This is proposed as a solution for countries, such as the UK, which cannot go along with the further drive for political integration, but which still wants to remain members of the EU. It is also suggested that it could be suitable for non-members such as Norway and Switzerland. This though would be unlikely as the main sticking point for Norway and Switzerland to join the EU was they did not want to be ruled by a foreign court i.e. the ECJ. The 'Associate' option would require adherence to the ECJ.
The trade-off with the 'Associate’ option means limited participation with EU institutions and the deal itself can also be limited in duration. Therefore what it would clearly mean is the UK would be down-graded to that of a second-class member. Some are calling this option a trap:
I continue to be puzzled why you (and Richard) dismiss the Spinelli Associate Membership proposition as not to be taken seriously. On the contrary it is a huge trap...If you look at the proposed draft treaty, AM can be negotiated behind closed doors to be any type of relationship. This is the perfect way to stitch up a deal in which we basically still have a supranational government, but is then sold to the British public (like Wilson) as the beginnings of a wonderful new relationship – in the EU but not run by it.A trap or not the first thing to note is the UK won’t have any choice; unless the UK joins the Euro (a very unlikely prospect), if it wants to remain EU members then the Associate Membership is the only option available unless we decide to leave.
But in many ways he’s right, the option is a trap…a trap for Cameron, Clegg and Miliband. All three, who are committed to remaining members, would be reduced to campaigning in a referendum on the new treaty arguing that Britain should become just a second-class member of the EU, excluded from its central counsels (And it's probably unlikely the treaty will even be ratified if it is subjected to a referendum, triggered by the 2011 European Union Act).
At a stroke it would shatter the illusion that we are fully paid up members, that we are at “the EU top table”, that "we’re in Europe, not ruled by it". 40 years of momentum of hanging onto the coat tails of EU integration, albeit reluctantly, will be brought to shuddering halt at ironically the EU's behest. We can imagine a scene of Cameron et al standing on quayside waving hopelessly as the EU integration ship sails off without us.
The EU is clearly comfortable with being open about the notion of a two-tier EU. This is a sign of confidence even arrogance in their own project. Such flexibility in the past has always been resisted on the basis that it creates a dangerous precedent where other member states start asking for a change in terms and conditions such that the entire project comes crashing down.
What gives the EU confidence is the belief that most members won’t adopt this option - thus leading to the unravelling of the single market - because it has devised the 'Associate' option as the worst of all worlds. As has been alluded to in the above comment, it is a terrible option; neither completely in nor completely out. And deliberately so as to make it a very unattractive option. One is reminded of the principles of the Workhouses in 19th Century:
Life in a workhouse was intended to be harsh, to deter the able-bodied poor and to ensure that only the truly destitute would apply.However the unattractive nature of the Associate Membership option has the side effect of making leaving for the UK more attractive. Unable to join the Euro and so be an 'intimate' member of the club it reverses momentum away from the EU and instead towards exit, by virute of the option being an EU marker that says either you're with us or you might as well leave. Our country is about to come against, in a transparent way, the true nature of the EU project.
We are about to be dumped in the departure lounge and no amount of protestations and deception by our political class is going to be able to cover that up.