Union hangover

It's hard to deny it anymore. The European Union, at least as such, is, if not a failed experiment, then badly botched attempt. One after another, third-rate economies tarted up to be second-rate and bolted onto first-rate economies are having to be bailed out by those said first-raters. The taxpayers of the robust economies are getting understandably tired of doing this, especially when the taxpayers of the faltering economies have no interest in economizing or changing the ways that put them in dire straits in the first place. How can such a union persist, particularly when it's not actually even fixed together as a single political entity? I no longer really think it can.

Years ago the suggestion of a "two-speed Europe" was uttered sotto voco. I didn't care for the idea. Everyone should follow the same rules! Everyone should have the same standards! They all arrive together! I think that was the general feeling in the EU as well. It seems to me now that was unrealistic, and maybe those suggestions should have been said a bit louder and discussed more adamantly. Don't get me wrong. I'm not talking about an a la carte union, which the British want and I find unutterably self-serving. It has all the charm, maturity, and respect for your roomies as claiming the right to come over on Friday night, find a bed mate, raid the fridge, and half-heartedly dump some pocket change in the coffee jar before you bugger off again past the sinkful of dirty dishes. No, not the Anglo-Saxon conception of the EU. There would be two sets of rules, depending on the speed of your economy; a core set, and a starter set. The problem is membership in the EU has always been toss 'em into the deep end if they can pump their arms and legs; don't worry, they'll swim. Sure.

It struck me sometime in the 2000s that the experiment was running a little hot. The EU was admitting new members with all the alacrity and discretion of a beer hall manager. The more the merrier, hurry hurry hurry before all the kegs are empty! The criteria for joining were shoddy and economies that had emerged from communism a decade earlier were being ushered in if they had something like a pulse. Well, it wasn't hard to have a blazing economy if you were being stuffed to the gills by corporations eager to take advantage of the fact your workers were still dazzled by the prospect of making twenty bucks a day. But that didn't make it a robust economy, as we're seeing. Even back then, I was having misgivings. It seemed to me then, and even more so now, that admission to the European Union, particularly the eurozone, should have been golden carrot dangled before prospective members for at least a generation. Something to work for. Tighten their economies up, show that they can be fiscally responsible, demonstrate their staying power, and train the citizenry for the responsibilities admission entails and the obligations to the other members.

I'm tempted to think that the only way to save the EU is for it to nova. Explode, and the core shed the dead weight members. Let them continue to trade and keep free movement of labour, but divorce the sick economies. Force them to rebuild and work toward the stable currency the euro really represents when it's not forced to back economies like Greece, where tax evasion is a gold medal Olympic sport. And if they can't be bothered to shape up and reapply, that works too. But I'd make them pay the freight for forex if they wanted to trade with the core EU. Come to that, I'd make the UK do that for sticking to the pound. If Germany can fold the mark, the Brits can certainly fold the pound, and if they won't, I don't see why the core EU should have to enrich bankers for the dubious privilege of paying for British goods in pounds.

I don't know what's going to happen, but I've reached the point where I no longer expect to see the EU—or more specifically, the eurozone—emerge with its current membership. In fact, I'm at the point now where I'm not sure it would be a good thing if it did. Maybe some of these economies need a timeout. Some of their taxpayers certainly do need to sit in the corner with the dunce cap on, that's for damn sure.

Yes to Europe means No to Tony

As of this morning, the Czech Supreme Court has cleared the way for Czech president Vaclav Klaus to sign the Lisbon Treaty, completing its ratification. Hopefully he will do so forthwith.

Of course, this leads to the immediate question: who will be the first president of the new Europe?

Personally, I feel that the president should come from among those countries that have demonstrated themselves to be committed to the project of continental integration. Tony Blair should not be in the running, as he hails from a nation that is not among those ranks.

Imagine instead the UK were integrating with not the EU, but the US, and the British were saying, "Oh, yes, we'll happily take full, unfettered access to your markets and offer you the same. But we won't accept to be tried in your courts or by your laws; and we don't want your Bill of Rights or certain articles of the US Constitution to apply to us; and we expect even people coming from the US to present their passports when they come here; and we won't agree to use the dollar. You see, while we're happy to move freely in your country and live, work, and learn as we please, we don't want you beastly people interfering in our lovely country. Oh, and please make sure your next president is one of us." What do you think the US would say? I think once they stopped laughing they'd be hard-pressed not to push the Button. It's gallingly insulting. Or maybe "de Gaulle-ingly" puts it better.

I guess it's fine for the British to cut the best deal they can, and play it the way they feel it, if the rest of Europe's willing to accommodate that. But there's no way the British, with all these tepid opt-outs and refusals to commit, should expect or even hope that one of their number should have the top job in an association they don't even fully participate in on so many levels. Frankly, I think there should be a tacit, or even explicit, disqualification for citizens of members that remain outside the eurozone, Schengen Agreement, and other crucial hallmarks of a continental home, from the presidency of the European Union.

N.B. Later, same day — Vaclav Klaus signed the treaty a couple of hours ago. Finally. Well, it took him far too long, but at least once the writing was on the wall, he put the writing on the treaty, too, and quick-smart. Alka Seltzer should work so fast. Congrats to the EU; the Lisbon Treaty is ratified at last!

Time for a two-speed Europe...?

I'm increasingly of the opinion that not only is a "two-speed" Europe justified, but it's even desirable.

First of all, let me say that I feel that the expansion of the European Union has been too hasty and too rapid. I'm happy, of course, that Eastern Europe is out from under communism, but having spent two or three generations adapting to it, I think at least a generation of getting used to the democratic process and free market economies was in order before they should have been ushered into a union with Western Europe. I mean, they needed to earn their stripes. That's just how I feel.

But, they're in. Some are adapting better than others. The Czechs seem not particularly happy to be there; their president is holding up the Lisbon Treaty, they've effectively sabotaged their program of getting their house in order to adopt the euro (while, incredibly, the Slovaks, with whom the Czechs once shared a country in which they looked down upon them as the poor cousins, managed it ably).

The British, too, are a problem. I'm particularly disenchanted with them. They want all the benefits of being in the EU, but they want to contribute nothing, or at least as little as they can possibly get away with. They want no onus put on them: no charter of rights, no European court, no shared currency, no common border controls... they're all too happy to eat the corn, but don't ask them to plow the field.

I think the requirement for unanimity in the adoption of the Lisbon Treaty was hopelessly naïve. It was a recipe for failure and I'm completely amazed it's gotten to the point that it has the ratification of 26 of 27 countries. But I don't think it should require even that to get going. There should have been a threshold point where, once reached, the treaty would go fully into effect for those countries acceding to it.

For example... when the United States was reforming, throwing out the creaky Articles of Confederation and replacing them with the Constitution in 1787, the Founding Fathers were not so foolhardy as to require the unanimous consent of all thirteen states before the Constitution would go into effect. They rightly anticipated there would be issues, and that some states might not be ready to sign on to something that new and untested. And so, they decided that as soon as nine of the states had ratified the Constitution, it would go into effect for those states that had done so. The others could join later, or not, as they pleased; but the important point is that the reticence of a few would not prevent the agreement from going into effect for those who had ratified it.

I feel that something like that should have been – should still be – put into effect for the EU. I think that it's long since passed a practical and similar point in it ratification. By the time something like, say, twenty of the member states had passed the Lisbon Treaty, it should have gone into effect for them. The other members under the old rules could hang on, but would have no say in the new institutions until they saw fit to join. Meanwhile, the core of Europe could move forward, and the stragglers could catch up, or eventually fall away, as suited them. And I would put a time limit on it: five years, maybe ten. Join or die, to coin a phrase.

If the Libson Treaty falls on the say-so of one Czech xenophobe, or the selfish, prideful arrogance of the British, then I think next time, the Union must take a page from American history, and institute a two-speed Europe.

The way back is the way forward

The saying goes that those who forget history are doomed to repeat it. To that I would add: or to forget how to. History can be a liberation.

I read a column today in The Globe and Mail... I forget who it was by, but the gist of it was a maudlin retreading of that tired old saw that it really didn’t matter how right we might be doing things in Canada, we’re joined at the hip by Fate to the United States and we’ll only be as well as it is sick.

Is that what we fought for as separate colonies in two continental wars? Is this why we finally came together to forge a new nation and common nationality a hundred and forty years ago? To imagine we have no future, no destiny, but that of the nation we’ve had to work so hard to remain distinct from?

A couple of weeks ago, I was in a used bookstore in rural Ontario. I came across a nice softcover book of Ontario’s history from 1610 to 1985. For the past week or so I’ve been reading it about half an hour in the mornings. And I came across some figures that were truly eye-opening.

In the middle of the 19th Century, before Confederation, the United Province of Canada (what had been Upper Canada and Lower Canada, and would become Ontario and Quebec respectively in Confederation) had a reciprocity agreement with the United States. Partly because they were sore at Britain for its conduct during the Civil War, and partly because they believed Canada’s separation from the US and adherence to the British Empire “unnatural” and only encouraged by reciprocity, the US unilaterally terminated the arrangement in 1866. And do you know what happened?

Canada promptly and obligingly curled up and died. Right?

Wrong.

Canada found other markets. And prospered.

In an age before the first prop-engine freighter ever took the skies, before refrigeration and air conditioning, when rail and sail were still the only ways to get it from here to there, this country (or what was to become this country) turned away from the easy, lazy continental trade we’ve decided is the centre of the universe, and actually hustled and found markets elsewhere.

In 1870, 51% of all Canadian exports were going to the US, and only 38% was going to the United Kingdom (the balance going pretty much to the rest of the Empire). But by 1916, 61% of our export trade was going to the UK and only 27% to the US. Even by 1937, the figures were about even: 41% to the US and 38% to the UK.

Now I’m not suggesting we can simply fall back on Mother England as our alternate to trade with the United States. But let’s remember... there’s a whole lot more to the world than just the United States, and if they’ve been rich and they’ve been close-by, that’s been convenient. But times change, and as they did before, so we must adapt. Our own history shows us what’s possible. If they could do it back then, with the incredible obstacles that time and distance represented for them, what right have we to fall back whining that the end of all good things is upon us? The EU is well-heeled, has nearly twice the number of consumers as the US, and looks upon us favourably (seal-clubbing notwithstanding; and we'll reserve comment here on fox hunting and bullfighting). China, India, and even much of South America are on the rise. These are places that will need our resources and can easily absorb the excess manufacturing output of a relatively smaller nation like ours. What I mean is, it really wouldn’t take that much of the world to pick up the slack the US is leaving behind for a country the size of Canada – if we’ll just get up off our asses and get in the game instead of moaning on the sidelines.

We did it before, and we can do it again. By all means, let’s wish the US well, but let’s not consign ourselves to the role of some Roman slave obliged to open his veins to share the fate of a humbled master. We have our own national life to lead, and our own stars to follow.

After all, wasn’t that the point in 1776, 1812, and 1867?

Trade pact with the EU?

I'm not seriously expecting this to come to pass, but I have to say, it's the most surprising news I've seen reported about Canada's future economic prospects in a long time. This was reported this morning in The Globe and Mail.

Canada-EU trade proposal rivals scope of NAFTA

Plan to lift barriers for goods and labour to be discussed at summit after election

September 18, 2008 at 2:00 AM EDT

LONDON — Canadian and European officials say they plan to begin negotiating a massive agreement to integrate Canada's economy with the 27 nations of the European Union, with preliminary talks to be launched at an Oct. 17 summit in Montreal three days after the federal election.

Trade Minister Michael Fortier and his staff have been engaged for the past two months with EU Trade Commissioner Peter Mandelson and the representatives of European governments in an effort to begin what a senior EU official involved in the talks described in an interview yesterday as “deep economic integration negotiations.”

If successful, Canada would be the first developed nation to have open trade relations with the EU, which has completely open borders between its members but imposes steep trade and investment barriers on outsiders.

The proposed pact would far exceed the scope of older agreements such as NAFTA by encompassing not only unrestricted trade in goods, services and investment and the removal of tariffs, but also the free movement of skilled people and an open market in government services and procurement – which would require that Canadian governments allow European companies to bid as equals on government contracts for both goods and services and end the favouring of local or national providers of public-sector services.

Previous efforts to reach a trade pact with Europe have failed, most recently in 2005 with the collapse of the proposed Trade and Investment Enhancement Agreement.

But with the breakdown of World Trade Organization talks in July, European officials have become much more interested in opening a bilateral trade and economic integration deal with North America.

A pact with the United States would be politically impossible in Europe, senior European Commission officials said.

A newly completed study of the proposed deal, which European officials said Prime Minister Stephen Harper decided not to release until after the election, concludes that the pact would increase bilateral trade and investment by at least $40-billion a year, mainly in trade in services.

Ottawa officials say they have overcome what they see as their biggest hurdle: the resistance of provincial governments to an agreement that would force them to allow European corporations to provide their government services, if their bids are the lowest.

Although Ottawa's current list of foreign-policy priorities does not include European issues, European and Canadian officials say Mr. Harper has been heavily engaged with the proposed trade pact.

The two governments have completed a detailed study of the proposed agreement that will be unveiled shortly after the election, should the Conservatives win.

Both Ottawa and Brussels have had staff work on a draft text for a deal they had hoped would be introduced at a Canada-EU summit, to be attended by French President Nicolas Sarkozy, European Commission President Jose Manuel Barroso and Mr. Harper in Montreal on Oct. 17. France currently holds the rotating presidency of the EU, and Mr. Sarkozy has said that he hopes to make economic integration with Canada one of his accomplishments.

Last Wednesday, a top Ottawa trade official wrote to Mr. Mandelson to propose “the launch of comprehensive negotiations toward a closer economic partnership at the Canada-EU Leaders Summit, to be held on October 17,” and stressed that all 13 provincial and territorial governments had agreed to the proposed pact at a July 18 meeting in Quebec City.

Because of the election, Mr. Harper appears to have decided not to unveil a full text of the proposed agreement, but instead to use the summit to inaugurate the trade talks with the launch of a “scoping exercise” that will quickly set the goals of the pact and lead to formal “comprehensive trade and investment negotiations” to begin in “early 2009,” according to communications between senior Canadian and European officials examined by The Globe and Mail.

Proponents, including all of Canada's major business-lobby organizations, are in favour of the deal because it would open Canadian exporters to a market of 500 million people and allow the world's largest pool of investment capital into Canadian companies without restrictions.

Because Canada's fractious provinces have killed attempts at a trade pact in the past, Europe is demanding that Canada accept a more far-reaching agreement than Canada and Europe had attempted before, in an effort to win a stronger commitment, EU officials said.

Major “deal-breaker” conditions, officials said, include full agreement by all 10 provinces, especially on the issue of European companies providing government services, and what are known as “geographic indicators,” which forbid products such as champagne and feta cheese to be produced under those names outside their nations of origin. Controversially for Canada, this may soon be extended so only English producers can use the name cheddar on their cheese.
However, both sides agree that there is far more political will to negotiate a major deal, on both sides than there ever has been.

“I am far more optimistic this time than I've ever been in the past. … I feel very confident that we will be able to launch something on Oct. 17 that will give us a better chance than we've ever had before to get a full deal in place,” said Roy MacLaren, head of the Canada-Europe Round Table, a pro-trade business organization that has been heavily involved in the negotiations.

As a trade minister in the Jean Chrétien government and later as a diplomat, Mr. MacLaren was involved in several previous attempts at a Canada-EU pact.

Time for a two-speed Europe

By a roughly 7% margin, the voters of Ireland have narrowly rejected the ratification of the Lisbon Treaty that would have streamlined the administration of the European Union and given it the legal personality is has so badly lacked for so long. This has the practical impact, on the surface of it, of killing the Lisbon Treaty in its tracks: its ratification is incumbent on the agreement of all 27 current members of the European Union, bar none.

I do not believe it is in the interests of the EU, or the world, for the work of European integration to be halted at this point. It should, and must, continue. First the European Constitution was rejected, and now the scaled-back Lisbon Treaty is in jeopardy. My personal feeling is that European integration cannot be allowed to stumble and fall stricken to the ground on the basis of the Irish vote.

The principal problem has been the well-intentioned, but fetishistic insistence on unanimity in these votes. Given 27 different countries with 27 different cultures, histories, and attitudes towards the project of European integration, it is a recipe for permanent disaster and disappointment that can only result in cynicism about the project, and an ever-increasingly likelihood of its ultimate failure, which I believe the world cannot afford. Reality must finally be faced in this effort. Unanimity must be abandoned. Moreover, it is time to face the feared as the inevitable: the dreaded “two-speed Europe” must now become a reality. The time has come for the core nations of Europe to declare “We are proceeding. The rest of you may catch up as you please. But the time has come for those of us dedicated to European integration to go ahead without you.” It will be up to ‘slow’ European countries to consider their interests and either sign on to the project, or eventually fall away from the EU.

There is a historical precedent for this, and a great one. When the authors of the American Union proposed its constitution in 1787, they were not foolish enough to insist that the document be ratified unanimously by all 13 members who had agreed to the Articles of Confederation the new constitution was proposed to replace. Instead, they realized that some states might have reservations, legitimate or otherwise, and took that into account when they required that if nine of the thirteen states ratified the Constitution, it would then go into effect for those participating members. The other states would be left to decide their own fate, in or out… but their trepidation would not hold hostage the intention of those members willing to go ahead to do so. As we all know, those 13 states all realized where their real interests lay; they eventually all ratified the Constitution and went on to even greater things in the future.

This is the reality that Europe faces today. If Ireland is not ready for Europe, that does not mean that Europe must wait forever. It’s time for a two-speed Europe, and may the Irish have cause to reconsider.