Will EU Level With Us?

It demands a level playing field to reach a trade agreement with Britain but it is not level itself.

UnlevelWe wouldn’t keep harping on about the EU’s Level Playing Field mantra (LPF) if they would stop insisting on it in the Brexit negotiations while flouting it themselves. In our last post [1] we remarked on how dramatically unlevel the Single Market is now becoming and yet the EU’s negotiators are still insisting on regulating UK state assistance to our own companies. We can be sure from history that any controls imposed by Brussels (LPF) with legal oversight from Luxembourg (CJEU) will be used to hobble our competitive position.

The latest covid-19 rescue package from Brussels was instigated by Paris and Berlin and is sure to be used to promote national champions, by its progenitors in particular, and national treasuries will be adding to that if they can afford to – that’s an unlevel playing field (ULPF) to begin with; Germany is to spend far more than the rest (see the summary below). We mentioned how Lufthansa is to receive €9 billion, much more than is necessary to survive the current crisis (as far as we can see at present) but enough to outmatch rivals – except for Air France-KLM which is to receive almost as much. It’s not the first time Single Market rules have been used to protect Germany’s national airline [2] – this link also describes the LPF requirements in M. Barnier’s mandate.Planes

We understand why the German government must do what it takes to restore its own economy and we are sure its participation in the EU’s bailout will not be for purely cynical reasons but conditions favourable to German interests are going to be considerably enhanced by the generous funding of its own industry. Nor are we saying that Germany deserves none of its relative success within the Union, only that the scales will be tilted further. This is hardly the vision presented to the world of a united and contented continent; already euroscepticism in Italy is approaching UK levels.

Under the green agenda, supposed to guide investment aid, car makers will get massive subsidies to develop electric cars, both German and French makes – in the former country €2 billion for company R&D plus €6,000 towards each purchase. Can Fiat or JLR compete without matching that?

Why then worry about a free trade deal? Subsidised cars will need levelling up with tariffs, that way domestic companies like JLR might stand a chance but Fiat could not compete unless Italy followed Britain out of the EU (Italexit); WTO rules permit action against state subsidised trade. Subsidised airlines could have their landing slots restricted or surcharged – thanks to Matthew Lynn for suggesting the idea [3] – Europe’s busiest airport, Heathrow, is likely to remain important. But this is not the way to run a prosperous, world economy. Some protectionism is inevitable post-covid19 for recovery and to secure supply lines against future crises.

The UK is not asking for special favours from the negotiations: Without resistance or retaliation the UK will suffer heavy discrimination. Our Government must walk away and retaliate if necessary.

[1] EU Rules: Bend Them

[2] The Levellers

[3] Matthew Lynn, business correspondent, Daily Telegraph, 6 June 2020Levellers

Note: “The Levellers were a political movement during the English Civil War committed to popular sovereignty, extended suffrage, equality before the law and religious tolerance. The hallmark of Leveller thought was its populism, as shown by its emphasis on equal natural rights” – Wikipedia

Germany's Virus Package


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