The EEA Agreement and why it is a potential vehicle for a UK implementation period after leaving the EU and while negotiating an EU/UK trade agreement.

Download a PDF of this article here: DOonEEAAarticle

Lord Owen’s proposals on the EEAA are also referred to in article by Liam Halligan in the Sunday Telegraph of 7 May.

It is very important that Brexit does not become the property of the Conservative Party or Conservative MPs during this General Election. It is the policy chosen by the majority of the British people in the referendum in June 2016. The country’s best interests will be served if as many Labour MPs as possible who are elected to the House of Commons on 8 June have unequivocally told their voters that they fully endorse the EU referendum result and are ready to support its implementation.

That means first: leaving the EU no later than March 2019, preferably much earlier; the reinstatement of our own UK and devolved parliaments’ laws, border controls, immigration policies and democratic governance; attempting to negotiate an EU/UK trading agreement and other trading agreements worldwide.

Staying in the Single Market on the terms and conditions as they currently apply to EU Member States, with no mechanism to control entry of EU citizens, would run counter to any fair-minded interpretation of last year’s vote to leave. It is, therefore, not a Brexit option despite being referred to by its proponents as a ‘soft’ Brexit.

The Prime Minister when spelling out the Government’s Article 50 stance sensibly said she would not seek to change the founding fathers’ commitment to ‘free movement of peoples’. This was neither ‘hard’ nor ‘soft’ but realistic: a recognition that the EU was adamantly against changing the terms on which its own Member States participated in the Single Market. The response we can now see from the Commission is a highly provocative demand for a €100 billion divorce bill. The British response should be to spell out in manifesto and legal terms what the Prime Minister meant when calling for an ‘implementation period’ after leaving the EU. This will allow during the next few months the UK government to see if the EU in their Article 50 negotiations are serious about whether we can reasonably expect an EU/UK trade agreement based on a ‘heads of agreement’ on implementation.

It is well understood that, although the Single Market was first developed by the EU, it was subsequently extended to include non-EU States. The name for this wider Single Market is the European Economic Area (EEA) and it is governed by a distinct Treaty, the EEA Agreement (EEAA). It is, however, insufficiently recognised that the Agreement provides for a two-pillar governance or supervisory structure, one for EU Member States and another for non-EU states. Neither the European Commission nor the ECJ holds sway in the non-EU pillar. [See accompanying detailed assessment and interpretation of the EEAA].

The EEAA is differentiated from the EU Treaty in a number of other, major ways, including, for example, to become effective in non-EU States, Single Market regulations must be approved by national parliaments of NEU States; there is no common agricultural or fisheries policy; there is no mandatory membership of a customs union (non-EU States can negotiate their own trade deals); and the EEA-wide freedom of movement principles have different interpretations and implementation processes.

While for States in the EU pillar, controls on cross-border movements of workers are constrained by the existence of a common EU citizenship, in the non-EU pillar there is no such constraint: the relevant Treaty entailments derive exclusively from economic and social policy considerations, not from quasi-constitutional Treaty rights. As a consequence one NEU state in the EEAA does operate mechanisms to restrict movement of workers.

The UK is currently a Contracting Party to the EEAA and, wisely, the Prime Minister did not combine the Article 50 notification with an Article 127 (EEAA) withdrawal notification, thereby keeping options open. A mechanism exists, therefore, to avoid a cliff-edge in March 2019 if, after exiting the EU, we remain a Contracting Party to the EEAA and seek to rely on the non-EU governance pillar while in the implementation period. There are some immediate implications of adopting such an approach.

First, there would be a need for some textual adjustments to the EEA Agreement to reflect the UK’s change in status. For the maintenance of market confidence, which could become a crucial factor during the ‘to and fro’ of the negotiations, the sooner those discussions are initiated the better. Given the mutual benefits that would be in prospect, it is difficult to see grounds for EU resistance to such adjustments, but if the European Commission were to refuse to cooperate then there would be time for recourse to international dispute resolution on the basis of Vienna Convention principles and provisions – on which the UK would very likely succeed.

Second, as EEAA Contracting Parties, Iceland, Liechtenstein and Norway are necessary participants in the discussions, particularly in relation to the governance/supervisory arrangements. We should start talking to them soon. Their goodwill will be essential and we need to talk to them anyway about future trade arrangements, separate from the EU trade negotiations. Notwithstanding their small populations, proximity, historic ties and common interests in natural resource management two of these three NEU states, Iceland and Norway, are significant economic partners for the UK. And Liechtenstein already operates immigration controls.

This phased/sequential procedure is neither a ‘hard’ nor a ‘soft’ exit. It is a mechanism that provides the opportunity for a mutually beneficial bargain to be implemented against a flexible timetable, but with expedient transitional arrangements that would themselves immediately satisfy the main wish of the referendum majority (to take back control). If there was an undue delay in reaching an EU/UK trade agreement the UK only has to give a year’s notice to leave the EEAA. We would then exit on WTO terms, but at a time of our own choosing.

Download a PDF of this article here: DOonEEAAarticle

Download a PDF of Lord Owen’s detailed EEAA assessment and interpretation here: DOonEEAAinterpretation

Lord Owen’s proposals on the EEAA are also referred to in article by Liam Halligan in the Sunday Telegraph of 7 May.

“I stress the EEA…. because it might be a mechanism for … gathering higher support for coming out of the EU. That must be our objective. It is certainly not our objective to ‘rise up’. What we need is unity, the maximum unity possible.”

Speaking in the House of Lords debate on the European Union (Notification of Withdrawal) Bill, 21 February 2017

Read Lord Owen’s full speech here: HLdebateonEUBill21.2.17

“We have to be flexible on many things. We need to come out of the EU as quickly as we can, and I would not wait two years to do this. That is the fundamental decision as I understand it, and which I believe is virtually irrevocable as the result of the referendum.

“How we handle the next few years is a very difficult question.

“…. there has to be a transitional period, but that transition should be after we have gone from the EU and before we have a trading agreement. In that area, there are flexibilities that we should be examining. Of course, we must first talk, as we are bound to do under Article 50, to the 27 EU member states…

“We should also talk to our other European friends – the non-EU members of the EEA.

“I stress the EEA…. because it might be a mechanism for healing some of the wounds and for gathering a higher percentage of people in support of a policy of coming out of the EU. That must be our objective.

“It is certainly not our objective to ‘rise up’. I hope nobody else goes to Bloomberg to make speeches…. What we need is unity, the maximum unity possible.”

(Article 50) is designed to damage a country that leaves… It is a disgraceful Article… that does not respect the rights of member states.

Lord Owen speaking in the House of Lords Debate on UK Withdrawal from the EU and Potential Withdrawal from the Single Market.

Thursday 27 January 2017

Download the PDF version here: H_LDebate26.17

My Lords, the rights of EU citizens already living in this country are a matter of honour and it is wholly appropriate that this House should direct its attention to that issue. It is not only a matter of honour for people in this country. We talk about Article 50, but Article 8 deals with good neighbourly relations between member states. Negotiation is an inaccurate word to describe our proceedings on Article 50; rather, it is a discussion. If this discussion is to produce what I call an amicable divorce, it is essential that we are all aware that there is more than Article 50, and that Article 8 should be one of the touchstones of the negotiation.

I agree with the plea of the noble Lord, Lord Balfe, in relation to British citizens who have served the European Union in many institutions. We urged them to go and work there—they were part of our membership of the European Union. We have an obligation to see that they are properly looked after in terms of redundancy and other aspects, and that the cost is borne by this country as it is our decision to leave. I believe that is also an essential element.

I mention Article 50 very briefly. It is a trap and was designed by two extremely clever people, one of whom I believe is in this House, sitting below me. The other was a former Prime Minister of Italy, Signor Amato. Both claim credit for this and boast that it was designed specifically never to be used. The more you look at it, the more surprised you are that any Government have ever used it. I have made it quite clear throughout that I do not believe it is appropriate to use Article 50 and that it would be much better to use the Vienna procedure for leaving a treaty, which has been established over many decades. Nevertheless, we are into Article 50.

There is an absolute necessity for the Government not to conduct their negotiation against a cliff edge. There are various ways of doing this and I have suggested some to them. However, at the end of the day, you can certainly limit the negotiating period not to two years but to a year or a little more so that your people have some months at least in which to prepare to leave the European Union. At the moment nothing protects us from the cliff edge.

You can imagine circumstances in which you are negotiating in good faith and perhaps the 27 other member states agree with you. The matter then has to go to the European Parliament, which is famous, particularly in the run-up to elections, for delivering a bloody nose to member states to prove its own virility. The matter also has to go through the procedures of every single Parliament of the 27 member states.

Let us be clear about this: the article is designed to damage a country that leaves. It is a disgraceful article and should never have been put into the treaty. It is one of the reasons many of us believe that the Treaty of Lisbon should have been subject to a referendum, and believe it was a disgrace that it was not. A lot of the damage we have suffered since entering the European Union has arisen due to the persistent view that people will not respect one another’s rights or the rights of member states. Article 50 does not respect the rights of member states

The best way … is for the Government to declare now a “Clean Brexit” – with the UK operating formally outside the all-embracing Single Market and the Customs Union.

Lord Owen’s postscript to Liam Halligan and Gerard Lyons’ paper ‘Clean Brexit’, published January 2017.

I am delighted to add a Postscript to this important and timely paper by Liam Halligan and Gerard Lyons – two economists I respect and whose writings I follow closely.

As someone who campaigned for the UK to join the European Economic Community back in 1971, in defiance of a three-line Labour Whip, I am an instinctive “pro-European”. Yet ever since Maastricht in 1991 I have become progressively more and more dismayed at the extent to which the eurozone has created a dysfunctional EU. It has also virtually destroyed the social element in the “social market”.

The Single Currency was a fatal step too far and can only work if an inner federalist eurozone core emerges sooner than the French Presidential candidate Macron is demanding. With Nigel Lawson, on a cross-party basis, I have campaigned since 1999 against the UK having anything to do with such a development. We are still to some extent in a cross-party phase post the 2016 referendum.

In reality, the 27 EU Member States’ absolutist demand for “freedom of movement” is part of the founders’ dream, necessary for a federalist Single Currency but not for a Single Market. Exiting the EU allows the UK, in the wider Europe, to trade as freely as possible in a neighbourly way, while cooperating under numerous other headings – including crime prevention, security and defence, science and technology, education and culture. That means the UK can also pursue our own free-trade agreements with the rest of the world – particularly with the fast-growing emerging markets that, increasingly, will bestride the global economy.

The best way to ensure this happens, as Halligan and Lyons argue, is for the Government to declare now a “Clean Brexit” – with the UK operating formally outside the all-embracing Single Market and the Customs Union. A deal that trades-off sovereignty with regard to our border controls in return for “market access”, could easily, as the authors state, lead to a messy and disastrous stalemate.

The impending Article 50 negotiating window, with its in-built “cliff edge”, will bring surprises, no doubt. And even if we do declare “Clean Brexit”, some kind of transitional arrangement may well be needed.

The cardinal point for the British Government is that they should carve-out a negotiating position with options. Opting and preparing for “Clean Brexit” puts the British Government in a strong position to strike sector-based deals with the EU, and ultimately a broader free-trade agreement, while preparing to trade as a sovereign nation once more.

Limiting business uncertainty is very important for the EU and the UK. Personally, I think the negotiating timetable should be: out of the EU by 1 March 2018 and fully out of any transitional arrangements no later than 1 March 2020. This means the May 2020 fixed-term General Election can take place with the referendum result honoured and normal party political engagement restored.

I am pleased to recommend this paper.

Access a PDF of this postcript here: LordOwenPostscript

Access the full research paper here: Policy-Exchange-Clean-Brexit-16th-January-2017

Halt the march towards a US healthcare system.

Writing for The Times ‘The Red Box’, 23 January 2017.

…. The game being played between the health secretary, Jeremy Hunt, and the chief executive of NHS England, Simon Stevens, over money is like the rattle of two drying peas in the same pod; they both want to bring to England the costly US healthcare system.

…. Our English politicians, whether Conservative, Labour or Liberal Democrat, have set a course heading for the costly US system, though only very few ever acknowledge this. They do not seem to realise that the STPs (changes of the Sustainability and Transformation Plan) coming soon are, in private, planning considerable hospital bed closures at a time when the Royal College of Surgeons has said that we cannot manage with less beds. They also plan on reducing services across the board.

These cuts are to finance a costly, predominantly US-designed external market healthcare system that our politicians have been introducing since 2002. They have done this with the support of newspapers who are headlining every NHS scandal. This includes, shame on them, the hand-wringing Guardian. Very few in England are daring enough to admit that the direction of travel is towards a US healthcare system and Red Box should call them out.


Why not, in the next budget speech, make all those over-65s who continue to work pay national insurance? It would raise, I am told, over £1 billion. I worked in business for 12 years past the age of 65 and could easily have paid national insurance. My generation were allowed to set mortgages and any related endowment insurance schemes against income tax. It was far easier to become a homeowner at an earlier age then. The elderly still working in England are now, I suspect, ready to pay more to return the NHS in England to the sustainable planned model that they have relied on for most of their life.

Download the full article here: HaltMarchtoUS4

Times letter: Election fever and the Article 50 court ruling

Letter to The Times, 5 November, 2016.

Sir, The government is correct to appeal to the Supreme Court but it must ask for judgements on all legal aspects of using Article 50. Is it sufficient for parliament to vote on a motion to use Article 50? Does it require legislation? Can that legislation preclude disclosure of the government’s negotiating position? Can parliament negotiate but not enact treaties with other countries and also negotiate with the World Trade Organisation during operation of Article 50?

If a treaty emerges from Article 50, will the “Ponsonby Rule” (the constitutional convention requiring international treaties to be laid before parliament 21 days before ratification) be sufficient with only a “yes” or “no” parliamentary vote, or must it be made legally subject to amendment?

Without such clarity the government would be better advised to exit the EU under the Vienna convention.

David Owen

House of Lords

View the jpeg here:



Lord Owen sets out proposals for a Federal UK Council

Addressing a seminar on ‘Politics post-Brexit’ at Cardiff University’s School of Law and Politics, Lord Owen today (Thursday 3 November) set out proposals for a UK-wide Federal Council in a comprehensive pamphlet drawing comparisons with the German Bundesrat.

Download the pamphlet here: a-federal-uk-council-2

“This pamphlet argues for a focused cross-party investigation of the German federal Bundesrat, without any commitment as to the outcome. It is something which needs to be offered early in the term of office of the new Prime Minister Theresa May, and is designed to appeal to the many Scottish, English, Welsh and Irish people spread across the UK who sense post-Brexit we need a new mechanism to hold the UK together by common consent.

“Providing for elected members at Holyrood, Cardiff Bay and Stormont, as well as devolved and decentralized government in England, to participate in a UK Federal Council is a very different and potentially more acceptable form of federal governance. It would involve the devolved London Assembly and the eight big cities in England, with separate representation for County and Borough Councils and unitary authorities in England.

“If the UK post-Brexit is to deepen its unity it is a reasonable assumption that there has to be some kind of structural interrelationship between all its parts and not just an ad hoc series of relationships with Whitehall. National identity, whether it be Scottish, Welsh, Irish or English deserves to be treasured as a binding force, not a divisive one. It all depends on whether we can find the correct balance.

“Referendums will not be in fashion at Westminster after the 2016 EU referendum. A federal UK could become a post-Brexit priority with broader support than would have been conceivable before 2016. If the Prime Minister does not form an all-party convention to consider a Federal UK Council, every possible step should be taken by Labour to negotiate key elements of a Federal UK Council with the SNP first, which then must include as many MPs from all the other parties as possible so as to create legislation for a Federal UK Council as soon as possible after the 2020 General Election.”

View the full pamphlet here: a-federal-uk-council-2

Eventual Eurozone reform and improving Russian/European relations

Speech by Lord Owen to the Progress Foundation’s 43rd Economic Conference on ‘Which Future for Europe?’, Zurich, Friday 28 October 2016.

Extracts only. Read the full speech here: zurichspeech2

The EU is wisely, four months on since the UK referendum vote to leave the EU, less inclined to dismiss Brexit as an event of little significance, a matter just for the British. The EU is more likely now, in the wake of Brexit, to start to face long overdue reform….

Defining a core Eurozone involving a Fiscal Union and a Banking Union will have to be openly discussed, as already has been done informally by Germany and the Netherlands. Initially at least with Belgium and Austria. Even if something dire happens to the Eurozone these four countries will ensure that a small Eurozone continues. The question is who will be their partners?

As for France, a lot will depend on the outcome of the French elections. But for the first time, whereas it would have been automatic in the past that Germany would insist on French membership, there may not be the level of public support after the elections in Germany to include France initially.

It is very unlikely that German public opinion will accept any system of automatic money transfers to Italy….

Other countries that would want to be part of a core Eurozone are Spain and Ireland. Finland in the past would have expected to be a member; perhaps not now. Luxembourg will want to participate but they, Ireland, Cyprus and Malta, may need to face tax haven questions first as it is very undesirable that any unacceptable practices should be inherited by a new Fiscal and Banking Union…..

The core Eurozone countries cannot throw a number of countries out of the Eurozone given the practical politics of the EU. What they can do is make them ineligible to be part of a core because of the way that core has fixed the initial criteria for a Fiscal and Banking Union. The weakest economies would become more vulnerable to speculative moves aimed at destabilising some of their economies, but if they can ride out speculation they might be able to stay in the Eurozone even though they were not protected as would be members of the core. Aware of their vulnerability and anticipating such speculation, some might prefer to leave rather than await being forced to decide to leave at a time of crisis. The best outcome would be if Italy voluntarily chose to leave the Eurozone for they would have the power to lead a serious restructuring of the EEA and ensure it was not unduly influenced by core Eurozone members. And others like Greece and Portugal might follow.

A core Eurozone will not be a North-South Eurozone in the sense of a formal geographical divide, though this may be the appearance. A divide will happen because of the design and disciplines of the core. Some countries that stay in the Eurozone and make the transition will be able to qualify to be part of the Fiscal Union and Banking Union over time. In effect this core will become a federal Europe.

… Besides Eurozone reform, there is the need to face up to President Obama’s criticism that Europe is “freeloading” within NATO and the disappointing record of the European External Action Service, EEAS.

… Only in a revived NATO, where European countries are no longer as President Obama rightly accused us of being ‘freeloaders’, and we make a greater financial contribution, will Europe redress the imbalance between us and President Putin’s Russian Federation.

Read the full speech here: zurichspeech2