(Title Image: Wales Online)
In previous parts, I’ve looked at the underlying requirements for foreign policy. This time it’s worth taking a detailed look at the foreign policy options in our immediate back garden.
This was originally written in August 2015 – when the EU referendum had only just started its formal passage through the UK Parliament. Obviously, the situation’s changed since then (heh) and, as of August 2017, the prospects of Wales rejoining the EU are slim to none. What’s certain is independence is now the only way Wales can ever rejoin the EU (or have a more formalised detatched relationship – like the EEA) for the foreseeable future.
- Wales & The World I: Our Embryonic Foreign Policy
- Wales & The World II: What’s the Welsh National Interest?
- Wales & The World III: The State Apparatus
- Wales & The World IV: Diplomatic Relations
The European Union Explained
- What Wales gets from the European Union
- Does Wales make the most of EU opportunities?
- Wales in Europe: What role do we play?
- The In-Out EU Referendum Bill
The EU is a supra-national organisation which could be considered a loose confederation. Nations cede or share sovereignty over certain policy areas to ensure rules are harmonised across the current 28 member states, which enables a single market to operate effectively. 19 member states also share the euro currency.
The EU has a combined population of over 500 million and a combined gross domestic product (GDP) of $18.2trillion. If it were a single nation it would have the largest economy in the world, comparable to the United States and China, but almost 4 times larger than Japan and 5 times Russia.
The EU has competence (decision-making power) over several areas of public policy. Some of these areas are exclusively within the remit of the EU, like:
- The customs union
- Monetary policy in relation to the euro
- Common fisheries policy
- Competition rules
Others are shared between the EU and its member states:
- Trans-European transport
- Research and development
- Consumer protection
- Some aspects of civil liberties and justice
- Some aspects of foreign policy and defence (especially within the EU itself)
The 2004 Lisbon Treaty established the three main parts of the EU’s structure:
- The European Council – Consisting of member states’ heads of government. They meet four times a year to set policy agendas and agree treaty changes/ratification. The presidency rotates every six months amongst member states. Currently, Wales is represented by the UK Prime Minister.
- The European Commission – Made up of one appointee from each member state and chaired by a President (currently Luxembourg’s Jean-Claude Juncker). They act as the EU’s “government” by proposing laws. Each commissioner is responsible for an EU portfolio in the same way as ministers in national governments. Wales has no representation.
- The European Parliament – Made up of directly-elected MEPs (currently 751), it sets the EU’s budget, debates and passes European laws (directives) and holds the EU Commission to account. Wales currently has 4 MEPs.
There are also supporting institutions such as the European Court of Justice (which adjudicates in cases involving EU law), Europol (cross-border police agency), the European Central Bank (ECB, based in Frankfurt), and the Court of Auditors (which monitors EU accounts).Wales isn’t a full EU member state and is represented by the UK, though Welsh Ministers have input into UK representations in areas of devolved policy. If Wales were independent and joined the EU, we would have a seat at the top tables.Joining the European Union
Anyone telling you with certainty whether newly-independent nations would or would not join the EU straight away is lying – it’s never happened before. There are no provisions within current EU treaties regarding secession from an EU member state. The only examples of constituent nations changing their relationship with the EU is to leave it, as Greenland (a constituent nation of Denmark) voted to do so in 1982. Crown dependencies like the Isle of Man and Channel Islands also remain outside the EU.
Despite the uncertainty, the Scottish Parliament’s External Affairs Committee undertook an extensive inquiry in the run up to the 2014 independence referendum (pdf).
1. The Requirements for EU Membership
Article 2 of the Lisbon Treaty outlines the constitutional requirements for prospective members, saying member states agree to cede or share sovereignty in certain areas of policy.The specific requirements – evaluated on a candidate-by-candidate basis – are outlined in the Copenhagen Criteria, a list of 35 policy areas which have to be harmonised to EU rules. These 35 areas include: free movement of goods and capital, competition and intellectual property law, fisheries and agricultural policy, tax and fiscal policy and things such as fundamental freedoms for minorities.
As the UK has to meet these criteria, Wales would have too by default prior to Brexit. For candidates outside the EU, like Turkey, the process takes longer – and would for Wales from 2019 onwards when the UK leaves the EU..
Member states wishing to join the euro have meet the requirements of the ERM II for a period of two years. So an independent Wales or Scotland wouldn’t be forced to adopt the euro as a condition of EU membership.
2. The Legal Basis
Witnesses agreed that Scotland wouldn’t fit the profile of a “transition country” – defined as a candidate for EU membership that has to go through the lengthy harmonisation processes to get to the level necessary to join the EU, like Albania, the former Yugoslavia and Turkey.Despite our economic problems, the fact Wales and Scotland have dealt with EU’s rules, treaties and procedures for a generation means both nations probably would be fit for EU membership from (near enough) day one.
The Committee determined there were two legal “paths”a newly-independent nation seceding from a member state could take to join the EU:
- The Article 48 Route – This was/is the preferred mechanism of the Scottish Government prior to Brexit. The Lisbon Treaty would be altered using revision procedures (to include Scotland as a member), then agreed by the other member states. This would happen in the period between a successful independence referendum and independence day, so negotiations would be undertaken by the UK Government on Scotland’s behalf. The process could start within days of a referendum and Scots would’ve remained EU citizens throughout. However, it places a lot of faith in the UK (or other EU members, like Spain) not doing anything to block the process – nation states tend to prefer the status quo.
- The Article 49 Route – This is the process by which all new member states are admitted to the EU. Any nation which meets the Article 2 requirements (outlined earlier) is eligible to apply for membership.This is based on a belief that previous treaty agreements no longer apply to states seceding from another state. This argument was used during Scotland’s independence debate by the UK Government and former EU Commission President, Jose Manuel Barrosso. The Scottish Government contend that Article 49 only applies to nations seeking membership when they’re already outside the EU.
3. How long could the process take?
Joining the EU requires an accession treaty between the prospective member and the EU, as well as ratification by all member states.The Scottish Government believe the process (under Article 48) could have been be concluded in 18 months – the period of time between a yes vote in the independence referendum and independence itself. However, the post-Brexit Article 49 route make take several years – perhaps even the best part of a decade.
4. Is Wales too small to be an EU member?
12 of the current 28 EU member states have a population of less than 6 million, and 7 of those have populations smaller than Wales (3.06million). Only 7 EU member states have populations at, or greater than, 20 million: Romania, Poland, Spain, Italy, the UK, France and Germany.The mean average population of EU member states is 18.1 million, though this is heavily distorted by that latter half-dozen. The median average population of EU member states is just 9.2million, so anything below this is probably considered “small”.
If England, Scotland and Wales were independent they would be the 4th, 20thand 22nd largest members of a 31-member EU respectively. Northern Ireland would be 26th (in a 32-member EU), though a united Ireland would be 17th (in a 31-member EU).
Why is population important? Because it determines the distribution of MEPs. The larger the population, the greater the number of seats. However, under the current system, no member state can have fewer than 6, or more than 96, MEPs. Smaller members are deliberately over-represented and larger members deliberately under-represented – a system called degressive proportionality, which undoubtedly favours small EU members (which would include Wales).
Presently, the UK has 73 seats – the same number as Italy, despite the UK having 10 million more people. Based on current apportionment to member states, you would expect the constituent nations to have the following number of seats:
The representation from nations that would make up the former UK (and subsequent influence in the European Parliament) rises from 73 seats to 92 seats (98 if you include Cornwall). So independence could not only result in greater representation from the Celtic nations but a much bigger voice for Great Britain in the EU – especially on matters where there are common interests, like fisheries.
This is based on a presumption that the EU Parliament would expand. If the number of MEPs remained capped at 751, then the apportionment for all member states would be reviewed, and the numbers I’ve given would be adjusted accordingly – perhaps in Wales’ case down to 6 or 7 MEPs, which is still more than we have now.
Based on 2014’s results, if Wales had the maximum estimate of 11 MEPs, the seats distribution would be (using this calculator) : Labour 4, UKIP 3, Conservative 2, Plaid Cymru 2.
How much would EU membership cost Wales?
Currently, Wales’ EU budget contribution is made via the UK on our behalf. By the EU’s own rules, its budget has to be balanced and is itself funded in three main ways:
- Traditional own resources – 75% of customs duties from non-EU imports. National governments keep the remaining 25%. According to HMRC figures from October 2014 (pdf), Wales raised £101million in customs duties for 2013-14, meaning £75.8million would go towards the EU budget, and Wales would keep the rest (£24.2million).
- VAT-based own resources – The EU Commission use formulae to generate a harmonised VAT base. 0.3% of this harmonised rate goes to the EU (though some EU members, like Germany, have a lower rate). Because the calculations are so complicated it’s difficult to determine how much an independent Wales would pay, but based on figures for similarly-sized nations, you would expect the Welsh contribution to be somewhere in the region of £70million.
- Gross National Income (GNI) based own resource – This is a set amount of member states’ gross national income (a slightly different figure to GDP) needed to balance the EU budget after customs duties and VAT have been accounted for. Based on the proportion of Irish GDP which went towards the EU budget (€1.53billion, or 0.834% of GDP) in 2014 (pdf p38 & 99), you would expect the Welsh figure (2012 GDP €69.9billion) to be £419.7million (€583million). Adjusted to take into account Wales’ relative economic weakness (about 98% of the EU-28 per capita) that falls to £411.3million.
Based on these figures, EU membership would cost Wales ~£558million per year, or £182.35 per head – which is probably an over-estimate considering the last known figures put it at €194 [£140] per head (presumably due to the UK rebate). Adjusting for those figures brings it down to £429.7million per year.
Wales would likely receive more back from the EU than we pay in (as is the situation prior to Brexit). Common Agricultural Policy (CAP) payments by itself are worth ~£250million a year to Welsh farmers and that’s before adding the (current) £275million a year from structural programmes like Objective One and the economic impact of trading in the free market.
Staying out of the EU
As of August 2017, this is going to be the default position as the UK (and Wales) voted to leave the EU in June 2016.
There are advantages to not joining the EU: greater powers over domestic policy (such as working hours, agriculture, fisheries etc), greater powers over immigration, no more EU directives, removal of a tier of government, freedom to pursue free trade agreements with anyone we want and saving the costs of EU membership.
My personal opinion is the advantages of EU membership outweigh(ed) the drawbacks; UKIP and some Conservatives – even some eurosceptic Welsh nationalists and socialists – argued differently and ultimately won. So let’s say Wales becomes independent then stays outside the EU, what are the alternatives?
- Join the European Economic Area (EEA) as a free-standing member – The EEA is the no-frills free market. Wales would therefore retain the benefits of the EU’s common market without the politics. However, to remain in the EEA, Wales would still have to comply with relevant EU legislation governing the free market whilst having no input into its development (because Wales would have no MEPs or representation on the European Council) and would still have to contribute towards the EU budget.
- Join the European Free Trade Association (EFTA) – The UK was a member of the EFTA until it joined the EU in 1973. EFTA membership would still ensure access to the free market/EEA, as outlined above, but it would also provide a much slimmed down version of the EU – no laws, no supra-national parliament and much cheaper membership costs (in the millions of pounds per year as opposed to hundreds of millions). However, despite Norwegian oil and Swiss fiscal acumen, it’s not the most prestigious trading bloc in the world. It would be like leaving the Champions League (EU) to play in the FA Cup (EFTA). Again, a contribution would need to be made to the EU to access the EEA.
- Sign bilateral free trade agreements with individual nations – The EU signs these agreements as a bloc (like TTIP). This ensures every member benefits, but it also means individual EU member states can’t take advantage of free trade opportunities under their own steam. If Wales opted not to join the EU, Wales could become a “mini-Switzerland” and sign free trade agreements on a case-by-case basis. For example, it would make sense to have a free trade agreement with Germany or France, but not Slovenia. The trouble is these treaties take ages to negotiate, and having to negotiate and sign so many of them in a short space of time will be a burdensome task – something the UK would have to do too if it voted to leave the EU.
Another option that emerged during the Brexit debate and its aftermath is the adoption of World Trade Organisation (Part VI) rules, meaning tariffs on exports and imports between Wales and the EU.
The British-Irish Council
The British-Irish Council (BIC) was established under the Good Friday Agreement as an inter-governmental organisation for the sovereign states, devolved nations and crown dependencies that make up the British Isles (or whatever you want to call the archipelago). Accompanying this is the British-Irish Parliamentary Assembly – which includes representatives from the National Assembly.
In 2012, the BIC established a permanent secretariat in Edinburgh.The BIC aims to foster “mutually beneficial development” between the nations and dependencies (although England and Cornwall aren’t represented). The BIC holds summits twice a year between heads of government and each “member state”takes responsibility of a specific work area. In 2013, the Welsh Government was responsible for early years education and social inclusion (jointly with Scotland), for example.
The BIC is essentially a talking shop. Its decisions and deliberations aren’t taken that seriously, and the only work areas where the BIC has had a tangible impact on policy are energy (cross Irish Sea and maritime supplies in particular) and education in minority languages.
It’s likely that independence for any of the Home Nations would result in changes to the role of the BIC. The nearest comparative body is the Nordic Council, which effectively acts as a “mini-EU” for the Nordic countries and their constituent nations like the Faroe Islands.
So in terms of reforms to the BIC, you could look at:
- Turning the BIC into a deliberative assembly like the Nordic Council, properly reflecting the political make up of the member legislatures. They could, like the Nordic Council, meet for a parliamentary session held over several days once or twice a year, with members nominated from their national legislatures.
- Create a separate Council of Ministers (for heads of government).
- Full representation for Cornwall and England.
- Grant the BIC a clear remit in certain areas, like the Common Travel Area (free movement between Great Britain and Ireland), cross-border energy and utilities supplies, mutual defence, fisheries patrols, intelligence-sharing, protection of minority languages, cross-border broadcasting, higher education co-operation etc.
- Consider a rotating presidency similar to the EU (proposed in Plaid Cymru’s manifesto during the UK election).
Council of Europe – Formed after the Second World War, the Council of Europe is a wholly separate body from the EU, focusing on human rights, democracy and the rule of law. There’s no political element to it and all member states retain sovereignty, with agreements sealed in legally-binding conventions. It has a Council of Ministers and a Parliamentary Assembly – Wales represented in the previous session by MPs Geraint Davies, Paul Flynn and Jonathan Evans. It’s funded by voluntary contributions, and a theoretical Welsh contribution would be somewhere in the region of €2million (£1.44million) based on 2014’s budget (pdf p217).The most famous convention is the European Convention of Human Rights (ECHR), which is enforced by the European Court of Human Rights. This is particularly unpopular amongst British nationalists as it undermines the supremacy of the British judiciary (see also – Devolution: Last Stand of the Human Rights Act?). Other conventions cover human trafficking, national minorities and basic rights and expectations for citizens. Other key pan-European organisations include:
- Eurocontrol – A pan-European air traffic control organisation that co-ordinates air traffic plans across Europe. It covers all of Europe except Russia and Belarus.
- European Patent Organisation – The organisation through which pan-European patents are granted.
- European Science Foundation – Self-explanatory. Usually, individual universities (or in the UK’s case, research councils) are members rather than nations. Wales currently doesn’t have a research council, but might with independence.
European Space Agency (ESA) – Again self-explanatory. It isn’t an agency of the EU and is currently jointly “owned”by 22 member states. Its headquarters are Darmstadt in Germany, while its launch base is in French Guiana in South America. Although the ESA has an astronaut corps, it has no independent means of launching manned missions.
The ESA’s budget in 2015 is €4.4billion (£3.2billion), made up of member contributions based on GDP. It normally takes several years to become a full member, but based on what Ireland pays (0.6% of the total budget or €18million), you would expect a theoretical Welsh contribution to be somewhere in the region of €12million (£8.6million).
Part VI moves beyond Europe and looks at Wales’ place in the global community, including the United Nations, other international organisations like the WHO and WTO and Welsh membership of the Commonwealth.