A Brexit deal everyone can support - Common Market 2.0

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A Brexit deal everyone can support - Common Market 2.0
A Brexit deal everyone can support
A Brexit deal everyone can support - Common Market 2.0
About the ‘Common Market 2.0’ Group

The Common Market 2.0 Group is an informal group of MPs
who are committed to overcoming narrow tribal party-political
divides, in the national interest.

We don’t have a formal committee structure, and nor do we
have any official designation or legal status. We are simply
united by two core beliefs: first that MPs must continue to
act to ensure that the UK does not crash out of the European
Union (EU) without a deal, and second that the Common
Market 2.0 proposals which are set out in this document
represent the only form of Brexit that respects the referendum
result while protecting the jobs and livelihoods of our
constituents.

The Common Market 2.0 Group wishes to thank George Peretz
QC, Anneli Howard, Adrian Yalland and Prof Sir Alan Dashwood
QC for their legal expertise and expert guidance. We would also
like to thank the Essex Research Trust and Lord Sainsbury for
their financial support.
Contents

Foreword                                                                  1

Leading the way in a 21st century Common Market                           3

        Respecting the referendum result without wrecking the economy:    3
        why we need Common Market 2.0
        The path to Common Market 2.0                                     4
        A leading role in Europe, outside the EU                          5
        The EU and EFTA countries support our proposals                   5

Common Market 2.0: more control with continued economic access            7

        Common Market 2.0 offers new powers to control immigration        8
        Common Market 2.0 would enhance our national sovereignty          9
        UK payments would reduce significantly                           11
        A negotiated Customs arrangement would mean the Irish backstop   11
        would not need to be activated
        Leading Brexit campaigners supported an EFTA-based Brexit        11
        ahead of the referendum campaign

A prosperous future for the UK                                           13

        Trade                                                            13
        Security                                                         13
        Workers’ rights                                                  13
        Citizenship rights                                               14
        Standards and regulations                                        14
        Participating in EU agencies                                     14
        Environment                                                      15
        Industry and procurement                                         15
        Digital                                                          15

Conclusion                                                               16
Substantively, we also believe our plan meets
Foreword
                                                    the key issues expressed in the referendum
                                                    itself and the key stumbling blocks that have
The UK is a great country with a long and proud
                                                    emerged since, as well as getting us as close as
history. Yet one thing most will probably agree
                                                    possible to “the exact same benefits” offered
on is that we aren’t exactly covering ourselves
                                                    during the referendum.
in glory right now. In fact, much of the public
feel quite alarmed at the seeming mess we
                                                    Our proposal takes as its starting point the
have got ourselves into with Brexit. Many are
                                                    common refrain that we heard from voters
fed up to the back teeth of hearing about all
                                                    in our constituencies during the referendum
the endless Groundhog Day twists and turns.
                                                    campaign: “We voted for a Common Market,
The only way out of this mess is to take a new
                                                    not all this political stuff.” In the 1970s and
approach. Politicians of all parties need to work
                                                    1980s, the British people broadly supported
together to deliver a sensible Brexit deal.
                                                    our membership of the European Economic
                                                    Community (EEC) because it delivered clear
As it stands, all of the current options have
                                                    economic benefits to British businesses and
been firmly ruled out. May’s deal has been
                                                    workers. It was only as the “ever closer political
consistently rejected, Parliament has firmly
                                                    union” took hold, that people began to turn
ruled out No Deal and there aren’t the numbers
                                                    against it. Common Market 2.0 offers us a way
for a Second Referendum. Increasingly, MPs
                                                    to recreate that simple economic relationship,
from all parties are reaching the conclusion
                                                    which is free of all the political paraphernalia of
that we need to put aside tribal, political
                                                    the modern EU.
differences and accept that every option carries
risks and no one outcome is anyone’s ideal.
                                                    As members of Common Market 2.0, the UK
                                                    would still have to accept the free movement
We are coming together to argue for a Brexit
                                                    of workers from other European countries,
deal that delivers the result of the 2016
                                                    but we would have new powers to impose
referendum and protects the economic
                                                    unilateral restrictions on European migration in
interests of people right across the UK.
                                                    exceptional circumstances if our government
Our plan is based on the idea that after the
                                                    deems it necessary. This is because the European
transition, in December 2020, the UK should
                                                    Economic Area (EEA) agreement gives members
join a new Common Market for the 21st
                                                    the right to suspend freedom of movement
century. Let’s call it Common Market 2.0.
                                                    if it can show that it is suffering from “serious
                                                    economic, societal or environmental difficulties”.
Politically, the Common Market 2.0 would:
                                                    In addition, we believe the government should
•   Offer Theresa May a last chance of a deal       enforce more strictly existing requirements for
    that can command a cross-party majority         European migrants to find work within three
    and win the support of business leaders         months or otherwise demonstrate that they can
    and trade unions.                               support themselves without claiming benefits.
•   Meet Labour’s five key demands for a            Successive governments have failed to enforce
    Brexit deal through membership of the           these rules properly and have let down the
    Single Market and an EU-UK customs              communities we represent.
    arrangement.
•   According to the EU’s chief negotiator
    Michel Barnier, offer genuinely frictionless
    trade with the EU as it is based on a set of
    institutions and procedures that already
    exist.
1
In Common Market 2.0, most EU rules would              4. Take back control of budgetary
not apply to us at all as we would be outside             contributions from the EU to allow
the common agriculture, fisheries, justice,               more money for public services as our
home affairs, foreign and defence policies. UK            contributions to the Common Market 2.0
representatives would sit on the policy-shaping           would be significantly lower than to the
committees that draw up proposals for new                 EU.
Single Market legislation and we would be able
                                                       5. Take the UK out of ever closer union
to resist pressure to implement new rules that
                                                          which would remove jurisdiction of the
we don’t like. EU law would no longer have either
                                                          ECJ and take us out of the common
“direct effect” or “direct applicability” in the UK.
                                                          fisheries, agricultural, justice, home,
We would leave the jurisdiction of the European
                                                          foreign and defence policies.
Court of Justice (ECJ) and join the European Free
Trade Association (EFTA) court. UK courts would        6. Eliminate the need for the Irish backstop
once again be supreme. Parliament would be                to be activated because we would move
sovereign.                                                seamlessly from the transition into
                                                          Common Market 2.0.
Although we would still need to make a financial
contribution for access to the Common Market           This pamphlet sets out the significant
2.0, the annual amount would equate to not             benefits of Common Market 2.0 for the UK
much more than half the amount we currently            when it leaves the EU. We believe this offers
pay.                                                   a genuine opportunity to not only command
                                                       a majority in Parliament but to bring together
Finally, as members of both the Single Market          the country around the UK leaving the EU by
and a new comprehensive customs arrangement            creating a new, powerful partnership for the
that initially will involve applying the existing      long-term.
common external tariff, there would be no
reason for the Irish backstop ever to be activated.    Delivering Brexit in a way that protects
The union of Great Britain and Northern Ireland,       the economic interests of the people
which is precious to all of us, would remain           we represent will require all of us to
intact and the foundations of peace in Northern        compromise. We believe that leaving the
Ireland as set out in the Good Friday Agreement        EU and joining Common Market 2.0 is a
preserved in perpetuity.                               compromise that MPs of all parties, and all
                                                       shades of opinion, should be able to support.
In summary, the Common Market 2.0 would:

1. Safeguard jobs by offering real
   frictionless trade through full access
   to the Single Market and a new
   comprehensive customs arrangement.
2. Guarantee workers’ rights and
   protections for the long-term as part of
   Common Market membership.
3. Provide new controls over Free
   Movement in exceptional circumstances.

                                                                                                     2
1. Leading the way in a 21st century Common Market

Respecting the referendum result without wrecking the economy:
why we need Common Market 2.0

In 1973 the UK joined the EEC – otherwise                                                                   The 52% to 48% margin of victory represents
known as the Common Market – a decision that                                                                a clear instruction to leave the EU but not a
was subsequently supported by a public vote                                                                 mandate for a hard Brexit, let alone for leaving
in 1975. Yet in 2016, 17.4 million people voted                                                             without a deal.
to leave the EEC’s successor – the EU. So, what
changed between 1975 and 2016?                                                                              The democratic will of the 52% must not
                                                                                                            be ignored, and the EU referendum should
The answer is clear: the British people’s                                                                   therefore be seen as a reset moment for
support for the UK’s relationship with the EU                                                               the UK’s relationship with our European
eroded, post-Maastricht. The EEC’s Common                                                                   neighbours.
Market was popular among the British public,
but the project of political integration advanced                                                           A newly formed UK-EU Common Market for the
by the Maastricht Treaty in 1992 caused our                                                                 21st century would reflect the strong economic
paths to diverge. Between 1992 and 1995, UK                                                                 ties between the UK and Europe that enjoyed
public support for strengthening our country’s                                                              broad democratic support throughout the
relationship with Europe dropped from 38%                                                                   1970s and 1980s, respecting the public desire
to 14% and never recovered. Support to leave                                                                for striking the right balance between political
the EU or weaken the relationship rocketed                                                                  sovereignty and economic integration. It would
to over 50%. The events that followed – Tony                                                                recast our country’s relationship with the EU
Blair’s 2004 decision that the UK should accept                                                             in a way that would better reflect our history,
free movement of people from the so-called                                                                  geography and politics.
accession eight (Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland, Slovakia,                                                               The cross-party group of MP’s supporting a
Slovenia) without a transition period, then later                                                           ‘Norway-style’ Brexit is therefore advocating
the Eurozone and refugee crises – only served                                                               that the UK leaves the EU and its political
to heighten concern about the UK’s place in the                                                             institutions in order to develop ‘Common
European project.1                                                                                          Market 2.0’ – a Brexit that respects the
                                                                                                            referendum result, protects the jobs and
The 2016 referendum was a call for the UK                                                                   livelihoods of our constituents, and begins to
to leave the EU and its project of ever-deeper                                                              reunite our deeply divided country.
political integration. But the 52%/48% result
is also a call to maintain a strong, close and
productive economic relationship with those
500 million consumers on our doorstep. In
short, the referendum result is an instruction
to move house while remaining in the same
neighbourhood.

1
    Matthew Goodwin, Brexit Britain: The Causes and Consequences of the Leave Vote, http://www.matthewjgoodwin.org/uploads/6/4/0/2/64026337/leave_vote_lecture.pdf

3
This form of Brexit would give the UK full
The path to Common
                                                    membership of the Single Market, which the
Market 2.0                                          UK helped create, and which underpins so
                                                    many British businesses’ trading success. But
To deliver Brexit based on Common Market 2.0        we would leave the EU’s political institutions,
the UK will renegotiate the Political Declaration   the jurisdiction of the ECJ, the common
to specify a future relationship with the EU        agricultural and fisheries policies and the EU’s
based on ongoing membership of the EEA              drive towards “ever closer union”. We would
through the EFTA pillar. Therefore, during the      also increase our power to control freedom of
transition that ends in December 2020, the          movement.
UK will need to negotiate its succession to
EFTA with a derogation to allow an exemption        On its accession to EFTA, the UK would move
from EFTA’s free trade agreements. At the           into the EFTA pillar of the EEA, sitting alongside
same time the UK will negotiate its entry into a    the ‘EEA3’ of Norway, Iceland and Liechtenstein.
comprehensive customs arrangement, with the         The ‘EEA3’ plus Switzerland make up EFTA.
EU, including the common external tariff unless     EFTA is an intergovernmental organisation that
and until alternative arrangements to secure        promotes free trade and economic integration
frictionless trade and avoid a hard border in       without political or monetary union. It was
Ireland can be agreed. The Common Market            founded in 1960. The UK was a founding
2.0 Group, just as Theresa May said in her          member until it joined the EEC in 1973.
Lancaster House speech, ‘hold no preconceived
position’ on how this can be achieved.              The EEA Single Market is the extension of
                                                    the EU’s Internal Market to cover the EEA3
                                                    (Switzerland has its own bilateral deal with the
                                                    EU). Each EEA3 member pays into the EU but
                                                    only for the institutions and services that the
                                                    country accesses.

                                                       EEA

                     EFTA                                            EU

                                      Iceland
                  Switzerland      Liechtenstein              EU member states
                                      Norway

                                                                                                       4
A leading role in Europe,                                                                                    The EU and EFTA countries
outside the EU                                                                                               support our proposals
Brexit is not just a reset moment for the UK,                                                                The EU has consistently made clear that a
but also for Europe. By leaving the EU and                                                                   Norway-style relationship, combined with a
joining the EEA via the EFTA pillar the UK would                                                             comprehensive customs arrangement that
kick-start the re-imagining of the European                                                                  delivers frictionless trade and no hard border
project that is so urgently and desperately                                                                  in Ireland, is one of three options for the UK-EU
required.                                                                                                    future relationship that they would support.
                                                                                                             The governments of Norway and Iceland have
European leaders recognise the limitations of                                                                also been positive about the UK joining EFTA.
the EU’s one-size-fits-all, top-down approach
to integration. President Macron in particular                                                               The EU
has spoken openly in support of a “Europe of                                                                 The EU’s chief negotiator Michel Barnier has
several circles” that better reflects the different                                                          been clear that there are three models for the
histories, cultures and political temperaments                                                               UK-EU future relationship: a Canada-style free
of its component parts.2                                                                                     trade agreement (which would inflict significant
                                                                                                             harm on our economy because it wouldn’t
The UK would have a central role to                                                                          include most services, and which would put
play in leading a group of like-minded                                                                       our union at risk because it would exclude
European countries that sit outside the                                                                      Northern Ireland), World Trade Organisation
political institutions of the EU but enjoy full                                                              rules (which would impose substantial tariff
participation in the Single Market. Membership                                                               and non-tariff barriers to trade), or our
of this outer ring of EFTA countries would                                                                   Common Market 2.0 model.
bring significant benefits to the UK, as outlined
throughout this pamphlet.                                                                                    In May 2018, Michel Barnier said:

UK membership would also bring substantial                                                                   “The only frictionless model for the future with the
benefits to EFTA, increasing its size ten-fold                                                               UK would be Norway plus, Norway being part of
to over 70 million people. EFTA’s institutions                                                               the Single Market plus a customs union.” 3
would be strengthened as would EFTA’s
influence in deliberations with the EU.                                                                      From the outset Barnier made it clear that a
                                                                                                             Norway-style relationship would have been
Leading and strengthening an outer ring of                                                                   welcomed by the EU side and that it had not
EFTA countries would mean an exciting new                                                                    been explored because of the red lines that
future for the UK, EFTA and the EU.                                                                          Theresa May put down.4

                                                                                                             Michel Barnier has also made clear that
                                                                                                             the EU was ready to renegotiate the Future
                                                                                                             Relationship.

2
  FT, 04 September 2018 https://www.ft.com/content/b9bc8caa-b026-11e8-99ca-68cf89602132
3
  Express, 22 May 2018, https://www.express.co.uk/news/uk/963597/Brexit-news-Michel-Barnier-Northern-Ireland-border-Norway-plus-solution-EU-UK
4
  Reuters, 19 December 2017, https://uk.reuters.com/article/uk-britain-eu-options/stairway-to-brexit-barnier-maps-out-uks-canadian-path-idUKKBN1ED23R

5
In January 2019 he said:

“If the United Kingdom chooses to change its red
lines, and to be more ambitious and go beyond a
simple free trade deal in our future relationship,
then the EU would be ready to immediately
support this evolution and respond favourably.”

EFTA countries
The Norwegian Prime Minister Erna Solberg
has made it clear that Norway will welcome us
into EFTA. She has said that Norway will help
the UK “find solutions” if we want to join (28
November 2018).

“If that is what they really want, we will find
solutions in the future.”

“To find a good agreement is important for all
European countries and I hope that we will see an
orderly deal that doesn’t disrupt economic affairs
in Europe.” 5

The only notable Norwegian politicians to claim
that Norway would reject our membership are
campaigners for Norway to leave EFTA and join
the EU.

The Icelandic Foreign Minister Guðlaugur Þór
Þórðarson told BBC’s Newsnight:

“We would be very positive towards the idea of the
UK joining EFTA or the EEA.” 6

5
    MSN (28 November 2018) https://www.msn.com/nb-no/nyheter/verden/solberg-sier-britene-er-velkomne-i-efta/ar-BBQcDyS
6
    Newsnight ( 27 November 2018) https://twitter.com/bbcnewsnight/status/1067551073269772288?lang=en

                                                                                                                         6
2. Common Market 2.0: more control with continued
economic access

As this table shows, by leaving the EU and joining the EEA via the EFTA
pillar, the UK would remove itself from a significant number of EU
commitments and increase national sovereignty across a range of areas.

                                         UK as EU Member           UK in CM2.0

    Single Market Access                        Yes                    Yes

    Financial services access                   Yes                    Yes

    Tariff free trade with EU27                 Yes                    Yes

    Freedom of movement                         Yes                    Yes

    Immigration Controls                        No            EEA ‘Safeguard Clause’

    EU financial contributions                  Yes               ~50% per head

    Voice on global standards bodies            No                     Yes

    EU Rules                                    Yes               Only 28% apply

    Right to resist new rules                   No                     Yes

    CAP and CFP                                 Yes                  Exempt

    Common Foreign & Defence Policy             Yes                  Exempt

    Justice & Home Affairs Policy        Yes, with opt-outs          Exempt

    European Court of Justice                   Yes                  Exempt

                                                              No, unless we choose to
    Charter of Fundamental Rights               Yes
                                                                    participate

    EU Science/Education Programs, e.g                        No,unless we choose to
                                                Yes
    Galileo                                                         participate

7
Article 112
Common Market 2.0 offers
                                                    1. If serious economic, societal or
new powers to control                                   environmental difficulties of a sectorial or
immigration                                             regional nature liable to persist are arising,
                                                        a Contracting Party may unilaterally take
Under Common Market 2.0 we would                        appropriate measures under the conditions
participate fully in the Single Market, which           and procedures laid down in Article 113.
entails freedom of movement. We would
                                                    2. Such safeguard measures shall be restricted
however be in an improved position in two
                                                       with regard to their scope and duration
significant respects (in large parts delivering
                                                       to what is strictly necessary in order to
what David Cameron attempted but failed to
                                                       remedy the situation. Priority shall be given
secure in his renegotiation with the EU in 2016).
                                                       to such measures as will least disturb the
                                                       functioning of this Agreement.
Under Common Market 2.0, the UK:
                                                    3. The safeguard measures shall apply with
•   Would have a qualified but unilateral right        regard to all Contracting Parties.
    to suspend freedom of movement
•   Would be able to apply existing rules more      In the event that the UK used the safeguard
    effectively than at present                     clause, Article 113 of the EEA Agreement
                                                    provides for a dialogue between the UK and
We would have the power under Article 112           the other EEA countries, in order to establish a
of the EEA Agreement to take ‘safeguarding          long-term solution to the underlying problem.
measures’. This allows an EEA/EFTA state to         The invoking party must call a conference and
take ‘appropriate measures’ in the event of         seek to resolve the underlying issues which
‘serious economic, societal or environmental        led to the measure. This is done via the offices
difficulties of a sectoral or regional nature       of the EEA Joint Committee. If the negotiation
liable to persist’. This would mean that if EEA     breaks down, Article 114 permits the other EEA
immigration reached extraordinary levels, we        states to take proportionate counter-measures
would have the power to impose restrictions.        but only those “strictly necessary to remedy the
                                                    imbalance.”
This safeguard clause could be applied on
a regional basis. For example, if difficulties      Article 113
arose of a regional nature it would be possible     1. A Contracting Party which is considering
to restrict free movement in a region while             taking safeguard measures under Article
maintaining it in other less affected areas. This       112 shall, without delay, notify the other
could mean that if Scotland wanted to continue          Contracting Parties through the EEA Joint
free movement on current terms it would be              Committee and shall provide all relevant
able to do so while other parts of the UK facing        information.
particularly high levels of immigration could       2. The Contracting Parties shall immediately
implement safeguard measures.                          enter into consultations in the EEA Joint
                                                       Committee with a view to finding a
                                                       commonly acceptable solution.

                                                                                                     8
3. The Contracting Party concerned may              It is important to note that such a safeguard
   not take safeguard measures until one            power would only be available in extraordinary
   month has elapsed after the date of              circumstances. But this is precisely the power
   notification under paragraph 1, unless the       that David Cameron tried to secure during
   consultation procedure under paragraph 2         his renegotiation with the EU and which was
   has been concluded before the expiration         resisted by the EU at the time. This implies that
   of the stated time limit. When exceptional       in the eyes of the EU this power could have a
   circumstances requiring immediate action         serious and substantial effect.
   exclude prior examination, the Contracting
   Party concerned may apply forthwith the          As members of Common Market 2.0 we could
   protective measures strictly necessary to        improve the enforcement of existing rules in
   remedy the situation.                            relation to Freedom of Movement. After three
                                                    months, EEA migrants need to be in work or
4. For the Community, the safeguard
                                                    be able to demonstrate they have a job. If they
   measures shall be taken by the EC
                                                    cannot, their right to reside may be revoked.
   Commission.
                                                    Some EU countries, including Belgium, Spain
5. The Contracting Party concerned shall,           and Germany, already enforce these rules
   without delay, notify the measures taken to      better than the UK does.
   the EEA Joint Committee and shall provide
   all relevant information.                        The combination of Article 112 and stricter
6. The safeguard measures taken shall be            enforcement of the current rules would put
   the subject of consultations in the EEA          the UK in a significantly better position to deal
   Joint Committee every three months from          with large rises in immigration. If large, new
   the date of their adoption with a view to        countries were to join the EU and extraordinary
   their abolition before the date of expiry        levels of immigration were to occur we would
   envisaged, or to the limitation of their scope   be able to implement the safeguard measure
   of application.                                  to ensure that migration did not reach the
                                                    levels experienced during the mid 2000s.
7. Each Contracting Party may at any time
   request the EEA Joint Committee to review
   such measures.                                   Common Market 2.0 would
                                                    enhance our national
Article 114                                         sovereignty
1. If a safeguard measure taken by a
    Contracting Party creates an imbalance          Under Common Market 2.0, the UK would
    between the rights and obligations under        have:
    this Agreement, any other Contracting Party
    may towards that Contracting Party take         •   A voice in the consultation process of any
    such proportionate rebalancing measures             proposed new EEA laws
    as are strictly necessary to remedy the         •   A vote on the EEA Joint Committee where
    imbalance. Priority shall be given to               unanimity is required
    such measures as will least disturb the         •   A domestic right of refusal to implement
    functioning of the EEA.                             new EEA law into its own domestic law
2. The procedure under Article 113 shall apply.

9
Common Market 2.0 would restore policy-             various institutions. Furthermore, the UK would
making power in a wide variety of areas,            regain its seat at global bodies such as the
end direct effect and direct applicability of       WTO. This means we will actively be able to
European Law, ensure British influence in the       shape global standards that are the basis for
shaping of Single Market regulations and end        many EU and EEA laws.
the jurisdiction of the ECJ. The UK would have a
voice, vote and right of refusal over proposed      A genuine vote
new EEA law.                                        If an EEA/EFTA state is not satisfied with a
                                                    proposed Single Market law they can contest
ECJ Jurisdiction ends                               the relevance of new EEA law to the functioning
Under Common Market 2.0 we would leave              of the Single Market and seek to secure
the oversight of the ECJ and come under the         changes, adaptations or derogations. This
jurisdiction of the EFTA court. The EFTA court is   occurs through the EEA Joint Committee where
a separate and independent court covering a         representatives from the EU and EEA3 meet
separate and independent jurisdiction. Except       ‘to decide on’ whether to ratify the proposed
for decisions pre-dating the EEA Agreement in       new EEA law. New EEA law is only incorporated
1994, the EFTA court is not obliged to follow       into the EEA Agreement with the unanimous
the decisions of the ECJ. This is similar to how    agreement of the EU and the EEA/EFTA states
English courts are not obliged to follow the        (unlike in the EU Council where voting is on
decisions of the Scottish courts.                   the basis of a qualified majority) which means
                                                    that the UK would have genuine influence over
Although highly authoritative, EFTA rulings are     new EEA law. This process yields results. For
not legally binding on the EEA/EFTA states and      example, Norway obtained derogations from
cannot be imposed. The UK could expect to           55 legal acts and Iceland from 349 acts, up until
negotiate as least one of the four judges on the    June 2011 alone.
EFTA court in contrast to one-in-28 on the ECJ.
                                                    1. The ‘Third Energy Package’– EU legislative
Voice, Vote and a right of refusal                     package entered EU law in 2009
                                                       • Norway only put it into domestic law in
Outside the EU and under Common Market 2.0               March 2018.
we would restore policy-making power in vast           • Iceland are yet to do so.
areas including agriculture, fisheries, foreign
                                                    2. The ‘Third Postal Service’ – EU Directive
and security affairs, justice and home affairs
                                                       •N
                                                         orway refused to implement this
and taxation. This would mean for example
                                                        into domestic law in 2011. Eventually
that we would leave the Common Fisheries and
                                                        implemented in 2013.
Agricultural Policies.
                                                    3. The ‘Hygiene Package’– EU legislative
A genuine voice                                        package
We will have considerable influence over the           • Norway only implemented this five years
initial shape of new EEA legislative proposals           after it became EU law.
because the EU is obliged to consult all EEA/
EFTA states on any new legislation. EEA/            A genuine right of refusal
EFTA state experts participate in the EU            We would no longer be committed to ‘ever
Commission’s preparatory work and have              closer union’ and the imposition of EU law
representatives on policy-shaping committees        into UK law through ‘direct effect’, and ‘direct
as well as having observer status in the EU’s       applicability’ would end. Indeed, because of

                                                                                                       10
this, the UK Parliament would actually be          about this EEA Grants Scheme – other than it
required to incorporate EEA law into British       being a voluntary ‘goodwill’ scheme – is that it
law meaning genuine democratic oversight           is calculated on the basis of the Norway’s per
of the proposed new EEA law is achieved by         capita GDP. If the UK decided to follow a similar
the EFTA states’ own Parliaments. Crucially        scheme, Norway’s per capita GDP is about
these new EEA laws will only take effect if they   $76,000 per year whereas the UK’s current GDP
are incorporated into UK law by Parliament         is $39,000 per capita, meaning the UK would
precisely because the ability of the EU to         pay close to half of what Norway pays.
impose law on the UK ends at Brexit and
the EEA Agreement ‘ringfences’ the national        A negotiated customs
sovereignty of non-EU signatory states. This
means the EFTA states maintain (and have
                                                   arrangement would mean the
used) a domestic right of refusal. For example,    Irish backstop would not need
Norway took five years to implement the EU         to be activated
‘Hygiene Package’ of regulations and nine
years to implement the ‘Third Energy Package’.     The biggest concern for many Conservative
Iceland is yet to do so. In 2011 Norway refused    MPs regarding the Government’s Withdrawal
to implement the ‘Third Postal Service’. This is
                                                   Agreement is the Irish protocol and specifically
an extreme measure and rarely used because
                                                   the backstop, due to the fact that the UK
the purpose of the EEA legislative process
is to achieve legislation by consent and not       cannot exit the arrangement – should it be
imposition and generally speaking it does so.      required – unilaterally.
But it also means the UK would gain a ‘right of
reservation’ over any new EEA laws it currently    Under Common Market 2.0 the UK would be in
lacks as a member state of the EU. Under           the Single Market and therefore all regulations
Article 102 of the EEA Agreement, the EU may
                                                   would apply to the UK in the same way as they
take reasonable countermeasures including
                                                   apply to the Republic of Ireland with customs
suspending that particular part of the EEA, but
an EFTA country can still refuse to implement a    arrangements, at least initially, applying as
piece of EEA law because its sovereign right to    they do currently. Therefore there would be no
do so is ‘ringfenced’ by the EEA Agreement.        reason for the backstop to be activated.

UK payments would reduce                           Leading Brexit campaigners
significantly                                      supported an EFTA-based
                                                   Brexit ahead of the referendum
Norway pays £140 per capita per annum vs.
                                                   campaign
the UK’s current £220 (post-rebate). Norway
makes annual contributions of €450m to
                                                   Support for Common Market 2.0, under its
cover the cost of Norwegian participation in
                                                   various banners, has come from across the
joint programmes, schemes and agencies,
                                                   House of Commons and across the Brexit
and pays a €50m membership fee to EFTA.
                                                   divide. Conservatives and Labour politicians are
But it also makes €390m in voluntary grants
                                                   working together in the Common Market 2.0
via EEA Grants Scheme. What is most notable
                                                   Group, and 76 Labour backbenchers defied the

11
whip in June 2018 to back an EEA-based Brexit
in what was the largest rebellion in the history
of the Parliamentary Labour Party.

And a number of prominent Leave
campaigners – including Daniel Hannan,
Nigel Farage and Owen Paterson MP – all
consistently advocated staying in the Single
Market during the campaign.7

Daniel Hannan MEP said:

“Norway and Switzerland, all of these countries
have completely free trade with the EU, and by the
way, I can’t help noticing they’re doing pretty well.”

“Absolutely nobody is threatening our place in the
Single Market.”

    Nigel Farage MEP said:

“I hear people say “Wouldn’t it be terrible if we
were like Norway and Switzerland? Really? They
are rich, they’re happy and they’re self-governing
countries.”

“Norway, Iceland and Switzerland do pretty well.”

“Norway has no ties in terms of their foreign
policy, with their fishing industry... They are opted
out and exempted from all of the things that make
the British mad.”

Owen Paterson MP said:

“Only a madman would actually leave the
market.”

7
    People’s Vote (Youtube: 17 Nov 2016) https://www.youtube.com/watch?v=0xGt3QmRSZY

                                                                                       12
3. A prosperous future for the UK

Trade                                                                                                       highly successful financial services industry
                                                                                                            relies on its financial passports which ensures
Common Market 2.0 would secure the                                                                          that they can operate across Europe from the
prosperity of the UK through continued                                                                      UK. The current Political Declaration would
membership of the Single Market and a new                                                                   not maintain current trading terms in services
comprehensive customs arrangement with                                                                      as it involves leaving the Single Market, which
the EU. This option is the only one that can                                                                would risk businesses moving to other parts of
maintain frictionless trade with our largest                                                                Europe.
trading partner. Any other option, at least until
technological solutions can be found, involves                                                              Security
an increase in trade barriers and would likely
harm our economy, putting jobs at risk.                                                                     Common Market 2.0 will give the police the
                                                                                                            tools they need to fight crime and protect our
Continued membership of the Single Market                                                                   people. By re-joining EFTA we will be able to
ensures tariff-free access to the EU and the                                                                negotiate continued access to crucial databases
other EEA/EFTA states. The government’s                                                                     such as the Schengen Information System (SIS)
proposal by comparison only includes an                                                                     that the police used 539 million times in 2017.
aspiration for tariff-free access. This option                                                              We will also be able to negotiate access to
would guarantee it as a treaty right under the                                                              the exchange of fingerprints and DNA which
EEA Agreement. Membership of the Single                                                                     are used to help catch suspects and potential
Market would, along with a comprehensive                                                                    terrorists. No country outside EFTA or the EU
customs arrangement, ensure that there are no                                                               have access to these arrangements.
additional border checks. This is vital given the
volume of UK trade with the EU. For example,                                                                Workers’ rights
2.6 million freight trucks passed through Dover
in 2016. Any additional paperwork such as                                                                   Common Market 2.0 ensures that we not
Rules of Origin Declarations will be costly for                                                             only maintain current workers’ rights and
firms and any additional checks could lead to                                                               protections but that we keep pace with future
disruptive and costly delays. Additional costs                                                              rights and protections. A No Deal Brexit
could put jobs at risk.                                                                                     and the current Withdrawal Agreement put
                                                                                                            British workers’ rights at serious risk. The
It is essential we maintain full participation                                                              commitments within the Prime Minister’s
in the Single Market in order to protect our                                                                Withdrawal Agreement to protect employment
service industries, which make up about 80% of                                                              law are unenforceable and weak, and are
the UK economy. Common Market 2.0 delivers                                                                  excluded from the legal measures that bind the
on this. Any additional barriers will raise costs                                                           rest of the agreement.8 Those arguing for a No
and put jobs at risk. For example, the UK’s                                                                 Deal Brexit have spoken openly of the desire

8
    The Guardian, 26 November 2018 https://www.theguardian.com/commentisfree/2018/nov/26/theresa-may-brexit-deal-rights-at-work-eu-protections.

13
to see wholesale deregulation, which would          Standards and regulations
include watering down labour standards.
                                                    Common Market 2.0 is the only plan that
Common Market 2.0 leaves us open to                 can ensure frictionless access to European
maintaining the current rights and protections      markets, maintaining the standards that British
we enjoy, as per the high EU labour standards       consumers expect. It will keep identical or
currently in place. It is these rights, such as     equivalent regulations meaning no additional
the working time directive, rights on annual        costs to business and no additional paperwork.
leave, equal pay, maternity and parental leave,     This is vital for the around 2.6 million freight
anti-discrimination and even health and safety      trucks passing through Dover each year.
laws, that British workers rely on to live a good
quality of life. Remaining a member of the          Those backing a No Deal Brexit have spoken
EEA would allow for the implementation of EU        openly about their desire to remove the UK
employment-related regulations into UK law,         from European standards and regulations. This
ensuring British people could still benefit from    could mean settling for lower standards on
these protections.                                  goods after Brexit.

Common Market 2.0 allows us to leave the            This plan would also mean that the UK would
EU as the British people have directed, but         regain its seat at global bodies such as the
maintain essential employment protection            WTO. This means we will actively be able to
ordinary working Briton’s rely on.                  shape global standards that are the basis for
                                                    many EU and EEA laws.
Citizenship Rights
                                                    Participating in EU agencies
There is no concept of “citizenship” in the EEA
Agreement and the EU Charter of Fundamental         The EEA3 States participate in the agencies
Rights does not apply. The EEA Agreement is an      below through decisions of the EEA Joint
economic treaty and not political one. However,     Committee. In addition, bilateral agreements
Annex V obliges EFTA state contracting parties      with the EU ensure the participation of
to respect the Citizenship Directive rights of EU   individual EEA3 States in several other EU
citizens, and also to extend equivalent rights to   agencies. The EEA3 participate in numerous
their own subjects and other EFTA state citizens    agencies and programmes, including
even though they are not themselves citizens        REACH (Chemicals), EMA (medicines and
of the EU. While this would not equate to the       pharmaceuticals, environment, food safety,
continuation of EU citizenship, which will end at   pensions, securities and markets, network and
Brexit, it should be of considerable comfort to     information security, railway, maritime and
UK citizens anxious about losing key citizenship    aviation safety). The EEA3 also have the option
rights such as free movement, residence and         of joining programmes like Erasmus, Horizon
healthcare.                                         20/20, Copernicus (environment), European
                                                    satellite navigation systems (Galileo) and the
                                                    Connecting Europe Facility (CEF) dealing with
                                                    telecoms and broadband.

                                                                                                    14
This means the UK would have the option of                                                           the one railway line in Lichtenstein). The
remaining in the agencies and programmes                                                             Norges Statsbaner AS, the Norwegian State
that we want to. This would include areas that                                                       Railway company, the government owned
the Prime Minister’s current deal fails to secure                                                    operator of the railways, was established
continued engagement in – Galileo being the                                                          in 1996, after Norway entered into the EEA
most obvious example.                                                                                Agreement (when a larger railway company
                                                                                                     was split into separate state-owned operation,
Environment                                                                                          administration and inspectorate bodies).

Current members of the EEA have agreed                                                               In the EEA, state aid is monitored by the EFTA
their ‘determination to preserve, protect and                                                        Surveillance Authority, meaning determinations
improve the quality of the environment and to                                                        are made by EEA members through a separate,
ensure the prudent and rational utilisation of                                                       parallel structure to that which monitors state
natural resources on the basis of the principle                                                      aid in the EU. The EFTA working group on
of sustainable development’.                                                                         state aid meets when required to determine
                                                                                                     the specifics of how state aid rules will be
In practice, this means all EFTA/EEA states                                                          interpreted within the EEA, and is the means by
commit to agreements on water, air, chemicals                                                        which discussions on state aid between the EEA
and waste, and the equivalent environmental                                                          and the EU are conducted.
protections as EU membership.9
                                                                                                     Digital
Industry and procurement
                                                                                                     British business, not least our vital services
The EEA states come under the same state aid                                                         industries, rely on the free flow of data across
rules as EU members. These state aid rules                                                           national borders. Data flows freely within the
prevent governments giving any business an                                                           EEA and EU, and both the EEA and EU grant
unfair advantage that would distort trade.                                                           ‘adequacy’ agreements with third countries
Such rules do not prevent governments from                                                           to allow the international transfer of personal
nationalising already privatised industries or                                                       data to countries outside of these areas. As a
prevent the state from setting up government                                                         member of the EEA, the UK would be covered
backed alternatives to privatized industries.                                                        by the existing data agreements and there
There are no policies in any of the major parties                                                    would be no need for a separate agreement,
manifestos from the last election that current                                                       meaning frictionless data flows, benefitting
state aid rules would in any way curtail.10                                                          British business.11

As Norway has shown, it is possible under
existing rules of the EEA for the state to play
a greater role in the delivery of services.
Norway has spent more on state aid than the
vast majority of EU countries, and a lot more
than the UK. For example, the Norwegian
government operates its domestic railways
(and the Austrian Federal government operate

9
 EFTA, January 2019, http://www.efta.int/eea/policy-areas/flanking-horizontal-policies/environment
10
   Andy Tarrant, Fabian Society: https://fabians.org.uk/negotiating-the-red-lines
11
   EFTA, January 2019, http://www.efta.int/EEA/Data-Protection-505036

15
4. Conclusion

Politicians, of all stripes, have expressed support for the adoption of
Common Market 2.0. This is a Norway-style solution that would see us leave
the political institutions as voted for in the referendum while avoiding the
prickly issue of falling into the backstop.

We would avoid the backstop by joining EFTA - an off the shelf arrangement.
As the institutions already exist this future relationship can be negotiated
much more quickly than any other option on the table. Crucially the EU
have already said that they would be happy to negotiate a Common Market
2.0 Brexit deal.

In addition to avoiding the backstop, Common Market 2.0 would allow us to
make trade deals with the rest of the world. Although it is true that initially
we would apply the EU’s common external tariff, a Common Market 2.0 deal
makes an agreement on alternative arrangements much more likely, which
would allow us to make these new trade deals around the world. This is
because membership of the Single Market will eliminate the need for most
checks at the Irish border as our regulations will be identical or equivalent.

Membership of the Single Market is also the best way to protect workers
rights and ensure that high standards are maintained. Common Market 2.0
through membership of the Single Market guarantees that workers rights
and standards are locked in, ensuring that there cannot be a race to the
bottom that would hurt workers up and down the country.

Common Market 2.0 is a well-defined relationship which the EU have
already said that they are prepared to accept. It can both avoid the
backstop and deliver the future relationship by the end of 2020, thereby
delivering on the Brexit referendum to leave the political institutions and
take back control.

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