The Future of Britain in the European Union

national | miscellaneous | news report Thursday November 14, 2002 12:11 by Ananda Moonasingha moonasingha at yahoo dot co dot uk Liverpool, England

The European integration is a modern social force of politico-economic dynamics sweeping across the Europe. The EU agenda on environment and social policy is inspiring. The Monetary Union is controversial. It is presumptuous to prognosticate a natural trajectory of the EU and its relations with the Britain.

The Britain’s membership in the European Union makes good sense. All three major political parties in the Britain agree with the membership in the EU. Though a minority of people prefer the withdrawal of UK from the EU the UK’s membership in the EU is not a serious question. Beyond the present level of membership, more serious impending embodiments like joining the common currency of Euro are the topics of serious debate.

The European Economic Community in one form or other has existed since its establishment by the original six in1951 as the European Coal and Steel Community, before the UK joined it in 1973. In 1957 through signing the Treaty of Rome it became the European Economic Community or the Common Market. UK joined the EEC primarily for trade agreements and the economic benefits of the single market. A major instrument of the EU, the benefits for farming industry under the Common Agricultural Policy (CAP) has been gradually reformed. The Maastricht Treaty in 1992 led to the creation of the European Union. Since 1995 there are 15 member nations.

Since the Britain joined the EEC, its scope and political structure have, grown, expanded ramified in all proportions toward federalism. Its central political organisation, legislature and authority, and economic instruments are a far cry from the EEC the Britain joined in 1973. These are the effects of European integration, a perpetual objective of the European Union. The integration can be viewed in terms of inter-alia the political, economic, technological and social. Of these the political and economic integration is the mainstay of the debate.

The following are the commonly cited benefits of Britain’s membership in the EU. Britain exports more to the EU than to the rest of the world comprising inter-alia the commonwealth, USA, and the Far East and South East Asia. Half of the UK trade is with the EU. UK exports to the EU member states have grown nearly 3 times as much as to the rest of the world. The Union disburses structural funds for regional development of economically impoverished regions and rural areas. The European social fund provides funds for training for employment and growth. The EU directives have ensured cleaner bathing water in beeches and less industrial air pollution. Some of the evident disadvantages are: UK contributes net payment of some £3bn to the EU, i.e., a difference between the total contribution to the EU budget by UK and the payments received by UK in agricultural subsidies and structural funds. Despite the single market, trade in the member states is not homogenised. For example the differential pricing of motor cars in the continent and in the UK. All in all the Britain pays a high subscription fee for the EU membership, and shares significant trade and economic activities.

The policy benefits of the free trade are derived from the elimination of internal quotas and tariffs and imposition of such barriers on the goods and services entering the union. Free movement of people, goods, services, and capital within the single market of the Union. Simplification and efficiency of financial transactions deriving from the single currency, transparency, and the associated harmonisation of the economic policies and criteria within the member states. These are the effects of economic integration. As mentioned earlier the Britain’s primary interest has always been in the areas of single market and free trade. The economic monetary union has clear implications on the national economic policies, measures, practices, efficiency and the exchange rate mechanisms geared to these factors; hence the current controversy.

The political integration concerns with the institutions of policy and decision making, security, and the general support of the communities of the member countries.

In the 1950s and 60s the Europe wanted the Britain to join the EC as much as the Britain wanted to join the European Community. Britain was already a member of the European Free Trade Area set up in 1959. It is commonly perceived that in the mid 20th century the Britain had lost an empire, no longer a super power, and was beginning to feel the competition from the rest of the world including far eastern emerging economies and losing trade with the commonwealth. The feeling on both sides of the channel was that the Britain must join the Common Market. It was a good neighbourly diplomacy in a new era of political and economic opportunity. The original 6 members wanted Britain in, because Britain was economically and politically strong as the European Community, and Britain would be a favourable enrichment to the Europe.

Nevertheless, Britain was apprehensive of the growing momentum and the dynamics of the European integration and the emerging developments of the monetary mechanisms. Britain preferred intergovernmental economic cooperation, and was sceptic of supranational integration. The unanimity, freedom to exercise a veto and to opt out of decisions are values Britain contended. It is an unavoidable consequence of the European integration that the spillover effects of cooperation in some areas trigger pressure for integration in others.

The growing interest of the neighbouring European nations to join the EU is in their interest. They believe that joining the EU will be instrumental to the process of catching up with the European standards of economics and development. The EU concedes with this interest and encourages the potential member states to meet certain entry criteria. European integration signifies teamwork. Several states acting in cooperation is better than performing in isolation. Integration denotes synergy. The advantages of integration are balanced by the implications of sovereignty.

With regard to the impending European Monetary Union, the chancellor of exchequer relies on the five economic tests: convergence, flexibility, investment, financial services, and the employment and growth. The convergence is the most important condition that can depicted as the convergence of economic indices of member states in harmony with the EU conditions. The factors like per capita GDP, exchange rate, cost of living, rate of inflation, living standards, and the unemployment rate. At present the Britain is behind in per capita GDP together with Ireland and Italy; where as Portugal, Spain and Greece are at the bottom, and the Germany, Denmark and Luxemburg are ranking at the top, well above the EU performance.

Joining the common currency that sets the exchange rate and interest rate, and also influences the rest of the monetary and fiscal policies is controversial. Setting a common economic standard for differing, fluctuating economic climates in a heterogeneous multifarious culture is controvertible. It is known that even within the UK, different regions exhibit different cultural environments with respect to economic performance that requires differing economic control criteria. Common economic and monetary union inhibits the fine tuning of economic instruments in the EU. The common currency is appreciable for that it minimises the impediments in financial transactions across the borders and brings the best of the objectives of the single market. It would facilitate transparency where the consumers and the businesses will be able to see exactly how much the products and services cost in different member countries. Transparency will stimulate the competition. Palpably the common currency is not viable without the common economic controls envisaged of the Monetary Union. Incidentally the countries with low per capita GDP, mostly those are eager to join the EU have higher economic growth potential than the member states with higher per capita GDP.

The flexibility is a vehicle of advocacy, enabling the partnership in common economic and monetary union, making allowances and concessions for not being able to meet the set criteria for economic integration.

Investment in physical and human capital in both quality and quantity are goals of investment. The investment in technological progress, accumulation of knowledge, and improvements in organisational efficiency are vital for economic growth. The single market and investment in capital attract the inward investment and foreign direct investment. However, despite the attractions of single market, some British manufacturers move their production to the emerging economies in the South East Asia because of lower production costs. The European Investment Bank is a key figure in furthering the EU economic integration.

Financial services comprise insurance, investment funds and services, banking, pensions and tax. The Investment Services Directive sets out the framework for the regulation of securities and derivatives market and, is a cornerstone of the EU Financial Services Action Plan. While the corporate financial services for business and trading are more integrated, in the areas of mass market in banking and insurance, it is divided along the national boundaries. The financial sector accounts for about 6 per cent of the EU output. The financial services have adopted the benefits of advanced information technology in expanding the services to a wider community.

Employment and growth are linked to the investment in physical and human capital mentioned above. Allocation of resources to their most productive activities is a fundamental principle of growth. The European Social Fund and parallel programmes of the member states provide the means to promote employment prospects through training and education, neighbourhood and environmental, employment opportunities. The European Employment Strategy (EES) promotes an active unemployment policy to take positive actions like incentives for training the unemployed at work, and to ensure the upkeep of skills while unemployed, and re-entering the job market. Even the European integration strategies have not yet solved the long-term unemployment problems of some continuously educated and retrained citizens. The European Commission articulate; ‘employment is the cornerstone for the development of Europe, for the well-being of our people, a cornerstone for the preservation of our social model'.

The opposition to the EU integration spurred by nationalism or prejudiced patriotism, as well as the campaigns based on assumed values are not prudence. The benefits of integration such as teamwork, cooperation, standardization, should be capitalised. Also the disadvantages of the aspects of harmonisation that restrict the efficiency of diversity, and inhibit the innovation and entrepreneurship must be deliberated. The markets thrive on confidence.

The EU shows some signs of a super state or supranationalism that implicates the sovereignty. The EU regulations bind the member states above the national laws. The EU directives require the member state to incorporate them to their national legislation. EU governance also reflects some aspects of federalism. It shares the legislature, the executive authority and sources of revenue between the European Commission and the member states. The EU structure of governance concedes the unanimity and veto of head of states in important decision making at the summit meetings.

In the process of implementing the agenda of total economic and political integration, constantly new ideologies evolve that come into debate that disturb the British political leaders and interests. What the Britain contemplates is for a united Europe of sovereign nation states. Not a United States of Europe, or a supranational government, super state or a federal state in Brussels. In Britain at local level there is the political community of borough, metropolitan or city council. Then there is the wider political community of county council that sets the structure plans guiding the local planning of land use, physical environment and the transport like. The structure plans are assented by the secretary of state of the central government. The local and structure plans are based on the local needs, quality and efficiency, and are influenced by the central government policies and incentives. The central government implements the wider economic policies including the public spending over the whole of the political community of the nation. The European integration implicates a further tier of political community of wider geographical area that sets imposing regulations and rules over the European Union member states. For all intends and purposes the member states remain sovereign, though technically sovereignty is impaired. The establishment of regional assemblies of Scotland, Wales and the Northern Ireland is in harmony with the concept of integration. The EU legislation is founded on a credible structure of consultation, and co-decision making involving a cyclic deliberation. The important point is the EU regulations and controls are explicitly concurred by the elected members of the European parliament representing the member states. It is governance by the coalition of the democratic process of the member states that in effect extenuates the idea of super state or federalism.

The EU governance is known inter-alia for bureaucracy. Besides regulations, directives and decisions, the European Union should be a centre for exchange of information, knowledge, innovative systems, so the member states can learn from each others strengths and overcome weaknesses. On one hand for example the major political issues of health, transport, farming industry, and education system in Britain. On the other hand it is difficult to be sanguine about the effects of directives with regard to, for example the future decisions in European Spatial Development Perspective; integrating the environment, land use, transport, economic development and regeneration. The flexibility should extend to the guidelines, so that the member states can choose between alternative solutions that satisfy their cultural preferences.

Finally, the glamorised vision of cultural integration of Europe is a fantasy. Europe is distinctly heterogeneous cultural space composed of many sub cultures dispersed in space and time. The accommodative and cosmopolitan integration of cultures is a reality. Though, far more Europeans speak English nowadays, the Europeans have distinct cultures of language. Even Welsh have a culture of language. The Brussels’s bureaucracy is distant from the people of the member states. The realistic cultural integration is in the palace of European Council. The inhabitants of the member states share the popular culture in the social sense, by participation in the activities like, music festivals, sporting events, eating and drinking. This has little to do with the European integration at Brussels. The common currency Euro might have some stimulating effect on the cultural integration in the area of tourism.

No wonder the dynamics of the European integration agenda is going to bedevil the British parliament. The European governance is a tier of extension of the intergovernmental parliamentary democracy in the Europe, in which some federalist or supranational characteristics are unavoidable.