Minister for Europe Speech at FT Live Summit – “Best of both worlds - Britain in a reformed EU”

On 14 April 2016, the Minister for Europe, David Lidington, made a key note speech at the FT Live event on the Future of Europe

Tomorrow marks the start of the formal referendum campaign. In 10 weeks’ time the British public will take an historic decision.

I am convinced that remaining a member of a reformed European Union is in the economic, political and security interests of this country.

That does not mean I think the EU is perfect. Frankly, you can’t serve 6 years as Europe Minister and think that this is an organisation that does not need some further reforms. But neither are the alternatives perfect and as I’ll indicate later in my remarks, I think that those alternatives carry much greater risks for the prosperity and security of the United Kingdom.

If we look at the record we see that while we may not win every battle, though neither does any other country, the evidence shows that 9 times out of 10, the UK does manage to get its own way.

And the new settlement the Prime Minister secured in February represented a further success. I’m sure you will be familiar with what we achieved – boosting European competitiveness and cutting red tape, ensuring fairness between euro-ins and euro-outs, securing a UK carve out from ever closer union, and restricting access to our welfare system.

Looking at it a different way, that February agreement did something vitally strategically important. We persuaded all other members to accept the principle that one size does not fit all; that different countries, as the EU develops further, should have the right to choose different levels of integration, while all remaining part of the Union.

When I consider the way in which the debate has developed so far in this country; I think the thing I have found most dismaying about the leave campaigns is that the advocates of a UK exit display a dispiriting lack of confidence in the ability of the United Kingdom to lead or shape the future course of Europe; a paucity of ambition.

Yet if we look at the history of Europe in the 40 years since Britain joined, we can see how this country has contributed to – or, I would say, driven – the EU’s greatest achievements.

The creation of the single market has brought benefits of higher economic growth, greater inward investment, and lower prices for consumers.

It was made possible by a formidable, if somewhat unexpected, partnership between Margaret Thatcher and Jacques Delors. Mrs Thatcher as Prime Minister realised that striking down barriers to trade and opening up Europe as the home market for British business made sense, and was worth the downside of moving to majority voting on those matters, as long as there was a strong British voice present at the table making those rules.

Benefits have followed too from the enlargement of the European Union to the new democracies of Central Europe.

Now like the single market, this was not something that was bound, inevitably to take place. At the time it was a controversial policy. And both Margaret Thatcher and John Major fought successfully to persuade their fellow leaders that this was the right thing to do.

The measure of their achievement can be seen if we compare the 25 years since the Velvet Revolutions, with the fate of the infant democracies that emerged in Central Europe after the First World War.

The first time round, every one of those democracies fell – under pressure of home-grown extremism or invasion by one or more neighbours.

In this last quarter of a century, we have seen the democratic process take root and flourish.

The difference is that this time, the complex, detailed work of EU accession negotiations – with their multifarious chapters and benchmarks – provided a mechanism which we could use to embed the rule of law, democratic institutions and human rights in parts of our continent where those values and traditions had been crushed for most of the 20th century.

But these 2 achievements of the single market and the enlargement of democracies in Central Europe are of the past generation.

So what are the great economic and political challenges that face Europe – and which require British leadership – today? I will talk about 4.

None can be overcome by one country acting on their own – not us; not France; not Germany. And I look forward with optimism and determination to our country leading and shaping the European response to those common challenges.

The first challenge is economic.

Global competition and digital technology are now dramatically shaking up the ways in which we and other advanced economies do business.

Unless we raise our game in terms of competitiveness, the next generation of Europeans will not be able to afford the standard of living or the social protection or the public services that our peoples expect to enjoy as their entitlement today.

We need to give all British and European businesses, whether they sell goods or services, the advantages of a home market on a continental scale.

At the same time we need regulation that is proportionate to the problem it is designed to tackle – which is why the Commission’s acceptance of sectoral regulatory burden reduction targets, and the ability to review the existing acquis, that we secured in February are so important.

And we need to redouble efforts to remove the costs that harm growth and stifle the creation of new jobs.

We also need to harness the collective weight of Europe – 500 million people – to forge new trade agreements: with the US, Asia and Latin America.

That would give our businesses easier access to world markets, so they can seize the opportunity to sell our goods and services to hundreds of millions of new customers in the emerging economies.

Tackling the economic challenge must start with the single market.

I understand why people sometimes complain about EU regulations, and sometimes they have good reason to do so. But we should not forget that having one set of regulations governing trade across 28 countries and 500 million people, can simplify bureaucracy, strip out transaction costs and allow firms to do business across our continent with astonishing ease.

And if we consider the alternatives; even if EU regulations did not have the force of law here, they would in the other 27 member states places UK businesses will want to carry on selling to even in the event of exit. Which means that firms could face having to follow one set of rules to sell here and other to sell into the rest of Europe. Not a recipe for success or for keeping costs down.

Since its launch the single market has added an estimated £200 billion a year to the EU economy, in today’s prices. That means trade, investment and jobs.

And this is not benefiting big businesses alone, 80% of Federation of Small Businesses members who export do so into the EU.

Even those who don’t – even those who don’t export at all – benefit from access to the Single Market. It means a more competitive supply chain. And a wealthier domestic consumer.

At the most obvious level, the single market means exporting to the EU without paying tariffs.

Previously, trade with the EU was clunky, confusing and costly. You faced a bewildering array of tariffs, from 14% on cars to 32% on salt.

Today, there are no tariffs.

Would we get that deal outside of the EU? It frankly seems unlikely.

What is the alternative? It depends which advocate of exit you listen to. Norway maintains access to large parts of the single market. But they pay nearly as much as we do per head into the EU budget. They accept free movement. And they have no say in the rules they nevertheless have to adopt.

Some have pointed to the Canadian model. But the EU/Canada trade deal took 7 years to agree and is still not in force. And it contains a raft of exemptions to free trade demanded by one side or the other.

It works for Canada. But we are not in their position. We are much more entwined economically and geographically with our immediate neighbours in Europe.

If not Canada, perhaps we could fall back on our membership of the World Trade Organisation (WTO).

But that would mean even more trade restrictions. Under the WTO ‘most favoured nation’ rules, we’d face tariffs of up to 10% on cars, 11% on clothes and 36% on dairy products.

Considerably worse than zero, that we currently have.

We all know that eliminating tariffs is not enough in a modern economy.

We must go further, and extend the benefits to trade in goods to other areas.

With four-fifths of the UK economy based on services, removing non-tariff barriers is essential.

As the Prime Minister has said, Britain is the country that “designs the building, consults on the deal and insures the premises”. I would add that we fly people to do the deal – EasyJet have said they simply wouldn’t exist without the EU – and then publicise it on social media afterwards – our tech sector is the biggest in the EU. The EU allows UK businesses to provide those vital services throughout Europe. And it allows individuals to work in any member state, with their professional qualifications recognised.

That is why the Prime Minister made this a focus of the UK’s renegotiation. And he achieved a clear commitment to continue deepening and liberalising the market in services, energy and digital.

Let’s look at trade.

The UK has always been the EU’s most vociferous and powerful champion of free trade in Europe. It’s an enormous British success story that the EU has signed trade deals with more than 50 countries – with more to come.

I well remember the Prime Minister intervening personally to get the South Korea deal over the line.

The EU has 9 more Free Trade Agreements on the way, including with Japan, India and America. Last year the Confederation of British Industry (CBI) estimated that when they are all completed, they will cover 88% of all UK trade.

If we left, each one of these would have to be renegotiated, bilaterally, one by one.

Of course, we could attempt to do this. But how long would it take? And would we really carry as much weight on our own as we would as one of 28, benefitting from the leverage in negotiations of the biggest market anywhere in the world? I think not.

Both the EU and Australia have signed deals with South Korea. The EU got a better deal: it eliminates tariffs nearly 4 times as quickly as the Australian deal.

So being part of the EU gets our business access to better terms for global trade.

Membership also gives the UK the opportunity to shape the rules that govern trade.

We are leading the negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between the EU and US, the 2 of the most important markets in the world. When that deal is finalised, it will set the standards for trade across the world.

Where would you rather be in that transatlantic negotiation – standing on the sidelines hoping everyone gets to the right place? Asking our friends to tell us what has been going on inside the Council room in Brussels? Or at the forefront of the negotiation, pushing hard to get the best deal possible? I know where I would rather be and what outcome I believe is in the best interests of the people of this country.

The second challenge is one of security.

Some say we would be safer outside the EU. I simply do not agree.

The world faces serious challenge from the globalisation of crime; terrorism; drugs; sexual offences; people-trafficking. The list goes on.

These problems do not stop at national borders. Pulling up the drawbridge and hoping that things will be all right, as some wanting to leave the EU seem to want, is not realistic in the modern world.

Our security relies on co-operation and collaboration with our allies.

We already exercise control at the border. We can refuse entry or deport individuals where we believe that they pose a threat. Since 2010 we’ve refused access to 6,000 European Economic Area (EEA) nationals.

But in order to do all this work effectively, we need to act in concert with our neighbours. EU membership helps us exchange criminal records with other Member States. Leaving is not going to help us share the intelligence we need with our European allies. It would make it harder.

And thanks to the EU’s police and judicial cooperation, we can work effectively across borders to tackle crime and terrorism.

Some here will remember the bad old days of the so-called Costa del Crime. When you could spend months trying to bring British criminals back from the continent to face British justice. Extraditions that failed because of different systems, incompatible bureaucracies.

Those days are gone. And they are gone because of progress made at the European level. Before the European Arrest Warrant was introduced, extradition took a year on average. Now there is a maximum of 90 days, and the average is only 48 days – or just 16 days if the suspect surrenders.

So it is not surprising that the men and women actually on the front line today, in the police, in the intelligence agencies and in the military have emphasised the security offered by the European Union membership.

Rob Wainwright, the British director of Europol, called the EU “critical to the UK’s attempts to fight serious crime.”

Of course, we can and should go further and the Home Secretary is at the forefront of these efforts. We are leading Europe in tackling the movement of people and weapons linked to terrorism by pressing for increased information-sharing, stronger control on the movement of firearms and enhanced aviation security. We have now secured stricter deactivation standards for firearms across Europe and shaped the Passenger Name Records directive.

In a world fraught with risk, we need more cooperation, not less.

The third challenge is an aggressive and truculent Russia.

We have seen aggression in Ukraine, through the destabilisation of the Donbas, the aggression in Georgia and – in defiance of the Helsinki Final Acts and international law – the illegal annexation of Crimea. And only a few months ago an independent inquiry found what we have long thought: that the Russian state probably directed the cold-blooded murder of Alexander Litvinenko here in London.

Yes, in facing that challenge the role of NATO is key: meaning that the UK’s role of ensuring the EU is aligned with and supports and complements NATO is all the more important.

It is vital, as we face this major diplomatic and security challenge, to ensure that the relationship between Europe and the United States remains strong. And we have to do this at a time when it’s very apparent that the American public, and many American politicians, are becoming impatient with what they see as Europe free-riding upon American taxpayers in financing the provision of security. So the historic role of the United Kingdom in ensuring that Europe and the United States remain in lock step, that we support and build a still vibrant and relevant trans-Atlantic western alliance is more important today than any time since the end of the cold war. And the EU is essential when it comes to imposing tough economic sanctions on Russia; responding to Russia’s use of energy as a tool of political interference; in ensuring defence against potential cyber attack; and strengthening the rule of law in countries in Eastern Europe.

Here too the UK is playing a leading role in Europe – in keeping the EU focussed on the gravity of the challenge posed by Putin’s Russia, and in ensuring that the positions of the EU and the US are aligned.

Finally, the fourth challenge is the collapse of effective governance in parts of Africa and the Middle East.

This has created safe spaces for terrorist groups to plan strikes against us. And the chaos has led to a humanitarian disaster, driving people out of their homes and across borders.

It’s not the only cause of the migratory pressures Europe is facing. There are pressures that arise, from economic underperformance in countries in African and Asia where 60% of the population are under 30, pressures that I think are building from climate change in certain parts of the world. But those phenomena together add up to a picture of sustained migratory pressures on the European continent.

We see the results every day in Greece, in Macedonia and elsewhere.

We simply cannot turn our backs. These problems are not going to go away. Quitting the EU is going to do absolutely nothing to stem the pressures from migration. What our priority ought to be is to help build an effective European response to this challenge.

Working with and through the EU, as well as with other international partners, the UK can help direct a comprehensive approach to the crisis. Working with our friends and allies to bring diplomatic pressure to bear where necessary; to build capacity in the local police, armed forces and courts in those countries; to help countries in Africa and the Middle East to create greater political and economic stability; to use aid and trade to give people in those developing countries the hope of a decent life and fulfilment of ambition in their own country. So they don’t feel the need to get out.

The EU-Turkey agreement for the first time means we have a plan that – if properly implemented – breaks the business model of the people smugglers by ending the link between getting in a boat and settling in Europe.

And the initial signs are that the deal is having an effect. It’s still early days, but the average number of daily arrivals to Greece so far in April is almost half of that in March. Turkey accepted over 300 returnees from Greece last week. Turkey, Greece and the EU will need to maintain efforts to ensure quick and effective implementation of the deal, and of course more will need to be done with the newly established, but still quite fragile, Government of National Accord in Libya.

The UK is playing an active, and I would argue a leading, role. We are contributing £2.3 billion in humanitarian assistance to support Syrian refugees, and the London Conference galvanised others to increase their support. British experts are now working in Greece to support the EU-Turkey agreement, and we are considering how future UK support could be most effectively deployed. We are already cooperating closely with Turkey to support their generous hosting of nearly 3 million refugees, and improving the effectiveness of their migration management. We stand ready to do more.

Responding to this challenge is not going to be easy, there are no instant overnight solutions. But I think that British work within Europe in recent years, in Somalia and Mali in particular, show that when the EU brings its range of assets to bear on international problems, we can succeed.

Now some like to portray the EU as something ‘done to’ the UK. The truth is that we are a leading member of the EU, and responsible for some of its key successes. The record shows that – whether we’re talking about the economic, security or foreign policy– where we seek to lead, we are able to do so.

We have helped already to shape the current state of the European Union – one of the world’s most important economic and political entities – I would argue we have done as much as if not more than almost any other Member State.

And I look forward to the UK continuing to play a leading role, through the European Union, in helping to shaping the future of our continent in the interest of the people of every one of the EU Member states.