Brexit: interesting coincidences

15/04/2014

A weekend of intensive work has delivered a partial but nonetheless detailed forensic analysis of the six IEA "Brexit" prize winning entries, which is too interesting not to share with you. Fill your bowls with popcorn, sit down and enjoy.

Regular ex-readers will recall that, when we first started realising that the IEA was playing fast and loose with its own rules, we suspected that all those entrants (like me) who had gone for the EEA option had been excluded. Then, when we saw all the six prize winners, this seemed to be confirmed. But this is only the half of it.

From our forensic analysis, what we are now seeing is that the winners – all of them – came up with the same very rare solution for their "Brexit" blueprints, which involved not only rejecting participation in the EEA but also seeking EFTA membership. Stay with me and you will shortly see quite how significant this is.

For a start., we first noticed this with Mansfield, who managed to win first prize with this interesting scenario. He wants the UK to join EFTA but entirely rejects the idea of EEA participation. And necessarily, for his proposal to succeed, EFTA members have to accept the UK's application to join them.

However, as we have pointed out, any member could veto British membership. It cannot be assumed that entry will be automatic. Yet, Mansfield does not seek to explore the views of EFTA members as to whether they would accept the UK and, if so, under what terms.

Despite the improbability of Mansfield's scenario, however, we start to see coincidences stack up. A similar lack of curiosity about EFTA's views is manifest in Murray and Broomfield, the second prize winners. They propose that the British government should consider "whether the UK should use as its negotiating position a proposal to re-enter the European Free Trade Area (EFTA) alongside Norway, Iceland, and Liechtenstein". There is not the slightest hint that EFTA membership is anything other than an entitlement. And, like Mansfield, they "propose that HMG should reject any option of joining the EEA".

Tim Hewish, as third prize winner, then follows suit. He takes the position that that "UK future trade policy should not hide behind the EEA or have a complex arrangement like the Swiss". Instead, he believes that the UK should look for "a completely separate bilateral deal". So once again no EEA. But, as for EFTA, here membership is a "vital and rapid tool for the UK to secure FTAs with third parties". And not content with hat, he continues:

We see it as a gateway to join exciting [he possibly means existing] FTAs that EFTA already has as a quickstep solution within our three year plan. For the UK to conduct its own separate deal with all of EFTAs current FTA partners (which has taken them over 20 years to craft) would take considerable time. By joining EFTA, the UK would inherit trade deals under Article 56 (3) of the EFTA Convention.

In this submission, though, there is a slight recognition that that the EFTA membership is "first and foremost a political matter and would need to be discussed at the highest political levels and between all nations involved". There is also an acknowledgement that a UK application "may be subject to increased difficulty due to its perceived size economically, politically, and in terms of population".

That, at least, is closer to reality, indicating entry would not necessarily be automatic – the only one of six who even addresses this issue.

From field trips to both Norway and Iceland, I would concur that EFTA membership would not be automatic. Having had the opportunity to discuss this with a wide range of politicians and activists in both countries, it would appear that any response to an application would depend on many factors.

The political colour of the government's in power, their current relationships with the EU, and the attitudes of the European institutions and Member States to UK membership could be highly relevant, but there is possibly one over-riding factor which will shape the response.

Essentially, in Iceland and Norway both, there are varying degrees of dissatisfaction with the EEA agreement, but also a realisation that the relative power of the three EFTA/EEA members is insufficient to force a renegotiation.

British membership, therefore, is seen as advantageous, but only inasmuch as the UK's strength could add leverage to the EFTA/EEA combination, strengthening their hand against the EU. On the other hand, Britain seeking membership of EFTA for its own selfish reasons, without it being prepared to do some of the "heavy lifting", would not be looked upon favourably.

On this, I contacted my recent Icelandic host, Björn Bjarnason, former Justice Minister in the Icelandic government. He suggested that there was one possible option we could look at, but it would have the UK initially outwith EFTA and the EEA. This had the UK joining with Switzerland to help it renegotiate its bilaterals, coming up with a better deal than EEA members had, which would apply to both countries.

With that in place, Bjarnason said, a British application to join EFTA would be welcome, as it would help EFTA members to improve their relationship with the EU. A Britain thus able to increase leverage would be welcomed. A Britain seeking to join EFTA as a camouflage for something else would merely create political problems within the EFTA.

Nevertheless, none of our winners actually went for the UK-Swiss option. From Clements, the fourth-rated Brexit prize winner, all we see is this earlier sense of entitlement, with two identical - and somewhat presumptuous - references to a Britain which should "reinstate her association with the EFTA". Again, participation in the EEA is rejected.

It is exactly such an approach that, according to Bjarnason (and others), we would expect to be turned down by EFTA members. But that brings in Stephen Bush, at number five in the prize rankings. He considers that EFTA membership will be "close to ideal for Britain to join and she should apply to negotiate this in parallel with the EU negotiations". Again, there is no indication that EFTA members could tell Britain to get lost. Just as before though, we see a rejection of EEA.

Finally, we have Daniel Pycock. He bluntly argues for "access to the European Union's markets from EFTA (rather than the EEA)". This is a misunderstanding of the role of EFTA, as entry to EU markets is gained via the EEA rather than EFTA. The one is not an alternative for the other. And, with that, we have a full house - six out of six going for the "EFTA-only" option.

Prior to the launch of the IEA's Brexit Prize, it has to be said that exit plans offering the precise combination of seeking membership of EFTA and rejecting participation in the EEA have been rare. Normally, one sees EFTA/EEA treated as a single package, accepted or rejected as a whole, primarily because the EFTA membership is normally sought in order to gain access to the EEA.

It should be noted that EFTA membership is not required to pursue the so-called "Swiss option", as the Association played no role in the bilateral agreements between Switzerland and the EU. This we know from René Schwok, writing in an official EFTA anniversary book. In other words, the "Swiss option" doesn't need EFTA membership. 

In fact, the advantage of the bilateral route for Switzerland is that it allowed her to make her own agreements without being bound by the EFTA framework. Thus, the only advantage the UK would gain from the EFTA-only option would be the ability to tap into EFTA's existing trade deals. But if that was the sole motivation, it is unlikely that the UK would be accepted as a returning member.

Now, here's the rub. We wrote at the beginning of this piece that to see this "EFTA-only" option was rare. Actually, it's very rare. In the ordinary course of events, it's difficult enough to find a single paper suggesting this option. There's a good reason for this. It's not a viable option. Normally, we get the "Norway Option", which requires EFTA/EEA membership. Or we get the "Swiss option", which doesn't involve either EFTA or EEA membership.

In fact, so rarely is th "EFTA-only" option that, before the IEA Brexit competition, I haven't been able to identify a single paper advocating it. Doubtless they exist, but they are hard to find. It seems hard to beleive that the winners were getting their inspiration from the internet. 

So what have we got? We have six papers all offered simultaneously by Brexit prize contestants. Since all of them were in competition, we might assume that they did not consult with each other, nor discuss their submissions.

Thus, for each of the six papers, their writers independently came to the conclusion that this flawed (and rare) option offered the best prospect of attaining "the fastest benefits of lower trade barriers" (this, The Boiling Frog reminds us was a requirement of the competition). And all seven writers independently concluded that the "EFTA-only" solution was the winning idea - not that any of them gave it that label. 

Here, one might suggest that the odds of six papers offering the "EFTA-only" option appearing in the IEA's shortlist of 17 papers, drawn from nearly 150, are astronomical. That so many could get through must certainly be a very remote possibility.

But then, what odds should we offer for all those six papers, not only offering this rare option but also going on to be selected as prize winners? And what are the odds of all six of them being chosen, and only those six, with no other option chosen?  We don't even get the more conventional offering of a rejection of EFTA and the EEA.