There were further attempts
to resolve the situation in 1998, which were unsuccessful. Then, on 17 December 1999 after a further review, the EEA Joint Committee (another of the formal EEA bodies that mysteriously have "no influence") decided that the "specific geographical situation of Liechtenstein" still justified "the maintenance of certain conditions on the right of taking up residence in that country".
This unstable situation, however, could not be allowed to last. In order to resolve it, the Joint Committee came up with a proposal
for a longer-term solution. Liechtenstein was to be allowed to introduce a quota system controlling the number of workers allowed to enter the country. This was given formal status by an amendment to Annex VIII
of the EEA Agreement, setting out what were called "sectoral adaptations", cross-referred to Annex V
on the free movement of workers.
As a formal amendment to the EEA Agreement, the decision provided for a new transitional period until 31 December 2006, and allowed for the new measures to apply subject to a review "every five years, for the first time before May 2009".
in 2009 and in 2015, it was concluded that there was no need to make any change to the current rules. The provisions on the "sectoral adaptations" could remain unchanged. Under the current arrangement, Liechtenstein issues 56 residence permits for economically active and 16 permits to economically non-active persons each year. Half of the totally available permits are decided by lottery, held twice a year.
The numbers involved are, of course, small beer, but Liechtenstein is a tiny country. What matters is that a precedent has been set. Within the framework of the EEA Agreement, an Efta state has suspended freedom of movement and replaced it with a quota system for what amounts to an indefinite period.
This is where the situation currently stands. Thus, whatever the EU might declare in terms of freedom of movement being "non-negotiable" for EU Member States, it is undeniable that it is negotiable within the framework of the EEA Agreement, as it applies to Efta states.
Therefore, if the UK chooses to follow the Efta/EEA option as an interim solution to expedite the Article 50 settlement, once the agreement is adopted it can follow the procedural steps pioneered by Liechtenstein. And by this means, it can impose limits on immigration from EEA states.
In terms of applying a quota system, it should be noted that, in the Australian-style points system, only 23 percent of the migrants admitted come under the points system. The overall limit is set by way of an arbitrary quota, set annually – currently at 190,000. This is, by any measure, a quota system
To that extent, the UK can have some of its cake and eat it. The "Liechtenstein solution" potentially gives our negotiators far more flexibility than at first imagined. We accept the EEA acquis
as it stands, but negotiate "sectoral adaptations" that bring the Agreement into line with UK needs. This should help us reach an amicable settlement with the EU, while keeping us in the Single Market.