The answer to “which EU law are you looking forward to losing”

2

October 15, 2016 by Paul Goldsmith

eu-bendy-banana-law

This blog is for all those who want to be able to explain why you wanted Britain to leave the EU to ‘take back control’ of our own laws. Or those who want to understand why it might be a good idea. I write this as a ‘neutral’ who is just a bit fed up with the puacity of arguments on this issue from both sides of the debate. 

As sports go, it’s as easy as shooting fish in a barrel. Every so often James O’Brien, the combative, opinionated and unashemedly Europhile LBC presenter, casts his fishing line out into Britain looking for Leave voters whose main issue was to free Britain from the bureaucratic red tape of the EU. Once someone has taken the bait, O’Brien asks a perfectly legitimate question – which is “which law are you most looking forward to getting rid of?” Without fail, the caller can’t think of one. Or they might name someone like ‘the shape of your bananas’ (like this caller did this week), which is one of those lies or distortions made up by the Leave campaign during the referendum, as O’Brien points out.

The problem is that Leave voters have got a strategy, which is to talk about rules and regulations we didn’t vote for and are not in Britain’s interests, but their tactics are completely wrong. Even if there WERE legislation on the shape of bananas – O’Brien is completely right when he says to the listener on the link that he cannot see how the economic damage being wrought on the UK (by the fall in the pound amongst other issues) was worth it for something as trivial as that.

No, the tactic that should be used here is to point out some far bigger problems with EU rules and regulations that our citizens haven’t had a chance to vote for or against.

Sometimes, subsidies have been granted to industries to use a technology or fuel that actually killed people – as in case 1 below – which is about Volkswagen. Sometimes, large multi-national firms have ganged up to lobby the EU Parliament to regulate against innovate small companies to protect their market share – at the expense of choice and price competition for customers (and possibly their health, as in case 2 below). Sometimes perfectly reasonable regulations and laws (such as in case 3) have been made that may well apply to some countries in the EU, but are massively against the interests of other countries, for which they are inappropriate – but against wish the national Parliaments and the electorates they represent can’t vote.

My point is this – the case that can be made against the EU is that it is an organisation whose directives apply to every single Member state, whether appropriate or not, and that have a superior legal standing than any laws made in those Member states. Sometimes, those rules and regulations are perfectly sound – and I would include stopping the race to the bottom in workers’ rights in that – although even they can harm the development of small businesses if applied even to start-ups. But sometimes, they have had effects that are at best unintended, at worst bordering on the corrupt.

So with immense thanks to Daniel Hannan who described these quite reasonably in his excellent book “Why vote leave“, here goes:

Case 1- Volkswagen, diesel, and the subsidies that killed people

Summary – The EU, lobbied by European carmakers, introduced subsidies and grants to encourage cars fueled by diesel to be manufactured – which lowered CO2 emissions but raised NO2 emissions – causing highly dangerous air pollution. 

In September 2015, it emerged that Volkswagen had been programming its vehicles to cheat emissions tests. Some diesel engines were fitted with a software controlled device that detected laboratory test conditions, causing emissions of nitrogen dioxide to drop to as little as one-fortieth of what would be emitted on the open road. Whilst the discovery was a terrible blow to the reputation of the company, its worth investigating why the EU, almost uniquely in the world, adopted standards that promoted diesel engines? Why was it that at the same times as the USA and Japan encouraged hybrid and electric cars, the EU enforced emissions standards focusing on carbon dioxide (CO2) not nitrogen oxide  (NO2)?

Back in the 1980s, Volkswagen had revived the almost dead automotive diesel market with its turbocharged direct injection (TDI) engines. BMW, Volkswagen and Daimler saw an opportunity to lobby for Brussels rules that gave them an advantage over their rivals. This despite diesel emitting four times more NO2 than petrol, and twenty-two times more particulates – tiny pollutants that penetrate our lungs, brains and hearts. The savvy companies focused on the need to reduce CO2 emissions and so slow climate change. So a massive operation took place to sell the new standard as part of the Kyoto process (in which many countries had agreed to reduce global warming). The result was series of subsidies and sweeteners to persuade car makers and the public to buy diesel.

The result was also that diesel went from 10% of the UK market and equivalent EU states to over half in 2012. Ministers and pressure groups who might have been expected to scrutinize what was happening tended to give carmakers the benefit of the doubt – right up to the 2015 Volkswagen revelations.

So, lets review. The EU, lobbied by a vested interest, adopted rules that killed large numbers of European citizens. We can’t quantify the fatalities because the cause of death was recorded as cancer or heart failure rather than NO2 inhalation or particulates emissions. We do know that air pollution kills more people globally than malaria and HIV combined. To be clear, ministers and policy-makers believed they were saving lives by tackling carbon emissions, and the car companies were not deliberately setting out to murder people – they were just convinced of the morality of something they happened to find convenient. But EU policy ended up killing many innocent people in the commercial interest of one industrial sector. How did this happen? Lobbying.

There are 25,000 lobbyists in Brussels, representing not just big business but also pressure groups. They all have a preference for back-room deals. This, in Brussels, is called “comitology” – where committees and technical experts meet and make trade-offs out of the public eye. Hence, agreements are reached behind closed doors that might not look very pretty if the exact details were known.

Case 2 – Alternative medicine and regulations designed to benefit multi-nationals

Summary – Lobbied by multi-national pharmaceuticals anxious to preserve market share, the EU introduced regulations for alternative medicine so costly that they put many small and innovative producers out of business – reducing choice and raising price for consumers. 

Another example – in 2005 the EU started to regulate, and in some cases ban outright, a number of higher-dose vitamin and mineral supplements, herbal remedies and other alternative medicines. Twenty million citizens around the EU were making either frequent or occasional use of the targeted products, and there was no evidence they were deleterious to health. Now, opinion is divided about the efficacy of complimentary medicine, but the question remains, why did the EU want to ban or restrict substances that were at best health-giving and at worst harmless?

There was no actual NEED for this ban. Some supporters cited the ‘precautionary principle’, which is where the EU has a regulation philosophy that states something should be banned unless it can be proven to be safe. Herbalists don’t set out to poison their clients – at the very least it’s a poor business model. Yet regulated the industry became.

Why? Because large pharmaceutical companies saw an opportunity to put their smaller rivals out of business. The new legislation required expensive tests beyond the means of small producers. Big companies, with entire compliance departments, were able to meet the new costs without difficulty. But independent herbalists reduced the range of what they could sell, and in some cases went out of business altogether as the giants assumed a large market share.

So, who gained? Multi-national firms. Who lost? The consumer. When a cartel of large producers succeeds in raising barriers to entry, the climate becomes less congenial to start-ups, and some entrepreneurs take their energy elsewhere.

Would legislation of this kind have passed through the separate national legislatures? Doubtful. MEPs and national MPs were deluged with letters from the users of alternative medicine who feared the new restrictions would harm their health. But the decision wasn’t in the hands of those national legislators – it was made by an unelected Commission and approved by the European Parliament, with members remote from their electorate to the point of near-invisibility.

National regulators can also be change-averse, heavy-handed and prone to lobbying from vested interests. But the problem is proportionate to the distance between the government and governed. The sheer diversity of conditions and needs across the EU guarantees that regulations have unintended consequences.

Case 3 – EU Ports Services Regulation and regulations specifically against the national interests

The EU introduced regulation to introduce internal competition in the massive Continental ports that is not needed in Britain’s smaller, privately owned, ports, and would actively damage them. 

Enough? No? How about a third example. Enter the EU Ports Services Regulation – adopted March 2016. This threatens the viability of Britain’s ports, not from malice but simply because it is impossible to apply a one-size-fits-all policy to such a heterodox continent.

British ports are private, profitable and plentiful. Smaller than their Continental counterparts, dotted more thickly along our coasts, they don’t rely on state aid, instead generating a healthy surplus for the Treasury and sustaining some 100,000 jobs. Continental ports tend to be sparser, larger, and generally state-owned and grant-dependent. Due to Geography, they are less likely to compete with one another.

So the European Commission has moved a regulation requiring them to introduce a measure of internal competition – to contract out their mooring, dredging, unloading, bunkering and so on to rival providers.

There may be a case for more competition within gigantic ports like Rotterdam and Antwerp – more diversity might lead to more efficiency and lower costs. But no such argument applies in the thriving, competitive market in the UK. Obligatory internal competition would wreck their economies of scale and deter investment as once a company wins a contract for port services they generally commit to major infrastructure costs like cranes, terminal facilities and the like. The Port Services Regulation could kill such investment.

All the British port operators and trade unions oppose the idea. You also won’t find a single Commission official who thinks the regulation will benefit Britain – it was never intended to apply to small ports outside the state sector. It is an example – of where Brussels rules not designed with her needs in mind, and can be outvoted on matters where she has a vital national interest.

Ports isn’t the only place this has happened. Art dealers, cheesemakers, temping agencies, slaughtermen, fund managers, trawlermen, steel workers, cider producers; all have suffered from EU rules designed to suit someone else. Plenty of sectors in other EU states have suffered similarly from regulations that took no account of their conditions.

In conclusion – the key is to look at the big picture on this – focusing on the small myths and in some places lies about directives on biscuits and bananas does not help your argument. A ‘supra-national’ organisation with rules and regulations that apply to all members and are superior to any rules and regulations voted for by national Parliaments will get things wrong. When that happens, there is little recourse. That, to many, is not democracy. 

 

 

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2 thoughts on “The answer to “which EU law are you looking forward to losing”

  1. Alistair Fox says:

    Thanks for posting these, if only the Brexiters could have been less emotional, less keen to avoid the facts and better informed by you… they may have won the argument…
    Maybe…
    1 Diesel
    This is about lobbying, misinformation and lack of scientific and engineering understand. Little of this is about the EU except for its powers to set standards. Standards bodies have traditionally been national or international and subject to the same pressures. Just think tobacco or lead in petrol, or why the US and Europe have different technical standards for mobile phones… etc. A case of the EU not being tuff enough perhaps.
    Incidentally, the VW testing issue is about the paucity of testing regimes, not the EU. [I can explain at more length but it’s not core to your argument].
    2 Alternative medicine
    “Who lost? The consumer” well they lost the ability to waste they money on unproven cures.
    “Would legislation of this kind have passed through the separate national legislatures?” Well in the UK we’ve legislated again ‘legal highs’ so I don’t see why not. The other side of the coin is that real ‘medical’ remedies have to be tested at high cost so why should ‘alternative medicines’ have every been exempt (the answer is of course that ‘alternative medicine’ means ‘not a medicine that’s proven to work’). To me this is just the same of ensuring that Economics Teachers have a basic understanding of economics. Not just a recommendation from the local butcher.
    3 – EU Ports Services Regulation and regulations specifically against the national interests
    Yes… this is one area where the EU gets it wrong. “Regulations specifically against the national interests” are clearly not in the interests of specific countries. The counter argument is “are they in the interests of that countries consumers OR the wider trading community”. That’s a harder question but there’s no doubt that trying to ‘manufacture’ the introduction of competition is often problematic, especially where there’s a natural monopoly c.f. water supply, railways, telecommunications etc. Even national governments can cock that up!

    Like

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