Beware the ides of March!
"Unlike all of Leave's promises during the EU referendum campaign, almost all our predictions a year ago have come true. This was not Project Fear, but a warning of Project Reality. See what we said..."
The case for the UK remaining in the European Union
Founders Hall Main Lecture Room, Royal Holloway University of London:
1430 Wednesday 16 March 2016 - debate w John Mills, Deputy Chair, Vote Leave
Nick Hopkinson, Chair, Liberal Democrat European Group; former Director, Wilton Park, Foreign and Commonwealth Office. @nickhopkinsonEU
Good afternoon. It is my pleasure to be with you. Thanks to Lawrence Smy and Robert Heslop at TEAM and RHUL. In making the case to remain in the European Union, I'll cover its origins; the Single European Market and trade; sovereignty; alternatives to EU membership; the viability of these alternatives, and implications for our international influence.
The origins and structure of the EU
After World War 2, there was overwhelming political will to make yet another devastating war in Europe impossible. US aid and the NATO alliance were not enough to rebuild Europe so the European Community, now the EU, was launched in 1958. In spite of ongoing Eurozone and migration crises, the EU has been very successful. The EU's 28 member states, all of which joined voluntarily, covers most of Europe. The EU remains a magnet for new members.
How briefly does the EU work? In areas of agreed competence, the European Commission, effectively the EU civil service, ascertains the European common interest in close consultation with member states. Most decisions though continue to be made at the inter-governmental level with UK ministers directly elected by British voters making decisions in the European Council. In addition, every five years we directly elect members to represent us in the European Parliament.
Eurosceptics maintain the EU decides 75% of UK legislation. However, neutral House of Commons researchers conclude the figure is in fact 13%. Even then, without the full agreement of both nationally accountable Parliaments and the Council, no Commission proposal can become law. The European Commission has only 32,000 civil servants, the same number as Leeds Town Council, and 1/20th the number of Whitehall civil servants.
The EU's budget is equivalent to only 1% of EU GDP, whereas UK Whitehall expenditure is 49% of GDP. Both the US and Canadian federal government spend 42% (Heritage Foundation/Wall Street Journal, 2014). Major spending areas of the EU's small budget are agriculture, rural development and fisheries (42%), while 30% is spent on regional cohesion and structural funds - competitiveness (10%), administration (6%), external action (6%).
99% of the tax we pay is spent by Westminster primarily on our health, social security, and pensions. The EU will only act if an issue cannot be sufficiently resolved by member states. The EU therefore is best placed to address transnational challenges such as climate change and transnational crime. Each penny in the pound we pay for our membership is worth the free access to the world's largest market and has the added benefit of some insurance against another war in Europe. What value do you give peace in Europe?
So if the EU were a federal state like the US or Canada, it would have a larger budget, a larger civil service and control many more common policies than it does now. The EU is therefore hardly a superstate.
2. The Single Market and trade: A key goal of the founders of the EU was to replicate the scale and prosperity of the US economy. However, the Single Market was regarded as incomplete without a single currency. So Member States, except the UK, formed the Euro area. The UK is also not part of the Schengen area which allows free movement of people across most of Europe. Eurosceptics cite the Eurozone and migration crises as main reasons why the UK should leave the EU. However, this is illogical because how can we leave a group in which we aren't in key respects part of?
The UK and the other 27 EU member states can achieve more beneficial trade deals when negotiating as a bloc with one voice. The US, China, and India will agree better trade deals with the UK because we are part of the world largest economy with 30% of world GDP rather than alone with only 2% (IMF).
Economic size also matters because the largest economies set global standards. The UK, EU and US can only retain global economic leadership through growth and co-operation. So in 2013, the US and EU launched talks on a Transatlantic Trade and Investment Partnership (TTIP).
Meanwhile just under half of our exports go to the EU with whom we enjoy even better terms in the form of no tariffs and increasingly harmonised legislation. If we left the EU, we would lose free access to our major export market. For example, 61% of UK car and commercial vehicle exports (2011) go to EU partners. Outside the EU, our car exports would incur a 10% tariff. Why would Ford or Nissan invest more, perhaps even keep, their many of their factories here if their profit margins are eroded?
Credit Suisse and Blackrock studies this year mirror a consensus amongst economists predicting a recession with a 2% drop in GDP if we decide to leave. The CBI estimates (2013) each individual is a net £2,660 better off per annum (less £340 cost). A Treasury study (2014) found 4 million UK jobs were linked to EU membership. Even the Leavers admit British jobs are at risk. In response to the April 2014 Radio 4 programme question "if it could be proved that Britain would be worse off outside the EU, would you still want to leave?", Nigel Farage said "it would be (a price) worth paying". Do you want to be worse off out?
Leavers argue the UK outside the EU would not be bound by EU regulations, and further competitive advantage can be gained by lowering wages. The same supposedly onerous EU regulations have not held back Germany's successful export economy or even our own. The World Economic Forum (2014/15) ranks the UK as the world's 9th most competitive economy, just behind the US, Germany + Hong Kong.
The EU in fact reduces regulation. Instead of 28 different sets of national rules, the EU provides a single set of rules which makes it easier for us to export throughout Europe. A level playing-field with harmonised rules offers compliance savings for our businesses. If the UK were outside the EU, we would either have to adopt EU rules or approximate them.
EU laws also ensure the quality and safety of the products, food and services we purchase. The Single Market fosters economies of scale and reduces prices. EU trade and competition rules save you around £500 per year (EU Commission, 2010). For example, mobile phone roaming charges in other member states will be completely eliminated by mid next year. Outside the Single Market, supply chains for large and small UK businesses alike will be disrupted. Combined with a further forecast fall in sterling, our food, drink and utility bills will rise.
Currently you have the right to travel, study, and work in another 27 EU member states. The EU has facilitated visa free travel across Europe including cheap and easy air travel. Some of you may wish to pursue studies at a university in another EU country through the ERASMUS programme. The education secretary wrote recently (Guardian, 17 January 2016) "We don't want our children to inherit a Britain cut off from the world, where their prospects are limited".
Unite the Union notes "the EU has given us the laws and protection (for) sickness and holiday rights, maternity and parental leave, and health and safety protection at work". The number of worker fatalities in the EU is a third that in the US.
European legislation has helped women by banning discrimination between men and women at work; closing the gender pay gap; giving all mothers the right to maternity leave; leading international efforts to end FGM, and supporting victims of international trafficking.
In short, we benefit from market access, higher investment, lower prices, higher standards and a fairer, less divisive society by remaining in the EU. Outside the UK will not benefit from EU trade deals.
3. Sovereignty: The EU, its enlargement to Central and Southern Europe and NATO have helped spread peace and prosperity throughout Europe. A war between any EU member state is now unthinkable. EU enlargement, spearheaded by the UK, provided a powerful incentive to candidate countries in Southern Europe and Central Europe to integrate, democratise, undertake economic reforms, and promote human rights. If we had not enlarged the EU, think of not one, but several Ukraines.
Countries in the West Balkans, Turkey and Ukraine are voluntarily lining up to join the EU. So if so many countries want to join the EU, why do Eurosceptics want to leave it?Eurosceptics argue we can leave the EU and magically regain control. However, no nation is sovereign in the conventional sense in today's inter-connected global economy. We pool, not lose, and enhance our sovereignty through membership in the EU, NATO and GATT/World Trade Organisation (WTO). Our prosperity and exports have increased exponentially as a result of membership in all three.
Since 1945, British foreign policy has championed our participation in international organisations as essential to increasing our security, prosperity and influence. Yet Eurosceptics strangely single out leaving the EU, rarely mentioning leaving the other 3,000 international organisations and thousands more international associations and standards setting bodies which benefit the UK. Nor do they mention amending or rescinding the other 13,200 international agreements we have signed since 1834 (FCO-Grieve).
We benefit by binding other countries to the same rules which our elected representatives have shaped with them. (Independent Vote Watch research found the UK only lost 1% of European Council decisions in 2004-9 and 6% in 2010-15). If the UK has a vital interest, it is rare we don't get our own way. If we leave the EU, we shall have no say and still have to accept EU legislation without any influence on it. We shall be less able to 'control' our own destiny as we put ourselves at the mercy of the decisions that the EU and other bodies will make without us. Leaving the EU means we become a rule taker, rather than a rule maker.
4 So if we leave the EU, what are the alternatives?
Non members Norway and Switzerland are often held as models. The price of Norway's access to the Single Market is accepting all EU rules and, unlike us, all migrants coming from the EU. As a non-EU member, Norway cannot take part in deciding the rules which govern it. Norway also has to contribute to the EU's budget. A Norwegian citizen pays only slightly less per annum than a British citizen. If the UK left the EU and negotiated an arrangement similar to Norway's "pay, no say" option, we would still have to pay about €4 billion per year (Bruges Group). This is hardly a saving on what we pay now for a seat at the EU top table, influence and access to the single market and EU programmes.
Switzerland has an even less advantageous deal because it is neither an EU nor EEA member. Unlike Norway, it has to negotiate endless ad hoc bilateral agreements, adding uncertainty and bureaucracy. Switzerland's access to the EU market is now in jeopardy in light of a 2014 referendum which narrowly voted to restrict free movement.
There are three other options. Turkey has a partial customs union which excludes their services and agricultural exports and means the EU shapes Turkey's international trade arrangements without Turkey's say. This clearly does not satisfy the Turks who want to become a full EU member. Canada's still unfinalised EU (CETA) deal is similar to Turkey's although Canada is not bound by EU trade deals but is bound by a supranational dispute settlement mechanism.
Lastly, there is the WTO option which sceptics erroneously argue would allow us to 'regain' a WTO seat. We already have one of the WTO's 162 seats, but it doesn't count for much other than granting most favoured trading nation (MFN) status, which experts refer to as least favoured nation status! Furthermore, WTO negotiations were effectively declared dead last December. The fewer trade barriers a country wants, the more it has to accept things which the Leavers don't like such as budget contributions, open borders, and supranational courts (Jack Schinkler (InFacts 2/3/16). In short, the Leavers can't have their cake and eat it too. We only continue having the best British deal by remaining in.
However, should it come to a renegotiation of our trade with the EU, the EU would have the upper hand because just under half of our trade is with other EU states whereas we account for only 8% of EU trade. Volumes + size of trade blocs matter. Leaving would also create uncertainty. As Boris Johnson said last month (DT 7/2/16): "leaving would mean embroiling the Government for several years in a fiddly process of negotiating new arrangements (thus) diverting energy from the real problems of this country."
Eurosceptics champion the Commonwealth as an alternative to the EU market. Yet none of its members is rushing to invest and trade with the relatively small mature UK economy just because we want to revert to the trading patterns of the 19th century. Canada is focused on the US market and Australia on trade with China. Indian Prime Minister Modi during his Autumn 2015 visit to the UK noted our continued EU membership was beneficial for India's trade and investment in the UK. All our major trading partners, including the US, China, Japan, and other EU member states have counselled against us leaving the EU. US Trade Representative Mike Froman stated last October (FT 30/10/15) "Washington is not particularly in the market for a trade agreement with a single nation like the UK … it is absolutely clear that Britain has a greater voice at the trade table being part of the EU (and) part of a larger economic entity".
So alternatives to our EU membership are sub-optimal. Instead of wishful thinking about non-EU countries increasing trade with us just because we have left the EU, Eurosceptics would serve our country better by pushing to complete the EU Single Market in areas such as financial and digital services. Here our competitive advantage would have a real chance of creating more British jobs.
5. Lastly, leaving the EU would make the UK less strong, secure and less influential in the world. Scotland would use BREXIT as a pretext to leave the UK in a second independence referendum. The Irish peace process would be undermined, potentially leading to renewed instability in Northern Ireland, and the need to renew North-South border controls. England would be weaker and more isolationist, and thus a less credible ally both militarily and diplomatically. The UK and the EU would be less secure because Europe and Ukraine would be more susceptible to destabilisation by a resurgent Russia. In short leaving the EU would be our biggest foreign blunder since George III lost America.
6. Conclusion: The benefits of our EU membership have all too often been taken for granted. Eurosceptics are unable to provide, let alone agree, a viable alternative to EU membership. We know what Remain looks like (the present) but we do not know what leave looks like. Leavers are therefore calling for an uncertain leap into the dark.
Nigel Farage said in early January (6/1/16 BBC) "Brexit was essential to becoming a self-governing, independent nation". What I have outlined is a UK outside the EU which on the contrary would be a disintegrating and less sovereign, fair and prosperous country. If we vote Leave, we lose control. The EU reinforces and progresses our shared British values such as respect for human rights, democracy, fairness and civil freedoms. Quitters say they want their country back - remainers want to take our country forward!
The UK is on balance more prosperous, fair and secure than when we joined 43 years ago. The government's study earlier this month on alternatives to EU membership concluded "no existing model.. comes close to providing the same balance of advantages and influence that the UK has under the status quo of EU membership".
This referendum is more about your future than that of anyone who is older than you. It is poor that some of you will be disenfranchised because of the change in the voter registration system and that 16 and 17 year olds, unlike in Scotland, will be denied a say in their future in the 23 June referendum. So do ensure you are registered to vote and do use your power of Facebook and Twitter.
You can also tell your parents, grandparents, and friends that, if you accept what I have argued, you believe your future is best served by voting for the UK to remain in the European Union.
Thank You! I look forward to your questions/ comments!
11/3/16 RHUL debate - 16316