Making the law

‘The European Court of Justice has a record of deciding cases not in accordance with the wording of treaties and legislation, but with the furtherance of the power of EU institutions’

Marketplace

European integration has always been messy. Basic to it has been the so-called Franco-German “twin engine” that began with the Elysée Treaty of 1963. Under the terms of the various European treaties, only the European Commission has the power to initiate new legislation in those areas of public policy where the EU has acquired full “competence”. But there has to be a suspicion that, in practice, the Commission pays more attention to informal pressure from German and French politicians than it does to grumbling from humbler member states.

The British, or at any rate the English, have a long and wonderful history as a meaningful nation. Until recent decades they have regarded themselves, almost by definition, as self-governing. To a majority of them the cause of European unity has no appeal and the transfer of power from the nation state to the Commission was anathema. Logically, opinion polls show that the most fundamental issue in last year’s Brexit vote was the recovery of sovereignty.

Some Remainers insist that the EU’s goal is not the creation of a federal super-state; they believe that Britain could rejoin the EU and remain a distinct national unit. The current spat between the Commission and the Republic of Ireland should come as a wake-up call. Since their accession to the then “Common Market” in 1973 the Irish have seen their involvement in European integration as a means of asserting their national identity, particularly as a way of overcoming their past subordination to Britain. Crucial to the process — in which the Irish have been impressively successful — has been the attraction of foreign investors, especially American technology companies, by setting low rates of profits tax.

The trouble is that the Commission — and behind it the governments of Germany and France — have been angered not just by the concentration of tech investment in one small island state, but also by the loss of tax revenue. A year ago the Commission demanded that Apple should pay back taxes to the Irish government of €13 billion, claiming that Ireland and Apple were complicit in “sweetheart deals” that amounted to illegal state aid. The Irish government and tax authorities have made token efforts to comply, but have not yet collected the back tax. In October the Commission decided to take the Irish government to law, specifically to the European Court of Justice, to decide the matters at issue.

No one doubts that Ireland has organised its tax system to induce foreign companies to locate in the country. After all, the setting of tax rates is a basic prerogative of the government of an independent nation state. Similarly, no one doubts that Apple has paid the (negligible) tax that was due, given the wording of tax treaties and legislation in force at the relevant time. Tim Cook, Apple’s chief executive, has described the Commission’s action as “total political crap”.

The English-speaking world (which includes Ireland, whether the Irish like it or not) has a tradition of upholding the wording of treaties and legislation in force at the relevant time, regardless of the resulting inconvenience to executive power (Hitler, Lenin, etc). It was not for nothing that in his celebrated 1946 Fulton speech Winston Churchill deemed “courts of justice” to be “independent of the executive”. However, the ECJ has a record of deciding cases not in accordance with the wording of treaties and legislation, but with the furtherance of the power of EU institutions. This may seem dreadful, but there is an excuse. The preamble to the Treaty of Rome, the document that inaugurated modern European integration, said that the aim was “to lay the foundations of an ever closer union among the peoples of Europe”.

If the ECJ backs the Commission in the squabble with Ireland, it will be helping the nations of Europe come closer together in a union comparable in its completeness with the United States of America. It will also be demonstrating that the British opponents of European integration under EU auspices have been right all along. A major purpose of the EU, with the geopolitical ambitions of the German and French elites as its motor, has been to forge a federal European super-state that would match the USA as a global power. Can it be overlooked that the single currency, the euro, was explicitly launched as a rival to the dollar?

The European Commission, backed by Germany and France, wants to end the fiscal independence of the EU’s member states. That is the only viable interpretation of the current dispute between the EU institutions and Ireland. But, if so-called “national governments” cannot set their own tax rates, they are no longer “national governments” in the usually understood sense. Brexit, the opposite of European integration, is proving just as messy as the pursuit of European integration. All the same, it is essential if the United Kingdom is to become once again a fully independent and self-governing sovereign nation.