Should Britain Leave The EU & Join NAFTA?

Between Obama - whose first act in the White House was to send Churchill's bust back to Britain - and the Boy Wonder, David Cameron - who renigged on a promise to allow his countrymen a referendum on their membership in the EU - there seems no chance at the moment that Britain and America will become much closer in their relationship, economically or otherwise. But they certainly should. That is the proposition of Iain Murray and James Bennet in an op-ed at the WSJ. They believe that Britain and the U.S. would both benefit significantly if Britain were to minimize its ties with the EU and in its stead join NAFTA.

Britain joined the EU in 1973, when it was nothing more than a loose economic union. Over the next four decades, the EU grew to become an anti-democratic, socialist monstrosity. Yet Britain stayed the course with the EU, even going so far as to jettison Margaret Thatcher when she stood athwart greater ties to the EU. But Britain's legal and political system, the culture, language and traditions, they are all at home in North America. They are not, as Murray and Bennet point out, at home with the nations of continental Europe. And today, the Brits are at a crossroads, whether to surrender the last vestiges of their sovereignty to the EU, or whether to turn towards North America. An attempt by Cameron to keep Britain at arms length from further EU integration has been met with a cold shoulder from the EU members:

. . . French President Nicolas Sarkozy helpfully summed up the results of this month's summit. He told Le Monde that there are now two Europes, one that "wants more solidarity between its members and regulation, the other attached solely to the logic of the single market." The Europe of regulation wants to press forward with deeper integration, stringent budget rules and a transition away from nation-state democracy.

The problem is that no one asked the peoples of Europe whether they wanted this. Nationalism is on the rise. Budget rules have been flagrantly ignored in the past, and the Franco-German plan does nothing to deal with the euro's structural problems, which make southern European countries grossly uncompetitive.

It is obvious to most outsiders that the euro zone's problems remain. The rating agencies have been unimpressed, and downgrades of most euro-zone members and their banks are now more likely than ever. This meant that Mr. Cameron was left with two choices: strike out for the shore or drown with the rest.

Perhaps the most interesting thing about Mr. Cameron's decision is the way he made it. It is now clear that he made an attempt—as he had promised British voters—to repatriate powers away from Brussels. This attempt was rebuffed with some prejudice. Given the outright hostility to Britain now evident in the European Union establishment, any further attempt at repatriation will be a non-starter. The implications are considerable.

The European Economic Community (EEC) for which the British signed up in a 1975 referendum—a community of free trade and cooperation, not supranational bureaucracy—is long gone. Worse, even today's less-palatable EU will soon no longer be on offer. Sometime in the next few years at most, Britain will likely face the choice between immersion in a powerful centralized European mega-state and full exit.

Most probably, the choice will be made in an atmosphere of crisis, with dramatic media coverage proclaiming impending doom for Europe. Britain today needs to think seriously about a Plan B, so that it does not have to take an option it will regret for lack of coherent alternatives.

Britain does have other choices. To find the country's new role, British leaders should look to North America.

Alone among EEC members, Britain narrowed some of its major trade networks when it joined. It also traded ordinary Britons' right to virtually bureaucracy-free movement, temporary or permanent, between the U.K. and British Commonwealth nations. This meant losing easy access to prosperous places like Canada, Australia and New Zealand, which enjoy plentiful jobs and high standards of living, for the largely theoretical right to take a job in Düsseldorf or Lille. While much trust was lost between Britain and the rest of the Commonwealth because of this move, strong personal, cultural and economic ties remain and could be revived. Ask the average Briton where he'd feel more at home, Paris or Toronto.

Canada and Australia have well-managed, vibrant economies. Both countries sit on huge deposits of natural resources of ever-increasing value. Britain's top-tier financial sector and still-excellent technical capabilities already play a role in Canada's economy. These ties could be much strengthened.

Britons also feel at home south of the Canadian border. Contrary to an oft-repeated myth, links between Britain and the United States are not reducible to the personal relationships between presidents and prime ministers. The U.S. and the U.K. have always been each other's primary financial partners. A few simple measures could substantially deepen this relationship, especially once Britain no longer needs to adhere to EU rules.

Foremost among these would be to admit a post-EU Britain to the North American Free Trade Agreement. Nafta is not a perfect vehicle, but it has the enormous advantage of already existing, with a nearly 20-year track record behind it. And unlike the EU, Nafta would not seek to impose a single social vision on its members. For example, Nafta has had no effect on Canadian social policy, which is very similar to Britain's—except for Canada having more revenue to pay for it all.

The ongoing euro crisis will not be resolved any time soon, and America will continue to be impacted by bank write-downs and declines in U.S.-European trade. Increasing U.S.-U.K. trade would be one relatively quick and effective way of taking up some of the slack.

Up to now, however, the U.S. has pursued a policy of propping up the euro while discouraging British independence from Brussels. This is incredibly short-sighted. Using the vehicles of the Federal Reserve and the International Monetary Fund to try to fill the gaping hole in Europe's finances will get everybody nowhere. Instead, British, American and Canadian policy makers (along with their Nafta partners in Mexico) should be taking the long view and preparing for a future in which the unsustainable euro zone inevitably collapses. Welcoming Britain back into the North Atlantic economic community would be a win-win for all involved.