Lessons from Brexit

The UK’s exit from the European Union (EU) is a seismic shift in international economics and global politics – and an opportunity for New Zealand.

The EU had origins in the concept of European integration after World War II. It led to the formation of the European Economic Community, or Common Market, in 1957. Britain joined in 1973, ending the cosy relationship where it bought virtually all of our agricultural products. Nowadays they buy less than 1%!

The European Union was formally established by the Maastricht Treaty in 1993, and further refined by the Lisbon Treaty in 2009. The EU is based on four founding principles or freedoms:

1. The free movement of goods.
2. The freedom to provide services.
3. Free movement of capital, and
4. Freedom of movement of workers.

It’s the last principle that has created the problems. The founders of the EU project, believed that allowing people to move from countries where there were no jobs to countries where there were labour shortages, would not only boost European growth, but would help prevent war by getting people to mix more across borders. In other words, from its inception, the EU was an economic project with social objectives.

Free movement gives all EU citizens the right to travel, live and work wherever they wish within member countries. But with an average wage many times higher than in Eastern Europe, Britain became a magnet for people from the East.

In response to growing public concerns about the effects of immigration on communities, UK Prime Minister David Cameron entered into discussions with the EU about reducing the number of European immigrants coming to Britain. The EU was adamant that it would not compromise the freedom of movement principle, a response which entrenched the nationalist view in the UK and ultimately led to the 52% to 48% vote in favour of it exiting the EU.

From the very beginning there were concerns that the EU would mutate from its primary role of facilitating free trade amongst nations of the European continent as a single market, into a political power base intent on imposing a common government on Europe. That has proved to be the case.

The EU is a bloated bureaucracy greedy for more control, and one that belches vitriol on those who dare express a view contrary to its own. The EU has become a boarding house for those who believe regulation is the answer to every problem, even when regulation is the problem. The European Parliament is expert at passing laws that no-one asked for, that no-one wants, and that no democratic government can change. Examples of such law-making were quoted during the campaign including rules that specify bananas must be ‘free from abnormal curvature’, that cucumbers need to be ‘almost perfectly straight’, but it was the lack of control over immigration flows that had incited hostilities between the pro and anti EU factions.

I have no doubt the 50,000 individuals who (directly) work for the EU are genuine in their belief that the means to regional harmony is assimilation – to allow the freedom of movement across borders. But the notion that diverse people with different cultures can live a utopian lifestyle as friends and neighbours is sadly naive. And what’s worse, the members of the European Parliament are too afraid to follow the UK example and put an “In or Out” referendum to voters in their home countries. As a French minister recently remarked, they were not going to put the question because it may not produce the right answer.

The Brexit vote was about ordinary people thumbing their nose at arrogant bureaucracies who impose their own ideals on others and take away the rights of individuals and individual countries to make their own decisions.

There is a salient lesson for New Zealand – and local and central government politicians in particular: In a democracy, the concerns of ordinary voters matter, and will eventually prevail. The problem is that most politicians get carried away with their own self-importance and they forget who really matters.

By leaving the EU, the UK has provided an opportunity for us to restore the favourable trading relationship we had with them before they joined the EEC in 1973. That’s got to be good for our exporters and primary producers in particular.

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