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07 April 2015

British Influence: What the British government should conclude from its own researches on the EU

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The government chose to abstain from drawing any conclusions from the mountain of evidence in its ‘Balance of Competences Review’, despite the fact that the whole exercise was meant to foster ‘evidence-based policy making’.

The British government is to be congratulated for the massive and high quality research effort it completed under the name of its ‘Balance of Competences Review’. This most thorough ever, independent enquiry into the workings of the EU saw 1,500 submissions of evidence, leading to 32 volumes and 3,000 pages of analysis with the findings.

But there the congratulations end. The government chose to abstain from drawing any conclusions from this mountain of evidence, despite the fact that the whole exercise was meant to foster ‘evidence-based policy making’. The House of Lords Select Committee on this topic estimated that the total cost of the operation was around £5 million, and questioned whether this expenditure could be justified if no conclusions were to be drawn.

Or course one understands why this bizarre outcome happened. Coalition politics. The Tories and Lib-Dems could not face the prospect of trying to agree the conclusions. However, since the findings were all published, it is up to anyone to draw their own conclusions, which is what a group of researchers at the Centre for European Policy Studies (CEPS) have done.

Actually the findings are very clear and quite fundamental for the shaping British policy towards the EU. One can hope that whatever government is formed after 9 May, it will shape its orientations accordingly.

There are three key words currently being used in the political discourse of Prime Minister Cameron and his Tory colleagues: reform, renegotiation and repatriation. These terms are loosely sprinkled in various speeches without clear definition and even interchangeably. However to define a strategy for resolving the EU question before a referendum, if there is to be one, it is necessary to clarify these key terms:

  • Reform is about improvement of EU policies applicable to all member states.
  • Renegotiation is about getting opt-outs or special deals for the UK.
  • Repatriation is about deleting competences for the Lisbon Treaty, thereby returning these powers to the member states.

A viable British government negotiating position will have to be based on a justifiable balance between these three types of action. It is precisely on this question that the evidence from the 32 volumes is now invaluable.

The essential finding is that the agenda for reform is wide open and substantial. However the scope for renegotiation is very limited because of the extent of the UK’s existing opt-outs (Eurozone and Schengen) and special deals (notably for the budget rebate). And the evidence came up with not one EU competence for which there was a case for its repatriation, because many of these powers are actually ‘shared’ with the member states, and the actual balance of shares was found to be mostly ‘about right’.

This means that the British government’s strategy has to focus on the reform agenda. Lord Nigel Lawson famously said in 2013 that he had joined the Brexit camp because the EU was ‘unreformable’. The evidence is to the contrary, for the past, present and future.

It should be recalled that Mrs. Thatcher’s nominee to the Commission, Lord Cockfield, was principally responsible for reforming single market policy, by introducing the principle of mutual recognition of standards for traded goods, allowing for less reliance on harmonising legislation, and thus serving as a model case of decentralisation.

Agriculture and fisheries have long been the staple diet of critics of the EU. But agricultural policy has been substantially reformed since the 1990s, with a categorical shift away from production support to income support, such that ‘butter mountains’ are a thing of the past. The fisheries policy was drastically reformed in 2013, such that ‘fish discards’ are now also a thing of the past. In all of these three cases (single market, agriculture and fisheries) UK negotiators were clearly punching above their weight.

Turning now to the present and future, there is an active agenda that is as if tailor-made for UK interests. The single market for services is incomplete, and the UK pushes for action here to cut out obsolete national discriminations. The new digital agenda sees the UK pushing a specific set of priorities, given that national policies in this field are simply not viable. In the recent decisions for EU energy and climate change policies to 2020 and 2030 the UK pushed successfully for what it considered to be the right balance between EU-level objectives and national implementation prerogatives. The financial services sector has seen radical reform at EU and global level since the onset of the Lehman Brothers crisis in 1998. The UK has worked successfully to defend the interests of the City, and in particular to prevent the Eurozone from taking measures that might discriminate against non-Eurozone member states. In the event of secession the UK would become defenceless against actions to tilt the playing field against non-member states.

There was one further question that was not addressed in the Balance of Competences Review, but which is of cardinal importance. What would be the consequences of secession be for British business? Polls of business leaders show overwhelming majorities that fear negative consequences. However the CEPS study adds to the evidence on this topic by looking at the legal consequences of secession. In a nutshell it would be a huge legal mess as thousands of laws of the UK statute book that are presently implementing EU legislation would be instantly repealed on the day of secession, unless the government chose to re-instate them without delay to avoid a legal void. But this then leads into the question what the government would choose to re-instate or not, bearing in mind that any significant repeal of single market law would mean loss of guaranteed access to the single market. The only sound economic option would be to join Norway in the European Economic Area: i.e. stay in the single market as a non-member state without a vote, but this of course would defeat the presumed political objective of secession.

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