ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Brexit and the future of Britain part 2 - EFTA

Updated on September 16, 2016

The EFTA trade block


Is the EFTA a safe port in the post-Brexit storm?

This is the second part in a series of articles looking at the options a post-Brexit Britain faces in its future relationships with the EU. Redefining this relationship is likely to take years if no the better part of a decade and is likely to employ a great amount of Parliament’s time and civil service resources to put into place. Whilst there are many options available to the UK and EU, options such as the UK joining the EEA or EFTA are being widely discussed in the media, business lobbies and political circles. Both these options do notionally hold to the mantra ‘Brexit means Brexit’.

In my first part I looked at the EEA option with the benefits and hurdles the UK could face. In this second part I look at the EFTA or European Free Trade Association. The EFTA is commonly referred to as the ‘Switzerland option’.

The EFTA, on the outskirts of Europe

Could the UK move from the blue EU bit to the green EFTA bit?
Could the UK move from the blue EU bit to the green EFTA bit? | Source

What is the EFTA

In the aftermath of the Second World War, different groups of European nations started forming various (and overlapping) treaties and cross border organisations such as the Brussels, Paris and Rome treaties. The UK participated early on in some of these treaties before her focus was drawn to the Commonwealth which was entering a transitional period. When in 1957/58 the European Economic Community (forerunner of the EC and from 2007/9 EU) was formed the UK was wary of entering such a close economic relationship.

This reticence to join the EEC led the UK to take a leading role in creating the EFTA as an alternative trading bloc for nations who were either unable or unwilling to join the EEC. The main difference between the EEC and EFTA was that the EEC had a common external customs tariff. This enabled each EFTA to coordinate their trade policies but also free enough to engage in any bilateral trade agreements with third countries.

At the time the EFTA was formed the EEC membership consisted of France, West Germany, Italy, Belgium, Luxembourg and the Netherlands, the ‘Inner Six’. The EFTA initially consisted of the UK, Norway, Switzerland, Austria, Denmark, Sweden, Denmark, Finland and Portugal, known as the ‘Outer Seven’.

What should Britain's future relationship with the EU be?

What should Britain's future relationship with the EU be?

See results

How does the EFTA differ from the EU?

Whilst the EU started out as a set of trade treaties to harmonise business practices, reduce and remove tariffs and bring national labour laws into line whilst it has become much more integrated. Today as well as common external trade policy, the EU is also concerned with social, environmental and legal harmonisation as well as creating an economic and monetary union. The harmonisation of these social and supposedly ‘non-economic’ policy areas is to reduce what are called non-tariff barriers for cross-border trade. Tariffs are direct taxes applied to goods and services. Non-tariff barriers can include things such as quotas placed on imports, product standards and administrative and regulatory differences and even exchange rates between currencies.

One could see the eventual endgame of harmonisation and monetary union project as the creation of a pan-European superstate.

The EFTA is a much looser trading agreement. It is designed to remove tariff barriers to trade whilst leaving member states still free to determine which non-tariff barriers and policy areas to harmonise and which are more beneficial to operate differently. Whilst EFTA states are party to the single internal market. This means that they implement the four freedoms, of goods, capital, labour and services. These are implemented for the three EEA states (Iceland, Liechtenstein & Norway) through horizontal provisions.

To find out more about Switzerland’s relationship to the single internal market, visit the European parliament website.

Switzerland, in the EFTA but not integrated into the EEA, is still party to the European single internal market (which is separate to the European Union). It’s access is via 120 bilateral agreements, two major sectoral agreements and membership of the Schengen area. The EFTA, via the EEA includes provisions for participation in EU flanking policy areas (policy areas outside the four freedoms).

Read more about the EFTA participation in flanking and horizontal policy areas.

The EFTA also negotiated a series of bilateral and multilateral trade agreements and treaties with countries spanning every major economic centre. You can view the blocks different trading relationships and statues around the world in this interactive map.

EFTA trading relationships

An interactive version of the map is available through this link.
An interactive version of the map is available through this link. | Source

The benefits of EFTA membership

Perhaps the ‘single’ biggest benefit of EFTA membership is participation in the single internal market, without being in the European Customs Union.

Relationships of different European political bodies


This means nations, or specifically Switzerland, are free to trade with the single market, but also free to apply their own customs tariffs (those main barriers to trade we looked at earlier) and negotiate trading relationships with third party countries. If the UK joined the EFTA we would retain preferential access to the single market and could retain access to the single market in services, should the UK be willing to apply free movement of people.

In a Blog for the London School of Economics Ruth Lea lays out the economic case for (re)-joining the EFTA in a more cogent way than I. She lays out the premise that for the UK’s trading patterns and policy, membership of the EFTA could be a benefit for the UK.

With a combination of single market access, participation in existing EFTA trading relationships, bilateral agreements and treaties as well as the ability to negotiate free trade agreements. Tangentially, Switzerland signed a free trade agreement with China in 2013, after three years of talks; whilst after 16 sumits the EU has still to sign a full FTA with China. Bilateral negotiations tend to go quicker than multilateral ones.

Hurdles to Overcome

As with membership of the EEA, the hurdles to joining would be less economic and more political. Membership would require the UK to keep (notional) freedom of movement in place which would continue to be a barrier to successive governments public target to reduce net migration. It is also politically difficult due to the nature of the Brexit campaign which was fought with immigration as a core issue.

There would also be payments into a common budget, as there are with any multinational organisation. Some of these payments do funnel back to the EU for participation in the single market and other flanking policy areas, as well as bilateral grants. Again budgetary contributions formed a central part of the leave campaign, remember the bus and the £350 million pounds a week campaign.

Other hurdles are perhaps less tangible. There are questions as to how much sovereignty the UK repatriates from the EU and what the trade off is. The Leave Alliance has a good article which address the ‘no-say’ fallacy which is often thrown as an argument against the EFTA and EEA options. The demonstrate the intricate and interlinking organisational relationships between the EU, EFTA and EEA.

In conclusion

In conclusion we can see that from the UK perspective, politically and economically there maybe clear benefits of EFTA membership over EEE or full EU membership. With a Swiss-style deal, the UK could gradually extracate itself from the bulk of those parts of EU membership, deference to the EU Commission, Schengen & Euro membership, application of the CAP and CFP policies, common trade agreements and ‘ever closer union’ which are not currently politically palatable. Even many remain voters have serious concerns with one or more of these aspects.

Perhaps an EFTA deal which kept freedom of labour as set out pre-Maastricht Treaty (where there were still visas for labour) and allowed a theoretical migration cap could be a solution. Whether this could be sold to enough UK voters and bought by the EU institutions would be a much larger question.

In the third part of my series I will look at the WTO or World Trade Organisation option.

An interview with European Commission President, Jean Claude Junker

And for a little bit of something different, here is an interview with Jean Claude Junker, President of the European Commission.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)