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Open Europe gives its initial assessment of the draft proposal tabled by European Council President Donald Tusk today.
2 February 2016
European Council President Donald Tusk has today tabled a compromise proposal on the UK’s renegotiation ahead of the EU referendum. This is a draft proposal and will now be discussed and negotiated between member states. There remain a number of unanswered questions and the details could yet change. The risk of watering it down remains real.
This keeps the possibility of a June referendum open (though there are a number of other hurdles, see here for details). It is a necessary step but not a sufficient one, meaning June is far from assured. A deal still needs to be found at the February EU summit.
The plan includes “solutions” in all the areas requested by Prime Minister David Cameron in his original letter to Tusk in November. On top of that the draft decision of European leaders restates the opt-outs the UK already has in a number of areas (including the euro and Schengen) and tries to broadly clarify the UK’s position in the EU.
Below, Open Europe lays out the key proposals in each section and the likely perceived strengths and weaknesses of each. In terms of the renegotiation, Open Europe will reserve judgement until the final agreement is reached (as noted, this is far from being guaranteed as the final deal). But our initial reaction is that based on this proposal the change secured from the renegotiation is likely to be a step in the right direction but unlikely to be transformative.
The main proposal in this section is improving the safeguards for non-Eurozone members. A set of principles has been laid out which should be safeguarded to ensure that there are equal rights for those inside and outside the Eurozone. There is also a mechanism to enforce these principles. If a number of members outside the banking union (exact number yet to be defined) believe any of said principles are being overridden by a certain piece of legislation it can request further discussion of the issue. The rotating Presidency of the Council of Ministers will then seek to find an agreement that takes account of the member state’s concerns. However, this process will take place “without prejudice to the normal operation of the Union legislative procedure”, meaning that the legislation can ultimately continue even if consensus is not found.
There are additional points included such as clarifying and confirming that the UK will not be involved in any future Eurozone bailouts and if EU-wide mechanisms are used that the UK and other non-euro members will be compensated. It also confirms financial supervision and macro-prudential remain under the UK’s control. An interesting point is that there could be flexibility in terms of secondary law implementing EU rules inside and outside the Banking Union. This could allow some differentiation in implementing things such as the rulebook on banks.
This section takes the form of a declaration from the EU to continue to work towards greater single market integration – with specific mentions for services, digital and energy – as well as expanding the number of free trade agreements. There are also commitments on better regulation and subsidiarity, though these remain quite vague. There is a commitment to look at “feasible burden reduction targets in key sectors”.
There is a long section clarifying what “ever closer union” means. Including that it does not amount to “an equivalent to the objective of political integration” and does not “require that further competences be conferred upon the EU”. It recognises the UK is “not committed to further political integration into the EU” and that the Treaties provide for “different paths” of integration that “do not compel all member states to aim for a common destination.” The substance of this will be “incorporated into the Treaties at the time of their next revision”.
The deal includes a proposal for a “red card” which would allow 55% of national parliaments (based on votes assigned under the current yellow/orange card procedures) to object to draft legislation if the objection is submitted within 12 weeks. EU ministers agree to drop the legislation if the concerns of national parliaments are not met.
The proposal explicitly acknowledges that “diversely structured” social security systems “may lead members of the workforce to be attracted to certain territories without this being a natural consequence of a well-functioning market” – a key argument made by the UK to address access to its unique system of in-work benefits. It further notes that if “overriding reasons of public interest, such as encouraging recruitment, reducing unemployment… averting the risk of seriously undermining the sustainability of social security systems, make it necessary, free movement of workers may be restricted by measures proportionate to the legitimate aim pursued.”
The four-year restriction on access to in-work benefits will be introduced via an ‘emergency brake’ that will be incorporated in the EU legislation on free movement and social security. The Commission has said that it is satisfied that “the type of exceptional situation that the proposed safeguard mechanism is intended to cover exists in the United Kingdom today. Accordingly, the United Kingdom would be justified in triggering the mechanism in the full expectation of obtaining approval.”
The Commission has pledged to bring forward proposals that would reduce the cost of paying child benefit to children who live abroad.
Donald Tusk has tabled a ‘draft decision’ of EU leaders, which would come into force the moment the UK confirms its intention to remain in the EU after the referendum. Such a decision of EU leaders taken under unanimity can only be reversed under unanimity, meaning the UK has a veto on any future changes. It will be lodged at the United Nations so that it is legally binding under international law and it commits EU leaders and the European Commission to instituting the various changes, some of which would be in place immediately after the referendum but others would require further action. This method was used for changes agreed with the Irish and Danish governments, which were later appended to the EU treaties. These are the likely precedents the UK Government will point to.