In or Out? Informing the political debate and popular opinion on UK’s EU membership

A seminar series organized by the Centre for Federal Studies, School of Politics & International Relations, University of Kent, with the support of the James Madison Charitable Trust

Summary of proceedings

 

First Seminar: The EU’s Political Economy

22 March 2016, 16.00-19.00, Committee Room G, House of Lords

 

Key points

Panel 1
  • Figures on the economic impact of Brexit vary from -8 per cent to +10 per cent of British GDP in case the UK leaves the EU; much depends on the basic assumptions and the methodology; there is little agreement among experts on either; nevertheless, a negative impact of 2-3% per capita GDP is a reasonable estimate
  • There is a fundamental difference between a customs union and a single market: the former is about the same tariffs whereas the latter is about common standards; how the UK trades with others countries is key to the question of remaining or leaving: 35 per cent of UK goods are traded with the rest of the UK and in services it is even higher
  • The World Trade Organisation (WTO) does not cover the service sector in general and financial services in particular, which represents a significant part of the UK economy; Brexit might mean more tariffs and non-tariff barriers for financial investment from the US, Switzerland or elsewhere
  • In case of Brexit, there are two options: either self-authorship of rules (‘sovereignists’) or roaming around the globe and free-riding on rule-making elsewhere (‘marketeers’)
  • As a customs union and a single market (not just a free trade area), the EU has been instrumental in lowering both tariffs and non-tariff barriers; in case of Brexit, how would UK ensure this for British business?
  • There is a widespread perception that the EU rule-book is costly for the British economy, but it is important to remember that the EU helps to remove national barriers to greater integration of services and that at the same time common rules for all services cannot so easily be agreed on, which also applies to UK trade after Brexit
  • Free markets and free trade can be assisted by supranational bodies such as the EU institutions, for example by restraining national governments to impede freedom of movement of capital, labour, persons and services
  • Three issues need to be tackled, and many EU partners want the UK to take the lead:
    • abandoning further centralisation, which empowers legislators and regulators, in favour of more mutual recognition of different standards
    • applying the principle of subsidiarity, which is mis-defined in the Treaties: EU should act where it believes that it has an advantage in terms of scale and effectiveness; whereas in Catholic Social Thought it is just the opposite: leave decisions to lower levels and get higher levels to assist lower levels
    • reducing overregulation while completing the single market in the area of services
  • Without such reforms, Brexit could leave Britain overregulated; so either the UK will stay in an overregulated EU or we could see an overregulated UK outside the EU; could not an over-centralised single market lead to civil disintegration (unemployment, social breakdown, etc.)?

Panel discussion
  • In addition to either being a ruler-marker or a rule-taker, there is also the key issue of enforcement
  • There are considerable differences between the single market, a customs union and a free trade area; voluntary compliance with common standards; single market can provide opportunities for a wide range of different interests (not just member-states or EU institutions but also business and other actors)
  • Another key distinction is between mutual recognition of diverse standards and the centralised harmonisation of identical standards; arguably in financial services mutual recognition is being eliminated, which is terrible and contributes to centralisation; one main question is whether this trend is reversible or not
  • Connected with this is the difference between enforcement of property rights and contracts (to enable free economic activity) on the one hand, and regulation that interferes in economic activity itself, on the other hand
  • Services are more highly regulated than goods (both within and without the EU), but inside the EU services are less regulated than elsewhere (e.g. US has tougher financial regulation), which has implications for Brexit
  • At the same time, Britain post-Brexit might be able to increase trade by mutual consent (with Ireland, Canada, USA and New Zealand)

 

Panel 2
  • Britain has always been the most outward looking member, getting the EU to strike trade deals, as well as championing enlargement (which has also brought the migration bulge)
  • Qualified Majority Voting (QMV) was also done under British influence to stop individual countries from blocking market liberalisation
  • Overregulated UK insurance market was exported to the rest of the EU; Britain is no basket-case for a regulatory paradise
  • Meanwhile, the EU has developed a good social agenda (paid holidays, paid maternity and paternity leave, etc.)
  • Since EU countries do not trust each other, they need a referee, which is the Commission; its new digital agenda should be surely welcome by the UK
  • Catholic Social Thought is a brilliant resource to bring politics back into political economy and conceptualise limits on the commodification of labour and life within the single market
  • Napoleonic directives and UK free trade turned the EEC into an unmediated space of free movement of both capital and labour, which has engendered atrophy and an inability among workers to self-organise and act
  • A renewed political economy could be built around 4 pillars:

(i) fiscal conservatism

(ii) workers’ representation on boards

(iii) vocational economy

(iv) regional banks

  • This would embed capital, support regional economies and balance competition with cooperation
  • Brexit should make the point that multinational corporations want in, which is not the same as national interest: 4 advantages for multinationals
    • reducing tax bill
    • cheap labour
    • predominance of lobbying and vested interest
    • the effects of free trade on corporate profits vs. wage compression
  • The economics of ‘leaving’:

[a] massive trade deficit of £70bn would give the rest of the EU a huge incentive to do a free trade deal

[b] £7bn worth of higher tariffs in terms of exports and £11bn in terms of imports, but also gains because the EU is declining and the Eurozone is mired in recession

 

Panel discussion
  • EU has a positive trade balance with the rest of the world; Canada trades with the whole globe while having very close privileged ties with its neighbour USA; leaving the EU would make the UK worse off, while staying in can help sort out the Eurozone
  • Is freedom of movement a human good? There is deep ambivalence because the EU has an incentive structure to induce people to migrate, which privileges the interests of both ‘big government’ and ‘big business’ (benefits from foreign cheap labour by reducing the costs of paying people a decent wage and of providing proper training)

 

Second Seminar: The EU’s Polity – ever-closer union, sovereignty, the four freedoms, and the role of national parliaments

21 April 2016, 14.30 – 18.45, Europe House, 32 Smith Square, London SW1P 3EU

 

Key points

Panel 1
  • The two-pillar structure (EFTA and single market) is purely formal: it’s a one-way street, with EFTA looking to the European Court of Justice
  • This has the potential to subvert sovereignty and representative democracy by privileging the role of the executive and technocracy
  • For Norway, it is a kind of ‘fax democracy’ (whereas for Denmark and Sweden their parliaments play a much greater role inside the EU)
  • Is the relation between Norway and the EU hegemonic? Hegemony applies to Greece, but not in the case of Norway where it is self-imposed; Norway loses out on self-determination and co-decision
  • The EU referendum is about sovereignty: who governs Britain, and how? Many EU decisions are made by COREPER and other no-smoke-filled rooms behind the scene
  • UK with 70 million people in the near future is very different from Norway with 5 million
  • The PM’s renegotiation is putting Britain into the second tier of a 2-tier Europe, which is dominated by Germany (a view shared by the former German Chancellor Helmut Schmidt); the voting system of the EU as a whole (not just the Eurozone) privileging the power of Germany
  • EU membership is not working for the UK: according to the House of Commons Library, Britain has a £67.8bn trade deficit (goods and services) per year; trade surplus with the rest of the world has risen to over £30bn; Germany’s surplus with the rest of the EU has increased from £68bn to £81bn
  • Freedom of movement of people cuts both ways (1.2-2million Britons live in other EU countries); the most recent figures show that 273,000 migrants came from outside the EU to the UK versus 257,000 from inside the EU
  • Evidence of why inward migration to the UK from rest of the EU:

(i) better jobs or better paid jobs

(ii) experience (e.g. English language)

(iii) not primarily benefits (in- or out of work benefits), as benefits in their home countries are often higher

(iv) migrants claim less and make a net positive contribution (£1.12 for every pound received, sometimes even £1.64 depending on the county of origin)

  • On the PM’s renegotiation:

(a) EU member-states can apply for an emergency break for 7 years (no benefits payable in the first year, but rising to normal levels by year 4); even if the Commission and the European Parliament approve, this could be challenged in ECJ because of discrimination against migrant workers

(b) concerning the ‘exportability’ of child benefits; same situation if UK special status is enshrined, then freedom of movement and single market will go in reverse for the first time

  • Even in the case of Brexit, leaving will not solve immigration problem, as Migration Watch shows (only reduction of EU immigration by about 100,000, leaving around 160,000); could also see increase in migration from outside the EU
  • EU referendum will not be decided on sovereignty or democracy, but on economics and possibly immigration; most people are worried about impact on their communities
  • De Gaulle was right about the difference of Britain; today’s Europe is also different compared with the vision painted by the Brexiteers:

(i) mild Euroscepticism by many ordinary Europeans, not just Britons

(ii) rightly or wrongly, Brussels is seen as a threat

  • David Cameron’s deal was better than many have said, not because of the emergency break on welfare benefits, but rather because of the special status right, which is likely to be imitated by other member-states
  • EU membership is like marriage: it’s a package but on balance it’s better to stay

(i) the economic case is clear: leaving would leave Britain worse off; pro-Brexit needs to produce more evidence of how the UK will be better off out by mapping what it would be like to be outside

(ii) Brexit would destabilise EU very seriously, that’s what EU partners are saying; it would reinforce German hegemony; like 1815 Congress of Vienna, the moment the settlement crumbles, there’s trouble for Britain, Europe and the world

  • Back in 1975, there was a civil, polite disagreement; now it’s very different; Harold Wilson said that he voted in because it would put the wrong people in charge and in power

 

Panel discussion
  • Federalism works for some countries, but not for Britain
  1. First-Past-The-Post voting system produces majoritarian rule
  2. QMV then thwarts this at the EU level (with backroom deals)
  3. regulatory collusion (decisions by consensus favours those who know what they want, which privileges Germany and France over against UK and small member-states)
  • Unique form of federalism; centralising in some respects, decentralising in others; the Germans themselves want a clearer distribution of competencies between member-states and EU levels
  • Bureaucracy is another key factor, driving forward a process that views politicians as ‘here today, gone tomorrow’; bureaucratic forces in London and Brussels working together
Panel 2
  • International politics is usually not very democratic at all (executive, civil service, etc.); the EU is actually very different

[a] Commission proposes, but does not decide

[b] national parliaments have an 8-week period in which to respond; many member-states mandate their ministers before they go to Brussels

[c] elected European Parliament and Council of Ministers composed of elected politicians

[d] EP does not have an inbuilt majority, so more plural than most national parliaments (debates are not the same because of languages, etc.); EP amends and even throws out Commission proposals

[e] Council: Germany has been outvoted more often than many others; 65% of member-states need to agree

  • The EU is not perfect, but certainly not inherently anti-democratic

(i) the EU could of course be improved, but it’s via interdependence or else can be done at national level (e.g. mandating minister in the case of the UK)

(ii) democracy can and should work at different levels (Bill Cash’s argument leads to an argument in favour of Scottish independence)

  • ‘Taking back control’ or sovereignty
    1. what sort of world do we live? All international bodies provide some limitations on national sovereignty
    2. The fact that we are able to have a ‘special status’ is proof that national sovereignty has not been destroyed
    3. sovereignty is not black-and-white, it’s a matter of degree (e.g. the sovereign monarch is not absolutely sovereign)
  • Justice and Home Affairs (JHA) is a good example of how EU membership benefits the UK

[a] new EU information exchange is a powerful tool in fighting terrorism and organised crime

[b] first opt-out from JHA, but since 2009 selective opt-in (European Arrest Warrant) has increased – not diminished – national sovereignty

[c] in the area of JHA and security, dismantling agreements (not to mention trade arrangements) will take years, if not decades; not just short-term negative impact, but long-term disaster of leaving by depriving UK the power and influence

[d] are we seriously proposing a full restoration of borders is possible? Around the South coast? Between England and Scotland? Between NI and the Republic

  • More EU cooperation really means ever-closer union because otherwise Britain is seen as being in decline and couldn’t manage on her own
  • Leave campaign is bringing some sunshine to this pessimism:

(a) 5th or 6th largest economy

(b) one of the largest and best armies in the world

(c) to those who say that we cannot negotiate trade deals, there are more than 100 countries that have not ceded power to a central super-state

(d) why can’t we pool intelligence resources? Britain has got some incredible resources that others would want to share

  • Regional Development Committee of the European Parliament

(i) not bringing funds back to deprived regions

(ii) ‘Cities 2020’ aimed at increasing absorption rate: some of this is good (funds) but other provisions are about enhancing EU regulations (environmental standards, employment standards)

  • Not a risky option to leave because it is about restoring democracy and renewing Britain as a free country
  • The 2009 Lisbon Treaty is often called the treaty of parliaments:
    1. national parliaments involved in treaty revision
    2. national parliaments working with each other and with the Commission and the EP (in accordance with the principle of subsidiarity)
    3. scrutiny of national governments
  • Do national parliaments make use of these instruments?
    1. representatives in Brussels
    2. COSSACK (committee for inter-parliamentary cooperation)
    3. Dutch and Danish parliaments are very active
    4. what is difficult is to get 1/3 of national parliaments (41 in total, upper and lower chambers) to show yellow or red cards; many will use national governments to oppose proposals
    5. select committees
  • National parliaments and the European Parliament
    1. they can contribute to the work of the EP but have no vote
    2. there can be tensions: sometimes the EP can dismiss the more direct involvement by national parliaments because their first task is to hold national governments to account; EP can see national parliaments as rivals (because they can propose, but the EP cannot);
    3. relations between House of Commons and MEPs is difficult; whereas the links between the House of Lords and MEPs are good
    4. inter-parliamentary cooperation has developed
  • enhancing democratic legitimacy is not a zero-sum game; boosting national parliaments is not necessarily at the expense of the EP or vice-versa

 

Panel discussion
  • Either ‘Norway’ status, which is actually about losing sovereignty (as we have heard), or else ‘going global’, in which case Britain needs to renegotiate all sorts of deals with no guarantee of getting better deal (e.g. South Korea-EU deal)
  • Leave campaign has failed to paint a picture of how Britain would be better off being outside – there is no vision of flourishing outside the EU; there are deficiencies in UK’s membership, but Britain has much more influence than people get it credit for
  • Leaving means that Britain could do radical things, e.g. abolishing VAT, because of the regulatory straightjacket; loose cooperation with other nations would be great, but the EU isn’t that because the ‘European State’ is happening
  • Democracy matters above all; Hungary and its people were thwarted by EU values, which is not democratic
  • House of Lords Europe Committee has an excellent reputation, but it doesn’t hold the government to account; nor does the House of Commons Select Committee
    • there are all sorts of ways in which national parliaments could shape things a lot more, e.g. mandating ministers
    • not necessarily the yellow and red card system, but it requires much more will and action on the part of parliamentarians
  • Complex accountability procedure
    1. a measure of fiscal responsibility for the EP might be good (not only national parliaments)
    2. vertical now, as national parliaments are involved in decisions at EU level, whereas more horizontal would be preferable
  • Mandating system cannot be easily replicated in cases such as UK; it tends to be working better in countries with minority government
  • There are plenty of ways of improving scrutiny by
    • shifting to a sectoral committee (and having an EU select committee as a kind of coordinating mechanism)
    • party channels can also be used (national parties and their party groups in the EP)
    • invite MEP to select committees, even if they don’t all respond to the invitation

 

 

Third Seminar: Britain’s Strategic Choice – National Security and Global Influence

7 June 2016, 2-7pm, David Napier Room, 1 Birdcage Walk, Westminster

 

Key points

Panel 1:
  • Brexit would lead to provincialism and detachment when Britain has always been European
  • retreat from Europe and the world
  • disintegration of the EU
  • division of the West
  • Brexit would raise the German question once again and cast doubt on Germany’s culture of restraint after 1945 (including a rapprochement with Russia going forward)
  • Brexit raises fundamental questions about global geopolitics:

(i) breaking rules (Russia)

(ii) ignoring rules (China)

(iii) throwing away the rule book (ISIS)

  • In this context, exceptionalism leads to political emasculation
  • NATO achieved what was sorely missing in 1914 and 1939; the EU is trying to build a duplicate of the alliance but without the US
  • there is no status quo in the EU, either more integration or disintegration; high watermark was said to have passed in the late 1990s but we all know what happened next (Constitutional Treaty)
  • if the EU achieves its aim to duplicating NATO or if it falls apart, not good for the UK to be part of it
  • a Single European State (and German hegemony) are a threat to Britain’s democracy
  • Brexit and the break-up of the UK would be cataclysmic:
    • loss of global influence
    • NATO diminished
    • EU security weakened
  • Are the five former and the current NATO General Secretary all wrong? And the over 10 US former secretaries of state and of defence?
  • There will be neither an EU army nor a Single European State; instead, the EU and NATO are working hand-in-hand and to weaken the EU is to weaken NATO

 

Panel discussion
  • While Western interventions have been a mixed bag, now is not the time to dismantle the only functioning military alliance and question the rulebook
  • Need for shared stories about European history and security; the Battle of the Somme was a European catastrophe, not just a British sacrifice
  • There are circumstances when the whole of the West and European powers (including Russian) could and should cooperate, e.g. in the battle against ISIS, but the problem is EU self-delusion and creating a Potemkin village that duplicates and undermines NATO capabilities
  • The Syrian civil war and the ensuing refugee crisis is a case of a lack of Western interventions; military campaigns in Bosnia, Kosovo and Afghanistan were not all failures
  • Single European State and EU army on the cards, and UK can’t stop it because of QMV
  • The greatest deception of the Brexit campaign is the suggestion that Turkey will soon join the EU
  • The USA is perhaps the supreme European power; without it there is no common purpose, but Washington is tired of cleaning up Europe’s mess
  • Fascism is back in Europe, whereas in the US it is authoritarian populism; as such the EU could unravel in the case of Brexit

 

Panel 2
  • Populism, nationalism, sovereigntism (if not new forms of authoritarianism) are one aspect of this neoliberal disorder; the EU has been slow to react and, together with its lack of regional solidarity on the refugee crisis, is paying the price
  • The need theoretically and practically to align domestic and foreign policies on non-territorial threats; contra global elitism, on the one hand, and regressive nationalism, on the other, what kind of political narrative can be developed to motivate this embedded political action?
  • Aligning national and global interests means rehearsing both the terms of domestic political responsibility and the terms of the social contract in radical distinction to the politics of fear
  • The supplementary relationship between national and post-national institutional instances, to address non-territorial threats, presents a good, theoretically attuned, but pragmatic way to move forward both in terms of political capacity (efficacy) and political legitimacy
  • The alternative is self-destructive sovereigntism, a movement on the wrong side of history; to oppose this tendency decisively requires proactive imagination, political vision and the ability publicly to narrate, in one, 4-storey national political responsibilities (sub-state, state, regional and global)
  • The EU’s four freedoms have created an unmediated space of circulation of capital and commodified labour; as such the EU has ceased to represent an uneasy coalition of interests, giving way to a fusion of Napoleonic directives with British free trade
  • The legacy of the early European project is under threat, as co-determination, a vocational labour market and regional banks are not on the EU agenda
  • What’s needed is to appeal to local and national traditions of democratic resistance to a brutal form of capitalism that is underpinned by a certain rationality
  • The best thing might be to leave to the EU in order to preserve it, allowing Germany and France to build the political union they’ve always been committed to
  • As evinced by the opposition between Trump and Clinton, there is an unpleasant nationalism on the right while the left has abandoned any meaningful critique, resistance and alternative to capitalism
  • The genuine alternative to globalism and nationalism is pluralism and the internationalising of the political
  • In its origins, the EU was a Catholic project that differed markedly from British Whig politics; today the EU combines Napoleonic directives with German Kantian formalism; Britain bears some responsibility because British constitutionalism combined with Roman law tradition could have mediated between both but failed to do so
  • The UK still has one of the best European traditions of blending liberty with solidarity, which is the British version of being European; Britain needs to try to redirect the EU along the lines of the original vision

 

Panel discussion
  • There is a disjuncture between emotions and politics, which is why immigration is so central to the campaign and so hard to address properly
  • Immigration erodes trust and is symptomatic of an EU that is remote and administrative
  • Do the legal and political structures of the EU make it un-reformable? That’s a matter of political judgement

 

Panel 3
  • Britain’s four strategic priorities
    • support for widening, not deepening, the EU and acting as a brake on political integration
    • liberalising the single market
    • promoting external trade
    • upholding the transatlantic alliance
  • EU referendum campaign has already done damaged to UK foreign policy; a close result will add to this; UK out of EU will be taken far less seriously by US, BRICS and other global players
  • UK retains control over important areas such as security and defence policy and development aid, so EU membership provides an interface of domestic politics and foreign policy
  • In a globalised world, trade and border control have changed fundamentally; EU itself is undergoing profound change with global supply-chains, the new digital age and big data
  • Why stay in? Because history and geography have put UK in Europe; EU is Britain’s global village; there is no sideline, so Britain can’t occupy this impossible position
  • Is EU today still a peace project – after brokering reconciliation between France and Germany?
  • The EU is caught between an Atlantic and a continental project, lacking any inclusive peace project with Russia
  • Greater West beyond historical West was never built after 1989; Gorbachev’s ‘common European home’ is now the Greater Europe that Russia wants to build

 

Panel discussion
  • What would happen after a Brexit vote?
  • role of parliament: repealing the 1972 European Communities Act would require a parliamentary majority, but most MPs are pro-Remain
  • what about the role of the Scottish Parliament and the Welsh and Northern Irish assemblies?
  • would there be a need for a general election?

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