31 March 2016
Betting Against Brexit
The UK should remain in the EU.
By John Watson
“Ultimate authority”; “Our priorities”; “Take back control”. The heady words glitter on the “Vote Leave” pamphlet which dropped through my letterbox. No more European Court of Justice imposing EU law. No more European Court of Human Rights. Let’s run our own immigration policy. Let’s get rid of those irksome restrictions imposed to ensure a level playing field across the free market. Let’s paddle our own canoe just as we used to before this EU stuff got in the way. Rule Britannia and God Save the Queen!
It all sounds very seductive but can it really be right? If we are to shake free of the European Union, do we believe that the other 27 members should do so too? That would mean each of the current EU members being free to follow whatever protectionist policies it chooses, free to pursue its own line in environmental matters regardless of the damage to its neighbours, and free to follow its own ideas on human rights. It could certainly make Europe more exciting but would involve a meltdown in the order which the EU has imposed on the continent. Could that possibly make the erstwhile EU members stronger or would countries from outside the block use the fragmentation to pull business away from us, gradually leaching the wealth out of a disorganised Europe and leaving it as a sort of Disneyland – a nice place to go on holiday but with no real seat in the Councils of nations?
In an increasingly joined up world, a fragmented Europe would be a soft target for international competitors, a collection of countries at the mercy of those who are bigger and better organised. How could it possibly be otherwise? Vote Leave suggests that we would regain our voice at the World Trade Organisation. Yes, but who will listen to it? How much clout will we have compared to that of the EU which currently represents all its members at that organisation?
If fragmentation doesn’t seem to work very well perhaps we had better try something better. What about if the UK comes out of the EU but the other members remain within it? Then the UK can hang around on its flanks, relying on some form of limited coordination with it and watching in impotent dismay if the block which we need as our partner falters or loses influence. It would be a risky business. What would we do if the EU put in place restrictions designed to move business from London to Frankfurt? What weight would our protests have if we were threatened by environmental policies over which we had no say? How would we persuade car manufacturers to maintain current levels of production in the UK if they are faced with tariff barriers when they export the vehicles to the EU? No, we will be much too heavily dependent on the goodwill of those we have spurned to let us into their market. Even if it is in everyone’s interest for them to swallow their pride and do this, logic does not always drive political decisions.
Enough of the negatives of Brexit. Both sides of the debate have their scare stories. Let’s break the mould by taking things logically and in stages. We’ll start with why we need a supra national body and, if we come to the conclusion that we do, we can then look at the extent to which the EU satisfies these needs and, if not, what can be done about it.
The requirement for some sort of European body is driven by the increasing interconnectedness of the world with which we have to deal. Businesses and other organisations now operate across national borders and the rules need to be set and enforced by agencies which operate across those borders too. Issues like nuclear safety are relevant to countries next to those which operate power plants. International rules designed to prevent unfair competition prevent countries from using state subsidies to grab business from their neighbours. If we are going to have free trade throughout Europe, then there are other things too. There have to be agreements to limit tariffs, a common arrangement for indirect taxes and restrictions on the way in which countries can build monopolies. All these things need to be arranged on a common basis if we’re going to cooperate. That means some form of overarching organisation. But we also need such an organisation so that we can deliver a coherent response to external threats. It is a tragedy that the EU could not cooperate better in dealing with the migration crisis but I expect that it would have been worse if each country had functioned wholly independently.
Now to switch the lens from the need for a supra national organisation to the way in which the EU performs its role.
“Subsidiarity” is the name given to the principle that decisions should be made at the lowest possible political level, so that a decision which only affects a particular community should be made by that community. It has been a principle of the EU since the Treaty of Maastricht in 1992. If that principle had been properly applied, the EU would only be involved with those areas which, by their nature, cannot be effectively dealt with by the member states. Sometimes that is what happens. For example the EU has introduced the European arrest warrant to make it easier to apprehend criminals across borders but those criminals are still tried by the courts of the country in which the offence was committed. In other cases though the EU is seen as ignoring the principle because it uses the excuse of maintaining the single market to introduce unnecessary amounts of regulation.
Concern about EU meddling is dealt with twice in the correspondence between David Cameron and the EU president, Mr Tusk. Mr Tusk makes it clear that the UK is not committed to participate in further integration and also suggests a mechanism under which legislation can be blocked if it does not respect the principle of subsidiarity. If all this works, the problem of increasing “meddling” would have been effectively addressed and, if there was also an element of “rolling back”, one of the main concerns of the Brexit lobby would disappear. The question is, however, whether the ideas behind Mr Tusk’s words will actually be delivered. There are reasons to think that they will be.
The first is that an excess of red tape makes the EU uncompetitive and there is only so long that the member states can put up with that. Another is that the leadership of the EU has moved from France to Germany and that that is creating the climate for reform. Go back to the late 80s and early 90s when the French socialist Jacques Delors was President of the European Commission. Then the EU was seen as an extension of French power with the stream of regulations imposed from the top increasing its grip on the member states. It doesn’t seem like that any more as an economically declining France steadily gives way to Germany, a country without the French power complex and whose government is well aware of the need for less regulation and more flexibility.
If you accept the idea that Europe needs an organisation to help its members maintain their place in the world, an EU which respected subsidiarity and which permitted us to continue to run our own economy would be somewhere near ideal from the UK’s perspective. It gives us the muscle of belonging to a larger organisation when we need it. It gives us influence over how the continent develops and it only interferes with our lives in those areas which need to be dealt with by a supranational authority. It is true that this ideal has not been fully delivered yet but the EU is clearly an organisation in flux and it is only by being there that we can influence the form it finally takes.
That, of course, leaves the issue of immigration. EU citizens are free to move from one country to another and net immigration from other EU countries runs at 142,000. No doubt that reflects the success of the UK economy but of course it does put strain on support services. There is a great deal of debate as to whether EU immigration strengthens the economy. Clearly it makes some contribution, although presumably as other areas of the EU grow their economies, the figure will drop.
Doubts as to the benefits of EU immigration at this level seem a poor reason to step out of an organisation which supports our place in the world. If we leave the EU and we find that, against a background of declining prosperity, the flow of talent reverses we may look wistfully at the problem we once had. EU immigration is both a cause and a fruit of economic success. No one knows quite what the balance is. It cannot be the right reaction to those doubts as to whether overall it is beneficial to simply take an axe to the tree.
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