Recently, our Prime Minister, went out of his way (all the way to Iceland in fact) to disparage the so-called “Norway option” (Norway is outside the political structure of the EU but has full access to the European Single Market via the European Economic Area (EEA) agreement).
On return to the UK, the Prime Minister continued his attack on the "Norway" option at a speech to the CBI on 9 November, in which he stated:
...what I think is a very duff argument put about by the Out campaign, which is that it would be easy for Britain to leave Europe and simply sign up to a deal like Norway. I think that would be a bad idea. When you look at the detail of the deal that Norway has, it is not a good deal.
The first thing to note is that being outside of the EU hasn't done Norway's economy any harm. Per head of population, Norway is more than twice as wealthy as the UK and exports more to the EU than the UK. The Legatum Institute has just ranked Norway the most prosperous nation on earth for the 7th year running.
One of the claims made by Mr Cameron regarding Norway was "They actually take twice as many per head migrants as we do in this country".
The key point to note is that Norway is subject to the same "Freedom of Movement" provisions as the UK. Norway's immigration rate is not higher than the UK rate because it has different rules (which is what the Prime Minister has sneakily implied !).
Whenever David Cameron is challenged on his failure to meet his own UK target (net immigration <100,000 per annum), he is quick to point to our improved economic performance as the cause. Norway is more then twice as prosperous as the UK, so if Norway has a higher immigration rate, Mr Cameron's logic would appear to be "We dont want to be like Norway, we'll be twice as rich and so get more immigrants".
In fact, there are additional options to manage immigration available to Norway via the EEA agreement. Articles 112-3 provides a kind of "emergency brake" to be applied "if serious economic, societal or environmental difficulties of a sectoral or regional nature arise and are liable to persist". If the phrase "emergency brake" sounds familiar, it is because it was among the options considered by David Cameron in October 2014 - by the time of his keynote speech on immigration in November 2014 the "emergency brake" idea had been dropped following discussions with Angela Merkel. So in summary, Norway has an "emergency brake" option on immigration, whereas David Cameron was unable to "negotiate" a similar arrangement with his fellow EU leaders.
Following the Norway option would allow the UK to repatriate powers from the EU in a number of areas. I'll highlight a few key points:
- Common Foreign & Security Policy (CFSP) - UK foreign & defence policy is increasingly "out-sourced" to the EU following the Treaty of Lisbon: The European Council (an EU institution) directs the common foreign and security policy (Article_26); UK is required to support this policy "actively and unreservedly" (Article_24 ) ; UK is required to defend the positions of the EU in the UN - the UK's permanent seat on the UN Security Council is increasingly at risk of being usurped by EU (Article_34).
- Taxation - The EU mandates a minimum VAT rate, as illustrated when the UK lost a European Court of Justice ruling on VAT rates for insulation and energy saving products. The EU charges Custom Duties on all goods imported from outside the EU.
- Judicial & political freedom Norway has full judicial independence and is not bound by the rulings of the European Court of Justice. Norway is also exempt from the EU's Charter of Fundamental Rights.
- Full self-representation at WTO and other global governing bodies (UNECE, Codex, the OIE, IPPC, IMO, etc.), where Single Market rules increasingly originate. UK has effectively surrendered its independent voice and veto on these bodies to the EU.
Mr. Cameron would be hard pressed to strike a deal as good as Norway's deal:
- Norway has a "Trade & Co-operation" relationship with the EU including full Single Market access.
- Crucially, Norway has MORE say over the rules governing the Single Market as it has retained its independent voice & veto on the Global bodies where these rules increasingly originate (currently 90% of Single Market rules are covered by Global bodies).
- The EEA agreement includes provisions for managing immigration not available to the UK.
- Norway is free from "Political Union" and is independent the EU's Political & Judicial Institutions. Norway remains a self-governing nation state.
So is Norway the ideal solution for those who want "Trade & Co-operation" but not "Political Union" for the UK ? Well, not quite, e.g. :
- The relationship regarding the Single Market is still asymmetrical. We would shape & influence the rules at a Global level, from where they are passed down to the EU and then eventually on to the UK via the EEA agreement (although there would be nothing stopping the UK implementing the rules earlier where it provides trading advantages).
- The UK would still be signed up to "Freedom of Movement", although as I hope to discuss in a later post, "Freedom of Movement" is not the key element to managing immigration and the UK would want to retain many aspects of "Freedom of Movement" in any case.
Nevertheless, the Norway option provides at least a minimum benchmark or can also serve as an interim solution (while negotiating the "ideal" solution over a longer period). Norway is by no means a "bad" option as the Prime Minster called it. It is in fact a "Good Start".
That's strike 3 for David Cameron on the Norway option, he is out of the game on this topic !
A fellow blogger has provided links to more info on the "Norway" option here .