13 February 2015

Is Norway a model for Britain’s relationship with the EU?


In December, Tory MEP and CapX contributor Daniel Hannan described how Norway beats the EU. He argued that Norway offers “a handy example of how a country can prosper by having a free-trade relationship with the EU instead of joining the Brussels political institutions,” and debunked the claims of the pro-EU lobby that Norway’s strategy couldn’t possibly work for Britain.

Today’s report by Civitas, The Norwegian Way: A case study for Britain’s future relationship with the EU, offers some convincing arguments which appear to support Hannan’s view. Author Jonathan Lindsel lists the many benefits for Norway’s strong but detached relationship with the EU, including:

“Norway, as a member of the EEA, has a veto for blocking EU rules on specific products or services without suspending the entire agreement. Norway is also able to fight for exemptions or adaptations without recourse to this veto.”

“Norway has the power, if the necessity arose, to suspend the free movement of labour in emergencies. Although it has not been tested, as Norway seeks to deal more effectively with the social and economic pressures, this provision is contained under the terms of the EEA to address serious economic, societal or environmental difficulties that arise from free movement.”

“Norway remains active in many of the EU’s cooperative activities such as scientific projects, health and food safety, and police training. Because these areas are not featured in the terms of the EEA Norway cannot be forced to take part, but it participates according to its own best interests.”

Perhaps the most powerful point of all is that Norway pays £22 per capita less into the EU budget than the UK, equivalent to £1.68 billion for the British population as a whole. Given the resentment over the high subsidies the UK pays to poorer European countries (and in particular the fury over the €2.1 billion surcharge in December as a result of a “budget correction”), the option for Britain to participate in the EU market without paying high member fees is certainly appealing. 

Where the Civitas report is less convincing is its analysis of Britain’s influence over the EU were it in Norway’s position:

“Norway has a strong track record of influencing EU legislation, being involved in EU legislation through the early drafting stages and contributing to the final outcome. Britain, were it to be in Norway’s position, would almost certainly have more influence still, as a larger economy with a closer history to the EU.”

While the UK might enjoy more influence than Norway (it is, after all, 13 times larger in terms of population, and over 5 times larger in terms of GDP), it would be giving up the overwhelming influence it has now, both within the EU and globally. Earlier this month on CapX, Declan Ganley argued strongly for Britain to use its power to reform the EU and remain at the forefront:

“Influence and size matter, not merely in business but also in politics. All things being roughly equal, no capitalist or businessman would choose a market of sixty million over a market of five hundred million. No global trade deal will be reached with the critical input of the Norwegians or the Swiss. For Britain, and for all of us who consider ourselves defenders of freedom, markets, and liberty, our best chance to bend the arc of history further in our direction lies on the continent.”

While Jonathan Lindsell claims “The Norwegian approach to the European Union offers a genuine alternative to consider… The Norwegian option retains all the trade advantages of EU membership while offering avenues for increased prosperity through trading around the world”, trade advantages are not the only reason to remain in the EU. The question of whether the other benefits which Ganley lists are worth the substantial financial and political costs of remaining in the EU will dominate any referendum campaign if Britain votes on membership. David Cameron is preparing plans for an in-out vote to take place as early as next year, if he wins this May’s general election.

Regardless of the outcome, Lindsell’s paper for Civitas offers a fascinating insight into how a post-Brexit UK could mirror Norway and continue to benefit from the best aspects of the EU. 

Rachel Cunliffe is Deputy Editor for CapX.