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Thursday, February 18, 2016

Daniel Hannan: If the UK Were Not Already a Member of the European Union, Would We Vote to Join It?

If the United Kingdom were not already a member of the European Union, would we vote to join it?

It’s never easy to answer hypothetical questions; but it’s worth noting how people feel in the Western European countries that stayed out. Perhaps the non-EU nations most comparable to Britain, being neither ex-Communist nor microstates, are Iceland, Norway and Switzerland. In all of them, there are solid and settled majorities against joining the EU.

Here are the latest poll numbers. In Iceland, which formally withdrew its application in 2015, voters oppose joining by 50.1 per cent to 34.2 per cent. In Norway, by 72.0 per cent to 18.1 per cent. In Switzerland, opinion polls on the EU are rarer, because membership was killed off when a referendum in 2001 resulted in a massive 76.8 per cent against reopening accession talks. Still, for what it’s worth, the latest survey shows that 82 per cent of Swiss citizens support their current bilateral arrangements.

None of these countries has a perfect deal with the EU, because perfection is unattainable in this life. And no one is suggesting that Britain, a large state which exports less to the EU in proportionate terms than the EFTA nations do, would precisely mimic their arrangements.

But, whatever minor annoyances they have, they plainly prefer their present freedoms to stepping onto a conveyor belt whose far end they can’t see. Supporters of accession have never been able to answer the question raised by the Centre Party’s Anne Enger Lahnstein, who led the successful ‘No’ campaign when Norway held its accession referendum in 1994: ‘To what problem is the EU a solution?’

Back in 1975, when the United Kingdom held its previous referendum on membership, that question seemed to have an answer. The EEC was supposed to be all about free trade. Most of us can no longer remember the mid-1970s, but those years were arguably our lowest moment as a nation. It was the era of the three-day week, government controls on prices and incomes, power cuts, double-digit inflation and constant strikes.

Throughout the ’60s and ’70s, the UK was outperformed by every European economy. ‘Britain is a tragedy — it has sunk to borrowing, begging, stealing until North Sea oil comes in,’ said Henry Kissinger. The Wall Street Journal in 1975 was even blunter: ‘Goodbye, Great Britain: it was nice knowing you.’

When Britons looked across the Channel, they saw what looked like a success story. The then six members of the EEC had suffered far more damage during the Second World War than the UK had. Their factories had been bombed, their bridges thrown down. And yet, they had somehow bounced back – indeed, not just bounced back, but comprehensively overtaken Britain and the Commonwealth.

In fact, although no one knew it at the time, Europe’s post-war economic miracle, the Wirtschaftswunder, was coming to an end just as Britain joined. The 1974 oil shock was the beginning of a relative decline for Western Europe that has lasted to the present day.

The combined economies of the present 28 members have shrunk, according to the IMF, from 30 per cent of world GDP in 1980 to 17 per cent in 2015 – and that decline is accelerating.

Let’s ask the question again. If Britain were not already in the EU, would anyone seriously be proposing that we join?

Back in the 1950s, regional trade blocs looked like the future. Freight costs were high, refrigeration expensive, and exporters tended to look to their nearest neighbours.

Even then, Britain was something of an exception. A more open and trading economy than any of the original EEC members, the UK had long been in the habit of importing food and commodities from more distant continents. As Charles de Gaulle put it in 1963, when explaining his decision to veto Britain’s entry:
“England [sic] in effect is insular, she is maritime, she is linked through her interactions, her markets and her supply lines to the most diverse and often the most distant countries. She has, in all her doings, very marked and very original habits and traditions.”
Yup, and very sensible habits and traditions they were. The point of trade is to swap on the back of differences – to purchase from overseas what you cannot produce without disproportionate cost. The most successful markets are therefore precisely, to quote de Gaulle, ‘the most diverse’.

We can argue about whether it ever made sense for Britain to abandon a truly pluralist global trading system, one which brought together agrarian, commodity-based, industrial and service-oriented economies, for a cluster of similar advanced economies at the Western tip of the Eurasian landmass. But, whether or not it made sense in the 1970s, it plainly makes no sense today.

In the Internet age, a company in Luton can as easily do business with a firm in Ludhiana, India, as with one in Ljubljana, Slovenia. Indeed, more easily. The Indian company, unlike the Slovenian one, will be English-speaking. It will share the British company’s accountancy methods and unwritten business etiquette. If there is a dispute between the two parties, it will be arbitrated according to common law norms with which both are familiar.

When it comes to investment, the natural affinities between the UK and India – affinities of kinship and migration as well as of law and language – are palpable. Britain is the third largest investor in India, and many of the British firms that operate there, such as JCB, see no point in being in the EU. India, for its part, is the third-largest investor in the UK, owning more there than in the other 27 members of the EU combined.

When it comes to trade, though, it is a very different story. JCB cannot sell its machinery tariff-free from India to the UK, any more than can Tata from the UK to India. Why? Because commerce is controlled by the European Commission.

When Britain joined the EEC in 1973, it surrendered to Brussels the right to sign independent trade agreements. The Common External Tariff was imposed in stages, artificially directing Britain’s trade from global to European markets – and in the process, wrecking the ports of Glasgow and Liverpool which found themselves on the wrong side of the country.

As long as it remains in the EU, Britain has no vote and no voice in the World Trade Organisation. We are instead represented there by one twenty-eighth of a European Commissioner – at present, as it happens, a former sociology lecturer from Sweden.

UK EU trade balance
As we can see from the above chart, Britain’s trade with the EU is in deficit and declining, while our trade with the rest of the world is in surplus and rising.

Supporters of the EU like to tell anyone who’ll listen that ‘around half our exports’ go to the EU. Of course, ‘around’ is a flexible word. In 2006, 55 per cent of Britain’s exports went to the EU. In 2015, it was 44 per cent. Where will it be twenty years from now? At what point will we drop the bizarre argument that, for the sake of a dwindling minority of our commerce, we must merge our political institutions with those of some other countries?

In the early 1970s, European integration looked like an exciting, modern project. But look now at the euro and migration crises. Look at the backward, inflexible, mulish way in which the EU keeps trying to solve its problems with more of the integration that caused them. Ask where the project will end up.

Would we vote to join the EU now? The question surely answers itself.

Daniel Hannan is an MEP for South-East England, and a journalist, author and broadcaster. His most recent book is How we invented Freedom and why it matters.


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