In The Press
BNE Chairman in the Times - “What’s it like out in the cold? Just ask Norway.”
19 December 2011
Norway has many qualities to commend it, including a beautiful rugged coastline and telemark skiing. But its relationship with the European Union is not one of them.
A growing clamour in Britain says that we should be more like Norway by enjoying the benefits of the single market but without Brussels diktats.
Sadly, the attractions of Norway’s icy Valhalla soon melt under the glare of reality. Norway has to follow all the EU’s rules on the single market on the free movement of goods, services, capital and people yet cannot be involved in setting those rules. For example, upcoming EU regulations on offshore gas safety standards will have a big impact on Norway, but it will simply be informed of them and then have to follow them — so-called “fax machine diplomacy”. Norway also has to pay about €340 million per year for access to the single market but, unlike members of the EU, gets nothing back.
Why is the EU so important? Glossing over the way it helped to reshape the map of Europe, constantly enlarging with Britain’s strong support, to take in Spain and Portugal after Franco in 1986 and the former Soviet and now former Yugoslav countries in the past ten years, its most important economic achievement has been the creation of a single market.
Before 1986, when Margaret Thatcher took Britain into the Single European Act, trade rules between European countries were mired in red tape and protectionism. The French were so determined to protect domestic paint producers that they demanded every foreign importer of paint to go through customs in Poitiers, which was strategically selected as the most inconvenient place to get to from any national border. The foreign paint went off, and uncompetitive French producers were protected.
The British-inspired single market changed all that. Directly or indirectly, it accounts for 3.5 million British jobs. The Prime Minister recently said in a pamphlet titled Let’s Choose Growth that: “the Single Market already adds €600 billion a year to our economy.” He added that “further liberalisation of services and the creation of a digital single market could add €800 billion more”. This is what happens when open markets are embraced.
In addition to completing the single market in services, we need to extend it to energy, digital and telecoms. To succeed, we need liberally minded allies.
Poland is a good example. I took a delegation of business leaders to Warsaw at the beginning of the month to encourage Polish ministers to work with Britain to deepen and extend the single market. The British Ambassador was late for the dinner at his residence. He had been at a funeral, sitting with the widow of the last surviving Polish pilot who had flown for the RAF during the Battle of Britain. The ties are strong, and the potential to use them to push Europe in the right direction enormous — if we negotiate with enough skill and confidence.
You would have thought that the facts about the single market are so self-evident that they would also be uncontroversial at home. A project inspired by the innovation and creative destruction of our industrial revolution, and at odds with old French protectionism. What’s not to like?
It is ironic that when a pro-reform group such as ours, which works with people from all parties, gathers a very large group of senior business people to sign a letter explaining the virtues of the single market as well as calling on the Government to remain fully engaged in Europe, it is regarded by some as an act of treachery.
Decision-making in open societies works best on the basis of a robust exchange of well-informed views. But that essential democratic process is damaged when those with different views attack them in a personalised and sensational manner.
Those who believe that we should remain engaged in the EU are often accused of crying wolf, with scare stories about a loss of influence if we withdraw. Did our staying out of the euro damage the City? No. But the choice now is to do what Norway does, or remain in the EU. The practical consequences of following Norway into Efta would be enormously damaging for a country that is still in the top ten of global exporters of goods and services.
Imagine being told what to do by a body over which we had no influence. We would contribute to EU funds, but get nothing back. The balance of power, and the rules we would have to accept, would inevitably tilt in favour of less liberal policies.
Leaving would not only neuter us in Europe, but make us weaker globally. Kamal Nath, India’s former trade minister, said at the Davos World Economic Forum that Britain would not have anything like the clout alone that it does as an EU member. The free trade agreements we negotiate through the EU are worth billions to Britain. A new deal with South Korea, for example, came into force on July 1 this year. The Government estimates that UK companies will benefit by £500 billion a year as 99.4 per cent of tariffs are eliminated from goods going into South Korea. We are central in negotiating similar agreements with Canada and India.
Norway is a country of just under five million people, relying for much of its economic growth on its abundant natural resources. Britain is a country of more than 60 million people, with a complex, diverse economy. We were the home of the industrial revolution and we are the third largest economy in Europe. We need to be at every EU meeting, attend every conference and be part of every treaty standing up for our interests. If we want to be more like Norway, we could try expanding Scottish skiing, but not join Efta. Our membership of the EU is too important.
Roland Rudd is chairman of Business for New Europe and of RLM Finsbury