The UK Government might have a secret weapon to stop us crashing out of the single market

Britain could remain bound by the EEA Agreement until notice is given under Article 127

If the possibility of crashing out of the single market without a deal is removed, then much of the EU’s negotiating leverage disappears (AFP)

The question of whether or not Britain should remain a member of the single market once it leaves the EU has dominated much of the Brexit debate since the referendum.

The Conservatives have been steadfastly against membership since May ruled it out in her Lancaster House speech in January. Labour on the other hand still has no definite position; with Jeremy Corbyn confirming on the BBC’s Andrew Marr Show that a Labour government would take Britain out, only for the party’s Brexit spokesman, Sir Keir Starmer, to support membership – at least as part of a transitional deal – a week and-a-half later.

So far little attention has been paid to the actual process of leaving the single market: the question of how we might go about it. But the answer could have profound implications for Britain’s leverage in the negotiations with the EU, as well as for its international reputation – depending on whether or not the Government gets it right.

The protocol for leaving the European Economic Area (EEA) is clearly set out in the single market treaty: the EEA Agreement. Article 127 states, “Each Contracting Party may withdraw from this Agreement provided it gives at least twelve months' notice in writing to the other Contracting Parties.”

But within the Explanatory Notes of the EU (Withdrawal) Bill – or Repeal Bill – the Government says, “The UK is a member of the EEA by virtue of its membership of the EU. Therefore on exit day the UK ceases to participate in the EEA Agreement.” In other words, it has no intention of giving notice.

MPs will debate the Repeal Bill on 7 September; and if it is passed unamended, the Government will have parliamentary consent to leave the single market without following the Article 127 protocol.

Charles Marquand, former legal adviser to the Treasury and barrister for Single Market Justice, a group campaigning to force a parliamentary vote over EEA membership, told me, “A failure to give notice under Article 127 would be a breach of the EEA Agreement – an international treaty.”

Marquand thinks there’s a chance this could land the UK in an international tribunal. Another EEA member may wish to preserve full access to British markets for as long as possible, and to buy more time to prepare for Britain leaving the single market. Such a state may seek action against the UK at an international tribunal – arguing that Britain should remain bound by the EEA Agreement until notice is given under Article 127 (and for one year thereafter).

After Brexit, businesses in the UK and the EU will presumably be adjusting to new customs and regulatory arrangements, as well as to new immigration controls. A sudden international ruling against the UK, which kept Britain in the single market for an additional year after Brexit, would be hugely disruptive, confusing, and inevitably costly.

Not to mention the damage that would be done to Britain’s reputation. Would the rest of the world be willing to sign new trade deals with a country that ignores its international treaty obligations?

The question is, why risk it? Why not just give notice?

The Government thinks it doesn’t need to, because the UK will be outside the “geographic” scope of the EEA Agreement when it leaves the EU. Many treaties have a section on geographic (or territorial) scope, which explain what parts of which countries treaties apply to. Article 126 of the EEA Agreement says that the territorial scope of the single market is limited to the European Economic Community (now the EU), plus Norway, Iceland and Liechtenstein.

It is for this reason that Catherine Barnard, Professor of EU law at the University of Cambridge, thinks the Government is right. “Although the EEA Agreement does require the giving of notice, I think the stronger argument is that we would fall outside its territorial scope when we leave the EU,” she says. On this view, we will not retain membership of the single market when we leave the EU, regardless of whether or not the Government gives notice.

But Heinrich Nemeczek, Academic Visitor to the Law Faculty at the University of Oxford, disagrees. “There is no mechanism by which the UK may leave the single market without giving notice,” he told me.

Article 62 of The Vienna Convention on the Law of Treaties describes the mechanism by which a country may terminate a treaty. It states that this can only happen upon a “fundamental change of circumstances”, but only if the change “radically” affects every other party, and comes out the blue (is “not foreseen”). Nemeczek argues these criteria would not be met by the UK leaving the EU.

Nemeczek thinks this could be the UK’s “secret weapon” in the negotiations with the EU. If the possibility of crashing out of the EU without a deal is removed – because Britain will remain a member of the single market unless notice is given – then much of the EU’s leverage disappears. It would also allay business fears of a cliff-edge Brexit, boosting investment and jobs in the short term.

The Government should be trying to find out whether or not Nemeczek is right, possibly by asking the European Court of Justice. What is there to lose? The Government could be throwing away crucial leverage and risking a diplomatic crisis with its assumption that once we leave the EU we automatically leave the single market.

Labour MPs and Tory rebels are reportedly planning to table an amendment to the Repeal Bill that would keep the UK in the single market for several years after Brexit, as part of a transitional deal. But if that amendment is defeated, and the bill is passed in its current form, parliament will have granted complete control over how we leave the single market to a Government that intends to breach an international treaty, according to some experts. And even if the amendment is passed, MPs would only be delaying the inevitable.

If we must leave the single market, surely it would be best to leave on amicable terms and in-keeping with our treaty obligations? Even Professor Barnard, who thinks the Government is legally in the right, argues we should give notice for clarity’s sake.

If MPs do not wish to risk an international tribunal, along with Britain’s reputation as a reliable and trustworthy trading partner, they must amend the Repeal Bill to prevent the Government from leaving the single market without giving notice under Article 127.