Saturday 11 July 2015

EU Referendum: The Difference Between EFTA And The EEA

In Friday's Telegraph we see an article by Icelandic MP Guthlaugur Thor Thordarson and Swiss MP
confusion between EFTA (European Free Trade Area) and European Economic Area (EEA), with a blurring of lines between the Swiss situation and Iceland's:
The clue is in the name: European Free Trade Association. Free trade and national sovereignty turn out to make a pretty good combination. Income per head in EFTA countries is, on average, 56 per cent higher than in the EU. And both our countries export more to the EU, in proportionate terms, than Britain does.
Britain was once the leading EFTA state. It could be again. Come on in: the water’s lovely.
This has led to confusion on social media such as this tweet from executive editor of ConservativeHome and a former campaign director of the TaxPayers' Alliance Mark Wallace:
Perhaps it's not surprising Wallace comes to this conclusion given that Icelandic MP Guthlaugur Thor Thordarson goes onto repeat this mistake on BBC's today programme (2hrs 49mins), a mistake echoed by presenter Mishal Husain.

Not that this is a recent phenomenon, for example here on Conservatives for Liberty they write, (with no mention of the EEA):
The main complaint that constitutes the ‘in’ camp’s only real argument against EFTA membership is that these countries have to follow all the EU’s rules without having any say in how they are made.
The "ruled by fax" argument is one that applies to the EEA not EFTA. And blogger Living in Greece, makes such a hash of describing the contrast between the two settlements that it is completely wrong.

EFTA and the EEA are very different agreements. EFTA membership consists of four countries Norway, Iceland, Lichtenstein and Switzerland. Of those four, three have EEA agreements, the exception being Switzerland which is a member of EFTA only.

EFTA membership is required for EEA participation and it's the EEA which gives Single Market access for Norway, Iceland and Lichtenstein (so-called NIL countries). Given Norway is the biggest county, it's known as the "Norway option" or sometimes the "EEA option".

Conversely EFTA on its own does not confer access to the Single Market - there is no trade relationship with the EU - which is precisely why Switzerland has to have bilateral agreements which are made outside the EFTA framework. Switzerland's EFTA membership is in no way related to its bilateral agreements with the EU.

And such detail matters for UK eurosceptics. Membership of EFTA is not automatic, each existing country has veto regarding the admission of new countries. And in particular both Iceland and Norway have dissatisfaction with the EEA agreement, but they are not powerful enough to force a renegotiation. UK membership of EFTA would therefore be seen as advantageous but only if we sign up to the EEA as well. Without agreeing to the EEA our EFTA membership submission will very likely be vetoed.

In addition we have EU-Swiss relations which are in crisis with the rejection in a referendum by the Swiss of the "free movement" provisions, with the bilateral treaties on the verge of collapse. The deadline for resolution is in February 2017, difficulties which will be high profile during the run-up to our own referendum. That though is a bilateral treaty problem not an EFTA one, but the failure to make such a distinction will lead to misleading interpretations of EFTA.

The above is probably a bit "Janet and John" for regular readers but it's not very reassuring when Icelandic and Swiss MPs are themselves seemingly unaware how their own country's agreements are made.

The two MPs probably meant well but their intervention has done nothing more than muddy the waters to the detriment of the UK's "no" campaign.

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