The future of the EU - the case for the UK’s remaining in Michael Johnson 24 November 2015

Issues for this session The positive case for UK membership of the EU Teaching the issues in a balanced and informed way avoiding prejudice and rhetoric – Base arguments on true facts and accurate figures (1) Britain’s place in the world (2) EU internal economy and Britain’s place in it (3) International trade (4) Need for positive change – better to be inside!

Britain’s place in the world (1) The UK is geographically, historically, linguistically and majority-ethnically a European country Britain’s world dominance and ability to go it alone lasted roughly 250 years – 1700 to 1950 Our “industrial revolution” industries (coal, steel and textiles) have largely gone We now depend mostly on providing and trading services Can still exert real global influence, but only as a leading member of a larger unit

Britain’s place in the world (2) Issues for consideration by teachers: – How to identify the realities of Britain’s current international position in the face of constant and conflicting media reporting? – How do we teach the history of Britain as a world power and distinguish reality from myth? – What tools can we give to students to enable them (1) to evaluate what arguments in the debate are valid and which not; and (2) to balance arguments so as to arrive at an informed opinion?

EU internal economy and UK place in it (1) UK GDP is £11.3 trillion; UK £1.8 tr., or 1/6 EU is a Single Market of 505 million people (60% bigger than USA, much richer than either India or China) EU internal goods trade is essentially free of restrictions 52% of UK total trade in goods is done within the EU: 50% of exports, 53% of imports Some important internal barriers in services remain, and there is no Digital Single Market or Single Market for Capital

EU internal economy and UK place in it (2) - Services Services are increasingly important in developed country economies and in international trade The UK provides and trades services on a global scale The WTO lists over 150 categories of services 80% of the UK economy and 33% of total UK trade The UK was Surplus on UK services trade of £85bn. in 2014 prime mover in the campaign to complete the EU Single Market from 1986: services liberalisation and transparent regulation are essential elements of that, though much more still remains to be done

EU internal economy and UK place in it (3) – Competition and investment EU competition policy safeguards all members against unfair restrictive practices and reduces prices In 2013 UK had just over £1tr. of overseas investment (FDI) stock, (£447bn. in EU) UK is largest EU recipient of inward investment from non-EU countries: £44bn. net in 2014, total FDI stock in UK in 2014 £1.065tr. Much, maybe most, of this FDI comes to the UK because we are in the EU and a good entry point. UK outside the EU would lose at least some FDI and maybe some major companies

EU internal economy and UK place in it (4) – Issues for consideration What is the structure of UK industry and commerce in the 21 st century? How far is the UK economy still independent on a national basis? How far is the economy internationally integrated (1) within the EU and (2) more widely, on the basis of global value chains? Is there any longer a viable place in the world for economies conducted on a national basis?

International trade – EU common commercial policy (CCP) (1) The EU is a customs union – there are no internal tariffs on goods, and non-tariff barriers are prohibited All member states apply uniform import tariffs to goods The CCP aims for international abolition of restrictions on trade and for liberalisation of service activities The EU applies common standards for goods and increasingly for regulation of services Trade agreements are negotiated and made at EU level Trade policy is developed in constant consultation between the Commission and member states, both bilaterally and in regular weekly meetings under the auspices of the EU Council Secretariat

International trade – EU common commercial policy (CCP) (2) The EU has 50 trade agreements in force and 84 in negotiation or awaiting implementation 5 major agreements are under negotiation including TTIP with US, and an agreement on investment protection with China The EU is vastly stronger if agreements are made and administered centrally: – Negotiating strength of a market of over 500 million – All member states on an equal footing and have equal opportunities to benefit from agreements if they can – In case of trade problems affecting one member state, it can call on whole EU and Commission for support

International trade – EU common commercial policy (CCP) (3) “Leave” campaign claims that UK can make its own independent trade agreements outside the EU The Prime Minister demolished this argument in his Chatham House speech on November 10: – Nothing in the EU prevents us from trading with anyone we wish – Other countries would have to be prepared to renegotiate with us advantages which we already have as an EU member – Even if others were willing, renegotiation would be a huge task taking enormous resources and many years – Pending any new agreements, UK goods exports would face tariffs and other barriers in markets where they do not face them at present – USTR Froman confirmed on 28/10 that the UK outside the EU would face tariffs in the US market; the US would not renegotiate a new agreement with UK

International trade – EU common commercial policy (CCP) (4) Issues for consideration: How does the UK determine trade policy priorities in the modern world and in the face of changing conditions? What priority sectors and/or activities should be the main focus of UK trade policy and promotion? Should governments consider non-economic factors such as human rights when deciding trade priorities? Is it easier to take account of non-economic factors at the level of individual governments or with agreed multi- state backing e.g. of the EU?

Conclusion – positive change No political structure lasts for ever, and that applies to the situation of individual countries in and out of the EU We must be alert to movements in international political and economic power and be prepared to adapt positively to changes The UK cannot put the clock back to where it was 50 or 100 years ago – dead-end ambition The UK must work positively within EU to make the best use of the structures we now have and the worldwide opportunities which they open up The EU works imperfectly in many respects. All must face up to these problems and the only way for Britain to do that is to work positively on the inside for reform