3 February 2015

Size matters: why Britain must fight for a pro-market EU


“If size were all that counted” my friend Dan Hannan writes, “China would be wealthier than Hong Kong, Indonesia than Singapore, the EU than Norway”. History has shown us, on each occasion that we have given it the opportunity, that a free and open society with a free and open market will always be more successful than a society that erects barriers to innovation, expression, and human ingenuity. On this point, he will find no argument from me.

But while size is not everything, it counts for much more than he readily admits. China may not be as wealthy as Hong Kong, but it exerts a much greater influence on world events. For global businesses, bringing products to market in the EU and China is much more important than bringing them to market in Hong Kong and Norway. Scale does not guarantee you success, but it does guarantee you influence – and to truly compete in the global marketplace, influence is a currency worth more than dollars, euros, or yen.

For this reason, and many others, Dan’s attitude to the EU is strategically and economically mistaken. His concerns spring from the same well that mine do – I know we both loathe the bureaucracy, the arrogance, the regulatory capture, and the contempt for democracy that have seeped into the heart of the European Machine in Brussels. As an MEP, he sees it every day. As an entrepreneur and a citizen, I feel its effects from afar, but am no less conscious of all that is wrong with the European project. There is no question that many of the policies enacted in Brussels should offend and repulse those of us who value liberty, enterprise, and champion free market capitalism.

These problems, however, will not be addressed by simply walking away. Europe, with its half a billion people, will always be one of the world’s great marketplaces. For all that we may disagree with the establishment in Brussels, it is, ultimately, correct in the basic assertion that Europe is much stronger and more influential united than it is as a loose collection of member states. Britain has a choice between directing and influencing one of the world’s great economic powers from within, or being influenced from without.

That last line is, of course, the simple argument against leaving – it will be repeated endlessly, along with threats and warnings from a European political class that has forgotten how to sell the very idea it exists to defend, in the hope that enough Britons will get cold feet and accept the status quo. I fear that in taking such a path, they will ignore the very character of the British people and help to create the very outcome they seek to avoid. The case for staying in Europe must be more than “you will suffer if you leave”, and the European Union must aspire to being more than a domineering and abusive spouse if it wants to save its relationship with the United Kingdom, or any other member state.

I can think of no other way to explain this except by writing from personal experience. I am an entrepreneur, and an inventor. The company I founded possesses more than 15 unique patents, and many more are pending with the U.S. Patent Office. They were not, you will note, granted by the European Patent Office, as that institution, despite nearly 40 years of effort, is still not a fully functioning Europe-wide institution. To patent my technology in Europe I would need a legal department the size of a small law firm working on the process in multiple languages to serve 28 different markets. In the United States, one patent guarantees the exclusivity of my technology in a market of three hundred million. In Europe, today, though thanks to the EU not for much longer (we may hope), one must apply for 28 different patents for 28 much smaller markets. Where would you patent your ideas, based on those numbers? As a telecommunications entrepreneur bringing a new technology to the market, I look for the largest market with the fewest barriers to entry. The European Union, for all its flaws, has done more to reduce barriers to entry to the European market than any conceivable alternative could have achieved. For all of that, however, there remains work to be done.

And so, there are those in the EU, to their credit, working on patent reform. A single European Patent issued by the European Patent office and enforced union-wide via a Unified Patent Court of Europe will open up to new technologies, in a simplified process, a market larger than the United States. European intellectual property rights will in one sweep be enforceable across the entire 28 member states, and at least one major barrier to doing business in Europe will have been torn down. It is essential that Britain helps drive this process forward by being a strong advocate for enterprise and free markets inside the European Union. The ability to access the single market is one thing, the ability to influence it in key ways like this is another. Regulatory standards for industry and business are a fact of life, and they are necessary. The idea that British companies could sell into the European Union without adopting those regulatory standards is obviously absurd, which means that Britain will be living with EU law whether it is a member of the EU or not. Britain will be forced to adopt European standards or sell its goods elsewhere, because Europe is a market that Britain simply cannot ignore.

It is not a good sign when the most attractive places that Dan Hannan can compare a United Kingdom outside the European Union to are Norway, Hong Kong, Switzerland, and Singapore. The United Kingdom is a nation with a proud history of influencing world affairs, and has assuredly exerted more influence over the history of the Continent than almost any other nation. The Eurosceptic argument, whether they accept it or not, is a cry for headlong retreat from the place where Britain can exert the greatest influence, and from where it can do the greatest good. The British instincts for democracy, for property ownership and free markets and towards the conservation of the ancient liberties of man are impulses that Europe now desperately needs, and as a European convinced of the need for radical reform of the European Union, I am acutely aware of the need for Britain to become an a leader in that fight.

The problem with Dan’s argument that Britain could become like Norway or Switzerland is not that he is wrong, but that he might be right. I do not want to see Britain become a diminished player on the global stage, sitting off the coast of Europe like a trawler next to an aircraft carrier, and nor should any Briton. As a free marketeer and a conservative, I want to hear the voice of British common sense around the European table, fighting stupid regulations before they become laws that its island people will feel the effects of in any case. Britain’s voice will never be stronger than it is in the EU, and her influence will never be more amplified than when it is exerted through leading membership of a marketplace of five hundred million.

Influence and size matter, not merely in business but also in politics. All things being roughly equal, no capitalist or businessman would choose a market of sixty million over a market of five hundred million. No global trade deal will be reached with the critical input of the Norwegians or the Swiss. For Britain, and for all of us who consider ourselves defenders of freedom, markets, and liberty, our best chance to bend the arc of history further in our direction lies on the continent. Those who oppose our vision for the world currently control too much of Brussels, and we must wrest that city and its dysfunctional institutions from them, rather than retreating from it.

Declan Ganley is a telecommunications entrepreneur, inventor, businessman and political activist. He is currently the Chairman and CEO of Rivada Networks.