Is the EU a giant squid?

Posted by Paul Samael on Sunday, June 12, 2016 Under: Random thoughts

In this post I’m going to look at whether the EU is so dysfunctional and plagued by major problems (e.g. migration, the euro etc) that it has become like a giant squid, threatening to drag us down into the abyss – so the safest course is to disentangle ourselves and leave.  For me, geography means that this “safer out” argument doesn’t hold much water (excuse the pun).  This is because, if we leave, “the squid” will still be sat there right next to us, with all the same problems – and since we have (and are likely to continue to have) important trade links with the EU, some of the tentacles can’t be detached without causing ourselves considerable pain.  But struggling to escape from the metaphorical tentacles of this rather strained squid analogy is a more serious point about whether the EU – with its 28 Member States – is now too unwieldy to operate effectively in its members' interests.

An international perspective

There’s no doubt that getting 28 countries to agree can be hard work and can involve messy compromises.  But that is true of almost all forms of international cooperation (consider, for example, the very troubled recent history of both climate change and multilateral trade negotiations).  It is even true of many systems of national government (consider, for example, the difficulties Barack Obama has experienced as a Democratic president trying to get measures through a Republican legislature).   

A more appropriate benchmark to judge how the EU is doing would be to compare it with other, similar regional organisations, like Mercosur in Latin America or ASEAN in Asia.  Both of these organisations have pursued initiatives similar to those of the EU e.g. dismantling barriers to trade, harmonising national rules, promoting free movement of people and freedom of establishment and (in the case of Mercosur) forming a customs union.  This shows that many other countries also see benefit in pooling their sovereignty in the same way as EU member states.

Making sure everyone plays by the rules

One key difference between the EU and other regional blocs is that, where EU member states do not play by the rules, their behaviour can ultimately be referred to the Court of Justice of the EU (CJEU) in Luxembourg.  Neither ASEAN nor Mercosur has a comparable enforcement mechanism – which means that if their member states drag their feet over agreed measures, there’s relatively little anyone can do about it except whinge (and in practice, this has meant that progress on some initiatives has fallen well short of what member states signed up to).  In the EU, by contrast, part of the European Commission’s job is to make sure that member states are living up to what they have agreed – if necessary by referring them to the CJEU.

From a purely UK perspective, there are good and bad things about this system.  Sometimes the UK is told that it hasn’t followed the rules or its attempt to challenge those rules is rejected - which always seem to generate lots of negative headlines.  But the system cuts both ways.  When France continued to ban British beef after the European Commission had declared it safe (following the outbreak of BSE), the CJEU ruled that the prohibition was illegal – and shortly afterwards, the French changed their policy (rather than face daily fines).   In a Mercosur or ASEAN-type arrangement, it would have been much more difficult to get the French ban lifted (as it would be if we left the EU).

But don’t we lose more than we win?

The popular perception is that in these kinds of intra-EU battles, we lose more than we win.  Indeed, pro-Brexit campaign Vote Leave claims that we lose most CJEU cases, citing a long list of judgments where this is said to be the case.  But to produce a meaningful figure, you would need to consider any case in which the UK had an interest in the outcome – whereas Vote Leave only looked at cases where the UK was actually a party (which is a much smaller subset of the whole - and, tellingly, did not include the beef ban case, which was brought by the Commission at the UK’s request, rather than by the UK against France).

For example, the UK has an interest in ensuring that UK businesses can compete on a level playing field with businesses elsewhere in the EU – so where the Commission acts to prevent illegal subsidies being granted elsewhere in the EU, that is arguably a “win” for the UK businesses (which don’t then lose out as a result of unfair competition from subsidised competitors).  From 2000 to 2013, the Commission ordered the recovery of illegal subsidies in 202 cases.  Only 4 were UK measures compared to 20 in France, 50 in Germany, 41 in Italy and 27 in Spain (see para 3.60 of this doc).   This suggests that on the issue of subsidies, we “win” as a country far more than we lose.  The UK has also scored some important victories recently – for example, in this ruling which ensures that clearing transactions in euro can continue to be done anywhere in the Single Market.  A loss would have threatened the UK’s leading role in processing trillions of financial transactions conducted in euro (although if we leave the EU, that market will be under threat again).

What about EU decision-making?

When it comes to EU decision-making, the popular perception is that the UK is constantly being forced to adopt legislation against its will (“by Brussels diktat”).  But the figures don’t really bear this out, as these 3 blog postings make clear: 
Inevitably there will be issues where the UK is unhappy with the results – many of which have become bugbears for eurosceptics and which get all the media attention.  But as noted in the second of the blog postings above, 87% of decisions taken in the Council of Ministers are by consensus – implying that the UK is broadly in agreement with the policy the vast majority of the time.  The key point here is whether it is worth leaving the club over the relatively low number of votes we lose, when most of the time, we appear to get a result that we can live with – and which has the key advantage of being binding on all the members of the club (so they all have to abide by the same set of rules – and if they don’t, the Commission and the CJEU can take action).  Also, if the EU really were as dysfunctional as is sometimes made out, its decision-making ought to have ground to a complete halt by now – whereas the 87% figure shows that in most areas, all 28 Member states are able to work out a solution they can all live with.  

Why doesn’t media coverage reflect any of this?

Little of this is reflected in the media because “UK agrees with 27 other countries” is a pretty boring headline – it’s much more interesting and dramatic to write about the EU not working or the UK having “lost” yet again (hence the somewhat misleading impression generated on both issues).  But in a club of 28, it’s not realistic to expect to win 100% of the time.  Similarly, the media focus has been on the crises facing the EU – migration, the euro etc – and not on the aspects of the EU that, despite these problems, have continued to work in the interests of its members, including the  UK (such as trade and the Single Market– see this post).  Unfortunately, many journalists are more interested in what they perceive to be a “good story” than they are in providing a sense of perspective.
But despite all that, isn’t the EU heading in the wrong direction?

Finally, eurosceptics argue that we should leave because the EU is “going in the wrong direction,” often appearing more interested in generating red tape than in promoting economic growth.  The EU has certainly made mistakes – the euro is probably the biggest.  But it has also shown that it is capable of recognising its mistakes and correcting them.  A good example is the Clinical Trials Directive, mentioned countless times on the Vote Leave website as a prime example of bad EU regulation.  Vote Leave are absolutely right to say that this legislation was very poorly designed – but it has now been amended, in reforms broadly welcomed by the pharmaceutical industry, scientists, pressure groups and medical charities.  Meanwhile, the new Commission (which is in charge of proposing legislation) has also set priorities which are more focussed around economic growth.  

Given the level of popular discontent across the EU, there is a clear opportunity for the UK (along with other Northern European countries) to push for the EU focus more on measures likely to promote economic growth – such as liberalising services (where UK businesses would stand to gain considerably).  If the euro-zone’s economic growth increased in the process, everyone (including the UK) would stand to benefit.  The euro crisis arguably presents a further opportunity for the UK because the EU may well need to restructure itself around an inner core of members which are happy to pursue further political integration (with a view to avoiding future euro crises) and an outer ring of countries like the UK, which are not.  Again, this would be likely to suit the UK better than the current arrangement (provided that it is not discriminated against by the core – but it has already secured such protection in relation to matters relating specifically to the euro).  It is a pity that the Remain campaign has not had much to say about any of this – it would be good to see some kind of positive vision being offered for the future of the EU, to counter all the predictions of doom (on both sides).

OK, OK, but we've rather gone off the point here.  Is the EU a giant squid?

No, not really - or if it is, it's more like the one that lives in the Hogwarts lake in the Harry Potter books and does various unsquid-like things, such as eating toast.  At any rate, it's quite some way from living up to its portrayal in some quarters as a nightmare creature of pure evil, like HP Lovecraft's Cthulhu.  Besides, I am reliably informed that Cthulhu has his eyes on a bigger prize - the presidency of the United States (watch out Trump!).

In : Random thoughts 

Tags: brexit cjeu cases "does the uk lose more than it wins?" 
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Paul Samael Welcome to my blog, "Publishing Waste" which will either (a) chronicle my heroic efforts to self-publish my own fiction; or (b) demonstrate beyond a scintilla of doubt the utter futility of (a). And along the way, I will also be doing some reviews of other people's books and occasionally blogging about other stuff.
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