Friday 16 October 2015

The international elephant in the room

Euroblog blogger, Jon Worth, fancies himself as a bit of a political wunderkind and sees fit to opine on the subject of Brexit. The brevity of his received opinions are worth a fisking since they do seem to encapsulate the basis of the europhile message.

He asserts that "If Britain were to be like Norway – inside the European Economic Area – the democratic gain for the UK is zero. Britain would have to implement the rules of the EU Single Market but would have no say over them. Norway’s Europe Minister Vidar Helgesen has said as much."

What we have here is a piece of political memery. It has no basis in fact which is why it contains a link that appeals to prestige and authority. Readers of this blog by now will be well aware of the many contexts where Norway has a great deal more direct influence in the laws that govern us, from fishing to maritime safety through to the automotive industry. It is the typical little Europe mentality that cannot see beyond the confines of the EU entity. To them, nothing else exists outside.

Indeed, it is now the case, or so says this Efta report, that more than 90 percent of the laws of the single market include policy areas covered by UN or other global bodies. Jon Worth seems to be conflating the EU with the single market. In most EU documentation, the EU aspect of the single market is referred to as the Internal Market - which is the only part of a much larger single market the EU has sole authority over. The overall EEA is but one single market, but there are global single markets which share zero tariffs and a common regulatory framework, which are expanding all the time. 

In fact, such is the nature of global trade now that the real deals, the ones that are often far from the public radar happen between obscure entities that govern standards and practices, with inputs from trade associations and mega transnational NGO's who often wield greater power at the top tables than many nation states.

Those who see the global trading vista in terms of big ticket moves like TTIP and single markets only in terms of the EU are only aware of a small fraction of what goes on on the international governance scene. Their understanding of the subject is breathtakingly simplistic ans superficial. Even those who should know better do not, and if they did, it would suit their purposes not to tell you. 

The real nature of global trade agreements advances by representatives from specific sectors and industries coming together to improve the trading environment and what is agreed by convention, invoking international standards, is merely rubber stamped by middlemen such as the EU. Indeed the EU lacks the manpower or the resources to cover such a magnitude of areas in any real depth. From automotive standards to labour laws, it defers to the international matrix of governance - UNECE to the ILO.

By way of being contrained by the EU we are preventing from chosing alliances and temporary coalitions that benefit our own existing and emerging markets, forcing us to lobby within the EU to raise our needs among many as a trading priority. This is not only damaging to the UK's economic interests it is also harmful to Europe in general since the UK is a driver of European growth.

As the EU clings to obsolete deep and comprehensive, all encompassing agreements forges sometimes over decades, it loses out on the many incremental improvements, and can often be held back by the uncooperative nature of those member states protecting their own interests. In effect there is subjugation to surpranationalism when clearly intergovernmentalism is the model that gets results. Europhiles are only dimly aware of this dynamic but are aware of how potentially damaging it would be to their ambitions were the public informed of it. It is for this reason it is seldom debated or acknowledged by the likes of Jon Worth or the Economist.

Worth goes on to say "the UK would not have to be part of the EU’s CAP and would not contribute to regional funds, so there would be a marginal budget win – that’s of course if all farmers and the UK’s poor regions would cease to be subsidised in a post-EU era (highly doubtful). Also there is free movement of people within the EEA, as there is within the EU, and that’s not going to reassure Tories and KIPpers. Yes, EEA membership would cause the least economic shock because access to EU markets would remain as it is, but if that’s what you want, why not stay in the EU?"

Indeed there is no doubt our agriculture would have continued subsidy and there is no practical reform I can think of that would bring this to an end any time soon, but the model we adopt would be ours to define. That in itself is a power worth having. As to free movement, Brexit does give us marginal extra powers which would need to be exercised along with other major reforms to those mechanisms we already have control over. Freedom of movement though is a concession worth making just to have our voice at the top tables once more. That alone is justification to leave the EU.

Worth argues that the alternative to the EEA, to be further our than Norway is – to have a relationship with the EU that is more like the relationship the United States has with the EU – that means have the power to set new standards for things. That, for example, car emissions standards are set differently. That IT firms data protection standards are different (a Safe Harbour with the UK, anyone?) That safety standards for suntan creme, the plastics used in childrens toys, and the efficiency standards for electric goods would all be different."

Again Worth demonstrates only a very superficial understanding of the available options. For instance, the European emissions standards are in fact made by the UNECE, to which both the EU and has adopted along with many other non-EU countries. It is more than likely that the UK would continue to be a participant at all levels in the UNECE, and could therefore have a mutual recognition agreement with the EU. Continued market access is not contingent on single market membership, even though it is likely that a variant of the EEA model would apply.

As to data protection, Worth is clearly unaware that along with banking rules, the progenitor is the OECD, a forum of more than 30 countries that has developed forward-thinking guidelines on the protection of privacy and transborder data flows. Decisions made within OECD are reached by consensus and commitments which are then usually the basis of intergovernmental agreements. Outside the EU we can participate in shaping such conventions either unilaterally or part of a trade coalition.

In matters such as electrical safety or vehicle emissions, we find the UNEF is involved, working closely with UNECE to provide standards and conventions and indeed strongly typed regulations adopted verbatim both by the EU, Australia and the USA. While the EU certainly has clout in such affairs, trade coalitions of industry groups, trade guilds, NGOs and corporate lobbyists working on a single sector of concern can often have equal or greater say than the EU.

Worth says that "Because these are the sorts of things that being outside the EU would allow the UK to set for itself, the House of Commons would gain new powers. But here the economic impact is much larger. There are basically two standards for car production worldwide – the American standard, and the European standard. Would Sony or Apple like to bear the cost of a UK energy efficiency standard and a different EU one? If – in practice – the EU standards for all these things are going to apply in the UK anyway, then we’re back to the Norway case above – the democratic gain looks theoretical."

Indeed, Mr Worth is so fond of his own superficial opinions that he as not actually read the leading Brexit proposal, where such issues are explored in full. We find many instances where Norway has greater influence and even Mexico is more agile on the global stage than the UK.

Worth concludes that "In short: if the UK wants an exit from the EU to cause as little economic damage as possible, it needs the EEA and will be like Norway. If it wants the full reassertion of sovereignty, then that is going to mean setting new standards for things, and that is going to be economically damaging. Britain can have an economically decent outcome from a Brexit vote, or a democratically decent one, but it can’t get both."

Indeed, most serious Brexit proposals concur that an EEA agreement is the most likely settlement as things presently stand, where Britain would retain full access to markets. The Ukip notion that we would have full sovereignty is one that is deeply flawed but then in the modern age, no individual state, nor indeed the EU has full sovereignty. Full sovereignty is a thing of the past. For sure the economic practicalities mean that we could not unilaterally set new standards, nor is there much reason to.

There is, however, every advantage to be had by having our own voice at the top tables and cutting out the EU middleman. By unbundling trade deals and seeking favourable conditions matching our leading industrial concerns, we can secure both an economical and democratic advantage. We would have the right of veto for starters. Being the fifth largest economy gives us certain leverage.

To think as Jon Worth does, you first have to either be oblivious of, or completely deny, the international dynamic of regulation and trade. Such arguments are made from a position of either ignorance or dishonesty. In recent debates I have found it is both, in that the europhile zealotry of "ever closer union" at any cost overrides any desire to bring about a global single market in a community of equals. For reasons that escape me, they think the subjugation of surpranationalism is preferable to intergovernmentalism. I have yet to hear a compelling reason why that is best for Britain.

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