SINGLE MARKET - FIFTH BARRIER DIFFERING SOCIAL, ENVIRONMENTAL & OTHER STANDARDS But harmonisation goes beyond product standards. If countries had significantly different social protection rules (like pay), or environmental rules (like pollution standards) or consumer protection rules, the countries with the weakest standards would potentially produce the cheapest goods. It would mean that potentially the country with the lowest safety standards, environmental standards, and social costs will win out. Other countries, seeing that their industries are being harmed by pursuing higher standards will adopt the lower standards and a race to the bottom will then take place. For instance, if France is the only member state that obliges all employers to pay women the same as men, then industries in the other member states could get an advantage as they would have lower labour costs. Likewise, if Germany has the toughest pollution controls on factories, again one can see why other countries could have a competitive
advantage because their factories have fewer costs. I wouldn t want to exaggerate this because sometimes a better functioning product or one that is for some reason more appealing to some sectors of consumers can be successfully exported from a country with higher standards. But the whole race to the bottom is a very real risk. Therefore, an important part of the Single Market involves creating strong common standards in social protection (mainly employment rights and consumer protection rights) and common standards for environmental protection. What they all have in common is that these standards have a direct link to the cost of producing goods. Lets look at environmental standards as an illustration. Legislation dealing with habitats or conservation are not dealt with under single market legislation. That s because they have no bearing on the cost of goods. There is a separate part of the Treaties dealing with environmental issues outside the single market. However, car
emissions, or the pollution rates allowed by industrial complexes, like factories, are part of the burden imposed on industries up and down the EU, so those rules are harmonised. They are usually minimum standards allowing more ambitious states to adopt more stronger controls. So why is all this important for the referendum. ONE THING IS key: This is a very sophisticated way of trying to ensure a balance between free trade and the protection of legitimate concerns. Some left-wingers and progressives have tried to label the EU a free trade zone. A free trade zone would not have had such a sophisticated and far-reaching system of harmonisation. Such a system has given us some of our most cherished rights, like equal treatment in the work place, consumer protection for unfair contract terms, as well as helping create a high level of environmental protection that gives industry a level playing field while providing us with a high environmental standards. Some very respected legal and policy commentators argue that the
balance is too much in favour of social and environmental standards, as well as red tape on business. Progressives see these rights as hard-won and important. Where you sit on the issue depends on your political views. To win over some the right-wing voters, PM Cameron has secured a promise from the other EU states that they will look again at the legislative proposals for the coming years with a view to focusing on giving more flexibility to business. So what would happen if you leave the EU. Should we leave the EU, we have a number of options. A separate post looks at these issues in detail (and it includes a podcast). In summary, looking at each option in turn: One option is simply to bring back all powers from the EU and not to conclude a treaty of co-operation with the EU. For those seeking sovereignty (i.e. our ability to pass all our laws), this is a good option. In that scenario we will have to abide by the EU s product requirements. That s how international trade works. If Russia or any other non-eu
nation wants to sell us goods, they must comply with EU product standards, otherwise those goods can not be lawfully put on the Single Market. That s a significant power. While it is not an absolute power, it is a very strong one. The exceptions are governed by WTO law and quite difficult to explain succinctly. Statistically though an extremely small percentage of national product requirements have been successfully challenged at the WTO. The fact that the UK will have to comply with EU product specifications will pose little difficulty in the short term as we already follow these standards, but may be problematic in the longer term. Here, technically, we would not have to follow environmental standards or anything beyond product standards. On the face it, this could give our industry an edge, because it would have lower costs. But it also means that as citizens we would have less stringent social and environmental rights. With a right-wing UK government in power, it is politically very likely that some of our social and environmental rights that we currently have as members of
the EU, would not be re-enacted into law after we left. Whether that worries you depends on your political stance. The second option for leaving is to conclude a co-operation agreement with the EU, like Switzerland has or as Canada is doing. There are many co-operation agreements between the EU and non-eu states which have different degrees of cooperation. So almost anything is possible. Switzerland follows almost all single market rules. Canada s agreement is very contentious, as is the TTIP agreement with the US being negotiated at present. The allegation is that those agreements dilute some of the rights set out in EU Single Market Law. Much more worrying, is that those agreements have some highly undemocratic aspects to them. For a start, the negotiations are in secret. As they are creating binding law, that is not how things should be done. We only know about aspects of the TTIP because of leaks or admissions by the EU or US negotiating teams. Equally problematic and in my view potentially illegal under EU law, are the investor dispute provisions. Under these the tribunals completely
outside normal court system can fine any member state if that member states has hindered the business of the investor. Using similar tribunal systems under other treaties, a cigarette company is currently suing Australia for having passed a law making all cigarette packages plain, while Egypt is being sued by a French company for raising the minimum national wage. I would suggest that neither TTIP nor the Canadian agreement (called CETA) are models we in Britain should aspire to. As I will discuss in a separate blog post CETA and TTIP show a rather worrying side to the EU. It poses a particular threat to our NHS. In short my view is that the Court of Justice would have strong grounds to annul the EU s participation in such an agreement and hence scupper the agreement, but that is not a view shared by some of my EU and international law academic colleagues. Another option post-brexit is to join the European Free Trade Agreement (Norway, Iceland and Lichtenstein) which together with the EU states forms the European Economic
Area. So the idea is to join the EEA. Well, here not only would we have to follow product standards, we would have to follow the whole Single Market set of rules and we would have no control on how they change or evolve as the EU will determine that for us!