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EU would work better without France

The European Union would work better without France, according to a report published by the independent think-tank Civitas. The French have undermined the spirit of mutual co-operation and give-and-take upon which the European project is based until they have become the principal obstacle to the reform of the EU, upon which its future depends.

In ‘How France Has Undermined the European Project’, published in the current issue of the Civitas Review, co-authors Wil James and Gregory Lowe argue that:

  • France repeatedly fails to transpose EU directives into French law.
  • France shows a strong reluctance to implement EU laws and ignores the threat of sanctions.
  • French high-handedness undermines the authority of the EU institutions.
  • France is systematically undermining the four economic freedoms that underpin the operation of the single market.

The four freedoms that France repeatedly violates are:

1. Free movement of capital: making a ‘national champion’ of yoghurt

France has led the drive to create ‘national champions’ in industry in an attempt to direct the ownership of prestigious French companies, despite its commitment under the terms of the Treaty of Rome. In January 2005, when the Swiss pharmaceutical firm Novartis launched a bid for Franco-German firm Aventis, it found its overtures firmly rebuffed by the French government who instead put pressure on a rival French firm to increase its own bid for Aventis. The resulting merger was announced to the strains of the Marseillaise. In July 2005, when it was rumoured that PepsiCo was planning a takeover of the French yoghurt manufacturer Danone, the French government reacted by declaring that the protection of French manufacturers was to become a major policy goal. Accordingly, M de Villepin announced in December that he had drawn up a list of industries that would be protected from foreign takeovers, including casinos and private security companies. Jacques Chirac went on to intimate that Danone would also be considered a national champion and could be protected under these laws.

2. Free movement of people: French fear of the Polish plumber

The free movement of persons is perhaps the most practical benefit for EU citizens. Moreover, it is of vital importance in solving the EU’s huge unemployment burden as the ability to move easily to find work is crucial to establishing a liberal, flexible workforce that can easily respond to market demands. It is therefore ironic that the free movement of workers is now the most restricted of the four freedoms. Following the enlargement of the EU to twenty-five members in May 2004, only three countries – Ireland, Sweden and the UK – opened their employment markets to migrants from the new member states. France was at the forefront of the counter-offensive against free movement. The spectre of the Polish plumber became a rallying call in France, symbolising the threat to French jobs that enlargement posed. Many of the EU’s largest economies, spearheaded by France, will remain partly or fully closed to workers from former communist member states.

3. Free movement to provide services: 600,000 new jobs scuppered by France

The EU Services Directive, a measure to liberalise the services industry across the EU, represented a significant chance to kick-start the European economy. With services accounting for 70% of jobs in the EU, a study into the impact of the services directive carried out for the Commission estimated that liberalisation in this sector could provide 600,000 new jobs and generate added value in the services sector of €33 billion. However, President Chirac denounced the proposals, saying that ‘liberalism would be as great a disaster as communism’. French politicians across the political spectrum seized upon the directive as the embodiment of the new, ‘ultra-liberal’, Anglo-Saxon Europe. In the light of ferocious French opposition, the Commission balked and withdrew the directive. When a revised draft was presented, many of the original proposals had been removed. Public healthcare, broadcasting, postal and audiovisual services, temporary employment agencies, legal and social services, public transport and gambling were all sidelined, and the much-vaunted ‘country of origin principle’, which would have allowed service providers legally based in one member state to operate in another, was dropped.

4. Free movement of goods: hanging out bras on the Maginot line

Free movement of goods is the best-established of the four freedoms, though many will remember France’s refusal to lift the ban on British beef, which it kept in place illegally from 1999-2002, repeatedly defying action by the European Commission. Today France is at the forefront of attempts to impose its protectionist outlook on the EU’s global trading position. This is best illustrated by the ‘bra wars’ incident between the EU and China, which took place in August 2005. Following the expiry of the WTO multi-textile agreement in January of that year, quotas were agreed with China on textile imports into the EU in ten different categories. However, quotas in six of these categories were exceeded by August, largely due to the fact that European retailers had placed their orders with Chinese manufacturers before the quota levels were agreed. With 80 million items sitting in ports around Europe, France, backed by Spain and Italy, lobbied hard to keep these items out in the hope of boosting its own flagging textiles industry. In brokering an agreement, the European Trade Commissioner Peter Mandelson could not contain his frustration with what he saw as unacceptable French protectionism, comparing protectionist attitudes to the historic Maginot line which failed to defend against previous threats to the French nation.

The rest of the EU cannot wait for France

In addition to this, France has the worst record of any of the EU-15 member states when it comes to transposing EU directives into national law, and is quite prepared to disregard EU law when it wishes. The most flagrant example of this was the refusal to honour the terms of the Stability and Growth Pact (SGP), which required that member states in the Eurozone should not run deficits of expenditure over income of more than 3% of GDP, or allow government debt to exceed 60% of GDP. France simply ignored this and had the rules changed, which ‘sent a clear message to smaller countries such as Portugal and Ireland, who had both previously been forced into measures to address their breach of SGP, that there was one law for smaller member states and another for countries such as France and Germany’.

James and Lowe argue that: ‘The rest of the EU cannot wait for France to make up its mind to reform. The new member states of eastern Europe are in a race to catch up with the affluence of their western neighbours before their population ages and their GDP plummets. The need to compete in a truly global marketplace makes the single market, based on the Four Freedoms, more important than ever.’

French exceptionalism no longer acceptable

The old principle of ‘French exceptionalism’, under which the French can do virtually whatever they want with regard to the EU, was just about containable in the old EU of 15 members, but will not work in the new, expanded EU. France needs to decide if it wants to belong to a more diverse EU which relies upon the rule of law and a level playing field. Otherwise: ‘it may soon find itself in a position incompatible with the principles of the organisation it played such a part in creating. Were this to happen, European leaders would have to confront the question of whether future EU co-operation might only be possible without France.’

For more information ring:

Wil James 07816 525203

Gregory Lowe 07779 323813

Robert Whelan 07732 674476

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