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3 March 2017

A leaked document from a European Parliament committee offers a revealing insight into the economic reality of Brexit and the EU’s inability to escape its own deluded ideology, underlining both why the UK is leaving and why it is well set up for Article 50. 

The European Parliament’s internal market committee has been mulling over the consequences Brexit will bring to bear on the economies of the UK and what is left of the EU. Leaked minutes from a recent meeting point to a committee with a surprisingly realistic outlook on Britain’s impending departure, although that is not to say it is not without discrepancies.

The IMCO committee is known, not only for its silly acronym, but also for being one of the more worthwhile components of the EU machine, not surprising given that the EU should only be about creating and preserving a single internal market.Women’s Rights and Gender Equality anyone? The committee is also headed by Vicky Ford, a British MEP. However, the encouraging notes included within the minutes are hardly representative of the EU’s position on Brexit.

Germany and Italy have stated their intention to fall in behind France in demanding Britain pay the ridiculous €60bn bill cooked up by the European Commission. Britain’s impending departure is (for once) provoking debate about nationhood and the EU in Brussels and beyond. The European Council, the EU institution constituted of Member States, is coming to the fore as a result, the Commission is its attack dog, hence the bill.

The Parliament, made up of directly elected members, mostly on a regional basis, by contrast has little sense of the nation in its DNA. Its burgeoning influence has helped drive the Euro-federalist agenda like no other EU institution. With the exception of Nigel Farage and Marine Le Pen, its most famous member is Guy Verhofstat, a man with European blood running in his veins, not Belgian, the country he once served as prime minister.

A common sense parliament?

But with Brexit asking difficult questions of the Member States (do we make life difficult for Britain, or follow its lead?) The European Parliament, and the IMCO committee in particular, is contrary to its track record emerging as the rational actor in the EU’s congregation of institutions and committees. Having the likes of Le Pen and Farage highlighting the EU’s failings on a regular basis may leave Eurocrats and fanatics aghast, but it also provides much-needed perspective absent in the gilded halls of the Commission and many of the EU’s capitals.

Two statements in the IMCO minutes stand out:

The Committee “Notes the unavoidable negative economic consequences of the UK withdrawal both on the EU27 and the UK…[and] calls on the UK Government for a strong cooperation to diminish the negative economic effects and to establish an efficient working arrangement between the EU and UK in a timely manner, as well as concluding the withdrawal agreement”.

…The Committee “believes it to be in the interest of the EU and the UK to pursue a special relationship in the future agreement pursuant to Article 8 TEU, which should include arrangements regarding deep mutual market access in goods and services”.

Article 8 of the Treaty on European Union commits the EU to forging strong trade ties with its neighbours.

The wording could be more accurate. Prospects of a severe economic downturn in the UK are looking slimmer by the day as economic data continues to defy forecasters’ pre-referendum predictions while major economies add themselves to the UK-Trade-deal queue. Besides this, it is a decent assessment, certainly more frank than one might normally expect from an EU institution. 

Note also the emphasis on agreeing a replacement economic deal in addition to the ‘withdrawal agreement’. The Commission and its French Brexit negotiator, Michel Barnier, is foolishly insisting that the ‘divorce’ proceedings solely occupy the first stage of the Article 50 talks, a tactic reflecting wishful thinking on the part of the Commission and key Member States, rather than an accurate appraisal of what can, should and ultimately will happen.

The odd delusion

The IMCO document is not without the usual contradictions surrounding the single market issue, offering a useful insight into the fundamental delusion all of the EU’s institutions are obliged to present, a delusion responsible for the panic among Remainers at the prospect of leaving the false idol that is the single market.

The minutes begin by expanding on what goods and services the two most economically significant of EU’s much vaunted, ‘Four Freedoms’ actually mean, starting with goods. Mirroring thousands of EU press releases, regulations, ‘scoping exercises’ and other pointless paraphernalia, IMCO focuses here on “standardisation and technical harmonisation” and “the mutual recognition of products” and other jargon. The infinitely more important subject of duties on imported goods is not addressed.

Under different circumstances, this would be inexplicable, but these Parliamentarians, like anyone else on the EU payroll, are reluctant to reveal the essential truth, that the most important issue surrounding goods, namely import duties, is in fact of no concern to the Brexit process. Keeping duties (also known as tariffs) is a cert. 

The forthcoming EU-Canada Trade Agreement, ratified by the European Parliament last month, eliminates 99% of EU duties for Canadian exporters. Bearing in mind the EU’s mandated commitment to forming trade ties with its neighbours, not to mention its dependence on the UK market, 16% of all exports, it is inconceivable that Britain will not secure equivalent or superior access to the EU market. Failing to do so will not be down to EU intransigence, but our own.

On the question of services, again IMCO fails to address the elephant in the room, the fact that the EU single market in services does not exist. Laughably, the minutes refer to “the mutual recognition of qualifications”. The EU has categorically failed to create a common market for any number of professions.

While subsequent British governments have made it shamefully easy for a plumbers, accountants and drivers qualified anywhere in Europe to hop over and work in the UK, the rest of Europe has been far more protective of their labour forces. Thanks to its corporatist tendencies, the EU has tried to prise these restrictions open, but largely failed.

The only triumph the internal market can boast is financial passports, licenses that enable banks, insurance companies and the like to easily operate across EEA borders (not just the EU). But as this campaign has already argued on countless occasions, there are alternatives to EU licenses that UK-based companies can happily take advantage of.

The essential deceit

So when IMCO’s minutes say, like the EU and EU27 are prone to piping: “participation in the Single Market is significantly more than that provided with third countries” it is not only lying, it is unashamedly helping to sustain an ongoing and commonly believed deceit. From an economic perspective, the only worthwhile elements of the four freedoms are duty-free access for goods along with a couple of pan-European initiatives under services and research, that is it. In other words, an only slightly glorified conventional trade deal. That is all the UK ever wanted from the EEC, the economic community that became a political ideal called the EU, and its what it should get under a conventional trade deal.

The endless articles, speeches and statements asserting that Britain must accept all of the ‘benefits’ of the internal market, free movement of goods, services, capital and people if it wishes for the privilege of one of them are deeply untrue. How can the UK class free movement as a benefit when it is manifestly viewed as a burden?

The EU and what membership entails represents a curious combination of capitalism and the dogmatic views typical of socialism. Capitalism functions on the basis of customers acquiring what they want and little more, suppliers perform that function and everyone is happy, indeed this is why there is a growing market for trade deals and not for political union. Independent nations want trade agreement so they go ahead and secure them. There are no dangerous distractions about creating a common people, the aim is to increase the flow of trade and improve living standards, that is quite enough.

Unfortunately for them, the EU and its founders are distracted by ideology, a lust for a single European nation, much like the soviets were drawn to establishing global communism. Euro-federalists should perhaps pay more attention to history. It is Ironic that Berlin, where it all ended for European communism is where the EU dream is most alive. Or perhaps not, there is always a tendency to use the rubble of one former empire to build a new one. Either way, what Berlin and Brussels want is of little interest to Britain.

The EU faces an essential conflict between ideology and economic necessity.  Stocked with camels and thoroughbreds, at the outset of the Article 50 negotiation, it is ideologically obligated to offer the UK camels, economically it has no choice but to sell the horses. That is all we want and mercifully, that is what we shall get, no camels, no needless sacrifices of sovereignty.