If the Conservative Party wins the 2015 general election, Prime Minister David Cameron has promised the British people that a referendum on the country’s future in the European Union will take place in 2017. A decision of this gravity needs to be made with the fullest understanding of its consequences, based on facts.
This book offers a succinct, objective and comprehensive review of the evidence, the source of which is the British government’s own research project, Review of the Balance of Competences between the United Kingdom and the European Union. This Review draws together over 3,000 pages of independent assessments of whether the distribution of powers between the EU and the member states is right or needs to be changed.
The case for policy reform, renegotiation or repatriation of powers is presentedacross 32 different policy areas. The picture that emerges is far more nuanced and refined than the rhetoric that surrounds this crucial debate on Britain’s future in Europe would suggest. The authors offer an analysis of the evidence and invite readers to draw their own conclusions from the information they present.
|Publisher:||Centre for European Policy Studies|
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About the Author
Michael Emerson holds honorary doctorates from the universities of Kent and Keele. He began his career as an economist at the OECD, Paris, and subsequently worked for the European Commission, Brussels, from 1973 to 1996, where his posts included advising Roy Jenkins (1977-78) and the Ambassador to the USSR/Russia (1991-95). Since 1996, he has been Senior Research Fellow successively at the LSE and the Centre for European Policy Studies (CEPS). He has authored and edited many books on a wide range of topics including European integration and foreign policy.
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Britain's Future in Europe
Reform, Renegotiation, Repatriation, or Secession?
By Michael Emerson
Rowman & Littlefield International, Ltd.Copyright © 2015 Centre for European Policy Studies
All rights reserved.
Part I - Questions
1. What is the Balance of Competences Review?
The ultimate question is whether Britain should stay in the EU or secede, which Prime Minister Cameron has committed to put to a binding referendum in 2017, in the event that the Conservative Party wins outright in the general election of May 2015.
The referendum is intended to resolve this question once and for all, while setting a target date sufficiently far ahead to allow for negotiations with the EU and other member states to solve as many of the perceived problems as possible in the meantime, and for public debate to mature in parallel.
To prepare the ground for defining its policy on Europe, in July 2012 the government launched a "Review of the Balance of Competences" of the EU, namely the balance between the EU and the member states in the distribution of powers. This is described in official documents as "an audit of what the EU does and how it affects the UK."
The core question that the Balance of Competence Review addresses is whether the distribution of competences between the EU and national levels is about right or is in need of change, which could mean changes in either direction, with repatriation of competences from the EU back to the national level, or the strengthening of competences at the EU level, or both at the same time. These changes might represent mere adjustments or be more radical in amplitude.
From the outset the Review was intended to collect objective evidence, with open invitations to any interested organisations, companies or persons to make submissions that would be analysed by the civil servants of the relevant government departments and published with transparent attribution of sources. In all, 32 sectoral reviews were commissioned, covering the entire landscape of EU policies, and the results have now been published, totalling around 3,000 pages of evidence submitted by some 1,500 independent individuals or organisations (see Annex A for links to the published materials).
As to the rules of the game, the terms of reference for these reviews were not to reach explicit conclusions and recommendations, but rather to provide objective materials for others to do so. In fact, the many volumes of evidence provide a unique resource for anyone seriously interested in this question. Nothing like this has been done before — and there are many textbooks on European affairs. For this reason the present authors wished to distil conclusions from this substantial basis, reducing the mass of evidence to a short book while subjecting the findings to our own independent assessments.
Regarding the political context, the Prime Minister set out his terms of engagement in the European question in his 'Bloomberg' speech in January 2013. While important as a political statement, the speech gave little indication of what he wanted, beyond such expressions as "the EU must change", "power must be able to flow back to member states, not just away from them", and the need "to negotiate a new settlement with our European partners" and for the EU to be "more flexible, more adaptable and more open". A year later, in March 2014, the Prime Minister reiterated his position, using much the same language of negotiating a "new settlement", with emphasis on "no to evercloser union"; "no to unnecessary interference and red tape"; and more specific reference to immigration and "the free movement to take up work, not free benefits". Many Conservative MPs talk of the need to "repatriate" competences of the EU, but mostly without stating which competences they have in mind, beyond the frequent references to immigration and certain labour market rules.
Overall, there is a huge contrast between the comprehensive and concrete survey approach of the Balance of Competence Review on the one hand, and political speeches that are generally thin in terms of operational content on the other. It is the task of the former to inform the latter.
2. What are the EU's competences?
The EU has accumulated many competences in recent decades. These are codified in several categories in the Lisbon Treaty, signed in December 2007.
The EU has a few 'exclusive' competences, where only the EU has the power to legislate in these areas. These are mainly in the field of international trade, and monetary policy in the eurozone. In these cases, the exclusivity is driven by practical realities, since customs union or monetary union could not function alongside multiple national policies.
The EU has a greater number of 'shared' competences, where both the EU and member states can legislate, with rules to prevent conflicting laws. The respective shares of the EU and member states can change over time, in either direction, depending on the extent of new legislation at either level, or the repeal of existing laws. Many of these competences are in the broad area of the single market, which requires many technical regulations to govern the supply of goods and services.
The EU has several 'supporting' competences, where it may carry out certain actions to support, coordinate or supplement the actions of member states, but where the main responsibility lies with the member states, such as for public health and education.
Two of the most important fields are the subject of more specific description under the Lisbon Treaty. For economic policy, for example, the treaty states that "member states shall coordinate their economic and employment policies within arrangements provided by the Treaty, which the Union shall have competence to provide" (Article 2.3, TFEU). These 'arrangements' include a considerable amount of legislation, most importantly for the eurozone.
For foreign policy the treaty says that "The Union shall have competence, in accordance with the provisions of the Treaty on European Union, to define and implement a common foreign and security policy), including the framing of a common defence policy" (Article 2.2, TFEU). The method remains largely intergovernmental here, however, with unanimity among member states forming the basic decision-making rule.
The core method of the official Balance of Competence Review has been to work systematically through all of these competences, obtaining independent evidence on how each has been functioning. This has been a huge undertaking, never before conducted on this scale. For each of these Reviews the bottom-line question is whether the competence of the EU in this area, relative to the powers of the member states, is about right. Or are the EU's competences excessive, or insufficient, for effective policy-making?
The main part of the present study consists of summary assessments by expert authors in each area of the findings and judgments made in the 32 Reviews.
The Reviews go deeper than the core question of whether the EU's competences are 'about right' or not, and consider where there is scope for improving efficiency and effectiveness in the functioning of present competences, without necessarily calling into question their attribution to the EU. This is material for the 'reform' agenda.
3. What are the underlying issues?
While the question of whether or not to secede from the EU is, in principle, clear, the answers should be based on the clarification of a second tier of questions that go into the underlying issues at stake. These concern both the conditions for continued membership and the conditions for secession.
On the conditions for continued membership, the political debate in the UK is using three keywords: reform, renegotiation and repatriation. There are crucial differences between these eventualities.
Reform is a loose and maybe over-used term. It can embrace any steps that improve the status quo, either at the level of individual policies and laws, or on a grander scale. In the context of the EU, reform means measures taken by the EU as a whole, without special provision for a single member state, such as the UK. The political speeches of the British government mostly refer to achieving a "reformed EU", which would be the basis for the government to recommend a Yes vote at the proposed referendum. UK opinion polls are clear on this point: there is a large majority in favour of staying in a "reformed EU", whereas the majority in favour of remaining in the EU without any such qualification is slender, or questionable. Reform is also part of the vocabulary of other EU leaders, and so in principle points to a positive way ahead. But then comes the question: What reforms? Here the Balance of Competence Review helps identify at the operational level where EU policies could be made more efficient, where so-called 'red tape' could be cut, etc.
Renegotiation is about the UK receiving special treatment or 'opt-outs' in relation to EU laws and policies. This has been done in the past, notably for contributions to the EU budget. As regards opt-outs, the major cases of the euro and Schengen area were negotiated at a time when these policies were being shaped. The practical question is whether further opt-outs might be sought by the UK and successfully negotiated with other member states.
Repatriation is about returning competences to the member states. This leads to the question of which competences might be targets for repatriation, and at what level. The first level consists of competences as defined in the Lisbon Treaty (as listed above). Repatriation would require unanimous agreement on treaty changes, followed by repeal of the numerous operational laws of the EU that have been passed on the basis of the treaty provisions. The second level consists of the individual legal regulations and directives, which can be repealed on an individual basis without withdrawing the EU competence at the treaty level. This enters into the detail of EU policies, and especially the many 'shared' competences of the EU, where the relative proportions of the sharing can be adjusted.
On the conditions for secession, the British government would first need to work out what it would seek. The idea of a simple, big-bang, unilateral repeal of all EU law on the British statute book is not plausible, since it would create a huge legal void and economic uncertainty. There would have to be a negotiated settlement. A number of scenarios are discussed in Part III, and each of these leads to the question of what the political and economic consequences for the UK would be.CHAPTER 2
Part II - Evidence
1. Core single market policies
1.1 Single market overview
The Review of the single market surveys a vast field, with many of the subsequent Reviews going into more detail sector by sector. Overall, this Review observes a broad consensus that the single market is the EU's core mechanism for advancing and sustaining its high level of economic development.
It highlights the strong influence of the UK on the development of the single market. The big move towards completing the single market began in 1985, when the objective was set to achieve this goal by 1992 with the aid of 279 legislative measures, masterminded by Commissioner Lord Cockfield. There were two general keys to this achievement: first the move to qualified majority voting in the Council, and second the increased emphasis on the method of mutual recognition as opposed to harmonisation.
Business interests note that the single market regime brings legal certainty and market openness, but also regulatory burdens. But these burdens are not necessarily greater than national regulations, and of course enterprises engaged in cross-border business are saved from having to master 28 different regulatory regimes.
In seeking to summarise what powers remain in the hands of member states the Review rightly comments that there is no clear boundary between EU and national competences, but rather a continuous process of interactions. Member states remain free to act as long as they do not infringe upon EU law, and in particular any restrictions on the free movement of goods, services, people and capital are subject to legal challenge.
The Review analyses effects on the economy, on economic actors, and on policy-making.
In goods markets integration in the single market has meant the development of complex cross-border supply chains for both material and service inputs. Integration has lagged behind in some important network industries, however, including energy, telecoms, transport and the digital IT sector. Whereas the early single market agenda has now reached a stage of maturity, for the network industries much remains to be done, and many popular comments that the EU is 'over-regulated' miss this point.
As regards foreign direct investment (FDI), there is a particular British interest in the single market, since the UK has been winning a disproportionate share of the EU total, notably from Japan. It is generally thought that international investors would downgrade the ranking of the UK as an investment location in the event of secession from the EU and its loss of completely secure access to the single market.
Regarding the regulatory burden on businesses, there is a broad distinction in the Review between large internationally oriented businesses that place a high value on legal certainty for their operations, and small-and medium-sized businesses that do not export and would prefer less regulation. UK respondents have two particular concerns; that the UK itself may be 'gold-plating' its implementation of EU regulations with unnecessarily costly provisions (but the evidence for this is not clear-cut); and that other member states may be less diligent than the UK in implementing such measures.
As regards the policy-making process, the Review notes the significant influence of the UK in pushing single market policy in a liberalising direction, and indeed other liberally oriented member states are concerned that secession by the UK would weaken this strategic orientation. For UK interests contemplating the prospect of secession there would be a double risk; both that access to the EU market would become uncertain, and that the single market al ime itself could become less liberal.
Looking to the future, the Review considers that a new longterm strategy for the single market will anyway be called for after the renewal of the Commission and Parliament in 2014. On the one hand this will need to fit in with the growing globalisation of the world economy, and on the other hand to be reconciled with the widening scope of eurozone economic governance, notably in financial markets. On the question of specific priorities the Review highlights the case for the 'digital single market'.
Finally, the Review asks where the UK might gain from the EU doing less in the single market area. If this were to mean weakening the depth of integration, "it is hard to see that could be in the UK's interest" (p.57 of the Review). Although it is easy to say that the EU should regulate less, justifying this in operational terms and deciding on what and how to regulate less is more of a challenge. The Review acknowledges the continuous pressure from markets and technological change to develop new or to revise existing regulations.
"The EU could help itself in this area by, for example, ensuring it has a properly functioning mechanism that screened legislative proposals more systematically and objectively, for example that a proposal would only proceed if it clearly had a positive impact on growth" (p.57).
The Commission's REFIT programme aims to achieve this, which the Review does not mention.
At the strategic level the Review shows the UK to have been a driver in support of a liberal regulatory order in the single market. The appreciable economic benefits of the single market to the EU as a whole including the UK are considered matters of broad consensus. The UK's interest in the single market is highlighted by its success in attracting a disproportionate share of foreign direct investment from third countries, which would be undermined by secession.
The Review does not explicitly discuss the consequences of hypothetical secession for the UK's access to the single market A seceding UK would surely wish to retain secure access to the EU single market, but the only evident model for doing this is the EEA regime enjoyed by Norway, which the British Prime Minister has ruled out on the grounds that it would mean an unacceptable loss of sovereignty. Yet anything less than this opens up a huge unknown as to what the post-secession regime would consist of. One hypothesis is that existing EU market legislation would remain in force unless and until it were repealed or replaced. If the UK were to adopt a selective approach its present guarantee of full access to the single market would be undermined. What is certain is that a seceding UK would have no say in new EU regulations or the revision of old ones, and no assurance at all that the direction of EU single market policies would be in the UK's interests. As the Review clearly shows, the EU's single market regulatory processes are in continuous interaction with the dynamics of globalisation and technological change, so merely keeping existing EU regulation on the books would soon become an obsolete option.
Excerpted from Britain's Future in Europe by Michael Emerson. Copyright © 2015 Centre for European Policy Studies. Excerpted by permission of Rowman & Littlefield International, Ltd..
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Table of Contents
Glossary / About the authors / Preface / Executive Summary – Common sense and noble idea / Part I - Questions / 1. What is the Balance of Competences Review? / 2. What are the EU’s competences? / 3. What are the underlying issues? / Part II - Evidence / 1. Core single market policies / 2. Sectoral policies / 3. Economic, monetary and social policies / 4. Justice and home affairs / 5. Education, research and culture / 6. External relations / 7. General issues / Part III – Conclusions / 1. By groups of policies / 2. By reform, renegotiation, or repatriation / 3. Contemplating secession / Appendix A. Balance of Competences Review – Schedule of the British governments’ work / Index / List of Boxes and Figure
Contributors: Graham Avery / Miroslav Beblavý / Arno Behrens / Steven Blockmans / Hugo Brady / Michael Emerson / Daniel Gros / Alzbeta Hájková / Karel Lannoo / Adam Łazowski / Jorge Núñez Ferrer / Steve Peers / Michael Wriglesworth