The European Union Membership Explained

I, like many, have had enough of hearing about the dreaded “B” word. Brexit is like an annoying sibling who won’t leave you alone or the weird stalker that seems to emerge from nowhere when you least expect them. BREXIT is everywhere, in the hashtag on social media or in the news, on pamphlets, and in the elections, and it will not be over any time soon no matter who wins the December 12th election.

On June 23rd, 2016, British people voted in the EU Membership Referendum with not a shred of information on what it means to be a member and what it means to leave. David Cameron, a Prime Minister at the time, irresponsibly issued the vote not having done his homework first. Boris Johnson campaigned on lies that would see UK get "back £350 million" ($452 million) to pump into National Health Service (NHS), which is a bottomless pit. Surely, that money would have to be shared with farmers who would lose out in EU subsidies, and not to mention the science fund that would lose out with Brexit.

The referendum was issued unprepared to an uninformed public. The results were: Leave received 17,410,742 votes equaling 51.89% and Remain received 16,141,241 equaling 48.11%. The population of the UK is 65.648 million.

Many of those who voted to leave are either right or far-right groups, pensioners who longed for the independent UK, Conservative youth, some immigrants, and of course, many of the rich, especially the aristocrats like the Conservative MP Jacob Rees-Mogg. The vote was predominantly against EU immigration. This was most evident with attacks on the Polish community right after the results came out. My English neighbor asked me, "will you be going back to your country now?" Only because I speak with an accent, but if she could speak as many languages as I do, she would also have an accent. "No, I won't be going back to my country," I responded, "because your country's politics destroyed my country, and all I got out of it is the British passport." It certainly permanently shut her up.

The amount of racism that erupted in the UK after Brexit became mind-boggling. A rather large number of British people grew openly racist towards immigrants as if it was open season — more on this in my next article.

Those who voted to get rid of immigrants are mostly those who don't even want immigrants jobs to begin with. Many companies who once employed Eastern Europeans can't find their replacement, because those Vote Leave Brits don't want to work when they can get more on welfare. Prices shot up, and businesses are losing out. Car factories are either closing or threatening with closure because they want to continue to trade under EU rules, and many of those who work in those factories voted for Brexit.

Yes, I agree, immigration should be controlled, but not by leaving the EU. The UK isn't the only member state that faces immigration crises. My EU friends have complained about it in Germany, Denmark, and France. But in the UK, the problem is not only the immigration from Eastern Europe but also from Italy, Spain and Portugal whose citizens can hardly grasp a level of English language needed but are getting employed faster in the NHS where they should be able to speak fluently. Some even in the British parliament where they cannot form a sentence. They aren't getting those jobs on their merit but from friends already working in those places. So yes, immigration is an issue, and it should be a points-based system, but it should not be the reason to leave the EU.

But what are the benefits of staying in the EU:

What is EU membership?

The EU is a political and economic union currently consisting of 28 states. These states have met various obligations by adopting various laws and regulations to be members. For the EU to adopt policies that concern defense and foreign affairs, all member states must agree unanimously. So, no state tells the other how to run the above in their countries. However, there is a time when the EU plays politics and allows a country to join the EU even when that country does not meet all obligations or when its GDP is not up to the task. Greece, for instance, was not economically stable to join, but as the EU likes to play politics with Turkey, Greece's arch-enemy, the membership invite was extended to Greeks. Croatia was another country that was deep in debt when it became a member state even though it was not ready. Croatia borrowed enormous amounts of money to fix the country. It owes back more than entire Yugoslavia before the 1990s wars. Under the EU membership, Croatia was forced to close its shipping yards after joining, making even more people unemployed.

How big is the EU Economy?

EU is considered to be the largest economy in the world whose GDP was estimated in 2018 to be $18.8 trillion. However, some have argued that the U.S. is the largest economy because America is a country while the EU is a trading block. But as a member of this economic might, the UK has significantly profited. Britain joined the European Economic Community, as it was known then, in 1973. Although it was lagging behind France, West Germany and Italy, whose gross domestic product per head was at 95% while Britain's was 50%, it soon caught up, and in 40 years it grew faster than the above mentioned three countries. By 2013 Britain was more prosperous, the first time since 1965 than the other three.

What is the Single Market?

Not only have I worked with this, but I also studied the law and economics behind it. So let me explain it:

Single Market is a trade agreement between EU member states, which makes trade amongst them by removing tariffs, quotas, or taxes on trade between member states. It allows for the "Four Freedoms" - free movement of goods, services, capital, and people. This is a non-negotiable agreement for any country that wishes to become a member state. Other trade barriers are also removed in this agreement – different rules on packaging, and product standards. It also strives for equal regulations like working hours, health, and safety.

However, if the UK leaves this block, it will automatically fall into the Word Trade Organization (WTO) rules.

But what are they?

Firstly, when WTO is in place, it is for countries that do not have trade agreements amongst themselves and therefore have to trade under WTO rules.

WTO Schedule - Each country has a list of tariffs (taxes on imports and goods) and quotas (limits on a number of products) that apply to other countries.

So, if UK trades under WTO, that means cars would be taxed at 10% when they cross the UK-EU border, while agricultural tariffs would be set at 35% for dairy products.

The British government did say they will introduce a temporary measure for the tariff issues, but under WTO, the UK cannot just lower tariffs for various countries or the EU if it doesn’t have a trade agreement in place.

Worst yet, the moment the UK leaves the EU, the EU is within its right to check products at its border coming from the UK. This would create significant queues at the borders, and Germany has already said its food producers won't bother exporting to the UK because of that. Prices will increase due to tariffs, and there may not be as many products in the UK as there once was until the UK can sort out some sort of recognition agreement. And the service sector, which makes about 80% of the UK economy could be hit hardest.

Currently, the U.S. has 20 agreements with the EU, while the EU has 40 agreements with 70 countries. If the UK leaves with No Deal, it is working to replicate those deals. However, the trade agreement with the U.S. would take a long time despite what President Donald Trump says. For instance, the biggest obstacle Johnson is facing, if he wins next month's elections, is that people oppose selling NHS to American pharmaceutical companies, which will most definitely form part of the U.S-UK trade deal.

How much did the EU cost the UK?

Margaret Thatcher, possibly the only competent negotiator the UK has ever had, successfully negotiated a rebate in 1984, which means London sent £13 bn ($16.8 bn) to the EU in 2015. While the UK receives £4.5bn ($5.8 bn) from the EU in regional aid and agricultural subsidies. The private sector received a further £1.4bn direct from the EU budget. So, the net cost of the membership is £7bn ($9 bn). According to the Office of National Statistics:

“In 2018, the UK's gross contribution to the EU amounted to £20 bn ($25.8 bn); however, this amount of money was never actually transferred to the EU. It is best thought of as a theoretical liability. This is because before the UK government transfers any money to the EU, the adjustment (or abatement) is applied. In 2018 the UK abatement was £4.5 bn ($5.8 bn). This means £15.5 bn ($20 bn) was transferred from the UK government to the EU in official payments. But this only accounts for the money that the UK pays to the EU – some of this £15.5 bn is credited back to the UK public sector, of which a proportion is then paid to the private sector. The EU pays money to the UK public sector to administer what are known as “shared management” programs. Under these, the EU makes payments to the UK authorities, which are then distributed in accordance with EU rules, for example, to farmers. Given these figures, the ONS reports that the UK government's net contribution to the EU – that is, the difference between the money it paid to the EU and the money it received – was £11 bn ($14.2 bn) in 2018 compared with the £20 bn theoretical liability.”

When we weigh Leave against the Remain, the above is leaning more on Remain than on the Leave. But the British Conservatives like Jacob Rees-Mogg would prefer a swift exit because, from January 2020, the EU will introduce a Tax Evasion Regulation, which means there will be a compulsory declaration of offshore accounts and the tax paid. This, of course, does not bode well for the wealthy Conservatives like Rees-Mogg. So, while his party taxes hard-working people, wealthy hide their money offshore, even Queen Elizabeth does it.

And any power the UK had in the world is slowly diminishing. Not to mention that the UK doesn't own anything that can be leveraged in trade deal negotiations with the U.S., and Americans know this. The UK will be a loser in this game, that is even if the US-UK trade reaches Congress, where Speaker Nancy Pelosi said it wouldn't have a chance if it causes crises in Northern Ireland.

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