Monday, 6 May 2019

Why does the EU have so many regulations?

I suspect EU officials would explain the regulations are a necessary part of the plan to amalgamate the member nations into one large state.  When a country joins the EU it agrees to abide by the EU regulations (current and future).  However I suspect this isn't the full story.  If harmonizing regulations (laws) across all members was essential why hasn't the EU done the same with fiscal union? 

Fiscal union is defined as "decisions about the collection and expenditure of taxes are taken by common institutions, shared by the participating governments".   The EU hasn't adopted fiscal union, however many of the members have adopted monetary union using the Euro as a common currency.  Adopting monetary union without fiscal union is somewhat like being partially pregnant.  Nations share the same currency but the value of that currency is then dependent upon the finances of individual members.  The EU attempts to resolve this issue by requiring members to limit their national debt as a set maximum percentage of the GDP.  However members have frequently ignore this (eg, Greece).  It's difficult to obtain an accurate picture of the EU's finances as even the EU's own auditors have been unable to give the EU accounts a clean bill of health.  But then my belief is financial accountability is secondary to political union and control.  Which brings me back to regulations.

Regulations are a means of control.   Control what the people can do.  Control industry, commerce and the environment.  Big business loves the EU and spends considerable funds lobbying Brussels to enact legislation (regulations) which protects them.  A large business has the necessary funds to comply with a volume of EU regulations whilst the smaller competitor is simply incapable of competing.  In effect, the EU is killing competition when it's competition which encourages innovation and drives down costs.  The EU also uses regulations to protect its own producers.  Let's assume you are a small EU producer of widgets.  You churn out the same old widgets you've always produced.  One day you are horrified to discover a Chinese widget makers is exporting widgets to the EU.  Not only are they cheaper, but they are better quality.  You head to Brussels where you successfully  lobby for widget regulations, tariffs and quotas to be introduced.  This has the effect of limiting competition.  

Another example who be the effect on the NZ dairy industry when the UK joined the EEC.  The EU gave the NZ dairy industry five years to adapt to the UK's membership with decreasing dairy quotas each year.  Moreover the EU implemented very strict hygiene regulations for non EU dairy producers.  So high that if the dairy farmer met the EU regulations you could almost eat off the milking shed floor.  Of course the EU didn't impose the same regulatory standards on its own dairy producers (which is why I wouldn't recommend eating off a French milking shed floor).  This was a simple case of using regulations to protect inefficient industry.   Interestingly, by achieving these high EU regulatory standards NZ's dairy industry was able to produce a high quality product at an internationally competitive price.  The NZ dairy output has grown significantly with high quality competitively priced NZ dairy products being exported to new markets all over the world.  But not much of it goes to the EU where inefficient producers are protected.

So in my opinion too many regulations are a bad thing stifling innovation and competitiveness.  Standards drop and prices increase.

My main criticism of the EU would be the deliberate lack of effective democratic accountability to the electorate is leading to yet more autocratic rule by the EU political elite and an unaccountable bureaucracy running wild drafting reams of regulations which are rubber stamped by a pampered EU parliament.  I don't believe this is sustainable.    

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