Wednesday, July 11, 2012

Britain should not ape Norway - but new EU membership terms are fully possible

In today's Telegraph, we argue,

During Prohibition in America, the bootleggers and Baptists found themselves in an unholy alliance. One liked Prohibition for commercial reasons, the other backed it due to religious conviction. The alliance proved short-lived. A similar union has now grown up between certain Europhiles and Eurosceptics. Both say that renegotiating new EU membership terms for Britain is impossible: one group because it thinks the status quo in Europe should prevail, the other because it thinks the UK should leave the EU altogether. Both positions miss the point.



From Open Europe "Trading Places" report.

The argument the Eurosceptics make is that Britain should “become like Norway”, i.e. leave the EU and join its more detached cousin, the European Economic Area. But this would actually be a much worse deal than the existing relationship. First, Norway is almost as much of an EU member as Britain is, implementing roughly 75 per cent of all EU laws, from labour market rules (such as the working time directive) to crime and policing measures.

Second, despite being forced to accept all these laws, Oslo has no representation in the EU’s institutions and virtually no way of influencing the decision-making process to reflect its national interests. Should Britain “become like Norway”, it would be home to 36 per cent of Europe’s retail finance market, but with no say over huge swathes of regulation governing that market. And it would have to accept EU employment law – currently costing UK employers £8.6 billion a year – but with no way of influencing it. The net effect would be less opportunity to hold Brussels to account, not more.

Finally, Norwegian companies face extra costs when selling manufactured goods to Europe, stemming from the EU’s arcane “Rules of Origin”, which impose a tariff on any imports that contain components from outside the EU, and lots of extra paperwork. This has been acceptable to Norway, since 62 per cent of its goods exports come in the form of fish or natural resources, which are not affected by these rules. Applied to the UK – its car manufacturing or pharmaceuticals industries – it would bring sudden additional costs and a competitive disadvantage.

In return for its deal, Norway gets control over its farming and fishing industries. This has economic benefits and helps the country manage and maintain its heritage. But fishing and farming only account for 0.7 per cent of UK GDP. As maddening as the EU’s policies covering these two areas are, would the trade-off really be in the UK’s interests? Pursuing a “Swiss model” – based on a cobweb of bilateral agreements – might be a slightly better fit, but it would present similar problems, for example limited access to the Single Market for the UK’s large services sector.

Europhiles are equally wrong in thinking that the status quo is an option. Whether the eurozone integrates further or breaks up, the rules of the game will change. It is clear that the British public will never accept being dragged deeper into a centralised EU.

As the newly launched Fresh Start group of Tory MPs argued yesterday, Britain should set out a new vision for its place in the EU. This should allow countries to integrate with each other to different degrees. To avoid the pitfalls of the Norwegian model, Britain must not only maintain access to the internal market for goods and services, but also a vote on making the rules, and therefore remain an EU member. But it could take a pick and mix approach in other areas, including retaining its opt-in arrangement on EU policing laws, while participating in a better-targeted EU budget and some environmental measures.

As Europe goes through profound political changes in the wake of the crisis, Britain will have plenty of opportunities to advance this position, including in budget talks and future treaty negotiations, over which it will have vetoes. Once new terms have been agreed, they could confidently be put to the electorate in a referendum.

But to show he can be trusted on Europe – and to avoid a stinging defeat at the 2014 European elections at the hands of Ukip – David Cameron must get to work right away. First, in the ongoing talks over the EU’s long-term budget, he should use his veto to insist on UK economic support being limited to the poorer member states, ending the irrational redistribution of money among richer countries. This would save taxpayers billions. Second, under a loophole in EU law, he could instantly bring more than 100 crime and policing laws back under the control of MPs. Last, as the eurozone presses ahead with a “banking union”, he is right to explore safeguards against its 17 members writing rules for all 27 EU states.

Contrary to what reform-sceptics on both sides say, Britain has leverage in Europe. If the choice is between the UK leaving or getting some powers back, liberal, northern EU countries in particular may – after a lot of posturing and negotiation – go for the latter. The alternative would be losing a key ally in upholding a rules-based system of liberal trade as Europe goes through a highly defensive phase. Germany fears a Mediterranean-dominated EU as much as anyone.

Britain is one of the world’s largest economies, and therefore a major market for other member states, a huge contributor to the EU budget, a powerful military force and a global leader in finance. It lends clout and reach to the EU in world affairs. If it makes the effort, it will most certainly achieve a better deal for both itself and for Europe as a whole.

15 comments:

Rik said...

Great summary.
Only the South of the EU has as much to gain from the UK remaining a EU-member.
If the EU would look to fall apart. Almost certain markets will interprete that like the whole thing possibly falling apart and likely the EZ with it. And they will feel the market pressure when their bonds are tanked more than already now. And for them it is simply a case of survival.
The East as well. They donot want a French model even less than Germany and Co (even if it would work, quod non at this moment).

Rik said...

Basically if Cameron acts as you propose in say 2014/2015 the British public can be asked if they accept the negotiated changes as sufficient. If not likely an in-out referendum will be necessary and we basically all know the outcome of that.
Probably in practice imho it would be an exit after say 5 years from agreeing, to reneg everything from both sides and give the UK the possibility to negotiate separate treaties where required.

Mally London said...

If UK were to depart from EU it is large enough to form the nucleus of a new group. I don't buy the argument that we would be crippled by EU regulation and tarrifs because it has to be remembered that we buy more from the EU than they buy from us. A new group would counter these foolish socialist anti trade rules presently prevailing in the EU and about to get worse when France gets going.

Patrick Barron said...

The author misses the eurosceptic point. The EU is undemocratic, protectionist, and socialist. The author's argument that the UK would face onerous barriers to selling its goods into a protectionist EU does not warrant giving up sovereignty. The EU harms only itself by erecting trade barriers; it impoverishes its citizens by denying them access to goods that they would purchase without the artificial barriers. It is a form of autarky on a continental scale. It may appear to work, but increasingly the EU members will see their standard of living lagging behind the rest of the world. The UK should leave the EU and seek better business partners elsewhere in the world. It should adopt unilateral free trade, accepting goods from any nation, including EU nations, whether or not those nations accept UK goods. The pounds held by those shipping goods to the UK will find their way back to the UK either in the form of export orders or capital investment. If those pounds never find their way back to the UK (and are held at the central banks of protectionist countries), then those protectionist countries have simply made a gift to the UK of their goods.

Idris Francis said...

This blog appears to be the same article that appeared in the Telegraph at

http://www.telegraph.co.uk/news/worldnews/europe/eu/9389279/Britain-should-pick-and-mix-over-Europe-instead-of-apeing-Norway.html

Anyone who thinks it even remotely credible, or that the EU would agree to unwind what it has slowly and cynically built up over 50 years, to give back those powers it has taken to itself would do well to read the hundreds of well informed comments on that Telegraph page, almost every one of which rejects the proposal out of hand.

In the years I have been following EU issues very closely, over many thousands of hours over 15 years, I cannot recall ever seeing an article so comprehensively rubbished by such an overwhelming proportion of respondents.

Think again Mr. Persson, think again Open Europe - if you think you and others are going to fool the people this time in the same way that Wilson and his fake renegotiations did in 1975, you have another think coming.

"Fool me once - shame on you. Fool me twice, shame on me"

Rollo said...

We do not want to ape Norway or Switzerland, or 'limp after in base imitation' as Shakespeare put it. We need to be an independent nation, free to make our own decisions and to trade as we please. Where there are benficial trade deals to do with this bloc, we should make them, under out terms. But it is a sinking ship. Think positive, think about the big world, not the smelly abyss of the EU.

Macky Dee said...

We ALWAYS come back round to that argument. Even Open Europe is saying it now. "We need to be at the table to influence things". WOW, if we are at the table now - it seems like we're being ignored. Open Europe will play a big part in the forthcoming debate about UK in EU, and i like most of what they say - but you need to understand that the public will only ever take the lowest common denominator when it comes to the facts. Like OpenEurope have just said - they think we're better off in, BUT the way that will translate to voters / public is - "we need to be at the table to have our voice heard" (even tho no-one believes our voice is heard). This is the same argument that Blair used. When people are told "we do half our business with EU" - theyre not told - so do other countries - USA / Canada / China. The only thing different about UK is location! I hope OpenEurope will be able to get across this message to the public without sounding like that old cliche. I actually beleive that even if openEurope wanted to leave - they wouldnt say - because the powers that be would stop taking them seriously.

Ray said...

an absolute declaration of our intention to leave the EU, would create the kind of upheaval that would fundamentally change the European Union as it exists now. I am and have been convinced for some time that there are several countries watching us very closely, and being aware of the true value of this country to the Union would follow our lead.Then we would end up with a Northern European community and a Southern community with alliances and agreements with the North.
Where the French end up in all this I don't know, it may want to be the big fish in the southern pond, but then who is going to subsidise it ? for all their bluster the French are probably having kittens when they hear the noise coming from the UK.

christina Speight said...

I'm sorry to say this but while Open Europe is excellent at getting behind the current facts and the economic smokescreen it is irredeemably pro-EU.

Rollo has got it. Regain our total independence then start making a deal with what's left of the EU but on our terms for they have more to lose than we do, No need to rubbish Norway in this argument. By the time a new relationship was settled Norway would. I'm sure, have noticed and acted accordingly in its own interests.

But to Open Europe please stop this pro-EU propaganda.

Ian Campbell said...

This "map" of who is connected to what and through which aspects of policy is excellent. Well done for producing it. It should be used by the team of MP's trying to simplify what has to be done to explain to UK voters what needs doing to get the relationship right.

We cannot stop Europe making an idiot of itself if it wants to - and it is making a pretty good fist of it over the Euro and debt crisis - but we can get our relationship right with whatever is left of the EU after they've finished bringing down what was, once, a worthwhile project.

We must be constructive in the interim for the unlikely event that the EZ problem will be solved successfully and that we are all still going to be neighbors whatever happens.

This is a much more constructive contribution than the CER recent rebuke of Eurosceptics and Europhiles.

Anonymous said...

OUT is the only option--renegotiation is not possible. QMV 2014--out before then

Average Englishman said...

I am totally with Christina, Idris and Rollo. The UK can find its own way in the big wide world thank you very much without asking permission from the likes of Rompuy, Barosso, et al. No more flannel from Open Europe or anyone else. It's time to go and if Cameron ever wants to be elected to anything again, let alone the leadership of this country, he'd better wake up to that fact; fast!

Anonymous said...

Open Europe - you are forgetting one fundamental flaw in your argument: the EU will never allow halfway house style membership - eneabling members to 'pick and mix' in order to suit their national publics.

If the EU allowed UK to renegotiate terms, so too would other members want the same, and this would mean the EU's whole raison d'etre (political union of Europe under 1 centralised government) would crumble.

Anonymous said...

If you read The Great Deception by Booker & North you will see that the EU Treaties are set up so that once "competencies" are given away they are not negotiable and WILL NEVER BE GIVEN BACK TO THE COUNTRY. "Acquis Communautaire" is embedded in ALL Treaties and is a One-Way ticket only. When will you start telling us the truth?

Anonymous said...

"despite being forced to accept all these laws........."

I have a problem understanding why and how Norway (or anywhere else) is "forced" to accept all these laws. Does it mean the EU would ban all commerce between the two entities if it didn't? If that were the case, how is it that Mexico, South Korea and many others now have free trade agreements with the EU? THEY certainly don't implement 75% of EU laws.

This talk of 'being forced' smacks so much of authoritarianism, it illustrates precisely the absence of democracy in the EU mindset. The larger question remains - from whence do the EU derive their power?