Sunday 25 November 2012

My vote for Europe

'The optimum deal for the United Kingdom is surely to be in a European free trade area but not in a customs union' - Daniel Hannan, Daily Telegraph 

The UK should leave the EU and instead join a free trading area such as EFTA, the 'European Free Trade Area'.  That's the view of Conservative MEP and prominent Euro-sceptic, Daniel Hannan, in his Telegraph blog.  

Switzerland and Norway, for example, are members of EFTA, allowing them to ‘freely’ trade with the European Union but without the apparent burden of being members of the European Union.   

These arguments will strongly appeal to those who believe that the UK could leave the EU, and still enjoy all the benefits of trading with the rest of Europe, but without having our national policies “dictated by Brussels”.  Many also argue that membership of EFTA would relieve us of having to contribute to the EU budget.

But before anyone signs up to this seemingly ideal scenario, the fuller picture needs to be carefully considered.

The founding members of EFTA, back in 1960, were Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the UK.  Later Finland, Iceland and Liechtenstein joined EFTA too. So there were ten members of EFTA enjoying the benefits of ‘free trade’ in Europe. You’d think that this wonderful, cosy arrangement would not only be maintained, but that more countries would be queuing up to join EFTA.  Actually the opposite is true.

From 10 to 4

Of the ten members of EFTA, only four remain: Liechtenstein, Iceland, Norway and Switzerland.  The six other countries – Austria, Denmark, Portugal, Sweden, Finland and the UK – all decided to leave EFTA in favour of the EEC/EU. 

There are perhaps unique reasons for Norway, Iceland, Switzerland and Lichtenstein (whose economy is closely tied to Switzerland), to remain members of the EFTA ‘free-trade club’, when all the others decided to leave. For one, Norway has huge reserves of oil and gas, and Switzerland and Lichtenstein are tax havens - meaning they have high GDPs per capita and relative prosperity . 

Furthermore, all four countries have much smaller populations than the UK - even smaller than the population of Greater London.  Their circumstances are not at all comparable to Britain; we cannot become Norway, Switzerland, Iceland or Lichtenstein.

Free trade?

But there’s something else many may not realise about being a member of the ‘free trade’ club EFTA.  For the privilege of EFTA countries being able to ‘freely trade’ with the EU, the EU charges them a price.  A huge price.  Despite not being full members of the EU, with all the membership privileges and voting power that would give them, the EFTA countries still have to contribute to the EU budget proportionate to their economies.

So, for example, Norway pays about €340 million a year to the EU budget as the cost of ‘free’ trading in the European Economic Area (EEA).  That is more than many EU members states have to pay, yet EFTA members are not entitled to any rebate from the EU, as is the UK, and they have no say in EU policies, as does the UK.

There is more.  For the benefit of ‘free’ trading in the EU market, members of EFTA have to adopt almost 90% of EU directives into their domestic policies.  It’s true that, unlike for most EU countries, members of EFTA can choose to opt out of EU directives – but they don’t, because they don’t want to lose 'free access' to the hugely lucrative EU single market. 

So as a price of belonging to EFTA, Norway and the other EFTA countries must still implement the EU single market legislation, including the social policies often disliked in the UK.  Yet despite having to pay towards the EU budget and having to adopt EU law, EFTA countries have no vote, and only marginal influence, in the policies, vision, direction, rules and laws of the EU.


If Britain withdrew from the EU and instead joined EFTA, we would still have to sign all the single market legislation into law, including social and employment policies.  We could opt out of the common agricultural and fisheries policies, but this would only save a modest £1.1 billion a year.  As members of EFTA, we would still have to pay billions towards the EU budget, but without any chance of a rebate, without any say in EU policies, and without any realistic prospect of an EU rescue if the country got into serious trouble.  

Is it any wonder that eight more countries want to join the EU, and not EFTA; in fact no new countries want to join EFTA, their membership is stagnant.  

Norway and Switzerland also wanted to leave EFTA and join the EU, but in referendums their people voted against; in Norway only marginally.  In future this may change as these countries increasingly realise that, as members of EFTA, they pay a high price for ‘free trade’ with Europe, but without any of the enormous range of benefits that full EU membership would offer.  

As members of EFTA, Norway, Switzerland, Lichtenstein and Iceland, still have to adopt most EU law, and pay sizeable contributions to the EU budget, but without any voting rights. Is that really what we want for the UK?

Economic crisis

It’s true that the EU is currently going through economic crisis, with some countries threatened with bankruptcy.  But the entire world, not just Europe, is going through severe economic crisis.  On the other hand, just think what might have happened to Greece, or Portugal, Spain or Italy, if they were not members of a club prepared to assist in their dark hour of need.

And as we contemplate our future membership of the EU, also just think what might happen to the UK if we leave the EU, and find ourselves alone in our own hour of need. Who will rescue us then?  Maybe more pertinently; imagine that when the world recovers from economic crisis, as it will, and we’re outside of the EU, the planet’s largest economy.  How will we feel if we abandoned what we thought was a sinking ship, only to look on with nostalgic eyes to see the ship bounce back, buoyed by the treasures of economic success, and realise we’re no longer on board, but out at sea?

Other articles by Jon Danzig:


  1. Many Countries are "Bankrupt" now. including the UK. Let it happen and life will get back to normal again and the R'swill go bust.

  2. I think very few of the (mostly) conservative, middle-class people who want out of the EU have really thought through what it would mean.

    The best possibility would be joinging the EFTA, which as pointed out above, entails all the financial costs of contributing to the EU budget plus still having to accept almost all EU legislation while having zero say. Being subject to so much legislation essentially emailed over from Brussels with no say in it, you'd think would go against every fibre in the beings of these supposedly pro-democracy Eurosceptics, but many of them hold up Norway and Switzerland as the example of what Britain should do.

    The other option, a complete break from Europe and its single-market and freedom of movement doesn't bare thinking about. For a start the over 2 million Brits who live in the EU are going to have to quit their jobs, sell their houses and re-immigrate back to Britain. This'll more than make up for the numbers of Poles who have to leave. And even that'll pale in comparison to the damage done to the nation as large corporations move to re-base most of their operations back inside the EU. The UK will become an impoverished branch office for a few multi-nationals, instead of a country capable of producing its own large firms.

  3. I was in New Zealand about fifteen years ago and was taken round a packing station, an abattoir. It was spotless, like a hospital. It was explained to me that in order for its production to be allowed into the EU, that day's production of lambs being destined to Bernard Matthew, the specifications of the abattoir had to follow that dictated by the EU. It was further explained to me that those specs. were stricter and more demanding than for EU abattoirs.

    1. Gerald, thank you for your contribution. It would be helpful if you added more information, as it seems odd that Bernard Matthews didn't have to follow the strict EU rules, which should apply to countries within the EU and exporting to the EU.

      On the other hand, if what you wrote is correct, maybe if Bernard Matthews had followed those strict EU rules, their livestock might not have been infected by a serious outbreak of H5N1 avian flu back in 1997 - just the time before you made your visit to New Zealand. As far as I know, we have not had similar problems of infected livestock exported to the EU by New Zealand, so thank goodness the EU have such rules to protect us.

    2. PS Correction, sorry, I meant 2007, not 1997