Using hindsight to understand Brexit and the EU

JUST as there are fears today in 2017 about leaving the EU, there have been fears and criticisms about staying in for decades. I came across a past model essay outlining arguments for and against staying in the Common Market or European Economic Community (the EEC as it was called).

It is illuminating with hindsight to take a short journey back through modern history to consider there was plenty of planning, thinking and debating before we joined and while we have been members – however in 2017 we know there has been little planning about how Britain – and businesses based here – will survive and prosper operating outside of the EU.

Highlights in the history below include calls for stronger links with the Commonwealth and developing nations outside the EU – and fears when staying in about being governed from Brussels or Strasbourg rather than from Westminster.

Brief history of the Common Market

Over the past 70 years or so, Britain’s role as a trading nation has changed because of the Common Market. In 1951 France, Germany, Italy, Belgium and the Netherlands set up the European Coal and Steel Community. Coal, iron and steel could be bought and sold within these countries without any trade restrictions. The community turned out to be a success.

In 1958, the six members of the ECSC set up the European Economic Community (EEC) or Common Market. Members of the EEC were to work towards free trade between themselves. They agreed to apply the same tariffs on all trade with non-members. They also agreed to work towards common policies on nuclear power, social welfare, tax, agriculture and transport. In 1961 and 1967 Britain applied to join the EEC, but Charles de Gaulle, President of France, felt that Britain had too many commitments to Commonwealth countries and the USA. He rejected Britain’s application to join the community. In 1970 a third attempt was made to join the EEC. This was successful, and in 1973 Britain became a member of the community.

Effects of Britain’s membership of the EEC:

  1. Britain joined the EEC too late to improve her trading prospects. The community had been in existence for 16 years and the six original members had shaped the community in a way which suited them.
  2. Britain had a different trading pattern from those of other countries, and this worked to our disadvantage. We lost our close economic ties with the Commonwealth.
  3. Britain had to pay huge sums of money towards the total EEC budget.
  4. Most EEC countries had more efficient industries than Britain. Free trade between EEC members opened up Britain to foreign manufacturers and British business and industry had to struggle to compete.
  5. The Common Agricultural Policy (CAP) kept food prices high, even though there were massive food surpluses (e.g. butter and beef ‘mountains’).

(You can probably understand that this potted history reasonably indicates the source and development of different attitudes in Britain to the the rest of Europe that we see play out as controversies in the corridors of power, the Press and media up to the present day.)

EU political map

Brexit – Britain is ‘leaving’ the EU, shown in map

How Britain used to discuss the European market

Here’s a conversation between a parent and son debating the pros and cons in the late 1980s…

“You’ve got it wrong, Dad. The Common Market is just a rich man’s club. It’s a way of helping people in business to make bigger profits by reducing tariffs between European countries.”

“You forget that lower tariffs will mean cheaper goods, John.”

“In theory, yes. But cheaper imports will ruin British industry. Look what foreign cars have done to the British motor industry. What’s happened to British-made motor cycles? In practice, membership of the EEC will mean higher food prices. Belgium, France, West Germany, Italy and the Netherlands will want us to raise our prices to bring them in line with theirs. And you know how much food costs when you go abroad!”

“Look, John, you know how inefficient some British farmers are. Membership of the EEC will help them a lot. With the Common Agricultural Policy, they’ll be much better off and they’ll be producing more food.”

“You’re talking rubbish, Dad. British farmers are some of the most efficient in Europe. The effect of the CAP will be that food prices will go up and certain items will be produced in too great a quantity. Farmers won’t have to worry about foreign competition. They’ll be able to produce as much butter or beef as they like. They’ll get a fixed price for their produce whatever happens. Worse still, Dad, we’ll get bigger and bigger food mountains and wine lakes. All the surplus food will be sold off to the Eastern Bloc or just dumped the sea. This seems criminal when a few thousand miles away there are people starving.

“But, John, you must remember that in some parts of Europe farming methods are old-fashioned and inefficient. Many farms are too small for modern machinery. The aim of the CAP is to increase the size of European farms. The commissioners will be handing out sums of money to uneconomic farmers to persuade them to give up small farms.”

“Dad, it’s only in Belgium, the Netherlands and Italy that you see a lot of these tiny farms. The British taxpayer will be subsidising foreign farmers!”

Peace in Europe

“Why are you so inward-looking, John? I’d have thought you’d like the idea of a united Europe. You’re in favour of peace aren’t you? Since the EEC was set up in 1957, there have been no major wars in Europe.”

“But there have been some dreadful acts of terrorism and violence. We need stronger links with the Commonwealth and the Third World countries, not with Europe. The future of the world lies with the developing nations.”

“The Commonwealth? You’re beginning to sound like an imperialist, John. With all your talk of tariffs and the Empire you seem to have a lot in common with the protectionists.”

“You remember the 1930s, Dad. We had to bring back tariffs then to protect British industry.”

“Was the European Free Trade Association in favour of tariffs? When Britain joined EFTA with Austria, Denmark, Norway, Sweden and Switzerland in 1959, there wasn’t much talk of tariffs then.”

Wider markets for UK business and industry

“That was 1959. Be realistic, Dad, we live in a changing world and have to be adaptable. I’m convinced that staying in the EEC will weaken Britain’s ties with the USA and the Commonwealth. It will harm our trade with Scandinavia. We’ll have higher food prices and unemployment and less efficient farming. We’ll be governed from Brussels or Strasbourg rather than from Westminster. And British industry will be destroyed by harmful competition.”

“Well, John, you’re entitled to your own views on this but I sincerely believe that our future lies with Europe. EFTA was never a success and geographically we’re closer to Europe than the Commonwealth. Staying in the EEC will give us a wider market for industrial goods and cheaper food imports. We’ll have more jobs in farming and industry. Workers will be able to travel freely from one European country to another in search of employment. We’ll all have a higher standard of living and there’ll be less likelihood of war breaking out in Europe. Finally, don’t forget that in this referendum it looks as if over 65 per cent of the voters are going to vote ‘YES’ to staying in.”

“I can see that we’re not going to agree about this, Dad. People may vote to stay in this time but when the next referendum is held, the result will be very different.”

“We’ll see, John, we’ll see.”

🙂

This entry was posted in Economics. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *