EU exit: why do they have to lie?

03/04/2015

A lie, as I am wont to say, is not simply a matter of telling an untruth but, when it comes to Oliver Kamm, a Times leader writer and columnist, he doesn't even bother to disguise his lies.

Writing in his paper on why future UK prosperity depends on remaining in the EU, he refers to the Norway "model". He then tells us that Norway is "a prosperous nation that is outside the EU but has access to the single market by being part of the European Economic Area" and that it "implements almost all EU regulations and laws while having no say at all in forming them".

Deconstructing the last part of that claim, not by any account can it be said that Norway implements "almost all EU regulations and laws". With the acquis standing at about 21,000 legislative acts in force, and the Single Market comprising around 6,000, the assertion made is simply not true. That, from someone who should know better, makes it a lie.

Coming then to the next part, there can be no justification for saying that Norway has no say at all in forming the Single Market rules. Even if one accepts that Norway's role is limited to consultation at the early stages (and it is far more), it cannot be rightly said that Norway has "no say at all" in forming the Single Market rules. That too is a lie.

Mr Kamm also asserts that "there's no cost-free way of gaining access to the internal market". Norway, he says, "has to pay for it. It makes a big budgetary contribution to the EU, almost half a billion euros annually, with no rebate".

Here, though, the lies become more devious. For sure, as part of the EEA package, there is provision for a range of financial contributions, but these include "Norway Grants", made by Norway to eastern enlargement countries to help with their post-Communist economic rehabilitation.

In the period 2009-14, these grants amounted to €804 million, supporting 61 programmes in 13 countries in Europe including the member countries that joined in 2004 and 2007. But this money is not remitted to the EU and is not part of the EU budget. It is administered separately, under the aegis of the Norwegian Ministry of Foreign Affairs.

Norway also provides 95 percent of the funding to the EEA Grants. The two together amounted to €1.8bn over the period, of which €1.71bn was paid by Norway. As with the Norway grants, the EEA grants are not part of the EU budget. They are administered by the independent Financial Mechanism Committee.

These payments are part of the EEA agreement but they are not specifically payments for access to the Single Market. They are effectively part of Norway's strategy for co-operation with the EU.

That, however, is not the full extent of relations. As of 2014, Norway participated in twelve EU programmes, including Horizon 2020, Erasmus +, the Consumer Programme and the Copernicus programme. It also has a bilateral arrangement for participation in interregional programmes under the EU's Regional Policy.

Additionally, it takes part in the activities of 27 EU agencies. These include the Education, Audiovisual and Culture Executive Agency (EACEA), the European Agency for the Management of Operational Cooperation at the External Borders (FRONTEX), the European Agency for Safety and Health at Work (EU-OSHA), the European Chemicals Agency (ECHA), the European Defence Agency (EDA), the Executive Agency for Health and Consumers (EAHC), the Research Executive Agency (REA) and the European Police College (CEPOL).

As to the budget for these activities, over the 2007-2013 multi-annual period, total EU spending was around €70 billion, of which the estimated EFTA contribution was in the order of €1.7 billion – averaging approximately €250 million a year. Norway carried 95.77 percent of that cost (€1.63bn).

This cash, therefore, is for services rendered and, even then, the funding was not one-way. Around €1.01bn was returned from EU funds, making the seven-year net contribution in the order of €620m - or about €90 million a year.

In the Seventh Framework (research) Programme, for instance, Icelandic and Norwegian participants, including many small and medium-sized enterprises (SMEs), were involved. Icelandic researchers were contributed to 217 projects, receiving funding of nearly €70 million. Norwegian researchers contributed to more than 1,400 projects, receiving €712 million. Both Iceland and Norway signed up to the successor programme, Horizon 2020.

As to the specific EFTA contributions paid for the functioning of the Single Market, these come out of the EFTA budget, to which Norway pays its contribution. There is no direct payment to the EU.

Currently the annual (2014) budget is 22,360,000 Swiss Francs (about £16 million), of which 55 percent is borne by Norway. This includes categories defined as EEA related activities, EFTA/EU statistical cooperation and EU/EFTA cooperation programmes. That, strictly, is the cost of Single Market Access which, on a pro-rata basis, would cost the UK less than £100 million per annum.

However, if the total gross amount were taken for Norway's annual payments were taken, that would amount to about £500 million in real money. Should the UK leave the EU and rejoin the EEA, the pro-rata payment would amount to about £6 billion a year gross – just under a third of current gross payments – or about £4 billion net. If it is done on a GDP ratio, the UK's economy is five times the size of Norway's, we would pay £2.5 billion gross. Net, that might work out at as little as £1.8bn.

By any reasonable measure, that is a bargain. Even with the lies, the case stands up for the Norway Option as an interim solution for leaving the EU.