Britain and the EU

1. Britain and the EU A brief history of the founding Britain’s joining and development within the EU The present relationship

2. The Steps to the EU • The Marshall Plan and its Irony • 1948 The Organisation for European Co-operation set up to implement the Marshall Plan • To establish stability in Europe • To prevent the spread of communism • To show that European nations could cooperate • They have shown that ability in resisting American pressure.

3. The Steps to the EU • 1948 The Organisation for European Co-operation • Secondary motives for the Americans—establishing markets for American goods • Providing a buffer zone between the Soviet block and North America • NATO was also part of that strategy • Containment

4. 1949 The Council of Europe • Established the European movement • Produced a political declaration demanding the political and economic union of European states • Dispute as to whether the union should a federal state or just a union—a question of surrendering sovereignty—still a major question.

5. The Steps to the EU • 1951 European Coal and Steel Community • To create a common market for coal and steel • An attempt to overcome traditional conflicts between Germany and France—the rationale was that countries that cooperate economically and politically do not attack each other.

6. The Steps to the EU • 1957 The Treaty of Rome • Began the integration of two new areas • The basis of the founding of the EEC and the Euratom (European Atomic Energy Community) to develop nuclear potential for peaceful means • Initiated the idea of a common customs union for the six member states. • Launched the idea of a common market to allow the free flow of persons, services and capital.

7. Treaty of Rome • Eliminated customs duties/restrictions of movement • Created common customs tariff/commercial policy to non-members • Adopted the Common Agricultural Policy

8. Treaty of Rome • Council of Ministers • European Commission • European Parliament • Court of Justice

9. 1979 European Monetary System Established • First step towards economic and monetary union • The goal was to stabilize currencies through stabilizing exchange rates • Limited fluctuation of currencies to a window of +/-5%

10. UK’s Entry • The UK remained skeptical toward a union of Europeans countries and especially one that consisted of France and Germany. • They also feared weakening ties with the Commonwealth and USA • They jointed EFTA as a counter move.

11. UK’s EntryHowever, they saw how successful the EEC was French and German production had risen dramaticallyThe UK applied for membership only to have it blocked twice by DeGaulle An example of how one person can stop political development

12. New Governments, New PossibilitiesEdward Heath was elected along with George Pompidou. Heath saw the dangers of being isolated in Europe.Pompidou was more favorable to Britain than DeGaulleA secret summit was held in 1971, between Heath and Pompidou and agreement was reached. The UK was officially admitted in 1973.

13. Questions and Doubts • The CAP was incompatible with Britain’s relation to the Commonwealth • Stagnation in the 1970s raised doubts as to whether Britain should not go it alone. • Britain opted out of the EMS • Feared losing control of monetary policies

14. Questions and Doubts • The fear of loss of sovereignty • Britain had ruled over half of the world and saw themselves as an independent power even though much of that power had eroded. • They were afraid that they would become a one-among-many and that they would be seen as too Euro-friendly by the USA.

15. Questions and Doubts • The conservatives feared a movement to the left influenced by the more social democratic countries in the EU. • They feared the implementation of the social charter which would give more rights to the workers.

16. Thatcher and the EU • The Thatcher government favored the four freedoms • Looking West or East • The special relationship with USA • Skepticism toward the Social Chapter which guaranteed workers’ rights and harmonizing laws regarding employment, working conditions and employee participation in decision making bodies in companies • Against the British concept of management

17. The Thatcher Rebate • Thatcher argued that the UK was getting much less out of the EU than they were paying in due to their relatively small agricultural industry • She threatened to veto an further expansion of spending if she didn’t get her money back. • The rebate equals about £3 billion today

18. The Advantages with EU Membership • 67% of UK trade goes to the EU • Free movement of labour helps supply labour for undesirable jobs • Bureaucracy costs are low • UK’s EU contribution = 1.5% of UK GDP • Grants to depressed UK areas • Net inflows have decreased • Social Chapter

19. The Disadvantages with EU Membership • CAP—expensive for non-agricultural countries; almost 50% of EU’s budget goes to CAP • High prices = oversupply • High tarrifs limits trade • Higher prices for consumers • Increased immigration—places a strain on housing and services • Social Chapter = higher labor cost

20. The Euro: Advantages • Cost of changing currencies. • The benefit = 1% of GDP • Price transperancy: easier to compare prices • Eliminates exchange rate insecurity • The Euro as a world currency • Inward investment: encourages foreign companies to settle in UK

21. EURO: Why the UK won’t joinThe electorate remains skeptical to the loss of sovereignty especially in regard to the EuroLoss of control of monetary & fiscal policy measures—devaluation and interest ratesDevolution of power over the economy to the ECB.Pride and tradition and the poundGeneral skepticism toward Europe

22. EURO 5 TESTS • Whether the UK has achieved sustainable convergence with the Euro-zone economies • Whether there is sufficient flexibility to cope with economic change • Whether joining would create better conditions for business to make long term decisions to invest in the UK • The impact joining would have on the UK financial services industry • Whether joining would be good for employment

23. Recent Developments • Tony Blair stated that he was pro-Europe • He ratified the Social Charter • He avoided the embarrassment of a failed Constitutional referendum • The Thatcher rebate—still a hot potato • Blair claimed that without it, Britons would pay 4 times/citizen than the French and Italians • Mad cow conflict

24. Recent Developments • French vs. the British • CAP vs. rebate • French are the largest beneficiary of the CAP • Cut the CAP vs. cut the rebate • Caused the breakdown of the summit in June, 2005 when Gordon Brown threatened to veto the EU budget if Britain lost its rebate. • The failure to accept a new constitution • The system is unwieldy and needs modernizing due to the expansion.

25. That Special Relationship Again • Blair’s support of Bush’s war in Iraq • Bush’s attacks on “old Europe” • Blair is caught in the squeeze • The worse things get in Iraq and the more Europe withdraws, the tighter the squeeze. • Fortunately this problem will soon be resolved and Obama is a plus.

26. What Creates an Anti-Europe Attitude • Traditional rivalry • An island mentality along with Britain’s history as a world-wide imperial power with a special relationship with USA • Don’t want to play second fiddle to Germany and France • The tabloid press’s negative reporting • Devolution is seen as loss of sovereignty • Brussels is seen as a top-heavy bureaucracy • Perhaps Britons are more indifferent than hostile • “We have enough with ourselves” attitude

27. The Political Parties and Euro-skepticism • The Conservatives are split down the middle—is pro-America anti-Europe? • A bitter battle where 80% of the party members are Euro-skeptics • “Blair is committed to the progressive extinction of Britain as an independent nation.”—Margaret Thatcher • “This could be the last general election of its kind, the last time that the people of the United Kingdom are able to elect a Parliament which is supreme in this country.”—William Hague • .

28. Labour and the EU • Labour is generally pro-Europe while Blair maintains close ties with the US • “I am a passionate pro-European…I believe in Europe as a political project.”—Tony Blair • Blair sees Europe as a social and political project as well as an economic one. • “The idea of Europe, united and working together, is essential for our nations to be strong enough to keep our place in the world.”—Blair • Some backbench opposition.

29. The Liberal Democrats and the EU • The most pro-European party • They favour both economic and poltical unification • “The EU has a fundamental role in guaranteeing peace and freedom in Europe. By promoting enterprise, protecting the environment, supporting global development and fighting discrimination, the EU brings enormous benefits to Britain.”—Policy Briefing, January 2005

30. The Independence Party and the EU • They were founded in 1993 to seek the UK’s withdrawal from the EU • “Membership in the EU stifles our initiative and threatens our freedom.”—IP Homepage • Against the Euro • Won one seat in the 2005 election.

31. The Impact: Regional Development • EU funds have helped regions such as Wales, the Midlands and the North recover from deindustrialization and the closing of the mines. • This plus foreign investment in light of UK’s EU membership have helped these areas revitalize.

32. The Impact: Economic • Harmonisation of specifications • The four freedoms • Reduction of documentation of exports • Opening of markets due to tariff elimination; a level playing field • Cross-border cooperation in science, education and industry

33. The Impact: Environment • EU environmental legislation will impose requirements which will affect regions differently • Manufacturing in the Midlands will bear a heavier burden due to green house gas emissions • Regions with a service sector base will be favoured.

34. The Impact: Social Charter • The EU Social Charter guarantees: • Safe and fair working conditions • Right to join a union & bargain collectively • Maternity leave • Vocational education • Rights of migrant workers • Equal pay for equal work • Fair termination

35. The Impact: Labour Force • Despite fears of a massive flow of workers the impact has been relatively little • Winners-Workers from abroad and employers. • Losers-those competing for low-wage jobs, but no negative impact on salaries. • Over 50% of the foreign workers return home.

36. Questions • What Impact Has Membership Had on Your Country—Politically and Economically? • How do you feel about the recent expansion to the east and south?