‘To be or not to be together…’ – the draft EU-UK deal

IIEA3rd February 20166min
"To be or not to be together…" With this brief Shakespearean allusion, Donald Tusk delivered the draft ‘new settlement’ being offered to the UK in response to David Cameron’s letter of 10 November 2015.

“To be or not to be together…”

With this brief Shakespearean allusion, Donald Tusk delivered the draft ‘new settlement’ being offered to the UK in response to David Cameron’s letter of 10 November 2015. The offer, to be considered by the European Council on 18-19 February, consists of a Draft Decision of the European Council and five draft Statements or Declarations amplifying aspects of the Decision. The document has been described in a statement to Parliament in Westminster as “a draft international law decision – which would be binding in international law and could only be amended if all signatories agreed.”

The draft settlement is the result of almost three months of consultation and bilateral contacts between Member States, the European Commission and the Secretariat of the European Council. The process culminated in David Cameron’s talks with Jean-Claude Juncker in Brussels on Friday 29 January and Donald Tusk’s hurried dinner conversation at No.10 Downing Street on Sunday, 31 January.

The package addresses the four ‘baskets’ detailed in the 10 November 2015 letter and proposes solutions to the British concerns under each heading.  It does so in a complex, often highly legalistic text which will be the subject of high-level diplomatic discussion over the coming fortnight. Many details, and some more substantial issues, remain to be settled in advance of the forthcoming European Council meeting, or at the meeting itself.  In particular, the question of possible treaty change – to meet the UK wish for certainty that decisions are ‘legally-binding and irreversible’ – is treated as a matter to be to be discussed in the context of a potential future revision of the Treaties, similar to previous arrangements for Denmark and Ireland.

On the highly sensitive question of in-work benefits for workers coming to Britain from other EU countries, the UK demand for a four-year ban on such benefits has not been conceded. A so-called ‘alert and safeguard mechanism’ – an emergency brake – will provide for a graduated limitation of entitlements over a four-year period, but only if the UK can satisfy the Commission and Council that there is serious pressure on its welfare system. It is, however, significant that the Commission has indicated its view that the present situation in the UK satisfies the criteria for implementation of the brake.

Three significant problems arise in this connection. The need to ‘prove’ the pressure on the system is seen by critics as leaving the UK subject to the authority of the Brussels institutions and not in control of policy. Then there is concern that some Member States, such as the Visegrad group of Eastern European countries, may find it hard to convince their voters that this mechanism is not a form of discrimination against their citizens (who they do not see as ‘migrants’ but as EU citizens exercising a treaty-based right of free movement). In addition, the text fails to set a time-frame for the implementation of the mechanism, leaving that decision to the European Council.

The UK had demanded clear provisions in respect of its permanent opt-out from the Euro currency with particular emphasis on the need to facilitate the co-existence of Euro and non-Euro countries and to protect the outsiders from negative impact of likely moves towards greater integration in the Eurozone. The Tusk text provides for a mechanism to give ‘necessary reassurances’ to the non-Eurozone countries but not to ‘constitute a veto’ nor to delay decisions. A draft Decision sets out the details of a settlement in dense, legal terms.   Some key conditions remain to be discussed and concerns continue in Paris and other capitals about the UK’s approach to the future of financial services in Europe.

On Sovereignty, the Cameron letter called for the UK to be excluded from the treaty commitment to an ‘ever closer union of the peoples of Europe.’  This had been signed-up to by Harold Macmillan, when the UK applied for EC membership in 1961 and by Margaret Thatcher when she signed the Stuttgart Agreement on European Union in 1983. For British Eurosceptics, however, the phrase has often been interpreted as a commitment to create a European federal state.

The Tusk paper makes clear that the UK’s existing arrangements, including opt-outs, in key policy areas mean that it is not committed to further political integration in the EU. It states that the references to ‘ever closer union’ are “not an equivalent to the objective of political integration […] and do not compel all Member States to aim for a common destination.” They do not support an extensive interpretation of the competences of the Union, a clear reference to the perceived, if much exaggerated, tendency of the European Court of Justice to reach such interpretations.

Also, on Sovereignty, the text provides for what has been called a ‘red card’ mechanism but in fact is a streamlining of the ‘orange card’ procedure of the existing subsidiarity control mechanism. This allows a group of national parliaments – making up a majority of 55% or 16 out of 28 – to block a draft legislative proposal on grounds of subsidiarity. This streamlining would, in theory, facilitate the process for national parliaments to block a piece of legislation. It is certain to be a headline announcement but is unlikely to be used often. In practice, legislative proposals are worked through a complex diplomatic system designed to produce compromise between all interests including national parliaments.

The fourth ‘basket’ is Competitiveness. Here, the draft decision meets most of the Cameron demands, since the Juncker Commission has already set out a programme dealing with the critical issues of services, energy, the digital market and international trade agreements. A central plank of the programme is a commitment to lowering administrative burdens and compliance costs, with the senior Vice President, Frans Timmermans, in charge of the Regulatory Fitness and Performance Programme (REFIT). An annual review will identify opportunities to simplify and minimise legislation – ‘returning powers to Westminster’ in Mr. Cameron’s words.

Prime Minister Cameron welcomed the proposals, declaring that Tusk’s wording on the most contentious area of welfare reforms were a “very strong and powerful package”. The Prime Minister said: “Sometimes people say to me, if you weren’t in the EU would you opt to join the EU? And today I can give a very clear answer: if I could get these terms for British membership I sure would opt in to be a member of the EU because they are good terms and they are different to what other countries have.”

As the draft text is subjected to close analysis – in political, business and union, media, academic and civil society circles – two major considerations arise.

First, the proposals must be adopted unanimously in the European Council. Achieving this will demand an intensification of the diplomatic activity which has seen the Prime Minister meeting all of his fellow Heads of Government and his Foreign Secretary, Philip Hammond, travelling to all 27 capitals. It is crucial that the specific concerns of a number of countries, such as those of the Eastern European states on Welfare and France on the Eurozone, are dealt with. And it is equally important that any apparent concession to the UK should not become a precedent for demands from other corners of the Union.

And, of vital concern, it must be recognised that even a unanimous endorsement of Mr. Tusk’s draft decision terms will not provide David Cameron with a winning manifesto for the coming referendum campaign. It will provide a positive launching pad, but will soon become no more than a part of a campaign covering a wider spectrum of issues – local, national and global.

The agenda is challenging: covering climate change, energy and environment; facing the implications of global development and poverty and, as David Cameron has insisted in more than one reflection, ensuring Britain’s long term national and economic security.  And, above all, the referendum campaign will be a national discourse on British identity and Britain’s role in the 21st century world.