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Monday, January 21, 2013

"Single Market yes. Federal Europe No"

As we argued here, though there has been quite a bit of noise from the business community over recent weeks, few interventions are actually dealing with the sharp end of the policy debate, e.g. what is the greatest threat to business: Trying to artificially lock in the status quo - and risk voters throwing out the baby with the bathwater; or seek a new deal that will put the UK's relationship with the EU on a sustainable footing? Car manufacturers, for example, rightly warn that Britain leaving the EU would be bad for their industry. However, they fail to explain - as do many of the usual suspects - how to square UK public opinion and further eurozone integration, with continued EU membership. To wish away the debate - saying that it causes "uncertainty" - is hardly credible, since for so many different reasons, the debate is happening any way, whether we like it or not.

Which is why this piece by John Longworth, the director general of the British Chambers of Commerce, was so timely. He writes:
What may surprise some in the Westminster bubble is that the view from the coal face is different from the one trotted out by some high-profile captains of industry and the chief executives of multinationals. In fact, it doesn't follow either the classic Europhile or Europhobe lines [ a point we made here - OE remark]. Britain's business community, many of whom export, wants to see real and substantive change in our relationship with the European Union. While four out of five insist that they want to remain part of the European single market, an even larger number say they are against further integration and transfers of power from Westminster to Brussels.

The prime minister's preferred approach of "renegotiation and referendum", then, is an option that chimes with the thinking of many pragmatic businesspeople whose primary interest in the European debate is ensuring that they can trade, hire, export and flourish. Forty-seven per cent of our members, a large plurality, think this is the right approach. In the simplest terms, a settlement that supports their business interests would simultaneously safeguard the UK's economic interest. It is premature to talk of extreme solutions to Britain's European question.

Yet maintaining the status quo, which both Europhiles and approximately one-quarter of companies favour, is simply not a viable option. Europe is changing. Britain cannot expect the EU to simply stand still while it navel-gazes and debates its future involvement. Nor can it just seek to negotiate favourable reforms within the club's existing rules, because the club's rulebook is changing. If Britain does nothing to renegotiate its position now, it will be dragged down the road of ever-closer union in the wake of the Eurozone. That raises the spectre of an "in/out" referendum in future that no pro-European campaign could realistically hope to win.
Similarly, Lord Wolfson - Chief Executive of Next - in the Sunday Telegraph:
I have listened carefully to the arguments of certain business people who oppose the renegotiation of our position in Europe. All their fears revolve round the loss of the single market. They rarely espouse the need for more regulation, less democracy or wider EU powers over our justice system. Implicitly, they argue that these burdens are the price we must pay for remaining in the EU. They claim it is risky for the Prime Minister to even try to negotiate a better deal for Britain. They assert that the uncertainty of renegotiation will undermine our economy. This is nonsense. Investors already know that British support for the EU is fragile. Unless we call time on the process of EU aggrandisement, democratic opposition will make our place in the EU even more uncertain. In the real world, very little investment is lost as a result of this so-called uncertainty, because it is already a fact of life. These scare tactics are all too familiar to me. They were the same threats used by the same people when they urged us to join the euro. I remember their warnings of economic isolation and ruin.
 He concludes:
Those Europhiles who argue that we must either accept a federal Europe or lose our place in the EU unwittingly act as recruiting sergeants for their opponents who say we should leave. Before adopting either extreme, we should at least try to negotiate a middle way – an EU that the majority of us would be happy and proud to be a part of. The message is clear: single market yes, federal Europe no.
Spot on.


Anonymous said...

The positions of all these Open Europe-type voices and Anti-EU thinkers differ in just one crucial respect:

You are concerned about "fax democracy" and from that position you (by then logically) conclude the UK has to remain a full member of the EU to access and influence the single market (with the added hope that you can somehow negotiate away the EU's entire raison d'etre of political union so you only have the single market left).

Anti-EU thinkers are demonstrating that "fax democracy", insofar as it exists at all, applies more to Britain *inside* the EU than to Norway and Switzerland outside it and that if you want access only to the single market, one should invoke Article 50 and move to an EEA-type or EFTA-type position (which keeps the single market).

Fax democracy is therefore the nub of the entire argument. Whichever side speaks the truth on this will ultimately convince the Wolfsons, BCCs and even Open Europes of this world, and win.

Andrew Smith said...

I notice that Ford UK have joined in the intensely party political debate. One might have thought they would be wary of getting into that. Thy better be careful they don't over step the mark into UK democratic debate.

What I found most odd was the proposition from Ford that trade within the European continent could not happen if we left the EU whereas, in Norther America, Ford have large manufacturing operations in Mexico which is emphatically NOT a member state of the USA.

Similar silliness from several businessmen who may think they are adding to the debate when in fact they are showing the pro-EU side to be on very weak ground indeed.

Agincourt said...

Christopher Brooker hasjust written an excellent & informative Telegraph article which refutes the suggestion that Norway’s so-called ‘fax democracy’ relationship with the EU is something for Britain to fear. The article is called “Norway’s ‘fax democracy’ is nothing for Britain to fear” – see:http://www.telegraph.co.uk/comment/columnists/9813101/Norways-fax-democracy-is-nothing-for-Britain-to-fear.html
As Brooker says: ‘Norway has more than once played a leading role in shaping rules which the EU members then have to obey. The EU countries are in fact more subject to “fax democracy” than Norway is.’ So instead of losing power over EU rules by leaving the EU, Britain would gain designer powers over those many international rules which then become adopted by the. In short, by leaving the EU, Britain would be assisting in designing what later become EU rules, rather than having them foisted on us when it is too late to alter them.

So, it's better to be like Norway & Switzerland who, despite all the deceptive talk about ‘fax democracy’ have much greater powers to design EU & international laws now than individual EU member states do now. If Britain leaves the EU & reverts back to the EEA or EFTA, it will be designing laws along side other non-EU nations at the UN & its subsidiaries’ levels, so designing the EU’s laws while fortunately being outside the EU. Norway & Switzerland have MORE power than EU members over international (often UN-inspired) legislation, which they in concert design, while EU members (who are excluded from these international rule-designing processes because the EU is their official representative in these discussions). So it is EU members instead who receive these new rulings ‘by fax’ (as the out-dated expression goes), after the EU has meekly received them from their international designers, & who then adds nothing more to them than the EU’s name, while deceptively claiming itself to be the sole originator of these new EU regulations, when in fact it is non-EU international bodies (including the EU) who are the true originators, & including Norway & Switzerland - & Britain too if it leaves the EU! Quite clearly then Better Off Out is the only sane policy for the UK (& probably for ALL EU members, not just Britain). Preferably today!

David Horton said...

Sadly for the title and main premise of this article, it is becoming abundantly clear that the French and Germans will only permit one direction for the EU to proceed. Placating the British electorate isn't part of the French/German plan and Cameron won’t get any compromise between now and whatever date he suggests for a referendum.

Extrapolating this, we have four outcomes, none of which I am afraid is a return to a single market-only model. Although possible, there as a stubbornness and intransigence in Berlin & Paris that dwarfs the disquiet at EU membership found in Britain.

Outcome one is that the British government of the day ignores popular opinion and decides to simply engage with the EU in its entirety. I am at a loss to plumb the consequences for this action. Suffice to say it would be terrifying that an elected Westminster government behaved in such a way. Tantamount to authoritarianism and completely unacceptable to the people of Britain.

Outcome two is to wait until Cameron's/successor's efforts to convince the EU to change taken place and then hold a referendum. Any changes that Cameron manages to extract from a likely very angry EU would be powers that the EU could afford to lose; therefore inconsequential. The electorate are increasingly suspect of all politics and no amount of dressing this up would change held convictions. Only one result in the subsequent referendum and Britain would vote to leave.

Outcome three is for Cameron or his successor to accept, sooner rather than later, that the EU won’t be able to give him a concession that can be paraded as a success. A referendum is called sooner than the established date.

Outcome four is the most likely. Cameron and successive governments keep procrastinating against a referendum while maintaining an uneasy and sidelined position in the EU. This outcome would cease if the EU needed a new treaty, because that would trigger a referendum.

All in all, it seems clear that unless the EU (Merkel and Hollande) changes its position on variable strata of membership, this is going to rumble on in perpetuity. Public ill-feeling towards the EU will deteriorate and a point will be reached when it makes no difference what Cameron squeezes out of the EU.

To summarise then, I can see Britain leaving the EU in the next three years unless the French and Germans accepts that not everyone likes the pace, depth or direction of travel that they are espousing.

Rollo said...

Here we go again: the same old 'most business wants to stay in the EU'. Most big business may well, though I doubt it is 4 out of 5. But 90% of the business in this country are SMEs; and I have yet to find one that wants to stay in.
There is no single market in the EU. The EU's principle is protectionism, and has been ever since the ECCS. And it is applied among the ex-nations as well as against the rest of the world.

Idris Francis said...

The clear evidence of how Britain in Europe, now risen from the grave as Business for Europe, lied and lied again about "3.5m jobs depend on EU membership" has long been in the public domain, but was very well illustrated by (of all people) Sir Samuel Brittan, formerly of the FT and formerly an euro enthiast, in his speech to the Oxdord Union in 2000, shorly after BiE's infamous launch at the Imax Cinema - see http://www.samuelbrittan.co.uk/spee8_p.html
Many of those involved at the time are now trying the same now, They were wrong then and are wrong now.

As Cameron's imminent promise of renegotiation (which is not meaningfully ossible as others point out here) IF he wins the next election, as Miliband looks increasingly unlikely to match that promise, as the In/Out referendum based on it would not happen until 2018 in any case, as the euro remains doomed, David Horton is right - we will be out long before any such referendum based on renegotiation.

If this is Cameron's reading of the position he is toast, as will be his party unless they replace him - and soon.

Cameron may be wrng that "fax democracy" withing the EEA like Norway would be worse than our position within the EU, and Booker might be right. But it is irrelevant because (like Switzerland which exoports 4 x per head to the EU what we do) there is no need whatever to sign up for it. The EU's trade surplus with us means that they need free trade between us more than we do, and that if they started imposing tariffs net cash would flow to us.

As for fundamentally more important issues like democracy and rhe right to hire and fire those who rule us, please read the comprehensive assessment by Pofessor Anthony Coughlan that I have put on my web site at http://www.fightbackwithfacts.com/the-eu-and-euro/

jon livesey said...

I was very happy to see this piece appear because it is very close to what I have been saying for a very long time.

There is a "they will, they won't" trend in some people's thinking that casts the debate entirely in terms of what France and Germany will or will not allow.

This completely misses that point that trade is a two-way street. Trade is not some zero-sum game, with the exporter as the winner and the importer as the loser. Trade improves the efficiency of both the exporting and the importing economy. If it did not, there would hardly be any point to trade.

So it is in everyone's interest to find a deal that will satisfy the UK's essential demands. And the UK has a real ace in the hole here, which is that we aren't asking for aid. We are asking for institutional changes that don't cost anything, and which moreover don't prevent the other EU members going after whatever degree of integration they choose.

The UK can perfectly well be satisfied by a realisation that the UK is a World actor which does not naturally fit into a European model of integration in the same way Germany's close neighbours do. Just recognise that, and a negotiation that leaves the UK in the Single Market, but outside Greater Germany will go ahead much more smoothly.

David said...

The Daily Telegraph today reports that Britain is now Germany's most important trading partner. The report also points out that Britain has a £17 bilion annual adverse balance of trade with Germany.

This fact alone should be enough to kill the trade scare- stories peddled not onl by the CBI and its big business allies, but also by Open Europe, to its discredit.

Denis Cooper said...

David Horton -

"This outcome would cease if the EU needed a new treaty, because that would trigger a referendum."

I don't know how many times this has to be said, but a new EU treaty would NOT trigger a UK referendum if it had been deliberately designed to allow the UK government to AVOID a referendum, and because of the way Hague wrote his "referendum lock" law that would not be a difficult thing to do.

This is not a theoretical conjecture, it is what actually happened with the EU treaty change demanded by Merkel in 2010 and embodied in European Council Decision 2011/199/EU of March 25th 2011.

Did we have a referendum on that EU treaty change? No, because Hague could lay a statement before Parliament saying that the new EU treaty provision did not "apply" to the UK and so there was no need for a UK referendum.

Hague's statement of October 13th 2011 is here, with the Decision appended:


and it concludes:

"Section 4(4) (b) of the Act provides that where an Article 48(6) decision relates to the making of a provision that applies only to Member States other than the UK, it is deemed to fall outside section 4. The Treaty change provision contained in this Article 48(6) Decision does not apply to Member States whose currency is not the euro. It does not therefore apply to the UK, as the UK is not among the Member States whose currency is the euro.

In my opinion the European Council Decision of 25 March 2011 amending Article 136 TFEU with regard to a stability mechanism for Member States whose currency is the euro adopted under Article 48(6) TEU does not fall within section 4 of the Act and no referendum is required in the UK."

Note that the test is not whether an EU treaty change "affects" the UK, but whether on paper the provision "applies" to the UK; so any EU treaty change which could be couched in the general form:

"The eurozone countries may do X"

would not "apply" to the UK and would not trigger a UK referendum.