EEA plus: a model for the future of the UK in Europe?

For all the noise about Europe in the UK, British sceptics (with some exceptions) aren't necessarily great at thinking outside the box. 

We have previously looked at the existing models used by countries that have decided against/been refused EU membership (i.e. Norway's EEA membership, Switzerland's Free Trade Agreements, Turkey's customs union with the EU, or simply the WTO) and concluded that they would all have drawbacks for a country and economy as large and diverse as the UK. In particular, the Norwegian model is pretty much a non-starter.

However, there is another hypothetical model, which we will set out in a forthcoming briefing, that could be more attractive if it could be secured: let's call it 'EEA plus'.

Now, we don't necessarily advocate this particular option and this is only a blogpost, but intellectually and politically, it's far more attractive than anything we've seen so far in terms of a fundamental replacement for the current EU structure. 

Over the last decade, several figures, including Jacques Delors, former EU Commission President, and Valery Giscard d’Estaing, former French President and author of the EU Constitution, have suggested the UK be given ‘associate membership’ or ‘special status’. Neither concepts have been fully fleshed out, but Giscard d’Estaing suggested that a ‘special status’ could allow the UK to opt-out of future EU policies, which could allow it to continue to vote on policies it took part in but not on those it didn’t. Lord Owen has made a similar argument - which he will expand on in a speech today.

From where we sit, there is one absolutely vital element that has to be added if this is going to work for the UK: voting rights. The great weakness of the EEA model at the moment is that a country like Norway, as we have noted repeatedly, is out of the EU but run by the EU. It just wouldn't work for the UK (which is home to 36% of the EU's wholesale finance market, for example).

So what 'EEA plus' would involve is single market access but with votes on all laws which are EEA relevant. For EU geeks, it would be a bit like EEA-EU co-decision over single market laws. There are several ways in which this could work. For example, an "EEA council" already exists with members from both the EU and EEA states. This could be expanded to be the effective decision-making body for the EU as a whole in the fields that apply to both constituencies. Alternatively, a majority could be needed in both the EU Council of Ministers and a comparable EEA body for it to become law in both. A range of other issues, such as an arbitrage mechanism and ECJ jurisdiction, would have to be thought through. Also, it would have to be designed so that only genuine single market measures made it into the agreement - not the add-ons such as employment laws (which Norway has to accept) - whilst the UK may wish to stay inside the EU customs union (which Norway and Switzerland are not part of). The UK may also want to be part of other areas, such as crime and police cooperation (perhaps on a bilateral opt-in basis) and there would also need to be consideration about the merits of retaining its veto over EU foreign policy for example.

But, crucially, such an arrangement would get around the massive drawbacks inherent in the Norwegian model. Another great advantage of this model is that it could provide an institutional wrapping for all those countries that for one reason or another cannot be full EU members, and certainly not eurozone members: the UK, Norway, Switzerland and maybe even Turkey. It would be a new mode of European membership - and, if the UK can get its act together, very much the "economic growth" tier.

If you think this is far-fetched, you might be right, but it's actually not a new idea. In 1989, ahead of the negotiations that would establish the EEA agreement, Delors mooted a “more structured partnership with common decision-making and administrative institutions”, which would have potentially given those countries market access and decision making powers, rather than the limited right of refusal that EEA countries currently have.

In a speech in 1989, discussing the potential approach to those countries who had remained in the European Free Trade Association (EFTA), Delors said:

“There are two options:

(i) we can stick to our present relations, essentially bilateral, with the ultimate aim of creating a free trade area encompassing the Community and EFTA;

(ii) or, alternatively, we can look for a new, more structured partnership with common decision-making and administrative institutions to make our activities more effective and to highlight the political dimension of our cooperation in the economic, social, financial and cultural spheres.

It would be premature to go into the details of this institutional framework. I have my own ideas, but they need to be discussed by the new Commission and then informally, without obligation, with the countries concerned. It should be noted however that the options would change if EFTA were to strengthen its own structures. In that case the framework for cooperation would rest on the two pillars of our organizations. If it did not, we would simply have a system based on Community rules, which could be extended — in specific areas — to interested EFTA countries and then perhaps, at some date in the future, to other European nations.

But if we leave the institutional aspect of such a venture aside for a moment and focus on the substance of this broader-based cooperation, several delicate questions arise. It becomes clear in fact that our EFTA friends are basically attracted, in varying degrees, by the prospect of enjoying the benefits of a frontier-free market. But we all know that the single market forms a whole with its advantages and disadvantages, its possibilities and limitations. Can our EFTA friends be allowed to pick and choose? I have some misgivings here.”

This option could probably qualify as both "in" and "out". For one, it would be very similar to the Single Market plus deal that Boris Johnson has argued for in the past and, could be defined as staying in the EU, although on a radically different basis.

A final sobering thought: the final result of the EEA talks only granted EEA states ‘decision-shaping’ powers through representation on non-legislative committees and consultation with the EU Commission and a right of refusal that is relatively weak becuase it can result in loss of market access – giving an indication that this will be a challenge to achieve.

Now Turkey is raising concern over democracy in the EU

This is a sign of the times.

In an interview with EUobserver, Turkey's permanent representative to the EU, Selim Kuneralp, made some interesting comments on the future of the eurozone . In particular, he said that, although the Franco-German proposals to strengthen central control over national budgets, which could steer the eurozone "in the right direction", they also risk undermining democracy.

He argued,

"In an election campaign, you have one party that says, 'I'm going to reduce taxes and invest in this or that, to build nuclear power plants or spend money on renewable energy, build more schools and better hospitals.' And the other party says, 'I'm going to do everything this guy is promising, but more.' So you have a race on who is going to spend more. But if you have this kind of mechanism [of central control] they won't be able to do it. That means you would have such a loss of sovereignty as to make election campaigns meaningless."

Clearly, Mr. Kuneralp does have a strong point. Perhaps EU leaders should rememebr the 'Copenhagen criteria' - the rules on democracy (and various other things) that countries wishing to accede to the EU have to fulfill - as they're trying to deal with the eurozone crisis...

Is Turkey going cold on EU membership?

As Europe limps along economically and struggles to speak with a single voice on… well almost anything, and at a time when the EU's two flagship projects - free movement and the single currency - are coming under massive strains, the contrast between the bloc and perennial candidate country Turkey could not be starker.

In 2010, the EU-27’s GDP grew by 1.8%, while in comparison, Turkey’s GDP grew by 8.2% over the same period (and by a phenomenal 150% since 2003), with steady growth of 4.6% projected for 2011. In parallel to its strong economic performance, Turkey is also becoming increasingly self-assertive on the world stage, most notably when, together with Brazil, it took the diplomatic initiative over the Iranian nuclear programme last year.

It now seems as if the increasingly confident Turks are turning against the idea of EU membership. Only 38% expressed support for the idea last year, compared with 73% in 2004. That's a spectacular drop.

Should this be of concern to the EU? Most definitely.

Irrespective of the pro and cons of Turkey joining the EU, Brussels' approach to this issue really represents the worst of all worlds. By constantly sending mixed signals about whether or not Turkey is in fact welcome - the EU risks antagonising a country that it really needs on side. Do you really want to tick off a country that is up and coming, possessing a huge market (that Europe's struggling economy desperately needs) - and whose geo-strategic importance is second to none?

France in particular, but also to some extent Germany, have not exactly encouraged the country's attempt to gain full EU membership despite the fact that Turkey has been an official candidate country since 1999 and in accession talks since 2005. You'd forgive Turks for feeling insulted by being messed around by the EU. This is now reflected in Turkish public opinion.

The problem with the EU's mixed-signals approach is that it could push Ankara in to the arms of far less pleasant countries, such as Iran. That would be a spectacular own goal for Europe.

It is also possible that full EU membership is becoming less appealing for the Turks for other reasons. A union in which debt is being past around and several countries are on the dole - and control over a country's political and economic future is partly in other peoples' hands - just isn't that attractive. While many in Europe are worried they would end up having to subsidise Turks, the idea of being asked to bail out troubled eurozone members (least of all Greece!), can hardly be appealing to the Turks either.

But there's another side to this which is often overlooked. Just as the EU has in the past acted as a driving force behind modernisation and reform in Turkey (albeit with mixed results), so Turkey could contribute to some badly needed reforms in the EU. An EU which has Turkey as a full member simply would have to withdraw from some crucial policy areas where it has over-stepped its mark in the past. Justice and Home affairs for example, where EU integration has made some quantum leaps over the last few years. Or the Common Agricultural Policy, which would probably implode if Turkey were to join, or the Structural Funds, or the excessive use of Qualified Majority Voting (as Turkey would instantly become the most powerful country in the Council of Ministers due to its size). In other words, Turkey's size and composition could in fact be a strong argument in favour of the country joining - at least for those of us who want to see some real and radical EU reform.

In fact, the UK of all member states ought to consider the strategic benefits of using the issue to build momentum for institutional reform within the EU. The EU could also draw lessons from Turkey’s dynamic economic performance which will be crucial to the continent’s future prosperity, especially in the context of Europe’s looming demographic crisis. Clearly, there are significant problems with the Turkish candidature that would have to be overcome, from the Cyprus issue to the status of the Kurdish minority, so it is important not to jump the gun here.

But for politicians - in the UK and beyond - ruling out the prospect of Turkey of tomorrow joining the EU of tomorrow would be a pretty serious mistake.

A vacuous slogan?

The European Parliament today held a hearing entitled "Unity in Diversity", one of the EU's more hypocritical slogans, on the role that religious belief should play in society after ratification of the Lisbon Treaty.

"Unity in diversity" is one of those wishy washy terms that often become rather meaningless. But wouldn't the EU be a much better place if this maxim, rather than that of "ever close union", was the one that prevailed, be it the EU's respect for religious differences to respect for the existing member states' differing legal systems, cultures and social and employment practices?

Guess that's not what the EU really meant though is it..