Why the UK Is Mistrusting European Integration - Essay Example

European business Our world since its origination has been a ‘hotbed’ of activity. Activity in the sense, we humans have been showing activeness bothmentally and physically, which have transformed our globe from an archaic one to an advanced one. That advancement is evident in every sphere of our life, as well as in the ‘sphere’, we live in. In addition, that advancement or development is seen in one of the important activities of the ‘sphere’, the activity of politics. With the advancement, humans spread out to new territories. In course of time that territories became cities, states, and eventually countries. Along with this evolution of humans and territories, the political setup, which ruled villages, also evolved and new political setups came into being, to rule cities, provinces or states and importantly countries. With the evolution and formation of countries, the political setups also evolved, with countries governed by different political setups including democracy, monarchy, Theocracy, Despotism, etc. This evolution and establishment of many countries with different political setups have necessitated the formation of an overseeing or conglomerate organization. The role of ‘conglomerate’ organization is manifold as it provides a forum to discuss as well as solve many important issues apart from aiding unison of countries. This paper will focus on one such organization, European Union. European Union is a conglomeration of countries in the continent of Europe. But, that conglomeration or integration has not been fully actualized, as certain older member states particularly United Kingdom opposing it and mistrusting it. So, this paper will first analyze why certain member states particularly UK is mistrusting European integration, and then will discuss the changes particularly institutional structure and economic changes that might reinvigorate the process of European integration. Background United Kingdom is regarded as one of the most dominant countries in the world history, as it strengthened its sovereignty as well as spread its influence all over the world in the earlier centuries. But, in recent times or in recent decades, citizens think that its supremacy and importantly sovereignty is being challenged by external issues or organizations, with which UK is voluntarily associated. That is, some actions of external bodies like European Union (UK holds membership of it) and its court is undermining the powers as well as the laws issued by the UK Parliament, thereby UK’s sovereignty. According to majority of the people, when UK signed the Treaty of Accession with the formative European Economic Community of six nations at Brussels in 1972, and then ratified that treaty in 1973, it entered the phase of subdue ness to the European Union’s laws. The European Economic Community was established when the Treaty of Rome was signed in 1957. So, it was the Treaty of Rome which set off the movement for more unison between the European countries. It can be considered as the founding treaty of the European Economic Community and the EU as well. Even though, UK did not sign or associate with the Treaty of Rome, it got associated with the resultant European Economic Community. Then, by also signing various other treaties, ratifying and accepting its new laws and constitution (except, treaties related to the common currency), it started to undermine its Parliament and thereby sovereignty. “Since 1972 The Queen has illegally signed five of the six EU Treaties… The five treaties define and build the EU as an unelected dictatorship... The sixth EU treaty will complete the abolition of Britain as a nation.” (eutruth.org). So, new treaties brought in new laws that brought in new problems, which most of the times ended in the favour of the European Union, thereby undermining the UK sovereignty further. That is, only after the UK became the member of the European Union that the European Court of Justice (ECJ) situated at Luxemburg started to assert its power over the United Kingdom’s judiciary as well as over the Parliament. UK because of becoming a member of European Union only, passed the European Communities Act of 1972 (EC Act 1972). But, that law overrode many of the laws enacted by the UK Parliament, as ECJ annulled any UK law which is inconsistent with the EC Treaties, thereby proving that the European Union’s laws is supreme than the UK laws. Along with this aspect, there are also a series of actions, which clearly seeded mistrust in the minds of the common people and impeded a more effective integration. Business-legal Cases, which seeded mistrust The Factortame vs. Secretary of State for Transport (1989), mainly initiated because of UK being the member state of European Union, is a legal case involving the UK Parliament and the European Court of Justice, and which in a way only confirmed the supremacy of European Union laws over the English laws, and thus seeded mistrust. The case involved Factortame, a Spanish fishing company and its directors, who appealed in the UK courts, for the removal certain restrictions imposed by the UK government on the bases of the Merchant Shipping Act 1988. That is, a section of the Shipping Act prevented the Factortame from using the foreign ships, which are actually registered as British ships, for the fishing purpose in UK waters. In the court, Factortame argued that they should be allowed to fish under the law of the European Economic Community (EEC). When the case came to the High court, the court ruled in favour of Factortame against the Merchant Shipping Act, thereby challenging the UK laws. But, when the judgment was petitioned in the Court of Appeal, the Court protected the parliament by overturning the High court’s ruling. But, Factortame took the case to the European Court of Justice (ECJ), which in June 1990, ruled that national courts could dis-apply legislation that contravened EU law. Consequently, the House of Lords this time ruled in support of Factortame, which meant that the Merchant Shipping Act, 1988 passed by the UK parliament was struck down in favour of a foreign company. This clearly undermined the UK sovereignty, as European court prevented the operation of a crucial law passed by the Parliament and thus set the initial suspicion among the people. Likewise the legal case of Van Gend en Loos vs. Netherlands Inland Revenue Administration (1963) also strengthened EU’s position in relation to the member countries. Even though, UK was not involved in the case, as the case involved a West German company, Van Gend en Loos and Netherlands, the judgement in favour of Van Gend en Loos against Netherlands’ domestic laws created a lot of mistrust about the utility of European Union among the UK citizens as well as among citizens of other old member states. Negative Influence of EU on employment law, employment contract UK’s EU membership has a significant impact on UK employment law and employee rights on the negative side and this created further mistrust among the citizens. Employment laws featured in the business environment is one of the key issues when it comes to economic integration. But undermining certain employment laws which are specific to certain countries like UK specific laws, will create mistrust and may impede Economic integration. That is, many employee centric directives were forced on UK, without giving any leverage to it. For example, UK had control of working time directive, controlling of hours, etc, but EU forced its own rules regarding these aspects. That is, the Working time directive 93/104 requires Member States to set their own limits on the length of the working week and working day, and also the provision to introduce a right to a minimum amount of paid annual leave. Likewise, the equality legislation provides equal opportunities to all irrespective of genders in workplaces. UK Employers have effectively circumvented this constraint on working conditions, but all that came to end with EU’s undermining of UK’s employee centric laws. (Nairns 2002). For example, in the case, Marshall v Southampton Health Authority (1986), Miss Marshall, a senior dietician, was compulsorily retired by her employer South Hampton Area Health authority at the age of 60, even though her male colleagues were allowed to continue till the age of 65. When she approached the Industrial Tribunal, it ruled in her favour by citing the Sex Discrimination act 1972, but when her employer approached the Employment Appeals Tribunal, it ruled against Marshall. This is when ECJ came into the picture and favoured Marshall by judging that the Marshalls dismissal was illegal. This case also undermined UKs laws and created a lot of mistrust among the citizens, which clearly prevented and is also preventing further economic integration among the countries of Europe under European Union particularly UK’s integration with Europe. Changes in economic approach and the European Unions institutional structure To minimize the above mentioned distrusts and to encourage further integration between European countries, particularly UK and Europe certain changes need to be brought in the economic sphere. These changes will actualize single market, where all the barriers to trade can be remove, to encourage more optimum trade and business between the member states. For that to happen, the member states for their part need to give a fresh impetus to the process, by clearing all the rules and bureaucratic red tapism which are stifling competition and jamming cross-border trade. Launching the OECD’s first Economic Survey of the European Union, the OECD’s Secretary-General, Angel Gurría, said: “A vibrant single market is central to Europe’s long-term prosperity.” He added: “The European Commission is making tremendous efforts to get rid of barriers to trade, and we fully support them”. (OCED, 2007). These changes need to be brought in various sector of the economic sphere starting with the services sector. Services Sector The main weak spot in the EU’s bid to become more integrated specifically in the internal market is the services sector. Correcting the services sector is a key component of the puzzle because although goods are already freely traded in the EU, services have lagged behind, despite generating two-thirds of the EUs economic activity and employing nearly 70% of its workforce. (BBC News, 2006). The different national laws and their strong holding to those laws make it tough for a service provider or company in one country to do business or offer services across Europe. This impediment apart from affecting the businesses also directly impedes economic integration and thereby European Integration. The only option which is expected to change this negative aspect of the services sector is the implementation of EU Services Directive by the end of 2009. The Directive, commonly referred to as the Bolkestein Directive, is an change or initiative on the part of the European Commission to create a single and unified market for services within the umbrella of European Union (EU). It is similar to and complements the already existing single market for goods. As mentioned above, the main purpose of this initiative, when implemented from December 28, 2009, is to provide barrier free channels for the proliferation of the service sector and thereby making EU "the worlds most dynamic and competitive economy" by 2010. “With the proposed legislation, the Commission wants to reduce the barriers to cross-border trade, principally by doing away with the service industry regulations of individual EU” (Wikipedia.org). It is expected that this change or initiative will create maximum jobs, thereby boost economic growth and in turn will provide optimum quality and choices for the consumers all over Europe. “The consultants Copenhagen Economics have predicted a 0.3% rise in GDP and a 0.7% increase in employment. The European Commissions estimates point to a 1.8% increase in GDP and 2.5 million new jobs. “ (BBC News, 2006). The positive point about this change is that it does not overtly impose on the countries’ influence and sphere, so it is non-discriminatory. Importantly for UK and its citizens, it is a positive initiative. That is, as this initiative provides economic benefits as part of more integration, without compromising on the sovereignty and uniqueness of its market, citizens do not oppose it and mistrust it. So, this change will surely minimize distrust and in turn will encourage more integration. Banking Sector and Currency integration To minimize distrust and encourage further economic integration, changes should be brought in the fragmented banking industry of Europe. Because, it will result in an optimized monetary policy. Monetary policy only involves in influencing the interest rates as well as the exchange rates for the advantage of a country’s economy. This can only be achieved through the actions of the central bank because they can centrally and optimally control the movement, flow and supply of money in the economy. “Monetary policy for the euro area is managed through the European Central Bank and the national central banks of the euro-area Member States, which together make up the Eurosystem”. (europa.eu). But, in the current scenario of mistrust and with each EU Member State operating its own monetary policy, actualization of the single market including in the service sector would be less effective, with trade being maximally disrupted and the incurred benefits on the lower side. So, a central bank and a coordinating agency can correct this situation thereby integrating the bank and the eventual economic integration. Speaking about a coordinating agency, this is where the role of Economic and Monetary Union (EMU) will be crucial. “Economic and Monetary Union (EMU) represents a major step in the integration of EU economies. It involves the coordination of economic and fiscal policies, a common monetary policy, and a common currency, the euro… For this reason, under EMU, monetary policy is closely coordinated, and within the euro area it is centralised and independent.” (europa.eu). So, EMU can play coordinating role in the matter of monetary policies and thereby enable coordination or integration among the member countries including UK. The other change or initiative that needs to be taken to optimize integration further is by accelerating the already established system of Single Euro Payments Area (SEPA). That is, Single Euro Payments Area (SEPA) initiative covering the European financial infrastructure involves the establishment of a financial zone for the euro. In that zone, all the electronic payments from debit cards, credit cards to online banking transfers are all considered domestic. This monetary system erases the differences between national as well as intra-European cross border payments, thus making integration optimal. This integration should be accelerated among all the European countries including UK, which is going in the other direction by still holding on to the pound and other metric systems. “Recently, the U.K.’s largest grocery chain, Tesco, defied British legislation and returned to using pounds and ounces. Tesco spokesman Simon Soffe explained, “We discovered that customers think in imperial measurements. If they are glancing at price posters in the stores, they don’t want to be converting figures in their head.” (Podliska). So, to avert this kind of situation, further implementation and acceleration of SEPA is the only option. SEPA will allow European customers to do cashless euro payments to anyone or to anywhere among the EU’s member states, using only a single bank account and with a single set of payment instruments. Common Agricultural Policy Common Agricultural Policy (CAP) adopted in 1950’s plays a crucial role in the development of the agrarian economy and in the economic integration of Europe. “Moreover, the CAP, as one key instrument of the integration process in the EU from the very start, has had and still has also strong political foundations and reasons, e.g. with regard to recent policy reforms, both within the Member States and between the EU, the third countries and the international institutions like the WTO (Niemi and Kola, 2005). But, it needs to be developed further, to encourage more integration among the European nations. Common Agricultural Policy is actually a system of European Union covering agricultural subsidies and programs. Certain changes can be undertaken to optimize this policy and one of them is reducing import controls among the member states. Also, the report calls for farm support to be cut and made less market-distorting. “It recognises that the reform of Common Agricultural Policy in 2003 was a major step forward but that to be even more effective the link between subsidies and farm production needs to be broken completely.” (OCED, 2007). If these changes are actualized there will be more economic interaction between the member states leading to European interaction. Conclusion So from this analysis it is clear that due to some mistrust regarding certain economic and business issues, certain member countries particularly UK has not fully integrated as part of the European Union. As far as UK is concerned, the mistrust is because they feel the supremacy of their parliament and sovereignty is threatened and also the there is a negative influence on the employment laws and the employment contract. To overcome this mistrust, certain changes or initiatives can be taken. That is, changes in the service sector, banking, currency as well as in the Agricultural sector will surely encourage coordination and thus economic integration and the eventual optimal integration. References BBC News, 2006, Q&A: Services Directive, viewed May 2, 2009 http://news.bbc.co.uk/2/hi/europe/4698524.stm europa.eu, How Economic and Monetary Union works, viewed May 3, 2009 http://ec.europa.eu/economy_finance/the_euro/em_union9403_en.htm europa.eu, Economic and Monetary Union, viewed May 2, 2009 http://ec.europa.eu/economy_finance/the_euro/the_euro6478_en.htm eutruth.org. Do you know the truth about the EU? accessed viewed May 2, 2009 http://eutruth.org.uk/ Niemi, J and Kola, J, 2005, Renationalization of the Common Agricultural Policy: Mission Impossible? International Food and Agribusiness Management Review, 8, 4. Podliska, B, Problems of European Union Economic Integration, viewed May 4, 2009 http://international.tamu.edu/eunotes/Vol2_Issue2.doc Nairns, J, 2002, Employment Law for Business Students, Longman OCED, 2007, Faster economic integration key to stronger European growth, says OECD report, viewed May 4, 2009 http://www.oecd.org/document/37/0,3343,en_2649_201185_39335333_1_1_1_1,00.html Wikipedia.org, 2009, Directive on services in the internal market, viewed May 2, 2009 http://en.wikipedia.org/wiki/Directive_on_services_in_the_internal_market Read More