The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

Robert Oulds is the Director of the Bruges Group and the author of Everything you wanted to know about the EU: But were afraid to ask

Simplifying Brexit: Maintaining third-party trade deals after Brexit

Memorandums of Understanding, or exchange of notes/letters, can form a key part of the necessary transitional arrangements as the UK moves from being an EU member state to an independent nation.

15th March 2017
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In our report What it will look like: How leaving the EU and the Single Market can be made to work for Britain[1] we explained that it should be relatively easy for the UK to maintain interim tariff-free trade with the countries who have signed deals with the EU, after Brexit.

 

‘The very worst case scenario is that the parties, UK and the [third party country] just need to deposit notification with the UN, or just [formally] inform the other parties if it’s not deposited at UN, that the treaties will continue and apply to UK after our secession. In other words, all these trade treaties don’t need to be renegotiated by an independent UK. Trade with other nations around the globe will continue as before.’

 

Back in December 2016, we also wrote that legal ‘devices’ such as MoU’s and ‘exchanges of letters’ could be extremely useful to the UK, the EU and ‘third countries’ during the Brexit process:[2]

 

‘A Memorandum of understanding (MoU) is an established device in public international law; less official that a treaty but more than a gentleman’s agreement. MoU’s can take various forms and can serve wildly different purposes. They can be short and cover one specific issue or be lengthy, covering a range of topics.

 

‘While they lack the legal certainty of treaties, the semi-official nature of MoUs means that one (or several relating to different areas of co-operation) could likely be signed quickly, without extensive consultation, parliamentary chicanery or ratification delays – as opposed to a potentially lengthy Free Trade Agreement (FTA) ratification.

 

‘These interim documents could help avoid a potential ‘cliff edge’ scenario as the 2 year article 50 period draws to a close in 2019.’

 

A recent report by the House of Commons Foreign Affairs Committee confirms much of what we said.[3]

 

In the report, representatives for The Bar Council Brexit Working Group, Professor Derrick Wyatt QC and Hugo Leith stated that: “There are 30+ countries to which the UK exports tariff-free under agreements between the EU and non-EU countries.”

 

But the Bar Council evidence suggests how this trade could be maintained after Brexit:

 

“In the event of an unplanned Brexit, the EEA agreement will cease to provide a basis for tariff-free trade between the UK and those three (EFTA/EEA) countries. It is likely that in the longer term, the UK will conclude a free trade agreement with these three EFTA states, in similar terms to those which it agrees with the EU. In the immediate aftermath of an unplanned Brexit, however, the UK would wish to carry on trade with these countries as if the EEA agreement were still in force.

 

“The UK might achieve this by an exchange of notes, in the international law sense (That is to say, a binding international agreement in the simplified form of an exchange of correspondence containing or incorporating by reference the terms of agreement), with the countries concerned, agreeing to conduct their trade by reference as far as possible to the EEA agreement, as if it were still in force between the parties concerned. This would in effect amount to a transitional arrangement as regards the UK and the three countries concerned, to be superseded in due course by a free trade agreement between the UK and the EFTA countries.”

 

They also suggested that when it came to relations between the UK and third countries, the UK and the third countries might wish to “put the arrangement on a sounder legal footing. It might achieve this by agreeing in an exchange of notes (in the international law sense) with country C to continue trade after Brexit on the same terms as before, referring to the agreement in question, and to any clarifications or modifications necessary to ensure continuity of performance of the trade obligations under the treaty. By such means, the UK might avoid WTO trade on the one hand, and putting a wholly new trade agreement in place, on the other, which would take time, and would not be achievable before Brexit.”

 

In short then, there is no need to assume that the UK will lose access to the trade deals that we have taken part in during the period we have been members of the EEC/EC/EU.

 

As the UK Government website states:

 

‘Like a treaty, an MoU can have a variety of names and can also be either in the form of an exchange of notes or a single document. However, the formalities which surround treatymaking do not apply to it and it is not usually published. Confusingly some treaties are called memoranda of understanding.’[4]

 

MoUs, or exchange of notes/letters, can therefore form a key part of the necessary transitional

arrangements as the UK moves from being an EU member state to an independent nation.


[1] https://www.brugesgroup.com/component/content/article/8-papers/1243-what-it-will-look-like-how-leaving-the-eu-and-the-single-market-can-be-made-to-work-for-britain?Itemid=101

[2] https://www.brugesgroup.com/blog/mou-the-key-to-a-smooth-brexit

[3] https://www.publications.parliament.uk/pa/cm201617/cmselect/cmfaff/1077/1077.pdf

[4] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293976/Treaties_and_MoU_Guidance.pdf

 

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A challenge to the TED talks: Brexit is ending the control of outmoded hierarchies

Technology is driving changes that remote bureaucrats have yet to imagine. Brexit is about openness. It’s about people realising their global role and forging new links with counties and other people. The British people, through Brexit have embraced what made this country so dynamic; freedom of information and limited top down control.

13th March 2017
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As reported in the Memo Chris Anderson, Founder of the renowned TED talks series of lectures has criticized Brexit and poured cold water on the possibility of Brexiteers speaking at his events. Stating that TED are pro-globalisation. Clearly he has jumped to the wrong conclusions about Britain’s EU exit and perhaps has globalisation very wrong.

Some cannot distinguish between internationalism, working with others, and the brand of globalization being pushed by supra-national institutions. Organisations like the EU are, in the words of Dr Anthony Coughlan in Tackling the EU Empire, ‘imperial arrangements like the Austro-Hungarian Empire, once known as a “prison-house of nations”, where different countries are ruled by a centralized bureaucracy in a far-away imperial capital.’ That model failed then and will fail again.

Supranationalism, what Chris Anderson must be confusing with Globalisation, is according to Dr Coughlan ‘the opposite of internationalism, which is a benign and progressive concept. Internationalism – from Latin inter, “between” – implies the pre-existence of sovereign Nation States. It refers to relations of co-operation between the States that constitute the international community, but with each controlling and deciding its own domestic and external affairs in accordance with the wishes of its people. Recognition of States based on the right to self-determination of nations and peoples is a basic principle of modern democracy and international law.

‘Supranationalism, in contrast to internationalism, implies a hierarchy, with the supranational level on top. Internationalism implies legal and political equality between the parties. Properly understood, internationalism is opposed to all forms of chauvinism and xenophobia. It implies coexistence among progressive “nationalisms” – that is, broad nationalisms rather than narrow, using the positive rather than the negative sense of that word in English. It implies patriotism and love of country, combined with respect for the many national communities into which humanity is divided and admiration for their varied cultural and other achievements.

‘Internationalism delights in the diversity of nations. Supranationalism seeks to erode national differences, either because they threaten the dominance of a particular ruling power or they make it more difficult for transnational big business to establish a world of homogenized consumers and employees. Supranationalism seeks the erosion of State sovereignty. Internationalism seeks to establish and maintain it.

‘The glory of European civilisation has been the diversity of its national components – in culture, science, political institutions, economic actors, legal systems, education systems, tax codes, fashion. In classical Europe emulation and competition between nations, communities and individuals spurred creativity and innovation.’

Britain always has been global, we are fully with the modern world. We invented modernity and took it around the globe. The British, instinctive believers in free trade, understand this and behind Brexit was a desire to reenter the rest of the world free from the Byzantine grip of a sclerotic EU. Britain tried european union, found it not to our tastes and are now seeking new opportunities over-seas.

The EU, just like the trans-national empires of the past, is not permanent. If any time line is extended long enough the chances of survival become zero. An organism, or organisation for that matter, must adopt or die. In the referendum, the British people rejected the EU’s inflexibility and its failure to adapt.

Top down, rent seeking, institutions are the past. Those holding onto the supranational institutions are desperately trying to support a system that kept the old cartels in power. Technology and the people’s legitimate rights to have a government of their own people will sweep away suprantionalism.

The greatest trend in world politics is the near universal demand for diversity and decentralization of decision making and power. Ever more countries are being born and taking their seat at the United Nations, an international body that has at its very core a respect for the nation state.

Whilst transnational empires will fail and new states will be born, there is also the beginnings of a trend towards not just smaller political units but economic empowerment of individuals. Using technology people are becoming free from the tired cartels that cling to supranational governance. Whilst global value chains are growing, people will no longer have to be passive receivers of the proceeds of growth as if they were in some feudal system. 3D printing is just the start. Indeed, even financial institutions may themselves have to adapt to deal with the challenge from crypto currencies and peer-to-peer investment models.

Top down information flows are the past, by rejecting the hierarchical organisation of the EU, Brexit has shown how we can live the information revolution. In the UK, centralisation is out, we have embraced the new world of horizontal information channels. In this exciting age of technology and easy communications across the globe, it is absurd that our lives were being managed by grey men in their ivory towers in Brussels.

Technology is driving changes that remote bureaucrats have yet to imagine. People are deciding how to live their own lives for themselves. Brexit is about openness. It’s about people realising their global role and forging new links with counties and other people. The UK has re-joined a world we helped to shape. The British people, through Brexit have embraced what made this country so dynamic; freedom of information and limited top down control.

If TED wants to remain relevant then it needs to be open to the new ideas at the heart of Brexit. This may require Chris Anderson to take a leap of faith and be open to the ideas that are driving the most exiting political movement in a generation – Brexit. Chris Anderson needs to look beyond the pseudo-globalisation of political, corporate and market hierarchies attempting to ensnare us in their web, whilst masquerading as enlightened progressives. The TED talks need to embrace the coming Cambrian explosion of devolution, fewer hierarchies, more markets and more information channels.

How we choose to live our lives and interact can no longer be controlled by old structures like the EU. It is not the big that beat the small, it is the fast who beat the slow.

If we can question the old tired structures of supranational governance, which come from the early 20th Century, and break free from it, then Chris Anderson can step up to the plate and listen to what Brexiteers have to say. It may take him out of his comfort zone, but I suspect that he will realise that despite the inevitable bumps on the road we point the way forward.

The French economist, Professor Jean-Jacques Rosa, in the Bruges Group publication, Saying No to the Single Market, summed up what is so wrong with the supranational version of globalization which the EU personifies. His arguments are summarised below. The EU is little more than organisational sclerosis.

The attempt to construct a third superpower by combining the former imperial nations of France, Germany, Italy and possibly even Great Britain was intended to reinforce and consolidate the Western Alliance. But the last quarter of the century saw a sea change in organization, coming from the information and communication technological (ICT) revolution.

The organizational trend underwent a complete reversal from the mid-1970s onward, changing the structure of most hierarchical organisations, and boosting the development of markets everywhere. I claim that the optimal organisation of the public sector and also of private businesses has been revolutionized by an informational tsunami during the past three decades in favour of smaller hierarchies and larger markets. And that is the reason why the old project of centralizing Europe by building an additional level of political organization above that of the nation states is now not only obsolete (the remnant of a former era) but also moving more and more afar from the modern (information era) optimal political organization. For that reason, it is deeply detrimental to growth and economic dynamism.

A problem of Centralisation
The single market itself is another step in that wrong direction, alongside with other centralising policies, whether effective, such as monetary policy (the creation of the euro) or projected, such as a single tax policy intended to suppress tax competition among governments. They all belong to the general category of anti-competition policies.

The single market really means European-wide centralisation of national regulations, a regulatory centralisation that decreases competition and consumer welfare.

It creates huge new rents for centralized European regulators and for business interest groups and oligopolies.

The centralisation of regulation ignores the difference of tastes in various countries. It also ignores the difference in economy conditions, such as the local (national) elasticity of demand, the elasticity of supply, the density of population in various countries, and so on. These factors explain the differences in the demand for environmental regulations from one country to another. Fixing the same standards for the whole of Europe ignores these differences in demands: one size does not fit all and the consumers are less well served. Thus, centralising regulation distorts competition instead of increasing competition.

Interest groups versus consumers
A regulation in fact is a tax plus a subsidy. The question is: is the centralisation of regulation increasing the overall volume of regulation? I say yes of course.

Why? Well take the European Union. The total population of the 28, soon to be 27, countries is about 500 million people. A large enough firm will now have its former lobbying budget available to lobby not 28 regulatory bodies but just one central authority and with greater outcome. It becomes more worthwhile to lobby. So there is an overall increase of the money spent lobbying and of course the regulatory authorities are influenced by the spending of lobbies and that’s what the late Professor and Nobel Prize winner George Stigler showed and called the “capture” of regulators by the regulated firms and their lobbies. The regulatory authorities are not completely independent of the actions and spending of the lobbies. Bureaucrats controlling access to a 500 million people are obviously more actively lobbied than bureaucrats controlling a market of 18.5 million people.

Rent seeking will increase and that’s bad news for consumers. That’s good for some businesses, that is good for the bureaucrats, but it is bad news for consumers. And so, the incentives for forming cartels, the collusion between firms, are much increased. As we know, cartels are good for business and bad for consumers: they result in higher prices and lower quantities.

There is a second important real effect of the centralisation of regulation, it comes from the dilution of democratic control. The formerly hard won national democratic control is reduced through the extension of the voting area and voting population, and that’s exactly what happens in business firms when you dilute the capital by the creation of new shares. You increase the capital and you dilute the power of the former owners (voters or shareholders). The control that these “owners” can exert on managers, that is, in this example, the politicians and bureaucrats, is lowered in the same proportion. Accordingly, the politicians all over the EU are not going to resist the trend towards more centralisation. On the contrary, they receive some personal benefits and increased independence vis-à-vis the electorate by that very diluting process.

My conclusion is that the centralisation of regulation brings about an extension of the size of central bureaucracies and this is the case even more when you consider that existing bureaucracies usually do not disappear when new ones are created.

Look at the European Central Bank. The ECB has been created and is now working in a huge expensive building in Frankfurt. But the French Central Bank still exists, it didn’t decrease its employment or budget and I suppose it’s the same for other national central banks in the Eurozone. So there is a net addition of monetary bureaucracies with the centralisation of monetary regulation and the creation of one more level in the political hierarchy, which results in an increase of the overall size of bureaucratic Europe.

On the business side of that process, the development of lobbies mainly benefits existing established firms because they are the only firms that can create a lobby. “Potential” firms obviously cannot, nor do the new entrants. The extension of lobbying thus favours existing firms. Existing firms are large firms, and the older they are the larger they are. It follows that centralisation of regulation and increased lobbying promote the concentration of business firms and business interests and that’s not really an advantage for consumers either.

This is not good for the creation of new firms and for the general dynamism of the economy. Indeed, it is the source of sclerotic organisation in the EU. It enforces and enhances the rents of large, older business firms and bureaucracies and freezes the hierarchical structure of both industry and political production at a moment when innovation, new small firms, and lighter government are required. It is a recipe for accelerated decline.

Organisational sclerosis
During the first three quarters of the 20th century there was a trend towards centralisation, concentration, increase of the size of hierarchies both public and private (big firms, big states). Industrial organisation economists call it the “fordist” era after the name of the American carmaker that invented the continuous production line, but it was also the era of socialism and centralisation of the state and of the increase of the size of state bureaucracies everywhere, including in the democratic “market economies”.

But from the mid-70s on, a reverse track upset organisational structures everywhere. Big conglomerates disappeared in the following decade, very large and inhomogeneous countries dissolved: the USSR first and then Yugoslavia, Czechoslovakia, while regionalist and secessionist movements multiplied in Spain, Italy, and elsewhere in the world.

Something big happened in the 1970s: that was the dawn of the information era. Suddenly information costs fell vertically because the drastic fall in the cost of storing, processing and communicating information due to the microchip, the computer, and radio transmission of the internet. An economist would say that when the cost of information is going down more information should be used. But a more intensive use of information is going to impact profoundly the structure of organisation of all productions.

When the cost of information goes down dramatically as it did in the 1970s, then the market becomes more efficient than the hierarchies. So hierarchical Europe is to shrink its hierarchies: they should be divided and reduced, and at the same time markets should expand, and that’s what happened in the 1980s, worldwide. It was even more the case in highly centralised economies such as the USSR. They simply went broke because their organisational structure had become uncompetitive and obsolete. They did not take advantage of the sudden fall in the cost of information. They did not realize that a new and abundant resource (information) was available for maximizing growth. Or if they did they weren’t able to change their outdated organisational structure to benefit from the new cheap resource and they lost to information intensive competition from the U.S.

Adam Smith called attention to the invisible hand of the market and the American economist Alfred Chandler explained in a symmetric fashion that the “visible hand” of the big corporation, the existence of large hierarchies, was characteristic of the 20th century businesses. What one could observe today is that since the last quarter of the past century large hierarchies are shrinking: the information era is the era of the “shrinking hand”.

Against this general background what are we doing in Europe? The EU is still extending the public (or political) hierarchies and contracting markets, a directly dysfunctional and unproductive strategy. The relative prices of factors and information tell us that they should be doing the opposite. We live in an extraordinary abundance of information, and the deluge is increasing.

The current European orientation towards increased centralisation is itself increasingly questioned and will be reversed just as in the last part of the 19th century, the previous British trend towards free trade and small hierarchies was replaced by a new trend towards centralisation, including both big firms and big state. I think that current European policies are a legacy of this period (the 20th century) but that they are counterproductive in the new era of the information age. What we need to avoid a growing organisational sclerosis is a radical about face of policy, a great reversal if you like.

A uniform union-wide regulation (and the underlying model of centralisation of everything) is just like the Ford Model T: the choice of the car paint is up to every buyer, provided it’s black. This could be a productive, wealth enhancing, policy in the price context of the past century. But it won’t do today.

With the falling costs of information, centralisation is out, variety is in and centralisation becomes directly unproductive and will lead to failure in a very short term as the information revolution proceeds at an accelerating pace.

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Another nail in the coffin of the Single Market

Last month, an event occurred which got little fanfare, but is likely to have a significant effect on the future of the UK, especially after Brexit. What happened was that the WTO Trade Facilitation Agreement has now entered into force.

10th March 2017

The Single Market

Lord Lamont, the former UK Chancellor of the Exchequer wrote in The Telegraph:wto

‘The single market is open to all advanced economies, in exchange for paying a relatively modest tariff of 3 to 4 per cent, something that evidently does not stop non-EU countries from selling within it.

‘Every developed country has access to the single market. The EU has a relatively low external tariff with the exception of certain goods such as agriculture.’[i]

When taken prima facie, Lord Lamont’s comments are seemingly correct. Only those countries who are essentially rogue states or have violated international agreements don’t have the ability to conduct trade with the EU, and the EU’s external tariffs are fairly low.

But Tariffs are only half of the story.

The problem of tariffs could be easily addressed by the UK signing a goods Free Trade Agreement (FTA) with the EU. Given the high volume of UK- EU 27 trade, this is seemingly a given.

A basic FTA need not take long to complete. The EU’s earlier iteration the European Economic Community (EEC) concluded basic FTAs in the early 70’s that took 6-7 months to agree, sign and come into force.

But the other half of the story relates to non-tariff barriers (NTBs), sometimes called "Non-Tariff Measures (NTMs)". These comprise everything else that can slow down trade or make it more expensive or complex.

The European Commission describes the Single Market as:

‘…one territory without any internal borders or other regulatory obstacles to the free movement of goods and services. The Commission works to remove or reduce barriers to intra-EU trade and prevent the creation of new ones so enterprises can trade freely in the EU and beyond. It applies Treaty rules prohibiting quantitative restrictions on imports and exports (Articles 34 to 36 TFEU ) and manages the notification procedures on technical regulations (2015/1535) and technical barriers to trade.’[ii]

So the Single Market goes beyond tariff reduction, and encompasses far more than just a Free Trade agreement. This is why the ‘remain’ side in the EU referendum campaign were so concerned about the UK leaving the European Union’s Single Market.

‘Remainers’ believe that after Brexit, even if the UK does get a Free Trade Agreement, our importers and exporters will be deluged with red tape, endless forms, checks and other barriers to entry as we will be operating outside the Single Market.

These are valid concerns, but we believe they are largely exaggerated – and here are the reasons why:

wcoThe EU has signed up to the WCO

In July 2007[iii], the EU signed up to the World Customs Organization (WCO) which works to enhance customs co-operation between signatory countries and works to simplify issues such as Rules of Origin (ROO).

From the European Commission’s own press release:

On 30 June 2007, the Council of the World Customs Organization (WCO) decided to accept the request of the European Union to join the WCO as of 1st July 2007. This decision grants to the European Union rights and obligations on an interim basis akin to those enjoyed by WCO Members.

‘The WCO plays an important role in promoting international customs co-operation and addressing new challenges for customs and trade. It is deeply involved in designing and implementing policies worldwide that integrate measures, which help ensure supply chain security, combat counterfeiting, promote trade and development, as well as guarantee efficient collection of customs revenues. Membership of the WCO highlights and confirms the central role and competence of the EU in international discussions on customs issues including customs reform. EU involvement in the WCO will focus on the full spectrum of customs issues, in particular the following broad areas:

  • Nomenclature and classification in the framework of the Harmonised system;
  • Origin of goods;
  • Customs value;
  • Simplification and harmonisation of customs procedures and trade facilitation;
  • Development of supply chain security standards;
  • Development of IPR enforcement standards;
  • Capacity building for customs modernisation and reforms, including in the context of development cooperation;
  • Mutual Administrative Assistance for the prevention, investigation and repression of customs offences.

‘The EU is a contracting party to several WCO Conventions, and contributes to the work of this organisation, including by ensuring presence and coordination with the Member States in defining and representing EU positions in the relevant bodies managing these conventions.’

The UK signed up to the WCO in the 1950’s and is a signatory in its own right, so will be able to address customs issues with the EU via this body after Brexit.

 

Harmonisation with EU rules

The UK’s rules and regulations are already synchronised with EU/EEA (European Economic Area) regulations and standards after decades of membership. This will also be true on the day after Brexit due to the Great Repeal Bill. Hence a strong (if not overwhelming) argument for ‘rules equivalence’ can be made.

 

The WTO Agreement on Rules of Origin (ROO)

This agreement encourages WTO countries (including all EU countries) to have fair and transparent rules pertaining to Rules of Origin:

 wtostructure

These rules state that:

‘Rules of origin shall not themselves create restrictive, distorting, or disruptive effects on international trade.  They shall not pose unduly strict requirements or require the fulfilment of a certain condition not related to manufacturing or processing, as a prerequisite for the determination of the country of origin….rules of origin are administered in a consistent, uniform, impartial and reasonable manner’.[iv]

 

Guidelines in the EU treaties

treatylisbonArticle 8 of the Lisbon Treaty states that:

‘The Union shall develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation.’[v]

As the UK will become a new ‘neighbouring country’ after Brexit, the EU is compelled to deal with us according to the Article 8 terms.

 

WTO Technical barriers to trade Agreement

The TBT agreement is key – it means that signatories (again, including the EU) agree to abide by rules about international product and technical standards. From the European Commission’s website:

The TBT notification procedure helps prevent the creation of international technical barriers to trade. It was introduced by the Agreement on Technical Barriers to Trade (the TBT Agreement), a multilateral agreement administered by the World Trade Organisation (WTO). It gives participants advanced knowledge of new technical regulations or conformity assessment procedures envisioned by other countries. The EU’s participation in the TBT Agreement helps businesses in EU countries access markets outside the EU.’

 

 

Aim of the TBT notification procedure

To avoid any potential technical barriers to trade, WTO Members submit national legislation at draft stage to other members of the TBT Agreement. They can then assess the impact on their exports and identify any provisions breaching the Agreement.

While allowing all WTO Members to maintain their right to adopt regulations, the TBT Agreement aims to:

  • prevent the creation of unnecessary and unjustified technical barriers to international trade;
  • prevent the adoption of protectionist measures;
  • encourage global harmonisation and mutual recognition of technical standards;
  • Enhance transparency.[vi]

The commission somewhat downplays the TBT agreement, however. What it actually states is that:

‘Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.

‘Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.

‘Where technical regulations are required and relevant international standards exist or their completion is imminent, Members shall use them, or the relevant parts of them, as a basis for their technical regulations. Members shall give positive consideration to accepting as equivalent technical regulations of other Members, even if these regulations differ from their own, provided they are satisfied that these regulations adequately fulfil the objectives of their own regulations.’[vii]

Since UK regulations and standards will be equivalent to their EU counterparts from day one, and will continue to meet international standards going forward, it will be extremely difficult for the EU to reject UK products sold into the EU market.

 

WTO Trade Facilitation Agreement

The most recent agreement, the WTO Trade Facilitation Agreement (TFA) will further increase trade co-operation.

As the WTO website states:

‘The TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.’[viii]

Perhaps especially important for Northern Ireland post-Brexit, the TFA also states that:

‘Each Member shall ensure that its authorities and agencies responsible for border controls and procedures dealing with the importation, exportation, and transit of goods cooperate with one another and coordinate their activities in order to facilitate trade.

‘Each Member shall, to the extent possible and practicable, cooperate on mutually agreed terms with other Members with whom it shares a common border with a view to coordinating procedures at border crossings to facilitate cross-border trade.’

The WCO welcomed the ratification of the TFA agreement in their press release of 22 February 2017, in which they wrote:

‘The World Customs Organization (WCO) congratulates the World Trade Organization (WTO) on the entry into force today of the WTO Trade Facilitation Agreement; an agreement that will expedite the movement, release and clearance of goods, including goods in transit, and which sets out measures for effective cooperation between Customs and other authorities, as well as provisions for technical assistance and capacity building in this area.

‘The WCO takes this opportunity to highlight that it will continue to seek improvements throughout the global supply chain to obtain the highest levels of safety, security and integrity, which will enhance trade facilitation for compliant actors. This will ultimately have a positive effect on the relationship between all border agencies and the Private Sector.

‘The entry into force of the Trade Facilitation Agreement (TFA) is an important milestone for the international trade and Customs community, coming about as a result of the fact that it has been ratified by 110 WTO Members, which pushes it above the threshold needed to take effect, namely ratification by two-thirds of the WTO’s 164 Members.’[ix]

 

In conclusion:

  • The volume and UK and EU will likely at least sign a basic goods FTA; meaning tariff-free goods trade will continue.
  • The UK’s rules and regulations are already synchronised with EU regulations and standards. This will also be true on the day after Brexit.
  • The UK and EU are signed up to the WCO, which exists to help simplify and resolve customs issues.
  • The WTO TBT agreement prohibits the EU from banning UK goods that meet international standards.
  • The WTO agreement on Rules of Origin means that the EU will have to ensure rules of origin are administered “in a consistent, uniform, impartial and reasonable manner” when dealing with exports from the UK.
  • The WTO Trade Facilitation agreement means the EU must co-operate with the UK on issues around the “movement, release and clearance of goods”.

When we combine these factors together we see that after Brexit, UK trade with the EU will be very similar after Brexit as before Brexit.

The EU has signed up to many agreements and treaties which in effect reduce the uniqueness of the single market.

Britain can therefore essentially have almost duplicate trade relationship by falling back on these international agreements (if necessary) which would mean that the UK could have the majority of the benefits of Single Market membership, but be free to choose which rules to obey when not exporting to the EU 27 countries or for domestic sale.

The TFA might not then be the final nail in the Single Market coffin (it is still useful to EEA members), but it is one substantial step towards reducing the importance of the Single Market to a post-Brexit UK.


[i] http://www.telegraph.co.uk/news/2016/06/13/not-only-can-britain-can-leave-the-eu-and-have-access-to-the-sin/

[ii] https://ec.europa.eu/growth/single-market_en

[iii] https://ec.europa.eu/taxation_customs/business/international-affairs/international-customs-cooperation-mutual-administrative-assistance-agreements/world-customs-organization_en

[iv] https://www.wto.org/english/docs_e/legal_e/22-roo_e.htm

[v] http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-european-union-and-comments/title-1-common-provisions/6-article-8.html

[vi] https://ec.europa.eu/growth/single-market/barriers-to-trade/tbt_en

[vii] https://www.wto.org/english/docs_e/legal_e/17-tbt.pdf

[viii] https://www.wto.org/english/tratop_e/tradfa_e/tradfa_introduction_e.htm

[ix] http://www.wcoomd.org/en/media/newsroom/2017/february/wco-welcomes-entry-into-force-of-the-wto-trade-facilitation-agreement.aspx

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Robert Oulds
Thank you for your comment. That was covered first in the Bruges Group paper What it will look Like: https://www.brugesgroup.com/m... Read More
Thursday, 16 March 2017 23:31
Robert Oulds
Earlier we also covered those points here: http://www.brugesgroup.com/blog/trade-issues-which-must-be-solved-by-david-davis-brexit... Read More
Monday, 20 March 2017 10:09
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Will the Netherlands be the next domino to fall?

Opinion poll shows Dutch opposition to the EU is strong and can win.

56% = Support Nexit (EFTA + FTA)

Only 44% = Support for EU

26th February 2017
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A new Dutch poll commissioned by the Bruges Group, carried out by www.peil.nl, shows that more Dutch people prefer the alternatives to the European Union than they do EU membership. As the alternatives are already gathering more support than EU membership a concerted campaign in the Netherlands, which could force a referendum[1], will mean Holland voting to leave the EU.

 

The Dutch general election will take place on 15th March and the question of the EU is becoming increasingly important. The Netherlands’ terms of EU membership are already being questioned by an increasing amount of political parties; namely the Centre Democrats (Netherlands)‎, ChristianUnion, Party for Freedom‎, Party for the Animals, Libertarian party, Reformed Political Party, and Socialist Party (Netherlands). Which can make gains. The issues are immigration, who makes law, and size of the Dutch financial contribution.

 

A new party, Forum voor Democratie (FvD)[2], which helped organise the recent Dutch Ukraine referendum is a supporter of exiting the EU and joining the European Free Trade Association:
https://forumvoordemocratie.nl/standpunten/europese-unie

 

Across the continent of Europe and beyond people want to take back control of their lives. A concerted campaign for Nexit, along the lines that we saw in the UK, can overtime, just like it did in Britain, move the Netherlands towards the exit. Britain will welcome our allies, the Dutch people, in a new post-EU Europe.

 

The question asked respondents which of 3 options they preferred, the results are below:

39% = EU

23% = EFTA (European Free Trade Association)

27% = FTA   (Free Trade Agreement)

11% = Don't Know

 

Without Don't Knows

56% = Nexit (EFTA + FTA)

44% = EU

 

1,174 people were polled over 14-15/2/17

 

The results show also (without Don't Knows):

Men 56% Nexit (EFTA +FTA), 44% EU

Women 57% Nexit (EFTA + FTA), 43% EU

 

Also all age groups 25 and over support Nexit options

And all regions prefer Nexit, even in the large cities a majority prefer the alternatives to EU membership.

 

In past referendums in the Netherlands, people have voted for less EU:

61.6% said Nee in 2005 to the EU constitution and 64% voted against the EU-Ukraine Association Agreement in 2016.


[1] Referendums, known in Dutch as volksraadpleging (people's consultation), can with political pressure, as in the UK, be held.

[2] FvD Press contact: Jeroen de Vries

Number: +31 642807493

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

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Youth activists talk with leading Brexiteers

Leading businessmen, politicians and academics talk with Paulina Sienniak and Ben Michael about how Brexit will work and what it means.

24th February 2017
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Rt Hon. Peter Lilley MP, Former Secretary of State for Trade and Industry, and Social Security.

Peter Lilley talks to Paulina about the single market.

Johan Eliasch, Co-Founder of Cool Earth and Chairman and CEO of HEAD.

Paulina talks to Johan Eliasch about Brexit.

Morten Dam of Denmark's FolkeBevaegelsen Mod EU (People's Movement against the EU).

Morten Dam discusses the EU.

Richard Tice, businessman and founder of Leave Means Leave, and co-founder of Leave.EU.

Paulina Sienniak speaks with Richard Tice.

Christie Davies, author of the Mirth of Nations, Professor Emeritus University of Reading.

Ben Michael talks to Professor Christie Davies.

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Why Brexit Should Be Accompanied by Irexit (Ireland exit)

Ireland’s political Establishment is only now realising that Brexit really does mean Brexit and that the case for an accompanying Irexit is overwhelming. Irish opinion is likely to move in this direction over the coming two years and UK policy-makers should encourage that.

Dr Anthony Coughlan

22nd February 2017

For forty years from 1973 the Republic was a major recipient of EU money through the Common Agricultural Policy. Since 2014 the Republic has become a net contributor to the EU Budget. In future money from Brussels will be Irish taxpayers’ money recycled. This removes the principal basis of Irish europhilia, official and unofficial.

If Dublin seeks to remain in the EU when the UK leaves it will have to pay more to the EU budget to help compensate for the loss of Britain’s net contribution. A bonus of leaving along with the UK on the other hand is that it would enable the Republic to get its sea-fisheries back - the value of annual fish-catches by foreign boats in Irish waters being a several-times multiple of whatever money Ireland got from the EU over the years.

As regards trade and investment, the Republic sends 61% by value of its goods exports and 66% of its services exports to countries that are outside the continental EU26, mostly English-speaking. The USA is the most important market for its foreign-owned firms and the UK for its indigenous ones. Economically and psychologically it is closer to Boston than Berlin and to Britain than Germany.

ireland1ireland2ireland3

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The UK is stuck in a quagmire over EU Defence Union

EU Defence Union has gathered pace since late 2016 and the UK is deeply involved. Ministers have so far failed to explain why they are agreeing to the plans and how they will regain control.

15th February 2017
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A senior EU Commission official boasted in January that the EU "has done more in defence in the last seven months than in the previous decades".

 

It certainly looks like they have stepped up the pace since the Brexit vote.

 

Two major plans outlining military union were released in November and approved by EU Governments in December, including the UK under advice from Sir Ivan Rogers, who was until January the top UK diplomat in Brussels who was so admired by pro-EU politicians.

 

Anyone who thinks these plans won't affect the UK could be in for a nasty surprise.

 

The plans create a central EU defence budget for the first time, make a grab for defence industries and procurement strategy, they plan for the acquisition of EU assets in space and surveillance, they invite EU member states to conjoin their defence forces permanently under an EU banner, they place obligations on member states’ intelligence services and they assert the "defence autonomy of the EU from NATO".

 

The EU uses typical guile, complexity and sheer volume of words so it's no wonder the media have barely picked up on them - as a journalist, where would you even start? Then there's the complexity of how the EU is turning the plans to reality, which is advancing daily and involves the EU Parliament, think tanks, defence industry and the EU’s deep reach into member states’ defence structures.

 

Veterans for Britain first spotted what was happening when on 15 November 2016 Federica Mogherini presented the first of the plans, known as the Security and Defence Implementation Plan, to a combined EU Council meeting of foreign ministers and defence ministers. The UK, represented by Sir Michael Fallon and Boris Johnson, approved this plan to “avoid playing dog in a manger”, i.e. avoid preventing other countries from participating when the UK had no desire to do so.

 

There are a few immediate problems with this stance.

 

Firstly, agreement places obligations on signatories to be involved – even if the UK has no desire to be involved it will be involved at least for the duration of its remaining membership.

 

Secondly, when we unpick what was said by ministers in the days after the EU Council agreement, we find that Foreign Office minister Sir Alan Duncan had written to MPs saying that the UK had signed not because it didn’t want to be involved, but because it might want to be involved – a clear contradiction to what Boris had said on the day of the agreement.

 

Thirdly, the agreement has certain repercussions for the UK beyond Brexit in 2019, most notably UK defence industries and control of defence procurement, while other post-Brexit implications in intelligence, military structure, funding and assets are only ‘likely’ to affect the UK, but depend on the UK Government’s desire in 2019 to claw back the control it has just given away.

 

Fourthly, the EU is not considering special exemptions or caveats for the UK. All the talk of a combined EU defence output includes figures which could only include the UK, such as a 100-billion-euro defence industry.

 

When Mogherini’s SDIP was approved by the UK, the defence correspondents of national newspapers had all been conveniently flown to Iraq for a week by Sir Michael Fallon’s MOD, to be embedded with UK forces. Any defence journalists who were still in the country on 15 November might have been forgiven for thinking that SDIP hadn’t been approved by the UK at all. At Veterans for Britain, we weren’t sure so we phoned the EU Council’s staff to find out. They told us that Sir Michael Fallon and Boris Johnson had indeed subscribed to the plan because they had offered no objection to the joint conclusions that the UK representative Sir Ivan Rogers had co-authored with his counterparts. In EU Council contexts, joint conclusions by member states in support of a document constitute agreement.

 

It’s useful to look at some of the details of Ms Mogherini’s SDIP. It calls for EU member states to enter ‘Permanent Structured Cooperation’ in defence (PESCO), an idea which has been lurking in the Lisbon Treaty and is described by its EU federalist architects as “the foundation for an integrated EU Armed Forces”. SDIP also calls on member states’ to propose new ways their intelligence services might correspond with a new central EU intelligence agency known as the Single Intelligence Analysis Capacity (SIAC), and proposes a new focus on the EU’s military intelligence body known as INTCEN.

 

Two weeks after SDIP was announced and approved, the EU Commission released a report, titled the European Defence Action Plan (EDAP), which includes an explanation for how EU officials propose to fund Ms Mogherini’s plans.

 

An EU Defence Fund will divert cash towards joint EU military units and EU defence research. It will be funded by the European Investment Bank, in which the UK is joint top shareholder. The EU Commission will also invite member states to contribute, with the promise that any such payments will not be governed by EU-imposed austerity rules. Apparently a great way for poorer EU nations to divert cash from their own militaries and still meet the NATO 2% requirement.

 

By the way, we know these EU plans sound outlandish to anyone who’s not heard about them before, which is why we at Veterans for Britain always take copies of the EU’s plans into meetings so that politicians and journalists know that we’re not making it up.

 

Mr Juncker’s EDAP describes EU’s push “towards Defence Union” and the creation of a single market for military equipment, which sounds fine until you realise it comes with the imposition of centrally-coordinated defence industry strategy and points to the removal of the member states’ current right to build their own ships and safeguard domestic defence supply.

 

Even more worrying is that Juncker’s EU Defence Fund (starting at five billion euros) will be in a position to offer free money to UK companies who want to participate in EU-led procurement projects, therefore putting a financial incentive on UK defence industries to demand involvement in the EU-controlled ‘defence single market’.

 

Mogherini’s SDIP and Juncker’s EDAP appeared on the agenda of the 12 December EU Council heads of government meeting, as point number 2 under the more generalised topic of ‘Security’.

 

The 28 heads of government including PM Theresa May were asked if they agreed with the previous agreement made by their foreign and defence ministers and Mr Juncker’s EDAP. They all did agree. Once again, there were no complaints, exemptions or caveats for the UK.

 

The UK's approval means it has signed up to at least two years of military integration with the EU and faces an ever bigger task after exit to unravel itself from the EU military equipment market or prevent UK intelligence services’ relationship with the Five Eyes network being compromised by demands to provide information to the EU’s SIAC intelligence service. There has so far been no statement from defence ministers to explain how the UK will extricate itself from EU decision making in two years’ time or whether it will resist potentially far-reaching changes in military structure, procurement, intelligence and funding between 2017 and 2019.

 

These plans had been preceded by three statements which created the mood music around defence union: the Merkel-Hollande-Renzi joint statement on the deck of an Italian aircraft carrier; a Mogherini statement in July on the forthcoming EU Global Strategy; and Juncker’s State of the Union address which alluded to a desire to expand the EU’s role in defence.

 

The EU Commission’s activity since SDIP and EDAP reflect their intention for an "unprecedented level of engagement". In January, they appointed administrative teams to implement every strand of the two plans and liaise with military and defence industry counterparts.

 

Ms Mogherini, who simultaneously acts as Vice President of the EU Commission, head of the European Defence Agency and head of the European External Action Service (the EU’s ‘foreign ministry’) is expected to announce the first EU member states participating Permanent Structured Cooperation (PESCO) on 25 March, the 60th anniversary of the 1957 Treaty of Rome which created the European Community.

 

At the end of January, the EU Parliament carried out a flanking operation in support of PESCO in which MEPs called on their national parliaments to be involved. In the same breath they went several steps further, calling for the ‘technically-intergovernmental’ European Defence Agency and the forthcoming PESCO to be annexed under the EU Commission’s remit. They also called for the EU Battlegroups to be considered part of PESCO, which will be worrying for the UK as British forces have participated four times as a lead nation on a rolling deployment since 2005.

 

What is happening in the UK following SDIP and EDAP? The EU has named two ‘hubs’ in the UK as part of the EU Network of Defence-Related Regions (ENDR) and one of them ‘Marine South East’ will specialise in ‘dual use’ robotics and maritime technology. Marine South East has been paid by the EU Commission to host an event in April featuring EU Commission, MOD and defence industry staff to explore what ‘More Europe in Defence’ will look like.

 

At the same time, pro-EU groups in the UK such as the Centre for European Reform and the (EU Commission-funded) Royal United Services Institute are going into overdrive either promoting the case for Defence Union or running down the UK’s prospects in defence autonomy.

 

Meanwhile, MPs will eventually hear a snapshot of what is contained in the EU’s military union plans when they are discussed by the Foreign Affairs Committee, Defence Select Committee and Exiting the EU Committee in the weeks ahead. They will have this opportunity because Sir Alan Duncan’s aforementioned note was escalated and marked as ‘politically important’ by Sir Bill Cash’s European Scrutiny Committee.

By David Banks, Veterans for Britain

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A Global Education System

How the UK should reorganise its university and research programmes

Robert Yee

9th February 2017

The UK has the ability to leverage current networks, continue to fund its current research programmes, and expand funding for scientific innovations. Going forward, the country will have to restructure its funding and knowledge-transfer programmes with its EU allies, and maintain an open environment with visas for people working on high-impact research projects. Furthermore, and almost simultaneously, the UK will need to look to partners in the US and the rest of the world for new programmes as well. Thus, a three-pronged approached is necessary for the UK for the future:

1. Encourage study at UK universities for both EU and non-EU countries

2. Promote international collaboration and innovative research ideas

3. Provide funding and financial aid to programs covered in #1 and #2

The government should support universities and research projects and prove that the country is willing and able to become a key powerhouse of academic prowess for the twenty-first century.

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Brexit and the Supreme Court

The Supreme Court has no jurisdiction in preventing the Prime Minister from invoking Article 50 to leave to EU. Its ruling is wrong. Jurisdiction was passed to the People, who have primary authority, by Parliament.

25th January 2017
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One must now wonder whether in his memoirs Lord Neuberger, President of the Supreme Court will say, of the unintended consequences of the Court’s Brexit decision, “Of course, the People had made a valid decision to leave the EU but at the time it seemed the right thing to send it back to Parliament.”

 

We are now ruled not by law but by legalisms.

 

Lord Neuberger and those Justices who voted with him are wrong.  Parliament is not sovereign.  Parliament is an administrative system for carrying out the will of the People.  In the final analysis, the People are sovereign.  That was established by the French revolution of which the French are justly proud.  In this county, for better or worse, Oliver Cromwell acted for the People at the time of a useless Parliament and an extravagant King.  

 

Similarly, it is the role of the Courts to codify the will of the People.  It was not the Courts that, in their love of justice, forced legislation to give women the vote or to abolish slavery on a protesting People.  If the Supreme Court is to create law as it is said to have done in this instance, it must be in accord with the wishes expressed by the People.

 

Brexit is a matter in which the Courts have no jurisdiction.  The Attorney General should not have stipulated that they had jurisdiction following Parliament’s clear decision to mandate the People to decide the matter.  One can hardly expect such august, learned and powerful men to draw limits to their own powers.  The Courts lost jurisdiction when Parliament handed the Brexit decision to the People and implementation to the Government.   That was what the People were told and that is the position.  David Cameron said publicly that in the event of a referendum vote to leave the EU he would give Article 50 notice the next day.  Clearly, he expressed what Parliament intended and his powers in the matter.   That he resigned rather than give Article 50 notice speaks of his ethics rather than the legal position.

 

Let us be plain about the situation.  The Prime Minister, Theresa May, underestimated the degree of disdain for democracy in this country.  Delay in giving Article 50 notice while combatting the whining, demands and invective of the Remainers permitted time for the rich and influential to devise means to keep a system from which they benefit but the People and the United Kingdom do not.  The Prime Minister is acting with honesty and integrity, with the good of the Country and the People’s wishes in mind.  Unfortunately, honest persons often underestimate the duplicity and unscrupulousness of the rich and powerful who seek only their own interests. 

 

It was always foreseeable with whom the Supreme Court would side.  Its statement that Parliament is sovereign is a smoke screen.  Parliament unequivocally passed an unqualified, simple, majority decision to the People by the 2015 Act and statements by Government Ministers.  All the evidence is that this is so; there is nothing to the contrary.  The Supreme Court has failed to uphold democracy, the consequences of which are not clear, but they will not benefit the country.  The Court has permitted an opening for delay and manoeuvre by those who wish to remain in the EU.  I understand that their Lordships have considered this matter, by intention, without consideration of the possible consequences of their ruling.   I would inform them, unqualified in law as I am, that law is always about consequences.  That is its purpose.   We have the case of the Iraq war as an exhibit.

 

It was clear the day after the referendum result on 23 June 2016 that a situation like this would occur when the Remainers immediately said that the referendum was ‘advisory’.  On 12 July I wrote a letter to the Chairman of the Treasury Select Committee that was considering the referendum result.  Perhaps inevitably it counted for nothing, but it was clear what had to be done.  The position is unchanged.  The Court is wrong.  Here is the letter:

 

*    *    *

 

It is a sad and extraordinary day when one must say that our Supreme Court is wrong.  We are experiencing events indicating that we are living in extreme and unstable times.  We must deal with the times with confidence in our abilities and culture against the trouble-makers and back the Prime Minister in doing so.  There is no-one else remotely capable of doing it.

 

By Christopher King MSc DipM DMS

 

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Robert Oulds
Its also bad law. The ECA 1972 was amended when the Lisbon Treaty was put through Parliament to incorporate Article 50, it was cle... Read More
Thursday, 26 January 2017 22:49
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Independence or incoherence? Why the Scottish government is misleading Scots

Scotland’s former First Minister Alex Salmond and (then) Deputy First Minister Nicola Sturgeon in 2007, at the launch of Choosing Scotland’s Future – a White Paper on a possible independence referendum. Picture by The Scottish Government.

Scottish First Minister Nicola Sturgeon has commented on several occasions in recent weeks on the subject of a second Scottish independence referendum. She first warned that she was not “bluffing” about calling another referendum, should the United Kingdom also leave the European single market. She then ruled out holding such a vote in 2017, effectively holding the threat of it over the British government as it moves ahead with Brexit.

There’s nothing wrong with many in Scotland, as in other European regions like Catalonia, wishing for independence. Indeed, notions of sovereignty, identity, and more representative democracy were all integral to Britain’s vote to leave the European Union (EU). Where such movements lose coherence, however, is in their insistence on remaining in the EU.

Why?

Many, many laws pertaining to the UK, including Scotland, originate in Brussels. Though the exact proportion of British laws stemming from the EU is hotly contested, it is likely quite large, with some estimates ranging up to 62%. What is more important, however, is how significant some of the EU’s competencies are. An “independent” Scotland within the EU would face the same quotas on its fisheries, abide by the same agricultural policy, honour the same trade deals signed devised in Brussels, and have absolutely no control over its borders. Its government also intends to continue using the British pound as its currency. In this sense, the stated intention of being “in the driving seat of [Scotland’s] own destiny and to shape [its] own future” loses its meaning. Without full control over essential areas like borders and monetary policy, a nation is not independent.

Moreover, the EU has always made clear that to secede from a member state is to secede from the Union. As such, Scotland deciding to leave the UK in order to retain its EU membership is not only impossible, but dangerously misleading to Scots.

Beyond the glaring incoherence of the Scottish government’s position, Scots have already decided on the matter of independence, and it is irresponsible for the Scottish government to use the threat of a future referendum as a political shuttlecock. It is common practice to hold referenda once in a generation, especially if their results are as decisive as the last time Scots were consulted, in 2014 (55% in favour of remaining in the UK). Sturgeon’s postponed threat of another Scottish vote depending on how “hard” Brexit ends up being is more of a bargaining chip than a true expression of Scotland’s will. This cynical approach to politics serves no one. Scots wishing to remain in the UK are under constant threat of a second referendum, while Scots wishing for independence are being manipulated for narrow political gains.

The desire for independence is unambiguously good. All willing nations deserve to gain their sovereignty, including most recently the United Kingdom. The Scottish government’s position rejecting Westminster while embracing Brussels does not reflect a genuine yearning for independence. Rather, it smacks of political opportunism. The people of Scotland –both for and against independence– deserve better.

This article first appeared on http://theeurosceptic.com

 

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What it will look like: How leaving the EU and the Single Market can be made to work for Britain

The PM, Theresa May, must focus on eliminating tariffs and clearing the EU's burdensome barriers to trade

17th January 2017

The Bruges Group report What it Will Look Like: How leaving the EU and the Single Market can be made to work for Britain details the potential challenges the UK faces when it leaves the EU. The report also explains how these problems can be addressed by Her Majesty's Government, ahead of Theresa May's planned Brexit speech on Tuesday 17th January 2017.

Only by knowing the potential pitfalls can the Prime Minister hope to mitigate and eliminate the EU’s burdensome trade rules and bureaucracy. The UK can then take advantage of the global opportunities that await us.

Drawing upon decades of research and analysis, this report clearly explains how:

  • There is no such thing as a truly 'Hard Brexit' - but there are significant obstacles.
  • A UK-EU trade agreement, focused on tariff reduction and clearing customs, could take just 18 months to complete.
  • The UK's bargaining position is stronger than many commentators believe.


This report deals with the top ten issues of withdrawal from the EU. It explains that specific, easily reached agreements on the mechanics of trade in both goods and services will not only resolve any problems that may arise when exporting to the EU but such arrangements will also protect and enhance our trade with the EU.

Theresa May needs to address in her EU speech the solutions outlined in this report. Brexit negotiators can draw on the findings of this new Bruges Group study which sets out a bold vision for Brexit and how exiting the EU, and even the single market and the customs union, can be made to work.

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Freedom of Movement and the Cruelty of the Euro

To escape the damage caused by the euro, and the resulting problems of mass migration, Brexit is essential for the UK

9th January 2017
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Summary

 

1.      The euro prevents EU countries with weak economies using currency exchange rates to adjust their competitiveness within and external to the EU.  The EU therefore has a policy of  ‘rebalancing’, or ‘internal devaluation’.  Rebalancing relies on the failure of uncompetitive industries.   The result is unemployment, lower wages and lower prices together with austerity justified by high levels of sovereign debt.  These pressures on the population are intended to force the creation of competitive trading industries and reduce non-trading activities.

 

2.      Regional EU payments are bureaucratically allocated and managed.  They are inadequate, inappropriate and inefficient compared with simple and automatic floating exchange rate adjustments.

 

3.      Freedom of movement theoretically reduces the unemployed population by moving labour to stronger economies that have labour shortages.  This is the reason for its importance to the Euro model.

 

4.      Rebalancing involves severe dislocation and widespread hardship.  The relief of hardship by EU welfare provision is inadequate and counter to the desired pressures to bring about rebalancing.  The EU policy of rebalancing is entirely unethical, repressive and manipulative.  It is a cruel policy reminiscent of Stalin’s forced 1930/40s population transfers.  Moreover, in practice it does not work and therefore nor does the euro. 

 

5.      By contrast, Brexit is ethical and traditional in seeking to develop local economies without dislocation and with whatever support is needed.  It incorporates normal exchange rate adjustments and acceptance of skilled persons of any origin through controlled immigration.  Many who voted for Brexit voted for jobs and standard of living.  The characterization of controlled immigration through Brexit as racist and discriminatory attempts to disguise the cruel nature of EU internal ‘rebalancing’.

*    *    *

Freedom of Movement and the Cruelty of the Euro

 

1.      It is a false accusation that the UK’s wish to control immigration is racist and discriminatory.  That accusation is intended to disguise a vicious and cruel EU policy.  Freedom of movement is asserted by the European Union to be a privilege and great benefit.  That is not true.  Its fundamental purpose and the reason for the EU’s insistence that the UK accepts it as a condition of market access following Brexit is to enforce use of the euro.

 

2.   It is well known that prior to adoption of the Euro the weaker economies of Southern Europe, such as Greece, were able to maintain rough competitiveness with the stronger states such as Germany by currency exchange rate movements.  After adoption of the Euro this was no longer possible, either within the EU or in relation to countries outside the EU.  The IMF, ECB and European Commission therefore adopted a policy of ‘rebalancing’.

 

3.      The rebalancing or ‘internal devaluation’ model assumes that when competitive trading differences arise between countries, the less competitive industries will fail.  There will be unemployment, less demand and a consequent fall in wages and prices.  Austerity is a tool to reinforce this process.  Where these conditions occur, the countries affected must develop more competitive production methods and move resources from non-trading activities to trading production.   Those persons made unemployed by this process or who cannot find work should be able to emigrate to EU countries that are more competitive and where there are labour shortages. This is the reason why freedom of movement is essential to the EU.  It reduces the economic pressures that are desirable for rebalancing. 

 

4.    Unemployment, euphemistically called ‘labour shedding’ is regarded as essential to rebalancing.  The ECB at present purchases company debt to sustain the financial markets since even negative interest rates and money printing have failed to give growth.   The EU regional funds that are given to Greece and Spain for social and economic purposes are inadequate, inappropriate and are inefficiently bureaucratically allocated and managed.  In practice they do not materially reduce the pressures for rebalancing/internal devaluation.  The only large scale assistance offered is more debt, additional to the debt that is a major part of their economic problems in the first instance.

 

5.    The traditional simple and automatic rebalancing of competitiveness by exchange rate movements involves little or no drastic economic reorganization or social disruption.  That is not the case within the Eurozone.  Eurozone rebalancing is driven by closure of industries, unemployment and migration.  The creation of new competitive industries is merely an aspiration.  The notion that competitiveness can be equalized between Greece and Germany, for example, by these means is absurd.

 

6.      The simple unemployment rate does not, of course, reflect the quality of employment taken up by employees from failed industries.  Their first option will be to take whatever employment is avalable, which will probably be at a lower income and living standard.  This is part of the ‘rebalancing’ process.

 

7.      The closure of uncompetitive industries with theoretical development of new competitive industries is euphemistically called ‘structural reform’.  In the real world, uncompetitive industries within the Eurozone definitely close; in competition with Germany and other Northern states, competitive industrial development of the southern EU states definitely does not and can not occur.  This is the source of the present imbalances within the EU.

 

8.      Apparently, the EU rebalancing policy has developed from a United States model.   If so, it is wholly inappropriate.  The United States is homogeneous for language and culture.  Even so, unacceptable within-country imbalances have occurred as they also have in the UK.  It is these that have given rise to the protest votes for Donald Trump and Brexit.  The EU is not homogeneous for language, culture and many other factors.  For these reasons, Europeans are much more attached to their locality of origin than Americans. 

 

9.      In any country, a major rigidity is that the unemployed usually have low skills.  They cannot afford to move or are unwilling to leave an uncomfortable but manageable situation where housing, family and familiar support networks exist and move to another country having a different language where there are great uncertainties.

 

10.  Persons who are skilled and have money will regard freedom of movement as beneficial, for holidays, or retirement for example.  Many of these would wish to relocate for career reasons in any case.  They would be welcomed by receiving countries, as the UK welcomes such persons from any country and would do so following Brexit.  Young persons with qualifications and without family will also emigrate readily, although their loss disadvantages their countries of origin.  It is evident however, that those often older persons who are displaced from failed industries will be least able or willing to emigrate.  This is what can be seen in practice.

 

11.  Adoption of the euro has therefore generated economic imbalances that will not be rectified automatically.  Worse, the rebalancing policy based on the euro has created hardship for millions of people in Southern Europe and the Republic of Ireland.  It is a cruel policy that ignores human welfare and rather than encouraging prosperity, is indifferent to the pain that it causes. 

 

12.  The human cost of the EU’s rebalancing policy, that is driven by industry failure and unemployment, has always been known to the institutions of the EU but they have chosen to ignore it.  The UK’s Brexit is based on positive policies to create employment by assisting existing industries and developing new ones with, of course, exchange rate adjustment of external competitiveness.  Not only is the EU’s rebalancing policy an ethical disgrace, the attempt to disguise its true nature and purpose by labelling those who do not accept it as racists is despicable.

 

13.  Together with these considerations, many EU states have very large public and private debt that will never be repaid.  This requires separate consideration but, briefly, debt permits control by the EU central institutions, particularly the ECB and IMF.  Its most obvious outcome is the sale of state assets, further weakening states that are undergoing ‘rebalancing’ stress.  It is these destructive debts knowingly given by the banks and underwritten by the ECB and IMF that provide the rationale for austerity.  Austerity is intended to reinforce ‘rebalancing’.

 

14.  There may be said to be four broad groups of people affected by Brexit:

 

i.                 People who are aware that they are suffering, or at least are not benefiting, due to EU policies.  They tend to support Brexit because their local industries have vanished and they want jobs and a reasonable living standard.  They are often not well educated and do not understand the technicalities of the Euro or how the EU functions.  Although not articulated in these terms, their views contain implied strategic factors as well as self-interest.  They identify uncontrolled immigration as evidence that the UK no longer controls its own economy and their destiny. This enables pro-EU activists to label them as ignorant, racist or espousing ‘the politics of hate’.

 

ii.            Educated and well-informed persons who understand that the EU is undemocratic, administered by a super-rich elite with dependent politicians, a large dependent bureaucracy and a dysfunctional currency.  They understand that the BIS, ECB and banks generally control the EU.  They might know, for example, that Mario Draghi came from bankers Goldman Sachs, achieved Presidency of the ECB and after his term of office returned to Goldman Sachs.  They might know that Goldman Sachs conspired with Greek politicians to hide Greece’s debts in order to obtain EU entry, so laying the foundation for the present economic misery of the Greek people.  They may view the EU to be on the path to tyranny, which would not be unusual in some EU countries.

 

iii.            Usually middle class persons who support the EU and believe that it is beneficial because their jobs depend on EU trading, are publicly funded or EU funded.  These apparently do not understand how the EU operates or do not care. Their evaluation is based on their immediate interests rather than whether  the EU system is democratically legitimate or benefits the UK. 

 

iv.             The rich and high level executives in international companies, banks, the ECB and IMF who understand the EU.  They will fight to retain the euro because it is they who have designed it in their own interests to make them richer and to give them political control of the EU through its economy.  This group believes in ‘realpolitic’ rather than democracy and will support tyranny as it has in the past.

 

13.  Because it is clear that the existing banks are hostile to Brexit, a priority for Brexit planning must be to organize a banking system independent of the ECB and the existing big banks.  Ideally local mutual units would be best for SMEs with a large central unit for major development and export finance.  The role of the Bank of England needs close examination.  The recent actions of the Royal Bank of Scotland in asset-stripping vulnerable SMEs indicates where the interests of all bankers lie.  It is noteworthy that Richard Branson who cultivates his image as ‘a man of the people’ has recently publicly opposed Brexit and is financing an opposition group.  The EU operates for the very rich.

 

14.  Those who designed the EU’s euro ‘rebalancing’ policy view people as theoretical economic units without human needs, feelings and attachments to family and locality.  Theoretically, it is not desirable to give welfare to because this would lessen the economic pressure that is essential to rebalancing.  In any case, the levels of welfare assistance would be impossibly large for the EU to accept.  This neglect of welfare is to the extent that in Greece large numbers of people are homeless and actually starving and in Spain youth unemployment is 45-50 percent.  ‘Rebalancing’ is not based on a democratic, egalitarian view of society.  It is a policy of repression and manipulation without any ethical content.   For this reason the euro does not work and nor does the EU.

 

15.  The creation of the EU and Euro is a far development from the Common Market that the UK joined.  The Common Market has moved from national directly elected parliamentary democracies to a centralized bureaucracy managed by a political and economic elite.  This elite, most visible in central banks, the ECB and IMF has little if any connection with or responsiveness to the immediate needs of the population.  It is not at all clear that the first priority of the EU is the welfare of its population.

 

16.  Brexit has a democratic and ethical foundation based on centuries of trading, economic development experience and the democratic development of society.  It will be traditionally designed to give benefits with the minimum of dislocation possible, to develop local skills and industries and to welcome skilled workers from all other countries.

 

17.  It is the writer’s view that on present trends, full EU integration based on the euro and supremacy of the banks over the public interest can only be achieved by political repression and a police state, that is, tyranny.  That is a form of government that often occurs in Europe.  The EU and UK parliament have permitted the spying and financial infrastructure of tyranny to be assembled under the guise of fighting terrorism.  The democratic Brexit decision is now being labelled ‘tyranny of the majority’ (John Major) and ‘populism’.  It is a bad sign.

 

By Christopher King MSc DipM DMS

 

Most of the following are discussion papers, not official ECB or IMF papers.

Official IMF report 2015 http://www.imf.org/external/np/pp/eng/2015/110915.pdf

http://voxeu.org/article/rebalancing-eurozone-internal-adjustments-won-t-be-enough )

http://www.imf.org/external/pubs/ft/sdn/2014/sdn1407.pdf

https://www.imf.org/external/pubs/ft/wp/2014/wp14130.pdf

http://www.economonitor.com/blog/2013/11/europe-the-failure-of-internal-devaluation/

 

 

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Will Donald Trump save or kill the Euro?

The EU's single currency, the Euro, is being unbalanced by the strength of the German economy. The undervalued Euro is used by Germany in a beggar-thy-neighbour policy to expand its exports; hurting not just the other members of the Eurozone but also countries further afield, including the United States. If the USA forces Germany to abandon this policy, it will mean Germany leaving the Euro. This will either be the end of the single currency experiment, or its salvation.

4th January 2017

During the election campaign Donald Trump highlighted a structural flaw in the US economy, namely, the country’s huge structural trade deficit, which he claimed is hurting many Americans.  Trump’s message was very simple: if instead of importing products the US exported them there would be more highly paid jobs in the US. Trump claimed that not all of the US’s trading partners are trading fairly with the US.  The implication being that some countries are taking US jobs unfairly.  Angela Merkel was clearly worried about this rhetoric.  Although Trump did not name Germany, she is clearly concerned that Germany will be exposed as having an unfair trading advantage with the US because it is benefitting from an under-valued Euro. 


Although no one would claim that Germany abandoned the Deutschemark in favour of the Euro in 1999 to gain an unfair trading advantage, this is undeniably what has happened.   As can be seen from the following table this has increased Germany’s current account surplus with the rest of the world.


Germany’s exports are now 30-35% cheaper in US dollars than they would have been if the country had retained the Deutschmark. This calculation is based on the assumption that the Deutschmark would have maintained its value against the Swiss franc.  And, it ignores the fact that Switzerland has intervened in the foreign exchange markets from time to time to depress the value of the Swiss franc against the US dollar and other currencies.   The Euro has become a disguised form of protectionism for the German economy, by making its exports cheaper and imports more expensive. Moreover, this is not a problem that is likely to disappear. The longer the Euro exists, at least in its current form, the greater the problem will become.  The question is what, if anything, will the new Trump Administration do about Germany’s unfair trading advantage and its ever growing current account surplus with the US. 


Under the Obama administration, the US enacted the Trade Facilitation and Trade Enforcement Act 2015. One of the purposes of this Act is to identify those countries which are trading unfairly with the US. This Act focusses on individual EU member states rather than on the EU as a single entity.  Title VII focuses on currency manipulation (sections 701-2).  Section 701(a)(2)(A)(ii) seeks to identify any major trading partner of the US that has:

(1) a significant bilateral trade surplus with the US (economies with a bilateral goods surplus of at least $20 billion (roughly 0.1 percent of U.S. GDP) are regarded as having a “significant” surplus);

(2) a material current account surplus (current account surpluses in excess of 3 percent of GDP to be “material”); and

(3) engaged in persistent one‐sided intervention in the foreign exchange market (net purchases of foreign currency, conducted repeatedly, totalling in excess of 2 percent of an economy’s GDP over a period of 12 months to be persistent, one‐sided intervention).[i]


In its October 2016 report, the US Treasury Department identified seven countries as satisfying the first criterion (China, Germany, Japan, Mexico, Korea, Italy and India), four countries as satisfying the second criterion (Germany, Japan, Taiwan and Switzerland) and two countries satisfying the third criterion (Switzerland and Taiwan).

Germany satisfies the first two criteria because it has a bilateral goods surplus with the US of $71.1bn, which represents 9.1% of its GDP, well above the thresholds of $20bn and 3% respectively.   Germany would only fall foul of the third criterion if the ECB sold Euros on a persistent basis in the foreign exchange markets.   Germany would fail to satisfy the third criterion even if the Euro conferred a much greater advantage to the Germany economy than it does today.  This is because the Obama administration has adopted the definition of currency manipulation which is used by the IMF.  This definition predates the formation of the Euro zone.  It assumes that the only way in which a country is able to artificially reduce the value of its currency to gain a trading advantage is by intervening in the foreign exchange markets.  This fails to recognise that another way of achieving the same objective is to join a currency union, such as the Euro. What is important is not how a country achieves an under-valued currency, but rather whether it has one, or not.


Ideally, the IMF would take the lead in addressing the deep seated structural problems of the Euro zone, and the serious threat which the Euro zone will ultimately pose to the global economy. Unfortunately, this is a problem that the IMF is unable to view objectively.  This is because European countries enjoy a disproportionate share of the votes on the IMF’s board.   This is illustrated by the fact that the IMF is currently headed by Christine Lagarde, a former French politician, and the previous ten managing directors of the IMF have all come from EU countries, with many being former politicians.


The new Trump administration, namely, Steven Mnuchin (Treasury Secretary), Wilbur Ross (Commerce Secretary) and Robert Lighthizer (US Trade Representative) cannot expect any help from the IMF in addressing the unfair advantage that Germany has in its trading relations with the US, and other countries. This is most unfortunate because it means that if the US wishes to address this problem it would have to take unilateral action on what would be a politically sensitive subject with an important European ally. However, if the new Trump administration is able to show beyond any reasonable doubt that Germany is benefiting unfairly in its trading relationship with the US from being part of the Euro zone it will have the moral authority to take action.  In such circumstances, Donald Trump is also more than capable of highlighting the shortcomings of the IMF in not addressing this problem.  The question is: what action could a new administration take to address this problem? 


An obvious answer is for the new administration to change the definition in the third criterion of section 701(a)(2)(A)(ii), so that it captures any country that is benefiting from a persistently under-valued currency against the US dollar.  If this change were made Germany would fall foul of all three criteria.  In such circumstances the Act states (section 701(b)(1)(A-D)) that the “President, through the US Treasury Secretary, shall:

(A) urge implementation of policies to address the causes of the undervaluation of its currency, its significant bilateral trade surplus with the United States, and its material current account surplus, including undervaluation and surpluses relating to exchange rate management;

(B) express the concern of the United States with respect to the adverse trade and economic effects of that undervaluation and those surpluses;

(C) advise that country of the ability of the President to take action under subsection (c); and/or

(D) develop a plan with specific actions to address that undervaluation and those surpluses.”


If the US is unable to persuade Germany to take steps to address this problem the President is able to take the following limited action under the Act (section 701(c)(1)(A-D)), and in particular (C) and (D):

(C) instruct the US’s Executive Director of the IMF to call for additional rigorous surveillance of the macroeconomic and exchange rate policies of that country and, as appropriate, formal consultations on findings of currency manipulation, or

(D) instruct the US Trade Representative to take into account, in assessing whether to enter into a regional trade agreement with that country or to initiate negotiations with respect to a regional trade agreement with that country, the extent to which that country has failed to adopt appropriate policies to correct the undervaluation and surpluses described in subsection (b)(1)(A).


As mentioned, the new US administration cannot expect any assistance from the IMF in this matter.  The subject of Germany benefitting from an under-valued currency could be another reason for the Trump administration not signing T-TIP, as to do so would undermine its bargaining position on this subject.  


More generally, if both President Trump and Congress wished to escalate this dispute they could take the ultimate sanction of increasing duties/tariffs on German goods to counter the benefit which this country is receiving from an under-valued currency.  Although the President and Congress do not currently have the requisite authority to take this action they could acquire this authority by passing the necessary legislation.  It has been suggested that the US might target currency manipulation by imposing a countervailing duty. Germany and the EU would no doubt complain to the WTO about the US’s action, but such disputes tend to take a long time to resolve.  Furthermore, there is some ambiguity as to how such a dispute would be settled.


If the Trump administration were to focus on Germany’s unfair trading advantage it is likely to negotiate in a tough, but realistic manner with Germany and the EU.  They know that Germany and the EU are unable to solve the problems associated with the Euro zone overnight.  They will no doubt want Germany to make concrete proposals that will address the problem of the country’s every growing trade surplus with the US.  At present, the IMF is doing Germany’s bidding and only requiring the Club Med countries in the Euro zone to embrace structural reforms.  The US will no doubt want Germany to also make structural reforms, because its current economic policies are supressing domestic demand, which means that its economy is overly dependent on the demand from other countries such as the US.  It can be expected that the US will urge Germany to adopt policies to boost domestic demand.  Initially, Angela Merkel and Wolfgang Schäuble will no doubt resent the interference from the Trump administration into their domestic affairs and will find their proposals deeply unpalatable.  However, on reflection they will hopefully see these proposals as a constructive way of easing the tensions in their trading relations with the US, and also benefitting their EU partners.  Angela Merkel being a pragmatist will appreciate that the Trump Administration could force Germany to leave the Euro.  This could be achieved by either imposing a countervailing duty on German goods or by removing Germany’s most favoured nation status and imposing tariffs on German goods.  Germany would then be faced with a choice of either remaining in the Euro and suffering a duty/tariff on their exports to the US, or leaving the Euro.  In either event, Donald Trump’s intervention on the issue should be welcomed as addressing an unsustainable structural flaw in the global economy.

 


[i] https://www.congress.gov/114/plaws/publ125/PLAW-114publ125.pdf (Trade Facilitation and Trade Enforcement Act 2015)

https://www.treasury.gov/resource-center/international/exchange-rate-policies/Documents/2016-10-14%20(Fall%202016%20FX%20Report)%20FINAL.PDF (Foreign Exchange Policies of the Major Trading Partners of the United States, Report to Congress, US Department of the Treasury Office of International Affairs, October 2016)

 

 

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Robert Oulds
Germany has been amongst the biggest distorters of world trade unbalancing the Euro, even breaking the EU's rules in their search ... Read More
Thursday, 05 January 2017 13:12
Robert Oulds
You are right, Germany (Angela Merkel) complains about him. She is trying to position herself as the last line of defence against ... Read More
Thursday, 05 January 2017 19:35
Robert Oulds
Thank you
Monday, 30 January 2017 09:32
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MoUs – the key to a smooth Brexit?

Whichever form Brexit eventually takes, whether ‘hard’ or ‘soft’; most parties would like the transition to be as painless and smooth as possible. To ensure that the Brexit process runs seamlessly, the UK and the EEA countries could agree a time-limited transition deal as a temporary ‘stepping stone’ to the final outcome.

19th December 2016

The deal need not be an official treaty but could take the form of what is called a Memorandum of understanding or MoU.

As the UK government website states:

“An MoU records international "commitments", but in a form and with wording which expresses an intention that it is not to be binding as a matter of international law. An MoU is used where it is considered preferable to avoid the formalities of a treaty – for example, where there are detailed provisions which change frequently or the matters dealt with are essentially of a technical or administrative character; in matters of defence or technology where there is a need for such documents to be classified; or where a treaty requires subsidiary documents to fill out the details. Like a treaty, an MoU can have a variety of names and can also be either in the form of an exchange of notes or a single document. However, the formalities which surround treatymaking do not apply to it and it is not usually published. Confusingly some treaties are called memoranda of understanding. Although an MoU is not legally binding it should be no less carefully drafted than if it were a treaty, given that it is always the intention to perform all HMG's commitments, whether legally binding or not.”[1]

An MoU is an established device In public international law; less official that a treaty but more than a gentleman’s agreement. MoU’s can take various forms and can serve wildly different purposes. They can be short and cover one specific issue or be lengthy, covering a range of topics.

Examples include the Memorandum of Understanding on Trade and Investment (MOUTI) Between the Government of Canada and the Governments of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua[2] and the Memorandum of Understanding between the Council of Europe and the European Union[3]

While they lack the legal certainty of treaties, the semi-official nature of MoUs means that one (or several relating to different areas of co-operation) could likely be signed quickly, without extensive consultation, parliamentary chicanery or ratification delays – as opposed to a potentially lengthy Free Trade Agreement (FTA) ratification.

These interim documents could help avoid a potential ‘cliff edge’ scenario as the 2 year article 50 period draws to a close in 2019.

Once agreed, the document (or documents) should be signed by the Secretary of State for Foreign and Commonwealth Affairs on behalf of Her Majesty's Government, representatives of the European Council and European Commission (including the High Representative of the European Union for Foreign Affairs and Security Policy) on behalf of the EU and a representative from the EEA Council.

The text of the ‘deal’ should be officially sent to the FCO Treaty Section, The European Commission and The EEA Council. We would then receive their signed copies in exchange, under the established procedure of international law called ‘Exchange of Letters/Notes’.

As a sign of good faith, the MoU(s) (signed by all parties) could then be deposited with the Secretary-General of the United Nations. This would not make the document any more or less binding, but it would be a show of good faith and would reassure businesses and concerned groups that all sides were committed to a stable transition. MoU’s could therefore go a long way towards bridging the gap between our current EU membership and our final negotiated arrangement.

Below is a brief outline of what we believe the UK-EEA MoU could look like.

Memorandum of Understanding

The purpose of this Memorandum of Understanding (hereinafter referred to as "MoU") is to maintain co-operation and secure free trade in goods and services between the signatories of the European Economic Area (EEA) agreement and the UK.

This MoU is intended to maintain where possible the Status quo ante in terms of trade until a more permanent agreement can be reached between the Parties. 

This Memorandum of Understanding is not legally binding on the Parties. This MoU is agreed in good faith between the signatories, on the basis that it is a fair and honest representation of their intentions.

Duration and Term

This agreement is intended to last for a period of two years from the date of signature. It may be renewed once, for a period of 12 months if all Parties agree.

 

 

Memorandum of Understanding on Trade and co-operation between the United Kingdom and the EEA

BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND, OF THE ONE PART, AND THE SIGNATORIES OF THE EEA AGREEMENT:

[THE KINGDOM OF BELGIUM, THE REPUBLIC OF BULGARIA, THE CZECH REPUBLIC, THE KINGDOM OF DENMARK, THE FEDERAL REPUBLIC OF GERMANY, THE REPUBLIC OF ESTONIA, IRELAND, THE HELLENIC REPUBLIC, THE KINGDOM OF SPAIN, THE FRENCH REPUBLIC, THE REPUBLIC OF CROATIA, THE ITALIAN REPUBLIC, THE REPUBLIC OF CYPRUS, THE REPUBLIC OF LATVIA, THE REPUBLIC OF LITHUANIA, THE GRAND DUCHY OF LUXEMBOURG, HUNGARY, THE REPUBLIC OF MALTA, THE KINGDOM OF THE NETHERLANDS, THE REPUBLIC OF AUSTRIA, THE REPUBLIC OF POLAND, THE PORTUGUESE REPUBLIC, ROMANIA, THE REPUBLIC OF SLOVENIA, THE SLOVAK REPUBLIC, THE REPUBLIC OF FINLAND, THE KINGDOM OF SWEDEN, ICELAND, THE PRINCIPALITY OF LIECHTENSTEIN, THE KINGDOM OF NORWAY], OF THE OTHER PART, hereafter jointly referred to as the “Parties”:

RECOGNISING the longstanding alliances between the UK and the nations of Europe;

COMMITTED to renewing their close and lasting relationship that is based on common values, namely respect for democratic principles, the rule of law, good governance and free and fair trade;

DESIRING to maintain currently high levels of trade and investment and seeking to avoid future barriers to mutual trade and investment;

RECOGNISING that UK as a European country shares a common history and common values with the Member States of the European Union (EU) and the member states of the European Free Trade Association (EFTA);

RECOGNISING the importance of International trade and economic cooperation;

COMMITTED to combating organised crime and money laundering, to reducing the supply of and demand for illicit drugs and to stepping up cooperation in the fight against terrorism;

HAVING REGARD to the outcome of the 23rd June 2016 UK Referendum on EU membership;

BUILDING on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organisation, done on 15 April 1994 (hereinafter referred to as the ‘WTO Agreement’) and other multilateral, regional and bilateral agreements and arrangements to which they are party;

HAVE AGREED as follows:

CHAPTER I:

ARTICLE 1 DEFINITIONS

General definitions

For the purposes of this Agreement and unless otherwise specified:

GATS means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;

GATT 1994 means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

Parties means, on the one hand, the European Union or its Member States or the European Union and its Member States within their respective areas of competence as derived from the Treaty on European Union and the Treaty on the Functioning of the European Union (hereinafter referred to as the 'EU Party'), and on the other hand, the UK;

TBT Agreement means the Agreement on Technical Barriers to Trade, contained in Annex 1A to the WTO Agreement;

TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement;

UK-EEA Joint Committee means the UK-EEA Joint Committee established under Article 5.1 (The UK-EEA Joint Committee);

Vienna Convention on the Law of Treaties means the Vienna Convention on the Law of Treaties, done at Vienna on 23 May 1969;

WTO means the World Trade Organization; and

WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.

ARTICLE 2 OBJECTIVES

1. The Parties hereby establish a free trade area on goods, services, establishment and associated rules in accordance with this Agreement.

2. The objectives of this Memorandum of Understanding (hereinafter referred to as "MoU") are:

(a) to liberalise and facilitate trade in goods between the Parties, in conformity with Article XXIV of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as ‘GATT 1994’);

(b) to liberalise trade in services and investment between the Parties, in conformity with Article V of the General Agreement on Trade in Services (hereinafter referred to as ‘GATS’);

(c) to provide appropriate protection of intellectual property rights, in accordance with the highest international standards, in conformity with TheAgreement on Trade-Related Aspects of Intellectual Property Rights(hereinafter referred to as ‘TRIPS’);

(d) to work to reduce non-tariff barriers between the parties, in conformity with the Technical Barriers to Trade (‘TBT’) Agreement;

(e) to promote peace and security for all Europeans.

Article 3 Relation to the WTO Agreement and other agreements

The Parties affirm their rights and obligations with respect to each other under the WTO Agreement and other agreements to which they are party.

Article 4 Customs duties

No new customs duty on imports shall be introduced in trade between the EEA states and the UK. Parties shall not institute any new taxes or other measures having an equivalent effect imposed on, or in connection with, the exportation of goods to the territory of each other.

Article 5 Joint Committee - establishment

1. A UK-EEA joint committee is hereby established, which shall be responsible for the administration of the agreement and shall ensure its proper implementation. For this purpose, it shall make recommendations and take decisions in the cases provided for in the agreement. These decisions shall be put into effect by the contracting parties in accordance with their own rules.

2. For the purpose of the proper implementation of the agreement the contracting parties shall exchange information and, at the request of either party, shall hold consultations within the joint committee.

3. The joint committee shall adopt its own rules of procedure.

Article 6 Joint Committee - constitution

1. The joint committee shall consist of representatives of the EEA and its signatory states, on the one hand, and of representatives of the UK, on the other.

2. The joint committee shall act by mutual agreement.

3. The joint committee shall meet at least twice a year in order to review the general functioning of the agreement, with the meetings alternating between Brussels/Strasbourg and London.

4. The joint committee shall, in addition meet whenever special circumstances so require, at the request of either contracting party, in accordance with the conditions to be laid down in its rules of procedure.

5. Each contracting party shall preside in turn over the joint committee, in accordance with the arrangements to be laid down in its rules of procedure.

6. The joint committee may decide to set up any working party that can assist it in carrying out its duties.

Article 7 political dialogue

1.       The parties shall hold, by mutual agreement regular meetings at Foreign Minister level.

2.       The parties shall take full and timely advantage of all diplomatic channels between the Parties, including within the United Nations (and specifically the UNECE), the Council of Europe, the OSCE and other international fora, to work towards resolution of shared problems.

3.       Other procedures and mechanisms for political dialogue, including extraordinary consultations, shall be set up by the Parties by mutual agreement.

Article 7 Combating crime and terrorism

1.       The Parties agree to work together at bilateral, regional and international levels to prevent and combat crime and terrorism in accordance with national and international law.

2.       The main focus and instrument of this co-operation shall be via INTERPOL

3.       The UK shall sign an operational agreement with EUROPOL

4.       The Parties agree to co-operate closely via the United Nations Office on Drugs and Crime (‘UNODC’) and World Customs Organization(WCO).

5.       The Parties agree to exchange information on terrorist groups and their support networks;

Article 8 Facilitating trade

1.       The Parties agree to work closely on customs matters in order to facilitate legitimate trade and to ensure the integrity of supply chains.

2.       The contracting parties also recognize the need for minimizing the incidence and complexity of import and export formalities and for decreasing and simplifying import and export documentation requirements.

3.       The Parties agree to work closely to minimize difficulties caused by rules of origin (ROO) and that on the importation of products from the territory of a contracting party into the territory of another contracting party, the production of certificates of origin should only be required to the extent that is strictly indispensable.

Final Clauses

1. This Memorandum of Understanding may be amended by the written concurrence of all Parties.

2. The Memorandum of Understanding comes into effect upon signature and will remain in effect unless terminated by consensus. Any Party may withdraw from this Arrangement with previous written notification, twelve months in advance to the other Parties.

Authentic texts

This Agreement is drawn up in duplicate in the Bulgarian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish, Swedish, Icelandic and Norwegian languages, each of these texts being equally authentic.

This agreement will be approved by the contracting parties in accordance with their own procedures.

Done at Brussels on the first day of May in the year two thousand and nineteen.

For the United Kingdom of Great Britain and Northern Ireland:

Für die Bundesrepublik Deutschland / For the Federal Republic of Germany:

Thar cheann Na hÉireann / For Ireland:

For the European Union / Pour l'Union européenne:

For the EEA Council: 

References:

 


[1] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293976/Treaties_and_MoU_Guidance.pdf

[2] http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/other-autre/ca-ac.aspx?lang=eng

[3] https://eeas.europa.eu/sites/eeas/files/mou_2007_en.pdf

 

 

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Brexit: UK now able to tackle tax havens

The EU is a dysfunctional organisation in the area of corporate tax

17th December 2016
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Summary

The EU is a dysfunctional organisation in the area of corporate taxes because:

 

1.      the EU Commission is not able to prevent EU countries such as Ireland, Belgium and Luxembourg operating as tax havens (this is because member states have not conferred legislative competence on the EU over direct taxation), and

 

2.      the Court of Justice of the European Union (CJEU) has developed the fundamental freedoms in its case law to prevent other EU countries tackling the artificial diversion of profits to these tax havens, unless the arrangements are “wholly artificial” (please see the CJEU’s decision in the Cadbury Schweppes case (C-196/204)). The CJEU applies the most liberal, even extreme, interpretation of Organisation for Economic Co-operation and Development (OECD) tax rules to allow multi-national corporations to avoid taxation.


 

One of the advantages of the UK leaving the EU is that the UK will be free to prevent UK companies from shifting their UK taxable profits to EU tax havens, such as Ireland, Luxembourg and Belgium, and non-EU tax havens.


 

Background

Tax avoidance is costing the UK billions, and the UK Government is powerless to address the problem all the time the UK remains in the EU.  This is because of the supremacy of EU law over English law.  Consider, for example, the CJEU’s decision in the Cadbury Schweppes case (C-196/204).  The case states that companies are free to shift their taxable profits to tax havens within the EU to reduce the burden of taxation in their host state unless the arrangements are “wholly artificial”.  Given that companies are able to ensure that their tax avoidance activities are not “wholly artificial”, this means that the UK is powerless to prevent UK based multi-national companies from engaging in tax avoidance in the other 27 member states.


 

Large UK based multi-national companies are not only aware of the opportunity which the CJEU’s decision has created, they are readily exploiting this decision for their own advantage.  This is one of the reasons why so many large UK based multi-national companies were in favour of the UK remaining in the EU.  They know that if the UK leaves the EU, there will be no restriction on the UK Government from tackling tax avoidance.


 

Countries remaining in the EU can only solve this problem by conferring on the EU authority over direct taxes, to determine the tax base and the rates of tax, so that tax havens no longer exist within the EU.  If this were to happen, companies operating within the EU would not be able to gain an advantage by shifting their taxable profits to the member state offering the lowest effective tax rate, or exploit the asymmetries between the bases on which member states levy tax.  Such a proposal is on the EU Commission’s agenda, because it recognises that it is impractical to have a single market where member states compete against each other for the taxable income of companies.  The only winners in such an environment are large multi-national companies.


 

The EU Commission has made proposals to remedy, one aspect of this problem, namely, for member states to have a common tax base (please see the Commission’s reports entitled A Common Consolidated EU Corporate Tax Base (2004), analysed first by the Bruges Group, and A Fair and Efficient Corporate Tax System in the EU (2015)).  If the EU Commission’s proposal were implemented it would solve part of the problem.  To solve the other part, the EU would need to be allowed to set the rates of tax for all companies operating within the EU.


 

In an environment where member states are able to compete for taxable income, the smaller EU states, such as Ireland, Belgium and Luxembourg, will always be able to offer the lowest effective rates of tax.  This is because they have less to lose than the larger member states from offering lower rates of tax to their domestic companies.   As a consequence, the EU has become an area for companies to seek out the lowest effective rate of tax for their taxable income.  This problem is particularly acute where income arises from mobile capital, such as finance and intellectual property, which for many large multi-national companies is their main source of income. It is not as though the smaller states benefit from this situation, because the amounts of tax which they collect are negligible.  The big winners are the large multi-national companies.


 

This is not a problem that critics of the EU have invented.  One only has to read the following comments by the EU Commission to realise that this is a real problem:

 

unfettered tax competition which facilitates aggressive tax planning by certain companies creates competitive distortions for businesses, hampers growth-friendly taxation and fragments the Single Market.


 

However, the co-existence of 28 different tax systems in one integrated market has also resulted in strong tax competition between Member States. As a consequence, Member States have progressively lowered their corporate tax rates, in order to protect their tax bases and attract foreign direct investment.


 

…….as corporate tax planning has become more sophisticated and competitive forces between Member States have increased, the tools for ensuring fair tax competition within the EU have reached their limits.


 

Differences in corporate taxation between countries are the driving force for corporate profit shifting”.


 

This is not a problem that was confined to Euro zone states, it applied to the UK.  This is one of the reasons the UK Government has had to cut the rate of corporation tax to 17% by 2020.  Because of the structural flaws mentioned above, all the time the UK remains in the EU it is engaged in a “race to the bottom” in corporate tax rates. 


 

Somewhat disturbingly, the EU has no power to tackle the problems mentioned above.  As the EU Commission states in its report the only way in which it is able to address this problem is by peer pressure:

 

The Code of Conduct for Business Taxation Group is composed of Member State representatives to deal with harmful tax competition in the EU, in a non-binding way, on the basis of peer pressure.


 

To tackle these problems the EU needs to have the unanimous backing of member states.


 

The flaws mentioned above have arisen because of the manner in which the EU operates.   The aim of the EU is to create a Federal States of Europe, akin to that which exists in the US.  The language of the EU Treaties, and in particular the fundamental freedoms, is open ended, which has allowed the CJEU to interpret these freedoms in an expansive manner.  The CJEU has applied them in a much wider range of scenarios than was ever intended.  For example, the Treaties were never intended to apply in the field of direct taxation, but the CJEU has not only applied them in this field more recently but also has prioritised the fundamental freedoms over domestic laws tackling tax avoidance. In contrast, the EU Parliament has been unable to enact a common corporate tax rate and basis for charging tax across the Union, because it has been unable to obtain the necessary support of all member states, as required.  To date, the smaller member states have been unwilling to support such measures because they would remove one of their competitive advantages.  However, the financial position of many member states is now so perilous that this has become a priority for the EU to address.  As a consequence, pressure may be exerted on the smaller member states to withdraw their objection to the EU Commission’s proposals for a Common Corporate Tax Base.

 

State Aid

The EU is able to take action against any member State offering “sweet heart” tax deals to specific companies.   This is because this type of behaviour distorts competition and violates the EU’s rules on State aide.   However, countries such as Ireland, Belgium and Luxembourg is able to circumvent the EU’s State aide rules by simply making the “sweet heart” tax deal available to all companies.

 

This is yet another example of how the EU does not have the power to effectively tackle tax avoidance.

 

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Robert Oulds
Thanks for your comment. You can see below a series of articles that show how the ECJ has continually been making decisions that a... Read More
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Robert Oulds
Hi Gary. We should have a competitive tax regime and encourage businesses to operate here. The EU problem is that companies which ... Read More
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The trade issues which must be solved by David Davis’ Brexit Department

Any withdrawal agreement must look at these issues and find practical solutions to make sure that goods enter the EU as seamlessly as possible.

5th December 2016
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Brexit negotiations must aim to prevent the complexities of trade slowing the free flow of goods after Britain leaves the EU. Any withdrawal agreement between the EU and the UK, must look at these complexities and find practical solutions to make sure that trade enters the EU as seamlessly as possible.

 

The Bruges Group has already explored the solutions to ease the trade in services, click here to read the research. In this piece the practicalities of trade in goods is explored.

 

The biggest challenges to resolve are the practical logistics. Few, if any, so far, have looked at these issues from the perspective of eliminating, or at least mitigating, the real hurdles that would appear after Brexit.

 

Inside the EU, exporting to Berlin is effectively not any different from sending goods to Birmingham, just that the transportation will, due to the distance involved set a slightly greater logistical challenge. There is no requirement for burdensome bureaucracy when moving goods between EU member states. When goods from Britain are transported to the EU, just like those destined to our shores from the European Union, they come and go via our ports, be they channel ports like Dover or airports such as Heathrow. Presently this is with no let or hindrance. No administration is involved. In fact, national borders in terms of trade can be said to no longer exist within the European Union. At least some red-tape, has been eliminated. Yet, without a practical agreement businesses that are involved in either exporting to the EU, or importing from it, will face costly delays.

 

The enormous mutual dependency, between British and continental firms, rightly cited by many as a reason why an agreement will eventually be reached on issues such as trade tariffs, have, however, not considered that the high volume of trade can be a source of problems. This centres around the fact that all imports to the EU must go through customs posts.

 

The UK’s trade in goods with third countries outside the EU is often relatively unfettered because it is in bite-sized portions. The trade from Britain through the many customs posts of the numerous states around the globe to which Britain exports is in manageable quantities. However, the sheer scale of goods going through for instance French ports is staggering. Quite simply they do not have adequate facilities in place to deal with the enormity of post-Brexit trade. Ports in the UK and Europe are not up to managing the high volume of freight, they lack the necessary infrastructure. The UK does not at present have the capacity to dramatically improve the UK’s customs facilities to deal with trade coming from the remaining EU states. Planning for what would be a series of major construction projects has not yet begun, and nor have the financial resources been allocated. Serious question marks exist over France’s ability, let alone willingness, to upgrade their facilities to deal with trade coming from the UK. Furthermore, a special UK-EU agreement on customs clearance must be in place by Spring 2019. Without such an agreement there will be trade gridlock.

 

Tariffs in themselves are not the issue, time is. The cost of collecting the customs duties, a set percentage of their sale price agreed with the WTO and charged to the importer, makes any financial benefit for the EU almost irrelevant. Any ‘benefit’ comes from increasing rivals' costs to protect EU producers. However, with increasingly interdependent markets, with global value chains where the genesis of a manufacture rests in many nations which have supplied the numerous parts, such a strategy makes little economic sense.

 

The real advantage of eliminating tariffs for the exporter, and the business importing the product, is not the removal of this tax on trade. The main benefit is that without the need to produce the paperwork and payments to meet these customs duties, the item will be subject to less delays at customs posts.

 

Before solutions can be found to ease the process of trade the hoops and obstacles need to be explored. All non-EU companies that send good to the EU must either pay tariffs, complete paper work, and clear customs; sending the goods to be approved via what is known as a designated port of entry. Even if a free trade agreement is in place customs officers checking products and making sure the necessary bureaucracy is complete is a common place occurrence.

 

The trade process

 

Designated port of entry

When exporting goods to another territory the host nation can stipulate a designated port of entry for the product. At present Britain and the European Union are one trade zone the UK has free access to any and all established places where both people and produce can be admitted. The EU has the hypothetical ability in the short term to prescribe a port of entry, and terms, that are inconvenient for British exporters. However, this will be a serious breach of international trade law. Articles XI:1, XIII:1, V:2, V:6 and I:1 of the 1994 General Agreement on Tariffs and Trade now administered by the World Trade Organisation. Under these rules one country cannot be treated less favourably than any other state in the export and transit of goods. What is more, as both businesses and consumers on the continent depend upon British imports there is no reason to believe that such problems will arise. Regardless of how the UK leaves the EU it should be business as usual via the existing ports of entry. Indeed, Brexit negotiations should seek to expand them to include more destinations accessible via HS1, the Channel Tunnel.

 

So far so good. However, there are other serious issues.

 

Exporting to the EU from outside is not bureaucracy free

Exporting into the EU requires a convoluted process to be completed. Goods must have assigned to them an identification number, inputted at the port of destination. The larger importers find the process easier. They can make their declarations at the end of the month. Those who export less to the EU will, however, be faced with bureaucratic hurdles.

 

Clearance for use, allowing the product to go into circulation to be sold in the UK, or an EU country, needs to be obtained. The process for assessing this, even in the EU, will differ from country to country. Mostly, however, this is often just a theoretical problem, rarely do customs officials demand compliance with national standards and rarely do they conduct a strict examination of documentation declaring that an item conforms to national or EU standards. It is legally possible to detain goods on the grounds of differing standards, but in practice this only usually applies to items that are deemed to be dangerous, illegal, or subject to anti-dumping duty (a tax on products suspected of being sold substantially below their normal value).

 

Still, the process of shipping goods to and from the EU is not without other bureaucratic impediments. The freedom of the items is also strictly regulated. From outside the EU, any goods entering the EU, if not cleared at port, which can be a laborious process, must be stored in a bonded warehouse, also known as an Enhanced Remote Transit Shed (ERTS) warehouse. Until they are declared to customs for an approved treatment or use.

 

Transhipped cargo not in free circulation will also require what is known as a CMR document. The CMR is a consignment note with a standard set of transport and liability conditions, which replaces individual businesses' terms and conditions. It confirms that the carrier (i.e. the road haulage company) has received the goods and that a contract of carriage exists between the trader and the carrier. It derives from the Convention on the Contract for the International Carriage of Goods by Road.

 

The process of clearing customs is increasingly becoming electronic. Systems used by exporters that integrate with the British customs system are the CNS and Destin8 computer systems.

 

The VAT hurdle

Value Added Tax (VAT) is often charged on imported goods, that is in addition to any customs duties. The details must be entered onto the Customs Handling of Import and Export Freight (CHIEF) system. This system records the declaration to the customs authorities details of the goods whether they are transported by land, air and sea entering or leaving the UK/EU. It allows importers, exporters and freight forwarders to complete customs information electronically. This is not without charge.

 

If there is no prior agreement for each consignment, going to a specific destination, to clear customs the importer must produce customs records for each, pay VAT and the customs duty, if any. This will be calculated per the value of the item at its final point of sale. The VAT rate will differ from country to country, and even item to item. In some cases, a product will be exempt, VAT will not apply. In other cases, an item will be zero-rated, requiring the documentation to be completed but with no final payment. Even where tariffs are eliminated when importing from outside of the EU there is still the requirement to pay Value Added Tax. If the exporter is registered for VAT then this can be claimed back but only if they registered. There is also a requirement for an input VAT certificate to be completed.

 

Remaining in the EU’s customs union, bit being in the EU, does not eliminate the requirement for form filling to be completed. The requirement to clear customs and complete documentation, known as an ATA Carnet, to validate the origin of goods and confirm that they are free from tariffs even applies to Turkey. This country is considered part of the EU’s customs union and therefore has tariff free access for industrial products; but it is not bureaucracy free access.[i]

 

The EEA is not the answer on its own

The EU’s internal market, open to the EFTA states of Iceland, Liechtenstein and Norway, have sought to resolve some of the problems through the European Economic Area agreement. Beyond granting the theoretical access to the single market in services and the right to bid for public procurement, the EEA seeks to remove all technical barriers to trade. There is regulatory conformity and most importantly the European Economic Area has the mutual recognition of standards. Regulation EC 764/2008 of 9th July 2008 demands that all members allow goods that are legally sold in one country to be sold in another EEA state.

 

One of the main benefits of being part of the single market comes through the principle of mutual recognition. This allows businesses to export to the entire European Economic Area, the internal market, without having to seek standards approval. As the Single Market is still not complete some member states still have differing standards. The principle of mutual recognition is that if a product has been approved as safe and saleable in one member state then it can be sold in all. This bypasses potentially costly and time consuming safety and regulatory checks in each country where the good is sold.

 

The EEA agreement also abolishes customs duties between the states participating in the single market. However, EFTA/EEA members must still go through a customs clearance process and outlay for VAT. These time-consuming procedures apply even to states such as Norway. Britain renouncing its EU membership but retaining, through membership of the European Free Trade Association, its status as a part of the European Economic Area will not on its own answer the practical and bureaucratic trade hurdles.

 

Tariff free trade

Whilst every possibility exists of there being an agreement(s) on reducing tariffs between the UK and the does not in itself eliminate all the bureaucratic hurdles.

 

If a business is sending produce to the EU from a country that has a free trade agreement it must prove that they were mostly manufactured or re-worked in a country that had a free trade agreement with the EU. If the business cannot confirm the origin of the goods, then the tariffs will apply. This can be sidestepped by making some modifications to the products in the exporting state, yet this may be subject to investigation. This is a rare occurrence, yet the need for paperwork to prove it is not rare.

 

Rules of origin

If the goods are of UK origin and if Britain has a free trade agreement, namely no tariffs to pay, importing into an EU country may require a Certificate of Origin to show its provenance. If its tariff free origin cannot be proved, a customs charge will be applied. Certificates of Origin can be obtained from a relevant countries chamber of commerce, they are however, expensive to obtain.

 

Anything that is already inside the customs union that has originated from a non-member will have been charged at its original port of entry and can therefore circulate freely within the EU. At present, as the UK is an EU customs union member, British exporters to the other 27 do not have to prove that they comply with the EU’s rules of origin. As supply chains are becoming increasingly globalised the need to demonstrate an item’s origins can be a complex burden.

 

The Trade Policy Research Centre argue that ‘the process of adapting to rules of origin based duty-free trade under a new UK-EU free trade agreement would be tedious, costly and disruptive to trade.’[ii] However, some developments are making this concern less relevant. The reduction in tariffs, where many goods are zero rated, reduces the need to complete the administrative duties. The EU has extended the area in which origin can be accumulated to not only cover more states but also to allow for an item to be obtained and manufactured in a number of countries without the final product losing the benefit of being tariff free when it enters the EU. This system has been in existence in the EU and European Free Trade Association since 1997 and for Turkey since 1999. Over time the EU does grant greater allowance to other countries to claim exception from rules of origin. And from 2017 under World Customs Union rules the procedure declaring a products origin will be simplified.

 

These are hurdles but they can be overcome, through effective negotiation. Furthermore, the application of these rules does present opportunities for Britain. If a tariff free trade agreement is in place UK businesses can corner the profitable market for business assembling goods. The now complex supply chains that dominate global production can create jobs in the UK. Gate way Britain.

 

Britain obtaining tariff free access to the remainder of the EU, along with measures designed to speed the passage of goods through customs, and developing trade links with the third countries around the world, will benefit Britain. Having a more liberal regulatory regime and tariff free access to the EU’s single market will make the UK a base by which third country producers, who have entered preferential trade deals with Britain, can access the EU without being subject to tariffs.

 

Within Britain value can be added to goods and re-exported from the UK to the EU. This will allow exporters to sidestep the EU’s rules of origin regime. Britain will be able to become a regional value added production hub. The British economy will therefore not only benefit from the additional bilateral trade with other territories but will also capture a number of benefits:-

1.      Increased trade

2.      Increased freight and haulage through the UK as a pass through   onto final destination

3.      Increased assembly and manufacturing within the UK (to meet rules of origin that require a declaration to be made that at least partial reworking has occurred to the produce)

4.      Increased economic activity and employment and the resulting fiscal benefits

5.      Increased use of a made in Britain mark makes the UK’s regulatory regime more internationally relevant

 

Even in the EU, technical requirements on import processes as well as standards will differ from each country. However, the fear that EU legislation prejudicial to the UK may queer the pitch against British sales to the continent is probably unfounded. As Britain conforms to EU standards at present there is little, if any, divergence. Further, as an increasing proportion of technical standards originate from global bodies, agencies of the United Nations, or relate to international agreements on technical barriers to trade, there will not be a sudden deviation from permissive regulations. These international agreements are designed to encourage cross border trade. It is worth reiterating the fact that rarely do customs officials demand compliance with national standards and rarely do they conduct a strict examination of documentation declaring that an item conforms to national or EU standards.

 

David Davis’ Department for Exiting the European Union must, however, focus on addressing the bureaucratic trade hurdles that can cause delays at customs posts. The alternative will be even worse congestion on the M20 after Brexit than that which exists at present.

 


[i] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:265:0018:0038:en:PDF

[ii] Ronald Stewart-Brown and Felix Bungay, Rules of Origin in EU Free Trade Agreements, Trade Policy Research Centre, 2012

 

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Asking Parliament to Vote on Article 50 TEU for the Third Time?

The very purpose of the referendum was to establish a decision-making procedure for leaving the EU. This procedure was implemented by the June referendum.

5th December 2016
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In R (Miller) v. Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin) (3rd November 2016), the Divisional Court determined that the government may not trigger Article 50 of the Treaty on European Union (TEU) without legislation being passed by Parliament. Article 50 states:

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements. … 3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, agreement with the Member State concerned, unanimously decides to extend this period. 



The claimants were members of the public described by the Divisional Court as “parties … whose interests are potentially affected in different ways” (para. 7 of judgment in Miller). The essential reason for the conclusion of the Divisional Court that legislation is needed was that triggering Article 50 TEU will inevitably have the effect of changing domestic law because those elements of EU law which Parliament has made part of domestic law by the enactment of the European Communities Act 1972 will in due course cease automatically to have effect.


The judgment seems open to criticisms on a number of grounds, chiefly the following: (i) it fails to adequately take into account the relationship between the UK legal system and the international legal system, understood here to include the European Union legal system, and the doctrine of dualism that applies to the incorporation of the EU Treaties into EU law; (ii) relatedly, its fails to adequately take into account the manner of incorporation of the EU Treaties into UK law by a method of reference or incorporation, and in particular, by reference to the entire body of EU law; (iii) the distinction drawn between categories of rights under EU law does not establish that some rights protected by UK law will be set aside in  way contrary to the European Communities Act 1972, and (iv) and the judgment does not fully consider any constitutional effects of the European Union Referendum Act 2015.


Parliament will need to vote on how to replace EU law in UK law when Brexit actually happens. The Miller judgment requires that Parliament votes to being the process of Brexit too. At a political level, the Miller judgment is very significant in that the House of Lords may well vote against triggering Brexit, and it would take one year for the House of Commons to be able to bypass the House of Lords under the Parliament Acts 1911-1949.

 

(i) The relationship between the UK legal system and the international legal system, understood here to include the European Union legal system, and the doctrine of dualism:

The essential argument made by the Divisional Court to sustain its conclusion in Miller was that triggering Article 50 TEU would mean that the UK could leave automatically after 2 years and that leaving the EU would undermine or alter the effects of the European Communities Act 1972 (‘ECA 1972’) and change or reverse the rights of individuals created by the ECA 1972. The Divisional Court noted the principle of parliamentary sovereignty as common ground: “Parliament can, by enactment of primary legislation, change the law of the land in any way it chooses. There is no superior form of law than primary legislation, save only where Parliament has itself made provision to allow this to happen. The ECA 1972, which confers precedence on EU law, is the sole example of this.” (para. 20). However, this includes the way in which ordinary EU legislation (i.e. EU legislation other than the Treaties, in the form mainly of Regulations and Directives) is passed at EU level. Legislation under Article 288 of the Treaty on the Functioning of the European Union is adopted in Brussels by the EU Council (of Ministers), with UK ministerial participation, as envisaged in s. 2(2) ECA 1972 (as noted in paras. 52-52 of the judgment). This procedure does not involve any vote by the UK Parliament, yet clearly changes UK law on a regular basis. This can only be because, as the Divisional Court says in paragraph 20 quoted above, Parliament has allowed this to happen.


The issue in Miller could thus be expressed as whether or not Article 50 TEU has also already been enabled by legislation in a similar way. Despite the Divisional Court conclusion in Miller, arguably the answer is yes. 


The Divisional Court continued that “An important aspect of the fundamental principle of Parliamentary sovereignty is that primary legislation is not subject to displacement by the Crown through the exercise of its prerogative powers” (para. 25) and the Court noted that this predated the Glorious Revolution of 1688 and could be found in The Case of Proclamations (1610) 12 Co Rep 74. Further, the Divisional Court noted that “Another settled feature of UK constitutional law is that, as a general rule applicable in normal circumstances, the conduct of international relations and the making and unmaking of treaties on behalf of the United Kingdom are regarded as matters for the Crown in the exercise of its prerogative powers”(para. 30). Thus, the executive exercises the power to engage in foreign and international relations, but it cannot do so in a way that has an effect on legislation passed by Parliament.   


Concerning the relationship between international law and UK law, the principle of dualism should first be clearly explained. The principle of dualism is recognised within the international legal system as one of two ways in which national legal systems can interact with the international legal system. The other is monism. Monism and dualism differ in the manner of incorporating international treaties or conventions into the national legal system. In a dualist system, which indeed the UK is, two steps are needed for an international treaty or convention to become part of UK law: (i) signature and ratification by the executive (in a monist approach, ratification also incorporates treaties into national law) and (ii) followed by incorporation into national law by Parliament. The argument of the Divisional Court – that because triggering Article 50 TEU would affect rights exercisable under EU law, it would therefore deprive the ECA 1972 of its effect and, thus, required an Act of Parliament to appropriately amend or repeal the ECA 1972 – seems reasonably persuasive at first, but this is so only because the judgment in Miller really does not take into account (i) the difference between producing effects in domestic law and producing effects at European/EU level and (ii) the way in which parliament has incorporated by reference the whole body of EU law into UK law.


Triggering Article 50 TEU would indeed produce legal effects at EU level, but it would not amend or repeal the ECA 1972. This is especially so when it is taken into account that the ECA 1972 has been amended by the European Union (Amendment) Act 2008, which was enacted specifically to give effect in UK law to the Treaty of Lisbon, and the Treaty of Lisbon included in it Article 50. This is the first occasion on which Parliament has already in effect voted on Article 50 TEU. The wording of the European Union Amendment Act 2008, which was not quoted in the Miller judgment, helps illustrate this. Seciton 2 of the European Union (Amendment) Act 2008 states:



Addition to list of treaties

At the end of the list of treaties in section 1(2) of the European Communities Act 1972 (c. 68) add— “; and 

(s)the Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community signed at Lisbon on 13th December 2007 (together with its Annex and protocols), excluding any provision that relates to, or in so far as it relates to or could be applied in relation to, the Common Foreign and Security Policy;”

 

This is important, because the Divisional Court in Miller specifically referred to the importance of parliamentary control as evidenced by the listing of the Treaties in s. 1(2) ECA 1972 (para 93(8) of the judgment):

 

Finally, we have already drawn attention to the significance of the fact that the principal EU Treaties which are given effect in domestic law are specifically listed in section 1(2). Section 1(3) provides for parliamentary control before any ancillary treaty can be made and regarded as a “Treaty” for the purposes of the Act, and hence given effect in domestic law.   The Crown cannot simply make and ratify ancillary treaties in the exercise of its prerogative powers and thereby create legal effects in domestic law. It is not compatible with this degree of parliamentary control – listing the main “Treaties” in the ECA 1972 itself and providing for a high degree of Parliament control by way of approval by resolution of both Houses before an ancillary treaty qualifies as a “Treaty” for the purposes of the Act – that Parliament at the same time intended that the Crown should be able to change domestic law by the simple means of using its prerogative power to withdraw the United Kingdom from the Treaties.

Yet now the Treaty of Lisbon, which created Article 50 TEU, is listed under s. 1(2) of the ECA1972 (as amended by the 2008 Act), but the Divisional Court did not attribute any significance to this. The method of incorporation that was chosen by Parliament to give effect to EU law – incorporation by reference – confirms that triggering Article 50 TEU will not change UK law, but simply apply a procedure set out in the ECA1972 itself as amended.

 

(ii) The manner of incorporation of the EU Treaties into UK law by a method of reference or incorporation:

The wording of s 2(1) of the ECA1972, which is the clause of the ECA 1972 that incorporates EU law into UK law, is broad enough to cover both the incorporation of individual rights and other procedures:

 

(1)   All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression“enforceableEUright”and similar expressions shall be read as referring to one to which this subsection applies.

 

In its judgment, however, the Divisional Court speaks as if only individual rights were incorporated and not Article 50 TEU, when both are subject to the same principle of incorporation by reference (see e.g. para. 62 et seq). What incorporation by reference means, is that instead of re-enacting all of the individual provisions of EU law in the form of UK Acts, instead, EU law is globally incorporated by a single provision of UK law, s. 2(1) ECA 1972, with the relevant Treaties thereby incorporated being listed in s. 1(2) ECA 1972. Thus, both the original Treaties and all amending Treaties, including the Lisbon Treaty, have been incorporated in the same way. Seen in this light, the reasoning of the Divisional Court becomes problematic. The Divisional Court suggests that triggering Article 50 will denude the ECA 1972 of its legal effect:

As Parliament contemplated, it was only if it enacted the ECA 1972 (and then amended it to refer to later EU Treaties) that ratification of those Treaties could occur. The reality is that Parliament knew and intended that enactment of the ECA 1972 would provide the foundation for the acquisition by British citizens of rights under EU law which they could enforce in the Courts of other member States. We therefore consider that the claimants are correct to say that withdrawal from the European Union pursuant to Article 50 would undo the category (ii) rights which Parliament intended to bring into effect, and did in fact bring into effect, by enacting the ECA 1972.(para. 66)

 

However, this is to suggest that Article 50 is in some way in conflict with the ECA1972: that triggering Article 50 will end up in a situation where the ECA1972 will no longer apply, yet it is exactly because the ECA 1972, as amended, has provided for Article 50 TEU to be a part of UK law that this is not so. Article 50 TEU is a part of the overall body of EU law that the ECA 1972 has incorporated. Article 50 needs to be seen as a part of this body of EU law and as something applies across the whole of EU law. By triggering Article 50, the government is providing for a procedure in EU law itself. The relationship between Article 50 TEU and the rest of EU law should be seen in the ordinary way in which different legal provisions relate to each other. Article 50 is lex specialis (specific law) and lex posterior (recent law) in regard to the rest of EU law. It is lex specialis or specific law in the sense that it provides for the particular or specific situation of leaving the EU. It is lex posterior or more recent law in that in effect amends EU law so that EU law itself provides for its own dis-application to a Member State, i.e. it amends the EU Treaties to this effect.

 

Contrary to what the Divisional Court suggests, there is no inherent or unresolvable conflict between Article 50 and rights created by EU law. Article 50 TEU regulates how EU rights are to be dis-applied. When Article 50 TEU is triggered, there will not be any provisions of UK law that have been left on the statute book, but which now have no legal effect. Yes, EU laws that have become part of UK law will be automatically dis-applied after the 2-year period (unless the UK and all the Member States agree to extend the period), leaving gaps in UK law. These gaps will be for the legislature to fill by replacing the ECA 1972, when Brexit actually happens, with an Act of Parliament that specifically sets out what rights previously set out in EU law to be continued in UK law.       


(iii) The distinction between categories of rights under EU law:

The parties and Divisional Court agreed on a distinction between three categories of right that would be involved in the triggering of Article 50 TEU:

- Category (i) rights capable of replication in the law of the United Kingdom, e.g. EU rules on maximum working hours

- Category (ii) rights enjoyed in other Member States of the EU by UK citizens, e.g. free movement rights   

- Category (iii) rights that could not be replicated in UK law, e.g. the right to stand for election to the European Parliament.


The Divisional Court suggests that triggering Article 50 would undo category (ii) rights. Triggering Article 50 would undo all of these rights. The Divisional Court seems mistaken in characterising, in para. 59, references by national courts Article 267 TFEU as a ‘right’, where decision to make a references to the Court of Justice are decided upon by national courts according to the criteria in the caselaw of the Court of Justice, and individuals cannot require a reference to be made as a right. But the same argument as above applies here concerning the undoing of rights: Parliament has provided for the undoing of these rights by incorporating Article 50 into UK law already.   

(iv) The European Union Referendum Act 2015:

The Divisional Court was very brief in its discussion of the effect of the European Union Referendum Act 2015, which can be seen as the second time Parliament has voted on Article 50 TEU. The Divisional Court’s conclusion is hard to reconcile with the parliamentary and institutional facts surrounding the passing of the Act. Referenda are a relative novelty at UK level. Apart from the referendum on the Alternative Voting System held in 2011, the last referendum at UK level was also on the EU, or European Economic Community as it then was, in 1975. Both the legislation proving for the 1975 and 2015 referenda simply stated that there would be a referendum on membership, i.e. the legislation did not say anything about the effects of the referendum. However, this does not seem to justify the conclusion of the Divisional Court that the referendum held in June 2016 was purely ‘advisory’ unless very clear language to the contrary is used in the referendum legislation in question (para. 106). In support of its conclusion, the Divisional Court did not cite any authority. It did refer to “a background including a clear briefing paper to parliamentarians explaining that the referendum would have advisory effect only” (para. 107). However, this does not seem sufficient to dispose of the constitutional effects of the referendum. It is clear from the House of Commons debate on the European Union Referendum Bill that the government intended that the decision of the people in the referendum would determine the issue of UK membership. The then Foreign and Commonwealth Secretary, Philip Hammond MP, stated on the European Union Referendum Bill:

This is a simple, but vital, piece of legislation. It has one clear purpose: to deliver on our promise to give the British people the final say on our EU membership in an in/out referendum by the end of 2017. (Hansard, Vol. 596, 9th June 2015)

Giving the people the final say means that Parliament must accept the referendum result. This is reflected in the fact that the vote to leave precipitated the resignation of the then Prime Minister, David Cameron MP.


 

When legislation is ambiguous, the rule of statutory interpretation in Pepper v. Hart [1992] UKHL 3 allows the courts to refer to Hansard, the official record of debates in Parliament, to help determine its meaning:


In my judgment, subject to the questions of the privileges of the House of Commons, reference to Parliamentary material should be permitted as an aid to the construction of legislation which is ambiguous or obscure or the literal meaning of which leads to an absurdity. Even in such cases references in court to Parliamentary material should only be permitted where such material clearly discloses the mischief aimed at or the legislative intention lying behind the ambiguous or obscure words.In the case of statements made in Parliament, as at present advised I cannot foresee that any statement other than the statement of the Minister or other promoter of the Bill is likely to meet these criteria.(Lord Browne-Wilkinson, p.22 of Bailii judgment text)

At the very least, the question of the status of the referendum seems by no means as straightforward as the limited discussion in the judgment in Miller suggests. In her judgment in Jackson v. Attorney General [2005] UKHL 56, Lady Hale indicated that Parliament might be bound by a provision of legislation requiring a referendum to be passed:

If the sovereign Parliament can redefine itself downwards, to remove or modify the requirement for the consent of the Upper House, it may very well be that it can also redefine itself upwards, to require a particular Parliamentary majority or a popular referendum for particular types of measure. In each case, the courts would be respecting the will of the sovereign Parliament as constituted when that will had been expressed. But that is for another day.(para. 163 of judgment in Jackson)

The Divisional Court in Miller refers to a briefing paper, but pays no attention to the clear statement above from the lead member of the government advocating the passing of the Bill. Under Pepper v. Hart, it was clearly open to the Divisional Court to refer to Hansard, and the above quoted statement by Philip Hammond is quite clear that the very purpose of the referendum was to establish a decision-making procedure for leaving the EU.  This procedure was implemented by the June referendum.

By Gerard Conway

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EU tax law creating £55 billion black hole in UK finances

HMRC has set aside £55 billion to cover the potential cost of payments, including interest, which the European Court of Justice will force upon the British taxpayer.

3rd December 2016
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EU law and direct taxes

The UK, in common with other EU member states, has not conferred any authority on the EU for direct taxes.  The Court of Justice of the European Union (CJEU) assumed this authority in the late 1990s by adopting a more expansive interpretation of the fundamental freedoms.


The staggering cost of EU law tax litigation
One of the consequences of being a member of the EU is that EU law is superior to English law.   Large UK based companies are, therefore, able to use EU law, and EU courts, to retrospectively challenge the legality of the tax laws enacted by Parliament.   This is highly profitable form of activity for large UK companies and their advisors, which is costing the UK Government tens of billions.  When UK companies challenge the legality of the UK’s tax laws under EU law they know they are “knocking at an open door”, because the CJEU is keen to expand its authority over Member States under the guise of “ironing out inefficiencies” in the operation of the single market. 


HMRC has set aside £55bn to cover the potential cost of the litigation in which it is involved.  There are two reasons why this figure is so large.  First in a number of cases involving EU law, UK companies are able to reclaim corporate taxes, dating as far back as 1973.  Second, EU law requires the UK Government to pay compound interest on these claims.  In the Littlewoods case, a claim of £208m, covering the period from 1973 to 2004, cost the Exchequer £1.2bn when compound interest was included.  The UK Government had previously estimated that the Franked Investment Income case (C-362/12) would cost £5-7bn.  However, this case could easily cost the Exchequer £30bn when compound interest is included, as it covers the period from 1973 to 1999.

 

European Career Politicians as EU judges
Each EU Member State is able to nominate an EU judge.  In 1995, Belgium nominated its Deputy Prime Minister, Melchior Wathelet, to be an EU judge.  Although Wathelet had studied law as a student, he had been a career politician from 1977 to 1995.  This raises questions about both his competence and his impartiality.


Wathelet was subsequently appointed as an Advocate General.  When a case comes before The Court of Justice of the European Union (CJEU) it is usually heard by at least five judges, one of which will be an Advocate General.  The Advocate General is responsible for writing a legal opinion on the case under consideration for the benefit of other judges.  In the majority of instances, the CJEU decides cases on the basis of the Advocate General’s opinion. This is what happened in the Franked investment Income case (C-362/12), a case that will cost the UK Government in the region of £30bn.  Wathelet wrote the legal opinion and the other judges agreed with his opinion. 


What did the UK Government do “wrong“ in the Franked Investment Income (FII) case (C-362/12) so as to breach EU law.
The simple answer to this question is: the UK Government did nothing “wrong”.  The reason the UK was held to have breached EU law is because the UK is a common law jurisdiction, rather than a civil law jurisdiction.  In fact, the UK is the only large common law jurisdiction in the EU, as the other common law jurisdictions are Ireland, Malta, and Cyprus.  All of the other EU member States are civil law jurisdictions.  This means that the EU commission is staffed, for the most part, with people from civil law jurisdictions, and the Court of Justice of the European Union consists mainly of civil law jurists.  This meant that in FII the UK was adjudicated on the basis that it is a civil law jurisdiction, notwithstanding that the facts of the case are unique to a common law jurisdiction.


In a civil law jurisdiction, only the State is able to create a restitutionary remedy against itself.  This means that the State has the opportunity to set an appropriate limitation period at the same time it creates a new remedy.   It is not possible for the UK Government to set an appropriate limitation period at the same time the English courts announce their decision to create a new remedy.  This is because the UK Government and the English courts operate independently of each other.  This means that the UK Government has no prior knowledge of the decisions of the English courts.


The reason the UK Government was held to have breached EU law was because the facts of FII were adjudicated by the CJEU on the basis that they arose in a civil law jurisdiction, notwithstanding that the facts are unique to a common law jurisdiction. The FII case is another example of the “one size fits all” philosophy, which prevails in the EU.

 

The UK Government and the BBC working together to conceal the truth regarding the EU
One of the Vote Leave claims was that the UK Government would have to repay £43bn in taxation because of EU law.

The BBC’s response to this claim on its Reality Check site was:

‘HMRC say: “There is no question of this amount or anything close to this amount [£43bn] ever being repaid as the figure is based on our losing every single case currently being litigated, which is not going to happen. In reality, HMRC wins most cases at Tribunal.”’


At the time HMRC gave this response to the BBC, it had produced its accounts for the year ending 31st March 2016, although they had not been published.    HMRC knew that the figure of £43bn was an under-estimate of the potential costs, because it had increased the figure in its latest accounts to £55bn.   Moreover, HMRC knew that the increase related to claims for breaches of EU law. 


There are several other comments that one can make about the comment HMRC gave the BBC. 

1.      Why did the BBC ask someone who reported to George Osborne to make a supposedly “impartial comment” on the Vote Leave’s campaign? 

2.      HMRC does not have to lose every single case for it to have to pay-out £43bn.   HMRC has already lost a number of important cases involving EU law that will require the UK Government to repay taxes dating as far back as 1973, together with compound interest.  These cases alone could cost the UK Government £43bn, or possibly more.  HMRC has consistently under-estimated the cost of settling these and other legal cases in which it is involved. 

3.      The courts decide who wins the cases in which HMRC is involved, not HMRC.  

4.      It is of no significance that HMRC wins most cases at Tribunal, because such cases are for trivial amounts.

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Protecting the City of London After Brexit

For the City of London membership of the European Union is a double-edged sword. Here the Bruges Group explains how this important industry can thrive after Britain leaves the EU.

30th November 2016
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Coming with EU membership is, for what it is worth, full access to the single market in services. Whilst this market is far from complete; being part of it, also known as the European Economic Area, is one of the ways Britain can have full unencumbered and automatic access for the sale of services into the EU. This right, that does not require setting up a subsidiary in the EEA nor the need to gain authorisation from each single market state, is known as passporting.

 

The ability of British based financial institutions to trade with countries on the continent is clearly a great benefit to the economy. At the same time, the EU’s reticence at making trade agreements, an exclusive EU competence, with emerging markets around the world that include access to their services markets is holding the UK back. EU membership has meant that Britain could not make agreements that allowed our great strength, the services industry, to fully engage with other markets around the world. Instead of looking at the enormous opportunities that Brexit presents, the debate so far has focused on the risks of losing access to the EU’s single market.


 

Prior to the Brexit referendum, the government sought to claim that the EU’s services market could of particular benefit to the British economy. The government argued that if the EU completes the Single Market in services – opening-up all member states to competition – the UK’s economic output could be boosted by as much as 7%.[i] The completion of the single market in services always was a very big if. Indeed, it is illusory. Many EU states have still have not properly implemented the EU’s services directive and are unlikely to do so. Keeping in place restrictive practices and barriers to entry.


 

That said, the services industry is still an especially important part of the UK’s economic links with the EU. In 2011 the UK's trade in goods with the EU was in deficit by around £43 billion; however, trade in services was in surplus by £16 billion. This reduced the overall deficit to approximately £28 billion.[ii]


 

The UK’s entire financial services sector, which supports the resulting and even larger international business services, is however threatened by the UK’s membership of the EU. These businesses sell their services much further afield than the continent, yet inside the European Union they will still be subject to the whims of EU laws proposed by the Commission and agreed by qualified majority vote without the UK having a veto.


 

EU regulators, the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities Authority have been established to regulate the industry across the EU. Some in the EU do not look kindly upon this very Anglo-Saxon industry. Under the European Systemic Risk Council and the European System of Financial Supervisors control, enforcing the writ of the European Commission, the City of London may have faced its biggest test. These new bodies have the power to close a financial institution. The EU bureaucracy has already began interfering in UK financial affairs.


 

Research by the economist Professor Tim Congdon CBE has concluded that this threatens the UK’s position as a world leader in international business services. These businesses are highly mobile and can easily relocate to more welcoming climates; taking their tax revenue and employment with them.


 

Research published by the Bruges Group found that ‘in the fourth quarter of 2013 business services accounted for 1,517,000 jobs in London, which was 28% of all London employment. (Their proportion in UK employment as a whole was 15.7%.)


 

‘These businesses are based primarily in or around the capital. London-based international business services (i.e., both financial and non- financial services) employ about 5% of the UK’s working population and produce perhaps 8% - 10% of its national output, with most of that output exported. Continued growth of these activities at above the growth rate of output as a whole would be positive for the UK’s average living standards.’


 

Since the 1960s financial services in Britain enjoyed stellar growth. It was the most dynamic part of the British economy. This has now ended, and Professor Congdon sees EU interference as being partly to blame. He argues that the EU’s regulatory structure is less efficient than Britain’s previous national system and the EU’s rules are in effect anti-growth. The 40 years of rapid expansion is now at an end, with some responsibility resting with the EU.


 

If Britain is to remain a prosperous nation, the UK must follow a path that will both protect businesses from the harmful effects of EU regulators whilst preserving full access to the EU’s single market. What can be done to achieve this?


 

There is the example of the Swiss, like Britain they have a strong financial services industry. Although they have a series of free trade agreements in goods these do not cover the export of services.


 

Swiss-based companies do not have the right to sell their services to the EU unless they establish a subsidiary inside the European Economic Area. This is not an insurmountable problem but should be avoided. Multi-national companies, by definition, can and do establish themselves in different jurisdictions. However, small and medium-sized enterprises will find creating subsidiaries burdensome. Restricting opportunities to tap into the EU’s internal market.


 

The Swiss experience is that rules that would deprive British financial service firms from operating inside the remaining EEA can be sidestepped. A Swiss report found that 'Though extremely cumbersome this does give them full access to the EU market.'[iii] However, if the subsidiaries are based in the EU they will be subject to the same heavy handed bureaucracies.


 

The UK can leave the EU, freeing businesses from the European Commission’s quangos, and keep full access to the Single Market. This can be achieved by Britain rejoining the successful and non-authoritarian European Free Trade Association (EFTA) and thus remain a member of the European Economic Area (EEA), also known as the Single Market.


 

Aligning the UK with EFTA will at a stroke free Britain’s financial services industry from control by: -

  • The EBA (European Banking Authority)
  • European Insurance and Occupational Pensions Authority
  • European Systemic Risk Board
  • European Securities and Markets Authority (ESMA)
  • Community Programme for Financial Reporting and Auditing


 

EFTA/EEA nations not only enjoy freedom from EU financial oversight, they also have the benefit of being able to run their economies as they see fit. They are free from EU debt risks and are not subject to European Union tax law, an area which the EU law is steadily expanding into. The City of London will also free from an EU Financial Transaction Tax. As a member of EFTA, Britain will also be able to veto the regulations that threaten pay within the financial services sector, such as; ‘Recommendation on remuneration the financial sector 32009H0384’.


 

Remaining in the single market, popular with the City and many that in the referendum supported remain, is becoming increasingly unpalatable to many leavers; even people at the top of the British government which once lauded the single market. The Lichtenstein model, one of restricting immigration whilst having full access to the single market, first outlined by the Bruges Group in 2013 has not settled the matter.


 

There is however a new hope. This is driven by mutual self interest.

 

According to Mark Carney, the Governor of the Bank of England;

“Banks located in the UK supply over half of debt and equity issuance by continental firms, and account for over three-quarters of foreign exchange and derivatives activity in the EU.”[iv]


 

Quite clearly, businesses in the EU need the City of London. However, despite this powerful incentive for the EU to keep in place Britain’s passporting rights there are still procedures that must be followed. It could be granted through the withdrawal agreement that would in theory emerge from the Article 50 negotiations. That is presuming that any agreement does not become regarded as one that needs the approval of all EU member states Parliaments, as an Association Agreement would so require.

 

There are still ways to resolve this issue. If the UK follows the same regulatory framework as businesses in the EU, then the European Commission can grant what is known as equivalence. This should not be too difficult for the UK. Presently, Britain follows the same regulations as the rest of the EU. What is more, according to a report by the House of Lords the UK would have implemented 41 of 42 EU financial services regulations even if Britain was not an EU member. The exception was the Alternative Investment Fund Managers Directive (AIFMD). This is not surprising, the genesis of many of these rules comes from global bodies. For instance, the WTO, OECD, IMF, the Bank if International Settlements, and the Financial Stability Board. Indeed, Mark Carney is the Chairman of this body and guides the development if its regulations. Through his international role, the Governor of the Bank of England, has been developing global rules on financial services, putting Britain firmly at the top table.


 

The EU rules that can grant financial firms based in the UK access derive from Article 46(1) of the The Markets in Financial Instruments (MiFIR). It grants non-EEA based firms the right to provide investment services in the single market without the need to establish a subsidiary in the EEA and without the provider being under the control of an EU member states national regulator.


 

To have this special passport, according to DLA Piper, there are a number of requirements:

(i) the firm is authorised in its home country and subject to supervision and enforcement by the relevant regulator (eg by the Financial Conduct Authority)
(ii) a positive equivalence determination from the European Securities and Markets Authority (ESMA) that the legal and supervisory arrangement of the third country have equivalent effect to the prudential and business conduct requirements under MiFID II
(iii) cooperation arrangements between ESMA and the third country authority specifying the exchange of information mechanism, the prompting notification for breaches and the coordination of supervisory activities, and
(iv) registration with ESMA (which is dependent on the above having occurred).[v]

 

Access for non-EEA alternative investment fund managers is also granted by Article 35, 39 to 41 of the AIFM directive; as long as they are operating under an equivalent jurisdiction. This again is subject to the ESMA.


This route may however prove to be a lengthy process, requiring registration and there is no guarantee that the politics of Europe will be easily obliging to a post-Brexit Britain.


 

There is however another way that the City’s interests can be protected. The World Trade Organisation, through its General Agreement on Trade in Services,[vi] is seeking to create international agreements that will dramatically open-up access to service industries.[vii] [viii] What is more, the EU is fully engaged with these negotiations. In time, an independent UK should be able to take advantage of WTO proposals for a streamlined “single window” through which businesses can trade their services across national boundaries.


 

The City of London brings capital to this country financing wealth creation as well as pubic services throughout the land. It attracts skills and other business supporting the wider British economy. Yet, the EU restricts the opportunities open to the City. At the same time, leaving does present challenges. The solutions, however, just like the opportunities, are global.

 

The UK’s financial services industry has a global role and should not be hemmed into little declining Europe. The City of London should not be afraid to make the switch. Not only do great prospects await it, there is the real likelihood that Britain’s financial services industry will, through the many routes open to it, be able to keep its access to the EU’s single market.

 


[i] Department for Business Innovation and Skills, BIS Economics Paper No. 11, The economic consequences for the UK and the EU of completing the Single Market, February 2011, page vi

http://www.bis.gov.uk/assets/BISCore/economics-and-statistics/docs/E/11-517-economic-consequences-of-completing-single-market.pdf

[ii] http://www.theyworkforyou.com/lords/?id=2012-11-14a.1507.0

[iii] Centre for Swiss Politics, University of Kent, Switzerland’s Approach to EU Engagement: A Financial Services Perspective, City of London, April 2013, page 4

[iv] http://www.telegraph.co.uk/business/2016/11/30/mark-carney-warns-eu-faces-financial-drought-cuts-uk-overnight/

[v] https://www.dlapiper.com/en/uk/insights/publications/2016/07/no-more-passporting-post-brexit/

[vi] https://www.wto.org/english/docs_e/legal_e/26-gats_01_e.htm

[vii] https://www.wto.org/english/news_e/news16_e/serv_05oct16_e.htm

[viii] https://www.wto.org/english/news_e/news16_e/snegs_14nov16_e.htm

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Rather than trying to stop Brexit, elites should focus on making it a success

Article 50 will be triggered, and the UK will leave the EU

28th November 2016
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The Royal Courts of Justice (London) where October’s High Court ruling that only Parliament can trigger Brexit was delivered.

The latest twist in the Brexit tale is the legal limbo hanging over who can trigger Article 50 of the Lisbon Treaty, signalling the United Kingdom’s departure from the European Union. Following a lawsuit filed in the summer, the High Court ruled on October 13 that the British government cannot trigger Article 50 without Parliament’s permission. This decision was immediately appealed by the government, who are anxiously awaiting the Supreme Court’s final word in December.

Rule of law is one of the foundations upon which Britain’s success over the centuries was built, and must be respected. However, I, like many people, was surprised by the message the High Court’s ruling was sending –that Parliament supersedes the will of the people, not the other way around. After all, isn’t Parliament supposed to reflect the will of citizens? Don’t all MPs, from the lowliest backbencher, to the prime minister, work for us?

In any case, I am not terribly worried about this court battle. If the triggering of Article 50 does end up going to Parliament, there will be enormous pressure on MPs to vote in line with their constituents, leading to a crushing majority in favour of leaving the European Union (EU). It is true that most MPs, across all parties, favoured remaining in the EU prior to June’s referendum, but not aligning with their electorate on this subject could very likely cost them their jobs next election. This threat is especially true for Labour MPs, many of whom saw constituents in northern “safe” seats reject the party’s advice advice by voting to leave the EU.

richard_branson_pic_4
Virgin Group founder Sir Richard Branson has been, and continues to be an outspoken opponent of the UK’s departure from the EU.

Where there is greater cause for concern, however, is in the growing pushback by elites opposed to Brexit. The following three examples are among the most publicized, but by no means the only instances of such pushback:

  1. Gina Miller: Following the referendum in June, a legal battle was launched by investment manager Gina Miller, challenging the government’s intention to trigger Article 50 without parliamentary consent. As mentioned above, the High Court ruled in favour of Mrs. Miller and her co-claimants, spurring the government to appeal the decision in the Supreme Court. Miller claimed that this ruling was about preserving parliamentary sovereignty, an important motivator for many Leave voters. However, one wonders why she or any of the other claimants did not defend Parliament while its powers were being stifled by institutions in Brussels.
  2. Richard Branson: The Independent recently revealed that former Labour ministers have received funding from Sir Richard Branson’s Virgin Group in their efforts to build a campaign opposing Brexit. Office space and legal advice were also committed, indicating preparations to launch a sophisticated drive to frustrate the British government’s efforts to sever ties with the EU. Branson was an outspoken opponent of Brexit during the referendum campaign, and seems not to have accepted June’s result by opposing the government’s effort to deliver it.
  3. Tony Blair and John Major: Former prime ministers Tony Blair and John Major have made statements in recent days on the possibility of a second referendum being held on Britain’s EU membership. Amid rumours floating about some form of political comeback, Blair recently suggested that Britons should “keep our options open” regarding a second referendum. He appears to ignore that options were open prior to the referendum, and that a clear choice was subsequently made to leave.

Timely debate is an essential tenet of functioning democracies, especially in the case of major decisions like continued EU membership. And indeed, such a debate was held in the months and years leading up to June’s referendum. Both sides debated vigorously, and the people of Britain have made their decision. Article 50 will be triggered, and the UK will leave the EU. Rather than trying to undermine voters, pro-Remain elites should focus their energies on how to help Britain make the most of the opportunities presented by Brexit.

 This article is from The Eurosceptic

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Fishing: The forgotten industry and the acid-test of Brexit

Does Brexit mean Brexit, with the change that we need, or will it just be business as usual

20th November 2016
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The EU's Common Fisheries Policy is a drain on the British economy. A condition of entry into the EEC, as it was then, the British government was required to surrender control over its fishing waters on 1st January 1973. Under United Nations rules a country now has the right, even the responsibility, to control the sea around its coast stretching out for a total of 200 miles or until the median line between two adjacent nations.

 

The European Commission opened UK waters to all other member states fishing fleets, apportioning fishing rights as they see fit. The Common Fisheries Policy costs Britain more than £3.7 billion per year caused through the EU depriving the UK of its valuable fishing grounds.


 

In 2012 UK fishing vessels landed 627,000 tonnes of sea fish (including shellfish) this yearly catch has a value of £770 million.[i] This is 13% of the value for the total EU catch.[ii] In 2012 British vessels account for approximately 12% - 13% of the total size of the EU catch.[iii] This figure remains relatively constant. In 2010 the total EU catch amounted to 4,923,000 tonnes, the share of this going to UK fishermen is 608,000 tonnes.[iv] The British catch in 2010 was again approximately 12% - 13% of the total for the EU.


 

This means that the EU fishing industry is worth £6.4 billion. Approximately 70% of this catch is taken in what were once British fishing grounds, now governed by the EU and open to vessels from other EU member states. This means that if these waters were fully reserved for UK fishermen, which would be legal under international law, then British fishing vessels would be able to land nearly £4.5 billion worth of fish. Yet the clear majority is being lost to our competitors in the EU, with British fisherman only being able to land £770,000 worth of fish.


 

Other estimates suggest that 80% of the total EU catch comes from what are, by United Nations standards, British waters. This would put the figure of the total resource taken from UK control by the EU at more than £5 billion.


 

The problems of the CFP are not just economic. The EU’s quota restrictions have had a disastrous environmental impact. For decades, if a vessel landed more than its allotted amounted they must then discard the fish that exceed the EU’s legal limit. The result was that as much as two thirds were returned to sea dead. Subsequently fish stocks declined significantly; further reducing the bounty of the sea. This policy has turned the once abundant North Sea into an ecological crisis zone. After more than four decades there has finally been some change, but the discard ban will only address the symptom of the EU’s disastrous free for all policy, the discarding of fish, rather than the actual cause, the EU’s control over quotas. The British fishing fleet will again be decimated as vessels must stop fishing when they exhaust their quota allocation.


 

The devastation on this industry can be measured by its human impact. In 1970 there were 21,443 fishermen in the UK; by 2012 that figure had been cut back to just 12,445.[v] The loss of jobs and the once active fishing fleet also had a detrimental effect on secondary industries that supported the fishing fleet and benefitted from the proceeds from this once sizeable business.[vi]


 

The effect of EU control via the Common Fisheries Policy has been to seriously damage a once strong industry. Landings into the UK have fallen from 1,039,100 tonnes in 1970 to just 489,100 in 2012. This steady decline has led to a growing dependency upon imports. In 2010, a total of 687,054 tonnes of seafood worth £2.23 billion was imported into Britain.[vii] That is British people having to buy back our own fish form foreign competitors. This must change, and with Brexit it should, but will it…?


 

This subsidising of foreign fleets by British consumers could be reduced if UK fishermen had their exclusive rights restored to them. There must be the full repatriation of UK resources and a fit for purpose UK policy implemented to allow the rejuvenation of this multi-billion-pound industry.


 

However, it is proposed by the Prime Minister Theresa May to incorporate the entire body of EU law, known as the Acquis Communautaire, into UK law. This will be via the so-called Great Repeal Bill. Yet, all EU law will include the legislation that underpins the Common Fisheries Policy (CFP).


 

The CFP is a reprehensible policy, both in terms of conservational and in operation. It would be expedient and advisable diplomatically and politically, that no facet of it is replicated, transposed or continued into UK law. Doing so would be to risk recognising in UK law the mechanisms of the EU’s policy – especially EU “equal access” and resources shares. That would be an abject betrayal of Brexit.


 

The CFP is constructed entirely of Regulations (direct EU law). Under the terms of Article 50, section 3, “the treaties shall cease to apply”, consequently so will the regulations and therefore the entire CFP and all mechanisms of it. The UK would revert to full control of our waters and all resources therein under international law (UNCLOS 3), with a clean slate to implement our own policy like Norway, Iceland and the Faroe Islands successfully manage.


 

The proposed Great Repeal Bill, as it stands, however, would negate this by adopting the CFP onto the UK statute book. This may prevent us from rebuilding and rejuvenating the industry and our long suffering coastal communities. If Parliament passes a bill that adopts into UK law the Common Fisheries Policy, along with all its iniquities, then our Members of Parliament will be betraying the industry again, just as they did in 1972 when the European Communities Act was passed into law.


 

To make sure that our fisheries are protected, the adoption of EU law into British law must exclude the Common Fisheries Policy. It is an area where UK law, and a sustainable policy for the benefit of our home fleet, should be put into place as soon as we leave the European Union. There must be no transition, it must be instantaneous.


 

Future policy must scrap all EU mechanisms, move to a Days-at-Sea, keep what you catch system, that is applicable to mixed fisheries – the Faroe Islands set this precedent in 1996.


 

The UK’s fishing industry could be a triumph for Brexit and Britain. The fishing industry and the communities that depend upon it can be saved as long as the Government exempts fisheries from the Great Repeal Bill, and puts into place our own policy. Indeed, British fishing can thrive as a world leader alongside other independent nations who fish the North Sea; Norway, Iceland and the Faroe Islands.


 

The British fishing industry was betrayed and bartered as expendable by Edward Heath when he sought to join the EEC. Fishing has become a microcosm and epitomises both the disaster of EU interference and incompetency. Due to this, fishing will be symbolic of withdrawal and will be the acid test of whether Brexit mean Brexit, with the change that we need, or will it just be business as usual.


 

Fishing could be held up as a beacon of the Government’s resolve and whether they can make a success of Brexit. As a nation, we should be bold. Aside from the London Convention of 1964, which granted rights to those who had habitually fished between the 6 and 12-mile limit for the 10 years prior to 1964, there is no provision for historic rights under international law on fisheries for the fishing limits from 12 to the 200-mile limit. It is the 200-mile limit that was snatched by the EEC as the price for admission into what became the EU. All current ‘rights’ for other EU fleets, and anyone else the European Commission has sold access to fish in our waters, comes via EU law. We can take back control from those interlopers, unless we are foolish enough to put those same regulations into force ourselves.

 

We need a British fishing policy ready to replace the failed EU system.


 

With the assistance of Fishing for Leave, Save Britain’s Fish


[i] http://www.marinemanagement.org.uk/fisheries/statistics/documents/ukseafish/2012/final.pdf

[ii] The European Fishing Industry, Struan Stevenson MEP, President of the Fisheries Committee of the European Parliament, page 9 http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Total_catches_in_all_fishing_regions,_2000-2010_(1_000_tonnes_live_weight).png&filetimestamp=20121022153701

[iii] http://www.europarl.europa.eu/aboutparliament/en/displayFtu.html?ftuId=FTU_5.3.9.html

[iv] http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Total_catches_in_all_fishing_regions,_2000-2010_(1_000_tonnes_live_weight).png&filetimestamp=20121022153701

[v] UK Sea Fisheries Statistics 2007, Marine & Fisheries Agency, 2012, page 24

  http://www.marinemanagement.org.uk/fisheries/statistics/documents/ukseafish/2012/final.pdf

[vi] Batten, Gerard, How Much Does the European Union Cost Britain? 2008, the Bruges Group

[vii] http://www.seafish.org/media/486918/faqs%20web%20version%20010711.pdf

 

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Europe, America and the Tectonic Plates

An earthquake in EU / US relations

19th November 2016
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For those who decry the United States, its politics and political culture comes straight out of the European enlightenment and Anglo-Celtic notions of economic, religious and political liberty. The system of governance, based on classical ideas from Sparta, owes an equal amount to Lycurgus as it does to Locke. It is of European origin.

Slowly, however, just like the tectonic plates which created the Atlantic, there was a growing separation between Europe and America. In the case of the Republic of Ireland, this divide never emerged. The Irish economy was more linked to America than continental Europe. It was on the same economic cycle as the United States, that is until the Eurozone crisis. With regards to Britain, despite the best efforts of Barrack Hussein Obama, the UK and the US remain close.

There have been times when superficially there seemed to be a gulf between the EU and the USA. At times, some elements in the EU seemed to take an anti-American position. That however was just a brief period and has long since been forgotten. The close relationship that has existed between the EU and the USA goes back an extraordinary way. In some respects, the EU is the creature of the United States of America and its foreign policy. The student has become the master.

There will soon, however, be a major shift taking place. One of seismic proportions. There will soon be a President in the Oval Office, and New York, that supported Brexit and correctly called the referendum result. This caused consternation in Brussels. President Trump will also support the UK in its post-EU future.

The shift is enormous. If President-Elect Trump continues with his scepticism of the EU it will mean much more in geopolitical terms than the end of an effectively dead trade deal, the much-reviled Trans-Atlantic Trade and Investment Partnership (TTIP).

It is worth here looking at the change, by looking at what had gone before and the important supporter which the EU will soon be missing.

The USA was the first modern supra-national state. Merging together separate, albeit similar, states and commonwealths. The idea of overarching federal institutions ruling over once democratic nation states was imposed on many countries in Western Europe. Even Britain was pushed to join. Kennedy was behind Harold Macmillan’s failed application to join in 1961.

The United States originally saw the EU as a bulwark against Soviet Communism. Since the collapse of the USSR, which cannot be attributed to the EU, Russia’s former satellite states have either become part of the European Union or Brussels’ Eastern Partnership.

Henry Kissinger, the former US Secretary of State, is reported as saying “Who do I call if I want to call Europe?” In fact, he has denied that he said this.[i] Yet the EU is indeed slowly developing one voice and regional influence.

This has the support of the American government. The US President, Barack Hussein Obama, certainly supported the UK’s continued membership of the European Union. In fact he saw it as a guarantee of American interests. On 13th May 2013 the US President said in answer to a question from the BBC’s James Landale during a discussion on Britain’s continued EU membership that we believe that our capacity to partner with a United Kingdom that is active, robust, outward-looking and engaged with the world is hugely important to our own interests as well as the world.[ii]

 

This expanded on a statement by the US Assistant Secretary of State for European and Eurasian Affairs, Dr Philip H Gordon, who on 9th January 2013 said that Britain’s “voice within the European Union is essential and critical for the United States… ”[iii]

 

The United States of America also supports the Single Market. This is perhaps not surprising as American firms export more to the EU than the UK does. Its total EU exports in goods alone amounted to more than $265 billion, with a further $9.9 billion coming in terms of the sale of agricultural products. In terms of services the figure is $194 billion. Clearly the US sees the EU to be in its commercial as well as its geopolitical interests. It is noteworthy that both the EU and the European Central Bank have followed and enforced US sanctions against Iran.

The EU’s myth of origin: All States and aspiring States have their “myth of origin” – that is, a story, true or false, of how they came into being. The myth of origin of the  European Union is that it is essentially a peace project to prevent wars between Germany and France, as if a collective tendency to go to war were somehow genetically inherited.  In reality the EU’s origins lie in war preparations – at the start of the Cold War which followed the end of World War 2 and the possibility of that developing into a “hot war”, a real military conflict between the two victorious post-war superpowers, the USA and USSR.

These two had been allies in defeating German Nazism and Italian Fascism but became bitter rivals after the World War ended in 1945. Europe was then divided between East and West. As fear of communism internally and externally stalked war-ravaged Europe, American policy was to push the continent’s former imperial powers towards closer economic and political integration with one another, pressurising them at the same time to abandon their colonies. US interests could then move in on these.

In 1947 the two Houses of the US Congress passed a resolution that “Congress favours the creation of a United States of Europe”. That same year US economic aid to revive Western Europe under the Marshall Plan was premised on the recipients supporting economic and political integration. In 1948 the American Committee on United Europe was established. For years this body channeled CIA (Central Intelligence Agency) money to the European Movement. That Movement’s national sections in each country became the main non-governmental propagandists for further EU integration and have remained so to this day.

In 1949 the USA wanted a rearmed West Germany inside NATO on that military alliance’s foundation. This greatly alarmed France, which had been occupied by the Germans just five years before. Jean Monnet, who was America’s man in the affair, came up with the solution. He and other technocrats had been pushing schemes of federal-style supranationalism for Europe since the end of World War 1. These had had no effect in preventing World War 2, but in the new situation post-1945, with the USA now supporting Euro-federalism as a bulwark against communism in Europe, Monnet and his colleagues saw their opportunity. To assuage France's fears of German rearmament Monnet drafted the Schuman Declaration, called after France’s Foreign Minister, proposing to put the coal and steel industries of France, Germany and the Benelux under a supranational High Authority as “the first step in the federation of Europe”.  This led to the European Coal and Steel Community Treaty of 1951.

A federation is a State, so the political aim of establishing a European State or quasi-superstate under Franco-German hegemony has been there from the start. The preamble to the German Constitution, adopted in 1949, speaks of Germany as “an equal partner in a united Europe”. Far from European integration being a peace project, therefore, the truth is that the first step towards supranationalism in Europe, the European Coal and Steel Community of 1951, was advocated and supported by the USA to facilitate German rearmament in the early years of the Cold War, and to reconcile France to that fact. 

The EU celebrates 9th May 1950, the date of this Schuman Declaration, as “Europe Day” each year. Jean Monnet became secretary of the supranational High Authority which ran the Coal and Steel Community. This was the predecessor of today’s Brussels Commission.

Following the Coal and Steel Community Treaty and against the background of the Korean War, the French Government, again pushed by the Americans, produced an ambitious plan for a European Defence Community (EDC). As Monnet put it in his Memoirs,1 ”Now the federation of Europe would have to become an immediate objective. The army, its weapons and basic production, would all have to be placed simultaneously under joint sovereignty. We could no longer wait, as we had once planned, for political Europe to be the culminating point of a gradual process, since its joint defence was inconceivable without a joint political authority from the start.”  This proposed Defence Community was to have a European Army, a European Defence Minister, a Council of Ministers, a common budget and common arms procurement under the overall aegis of a European Political Community. The treaty establishing the EDC was ratified by the German Bundestag, but it caused a political storm on both Right and Left in France and the French National Assembly narrowly rejected it.

Alerted by this setback the Euro-federalists decided henceforth to play down their ultimate goal of political integration and from then on to stress economic integration as the supposed route to prosperity. From 1954 onward “building Europe” was to be presented to Europe’s peoples as essentially a matter of economic growth and jobs. This would make political supranationalism more easily sellable to the different national publics. Supranationalism is the essence of the EU’s ideology.

A spin-off from the Cold War: Historically therefore the EU is a spin-off of the Cold War, which was pushed by the USA and its allies in the 1950s and subsequently to provide an economic underpinning in Europe for the NATO military alliance.  Following the 1956 Suez debacle, when the USA foiled the attempt of the British, French and Israelis to overthrow the Egyptian government by force, the Americans urged British Conservative Prime Minister Harold Macmillan’s government to apply to join the EEC. By doing that Britain would regain America’s favour, as well as obtain from America the guided missiles which alone would enable her to continue as the world’s third thermonuclear power. Britain had detonated her first H-bomb in 1957, but had no independent means of delivering atomic weapons to possible targets.

Pressed by the Americans, Britain applied to join the EEC in 1961. Ireland and Denmark applied to join simultaneously because of their dependence at the time on British trade.  As a major food exporter France wanted the Common Agricultural Policy to be fully in place, with its big subsidies for French farmers, before admitting food-importing Britain, which would want lower food prices, not higher ones.  This led French President Charles de Gaulle to veto British membership of the EEC in 1963 and again in 1967. Britain did not finally join the EEC, together with Ireland and Denmark, until 1973. American proponents of Euro-federalism also advocated a European monetary union from an early date.  In 1965 a US State Department memo advised the then Commission Vice-President Robert Marjolin to pursue a common European currency by stealth. It recommended suppressing debate until the point at which “adoption of such proposals would become virtually inescapable”.

In those years of the Cold War between the West and Russia “Euro-federalism” became the creed of a host of intellectuals on the Right and Left across the continent, disillusioned with the failed ideologies of the 20th century. On the political Right fear of communism made people comply with American advocacy of integration. On the Left traditional antagonism to “nationalism”, identifying that with imperialism and chauvinism, provided the rationale for theories which proclaimed capitalist supranationalism to be the forerunner of supranational socialism. In the meantime, there were lucrative careers to be made in pushing the integration “project”.

The euro as a response to German Reunification:  Forty years after the 1951 Coal and Steel Community and the 1957 Treaty of Rome setting up the European Economic Community(EEC) which followed, another major shift occurred in Franco-German power. This was Germany's reunification as a side-effect of the collapse of the USSR in 1991. It led these two countries to establish EU Economic and Monetary Union (EMU) and its single currency, the euro. Eurofederalist circles had for years been canvassing a currency union to give the EU bloc this essential features of statehood. West Germany’s absorption of East Germany and the establishment of a unified German State now gave the political opportunity.

This would give Germany a central role in running a potential EU world power. France in turn hoped that the euro would give it a political lock on Germany.  A Franco-German army brigade with joint officers and a joint command was simultaneously established as symbol and prototype of the European army of the future. Belgium, Luxembourg and Spain have since joined this common “Eurocorps”.   American support for German reunification was contingent on the reunified Germany remaining a member of Nato, even though Nato’s counterpart, the communist-bloc Warsaw Pact, had vanished with the dissolution of the USSR and the end of the Cold War. America’s involvement in European affairs was thus continued through Nato, and its continued support for further EU integration. The US pushed Nato military bases into the former Warsaw Pact countries.

The election of Donald J Trump could well be of earthquake proportions in EU / US relations. Separation has begun. No more will Washington and Brussels be as thick as thieves stealing our democracy. A new administration will be more favourable to Britain than to Germany. The US State Department may well be instructed to support emerging independent nation-states in Europe, the first of which will be the UK. The decades of American support for European integration is at an end.

Arguably it was always inevitable that this break would happen. The EU has pretentions for military power that will undermine Nato. And as American power retreats from its post-World War II zenith there would have been growing resistance to those who see the EU as a collective junior partner of the USA in world politics. People no longer want their country to be subsumed in an inward-looking out-of-date bureaucratic bloc whose post-Second World War raison d’etre has long passed into history. The shock of there being an anti-EU American President is nonetheless still great. The EU may soon loose its biggest and most influential supporter, the United States of America.

Research courtesy of Professor Anthony Coughlan from Tackling the EU Empire: Basic critical facts on the EU/Eurozone

 


[i] http://www.businessweek.com/ap/2012-06-27/kissinger-says-calling-europe-quote-not-likely-his

[ii] http://www.whitehouse.gov/the-press-office/2013/05/13/remarks-president-obama-and-prime-minister-cameron-united-kingdom-joint-

[iii] http://www.state.gov/p/eur/rls/rm/2013/jan/202650.htm

 

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The Obsession with Regulation

The European Commission does not just propose regulation affecting its own internal market but also aggressively seeks to export its rules beyond its own borders

15th November 2016
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The European Commission predicted that the once much-heralded Transatlantic Trade and Investment Partnership (TTIP) will boost EU GDP by 0.5% which will annually add €120 billion to the economy.[i] The gains seem significant but they represent little more than a rounding error in the calculation of economic output.


The speculative benefits are unlikely to be realised. TTIP is effectively dead. Its future looked bleak even before Bernie Sanders rose to prominence in the United States, acting as the bête noire of corporate interests, and long before the election of Donald J Trump. It was EU intransigence on regulatory issues that caused the gridlock and not the public’s overwhelming opposition to the Investor State Dispute Settlement (ISDS); the courts where nation-states can be sued and punished for policies detrimental
to corporate interests.


The fact that agreement on regulation and the precautionary principle was never reached caused the TTIP to be cast aside; another casualty of the EU’s obsession with regulation. Now that there will be a new President who was elected, not just on a ticket of opposition to trade agreements that export US jobs, but also, on a platform of removing job destroying regulation, the gulf is now wider than ever. A President Trump aims to achieve the proverbial bonfire of regulation.


Such promises, which aim to restore an economies competitiveness, are often made yet rarely delivered. An aspect of this is no doubt the international angle, an increasing amount of regulation comes from global bodies that are agencies of the United Nations. Repealing them will require a country to breach international agreements. Trump, however, is prepared to do this. The EU, however, will not.


There is an
international dimension at work and remains behind the initiation of many EU rules. There is a plethora of UN sponsored standard setting agencies which produce proposals for legislative standardisation across continents and beyond. An increasing amount of what we know as EU legislation is originating above the EU.[ii] The EU recognises as part of the case law underpinning the workings of the European Union recognises that international law is to be incorporated into EU law which therefore, via Brussels, becomes the law of each and every member state. The legal decisions of the European Court of Justice which confirm this are: Case 104/81, Kupferberg, Case C-192/89 Sevince and Case C-277/94 Taflan-Met.


Whilst the EU does passively receive some from upstream global sources such as the United Nations Economic Commission for Europe. The EU is not just a passive receives of diktats from the international organisations that sit above Brussels and are incidentally even more opaque than the arcane workings of European institutions. Global UN bodies are not the only source of regulation. The EU is still a source of much red-tape woe. What is more, Brussels seeks to export its regulations beyond its own borders. Pushing them onto its neighbours, over-seas through free trade deals and up to the global bodies; spreading the anti-competitive drive.


The European Commission does not just propose regulation affecting its own internal market but also aggressively seeks to export its rules beyond its own borders. Instead of liberalising the Single Market the EU is looking to raise rivals’ costs. This includes the most important potential trade deal in EU history. Instead of allowing European businesses to innovate more freely the Commission was attempting to make the USA apply what is known as the ‘precautionary principle.’


According to Professor Ragnar Löfstedt the Director of King's College London Centre for Risk Management whenever a new endeavour or products is proposed the European Commission can decide to ban a product until its producer demonstrates that it poses no (or an acceptable) risk. This attitude is at the heart of EU regulation and largely responsible for the growing complexity and rigidity of European Union law. Its use has been upheld by the European Court of Justice in legal cases including Pfizer Animal Health SA v. Council 1999 E.C.R. II-1961.[iii]


The precautionary principle stymies innovation and harms economic growth. It is this well-intended in theory, but pernicious in practice, belief that is responsible for the march of health and safety legislation.
[iv]


The stubborn requirement for this and not allowing free access to goods which do not comply with the precautionary principle had the effect of scuppering the Transatlantic Trade and Investment Partnership between the EU and the USA. The United States of America has a different approach to risk-management which is more open to innovation.[v]


From the European Commission perspective, free trade agreements are not just to encourage the export of goods but also exist to export its regulations. A condition of tariff free trade access and the faster transit through customs is for the non-EU state to apply common technical and health and safety standards. Compliance with EU environmental rules and a commitment to ensuring that competition is not being distorted by state intervention is also mandated. As is the protection of intellectual property rights and that public procurement will be open to all.[vi]


Some even demand that in exchange for tariff free trade with the EU countries sign up to the EU’s human rights agenda. For the EU trade is politics by other means. There is a price to be paid for accessing the EU’s internal market from outside the EU. So what is the basis of this regulation and is it a burden on businesses?


A case can be made that common standards boost trade and make it easier for both service providers and manufacturers. Value is added to goods through an increasingly complex chain of production over many jurisdictions, with different parts and programmes originating in several countries. Global production, it is argued, requires global regulation. The Brussels bureaucracy is not the only organisation that promotes this position. It is even shared by some in the United States of America and is espoused by the influential US group the Council on Foreign Relations.[vii]


What is more, the setting of different standards in one country can be used as a protectionist measure that makes it more difficult for one country to produce products for the recipient’s market. This is especially the case if the exporter must pass costly and time consuming safety checks.


The standardisation of regulation will therefore remove these technical barriers to trade. Certainly, it is the case that supply lines are always improved if there is interoperability. The difference between domestic and export markets will also be reduced making it easier for businesses to operate in one environment.


The arguable increase in trade does not consider the probability that some businesses can reach agreement themselves making the regulation unwarranted. The desire for regulation also fails to consider that the costs of compliance. The level of interference has reached a point where it becomes excessive. Standardisation is also monotonous and impinges on creativity harming innovation.


There is substantial evidence which suggests that overregulation is holding back economic growth.
A report on the burdensome cost to business was commissioned by the pro-EU Prime Minster, Tony Blair, during his time in office. The 2005 report by the Better Regulation Task Force for the then premier estimated that regulation cost the British economy 10-12% of GDP. That amounts to approximately £150 billion per annum. This cost is divided between, administration which entails 'familiarisation, record keeping and reporting, including inspection and enforcement.' This accounts for around a third of the burden with the remainder coming from the 'costs directly attributable to the policy goal.' At least half of this regulation, and therefore at least half the costs, originate from the EU; with this amount steadily growing. Half the cost equates to £75 billion pounds per year.


Other arms of the state have, however, come to different conclusions with civil service impact assessments reaching a different figure. These have been analysed by the British Chamber of Commerce in their Burdens Barometer 2010 report. According to this the annual cost of EU regulation is £7.5 billion per year, still not an inconsiderable sum.[viii]

Who is correct?


The figure derived from the British civil service may well underestimate the costs of regulation. Their impact assessments have been criticised by the Better Regulation Task Force. This report argued that the evaluations by Whitehall are inadequate. They lack a full cost benefit analysis of how the regulation is to be implemented and enforced. What is more, the impact assessments do not include nor fully explore other, less costly, alternatives to regulation.


The EU also produces its own impact assessments on the advantages and disadvantages of its own regulations. Just as the EU regards that the appropriate level for law making is at the European level it also regards its rules as beneficial with affordable costs. The fundamental floor at the heart of EU impact assessments is the fact that the Commission, the body which produces the legislation, also conducts the cost/benefit analysis of the proposals.[ix]. The bureaucracy, which incidentally leaves implementation to the EU’s arm’s length agencies and the member states, are unlikely to consider their own ideas as defective.


What is more, the monitoring of the legislation once in force also rests with the European Commission, the same body that has the monopoly on introducing the directives and regulations.


The Roman poet, Juvenal, in his satires famously asked Quis custodiet ipsos custodes? This translates as “Who will guard the guards themselves?" Or "Who watches the watchmen?" When it comes to law making in the EU the answer is that the EU is its own guardian. The future of enterprise in Europe rests with the benevolence, or perhaps, malevolence of the European bureaucracy.


Even supporters of the EU and some senior figures in the European Commission have admitted that the overregulation of business is harming the economy.


Peter Mandelson, as Secretary of State for Trade, told the Confederation of British Industry conference on 8th November 2004 that the cost of EU regulation amounts to holding back GDP in the EU by as much as 4%.[x] He was soon to become the EU Commissioner for Trade, taking up that post just two weeks later. This regulatory burden did not decrease during his time at the centre of the EU.


Those in the UK that believe that EU regulation is seriously to the detriment of enterprise are not alone. The Netherlands has also concluded that the EU is bad for business. As long ago as 2002 the Dutch government estimated that the administrative burden of regulation alone, which they define as ‘the costs imposed on businesses when complying with information obligations stemming from government regulation’ cost them 3.6% of GDP.[xi]


Other Dutch reports have come to similar conclusions. In 2004 a report commissioned at the request of Gerrit Zalm, the then Dutch Deputy Prime Minister who also served at that time as the Netherland’s Finance Minister, estimated that the administrative burden on business in his country cost 3.7% of economic output. These conclusions were supported by the Organisation for Economic Co-operation and Development (OECD). In 1997 they predicted that regulatory reform in the Netherlands could boost Dutch GDP by 3.5%.[xii]


Like the UK, not all Dutch regulation, comes through the imposition of European Union directives and regulations. In the Netherlands, it is estimated that the EU element amounts to 40%. The proportion for the UK is higher, now as much as 60%.


On 10th October 2006 G
ünter Verhuegen, the European Commissioner for Enterprise and Industry and a Vice-President of Commission stated that,

"Many people still have this concept of Europe that the more rules you produce the more Europe you have. The idea is that the role of the commission is to keep the machinery running and the machinery is producing laws. And that's exactly what I want to change."


Verhuegen’s bid for reform was, however, blocked according to the Commissioner by the EU’s administrative culture.[xiii] Even the Vice-President could not stop the legislative avalanche.


G
ünter Verhuegen also estimated that the annual cost of EU regulation across the EU amounted to €600 billion per annum (around 5.5% of GDP), while the benefits of the Single Market amount to only €160 billion: therefore the costs exceeded the benefits by a staggering €440 billion.[xiv] Later, in a letter from Commissioner Verhuegen to Bill Newton-Dunn MEP, on 18th June 2007, the Commissioner gives the overall figure of just the administrative burden of EU level legislation as costing 3.5% of GDP for all member states and this sum would be similar for the UK.[xv] What is more, the figure of three and a half per cent actually excludes the costs that directly relate to the policy goal making the final figure much higher.


It appears that even these, now former, Commissioners have a better recognition of the harm that EU rules have on competitiveness than British civil servants whose analysis of the costs of regulation in their impact assessments clearly underestimate the burdens that are being placed on businesses. Yet they could stop the ever-growing amount of EU rules. If the EU has not changed this damaging practice after more than a decade of governments recognising there is a problem what hope is their of change now… ?


All measures of the cost of EU regulation show that there is indeed a significant price that business and therefore consumers have to pay as a result of EU rules. Across the EU enterprise, production and entrepreneurship have been replaced with regulation, inspection and compliance. Even the Confederation of British Industry mentioned in a report on the European Union that, The EU has moved too far from ‘adding value’ to ‘adding functions’, resulting in ‘mission creep’ in several areas.’[xvi]


Yet why at this difficult economic time is it still in place and continually being added to? Or, more specifically, cui bono; who benefits from the EU?


The reasons for EU regulation

Apart from the precautionary principle there are also other factors that have led to the growth of regulation.


Sir John Robert Seeley, the historian and writer on religious affairs, in his 1883 book the
Expansion of England wrote of the British Empire that we seem, as it were, to have conquered half the world in a fit of absence of mind.’ The Empire of the European Union, a realm of regulation, has conversely been deliberately established. It is not a free trade area that has been on an accidental legislative binge. The higher authority of the EU uses law to achieve its goal; that is the building of a monolithic system of political control that is aimed, rightly or wrongly, at reigning in the excesses of the nation states. By implication the nationalist passions of the citizens of its member states are also kept in check. Or so the thinking goes. Building Europe requires the establishment of a body of law known as the acquis communautaire. A new political power cannot be said to exist unless it is an active law maker. The European Commission recognises that its political governance cannot be established in an absence of law.


Whilst the EU is largely immune to influence from national democratic institutions it is very much open to lobbying for new legislation from both environmental groups and multi-national businesses alike. Small and medium sized enterprises, who suffer most from red-tape, do not have the finances the time nor to defend their interests. This is not surprising; since 2010 there have been
3580 new EU rules on business that would take 92 days to read.[xvii] Naturally the bigger the business the greater the resources it can spend on both being consulted by Brussels on future legislation and on lobbying for laws that are in their interests. This can include regulations that add costs on to competitors. Despite the apparent quest for harmony between the people of Europe, EU law making can also be manipulated to raise the costs of a rival country.[xviii]


The City of London and the UK’s financial services industry has borne the brunt of this assault. Recent regulations concerning; Credit Rating Agencies, and the establishment of the European Systemic Risk Board, the European Banking Authority, the European Securities and Markets Authority the European Insurance and Occupational Pensions Authority are prime examples. As is the Alternative Investment Fund Managers directive.


The expansion of the EU is also another factor. The accession of the once Soviet dominated states did not lead to a new European paradigm where excessive regulation would be resisted. Far from leading to a liberalisation of the EU the eastward expansion became another excuse for yet more law making. In the opinion of the Commission the former communist states of Eastern Europe had insufficiently developed law for a capitalist free market. Apparently their economies were in need of stewardship by the EU. The standardisation that followed led to even greater EU interference.


The former President of the Czech Republic, Václav Klaus, said, during his time in office that, "every time I try to repeal some Soviet-era directive, I'm told that whatever I am trying to scrap is a requirement of the European Commission."


The European Commission is not the only EU institution that is adding to the legislative morass. A member of the Commission Legal Service blames another branch of the EU, the European Parliament. ‘The European Parliament, under the co-decision [ordinary] procedure, is allowed to propose uninformed, irrational, impractical amendments, safe in the knowledge that they have no responsibility for implementation.’[xix] Other EU institutions are also part of the problem as any ambiguity is clarified by the European Court of Justice who inevitability add evermore complexity to EU law; which once in place is extremely difficult to repeal.[xx] EU rules resemble the complicated financial devices bankers use like their debt swaps and derivatives. Few in the banking sector understood how they operated in practice let alone the risks involved. Complex EU law is equally economically damaging.


Excessive EU regulation is a cost too far. The European Union is most definitely in relative, if not actual, economic decline largely because of excessive regulation.


It is only fair to leave the last word to the EU. According to a report by the European Commission titled Global Europe 2050 in the year 2000 the EU accounted for 25% of world economic output. However, by 2050 its share of global GDP will be ‘as low as 15%.’ The EU’s own report goes onto say that,
By 2050, Europe’s share of global economic product may be lower than it was before the onset of industrialization, hardly a trend leading toward global economic dominance.’[xxi]

This article was in Commerce Review

 


[i] http://ec.europa.eu/trade/policy/in-focus/ttip/

[ii] North, Dr Richard, The Norway Option: Re-joining the EEA as an alternative to membership of the European Union, the Bruges Group, 2013, pages 10 - 28

[iii] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61999A0013:EN:HTML

[iv] Mason, William, The Costs of Regulation – and How the EU Makes Them Worse, the Bruges Group, 2008

[v] http://www.truthabouttrade.org/2013/07/03/u-s-eu-trade-agreement-and-the-precautionary-principle

[vi] http://ec.europa.eu/trade/policy/countries-and-regions/agreements/#_europe

[vii] http://www.cfr.org/trade/better-regulation-freer-trade/p28508

[viii] UK-EU economic relations – key statistics, House of Commons Library, SN/EP/6091, 13th February 2013, page 6

[ix] http://ec.europa.eu/governance/impact/index_en.htm

[x] Financial Times, 8th November 2004

[xi] Regulation - Less is More: Reducing Burdens, Improving Outcomes, A BRTF report to the Prime Minister, 2005 http://www.bis.gov.uk/files/file22967.pdf

[xii] Review of the Dutch Administrative Burden Reduction Programme, World Bank Group, 2007 http://www.doingbusiness.org/~/media/FPDKM/Doing%20Business/Documents/Special-Reports/DB-Dutch-Admin.pdf

[xiii] http://euobserver.com/economic/22610

[xiv] http://www.worldcommercereview.com/publications/article_pdf/66

[xv] http://www.publications.parliament.uk/pa/cm200607/cmselect/cmeuleg/519/519we10.htm

[xvi] CBI, Our Global Future: The business vision for a reformed EU, November 2013

http://www.cbi.org.uk/media/2451423/our_global_future.pdf

[xvii] http://www.freebritain.org.uk/_blog/Free_Britain/post/newrules/

[xviii] http://www.brugesgroup.com/SpeechByRolandVaubel2010.pdf

[xix] Bellis, Robin, “Implementation of EU legislation. An independent study for the Foreign & Commonwealth Office, 2003,

[xx] Mason, William, The Costs of Regulation – and How the EU Makes Them Worse, the Bruges Group, 2008

[xxi]  http://ec.europa.eu/research/social-sciences/pdf/global-europe-2050-summary-report_en.pdf

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The EU, Lichtenstein and Immigration

In 2013, writing for the Institute of Economic Affairs, Robert Oulds of the Bruges Group, first explained that Britain can remain fully engaged with the Single Market and still have restrictions on immigration.

14th November 2016
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The media would have it that events are moving towards a clean Brexit. Yet it is still worth considering that Britain does have other options. And these are not as weighted towards the interests of Brussels and Berlin as our European competitors mistakenly believe.

Other EU leaders should bear this in mind, their demands for continued free movement in exchange for being a part of the Single Market, or a free trade agreement, are not only unreasonable but also unenforceable. Not only do other countries have trade agreements without the obligation for free movement, even in the Single Market one small, yet notable, country has opted out from freedom of movement.

A core principle of the European Union is the free movement of peoples between member states of the EU. This is one of the main areas where people will see the effects of EU membership. The rules governing this are contained within EU Directive 2004/38/EC.

Under its rules deportation can only happen when ‘The personal conduct of the individual concerned must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society.’ It also states that, ‘Previous criminal convictions shall not in themselves constitute grounds for taking such measures.’[i]

Other areas on controversy concern the economic impact of migration. One a half million non-British citizens of other EU member states work in the UK, this constitutes around 5% of employment in Britain.

 

According to the respected think tank specialising in issues relating to immigration, Migration Watch UK, an immigrant will have to earn approximately £27,000 to make a positive financial contribution to the British economy. This figure is based upon the average earnings in Britain with an additional amount added on to make up for the cost of the additional infrastructure to support the new entrants into the UK. The need for extra provision in housing and education are issues. Naturally, an increase in demand without a corresponding increase in supply will drive up both rents and house prices. Immigration also influences depressing the average wage of existing British residents.[ii]


The least well of existing residents lose the most from immigration. For each 1% increase in the number of working age immigrants there was a 0.6% decline in the pay packets of those in the bottom 5% of the pay scale. The lowest paid ten per cent suffered from a 0.4% decline in their wages.[iii] What is more, the least skilled existing British workers had a reduction of 0.5% in their salaries.[iv] Over time salaries should increase, especially as inflation has been marginally going up.


Another cost of immigration is the transfer of money that migrants have earned in the UK back to their

country of origin. According to the World Bank each year $1.2 billion is sent from Britain to Poland alone.[v]

 

This is money that is leaving the UK and benefitting another state. This transfer of funds out of the UK to family in home state their home state, or to fund investments in their country of origin, is of enormous economic importance to many who reside in Eastern Europe.[vi]

The economist Professor Tim Congdon estimates that the influx of 700,000 new workers from Eastern Europe had displaced some British born workers, costing the UK economy ⅜ of 1% of its economic output.[vii] This is not a great figure, yet for those that have a lower chance of employment the effects can be devastating.

Much of these costs, however, rely on the immigrants being economically active. According a report by the European Commission the number of non-working immigrants from the EU had risen from 2006 – 2012 by 42% to more than 611,779. According to the same report between 2008 and 2011 there was a 73% increase in the number of people from the EU coming to Britain without a job..[viii] Of the more than six hundred thousand economically inactive EU migrants to Britain as little as approximately 10% of them are claiming job seekers allowance.[ix] Yet, there is still a cost to their residency in the UK. It has been estimated in the Commission report that they are costing the British National Health Service £1.5 billion per year.

 

Dry economic numbers are not the only considerations when assessing the impact of immigration from the EU to the UK. There are also social considerations and matters of community cohesion. The former Labour Home Secretary, Rt Hon. David Blunkett MP, warned on 11th November 2013 that the influx of Roma from Eastern Europe may cause riots on the streets.[x]

 

Though there is much discussion about migration from the rest of the EU to the UK, 1.8 million UK citizens live in other EU states. They take advantage of the free movement of persons - a right enshrined in EU treaties. Those that have established a residency, which will include both living and owning property, in an EU member state will have their rights protected upon withdrawal.

 

This entitlement is known as an ‘executed right’. Article 70 b. of the Vienna Convention states that the withdrawal from a treaty ‘Does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination.’ This view is supported by the constitutional expert Lord McNair. He concluded that such rights established by a treaty will remain in force even if the agreement is terminated by Britain’s exit. In law they are considered to be executed by the treaty and “have an existence independent of it; the termination cannot touch them.” Their status will be guaranteed because of the “well-recognised principle of respect for acquired [vested] rights.”[xi] Furthermore, it is a legal norm and the Oxford Journal in its year book on international law argues that Acquired Rights are Customary Law and therefore take precedence over national law at the international level. And will be regarded as such by the International Court of Justice in The Hague.

 

Indeed, any attempt to cancel the right of French and German citizens already in the UK live and work in Britain would be diplomatically contentious. London has a large French population. According to a November 2013 report by the Centre for Research and Analysis Migration, between 2001 and 2011 immigrants to the UK from the EEA contributed 34% more in taxes than the British state spent on supporting them.[xii]

 

Therefore the impact of Britain leaving the EU will not be that great for those EU citizens already resident here or for British citizens living abroad. The difference will be felt by those who move to a different state after British withdrawal.

 

These issues surrounding immigration are used by both sides in the on-going debate as to whether Britain should remain in the European Union. Some argue that Britain should leave to control immigration from Europe, on the other side the issue of the free movement of persons is intrinsically linked both politically and legally to free access to the EU’s Single Market. That has been made clear by the German Chancellor Angela Merkel and should Britain choose to leave the EU free movement will be a condition on any new free trade agreement.

 

Yet there is another way. Britain can leave the but keep full access to the EU’s Single Market by re-joining the European Free Trade Association and remaining in the European Economic Area. This will also allow for some action to be taken to control immigration.

 

Liechtenstein, an EEA member with less potential influence than Britain, continues to use clauses in the EEA agreement to restrict the movement of persons. Article 112(1) of the EEA Agreement reads: ‘If serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising, a Contracting Party may unilaterally take appropriate measures under the conditions and procedures laid down in Article 113.’ The restrictions used by Liechtenstein are further reinforced by Protocol 15 (Article 5 – 7) of the EEA agreement. This allows Liechtenstein to keep specific restrictions on the free movement of people. These have been kept in place by what is known as the EEA Council.[xiii] Last year Lichtenstein gave residency to just over 70 people. At present, in the EU, Britain is obliged to accept hundreds of thousands each year.

 

There will also be greater latitude to restrict non-British EU citizen’s access to benefits and to deny residency to those who are deemed to not have sufficient resources to support themselves. The current debate in Britain on immigration largely ignores the role of the European Court of Human Rights and the European Convention.

Article 3 of the Convention (inhuman or degrading treatment or punishment) and Article 8 (private and family life, his home and his correspondence) would also be relevant to the issue of immigration. These two articles are often taken together, especially in cases of repatriation.

EEA/EFTA states are outside Article 6 of the EU’s Treaty on European Union, which states:

2. The Union shall accede to the European Convention for the Protection of human Rights and Fundamental Freedoms. Such accession shall not affect the Union’s competences as defined in the Treaties.

3. Fundamental rights, as guaranteed by the European Convention for the Protection of human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union’s law.


Immigration into the UK cannot tackled properly until the, non-EU, European Convention is interpreted with greater diligence. There is scope for this through exiting the EU but remaining in for the time being the European Economic Area.

The EEA relevant rule relating to freedom of movement has qualifications, conditions and limitation.

(10) Persons exercising their right of residence should not, however, become an unreasonable burden on the social assistance system of the host Member State during an initial period of residence.  Therefore, the right of residence for Union citizens and their family members for periods in excess of three months should be subject to conditions.

(12) For periods of residence of longer than three months, Member States should have the possibility to require Union citizens to register with the competent authorities in the place of residence, attested by a registration certificate issued to that effect.

(22) The Treaty allows restrictions to be placed on the right of free movement and residence on grounds of public policy, public security or public health.

Article 7, 1 b)

(b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State.[xiv]



No right is absolute, and neither is freedom of movement within the EEA. What is more, EEA rules only apply to EFTA nations after they have assessed the relevant legislation and applied it according to their own interpretation of what freedom of movement means.

Much can be done unilaterally. As an EEA member outside the EU, the UK will also can re-write EEA relevant rules. Whilst they must still broadly conform to existing legislation it will grant some latitude to make sure that British interests are better served.

Iceland unliterally opted out from the free movement of capital after its crash in 2008[xv], Lichtenstein is outside the free movement of persons. Britain can do the same. Knowing this tells us that the EU’s negotiating position is a weak one. We will have our cake and eat it, and apportion it to our own citizens and residents first.

This article was in Commerce Review


[i] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:229:0035:0048:en:PDF

[ii] Anthony Scholefield, Warning: Immigration Can Seriously Damage Your Wealth, the Social Affairs Unit, 2007

[iii] Christian Dustmann, Tommaso Frattini and Ian Preston, CDP No 03/08, The Effect of Immigration along the Distribution of Wages, 2008

[iv] Gavin Thompson and Daniel Harari, The economic impact of EU membership on the UK, SN/EP/6730, The House of Commons, 17th September 2013

[v] http://www.theguardian.com/global-development/datablog/2013/aug/09/remittances-britain-data

[vi] http://blog.euromonitor.com/2011/09/regional-focus-remittances-inflows-crucial-for-many-eastern-european-consumers.html

[vii] Congdon, Professor Tim, How much does the European Union cost Britain? 2013

[viii] http://www.telegraph.co.uk/news/worldnews/europe/10375358/True-scale-of-European-immigration.html

[ix] http://niesr.ac.uk/blog/benefit-tourism-commission-gives-us-some-facts#.UoJIi5hFB2t

[x] http://www.telegraph.co.uk/news/uknews/immigration/10442352/Roma-migrants-could-cause-riots-in-cities-warns-Blunkett.html

[xi] Lord McNair, The Law of Treaties, 1961, pages 531 – 532. And, Leaving the EU, House of Commons Research Paper, 13/42

[xii] http://www.cream-migration.org/publ_uploads/CDP_22_13.pdf

[xiii] EEA Council Decision No. 1/95, Official Journal of the European Communities, 20th April 1995, pages L 86/58 and 86/80

[xiv] DIRECTIVE 2004/38/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2004

[xv] Official Journal of the European Communities, 3 January 1994, pages L/28, 176-8 and 562.

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Nobel Laureates - Britain leading the world

Remoaners should not doubt our abilities as a nation

10th November 2016
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Remain campaigners spent much time saying that we British must stay in the EU, as if we are not clever enough to exist without the help of the EU bureaucrats.
 
They seem to have forgotten that it was British engineers and entrepreneurs that developed the Industrial revolution that gave power to the world first with steam and then electricity.
 
Engineers such as Watt, Faraday and Brunel started the tradition. From 1812 the London Stock Exchange enabled industrialists to raise the money to build and develop inventions that would benefit the population.
 
By the later part of the eighteenth century most homes in cities and large towns had access to pure water, and because of the work of Joseph Bazalgette sewage systems were built to further protect the population of London (3 million) from disease and infection.
Our inventiveness has contributed to safety regimes in many industries, Davy lamp was one of the first. Radar has provided security in peace and war in the air or on the sea. The theories of mathematicians from John Napier to George Boole have been vital support to scientists and engineers.
 
Travel has been safer and faster since roads were paved by MacAdam. The jet engine and internal combustion engines, the compression engine was patented in the UK two years before Diesel in Germany.
 
The British contribution to improvements in healthcare specifically anesthetics, inoculations and vaccines have helped to ease the suffering and prolong life. This work is continuing with DNA and the Genome project.
 
In 1901 The Nobel Institute inaugurated a way to recognise outstanding work in science medicine and literature around the world by awarding Prizes each year. To count up the number of prizes won gives an indication of education and abilities of the inhabitants of the countries of the world. According to the Nobel website Britain scores well compared with other countries. Our first Nobel laureate was Randal Cremer who won the Peace Prize in 1903. In 1904 we won the Prizes for both Chemistry and Physics, Ramsay and Rayleigh respectively. The most recent being for Physics, Economics and Chemistry in 2016, in 2013 for work with the Hadron Collider at CERN, Medicine in 2012 and in 2015 Economic Sciences. Through the Twentieth Century our population, of now 64 million, has earned 80 Nobel Prizes. Germany has won 72. Present population 80 million whilst USA has the poorest record of 257 from a population of 316 million.
 
Despite this historic and ongoing success Remoaners still do not have faith in this country’s capabilities.
 
A major part of the argument put forward by proponents of the EU is about trade, which somehow ignores the fact that Great Britain has existed as a unique entity for one thousand years, and it became the most successful nation in the world and the power house of industry for the whole world. Although, there are, of course, some facts regarding out activities in the world during that period that we would like to forget they are eclipsed by the immense sacrifices that the people of Britain and its, then, empire made in fighting tyranny across the globe. Including two ruinous world wars; the endeavours, of which, resulted in our financial demise.
 
For some reason, in Great Britain achievement and especially industrial achievement are a type of conversation to be avoided, and very few people are actually aware that we have accounted for very much internationally. Indeed, if you were to stop an average British person on the streets and ask them to name the ten top British inventions, or discoveries of world wide significance, you may get a radar from some of them and even the jet engine from slightly less. But,  you are more likely to get the Beetles, or Manchester United from most ! Having lived in two countries in the present EU, including Germany, I am aware that they are proud of their industrial heritage  and delight to recount it for you.
 
All the above has resulted in a lack of belief in our own abilities, and a belief reinforced by the Stay In the EU supporters who insinuate that Great Britain could not survive on its own. So I have set about finding out just what Great Britain has given to the world, and you would be surprised . I admit when you come to sports that there were always people who kicked something or hit objects with a stick, but it is the nation that recognises this as a sport and lays down the rules for it, that truly turns kicking the odd stone, into the game of football, or hitting stones with sticks to becoming the game of golf etc.. Indeed, a Japanese survey into which nation had contributed the most worldwide adaptable inventions concluded that the British were responsible for 40% of all of them.
 
World’s top three nations for Nobel Laureates:

America            270 Laureates    Population         324,464,680      = 1 per 1.2 million
United Kingdom 109 Laureates    Population         64,542,000        = 1 per 0.59 million
Germany           76 Laureate       Populatio           82,506,000        = 1 per 1.085 million

 
As you can see the American population is c. 5 times greater than the UK.
 
Why then do the Remoaners doubt our abilities as a nation?
 
So just what were these gifts to the world that Great Britain invented. The list below is not exhaustive but it probably includes all the major inventions and discoveries: -
 
Steam engines.
Railways.
Industrial revolution.
Flying shuttle.
Iron ships.
Screw propeller.
Worldwide cable networks.
First radio signals sent/received from these shores.
First public radio broadcasting service.
World’s first radio factory.
The jet engine.
Radar.
Antibiotics.
Vaccination.
Splitting the atom.
The (not so attractive socially, but nevertheless the atom bomb was invented by America, Canada and Great Britain, in partnership).
The world’s first commercial nuclear power station.
Television.
The English language.
Darwin.
Newton.
Military tank.
Electronic programmable computer.
Mechanical programmable computer.
The internet.
Consistent winner of world land speed and water speed records.
Many of the world’s racing cars, including Mercedes are engineered here.
Currently building the Sabre engine (space/air) engine.
Carbon fibre.
Graphene.
The G-nome.
Structure of DNA.
Threshing machine.
Iron Bridge.
Percussion ignition (firearms).
Electromagnetic induction (The electric motor/dynamo).
Steel.
Jump jet.
Hovercraft.
Postal system.
Bolean algebra.
The light switch.
Electric light bulb.
Cats eyes.
DNA profiling.
World’s first SMS message.
Power loom.
Rugby (forerunner to American football).
Modern golf.
Modern tennis.
Modern football.
Sewing machine.
Cricket.
Self-winding watch.
Electric vacuum cleaner.
Thermos flask.
Lawnmower.
Float glass.
Electric telegraph.
Pneumatic tyre.
Fax.
Hypodermic syringe.
Reflecting telescope.
Disc brakes.
Steam turbine.
Marine chronometer.
Modern torpedo.
Glider (First heavier than air machine).
Seed drill.
Modern Cement.
Stainless steel.
The principle of the electric transformer.
Waterproof material.
Photography.
Tin can.
Smallpox vaccine.
Hydraulic press.
First purpose built fighter aircraft.
Diagnostic ultrasound.
Rubber band.
Electric clock.
Electro plating.
Stun grenade.
Corkscrew.
Anaesthetic.
Hydrogen-oxygen fuel cell.
Blood circulation.
Electromagnet.
The proton (discovery).
Valve (radio).
Submarine.
Adjustable spanner (wrench).
Modern crane.
Two stroke engine.
Compression ignition (the system used for diesel engines).
Toaster.
Chobham armour.
TarMacadam (road surfaces).
Asdic.
Carbon arc lighting (this preceded the electric light bulb).
Bailey Bridge.
Vulcanisation.
Ophthalmoscope.
Davy lamp.
 
 
Research by Vernon J Yarker

 

 

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Interview with Kristiina Ojuland

Estonian Foreign Secretary (2002 - 05) talks to the Bruges Group

David Wilkinson
7th November 2016
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Understanding the Central European Revolt
Kristiina Ojuland, the Estonian Foreign Minister who took her country into the EU, has since had a somewhat Damascene conversion. Despite being the Foreign Secretary who negotiated Estonia’s accession to the EU, she is now a Eurosceptic having recently and even described the EU as a failed state and a betrayal of everything European.
 
Kristina explains the growing revolt against the EU that is emerging in Eastern Europe, their fears regarding mass migration and concern over another empire to the east. Kristiina Ojuland is particularly concerned about the devastating effects in countries like Estonia of de-population, the brain-drain and family break-up caused by people emigrating to countries like Britain. She, along with others in Eastern Europe, is concerned about the replacement of their absent population with EU quotas of migrants.

Listen to the full interview below.

 

The Podcast

Kristiina Ojuland

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Tax Reform - Post-Brexit

Tax simplification for Brexit

Flat taxes to drive economic growth

Sir David Roche
9th November 2016
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The sole aim of Tax Reform is to get in more taxes.

 

The UK is running a large deficit between what it receive in taxes and what it spends on services. Albeit money is cheap, it cannot go on for ever. With money so cheap it is an ideal time to make changes.

 

The tax code is now very complex and needs to be thrown out and replaced with a very simple model all can understand.

 

The reason it is so complicated is that successive, Labour and Conservative governments have given ‘tax breaks’ to their supporters to get elected. They have stayed in the code while new ones get invented.

 

The Hall Rabushka model is a place to start. This book on Flat Tax was published in 1985. It suits a closed continental economy like America but would need some changes for the English Economy. The difference being that getting in more taxes is competitive. It has nothing to do with ‘International cooperation on tax avoidance’.

 

However, the principal is that a tax return should be done on a post card is a good one. The post card looks like this: [with some simple numbers]

Total Annual Income                                                            £110,000

Tax free allowance                                                                   10,000

Net taxable income                                                                 100,000

Tax @ 25%                                                                               25.000

Post Tax income                                                                        85,000

 

The big note is that other than the tax-free allowance to keep the lowest paid out of the tax threshold there are no other allowances. The other reason to have a tax-free allowance is that it is expensive employing people to collect small amounts of tax.

 

The tax payer can do what he likes with his post tax income. He can give some of it to charity; save some for his pension or spend it. Whole industries like the pension industry, the charity industry, the ISA industry will not like it and do its best to stop it. The number of tax collectors and accountants who calculate tax will be reduced dramatically. They will not like it either. But the taxpayer will.

 

The Daily Telegraph did a tax computation on this taxpayer some years ago. By the time they used the current tax avoidance schemes, pension, ISA, EIS etc. They got his tax paid down to about £4,000. “Aggressive Tax Avoidance” is caused by Governments.

 

‘Trickle down’ and ‘Net Immigration’

When Mrs Thatcher reduced the top rate to 40% this idea was that this rich people with more money to spend would spend it in England so it will trickle down into the economy. What happened was ‘trickle out’. Net immigration is the difference between poor people coming into the country and rich people leaving it.

 

Tolerance and the Treasury model.

England is the most tolerant country in the world but there is an intolerance to ‘high earners and bankers’. As they must live in England to bank or play football they all pay tax. The Rich are in fact the business owners who live in Monaco or Switzerland. We want them back because we want their money. A straw poll of Verbier residents, who currently pay no tax, would pay 25 to 30 percent of their world-wide income for the right to live in England on the above model, subject to no inheritance tax. The Treasury model is a closed system and does not include this vast store of wealth that could be tapped.

 

Inheritance tax; in 1979 Mrs Thatcher abolished exchange control which was designed to stop money flowing out of the country. The result was that so much money flowed into the country that the Bank did not know what to do with it; and at $2.40 to the £.

 

Inheritance Tax currently produces about 3.5% of total revenue, and it costs an estimated 40% to collect. It is not much compared to the flow of money into the country if it were abolished. If we get these people back, we get 20% of all they spend. Trickle Down would finally work.

 

Chancellor Osborne always knew about this but was been too frit to do it. He had a go at limiting tax relief to charities and got roundly beaten. He wanted to reduce corporation tax but fears abolishing it on the Estonian model:

 

Siim Kallas in Estonia found that company tax was yielding the least revenue and abolished it. But with a twist! No company tax was to be charged on company profits that remained in the company or its subsidiaries, but taking money out of the company by way of dividend, director’s entertainment, cars etc was subject to the flat tax rate, then 26%. This was done by simply adding an extra line to the monthly VAT form. This had two magical effects; firstly, revenue came in immediately instead of an 18 month wait and as companies did not have to depress their profits, which any accountant can do, to avoid tax. They declared as much as they liked and in a year, this doubled the country’s GDP.

 

Nothing had changed but the GDP pundits thought it must be a great place to invest, which they did, making it a self-fulfilling win, win situation.


With the confidence that comes from having available new computer models it is the time for a body in the City to research and run it on a simplified basis on a totally fiscal and non-political basis.

The current guide to taxpayers is here.

 

Sir David has been an advocate of Tax Reform for some years. Most notably in Estonia, Slovakia and more recently to an African country that has hopes of being the ‘Dubai of Africa’. With the Tax Payers Alliance he contributed to the Forsyth Commission. He has had contributions in these efforts from the leading Tax Chambers in London and a leading City economic Think Tank.
Sir David served as a Director of private companies in the sectors of energy; leisure, shipping, and Eastern European property. He represented Siemens Wind Energy on the Board of The British Wind Energy Association, and advised on Estonian, Czech & Slovak, and Balkan investments. Sir David has been the Chairman at Plaza Holdings Ltd since 2002 and a director and founder of Neasden Aggregates in the cement industry at present. He has been the Chairman of the Board of Directors at Strategic East European Fund . He held various positions including serving as the Chairman to Carlton Real Estate Plc and as a Member of the Estonian Government Tax Reform Commission from 1993 to 1994. Sir David is a regular commentator on the BBC, other television networks. Sir David qualified as a Chartered Accountant with Peat Marwick Mitchell, (now KPMG). He is also an FCA. He was senior manager UK Banking at Samuel Montagu, (now. HSBC)
Sir David was educated at Wellington and Trinity College Dublin.

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Obituary: Betty Simmerson

Martin Page Remembers Betty SimmersonLovers of freedom everywhere and supporters of the struggle to restore Britain`s national independence and sovereignty will be saddened to learn of Betty Simmerson`s death ( on 21st October at the age of 89 ), and yet inspired to learn, or learn more, about her life. Coming from a modest background in Britain, s...
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A Deeply Troubling and Wrong-Headed Decision

When it comes to using the prerogative for "less Europe", there are implied limitations which do not seem to exist for "more Europe".On 3rd November 2016 the Divisional Court handed down its judgment in R (Miller) -V- Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin). The court has, to the surprise of most informed observer...
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Leave Means Leave

Richard Tice, Chairman of the Leave Means campaign, will be speaking at the Bruges Group conference on Saturday 5th November. Here Richard gives a summary of what he will be telling us.
Please see below details about our forthcoming conference:


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Frequently Asked Questions

What you need to know to navigate your way throught the referendum debate.

21st June 2016
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 Economy

  Jobs

  Trade

  Law and Order

  Britain and the UK

  Post-Brexit

  Worker’s Rights and Trade Unions

  Investment

  Environment

  Peace and Security

  Students

. Mobile Phones 

. Media

Economy

How much would the UK actually save if we left?

The net government EU contribution for 2015 is effectively £8.5 billion.

 Read on...


Haven’t Brexit fears affected the value of Sterling? Will the value of the Pound in my pocket suffer if we vote to leave? .

There are been several factors, including low UK interest rates, and trader caution in the light of wider global economic pressures. However, economists at the private bank Berenberg believe that there is a low probability of a Sterling crisis post-Brexit. However, there is separate evidence that the EU faces massive difficulties of its own in the year or so ahead, which could impact the euro on markets, putting it into relative decline.

Forecasting is not an exact science, but Sterling could see pressure regardless of the referendum, due to US interest rates and the UK’s large current account deficit. Investors are also said to think that UK interest rate rises will occur much faster following a Remain vote than a Leave vote.


I work in financial services. Would my job be at risk? .
Some financial services within the EU require a financial services ‘passport’ to supply. Current rights could be preserved by retaining membership of the wider Single Market (EEA) or by specific agreement with the EU. .

It is EU agencies that threaten jobs in financial services and associated businesses.

Read on...


Would leaving the EU affect property prices? .

There may be no 100% clear-cut answer. The recent slowdown has been more due to changes in Stamp Duty; the EU referendum has not hit consumer confidence. International buyers have also been put off by strict regulations. Prices reflect demand which cannot currently be met by supply. The market reflects the wider economy, which could be positively affected by Brexit or many other factors, including London’s relative attractiveness as a location and affordability pressures. 


Are there economists that favour leaving the EU?

Mark Carney of the Bank of England, Christine Lagarde of the IMF, and the Treasury and Mr Osborne have all come out saying that a vote to leave the EU would be a disaster for the UK, Europe, and the world. Don’t you think this is something we should take serious notice of?

We have been here before, when Prime Minister Tony Blair arranged for very important persons, one after the other, to give similar warnings if the UK did not join the Eurozone. Is the same thing happening now?

When Mark Carney gave a speech on 21 October 2015 at Oxford University, it was accompanied by a report that cited a number of economic forecasts. The average forecast was that there would be little or no economic difference if the UK leaves the EU. What has changed so suddenly to make Mr Carney ramp up his forecast to something much more dismal

In contrast to Mark Carney, Christine Lagarde, and George Osborne, a group of independent economists came out in April 2016 with a report titled The Economy after Brexit – in which they do the numbers, give their assumptions, and explain their reasons. They say that if the UK leaves the EU:

1. our international trade will increase,

2. UK productivity and economic output will increase,

3. international competitiveness will increase,

4. employment will increase, and

5. real wages will increase.

There are independent economists, not spokespeople for the Government. The group is comprised of Roger Bootle, head of Capital Economics, a global economics consulting firm, Ryan Bourne, Head of Public Policy at the Institute of Economic Affairs, Professor Tim Congdon, CBE, formerly on the Treasury’s Panel of Independent Forecasters, Warwick Lightfoot, formerly Special Advisor to the Chancellor of the Exchequer, Dr Gerard Lyons, Chief Economic Advisor to the Mayor of London, Neil MacKinnon, Senior Advisor to City of London firms, Kent Matthews, Professor of Banking & Finance at Cardiff University, and Patrick Minford, Professor of Applied Economics at Cardiff University. .

Indeed, wages overall are likely to go up, because there will be controlled migration and downward pressure on wages overall will slow down or even will stop. According to the Bank of England, the EU harms working people.

Read on…


The Government says that the cost of living and prices in the shops will go up if we leave the EU. What are the facts?

If we leave the EU the cost of living will go down, and wages are likely to go up overall.

Here are the reasons why the cost of living and prices in the shops will go down if we leave the EU:

  • Our contributions to the EU Budget, plus Budget top-ups, plus other, hidden contributions to the EU will stop. This will mean that the cost of UK government will go down, which means rising government debt and the interest payments on it can be contained, and taxes can be reduced or at least contained.
  • Mass EU migration into the UK can be controlled, which means that the increase in rental/housing costs, due almost entirely to net immigration pressure on prices, will be contained:

For example, Londoners now spend two-thirds of their income on rent compared to about half five years ago (Official figures released in January 2016).

  • EU protective import duties on imports such as food, machinery, shoes, clothing, and other items will be eliminated, reducing prices in the shops.
  • Getting out of the EU Common Agricultural Policy will again reduce food prices, since the whole point of CAP is to apply protective tariffs (up to 50%) against food coming in from outside the EU. .
  • VAT, which is an EU sales tax, is unlikely to be eliminated but the proportion of it that we have to send to the European Commission, can be eliminated.

Why is the prospect of leaving causing business so much uncertainty? .
Not everyone considers Brexit to be even a significant risk. Some economic models show practically no ill-effects and many benefits. Indeed, instead of talking Britain down we have much to be positive about.

Read on…


Jobs


Are jobs at risk if we leave the EU?

Remain claim that millions of jobs are at risk. The three million jobs claim goes back to a study done for the National Institute for Economic and Social Research (NIESR). Dr Martin Weale, Director of the NIESR, said the claim was “pure Goebbels”, referring to the Minister for Propaganda in Nazi Germany. Professor Iain Begg of the LSE, author of the report, said: It has always been a bit of a false perspective to say that three million jobs would be lost. .

There are a number of reasons why, at first, there will be little or no change in the level of employment if we leave the EU. There have been a number of economic reports all saying this: little or no change in the short term. But in the medium to long term employment is likely to steadily rise if we leave the EU.

See more…

 


Trade


Would it be more difficult to secure trading deals without the EU behind us? .
EU trade deals have previously been held up over French interests. Non-EU countries like Switzerland have secured more deals than the EU, and the USA has concluded about 20 deals with countries smaller than the UK. There is evidence that future international deals will be open to for other countries to join.

Read on...

 


How would we preserve trade with the EU and the rest of the world if we left?

The UK and all EU members are committed to World Trade Organization (WTO) objectives, such as stabilising the world trading system and removing barriers. We could use also this forum to preserve trading relationships with the world’s other main economies, which are also signed up.

Furthermore, Article 34 of the Vienna Convention means that trade agreements with the rest of the world will stay in force. It states:

When a part or parts of the territory of a State separate to form one or more States, whether or not the predecessor State continues to exist: .

(a) any treaty in force at the date of the succession of States in respect of the entire territory of the predecessor State continues in force in respect of each successor State so formed.

The UK and the third country just need to notify the UN, that the trade treaties will continue and apply to UK after our secession. In other words, all these trade treaties don’t need to be renegotiated by an independent UK.


Would our exports (e.g. motor vehicles) face steep tariffs if we left the EU?
The UK and other EU countries are big importers and exporters. All common sense dictates that we maintain free trade in both directions and avoid import tariffs of 10%. As a precedent, the EU and a major manufacturer, South Korea, have agreed a tariff-free trade agreement in cars. .

The numbers of German cars exported to the UK is quite telling. For instance, the Volkswagen Group has a 19% share of the UK market, which totalled 374,000 cars sent to Britain in 2011. BMW sent to Britain that same year 130,000 cars produced in Germany. BMW also produces the Mini in the UK and exported from Britain to the continent 156,000 cars each year; they also own Rolls-Royce which sends cars to the rest of the EU. UK car plants are so efficient that the Japanese car firm Toyota even exports cars back to Japan from its plant in Derbyshire; yet Japan is not in a political union with the UK.


Law and Order


What is EU law?

It’s the European Union’s body of law, which is getting on for 200,000 pages long, is known as the Acquis Communautaire. The Acquis, as it’s usually known, is all the regulations, directives, policies, practices, and formal opinions of the EU. It represents the powers gradually acquired by the EU over the years, in what is known as competences.

Competences is EuroSpeak for the exclusive right and power that the EU has in making laws over and above its member states. .

Only the EU, not national governments, can make laws in these competence areas, and the number of competence areas grows continuously. It’s like a ratchet which doesn’t wind backward in devolving powers back to member countries, only forward in one direction for more EU competences and more EU laws.

Read on...


Does the European Arrest Warrant make us safer?

The European Arrest Warrant has dealt a body blow to traditional British values. A Justice Minister or prosecutor (note: not a judge) in any member state, including one lacking our tradition of civil liberties and quality of justice, can have a British citizen in the UK arrested and extradited to face trial for an alleged offence that may not even exist in British law. A British judge has no right to intervene except on purely technical grounds, there is no .

assessment of prima facie evidence and the arrest can be made by a Europol officer. The accusation can be wafer-thin and of course once abroad the British citizen lacks the protection of habeas corpus.

See more…


Britain and the UK


Would leaving the EU cause the breakup of the UK? .

A Scottish breakaway is unlikely, as it would only be viable if several conditions were met. These including the price of oil, which is likely to stay too low for the foreseeable future. Exiting the EU will allow for more powers, such as over fishing and agriculture, to be given to the Scottish Parliament, it will be super devo max for Scotland.


How long would it actually take to leave the EU?

After the vote to leave the Government should notify the EU, under Article 50 on the Treaty on European Union, that the UK will leave. There will then be negotiations on a withdrawal agreement, defining the future trade relationship between Britain and the remainder of the EU. This process should take 2 years. .

Articles 3 and 8 of the Treaty on European Union legally requires the EU to negotiate free and fair trade with non-EU countries.


Would we keep an open border between Northern Ireland and the Republic of Ireland? .

Legislation ensures that the border would be kept open, keeping trade and travel easy. Regardless of this the United Nations Economic Commission for Europe has schemes (known as a TIR Carnet) that allows for goods to pass without hindrance across customs posts. However, that need will not arise.


Post-Brexit


How long would it actually take to leave the EU?
 .
After the vote to leave the Government should notify the EU, under Article 50 on the Treaty on European Union, that the UK will leave. There will then be negotiations on a withdrawal agreement, defining the future trade relationship between Britain and the remainder of the EU. This process should take 2 years.

Articles 3 and 8 of the Treaty on European Union legally requires the EU to negotiate free and fair trade with non-EU countries.


Would UK nationals lose the right to live in the EU state in which they currently reside?
Those that have established a residency, which will include both living and owning property, in an EU member state will have their rights protected upon withdrawal. This entitlement is known as an ‘executed right’. Article 70 b. of the Vienna Convention states that the withdrawal from a treaty "Does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination". .

This view is supported by the constitutional expert Lord McNair. He concluded that such rights established by a treaty will remain in force even if the agreement is terminated by Britain’s exit. In law they are considered to be executed by the treaty and ‘have an existence independent of it; the termination cannot touch them.’ Their status will be guaranteed as a result of the ‘well-recognised principle of respect for acquired [vested] rights’ (McNair 1961). Furthermore, it is a legal norm and the Oxford Journal in its yearbook on international law argues that Acquired Rights are Customary Law and therefore take precedence over national law at the international level. Furthermore, they will be regarded as such by the International Court of Justice in the Hague. Therefore, Britain leaving the EU will have no impact on EU citizens already resident here or for British citizens living abroad.


Name me one public figure who has said that Britain could prosper outside the EU?

David Cameron noted in his Chatham House Speech “I am not saying for one moment that Britain couldn’t survive outside the European Union. Of course we could…”, giving several reasons.

David Cameron also said on 6 January 2013:
"If we were outside the EU altogether, we’d still be trading with all these European countries, of course we would... Of course the trading would go on. .
Sometimes … There’s a lot of scaremongering on all sides of this debate. Of course the trading would go on."

Read on...


If we left, would we lose the ability to influence the standards of the Single Market?

As part of globalisation, the EU is discarding its rules and regulations for wider global standards, unless there is a sound reason for not doing so. Many Single Market standards are covered. Outside the EU, we would gain a vote on international bodies making the standards. Inside the Single Market (EEA) we would still get consulted.

Read on...


Why can’t we stay in and reform the EU?

The EU is designed to create a political union. Members must do nothing to jeopardise this, and

its court, the European Court of Justice, has ruled that powers cannot flow back.

Read on…

 


Would leaving the EU be “a leap in the dark”? .
It might be for the government, which has failed to produce a Brexit contingency plan, as it instead preferred to scaremonger. However, the UK has many international connections that would provide some continuity and stability. We ran our own affairs before we joined the EU in 1973.

Read on…


If we left, would I have to face longer passport queues at airports? .

Nationals of non-EU countries like Switzerland and Norway enjoy the faster queues too. The UK could certainly preserve its priority if it remained in the Single Market (EEA).

Read on...


Would the EU try to punish us for leaving? .
The EU must respect the UN Charter guaranteeing self-determination of nations. It must negotiate with us 'in good faith' under both EU and international law. Other agreements will help safeguard our trade and security. It is not in the EU’s interest to damage its major customer when common sense dictates a win-win arrangement. Furthermore, the EU is mandated to seek free and fair trade with countries outside of the EU.

Read on…


Worker’s Rights and Trade Unions


Would workers lose their rights outside the EU?

Many employment rights are agreed at wider international level (e.g. at the International Labour Organisation), They would exist independently of EU membership. Some labour organisations see EU policies and legal decisions as a threat to working people’s conditions, claiming EU austerity is driving UK austerity. Social Europe is a myth. This has been proved by EU led austerity and decisions by the European Court of Justice that undermine trade union rights.


Should a trade unionist be for or against the EU?

The policies of the EU run contrary to the policies and principles of trade unionists.

Big businesses use the EU system:

  1. Spend a lot of time and money in lobbying the European Commission in Brussels, who don’t want things to change. It has been estimated by EurActiv.com that there are about 30,000 corporate lobbyists in Brussels, and about 80 per cent of input to the European Commission for initiating EU laws comes from big multinationals. For these companies, there are vested interests in remaining.
  2. Want to remain in the EU because of access to the EU Single Market. If they have a base in the UK then, as long as the UK remains in the EU, access to the Single Market is clear. What they appear not to realise is that they do not need to be in the EU to enjoy access to the EU Single Market. American companies are an example.
  3. Want to keep the lower wage bills with the UK being in the EU. Large migration into the UK from/through the EU means pressed-down wages. If big companies benefit from this, keeping their costs low and profits high, they don’t want things to change.


Investment


Would leaving lose us Foreign Direct Investment (FDI)?

There is evidence that EU membership boosted FDI into the UK in the early years only. Many non-members have since attracted more FDI. A government publication admits that there are several wider business factors like the UK legal system that encourage FDI. Indeed, the countries in Europe that receive the most FDI are not in the EU.

Read on…

 


Environment


Why do some environmental groups support the EU?

The funding towards the EU’s Civil Society Contact Group in 2011 amount to more than €3 million and made up the bulk of each organisations funding.

  • The European Public Health Alliance received €681,536 which constituted 61 per cent of its funding.
  • CONCORD (The European NGO confederation for relief and development) was granted €691,345, 51% of its funding.
  • Social Platform (Platform of European Social NGOs) was granted €654,289 86% of its total income.
  • The European Civil Society Platform on Lifelong €200,000 which equals 74% cent of its funding.
  • Culture Action Europe was granted €110,500 and made up 45% of its proceeds.

Environmental organisations especially benefit from Brussels. As in the previous list the recipient organisation is listed followed by the size of taxpayer funding from Brussels and the percentage of their income that comes from the EU.

  • Birdlife Europe €332,163 (35%);
  • CEE Bankwatch Network €836,238 (45%);
  • Climate Action Network Europe €295,022 (33%);
  • European Environmental Bureau €894,000 (41%);
  • European Federation for Transport and Environment €275,516 (16%);
  • Health and Environment Alliance €362,992 (59%);
  • Friends of the Earth Europe €1,195,259 (46%); Naturefriends €365,735 (41%);
  • WWF European Policy Office €599,954 (13%).

There is nearly a further three dozen organisation engaged with the EU’s social platform. These range from; the European Association of Service Providers for Persons with Disabilities to the European Council for Non-Profit Organisations (CEDAG) to the European Region of the International Lesbian, Gay, Bisexual, Trans and Intersex Association (ILGA Europe). And more than a dozen pro-EU campaign groups such as; Centre for European Policy Studies, Pour la Solidarité and Friends of Europe each receiving the bulk of their funding from the European taxpayer. The list goes on and the financial cost increases. .

In return for involvement at the heart of the EU’s policy making process the participating organisations are encouraged to promote the European ideal to its network of citizens in the member states and across Europe.


Peace and Security


Is the EU about peace?
It is claimed that he EU is about peace. This is the first, last and only defence of the EU by many Remain campaigners today. Can the EU still claim to be a peace project? .

See more…


Students

.
How does the EU help the young in the UK?

The EU is hurting the prospects of young people on the continent as well as in the UK.

Read on...

 

.
Is the Erasmus programme for student exchanges open to non-EU citizens?

The Erasmus programme includes 37 countries, 9 of which are not in the EU. Even Israel is a part of the scheme.

.

Mobile Phones

Shouldn’t the EU get the credit for suggesting that mobile roaming charges be reduced?

The idea was actually been promoted globally by the OECD and the International Telephone Users Group, and action taken on a far wider level. The idea was first raised by the International Telephone Users Group (INTUG) in 1999. Action was taken by many countries (e.g. India, the ASEAN bloc and Latin American countries) after the OECD pushed for a reduction on a far wider basis, although aware of the issues, the EU had missed the chance to take meaningful action before then.

Media

Can I trust the BBC’s EU coverage?
The BBC receives millions in funding from the EU.

Parliament’s European Scrutiny Committee has said that it is:

. . .  deeply concerned about the manner in which the BBC treats EU issues. Our witnesses seemed to be more intent on defending and asserting their own opinions, mindset and interpretation of the obligations under the Charter and Framework Agreement than in whether they had in fact discharged them or whether they had the mindset to carry through their aims in the interest of the license fee payers, and the public in general.

And the Committee’s chairman said:

The BBC is especially culpable in this regard.  BBC coverage of European issues has given disproportionate airtime to the most extreme and often ill-informed opponents of Europe . . . while marginalising those who attempt to engage in nuanced and constructive debate … The British people, for the sake of the entire continent, must make the right decision for the right reasons …  The media, especially the BBC, must do far more to raise the standards of debate.

 


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The Challenge to George Osborne and £350 million to the EU each week?

EU membership is the biggest risk to the public finances. In these two films young people explain what our politicians have failed to grasp.

Paulina and Ben plus Emma and Jo
18th June 2016
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Paulina and Ben (15) challenge George Osborne on EU sovereign debt and how a Remain vote will leave them liable for massive payments.

Mr Osborne - if you think we are wrong come and explain how we are safe. That is our challenge.

Vote Leave claim we send £350 million to the EU every week - but do we? The Bruges Group's young expert, Joe, and Emma give you the full SP.

With all the financial risks associated with the EU, £350 million per week looks like a gross underestimation!

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The Challenge to George Osborne and £350 million to the EU each week?

EU membership is the biggest risk to the public finances. In these two films young people explain what our politicians have failed to grasp.

Paulina and Ben plus Emma and Jo
18th June 2016
Type text for SEO (example Bruges Group : Image Title)

Paulina and Ben (15) challenge George Osborne on EU sovereign debt and how a Remain vote will leave them liable for massive payments.

Mr Osborne - if you think we are wrong come and explain how we are safe. That is our challenge.

Vote Leave claim we send £350 million to the EU every week - but do we? The Bruges Group's young expert, Joe, and Emma give you the full SP.

With all the financial risks associated with the EU, £350 million per week looks like a gross underestimation!

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The UK’s liabilities to the financial mechanisms of the European Union

The UK’s potential exposure to the EU is over £80 billion.

Bob Lyddon
16th June 2016

Independent research, commissioned by the Bruges Group from acknowledged expert in this field Bob Lyddon, shows that the true extent of the UK’s potential exposure to the European Investment Bank (EIB), European Central Bank (ECB) and EFSM (European Financial Stabilisation Mechanism) is over £80 billion. If the crisis in the Eurozone continues this already high figure could increase massively.

The UK carries huge financial liabilities as an EU Member State, liabilities that could translate into calls for cash far higher than our annual Member cash contribution. These are created through various funds and facilities of the EU itself, and through shareholdings in the European Investment Bank and the European Central Bank. Each of these bodies engages in financial dealings on a large scale, with the Member States acting as guarantors for sums borrowed. The main recipients of funds are the Eurozone periphery states: Italy, Spain, Greece, Portugal and Ireland.

The UK, being one of the largest and most creditworthy of the Member States, is looked at as one of the guarantors most able to stump up extra cash as and when demanded, demanded, that is, by a Qualified Majority of Member States with no unilateral right of refusal. Such calls can be expected if another crisis blows up in the Eurozone.

The UK’s leaving the EU would relieve us of these considerable risks and liabilities. This independent research shows that Britain should leave the European Union.

Jim Mellon, billionaire investor and well known specialist in sovereign risk, described this research as,
“An excellent, incisive and important work. The European Union is a millstone and we have a once in a life time opportunity to be free of it.”

Losses would be claimed by the EU institutions and added to the UK PSBR and therefore to the national debt, except that our current paid-in capital in EIB (€3.5 bn) and the ECB (€0.1 bn) have already been paid in and are already part of the UK's national debt.

Event UK cost in £ Cost per household
UK loses its capital in the European Investment
Bank and the ECB
32,560,000,000 £1,185
Loses through the European Financial
Stabilisation Mechanism
48,000,000,000 £1,747
TOTAL 80,560,000,000 £2,932

Number of UK households = 27,468,000

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The UK’s liabilities to the financial mechanisms of the European Union

The UK’s potential exposure to the EU is over £80 billion.

Bob Lyddon
16th June 2016

Independent research, commissioned by the Bruges Group from acknowledged expert in this field Bob Lyddon, shows that the true extent of the UK’s potential exposure to the European Investment Bank (EIB), European Central Bank (ECB) and EFSM (European Financial Stabilisation Mechanism) is over £80 billion. If the crisis in the Eurozone continues this already high figure could increase massively.

The UK carries huge financial liabilities as an EU Member State, liabilities that could translate into calls for cash far higher than our annual Member cash contribution. These are created through various funds and facilities of the EU itself, and through shareholdings in the European Investment Bank and the European Central Bank. Each of these bodies engages in financial dealings on a large scale, with the Member States acting as guarantors for sums borrowed. The main recipients of funds are the Eurozone periphery states: Italy, Spain, Greece, Portugal and Ireland.

The UK, being one of the largest and most creditworthy of the Member States, is looked at as one of the guarantors most able to stump up extra cash as and when demanded, demanded, that is, by a Qualified Majority of Member States with no unilateral right of refusal. Such calls can be expected if another crisis blows up in the Eurozone.

The UK’s leaving the EU would relieve us of these considerable risks and liabilities. This independent research shows that Britain should leave the European Union.

Jim Mellon, billionaire investor and well known specialist in sovereign risk, described this research as,
“An excellent, incisive and important work. The European Union is a millstone and we have a once in a life time opportunity to be free of it.”

Losses would be claimed by the EU institutions and added to the UK PSBR and therefore to the national debt, except that our current paid-in capital in EIB (€3.5 bn) and the ECB (€0.1 bn) have already been paid in and are already part of the UK's national debt.

Event UK cost in £ Cost per household
UK loses its capital in the European Investment
Bank and the ECB
32,560,000,000 £1,185
Loses through the European Financial
Stabilisation Mechanism
48,000,000,000 £1,747
TOTAL 80,560,000,000 £2,932

Number of UK households = 27,468,000

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The Business of Hope

We are better off out!

Emma Jane
11th June 2016
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Does Britain face dire consequences if we leave the EU? What is the effect of the EU on business?

This film talks to two businessmen about Brexit and explores the economic issues surrounding the UK's EU membership.

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The Business of Hope

We are better off out!

Emma Jane
11th June 2016
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Does Britain face dire consequences if we leave the EU? What is the effect of the EU on business?

This film talks to two businessmen about Brexit and explores the economic issues surrounding the UK's EU membership.

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Failing to Hold Back the Incoming Tide

How EU law has supremacy over national law and why attempts at reform will never succeed.

1st June 2016

The revolutionary nature of what the Court of Justice of the European Union (CJEU) has achieved in establishing EU legal supremacy cannot be overstated. The story of the emergence of the supremacy of EU law is a story of audacious expansion of legal authority enabling the CJEU, in the words of the scholar Karen Alter, to effectively become the ‘master of the Treaties’. The CJEU has become ‘master’ by awarding itself considerable latitude over the interpretation of the Treaties and the balance of competences between Member States and the EU. However, it has not done this entirely on its own. At different times the acquiescence of the Member States has been vital.

Achieving and consolidating legal supremacy has required collusion in the guise of new treaties. The Member States agreed a long series of treaty revisions that have:

Increased significantly the range of competences of the EU offering much more scope to integrationist judges (with the help of litigants and interest groups) to develop their doctrines further and increase their power;
and
Altered dramatically the decision-making processes within the EU, instigating a sustained shift from unanimity in the Council of Ministers to routine use of Qualified Majority Voting (QMV), and from a situation where the Council of Ministers was the senior decision making body on most policy issues to a system of co-decision between the Council of Ministers and the Parliament on the vast majority of policy issues.

The Prime Minister David Cameron suggested in a speech to Chatham House in late 2015 that as an accompaniment to his re-negotiation package he would like to introduce reforms which ‘…uphold… [the]… constitution and sovereignty’ and which protect the ‘…essential constitutional freedoms…’ of the UK. This paper has attempted to show that this domestic part of his EU reform agenda is, like his re-negotiation, likely to be a damp squib, achieve very little of substance and fall short of his own stated ambitions for the policy. In reality, raising the possibility of domestic legal reforms to uphold the constitution, sovereignty and protect essential constitutional freedoms is marketing and political spin, nothing more substantive that that. Empty domestic reform does however, nicely complement the vacuity of the claim that Cameron has achieved reform in the EU. Cameron’s reforms are likely to be nothing more than rhetoric and spin.

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Brexit and Free Trade

Would a post-Brexit UK be better able to sign free trade agreements with the rest of the world?

Sam Winders
9th May 2016
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This report investigates whether the UK would be better able to sign trade agreements with countries outside of Europe outside of the EU. A key consideration of this question is whether a larger domestic market confers a significant advantage when concluding trade negotiations.

To this end I undertake two case studies in which I investigate the likely nature and scope of a potential British trade agreement with China and the US. These two countries are not only important trading partners of the UK, but their economic might directly tests whether Britain, with a smaller domestic market than the EU, would be able to conclude deep and comprehensive trade deals with substantially larger economic powers.

This paper unequivocally supports the argument that Britain will be much stronger and more prosperous independent of the EU. Outside of Brussels' restrictive embrace, the world is the limit.

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Response to Justin Welby the Most Reverend Archbishop of Canterbury

Let us look at this prayer line by line

David Wilkinson
26th April 2016

The Church of England has released a prayer for the EU referendum campaign. The prayer is for use by churches and individuals ahead of the vote on 23rd June.

We feel this is a good prayer. It is regrettable that there have been comments critical of our Archbishop. Lord Tebbit is right in saying that there is ambiguity  - in some people's minds, about this prayer and confusion in their statements. The EU effects all of the world and we might pray for all of the world when considering our referendum decision.

Let us look at this prayer line by line.

God of truth,

give us grace to debate the issues in this referendum

with honesty and openness.

Not only must it be a Eurosceptic's plea that honesty and openness should prevail but what worth has a referendum decision, even for us, if it is gained by deceit?

Give generosity to those who seek to form opinion

and discernment to those who vote,

We might go futher and pray that we ourselves might engage in deep reflection and attempt to discern and abide by God's will before we seek to form opinion. And who could disagree that our intention when we speak should be generous? The manner in which we all conduct ourselves in this referendum should be as Jesus taught us.

that our nation may prosper

of course - and not even primarily in monetary terms.

and that with all the peoples of Europe

This is where my enthusiasm for the Arch-Bishop's prayer really builds because it as a blow against the harm the EU is causing to my neighbour that a vote for Brexit really matters. The prayer says peoples, plural, of Europe. This is the eurosceptic view. And the error of confusing the EU with Europe is avoided. And with the peoples of Europe, of course: it is for a better kind of "with" than the regime of the EU that our cause is all about.

we may work for peace and the common good;

With all my heart, yes!  There is more to peace than just not being in a shooting war.  If we sincerely believe that the EU has put its ideology, its idolatry, of the Euro before a care for the misery of the people from Ireland to Greece, then surely our first hope must be for real peace.  We see tensions and hatred building up in Europe today because of the injustice of the Euro and the babylonian shifting of people called free movement of labour. Let us pray for all who are shifted from their homes.

for the sake of Jesus Christ our Lord.

Because we should not, in our arrogance, forget that all that we think is right or wrong in the affairs of men is subject to a higher purpose.

Amen.

Amen

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For Family Businesses

A level playing field for small, medium and family businesses
21st April 2016
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A vote to leave will give us more say over our economy. It is an opportunity to have:
●  Fair taxation, end big business tax avoidance by restoring national control
●  A level playing field for small and medium sized businesses
●  Bolster small businesses
●  Support entrepreneurship
●  Accountable British people helping to make the regulations, not a faceless bureaucrat in Brussels
●  Global trading, better opportunities to open up global markets
●  Access to the single market without our economy being dominated by those countries who make policies in the name of Europe what they will not ask for themselves

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EU Militarisation: A Dangerous Future

Protect our defence and security – Vote to Leave the EU
21st April 2016
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According to Colonel Richard Kemp Britain would be forced to join an EU army within five to 10 years if people vote to Remain in the EU.

“An EU army is inevitable. As the EU has declared, it is moving to ever closer union,  it intends to become a fully fledged superstate. That’s the plan.”

“We would essentially be giving up our right to sovereign self-defence. Control of the EU army would not rest with us but in a collective EU decision.”

“There would never be consensus for an EU military operation  to retake the Falklands. It could not happen.”

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Emergency Exit

A look at what can be once we are free

Marcus Watney
21st April 2016
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It isn’t going to be sufficient to grumble about how incompetent, dictatorial and corrupt the EU is. We are going to have to show convincingly that outside the EU we will be more free and more in control of our own lives; that freedom is something to be positively desired and pursued, and that liberty is priceless and so cannot be measured in pounds and euros.

We need to focus the debate on exactly how the new co-operative alignment of sovereign states that eventually replaces the European Union is likely to be structured. Only then will people stop obsessing over whether it is safe to leave the moribund EU, and begin to take departure for granted. Thinking and debating where you are going is always more exciting than mulling over where you have come from.

This paper is a comprehensive critique of the EU and a look at what can be once we are free.

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The EU and poverty briefing

This is a briefing supporting the 'How the EU makes you poor' leaflet. The briefing gives you, the activist, the arguments to use and back-up information when discussing the topic with an undecided voter. It can also be used to deliver a presentation on migration issues.

8th April 2016
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Stuart Rose, who was Executive Chairman of Marks & Spencer, speaking to MPs suggests that wages of low skilled workers could rise in the event of Britain leaving the EU.

According to the former M&S boss if there were restrictions on EU migrants, then “the price of labour will, frankly, go up”.

Immigration makes it harder to attend a good university, obtain a well-paid job, and secure affordable living accommodation. It is also having a debilitating effect on the countries of Central, Eastern and Suthern Europe who are suffering from a brain drain. They are losing their best and brightest to low wage employment in our post-industrial services sector.

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Opinion Poll: There is an alternative to EU Membership

EU referendum Opinion Poll

Robert Oulds
29th March 2016

58% said they would prefer Britain being a part of the European Free Trade Association (EFTA) rather than the EU, 42%

A majority of voters would prefer the UK to be a member of the European Free Trade Association (EFTA) as opposed to the EU, according to a new survey published today by the Bruges Group.

Removing don’t knows, of those expressing a preference in the survey, a clear 58% said that Britain would be better off as a member of the trade group EFTA, as opposed to 42% who thought that Britain should remain a member of the EU.


EFTA differs from the EU in that it would not have jurisdiction over the UK’s agriculture, fisheries, home affairs or justice policies. It takes Britain out of the Europe Union whilst still giving UK businesses full access to the EU’s Single Market. EFTA membership would also allow the UK to negotiate free trade agreements with countries outside of the EU.
In addition, Britain would become again a sovereign nation with more power over its domestic affairs. This is the positive alternative to EU control.


Also, taking out the don't knows:

  • Scotland, EFTA 52%, EU 47%
  • Wales, EFTA 54%, EU 46%
  • London, EFTA 55%, EU 45%
  • 18-34, EFTA, 50%, EU 50%


Robert Oulds, Director of the Bruges Group, said:

“There is a fully worked out exit plan that clearly sets out what Britain will be like once we vote to leave the EU. We have shown there is a viable alternative to EU membership and what is more this will win us the referendum.

“The option of re-joining EFTA is very popular with the British public.”

- ends -


- notes for editors -

The opinion poll was carried out by Opinium for the Bruges Group on 11th March 2016, with 2,001 interviewees. The question asked was:

“The European Economic Area (EEA) is the single market that allows for free movement of goods, services, people and capital between all participating European countries. There are two organisations which allow countries to access this EEA single market - the European Union (EU) and the European Free Trade Association (EFTA).

Members of the EFTA adopt some of the regulations that the EU passes in order to be able to access the EEA single market and contribute to the EU’s budget but are not bound by EU rules on agriculture, fisheries, home affairs or justice policies.

EFTA members are also able to negotiate trade agreements with outside countries whereas the EU does this for its member states. In return, EFTA members have much more limited influence over how EU rules are made.


If the UK left the European Union, it could become a member of the EFTA instead.

Supporters of this move say that the UK would have to adopt fewer European regulations and pay less into the EU budget than it does now while still being able to help shape the rules.

Opponents say that the UK would still have to abide by EU rules to be part of the EEA single market but would have no say in making those rules


With this in mind, which would you prefer the UK to be a member of?”

EEA & EU (European Economic Area and European Union) (513 respondents out of 2,001)

EEA & EFTA (European Economic Area and European Free Trade Association) (710 respondents out of 2,001)

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David Nuttall MP speaks to the Bruges Group

Britain is Better Off Out

Glenn Bullivant
4th January 2016
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Glenn Bullivant speaks to David Nuttall MP, the Chairman of the Parliamentary All-Party Better Off Out Group. David Nuttall is the Memmber of Parliament for Bury North. David’s motion in the House of Commons of 24th October 2011 called for a referendum on EU membership and defeated the government which at the time opposed such a vote. As such it was instrumental in forcing the referendum firmly onto the political agenda.

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Tackling the EU Empire

Basic critical facts on the EU/Eurozone

Dr Anthony Coughlan
12th December 2015
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Professor Anthony Coughlan of Trinity College Dublin and TEAM the international Alliance of EU-Critical movements has compiled a handbook for Europe’s democrats, whether on the political Right, Left or Centre.

Readers are invited to use or adapt this document for their own purposes, including changing its title if desired, and to circulate it to others without any need of reference to or acknowledgement of its source. People circulating it to others might consider adding an addendum outlining their own country’s experience of the EU/Eurozone.

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The EU Threat to Democracy and Liberty

Defending Europe's pluralism and diversity

Philip Vander Elst
17th November 2015
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We must not only be unafraid of a future outside the European Union. We should positively embrace it, because in rejecting the supranationalist goal of a European State, we would be defending the pluralism and diversity which has been the true glory of European civilization. As Wilhelm Wilhelm Röpke, one of Germany’s greatest liberal economists put it in the 1950s:

“In antiquity Strabo spoke of the ‘many shapes’ of Europe; Montesquieu would speak of Europe as a ‘nation des nations’; Decentrism is of the essence of the spirit of Europe. To try to organise Europe centrally…and to weld it into a bloc, would be nothing less than a betrayal of Europe and the European patrimony.” (A Humane Economy)

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The Sun and Trends in the Central England Temperature (CET) since 1659

The Sun and Climate Change

Dr John Pendlebury & Roderick Taylor
16th November 2015
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Atmospheric carbon dioxide is not the dominant force which changes the Earth’s climate. Warming is present, but there has not been any change in temperature in the summer months The dominant factor in determining changes in the world’s climate is the Sun.

The essential point is that estimating trends over anything other than very long periods is subject to a high degree of standard error. Only by taking data over the full length of the series produces anything of much value.

Attempts to reduce the emissions of carbon dioxide to the atmosphere such as the so-called but misnamed ‘carbon’ capture and storage (CCS) are pointless. Why should we be spending billions on global warming counter-measures as a result of climate specialists telling us huge problems are in store for us. These doom-mongers have no clothes. Their limitations continue to be exposed.

 

 

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Sweden's Immigration Crisis

The emergence of a political and cultural crisis

Pelle Neroth Taylor
12th November 2015
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Sweden has many things going for it, but may not be the democratic utopia many British people think – and, in a strange kind of poetic justice, may pay the price by quashing the freedom of speech of the “little people”, and hiding the problems associated with immigration. The EU has played a part in Sweden’s situation, in that the Schengen treaty has made the influx larger than would otherwise have been, and psychologically, membership of Europe has arguably loosened the psychological ties between the Swedish elite and their home country. But the EU is not the only culprit. The Swedish elite bears a large share of the responsibility.

 Swedish politicians have, with steely determination, opened their country up to mass immigration. Sweden’s demographics are changing fast. Many Swedes boast that their country is a beacon of enlightenment but this is giving rise to political extremes.

 

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British Euroscepticism

British identity and tradition

Adriel Kasonta
11th November 2015
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The supremacy of Parliament is a refuge of freedom in Britain. The weakening of the sovereignty of Parliament is not only a threat to the independence of the legislative and libertarian tradition but also a threat to the rule of law, which rests on the legal legitimacy founded by elected lawmakers. This kind of legitimacy cannot be ensured by the European institutions which do not have the right to demand obedience from the European citizens, since it rests on national identities embedded in individual states. The so called 'democratic deficit' is getting worse with every interference of EU law in the lives of the people.

It is being continuously emphasized that in Britain, various EU rules are construed as a malign attack on the British way of life which needs to be repelled.

Europeanness means the British identity being just one among many. The problem is that the EU possesses no historical or cultural basis. Therefore, it is doomed to be perceived as a rather abstract and artificially made concept.

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EU Renegotiation Briefing

David Cameron to adopt EU plan for second-class membership

Robert Oulds
10th November 2015

Prior to the referendum being held David Cameron will present to the British public proposals for reform of the EU, heralding a new British model of membership. This will include proposals for the creation of a two-tier Europe, where there will be a distinct divergence between the Eurozone (core Europe) and the outer non-Eurozone states. This is the essence of what David Cameron claims he is negotiating. It means the UK accepting what has become known as ‘Associate Membership’ of the EU. This new status may be rebranded as the ‘British Model’.

The so-called renegotiation is nothing more than David Cameron acquiescing to the EU’s demands, and failing to defend the British national interest. The UK will be told to accept this second-class status. The bogus renegotiation is, in reality, merely the acceptance of an existing EU plan which will turn the UK into a second-class member of the EU. Although ever-closer Union will no longer apply to Britain ultimately the UK will lose money, influence and power.

The Prime Minister is simply engaged in an exercise of managing expectations. In on current terms is an option that no longer exists, full integration with the newly emerging core EU by becoming part of the Eurozone is beyond the pale, yet an associate status is the worst of both worlds. The two-tier EU package that Cameron will try to sell to the electorate is little more than him blundering into a new relationship where we lose influence but will still be bound by many of the existing obligations of EU membership. David Cameron will be forced to accept these changes.

The result of this so-called renegotiation will be the Prime Minister signing up to a federalist plan that will allow the Eurozone to centralise but the UK will be excluded from the centre of the EU, isolating Britain still further. What is more, the two-tier EU will most probably become a two-speed EU. Where the UK, and the other non-euro EU members, are cajoled by the core into standardising their policies with the core Eurozone states.

The idea was first proposed by former MEP Andrew Duff. It was a ‘...strategy for resolving the British problem’.

  • Subsequently it has been proposed in the Spinelli Group paper: ‘A Fundamental Law of the European Union’
  • The original Duff plan for achieving associate status proposed that Associate Membership could be achieved either through a new and specific Article(s) in the Treaties or through the Member State first leaving the EU (utilising Article 50) then re-negotiating from the outside the ‘new’ Associate status.

Click here to read the Prime Minister's Letter to the President of the European Council

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Britain's Global Leadership

The positive future for a UK outside the EU

Ewen Stewart
19th June 2015

To purchase a copy please visit:
www.brugesgroup.com/shop

The Bruges Group firmly believes that we need to reframe the debate to focus on the positives that Britain poses, in particular our excellent global links, higher education, to the City of London and technical brilliance in manufacturing. The UK, when freed from the restraints of the EU, has numerous attributes. Quite simply we do not have to be governed by Brussels to secure our prosperity, in fact far from it. As things stand Britain, being subsumed within the EU, is punching below its weight. We want this country’s potential to be fulfilled. Establishing the confidence that we need will be an important part of this. This booklet makes this positive case. Members of the Bruges Group will receive this research for free.

• Inside the EU we are punching below our weight and should do better. Self-belief coupled with a hard analysis of the nexus of power and strategic advantage will lead to this being addressed but that can only be so once we are outside of the EU.

• The Eurocentric orientation of the UK is misplaced. Emerging markets, by 2018 are expected to account for 45% of world GDP and the European Union’s share will have declined from 34.1% to 20.2%, with the Eurozone representing an even smaller 14.6%. China’s share is predicted to surpass the entire Eurozone by 2018.

• Nations that can address this extraordinary shift in global growth will capitalise most effectively on these new trade flows. The attractive European trade bloc, of the 1970’s does not look so attractive in this light, given the Eurozone’s inexorable decline of the share of global GDP. The UK is uniquely well placed to exploit these shifting trading patterns given its global links and its service and financial sector bias.

• Britain is uniquely positioned globally in terms of economic, cultural and soft and hard power assets. The UK is home to the world’s global language, the world’s most global city and many of the most notable global universities and research institutes. British legal ideas and the common law approach is admired the world over. It is the basis of our stability. These advantages would continue irrespective of our membership of the EU.

• British manufacturing remains comfortably within the top ten, in terms of output, globally. The UK is now a net exporter of motor cars with four out of every five cars produced in Britain exported. Britain is the world’s second most significant aerospace manufacturer, possesses two out of the top ten global pharmaceutical companies while also having strong positions in marine, defence systems, food, beverage and tobacco manufacture, off-shore engineering and high-end engineering and electronics. British design, be it in fashion or sports cars, continues to be world beating.

• Britain’s manufacturing base has shrunk, in common with most other developed economies, as the Far East has undercut on price. However the UK retains a key skills base and has developed a high-end, high-margin capability. Membership of the EU, with its cost pressures has almost certainly done more harm than good to this capability. Industry has little to fear from withdrawal.

• The UK is a world leader in sport, media and culture. Higher education is also a great strength with British universities ranked amongst the best in the world. This coupled with the growing strength of the English language and our traditional excellent global links gives the UK real influence in world affairs. This will not change once we are outside the EU.

• While the US is the pre-eminent power accounting for 39% of all global defence expenditure and an even greater technological lead the UK’s defence expenditure remains in the global top 4. Technologically too Britain’s forces, while numerically modest, are highly advanced. Technology generally trumps numbers. The UK is perhaps one of only 5 or 6 nations that can still project power across the globe.

• As the world’s 5th largest economy Britain will not be isolated by leaving the EU. On the contrary British power would, in some cases, be enhanced. For example we would swap our 12% EU voting weight at the World Trade Organisation for a 100% British vote.

• The UK is currently estimated to be a member of 96 different international governmental organisations so the loss of one such organisation, albeit a very important one, is unlikely to be damaging.

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Britain's Global Leadership

The positive future for a UK outside the EU

Ewen Stewart
19th June 2015

To purchase a copy please visit:
www.brugesgroup.com/shop

The Bruges Group firmly believes that we need to reframe the debate to focus on the positives that Britain poses, in particular our excellent global links, higher education, to the City of London and technical brilliance in manufacturing. The UK, when freed from the restraints of the EU, has numerous attributes. Quite simply we do not have to be governed by Brussels to secure our prosperity, in fact far from it. As things stand Britain, being subsumed within the EU, is punching below its weight. We want this country’s potential to be fulfilled. Establishing the confidence that we need will be an important part of this. This booklet makes this positive case. Members of the Bruges Group will receive this research for free.

• Inside the EU we are punching below our weight and should do better. Self-belief coupled with a hard analysis of the nexus of power and strategic advantage will lead to this being addressed but that can only be so once we are outside of the EU.

• The Eurocentric orientation of the UK is misplaced. Emerging markets, by 2018 are expected to account for 45% of world GDP and the European Union’s share will have declined from 34.1% to 20.2%, with the Eurozone representing an even smaller 14.6%. China’s share is predicted to surpass the entire Eurozone by 2018.

• Nations that can address this extraordinary shift in global growth will capitalise most effectively on these new trade flows. The attractive European trade bloc, of the 1970’s does not look so attractive in this light, given the Eurozone’s inexorable decline of the share of global GDP. The UK is uniquely well placed to exploit these shifting trading patterns given its global links and its service and financial sector bias.

• Britain is uniquely positioned globally in terms of economic, cultural and soft and hard power assets. The UK is home to the world’s global language, the world’s most global city and many of the most notable global universities and research institutes. British legal ideas and the common law approach is admired the world over. It is the basis of our stability. These advantages would continue irrespective of our membership of the EU.

• British manufacturing remains comfortably within the top ten, in terms of output, globally. The UK is now a net exporter of motor cars with four out of every five cars produced in Britain exported. Britain is the world’s second most significant aerospace manufacturer, possesses two out of the top ten global pharmaceutical companies while also having strong positions in marine, defence systems, food, beverage and tobacco manufacture, off-shore engineering and high-end engineering and electronics. British design, be it in fashion or sports cars, continues to be world beating.

• Britain’s manufacturing base has shrunk, in common with most other developed economies, as the Far East has undercut on price. However the UK retains a key skills base and has developed a high-end, high-margin capability. Membership of the EU, with its cost pressures has almost certainly done more harm than good to this capability. Industry has little to fear from withdrawal.

• The UK is a world leader in sport, media and culture. Higher education is also a great strength with British universities ranked amongst the best in the world. This coupled with the growing strength of the English language and our traditional excellent global links gives the UK real influence in world affairs. This will not change once we are outside the EU.

• While the US is the pre-eminent power accounting for 39% of all global defence expenditure and an even greater technological lead the UK’s defence expenditure remains in the global top 4. Technologically too Britain’s forces, while numerically modest, are highly advanced. Technology generally trumps numbers. The UK is perhaps one of only 5 or 6 nations that can still project power across the globe.

• As the world’s 5th largest economy Britain will not be isolated by leaving the EU. On the contrary British power would, in some cases, be enhanced. For example we would swap our 12% EU voting weight at the World Trade Organisation for a 100% British vote.

• The UK is currently estimated to be a member of 96 different international governmental organisations so the loss of one such organisation, albeit a very important one, is unlikely to be damaging.

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The Future of the euro

An address and question time with Professor Bernd Lucke MEP

18th June 2015
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An address and question time with Professor Bernd Lucke MEP, founder and leader of the Alternative for Germany (Alternative für Deutschland) political party which opposes the euro. Recognising that the Single Currency is harming the economy Bernd Lucke MEP will gave a very interesting perspective on the crisis in the eurozone. Professor Lucke discussed the future of the euro.

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Committee Room 10
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London SW1A 3AA

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Flickr Gallery 18th June 2015

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