Through this Council is where the UK would “continue to participate in the
numerous different formations where the details of single market regulation and
other policies in…are discussed and negotiated”38.
They however clarify that the Council would not be able to pass EU legislation
however it would be involved in the drafting of EU legislation and have the
right to propose amendments.

 

 

EU budget contribution

The Swiss and Norwegian model requires
both nations to pay into the EU budget in return for single market access. This,
like the commitment to the four freedoms appears to be a sticking point for the
EU with Wolff and Sapir stating that “Without contributing to the budget, no
access to the single market can be granted”39.
The European Commission have further alluded to this by stating that in the
case of Switzerland, “as a consequence of its partial integration into the EU’s
single market, Switzerland pays a financial contribution to economic and social
cohesion in the new EU member states”40.
It should also be noted that both nations, whilst paying into the EU budget, do
not have a say in the shape of legislation originating from Brussels.

 

It is the belief of this essay that
the wishes of the British people must be respected but also single market
access should be made available to the UK. The Continental Partnership model strikes
a median with the UK contributing to the EU in return for the limited access it
receives. Wolff and Spair view this as ‘compensation’ as EU countries would be
compensated “for their reduced emigration possibilities and the entailed loss
in economic wellbeing”41.
It could also be argued that by contributing to the EU budget, the UK will be
developing markets for itself. Much of the EU budget is spent on reducing
economic gaps in the Union through investment and projects. Not only would such
a contribution appease EU member states who may be hurt the most from a
constrained free movement of workers system but it would allow funding to be
diverted into growing the EU single market. It must be held however that the UK
would have to negotiate a lower contribution toward the EU budget in order to
meet the demands of the Leave campaign.

 

CJEU Reconciliation with Parliamentary
sovereignty

This segment of the essay will discuss
how the sovereignty of Parliament will be reconciled with the potential
jurisdiction of the CJEU to interpret and resolve disputes arising from the
Brexit agreements.

 

Parliament, the supreme law making
body in the country (under the doctrine of Parliamentary sovereignty) can be
seen to be in conflict with the functions of the CJEU. Since the UK’s accession
into the EU, there has been much debate whether Parliament is sovereign with
the advent of the supremacy of EU law. Zhang articulates that there was “no
formal basis”42
of EU law being supreme through its treaties. Instead, this doctrine has been
born through case law with the landmark case of Costa v ENEL where the court established that “the EEC Treaty has
crated its own legal system…became an integral part of the legal systems of the
member states and which their courts are bound to apply”43.
     In Factortame, the CJEU ruled that UK law at the time was in conflict
with the EU Treaty which led to a disapplication of a UK statute.

 

During the transitional period, it is
this essay’s view for the UK to stay under the jurisdiction of the CJEU and any
matters before Brexit to be adjudicated under the CJEU. In upholding the rule
of law, matters that occur up until Britain’s membership of the EU must be
ruled under the current system. Parker and Barker raise the point that if CJEU jurisdiction
ended suddenly “it would require Britain to have in place an entirely new regulatory
regime, creating bureaucratic and business upheaval”44.
This is currently the EU’s negotiating guidelines.

 

Disputes arising from post-Brexit will
be adjudicated under the Continental Partnership model which involves the CJEU
to a large extent. Under this model, “members would have to accept the
enforcement measures and jurisprudence that safeguards the relevant freedoms of
the single market”45.
When comparing this to the Norwegian model, both structures seem similar. This
may appear to be an affront to the views of the British people. Whilst this
argument may hold weight it is worth to examine two things. The first being
that Parliament will still is sovereign. As discussed by Elliott, “primacy
enjoyed by EU law in the UK is itself attributable to an Act of Parliament…and
Parliament remains capable of amending, overriding or even repealing that Act”46.
We can conclude that although Parliament may be bound under the laws that the CJEU
interprets, the sovereignty of Parliament allows it to ‘pull the plug’
(although there may be consequences). The second element to examine is CJEU
jurisdiction will not expand to all spheres as the Continental Partnership model
as it would create a trading relationship only. Connected to this is the
contention that if the UK is to benefit from the EU’s single market, it must be
able to play by its rules. Homogeneity in the EU single market is required for
it to function and is the aim of the EU in its dealings with non-EU member
states such as the EFTA parties47.

 

Conclusion

In an attempt to provide post-Brexit clarity,
it is apparent that the Swiss, Norwegian and Continental Partnership models face
difficulties. Through its three core features creating a compromise between the
EU and the UK, the Continental Partnership model prevails. It allows sufficient
UK access into the single market whilst also retaining the political will of
the British people. The second feature allows for British influence on EU
legislation but, the UK must adopt this legislation regardless. The third
feature is the contribution to the EU budget, which must be a concession that
the British Government is willing to make. The second element of the question
asks how the sovereignty of Parliament could be reconciled with the jurisdiction
of CJEU in both Brexit agreements. In reference to the interim agreement, in
order to uphold the rule of law, it is vital the CJEU adjudicate for disputes
up until ‘Brexit day’. Upon Brexit, disputes arising should be adjudicated in
the Continental Partnership model mechanism.

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