Daniel Hannan’s argument that Britain should leave the European Union and seek to emulate Switzerland in its relations with the EU (read it here) relies on two assumptions, neither of which I think is true. The first assumption is about the EU, the second is about Britain.
The EU assumption is that it would be willing to see Britain emulate the position of Switzerland. The Swiss advantage, as Daniel Hannan sees it, is that it has access to the European single market, the largest and richest consumer market in the world, without having to comply with all the regulations that apply there. The British economy is being harmed by the excessive scope of EU regulation, say the eurosceptics, and the Swiss option is a way to reduce it.
But this strategy relies on the EU agreeing, and there are good reasons to doubt that it will.
Switzerland has a much smaller economy than Britain, and is highly integrated with the EU. As much as 70 per cent of its foreign trade is with the European Union – when you look at a map, you can see why. (What happens to the other 30 per cent – is there a tunnel?)
It also follows much of the EU approach to regulation of its own volition: it does not seek to evade EU regulations in order to obtain a competitive advantage over the EU. It is not a low wage economy undercutting EU manufacturers. But this is what Daniel Hannan would have Britain do. If this was the British intention, why should the rest of the EU facilitate it? An economic deal of some sort would be struck, certainly, as there would be a strong mutual interest in doing so, but the British cannot assume that the EU would offer them the same deal that is offered to the Swiss.
Could we force the EU to offer better terms? Britain currently imports more from the rest of the EU than it exports to it: Daniel Hannan supposes that this economic weakness could turn into a political strength. Simply phrasing the position like this shows how hollow it is as a hope. What gives an economic negotiating position strength is not the balance of trade – it is out-dated mercantilist economic thinking to treat exports as “good” and imports as “bad” – but how important that trade is to the economy. Trade between Britain and the EU represents half of Britain’s trade and 30 per cent of its GDP, whereas that same trade represents one tenth of the EU’s trade and only 3 per cent of its GDP. Making that trade relationship weaker would harm the UK much more than it would the EU: Britain is in no position to dictate terms.
But not only does Daniel Hannan make a false assumption about the EU – that it would offer the UK the same terms as it offers Switzerland, when it probably wouldn’t – he also makes a false assumption that the UK would welcome those terms. Look at them closely, and see how unacceptable they would be.
Swiss companies have access to the European single market, as long as they comply with its rules. But who makes the rules? The European Commission – representing EU members only – makes the proposals, which are then approved by the Council of Ministers – representing EU member states only – and the European Parliament, elected by citizens of the EU only. Switzerland and the Swiss people have no say in the matter. Their only involvement is to be bound by the rules.
Now maybe this is acceptable to Switzerland because it has a small population – less than 2 per cent of that of the EU – and expects little influence on the world around us. It has grown used to bobbing up and down on the surface of world affairs: it only joined the United Nations as recently as 2002, for example, and its banks collaborated with the Nazis during world war two while the rest of the world was fighting them.
Britain, on the other hand, is one of the largest member states in the European Union and, when it comes to the regulation of the single market, is one of the most influential. While the Swiss might think that their ability to shape the rules would be small, this is not at all the case for the British, for whom influence over rules changes is paramount.
And those rules will continue to change. Developments in technology and in society will affect the balance to be struck between the role of the market and the role of the state, and when it comes to the role of the state, the balance between the role of the member states and the role of the European Union as a whole. The Swiss might be content to be spectators in this process, standing outside with their noses pressed against the glass, but that isn’t necessarily in the British interest.
Not only does Daniel Hannan misjudge the European Union, he also misjudges Britain. The British can and expect to have influence in the world in a manner that the Swiss deliberately avoid.
No matter how lovely the lakes and how splendid the mountains, Switzerland is not a model for Britain in its relationship with the European Union. Britain is a proud and, when it chooses to be, influential member of the EU, and should stay that way.