By Daniel Hannan

PUBLISHED:16:39 EST, 16  August 2012| UPDATED:01:42 EST, 17 August 2012

 

After 13 years as an MEP,  Daniel Hannan’s knowledge of the way Brussels works is second to none. Now he  has written a forensic analysis of why it’s rotten to the core. Yesterday, in  our exclusive serialisation, he examined how the euro has brought ruin to  Europe. Today he argues that Britain must break with Brussels if its economy is  to prosper again…

Every nation joins the European Union for its  own reasons. The French saw an opportunity to enlarge their gloire, the Italians  were sick of a corrupt and discredited political class.

The burghers of the Low Countries had had  enough of being dragged into wars between their larger neighbours, and the  former Communist states saw membership as an escape from Soviet  domination.

One thing in common is that they all joined  out of a sense of pessimism: that they couldn’t succeed alone.

What might have been: The unsuccessful 'No to Europe' campaign in 1975What might have been: The unsuccessful ‘No to Europe’  campaign in 1975

Confident and prosperous nations, such as  Norway and Switzerland, see no need to abandon their present liberties. Less  happy nations seek accession out of, if not despair, a sense of national angst.  Britain signed up in 1973 at what was our lowest moment as a modern nation. Ever  since the end of World War II, we had been comprehensively outperformed by  virtually every Western European economy.

Suffering from double-digit inflation,  constant strikes, the three-day week, power cuts and prices-and-incomes  policies, decline seemed irreversible.

It was during this black period that we  became a member of the Common Market, with the electorate confirming the  decision by a majority of two to one in a referendum two years later. Our timing  could hardly have been worse. Western Europe as a whole had grown spectacularly  since 1945, bouncing back from the war years with the help of American aid. But  shortly after we joined, world oil prices quadrupled after a crisis in the  Middle East, and this growth shuddered to a halt.

Far from joining a growing and prosperous  free-trade area, the United Kingdom found itself confined in a cramped and  declining customs union. We had shackled ourselves to a corpse. And in doing so,  we foolishly stood aside from our natural hinterland – the markets of the  Commonwealth and the wider Anglosphere, which continued to grow impressively as  Europe dwindled.

These historic ties had always set Britain  apart from the rest of Europe. Britain might be just 22 miles from the  Continent, but her airmail letters and international phone calls went  overwhelmingly to North America, the Caribbean, the Indian sub-continent,  Australia and New Zealand.

We conducted a far higher proportion of our  trade with non-European states than did any other member. We still do.

This was why France’s General de Gaulle  vetoed our first two applications to the EEC. Perhaps he knew us better than our  own leaders at the time did.

French president Charles de Gaulle vetoed Britain's first two applications to the EEC. Perhaps he knew us better than our own leaders did at the timeFrench president Charles de Gaulle vetoed Britain’s  first two applications to the EEC. Perhaps he knew us better than our own  leaders did at the time

Twenty-five years later, Margaret  Thatcher  was to make the same argument when she observed that throughout her life,  Britain’s problems had come from Europe and its solutions  from the rest of the  English-speaking world.

Nonetheless, in the post-war years, we were  far from standoffish about the moves made by other countries towards greater  European integration. Our leaders argued for the creation of a broad and  flexible European free-trade area, doing business with the rest of the world.

What they opposed was a protected European  sector, with prices regulated by the state.

That, though, was precisely what the clique  of federalists were after – a tight community based on a common external tariff,  industrial and agrarian subsidies and common political institutions.

Successive prime ministers refused to join a  Common Market that precluded Britain’s trade links with the Commonwealth – until  Tory prime minister Edward Heath came along.

A fanatical and uncritical  Euro-integrationist, he was determined to get us in on any terms. He acquiesced  in full to the EU’s agricultural and industrial policies, external protectionism  and anti-Americanism.

He loudly applauded its ambition to become a  single federal state – though he downplayed this aspect for domestic purposes.  The case he made to the British people was on economic grounds – that Britain  would be better off – and he expressly denied that our sovereignty would be  affected.

This has been thrown back at the Conservative  Party ever since. People felt, with reason, that they had been deceived, that we  had joined on a false premise.

Instead of becoming members of a common  market, based on the free circulation of goods and mutual recognition of  products, we had joined a quasi-state that was in the process of acquiring all  the trappings of nationhood – a parliament, a currency, a legal system, a  president, a diplomatic service, a passport, a driving licence, a national  anthem, a foreign minister, a national day, a flag.

For Britain, the promised benefits of the European community have never been deliveredFor Britain, the promised benefits of the European  community have never been delivered

There was further disillusionment when the  common market itself never properly materialised. The European Commission turned  out to be keener on standardisation than on free trade.

Rather than enabling mineral water from  Britain to be sold in Italy, it preferred to lay down precise rules on bottle  size, content and so on. Products were banned if they did not conform.

Instead of expanding consumer choice, the  European authorities were restricting it. And we paid for it. All this  over-the-top regulation was – and is – fantastically expensive, outweighing any  of the benefits of the single market.

The Commission’s own figures show that the  single market boosts the wealth of the EU as a whole by €120 billion a year, but  this is dwarfed by the annual €600 billion cost of business regulation.

For Britain, the promised benefits of the  European community have never been delivered. On the contrary, our pockets have  been picked. In all but one year since joining, Britain has paid more into the  EU budget than she has received back – the exception being 1975, coincidentally  the year of our referendum on withdrawal.

Indeed, for most of those 38 years, there  were only two net contributors – us and Germany. Every other country came out  ahead of the game. We did not.

We were also penalised by the Common  Agricultural Policy, a system designed for the needs of smallholders in France  and Bavaria rather than an efficient farming sector like ours.

Once again, Britain paid in more and got back  less.

As for the Common Fisheries Policy, that was  openly anti-British. Its quota restrictions applied only to the North Sea and  not the Mediterranean or Baltic.

Our trade suffered, too. Until 1973,  Britain  had run a trade surplus with the existing EEC members. It now  went into  deficit, where it’s remained to this day. Meanwhile the  markets that Britain  forsook – Canada, Australia, New Zealand – surged.

Our institutions, temperament, size and experience equip us to seek a fundamentally different relationship with BrusselsOur institutions, temperament, size and experience equip  us to seek a fundamentally different relationship with Brussels

Today, while the eurozone remains stagnant,  the Commonwealth is expected to grow at 7.2 per cent annually for the next five  years.

This fact seems to escape Euro-enthusiasts.  In a debate last year, a former Europe Minister, Labour’s Denis MacShane, told  me condescendingly that what I failed to appreciate was that Britain sold more  to Belgium than to the whole of India.

That, I replied, was precisely our problem.  Which of those two markets represented the better long-term prospect?

Yet, four decades on from the disastrous  decision to join the European project, Britain still has alternatives. There is  still a world beyond the EU – if only we would separate ourselves from what  amounts to a restrictive, protectionist and high-tariff customs union rather  than a proper free-trade area.

And the good news is that we can. There is  nothing to stop us pulling out and going our own way.

Unlike other parts of the EU, such as  Germany, we are not held back by a reservoir of European sentiment, desperately  clinging to some notion of unity and union for historical reasons.

Our institutions, temperament, size and  experience equip us to seek a fundamentally different relationship with  Brussels. As the euro crisis deepens, seceding increasingly seems the right way  to go. So what precisely is the alternative to EU membership? Well, several  countries – ranging from the Channel Islands and Liechtenstein to Iceland and  Turkey – are already part of the single market without being full members of the  EU.

While each has its own particular deal with  Brussels, all have managed to negotiate unrestricted free trade while standing  aside from the political institutions.

The best model is Switzerland, which rejected  membership in a referendum in 1992. Although its main political parties had  campaigned for a Yes vote, they accepted the verdict of their people and  negotiated a series of commercial accords covering everything from fish farming  to the permitted size of lorries on highways.

The Swiss have all the advantages of  commercial access without the costs of full membership. Switzerland  participates fully in the four freedoms of the single market – free  movement  of goods, services, people and capital – but is outside the  ruinous Common  Agricultural Policy and pays only a token contribution to the EU budget. Swiss  exporters must meet EU standards when selling to  the EU – just as they must  meet, say, Japanese standards in Japan.

But they are not obliged to apply every  pettifogging Brussels directive to their domestic economy.

Tory prime minister Edward Heath was determined for us to join the EEC on any termsTory prime minister Edward Heath was determined for us  to join the EEC on any terms

Critically, Switzerland is also free to sign  trade accords with third countries, and often does so when she feels that the EU  is being excessively protectionist.

The result is that the Swiss export four  times as much per head to the EU as we do.

So much for the notion that our exports to  the Continent depend on our participation in the EU’s institutional structures.

But what, you may ask, if we leave and the  other member states turn on us? What if they decide to discriminate against our  exports?

This is hardly likely to happen since we  import more from the EU than the EU imports from us.

They would be cutting off their noses to  spite their faces if they restricted the cross-Channel commerce from which they  are the chief beneficiaries.

Overnight, Britain would become the EU’s  largest trading partner and most important neighbour. Love us or hate us, they  wouldn’t turn their backs on us. And nor would we turn our backs on them.

As well as our trade links with the  Continent, we would want to continue intergovernmental cooperation, our military  alliance and the like. We cannot but be interested in the affairs of our  neighbours.

At the same time though, we would raise our  eyes to more distant horizons and rediscover the global vocation that our  fathers took for granted.

There are those who argue that we as a nation  are too small to survive on our own in this way, but such a notion rests on a  misconception.

The most prosperous people in the world tend  to live in tiny countries, such as Liechtenstein, Qatar, Luxembourg, Bermuda and  Singapore. The 10 states with the highest GDP per head all have populations  below seven million.

If seven million Swiss and four  million  Norwegians are able not simply to survive outside the EU but to enjoy arguably  the highest living standards on Earth, surely 60 million Britons could manage?

And anyway, what matters to a modern economy  is not its size but its tax rate, its regulatory regime and its business  climate.

What has changed most radically of all in the  21st century is technology. In the 1950s when the European economic community  was launched, regional blocs were all the rage. So were conglomerates of every  sort – in business, in politics, in the trade-union movement.

Wise-sounding men asserted authoritatively  that the world was dividing into blocs, and that it would be a foolish country  that found itself left out.

Nowadays, though, distance has ceased to  matter. Capital surges around the globe at the touch of a button. The internet  has brought the planet into a continuing real-time conversation. Geographical  proximity has never mattered less.

A company in my constituency in south-east  England will as easily do business with a firm in Dunedin, on the opposite side  of the planet, as with one in Dunkirk, 25 miles away. More easily,  indeed.

The New Zealand company, unlike the French  one, will be English-speaking, will have similar accountancy practices and  unwritten codes of business ethics. Should there be a dispute, it will be  arbitrated in a manner familiar to both parties.

None of these things is true across the EU,  despite half a century of harmonisation. Technological change is making the EU  look like the 1950s hangover it is.

So, if the United Kingdom pulls out of the  EU, if we can negotiate an amicable divorce, we can be reasonably certain of one  thing – that we will be better off.

But that’s not all. The European dynamic  would be wholly altered too – and for the better, as other nations demanded a  similarly reformed relationship.

The exit of the United Kingdom would tilt the  balance fundamentally in favour of the core federalist states. But many of the  nations on the periphery would become uneasy.

There could well be a separating-out into a  compact European Union – based around Germany and France, with a single  currency, a common finance ministry and the full panoply of fiscal union – and a  European Community, of which Britain would be a member.

This Community would be linked to the  European Union through a free market and enhanced inter-governmental  collaboration but its members would remain politically independent.

This separation might well be beginning  anyway as a result of the euro crisis. The centre is finding it harder and  harder to maintain its hold.

European integration rests, to a far greater  degree than its supporters like to admit, on a sense of inexorability. People  might not have chosen political union but, since it is happening anyway, they  shrug and go along with it.

But if one of the four largest member states  were to opt out, that sense of inevitability would evaporate and Europe would be  able to regroup in ways that make more sense.

In my opinion, getting out is now the  greatest gift Britain could give not only to ourselves, but Europe as a whole.

If we set the precedent, others will surely  follow – and troubled Europe might yet be rescued from her current discontents  and economic woes.

Read more: http://www.dailymail.co.uk/news/article-2189465/We-CAN-break-free-shackles-Brussels.html#ixzz23xy09VBK