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Thoughts on the forthcoming EU Referendum

March 2, 2016 11:00 AM
By James Emerson

James Emerson

James Emerson

The outcome of the Referendum on remaining in the European Union (EU) will have long-term consequences for the UK. If UK citizens vote to leave the EU, it is most unlikely that there will be an opportunity to re-join for many decades - if ever. The decision of the voter should not therefore be dominated by his or her current feelings, particularly if they are somewhat emotional in nature, but by what will be in the interests of their children and even their grand-children. This will principally be dominated by considerations of whether or not they are more or less likely to have a good job that will enable them to live a full life. An important aspect of the presentation of the issue by the Lib Dems should therefore be to stress the long term nature of the decision.

While pollsters indicate a majority in favour of staying in, the outcome of the referendum is by no means certain. In 1975 when the UK decided in a referendum to remain in the EEC all the three main political parties were in favour of doing so. Today the situation is significantly different with considerable sections within both the Conservative and Labour parties favouring the exit option. Also as a consequence of the emergence of UKIP voters have been fed a stream of negative information concerning the EU, some fair, others not.

This gives rise to two aspects of the Lib Dem presentation of the case for staying in. Firstly, if a voter the voter feels that, on balance the UK should remain a member, then he or she must vote. To do otherwise, on the grounds that the issue is complicated and not clear cut, could give rise to a result that is not in their interests or in that of their children and grand-children. Secondly Lib Dems should not be claiming that all is well within the EU when it is patently not. That is not a credible position to take. There are however millions of voters within the EU that would share the view that the EU needs reforming. The choice is therefore between, whether, in concert with others, the UK works towards making it better or whether it withdraws and surrenders the advantages that it offers - however imperfectly.

The case for remaining in the EU is both economic and political with the former being more important in terms of the everyday life of voters. Europe, with a population of 500 million affluent consumers, is a key market for many companies in the UK and their survival, to a greater or lesser extent, is dependent on being able to supply that market in an efficient manner. It is also a key market for the UK customers of UK companies. If the rest of Europe is important to any company then it is also important to those companies that supply them. If the UK decides to exit the EU then there will be uncertainty on the nature of the trading relationship that will subsequently exists between the UK and the EU. It is likely that a trade agreement would be reached between the two that would ensure that the free movement of goods. This however will be conditional on the UK continuing to adhere to most, if not all, the rules on the single market. It is unrealistic to expect the EU to allow free access to its markets if the UK decides play by different rules. Both Norway and Switzerland have had to accept most of the EU regulations as the price for having free access to the EU market. There are however a number of other economic issues that would act negatively upon the UK if it exited the EU.

One has to question whether EU companies will be as willing to buy products from UK companies if the UK was outside the EU. This might not have any impact in any short-term contract but it could be a significant factor if it was a long-term relationship of importance such as the supply of an important component in car manufacture. In such cases a supplier located in the EU could, all other things being equal, be the preferred supplier. There is the issue of the trade agreements with other major trading countries such as the US, China and Japan but also with the emerging economic powers such as India, Brazil and Russia. The voter should ask him/herself how these countries will rank in importance the UK with a population of 60 million and the EU with 440 million. It is almost certain that they will first want to negotiate a trade agreement with the latter. They may in the end agree to the same terms in an agreement with the UK but it will be later and even then they might be prompted not to do so by the EU so as to achieve a commercial advantage. Certainly the terms that are agreed with the UK will not be more favourable that the terms that they agree for the EU. It is clear there is a solid economic case for the UK remaining part of the EU.

There is however one area where the case for the UK remaining part of the UK is particularly strong - almost overwhelming. That relates to future inward investment into the UK. If the purpose of an investment is to supply the European market, it will be made within a trading area of 440 million people rather that one with 60m people, particularly if there is a significant degree of uncertainty on the nature of the trading relationship between the two in the future. One needs to question whether Nissan would have invested in Sunderland if the UK had not been part of the EU. Would Toyota have invested in Derby and Honda in Swindon? In other major industries the picture will be the same. Future major investments will not be made if the UK is outside the EU. Thus in terms of the availability of good quality jobs for our children and grandchildren in high tech capital intensive industries continued UK membership of the EU is vital.

On the political side there are two factors to be considered - one strategic one more operational. One of the objectives of the Founding Fathers of the EU was to create cooperative relationships between the countries of Europe such that, following two World Wars, further conflict within the Continent would be prevented. In this respect the EU has been a resounding success. It is difficult, from today's perspective, to imagine that a further war between European powers would be possible. That may be true but there is a danger of complacency. The EU is an association of democratic countries within which the rule of law prevails and where the rights of each individual are by and large considered to be the same and are protected. There are no totalitarian states and the structures and disciplines of the EU mean that it is most unlikely that such states would emerge. The EU thus remains a pillar underpinning the basic political stability of Europe.

The operational benefits of being a part of the EU are clear-cut. Already we have seen the disadvantages in terms of political authority and respect, resulting from the UK's lack of real positive involvement in the EU. The UK is seen to be on the side-lines and it is Merkel and Hollande who go to Moscow to discuss the Ukraine problem with Putin and it is they that almost automatically get together to discuss major issues as they arise. The UK outside the EU would become an ever greater irrelevance. This would bring with it an inability to use its significant diplomatic influence and military capability to influence EU decisions in international affairs. The UK would not be involved in the discussions. Inside the EU, the UK will be seen by countries such as the US and China as an important conduit for feeding their views into the EU. They will want to establish a dialogue with the UK. Outside the EU, the UK will have little such influence and will thereby become largely irrelevant.

Some are concerned continued membership of the EU will inevitably lead to greater political union. The problems of the Euro and the failure to handle the refugee crisis in a cohesive manner shows more policy co-ordination may be required. However a new treaty involving changes of this nature would require the consent of the people via a further referendum. At the moment, such moves are unlikely to have the support of the majority in many EU member states.

Immigration into the UK is of concern to many voters - particularly in certain locations. It is appropriate that they be addressed and that Lib Dems are seen responding to them. Lib Dems should be highlighting the benefits that are derived from immigration from the EU. These include the net benefit to the Exchequer, the dependence of the NHS and the Social Care sectors on immigrants and the willingness of migrants to take jobs that UK residents find unattractive. For every immigrant that breaks the law there are many more who contribute to the wellbeing of society and who have settled well into the UK and consider themselves to be UK citizens. We should not be judging immigration on the basis of the relatively few 'bad apples'. There is an equal number of UK citizens living elsewhere in the EU taking jobs and drawing benefits.

EU regulations are said to have impacted upon UK companies in a negative manner. In part this is a case of the UK "shooting itself in the foot". The source of much of the problem is the difference between English Common Law and Napoleonic Law as practiced on the Continent. The former places a heavy emphasis on the actual words that are used in any law or regulation rather than its more general intent. It is a very precise form of law. Words mean what they say and it is the role of the judiciary to implement accurately the meaning of the words as written. The intention of the words and hence the ability to interpret the words is not something that English Law takes into account. Thus if a regulation comes from Brussels, the UK regulators apply it in strict conformity with the words contained in the regulation. Under Napoleonic Law an EU regulation is more an expression of an intent or objective. It is up to the national regulator to interpret that intent or objective in manner that is deemed to be best applicable to their country. This leads to variations in the implementation of EU regulations in terms of both how they are applied and the timing of their introduction. Thus the situation in the UK can be very different from that which exists elsewhere in Europe. Given the diligence of the UK Civil Service this difference frequently is to the detriment of the UK with the EU thus appearing to be an over- zealous regulator. Thus the solution lies, at least in part, in the hands of the UK government and its regulators. The UK should learn to "play the game" in the same way as other EU member states.

Working within the structure of the EU also facilitates effective and cohesive action in tacking cross-border issues such as climate change, terrorism, criminality and pollution which no one country can address in isolation.

In summary, the EU is by no means perfect but it is the interests of the people of the UK that the UK remains a member. The choice lies between leaving it and it's admittedly less than satisfactory aspects and thereby becoming a political irrelevancy and an economy that is growing more slowly than it might otherwise do and remaining part of it - adopting a leadership role and working with others to make it better.