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Free movement of people and the new legal order – the EEA

Dr Philipp Speitler*

Had one to summarise the situation in Europe after the Brexit referendum, one might feel tempted to make reference to a rather famous Pete Seeger song and ask: Where have all the (flowers) visionaries gone?

By contrast to the past, a large number of Europeans seem to be sceptical towards the European project as is. The reasons for scepticism differ, clearly. However, sceptics (setting aside the opponents to the European project) and supporters share one ground in common: a desire for ideas and solutions (one may call them visions) for how to cast a structure that (re-)unites the States of Europe – maybe even beyond the borders of the European Union. Does this require that one openly embraces a Europe of different speeds?

Luckily, getting or maintaining access the Single Market seems to be attractive for many, including the United Kingdom and Switzerland. Could that be a starting point? Yes, it might. However, even the understanding of a future Single Market differs at present. In particular, the question of whether and to what extent the free movement of persons is to be seen as a must, is currently under discussion. In that respect, I may mention the Bruegel paper that suggests that a certain distinction ought to be made between the free movement of persons and the other fundamental freedoms.

This blog-piece’s objective is simpler than answering those questions: it shall shed (some) light on the EEA Agreement that extends the EU Single Market to the three EFTA countries, Iceland, Liechtenstein and Norway.

Allow me to start with the non-Features of the European Economic Area (EEA), since that is something one is recently asked about rather often. As a matter of fact, the European Economic Area is not a Customs Union. There is no Common Trade Policy or a Common Foreign and Security Policy. Justice and Home Affairs are not part of the Agreement - even though the EFTA countries are part of the Schengen area. Moreover, the EEA is neither a Monetary Union (EMU) nor is taxation harmonised within its boundaries. Some probably would want to add that there are no pecuniary fines if a State infringes the Agreement.

What are the features of the EEA? As already mentioned, the EEA core objective is to extend the EU Single Market to the three EFTA States and to create a level playing field for economic operators and individuals in (now) 31 countries. How? By the application of the four fundamental freedoms and by ensuring equal conditions of competition. In order to establish a ‘dynamic’ EEA, secondary EU law is continuously incorporated into the Annexes of the Agreement once the Contracting Parties have agreed on its EEA relevance. Unchanged? Yes, quite often, but not always. There are numerous examples where minor amendments have been made, but rather few of major amendments. The exclusion of European citizenship may be the most prominent example of the latter category. It may therefore be correct to conclude that no political powers have been referred to a supranational level. Still, representatives of the three EFTA States have the right take part in the law-making process on an experts’ level, commonly referred to as decision-shaping. Allow me to add in that respect that the President of the EFTA Court, Carl Baudenbacher, recently recalled in his SIAF speech that the then President of the Commission, Jacques Delors, had even proposed decision-making rights at the beginning of the EEA negotiation process. While decision-making rights were not part of the final Agreement it is proof of a visionary spirit. The same spirit and the negotiation skills on the EFTA side may have paved the way for the acceptance of the two EFTA institutions in the EEA- the EFTA Surveillance Authority and the EFTA Court. Both have vastly contributed to ensure that the Single Market of 31 functions more or less smoothly. In my respectful view, judicial homogeneity is the most important tool in that respect. It is a “no-brainer” that the EFTA Court’s and the ECJ’s case-law aim at maintaining a level playing-field. However, and by contrast to what one sometimes reads, the EFTA Court’s role is not limited to identifying and copying and pasting the relevant case-law of its sister court. As an independent court it has to find a case related answer and not a copycat solution. Consequently, then ECJ President Vassilios Skouris described the relationship between the two courts as a ‘fruitful exchange’ and others observed an ‘EFTA spirit’ in the assessment of economic issues by the EFTA Court. Finally, I would like to mention the participation of the EEA EFTA countries in Horizon 2020 and Erasmus+ as features of the EEA in 2016.

Does the EEA and its (non-)features literally come at a certain price? Yes, the three EFTA countries pay to the EU via the so-called EEA grants. However, this money does not go directly into the EU’s budget, but to sixteen beneficiary countries where certain projects are financed.

And what about free movement of persons? Is it equally ensured in the EFTA pillar of the EEA?

Before I try to answer those questions, I would like to mention that immigration from third countries is not part of the EEA Agreement. Moreover and by contrast to the EU, an EEA EFTA State may – under certain conditions - unilaterally apply safeguard measures if serious economic, societal or environmental difficulties of a sectorial or regional nature are arising.

Coming back to my initial questions, the answer as regards the economically active is yes. Neither the agreement nor the case-law suggest anything else.

But what about the non-economically active, such as workers’ families, students and unemployed? There the written law and the case-law differ. By contrast to the EU, citizenship is not part of the EEA. As a result of a long negotiation period and as a pre-requisite of the incorporation of Directive 2004/38/EC into the EEA Agreement it was excluded. But what does this mean in practice? There are four EFTA Court judgments out there that provide answers – Clauder, Wahl, Gunnarsson and Jabbi.

Before I try to summarise those rulings, I would like to mention that Jabbi probably must be seen as a special case in two respects. Firstly, no circumvention of Norwegian law was involved and that the EFTA Court’s decision seems to reflect the legal situation in Norway quite closely. Secondly, Jabbi is particularly important since the Court (for the first time) openly emphasised its independence.

Jabbi is in line with previous precedents. It reiterates what was previously held in Wahl and Gunnarsson: on the basis that the notion of citizenship was excluded from the scope of the EEA Agreement, rights based on that concept cannot be invoked in the EFTA pillar of the EEA. That means that particularly rights based on the rather famous Article 21 of Directive may not be accorded to family members.

However, it would be a misunderstanding to conclude that the non-economically active are stripped of all rights. The EFTA Court approved that rights stemming from EU law that (i) had been part of the EEA’s legal order before the introduction of Directive 2004/38, and (ii) were replaced by that Directive cannot be deemed to have been taken away from individuals by way of introduction of the concept of citizenship in the EU and the fact that the ECJ may base its findings on that concept these days. In other words, by way of a “time machine” students and family members seem to find themselves in the EFTA pillar in a situation that mirrors that in the EU before the introduction of Directive 2004/38. However, whether this is the whole truth remains to be seen. Future judgments and vision(arie)s may change that picture and maybe even the framework of the EEA.

* Judge, Baden Württemberg; Corresponding Member E.M.B.L.-HSG and Lecturer, University of St.Gallen HSG; former Head of the President’s Cabinet and Legal Secretary, EFTA Court.

Responsibility for the information and views set out in this publication lies entirely with the author.