David Campbell Bannerman is a Conservative MEP for the Eastern Region.
When it comes to working up ideas for the end game outside of EU membership, I confess to being a bit of a geek. I’ve been working on alternatives to the EU for over 14 years. I chose to serve for nearly ten years on the European Parliament Trade Committee to seek to understand how trade deals work within the framework of the World Trade Organisation (WTO) and its global rules.
I fully recognise that finding a UK model is a headache, even mind-numbing occasionally: there is a huge learning curve; alternate models suddenly come into favour – and just as suddenly hit brick walls. There’s a distillation process by which, only over time and with the right perspective, is it possible to distil the whirring ingredients into a workable whole. No wonder the Cabinet has needed to take its time.
In this push for an acceptable solution, the notion of the U.K joining or rejoining EFTA (the European Free Trade Association of Norway, Iceland, Lichtenstein and Switzerland) has now popped up as a proposed ‘solution’ – a claimed catch-all panacea.
Sadly, I don’t think it provides any solution at all – merely different problems. What EFTA is not is some kind of convenient bolt hole for departing EU members. Nor is it ‘an agreement’ as some call it: whilst EFTA negotiates trade deals, each member state agrees and signs them individually.
I respect EFTA, like EFTA, admire EFTA and have worked with it on several liaison bodies: I sat as an MEP on the EU-EEA Joint Parliamentary Committee handling aspects of the EEA agreement, and was formally questioned many times on Brexit by EFTA Parliamentary delegations.
Hand on heart, I did originally flirt with a solution based on EFTA membership and a more flexible version of the EEA (the European Area Agreement) – what I called ‘EEA Lite’ – in my 2013 book Time to Jump. That was at a time when leaving the EU seemed so impossible that a leaving option as close as possible to the EU but not Norway’s EEA was attractive. It is still a valid model, but things have changed markedly since Brexit, the Lancaster House and Florence speeches. We have moved on.
For all this was before the EU’s largest and most modern free trade agreement – Canada’s CETA (Comprehensive Economic & Trade Agreement – was delivered and agreed. FTAs then were smaller, weaker, restricted. But now we have a proven base model in CETA that has become the best foundation for the U.K.’s bespoke deal – for what I call ‘SuperCanada’ (CETA+++): bigger, better and wider than CETA, particularly in services.
For EFTA membership would bring a lot of problems with it:
- The UK’s population is around four times the size of Norway, Iceland, Liechtenstein and Switzerland put together: existing EFTA states are concerned that the UK would be over-dominent if it joined. And the U.K might feel rather like Gulliver – rather too big for its surroundings.
- It is entirely possible that a U.K. application might be vetoed by Norway. Not only is Norway the top EFTA dog, but Norwegian politicians still harbour clear ambitions to get into the EU (despite 80 per cent of the population being anti). Norway’s ‘Conservatives’ are far closer to our Liberal Democrats.
- EFTA Free Trade Agreements (FTAs) are unsuitable for the world’s sixth largest economy: Britain’s. Norway’s economy is dominated by fish and oil; Iceland’s by fish, energy and aluminium (finance no longer); Switzerland’s by finance, pharmaceuticals and food processing. All important – but not nearly as comprehensive the U.K’s economy, with its vital motor industry for example. Signing Britain up to existing EFTA-sized trade deals is not attractive, and some ongoing EFTA trade deals such as India, Indonesia and Malaysia would get in the way of far more substantial UK deals. Better to do our own.
- EFTA is complex. Switzerland is in EFTA but not in the EEA, and has 120 bilateral agreements with the EU, ones that hardly cover key freedoms such as services – which is why major Swiss banks like UBS operate out of London. To replicate these 120 plus agreements is a complete non starter, would take decades, and is one the EU has already ruled out.
- All EFTA states have to accept free movement of people, even in Switzerland – despite a referendum vote against it, the Swiss ended up with a limited deal by which Swiss employers give priority to Swiss-based jobseekers. Lichtenstein only has a derogation (exemption) because it is tiny. Canada’s deal has no requirement for EU-style free movement.
- EFTA remains far too much in the orbit of the EU. The EEA was designed to get Norway & Iceland into the EU, not out. Whilst the three EFTA EEA counties are in the Single Market and have to slavishly follow EU regulations with no say, Switzerland is not – yet it must still follow many Single Market laws in any event. That’s not attractive for Britain.
- EFTA countries make substantial voluntary contributions to primarily Eastern European projects through EEA and Norway grants bodies, and the Swiss contribution. Canada does not have to pay anything for market access nor to Eastern Europe.
- EFTA conventions would tie the U.K. on customs and rules of origin matters, undermining our ability to do trade deals with other countries, as well as binding us back into the ‘EU acquis’ in many areas. They would also tie the U.K. in to special rules governing liberalisation of trade in services and investment in land and air transport. The EFTA Convention integrates elements of the EU-acquis as well as relevant bilateral Switzerland-EU agreements.
So on examination the EFTA option fails to be an attractive or suitable option.
The reality here is that we are getting lost in the weeds – the massive, twisting, conflicting detail. Life is so much simpler if we see this as whether we want to wrestle with the complexities of European models or go for the kind of relationship so many other nations round the world enjoy with the EU.
We don’t need a European solution; we need a global solution. We must think independent Anglosphere, not dependent Eurosphere.
When we do, with one bound we are free: no Customs Union, no Single Market, no ECJ, no EEA, no EFTA, just a free, independent sovereign nation like Canada, the USA, Japan, India, Australia or New Zealand doing a deal with the EU – and most of these nations have deals very much based on CETA.
By all means let us sit in on EFTA as an associate or observer member – we want friendly relations and need trade deals with its four members – but we must look beyond seeing EFTA as the bigger solution.
I am writing this in Columbia, which has eight technical committees with the EU covering everything from customs to government procurement, technical barriers of trade to market access, feeding into an overarching trade committee: this is where they manage the implementation of the deal and sort delivery and disagreements.
So a super variant of CETA for a departing EU member soon set to become the rest of the EU’s largest single customer is suitable, welcome and doable. But, sorry: EFTA is a dead-end solution. Like a wall in a maze. SuperCanada is the neatest, most deliverable and familiar model to use. Let’s embrace it fully now.