Brexit and our current terms compared

 

Issue

Current EU terms

Chequers Deal

EEA

Status and influence within

the EU

Since 1973, the UK has been a Member State of the European Union (EU).

 

The UK has been judged one of the most successful countries in shaping EU laws, particularly on issues of importance to the UK.

 

Special privileges have been granted to the UK:

  • budget rebate negotiated by Margaret Thatcher
  • opt-outs from the Schengen Area
  • opt out of the Euro
  • opt-out of the Social Charter

 

Other policy areas in the EU are subject to unanimity at the request of the UK including taxation and immigration policy.

After leaving the EU on 29 March 2019, the UK would become what the EU treaties define as a “third country”.

 

The EU and the UK have agreed a transition period of roughly two years between withdrawal from the EU in March 2019 and the start of a new relationship. During this period the UK would already have become a third country but would continue to follow EU rules, pay into the EU budget and abide by rulings of the European Court of Justice (ECJ). As a third country, the UK would have no official influence over EU decision-making and would have to adopt and abide by rules that they have had no say in.

EEA states have little influence on the decision-making process of EU legislation. EEA countries have no power to vote or veto legislation put forward to the European Parliament that may impact them.

 

Instead, EEA states can input on European Commission committees or by submitting comments to actively influence the decision-shaping process of EEA legislation.

 

The Commission is also allowed to informally seek advice from experts from EFTA states in the same way as EU experts when new legislation is formed in an area that is covered by the EEA Agreement. These experts are invited on the basis of their professional qualifications; they are not seen as representatives of individual states.

EU Budget

In 2016, the UK’s net contribution to the EU amounted to £9.4bn, representing 1.2% of government spending or £39p per person per day. £13.9 billion was transferred from the UK government to the EU (gross contribution was £18.9bn, rebate £5bn). £4.4 billion was however credited back to the UK public sector, of which a proportion was then paid to the private sector, taking the UK net contribution to £9.4 bn. This figure however doesn’t include EU money that comes back directly to the UK private sector (for example, to fund research in UK universities).

 

The 1985 rebate reduced the UK’s contribution to the EU budget by 66%: the slack was picked up by the other states. Blair The UK government slightly reduced the rebate in 2005 in return for reforms of the Common Agricultural Policy reform.

Theresa May has confirmed that the UK would continue making contributions into the EU budget in order to get “associate membership” to key agencies as well as access to some research, educational and cultural programmes.

 

Science and innovation as two key areas have been identified as two areas in which the UK will be making contributions, but how much the total bill would be will not be clear until there is more clarity on what agencies, programmes and areas of cooperation the UK would see access to. But this would definitely come on top of the £37.1bn Brexit divorce bill, and would have to be paid back until at least 2064.

 

It is very unlikely that the UK would continue to benefit from the rebate it has secured as a Member State.

EEA states contribute to the EU budget. Each individual states’ contribution is determined according to its GDP in relation to the total GDP of the EU and EEA states combined. EEA states contribute to both the EU operational costs, which form the majority of the EEA budget, and the administrative costs of the European Commission.

 

Norway, for example, makes a significant contribution to EU spending, making grants to poorer EU Member States and contributions to a number of EU programmes. One former Norwegian Minister for Europe has said that its “financial contributions…[are] on par with comparable EU member states” when GDP is taken into account.

Single Market and Customs Union

The EU Single Market and Customs Union have given the UK access to the world’s largest market. A key policy of the Thatcher era, the UK was key in the creation and promotion of the Single Market.

 

In 2017, UK exports to the EU amounted to £276 billion (44% of all UK exports). UK imports from the EU totalled £347 billion (53% of all UK imports).

 

3.5 million jobs in the UK are linked to the export of goods and services to the EU.

 

Increased trade with Europe between the early 1980s and the late 2010s may be linked to 6% higher income per capita in the UK - £3,300 a year per British household.

The Chequers proposal put forward by Theresa May confirms that the UK would leave both the Single Market and Customs Union. Under this proposal, the UK and EU would maintain a common rulebook for all goods, including agri-foods. In essence, this commits the UK to following EU rules on goods with the acknowledgement that if the UK decides to diverge from the EU on standards or tariffs (for example), that there would be consequences for access.

 

Services form 80% of the UK economy, and 32% of the UK’s exports to the EU. The Chequers agreement states that there would be different arrangements for services in order to achieve regulatory flexibility, with the subsequent recognition that the UK would not have the same level of access to EU markets.

 

The government’s Brexit impact assessment expects GDP to decline across the country the UK leaves the Single Market and Customs Union. In the event that the UK signs a Free Trade Agreement with the EU, the North East, West Midlands, and Northern Ireland, should expect 11%, 8%, and 8% dip in growth respectively.

EEA Member States are members of the Single Market for goods and services, but not  for agricultural goods and fisheries.

 

EEA members must automatically follow new Single Market rules, without much power or voice to substantially influence how such legislation develops. While EEA states have the right, in theory, to collectively refuse new Single Market rules under a so-called ‘right of reservation’, in practice, this has rarely been used. EEA states have only negotiated substantive exemptions in a very limited number of cases.

 

EEA states are not in the customs union.

ECJ jurisdiction

The ECJ ensures EU law is interpreted and applied the same way in every member state.

 

The Court of Justice comprises of one judge from each EU Member States, as well as eleven advocates general.

 

The General Court comprises of 47 judges. In 2019 this will increase to 56, two judges from each EU member state.

Theresa May has made ending the jurisdiction of the ECJ in the UK one of her red lines in the Brexit negotiations. It has become increasingly clear that this would not be possible. For example, “associate membership” to key agencies would require accepting the jurisdiction of the ECJ in relevant matters.

 

After we leave the EU, the Withdrawal Bill will copy EU law into UK law. Cases will be determined in our courts, but where appropriate, UK courts would look to the ECJ’s judgements, as they do for the appropriate jurisprudence of other countries’ courts.

 

The Chequers agreement has unilaterally signed the UK up to following EU rules on goods.  It has proposed that a joint institutional framework be developed for the interpretation and application of UK-EU agreements by both parties, but accepts that EU case law will be consulted in areas relating to the common rulebook. Several sources have also reported that the UK government has agreed that EU judges will be the legal arbiter of disputes over payments to Brussels and the rights of EU citizens, which would continue the supremacy of the ECJ over the UK courts.

The nature of the EEA agreement means that EEA/EFTA countries are subject to most of the EU legislation covering the bloc’s internal market with the exception of only a few key areas such as agriculture and fisheries.

 

As soon as a EEA-relevant EU legal act has been adopted by the EU, it is the EEA Joint Committees responsibility to act quickly so the legislation can be implemented throughout both EU and EEA states simultaneously. If there are issues with this procedure, Protocol 34 allows for the possibility of the EEA state to ask the ECJ to arbitrate.

 

The ECJ also has jurisdiction over any associate memberships that EEA states may be part of. The ECJ has supreme jurisdiction over areas such as Euratom and food safety legislation.

Irish Border

The common UK-Irish EU membership has played an important role in underpinning and safeguarding the Good Friday Agreement (GFA), and has helped dilute cross-community tensions in Northern Ireland.

 

Much of the GFA was based on the EU Convention on Human Rights. Northern Ireland is more dependent on EU funding than any other region of the UK and the anticipated loss of that funding is expected to have a devastating impact on the region’s economy and thus stability.

The government has promised to ensure no physical border in Northern Ireland. The Chequers agreement goes some way to ensuring this, proposing a ‘common rulebook’ on goods and agri-food negates the need for extensive customs checks at the border.

 

The UK has proposed a ‘facilitated customs agreement’ whereby technology is used to track the destinations of goods to determine their final destination. Goods and agri-foods that remain in the UK will be charged UK tariffs, whilst those goods that are destined for the EU will pay EU tariffs that are collected by the UK government and are transferred to the EU at a later date.

 

However, the fate of the Chequers proposal is uncertain; Michel Barnier has confirmed that it is unacceptable to the EU and no subsequent plan has been put forward by the UK government.

 

The Irish border has become one of the key sticking points of the Brexit negotiations, with the EU refusing to back down from their agreed position in January 2018 for a backstop that would keep Northern Ireland within the EU Customs Union, with the border down the Irish Sea.

 

Whatever the end deal, it is clear that both sides do not want a hard border between Ireland and Northern Ireland. Should one be imposed, it would have dangerous implications for the Good Friday Agreement.

There is precedent for a frictionless border arrangement between an EEA and EU country; Norway (part of the EEA) shares an extensive land border with Sweden. A member of the single market, Norway trades most of its goods with the EU without customs duties (with some exceptions, such as agricultural products and food). Norway has also adopted EU legislation on coordination of social security and the Schengen Agreement on abolishing border controls.

 

Of the 80 border crossings between Norway and Sweden, 14 have border infrastructure for customs checks. These checks are light-touch, involving spot checks rather than all vehicles. Technology is increasingly being used to eliminate the burden of physical checks, with number plate recognition in use.

 

However, there are a number of reasons why the Norwegian model may not be appropriate. Northern Ireland has 208 crossings, of which most do not have any border infrastructure at all. The EU has also rejected the UK proposal to collect tariffs on behalf of the EU.

Freedom of movement

While allowing UK citizens to work, study, and live abroad, freedom of movement has also contributed to the health of our economy and public services. A UCL study found that EU migrants contribute £20bn more in taxes than they receive in any form of benefits and 10% of doctors and 7% of nurses in the UK are EU nationals. Some vital specialised jobs rely on EU citizens for up to a quarter or a fifth of their staff (paediatric cardiologists: 28%; cardio-thoracic surgeons: 24%; clinical neurophysiologist: 22%; neurosurgeons: 20%).

 

There are a range of limits to freedom of movement that the UK currently has the power to implement but chooses not to. In countries like Denmark and Belgium, there are rules stating that EU nationals must move on from the country if they have not found a job within four months.

 

The EU has undertaken reforms of its freedom of movement rules. For example, the EU has recently adopted a revision of the Posted Workers Directive requiring firms to comply with local standards when workers are posted temporarily to another EU country (equal pay for equal work in the same place).

Both Theresa May and Jeremy Corbyn have maintained that on leaving the EU freedom of movement would end.

 

The Chequers agreement says very little about freedom of movement, just that the UK will “ end free movement; giving the UK back control over how many people enter the country”. The agreement also includes a ‘mobility framework’ that ensures that UK and EU citizens can “continue to travel to each other’s territories, and apply for study and work - similar to what the UK may offer other close trading partners in the future”. This is likely to be similar to a visa programme, although final proposals will not be published until the Migration Advisory Committee’s report in September 2018.



As an EEA member, the UK would have to accept the EU’s free movement rules without retaining our current ability to influence free movement legislation.

 

The power that EEA countries hold to limit immigration is restricted. In theory, EEA States can impose restrictions on free movement that go beyond EU law. In reality, however, this rarely happens.  “Safeguard” measures can only be invoked if there are “serious economic, societal or environmental difficulties of a sectoral or regional nature”. Any action taken in response must be ‘limited in its scope and duration to what is strictly necessary to remedy the situation”.

Euratom

As a member of the EU the UK has a seat at Euratom, the organisation which ensures the security of atomic energy supply in Europe.

 

Benefits include:

  • Uniform standards of safety for transportation of nuclear materials
  • Protection of nuclear energy supply networks
  • Sharing of research into nuclear energy.

Theresa May has confirmed the UK’s intention to leave Euratom. There is no provision under the Euratom Treaty for any State to be a member of Euratom but not the EU, particularly given the shared institutional arrangements for both Treaties.

 

Without an appropriate replacement, British power stations may not be able to source nuclear fuel. The transportation of other nuclear materials may also end. This would put UK patients at risk of losing access to nuclear isotopes used in cancer treatments and medical imaging.

Membership of the EEA does not relate to membership of Euratom. Both Norway and Switzerland buy into some of its programmes, allowing them to take part in various research programmes, but do not participate in the whole treaty.

 

Arrangements under the Euratom treaty require acceptance of the jurisdiction of Euratom institutions (the European Commission and ECJ).

Passporting rights

Passporting rights allow UK finance firms to sell their products across the EU. This offers access to 500 million citizens and 22 million firms.

The threat of losing passporting rights has been the biggest concern for the finance industry that accounts for 6.5% of total UK economic output and 1.1 million jobs. 35,000 jobs could be at risk, along with £5billion of tax revenues per annum.

 

Theresa May ruled out continuing passporting after Brexit. She notes in the Chequers agreement that “arrangements on financial services” will be put in place that “preserve the mutual benefits of integrated markets and protect financial stability, noting that these could not replicate the EU’s passporting regimes”.

EEA States share the same financial passporting regulations and freedoms as EU states.

Fighting terrorist networks

The European Arrest Warrant (EAW) allows EU countries to extradite people between Member States to face prosecution for a crime, or to serve a prison sentence.   Since 2004, UK has surrendered over 10,000 individuals under the EAW. The EAW has brought high-profile criminals back to the UK, such as Hussain Osman, who attempted to carry out a terror attack in London in July 2005.

Only EU member states have access to the European Arrest Warrant (EAW) and as a third country the UK is expected to no longer be a party. In principle, the UK intention to remove the jurisdiction of the ECJ in the UK would also make the EAW inapplicable to the UK as the ECJ oversees the EAW.

 

The government is seeking to agree a new bespoke security arrangement with the EU. As per the Chequers proposals, the UK intends on maintaining operational capabilities on internal security, but has not elaborated on how this will be achieved.

 

The EU has expressed its willingness to conclude a new extradition treaty. However, it would have more limited scope and would not apply to all EU Member States as 18 EU countries’ constitutions, including France and Germany, bar the extradition of their own nationals to third countries.

As members of the Schengen Agreement, Norway and Iceland have signed up to the EAW, although it has yet to come into force. It is overseen by the ECJ and took 13 years to negotiate. The agreement is similar to the EU agreement, but includes two discretionary bars on extradition; the option to refuse to extradite their own nationals, and the ‘political offense’ option.

Food Safety

As a Member State, the UK has benefited from the EU’s high food safety standards.

 

The European Food Safety Authority (EFSA) was set up in 2002 following a series of food crises in the late 1990s. EFSA produces scientific opinions and advice that form the basis for European food policies and legislation.

 

The EU’s Rapid Alert System for Food and Feed (RASFF) database was set up in 1979 to enable swift reaction when risks to public health are detected in the food chain. The database provides a round-the-clock service for food safety notifications.

The Chequers agreement proposes a “common rule-book” for agri-foods, committing voluntarily to harmonisation with EU rules on food standards, animal welfare, meat quality etc. that would allow frictionless trade at the border.

 

There is little information on how the common rule-book would be enforced, nor on whether the UK would have any input in what rules are enforced in the future. The Chequers agreement accepts that any deviation from harmonisation “would have consequences”.

 

As the UK negotiates trade agreements with non-EU countries, including the US (which has already stated that agri-foods would be a key requirement for any US-UK trade deal), it may decide to accept products into the UK which are not currently permitted under EU law, for example hormone and antibiotic-treated meat, genetically modified foods, or chlorinated chicken. Any relaxation of food standards to below the measure set by the EU would result in the in ability of the UK to export those goods, leading to detrimental effects on trade.

 

The UK is likely to lose access to the EU RASFF database and the European Food Safety Authority.

 

Delays at the border due to the re-introduction of customs checks between the EU and the UK could also have food safety implications and shorten the shelf life of chilled goods.

EEA member states have followed a harmonised ‘Food Law Package’ since 2010, where rules that outline the principles for food production, traceability, risk analysis and precautions are followed by both EU and EEA states. THis allows for the free trade of food and agricultural products across the EU and EEA. EEA states also participate in the European Food Safety Authority. EEA states have little input on developing new legislation in this area.


For issues that fall outside of the ‘Food Law Package’, the EEA has a ‘Working Group on the Food Chain’, which is concerned with matters to do with animal health and welfare and animal feed, as well as public health matters related to animal products. The Working Group follows the development of new food legislation in the EU and facilitates the implementation of relevant legislation into the EEA Agreement.

EU Digital Single Market

The EU Digital Single Market aims to reduce barriers when using online tools and services across the EU.

 

It has brought a range of benefits including the abolition of mobile roaming charges across the EU in June 2017. The UK government claimed  to have played a leading role in securing this deal.  The EU also adopted a regulation to ban unjustified geo-blocking – requiring retailers to give online shoppers access to goods and services on the same terms all over the EU, regardless of where they are connecting from.

Theresa May has confirmed that the UK would no longer be part of the EU’s Digital Single Market.

 

British consumers would experience roaming surcharges when travelling across the EU again. An average business trip to an EU country could translate into surcharges for using mobile data between £195 to £778 (no VAT included). UK residents made 35,287,000 visits to the EU in 2016.

 

After Brexit, British consumers won’t benefit from the new EU regulation on geo-blocking due to come into force at the end of this year.

EEA members participate in the Digital Single Market.

 

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