In 120 days, British voters will determine the UK’s European future in a historic referendum. The culmination of Prime Minister David Cameron’s negotiations in Brussels on 18–19 February guarantees an intense debate during the next four months over the merits of the UK remaining or leaving the EU. A first challenge for the ‘remain’ campaign is that it is hard to argue that the negotiations have delivered Cameron’s key objective of Britain inside a ‘reformed EU’. Britain may instead be part of an EU in deepening crisis, as it grapples with the twin challenges of migration and eurozone stabilisation. Nor, assuming the British economy keeps up its current growth rate, will there be any near-term halt to the high levels of EU migration into the UK.
On the other hand, the negotiation did secure three important government objectives: it has contained the drive towards an ever closer union and Britain’s inclusion within it, improved democratic accountability by strengthening the role of national parliaments, and defined limits on the powers of eurozone institutions over non-eurozone EU members like the UK.
The challenge for Cameron now is to elevate the strategic case to remain, even as those arguing to leave point to the gap between his initial negotiating objectives and the results.
David Cameron’s overarching goal has been to deliver a ‘reformed EU’ within which he could argue the UK should remain a member. He defined a reformed EU as one that would be more competitive, more flexible, more democratic and more open.
Will the EU be more competitive? There is nothing in the 19 February Decision of the Heads of State or Government or the related Declaration in Annex III which guarantees it. The text is full of exhortations to ‘take concrete steps towards better regulation’ and to lower ‘administrative burdens and compliance costs’, but the battle to turn these exhortations into reality had already been joined by the Juncker Commission 18 months ago. Despite a promising start, the results will not be clear for the next year or two, especially in terms of opening up the EU’s markets for digital and other services. And the EU’s trade deals, which are briefly listed as part of the reform package, will move forward at their own, mostly glacial pace, as they do for all countries. It is also worth remembering that many of the EU regulations that frustrate Conservative politicians and some business leaders, such as those protecting the environment, consumers or workers, are as popular with the British public as they are on the continent, as both Jeremy Corbyn and Alan Johnson have argued.
Will the EU be more flexible? Not on the key question of free movement of EU workers. As Cameron quickly realized, seeking some sort of quota system would be a non-starter, given that EU members have built a highly integrated Single Market in which the relative competitiveness of its members is meant to be balanced across the four ‘freedoms’: free movement of goods (where Germany excels), capital (where the UK excels), labour (where central and southern EU states have a price advantage) and services (where all EU members could profit if the market were more open). Building explicit barriers to labour would defeat the purpose of the Single Market, which has long been more than a free trade area. Having eliminated all national tariffs at their borders and created a customs union in 1968, EU governments have since gone far beyond WTO parameters and removed barriers to trade also behind their borders, preventing each other from using state subsidies or differential health and safety standards, for example, to block trade. This is a point which members of the Brexit camp appear either to ignore or not understand.
The Decision does take steps towards preventing the abuse and distortion of free movement of EU labour into the UK caused by its own non-contributory welfare system. But, assuming these are approved by the European Parliament, they are unlikely to reduce the current relative attractiveness of the UK labour market. The prime minister, who pledged again at the last general election, just nine months ago, to reduce net migration into the UK to the ‘tens of thousands’, has now agreed a deal that confirms his inability to achieve this objective. It would have been better if Cameron had heeded the advice not to re-assert this pledge.
Steps in the right direction
On the other hand, the UK negotiating team made real progress on creating a more flexible EU in one important area – the further deepening of the eurozone. There are now explicit commitments to prevent discrimination against countries and companies outside the single currency; to avoid ‘caucusing’ by eurozone members to the disadvantage of euro ‘outs’; and to limit the jurisdiction of the European Central Bank to the oversight of eurozone institutions. These steps do not mean a UK veto over EU financial services regulation – as Annex II on the implementation of the ‘emergency brake’ on this issue makes clear. But they do constitute legally binding commitments that are critical for the UK, which accounts for over 60 per cent of the EU’s net exports of financial services, and that will be enshrined in the EU treaties in the future.
Cameron’s drive for a more democratic EU was also successful in two important respects. First, the Decision confirms that ‘the process of creating an ever closer union among the peoples of Europe does not offer a legal basis for extending the scope of any provision of the Treaties or of EU secondary legislation’ – a section targeted specifically at preventing the European Court of Justice from deepening integration through its own case law. The Decision states that the extension of EU competence can only take place through revision of treaties, on which the European Union Act of 2011 gives the British people the right to decide by referendum.
Second, if 55 per cent of the allocated voting share of national parliaments in the EU chooses to block a new draft piece of EU legislation, then member governments must not consider it until it has been amended. Sceptics argue that this is just a re-statement of the existing arrangement whereby governments can block EU legislation through ‘qualified majority voting’. But this ignores the key point that governments often pass new EU laws behind the backs of their parliaments and then blame Brussels for the result. Although the 55 per cent threshold may sometimes be hard to reach, national parliaments now have the ability to play a much more active scrutiny role on behalf of their electorates, increasing the accountability that Cameron demanded in his January 2013 Bloomberg speech.
Straining to raise the electorate’s sights
In order to win the referendum, Cameron has long known that he has to ask the British public to raise its sights beyond the minutiae of this imperfect deal. He first listed the strategic benefits of the UK’s EU membership in the closing section of his Bloomberg speech and addressed them again at the outset of his Chatham House speech in November 2015, which laid out the UK’s negotiating demands. Since his return from Brussels, he has doubled down on this theme.
One problem with David Cameron now highlighting the linkages between British prosperity and security and EU membership is that his new deal barely touches this agenda. Only two of his four specific objectives will directly influence the UK’s future prosperity and security (those on competitiveness and financial governance), and on only the latter did he achieve a relatively clear resolution.
But Cameron is now challenging the myth that Britain should only be interested in the sort of transactional relationship with the EU that the negotiation represented. If he wins, he will have grounded the country’s EU membership on firmer foundations, based on a new democratic mandate and freeing a majority of the British public from the illusion that the country is best served by clinging to notions of absolute sovereignty in an increasingly interdependent world. Britain can best tackle global challenges that matter to its citizens, from climate change to terrorism to internet governance, from within the EU. It has the best prospects to negotiate trade deals with large, nationalistic economies like China or to impose effective sanctions against countries like Russia or Iran as part of an integrated economic bloc of 500 million people. And if Britain is to retain its long-standing position as Europe’s leading recipient of foreign direct investment, then it needs a seat at the EU table, negotiating the compromises that set the common standards of the world’s largest Single Market.
At the same time, Britain will continue to have the sovereign right to decide whether or not to integrate further, retaining the flexibility of being inside the EU but outside the euro, the Schengen agreement on open borders, the Charter of Fundamental Rights and most EU rules on justice and home affairs. And it will continue to have sovereign control over 95 per cent of its government budget and key areas of domestic and international policy, from pensions, healthcare, education and taxation (bar VAT) to defence and foreign policy.
The Brussels negotiation last weekend addressed some important issues in Britain’s membership of the EU. But these were not the whole picture. Thankfully, the negotiations are concluded, and the deal is struck. It is time for the British public to examine the much broader case for EU membership, in all its dimensions.
Dr Robin Niblett, Director, Chatham House.