Wednesday, 26 July 2017

European Free Trade Association (EFTA)

The European Free Trade Association (EFTA) is an intergovernmental organisation set up for the promotion of free trade and economic integration to the benefit of its four Member States: IcelandLiechtensteinNorwaySwitzerland.
The Association manages the EFTA Convention; EFTA’s worldwide network of free trade and partnership agreements, and the European Economic Area (EEA) Agreement.
The European Single Market comprises the 28 states of the European Union plus Iceland, Lichtenstein and Norway and Switzerland via bilateral agreements. The United Kingdom could leave the European Union and Customs Union but rejoin EFTA/EEA and thus stay in the European Single Market.

The benefit of doing this is that the United Kingdom would retain access to Single Market databases (such as Single European Sky) and thus the calamity that would befall the United Kingdom in the event of a 'Hard Brexit' (no deal scenario) would be lessened considerably.

To take just one example when coming back into the UK from abroad by air, the traveller is invited to go through gates for nationals of the European Union 'and the EEA'. 
There are two queues at passport control – one for European Union (EU)*, European Economic Area (EEA), British and Swiss nationals, and a second for all other nationalities. (
EFTA is governed by the EFTA convention (
 and the EEA by the EEA agreement (

The main objection to the single market and therefore to being in EFTA/EEA is the Four Freedoms. These are: Freedom of Movement of People, Capital, Goods and Services. Mrs May in her various statements that "Brexit means Brexit" (whatever THAT means) and in her Lancaster House speech said this:
But I want to be clear. What I am proposing cannot mean membership of the single market.
European leaders have said many times that membership means accepting the ‘4 freedoms’ of goods, capital, services and people. And being out of the EU but a member of the single market would mean complying with the EU’s rules and regulations that implement those freedoms, without having a vote on what those rules and regulations are. It would mean accepting a role for the European Court of Justice that would see it still having direct legal authority in our country. ( Point 8
Dr Richard North of (to whom this post owes a huge debt) has found a clever way around complete movement of people in Chapter 4 (Safeguard measures) of the EEA agreement. Articles 112 and 113 of the EEA agreement:
Article 112
  1. If serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising, a Contracting Party may unilaterally take appropriate measures under the conditions and procedures laid down in Article 113.
  2. Such safeguard measures shall be restricted with regard to their scope and duration to what is strictly necessary in order to remedy the situation. Priority shall be given to such measures as will least disturb the functioning of this Agreement.
  3. The safeguard measures shall apply with regard to all Contracting Parties.

    Article 113
  1. A Contracting Party which is considering taking safeguard measures under Article 112 shall, without delay, notify the other Contracting Parties through the EEA Joint Committee and shall provide all relevant information.
  2. The Contracting Parties shall immediately enter into consultations in the EEA Joint Committee with a view to finding a commonly acceptable solution.
  3. The Contracting Party concerned may not take safeguard measures until one month has elapsed after the date of notification under paragraph 1, unless the consultation procedure under paragraph 2 has been concluded before the expiration of the stated time limit. When exceptional circumstances requiring immediate action exclude prior examination, the Contracting Party concerned may apply forthwith the protective measures strictly necessary to remedy the situation.
    For the Community, the safeguard measures shall be taken by the EC Commission.
  4. The Contracting Party concerned shall, without delay, notify the measures taken to the EEA Joint Committee and shall provide all relevant information.
  5. The safeguard measures taken shall be the subject of consultations in the EEA Joint Committee every three months from the date of their adoption with a view to their abolition before the date of expiry envisaged, or to the limitation of their scope of application.
    Each Contracting Party may at any time request the EEA Joint Committee to review such measures.

"If serious economic, societal or environmental difficulties...." The United Kingdom could argue that virtually uncontrolled immigration satisfies the condition in Article 112 (1)

Even better though, it is now clear that the Cabinet or certainly some Cabinet Ministers are willing to accept Freedom of Movement of people in the short term. I have read two years in some press reports. Therefore Mrs May's objection to being a member of EFTA/EEA no longer applies. 

When we join EFTA/EEA we immediately invoke article 112 of the EEA agreement whilst negotiating with our EFTA colleagues a better deal. EFTA/EEA would be the fifth largest trading bloc if the UK were to join it. 

Mrs May was incorrect in stating the "European Court of Justice that would see it still having direct legal authority in our country". 
If we were a member of EFTA/EEA, there is an EFTA Court:
The EFTA Court fulfils the judicial function within the EFTA system, interpreting the Agreement on the European Economic Area with regard to the EFTA States party to the Agreement. At present those EFTA States are Iceland, Liechtenstein and Norway ...
The United Kingdom in EFTA would have to deal with the EFTA court and NOT the European Court of Justice (ECJ). The EFTA court does not have to apply the rulings of the European Court of Justice
The EFTA Court has jurisdiction with regard to EFTA States which are parties to the EEA Agreement (at present Iceland, Liechtenstein and Norway). The Court is mainly competent to deal with infringement actions brought by the EFTA Surveillance Authority against an EFTA State with regard to the implementation, application or interpretation of EEA law rules, for giving advisory opinions to courts in EFTA States on the interpretation of EEA rules and for appeals concerning decisions taken by the EFTA Surveillance Authority. Thus the jurisdiction of the EFTA Court largely corresponds to the jurisdiction of the Court of Justice of the European Union over EU States. (
The important parts in the above introduction to the EFTA court are:
'.... for giving advisory opinions to courts in EFTA states' and 'The EFTA court largely corresponds'. It would seem then that the ECJ does not have direct legal authority but that the EFTA court has advisory authority.

There is then an Inter-Governmental organisation that the United Kingdom could join as an Independent Sovereign Nation free of the shackles of the Commission and the ECJ. 

In this Inter-Governmental organisation we could represent ourselves (as opposed to being 28th represented by the EU) and negotiate our position on an equal footing with other Sovereign nation states (Norway, Iceland, Liechtenstein and Switzerland). We could even help the other nations negotiate a better Inter-Governmental Free Market which non EU member states in Europe might want to join.

The Article 50 clock ticks ever louder.

We must instruct our Government that EFTA/EEA is what we want.
It is least risky economically and avoids the cliff edge of the 'Hard Brexit' that this Government seems determined to deliver. EFTA/EEA is the best initial stepping stone on the road to undoing 44 years of subservience to a supra-national body.

Let's go for it. 

Monday, 24 July 2017

THIRD Country

On 29th March 2019, the United Kingdom leaves the European Union and becomes a third country. In the absence of a 'new, comprehensive, bold and ambitious free trade agreement' there will be a hard border between the United Kingdom and the European Union maybe on World Trade Organisation (WTO) rules.

Although it is true that the United Kingdom complies with all European Union regulations and rules today, the day after we leave the European Union there is no guarantee from the European Union's perspective that this will continue to be the case. There are therefore administrative matters that need to be sorted out when we export goods: 
Nevertheless, the EU will require as conditions for entry, compliance with EU production regulations, licensing of establishments and much more, in a graduated hierarchy of controls. But, to compensate for the inherent limitations of its power within the third country territories, the EU also imposes border controls. 

When we thus turn to Article 229 of Regulation (EU) 2016/429, we see a five-tier control system in place. 

Firstly, goods must come from a country officially listed as permitted to export the relevant categories; secondly they must come from establishments which are approved and listed; thirdly, they must comply with all relevant animal health requirements laid down by the Union; and fourthly they must be accompanied by animal health certificates and by other declarations and documents as required. 

Finally, the consignments must be presented to a Border Inspection Post (BIP) – now called Border Control Post (BCP) – where they must pass inspection. Only when the fees due are paid and the "Common Veterinary Entry Documents" are endorsed can the goods be presented for customs clearance. (
The nearest Border Inspection/Border Control Post in France is not in Calais. It is in Dunkirk ( and (
This post has recently been refurbished and can deal with 5000 consignments per year. (

I recently travelled on Eurotunnel where the following was on the wall of the train: 
"Via the Channel Tunnel: Each year, Eurotunnel carries 1,600,000 trucks to and from the UK, with a total trade value of £91bn"

Assuming that half of these are outbound, that's 800,000 trucks. If 10% need to be inspected thats 80,000 trucks or 219 per day. 5,000/365 is 14 trucks a day. What happens to the other 205 trucks?
Then there are other conditions or requirements; non tariff barriers to trade: (

Dover will become a car park. Operation Stack on the M20 may well be in force indefinitely. That is just Dover.

Then there is ferry travel from Holyhead and Fishguard. Here is the list of Inspection Posts in Ireland (
There is no good reason why France or Ireland should increase their BCP capacity to suit the vagaries of the United Kingdom. Why should they? Even if they did undertake such an increase they would most likely want a UK contribution toward the cost of such an upgrade.

As previously posted, once the United Kingdom becomes a third country access to European Union Databases may well cease.

Moving on to flights Michael O'Leary of Ryanair has twice warned about the dangers of no deal to the operation of carriers to mainland Europe from the United Kingdom:
Last week, Peter Fankhauser, the chief executive of Thomas Cook, colourfully predicted that unless our politicians wake up to these potential dangers, we risk being taken back to the "medieval age", echoing the rather plainer warnings of Michael O'Leary, the chief executive of Ryanair, that in Britain we could even find ourselves no longer entitled to fly our aircraft anywhere outside UK airspace. ( and (
No flights to Spain, Portugal, Italy and other holiday destinations - imagine what that will do for Conservative Party political fortunes.

There are implications for medicines and the European Medicines Agency which the Government has already said will move outside the United Kingdom to a new European Union based site (e.g. Madrid?) and which the European Union expects the United Kingdom to pay for the relocation of or at least contribute toward it.

Veterinary issues are also a consideration ( (


For importation, additional animal health requirements are set out in specific Commission Decisions. These lay down health certificates which must accompany all animal imports. In general, these certificates must be signed by an official veterinarian of the competent authority of the exporting non-EU country guaranteeing that the conditions for import into the EU have been met.
On arrival in the EU, the animals and the accompanying certificates must be verified and checked by EU official veterinarians at a designated Border Inspection Post (BIP). Further checks on the animals may also be carried out at the final destination.
None of this is very palatable but it is a fact of life. Michel Barnier has said that he needs answers:
We now need to know the UK's position on each of these issues", he says, "in order to make progress". He adds, not unreasonably, "We need to know what we can do, and [then] we can negotiate in earnest". In a statement of the obvious, he went on to say: "We cannot remain idle as the clock is ticking".

In this, the first phase of the talks, there are three elements – known to us all. The first is "rights of EU citizens" and the second is the Financial Regulation. On this, Barnier says: "It is essential for the United Kingdom to recognise the existence of financial obligations which simply stem from the period during which it is a member of the EU, and in particular from our current multiannual financial framework".

Only once the EU gets this [formal] recognition, he says, can we "begin work on the methodology and agree in this first phase of negotiations on this methodology".

Of the third - issues related to Ireland - " we want to start discussions quickly on the maintenance of the Common Travel Area between Ireland and the UK, defining precisely its various relevant aspects, and also on the protection of Good Friday commitments Agreement , in all its dimensions".

In what might be a glimpse of the iron fist in the velvet glove, Barnier then says: "On subjects of such importance, it is essential to ensure that we are on the same political line before seeking technical solutions". He adds: "I want to be clear again on these issues: these three priority subjects for the first phase of the negotiations are inseparable". (
The Cabinet of the United Kingdom seems impervious to all this. A Free Trade Agreement (FTA) will be easy to set up because we already comply with all the EU requirements they say. Yes we do TODAY but what about on 30th March 2019? It is not as simple as the Cabinet ministers make out.

The day after the United Kingdom leaves the European Union it becomes an external country (a third country) and the European Union has no alternative but to protect itself from what might be sub standard, rogue or unsafe imports. It is that simple.

The National Audit Office has suggested that there might be as much as a £34 BILLION hit to tax revenue if the new HMRC CDS (Customs Declaration Service) system is not ready in time as it might not be (
There is still a significant amount of work to complete, and there is a risk that HMRC will not have the full functionality and scope of CDS in place by March 2019 when the UK plans to leave the EU. HMRC recognises this risk. The decision to leave the EU could increase the number of transactions by around 200 million and more than double the number of traders having to go through customs processes. HMRC faces some significant challenges to deliver the programme within the current timetable. 
This blog has hardly scratched the surface of all the issues involved.

The idea of 'No Deal' would be, in my view, madness. Farmers, Drug Manufacturers, Travellers, Airline Companies could all be seriously constrained by such a policy. 

The United Kingdom needs to opt for a safe interim 'staging post' to protect itself from such a calamitous outcome. It needs to opt for EFTA/EEA membership where much of the danger can be avoided in the short to medium term.

This will be discussed in the next blog.

Sunday, 23 July 2017

It does not have to be like this

(I had intended my thoughts to be one post but it would be far too long so I have split it up into more than one.)

I am a Leave voter - I voted Leave and would vote Leave again. I voted Leave because I wanted to be out of the jurisdiction of the European Court of Justice (ECJ) and of the unelected Commission; so that MP's were answerable not to the Commission but to their electors in their constituencies, to the United Kingdom voter.

Mrs 'President' May said the following in her Lancaster House speech:

That starts with our close friends and neighbours in Europe. So as a priority, we will pursue a bold and ambitious free trade agreement with the European Union.
This agreement should allow for the freest possible trade in goods and services between Britain and the EU’s member states. It should give British companies the maximum freedom to trade with and operate within European markets – and let European businesses do the same in Britain.
But I want to be clear. What I am proposing cannot mean membership of the single market.
European leaders have said many times that membership means accepting the ‘4 freedoms’ of goods, capital, services and people. And being out of the EU but a member of the single market would mean complying with the EU’s rules and regulations that implement those freedoms, without having a vote on what those rules and regulations are. It would mean accepting a role for the European Court of Justice that would see it still having direct legal authority in our country. (

The United Kingdom was therefore going to leave the Customs Union and "So we do not seek membership of the single market. Instead we seek the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement."

On the 29th March 2017, May then gave formal notice that the United Kingdom was invoking Article 50 of the Lisbon Treaty. From what I have read it seems the Article 50 notification cannot be revoked. In response Donald Tusk wrote:
..While an agreement on a future relationship between the Union and the United Kingdom as such can only be concluded once the United Kingdom has become a third country

The reason given for leaving the single market was thus so that the United Kingdom would not be subject to the 'Four Freedoms' especially Freedom of Movement of people.

On 29th March 2019 the United Kingdom will become a third country i.e. NOT a member of the European Union and only at that point can a new agreement be concluded - AFTER we have left. So what does third country ACTUALLY mean?

It means basically that access to shared databases will probably stop in the 'No Deal' scenario. Access to the Single EUROPEAN sky, medicines, agriculture, customs and other databases may well be switched off. Not because the European Union is vindictive but because the United Kingdom is taking the Sovereign decision to leave the European Union. It is a United Kingdom decision not an EU one.

Michael O'Leary of Ryanair, of whom I am no great fan, has already warned that No Deal will mean that flights to the European Mainland will cease and has stated that Ryanair flights might stop as early as September 2018.

Between 29th March 2019 and the agreement of a 'new, comprehensive, bold and ambitious free trade agreement' the United Kingdom will be in a 'limbo' until it appears on the official 3rd Country list maybe six months after 29th March 2019.

Then the United Kingdom will be officially a third country with all that implies - which will be the subject of Part Two. 

It really doesn't have to be like this.