07/09/2013
Some interesting observations come from
Ruth Porter in the
Daily Telegraph under the headline, "We're foolish to assume that big business knows best about our trading opportunities in the EU". And, in the wake of the feline dishonest from
Lord Wolfson, we would find it hard to disagree with that observation.
Porter says it's no coincidence that some of the most strident business voices issuing dire warnings about the implications of leaving the EU are from big multi-nationals, such as Keith Skeoch, chief executive of Standard Life Investments, Sir Martin Sorrell, chief executive of WPP, and Peter Sands, the chief executive of Standard Chartered bank.
However, to judge from Ruth Porter's input, there is a huge temptation to assert that it would be equally foolish to assume that small business was any better qualified to pontificate about our trading opportunities in the EU.
In this, I was particularly taken with Mz Porter's comments about the effect of "a fundamental renegotiation of Britain's relationship with the EU". Asserting that a different relationship with the EU would most certainly not mean that companies in other countries stopped trading with us, she then suggests that if a fighter-pilot helmet manufacturer in Germany needed a certain component that is made best in the UK, it will continue to buy that part here.
It is fascinating that she should pick on an aviation component, and a military one at that. Production in this area is tightly bound by what is called "red-tape". The component would most certainly have to comply with national specifications, most probably joint (European) aerospace standards and â where applicable â NATO standards. Components for civilian aircraft would have to confirm with even more rigorous standards
But the point is that the trade would only take place if there was compliance with the relevant standards, which is a situation which would apply whether we were in the European Union or not - and most likely would be the same whether we were in or out of the Union.
Further, whether we are in or out of the EU, we will still need a system of regulation and, while companies in general might bitch about the rules, they are not the only players. The fate of
Turkish Airlines Flight 981, which crashed outside Paris on 3 March 1974, killing all 346 people on board, provides sombre testimony to what happens when regulator and industry get too close. The public and commercial interests do not always coincide.
Even then, and more so now across a far wider field - as we are continuing to point out - regulatory standards are established globally (and especially the case with aviation parts). As the trend towards global harmonisation gathers momentum, membership of the EU increasingly becomes an irrelevance when it comes to framing standards.
Inevitably, the workings of regulatory systems are always going to be complex. Necessarily, they tend to favour the larger firms which can spread compliance costs across a wider product (or service) range and enjoy the benefits of scale. But that is not always, or entirely the case. Small firms can often react faster to changes in the regulatory environment, and exploit niche markets while the lumbering multinationals are still pondering about the lunch menus for their next series of board meetings.
And there is also an upside to regulation. It should be recalled that one of the first attempts to introduce a formal system of meat inspection in the UK came in 1922 at the behest of the meat industry. This is evidenced by the Ministry of Health "Circular letter and memorandum on a system of meat inspection⦠for adoption by local authorities and their officers" (Circular 282). It referred to a "recent report" of the Departmental Committee on Meat Inspection, and drew attention to:
â¦the fact that there exists considerable diversity as regards both (a) the amount of meat inspection actually carried out in different districts; and (b) the standards of judgement and practice of individual inspectors.
Not least of the reasons why this situation was unsatisfactory was:
⦠lack of uniformity in these matters has the effect of imposing unequal liabilities on traders according to the standard of inspection adopted, and in localities where little or no inspection is carried out serious embarrassment is caused to honest traders owing to the absence of any check on unscrupulous traders.
It thus became the traders themselves who were the driving force behind establishing the entire system of regulation. Going back to aviation parts, a properly working regulatory system - which includes policing to root out counterfeits - protects not only the public but also
bona fide manufacturers and dealers, airlines and other users.
Then, at an international level - as we saw with
fisheries products - a common standard facilitates trade and actually reduces overall the costs of doing business. By no means everything about regulation is bad. To a very great extent, it is the lubricant which enables trade. Compliance costs are, therefore, a necessary price of doing business.
But how national and international regulatory systems work have, or should have, very little to do with the way we are governed. The fact that they are so closely linked in EU member states is the result of a confidence trick inspired by Jean Monnet, who devised a way of securing the political integration of Europe, disguised as economic integration. He and his successors hijacked the international system of trading regulation for their own purposes.
Thus, the great need is to decouple the formulation of trade rules from our general system of government. The one should not depend on the other. We do not need to subsume our Parliament and our laws to Brussels just so that we can trade internationally in aviation parts. The issues need to be decoupled.
But decoupling will not magic away the entire international regulatory system. It will still exist, and would have have existed even had the EU never been invented. Then, as to whatever regulatory system is devised and maintained, businesses â whether large or small â have a valid claim to be consulted and to be involved in the practicalities of their framing and implementation.
But as to the larger issues, the type and nature of our general governance, this â so to speak â is not the business of business. Business may have a right to expect a stable and predictable regulatory environment - insofar that this can be assured - but no business has any right to dictate how we, as a people, are governed.
That, of course, includes considerations of membership of the European Union. When it comes to whether we stay in or withdraw, as far as business is concerned, our message to these opinionated captains of industry should be: this is none of your business.
Membership is not an economic issue - it is a political issue. Lord Wolfson - who has been so voluble on this matter - should climb back in his box and concentrate on selling his knickers - or whatever it is he does. As a shopkeeper, how we are governed is not his business
COMMENT THREAD
