Tuesday, November 21, 2006

A few reasons not to leave the EU

I feel the need to undermine the right wing blogosphere's dominant paradigm. The idea, as expressed by a certain peer this evening on 18DoughtyStreet, that there is no case for not leaving the EU relies on a number of misconceptions.

First, the descriptions of vast amounts that the EU costs us are based upon it hurting free trade. This relies first on the EU, which would be our largest trading partner by some margin, not putting tariffs against us because it wouldn't be in their interests (as they sell more to us than we sell to them) but a eurosceptic arguing on the basis of the European Union's strict rationality and an enlightened French trade policy cannot be convincing. Second, it relies on predictions that we could secure a more liberal trade policy from the United States as they really love us as good little War on Terror buddies. Anyone who knows much about American political history or culture can tell you they're unreliable free traders at best. Look at the Joint Strike Fighter Project where they are holding up the release of basic information to us.

Finally, it relies on the idea that we would be unilateral free traders; this sounds credible initially but we are a fallible political culture like every other and if, for example, farmers started to commit suicide under the pressure of losing the CAP are the euronihilists really confident a tariff couldn't pass? It's not like our immigration policy can really be defended as a triumph of rationality. Leaving the EU could increase the freeness of our trade but on the balance of probabilities a sensible assessment has to be that it would make our trade less free.

The second argument that the euronihilists rely upon and which does not stand up to scrutiny is that the EU cannot be reformed. "We've been trying for decades" is usually the response to anyone claiming the EU can be improved. The problem is that things have changed and our past record of failure might not imply failure in the future. We joined the EU in a position of weakness as a declining power and moribund economy after the basic terms of engagement in the EU had already been set. Since then our agenda for the EU as primarily a free trade area has been boosted by our conscious effort to secure enlargement that makes a deep political union ever more difficult. The rejection of the constitution before it even came to us is an early sign that the integration train has been derailed.

Finally, the euronihilist case relies upon the argument that nothing significant and positive has been achieved by the EU. Enlargement is, again, the reason this argument does not hold. Just as the Marshall Plan created economic incentives to a liberal economic development and softened the blow of adopting such a system the European Union did the same for creating relatively stable political societies and would appear to have played an important role in the remarkable success story of Eastern Europe over the last decade and a half. This is a remarkable, significant and positive achievement of the European Union.

There are serious problems with the EU: The CAP is truly disgusting, there is massive corruption and a growing burden of regulation. However, the EU has achieved something remarkable for Eastern Europe, is a force for more free trade and can be improved.

212 comments:

1 – 200 of 212   Newer›   Newest»
Gracchi said...

Good post, I agree with you. The one thing I'd add to your analysis is that the EU does make available freedom of movement throughout its borders- consequently it has brought together European populations to know more about each other. The cultural exchange particularly at UK universities may not have a value but is certainly good for the country.

Serf said...

The second argument that the euronihilists rely upon and which does not stand up to scrutiny is that the EU cannot be reformed.

This is where I think you are very wrong. For all the talk of reform, the EU is continuing to churn out useless and damaging "one size fits none" regulations. The push for further political integration is still there as is the inclination toward idiocies such as tax harmonisation.

The biggest problem is that the view of business that is prevalent in much of Europe is that doing business is a privilege given to you by the government. Thus the need to regulate every aspect of every business dealings.

If you really think that the EU is reformable, give one concrete example of a step in the right direction, and I don't include any successful defence against steps in the wrong one.

Rog said...

Interesting, when i read this I thought it was a spoof, but you are actually serious?

If you don't think the EU costs us "vast amounts", would you kindly give your estimate as to how much is does cost us?

Can you estimate the tariffs the EU would levy against us should we be wise enough to leave (would they exceed WTO limits, for instance)? You don't ignore our trade deficit with the EU, but assume our EU chums would damage their trade in order to punish us? Remind me why it's a good idea to have these people in a superior position to our own government.

Certain information on the JSF is wisely limited by the US because they simply cannot take on trust that the information won't leak (or be sold) to undesirable destinations. I don't blame them one bit.

Reform: "our past record of failure might not imply failure in the future"... Hilarious. Like a surgeon performing a head amputation to cure migraine, in spite of the fact it's never worked before. "It might work one day, so let's keep doing it".

We joined in a position of weakness you say. OK, but how has QMV and dilution of voting strength increased that? It hasn't. Started with little influence, and gaining less as time goes by.

Free trade? We do most of our foreign trade with non-EU countries. The EU impose tariffs on such trade.

Peace in Eastern Europe? You are kidding, right?

Apart from that, spot-on analysis.

ken said...

Just about every thing you have chosen to highlight is open to debate.

You argue that the case against the costs of the EU relies first on the EU not putting tariffs against us because it wouldn't be in their interests. Claiming the EU would be our largest trading partner by some margin, therefore implying that the EU would imposes draconian tariffs if we left, but you offer no reason why they would do this other than they would act irrationally, neither do you recognise that if we were to leave we would arrange the details of our future trading practices at the time. You ignore the WTO, you ignore the fact that world tariffs are not that draconian in the first place, but most of all you ignore the fact that most of our trade is within the UK. 80% of our trade is internal, 11% is with non-EU nations, and only 9% is with the EU. So if they did act irrationally and impose draconian tariffs that would only affect 9% of our total trade. But most of all you ignore the sheer size of our growing contributions to the EU which dwarf any tariffs they might impose if we left.

Your second point “trade with America” is plain wrong the case for leaving has never been clearly debated, there are however several avenues which could be and should explored, The European Free Trade Association, The European Economic Area, for instance. The North American Free Trade Agreement is perhaps the less likely of the opportunities which would present themselves to us if we were free of the shackles of the EU.

As unilateral free traders; Britain would be free to make any grants to its own farmers it wished and the likelihood is that they would better off out of the EU, after all the CAP was designed to support the French farmer not the British farmer. At present our immigration policy is defined by the EU, which as you admit cannot really be defended as a triumph of rationality.

If you are so certain the EU can be reformed then let us please see the evidence to show that our past record of failure “will” not imply failure in the future. I am afraid generalisations will not suffice at a time when the Intergrationalist are pushing their EU Constitution and in the interim our government is agreeing to introduce the measures in the Constitution by the back door.

The idea that enlargement would make deepening political union ever more difficult is a shot fox, the intergrationalist have taken the same issue and turned it round “ there can be no enlargement without deepening the political union, because the EU system would become mired in administration difficulties.

The base line is that the EU is not a free trade organisation it is destined to be a Nation state, everything it does it directed at amalgamating its members states, with the EU as the ruling authority. When the constitution is ratified the EU will be superior to its members. What could possible work to force a change in direction, to ensure that Britian remains an independent sovereign nation state, and at the same time turn around 50 years of integration and totally reverse the direction of the EU, so that is does become a free trade organisation.

Tim Worstall said...

As the person (at least I think I am) who invented the word euronihilist perhaps I can correct you on a minor matter?

'This relies first on the EU, which would be our largest trading partner by some margin, not putting tariffs against us because it wouldn't be in their interests (as they sell more to us than we sell to them) but a eurosceptic arguing on the basis of the European Union's strict rationality and an enlightened French trade policy cannot be convincing.'

No, it doesn't. The person who has done the calculation is Patrick Minford. If we leave and declare unilateral free trade: and the other 24 continue to impose the standard external tarrif (they can't, under WTO rules etc, impose higher tarrifs than they charge everyone else) then the UK economy benefits by 2.5 % of GDP.

Over and above that you're missing the point that it is the imports that make us rich, not the exports.

Matthew Sinclair said...

Okay, here goes:

Gracchi: I agree, also I think freedom of movement offers a solution to the integration problem we're now having with immigration (it allows us to discriminate in immigration in favour of Europeans).

Serf: I think I agree with you here but I don't think it invalidates my analysis which is, essentially, that enlargement has constituted a turning point. I could be wrong but we'll see over the next few years as the Eastern Europeans settle in. For one thing they mean the average European state is no longer a huge welfare state.

On examples though: The CAP is moving in the right direction, the EU's position in external negotiations is (the CAP aside) quite good.

Rog: I'm afraid that's a research project I don't quite have the resources for.

I think that either they are either somewhat rational people in which case EU trade policy can be improved or they are irrational and destructive in which case they won't allow us to remain in the sort of free trade relationship the UKIP, for example, envisions. Without this you're going to do huge damage to the City among other things.

The Americans can't trust us with military technology? They gave us their ICBM (Trident). Hasn't shown up in China has it? On the other hand American anti-sub tech. has.

Or a person trying a blood transfusion who finds one fails but after conditions change (blood types are discovered) he can perform the procedure effectively...

There are now lots of Eastern Europeans with much smaller states. The average is no longer as dismal. QMV doesn't affect the balance of power but, rather, the ability to stall.

I didn't say peace in Eastern Europe. I said creating incentives to good governance in Eastern Europe. Given how remarkable their progress has been this is a solid achievement.

Rog, Ken and Tim: I think you are being rather optimistic in assuming we would be a unilateral free trading state if we were to leave the EU. That is possible and would, of course, be a great idea but we would face the same pressures that a whole load of other states are facing.

It seems at least as likely that we would prove as vulnerable to interest group lobbying as any other state (everyone goes weak in the knees when farmers complain). Also, you don't think the Lib Dems would be proposing a "green tariff" and one of the major parties would adopt the idea *shudder*

Ken acknowledges this in a way:
"Britain would be free to make any grants to its own farmers it wished and the likelihood is that they would better off out of the EU"

Woo... UKAP.

DavidTBreaker said...

You must be mad.

1. Switzerland has unilateral free trade, Australia has it with Thailand and the USA, the USA has it with Canada and Mexico. We too can have unilateral free trade agreements.

2. The EU cannot be reformed because it's direction and basis - the planning and thoughts behind it - are all in the wrong direction. Basically towards 'ever closer union'.

3. There's also the argument about all nations being free.

ken said...

Mathew with respect you have not attempted to show why we would better off staying in the EU.

The problem with the wait and see approach is that the intergrationalist are not waiting to see, they are forging ahead with deepening the integration process. Even though the French and Dutch voted no to the Constitution it is being introduced piecemeal even as other forces are at work to bring it back in its entirety. To give any credence to your position you would need to show not just a slowing down of the integration process but compleate repudiation of that process and an achievable political alternative end position for the EU and its members.

At present the only offer on the table and the only goal is a United States of Europe, is that an acceptable outcome for you even if the nation state is less socialist than it is at present.

The Pedant-General in Ordinary said...

"Anyone who knows much about American political history or culture can tell you they're unreliable free traders at best. Look at the Joint Strike Fighter Project where they are holding up the release of basic information to us."

Oh for heaven's sake - this is ridiculous. The largest reason that the US is reluctant to share military information with us is because of the EU's expansion into defence. The US is rightly worried about the French getting hold of US technology and the Chinese getting access to it from there.

If this is the best argument against US attitudes to free trade, you are very very thin ground.

Matt said...

No one has mentioned Norway.
Norway is not within the EU, though is a major trading partner. It is possiable to thrive outside the EU system...so far so good, right?
Well, no. As Norway wants to trade with the EU it needs to keep its rules, regulations and porcedures level with its biggest market. This ensures an open and free market.
This results in Norway defacto introducing EU legistatltion into Norwegian law but not actually having any SAY in shaping that legistlation.
Given that the EU is also the UKs largest trading partner, we would end up inthe SAME position. And given the relative size and diversity of the UK economy, the fact that many non-EU businesses have European bases here, with drawing would make no difference to the implemetion of a vast swath of EU legistlation into UK law. Its jsut that we would have no say in how its developed.

As for the Eastern European comment. Compare the Eastern European countires that wanted to be in the EU and which worked for it, and those outside. The EU has been a very very positive force in Eastern Europe.

Third, people take about trade as if it does not matter. I am sorry but the Thatchrite dream of a service economy is just that, a dream. And while services are importnant, what do you think those services are? Buying and selling of items....imported into this country! You want to see a closed economy, move to North Korea! Over 50% of imports and exports go to the EU...that matters. We are all not working in the square mile, we are all not global city bankers in which the globe is the market (and thank goodness the City does well...wonder how much of that investment comes into the UK because of its global foot print and a member of the EU with its open market and common standards allowing east movement of goods, services, people and capital!!!!

While it is one thing to have an open debate about Europe, and we should, its very hard if its based on ignorance, out-dated views of the UK (the Empire is gone, get over it) or a desire to become the 51st state (it makes me laugh when you have those who want to have an 'independent' UK by getting out of Europe and then in the next sentance ask if Uncle Sam wants a blow job!)

ken said...

What Norway has is a trading agreement with the EU, “a single market” yet it has retained its political sovereignty as a an independent nation state. Any other arrangements it may have with the EU are agreed by both Norway and the EU in bilateral treaties, so it could well be argued that Norway has a much greater voice in its own laws and regulations than it would if it were a full member of the EU.

The lack-of-influence argument can be countered by the fact that Norway cannot be outvoted under the QMV rules, so that if it does not agree, then it can simply refuse to implement the EU Regulation, it has in fact retained its full veto in all areas, unlike Britian.

The other point to consider is exactly what sort of influence would a small country like Norway have within the EU in any case, having a seat at the table does not mean that what Norway says will be heard or that Norway would have a meaningful voice in EU laws and regulations. For that matter what real influence does Britian have in deciding the rules, regulations and general direction of the EU, even though we are full members of the Union and one of its major paymasters, all we have is a catalogue of failures to create a free market and prevent continual integration. All we are offered is that just perhaps these decades of failure might be coming to an end due to enlargement of the EU this despite the fact that all new members have to accept all of the previous agreements, all of the Acquis, all of the laws, will be fully bound the EU's common foreign policy, EU's common fisheries policy, the common agricultural policy and must adopt the euro. At the same time the intergrationalist are deepening political integration as a consequence of enlargement rather that the opposite being the case.

The EU only advances the influence of the nation state if its policies coincide with that of the nation state, if they do not then it has the opposite affect of silencing the voice, diminishing the choice and the freedom of the nation state.

The lack of influence argument is also challenged because Norwegian companies, organisations and public bodies have chosen to be partners in a number of EU programmes (enterprise, environment, education and research programmes and projects) and within those programmes the Norwegians are on an equal footing with partners from all the EU countries.

Norway’s detachment from the EU is becoming more significant with the increased political integration within the EU, we are no longer just considering just trade policies and common market regulations, but the overall integration of criminal laws, social laws, police networks, armed forces networks etc. All of these are outside of the basic agreement with Norway. At present all of the agreements within the EU are treaty based, Norway’s detached situation will become much more evident when that changes and the treaties are transformed into a constitution.

However the Norwegian political elite, is like ours in Britian is pro-EU, and is "inching" Norway towards the EU by slowly and gradually adapting to EU standards and regulations this strategy, will eventually make Norway a member in all but name.

But who knows how the situation may develop- Switzerland and Norway are outside the EU because their governments could not win referendums to join, otherwise they would already be members. But the pressure being created by the intergrationalist for a Constitution will demand that a number of EU countries will hold referendums on the new constitution over the next two years- unless as seems likely they will deny us a voice- Those countries that reject the constitution might have to negotiate a new kind of relationship with the EU and if that happens, the Swiss and Norwegians might end up as role-models for the rest of us who do not want to see our nation states subsumed onto the United States of Europe.

Anonymous said...

Your arguments are premised upon the assumption that with enlargement we have turned the corner and now the EU will be reformed. I see no real evidence for this, in fact the reverse.

Your hope of reform lies in the new members to the east. All of these new states will become "welfare recipients" for the next generation and will gradually move (back) to the default statist position. Indeed several of them contain ex-communists in key government positions, who are signed up to the federalist position.

You acknowledge the CAP is bad, yet Britain has achieved no significant reform, despite recently giving up the best bargaining chip we have ever had. Corruption remains endemic and the only minister rejected in recent years was someone who committed the sin of being catholic. The principle journalist to challenge some of these excesses has been arrested for his sins, and his evidence seized.

The constitution is far from being dead. We have been here before - the voters will keep being asked until they get the answer right.

But don't worry, the alternative is, as you say, uncertain.

Anonymous said...

"This is where I think you are very wrong. For all the talk of reform, the EU is continuing to churn out useless and damaging "one size fits none" regulations. The push for further political integration is still there as is the inclination toward idiocies such as tax harmonisation."

I'm sorry but anyone who follows the EU can see that this "one size fits all" philosophy has changed drastically since the 1970's. The EU has clearly moved away from total harmonisation to flexible standards and mutual recognition. Virtually every new policy area since Maastricht has been made without reference to harmonisation.

The problem with EU reforms isn't that they don't happen (massive reforms have happened since the early 90's on harmonisation) it's that nobody follows affairs at the EU outside of a couple of Sun articles.

John said...

"What Norway has is a trading agreement with the EU, “a single market” yet it has retained its political sovereignty as a an independent nation state. Any other arrangements it may have with the EU are agreed by both Norway and the EU in bilateral treaties, so it could well be argued that Norway has a much greater voice in its own laws and regulations than it would if it were a full member of the EU.

The lack-of-influence argument can be countered by the fact that Norway cannot be outvoted under the QMV rules, so that if it does not agree, then it can simply refuse to implement the EU Regulation, it has in fact retained its full veto in all areas, unlike Britian."

This somewhat misses the point I feel, the lack of influence argument is about Norway's ability to influence the regulations created in the EU itself. When the EU adopts regulations Norway cannot ignore them simply because it isn't a member of the EU, the Norwegian market is tiny and the vast majority of trading Norwegian companies do abroad is with the EU, therefore the regulations are adopted anyway. A company cannot feasibly manufacture two products (one for Norway and one for the EU) so whether Norway is an EU member or not it still harmonises its regulations with it.

This is a moot point slightly because of Norway's influence within the EU, for Britain the argument is far far stronger because of Britain's size and the amount of Council votes it has. Virtually nothing in the EU which Britain has to adopt is done without Britain's approval, just look at the Council votes for the evidence of that - you'll be hard pushed to find a single "EU imposed law" which the British haven't agreed with in the Council.

The classic argument of advocating a withdrawal from the EU and entry into a free trade agreement completely neglects the fact that we'd have to adopt the vast majority of EU regulations anyway - heck, America has to adapt a large percentage of its regulations to the EU so what hope do we have? All we'd be doing is giving up our influence to shape the regulations we'd be forced into following anyway.

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I see you, I feel you
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Far across the distance
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You have come to show you, go on

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Local Attractions

National Gallery of Scotland 1.1km
Edinburgh Castle 1km
National Museum of Scotland 1.4km
Edinburgh Zoo 4.3km
Royal Botanic Garden 2.1km


Local Businesses

Edinburgh International Conference Centre 1km
Edinburgh Exchange District 0.8km
Standard Life 0.5km
Anderson Strathern 0.5km
HBOS 0.8 km

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