The Single Market Question: why Article 127 needs our attention

5 Oct 2017

With Theresa May's Florence speech offering a semblance of calm, the process of leaving the European Union has only just begun. 


Amidst the backdrop of prolonged negotiations lies the often underreported piece of legislative verbiage that could prove to be the thorn in the side of Britain. Article 127 derives from the 1994 European Economic Area Agreement.  Here, the EU extended Single Market membership to three non-EU nations: Lichtenstein, Iceland, and Norway. As a result, these nations were given access to the free movement of people, goods, and services from a range of EEA participants. The United Kingdom is a signatory to this agreement and as such is a member of the European Union.


The impasse is surrounding the wording of the Article. Debate surrounds whether the government needs to enact Article 127 to cease membership of the EEA, or instead withdraw automatically under Article 126. It states: ‘Each Contracting Party may withdraw from its Agreement provided it gives at least twelve months' notice in writing to the other Contracting Parties. Immediately after the notification of the intended withdrawal, the other Contracting Parties shall convene a diplomatic conference in order to envisage the necessary modifications to bring to the Agreement.’


The ambiguity surrounding such regulation has resulted in a key argument between the UK Government and the Single Market Justice (SJM) campaign. This group has claimed that because the UK is a separate 'contracting party', leaving the European Union does not automatically result in a cessation of EEA membership. As a result, it is viewed that because British EEA membership is enshrined in UK law through Parliament's 1993 Agreement Act, then triggering Article 127 would require parliamentary approval.


However, an alternative argument has been put forward, namely that the UK can automatically withdraw EEA-EU membership under Article 126 (1) of the EEA Agreement. The Article states that ‘the Agreement shall apply to the territories to which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty, and to the territories of Iceland, the Principality of Liechtenstein and the Kingdom of Norway.’


Surely then, from the legislative affirmation, the UK is a member of the EEA only because of European Union membership, and, as a result, withdrawal from the EU means an automatic termination of EEA status? The question remains, therefore: what is the government's position? This is the problem, for there is an evident display of incoherence on the executive's behalf. Upon challenging the Government through the Divisional Court on the topic of Article 127, the SMJ reported that the Government accepted that Article 126 does not #give rise to the termination of the EEA Agreement ipso jure.’


Yet, surprisingly, the Department for Exiting the European Union seemed to somewhat U-turn, stating that the EEA Agreement will ‘no longer be relevant for the UK,’ ‘it will have no practical effect’ and therefore ‘we do not envisage a vote.’ What is clear here, despite the ambiguity, this agreement is entirely a question of inference, a question of which, if not addressed by both parties to achieve consensus, threatens to truly stall Britain's withdrawal from the European Union. Indeed, with the government yet to make a decision on this matter and seemingly ambivalent to do so, it would seem that the door is being left open for further challenges. Only time will tell.

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