EFTA – A Short Introduction

by Camilla de Coverly Veale | 29th August 2017

The European Free Trade Association (EFTA) is a regional trading bloc currently made of four member states: Norway, Iceland, Liechtenstein and Switzerland.

EFTA allows Norway, Iceland and Liechtenstein to access the EU single market. The bloc liberalises trade with the EU – and the rest of the world- without seeking political union with its fellow members. Established in the 1960s, the UK was a founding member.

Recently membership, or mimicry, of EFTA has been muted as a way the UK could access the single market without being subject to the European Court of Justice (ECJ). Theresa May appears supportive of using EFTA as an ‘alternative court’. Michel Barnier, the EU’s chief negotiator, acknowledged in July that EFTA’s court was ’empowered’ to interpret the EU’s legal documents. Both EFTA and the ECJ courts are located in the same city, often applying matching laws, but they are regarded as independent. Nevertheless, the common perception is that where the ECJ treads, EFTA follows. This ‘tethering’ to the EU’s courts is likely to concern ardent Brexiteers. Jacob Rees-Mogg commented: “One of the rulings of the EFTA court is that it wishes to be as close as possible to the European Court of Justice because it believes that there should be homogeneity. It doesn’t diverge from the ECJ in normal circumstances”. Norway is subject to EFTA’s rulings. In the run up to the 2016 referendum many in Norway were clear about their perceived disadvantage: subject to the EU’s decisions (via EFTA’s court) without having any influence. Despite this, EFTA is generally considered to be more flexible: the national courts of EFTA members are not obliged to seek guidance from EFTA’s court, unlike the ECJ’s; there is also more room to manoeuvre in complying with its rulings. Judges are also made up of EFTA’s own members.

If EFTA is becomes the chosen vehicle for Brexit, the Conservatives may have to go into the next general election having to put the benefits of being member of EFTA front and centre of their campaign. If this were to happen EFTA membership could end up being perceived as a bad compromise for both sides: ‘not as good as being in’ and, at the same time, ‘not as good as being out’. There is also the potential the UK could be barred from EFTA membership. All member states must agree to a new member – giving any member a veto. Concerns have been voiced in Norway over a potential loss of dominance if such a large country were to (re)join. The combined population of current EFTA members is roughly 14 million: the UK population alone is 65 million.

 

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About the Author

Camilla de Coverly Veale

ccveale@maitland.co.uk

Camilla joined Maitland in 2016 from two contrasting research/PR roles, one with a crossbench peer in the House of Lords and the other with micro-payment tech start-up, Agate.

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