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Friday, June 07, 2013

Hey Berlin, this is what an EU without Britain would look like

Open Europe's Director Mats Persson writes on his Telegraph blog,
One of the biggest questions in today’s European politics is what price Germany is willing to pay to keep the UK in the EU. One school of thought – which strangely sees an over-representation of retired Europhiles and hardcore Eurosceptics – claims virtually no price at all. Berlin will choose Paris – and Warsaw – any day of the week. David Cameron might as well throw in the towel now.
Well, the past week may have given Berlin a taste of what an EU without Britain could look like. And it ain’t pretty.
The looming EU-China trade war has again pitted Europe’s north against its south, with Beijing pursuing its patented ‘divide and conquer’ strategy. The dispute was triggered by Brussels’ decision to impose anti-dumping tariffs on heavily subsidised solar panels from China. Beijing’s retaliation was swift: you Europeans spend an awful lot of cash subsidising wine. Is that really legal under World Trade Organisation rules?
It hasn’t been lost on anyone that the biggest wine producers in Europe also are the strongest proponents of the solar panel tariffs: France, Italy and Spain. Given the symbolic importance of wine in these countries, this is no longer only business: it’s personal.
A trade war with China would hurt everyone but, wine exports notwithstanding, it would be particularly bad for Germany. With demand in the eurozone drying up, the boost in German exports is largely due to a rise in its share of the Chinese market. A disruption in these export flows now, when the European recovery is balancing on a knife’s edge, would be a disaster for Germany.
It’s therefore not surprising that Berlin has gone to town over the anti-dumping tariffs, and it has been backed by the UK and other liberal countries.
However, since the EU has so-called “exclusive” competence in trade policy, the European Commission negotiates on behalf of all EU member states and Germany is hostage to majority decisions amongst EU ministers.
The way EU trade policy is decided is complex. A final decision on whether to keep the tariffs in place will be taken at some point towards the end of the year, though it could well be solved before then. But clearly, without the additional pressure and weight of the UK, Germany would struggle to get its way on this one. Any short-team decision to remove the tariffs requires a so-called Qualified Majority. Germany would find it extremely difficult to reach the necessary voting share absent the UK (and may even struggle with it, though the final decision is taken by a simple majority).
And this is where Brexit meets the German economy. At the moment, under a Qualified Majority Vote the Northern, liberal bloc has a “blocking minority” in the EU’s Council of Ministers, which means it can stop the many attempted protectionist measures originating in the Mediterranean. The southern group, too, has a blocking minority – meaning the two blocs balance each other. However, should the UK leave, the Mediterranean block would substantially strengthen its collective voting weight, whilst the German-led North would lose its blocking minority altogether. The field would be wide open for a barrage of anti-dumping tariffs and tit-for-tat trade wars (think “Buy European”) with China and other crucial destinations for German products.
There are several other reasons why Berlin fears a UK exit more than it lets on – prospect of paying even more to the EU, extra costs to UK-bound exports, losing a financial gateway to global markets, geopolitics and more. But as Germany increasingly goes global, it’s the fear that a more protectionist EU could prevent it from doing business across the world which really hits home.


Peter Kirby said...

Of course if the EU did not exist then each country could set its own tariffs in the interest of their own industries. Problem solved.

Rollo said...

Love to see Brussels when we stop funding them: the time would rapidly come when they could no longer pay their wages or pay the prestige project or even the lighting and heating of the hideous buildings. What a joy to see all those specially selected persons de-throned.

Denis Cooper said...

It would be folly to suppose that the German elite, once again set upon hegemony in Europe, would ever be prepared to pay anything like a sufficient price to justify the UK remaining in the EU; such a price would necessarily require the abandonment of their driving ambition to create a German-dominated pan-European federation, and they would never agree to that.

whoknows said...

"...driving ambition to create a German-dominated pan-European federation..."

This view is very funny from a german taxpayers perspective. How can conformation bias distort its own view to this extreme?

The only wish of the german elite is to lay down all its power und german sovereignty into the trustworthy hands of the EU. They want to get the final salvation for WWII and stop being the pariah of Europe.

David Horton said...

I've always doubted that Cameron would be able to raise more than a few empty promises about Cheddar production and North Sea Cod catches. However, if this article is to be believed, Cameron appears to have a very strong hand - at least with Germany.

More relevant however, is that this article inadvertently masks an irretrievably divisive issue. The very fact that this situation may occur (is occurring) is testimony (to the French and a few others) that Britain does not have a monopoly on self-interest. The international EUphiles and other proponents of the EU, have justified membership entirely due to the concepts of balancing international interests and single markets for the greater good. Yet here we have the nations themselves pushing and shoving each other out of the way to be first at the feeding trough.

Not that the German position will make any difference to Britain, although it is a delicious irony that they who argued, fought, schemed and bullied smaller EU nations are now, themselves dependent on the EU's greatest critics. It would be better for Germany to face up to it. Bribing, cajoling, praying, hoping or pleading with Britain to remain a member is risible. A bit like a lame zebra offering a watermelon to a hungry lion.

As the British loathing of all things EU gains momentum, the position will crystallise. It wouldn't be too fanciful to suggest that as Britain heads for the exit, we are knocked aside by some very worried Germans, Swedes or Danes who are of the same mind. The Norwegians and Swiss must be watching very closely indeed. Instead of Camembert, Rioja and Linguine, maybe we will be seeing, Gruyere, Akevit and Gravlak. I’m fine with that!

So here it is. Regardless of the concessions Cameron squeezes out of Brussels, the British people will be voting to leave the EU the first chance they get. The reason is simple. The EU cannot and chooses to not, return to the EEC. And that is what we voted to join.

Denis Cooper said...

whoknows -

It's not seen as a very funny view by those Germans who share it and who worry about what their own elite are trying to do, and there are some such.