As free as Norway after Brexit: How would membership of the European Free Trade Association affect benefit spending for migrants in Britain?

This article was originally posted on the ESRC 'The UK in a Changing Europe' website and is based on work done as part of the Understanding the drivers and consequence of population changes in the UK in the context of a changing Europe research project. This research was funded by the ESRC as part of the UK in a Changing Europe Initiative.



Paul Bridgen, Traute Meyer, Josh Moran (University of Southampton)
P.Bridgen@soton.ac.uk; T.Meyer@soton.ac.uk; B.Moran@soton.ac.uk



To many Eurosceptics, countries like Norway are the perfect example of how leaving the European Union could benefit the UK. Norway, they argue, is not part of the EU but has access to the internal market, it is "rich, happy, and self-governing", it "retains the right of veto" on EU legislation, it is not forced to pay "extortionate EU membership fees" and, importantly in the context of the British debate, it has "opted out and exempted from all of the things that really make the British mad". From the Eurosceptics' perspective the Norwegian set-up could provide Britain with the 'best of both worlds': on the one hand Britain would continue to trade freely with the EU and thus maintain a strong economy; on the other it would retain sovereignty, free of EU stipulations.

One of the EU rules that Eurosceptics suggest 'get the British mad' is freedom of movement; the right of all EU nationals to enter and reside in other EU countries. This principle is guaranteed by the Treaty on the Functioning of the European Union, one of the two major pieces of EU legislation that outline how the EU works. Opinion polls have consistently shown that the British public are not happy with the high levels of migration from other European countries; a significant proportion believe EU migrants are a drain on the welfare state despite limited evidence that this is the case. These feelings have been exacerbated by the sharp increase in migration which occurred after the EU expansion into Central and Eastern Europe in 2004.

So what exactly is Norway's relationship with the EU? Would copying Norway give Britain greater control over its borders and migrants' access to the British welfare system? Before we can answer these questions, we have to consider the two other trade organisations in Europe and their relationships with the EU.

European trade organisations

The EU is not the only organisation that promotes trade across Europe; it isn't even the biggest. This is the European Economic Area (EEA), which includes all 28 EU member states and three other countries; Norway, Iceland, and Liechtenstein. These three countries, along with Switzerland, make up a third trade group: the European Free Trade Association (EFTA). Norway, Iceland, and Lichtenstein are members of the EEA and EFTA, but not the EU, Switzerland is a member of EFTA, but not the EU and the EEA, and Britain, along with 27 other countries, is a member of the EU and the EEA, but not EFTA.

Simple, right? Well, maybe not, but it gets a bit clearer when you examine each type of membership in more detail, and what they mean for freedom of movement and migrant access to welfare benefits.

EEA and EFTA, but not EU: Norway, Iceland, Liechtenstein

Norway, Iceland, and Liechtenstein all opted out of EU membership for various reasons during its development, but chose instead to become part of the EEA. Its purpose was to allow countries that didn't want to take part in all aspects of political union to participate in free trade. All EEA countries are part of the single market, but are not required to participate in other areas of the EU, including justice and home affairs, economic and monetary union, the customs union, common foreign and security policy, common fisheries policy, common trade policy and common agricultural policy. So the logic of the Eurosceptics is clear: copying Norway would retain Britain's route into the single market, while providing a plan of escape from further European integration. However, the problem with this logic is that by accepting entry into the single market, all three countries agreed to the most important, and controversial, principles of the EU: the free movement of goods, services, capital, and people. As a result, their borders with the Union are as open as those of Britain, and they pay benefits to EU nationals under virtually the same conditions as their EU counterparts.

If we assume that Britain leaves the EU and remains in the EEA in its current format, it would gain exemptions in some areas but most rules and regulations related to the single market would remain unchanged. At the same time, it would lose its place in the European Parliament and the European Council and, with those, any direct influence over European policy. This includes legislation related to the internal market, which it would have to implement. On top of this, although EEA members are not required to pay membership fees, they are required to pay the equivalent in contributions to EU structural programmes. This means that it is unlikely that the fees paid by Britain would change much.

EFTA country Switzerland

Like the EEA, EFTA was founded as an alternative to the growing European Economic Community (EEC). It was intended to facilitate trade between its members. Switzerland remains the only member that is not also a participant in the EEA or the EU. It doesn't have direct entry into the EU's single market but has had to negotiate instead its own bilateral agreements with the EU to gain access. These agreements give Switzerland a similar status to EEA countries and crucially include the free movement of people and the provision of benefits on similar terms to its EU counterparts. This means that although the 'pick and choose' system implied by the Swiss model could, in theory, allow Britain to selectively adopt the EU stipulations it wants whilst ignoring the rest, in practice there is very little difference between Switzerland, the EEA, and the EU in terms of open borders and migrants benefits.

Some might argue that Britain, in negotiating its own deal with the EU, could choose not to adopt the provisions on free movement and welfare benefits. However, recent developments in the EU's relationship with Switzerland suggest this will not be possible. As far back as 2010 the European Council concluded this relationship had "become unwieldy to manage and … clearly reached its limits". When, in 2014, the Swiss population voted by referendum to enforce immigration caps, including limits on EEA nationals, the European Commission responded by suggesting a single market composed of members with different rules was not a viable option, and indicated an intention to rethink Swiss access to free trade if the cap was implemented.

The Norway option: fact or illusion?

Joining the three EEA countries that are also in EFTA would thus not, in its current form, allow Britain to balance free and open trade with restrictions on internal migration and access to benefits. It would in fact change very little about the situation of EU migrants in Britain whilst excluding Britain from the Union's decision making processes. The Swiss option also appears to be a non-starter. It is doubtful that Brussels would allow Britain to adopt it, even if it could somehow be used to satisfy British requirements.

In short, the 'best of both worlds' option for Britain with respect to its relationship with the EU appears to be illusory. There is no available arrangement currently in place, not even in Norway, which allows countries to benefit from the advantages of free trade with the EU whilst opting out of the implications of free labour movement.


Note: This article gives the views of the authors, and not the position of the Centre for Population Change, nor of the University of Southampton.


About the Authors

Professor Traute Meyer is Professor of Social Policy within Social Sciences: Sociology, Social Policy & Criminology at the University of Southampton. Her work contributes to comparative welfare state research in Europe, and it explores in particular the role of private agents as social policy players in European pension regimes.She is working within the migration strand of the Centre for Population Change and has worked on the following project: "Free movement, pension costs: the projected pension outcomes of European Union migrants to Britain in comparative perspective".

Dr Paul Bridgen is Associate Professor in Social Policy within Sociology at the University of Southampton. Much of his most recent work has been on pension policy and politics, particularly occupational pension developments in Britain and Germany as part of the Anglo-German Foundation's Creating Sustainable Growth in Europe research initiative. He is working within the migration strand of the Centre for Population Change and has worked on the following project: "Free movement, pension costs: the projected pension outcomes of European Union migrants to Britain in comparative perspective".

Josh Moran is a research Fellow in Social Policy within Social Sciences at the University of Southampton. He is currently working on a project for the Centre for Population Change exploring how EU migrant's entitlements to benefits have changed in the context of the UK's shifting relationship with Europe.

Posted 19/04/2016 17:02