Daniel Hannan

WHAT would happen if we left the EU? Michael Gove is the most senior minister so far to suggest that the Prime Minister’s declared policy — to recover powers from the union while remaining a member — can’t succeed without a credible threat of withdrawal.

The Education Secretary is absolutely right: there is no chance of our own EU officials seeking the meaningful repatriation of powers, let alone the EU granting it, unless everyone understands that we will otherwise leave.

This isn’t something we can bluff about. We have to be prepared to walk away if our minimum terms are not met.

So what would happen if we reached that position? What if the EU refused to meet our bottom line? What if we were left with no alternative but to pull out?

Amicable

As far as our own procedures go, secession is simple. European law has primacy over British law because of the 1972 European Communities Act. That statute could be repealed in days.

In reality, of course, we’d want an amicable separation.

Under Article 50 of the Lisbon Treaty, the EU is required to negotiate an alternative deal with any state that gives notice of its intention to leave.

What should Britain ask for in such negotiations?

There is little doubt that we’d want to opt out of the noneconomic aspects of membership. We’d want to settle our own human rights issues. We’d want to control our own borders, deciding whether or not to allow unrestricted access to EU nationals.

We’d want to determine our own employment legislation. We’d want to set our own welfare rules. We’d want to run our own foreign policy, separate from the new EU diplomatic corps, the Common External Action Service.

We’d want to control our own agricultural policy, instead of being forced to subsidise our farmers’ Continental competitors as we have for so long. We’d want sovereign control over our own fishing grounds, out to 200 miles or the median line between our coastline and a neighbouring state’s, as allowed by maritime law.

We’d want our Euro officials, including our MEPs, to be released into more productive jobs. (Speaking personally, I will breathe a deep sigh of relief on the day my job disappears.)

And, of course, we’d want to stop paying for the whole EU racket.

Last year, we handed over £19.7 billion to the union. To put that sum in context, the total domestic savings made in the same year by all the government budget cuts put together came to £6.2 billion.

Of course, pulling out of all these common policies doesn’t mean we stop talking to our neighbours; simply that we collaborate on an intergovernmental basis rather than being told what to do by the Brussels institutions.

The toughest talks will be over trade. How could we enjoy open commerce with our EU allies while at the same time participating in the growing markets of the wider world? One option would be to remain in the European Economic Area (EEA), alongside Norway. The EEA, established in 1992, offers full participation in the single market without any of the political structures.

Norwegians prefer it to EU membership — and you can see why. In per capita terms, Norway exports two-and-a-half times as much as we do to the EU.

There are drawbacks, though. The EEA was only ever intended as a stepping stone to full membership. Thus, the Norwegians are already obliged to implement many of the EU’s social, employment and environmental regulations, as well as paying into the EU budget.

A better model is Switzerland, which rejected EEA membership in a referendum in 1992 and instead set about negotiating a series of free trade agreements with the EU, covering everything from fish farming to the permitted noise of lorries on roads.

In consequence, the Swiss have almost all the advantages of membership with almost none of the costs.

They enjoy the four freedoms of the single market — that is, free movement of goods, services, people and capital — while remaining outside the political structures and making only a token budget contribution.

Switzerland sells four-and-ahalf times as much to the EU, per capita, as Britain does, and its people are the wealthiest in Europe.

Critically, both Norway and Switzerland are able to sign trade deals with non-EU states. They have a free trade accord with Canada, for example — something we have to wait for Brussels to do on our behalf.

And you can be certain that, when the EU eventually gets round to signing a treaty with Canada, it won’t be the open one Britain would have agreed, because it will be concerned with protecting vested interests on the Continent, which are much more hostile than their British counterparts to free trade.

Trend

In his speech at the Conservative Party conference last week, David Cameron took justified pride in the growth in Britain’s global trade: ‘Over the past two years, our exports to Brazil are up 25 per cent, to China 40 per cent, to Russia 80 per cent.’

He didn’t mention that, over the same period, our exports to the EU had fallen and that the trend is accelerating.

In the past three months for which we have full figures — April, May and June — our exports to the EU fell by 7.3 per cent, while our exports to the rest of the world rose by 13.2 per cent.

The latest official statistics show that the EU now accounts for the lowest share of our trade since the current measure was introduced in 1988. Britain needs to reconnect with developing markets, not least those to which it is attached by the natural affinity of language and law, affection and kinship.

As the EU shrinks, the Commonwealth is surging. Its economy overtook that of the eurozone in June and, according to the IMF, will grow at 7.3 per cent annually over the next five years, while the EU barely grows at all.

Is it possible to recover our global links while trading freely with Europe?

After all, these negotiations on Britain’s withdrawal would be talking place because the EU had refused to offer us a better deal from the inside. Why should the other European members grant us open access to their markets?

Grudge

The short answer is that they offer such a deal to Switzerland, which is a far less important market for them than Britain. On the day we left, we would become overwhelmingly the EU’s chief export destination, accounting for around a quarter of all its foreign sales.

And here’s the killer point: we buy from the EU far more than we sell to it. Our deficit with the EU in 2010 was £46.6 billion; our surplus with the rest of the world was £10.3 billion. In any negotiation, the customer tends to have the upper hand over the salesman.

That’s not to say we wouldn’t still have spats: more scallop wars with French fishermen, blockades of British lorries at the French Channel ports, perhaps by militant trades unionists. But, of course, we have all these things now even when we are full members.

Might EU states seek to close their markets to Britain out of sheer spite? Might they, as the Polish foreign minister, Radek Sikorski, suggested last month ‘ hold a grudge against a country that had selfishly left the EU’?

I don’t imagine so for a moment. We would remain their military allies, their diplomatic supporters and their biggest customers.

But if Sikorski is right: if EU leaders resent us so much that they’d cut off their nose to spite their face, why the devil do we invite them to rule us at all?