UK and the EU

The EU referendum is less than two months away, yet many people still don’t really know what the EU is about or what it does.  The leave camp tell you it is an interfering bureaucracy hell bent on a federal Europe, and the remain camp tell you that if we leave we will be left in an economic wilderness. Neither is true, so here is my take after working there for ~20 years.

EU

What is the European Union and how does it work?

The EU is based on the assumption that Europeans have more in common than they have differences. That by working together we can achieve more than we can individually. The impetus for all this originated from the aftermath of the second world war. The first steps to try to bring Europe back together again were made in 1950 by Robert Schuman (French foreign minister), specifically to avoid the possibility of any future conflict. On 9 May 1950, he proposed establishing a European Coal and Steel Community (ECSC). In countries which had once fought each other, the production of coal and steel would be pooled under a common High Authority. In this practical but also symbolic way, the raw materials of war were being turned into instruments of reconciliation and peace. Six countries initially joined – Belgium, Italy, France, Germany, Netherlands and Luxembourg.

This security aspect has largely been forgotten in the intervening years. We easily forget that Spain was ruled by the dictator General Franco until 1975, Portugal by Salazar until 1970 and Greece by a military junta until 1974. Greece joined the EU in 1981 while Spain and Portugal only joined in 1986, which helped secure their new democracies. The UK, Denmark and Ireland had already joined in 1973, bringing a ‘stable’ European Community up to 12 nations.

More controversial perhaps was the rapid expansion following the fall of the iron curtain, leading first to the re-unification of Germany and then later to the ‘EU enlargement process’  including former Soviet block countries. On the one hand this process has been a huge stabilising influence on the new democracies of Eastern Europe, but on the other hand has caused external tensions with Russia and internal EU tensions due to their large initial disparity of GDPs. However, one thing is important to remember in the debate about resultant EU migration to the UK. It is predominantly young people who have come to work in the UK and who have no intention whatsoever of becoming British citizens. This is not immigration as such, since the vast majority will eventually return to their home countries. It is no different to UK citizens working or retiring to France, Spain or the rest of the EU because they find housing and the cost of living cheaper. They pay taxes and contribute to the UK economy exactly like anyone else. Nor would they be here if jobs were not readably available for them in UK firms. It is unfair to imagine that they are somehow stealing jobs from British people.  Either there is a free single job market in Europe or there isn’t.

One of the further problems of Enlargement has been to  complicate EU decision-making as now there are 28 nations to consult in as many languages. It is mainly for this reason that the original member states lost their absolute veto to new legislation. This is now causing headaches and perhaps for this reason it is true that the rush to Enlargement was a bit too fast for the older member states, particularly the UK.

The single market

Sometimes the argument about the EU is reduced to just money. How much does the UK pay in and how much do we get out? The UK pays about twice as much in as we get out, but this is mainly because we are richer than the new member states. Funds are allocated specifically to help poorer economies catch up with the rest of Europe. Is this a price worth paying? That depends on whether you think peace and stability in Europe is the most important goal. Less developed regions of the UK are also eligible for funding.

regions

Many of the benefits of the single market are not that obvious and we have learned to take them for granted. For example the wide choice of food, wine and restaurants now available across the UK is a direct spin-off of our membership of the EU. Cheap air travel, free movement for holidays and tourism are all indirect benefits. Even the dreaded euro has made traveling around Europe as easy as driving around Britain. I remember the days when at every border crossing you had to stop at the bureau de change and convert currencies, always at a loss.

So should the UK have joined the euro? Certainly if we had joined the euro then we would not be having a referendum about leaving. The euro has been good for some countries and bad for others because their national economies were already disparate when the euro started. The euro has been a boom for German exports because it artificially kept their prices lower, and a disaster for Greece with higher than normal prices partly due to a bloated public sector. The euro must eventually succeed or the EU itself will fail. For that reason euro states are being forced to adopt the same monetary policies, resulting in a loss of sovereignty. While the UK remains outside the euro we escape this dilemma. However what exactly is sovereignty? Have we really lost some of our sovereignty and can we get it back again by leaving the EU?

If the UK wants to decide everything for itself without EU interference, then it will come with a price. If you want to sell your products on important markets you have to respect the rules valid for those markets. If you want to attract investments you have to make sure you are attractive by either being, or being part of, a big market. If you want to be safe, then you have to take an active part in close security cooperation with allies. If you want to have influence and not be irrelevant on the world scene you have to work closely with others. All this means sharing sovereignty with others – especially allies in Europe and the US.

What really is sovereignty about anyway, and what does it mean in today’s world?
The British political philosopher Thomas Hobbes wrote about it in his book Leviathan in 1651. This was a description of a state with an absolute sovereign – a ruler with absolute power who decided everything for everybody. Louis XIV (the Sun King) of France lived and ruled during the same period, and he tried to decide everything. Examples today are Kim Jong-un in North Korea and Robert Mugabe in Zimbabwe. Sometimes populations actually need protection from such absolute sovereignty. There is no doubt that being a member of the EU did stabilise democracy in Spain, Greece, Portugal and the new member states, and this on its own must be a good thing. The UK is different of course, but even so continuing to be a member of the EU ensures that some future government cannot take extreme measures in the future. Few remember how close Britain became to adopting radical socialism during the Wilson and Callaghan years, or that Tony Benn, militant tendency and Socialist Workers Party all also opposed membership of the EU. Such safeguards from political extremes of left and right does indeed involve a loss of sovereignty. A basic requirement of EU membership is a democratic government, free press, human rights and an open and free market economy.

So what has the EU ever done for us apart from cheap wine? One reason why we British feel a bit disconnected from EU membership benefits is simply due to language. Language teaching in UK schools is diabolic and getting worse. If all young people had a basic grasp of conversational French or German or Spanish or Italian then they would benefit far more from being part of Europe. There are exchange schemes for students to live, study and work in Europe which most schools and universities don’t take any advantage of. The fact that UK is an island also has a psychological effect making it appear to be more difficult to travel around Europe, but this is not really true. More interaction with different European cultures would also bring us other benefits. For instance the number of UK staff working in EU institutions is far too small for our size. We are the second largest contributors to the EU budget yet have proportionately the lowest number of EU employees. The best way to get more influence is simply to have more UK staff working in Brussels. The fact is that we have far more in common culturally with Europe than we do with say the US. Just using the same language is not the same thing as having the same outlook. We share common European values with a long history.

So how does the EU work ?

At the core of the EU are the Member States and their citizens. The unique feature of the EU is that, although these are all sovereign, independent states, they have pooled some of their ‘sovereignty’ in order to gain collective strength and the benefits of size. Pooling sovereignty means, in practice, that the Member States delegate some of their decision-making powers to the shared institutions they have created, so that decisions on specific matters of joint interest can be made ‘democratically’ at European level. The EU thus sits between the fully federal system found in the United States and the loose, intergovernmental cooperation system seen in the United Nations. The decision making powers of the EU are defined in treaties.

The EU treaties

The European Union is based on the rule of law. This means that every action taken by the EU must be founded on treaties that have been approved voluntarily and democratically by all EU countries. The treaties are negotiated and agreed by all the EU Member States and then ratified by their parliaments or by referendum. The treaties lay down the objectives of the European Union, the rules for EU institutions, how decisions are made and the relationship between the EU and its Member States. They have been amended each time new Member States have joined. From time to time, they have also been amended to reform the European Union’s institutions and to give it new areas of responsibility.

A list of all such treaties is as follows:
1. The Treaty of Paris, establishing the European Coal and Steel Community, was signed in Paris on 18 April 1951 and entered into force in 1952. It expired in 2002.
2. The Treaties of Rome, establishing the European Economic Community (EEC) and the European Atomic Energy Community (Euratom), were signed in Rome on 25 March 1957 and came into force in 1958.
3. The Single European Act (SEA) was signed in February 1986 and came into force in 1987. It amended the EEC Treaty and paved the way for completing the single market.
4. The Treaty on European Union (TEU) — the Maastricht Treaty — was signed in Maastricht on 7 February 1992 and came into force in 1993. It established the European Union, gave the Parliament more say in decision-making and added new policy areas of cooperation.
5. The Treaty of Amsterdam was signed on 2 October 1997 and came into force in 1999. It amended previous treaties.
6. The Treaty of Nice was signed on 26 February 2001 and entered into force in 2003. It streamlined the EU institutional system so that it could continue to work effectively after the new wave of Member States joined in 2004.
7. The Treaty of Lisbon was signed on 13 December 2007 and came into force in 2009. It simplified working methods and voting rules, created a President of the European Council and introduced new structures with a view to making the EU a stronger actor on the global stage.

Who takes the decisions?

Decision-making at EU level involves various European institutions, in particular:

  • the European Parliament, which represents the EU’s citizens and is directly elected by them
  • the European Council, which consists of the Heads of State or Government of the EU Member States
  • the Council, which represents the governments of the EU Member States
  • the European Commission, which represents the interests of the EU as a whole.

The European Council defines the general political direction and priorities of the EU but it does not exercise legislative functions. Generally, it is the European Commission that proposes new laws and it is the European Parliament and Council that adopt them.
The Member States and the Commission then implement them.

What types of  legislation are there?

There are several types of legal acts which are applied in different ways.

  • A regulation is a law that is applicable and binding in all Member States directly. It does not need to be passed into national law by the Member States although national laws may need to be changed to avoid conflicting with the regulation.
  •  A directive is a law that binds the Member States, or a group of Member States, to achieve a particular objective. Usually, directives must be transposed into national law to become effective. Significantly, a directive specifies the result to be achieved: it is up to the Member States individually to decide how this is done.
  • A decision can be addressed to Member States, groups of people, or even individuals. It is binding in its entirety. Decisions are used, for example, to rule on proposed mergers between companies.
  • Recommendations and opinions have no binding force.

Every European law is based on a specific treaty article, referred to as the ‘legal basis’ of the legislation. This determines which legislative procedure must be followed. The treaty sets out the decision-making process, including Commission proposals, successive readings by the Council and Parliament, and the opinions of the advisory bodies. It also lays down when unanimity is required, and when a qualified majority is sufficient for the Council to adopt legislation.

The great majority of EU legislation is adopted using the ordinary legislative procedure. In this procedure, the Parliament and the Council share legislative power.
The procedure begins with the Commission. When considering launching a proposal for action, the Commission often invites views on the topic from governments, business, civil society organisations and individuals. The opinions collected feed into a Commission proposal that is presented to the Council and the Parliament. The proposal may have been made at the invitation of the Council, the European Council, the Parliament or European citizens, or it may have been made on the Commission’s own initiative.
The Council and the Parliament each read and discuss the proposal. If no agreement is reached at the second reading, the proposal is put before a ‘conciliation committee’ comprising equal numbers of Council and Parliament representatives. Commission representatives also attend the committee meetings and contribute to the discussions. Once the committee has reached an agreement, the agreed text is then sent to the Parliament and the Council for a third reading, so that it can finally be adopted as law. In most cases, the Parliament votes on proposals by simple majority and the Council by qualified majority voting, whereby at least half of the total number of EU Member States, representing about two thirds of the population, must vote in favour. In some cases, unanimous voting is required in the Council.

National parliaments receive draft legislative acts at the same time as the European Parliament and the Council. They can give their opinion to ensure that decisions are taken at the most appropriate level. EU actions are subject to the principle of subsidiarity
— which means that, except in the areas where it has exclusive powers, the Union only acts where action will be more effective at EU level than at national level. National parliaments therefore monitor the correct application of this principle in EU decision-making. There are a few areas where the EU has exclusive powers over national governments. These cover: trade, customs, competition rules, monetary policy for the euro area, and the conservation of fish.

In all other policy areas the decisions remain with the Member States. Thus, if a policy area is not cited in a treaty, the Commission cannot propose a law in that area. However, in some fields, such as the space sector, education, culture and tourism, the Union can support Member States’ efforts. And in others, such as overseas aid and scientific research, the EU can carry out parallel activities, such as humanitarian aid programmes.

Eurozone monetary policy is managed by the European Central Bank. Fiscal, labour and welfare policies remains with member states, but eurozone countries must conform to EU set rules on deficit and debt levels.

The Commission.
The commission is essentially the civil service of the EU. It is divided into Directorates (ministries) each with a politically appointed Commissioner (Minister), one from each member state. There is a president of the Commission who holds regular ‘cabinet meetings’ with Commissioners to decide budgets, strategy, policy, future legislation etc. The active Policy Directorates (Ministries) are:

Agriculture and Rural Development
Competition
Climate
Economic Affairs
Education and Culture
Environment
Energy
Health and Food Safety
Humanitarian Aid
Information Technology, Networks
Trade
Research and Development
Regional and Urban policy
Fisheries and Maritime affairs
Justice and Consumer protection

So for example, Universities and small companies can apply for research funding for large projects to DG Research and DG Information. Regional governments can apply for infrastructure funds through DG REGIO. Schools and University students can get grants to study and live abroad under the Erasmus programme. I am sure the UK doesn’t get our fair share, but this is also partly due to our ignorance and poor internal communication. The work of the Commission is  monitored by the European Parliament who also have the power to sack the Commission. They actually once did this by forcing the resignation of the Santer Commission in 1998, following various scandals. The Commission is often criticized for having too much political power in Europe, but nevertheless it is still subject to democratic control.

Is this a once in a lifetime decision? Will the UK eventually be forced to join the Euro if we remain in the EU, and get subsumed in some future super state?  No it isn’t – because any such moves would trigger new referenda, and it would not just be the UK who might then vote no. All new treaties require the unanimous approval of all member states. This provides long term safeguards against forced loss of sovereignty.

Acknowledgement: Thanks to Niels Thogersen for providing background material.

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