IASbaba’s Daily Current Affairs – 2nd March, 2016
TOPIC: General Studies 2
- Bilateral, regional and global groupings
- Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora.
- Important International institutions, agencies their structure, mandate.
EU referendum: the big questions for Britain
- The roots of the EU lie in the aftermath of the Second World War with the search for ties across European boundaries to prevent the two great continental powers, France and Germany, from ever again taking up arms against each other. Britain was not initially on board, but became the seventh member country in the early 1970s.
- At that stage, the EU was generally known as the Common Market, a free-trade zone much more than a political alliance. The EU expanded to almost every corner of Europe, particularly after the implosion of the Moscow-led Communist bloc in eastern Europe. Half a billion people now live in EU member states, powerful nations including Serbia and Turkey are queuing up to join, and no member state has ever left the EU — at least, not yet.
- Britain has always been an uneasy member of the EU. In the 1980s, British Prime Minister Margaret Thatcher railed against European interference in member states’ monetary and fiscal policy.
What is European Union or EU?
- The European Union (EU) is a politico-economic union of 28 member states that are located primarily in Europe.
- It covers an area of 4,324,782 km2, with an estimated population of over 508 million.
- The EU operates through a system of supranational institutions and intergovernmental-negotiated decisions by the member states.
- The institutions are: the European Parliament, the European Council, the Council of the European Union, the European Commission, the Court of Justice of the European Union, the European Central Bank, and the Court of Auditors.
- The European Parliament is elected every five years by EU citizens.
- The EU has developed an internal single market through a standardized system of laws that apply in all member states.
- EU policies aim to ensure the free movement of people, goods, services, and capital, enact legislation in justice and home affairs, and maintain common policies on trade, agriculture, fisheries, and regional development.
- The monetary union was established in 1999 and came into full force in 2002. It is currently composed of 19 member states that use the euro as their legal tender.
When was the EU formed?
- The EU can trace its origins from the European Coal and Steel Community (ECSC) and the European Economic Community (EEC), formed in 1951 and 1958 respectively by the Inner Six countries of Belgium, France, West Germany, Italy, Luxembourg and the Netherlands.
- French foreign minister Robert Schuman led the formation of the ECSC with the Schuman Declaration in May 1950. The organization was a forerunner of several other European Communities and what is now the European Union.
- The European Union was established under its current name in 1993 following the Maastricht Treaty.
Why was the EU created?
- After the Second World War there was a new movement to create unity between Germany and France, which would ultimately lay the foundations for the European Union four decades later.
Which countries are in the EU?
- The European Union is an economic and political union of 28 countries. Each of the countries within the Union is independent but they agree to trade under the agreements made between the nations.
- Twenty two of the member states also belong to the Schengen Area, which is comprised of 26 European countries that have abolished passport and border controls at their common borders.
- Of the countries that are not part of it, Bulgaria, Croatia, Cyprus and Romania all intend to join, while the United Kingdom and Ireland have opted out.
- The European Economic Area (EEA) includes EU countries and also Iceland, Liechtenstein and Norway. It allows them to be part of the EU’s single market.
- Switzerland is neither an EU nor EEA member but is part of the single market - this means Swiss nationals have the same rights to live and work in the UK as other EEA nationals.
What is the purpose of the EU?
- The European Union operates a single market which allows free movement of goods, capital, services and people between member states.
When will the EU referendum be held?
The date has been set for 23 June 2016.
What will the referendum ask?
Should the UK remain a member of the EU or leave the EU?
Who can vote in the EU referendum?
Eligibility will be based on the criteria for voting in a general election, which means citizens of most EU countries (who can vote in local and European elections in Britain) will not be allowed to take part. Anyone over the age of 18 who falls into one of the following groups can cast a vote:
- British citizens resident in the UK
- British citizens resident overseas for less than 15 years
- Citizens of Ireland, Malta and Cyprus resident in the UK
- Commonwealth citizens resident in the UK
- Commonwealth citizens resident in Gibraltar
The pros and cons of leaving the EU
Perhaps the greatest uncertainty associated with leaving the EU is that no country has ever done it before, so no one can predict the exact result. Nevertheless, many have tried.
- One of the biggest advantages of the EU is free trade between member nations, making it easier and cheaper for British companies to export their goods to Europe. Some business leaders think the boost to income outweighs the billions of pounds in membership fees Britain would save if it left the EU.
- The UK also risks losing some of its negotiation power internationally by leaving the trading bloc, but it would be free to establish trade agreements with non-EU countries.
- Ukip leader Nigel Farage believes Britain could follow the lead of Norway, which has access to the single market but is not bound by EU laws on areas such as agriculture, justice and home affairs. But others argue that an "amicable divorce" would not be possible.
- Britain would still be subject to the politics and economics of Europe, but would no longer have a seat at the table to try to influence matters.
- "Brexit(Britian’s exit)" scenario is that the UK economy loses 2.2 per cent of its total GDP by 2030. However, it says that GDP could rise by 1.6 per cent if the UK could negotiate a free trade deal with Europe in long run
- The general view is that inward investment could slow in the lead up to the vote due to the uncertainty of the outcome and its consequences, following the precedent set ahead of the Scottish independence referendum in 2014.
- Longer term, there are diverging views: pro-Europeans reckon the UK's status as one of the world's biggest financial centres will come under threat if it is no longer seen as a gateway to the EU for the likes of US banks, while Brexit campaigners argue London's unique appeal will not be diminished.
- This will be seen as positive by those advocating a vote to leave. It reckons the departure of one of the union's most powerful economies would hit its finances and also boost populist anti-EU movements in other countries. This would open a "Pandora's box" that could lead to the "collapse of the European project".
- Free movement of people across the EU opens up job opportunities for UK workers willing to travel and makes it relatively easy for UK companies to employ workers from other EU countries.
- Exit prevents the UK "managing its own borders". Limiting this freedom would deter the "brightest and the best" of the continent from coming to Britain, create complex new immigration controls and reduce the pool of candidates employers can choose from.
- Euro skeptics argue that the vast majority of small and medium sized firms do not trade with the EU but are restricted by a huge regulatory burden imposed from abroad.
- However, on the other hand warn that millions of jobs could be lost if global manufacturers, such as car makers, move to lower-cost EU countries, while British farmers would lose billions in EU subsidies.
- Britain may lose some of its military influence – many believe that America would consider Britain to be a less useful ally if it was detached from Europe.
- On the plus side, Britain would also be able to claim back its territorial fishing waters, scrap caps on limits to the number of hours people can work per week, free itself from the EU's renewable energy drive and create a freer economic market. This would turn London into a "freewheeling hub for emerging-market finance – a sort of Singapore on steroids".
- The most likely outcome is that Britain would find itself "as a scratchy outsider with somewhat limited access to the single market, almost no influence and few friends. And one certainty: that having once departed, it would be all but impossible to get back in again."
In favor of Brexit :
- There is a strong belief amongst Pro exit that they are leaving the "door open" to terrorist attacks by remaining in the European Union. "This open border does not allow us to check and control people".
- Failure to do so, significantly increase the terrorist threat and endangers people and is a betrayal of this country.
- Argue that the EU is an "increasingly important pillar of our security", especially at a time of instability in the Middle East and in the face of "resurgent Russian nationalism and aggression".
- UK benefits from being part Europe, as well as NATO and the United Nations. It is through the EU that you exchange criminal records and passenger records and work together on counter-terrorism. We need the collective weight of the EU when you are dealing with Russian aggression or terrorism.
Would taxes change?
- Better off out: The EU has limited power over tax, which is largely a matter for national governments. The exception is VAT which has bands agreed at the EU level. Outside the EU, the UK would potentially have more flexibility.
- Better off in : Tax avoidance and evasion will reach crippling levels as our economy becomes increasingly wholly owned by foreign multinationals that make tax avoidance in Britain central to their business strategy.
Would Britain's legal system, democratic institutions and law-making process change?
Better off out:
- It would be a major shot in the arm for British democracy as the Westminster parliament regained its sovereignty and re-connected with voters.
- The country would be free from the European Arrest Warrant and other law and order measures, but would still have to deal with the European Court of Human Rights, which is separate from the EU.
Better off in:
- Britons benefit from EU employment laws and social protections, which would be stripped away.
- Withdrawal from the European Arrest Warrant could mean delays for the UK in extraditing suspects from other European countries; and the UK already has some opt-outs from EU labor law, including the Working Time Directive.
Connecting the dots:
- Should the UK remain a member of the EU or leave the EU? Examine
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