21 May 2015

What should, could and will Cameron get from his EU renegotiation?


With a Conservative majority and all the Labour leadership candidates saying they support a referendum on our EU membership, it now seems certain we shall have one in either 2017 or 2016. The options will be to either leave or stay on the terms secured in a renegotiation, which is apparently to be completed by this autumn. David Cameron is due to brief his EU partners on what he wants from that renegotiation this Friday.

What should he be after, what is he after, and what will he get?

First, the shoulds. Here’s what I would regard as pretty much a minimum list.

  • The non-Eurozone EU must be large enough that it is stable and able to add new members. That means that references in the Treaties to the euro as the “single currency”, to “pending the euro becoming the currency of all Member States of the Union” (Protocol 14) and to the euro being “the currency of the European Union” must go. Given that all but four of five of the current members of the EU are intending to join the euro by 2020, that also means that there needs to be a further expansion of the EU with many, if not most, of the new members joining without joining the euro.
  • The rules of voting in the EU must change such that the Eurozone cannot collectively set all the rules of the Single Market. As the voting rules work at present, the Eurozone will always have a “qualified majority” so the non-Eurozone EU will soon be in much the same position as Norway — forced to accept Single Market rules that it has no substantive role in fixing.
  • Britain must be permitted to pass a new sovereignty law that asserts that, in respect of the UK, conclusions of the European Court of Justice do not have independent legal force. They constitute only an arbitration over whether we are or are not in violation of our Treaty obligations. Thus, a British bureaucrat or minister is not acting against the law, and hence potentially subject to malfeasance, if she acts in ways that violate Treaty obligations but have not been specifically implemented by Parliament.
  • Britain must explicitly be exempted from the obligation to seek “ever closer union”.
  • Britain must withdraw from an EU common criminal space or defence space and be under no implicit obligation to participate in them at a later date.
  • We must withdraw from the common foreign service provisions of Lisbon (e.g. the EU embassies and EU High Representative).
  • We must repudiate our involvement in the passerelle clause of Lisbon.
  • We must state that the UK is not part of the single legal entity, for international negotiations, created by Lisbon.
  • We must repudiate our commitment, under Lisbon, to be in good standing with the European Convention on Human Rights and to accept as binding the findings of the European Court.

I could spend (I have, over the years, spent!) article after article explaining why each of these points is vital. But since this isn’t David Cameron’s list, let’s instead focus upon that. Here’s what he is reported as asking for.

  • Restrict the ability of unemployed EU migrants to claim benefits in the UK and force those that do come here to work to wait four years before they can claim in-work benefits.
  • Exempt Britain from the “ever closer union” obligation.
  • Change the Single Market voting rules such that non-Eurozone EU members can’t have rules imposed upon them by the Eurozone. As part of this, he is reported as demanding that all references to the euro as the “single currency” of the EU be removed from the Treaties.
  • Allow national parliaments to club together to block new EU rules.

You’ll notice that two of these renegotiation objectives match those I set out – the ever closer union one and the Eurozone vs non-Eurozone one. Two of them aren’t on my list (mainly because they are (a) A Bad Idea; and (b) incompatible with the concept of the EU). And several of those on my list aren’t on his. This last point may be a bit less important than it seems in that if we secured the ones on Cameron’s list we’d probably get most of the other ones that I indicated fairly automatically, almost by way of footnotes. But even that would still leave some pretty significant gap between my position and his.

What will he get? I think there’s a good chance that he will get a stripped down (and largely – and mercifully – cosmetic) version of the benefits one. The UK does not currently take advantage of all the scope even the current EU rules offer to restrict benefits for migrants (partly for wonkish reasons to do with the way our benefits system works). We could get something cosmetic, giving our policymakers the excuse to change our rules in way that take fuller advantage of the EU’s rules.

I note that, as should be obvious to anyone that knows the first thing about the EU, there is precisely zero possibility that any of these benefit rules changes will constitute any restriction whatever upon the Free Movement of Persons, which is as fundamental an aspect of the Single Market as there not being tariffs on imports, despite Cameron’s daft repeated assertions that he will renegotiate this (which he even re-stated, in terms, in the televised Leaders’ Debate). But, hey!

I think he will get the exemption from ever closer union. I also think there’s a pretty good chance he can get some additional protections for non-Eurozone EU members from being over-ruled by the Eurozone. There is already a new voting system that operates at the European Banking Authority called “double majority” voting, whereby for certain EU banking rules to change there has to be a majority (in the relevant technical sense) of both the Eurozone and the non-Eurozone. The rest of the EU could agree to that being extended to other policy areas.

It’s of interest to understand why they might agree. Because although this seems like a huge change to the EU’s rules, it would actually be much less significant than it first appears. The reason is that the European Banking Authority rules already contain in the small print a provision that once the number of non-Eurozone members falls below five, the double majority system lapses and there has to be something new. That same bit of small print for Cameron’s renegotiation would do nicely, because the number of non-Eurozone EU members is due to fall below five by around 2020. It would basically be an agreement to give the non-Eurozone EU a collective veto on new rules for about three or four years. If that helps Cameron, I suspect our EU partners will shrug and say “OK.”

A protection like double majority voting is essential if the non-Eurozone EU is to be viable over the longer term – and I don’t mean just for the UK – the same problem will apply to Demark, Sweden and Bulgaria as well (the other three likely long-term non-euro EU members). But it won’t be enough by itself unless the non-Eurozone EU can be big enough, relative to the Eurozone, to be viable. The soon-to-be 24 members of the Eurozone can’t be expected to allow four non-Eurozone members to have a long-term veto over all rule changes.

Anyway, Cameron might get this, and it could easily look like a really big deal (even to our negotiators) until one examines the small print carefully.

Lastly there’s the proposal to allow national parliaments to block laws. It’s certainly true that this is a negotiating point on which Cameron will have allies in many other Member States. But it is very unlikely to go through in any substantive way. Perhaps there will be something cosmetic, but the EU’s legislative procedures are already arcane and convoluted enough without having even more layers of complexity. It’s a daft idea, frankly. The whole point of the EU is that collective decisions should be able to over-rule decisions of individual parliaments. That can’t really change in any important way.

So I think he can get somewhere with the renegotiation points he raises. And I don’t think one should regard his list as unambitious. It is ambitious and probably won’t all be achieved. But in the end, two basic questions will remain:

  • Is it really viable, over the longer term (say, another 20-25 years) for the UK or any other country to be in the EU without being a member of the euro? I don’t think it will be.
  • Can Cameron make the Freedom of Movement issue go away? I believe that leaving the EU in order to abandon Free Movement would be exactly the wrong reason. It would clearly mean not merely leaving the EU but also leaving the Single Market (of which Free Movement is an intrinsic and ineliminable part). It would also mean that any new deals we did with other countries after leaving the EU (“Hello, Australia and Canada. Are you available for a meeting?”) would be unlikely to include free movement with them – which would be a bad mistake.

I believe we should not by any means rule out the possibility that Cameron and Osborne conclude, given what they get from the renegotiation and given the mood within the Conservative Party and the country, that their best strategy is to come back with a deal and recommend we say No and vote to leave the EU. That’s not certain – I don’t think even they necessarily yet know what they’ll do. But don’t rule it out yet.

Andrew Lilico is Chairman of Europe Economics.