September 2012 Outsiders on the inside Swiss and Norwegian lessons for the UK By David Buchan Outsiders on the inside: Swiss and Norwegian lessons for the UK By David Buchan Calls are multiplying in the UK for a renegotiation of Britain’s relationship to the European Union. Many British eurosceptics are eyeing Norway and Switzerland and asking whether Britain would be better off outside the EU with Norwegian and Swiss-style association agreements. The answer is no, because these association agreements increasingly frustrate many Norwegians and Swiss, and the EU itself. Norway’s European Economic Area (EEA) arrangement has denuded the content of the country’s political debate, while Switzerland’s relationship with the EU has reached an institutional impasse. The Norwegian and Swiss experiences underscore the difficulty of developing a form of associate membership satisfactory both to Brussels and the country in question. However, the eurozone crisis could end up creating an outer ring of EU states focussed mainly on the single market that could be acceptable to Britain and perhaps attractive to Norway and Switzerland. The eurozone crisis has plunged the European Union’s entire structure into flux. The 17- country eurozone could solidify into a United States of Europe, with a fiscal and political union to back up its monetary union. Or the eurozone could disintegrate, probably breaking up the wider European single market as well. In either eventuality, the UK, which has become the most malcontent of EU members, will almost certainly want to renegotiate its relationship with, if not its membership of, the EU. This may well involve a loosening of ties. In the view of many of the UK’s growing number of eurosceptics, Britain should seek a similar kind of relationship to the EU as Norway and Switzerland. The one element of EU membership that most Britons, be unpalatable for the UK. Switzerland has more control even many eurosceptics, want to preserve is access to over which EU legislation it introduces. This is likely to be Europe’s single market. And access to the single market more attractive to British politicians. But Swiss-EU ties have is what Norway fully has, and what Switzerland to a reached an impasse and the EU is so frustrated with the large degree has. So the notion of being half in and half model that it is unlikely to be willing to offer it to the UK. out of the EU – of being part of the single market, but not having to pay into the EU budget or be part of the It is natural that many in the UK should cast an eye on the common agriculture and fisheries policies and so on – is relationships that their one-time partners in the European appealing to many Britons. Free Trade Association (EFTA) – Norway and Switzerland – have forged with the EU. In doing so, however, they Could Britain adopt a similar link to the EU as Norway should be aware of the growing dissatisfaction building and Switzerland have? And would it want to? This paper up around both relationships. These dissatisfactions are suggests the answer to both questions is no – not least not identically shared in Oslo, Berne or Brussels. because these relationships are no longer proving entirely satisfactory to the Norwegians, the Swiss or the EU itself, Norway has recently carried out an exhaustive review and are therefore not a suitable model for other countries of the impact of its relationship with the EU, through to follow. the European Economic Area (EEA), rather similar to the UK government’s current ‘audit’ of the impact of EU Norway’s ties to the EU have functioned rather well for membership on Britain. The Norwegian review concludes Norway, but they require the country to implement nearly that the EEA agreement – which involves Norway (and unconditionally large swathes of EU legislation. Even in the two smaller EEA members, Iceland and Liechtenstein) Norway, this is beginning to create difficulties and it would adopting EU legislation in which it has no direct say – Published September 2012 [email protected] | WWW.CER.ORG.UK OUTSIDERS ON THE INSIDE: SWISS AND NORWEGIAN LESSONS FOR THE UK 1 has run smoothly and to Norway’s general economic though the Swiss government cannot say this too and social benefit. But the review also accepts that the loudly because the Swiss people voted against joining EEA agreement has, by its very nature, sapped Norway’s the EEA in 1992. In effect the Swiss now want ‘EEA political debate of content and created a democratic Plus’ – the right to influence EU laws as they are being deficit. For its part, the EU has, predictably, no problem made (which Norway clearly has) but also the right with the political subservience inherent in Norway’s EEA to ignore or reject EU laws once the laws have been arrangement. Indeed it is political, or policy, subservience made (which Norway has only marginally). If the Swiss that has ensured the smooth technical running of EU- were to get ‘EEA Plus’, Norway would almost certainly Norwegian relations. want the same. The EU might then find its demands of Switzerland boomeranging in the form of an unwanted For the EU, it is precisely the lack of any such political re-negotiation of the EEA. subservience, or more precisely any supranational dispute settlement, in Switzerland’s agreements with the EU It is possible, as will be suggested at the end of the that is causing increasing problems in EU-Swiss relations paper, that future institutional changes inside the EU – and increasing frustration in Brussels. The EU is in fact for instance, a formalised two-tier EU – could provide a trying to push Switzerland into accepting some form of solution to the tensions and frustrations surrounding supranational surveillance of its agreements with the Norway’s and Switzerland’s relationships with the EU. But Union. So, as far as EU-Norwegian relations go, it is the for the moment neither relationship provides a model Norwegians who are less happy than the EU, and in the attractive to Britain. The UK would find it politically EU-Swiss relationship, the frustration is more on the EU intolerable to accept hand-me-down legislation as the than the Swiss side. Norwegians do in the EEA. A Swiss-style relationship based on bilateral negotiations and agreements would be Switzerland’s proposed solution to the institutional inherently more palatable to the British, but it is probably problems raised by Brussels is very similar to the EEA, not a model that is any longer on offer from Brussels. The European Economic Area agreement The European Economic Area (EEA) is the bridge between the EU and three of the four members of the European Free Trade Association (EFTA) – Norway, Iceland and Liechtenstein; the fourth Eftan, Switzerland, has separate bilateral agreements with the EU. The 30 EEA states (EU-27 plus EFTA-3) have two bridging institutions – an EEA ministerial council and a joint committee of senior officials – that rest on separate pillars for implementation and judicial enforcement. The EFTA pillar mirrors the EU one. The EFTA Surveillance Authority monitors compliance of EEA rules by the three Eftans, as the European Commission does for EU states, and the EFTA Court adjudicates over the three Eftans as the European Court of Justice does over the EU-27. The traffic over the bridge is one-way – legislation flows from the EU to the Eftans. The EEA was never intended to make its own rules and laws, but rather to be a transmission belt of the EU acquis to those states which wanted access to the single market but not as a full EU member. At the core of the EEA are the four freedoms of movement of goods, service, capital and people, plus some ‘flanking and horizontal policies’ such as competition rules and legislation on health and safety at work which are essential accompaniment to the internal market. So, if ever the UK were to join the EEA, it would not escape the working time directive. As an EEA member, it would also have to continue to accept workers from Eastern Europe. Excluded from the EEA are the EU’s common policies on agriculture, fish, foreign and security policy, justice, immigration and of course money. However, Norway has chosen to align its policies on justice, immigration, by like Switzerland, joining the Schengen and Dublin conventions. They also choose to align their foreign and security policies with the EU. Participation in the single market has a financial price. Both Norway and Switzerland pay a share of EU programmes on research, education and so on in which they take part, and from which they benefit. But neither gets any direct return from their payments to the EU’s aid and cohesion programmes. These payments amount to €1.79 billion from Norway over 2009-14 and just over €1 billion from Switzerland over 10 years. They can both afford this: they are two of the richest countries in Europe. Published September 2012 [email protected] | WWW.CER.ORG.UK OUTSIDERS ON THE INSIDE: SWISS AND NORWEGIAN LESSONS FOR THE UK 2 Could Britain follow Norway? Had all seven Eftan countries that negotiated the EEA between 1990 and 1992 stayed in the arrangement, The EU-Norwegian relationship was never a model, but the outcome on EEA legislation might have worked more an accident of history. Norway joined other EFTA slightly more equitably. But the EEA was never about countries in negotiating, with Brussels, the EEA that came negotiation or co-legislation, and was intended mainly into force in January 1994, but it would have then joined as a vehicle for EFTA adoption of EU laws and rules.