Back to a European trading partnership

Like other members of the EU, Britain gains some benefits from the trading partnership. But the EU also imposes many costs. Currently, the costs greatly outweigh the benefits.

British politicians persistently underestimate the strength of our position. The EU needs the UK more than the UK needs the EU. We are net contributors to the EU budget, and net importers from Europe. EU-philes threaten that we will lose business if we leave the EU, but in reality other EU members would lose more from starting a trade war with us than we would. It would be in everyone's interests to continue to trade. Despite the threats, in practice we would continue to enjoy strong commercial links with the EU, as Switzerland, Norway and Turkey do.

Nevertheless, there are benefits of efficiency and stability in being part of a trading union. We should try to persuade our European partners to remove many of the inefficiencies that weigh down our economy and theirs. If we succeed, we should stay in a European Union that had thereby moved back towards the trading union to which it should rightly be limited. If we do not, we should leave. If we are clear that that would be the result, and that we are unafraid to take that route, we are more likely to obtain the changes we want.

To make it clear to our partners that we would leave if we could not reduce the burden, and to honour the broken referendum promises of all the main parties at the 2005 election, the UK government should promise an "in or out" referendum towards the end of the next 5-year parliamentary term. It would set out the list of Directives and other measures from which it required derogation (i.e. exemption) or abolition. And it would make clear to the EU that whether the government recommended and campaigned for an "in" or "out" vote would depend on achieving these derogations or abolitions.

A full list of toxic Directives and other European measures would be long and tedious (OpenEurope have produced a fuller but still incomplete list). But the following are a few of the European measures that should be abolished or from which the UK should seek derogation:

• The Working Time Directive, telling people how many hours they ought to work. That should be up to each person, their employer, and safety considerations.
• The Common Agricultural Policy (CAP). We put much more in than we get out. Our farmers are more efficient and have higher standards than in many European countries. We would be better off deciding our own rules and deciding how to use our own money.
• The Common Fisheries Policy (CFP). A disgrace, causing the destruction both of fishery stocks and of the British fishing industry. We should reclaim control of our national waters, and switch from a quota system (that does not prevent over-fishing, but does cause fishermen to throw back perfectly good catches), to a property-rights system, such as adopted by New Zealand, Australia, parts of America and elsewhere.
• The Emissions Trading Scheme (EU-ETS). Too cheap to deliver investment in green technology, too expensive (compared to other countries) to avoid harming European industry, and too unpredictable to make it easy to invest in the new energy infrastructure that we need. A dumb idea, badly implemented and disastrous in operation, providing unearned profits for the big companies who get the generous allocations, at the expense of customers and the more honest nations (like the UK).
• The Renewables Directive. Sets unrealistic targets on the basis of irrational allocations and sub-divisions between uses.
• The Large Combustion Plant Directive and the Industrial Emissions Directive. Between these directives, which will force many of our existing power stations to be switched off in the near future, and the deterrence to replacement infrastructure created by many of the other stupid government interventions, both European and national, Britain risks black-outs in the near future.
• The Biofuels and Renewable Transport Directive. We now know how counter-productive European biofuels are to the aim of reducing carbon emissions. A classic example of how micro-managed, targeted mechanisms assume much greater knowledge and understanding than governments possess.
• Combined Heat and Power (CHP) Directive. A spectacular way of making something simple incredibly difficult, and deterring exactly the sort of practice that it aims to promote.
• Landfill Directive. A great way of forcing on people inconvenient systems that cost a lot more money and offer little genuine benefit. Internalize the social cost of carbon with a carbon tax, and then leave it to communities how they want to dispose of their waste. Along with associated legislation like the Packaging Directive, responsible for large increases in council-tax bills.
• Waste Incineration Directive. Regulates the mechanics rather than the emissions. It doesn't matter what technology you use, so long as the emissions from combustion plant are clean enough to avoid harm. This Directive takes the opposite view. It doesn't matter how clean your emissions are, so long as the technology you use conforms with blunt, generalized requirements.
• Waste Electrical and Electronic Equipment Directive (WEEE). Responsible for big piles of old electrical equipment, and lots of illicit shipping to developing nations, where the equipment is disposed in a more harmful way than it would have been disposed of in Europe without the Directive.
• Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH). So prescriptive that it threatens to put lots of companies out of business who have been caught by unintended consequences of unnecessary prohibitions or limits.
• Environmental Impact Assessment (EIA) Directives, which force applicants for planning permission to commission expensive reports regardless of whether they would be refused for other reasons, rather than the more proportionate approach of making preparation of EIAs a condition of successful applications, avoiding unnecessary cost to unsuccessful applicants.
• Charter of Fundamental Rights, incorporating "social" rights that are counterproductive, inconsistent with Britain's culture and traditions, and imposes significant "social" costs for minimal benefit.
• Various "equal opportunities" Directives that tell employers who they should employ, for all sorts of reasons other than that they are the most suitable person for the job.
• Alternative Investment Fund Management (AIFM) Directive and Markets in Financial Instruments Directive (MiFID). Places unnecessary restrictions on parts of the financial sector that present the least systemic risk and that have not called on the public purse to bail them out, whilst failing to constrain the toxic behaviour and structure of those parts of the financial sector that present significant systemic risk and that have required significant public funds to baiil them out.
• Temporary Agency Workers Directive.