EU Referendum

EU Referendum: immigration and the "British option"


In what is finally a realisation that their voters are none too keen on their embrace of unrestricted immigration, senior Labour politicians from Tom Watson to Yvette Cooper are urging reform of the EU's free movement rules.

Watson, Labour's deputy leader, says the rules would have to be re-examined given the scale of discontent about migration, not just in the UK but across Europe.

Firmly lodged on fantasy island, though, Watson argues that the UK should "reform the rules from inside the EU", using the UK presidency in 2017 to put the issue on the agenda.

Helpfully, the Guardian tells us that EU leaders blocked any changes to the principle of free movement during David Cameron's attempt at EU reforms, with Merkel (amongst others), saying it was "non-negotiable".

However, completely ignoring the lessons from this experience – and what must have dawned on even the thickest of the very thick, that EU "reform" is not a proposition – Watson is saying: "I think it's very likely that a Labour government would want to reform the European Union".

Surely, at some point, there must come an end to the delusions of Westminster politicians, which each party successively pledging "reforms" and then failing at the first hurdles. With Cameron having so spectacularly failed, one wonders what sort of fairy dust Watson is sprinkling if he thinks Labour can do any better.

But, what is emerging from our current investigations is that, while membership of the EU affords little opportunities for change, Efta state members of the EEA have far more flexibility than we imagined.

As to Liechtenstein, this is a country which we have identified as having been able to suspend the full application of freedom of movement, instead applying a modest quota system for migrants, while also participating fully in the Single Market.

It has since emerged that these arrangements have been reviewed twice since the were formalised in 1999, most recently last year, in 2015, when it was concluded that there was no need to alter the current rules. The provisions on the so-called "sectoral adaptations" could remain unchanged.

This means that Liechtenstein has been operating its arrangements for 17 years and there is no suggestion that it should be discontinued. Nor does it matter that Liechtenstein is a micro-state. It is still a fully-fledged contracting party within the terms of the EEA Agreement. Therefore, what applies to one legally can apply to any or all.

And nor is Liechtenstein alone in exempting itself from EEA provisions. In 2008 Iceland, despite being bound by the EEA Agreement to guarantee freedom of movement of capital, Iceland unilaterally invoked safeguard measures and put capital controls in place following the banking crisis. In this case, it used the specific provisions of Article 43 of the EEA Agreement.

How different this is in the event of an EU Member State wishing to employ the so-called "emergency brake". It is required to ask the European Commission to take action on its behalf, leaving David Cameron with his pathetic restriction on migrants' benefits, only after months of high-level negotiation. Tiny Liechtenstein and Iceland – with a population the size of a London Borough – are more powerful in this instance than the mighty United Kingdom.

Safeguard measures, therefore, are turning out to be the best-kept secret of this campaign.

Recently, we saw a YouGov poll commissioned by the Adam Smith Institute which found 54 percent of respondent would support the Norway option, compared to just 25 percent opposed. Some 57 percent thought the government should at least consider such an option.

The irony here is that this enthusiasm for the "Norway Option" is expressed without any specific reference to the safeguard measures, and with respondents being completely unaware even of the concept of "sectoral adaptations", much less the recent history of Liechtenstein in suspending the operation of freedom of movement provisions.

Nor indeed is "Norway Option" representative of Flexcit, or what might be available with a fully negotiated Article 50 settlement. Not least, the UK is going to have to continue operating the CAP and the CFP for the time being, and these will have to be worked into the UK version of the EEA Agreement.

What helps here is the flexibility of this agreement which can accommodate country-specific amendments without changing the fundamental nature of the Agreement. With UK-specific protocols and Annexes, including its own "sectoral adaptations", this will end up being the "British option", tailored to its particular needs.

This does not make it a bespoke agreement, so much as EEA-plus. The point about taking on board the core EEA agreement is that it reduces the number of issues that must be negotiated, giving us a better chance of completing the Article 50 negotiations within the two-year timescale.

Those readers who have followed the accession negotiations for British entry to the EEC, with the first tranche from 1961 to 1963, and then again from 1970 to 1972, will know how the talks were bogged down with the most intricate technical detail, so tedious that after a while, the media stopped reporting it.

In Flexcit, we discuss how the negotiations on agriculture will have to deal with the quota allocations for beef and other commodities. And since the farming subsidy allocation agreed with the WTO is held on behalf of Member States by the Commission, the UK will have to negotiate with the Commission a release of part of its allocation, so that we can fund our famers.

These points, the re-allocation of landing slots for civil aircraft, route permissions and much else that would potentially be voided by Brexit, together with expat rights – including access to medical services – and participation in EU programmes, from space to slaughterhouse monitoring, will all have to be addressed. And then there will doubtless be prolonged and tortuous discussions on the financial settlement.

Fortunately, the EEA Agreement has proved to be a flexible and durable instrument but, even with its adoption, completion of negotiations within the two year timetable will be extremely difficult. Without it, where every detail has to be settled anew, agreement in the time will be impossible.

However, at least there is light at the end of the tunnel in respect of immigration, if we can agree "sectoral adaptations" to the mutual satisfaction of all parties.

But on that note alone, it should be noted that it took Liechtenstein from 1995 to the end of 1999 to resolve the issues – a full five years. And we have only two years to complete a far more ambitious package – the "British option". You can see why the like of Cameron don't want the hassle which, to me, is one of the better reasons we have for leaving the EU.