BUSTING THE LEXIT MYTHS
Issued by Lord John Monks and others on 30 January
The document from Lord Monks and others puts the case for Britain remaining in the Single Market and, if possible, in the EU itself. It does so mainly by seeking to attack claims by the Left that the EU is incompatible with public sector intervention. The document can be downloaded here: https://d3n8a8pro7vhmx.cloudfront.net/in/pages/14074/attachments/original/1517301904/lexit_paper_finalPRINT_noembargo.pdf?1517301904
It is likely to be widely used in the trade union and labour movement in discussions and debates over the next month. It makes its case by ignoring some key elements of the EU’s constitutional and legal structures and providing partial truths on the rest. Its omissions provide important pointers to what its authors see as the key weaknesses in their own argument.
1. Public Procurement and contracts
It makes no mention at all of EU requirements for compulsory competitive tendering and the limitations imposed on requirements to pay a living as against minimum wage, to require union recognition or collective bargaining or on the freedom to exclude companies with record of blacklisting. None of this is legally possible within the EU’s Single Market. Nor is there mention of legal obstacles to introducing requirements for local/regional sourcing of materials and services. Such intervention represents a central plank of Labour industrial strategy and also of its 2017 election programme. This represents a very major weakness in the document.
2. Anti-TU judgements of EU Court of Justice
No mention is made of the anti-TU judgements of the EU Court. The Viking and Laval judgements are ignored. These ban trade unions from using collective action to secure locally bargained rates for ‘posted workers’ employed by firms from elsewhere in the EU. Equally the Ruffert and Luxemburg judgements prevent local and national governments requiring this through their own legislation. Nor does it mention the recent Holship judgement by the EFTA court, using EU law, that has rendered the Norwegian dock labour scheme illegal because it restricted the ability of firms from outside Norway to pick their own workforces on the dockside. Instead the pamphlet’s one comment on posted workers, where it knows it is one weak ground, is to say that President Macron of France is proposing a change in EU law. It fails to stress that EU law currently remains as it was. EU and EFTA courts make anti-TU judgements because they work within the terms of the EU Treaty that priorities the right of establishment and the free movement of capital. This will continue.
3. EU policy to remove collective bargaining in favour of individual and plant bargaining
Under the terms of the EU2020 programme all EU member states have been required to move towards employment policies that are based upon ‘flexicurity’, individual contracts that are easily terminated but provide a safety net of some social security provision – as along as this provision is not sufficiently high to provide an incentive to staying out of the labour market. Member states have to report annually on progress in implement these reforms (as well as lengthening working lives by increasing the pension age). The European TUC has repeatedly criticised these measures as driving down wages and conditions as have leading labour lawyers such as Hendy and Ewing. No mention is made of this. Although this programme only applies to EU member states (as against Single Market members), it will – through competitive pressure – also impact on single market members of EFTA. The EU’s policy to erode collective bargaining is set out in detail in the EU Commission paper Labour Market Developments in Europe 2012
4. Freedom of movement of capital and freedom of establishment
No mention of restriction on any return to the type of regional policy applied in Britain up to the 1970s and of particular benefit to Scotland. There can be no direction of capital in face of ‘freedom of establishment’.
Glaring statistical error
On p 6 the document quotes an ‘official government estimate’ (without source) that a Hard Brexit would see GDP reduced by 7.5 per cent each year - i.e. by 2030 Britain’s GDP would be reduced to one quarter of its current size (a mistake worthy of Boris Johnson). The total value of British exports to any country is currently equivalent to about 25 per cent of GDP and manufacturing contributes only 10 per cent of British GDP.
1. Public ownership and private ownership
Section on Rails Privatisation does not give full details of Fourth Rail Package and requirements for separation of the ownership of the track from the operation of services and other requirements for the separation of goods and passenger traffic and high speed services from local services. All are designed to heighten competition – with the kind of cost-cutting and profiteering consequences that have already had disastrous consequences in Britain (privatised by John Major under the terms of the first EU rails directive. It claims that state owned companies still operate in Germany and France, which is correct, but does not explain that significant parts of the network are now run by the private sector and that rail unions in these countries have strenuously opposed this process. Nor does it give any detailed and costed analysis of the impact of the requirements for the opening of goods, express and now all passenger services to competition on the viability of public operators. The same applies to its comments on postal services and telecommunications. It is unfortunate that trade union and Labour representatives should give credence to this very misleading information that prejudices the livelihoods of fellow trade unionists.
2. State aid
The pamphlet argues that state aid is permissible. This is true. But it is very strictly limited. It is permissible in special circumstances and to avoid systemic damage, as during the banking crisis. In these cases, however, strict EU rules apply to the phasing out of the aid and reprivatisation. In Britain the RBS has been required under EU rules to reduce its size and to cut massive numbers of branches. Most trade unionists who have experienced workplace closure will remember the futile attempts to secure EU aid or any government assistance requiring state aid. The MEPs signing this document should remember this themselves. Equally EU accounting definitions of what is public and what is private, have limited government intervention as with the Scottish Futures Trust in 2015-16. These prohibitions would all apply under the Single Market or within the EU Customs Union.
The pamphlet argues that that mandatory EU sanctions against government deficits ‘only’ applies to Eurozone countries. This is misleading on three counts. First, it minimises the drastic consequences for these Eurozone countries in terms of mass unemployment and, for those countries within EU programme, mass privatisation and reductions in all social services and pensions. It represented an assault on working people without precedent since 1945 – and by depressing wages and conditions also had a wide impact outside the Eurozone. Second, it makes no mention at all of the 2012 Fiscal Compact which was negotiated with ALL EU countries except Britain and the Czech republic. This reduced the deficit limit on current deficits to 0.5 per cent (with an obligation to reduce debt over 60 per cent GDP over a strict timetable). This was mandatory. It was required to be written into national law. It is currently being written into EU Treaty Law. Third, the Monks document makes no mention that all EU countries, including Britain, were required to report annually on their progress towards deficit reduction. There were no financial penalties for non-Eurozone countries. But non-compliance was publicly reported and would consequently credit ratings and a countries ability to borrow. Britain’s current programme can be found here: https://www.gov.uk/government/publications/europe-2020-uk-national-reform-programme-2017
Does this effect members of the Single Market ? Yes. Because the general deflationary trend across the EU, will affect estimations of interest rate payments and credit ratings for other countries. As the European TUC said in 2012, the policy was effectively that of the gold standard era of making wage earners pay for crisis by lowering wages.
4. EU trade treaties
The Monks document minimises the dangers posed by EU trade treaties – eg CETA – in terms of compensation to private companies for forgone prospective profits (quite different from compensation for privatisation with which the document seeks to confuse the argument). These treaties will apply with full force if Britain remains a member of the EU custom union – as will the EU’s ‘Fair Trade Agreements’ with developing countries that include exploitative provisions on the opening of public services to competition and the opening of land and water resources to private sale. WTO provisions do not involve international commercial courts (it operates via negotiations between governments) and offers much more opportunity for progressive policies. China has been able to lead a strong alliance of developing countries in the WTO in favour of technology transfer agreements and other arrangements that assist state-led economic development.