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The EU Referendum: You’d Better BeLeave It

13/04/2016 | Tom Spiller

In commercial litigation lawyers are taught to look at a situation not only with reference to the letter of the law, but the overall commercial context and the strategic dynamic of each dispute that comes across their desk.

The EU referendum is very much a dispute and is perhaps the most divisive issue of recent times in this country – with the Poll of Polls showing that the country is evenly divided on the matter – so the approach that we should take is no different here and I will first consider the current context in which the issue arises.

The State of the Union

In 2016 the following picture presents itself:

  • economic growth in the EU economies is in decline – in 1973 the 28 members of the EU accounted for 36% of global GDP, in 2015 it was only 17%;
  • unemployment, and particularly youth unemployment, stands at between 25% and 40% in the largest EU economies;
  • since 2008 the European Central Bank has had to bail out Cyrpus (twice), Greece (three times and counting), Hungary, Ireland, Latvia, Portugal, Spain and Romania (thrice). The fact that these countries have entrusted monetary policy to the EU has meant that they have lost control of the ability to manage their own finances and led to some of them having to raise taxes whilst cutting public spending. Some doubt whether the Euro will last: it hasn’t been much of a success so far.
  • intra-EU relations are fractious: (i) the Dutch voted no to the EU agreement with Ukraine as a show of discontent over the un-democratic nature of the EU, (ii) there are anti-German marches in Athens and other European cities on a regular basis and (iii) there is tension between Germany and the Balkan nations over the refugee crisis that has perhaps irreparably damaged the effectiveness of the Schengen Zone.

 

An organisation that began life as a multi-lateral trade organisation (the EEC) designed to allow for a degree of free trade between six Western European nations has become a sovereign body with 28 members and its own currency, immigration policy, legislature, executive body, foreign policy and judiciary.

In summary: bad.

Britain has tried to block legislation going from the European Council to the European Parliament 55 times in recent years and has failed on every try. British MEPs of all persuasions have combined to block legislation in the European Parliament 576 times over the last six years and 485 of those were still passed into the EU statute book.

Britain’s membership of the EU means that it cannot negotiate its own trade agreements in international forums. Instead of having our own, elected ministers negotiate for British interests on our behalf, we are represented at the WTO by one 28th of an unelected EU official: a former sociology lecturer from Sweden. She would not have been my first choice.

The simple fact is that the interests of the EU as a whole, or at least the most powerful actors within in, are often not the interests of Britain. Take for example the Ports Services Regulation, a regulation aimed at improving the competitiveness of continental ports, which are few and often state-owned. This regulation has no purpose in Britain where ports are many, small and independently owned, yet the regulation is being imposed anyway in a characteristically “one size fits all” approach. British politicians of all persuasions have voted against it in the European Parliament but they have been over-ruled. This legislation, that will damage our ports – which we need to be healthy in order to thrive as a trading economy – will pass into law despite our resistance. Many further examples of this trend exist in relation to art, cheese, temping agencies, trawlermen, steel workers and cider producers to name but a few.

At a time when the best prospects for future growth and trade lie outside of the EU (15 of the G20 economies are non-EU nations) our membership of the EU stands as a barrier to us negotiating deals with prospective new partners. At a time when India and China offer attractive opportunities for trade we do only 3.6% (China, our sixth biggest export market) and 1.7% (India, the third largest foreign investor in the UK) of our trade with them because the EU prevents us from doing so. Britain is currently the fifth biggest economy in the world – how much bigger would we be if we unshackled ourselves from the EU?

Would Britain vote to join the EU now? I think that the answer is no.

The Law

In Britain we have a legal system under-pinned by the rule of law and democracy. The same does not really apply to the EU (i.e. the supra-national bureaucracies that form the EU’s institutions) which is a law unto itself and is of course entirely unelected.

Democracy itself is founded upon principles of accountability, choice and scrutiny, yet members of the European Parliament, that vote on laws (3,500 of them being passed since 2010 alone) which effect the daily lives of British citizens and small businesses which operate in Britain, are so distant and unknown as to be unaccountable to the British people. If the governing party in Britain does something that we do not like, we know that we need to campaign against them and we know where to find them. But what is our recourse against German, Romanian, Latvian or Portugese MEPs?

Also, the EU’s brand of democracy is of the most expensive kind in the world. An ordinary MEP earns more than the British Prime Minister – an extraordinary fact. MEPs are paid a block grant of £3,500 per month (even though their offices in Brussels and Strasbourg are paid for) without needing to submit receipts, they are given 12,000 Euros a month for staff costs and are paid their travel costs of attending the European Parliament based on the number of kilometres they have to travel to get there, not their actual costs. Britain is the second largest contributor towards the EU’s budget, so it’s more than likely to be British pounds that are gushing into the pockets of the European politicians that are not accountable to you.

When Britain entered the EEC it was all about trade. Britain would benefit from being part of a free trade organisation in Europe, but I do not think that it is in Britain’s interests to be part of the EU, a self-declared supra-national legal and political entity which we pay £10 billion per year for membership of and often operates in a way which is against British interests.

The Strategy

Vote Leave on 23 June.

In a post-EU world, Britain will be free to play to its strengths by re-establishing our trading links with the commonwealth and the English-speaking world more generally.

79% of Britain’s economy is the sale of services. We sell mainly to countries and firms where they speak English and whose time zone is not too distant from ours. GMT and the English language will not change if we leave the EU; they are inalienable, national assets.

We will be free to conclude free trade deals with the G20 and will of course be able to spend the £20 billion that we send to the EU every year (this is a gross figure, the net annual cost of membership is £10 billion, as stated above) on our own domestic concerns, and perhaps even opt in to the odd EU scientific research scheme, much like Norway and other non-EU European countries do.

It is the favourite tactic of the pro-EU campaign to warn against the risks and uncertainty that a Brexit would entail. But they have sometimes struggled to be consistent in this message. In the words of Sir Stuart Rose, the Chairman of the largest Remain campaign group (which is funded by the EU), Britain Stronger In:

“Nothing is going to happen if we come out of Europe in the first five years, probably. There will be absolutely no change.”

Sir Stuart has also told us that wages for Britain’s workers will also increase in the immediate aftermath of Brexit. So much for “project fear” then.

And free trade with the EU would continue. Every non-EU country from the edge of Eastern Europe to Iceland is a member of EFTA, an organisation which extends the access to the European single market to non-EU members. I do not think that it can seriously be suggested that Britain, the EU’s second largest customer and the world’s fifth (for now) largest economy, who has a trade deficit with the EU of £50 billion (we run a trade surplus of £20 billion with the rest of the world) will be excluded. No EU politician is likely to make a decision that makes it harder for them to sell goods to us. In the highly unlikely event that Britain was not allowed to conduct free trade with the EU economies then it would be done on the basis of WTO reciprocal trade tariffs, in the interim period whilst free trade treaties are negotiated with our major, non-EU trading partners, the EU and its component member states all being members of that organisation. Trading on the basis of WTO tariffs, without the cost of EU membership and having the ability to conclude our own trade agreements with the rest of the world would be a very much more profitable situation for Britain than the one it finds itself in now.

Perhaps the last word should be one from China, the second largest economy in the world:

“Whether the UK will stay in the EU or not, will not do any harm to trade and economic ties or financial relations between the UK and China” – Chairman of the China Construction Bank, the world’s second largest bank.

Opinions are my own and not the views of my employer

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