Lest We Forget: EU origins for Brexit

“Lest we forget”[i]

What is the EU today? From “Milestones or Millstones”[ii], the EU (with the UK having departed from 1 February 2020, now being EU27) must be mapped, its basic (original) tenets and motivations understood.

History:

We know the period of the two World Wars purged the bilateral trade agreement pandemic: with both starting in Continental Europe. The 1918 Treaty of Versailles[iii] ended WWI. Economist Keynes, was critical of its harshness, foresaw Germany’s economic collapse: with later economic and political costs for Europe and beyond[iv]. Germany under Versailles fed Hitler’s rise, and then he started WWII. In these wars many Continental European peoples experienced oppressive foreign occupation. “Lest We Forget”, yes! “But, what learnt?”

A global spirited push ushered in to ensure peace, security and prosperity: the United Nations was born. Even before WWII ended London played a role in the peoples of Europe’s push: in London (1943) representatives of exiled governments of Belgium, The Netherlands and Luxembourg [“Benelux”], to strengthen economic ties, signed an agreement of currency rates of exchange and payment systems regulation[v]; and, also there, those same, in 1944, signed a Customs Convention[vi] for a customs union (being one common tariff community vis-á-vis third countries) with no internal tariffs, and to restore post liberation economic activity. Their incentive and headway still survives.

A wider Continental European push lead to the (1951) European Coal and Steel Community Treaty [“ECSC”][vii] (signed by Belgium, France and Germany, Italy, Luxembourg and The Netherlands: often referred to as ”the original six”): founded upon a common market, “resolving”, inter alia, “…to create, by establishing an economic community, the basis for a broader and deeper community among peoples long divided by bloody conflicts; and to lay the foundations for institutions which will give direction to a destiny henceforward shared”.  It created a borderless, but supervised, market for coal and steel (earlier used terribly), a common market (without customs duties or taxes) for production, international trade building, improve economic conditions, employment and conditions of living. Institutions were created, being: The High Authority, The Assembly, The Council and The Court [today, respectively, The European Commission, The European Parliament, The Council of the European Union and The Court of Justice of the European Union]. ECSC oversaw the Community coal and steel industries: receiving information, to provide forecasts from member governments, with governmental cooperation, for efficiently for all. Competition and commercial practices were to be level so forbade price fixing, and unfair practices of market distorting competition. Members maintained powers of commercial policy yet ECSC could act directly when non-member countries were concerned (e.g. dumping) by use of custom duties limits and export/import licences. ECSC direct action could also foil abnormally low wages. Member rules for immigration were adjusted for workers from other member countries. ECSC survived its defined life of 50 years. Before further mapping we remind ourselves of competence.

Questions of competence

Agreement between parties establishes the rights and obligations. Where an agreement creates a body or institution vested with powers it is the agreement itself that defines the: who, when, what and how those powers enacted. Those criteria set the scope of competences (and their exceptions) of the created bodies or institutions of the agreement. Competence granted under the agreement may be exclusive (entirely given away) or shared. Our context is of sovereign countries entering into agreements with other sovereign countries and/or a body or institution already created by agreement. By entering the agreement a sovereign country may be agreeing to relinquish a power that only it could otherwise exercise. In that sense there can be an erosion (lawful and agreed) of sovereignty. Of course this must be done within the constitutional limits. It is done freely as a price for the benefits it expects to receive (by entering the agreement): a qui pro quo. Two most jealously guarded sovereign powers are: the right to tax (the EU has no direct taxing right) and the right to defend itself (think of Versailles). 

Mapping continues

Post-ECSC (one community), the wider European push, continued by successive numerous detailed Treaties[viii], invariably Members gifting some competences to the EU.

By the (1957) Rome Treaty on the Functioning of the European Union[ix] [“TFEU” or “EEC Treaty”] the Common Market (for free movement of goods, people, services and capital) was born. A common trade policy was made. Alignment of economic policies continued, as did an approximation of laws (“harmonisation”) with respect to trade in goods and services within its Community: with free and fair competition being without disturbing subsidies or state aids within its bloc; and a customs union (common tariffs on third country imports)[x] to be supranationally managed. Unities of policy with respect to agriculture [“CAP”], fisheries [“CFP”] and transport[xi] were introduced. Provisional capability was made for environmental, industrial, regional and social policies.

Contemporaneously, the European Atomic Energy Community [“Euratom”] was formed by treaty[xii]. These three Communities (ECSC, the EEC and Euratom) later, had their executives merge by the Brussels “Merger Treaty”. The European Court of Justice is the arbiter on EU Law interpretation and for disputes between Member States, the Union and Member States, institutions of the EU and its citizens. The (1985) Single European Act, revised the Rome TFEU and ensured the creation of the internal market (with no internal borders and movement freedom for people, goods, services and capital). New EU competences were gained.

The (1992) Maastricht Treaty (or Treaty on the European Union) [“TEU”] enunciated the notion of EU citizenship allowing Europeans’ freedom (including to work) within the bloc and it strengthened the Parliament. Its focus was upon the European Communities, common foreign and security policy [external action] and extending members’ government cooperation for justice and home affairs (being for EU border control and information sharing between European and national police forces). It provided economic and monetary union making: sowing seeds for the euro currency (which the UK decided against). More EU competences were gained, including: industrial policy, consumer protection, education and training. It also introduced the important legal principle of “subsidiarity principle”, meaning that the EU, as opposed to Member national governments, would only act when such the action at an EU level was more effective. 

The Treaty of Amsterdam  (1997) prepared for EU membership enlargement and new EU competences were gained. It aimed to strengthen progress matters of employment, freedom and justice (including intra-EU extraditions), international status and the evolution of EU law[xiii]. Some immigration policies shifted from intergovernmental cooperation to EU decision-making (e.g. asylum). The Schengen agreement was incorporated into EU law (the UK and Ireland, never Schengen members, exercised an “opt out”). For “serious and persistent breach” by a Member State of basic EU principles, other Member States could move to remove that State’s treaty rights, including its voting right on legislation. 

Treaty of Nice (2001) prepared EU Membership enlargement and necessary changes in composition of its institutions and their voting systems.

Lisbon Treaty[xiv]

This brought legal personality to the EU. The EU has exclusive competence in defined areas, including: customs union; competition law for the internal market (a level playing field); euro monetary policy; sea biological resources under the CFP; common trade policy and international agreements with a legislative act or necessary to assist an internal competence. Shared competences (between EU and the Member States: so that the States may exercise their competence when the Union is not exercising its own) for action began, including: internal market; agriculture; and fisheries (excepting conservation of a biological sea resource); environment; consumer protection; transport; and energy. In areas, excluding harmonisation, where the States have retained exclusive competence, the EU may provide support and coordination, including for: culture; education; human health protection; industry; and tourism. Article 50 prescribed the procedure for Member State voluntary withdrawal from the EU: UK left the EU at 23:00 (GMT) on 31 January 2020 but, for future negotiations and by agreement with both the EU and remaining Member States, conserved the status quo until 31 December 2020.

EU Membership Requirements:

Applicant European countries are required to comply with all EU standards and rules, have the EU institutions and existing Member States consent, and have its own people in favour of membership by Parliament or referendum. Stable democratic institutions must exist, as the rule of law, and there must be protection of human rights including their minorities. It must be a free market economy with competition. With EU oversight 35 chapter policy areas are involved.

Complaints and Remedies

The EU Commission can bring infringement proceeding against a Member State that fails to transpose a Directive non-compliance with EU primary law or its core values: Hungary with respect to EU asylum Directives and the Charter of Fundamental Right of the EU [“Charter”]; and Poland for threats to the judiciary risking the rule of law (an EU core value). The Charter has been invoked by individuals with respect to privacy protection: e.g. Schrems, where the European Court voided an EU Commission decision due to lacking of privacy guarantees, in the US-Safe Harbour scheme, to prevent US intelligence access of an EU resident’s private data (sent from the EU to the US storage hub).

Disputes on the interpretation or effect of EU law may arise between Member States, with or against an EU institution, or even between institutions themselves. In certain instances an individual may, in clear precise and unconditional and finite cases, directly prosecute his EU right in a National or EU Court: usually occurs when a Member State fails the obligation to suitably transpose a Directive. Remedies are usually voiding an action or a monetary damages. Punitive penalties usually are set to maximum sums or a percentage of worldwide turnover.

Two other matters:

As above, the Schengen Acquis (1985) was put into the acquis communautaire by Amsterdam Treaty (1997) and permits member national visa free travel and no checks at common borders with member States (UK and Ireland opted out of this)[xv].

European Economic Area [“EEA”] is created, by agreement, between the EU and the three (remaining) members of the European Free Trade Association [“EFTA”] (Iceland, Liechtenstein and Norway) with the aim of an extended internal market following the same rules of the EU Single Market (labour goods services and capital). EFTA differs as it States do not abide the EU common agricultural and fisheries policies and nor are they members of the EU Customs Union. Otherwise EFTA runs as parallel mirror workings of the EU (including having its own Court).

So what comprises EU now: From the original six to the current EU 27 one Union evolved aiming to promote peace, greater economic, social and political harmony within their collective geography. That progress and growth in new competences was due to post-wars motivations of European peoples and their countries agreeing to give up some powers, as a quid pro quo, for (at least perceived) mutual benefits. The population of the EU27 member states [“EU27”][xvi] is approx. 500 million people. The UK has approx. 65 million. Barriers to international trade in agriculture remain large. Mutual recognition of some technical certificates facilitates trade in industrial products thereby reducing testing costs of certifying exports and imports. 

Should “Leave” mean, leave without any UK-EU alignment, the UK completely servers ties with the EU: WTO (in “Milestones or Millstones”). Now having mapped the EU we can next compare and view some spoken of issues of Brexit. 

[i] Certainly no disrespect to any fallen is intended by this phrasal use as the author had six great uncles (all children of one Australian family) who fought in WWI in France, Belgium and Turkey: two survived to return home. Their story has been told, Cedric Hampson, “The Brothers Keid”, 2005, CopyRight Publishing, ISBN1876344399.

[ii] “Milestones or Millstones”, CA ANZ UK, “Insight”, 23 April 2020.

[iii] Treaty of Versailles, signed on 28 June 1918 (exactly 5 years since the assignation of Archduke Franz Ferdinand that triggered WWI) was for peace between Germany and the Allies included a covenant creating the League of Nations. 

[iv] John Maynard Keynes, “The Economic Consequences of the Peace”, 1919, Macmillan &Co. Keynes, economist, was a representative of the British Treasury at Versailles.

[v] London, 21 October, 1943, the signing of Benelux Monetary Convention, that came into force in April 1949 and can be seen at: https://www.cvce.eu/en/education/unit-content/-/unit/026961fe-0d57-4314-a40a-a4ac066a1801/16eb9716-3077-4c69-8868-e5b046dc3861/Resources#9953368d-066c-421b-b966-4b01315c4f7d_en&overlay

[vi] London, 5 September, 1944, the signing of the Benelux Customs Union that came into force on 1 January, 1948, at Arts 2 and 3 and generally, can be viewed at: https://www.cvce.eu/en/education/unit-content/-/unit/026961fe-0d57-4314-a40a-a4ac066a1801/16eb9716-3077-4c69-8868-e5b046dc3861/Resources#ac12ecf6-6d89-48fc-ba05-5309aec76f78_en&overlay   Post WWII with their 1958 Treaty of Benelux Economic Union[vi] creating its own institutions (incl. a Court) and was renewed in 2008.

[vii] English (draft) at: https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:11951K:EN:PDF or at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:11951K/TXT

[viii] The main amending Treaties are: The Single European Act, of 1986, in force from 1 July 1987, that can be viewed at: https://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=celex:11986U/TXT; Treaty on the European Union [“TEU” or “Maastricht Treaty” of 1992, of 7 February 1992 and in force from 1 November 1993, can be viewed at: https://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=celex:11992M/TXT ; the Treaty of Amsterdam, signed 2 October, 1997, in force from 1 May 1999, can be viewed at: https://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=celex:11997D/TXT ; Treaty of Nice, 26 February, 2001, in force from 1 February 2003, can be viewed at:  https://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=celex:12001C or https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12001C%2FTXT ; and, finally the Treaty of Lisbon, signed on 13 December 2007 and effective from 1 December 2009, can be viewed at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A12007L%2FTXT , together with the CHARTER that can be viewed at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:C:2007:303:FULL&from=EN

[ix] TFEU, Rome, signed by the original six on 25 March, 1957 and in force from 1 January, 1958 can be seen at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:11957E/TXT

[x] The common trade policy together with an applicable customs union, being supra-nationally managed, sets the agreement apart from a “Free-trade Association”.

[xi] Common policy for: agriculture and fisheries (Arts. 38-47), trade (Arts. 110-116) and transport (Arts. 74-84), can be viewed at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:11957E/TXT.

[xii] European Atomic Energy Community [“Euratom”] Treaty can be viewed at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:11957A/TXT&from=EN

[xiii] EU law also known as the “acquis communautaire”.

[xiv]  The Lisbon Treaty was signed on 13 December 2007 and entered into force on 1 January 2009 and can be seen at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A12007L%2FTXT

[xv]  Schengen Agreement, signed 14 June 1985 and effective from 15 June 1985 can be viewed at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2000.239.01.0001.01.ENG&toc=OJ:L:2000:239:TOC whilst the protocol of Amsterdam bringing Schengen into EU law can be viewed at:https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A11997D%2FPRO%2F02 

[xvi] Accessions, from the original six, to what is was the EU28, by Treaty date are: 1972, Denmark, Ireland and the UK; 1979 Greece; 1985 Spain and Portugal; 1994 Austria, Finland and Sweden; 2004 Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia; 2005 Bulgaria and Romania; and 2013 Croatia.