European Economic Area: UK Membership

Steve Baker Excerpts

Monday 6th November 2017 Commons Chamber

[The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)]

I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing this debate on the European economic area and matters related to it. It has been an exceptionally vibrant debate, which is reflected in my time running extremely short as I rise to sum up.

The EEA agreement entered into force on 1 January 1994 between the European Community, as it was, and members of the European Free Trade Association. The agreement has the effect of extending the internal market of the EU to three European Free Trade Association members: Iceland, Liechtenstein and Norway. The fourth current EFTA state, Switzerland, rejected EEA membership in a referendum in 1992.

The territorial extent of the EEA has changed over time, with all new countries joining the EU obliged to become signatories to the EEA agreement. A number of countries have joined the EU from EFTA, including Denmark and the UK in 1973, Portugal in 1986, and Austria, Finland and Sweden in 1995. Neither EFTA nor the EEA were designed to facilitate exit from the European Union. Indeed, EFTA and the EEA have been conveyors to EU membership, interrupted by referendums in the two largest remaining EFTA states. I mentioned Switzerland’s rejection of the EEA in 1992; Norway rejected EU membership in 1994.

As we look to the future, we value our relationships with EEA and EFTA states, and we will continue to do so after we leave the European Union. We have made it clear that our offer to the EU on citizens’ rights also applies to the EFTA countries. We are talking with the three EEA-EFTA countries and Switzerland to ensure that there is continuity, recognising the need to promote stability for businesses and individuals from and within those countries.

The motion that we have debated today claims that

“for the UK to withdraw from the European Economic Area…it will have to trigger Article 127 of the EEA Agreement”.

As I said in a written answer on 12 September, when we leave the EU, the EEA agreement will no longer operate in respect of the UK. The UK is only a party to the EEA agreement by virtue of our EU membership, so the Government’s legal position is clear: article 127 does not need to be triggered for the agreement to cease to have effect when we leave the EU.

We have explained our policy repeatedly. The Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Worcester (Mr Walker), said in answer to a written question on 17 October that

“the European Economic Area Agreement will no longer operate in respect of the UK”

when we leave the EU. Prior to that, the Secretary of State said in response to the hon. Member for Aberavon on 7 September:

“The United Kingdom is a party to the EEA agreement in its capacity as an EU member state, so on exit day the EEA agreement will cease to operate in respect of the UK.”—[Official Report, 7 September 2017; Vol. 628, c. 285.]

Finally, my right hon. Friend the Prime Minister confirmed to the House as early as March that our participation in the EEA is linked to our EU membership.

It is not only the Government who have made that clear. The man who led the European Council’s legal service for 22 years, Jean-Claude Piris, wrote in an article in September that the UK

“will automatically cease to be an EEA member when leaving the EU.”

He added:

“Neither the EU, nor its current 28 member States, are members of EFTA. After Brexit, the UK, not being a member of EFTA, and not anymore an EU member, could not be an EEA member”.

The president of the EFTA court, Dr Carl Baudenbacher, who has been quoted a number of times today, has also explained that the UK will lose EEA membership automatically when we leave the EU:

“A State can only be an EEA Contracting Party either qua EU membership or qua EFTA membership.”

On the fundamental premise of today’s motion, there is a clear consensus that the EEA agreement will cease to operate automatically in respect of the UK when we leave the EU.

The second part of the motion calls on the Government

“to provide time for a debate and decision on a substantive motion on the UK’s continued membership of the EEA”.

I welcome the opportunity we have had today to debate the EEA. A further debate is unnecessary. In addition to today’s debate, as has been mentioned, amendments have been tabled to the European Union (Withdrawal) Bill. It remains to be seen whether the House will turn to those in Committee.

As the Government have made clear, when we leave the EU, we will leave the EU’s internal market. We will not seek to become signatories to the EEA agreement. Acceding to the EEA would guarantee a bad outcome for the UK. As hon. Members know, the EEA agreement covers the four freedoms: the free movement of goods, services, persons and capital. We have listened to EU leaders, and we understand and respect their position that the four freedoms of the single market are indivisible and that there can be no cherry-picking. The democratic decision of the people of the UK means that we cannot accept all the obligations of the EU internal market, so things will be different when we leave.

European economic area membership would mean the UK having to adopt at home, automatically and in their entirety, new EU single market rules in order to maintain market access—rules over which we will have little influence and no vote. Such an absence of democratic control would not be viable for the people and businesses of the UK. I share the concerns of my right hon. Friend the Prime Minister that EEA membership would inevitably lead to friction and a damaging reopening of the nature of our relationship in the near future. That would be exceptionally undesirable.

Whether the EEA is right for the EEA-EFTA states is a matter for them; I say only that it would not be right for the UK, which is quite different from the EFTA states. Norway’s population is 5.26 million and Switzerland’s is 8.42 million. There are more than 8.5 million people in Greater London alone. Iceland’s population of 338,000 is comparable to that of the great city of Coventry. Liechtenstein’s population of something over 37,000 is about half the number of electors in the Wycombe constituency.

Those of us who care about the future prosperity of the UK cannot allow our country to be shoehorned into a position of permanent rule-taking, with the inherent considerable risks of major harm to our economy. Our task is to find a new way to work together in partnership with the countries of Europe, recognising that our rights and obligations in relation to the EU have changed. However deep our love for the EEA states, it cannot be said that they are comparable to the UK either in population size or economic structure. I have no hesitation in saying that that the EEA would not be right for us, even if it may be right for them.

The Government will seek a unique and ambitious economic partnership with the EU, based on our rules and regulations being the same at the start and on maintaining our commitment to free trade and high standards, while allowing for us both to make changes where we want to. When we leave the EU, we will no longer be part of the EEA.