Memorandum to: Opinion Formers

From Lord Pearson of Rannoch
(Member, Lords Select Committee on the European Communities, 1992-96)

BETTER OFF OUT

It is widely feared that the United Kingdom has become too insignificant to prosper outside the European Union, (which we haven't - see points 56-57). We are told that we must therefore be ‘at the heart of Europe’, and lead it into the paths of righteousness, (which we can't - see points 8-11). Most people also assume that the EU will safeguard peace in Europe, (whereas it may have the reverse effect, see point 28). Then all our leading politicians and media say that the advantages of being in the EU are so obvious and overwhelming that they refuse even to discuss what life might be like outside it.

So, in an attempt to encourage national debate on this greatest issue of our time, herewith some of the case for the United Kingdom to leave the European Union, in 60 simple points, under the following headings:

1. History – How did we stray into this quicksand? (Points 1-12)
2. How bad is it now? (Points 13-25)
3. What else do they have in store for us? (Points 26-27)
4. Sixteen common misunderstandings. (Points 28-43)
5. Economics – will EMU fly? (Points 44-51)
6. 'Enlargement' – should the new democracies of Eastern Europe join the EU? (Points 52-55)
7. The way forward: A Free Trade Agreement with the EU, and independence. (Points 56-60)

Conclusion: "There is nothing frightening, ‘extreme’, right-wing, or negative about leaving the EU and keeping our hard-won right to govern ourselves. It would be a liberating, positive thing to do. And we would be very much richer as well."

(of the 87 "QMV"s 62 votes are required to pass a law
and 26 votes are required to block one).

1. History – How did we stray into this quicksand?
    
   

   1. The post-war ideas which inspired European integration are now obsolete. These were largely (a) to resist the growing menace of the Soviet Union, and (b) to stop Germany going to war again. (See point 28).

   2. During the 1960s & '70s Britain had two other reasons for wanting to join what was then the European Common Market. These were (a) to emulate Germany's industrial success and (b) as a hedge against our far left taking power.1 These aims are now also redundant.

   3. The 1957 Treaty Establishing the European Community ("The Treaty of Rome") set up the Common Market. From the start, this had as its goal 'the ever closer union of the peoples of Europe'. The other signatories have always understood this to mean the gradual creation of an EU megastate. Only British Governments, both Labour and Conservative, have consistently fudged the issue.

   4. Edward Heath agreed the Treaty in 1972 and took us into the Common Market, sacrificing our fisheries behind Parliament's back. ^[2] (See point 22).

   5. During the 1975 referendum, when the British people voted to stay in the Common Market, the Labour Government sent a leaflet to every household in the land, saying: "There was a threat to employment in Britain from the movement in the Common Market towards an Economic and Monetary Union. This could have forced us to accept fixed exchange rates for the pound, restricting industrial growth and so putting jobs at risk. This threat has been removed."

   6. Radio 4 has confessed that the BBC was heavily biased in favour of a 'yes' vote before and during the 1975 campaign. The 'yes' campaign was also generously funded by the CIA.^[3] The BBC and Independent Television remain biased in favour of our EU membership today.

   7. All subsequent amendments to the Treaty have increased the power of 'Brussels' at the expense of national sovereignty. These amendments were: the Single European Act of 1985, the Treaty on European Union - 'Maastricht' - of 1992, and the Amsterdam Treaty of 1997, (collectively referred to as the 'Treaty of Rome'). Thus the original European Common Market has been subtly changed into the European Union of today, without the peoples' understanding or consent.

   8. Of all the Treaty changes, the Single European Act has turned out to be the most destructive, because it set up the Single Market (not to be confused with the former Common Market) and gave control of our industry, commerce and environment to majority voting in Brussels. (See chart opposite).

   9. There are 87 'qualified majority' votes among the 15 member states. 62 votes are required to pass a law and 26 to block one. The UK has 10. This is the mechanism which has allowed so many British interests to be damaged or destroyed by Brussels' harmonising craze. We often cannot muster the extra 16 votes to form a blocking minority because our 'partners' do not share our international trading perspective. Current examples of our damaged commercial interests are our very valuable international art market, thanks to increased VAT and a levy on the re-sale of art; and our mergers and acquisitions industry, thanks to the Takeover Directive.

   10. Other British interests which have suffered the cancerous influence of "Brussels" include our air space, armed forces, boat builders, bridges, cheese-makers, civil service, chocolate, condoms, dairy farmers, duty-free shopping, euro-bonds, freedom of religion, hallmarks, hedgerows, herbal medicines, legal system, lorries, market gardeners, oak trees, paper rounds, pheasant shooting, ponies, postal service, race relations, sexual discrimination and harrassment, slaughter houses, taxation, taxis, waste disposal, water, whisky, working week, the roast beef of Old England, the London bus and the excellent lavatory designed by Thomas Crapper.

   11. John Major believed he had negotiated a measure of national independence at Maastricht (1992), when the 'subsidiarity' clause was inserted into the Treaty. He believed this meant that Brussels would only dominate when the nation states could not do something better on their own. He even claimed that 25% of all EU legislation would be withdrawn under this triumph, but not one comma has been changed. The catch was in the third line. The EU agreed to allow the states to do their own thing only 'in areas which do not fall within its exclusive competence'.^[4]

   12. The question as to whether we should stay in the EU has scarcely featured in any General Election campaign since 1983.

2. How bad is it now?
    
   

   13. The emerging EU megastate already has its own parliament, executive, supreme court, currency, flag and anthem. It is planning its own written constitution, army, foreign policy, police force, legal and tax systems. (See points 26 and 27).

   14. The EU is the only institution on the planet which pretends to be a democracy but whose bureaucracy, the Commission, has an almost exclusive right to propose legislation,^[5] and to conduct international affairs. ^[6]

   15. The Treaty takes precedence over Acts of Parliament. So if our Government (the executive) is outvoted or agrees EU legislation in Brussels, our Parliament must put it into British law, on pain of unlimited fines in the Luxembourg Court. ^[7]

   16. The number of EU laws in force has risen from 1,947 in 1973 to more than 25,000 today. Only a handful of these were even discussed in the UK Parliament.

   17. The Treaty decrees that once Brussels has acquired a power from the nation states, that power is never given back (the 'acquis communautaire', or, in plain English, the ratchet). ^[8]

   18. The Treaty does not contain an exit clause, and can only be amended by unanimity among all the member states.^[9] It is therefore deceptive to suggest that we can 're-negotiate the Treaty' unless we are prepared to leave the EU if our 'partners' don't agree the changes we need (which they won't).

   19. Most of our foreign policy is now agreed in 28 EU foreign policy groups meeting in Brussels.^[10]

   20. Our new Regional Development Agencies cover areas agreed in Brussels and are the blueprint for Regional Assemblies reporting directly to Brussels, thus making Westminster even more redundant.

   21. The Common Agricultural Policy is an environmental disaster, costing British taxpayers around £6 billion p.a. and hitting every person in the UK with some £250 p.a. in extra food costs.^[11] The votes to change it cannot be mustered in Brussels. With the money the CAP costs us we could look after our farmers and countryside, with billions to spare for other things.

   22. The Common Fisheries Policy is even worse. Before we joined it we owned 80% of the fish in EU waters, whereas now we are allowed to land only some 25% of the permitted EU catch. The policy is hopeless because the bureaucrats who designed it thought they could conserve fish by limiting the quantities landed in port. They did not realize that most fish are dead when they come up in the nets. So that is why millions of tonnes of fish are thrown back dead into the sea each year in the name of EU conservation ('discards'). The votes to change this policy cannot be mustered in Brussels. International experience (Canada, Namibia, Norway) shows that our stocks could be conserved if we controlled them, satisfied our own industry and market, and then leased any surplus to other countries.

   23. It is generally agreed that at least 10% of the EU's £60 billion annual budget goes in fraud and mismanagement^[12] (probably more).

   24. The EU's £5 billion annual foreign aid budget is corrupt and misdirected.^[13] We could spend our £875 million contribution much more effectively on our own.

   25. Those who work for the EU's institutions - Commission, Council, Court and Parliament - are committed to building the EU megastate, and to marginalise national Parliaments. Every initiative is pursued, and every problem approached, with that goal in mind.

3. What else do they have in store for us?
    
   

   26. The next turns of the screw will be applied at another Inter-Governmental Conference (IGC) in Nice in December 2000, when further amendments to the Treaty will be agreed, (to be known as the 'Treaty of Nice'). The Government has already said it may surrender our veto (i.e. give up our sovereignty) in more areas of transport, the environment and the workings of the Luxembourg Court.^[14] In parallel with this, the Euro-crats plan:

       26a An EU army, inspired by France’s jealousy of the United States and supported by the Prime Minister. This new force is to be ‘capable of autonomous action’^[15]and will therefore undermine NATO.

       26b An EU legal system, ‘Corpus Juris’, which threatens Habeas Corpus and trial by jury.

       26c A written EU Constitution, known as the Charter of Fundamental Rights, which is to be justiciable in the Luxembourg Court, and which will therefore take precedence over all our legislation.

   27. To make the Single Market and EMU succeed, Brussels now says that tax ‘harmonisation’ is necessary (ie UK taxes up by 20%^[16]). The Treaty allows us to veto this if the Commission proposes it as a tax measure (like the Withholding Tax, which threatened our huge euro-bond market). But if the Commission proposes tax harmonisation as Single Market legislation, we may well be outvoted. If we then appeal to the Luxembourg Court, we will lose. (See John Major’s letter to Jacques Santer of 12/11/96, attached).

4. D. Sixteen common misunderstandings
    
   

   28. The Euro-philes’ most important claim is that the EU is essential to keep peace in Europe. However, democracies do not provoke war, whereas forced or premature conglomerations of disparate nations do (eg the Soviet Union, Yugoslavia, and much of Africa). So the Euro-realist model of Europe’s democracies retaining their identity, and trading freely together under NATO, is less likely to end in conflict than is an undemocratic EU megastate.

   29. The word 'Europe' has been appropriated by the Euro-philes to mean both the continent of different nations and the emerging EU megastate. So when a Euro-realist is rude about ‘Europe’ – referring to a product of the Treaty and Brussels – he is easily cast as ‘Euro-phobic’, a ‘little Englander’, or a ‘dangerous nationalist’ etc. Most Euro-realists love the Europe of different nations, but hate the Treaty and the dictats from Brussels.

   30. The Luxembourg Court of Justice is not a court of law. It is the engine of the Treaty and must always find in favour of the ‘ever closer union of the peoples of Europe’ ordained by Article 1. It can and does overturn British law.^[17]

   31. (a) Economic and Monetary Union (EMU) – the ‘Single Currency’ – is a political project, designed to force the creation of the megastate. Only in the UK do politicians pretend it is an economic project.

       (b) As at July 2000 the pound is not ‘strong’. It is standing at a 6 year low against the dollar, and 60% of our exports are dollar related.^[18] The euro is weak against all currencies.

   32. The Prime Minster and other Euro-philes often claim that ‘nearly 60% of our trade is with the EU’. Not so. What they mean is that nearly 60% of our exports of goods goes to the EU. Only some 40% of our total exports goes to the EU (goods plus services plus investment income).^[18]

       But Brussels’ dictats are inflicted upon the whole of our economy, so the real point is that only some 10% of our jobs^[22], and 10% of our Gross Domestic Product^[19], are involved in trade with the EU (declining and in deficit). Rather more than 10% of our GDP goes to the rest of the world (growing and in surplus.) The remaining 80% of our jobs and GDP depend on our domestic economy. So the mangy 10% tail is wagging our healthy 90% dog.

   33. We do not ‘trade with the EU’. We trade with the individual countries of the EU, and do more trade with the USA than we do with France and Germany combined.^[24]

   34. Insignificant amounts of inward investment into the UK are attracted by our membership of the EU. Most foreign investment comes here because we have a large business-friendly economy, with light regulation, low tax and a reliable workforce; we also speak English, are free of corruption, and are not in EMU.^[20]

   35. Measured by earnings, Japan has accounted for less than 1% of inward investment into the UK. 66% has come from the USA, 7% from France, 4% each from Germany and Australia, and 3% from Switzerland.^[21]

   36. It is silly to pretend that our 3 million or so jobs which support our trade with the Single Market would be lost if we left the EU. The trade would continue, and so would the jobs.^[22] (See point 57).

   37. The World Trade Organisation has brought average international tariffs down to 3.8%, and is aiming for zero.^[23] This makes the EU largely redundant commercially, leaving us only with its dangerous political ambitions.

   38. Contrary to Euro-phile rhetoric, we have not ceded any of our sovereignty to NATO. We could leave it at any time, and it does not interfere with our legislation or taxation.

   39. If the UK were to join NAFTA (the North American Free Trade Agreement between the USA, Canada and Mexico), we would not become the USA's 51^st state, as Euro-philes often claim. NAFTA is a free trade area, not a customs union like the EU. All three countries have retained their currencies, which float freely. NAFTA relies on inter-governmental collaboration, and does not employ a single bureaucrat.

   40. There is no such thing as ‘EU aid’ to the UK. The UK pays about £11 billion annually to the EU, which is graciously pleased to give us back some £5.5 billion^[24] for projects designed to improve its own image. We could spend the whole £11 billion much better ourselves, without the superfluous, corrupt and bureaucratic filter of Brussels.

   41. UK businessmen say they support the Single Market because they have not understood the difference between it and the former Common Market. What they really support is free trade, which we would keep if we left the EU. (See point 57).

   42. Leading Conservatives say they support our membership of the EU because they took us into it, and politicians are not good at public confession. That is why they say that a policy to leave the EU would ‘frighten the horses’. It wouldn’t frighten the voters (see point 60).

   43. It is not ‘inevitable’ that we must continue to sleepwalk into the emerging EU megastate. Our policy toward the EU should be like any other, and therefore subject to change by Parliament as the national interest requires.

5. Economics – will EMU fly?
    
   

   44. Britain’s membership of the European Exchange Rate Mechanism (ERM) in the early’90s cost one million jobs and sent 100,000 businesses bankrupt. EMU is the ERM without the escape hatch.

   45. EMU's basic flaw is that one interest rate must fit 11 different and diverging economies, where mobility of labour is low, there is no common language, and interstate transfers on the scale practised in the USA are non-existent. (To hold the US together, interstate transfers through the federal budget can reach 20% of a state's GDP. The EU budget is at present limited to 1.27% GDP)

   46. If EMU survives, the UK does not have a long-term opt out, because 6 clauses have been left in the Treaty which commit us to run our economy in a ‘communautaire’ way,^[25] on pain of unlimited fines in the Luxembourg Court,^[7] (eg for ‘exporting unemployment’ or ‘unfair tax competition’). Our adherence to the EU's Stability and Growth Pact ensnares us further. (Major's letter to Santer 12/11/96 refers).

   47. The UK’s economy continues to diverge from that of the EU, while it continues to converge with that of the USA. So the pound has tracked the dollar naturally, and moved away from the euro^[26]. Hence the idea that we might join a new North Atlantic Free Trade Area^[32].

   48. Thanks to its labour and social policies, the EU’s share of world markets is declining (down 11% over the last ten years), while that of the North American Free Trade Agreement (NAFTA) is increasing (up 21% over the last ten years)^[27]

   49. The Euro-phile claim that interest and mortgage rates would fall if we join EMU is simplistic. We would certainly be forced to accept the wrong interest rate, risking inflation, unemployment and, in the longer term, higher rates than if we stay out.

   50. If we join EMU, our eventual share of our ‘partners’’ unfunded pension liabilities could amount to at least £20,000 per person or £1.2 trillion.^[28]

   51. There won’t be a referendum on EMU unless the Prime Minister is fairly sure of winning it. But the country will go on being sucked into the quicksand of the rest of the Treaty, which we cannot avoid while we stay in the EU. (See B & C above).

6. ‘Enlargement’ - should the new democracies of Eastern Europe join the EU?
    
   

   52. EU membership would be very damaging to the new democracies of Eastern Europe, because their emerging economies cannot afford the EU’s social and employment policies, nor the rest of the ‘acquis communautaire’.^[29]

   53. All that the emerging economies of Eastern Europe really need is defence through NATO and access to the Single Market, which is denied them. (But of course they like their EU subsidies while they queue to join).

   54. Luckily, enlargement of the EU is unlikely. Existing members cannot agree to share their benefits under the Common Agricultural Policy, or the Structural Funds (£20 million per day to the so called ‘4 poor’ - Greece, Portugal, Spain and Ireland, - who can veto any dilution). The applicant nations are also waking up to reality.

   55. The Inter-Governmental Conference at Nice in December, 2000, is billed as preparing the EU for ‘enlargement’. The Eurocrats in Brussels are making this the excuse to grab even more power, so that they can rule over a larger and more disparate empire. Hence their proposals for the Charter of Fundamental Rights, an EU army and police force, and tax harmonisation (see points 25-27 above).

7. The way forward: A Free Trade Agreement with the EU, and then independence.
    
   

   56. The UK is a founder member of such international bodies as the UN Security Council, G7, the World Trade Organisation, the International Monetary Fund, the World Bank, the Commonwealth and NATO.

   57. We are now the world’s 4^th largest economy, after the USA, Japan and Germany, having just overtaken France. It is absurd to fear that we would not thrive on our own, after negotiating a free trade agreement with the EU such as those enjoyed by Switzerland and Norway, which export more per capita to the EU than we do. The EU also has free trade arrangements with countries such as Iceland, Liechtenstein, Greenland, Turkey and the Channel Islands. Even Mexico, a NAFTA member, has just negotiated a comprehensive free trade agreement with the EU.^[30]

       We have an annual £6 billion trading deficit with the EU, and a cumulative £350 billion deficit since we joined in 1973. ^[31] This means that they have many more jobs dependent on their trade with us than we do on our trade with them.

       The UK would therefore be able to negotiate a better free trade agreement with the EU than the agreements reached by less significant markets. We should then leave the EU, allowing our ‘partners’ to build their megastate unhindered by recalcitrant Albion.

   58. Contemporarily, if we really are too frightened to stand alone, (as do Japan, Switzerland and most other countries in the world), we should decide whether to join a new free trade agreement between North Atlantic countries,^[32] perhaps including other English speaking peoples.

   59. Even without negotiating a free trade agreement, the UK would be some £2 billion p.a. better off if we exported to the Single Market from outside the EU, because our contributions to the EU outweigh our tariff advantages by that amount^[33].

   60. Consistent polls indicate that some 50% of the British people want either to leave the EU, or to reduce our relationship with it to one of free trade^[34]. At least 60% are against EMU. And this is in spite of being told by all our leading politicians and media for 25 years that membership of the EU is vital to the national interest. The case for leaving the EU is much easier to understand than the complexities of EMU. If that case were properly explained, popular support for it would be clamorous.

Conclusion

It is not just that membership of the EU is wrong for the UK; the Treaty of Rome is a potential disaster for Europe. But, sadly, most of our ‘partners’ appear determined to achieve full political union within a failing, sclerotic, corporatist economy. Unanimity is required to amend the Treaty, which therefore will not be renegotiated as the UK wants. So, very soon, we will have to choose – in, or out. Do we want to become the subservient region of an undemocratic megastate, or do we want to stand on our own feet and take our rightful place in the world? There is surely nothing frightening, ‘extreme’, right-wing, or negative about leaving the EU and keeping our hard-won right to govern ourselves. It would be a liberating, positive thing to do. And we would be very much richer as well!

Malcolm Pearson