"We would be like Norway. We would pay but have no say.”
This was the essence of the argument used by supporters of Remain to deter the British people from voting to leave the European Union, referring to Norway’s membership of the European Economic Area (EEA) through the European Free Trade Association (EFTA). But is Norway’s arrangement with the EU really that bad? The short answer is no.
Most obviously, whether you ask the UN or the OECD, Norway enjoys the highest standard of living in the world. If the Norwegians have not been on the top of such lists, the Swiss usually have. Even Iceland, despite the economic difficulties the country suffered over seven years ago, has outranked Britain and almost all other EU members on such terms. And the three countries have one particular thing in common: while Switzerland is not in the EEA, they are all members of EFTA and reject EU membership.
Those suggesting life outside the EU would be disastrous by pointing to Norway, Iceland and Switzerland must therefore explain why they are so prosperous. But the other argument used by Remain campaigners – that the EFTA/EEA countries must adopt all EU laws and pay a high “membership fee” to the EU budget for access to the Single Market, while being unable to influence the laws they must adopt – also demands a correction.
First, the EFTA/EEA countries have not adopted every EU law through the EEA Agreement. No study supports that claim. In fact, research by Iceland’s foreign ministry and the EFTA Secretariat in Brussels found the percentage to be more like 10 per cent. Moreover, EU laws don’t become active in the EFTA/EEA countries unless they’re first implemented by their domestic institutions.
Second, unlike EU members such as Britain, the EFTA/EEA countries sit in their own right at global tables where international rules are set. These rules, made by bodies like the World Trade Organisation (WTO), form a large part of the EU’s legislation and often require unanimity when first agreed (giving the likes of Norway an opportunity to influence them at source). EFTA/EEA countries have the chance to give their input at EU level too and they sit in the EEA Joint Committee, which decides which EU laws are incorporated into the EEA Agreement, meaning each EFTA/EEA country can veto the adoption of individual EU laws.
Third, there is no Single Market “membership fee” for EFTA/EEA countries. The three EFTA/EEA countries have, however, paid development grants (negotiated with the EU every five years) to EU countries in eastern and southern Europe and also voluntarily pay to participate in several EU programmes such as Erasmus. But there is no legal obligation for them to do this. Moreover, Iceland gets more money back from the EU in the form of grants.
How does this compare with Britain in the EU? Britain is represented by the EU at global bodies like the WTO, which set rules the EU must implement. Moreover, Britain is subject to nearly all EU legal acts, which become legally binding as soon as they are agreed by EU institutions, and the UK only has a veto over very limited and fast diminishing areas. Finally, despite having a seat at the EU table, Britain usually gets outvoted when it really matters.
What Britain pays to the EU budget is largely used to finance the day-to-day running of the EU, like agricultural subsidies (mainly to continental farmers), officials’ salaries and benefits, and the Brussels-Strasbourg travelling circus. Meanwhile, the EFTA/EEA countries fund specific development projects and programmes they choose to participate in. Moreover, unlike Iceland, for example, Britain pays more money to the EU than it gets back.
It’s also important that the EEA Agreement's scope is limited to the Single Market. Many very significant sectors are excluded, like foreign affairs, judicial and home affairs, economic and monetary issues, trade agreements, taxation, customs, borders (Schengen is not part of the EEA), fisheries and agriculture. For Britain, most of these sectors are subject to EU supranational authority.
Are the people of Norway, Iceland and Switzerland happy with their existence outside the EU? For more than 11 years, EU membership has been rejected in every opinion poll published in Norway. The most recent one, at the end of last year, had an overwhelming 72 per cent against EU membership. Meanwhile, every opinion poll in Iceland for over six and a half years has had a solid majority against EU membership and the vast majority of the Swiss are happy with the bilateral agreements they negotiated with the EU after rejecting EEA participation in a 1992 referendum.
This isn’t to say that Britain will simply end up with a copy of Norway’s relationship now it has voted to leave. In fact, a series of bilateral treaties, the so-called Swiss model, may be better because it wouldn’t require the adoption of EU laws. Further, the UK will no doubt be able to secure a better arrangement than both countries, as even the Remain campaign admits.
But more importantly, by leaving and by being able to sign its own trade deals, Britain will secure a far better relationship with the rest of the world which, unlike the EU, is actually growing.