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Common Market 2.0: a possible Brexit compromise?


On Monday evening, the UK Parliament decided to hold a series of indicative votes on possible ways forward to break the current Brexit impasse. 

Assuming this goes ahead, the Speaker of the House of Commons will  decide which options to put before MPs later today;  one of them is expected to be the Norway Plus option or "Common Market 2.0", as some of its advocates prefer to call it.  There has been some speculation that this could ultimately attract majority support as a compromise option, on the basis that it respects the result of the referendum by allowing the UK to leave the EU, whilst maintaining close economic ties.  What does it mean and if MPs support it, would it represent a viable way forward in the limited time available?

What is Common Market 2.0?

Common Market 2.0 is being advocated by a cross-party group – consisting of Conservative MPs Nick Boles and Rob Halfon and Labour MPs Stephen Kinnock and Lucy Powell.  It would involve leaving the EU but remaining in the Single Market through an existing structure, namely the EEA Agreement (to which the EU, Norway, Iceland and Liechtenstein are all party).  As such, the UK would no longer be subject to the more political dimension of the EU (based on the Treaty obligation to pursue "ever closer union") and would also regain sovereignty in areas such as agriculture and fisheries and justice and home affairs.  The group argues that this responds to a common complaint from voters during the referendum campaign which it characterises as: "we voted for the Common Market, not all this political stuff."  The group also proposes that alongside EEA membership, the UK should enter into a customs union with the EU in order to preserve frictionless trade with the EU and to avoid the need for a hard border in Northern Ireland (although their views differ on whether the UK should remain in the customs union permanently).

Although the UK would still have to accept the principle of free movement of workers, the group argues that the referendum result should not be interpreted as signifying a desire to stop EEA immigration altogether – it suggests that voters' concerns were primarily around the UK's inability to take any action to curb very high levels of EEA immigration which were having a significant adverse impact on local services in some areas.  It notes that since the referendum, EEA immigration has gone down and argues that if there were to be a significant new wave of EEA immigration in future, the safeguard provisions in the EEA Agreement would allow the UK to respond more effectively than it could as an EU member – if necessary by unilaterally suspending the free movement of people.

These issues – along with others – are discussed in more detail in our Q&A on the EEA option, which has been updated to take account of the Common Market 2.0 proposal.

If MPs support it, is it a viable way forward?

During Monday evening's debate, the Prime Minister expressed scepticism about whether MPs' preferences on Brexit would be acceptable to the EU.  However, there is little doubt that, at least in broad terms, the Common Market 2.0 proposal would be acceptable to the EU – because the EU's chief negotiator, Michel Barnier, has stated on numerous occasions that "Norway plus" is an option.  

A potentially more problematic issue is whether Norway, Iceland, Liechtenstein and Switzerland would be prepared to allow the UK to join the European Free Trade Association (EFTA), as this is a precondition for joining the EEA Agreement as a non-EU member state.  Advocates of Common Market 2.0 argue that these countries would be unlikely to stand in the way of the UK seeking to join – but given the current state of politics in the UK, it would not be unreasonable for them to harbour some concerns over whether the UK might prove to be a destabilising force.  However, even if EFTA membership proved more difficult than expected, there could well be ways of circumventing the problem - for example, as suggested at Q17 of our Q&A, the UK could seek a legally separate agreement with the EU on the same terms as the EEA Agreement.

The cross-party group also argues that no changes would be necessary to the Withdrawal Agreement because their proposal would make it highly unlikely that the controversial provisions relating to the "Irish backstop" would ever be brought into force.  It would therefore only be necessary to amend the political declaration.  That document is relatively short and could probably be amended reasonably quickly, given goodwill on both sides.  At a seminar at Chatham House last week, the group indicated that a revised draft political declaration was already being drawn up.

Will MPs vote for Common Market 2.0?

At last week's Chatham House event, Nick Boles said that the group had held discussions with the Labour Party leadership; he believes it has managed to provide reassurance that the state aid rules which would be likely to apply under the EEA Agreement would not prevent a future Labour government from pursuing key policies in its manifesto.  He was therefore hopeful that in a "crunch vote" on the issue (as opposed to the indicative votes procedure mentioned above), Labour might be prepared to whip its MPs to support the proposal.   Rob Halfon suggested that more moderate Conservatives would be prepared to support it.  There was an acceptance that the proposed customs union would be problematic for some, particularly on the Conservative side, but Halfon said that he hoped this would not need to be in place for the long term (in which case the UK would – like the other EEA-EFTA States – have greater freedom to make its own trade agreements).  

But even if MPs ultimately come out in support of Common Market 2.0, will the government be willing to go back to the EU to seek a revised political declaration on that basis?   After all, the negotiation of international treaties is usually a matter reserved to the executive, not Parliament.  This question is not unique to Common Market 2.0;  it arguably affects any option that MPs support which differs from the deal that the government has already negotiated.  Given the clear divisions within the Cabinet and the Prime Minister's waning authority, the answer – as usual with Brexit – is anything but clear.

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