Is EFTA a step in the right direction? An explainer.

Our priority now is to get as good a deal as we can along the lines we promote in our petition here. There is however considerable interest in EFTA as an option for Brexit at the end of the transition period. For instance we came across a recent article in Times of Malta (22 October 2020) reporting that Britain had agreed a provisional trade deal with Norway, Switzerland, Lichtenstein and Iceland “to ensure continuity after its Brexit divorce from the European Union” and keep the vast majority of its trade with these small countries tariff free. There is also a well organised campaign for the UK to re-join EFTA. What is the significance of this news? Could the UK have a semi detached arrangement rather like Switzerland but still within the EEA?

Juliet Lodge works on the EU, biometrics and artificial intelligence and its ethical impact on policy and democracy. She was elected EU Woman for Europe and is active in many EU groups associated with Devizes for Europe. So we asked Juliet to explain how EFTA works. Does it function like a bloc? Is it a way of building partnerships for medicine, research and other collaborative initiatives with the EU? We publish her comprehensive reply below.

EFTA or bust?

It is rather disingenuous to suggest that an alternative for the UK to EU membership lies in EFTA. The clue is in the name: European Free Trade Association.  It was set up as an intergovernmental free trade association precisely because the UK did not want to be part of a supranational organisation, the then newly created European Economic Community, that would make common regulations binding on all partners, modelled on its predecessor, the European Coal and Steel Community. One was built on the principle of promoting free trade with decisions in the hands of governments, the other on promoting integration, and decisions taken on the basis of proposals put forward by an independent, supranational body – the Commission – to be agreed by member governments in a Council of Ministers.

Even before the EEC was formally launched in 1957, the UK was having doubts about where its ‘rival’ – EFTA – could meet the UK’s expectations. Within four years, the UK tried to get into the EEC, only to be rebuffed by the then President of France, Charles de Gaulle.   Then, as now, some four years after the Brexit referendum, the faction within the Conservative party wedded to illusions of imperial supremacy, sovereign entitlement and greatness seemed not to understand that the world had moved on.  Then, multilateralism, supranationalism and the concept of doing things together, no matter how imperfectly, seemed to be the way out of the devastation of the war. The point was to try to do better together and not give up.

The word ‘community’ signalled a commitment to integration rather than cooperation. Originally, the EEC’s remit was very limited and focused primarily on trade.  Over the years, its members have widened its scope to include action on areas where working together it hoped to yield a better result than doing things separately.  Climate change, environmental protection, cross border police and security, research, standards and measures – including the idea of EU citizenship and a common passport. Citizenship adopted by the members whose number expanded from six to 27 by 2016, enabled people to move from country to country and access social welfare on the same footing as nationals were. The EEC changed its name as it became more integrated, from EEC to European Community and then to European Union, and early EFTA members followed the UK in joining the EEC.

So can EFTA be an equivalent alternative to the EU? Short answer is of course not. The EU is far larger even if it’s only looked at as a market. EFTA comprises two original founding members: Norway and Switzerland, Iceland and Liechtenstein. Austria, Denmark, Sweden, Portugal, like the UK, later joined the EU, as did Finland, which had become an EFTA Associate member in 1961, full one in 1986 and then left in 1995 to join the EU. In 2009 Iceland applied to join the EU but then withdraw its application in 2015.

Relations between the EU and three EFTA members, Iceland, Norway and Liechtenstein, are governed by the European Economic Area Agreement (EEA) which came into force in 1994. In effect, this extends the EU’s single market, operative since 1993 to those members enabling them to be part of the EU’s four freedoms of movement, covering goods, services, people and capital. Crucially, however, they have to abide by whatever rules and regulations are made by the EU for those areas without having any right to determine their content. So they gave their independent sovereign decision making power in those areas to the EU. Switzerland’s relations however fall under a series of complex bilateral agreements.

On the face of it, the EEA would be a neat way for the UK to avoid most of the disadvantages of not being in the single market without a public loss of face. It would be relatively easy for political spinners to suggest the EEA is something completely different, and therein lies one of its political advantages.

Do EFTA members trade with other countries below EU standards?

I don’t have the definitive answer. My guess would be yes in terms of imports that are not part of onward development for export to EU. However EFTA is not a bloc in the way EU is trade wise. It is more of a trading arrangement among members who want customs/ tariff benefits among themselves.  I think the secretariat tries to align them but this is no way comparable to what the EU does in my opinion. In any case, the trade UK does with these four countries is relatively trivial.

Professor Juliet Lodge

EFTA: find out more

EFTA’s secretariat is in Brussels, and its Head Quarters is in Geneva. Visit the EFTA website

EFTA-UK: EFTA-UK is a campaign for the UK to re-join EFTA.