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Trade war over gambling

By
editor
 – 30/01/2013Posted in: Blog
English Harbour and Falmouth Harbour on Antigua (picture Frederik Ramm)

English Harbour and Falmouth Harbour on Antigua (picture Frederik Ramm)

International trade disputes often shine a light on odd behaviour, and the dispute between the United States and the tiny Caribbean island country Antigua and Barbuda is no exception.  Originally colonised as a site for sugar plantations, the decline of the Antiguan sugar industry has left it looking for new industries.  The internet offers plenty of opportunities, and one of those is gambling.  Antigua became host to online gambling businesses appealing to customers around the world and particularly in the United States.

The US, in a peculiar fit of morality, has made gambling on the internet illegal (although not in Las Vegas or on Native American reservations) and has banned its residents from visiting Antiguan gambling sites.  This has hurt Antigua badly: employment in the industry there has fallen from 4,000 to 500.

The Dispute Settlement Body of the World Trade Organisation has ruled in Antigua’s favour, and trade retaliation up to a permitted level is now proposed.  The nature of that retaliation is intriguing – offering Americans free downloads of material they would have to pay copyright fees for in the US (maybe this is what David Cameron meant when he said that island peoples have “a frame of mind that is more practical than emotional”, as opposed to those over-emotional and impractical continentals living on the land from California to the New York Island) – but the very fact of the ruling is interesting in itself.

The fact is that in the WTO, cases are not won by the strongest country. They are won instead by the strongest argument.  When international relations is governed by rules, the weak do not have to cower in the face of the strong but they can stand up for their rights.  Antigua, with population 80,000 and GDP $1.2 billion, is protected by membership of the WTO; outside that organisation, it would have no chance of exerting pressure on America, with population and GDP thousands of times the size.  The rule of law exists to protect the weak and restrain the strong.

(h/t Andreas Bummel)

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The wrong conclusion on welfare reform

By
editor
 – 24/01/2013Posted in: Blog

In his speech on Europe yesterday, David Cameron observed that Europe, with seven per cent of the world’s population and 25 per cent of world GDP, accounts for 50 per cent of world welfare spending.  This is a striking statistic but is it actually something to criticise the EU for? Is it even such a surprise?

Let me make a rough guess that towards 100 per cent of the spending on Maseratis is made by the nation’s millionaires.

That is not to say that welfare spending is a luxury like a sports car but that it is something that inevitably is going disproportionately to be incurred by the richer parts of the world.  And that includes Europe.

These days though we can also think of it as an essential part of a modern economy. It gives people the confidence to take risks in setting up new businesses. It gives workers the willingness to accept redundancy from a declining industry in order to learn new skills and search for a new job. It is actually the means by which the disabled or the retired are offered the chance of a decent, dignified life, and it is good for economic growth in that it can route income and wealth from economically unproductive uses, such as inflating the prices of property and fine art bought by the rich, to economically more productive uses, such as buying food and clothes and providing heating for the poor.

In that other major speech this week – Barack Obama’s inauguration speech – he put it thus:

The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.

Too much welfare spending is undoubtedly a bad thing, but I think we can say also that so is too little.

Why has welfare spending grown? This website has observed before that an ageing population and declining birth rate will lead to growing dependency ratios (each person in work is going to have to support more non-working people) which in turn will pose a new challenge to existing welfare strategies. Governments were warned about this over the past decade but did not deal with it at the time. This is one of the reasons why national public finances are now in trouble.

But an important word in that last sentence is “national”. The task of reorganising welfare systems is a national one, not a European one. The EU does not set benefit rates nor the conditions for eligibility. Those are decisions for national governments. The EU has an influence at the margins in its insistence on the free movement of workers and their corresponding eligibility for benefits in member states to which they might move for work. But using the need for welfare reform as a stick to beat the EU with is quite wrong.

In fact, looking at the need for welfare reform, the EU is an asset not a liability. What will bring welfare bills under control is a more productive labour force, meaning both that more people are in work and that they work better in the jobs they are doing. EU investment in technology and trans-European networks and further moves to eliminate non-tariff barriers in the single market are the keys to a more productive European economy and a more productive labour force.

That welfare spending statistic is a reason for more action by the EU and not less. David Cameron makes a good point but draws the wrong conclusion.

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The Speech

By
editor
 – 23/01/2013Posted in: Blog
David Cameron (picture Number 10 Downing Street)

David Cameron (picture Number 10 Downing Street)

So we have finally heard The Speech. David Cameron spoke this morning to outline what Conservative party policy on Europe would be after the next election. (Read the speech here.)

David Cameron wants to renegotiate the terms of British membership of the EU and put those new terms to a referendum. If those terms are not approved, then Britain will have to leave the EU. He didn’t spell out what those renegotiated terms would be – he does not know what he wants, and he does not know what the other member states will let him have – so his strategy for keeping the UK in the EU (which is how he describes it) is full of enormous and possibly insuperable uncertainties. Who advises him on this stuff?

He couches his demands for change in the context that every member state wants change.  Maybe they don’t realise themselves, but they do.  Of course, the principal change that most of them want is for a more democratic and integrated eurozone, which is not at all the direction that David Cameron has in mind.  His vision of Europe is at odds with that of most of the rest of the continent.

Furthermore, those things he said before about changes to the EU being decided by referendums only apply to other people’s changes. For he proposes that a Conservative victory at the next election is itself enough, without needing a referendum, to justify unwinding Britain’s EU membership somewhat.  The exact extent of the unwinding will be defined in their election manifesto with the threat that he will take his ball home if he does not get what he wants. The alternative to a Tory EU will be no EU at all.

Noting that we can’t be sure exactly what the Tory demands will be, we can still lay out the challenges for pro-Europeans in each of the three main parties.

For Conservatives, they are going to have to weigh up the demands made of the EU in their manifesto (and there will be a lot of lobbying and arguing between now and then about what those demands should be) to decide whether they are bearable. If not, or if they are so unrealistic as to be unachievable (remember, there is no guarantee that the other member states will agree to whatever it is that the Tories want), then our friends in the Conservative party are going to have to seek advice from Labour veterans of 1983. In that year, the Labour policy was to withdraw from the then EEC without a referendum: some Labour pro-Europeans left to join other parties; others clung on with the thought that their party was destined for defeat.

For Labour, the first question is what reforms of the EU it too should demand – it can’t go into the election defending the status quo – and the second is whether to propose a referendum on them. It would be a great risk to hold a referendum which had leaving the EU as an option, but a referendum which did not offer that option would not satisfy the demands of Ukip and thus would fail to keep pace with the Tory offer. (Read the arguments for, by Dan Hodges, and against, by David Clark.)

Like pro-European Tories, the Liberal Democrats will also have to study the demands laid out in the 2015 Conservative manifesto. Can they live with them? The coalition negotiations in May 2010 fairly rapidly reached agreement on what to do about Europe: as little as possible, but enough to placate the right wing. The EU Act requires referendums on future pooling of sovereignty within the EU, but the big demands of pulling out if certain EU policy areas, such as social and employment policy, were shelved. After this build-up, such demands can’t be postponed again, or the Tory party will explode. So if there is no clear winner at the next election, the Liberal Democrats will be faced with an existential choice, to side with the Tories as they did in 2010 and connive in their anti-European strategy, or to join with Labour and plot a different course.

The only people happy with what has been proposed are the members and supporters of Ukip.  A Tory victory at the next election gives them at least a partial withdrawal from the EU if not outright departure.  And the more the Tories talk excitably about what their negotiating demands will be, the harder it will be to manage their expectations when some of those demands are not met.  This new strategy of Mr Cameron’s could get horribly out of his control.

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A bit off

By
editor
 – 22/01/2013Posted in: Blog
Andrea Leadsom MP, coordinator of the Fresh Start group (picture Andrea Leadsom)

Andrea Leadsom MP, coordinator of the Fresh Start group (picture Andrea Leadsom)

If a future British government wants to renegotiate membership of the EU, the Fresh Start group of Tory MPs has published its view of what that renegotiation should achieve.  The central claim is that the EU does too much, so there are policies that should be discontinued at European level and picked up again nationally (or not, as each national government should decide).  The budget should be cut, some agencies and institutions closed down, and national vetoes should be exercised more.  (You can read the plan here http://www.eufreshstart.org/downloads/manifestoforchange.pdf)

This blog is not going to write a detailed criticism of the plans (CBIE has published such a document here http://www.britishinfluence.org/images/stories/PDFs/fscritique.doc) but there is a bigger, more fundamental point that needs to be made.

The opening demand in the Fresh Start plan is the call for “An emergency brake for any Member State regarding future EU legislation that affects financial services.”  Financial services are important to the UK and so the British should have a veto.  This is not special pleading on behalf of the UK, oh no, because everyone else should have a veto too.

But what’s this?  Financial services are picked out for this treatment because they are important to the UK, “just as the automotive industry is critical to Germany, agriculture is to France, and fishing is to Spain.”  So, policies relating to cars, food and fish should be subject to unanimity too.  That’s where this unpicking of the European Union is going.

So when the Fresh Start manifesto claims

We must maintain and expand the benefits offered by the single market, safeguarding what we already have, and developing further opportunities within and outside the EU.

it does not mean it.  The idea of trade free of tariff and non-tariff barriers is long-standing, inherent in the very idea of European integration in the first place.  It took the Single European Act to make that idea a reality because it depended on Qualified majority Voting rather than unanimity among the member states in order to make agreement on the abolition of non-tariff barriers possible.

Fresh Start also claims that

This Manifesto for Change is not about ‘cherry picking’; its goal is rather to articulate the necessary reforms that would lead to a more sustainable relationship for the UK in the EU.

which of course means that it is about cherry picking.  There’s nothing necessarily wrong with that, but if the authors cannot even persuade themselves, they are going to have a hard time persuading others.

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Dam!

By
editor
 – 18/01/2013Posted in: Blog

The intergovernmental way of doing business took another knock yesterday at a meeting of the Mekong River Commission (MRC), a body that brings together Thailand, Laos, Vietnam and Cambodia to manage the water resources of the region.

The Mekong river is 4,350km long, rising in Tibet and flowing through China, Myanmar, Laos, Thailand and Cambodia until it reaches the sea in Vietnam, and its river basin drains the whole of the region.  Millions of people depend for their livelihoods and their diets on the river; it is fragile ecosystem that needs to be protected.

To build a dam or divert the flow upstream will have important consequences downstream, and because upstream and downstream are in different countries an international organisation was set up to try to manage these issues.  The treaty binds the member states to consult with each other on river management projects, but it does not ultimately constrain them in their decisions.  The national government ministers are supposed “to review and come to mutual conclusions on the management and development of water and related resources”, but if they do not come to “mutual conclusions” a country can simply press on as it wishes.

The current dispute is over water management projects in Laos, to which the other three countries object.  What can they do if their objections are ignored?

NGOs in the field are in no doubt.  Kirk Herbertson, Southeast Asia Policy Coordinator for International Rivers, says that:

The Mekong River Commission is in desperate need of legal and institutional reform.  It’s a broken process that needs immediate fixing.

An international system that takes decisions but cannot enforce them, or that cannot take the right decisions at all, is in serious need of improvement.  Anyone familiar with the European experience will agree with that.

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Speech, interrupted

By
editor
 – 18/01/2013Posted in: Blog
David Cameron (picture Number 10 Downing Street)

David Cameron (picture Number 10 Downing Street)

The will he? won’t he? was finally settled, with a date of 18 January in Amsterdam for David Cameron’s speech on Europe.  But then reality intervened in the form of a terrorist attack on a gas installation in Algeria which provides rather more pressing duties for the prime minister.

But isn’t that the point?  Whatever British politicians might want to say about Europe, British interests are entwined with Europe whether they like it or not.  Islamist gunmen storming a pumping station are not going to separate out the hostages according to who is an EU citizen and who is from somewhere else.  The interdependent world includes us.

So, when the prime minister finally gets to deliver his speech, his case against an attempt at isolation will be strengthened, which leaves us with the question of how to make EU membership work better.

¤ ¤ ¤

The latest set of extracts, issued in advance of a speech that was never given, is here http://www.politicshome.com/uk/article/70053/pms_delayed_europe_speech.html

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A lack of leadership

By
editor
 – 18/01/2013Posted in: Blog
Leading British pro-European

Leading British pro-European

It has been a consistent theme of this website that Britain’s role in Europe is declining because of a lack of leadership.  Yes, public opinion is drifting against the EU, but that’s hardly surprising when nobody is willing to put the opposite case.  And yesterday we had empirical proof of this.

The Centre for British Influence through Europe (CBIE) issued an open letter to the prime minister signed by Conservative MPs (read it here).  They claimed to have “dozens” of signatories, but count the names carefully and you will find only 15.  Where are the others?

Elizabeth Rigby who wrote a story for the FT on the subject remarked that “Most stark thing? 10 MPs are anonymous such is level of anti-EU feeling in party”.  Here is our lack of leadership laid bare.

MPs are elected to public office on the basis of their political opinions and actions.  They are paid somewhat more than twice the average annual salary in this country in order to do so.  And a whole bunch of Tory backbenchers are in hiding.  If they were living in some kind of dictatorship, in fear or their liberty or their lives, then secrecy would make sense.  But there is no comparison between the people who struggle in danger against tyranny and people who are elected members of the House of Commons.

It would have been better for the CBIE to have said they had 15 signatories who were willing to put their name to their view of Europe, rather than to claim “dozens” who actually include people who will do nothing of the sort.

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Does Europe need a new treaty?

By
editor
 – 11/01/2013Posted in: Blog
Andrew Duff MEP (speaking), Brendan Donnelly in the chair

Andrew Duff MEP (speaking), Brendan Donnelly in the chair

A talk last night by Andrew Duff MEP, president of the UEF and author of a recent paper, “On governing Europe”, in which he outlined the need for and route towards a new European treaty. (Read the paper here.)  The present EU institutions are incapable of managing the current crisis in the eurozone; without reform, the euro will not survive, and without the euro, the EU will not survive.

Pro-Europeans should not be complacent that enough has been done to ensure the survival of the euro, he argued.  We cannot be content with policies that leave more than 50 per cent of young people in Spain unemployed.  It is surprising that the requirements of austerity have produced so little opposition so far.  The current position cannot last.

Andrew Duff described the process whereby a new treaty could be drafted by a convention in the spring of 2015, after the next European elections.  In the absence of a preparatory committee established by the European Council, the UEF would present its own first draft.  (It did something similar at the time of the last convention in 2002 – read it here – with regular updates here.)

As far as this blog is concerned, Andrew Duff’s argument for the need for a new treaty is a solid one.  There are gaps and holes in the European Union that the economic crisis has revealed, and there are others that were visible even before then, and we need to get those holes fixed.  The question is not the need, it is the likelihood.

After the rejection of the Constitutional Treaty in referendums in France and the Netherlands in 2005, an over-riding condition for its successor, the Lisbon treaty, was that ratification should be as smooth as possible.  No referendums except where strictly necessary, i.e. Ireland, and the fact that the first referendum on Lisbon there was a No vote explains why.  Given the fragility of the EU right now, it is easy to imagine the heads of government preferring to do as little as possible that might require new ratification procedures in each member state.  Quite a lot can be done by intergovernmental agreement within the existing treaties.

By this line of thinking, pro-Europeans should be modest in their ambitions in order not to risk things getting worse.  But things risk getting worse anyway.  Europe and Europeans need more than the current treaties offer them.  They need a new treaty, and the difficulties of ratification need to be overcome by leadership.

¤ ¤ ¤

One way of getting round the difficulty of ratification in each of the 28 member states (or 29, depending on what happens in Scotland) is to create a category of Associate Member.  Andrew Duff envisages that this might be a useful option for member states that do not accept the federal conclusions supported by all the others.  He made clear that, contrary to the way in which this proposal had been reported in the press recently, e.g. here and here (£), he was not advocating that the UK should seek Associate Member status, only that the option should be included in the new treaty.

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Silence where a policy should be

By
editor
 – 08/01/2013Posted in: Blog, Featured Articles Top
David Cameron and Nick Clegg (picture 10 Downing Street / Flickr)

David Cameron and Nick Clegg (picture 10 Downing Street / Flickr)

The coalition government’s mid-term review and relaunch yesterday gave us an update on what they think they have achieved.  Of course, because the coalition is made up of two separate and, at the next election, competing political parties, what they think of as their achievements varies notably between the parties.  (Read the report here http://midtermreview.cabinetoffice.gov.uk/)

The section on Europe  http://midtermreview.cabinetoffice.gov.uk/fixing-the-economy/europe/ is a perfect illustration of this.  It lists some of the things that the government has done – keeping out of the eurozone bailout mechanism, for example – but not others.  No mention of the Fiscal Compact Treaty, which came into force on 1 January 2013 despite David Cameron having thought he had vetoed it.  And no mention of the closure of the Treasury unit that was preparing for euro entry, something the Liberal Democrats surely rue.

And in the forward-looking section, there is utter silence on the future of Europol and the European Arrest Warrant.  The UK has the right to withdraw from justice and home affairs cooperation if it wishes but has to notify its decision to do so during this year.  Home secretary Theresa May said at the Tory party conference that she wanted to do so, but it is not just up to her.  Her coalition partners will need to agree, and their manifesto said that Europol membership should remain.  Either the Tory right will be disappointed, or Nick Clegg will be making another apology video before the end of the year.

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Can David Cameron save the unions?

By
Richard
 – 21/12/2012Posted in: Blog

David Cameron (picture The Prime Minister’s Office)

The promise by the prime minister of a new policy on Europe to be outlined in a speech in January rules out most useful comment on the issue between now and then.  For the same reason that a referendum on EU membership while the eurozone crisis is still not settled makes no sense – what kind of EU would we be voting on? – criticism of Tory policy has to wait until we find out what that policy is.

But if we can’t criticise the policy yet, we can still lay out the problem that the new policy needs to solve.  The problem is that the eurosceptic demands of the EU are ones which the EU cannot meet.  Britain wants less single market regulation, we say, except in the areas where it benefits us.  Detach social policy from the single market; exclude fisheries from the family of common policies; allow financial services to be traded freely across the continent but regulated only nationally: these are our demands.  How far are the other member states willing to go in making concessions to satisfy them?

Britain has steadily excluded itself from much influence in the EU in the past few years, so our friends are not as numerous as they once were, and who believes that, even if a set of British demands were met, this would be the end of the matter?  British anti-Europeans would simple declare that things were going their way and demand yet more.

The twin-track strategy of anti-European rhetoric while relying on some kind of engagement with the EU is not going to end well.  But still, we are jumping ahead: let the prime minster say what he must.

One part of the UK where his new policy will be particularly significant is Scotland.  This blog has written previously about the route that would be followed were an independent Scotland to apply for EU membership in its own right.  Negotiations to join the EU would take place at the same time as the negotiations to leave the UK, so that Scotland could aim for a simultaneous  transition.  (Graham Avery describes the scenario in a note for the House of Commons Foreign Affairs Select Committee here.)

Opponents of Scottish independence – unionists, or British nationalists, depending on what you think of them – have been trying to raise the fear that those negotiations will be difficult and protracted – will Scotland have to set up border controls?  will it have to join the euro?  will it get a budget rebate? will the Spanish agree? – in order to suggest at that a Yes vote for independence would put Scottish EU membership at risk.

Sir David Edward, formerly a judge in the European Court of Justice, demurs.  Writing for the Scottish Constitutional Futures Forum, notes that the existing European treaties impose “obligations of good faith, sincere cooperation and solidarity” and that any negotiations would be conducted accordingly.  This is a political matter, not a legal one, but it seems wrong to rate too highly the risk that those negotiations might fail.

A rather bigger risk, it seems to me, is that, after a Scottish No vote, the whole UK might vote to leave the EU itself.  This is the route down which the anti-Europeans are taking us, and the route down which Scotland would commit to be taken if it voted to stay within the Anglo-Scottish union.

Opinion in Scotland and England differs.  A poll conducted for the Times by Populus in June 2012 found this:

Do you want the UK to be part of the single market in a wider European Community? Yes No Result
Scotland 30 44 -14
England 32 40 -8
Great Britain 32 40 -8
Do you want the UK to remain in the European Union, keeping open the option of joining the more integrated Eurozone?      
Scotland 39 40 -1
England 36 45 -9
Great Britain 36 44 -8

The Scottish people are notably more pro-European than the English, being between 6 and 8 percentage points more favourable towards the EU.  However, Scotland is only around one-tenth the size of England, so its pro-European sentiment is swamped by the opposite view south of the border.  One might very well argue that the best way for Scotland to stay in the EU is to vote to leave the UK and escape the electoral preponderance of the English eurosceptics.

Of course, to be sure of this, we will have to wait and see what the prime minister says in his speech in January.  Maybe he can save not one but two unions.

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