The British public have been promised
a referendum by Prime Minister David Cameron to be held sometime between now
and the end of 2017. I have come to find that this is the most important issue
facing the UK and international relations probably since the turn of the 20th
century and far more important than the debate on Trident.
However, the quantified arguments
for and against staying in the EU appear to be based on short sighted emotive topics without any serious reflection over
long term consequences. Consequences of which could ultimately shake the
foundations of our national identity, our security, and global development.
This short piece tries to simplify
the facts and reflect upon the consequences. It’s only having sat down, and patiently
reflected over the existing relationship with the EU, the alternatives and the globally
multi-polar world have I come to a conclusion.
Trade
The EU in 2014 accounted for 44.6%
of UK exports of goods and services and 53.2% of UK imports of goods and
services. Just based on these figures the EU is the major trading partner for
the UK. The more we export, the more new money enters the UK. Exporting is important
because it opens up new markets to British businesses.
But let’s dig a little deeper, our
trade with the EU is dominated in goods rather than services and we buy more
from the EU than the EU buys from us. Since 1999 and 2014, our imports have grown
on average 4.9% per year, compared to our exports which have grown 2.5% per
year, which has left a trade in goods deficit at £77 billion.
Now, the UK also sells its services
to the EU, and we are very strong in this regard with a surplus of £15.4
billion in 2014. Nonetheless, despite our strong position in the trade of our
services, it is overshadowed by the overall deficit in trade due to the fact
that we have been unable to compete stronger in the trade of our goods.
Our export to non-EU countries has
however grown faster than it has with the EU; at a rate of 6.5% p.a. in
contrast to 3.6% with the EU.
Direct Foreign Investment into UK
Of the UK’s ownership of foreign
assets, 43.2% is invested in the EU, similarly the EU’s ownership of foreign
assets consist of 46.4% which is directly invested into the UK. Interestingly, the value of assets held in the
UK by non-EU countries has resulted in their value exceeding the EU stock in
2010.
In terms of individual countries
investing in the UK, India remains the third largest investor only after the USA,
and France.
It is foreign investment that contributes
to significant job creation and in 2014 investment into the UK came from more
than 70 countries, including emerging markets. Of the top 20 countries
investing in the UK, contributing to UK jobs and economic growth, 11 were
either part of the EU or within the EEA.
The Alliance
So, why can’t we merely retain a
trading alliance as it is beneficial to us all? We essentially could. But let’s
take a step back. You see, in most trades between people there is some form of
contract and an understanding of terms and even an understood unspoken culture
in a familiar environment. We often take this as granted between respectable parties to a trade. Now, as
commerce moves into unfamiliar territories involving different currencies, languages,
cultures, negotiated trade borders, the impact of the trade in local jobs and
labour conditions, we have always needed a governing legal framework.
As transportation and communication
improved considerably since the turn of the 20th century it brought
nation states a lot closer together and we formulated the WTO (World Trade
Organisation) which is supposed to
deal with the global rules of trade.
Essentially, there will always be
some form of governing framework, and because of the proximity of the EU member
states and our collective history of violence and warfare, Europe was able to
formulate a governing set of rules and a representative government with the aim
of ending neighbourly feuds and maximising economic cooperation.
The Fears
So, we cannot escape some form of
governance between nations, and so far what has been unnegotiable for the EU
has been:
1. The ‘Free’
Market
2. The Free
movement of people
3. Implementing
social reform
There is certainly merit for having
all the above to ensure maximisation of equity and fairness amongst member
states. For instance, the ‘free’ market is not really free if you don’t have
the free movement of people which contribute the most to labour cost.
Furthermore, without the free movement of people into new communities, the free
market could ultimately have severe consequences for the local economy in terms
of job creation, welfare, and entrepreneurial success.
The fears of a stronger EU are not unfounded;
in fact the fears are natural because logic would indicate that a stronger EU would
mean more laws imposed on us when
negotiations have not gone entirely in our favour. However, exactly the same
thing happens when our local government tries to negotiate for more money for
services from central government. Then again cooperation is always about
compromise for the benefit of the collective whole.
But what do we mean by a loss of
our sovereignty? Ultimately it means loss of power over our courts, our
borders, our economy, and even our foreign policy and defence at the extreme.
Well, the latter is not as extreme in thought any longer as the EU already has
a Foreign Minister, an office which is held by the Italian Federica Mogherini
and proposals for an EU army have already been tabled.
Just think about it, the continents
national budgets are strained, we are unable to spend on every necessary area for
the welfare of our citizens be it health care, education, defence or retirement.
Having a closer alliance with the EU could allow us to become far more
efficient in the allocation of resources. Hence an EU army may not be ideal but
an economic necessity. Similarly, private healthcare to deal with the burgeoning
cost of the NHS operating under EU governance as opposed to US corporate
practices may offer a solution.
What’s more if the UK decides to
join the EU, I expect it will be a matter of only some brief time that we also
adopt the single currency.
The Alternative
I still wonder whether the referendum
will even happen. I expect that it will. If however, we voted to leave the EU,
it has been mooted that we could develop our alliance with the Commonwealth.
But the Commonwealth is nowhere near as developed as an economy and
infrastructure as the EU. Also bear in
mind our preferential access so far to the non-EU market is made preferential only
due to our membership of the EU. Globally we account for around 4% of exports
of goods and services, a figure that is falling as emerging markets become more
integrated into the global economy thus having greater access to more providers
of services and goods. Even if we are to consider imports most crucially
energy, as emerging markets increase their demand our bargaining power will be
considerably weaker without the EU, and having chosen to ally with the
Commonwealth we would not be able to command the same level of purchasing
power nor political clout.
Furthermore, if we were to consider an
alliance with the Commonwealth, are we not merely replacing one trade and political
alliance with another? Albeit the EU is one made up of 'grown-up professionals' which we cannot necessarily command and must respect on an equal footing,
whereas the Commonwealth could be one that we could ‘command’ and give us a
sense of nostalgic imperialism.
There are other alternatives such
as negotiating something similar to the Swiss, a free-trade agreement, or even
operating under the WTO, but all of these options reduce our ability to trade
on our own terms and we would still have to abide by EU expectations on consumer
protection, product standards and technical specification. Crucially, the UK
would also not be able to push changes in policy that could be more amenable to
its offering.
The Opportunity
We now live in multi-polar world with
rising economies and stronger foreign military prowess from the likes of
Russia, China and India among others. The 20th century and the early
part of the 21st have seen too many a conflict on the back of
technological advancement and the advancement of popular culture that for the
large part has promoted respect and tolerance.
The cost of leaving the EU could
severely compromise the efficiency in which the continent can respond to shared
threats and market opportunities.
We must put aside our fears of ‘losing’
our national identities as identity is something that is always in flux and
evolving from one generation to another. The preservation of our identities at
some level means we are not willing to adapt when we find something better or
more relevant to us and our place in the world. We will never lose our sovereignty, we actually never really
had it in the first place, but whatever we did have will only evolve and we
must be the architects for the evolution to take place in accordance to our
stimulus.
Should we leave the EU, the EU will
become weaker as we will too and if we cannot compete on the world stage our international
gravitas would have serious challenges as we compete against emerging economies
on the international scene. In a time when the geopolitics is anything but
stable a strong degree of unity is overwhelmingly needed to counter the threats
against division. Only 50 years ago this would not have been a problem but
today international trade and international polity is crucial to global
stability.
Although the UK has been an EU
powerhouse we’ve also been on the side-lines in nurturing European political
development, it is time the UK becomes fully invested in the EU, accepting that
there is no real alternative.
If you haven’t guessed, I will be
voting to stay in the EU and eventually lead it!
Source:
https://www.gov.uk/government/publications/ukti-inward-investment-report-2014-to-2015/ukti-inward-investment-report-2014-to-2015-online-viewing
