The (Uncertain) Impact of Brexit on the United Kingdom's Membership in the European Economic Area

Abstract

Until recently, the on-going legal discussions about ‘Brexit’, the United Kingdom’s upcoming withdrawal from the European Union (EU), have predominantly focused on the requirements and consequences of the withdrawal procedure set out in Article 50 of the Treaty on European Union (TEU). A hitherto neglected, though arguably no less important question concerns the effect, if any, that a withdrawal from the EU will have on the UK’s membership in the European Economic Area (EEA): Given that the EEA extends many aspects of EU membership beyond the EU’s borders, resulting in a Common Market ‘light’, a future UK membership in the EEA could – at least from a European business law point of view – effectively result in ‘business as usual’, as a significant share of EU law would continue to apply to UK companies, albeit in form of EEA law. Against this background, it is interesting to note that legal analyses of Brexit generally assume that the UK’s EEA membership will be terminated ipso iure, should the UK decide to withdraw from the EU. According to this view, the UK subsequently could (re-)apply for EEA membership should its government so choose, with such an application having to be accepted by all remaining EEA Contracting Parties – an option commonly referred to as the ‘Norway option’ in reference to Norway’s status within the EEA. The present article challenges the underlying (and often merely implicit) assumption that the UK’s withdrawal from the EU will automatically result in its withdrawal from the EEA, given that the EEA Agreement is a separate international treaty subject to separate legal rules governing withdrawals and effects of possible changes in EU membership. It argues that a withdrawal from the EU will in fact not affect the UK’s continuing EEA membership, as long as the UK does not voluntarily choose to also withdraw from the EEA. It then analyses the post-Brexit situation under the EEA Agreement by addressing its practical application to a number of different areas, as inter alia the free movement of UK companies within the EEA, the future of the ‘European passport’ for UK credit institutions and investment firms, as well as the free (but possibly restrictable) movement of workers in the EEA.