Posted on Thursday 13 June 2013 by Ulster Business

John Simpson

The arguments about the benefits and costs of UK membership of the European Union have become a major issue at Westminster.

There is the worrying prospect of an uncertain four-year debate, until 2017, on whether the UK electorate can be offered renegotiated relationships within the EU in a choice on whether to remain part of the continuing EU.

Northern Ireland will play a small part in the wider debate. Logically Northern Ireland has strong reasons for wanting to find an agreed renegotiation so that the UK remains in the EU.

The debate about whether the UK should remain within the EU is much more complex than a straightforward 'in-out' choice. The least satisfactory prospect is of a four year debate that generates enhanced antagonism between the UK Government and the other European governments.

The easier part of a renegotiated arrangement would be to maintain a full trading common market, for goods and services, linked to a framework that ensured that the trading arrangements functioned in a 'level playing field'. Agreeing on the conditions for a level playing field, including competition rules for goods, services and people may be more difficult.

The inherent contradiction in any renegotiation is the strain between (a) the UK government wishing to have authority to make its own decisions and avoid unwelcome EU decisions and (b) the need for an EU mechanism acceptable to 27 countries.

If a decision by the UK to leave the EU lacked the degree of goodwill needed to minimise the disruption of the decision this might create a fractious departure which would be the worst possible outcome. Despite any reservations, the status quo would be preferable to that outcome.

PASSIVE ACCEPTANCE?

There are many uncertainties influencing the debate. What are the features of EU membership that are most unacceptable? What EU legislation or rules are unnecessary and should be removed? The usual complaints tend to be generic by referring to undue Brussels interference, bureaucratic procedures and/or excessive costs of the EU mechanisms and the cost of the EU budget.

To create a sensible debate, vague generic dislikes should not be allowed to dominate discussion. Specific identified concerns would help the debate and might, in their articulation, help to reach an amicable renegotiation.

Two critical assumptions might be made to narrow down the scope of the EU debate.

First, there is no expectation that the UK will be asked to join the 17/18 countries that have adopted the Euro as a common currency. That prospect has gone. The Euro mechanisms have not yet been developed within a sufficiently developed monetary policy framework.

Second, if the UK does vote to leave the EU, the current free trade (tariff free) access to the EU countries could be expected to remain in place. Even with an acrimonious UK departure, restoring tariff walls is not a likely option.

These assumptions might encourage the response that, with the UK outside the EU, there could be minimal impact on the UK economy. That looks deceptive.

The risks of such a passive attitude lie in the emerging perception of the UK as an outsider to the larger EU economies. The UK economy, outside the EU, would have a diminishing influence. If the UK was separated from the decision making Councils and Parliament, the UK influence would become similar to that of Norway or Switzerland.

RENEGOTIATION

A critical feature for the UK Government is the way in which it intends to ask for a renegotiation of aspects of the EU Treaties. Is this a renegotiation solely from a UK perspective, in which only UK interests are identified? Alternatively, is this a renegotiation so that other Member States might see advantage for the whole EU in making agreed changes?

In other words, is the UK bid an effort to make the EU function more acceptable for each Government? There are some signs that this more constructive approach might attract wider support, including the German Government.

A constructive approach to renegotiation would reduce the impact of EU policies which are accepted as going beyond the logic of the original Treaty of Rome and the later Maastricht refinements. The renegotiation will have more chance of success if there continues to be agreement that the EU should ensure a well ordered common EU market. Selective opt-outs to suit a small number of Member States but at the price of disadvantaging others would be unlikely to succeed.

There are some EU policies which have Community-wide logic even when individual states disagree. Effective Common Fisheries Policies should offer collective benefit even when some countries wish otherwise. The (so-called) Social Chapter with its implications for working conditions has a core logic yet has dimensions that might be amended, including the Working Time Directive.

The EU multinational trade negotiations are a form of mutual protection. The emerging Community patent legislation is a useful shared benefit.

There is some misunderstanding of the relationship of the EU with the questions of Human Rights. The European Convention on Human Rights is separate and not affected by EU agreements.

NORTHERN IRELAND INTERESTS

Northern Ireland will take part in the EU debate with considerable direct and indirect interests.

The direct interests include:

• Arrangements that optimise the ability to attract foreign direct investment leading to increased employment and earnings.
• Agreed rules and procedures to avoid unfair competition in State Aids with other EU regions.
• Access and support for agriculture and the export of farming and food products.

If the UK were to leave the EU, the UK, including Northern Ireland, would risk becoming less attractive as a location of inward business investment. This could be particularly significant if the Republic of Ireland remains a full EU member.

Although in Northern Ireland there are sometimes complaints that the EU rules on State Aid restrict the ability to compete with other regions (by imposing ceilings on the permitted levels of State Aid for new investment), if Northern Ireland was outside the EU and better able to offer higher State Aid, this poses the risk of a competitive bidding situation where taxpayers pay more in a less disciplined process.

One of the largest concerns for Northern Ireland, if the UK leaves the EU, would be the consequence of the removal of, or substantial adjustment to, the Common Agriculture Policy. There is a risk that the interest of the UK Government to reduce the cost of the CAP would be contrary to the interests of local farming and food exports.

From a Northern Ireland perspective, which would not be identical with the perspective in GB, the debate on EU membership has short-term disadvantages and longer-term threats. In the short-term, the rebuilding of the local economy will be adversely affected by several years of uncertainty about the outcome of the renegotiation.

In the longer-term, the emerging differences with the Republic of Ireland, if the UK leaves the EU, are likely to work to Northern Ireland's disadvantage. Even more fundamental, if the UK moves to a marginal position with less influence on the wider European economies, that marginalisation would be to the disadvantage of the UK in general and Northern Ireland in particular.

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