Friday, 9 December 2016

Moving beyond little Europe

From producing a piece of software to building an Airfix spitfire, it doesn't take very long to have the core concept established. Very rapidly, you can produce something which broadly represents the finished product - but lacks the finesse to be considered complete. The final steps make up the longer and more difficult work and can take even longer than producing the core concept. And that is what we can say about the EU. It is an unfinished project where all the intense effort goes into making only marginal incremental gains. That is why it has stalled.

Making further gains is now intensely political and increasingly difficult to bring member states along with it. In so doing we are collectively neglecting the fact that broader gains can be made by expanding the core concept, the bit that works, and doing for the rest of the world what we have achieved in Europe. Though some would have us leave the single market, severed of all ties, there is no rowing back on what has been done. The mission is now to take that further.

In order to fully divorce from the single market as some would have it, we would have to invent new systems of administration for the purpose of erecting barriers where none presently exist. There is no economic gain to be had and we probably couldn't even if we wanted to. It would require major changes in transport infrastructure for which there is no political will or budget to do it on either side of the Channel. Even if we do leave the single market, it's hard to envisage major changes to how our borders function.

All the while, in this dismal and parochial Brexit debate, it is the assumption that the rest of the world has stood still. There is an assumption that pulling out of the EU necessarily means rowing back on decades of gain and that fortress Europe is the only game in town. What we increasingly see, if we look elsewhere, is that a universe of largely anonymous but influential organisations are constructing a single market of their own outside of the EU.

The commercial and trade opportunities in this are vast but they are not to be found by pursuing the "bumper deals" bilateral mindset. It requires a high level of global multilateral engagement and foreign investment. What we are seeing is the emergence of global customs systems, developing independently of the EU, and outside of the blocs. This largely supersedes the single market, and in a sense is privatising it. As standards bodies have gradually replaced technical governance from government, with nations states and blocs adopting private standards, they are increasingly turning over the management of borders over to quasi-private organisations regulated independently. We are moving to a state where even the EU is not the sole authority on its own frontiers.

Through the Authorised Economic Operator system, along with TIR and advancements in border crossing technology, the European single market framework is being eroded and replaced by a point to point system taking little account of bilateral trade deals. It exists for the free movement of goods over borders, eliminating much in the way of customs intervention. The standards on which it rests are global standards, not EU regulations - which are increasingly one and the same anyway.

In respect of leaving the EU, abandoning the political union, we may lose some peripheral advantages but we are not pulling out of the many global organisations working to bring about greater harmonisation of standards and systems. In fact, leaving the EU gives us a greater presence and a freer hand. Moreover, if this is true of goods then it is even more true for services in which we are seeing newer sectors developing their own global standards entirely independently of the EU. Patents, banking rules, cross border payments, internet and communications are all now global concerns which sidestep regionalism entirely.

At some point I am going to get bored of saying this but in many respects the political union of the EU is the inhibitor to further progress as the EU attempts to defend le grand project from outside intrusion. Globalisation very much undermines its raison d'ĂȘtre. If global entities are creating common rules then there is no longer practical need for the EU and its superstate aims become redundant.

In the round we have a debate mired in the dogma of yore which bares no relation to things as they are and the overall direction of travel. On the one hand we have little Europe europhiles who think the EU is the be all and end all of economic cooperation - and could not happen without political union, and on the other we have eurosceptic simpletons who think Brexit is a binary estimation between following rules and not following rules, completely oblivious to two decades of international development beyond the confines of the EU.

There is an obvious case for continued cooperation with Europe but that should not blind us to the fact that the EU is not the top table, and is increasingly a middleman in the process of relinquishing much of the responsibility for harmonisation and integration. Far from being disengagement, Brexit is more likely to to be a pragmatic admission that EU level integration has gone about as far as it can without widening the scope beyond the EU - and the EU is not the best vehicle to that end. Regionalism serves only to frustrate that process whereas full global engagement stands to bring about more tangible gains for first world economies.

As it stands we have very little to trade with in terms of opening up our own markets as they are already fairly open to begin with. Trade has moved on to a different plateau where the aim of the West must be to bring about a more inclusive global marketplace, opening up and supporting emerging economies for the common good. That kind of cooperation has worked in Europe. It's about time we up-scaled those ideas. Brexit may well be the catalyst. 

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