Thursday, December 02, 2004

How the Swiss got the dime and the bagel...

This article explains imo very clearly how smart the swiss deal in their talks with the EU.

The Wall Street Journal, December 2, 2004
STATE OF THE UNION - Is Britain on Its Way Out?

It is worth looking at how Switzerland -- and, for that matter, its three partners in the European Free Trade Area, Iceland, Norway and Liechtenstein -- manage their relations with the EU.

The first thing one notices is that these countries are very rich. Over the past decade, the EFTA four have comfortably outperformed the EU. GDP per head in EFTA countries is, on average, twice that in the EU. Their unemployment rates are lower, their stock markets stronger, their currencies more stable and their interest rates well below those in the euro-zone.

What does it mean to be an EFTA country? The EFTA states are covered by the so-called four freedoms of the EU's single market: free movement of goods, services, people and capital. They are able to opt into other common policies on a case-by-case basis, whether research and development, classification of medicines or border-free travel. Yet they are spared the
huge costs and inefficiencies of the Common Agricultural Policy. They are also free to control their own fisheries and their own energy reserves. They are able to sign free-trade deals with third countries, and they are outside much of the EU's social and employment regulations. They have their own foreign policies, immigration controls, legal systems and civil rights. And
they pay only a token amount to the EU budget.

Three of these states, Iceland, Norway and Liechtenstein, are also in the European Economic Area, which obliges them to assimilate some EU laws. But such regulation affects only a small and clearly delineated part of their public life. Although more than 3,000 EU directives have been implemented by these three states since 1992, they have required only 50 legislative acts in Norway and Iceland (fewer in Liechtenstein, which joined later). And unlike in the EU, the courts of the EFTA states do not have to automatically give force to EU rulings. Their parliaments are, in the correct sense of the word, sovereign.

British Europhiles like to claim that each of the EFTA states is, in its way, unique. "You can't compare us to Iceland," they say. "Iceland has fish." So, of course, would Britain but for the ecological catastrophe of the Common Fisheries Policy. "We're nothing like Norway," they go on. "Norway has oil." Well, Britain is the only net exporter of oil in the EU. "Switzerland is a special case," they add. "Look at all their banks and financial services." Look at the city of London, for heaven's sake, the
financial capital of Europe -- although not for much longer if we continue to adopt EU rules on taxation and banking practices.

Then, in a delicious back-flip, the EU-enthusiasts try a new argument. "But Britain is nothing like these EFTA states -- they're much smaller than us." This is a curious inversion of their usual contention, namely that Britain is too puny to survive on its own. What I think they mean, to be fair, is that Britain, as a country with global interests, cannot absent itself from Europe's councils.

But even this argument is hard to sustain. Switzerland , with a population of 7.4 million, manages to host most of the world's big international organizations, including the Red Cross and large chunks of the United Nations. Norway, with 4.6 million people, has extraordinary global reach: Its diplomats are active in Sri Lanka and the Middle East, Southeast Asia and Sudan. Iceland, with a population of just 280,000, has hosted visits from four U.S. presidents, two Russian leaders and, most recently, the Chinese premier, who stayed for several days to study the island's economic success.

Mr. Hannan is a member of the European Parliament. This is adapted from "Voting on the constitution: What Britain should know about the consequences," a policy paper to be published by Politeia this week.