WEEKLY COMMENT 13-12-2012

WEEKLY COMMENT 13-12-2012

By Barry Edwards

 

There has been a lot of discussion concerning the UK status within the EU in the last few weeks. It seems that The Conservative Party is splitting itself into three representing;

  1. Definitely remain in the EU.
  2. Come out of the EU.
  3. Repatriate some of the powers but remain a member mainly for trade purposes as originally decided in the last referendum.

It appears that The Prime Minister and Boris Johnson, who has become a lead spokesman on this matter, are both seeking to promote option 3 and then ask the nation in a referendum whether they agree with that or come out altogether.

The debate is attempting to finally resolve the EU question so that the politicians and business can be certain how to plan ahead with full support from the nation.  If the UK was a large company this would be a very reasonable approach and makes perfect sense. Unfortunately, we are a diverse nation of people who have very strong views not all of them based on the actual facts of the situation.

Since there is nothing much happening on a business front and having given that brief overview of the EU circumstances, I have decided to give you the benefit of my thoughts on this matter to throw the cat amongst the pigeons as it were and see if you have any comments to make, no bad language, please!

Before I give my views, here is a short history;

In 1973 we joined the European Economic Community (EEC) during the Edward Heath Conservative government. The Labour Prime Minister Harold Wilson was elected in 1974. His party’s manifesto promised to renegotiate the terms of Britain’s EEC membership, and then hold a referendum, sound familiar!

The EEC heads of government agreed to a deal in Dublin on 11th March 1975; Wilson declared “I believe that our renegotiation objectives have been substantially though not completely achieved”, and that the government would recommend a vote in favour of continued membership. On 9 April, the House of Commons voted 396 to 170 to continue within the Common Market on the new terms. In tandem with these developments, the government drafted a Referendum Bill to allow the referendum to take place since there was no constitutional basis for it to be conducted.

The referendum on continued membership of the EEC, usually referred to as the Common Market, was held on the 5th of June 1975 and decided by a majority of 67% in favour on a turnout of 65% of the population.

The Maastricht Treaty established the European Union under its current name in 1993. The latest amendment to the constitutional basis of the EU, the Treaty of Lisbon, came into force in 2009.

Throughout our membership there has been continuous political dissent and both major parties have had problems getting the statutes imposed on us from the European Union and its predecessor the EEC through parliament.

From the very beginning of our membership, it is fair to say that most people are happy with the larger market it provides the UK without any tariffs or laws preventing the free flow of trade. However, the flood of directives that have been imposed on us from the EU since the original referendum has really got up the noses of many people and we are in the unhappy situation of discontent from a good majority of the nation who are now saying enough is enough.

General Elections in this country have never featured the EU as a major policy subject and the government now finds itself in the unenviable situation of having to reflect current opinion in its dealings with the EU whenever the important summits take place.

This succinctly brings us to where we are now, although I admit without every nuance that is the heart of the debate concerning the EU.

So, it is now my turn to espouse and stimulate discussion on this forum. To start with the following are the basic four rules that should apply throughout the EU which I believe most people would agree with and in principle do apply.

My first thought is that the concept of the EU is very much to the benefit of all countries that are part of the union because it is pure common sense that to have a market of 500 million to sell to is better than 60 million in the case of the UK and in many countries far fewer than that. Belonging to the large consortium of countries that can trade without restriction has to be an advantage for all members.

Secondly, agreeing how that trade should be conducted is necessary for proper relationships to evolve and therefore a comprehensive framework of the processes has to be written down for all to conform with and understand clearly. This requires certain institutions to be in place to oversee and enforce the rules that every member accepts.

Thirdly, representation of that market when dealing with other large economies or other trading blocs is best carried out by a properly constituted organisation on behalf of all members to gain the best advantage in negotiations with those other parties.

Fourthly, commercial enterprise needs to be allowed to conduct its business with a free hand providing the social and personal rights of all citizens are faithfully protected and enforced in law throughout the EU to protect against unfairness and exploitation.

Unless you are in the option 1 camp, coming out of the EU altogether, most people would not disagree with those four basic rules. The problem is how far these rules should be taken to manage and protect all members of the union. This is where the disputes occur and fundamentally it is a question of implementation of these rules and regulations that is the cause of almost all of the dissension.

What this means is, should the EU concern itself with the individual rights of each citizen, how many hours you can work, the terms of employment and so forth? For many the answer is no. These people believe the EU should only set a basic framework and leave the rest to each country to make the laws for all these matters.

Although we are discussing the EU from the British point of view, many people in mainland Europe hold this view as well. Therefore, it is clear that the politicians and the people are at odds about how far this encroachment should go. Up to now the politicians have done a bad job of trying to explain themselves and the misinformation over this basic matter is the real cause of the dissension.

In my opinion, the reason the politicians have not explained why they take this approach is because the bureaucrats running the EU are the cause of problem. Here is my explanation for this;

When you have a trading area involving many countries local competition is only to be expected and helps to improve overall efficiency over time. If a company in another country wishes to compete for work in another, the EU rules should mean that the contract should be given to the most competitive submission wherever that company is situated within the EU. In fact, what actually happens and was especially unfair prior to the Maastricht treaty is that the country or region within that country would impose local restrictions by requesting special licences and conformation to a set of artificial conditions which did not apply to the local company competing for the work. Consequently, the outside competitors found themselves out of time for submission of the contract and lost out to the local company.

These barriers were imposed by the bureaucrats of the country supposedly offering the work to specifically favour their own local business whether or not they submitted the most competitive tender or not. In effect the local company was told to adjust its tender to match the most competitive and they were awarded the work. Many would say this is perfectly natural but it happens to be a direct contradiction to EU rules.

Therefore, the politicians had to start imposing strict conditions to counteract this practice, under pressure from businesses, by creating a mass of laws to bypass the influence local bureaucrats could have on work and contracts offered anywhere in the EU. To make this effective those laws override individual country laws and become particularly invasive to make the playing field equal and fair. This is where the dissension occurs and it is not surprising that it does.

If you do not explain why you are imposing these laws in the first place it is not surprising to find strong reactions against this legal invasion. That does not mean that if you did explain it everything would be alright, it clearly would not but at least people would understand and a proper debate could be had to find the best solution.

My main argument is that this is the fundamental reason why you have this disconnect between the politicians and the people which will continue unless the real explanation is properly discussed. That means that the bureaucrats have to accept responsibility for the situation which is not an easy task to achieve as we are discovering with the bankers who caused the financial crisis.

The politicians are unlikely to go down that route and therefore they must think of a suitable explanation to satisfy the people that there is a need for all these laws imposed from the EU. It is not likely to happen soon and the disconnection between the people and the politicians will continue.

This is a subject that I am sure we will revisit on many occasions and your comments will be a big influence in how we put forward a satisfactory solution for open debate.

That’s it for this week, more observations next week. After that we will have a break for Christmas and pick up again in January.

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