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Sovereignty and membership of multilateral institutions
In essence, the question the country has to answer on 23rd June – whether to Leave or Remain – is about how we maximise Britain’s security, prosperity and influence in the world, and how we maximise our sovereignty: that is, the control we have over our own affairs in future.
I use the word “maximise” advisedly, because no country or empire in world history has ever been totally sovereign, completely in control of its destiny. Even at the height of their power, the Roman Empire, Imperial China, the Ottomans, the British Empire, the Soviet Union, modern-day America, were never able to have everything their own way. At different points, military rivals, economic crises, diplomatic manoeuvring, competing philosophies and emerging technologies all played their part in inflicting defeats and hardships, and necessitated compromises even for states as powerful as these.
Today, those factors continue to have their effect on the sovereignty of nations large and small, rich and poor. But there is now an additional complication. International, multilateral institutions exist to try to systematise negotiations between nations, promote trade, ensure cooperation on matters like cross-border crime, and create rules and norms that reduce the risk of conflict.
These institutions invite nation states to make a trade-off: to pool and therefore cede some sovereignty in a controlled way, to prevent a greater loss of sovereignty in an uncontrolled way, through for example military conflict or economic decline.
Article 5 of NATO’s Washington Treaty is a good example of how this principle works: NATO member countries, Britain included, have agreed to be bound by the principle of collective defence. An attack on any single member will, according to the Treaty, be interpreted as an attack on all members, and collective defence measures – including full military action – can be triggered. Britain could find itself bound to go to war because of a dispute involving a different country – a clear and dramatic loss of control of our foreign policy – but on the other hand, NATO membership means we are far more secure from attack by hostile states – which increases our control of our destiny. This is an institutionalised trade-off that the vast majority of the public – and most political leaders, apart from Jeremy Corbyn – think is worthwhile.
Looking back at history – and not very distant history at that – we know what a world without international, multilateral institutions looks like. Any student of the way in which Europe stumbled its way to war in 1914 knows that the confused lines of communications between states, the ambiguity of nations’ commitments to one another, and the absence of any system to de-escalate tension and conflict were key factors in the origins of the First World War. The United Nations may be a flawed organisation that has failed to prevent conflict on many occasions, but nobody should want an end to a rules-based international system and – so long as they have the right remits – institutions that try to promote peace and trade.
How we reconcile these institutions and their rules with democratic government – and the need for politicians to be accountable to the public – remains one of the great challenges of this century. And the organisations of which the United Kingdom should become – and remain – a member will be a matter of constant judgement for our leaders and the public for many years to come.
Principles for Britain’s membership of international institutions
We need, therefore, to establish clear principles for Britain’s membership of these institutions. Does it make us more influential beyond our own shores? Does it make us more secure? Does it make us more prosperous? Can we control or influence the direction of the organisation in question? To what extent does membership bind the hands of Parliament?
If membership of an international institution can pass these tests, then I believe it will be in our national interest to join or remain a member of it. And on this basis, the case for Britain remaining a member of organisations such as NATO, the World Trade Organisation and the United Nations, for example, is clear.
But as I have said before, the case for remaining a signatory of the European Convention on Human Rights – which means Britain is subject to the jurisdiction of the European Court of Human Rights – is not clear. Because, despite what people sometimes think, it wasn’t the European Union that delayed for years the extradition of Abu Hamza, almost stopped the deportation of Abu Qatada, and tried to tell Parliament that – however we voted – we could not deprive prisoners of the vote. It was the European Convention on Human Rights.
The ECHR can bind the hands of Parliament, adds nothing to our prosperity, makes us less secure by preventing the deportation of dangerous foreign nationals – and does nothing to change the attitudes of governments like Russia’s when it comes to human rights. So regardless of the EU referendum, my view is this. If we want to reform human rights laws in this country, it isn’t the EU we should leave but the ECHR and the jurisdiction of its Court.
I can already hear certain people saying this means I’m against human rights. But human rights were not invented in 1950, when the Convention was drafted, or in 1998, when it was incorporated into our law through the Human Rights Act. This is Great Britain – the country of Magna Carta, Parliamentary democracy and the fairest courts in the world – and we can protect human rights ourselves in a way that doesn’t jeopardise national security or bind the hands of Parliament. A true British Bill of Rights – decided by Parliament and amended by Parliament – would protect not only the rights set out in the Convention but could include traditional British rights not protected by the ECHR, such as the right to trial by jury.
I also know that others will say there is little point in leaving the ECHR if we remain members of the EU, with its Charter of Fundamental Rights and its Court of Justice. And I am no fan of the Charter or of many of the rulings made by the Court. But there are several problems that do apply to the Court of Human Rights in Strasbourg, yet do not apply to the Court of Justice in Luxembourg. Strasbourg is in effect a final appeals court; Luxembourg has no such role. Strasbourg can issue orders preventing the deportation of foreign nationals; Luxembourg has no such power. Unlike the European Convention on Human Rights, the European Treaties are clear: “national security,” they say, “remains the sole responsibility of each Member State.”
And unlike the ECHR, which is a relatively narrow human rights convention, our membership of the EU involves cooperation – and, yes, rules and obligations – on a much wider range of issues. The country’s decision in the referendum is therefore a much more complex undertaking. So I want to spend some time to go through the most important issues we need to consider. [...]
Trade and the economy
The headline facts of Britain’s trade with Europe are clear. The EU is a single market of more than 500 million people, representing an economy of almost £11 trillion and a quarter of the world’s GDP. 44 per cent of our goods and services exports go to the EU, compared to five per cent to India and China. We have a trade surplus in services with the rest of the EU of £17 billion. And the trading relationship is more inter-related than even these figures suggest. Our exporters rely on inputs from EU companies more than firms from anywhere else: nine per cent of the ‘value added’ of UK exports comes from inputs from within the EU, compared to 2.7 per cent from the United States and 1.3 per cent from China.
So the single market accounts for a huge volume of our trade, but if it is completed – so there are genuinely open markets for all services, the digital economy, energy and finance – we would see a dramatic increase in economic growth, for Britain and the rest of Europe. The Capital Markets Union – initiated and led by Britain – will allow finance to flow freely between member states: the first proposal alone could lead to £110 billion in extra lending to businesses. A completed energy single market could save up to £50 billion per year across the EU by 2030. And a digital single market is estimated to be worth up to £330 billion a year to the European economy overall. As Britain is the leading country in Europe when it comes to the digital economy, that is an enormous opportunity for us all.
These changes will mean greater economic growth in Britain, higher wages in Britain and lower prices for consumers – in Britain. But they will not happen spontaneously and they require British leadership. And that is a crucial point in this referendum: if we leave the EU it is not just that we might not have access to these parts of the single market – these parts of the single market might never be created at all.
The economic case for remaining inside the European Union isn’t therefore just about risk, but about opportunity. And it isn’t just about fear, but about optimism – optimism that Britain can take a lead and deliver more trade and economic growth inside Europe and beyond.
There are risks we need to weigh, of course. And there are risks in staying as well as leaving. There is a big question mark, for example, about whether Britain, as a member state that has not adopted the euro, risks being discriminated against as the countries inside the Eurozone integrate further. When the European Central Bank said clearing houses dealing in large volumes of euros had to be located in the Eurozone, it could have forced LCH.Clearnet to move its euro business out of London, probably to Paris. That was struck down by the EU’s General Court, but the threat was clear. And that is why it was so important that the Prime Minister’s negotiation guaranteed a principle of non-discrimination against businesses from countries outside the Eurozone.
If we were not in the European Union, however, no such deal could have been agreed. There would be little we could do to stop discriminatory policies being introduced, and London’s position as the world’s leading financial centre would be in danger. The banks may be unpopular, but this is no small risk: financial services account for more than seven per cent of our economic output, thirteen per cent of our exports, a trade surplus of almost £60 billion – and more than one million British jobs.
But this is all about trade with Europe. What about trade with the rest of the world? It is tempting to look at developing countries’ economies, with their high growth rates, and see them as an alternative to trade with Europe. But just look at the reality of our trading relationship with China – with its dumping policies, protective tariffs and industrial-scale industrial espionage. And look at the figures. We export more to Ireland than we do to China, almost twice as much to Belgium as we do to India, and nearly three times as much to Sweden as we do to Brazil. It is not realistic to think we could just replace European trade with these new markets.
And anyway, this apparent choice is a false dichotomy. We should be aiming to increase our trade with these markets in addition to the business we win in Europe. Given that British exports in goods and services to countries outside the EU are rising, one can hardly argue that the EU prevents this from happening. Leaving the EU, on the other hand, might make it considerably harder. First, we would have to replace 36 existing trade agreements we have with non-EU countries that cover 53 markets. The EU trade deals Britain has been driving – with the US, worth £10 billion per year to the UK, with Japan, worth £5 billion a year to the UK, with Canada, worth £1.3 billion a year to the UK – would be in danger of collapse. And while we could certainly negotiate our own trade agreements, there would be no guarantee that they would be on terms as good as those we enjoy now. There would also be a considerable opportunity cost given the need to replace the existing agreements – not least with the EU itself – that we would have torn up as a consequence of our departure.
Inside the EU, without Britain, the balance of power in the Council of Ministers and European Parliament would change for the worse. The liberal, free-trading countries would find themselves far below the 35 per cent blocking threshold needed in the Council, while the countries that tend towards protectionism would have an even greater percentage of votes. There would be a very real danger that the EU heads in a protectionist direction, which would damage wider international trade and affect for the worse Britain’s future trade with the EU.
So, if we do vote to leave the European Union, we risk bringing the development of the single market to a halt, we risk a loss of investors and businesses to remaining EU member states driven by discriminatory EU policies, and we risk going backwards when it comes to international trade. But the big question is whether, in the event of Brexit, we would be able to negotiate a new free trade agreement with the EU and on what terms.
Some say we would strike deals that are the same as the EU’s agreements with Norway, Switzerland or even Canada. But with all due respect to those countries, we are a bigger and more powerful nation than all three. Perhaps that means we could strike a better deal than they have. After all, Germany will still want to sell us their cars and the French will still want to sell us their wine. But in a stand-off between Britain and the EU, 44 per cent of our exports is more important to us than eight per cent of the EU’s exports is to them.
With no agreement, we know that WTO rules would oblige the EU to charge ten per cent tariffs on UK car exports, in line with the tariffs they impose on Japan and the United States. They would be required to do the same for all other goods upon which they impose tariffs. Not all of these tariffs are as high as ten per cent, but some are considerably higher.
The reality is that we do not know on what terms we would win access to the single market. We do know that in a negotiation we would need to make concessions in order to access it, and those concessions could well be about accepting EU regulations, over which we would have no say, making financial contributions, just as we do now, accepting free movement rules, just as we do now, or quite possibly all three combined. It is not clear why other EU member states would give Britain a better deal than they themselves enjoy.
All of this would be negotiable, of course. For the reasons I listed earlier, Britain is big enough and strong enough to be a success story in or out of the EU. But the question is not whether we can survive Brexit: it is whether Brexit would make us better off. And that calculation has to include not only the medium to long-term effects but the immediate risks as well.
The Union with Scotland and the other risks of Brexit
Now it is sometimes suggested that Brexit could lead to other countries seeking to leave the European Union. Some even believe that Brexit might be a fatal blow to the whole EU project. And some, I know, think that this would be a good thing. But I’m afraid I disagree. The disintegration of the EU would cause massive instability among our nearest neighbours and biggest trading partners. With the world economy in the fragile state it is, that would have real consequences for Britain.
But if Brexit isn’t fatal to the European Union, we might find that it is fatal to the Union with Scotland. The SNP have already said that in the event that Britain votes to leave but Scotland votes to remain in the EU, they will press for another Scottish independence referendum. And the opinion polls show consistently that the Scottish people are more likely to be in favour of EU membership than the people of England and Wales.
If the people of Scotland are forced to choose between the United Kingdom and the European Union we do not know what the result would be. But only a little more than eighteen months after the referendum that kept the United Kingdom together, I do not want to see the country I love at risk of dismemberment once more. I do not want the people of Scotland to think that English Eurosceptics put their dislike of Brussels ahead of our bond with Edinburgh and Glasgow. I do not want the European Union to cause the destruction of an older and much more precious Union, the Union between England and Scotland.
Brexit also risks changing our friendships and alliances from further afield. In particular, as President Obama has said, it risks changing our alliance with the United States. Now I know as well as anybody the strength and importance of that partnership – our security and intelligence agencies have the closest working relationship of any two countries in the world – and I know that it would certainly survive Britain leaving the EU. But the Americans would respond to Brexit by finding a new strategic partner inside the European Union, a partner on matters of trade, diplomacy, security and defence, and our relationship with the United States would inevitably change as a result. That would not, I believe, be in our national interest.
We should remain in the EU
So I want to return to the principles I set out to help us judge whether Britain should join or remain a member of international institutions. Remaining inside the European Union does make us more secure, it does make us more prosperous and it does make us more influential beyond our shores.
Of course, we don’t get anything like everything we want, and we have to put up with a lot that we do not want. And when that happens, we should be honest about it. The Common Agricultural Policy, the Common Fisheries Policy, the free movement of people: none of these things work the way we would like them to work, and we need to be smarter about how we try to change these things in future. But that does not mean we have no control over the EU. Britain can and often does lead in Europe: the creation of the single market was driven by Mrs Thatcher, the competitiveness and trade agendas now pursued by the Commission were begun at the behest of Britain and Germany, and I can tell you that on matters of counter-terrorism and security, the rest of Europe instinctively looks towards us. But it shouldn’t be a notable exception when Britain leads in Europe: it must become the norm.
And turning to the final test: to what extent does EU membership bind the hands of Parliament? Of course, every directive, regulation, treaty and court ruling limits our freedom to act. Yet Parliament remains sovereign: if it voted to leave the EU, we would do so. But unless and until the European Communities Act is repealed, Parliament has accepted that it can only act within the limits set by the European treaties and the judgments of the Court of Justice. The freedom to decide whether to remain a member of the EU or to leave will therefore always be in the hands of Parliament and the British people.
I do not want to stand here and insult people’s intelligence by claiming that everything about the EU is perfect, that membership of the EU is wholly good, nor do I believe those that say the sky will fall in if we vote to leave. The reality is that there are costs and benefits of our membership and, looking to the years and decades ahead, there are risks and opportunities too. The issues the country has to weigh up before this referendum are complex. But on balance, and given the tests I set earlier in my speech, I believe the case to remain a member of the European Union is strong. [...]