Is the Optimal Solution for Brexit Right Under the UK Nose?

By Eliav Boaron, our associate at Or-Hof Tech & IP Law.

The article is part of Eliav’s post Master of Laws studies at the University of Oxford – Faculty of Law and was co-authored by his law professor – Dr. Christopher Whelan.

Why Is EFTA the Right Result for Brexit?

By: Eliav Boaron[1]

 

 

 Table of Contents

Preface – The UK And Its Relationship with the EU 1
Brexit – What Are the Leading Aspects in Order to Have the Right Result? 2
EFTA – Why Is It the Right Result for Brexit? 3-15
1.       Completing Brexit 4
2.       Preserving a Relationship with the European Union 5-6
3.       Reregulating Movement of Goods 6-7
4.       Renegotiating Customs Union Agreements 8
5.       Addressing Immigration Concerns 8-9
6.       Protecting International Trade Relations 9-10
7.       Eliminating Direct Effect & Primacy of European Union law 10-12
8.       Reducing Expenses on the EU 12-13
9.       Avoiding Bailouts for the Other EU Member States 13-14
10.    Showing Market Stability and Certainty 15
Conclusion 16

 

 

Preface – The UK And Its Relationship with the EU

The United Kingdom (“the UK“) has been a member state of the European Union (“the EU“) since 1973.[2] However, the future of this membership is unclear due to “The United Kingdom European Union Membership Referendum”, which took place on June 23, 2016.[3] The British people voted to leave the EU by 51.9% (17,410,742 votes) to 48.1% (16,141,241 votes).[4] This decision is also known as “Brexit”, a portmanteau word of “British” and “Exit” (“Brexit“).[5]

As a result of this referendum, on March 29, 2017, the British government invoked “Article 50 of the Treaty on the European Union” in a letter to the EU council president Donald Tusk.[6] Thus, the UK initiated the official EU withdrawal process, putting the UK on course to complete the withdrawal by Friday, March 29, 2019.[7] However, it should be noted that this deadline can be extended if all 28 EU member states agree.[8]

Some of the doubts and questions which experts wish to clarify are: what will be the relationship of the UK with respect to the EU in a post-Brexit era (“post-Brexit“)? Does this mean that no EU regulations, treaties, standards, rules, or decisions will apply to the UK? And which connections, if any, will the UK have with the rest of the member states of the EU?

These questions, among others, raise many speculations and suggested results. One of the optional results relates to the European Free Trade Association (“EFTA“). This result suggests that after leaving the EN, the UK should join EFTA.[9] This paper aims to elaborate on this optional result and supports it. The paper offers 10 reasons on its behalf. It should be noted that there is a fundamental assumption in this paper; the British government follows the majority decision and indeed leaves the EU.

 

Brexit – What Are the Leading Aspects in Order to Have the Right Result?

There are three main aspects which, among other aspects, any good result should consider:

Firstly, addressing all of the citizens of the UK. Brexit was not a political decision. In other words, it was not a left-right issue. Hence, when analyzing Brexit and its optional results, it is a necessity to take into account issues and concerns from the entire political spectrum, and even including the concerns of the voters who did not vote for Brexit.

As an example, on the one hand, some liberals opposed Brexit. Some of them, however, supported it, because they felt it damages essential workers’ rights, such as the minimum wage in the UK. This, due to an “open borders” policy which allows immigrants from other member states to work in the UK for lower salaries. On the other hand, some conservatives opposed Brexit, and some of them supported it because they wanted to put the UK’s interests first, before and above the EU’s interests.

Therefore, any result to post-Brexit should address issues that matter to the British people, and with regards to Brexit supporters, these main issues are: completing Brexit and addressing immigration concerns.

 

Secondly, addressing the EU’s standards and the rest of its member states. In a reality which allows the UK to act, enact, trade, import, and export without any obligations to EU’s regulations, treaties, standards, rules, or decisions – who will be the referee? How can the UK be an active player in the European market if it has nothing to do with its establishment?

Take the European Court of Justice (“the ECJ“), for instance. During the time, the ECJ has developed two essential rules on which the legal order rests: direct effect and supremacy. Thus, if the UK is no longer a member state of the EU, these principles could be irrelevant for the UK. Meaning, the UK could simply ignore EU rules. This raises uncertainty in the market.

Hence, in order to manage political and economic relations with the rest of the EU member states, as well as the rest of the world, any good result should have a “frame work” which includes: eliminating legal doctrines like direct effect and supremacy, reregulating movement of goods, preserving a relationship with the EU, renegotiating customs union agreements, and protecting international trade relations.

 

Thirdly, addressing the UK’s economy, specifically with respect to relationships with other EU member states. A good result should address the economic challenges that the UK has been facing. This includes reducing expenses on the EU, avoiding bailouts for the other EU member states, and showing market stability and certainty.

 

EFTA – Why Is It the Right Result for Brexit?

The crux of this paper is a proposal result for Brexit and its implications. This result suggests that the UK, after leaving the EU, should join EFTA. Before presenting the reasons why EFTA is the right result, some history and basic information should be briefly mentioned regarding EFTA, its 4 current member states, and its highest governing body:

“EFTA was founded in 1960 on the premise of free trade as a means of achieving growth and prosperity amongst its Member States as well as promoting closer economic cooperation between the Western European countries. Furthermore, the EFTA countries wished to contribute to the expansion of trade globally…[10]

Norway and Switzerland were among the founding Member States of EFTA in 1960. Iceland joined EFTA in 1970, followed by Liechtenstein in 1991. [11]

Norway, Iceland (from 1994) and Liechtenstein (from 1995) are also parties to the European Economic Area (EEA) Agreement with the European Union, while Switzerland has signed a set of bilateral agreements with the EU…[12]

The EFTA Council is the highest governing body of EFTA.”[13]

This paper proposes 10 main reasons why EFTA is the right answer for Brexit, and how EFTA can properly address the aspects mentioned above, all in the following order: Completing Brexit, Preserving a Relationship with the EU, Reregulating Movement of Goods, Renegotiating Customs Union Agreements, Addressing Immigration Concerns, Protecting International Trade Relations, Eliminating Direct Effect & Primacy of European Union law, Reducing Expenses on the EU, Avoiding Bailouts for the Other EU Member States, and Showing Market Stability and Certainty.

 

  1. Completing Brexit

To begin with, completing the Brexit process is essential to the UK government if it wants to show its people that the majority decision, in a democracy like the UK, must be respected by their own representatives.

“Theresa May had been against Brexit during the referendum campaign but is now in favour of it because she says it is what the British people want. Her key message has been that “Brexit means Brexit” and she triggered the two year process of leaving the EU on 29 March.”[14]

Joining EFTA will not stop the UK from this task. Meaning, the UK can leave the EU and yet be part of EFTA. As mentioned above; Norway, Switzerland, Iceland, and Liechtenstein are all not member states of the EU. However, they are member states of EFTA, and thus successfully manages economic relations with the EU.

Therefore, the first advantage of EFTA is the ability to complete the process of Brexit with fewer damages, if any, regarding the UK’s economic status in the European market. This properly addresses, first and foremost, the willingness of 51.9% of the votes to be no longer a member state of the EU. However, and equally important, it also addresses the willingness of 48.1% of the votes to keep strong relationship with the EU.

It could also bring trust to the British people regarding the UK government. Nowadays, as some polls suggested, many British people do not believe politicians. If Brexit is completed, it could positively change the public opinion with respect to their representatives. Even if some people do not support Brexit, they will at least accept the fact that there was a referendum, and that the government therefore follows after its result.

Moreover, completing Brexit can preserve a relationship with the EU, which is an important aspect for all parties. This issue will be elaborated on herein.

 

  1. Preserving a Relationship with the EU

Norway, Iceland, and Liechtenstein are member states of the European Economic Area (“the EEA“) as well as EFTA, however not member states of the EU. Switzerland is a member of EFTA, however is neither a member of the EU nor a member of the EEA. So, what kind of model should the UK embrace in post-Brexit?[15]

“Now that the UK has voted to leave the European Union, attention has turned to what our future relationship with the EU might look like. There has been much interest in whether different ‘models’ of EU relationship – such as the Swiss model, Norway model or even Turkish model – could work for the UK. However, it seems likely that the UK’s future relationship will be a bespoke arrangement, not directly copying any current model but forging a new one to suit UK and EU interests.”[16]

The answer is a unique model which will be suited for the UK and its needs. The UK needs to find a way to preserve its relationship with the EU, especially in trades, in order to lead its economy forward. At the same time, the UK must consider Brexit’s implications.

Thus, being a member of the EEA will be very problematic for the UK, because “the purpose of the EEA Agreement is to guarantee, in all 31 EEA States, the free movement of goods, people, services and capital – ‘the four freedoms'”.[17]

These “four freedoms” are not what the majority of the voters wished to have when they voted to leave the EU. In fact, these freedoms probably were one of the main reasons which created Brexit in the first place. Therefore, and in order to complete Brexit with its real meaning, the UK should leave the EU as well as the EEA. This will not stop the UK from joining EFTA, similar to Switzerland.[18]

The UK should frame its relationship, therefore, based on bilateral treaties or agreements which clearly and effectively set for the conditions for post-Brexit. It is doable, and Switzerland indeed achieved this relationship with the EU after the Swiss Confederation adopted provisions of European Union law in order to participate in the EU’s single market.

However, it is not simple. The UK would be the first member state in EFTA that would not allow freedom of movement for member states of EFTA and the EU. Even Switzerland signed on “Bilateral I Agreements” in 1999, which allows, among other things, a large share of EU law applicable to Switzerland, such as free movement of goods and people.[19]

This is a result which the UK may not be pleased with. After all, one of the ideas behind Brexit is to restrict this freedom of movement and thus put the UK’s interests first. Therefore, negotiations of leaving the EU, as well as the EEA, and yet be a member of EFTA, will not be an easy task.

However, since the UK has a better position in the international trade relations as well as in the EU than Switzerland, due to its stronger economy and better political position in the world, it is, once again, doable.

For example, The UK government can say the following: “we agree to cooperate in fraud pursuits. We also agree on air and road traffic, agriculture, science, and so on. However, we demand that the EU will compromise on the freedom of movement issue, and thus respect the result of Brexit.” Easy task? No. Yet doable? Yes indeed.

In any scenario, as mentioned, any agreement must take into account the fundamental idea behind Brexit: no freedom of people, goods, services, and capital. In short – no EEA principles to be applied to the UK or even the Swiss model.

As a result, any result should (a) reregulate movement of goods (b) renegotiate customs union agreements, and (c) address immigration concerns. These three issues, in the above order, will be elaborated on herein.

 

  1. Reregulating Movement of Goods

As mentioned above, a member state of the EU had the right to free movement regarding goods, people, services and capital – “the four freedoms”. It means, among other things, that a member state cannot regulate however it wishes its imported and exported goods.

As an example, in Cassis de Dijon[20], the ECJ held that regulations which apply to both imported and to domestic goods and produce an effect equivalent to a quantitative import restriction are unlawful restrictions on the free movement of goods right:

” It is clear from the foregoing that the requirements relating to the minimum alcohol content of alcoholic beverages do not serve a purpose which is in the general interest and such as to take precedence over the requirements of the free movement of goods, which constitutes one of the fundamental rules of the Community. In practice, the principal effect of requirements of this nature is to promote alcoholic beverages having a high alcohol content by excluding from the national market products of other member states which do not answer that description. It appears that the unilateral requirement imposed by the rules of a member state of a minimum alcohol content for the purposes of the sale of alcoholic beverages constitutes an obstacle to trade which is incompatible with the provisions of Article 30 of the Treaty. There is therefore no valid reason why, provided that they have been lawfully produced and marketed in one of the member states, alcoholic beverages should not be introduced into any other member state; the sale of such products may not be subject to a legal prohibition on the marketing of beverages with an alcohol content lower than the limit set by the national rules.”[21]

This decision is based on the idea of EU’s single market. Meaning, all EU citizens can trade freely, have the right to export, import, and move in and out of each member state, as they wish. This reality, with respect to the UK, is going to change in post-Brexit. The majority of the British people simply do not like this free movement right and its implications, such as Cassis de Dijon case, which basically design their way of life.

By leaving the EU, the UK can renegotiate and reregulate the way goods, people, services, and capital, come in and out of the country. Joining EFTA will not damage this negotiation, but rather help the parties to rely on this well-known organization and through it to reach an agreement which answers this issue, as well as many other issues, such as a new customs union agreement with the EU.

 

  1. Renegotiating Customs Union Agreements

Prime Minister May knows she has to reach an agreement which addresses customs union issues. As of today, the UK, as a member of the EU, has a tariff-free trade policy with Europe. Will this stay the policy in post-Brexit? Prime Minister Theresa May says:

“Whether that means we must reach a completely new customs agreement, become an associate member of the customs union in some way or remain a signatory to some elements of it, I hold no preconceived position.”[22]

As of today, reaching a new separate customs union agreement with the EU is doable, since the EU also has separate customs union agreements with Turkey, Andorra, and San Marino.[23] The UK could try to reach a deal with the EU which allows tariff-free access for some industries to the customs union, on the one hand, and not getting in the way of the UK’s trade agreements with non-EU countries, on the other hand.

However, it would be a complex negotiation which might not be agreed on by the parties, since there is a limit to what the EU could do with respect to the UK’s demands, and it could potentially create a “tariff-free route” into the EU through the UK. So, again, easy? No. Doable? Yes indeed.

EFTA will not stop the UK from achieving this kind of agreement. Moreover, EFTA has a great frame of trading freely in the European market and, at the same time, allowing the EU member states to negotiate on the payment of their fair share and their immigration policies.

 

  1. Addressing Immigration Concerns

Brexit supporters want to see a reduction in immigration. Either it is because immigrants are taking their jobs or it is one of the factors to slow down from raising the minimum wage. The reason is less of the matter. What matters is what will be the right replacement for the “open borders” policy that the UK and the rest of the member states of the EU have today.

“Prime Minister Theresa May has said one of the main messages she has taken from the Leave vote is that the British people want to see a reduction in immigration.”[24]

Prime Minister May has also said she remains committed to getting migration down to a “sustainable” level. The question is, therefore, how does the UK achieve such a result? There are various ways to reduce and restrict immigration, and there are even terms regarding this process: “Hard Brexit” and “Soft Brexit”:

“… a ‘hard’ Brexit could involve the UK refusing to compromise on issues like the free movement of people even if meant leaving the single market. At the other end of the scale, a ‘soft’ Brexit might follow a similar path to Norway, which is a member of the single market and has to accept the free movement of people as a result of that.”[25]

The UK cannot seriously consider being part of the EEA, meaning allowing immigrants from the rest of the member states of the EU to come into the UK. This result is the opposite of what the majority of the British people voted for.

Hence, the UK needs to reach a specific agreement which frames how it deals with trading in the EU as well as what the immigration policy of the UK is. This is far from being a simple task. Even Switzerland agreed to accept freedom of movement via bilateral treaties. The UK, therefore, needs to compromise on its number of legal immigrants each year, while protecting international trade relations.

 

  1. Protecting International Trade Relations

What will be the right path to post-Brexit trade deals? And how does the UK protect its trade relations in Europe as well as the rest of the world? These are highly complex and important questions.

“The post-Brexit trade deal is likely to be the most complex part of the negotiation because it needs the unanimous approval of more than 30 national and regional parliaments across Europe, some of whom may want to hold referendums.”[26]

The idea behind EFTA is to allow its members to trade freely among themselves and the member states of the EU. Meaning, creating a free trade area parallel to the EU, thus participating the EU’s single market. EFTA, therefore, frames a trade zone in which all four countries that are not in the EU – Iceland, Liechtenstein, Norway, and Switzerland – can still trade with the rest of the member states of the EU.

Once the UK completes Brexit, and it is not part of the EU anymore, it must protect its position in the international trade relations. Being a member of EFTA can be the right path to achieve such protection. It indicates to the rest of the member states, as well as the rest of the world, that the UK economy is not in chaos. It shows that the UK is still wanting to preserve relations with the European market, and under no circumstances does it wish to isolate itself from the global economy.

In other words, although not being a player in the EU, the UK still effectively trades with Europe, as well as the rest of the world, however under different rules. And EFTA could help to frame these rules.

Along with all of the potential agreements which could be reached, any effective result needs to consider law and order. In other words, finding rules which protect trades is one thing, having dispute resolutions is another thing.

There are many legal principles which are relevant to Brexit and its implications. Two main legal principles will be discussed now in the following order: (a) Direct Effect of European Union law. (b) Primacy of European Union law.

 

  1. Eliminating Direct Effect & Primacy of European Union law

In a landmark case of the ECJ, Van Gend en Loos (1963)[27], the principle of direct effect was created. The ECJ held that there are certain legal rights which could be enforced before courts, even by citizens of the EU:

The Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields and the subjects of which comprise not only member states but also their nationals. Independently of the legislation of member states, community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage. These rights arise not only where they are expressly granted by the treaty, but also by reason of obligations which the treaty imposes in a clearly defined way upon individuals as well as upon the member states and upon the institutions of the community… The wording of article 12 contains a clear and unconditional prohibition which is not a positive but a negative obligation. This obligation, moreover, is not qualified by any reservation on the part of states which would make its implementation conditional upon a positive legislative measure enacted under national law. The very nature of this prohibition makes it ideally adapted to produce direct effects in the legal relationship between member states and their subjects.[28]

Put simply, the direct effect principle may, under Van Gend criteria, confer rights on individuals in the EU. These rights must be recognized and enforced in the courts of member states within the EU. The ECJ has a notable legal power, since it can determine whether or not any particular measure satisfies the Van Gend criteria.

However, if the ECJ has no supremacy, then the member states can simply ignore EU rules. Therefore, in another landmark case, Costa v. ENEL (1964)[29], the court ruled that all member states had transferred sovereign rights to the EU, and thus EU law cannot be overridden by any domestic member state law. In short, EU laws are supreme:

“It follows from all these observations that the law stemming from the treaty, an independent source of law, could not, because of its special and original nature, be overridden by domestic legal provisions, however framed, without being deprived of its character as community law and without the legal basis of the community itself being called into question.”[30]

Put simply and generally, when there is a conflict between European Union law and the law of a member state, European law prevails.

Direct effect and supremacy, therefore, have given the ECJ legal tools to intervene, if need be, in national laws of any member state. Some Brexit supporters do not like this intervention. It could be explained by their reference: nationalism rather than globalism thus putting the UK’s interests first. Therefore, a good result for them would be the elimination of these legal doctrines.

If the UK, while completing Brexit, decides to join EFTA, as a member state, there will be no direct effect and no supremacy. In fact, the ECJ will have no power with respect to the UK. Moreover, similar to Switzerland who is not part of the EEA, even the EFTA Court will have very limited power regarding the UK, since the UK will have to drop out of the EEA in order to restrict its immigration and freedom of movement. At the same time, the UK will have to follow future bilateral treaties which will be negotiated by all member states, assuring that the UK will play fairly in the European market as well as with countries out of the EU and EFTA.

While law, order, and legal doctrines are all important, another essential aspect regarding post-Brexit is the economy, which will now be discussed with a concentration in three fields in the following order: (a) reducing expenses on the EU (b) avoiding bailouts for the other EU member states, and (c) showing market stability and certainty.

 

  1. Reducing Expenses on the EU

Brexit supporters wanted to stop funding the EU, and alternatively invest this sum of money in their own interests, such as the National Health Service. Whether it was just a consequence of a campaign slogan or actually a real fact, it is undisputable that being a member state of the EU has a financial price:

“In 2015, the UK’s full membership fee was £17.8 billion. However, Britain doesn’t pay that full fee. Because of a deal negotiated by Margaret Thatcher in 1984, Britain gets a ‘rebate’, an annual reduction in contributions. In 2015, that rebate reduced our contribution to £12.9 billion. That’s around £200 for every person in the UK. For context, that is more than the annual budget of the Home Office, which spends about £9 billion a year. It’s around a tenth of the budget for the NHS in England. It’s also enough to reduce the basic rate of income tax by 3p in the pound.”[31]

EFTA can properly address this concern, while leaving the EU will assure that the UK will not pay for this organization anymore. The UK can join EFTA and enjoy its benefits with respect to trading in the EU, however with substantially fewer expenses from the UK.

 

  1. Avoiding Bailouts for the Other EU Member States

During the Brexit campaign, politicians mention, time and again, the bail out issue. Does the UK have to bailout EU member states such as Greece and Italy due to their economic behavior? If you ask Mr. Boris Johnson, a British politician, the answer is pretty clear:

“The eurozone is being strangled by stagnation, unemployment and a lack of growth, it could explode at any time and we will be forced to bail it out”.[32]

This statement is not the view of many other politicians who simply do not agree with Mr. Jonson. The most notable example of one of them is former prime minister David Cameron who says: “The Leave campaign is simply wrong to claim we will have to bailout Eurozone countries”.[33]

It should be noted that both sides are right and wrong. There are two main questions, that should be asked, in this context:

Question number one: when will the UK be protected from any payment to another EU member state? Answer: “‘Where the beneficiary Member State is a Member State whose currency is the euro, the granting of Union financial assistance shall be conditional upon the enactment of legally binding provisions, with a dedicated arrangement for that purpose having been put in place prior to disbursement, guaranteeing that the Member States whose currency is not the euro are immediately and fully compensated for any liability they may incur as a result of any failure by the beneficiary Member State to repay the financial assistance in accordance with its terms.’ Counncil Regulation Amendment, 4 August 2015. In other words, the UK will not have to pay the costs of any Eurozone bailout funding provided through the European Financial Stabilisation Mechanism.”[34]

Question number two: when could the UK potentially bailout EU member state? Answer: “Article 122 of the Treaty on the Functioning of the European Union says that the EU may offer emergency financial support to member countries: ‘Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council… may grant, under certain conditions, Union financial assistance to the Member State concerned.’ The EU could theoretically use this power to ‘grant ad hoc financial assistance to a Member State’ in the future, in the words of the EU court. The EU deal negotiated in February doesn’t change the treaties, so its guarantee that bailouts ‘will not entail budgetary responsibility for Member States whose currency is not the euro’ might not be accepted by the court.”[35]

No matter what your personal view regarding this issue is, some scholars hold that there are member states, like Greece and Italy, which have taken themselves into deep debt and unemployment crisis due to their irresponsible economic conduct.[36]

Hence, some Brexit supports do believe that the UK should not pay for mistakes or wrong conducts of others. They feel that the UK has its own problems and issues which should come first and foremost. Thus, by leaving the EU, they can guarantee that no bailout will be on the table. And if the UK joins EFTA, there will be neither obligation nor duty with regards to bailingout other member states, on the one hand, and yet it will assure economic relationships with EU member states, on the other hand.

To conclude this issue, EFTA can easily give the right result for the bailout concern. Being a member state of EFTA can also state market stability and certainty, which will help the UK’s economy and currency.

  1. Showing Market Stability and Certainty

It is no secret that the market prefers stability and certainty when it comes to business. Indeed, some investors would love to take risks and thus expand their profits if their business decisions are right. However, most investors seek stable markets that they can invest their money in and do business with a party or state which its financial future seems to be clear.

“The uncertainty surrounding the EU referendum led to market jitters and a slump in the value of sterling.”[37]

Some individuals saw Brexit as a big surprise, especially when it came to the news organizations which mostly thought it would be a clear result: not leaving the EU. After the referendum, when the reality showed it had a different plan for the future of the UK, the market literally panicked, and a feeling of uncertainty has taken place ever since.

As an example, the Great Britain Pound (“GBP“) has substantially slumped due to the uncertainty that the market has felt regarding Brexit.[38] One way to “resurrect” GBP is to signal to the rest of the world that the UK is a member in an organization that has rules and standards. An organization in which all its members have great respect, and, more so, an obligation to fulfill their duties.

Therefore, what the UK should do in order to fix its economy and improve its current low currency value is to bring back the stability and certainty that investors are craving to see. By joining EFTA, although under specific bilateral treaties, not only does the UK show the rest of the world that its economy will be an active player in the EU’s single market, but it could also help GBP raise its average rate in the near future.

 

Conclusion

Brexit is a process with some notable implications and challenges. It affects the UK, the rest of the EU member states, and even the rest of the world. Hence, there is a complete necessity to think and act in a way which addresses the citizens of the UK, the EU member states, and the economy.

An optional result can be EFTA. Meaning, the UK will complete the process of leaving the EU, as well as the EEA, and then join EFTA. This paper does not propose in great detail what the clauses in this kind of an agreement should be, however, it does support doing so via an economic tube: EFTA. In addition, this paper does not cover all the details regarding the post-Brexit relationship with the EU and the potential future regulations with regards to the freedom of movement of goods, services, people, and capital – but it does believe that EFTA can be the right starting point to negotiate on these issues. Moreover, this paper does not draft new customs union and immigration agreements, but it does think it can be done if the UK will become the fifth member state of EFTA.

Joining EFTA will indeed lead to eliminating legal doctrines such as direct effect and supremacy, which the ECJ has and the EFTA court does not have. However, at the same time, it does allow the UK to reach bilateral agreements or treaties with the EU member states, as well as other countries, which can frame the rules for their new trading policy.

Being a member of EFTA can also reduce expenses that the UK has due to its current membership in the EU. Furthermore, it can assure the UK that it will not have to bailout EU’s member states. Finally, it can show the market and its investors a level of stability and certainty.

For all of the above reasons, the conclusion of this paper is this: EFTA is the right result for Brexit. Having concluded this, only time will tell if this optional result will be embraced by the British government, and if so, what will be its implications.

[1] Post Master of Laws Candidate at the University of Oxford – Faculty of Law in collaboration with The Ohio State University – Moritz College of Law. Should you have any questions or comments regarding this paper, please feel free to contact me via email: boaron.1@osu.edu or eliavboaron1987@gmail.com. I owe a debt of gratitude to Dr. Christopher Whelan from the University of Oxford – Faculty of Law for his eye-opening comments.

[2] For more discussion regarding the EU and the way it works see: BBC NEWS, What is the EU and how does it work?, http://www.bbc.co.uk/guides/zgjwtyc (Last visited July 23, 2017).

[3] Alex Hunt and Brian Wheeler, Brexit: All you need to know about the UK leaving the EU, BBC NEWS (July 13, 2017), http://www.bbc.co.uk/news/uk-politics-32810887 (Last visited July 23, 2017).

[4] BBC NEWS, EU Referendum Results, http://www.bbc.co.uk/news/politics/eu_referendum/results (Last visited July 23, 2017).

[5] BBC NEWS, supra note 3.

[6] BBC NEWS, Brexit: The UK’s letter triggering Article 50, http://www.bbc.co.uk/news/uk-politics-39431070 (Last visited July 23, 2017); For more discussion regarding who will negotiate Brexit see: BBC NEWS, Article 50: The people who will negotiate Brexit, http://www.bbc.co.uk/news/world-europe-39236683 (Last visited July 23, 2017).

[7] Id.

[8] BBC NEWS, supra note 3.

[9] To be precise, returning EFTA, since the UK had been a member of EFTA from 1960 to 1973, before it joined the EU.

[10] EFTA, The European Free Trade Association, http://www.efta.int/about-efta/european-free-trade-association (Last visited July 23, 2017).

[11] EFTA, The EFTA States, http://www.efta.int/about-efta/the-efta-states (Last visited July 23, 2017).

[12] Id.

[13] EFTA, EFTA Council, http://www.efta.int/about-efta/efta-council (Last visited July 23, 2017).

[14] BBC NEWS, supra note 3.

[15] See House of Commons Library, Leaving the EU, Research Paper 13/42, available here: http://www.parliament.uk/briefing-papers/rp13-42.pdf (Last visited July 23, 2017).

[16] Robyn Munro, Options for the future UK-EU relationship, POLITICO (Aug. 2016) http://esharp.eu/debates/the-uk-and-europe/options-for-the-future-uk-eu-relationship (Last visited July 23, 2017).

[17] EFTA, The EFTA Surveillance Authority at a glance, http://www.eftasurv.int/about-the-authority/the-authority-at-a-glance-/ (Last visited July 23, 2017).

[18] Hortense Goulard, Switzerland withdraws application to join the EU, POLITICO (Jun. 15, 2016) http://www.politico.eu/article/switzerland-withdraws-application-to-join-the-eu/ (Last visited July 23, 2017).

[19] European Commission, Countries and regions – Switzerland, http://ec.europa.eu/trade/policy/countries-and-regions/countries/switzerland/ (Last visited July 23, 2017).

[20] Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein (1979) Case 120/78

[21] Id.

[22] BBC NEWS, Reality Check: How could customs union deal work?, (Jan. 17, 2017), http://www.bbc.co.uk/news/business-38654147 (Last visited July 23, 2017).

[23] Id.

[24] Id.

[25] BBC NEWS, supra note 3.

[26] Id.

[27] Van Gend en Loos v. Nederlandse Administratie der Belastingen (1963) Case 26/62.

[28] Id.

[29] Falminio Costa v. ENEL [1964] ECR Case 6/64

[30] Id. p. 593; For more discussion with this regards to this issue see: The Treaty of Lisbon (focus on section 17– “Declaration concerning primacy”), available here: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12008E%2FAFI%2FDCL%2F17 (Last visited July 23, 2017). In addition, see the following cases: Amministrazione delle Finanze v. Simmenthal SpA (1978) Case 106/77; Marleasing SA v. La Comercial Internacional de Alimentacion SA (1990) C-106/89.

[31] Asa Bennett and James Kirkup, How much money does Britain currently pay the EU?, The Telegraph News (Mar. 10, 2017), http://www.telegraph.co.uk/news/0/how-much-do-we-spend-on-the-eu-and-what-else-could-it-pay-for/ (Last visited July 23, 2017).

[32] Conor James, McKinney, and Richard Braham, Will the UK pay for future Eurozone bailouts?, Full Fact (Jun. 22, 2016), https://fullfact.org/europe/will-uk-pay-future-eurozone-bailouts/ (Last visited July 23, 2017).

[33] Id.

[34] Id.

[35] Id.

[36] For more discussion with respect to economic and monetary union see: Alicia Hinarejos, European Union Law, Edited by Catherine Barnard and Steve Peers, Oxford University Press (2013), pp. 567-590.

[37] Alice Foster and Tom Batchelor, EU referendum 2016: How has Brexit affected the pound?, SUNDAY EXPRESS (Jun. 27, 2016), http://www.express.co.uk/finance/city/658338/Brexit-EU-Exit-How-Affect-Pound-UK-Economy (Last visited July 23, 2017).

[38] The Guardian, Pound slumps to 31-year low following Brexit vote, http://www.express.co.uk/finance/city/658338/Brexit-EU-Exit-How-Affect-Pound-UK-Economy (Last visited July 23, 2017).

 

 

This article is part of Eliav’s post Master of Laws studies at the University of Oxford – Faculty of Law and was co-authored by his law professor – Dr. Christopher Whelan.

 

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