Tory MEP's Brexit hopes branded 'hardly credible'

Andrew Duff warns that plans for the UK to negotiate a Swiss-style relationship with the EU are 'only half thought through'.

04 Feb 2014

The UK Conservative party is luxuriating in three contrary opinions about Britain's place in Europe. First, there's the Tory status quo faction, which, if it could, would stay in the EU as it is at present. Second, there's the Tory federalist faction, most recently articulated by British chancellor George Osborne, which knows that the EU must deepen its integration in banking and fiscal matters, but which wants it to integrate without the participation of the UK. And, third, there's the Tory Swiss faction, peddled by Conservative MEP Daniel Hannan in his article in the 16 December issue of the Parliament Magazine. Hannan wants the UK to 'withdraw from the EU's political structures while retaining trade links - along the lines of what Switzerland does, though with some modifications'.

"The internal dynamics of European unity coupled with external pressures, both of which have quickened as a result of the financial crisis, mean that the EU is destined either to unify more deeply or fall apart​​"

The problem for the Conservatives is that all three approaches are only half thought through. The first option is flawed because the status quo in Europe does not really exist. The internal dynamics of European unity coupled with external pressures, both of which have quickened as a result of the financial crisis, mean that the EU is destined either to unify more deeply or fall apart. Later this year a freshly elected leadership of all the institutions will be in place. Constitutional courts will have judged that the Lisbon treaty has been stretched to breaking point. German chancellor Angela Merkel will be getting impatient. With his demands for a renegotiation of Britain's terms of membership, even UK prime minister David Cameron will prove to be a catalyst for change. A constitutional convention to change the EU treaties will be irresistible, probably starting in 2015.

Such a convention will have to choose between, on the one hand, building the governance of the EU around the European council of heads of government and, on the other, turning the European commission into a proper parliamentary government. Whichever institutional decision is taken, the result will be some kind of fiscal union without the UK. Cameron and Osborne have no strategic answer about what happens to Britain then, and only seem dimly aware that fiscal union must mean federal government. 

Dan Hannan likes Switzerland. So it's worth looking in some detail about how the Swiss manage their relationship with the EU. Switzerland is a member of the European economic area free trade association, but, unlike Iceland and Norway, not of the European economic area. The EU is Switzerland's biggest trade partner, but it remains outside the single market. There is no overall Swiss treaty with the EU but around one hundred bilateral agreements in different economic sectors negotiated laboriously over the last 25 years. Switzerland, unlike the UK, is actually a member of the Schengen area. Berne and Brussels are tied together by oodles of red tape - but there is no Swiss representation in any of the EU institutions and precious little democratic accountability. 

The question of arbitrage is particularly difficult, as the Swiss refuse to accept the supranational judicial authority of the European court of justice. Instead, there are 15 different joint 'settlement committees' which try to thrash out disputes. Oh, and everything on the Swiss side has to be approved by referendum - a tool which Hannan and his Eurosceptic friends feign to worship and adore. There have been seven Swiss referendums so far on EU matters. The latest, which takes place on 9 February, is about establishing quotas for foreign immigrants. The referendum is promoted by the SVP - an Alpine UKIP - and fiercely contested by business, especially the Swiss pharma and tourist industries which rely on non-Swiss nationals for over 40 per cent of their workforce. If the answer is 'Yes', Switzerland will have jettisoned the EU's cardinal principle of free movement of people and five of the bilateral single market agreements with the EU will immediately fall. More referendums beckon, including the extension of the Swiss arrangements to the EU's new member state of Croatia. 

So the future of Swiss relations with the EU is unstable and subject to heavy litigation. Swiss foreign minister Yves Rossier, denying that his country is trying to cherry-pick, argues that it wants to move closer to the EU across the board. Prospects of improvement are remote, however, because the EU council refuses to give the commission a mandate to negotiate an overall agreement. And guess which member state in the council is blocking such a move? In a delicious irony, it is the British government which insists on there being Swiss 'mixed agreements' with 28 EU states rather than one with the union as a whole. The Hannan dream of Gross Schweiz (or is it Klein England) is hardly credible.