Brexit is a strategy – re-asserting sovereign power, and changing the legal, economic, trade, security, foreign and diplomatic direction of the UK. Negotiations are the tactics to give effect to the strategy.

The question in 2016 was: ‘Should the United Kingdom remain a member of the European Union or leave the European Union? ‘ It should be to state the obvious, that to Leave means no longer being a member of EU institutions, subject to its internal rules, and the jurisdiction of the European Court of Justice. That involves leaving the EU customs union and the Single Market. To do otherwise is to remain.

Continued adherence to the customs union rules out unilateral trade deals with non-EU states. Continued membership of the Single Market, whose rules derive from the Single European Act, an EU institutional pillar, also means staying in - at a disadvantage as an associate, with no voting power or influence over amendment or extension of its rules. ECJ Jurisdiction would apply, as it is the final arbiter on the application of the Single European Act.

There has been confusion over the words ‘Single Market.’ As I describe it above, it is an EU institution, but it can also mean no more than a ‘market’ that encompasses 500 million people in 27 states. That second definition is the one that applies when the EU states trade with the rest of the world. Neither China, USA, Japan or any other country outside the EFTA bloc, are subject to the Single Market Act or the jurisdiction of the ECJ. They trade with the ‘market’ under WTO rules, and do very well.

In coming out of the ‘Single Market’ the UK will seek continued access to the EU ‘market’ but on different terms to those that govern EU-China trade, for example. The free trade flow between the EU states and the UK has existed since 1973. The UK does not want to see impediments to that free flow, so the question is whether the EU wishes to do so, as a means of ‘punishing’ a member state who wishes to leave?

That are strong economic grounds for believing that for all the huffing and puffing, and the odd sound of fury from some EU quarters, the UK objective is possible. They are based on common sense.

The EU 27 exports £690 bn of goods and services to the UK each year, and the UK to them is £628bn. There is a lot of business, investment, and huge numbers of jobs on both sides, at stake. It would be remarkable, indeed remarkably stupid, if German, French, Italian and Dutch business and trade unions do not press for the freest possible bilateral trade. I would not like to be the German MP who, in order to ‘punish’ the UK for having the temerity to leave, was willing to tell his car worker constituents he was deliberately sacrificing their jobs to do so.

From July 2017 ROSE Bulletin

Steve Turner’s Foreword to the new Institute of Employment Right’s publication “Europe, the EU and Britain: Workers’ Rights and Economic Democracy”

“The question of Britain’s membership of the EU was one which divided both Britain and the trade union movement. Important issues were raised on both sides.

On the Remain side, trade union members were deeply concerned about the employment rights underpinned by the European Union (EU); ongoing rights of migrant workers to both stay in the UK and fight exploitation in the labour market; the impact on external investment; and the consequences for trade with Britain’s biggest market as well as the resulting impact on jobs. On the Leave side, the concern was with the neoliberal framework for EU law, the erosion of trade union rights, the restrictions imposed on state aid, on public ownership and the proactive use of public procurement.

‘Programme for a radical restructuring of the economy’

Now, however, we are beyond the debate. A democratic decision has been made. What is critical is the kind of settlement that is reached. This question has been made all the more urgent by political developments in Britain: the emergence of the Labour Party as a credible party of government with a programme for a radical restructuring of the economy, a reassertion of trade union rights and collective bargaining, and an active, interventionist, industrial strategy including a measure of public ownership. The type of settlement reached with the EU will directly determine whether or not this programme can be realised…

‘For the few not the many’

The types of exit from the EU envisaged by the current Conservative government – and there are clearly more than one being canvassed – are all essentially neo-liberal. One will incorporate all elements of EU law into British law, including competition law, in a bid to secure preferential access terms for big business, particularly the City of London. The other, the Singapore model offered by Boris Johnson, would seek trade deals modelled on the Transatlantic Trade and Investment Partnership (TTIP) and the EU-Canada Comprehensive Economic and Trade Agreement (CETA) and be equally prejudicial to an activist industrial policy.

Whatever the Conservatives try to do, we can be sure it will be for the few and not the many. This is why it is so important that trade unionists identify their own priorities for an EU settlement and campaign for them now.”

Visit the IER website for more information and to purchase http://www.ier.org.uk/node/3628

 

 

Middle-sized manufacturing firms believe they will benefit in the long run from being outside the Single Market 

A survey published by Financial Times on 15 January reveals that a majority believed that within five years they would benefit from being outside the Single Market. The survey covered firms with a turnover of between £30 million and £300 million. They believe that WTO rules would be beneficial for the trade in goods. This contrasts with the position of major corporations and banks who generate significant income from financial service

Leopard 2 A7, Eurosatory 2010

The main EU battle tank Leopard 2A7 manufactured by Krauss-Maffei Wegmann Maschinenbau Kiel in service in Austria, Netherlands, Germany, Poland, Denmark, Spain and Sweden  (picture credit: ©Bundeswehr/Modes)

The further development of the EU’s programme for a permanent military structure (PESCO) was approved by the Council of Ministers on 11 December 2017.

Current central EU military expenditures of approximately 1 billion euros annually will be increased to 3.5 billion by 2021. In addition the 25 participating EU states will commit themselves to spending a minimum 2 per cent of their GDP on defence from that date. The increased central EU expenditures will be for developing new military technologies and providing the central command structures for the integration of armed forces.

All EU armed forces will be integrated into NATO command structures. The 2018 EU fact sheet puts it thus: ‘EU Member States and NATO Allies have one single set of forces. Coherence of output and timelines continues to be pursued between the NATO Defence Planning Process and the EU Capability Development Plan.’ A joint declaration was issued 5 December 2017 strengthening agreements on EU-NATO integration set out in the Joint Declaration of 2 December 2016.

European Economic Area (EEA)

This combines both the Single Market and a Customs Union. The current members are Norway, Liechtenstein and Iceland together with all EU countries. Members are bound by the terms of the Single Market and also all EU trade treaties and cannot negotiate trade treaties independently. Switzerland is a member of the Single Market but not the EEA or the Customs Union. Norway is a member of the EEA (and Single Market) but not of the Customs Union. This means that Norway and Switzerland can negotiate trade treaties independently. They are not bound by treaties negotiated by the EU such as CETA.

The Single Market

Single Market membership comprises Norway, Liechtenstein, Iceland and Switzerland. Membership requires compliance with a substantial part of the Lisbon Treaty (TFEU) legislation including:

  • free movement of goods, services, persons and capital (including right to establishment)
  • EU compliant rules on competition and state aid (including procurement rules)
  • Compliance with EU Court of Justice case law including rulings such as Viking and Ruffert that restrict rights to strike action.
  • No state aid or public ownership that distort competition
  • Observance of EU legislation on consumer protection, company law, and economic statistics (important for what is categorised as public and private in terms of spending by government-sponsored bodies).
  • The payment of a financial contribution The Single Market does not require the adoption of EU regulations on o direct or indirect taxation (specifically VAT) o agricultural or fishery policy
  • budgetary supervision and limits to borrowing and the rules associated with economic and monetary union.

The Customs Union

This includes Iceland and a number of very small states (Monaco, Liechtenstein, Andora). They have to adhere to the terms of the Single Market to trade into the EU. Turkey has a Customs Union agreement covering most manufactured products but not agriculture. It is still bound to adhere to the EU legislative acquis/provisions on state aid and procurement for those sectors and is limited in its ability to strike trade deals with non-EU countries.

Heightened austerity being written into EU Treaty and National Law 

In 2012 twenty-six of the EU states agreed a Fiscal Compact as part of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. This became law in January 2013.

The compact imposes an obligation to observe strict budgetary discipline: a maximum structural budget deficit of 0.5 per cent of GDP per year and a speedy reduction in the national debt up to the reference value of 60 per cent of GDP. In June 2017 the President of the EU Commission, J-P Juncker, called for this to be integrated into the Founding Treaty of the EU and as a result into the national law of all members. Under the terms of this agreement individual member states will not be able to unilaterally withdraw from the Compact.

The proposal is currently being debated in the EU parliament. Opponents describe it as a further stage in the preparation of fully federal EU.

In 2012 the ETUC commented ‘running as a red line through the programme of Economic Governance is the idea of turning wages into the main instrument of adjustment: currency devaluations (which are no longer possible inside the Euro Area) are to be replaced by a devaluation of pay in the form of deflationary wage cuts.’

ROSE intends to publish a series of pamphlets from varying political positions to stimulate debate on Scotland’s future relationship with the EU. The first will be by Pauline Bryan and Vince Mills. Here Pauline explains why she thinks such debate is necessary.

From the mainstream SNP to members of the Labour Party who would describe themselves as ‘centrist’ there has been an argument that leaving the EU is act of economic self-harm. Rather than asking why a million Scots voted to leave and trying to address their concerns, there has been smug, middle class applause for the wonders of the Single Market and the Customs Union and the supposed benefits these have bestowed on the UK and Scotland.

Damage to Scottish Economy

This ignores the damage done to fishing, agriculture and the manufacturing base of Scotland and the endless rules and regulations designed to strengthen the ‘free’ market at the expense of the public sector, not to mention the fiscal pact’s tightening of austerity.

  • It ignores, for example how Scottish fishing has suffered because EU policies favour the larger shipping vessels. A study by the University of the Highlands and Islands’ NAFC Marine Centre discovered that boats from other EU countries on average caught 58 per cent of the fish and shellfish landed from UK waters between 2012 and 2014.
  • It ignores how over years in agriculture the largest UK recipients of support have been companies such as Tate & Lyle, Nestle, Cadbury, Kraft and a host of manufacturers of bulk animal fats, sugars and refined starches.
  • Worst of all, perhaps, it ignores the damage done to Scotland’s economy by the persistent undermining of the manufacturing sector and the well paid, highly skilled jobs associated with high end manufacturing in favour of deindustrialisation and casualisation that the move to a services dominated economy has meant.

The SNP government does not deny that Scotland’s manufacturing base has been undermined by membership of the EU but refuses to acknowledge its negative impact on the Scottish economy.

“Manufacturing fallen from 36 to 10 per cent of Scotland’s GDP”

In its most recent defence of the EU Scotland’s Place in Europe the Scottish government argues: “Today services contribute approximately three quarters of Scotland’s GDP compared to less than half when we joined the EU. Over the same period the contribution of manufacturing has fallen from 36% to around 10% of GDP”.

This blindness to the underlying weakness of the economy is surprising since it has been highlighted by the Fraser of Allander Institute’s Economic Commentary published in December and reinforced by the low growth figures reported in January this year. The Economic Commentary points to ‘… a backdrop of ongoing economic fragility. Growth in Scotland slowed to just 0.1% over the 3 months to June. Over the year, growth has been around 1/3 that of the UK. In contrast, employment continues to be close to a record high – at least since the Labour Force Survey started in 1992. The downside has been further falls in productivity.’ Furthermore, as the authors note ‘…the recent growth in employment has been driven by rising self-employment.’

The pamphlet seeks to highlight the limitations that the single market would place on state intervention to address Scotland’s economic ills together with the kind of actions that it could take to improve the Scottish economy by exploiting the freedoms that being outside the confines of the EU offers Scotland and the UK.

The pamphlet, Getting the Best out of Brexit, is available for £2, from ROSE c/o RMT 180 Hope Street, Glasgow G2. ROSE does not, as an organisation, either endorse or dispute its content. Its publication is to assist to discussion. Cheques to ‘SCAEF’.

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ROSE was formed to bring together those in the trade union and Labour movement who want to campaign for a post-Brexit settlement that protects and enhances workers’ rights both at work and politically in terms of the freedom of Scottish governments to advance democratic control and public ownership.


Our core principles are, 
•    the enhancement of workers’ rights in Scotland
•    internationalism and solidarity with all those across Europe struggling against austerity and privatisation.