Friday 16 May 2008

Arguments of Lisbon No Camp built on Sand

There have been some very impressive and eye catching claims made by the various factions within the No Camp. In some cases their argurments are made very professionally, are bolstered by quotes from the Treaty and often look entirely plausible. I have found, however, that in all cases that I’ve seen so far, when you dig a little deeper, you find that these impressive edifices are build on foundations of sand. The technique is usually to misrepresent the content the Treaty or to use sleight of hand to shock the reader into thinking that behind the Treaty there is a vast and hidden agenda in which both the Yes camp and the referendum commission are complicit. Another tactic is to imploy the notions of sovereignty and nationhood in an evocative way that obscures any reasoned argument about the value of our place in the Union and about the need for deep and substantial international cooperation in a world dominated by big players. In turn I will now examine some of these claims.

Corporate Tax

Let’s start with taxation. It’s widely cited by the No camp that Lisbon will lead to tax harmonisation which we all know would be detrimental to the Irish economy. For example, the Libertas campaign has the following Slogan on its buses “don’t let Brussels set our taxes!”.

First, there is no provision in the Lisbon treaty to allow the Union to alter corporate taxes without unanimity. The EU already has competence in the area of taxation, but it will remain under the unanimity rule. In the consolidated Treaties (as they’d appear after Lisbon) there is specific competence given in the area of indirect taxation, but even here, unanimity is preserved:

The Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition. [ Consolidated TEU, Art. 113]

Where ‘turnover tax’ essentially means VAT. Note that this provision is specifically dealing with indirect taxation. Corporate tax is a direct form of taxation so there is no question of it being imposed without getting further consent from the member states. In fact, so sensitive is the area of taxes that even the area of Energy, which was introduced in Lisbon and is normally decided by QMV, any possible fiscal implications were specifically ruled out without getting the consent of all nation states:

The Council, acting in accordance with a special legislative procedure, shall unanimously and after consulting the European Parliament, establish the measures referred to therein when they are primarily of a fiscal nature.[ Consolidated TEU, Art. 194]

This approach applies throughout the treaties. Again, for example, in the area of environment, matters relating to taxation are to be decided using unanimity. In short, Lisbon does nothing to damage our low corporation tax rates.

Proposing Commissioners

Another area which has been highlighted by the No camp (particularly by Anthony Coughlan) is that the treaty changes the way nation states select a commissioner. First, the phraseology always used is “Ireland will loose the right to a commissioner”. In fact, the treaty states that although only 2/3 of states will appoint a commissioner for any one term, this operates on a strictly equal basis and in a manner which seeks to ensure a demographic and geographic spread. Furthermore, a commissioner is an officer whose remit is to promote the interests of the Union, not of member states:

The members of the Commission shall neither seek nor take instructions from any Government or other institution, body, office or entity [Consolidated TEU Art 17.5].

Any Commissioner which violates this can be forced to resign by the President of the Commission. Furthermore the commission as a body is responsible to the democratically elected European Parliament.

Mr. Coughlan makes much of the change in wording from using the verb “propose” to the form “suggestion” in relation to how commissioners are appointed. His implication is that that Council and Parliament can ignore our suggestion and then select whoever they want. But the text is clearer than that. They shall be selected…on the basis of the suggestions made by Member States [Consolidated TEU 17.7]. There is no escaping the suggestions by the member state. Clearly, as has happened before in the case of Italian commissioner designate Buttiglione, the member state may suggest an entirely unsuitable candidate whose tract record is incompatible with promoting the interests of the Union. In the Italian case, the MEPs threatened to veto the appointment and the designation had to be withdrawn. The process was fully democratic.

Workers’ Rights

The Socialist Party of Joe Higgins are voting No because they claim Lisbon will be bad for workers’ rights. This, the argument runs, would be par for the course because the EU has done little for workers anyway. Instead, as their web page points out, the socialists argue for “a democratic, socialist Europe of workers” to replace “the capitalist club that the EU is.” Leave aside the ideological debate here. Let’s look at the history of workers rights in Ireland since our membership of the so-called capitalist club. Where the title of the Act doesn’t make its provisions broadly obvious, I have added some explanatory text and in each case I have noted if the Irish law was the implementation of a Union directive.

Ireland Joins EEC 1 Jan 1973

The Holidays (Employees) Act 1973 - increased annual leave from 2 to 3 weeks

The Minimum Notice and Terms of Employment Act 1973 – right to a minimum period of notice before dismissal

Anti-Discrimination (Pay) Act 1974.

Employment Equality Act 1977 implemented the 1975 Equal Pay and the 1976 Equal Treatment Directives

Unfair Dismissals Act 1977

Protection of Employment Act , as amended in 1996 and 2000, implementing Council Directive 75/129/EEC which puts an onus on employers to enter consultation with employees representatives in the case of collective redundancy and to notify the relevant authorities.

Terms of Employment Act 1994 – Directive 91/533/EEC which puts an onus on employers to make conditions of employment clear and specific

Maternity Protection Act 1994 92/85/EEC

Adoptive Leave Act 1995

Protection of Young Persons (Employment) Act 1996 94/33/EC

Organisation of Working Time Act 1997, 93/104/EC – clarifies conditions on working time, minimum rest period, maximum shifts

Parental Leave Act 1998 – 96/34/EC

Employment Equality Act 1998 - the purpose of which was to outlaw

discrimination in employment on nine separate grounds (gender, marital status, family status, sexual orientation, religion, age, disability, race and membership of the Traveller Community) thus further implementing Directives 75/117/EEC and 76/207/EEC and anticipating Directives 2000/43/EC and 2000/78/EC

National Minimum Wage Act 2000

Carer’s Leave Act 2001

Protection of Employees (Part-Time Work) Act 2001, the purpose of which was to transpose Directive 98/81/EC and Directive 96/71/EC. – on working in hazardous environments, and entitlements of workers posted to Ireland from other member state

Protection of Employees (Fixed- Term Work) Act 2003, the purpose of which was to transpose Directive 99/70/EC. – equal treatment of fixed term contractors

European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003, the purpose of which was the transposition of the mandatory requirements of Directive 2001/23/EC – protection of employees in mergers, acquisitions, and bankruptcies

In short, after Ireland’s accession to the Union enactment of workers’ rights legislation in this country accelerated. Many of those protects were directly as a result of EU measures. Even recently many of our protections for workers, especially part-time or fixed-term workers have been driven by EU measures. The picture is clear – the EU has been an overwhelming sponsor of workers rights.

It is true that the EU has attempted to promote competition in the services area by making it easier for workers to cross borders, notably via the famous services directive of 2001 which aimed to allow companies to maintain workers in another country for a temporary period on conditions of the country of origin. It should be understood that services remains an area that is stubbornly closed to competition and which as a result is highly uncompetitive internationally and is, quite simply, ripping off the local consumer. But even here, the EU measures were both limited and controversial and in the end the final measures were so watered down that they remain completely insignificant. Overall, nothing promoted from the angle of competition has undone the huge body of workers’ rights that the Union has promoted and accumulated over the years.

Health Strategy

Many No campaigners argue (the socialists, and members of the Peace and neutrality alliance) that the Lisbon’s provisions on competition will break open our health services to the private sector and make health care a product not a public service. (Let’s ignore the fact that the elected representatives in many countries with public services to put ours to shame, have negotiated, agreed, and ratified the treaty)

The crux of the argument here is competition. First, the provisions for competition and its central place in EU economic thought is already there. Lisbon does not create it, nor significantly enhance it. It is already explicit. Voting No to Lisbon will not undo it.

Second, our health services, again without and before Lisbon, have already been opened up to the private sector. This was not the fruit of some EU capitalist club, but the direct result of the ideology of the Irish government, particularly that of the PDs.

Third, the treaties include specific provisions on health. Many of them are related to disease control measures or promoting public health. But the Treaties single out health as a sensitive area where the Member state should have prime place and freedom to act:

Union action shall respect the responsibilities of the Member States for the definition of their health policy and for the organisation and delivery of health services and medical care. The responsibilities of the Member States shall include the management of health services and medical care and the allocation of the resources assigned to them [ Consolidated TFEU 168.7]

In short, Lisbon does not alter the fact that our shabby two-tier health service is entirely of our own making and fixing it will remain a job for the Irish nation, its representatives, and the employees in the service.

Constitutionality, Independence and the Superstate

There are two issues here. First, the allegation by the No camp of sleight of hand employed when talking about the change to the constitution and second, the issue of whether the EU is a state and Lisbon a constitution.

Anthony Coughlan has argued that the referendum commission is failing in its duty to inform us about Lisbon because it has not told the Irish people that we will have a new subarticle 11 in article 29.4 which states that :

No provision of this [Irish] Constitution invalidates laws enacted, acts done or measures adopted by the State that are necessitated by membership of the European Union referred to in subsection 10° of this section, or prevents laws enacted, acts done or measures adopted by the said European Union or by institutions thereof, or by bodies competent under the treaties referred to in this section, from having the force of law in the State

True, that will be the text of the new subarticle 11 if Lisbon is passed. What Mr. Coughlan fails to say is that this is already in our constitution as article 29.4.10 and is only being moved down to article 11 to make way for the clause on the ratification of Lisbon which logically would go into article 10, just after the other clauses on the earlier treaties. So the general clause, as quoted here, simply moves to the end of the list in this subsection. Once again, voting No to Lisbon makes no material change here. We retain the above clause to prevent constitutional challenges to each piece of EU legislation which comes along under areas of competence which we have already agreed to give to the EU.

The next issues is that the No camp argues about whether Lisbon is a constitutional treaty and if the EU is a superstate. Again PANA and Coughlan are to the fore in these arguments.

A constitution is a set of rules for a system of governance. When we joined the Union we agreed that some functions of government (government being the authority to make laws and administer them) would be taken by the Union on our behalf. We entered this system eyes open and our experience so far has been overwhelmingly positive. By definition the entire list of Treaties signed so far comprise a constitutional framework for the Union. They are its rules, they set out how it works. No more, no less.

Certain factions of the No camp attach an almost mythic meaning to the notion of the nation and of the state. I think you see where I’m going here. For them the nation and the state are sacred concepts. If you’ve followed the piece this far there is no need to remind you where this kind of ideological dogma has led in the past. If you can remain a little pragmatic and level headed about it, I would propose that a state is a political association with sovereignty over a defined area. Under that definition, yes, the EU is a state. But let’s add the qualifiers we know belong here. It is a voluntary political association with limited sovereignty given to it by its members to promote their interests as a collective.

Moving on to independence – another sacred cow for the No camp. First, this is not 1916. We live in the 21st century where the world is tightly interconnected and interdependent as never before. A multipolar world is emerging where the major issues, such as global trade and climate change, are decided by a small number of big players. Though new in depth and extent, the picture of dominant players controlling the international scene is not as new as we think. The modern world was ever thus. Alliances and clashes of the Great Powers characterised the development of the modern world from the Teaty of Westphalia of 1648. But key here is the acknowledgement that, with one twentieth of one percent of the world’s population, a minuscule nation such as ours needs to be part of something bigger. We are one of the most globalised nations on the planet, which for the most part has been to our great advantage. Independence today, therefore, is a chimera. In theory we could attempt to go it alone, and push our bow straight into the great waves of globalisation. Or we can travel in convoy with the European Union, where we have good reason to hope that, certainly not all, but most of our key interests will be protected in a Union where human rights and civil liberties are probably better protected than anywhere else on the planet.


WorldbyStorm said...

Interesting points you raise, and I'd broadly concur. Latest anti-Lisbon meme doing the rounds? That tax harmonisation will be introduced by the backdoor by an inner core of countries...who would then force repatriation of taxes on companies owned by them based in Ireland, or alternatively on companies owned outside of - say France with sites in Ireland and France. Now to me that doesn't make sense. For example, how would it affect a US based company which wanted a foothold in Europe? It wouldn't... it would simply stay in Ireland and continue to sell into the inner core.

Jonathan Brazil said...

I may be open to correction on this and if so then please don't hold back in slamming me as I'd hate to become one of those who spreads the unfounded word. However, in relation to tax issues, perhaps I'm mistaken but from my reading of the treaty and surrounding documentation it is possible that this will happen as a de facto harmonisation. Tax hamonisation is perhaps a bad term, chosen by many purely because it gets the point across without making it sound too complex. My take however, is that this "harmonisation" can effectively be brought about by the EU being able to deem Ireland's low corporation tax rate as being unjustified in line with EU laws. It can do this by making the call that differences in taxation between countries in the EU are a barrier to free and unbiased competition within the EU. It doesn't explicitly introduce a new tax rate for all member states as would probably be more descriptive of harmonisation but it does provision for such a ruling to be made, especially considering that the ECJ would be a higher authority than our national parliament on this issue of competition within the EU. If I am wrong please set me straight, it is a big document and body of supportive text to fully understand in its entirety.

Also in addition to your debunking of many no arguments which I happen to agree in part with even though I will be a no voter, it would be nice to see you equally debunk some of the ridiculous yes arguments such as more jobs, better life, EU chaos if we vote no, etc, etc, etc. These arguments are even less tangible than some of the whacko no arguments and are seriously misleading to the public who need to make individual decisions on how they want to be governed and not what Irish party they want to side with.

Tomaltach said...

Thank you for taking time to comment.

I see your concern in relation to tax. I would point out though that th e ECJ makes decisions based on the content of the treaties and existing case law. No existing case law allows it to force a decision on taxes. This is the case because the treaties have been clear about taxation (including Lisbon). Taxation is so sensitive that whereever it arose several member state insisted that it be ring-fenced with unanimity. So the jurisprudence if you like, regarding taxation is that all states must agree. The ECJ cannot overrule that core principle that appears throughout the treaties.

Of course, this does not take away the fact that some largers states and the commission view a consolidated tax base as a key future enhancement of competition. The one way they can move in that direction is using the 'enhanced co-operation' provision (whereby a subset of states might do their own tax consolidation). But that provision exists since Maastricht, was clarified in Nice, and retained in Lisbon. So Lisbon opens no doors there that didn't exist already.

With or without Lisbon the struggle over consolidated tax in part or all of the Union will remain. But Lisbon doesn't alter it one way or another.

You are right that there is much scaremongering in the Yes camp as well. The sky will not fall if Lisbon fails. But I think it is naive to think that there will be no consequences if a reform proposal fails which the Union has worked on for a decade. Many of the ideas in Lisbon date at least to the late 90s and have been fleshed out painfully over the last 10 years. If it is blocked, no Ireland will not face sanctions, but the general EU will appear to be unable to reform itself without paralysis. Let's face the reality, in the EU, as in the International system in general, the bigger states are the movers and shakers. And the bigger states have seen EU reform as important for their and for EU interests for a long time. To say the least they will not be happy if it fails. It is likely that if they feel a few protocols to deal with Irish concerns cannot get it passed, they will decide that some of the reforms must go ahead anyway, perhaps in a slimmed down version which could be put to Ireland in a more digestable manner, or else, more worryingly, as enhanced co-operation. On the face of it, the small states in the negotiations got most of what they wanted. Enhanced blocking power, and equal status at the commission (let's not forget the big states felt it ridiculous that say Malta would have the same input at the commission as say Germany. They wanted to give 'junior' commissioners to smaller states. But the smaller state prevailed and access to the commission will be equal.)

Let's not kid ourselves - we are 0.8% of Europe's population. Large forces are at play here. One way or another we are not going to be able to stop a train that is more than 100 times our size. The small states are getting the best deal possible. We should seize it.

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