II – The Market Solution: EFTA/EEA

Read part I – A soft landing 

Part II of V

A relationship with the EU based on membership of EFTA and the EEA is referred to as the “Norway Option” because it forms the foundation of Norway’s European policy. It is however misleading in many ways to call it the “Norway option” as we are not actually looking to emulate Norway per se (an impossibility anyway given our very different circumstances), but to use it as an “off the shelf” model to create our own relationship and protect our Single Market access.

Britain is already a contracting party to the EEA so all the technical measures are in place. The EEA agreement does not state that leaving the EU also means leaving the EEA, thus this will become a matter of political discussion; though it would require such a concerted effort on the behalf of the EU to force the UK out of the EEA that it seems totally unfeasible and unrealistic. Outside of the EU it is assumed that membership of EFTA is required as the EEA agreement is an agreement between the EU and EFTA members. Membership of EFTA would be beneficial as the UK would gain access to established Free Trade Agreements and ready-made consultative arrangements.

A EFTA with the UK would be a significant global player; as a trading group it would be fourth in the world league:

EFTA+UK

EEA Costs

EEA membership includes a range of financial contributions. Included within these are the “Norway Grants”, paid by Norway as a form of aid for the economic rehabilitation of post-Communist countries, these voluntary grants amounted to around €804 million in the period 2009 -2014. This money is not paid to the EU. Norway also provides 95% of the funding to the EEA Grants, which alongside the Norway Grants brings the total to €1.8 billion from 2009-2014.

The total spend for EU programmes with EFTA/EEA participation over the 2007-2013 period amounted to €70 billion, with the contribution of EFTA amounting to €1.7 billion (approximately €250 million a year, of which Norway accounted for 95.77% of the cost.

As of 2014 Norway participates in twelve EU programmes, including Horizon 2020 Erasmus+ and the Copernicus Programme. It also takes part in 26 EU agencies. It is highly likely that the UK would wish to continue its participation in many of the same programmes and agencies beyond the length of its current obligations (which would continue after secession).

Funding is not however one way. Over the last financial period Norwegian beneficiaries were paid €1.01 billion from EU funds, making the net contribution over the seven-year period €620 million, approximately a €90 million net contribution per year. If this was applied to the UK on a pro-rata basis as part of the EFTA/EEA arrangement, it would contribute approximately €2.5 billion annually, 70% of which is accounted for by the EU’s research programme.

EFTA makes a financial contribution of behalf of its members of 22,360,000 Swiss Francs – approximately £16 million – for their participation in the single market. In 2014 Norway’s 55% share of that contribution amounted to approximately £8.1 million. This is essentially the cost of the Single Market. Access to which would cost (on a pro-rata basis) the UK less than €200 million per annum.

Why opt for an “off the shelf solution”?

So why should we opt for this “off the shelf” market solution? Despite the popular myth, there is no requirement for the EU to conclude a free trade agreement with seceding members by the end of the two year stipulated negotiating period. Any attempt to negotiate a “bespoke” trade agreement with the EU would be a slow and painstaking process which would likely take a minimum of four years to five years.

Once you start to quibble and unpick arrangements, they unravel, Pandora’s box opens and it takes years of negotiations to deal with it in a manner that satisfies both sides. Those who assert that Britain can conclude her own unique trade agreement with the EU in two years, before treaties are void and we drop out of the EU like a rock plunging into deep water, are, quite frankly, talking nonsense based on myth, over simplification and a total overstatement of the cards we hold at the table.  Switzerland is often cited as a model to follow, yet it is not taken into consideration that it took 16 years in all to negotiate the current relationship.

The market solution protects the British economy and de-risks Brexit, thereby neutralising the main arguments of the Remain side and giving us the best chance of winning the referendum. Although I believe that membership of EFTA/EEA is preferable to being a provincial EU state, I acknowledge it is sub-optimal compared to the great potential for reform that Brexit gives us and thus is merely the foundation on which we build our future relationship with the EU.

To win the referendum we must express a positive vision and have the ability to promote the high ideals of self-determination and the restoration of democracy without such arguments being smeared with the Europhile fear, uncertainty and doubt. If we do not neutralise the fearmongering, which Remain will build their campaign on in order to avoid engaging on issues of principle, we will not win.

This is because of the unavoidable fact that their fear mongering is not entirely baseless. The economic consequences of a badly executed secession are potentially calamitous. Export of goods and services is about 32 percent of the UK economy (GDP) with imports accounting for 34%, of which the 27 other EU member states account for approximately half.  Trade with Europe is hugely important to the British economy, thus unnecessary disruption is a serious risk and risks causing a recession.

It is most encouraging that the EFTA/EEA option is attractive to the public. The Bruges Group carried a Survation poll which showed a clear majority of 71% expressing their preference for membership of EFTA. There are significant benefits to our continued participation in the Single Market; it would give the UK tariff free access to the marketplace.


Ben is the Conservatives for Liberty Web Editor and a Brexit campaigner.  He blogs at The Sceptic Isle. Follow him on Twitter: @TheScepticIsle

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The views expressed in this article are that of the author and do not necessarily reflect the views of Conservatives for Liberty