The story of Icarus and his father Daedalus comes to mind when one sees the situation into which the two oldest unbroken democracies in Europe, Switzerland and the United Kingdom, have maoeuvred themselves with their European policy. To escape from the captivity of the Cretan King Minos, Daedalus built wings made of feathers and wax for himself and his son to enable them to fly. Of course, the wax wings caused two problems: if the two flew too close to the sun, the wax would melt. However, if they flew too low above the sea, the splashes of water from the waves would soften the wax. Icarus became exuberant, rose high and higher and finally flew too close to the sun. The wax melted, he crashed into the sea and died.
Switzerland and the United Kingdom (“Britzerland”) came from very different directions – one an EU member since 1972, the other in EFTA but not even in the EEA. Nevertheless, both are on the verge of paying dearly for their exuberance and miscalculation of reality.
Let us start with Switzerland. Together with the other six EFTA partners, Switzerland negotiated with the EU from 1989 onwards to conclude the multilateral EEA Agreement. It was clear from the outset that substantive EEA law should be based on EU law. A central issue was whether the EFTA States should have a right to vote in the creation of new EU law relevant to the EEA. The EU refused to grant this right, but at least it gave the EFTA States a co-determination right meaning that they could be involved in the technical design of new EU law. Indignation was nevertheless widespread in the Swiss delegation. Some of the most influential diplomats became so obsessed with the question of co-decision that all the other advantages of the EEA were undervalued. Such advantages were and are: free access to the EU single market, the EFTA States having their own supervisory authority and their own court of law, and the retention of sovereignty in foreign policy, foreign trade policy, agriculture and monetary policy (fisheries are of no importance to Switzerland). The Swiss left the safe flying zone and (supposedly) approached the sun: EU accession. The EU fanatics in the country were so blinded that they successfully urged the government to apply for EU membership before the referendum on the EEA. Only if there was a prospect of being able to sit at the table of the big players was the EEA Agreement acceptable. The request was lodged in Brussels in May 1992. A first crash followed on 6 December 1992 when the EEA Agreement was rejected in the referendum.
After some stupor, the people in Berne got back on their feet. Switzerland succeeded in concluding a number of bilateral agreements with the EU that were not controlled by supranational institutions (a surveillance authority and a court). The goal of joining the EU was no longer as high on the agenda as in 1992, and it became increasingly clear that there would be no majority in favour of EU membership among the people.
Therefore, the EU fanatics tried a trick: when the EU demanded that a framework be built around the bilateral agreements in the form of a supranational surveillance authority and a court, they did, against the advice of the EU, not opt for the EFTA Surveillance Authority and the EFTA Court. No, you can hardly believe it; in 2013, the government got closer to the sun again and announced that Switzerland wanted the institutions of the other party, the European Commission and the ECJ. In 2017, however, it became clear that this “pure” ECJ-model would hardly stand a chance in a referendum. Now, good advice was expensive. In this situation, the EU presented the so-called Ukraine model: The Commission should be able to unilaterally sue Switzerland and the ECJ should have the last word. To conceal this transfer of sovereignty, an “arbitral tribunal” was planned, which would, however, have to ask the ECJ for a binding ruling in all the important cases. The Berne spin machine seemed to succeed in selling this construction to the public, especially in the first half of 2019. In recent weeks, however, more and more critical voices have been heard, including from three former government ministers, from an influential party leader and from a former chief negotiator. People are beginning to realise that an agreement in which one side provides both the watchdog and the court is an unequal treaty. The framework agreement has not yet been signed. Nevertheless, regardless of whether the Swiss government signs or not, the fate of Icarus looms once more: if the government swallows the treaty, it risks it being sent down the drain in the referendum. If it says no, it will incur the wrath of EU leaders, who have lost patience after six years of negotiations. Brexit has of course contributed to the hardening of the Brussels position. The EU leaders have already imposed sanctions on Switzerland and have held out the prospect of further malice. They refuse the conclusion of new bilateral agreements guaranteeing access to the single market.
In the United Kingdom too, the government flew close to the sun following the Brexit vote of 23 June 2016. An EEA solution was rejected with arguments similar to those used in Switzerland in the early 1990s. Instead, the Brexiteers indulged in the idea of forming a new alliance with the economically successful former dominions Canada, Australia and New Zealand (“CANZUK”). They also thought that the special relationship with the USA could be deepened. To be sure, there were serious attempts in Parliament to reach an EEA or EEA-like solution with the EFTA Court – with one or even two British judges. Ultimately, however, this failed because of an unholy alliance of Remainers and Hard Brexiteers. Both of them flew too high, the retainers dreamed of a second Brexit referendum and the Hard Brexiteers did not want a supranational court at all. After the Swiss government had agreed to the Ukrainian model in spring 2018, the EU presented this mechanism to No. 10. A bit surprisingly, the May government accepted it in the so-called Checkers Plan of July 2018. The Johnson government also agreed to it and now the Ukraine model is part of both the Withdrawal Agreement and the Political Declaration. The fact that a country recognises the court of the other party as a decision-maker is a central feature of an “unequal treaty”. Nobody knows this better than Britain, which itself started operating extraterritorial courts in China and Japan in the second half of the 19th century after the second opium war.
In these days and weeks, British and EU negotiators are struggling to conclude a skinny trade agreement. It is not clear though how disputes would be settled. But it is plain that the EU wants to see the Ukraine mechanism through. That is what Brussels is offering to European states that are not members of the EU nor the EEA. It is not a tailor-made suit, but an off-the-peg product. The British, although coming from a different direction, tried to fly as high as the Swiss.
As to the rest, the mechanism with the European Court of Justice and the fake arbitration panel will also be brought to the attention of the states of the Southern Mediterranean such as Morocco, Tunisia, Jordan and Egypt – former colonies or protectorates of European powers. Now, the EU tries to put the British and the Swiss in the same drawer. This development is a consequence of the attempt to fly too high. The EFTA institutions, which are not very exciting in themselves, but represent a sensible middle ground solution, were rejected as not good enough. And now, as with Icarus, there is the threat of a crash, a placement in the same league, in which countries with completely different economic and political features are to be found. A different kind of crash could occur if the UK rejected the Ukraine mechanism. The consequence could be a no deal-Brexit. This could be very painful in the short term, but in the long term it would be far preferable to “colonisation without colony”. For Switzerland too, the renunciation of new agreements would be more bearable than the Ukraine mechanism. Ultimately, you have to hope that in London and in Berne they will understand that you can neither fly too high nor too low. As a reasonable compromise, docking with the EFTA institutions is still an option for Britzerland.
Prof. Dr. Dr. h.c. Carl Baudenbacher (Monckton Chambers, London) is a Former President of the EFTA Court and a Visiting Professor at LSE.
EFTA4UK are grateful to Prof. Baudenbacher for this exclusively revised and updated version of an article which first appeared on his LinkedIn page.