Reasons for Margaret Thatcher to Sign up Single European Act - Essay Example

Why Margaret Thatcher signed up to the Single European Act Number Department The Single European Act 1986 The Single European Act (SEA) 1986 was a treaty ratified by the European Economic Community (EEC) now the European Union (EU) that required all of the states under its jurisdiction to support an economic merger that would see them set up of a universal European currency as freer economic engagements. The Treaty was ratified in February 1986 in Luxembourg and The Netherlands and became operational on July 1, 1987. Numerous important rules codified in the SEA introduced vital amendments to the basic agreements that brought together the founding members of the European Community in the mid-20th century. These agreements included the European Coal and Steel Community (ECSC), and the European Atomic Energy Community (EURATOM). The United Kingdom was a significant player in the formation of SEA; it participated in the events that led to its creation in the mid-1980s. This paper examines some of the reasons why British Prime Minister Margret Thatcher endorsed the SEA. Background of the SEA The very advent of SEA can be traced to the mid-20th century 1945 (Cooper and Tomic, 2007). The then integration activities happened in rather steady steps, especially following the establishment of the ECSC in 1952. Gehler (2006) notes that with six founding member countries, Belgium, Luxembourg, West Germany, France, Italy, and the Netherlands, the ECSC marked the first contemporary, multinational economic union in Europe. In 1958, when it became clear that economic integration in Europe was tenable, the member countries of the ECSC advanced their international cooperation through the ratification of the Treaties of Rome, which established the EEC and EURATOM (Basdeo, 1990; Moravcsik, 1991). According to Timur, Picone and Desimone (2011), the EEC’s primary objective was economic coordination of the region via a universal market and the elimination of trade restrictions. From 1970, the subsequent two decades saw the EEC activities deepen to include the United Kingdom, Denmark, Spain, Greece, Ireland, and Portugal. The new expanded economic union was faced with political and economic problems including fuel crisis that peaked in the early 1970s and pressures from the North America that needed trade liberalization to succeed (Cooper and Tomic, 2007). The European heads of governments reacted with, perhaps the clearest intent of a common platform that would foster important economic and inter-governmental cooperation. Of particular concern in this paper was UK’s adoption of the SEA following Prime Minister Margret Thatcher’s endorsement of the Treaty (Bache et al, 2011). Why Thatcher signed the Act PM Thatcher signed the Treaty in order to make Britain part of the great institutional changes in the European continent and foster mutual economic benefits (Murphy, 2000). The leader was convinced that with a wider mandate in the formation of the internal market in an environment where the Council could adopt decisions by majority vote instead of unanimous decisions, a greater level of efficiency in the running of national and international affairs would be the outcome. This would improve decision-making processes and prevent the constant delays which had become common in the lobbying for the passage of economic policies by unanimous vote (Gehler, 2006). Unanimity would no longer be needed to pass measures geared towards establishing the Single Market, and with the exemptions of regulations concerning duties, the free movement of EU citizens as well as labour rights and welfares would be guaranteed. As Daser and Hylton (1992) have suggested, Thatcher was sure that with SEA setting the European Council (EC) and legitimizing the conferences of the top-most government representatives, the resolutions passed therefrom would be binding to the Member States. Despite the lack of decision-making authority by the EC, Corbett (1989) notes that Thatcher foresaw a scenario where an enhanced Parliaments authority would result in more international oversight on various economic issues affecting the region including environmental conservation efforts whose concerns would not require a majority decision to pass. The Act elaborates existing regulations relating to enforcement powers. Article 10 overruled Article 145 of the EEC Treaty, specifying, as a common policy, that the Council now would have more powers to enforce the international resolutions (Murphy, 2000). With the Council’s direct enforcement mandate limited to specific cases, Thatcher was sure that her county’s national interests and sovereignty would be preserved under the new arrangement. With the creation of the Court of First Instance (CFI) under SEA, the UK was sure of that there would be an avenue through which any international disputes arising from her economic engagement with her trade partners would be resolved (Bache et al, 2011). Political reform would favour UK Thatcher was convinced that the political reform envisaged under the act would be appropriate for not only her county but the whole region as well (Young, 1998). The definition of single market in the Act, as a region without internal controls in which the uninterrupted movement of commodities, people, services and pecuniary assets would be guaranteed, convinced Thatcher about the better prospects of economic investment in the country under the Treaty (Corbett, 1989). On pecuniary capacity, the United Kingdom read consistency in the policy implementation, since the Act would be geared towards inserting monetary capacity regulations (Basdeo, 1990). In addition, even though, social policy was already in place under the EEC Treaty, newly inserted articles in the SEA would streamline the existing provisions (Basdeo, 1990). Article 118A of the Act, which empowers the Council to enforce resolutions of a majority within the lieu of fostering cooperation, would be particularly important to the operational environment of the Community. Britain viewed the provision as very important to the improvement of health and safety of not only the UK citizens, but that of the countries under the EU banner (Cooper and Tomic, 2007). Article 118B of the Act empowers the Commission to take a more proactive role in developing dialogue between organizations and labour unions at the international level. According to (Basdeo 1990), the incorporation of a Community regulation of economic and social interrelation was particularly at the interest of the United Kingdom, since it would create economic parity within the affected EU countries and to help bridge the development gap between them and their developed partners under the union. On research and the development of technologies, the United Kingdom was convinced that Article 130F of the Act was important to its domestic interests (Bache et al, 2011). Basdeo (1990) says the provision would reinforce the scientific and technological innovations in Europe through competition, and enable the country to make strategic investments in such programs. Thatcher hoped that this could generate substantial gains for the country in the then rapidly growing technology industry. Concern for conservation of the environment at the international Community level was already taken care of under the Maastricht Treaty. The UK’s endorsement of the law was informed by the addition of three new provisions under Articles130R, S and T, which sought to empower the international body to take steps to preserve, safeguard and enhance environmental quality (Basdeo, 1990). This way, Thatcher was sure that her country and the whole of Europe would enjoy better human health, and prevent overexploitation of the natural resources (Bache et al, 2011). In addition, with the regulation specifying that the international Community should only swing into action on environmental issues when national institutions could not effectively handle environmental issues, the United Kingdom was convinced that her domestic environmental laws would remain intact and help in resolving smaller disputes. Article 30 requiring Member States to work towards formulating and putting into practice a common European foreign policy would improve UK’s participation in defining the cause of the Community’s response to national and international issues (Young, 1998). To this end, the London hoped that it would develop strong foreign security policies arrived at as a result of proper consultation with other EC Member States. Lodge (1986) noted that with the Council’s presidency reserving the rights and powers to start actions, supervise the programs and raise the position of the Member States, the UK was sure that the Council would preserve her positions on domestic and foreign policy. Opening new Economic Frontier Apart from improving international relations and the enactment of more liberal policies at the national level, Thatcher’s signing of the Treaty was informed by the prospects of jobs creation for UK citizens and EU citizens (Lodge, 1986). A SEA structure, according to economists of the early 1980s, would serve to lower the rate of joblessness in Europe by increasing economic development of member countries by a minimum 2 percent annually (Lodge, 1986). As Timur, Picone and Desimone (2011) said, London was sure that deeper European cooperation would be imperative to the Europe’s ability to challenge other fledged economies in the world such as America’s North United States and Asian Japan in providing alternative technologies for use in the neo-modern world of the 21st century. The Prime Minister was convinced that the SEA would bolster the ECs administrative process; actualize cooperation on matters related to foreign policy; foster inter-governmental unity on research and new technologies and set up a credible European common market for commodities by eliminating all non-tariff restrictions to intra-EC business within five years of its enactment. With these provisions, PM Thatcher was also convinced that a more empowered European Parliament would enact fairer economic legislation that would streamline ineffective national laws both within the United Kingdom and in neighbouring countries, which at the time served to only hinder greater economic opportunities for her country and other EU Member States. Better Economic Competition As Robinson (2008) suggested, reeling under the weight of unfair competition brought about by unfavourable national laws adopted by the UK’s trading partners, Thatcher adopted the Act in order to facilitate the creation of a single economic environment that would stimulate better competition among companies within the region and beyond. She believed the Treaty would also enable different European firms to realize improved economies of scale (Musiałkowska, Sapała and Wróblewski, 2012). Conversely, there was some disconnect in this reasoning: increased economies of scale oftentimes precipitate leaner and bigger companies, while higher competition facilitates the creation of more companies. Regardless of the two opposing views, Thatcher foresaw the need to not only recognize but take practical steps to facilitate the realization of a widened market which would present better economic outcomes for all parties anyway. During the grace period for the implementation of the SEA, after its signing in 1987, the European Community indicated that it would permit more competition from outside investors with a view to improving the quality of goods and services in Europe (Lodge, 1986). As a result, Thatcher approved the Act on the premise that the move would facilitate more investment from North America and from Asia Pacific. Thatcher was convinced that companies which had already invested in other European countries would make inroads in the United Kingdom and other countries as well with better economic prospects (van Riemsdijk, 2013). Outcomes of SEA Despite the positive intention of the SEA, its enactment and the inclusion of more member countries into the EU over the past two decades have brought about mixed outcomes. On the one hand, SEA has lived to most of the expectations of its architects by fostering real integration of the EU Member Countries (Potts, 1997; Moravcsik, 1991). It has also eased the passage of EU laws by slackening the rules of voting of the Council of Ministers. This has been evident in the deeper union that the international community has become over that past two decades. Nonetheless, it also empowered the European Parliament’s legislative powers, and as such, contributed to the realization of massive deregulation of international economic engagements within the EU as espoused by British Prime Minister Margaret Thatcher during her commitment of her country to the Community in 1986 (Robinson, 2008). On the other hand, SEA is accused of being responsible for protectionism polices against the operations of non-European companies in the Union (van Riemsdijk, 2013). Companies such as Japan’s Nissan, America’s Proctor & Gamble and Gillette have experienced serious problems operating in the European Union so called Single Market due to voluntary export restraints (VERs) and protective tariffs imposed by individual EU Member Countries. In an effort to capitalize on the Single Market policy, Nissan for instance, built an automobile assembly plant in Britain hoping that it would be allowed to export cars to other EU Members with ease (van Riemsdijk, 2013). But to its dismay, France and Italy imposed domestic tariffs on the company’s products, arguing that the products remained Japanese. In light of this, the SEA it is arguable that SEA was established to build closer economic ties within the EU and protect local companies from meaningful competition by external companies. Conclusion The SEA marked a significant attempt by the European Community to remove restrictions which had historically hindered effective competition and distribution of wealth within the continent. PM Thatcher signed it in order to create a real common market in which all countries within the EU would stand to benefit. The SEA is credited for introducing a greater level of democracy into the international Community’s affairs by giving the EU Parliament more authority to enact more universally acceptable laws that would transcend national borders. Regardless, the SEA has reduced the level of the Community’s accountability to Member States by enhancing the prospects of enacting laws without the approval of everyone and impeded international economic participation in the country. References Bache et al. 2011. Politics in the European Union. 3rd ed. Oxford: Oxford University Press, pp.146-58. Basdeo, S. 1990. The Single European Act: A CARICOM perspective. Journal of Inter- American Studies & World Affairs, 32(2), p.103. Cooper, L.W., and Tomic, A. 2007. European Monetary Union (EMU) and the single currency: its current status. Journal of International Business Research, 6(2), pp.59-68. Corbett, R. 1989. Testing the New Procedures: The European Parliaments First Experiences with its New Single Act Powers. Journal of Common Market Studies, 27(4), p.359. Daser, S., and Hylton, D.P. 1992. The European Community Single Market of 1992: European Executives Discuss Trends for Global Marketing. European Business Review, 92(1), p.29. Gehler, M. 2006. From Paneurope to the Single Currency: Recent Studies on the History of European Integration. Contemporary European History, 15(2), p.289. Lodge, J. 1986. The Single European Act: Towards a New Euro-Dynamism? Journal of Common Market Studies, 24(3), p.203. Moravcsik, A. 1991. Negotiating the Single European Act: national interests and conventional statecraft in the European Community. International Organization, 45(1), p.19. Murphy, N.B. 2000. European Union financial developments: The single market, the single currency, and banking. FDIC Banking Review, 13(1), pp.1-18. Musiałkowska, I., Sapała, M., and Wróblewski, Ł. 2012. The strengthening of the Single European Market vs. the crisis. Poznan University of Economics Review, 12(2), pp.74- 105. Potts, N. 1997. National economic sovereignty and the Single European Currency. European Business Review, 97(1), pp.11-23. Robinson, T. 2008. The Evolution of Electricity Prices in The EU since the Single European Act. Economic Issues, 13(2), pp.59-70. Timur, A., Picone, G., & Desimone, J. 2011. Has the European Union achieved a single pharmaceutical market? International Journal of Health Care Finance and Economics, 11(4), pp.223-44. van Riemsdijk, M. 2013. Obstacles to the Free Movement of Professionals: Mutual Recognition of Professional Qualifications in the European Union. European Journal of Migration & Law, 15(1), p.47-68. Young, A.R. 1998. The Evolution of the Single European Market. Regional Studies, 32(4), p.386. Read More