EU MEMBERSHIP – UNDERSTANDING THE RULES

While combatants wrestle over potential outcomes of the Brexit debate, we should recognise the part played in all these shenanigans by fear, borne of uncertainty. Many warnings against the dire consequences of leaving the EU have an emotional flavour not rooted in economic logic, while some Brexiteers counter such warnings with equally fanciful claims for the blessings of an EU-free future.

As so few participants in the debate appear to have done the most basic homework of examining the rules of the club, here is a brief summary of the conditions that apply to EU membership.

Single market in practice

The idea of a “single market” appears to be harmless enough. It appears to connote the wholesome idea of free trade, whereas it actually refers to trade that is free only within the limited arena of a defined club of nations, to which the following additional conditions apply:

(i) Immigration

To stay in the single market when not a member of the EU is quite possible, as in the cases of Norway, Liechtenstein and Iceland – but only if you permit free movement of goods, services, capital and people. Maybe Icelanders, Liechtensteiners and Norwegians feel slightly less anxious about that last stipulation, but many in the UK will recognise that immigration would then be virtually impossible to control – which happens to be one of the main reasons they voted to leave in the first place.

(ii) Annual payments & the influence of ECJ

Membership of the single market also requires making substantial annual payments towards the EU’s budget and accepting, in some degree at least, a role for the European Court of Justice.

(iii) Non-tariff barriers

Then there is the host of “non-tariff barriers” that the EU has pledged to dismantle – but somehow has not managed to do so. These include regulations on packaging and safety standards, as well as inevitable trivia such as the minimum level of alcohol in a drink before you can label it a cocktail, or the maximum noise level permitted to a lawnmower – matters that would more sensibly fall within “any other business” on the agenda of the local parish council meeting, and are hardly the stuff of international concern.

to impose full-scale regulatory uniformity

All this is intended to create a “ level playing field”. What it seeks in practice, however, is to impose full-scale regulatory uniformity, effectively eliminating competitive advantage, whether arising from technological innovation, inventiveness or simply economies of scale.

A newly invented hip replacement part, for example, requires a “certificate of conformity” before it can be put on sale in the single market. This condition attaches to every policy area from taxation and welfare to banking, trade and product design.

(iv) Trade “negotiations”

It is an illusion that the negotiators themselves have magically acquired the power to trade, despite the fact that neither they, nor the governments they represent, are trading entities. They themselves cannot trade, and therefore cannot effectively enter into trade deals – which is why, by now, citizens on both sides of the debate are sick of all the meaningless banter between politicians involving offers, counter-offers, “red lines”, provisos and conditions, day after day ad nauseam. These tedious squabbles are not about trade at all; they are really negotiations about obstacles to trade.

Trade, after all, requires nothing more than a product, a willing buyer, and a willing seller. These are the traders, and the last thing they need is a government quango to “help” them!

Customs union

Membership of the EU customs union requires all member countries to club together to agree a common level of tariffs applicable to all goods entering the EU from non-member countries.

this form of protectionism is double-edged

As with all impediments to trade, this form of protectionism is double-edged: EU producers may benefit from such anti-competition measures in the short term – but never lose sight of the harm suffered by citizens of all member countries , being prevented from enjoying the cheaper raw materials and products that developing countries are desperate to sell them.

The regulations set high tariff barriers against imports into the EU of food, clothing, raw materials, minerals, components and many other goods from the developing world. These trade barriers effectively prevent thousands of producers, growers and ordinary workers in Africa, South America and Asia from escaping the shackles of poverty by trading with European customers willing to pay reasonable prices for their products.

Instead, people in these developing countries have to be sustained by inefficient and corrupt foreign aid programmes. As we know, much of this money, sequestered from domestic taxpayers and given to aid agencies, finds its way into the private coffers of feckless elites in countries consistently pillaged by their own rulers.

Lessons taught over more than 50 years have shown that (i) the more development aid a country receives, the less likely it is to achieve economic success; (ii) excessive largesse tends to undermine the recipient country’s own food and agricultural industry, making famine more rather than less likely; and (iii) aid can never take the place of self-reliance.

“Development aid” has never created a single job.

___________________________________________________________________