local contact is very different, it means anyone in the world can use that domain. EU is quite restrictive even by the standards of its constituent countries, e.g. germany doesnt require you to be a german resident.
The rules allow EEA members that are not part of the EU , like norway, to use .eu. Given that there are so many british domains registered it seems like breaking them is the wrong approach - a simple change in the rules would do it.
