Issues

Making the most of Europe

david-lidington1 The European Union needs to drive up its competitiveness and trust national parliaments with more powers, Europe Minister David Lidington tells Peter Cheney. The former Shadow Northern Ireland Secretary also calls on the province to maximise its gains from the G8 summit.

Belfast’s post-Troubles recovery was starting to take shape in 2003, when David Lidington became Shadow Northern Ireland Secretary. Ten years later, he is back as Minister for Europe and meeting agendaNi in the New York Stock Exchange’s city centre offices.

“There’s a real test facing Europe,” he states, adding that this is partly economic and partly political.

Lidington continues: “What we face now is both the unwinding of a spending and borrowing binge that went on for a decade and a half by governments and the private sector, and that causes hardship, and at the same time this historic shift of global economic power to the emerging economies of Asia and Latin America.”

If the next generation of Europeans is to enjoy the living standards that we take for granted, Europe “has got to get more competitive and it’s got to raise its game fast.”

He recognises that people are sometimes frightened by the impact of globalisation but there are no easy answers: “You cannot preserve the current state of the global economy in aspic. It is going to change and we need to show that Europe can grab the opportunities of selling to these millions of new consumers in the emerging economies.”

The single market is still “far from complete” as the Services Directive is not properly implemented by all member states and further liberalisation is needed. The EU also needs a single digital market. Last year, 40 per cent of people in the EU bought something online but only 10 per cent of those transactions crossed a national frontier.

Harmonising copyright rules and consumer protection rules and payment mechanisms would promote more online trade. The EU is already at a disadvantage compared to the USA and China and India will soon be developing large digital economies.

On free trade, the EU has started negotiations with the USA. Barack Obama announced his support for an agreement (the Trans-Atlantic Trade and Investment Partnership) in February and this is “top of the agenda” for David Cameron and Angela Merkel.

“If we get that, that will increase the opportunities enormously for business in Northern Ireland [and] throughout the EU,” he comments. Sceptics, though, often claim that free trade benefits large corporations but not necessarily small businesses.

Lidington doesn’t accept that point. SMEs can be encouraged to increase their exports and he acknowledges that Germany is “much better” at promoting SME exports than the UK. Most hi-tech businesses start small but quickly build up a global network.

Diversity

The political challenge is driven by the creation of the single currency, which splits the EU between 17 euro zone countries and the remaining 11 member states. It involves “getting the relationship right” between those two groups of countries and responding to public discontent.

That discontent is clear in British Euro-scepticism but the trend runs right across Europe. In the French presidential election, almost a third of voters supported the Front National or the far left Mélenchon movement. Lidington also points to the rise of Beppe Grillo’s populists in Italy and “frankly neo-fascist” parties: Golden Dawn in Greece and Jobbik in Hungary.

All of those political movements have “flourished on the back of what is a genuine sense of alienation”. The answer, in his view, is two-fold: delivering on the economy and giving national parliaments (which are closer to their electorates) a stronger voice in the EU.

Europe needs to show that it is “grown up and flexible enough” to take account of different levels of integration. The passport-free Schengen zone is another example of variation in the union: 22 member states are in and six out.

When the description of a ‘twin-track’ Europe is put to him, he says he prefers “variable geometry” as twin-track implies everyone moving to the same destination at different speeds. In essence, he wants to see “a Europe that respects diversity.”

The Lisbon Treaty, though, shifted power away from member states and into the main EU institutions which will now be reluctant to give power back. Pressed on that, he says that several member states are seeking a rebalancing of power but “we sometimes use different vocabulary.”

The Germans talk about “subsidiarity and proportionality” which means making the European Commission and European Parliament “less meddlesome and less prescriptive”.

While Lidington dislikes many aspects of the Lisbon Treaty, he is pleased that it gave national parliaments power to challenge the Commission. The ‘yellow card procedure’ requires the Commission to rethink a proposal if nine national parliaments object.

Lidington wants to encourage a debate on how to increase the powers of parliaments. A ‘red card procedure’ would allow parliaments to block Commission proposals. Parliaments could also be given the power to tell the Commission to take action through an ‘own initiative’ report. 4

david lidington2 The UK’s G8 presidency has three key themes: more trade, dealing with tax evasion, and transparency. Cameron, ideally, wants to revive the Doha talks on global free trade but he will settle for more bilateral and sectoral agreements.

Corporate tax evasion “can only be addressed globally” as capital is very mobile. Britain has signed agreements on sharing tax information with Switzerland and other tax havens, and wants to see this rolled out at a higher level.

The problem, though, is hardly new. Asked why action has not been taken sooner, Lidington says that is “a perfectly reasonable question” to ask Gordon Brown: “It’s one thing to rail against the inequities of the system. It’s another thing to do something about it.” The last Conservative Government, he says, held office before the digital age when money was harder to move around.

Transparency involves getting more countries to sign up to an international code of conduct on transactions in the mining industry.

Speaking about the G8, Lidington says: “It’s going to be a magnificent showcase for Northern Ireland. The business will certainly be there in the short term, in the run-up to and the duration of the summit. It’s up then to Northern Ireland to use that opportunity.”

A small number of international journalists would make their way to Fermanagh but hundreds of others would be covering the G8 from Belfast. Most would be getting their first impression of the province.

The contrast between the summit and the history of the Troubles itself sends out a positive message. The story is complemented by high standards in the hospitality industry and its scenic countryside, and the summit puts the region “on the mental map” for senior business leaders.

It is put to him that the G8 story may pass quickly in a 24-hour news cycle. Responding, he emphasises that Northern Ireland has never had this opportunity before and David Cameron chose Lough Erne “very deliberately” to give the province’s reputation a boost.

“Grab this opportunity,” Lidington repeats. “Run with it.”

To make the most of Europe, Northern Ireland politicians need to work “ever more closely” with the UK Government and recognise that they can use British embassies across the continent to stand up for the province’s interests.

The Scotch Whisky Association has used embassies to promote its products around the world for many years “and there’s no reason we shouldn’t do the same for Bushmills.” He continues: “It’s up to Northern Ireland leaders in politics to actually establish those contacts, to build on the network.”

UK Government ministers are required to consult their devolved counterparts on EU negotiating positions that affect their interests.

Devolved and UK ministers meet quarterly to discuss European matters through the Joint Ministerial Committee and Lidington is “always available at the end of the phone” if Northern Ireland ministers want him to lobby other Whitehall departments on Europe.

In the business world, he notes that the UK Trade & Investment agency is working “very closely” with Invest NI. Northern Ireland businesses are encouraged to bid for slots on UK Government trade missions and the embassies support trade missions run by the Executive e.g. the First and deputy First ministers’ visit to Brazil.

“There is no magic wand to break open markets,” he concludes. “I think it’s down, at the end of the day, to the Government supporting and fostering the entrepreneurial spirit that built Northern Ireland’s commercial success in the past. We need to do so again.”

Estonia: a transformed small economy

Estonia’s rapid emergence as a “dynamic, free enterprise economy” shows how a small European country can turn its prospects around, Lidington points out.

With a population of 1.3 million, the Baltic state is similar in size to Northern Ireland and has experienced a more violent history during the Second World War and Soviet occupation. Estonian software developers created Skype in 2003 and it is now recognised as “one of the market leaders in e-commerce and in e-government”.

The Minister thinks that Eastern Europe’s transformation since the fall of the Berlin wall is easily forgotten: “Democracy, human rights [and] the rule of law are now established in those parts of Europe where those traditions were crushed for most of the 20th century.”

Profile: Rt Hon David Lidington MP

David Lidington studied history at Cambridge University before working for BP and Rio Tinto Zinc. He was Douglas Hurd’s special adviser in the Home Office and Foreign Office, and has been MP for Aylesbury since 1992. He held the shadow Northern Ireland brief between 2003 and 2007 before shadowing the Foreign Office for three years. He has been Minister of State for Europe since 2010. David is married to Helen with four sons.

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