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The British Influence Scorecard 2014 Source: British Influence Date: 01.2014.
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The BriTish influence scorecard 2014 WhaT influence doesBriTain have in The eu?
RepoRt of an independent panel chaiRed by loRd hannay of chiswick
2
About British Influence
British Influence is the
umbrella campaign to keep
Britain in Europe and to push
for British-led reform of the
EU. We are a cross-party
organisation who believes
that Britain is better off in a
better Europe.
An independent and not-for-
profit organisation, we are
not affiliated with, nor do we
receive any funding from any
government, political party or
EU institution.
The BriTish influence scorecard 2014 WhaT influence doesBriTain have in The eu?
RepoRt of an independent panel chaiRed by loRd hannay of chiswick
Copyright of this publication is held by British Influence. You
may not copy, reproduce, republish or circulate in any way the
content from this publication except for your own personal and
non-commercial use. Any other use requires the prior written
permission of British Influence.
January 2014
British Influence
83 Victoria Street
London SW1H 0HW
conTenTsforeWord BY PeTer WildinG .................................................................................... 7
The scorecard raTinG sYsTem exPlained ..................................................10
inTroducTion BY lord hannaY of chisWick .........................................11
ParT i: The sinGle markeT & economic affairs
Chapter 1: Single Market ............................................................................... 17 Chapter 2: Economic Affairs......................................................................... 25
ParT ii: enerGY, environmenT & food
Chapter 3: Energy & the Environment..................................................... 35 Chapter 4: Agriculture & Fisheries ............................................................. 41
ParT iii: exTernal relaTions
Chapter 5: External Relations ...................................................................... 47
ParT iv: crime, JusTice & socieTY
Chapter 6: Justice & Home Affairs ............................................................ 49 Chapter 7: Culture, Society & Regions ................................................... 61
ParT v: insTiTuTions & accounTaBiliTY
Chapter 8: The EU Institutions .................................................................... 69 Chapter 9: Subsidiarity & Proportionality ............................................... 75
BioGraPhies of Panel memBers .........................................................................81
acknoWledGemenTs ..................................................................................................84
7
foreWord BYPeTer WildinG
BriTain: leader or loser in euroPeToday, on its first anniversary, British Influence, the
campaign to keep Britain in a reformed Europe,
publishes the assessment of an independent panel on
whether the UK is a leader or a loser in the EU. The
report shows that, contrary to all received wisdom,
Britain can achieve its aims in the EU, especially when it
works closely with allies. But the report also shows that
if there was a clear vision of Britain’s place in the EU and
the will to pursue that vision, we could achieve so much
more. In a world of rule-making power blocs, which
could pit Europe and America against China and Russia
in a battle to keep trade flowing and markets open to ensure global growth, the UK has
a real chance to be a critical player in the EU. By pulling the available European levers
of power Britain could increase our prosperity by leading political and economic reform
and increase our power by leading Europe’s diplomatic outreach. Berlin supports
completing the single market and Paris supports cooperation in defence. London
should be a vital player in this world and it could be. The EU is not perfect but it is the
best available mechanism for Britain to achieve its goals.
But, far from being a leader, is Britain, in fact, a loser? This vision is a superficially
attractive blend of the isolationist and globalist. It depends on pretending at the same
time that the UK counts for nothing in the EU but counts for something in the world.
The isolationists lament the loss of power in a country that has helped bring democracy,
freedom and the rule of law to the entire continent of Europe since 1945. In their view
the UK is now the runt of the European pack, forever powerless against Brussels’
meddling and hostile states while others lament the loss of ambition in a country that
is, in fact, the cock of the European heap and, freed from the purported shackles of EU
restraint, could rule the global roost again.
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a PeoPle adrifTGiven the consequences of these fundamental choices on the next generations’ prosperity,
it is a scandal that they are completely lost on the British public. Time and again we hear
that the public has no idea where the country was heading in the world or what the country
did in Europe and why. People could be proud to be part of Britain as a leader in Europe
but, as far as they are concerned, Britain is a loser. This lack of clear leadership from the
political elite and the lack of any balance from the media leave a sad picture of a patriotic
public more uncertain and hostile to the forces of globalisation whilst at the same time
eager to channel their pride into practice.
This report reveals that we therefore face a political as well as a moral crisis. The failure to
lead and inform the public of their country’s place in the world as Churchill, Thatcher and
Blair sought to do has left an existential vacuum filled by a new poujadism. It needs to be
filled by a new patriotism where the people are guided by their leaders and informed by
their press that Britain is a big player in Europe, often wins its battles and keeps its friends.
As Janan Ganesh of the Financial Times said recently, in a sideswipe at a country adrift,
“Britain has delusions not of grandeur but of weakness.” 1
…in search of a roleAs Lord Hannay says in his memoirs, Britain’s Quest for a Role, Britain must assert a
positive, pro-membership policy, now more than ever. This report is the first of an annual
assessment of how well Britain sets this agenda in Europe and how it could do better. This
is a work in progress.
Like a global grande dame, the UK has had two historic curtain calls since victory in the
war. The Suez crisis ended the Empire in 1956, and joining the European Communities in
1973 showed that we recognised that our future wealth and position in the world could not
come from the Commonwealth. The choice was made for Europe.
Who could deny British influence has yielded massive results? As Radek Sikorski, the Polish
Foreign Minister, said, “Europe is now an English-speaking power”2. Its key achievements
have been British led: the creation of the single market and the successive enlargements to
bring in the former dictatorships of southern Europe, the great Scandinavian democracies
and the former Communist states of Eastern Europe. Today many Member States support
the UK in its efforts for political and economic reform in the EU and diplomatic power
projection in the European area. The USA wants “a strong Britain in a strong Europe”3,
1 The Financial Times, Britain suffers delusions of weakness not grandeur, December 2012: http://bit.ly/1mvXAl92 Radek Sikorski, Speech in Oxford, September 2012: http://www.mfa.gov.pl/en/news/minister_radoslaw_sikorski_in_britain_to_spoke_out_in_favour_of_europe3 Reuters, Obama tells Cameron wants Britain in “strong European Union”, January 2013: http://uk.reuters.com/article/2013/01/17/us-britain-eu-obama-idUSBRE90G1CT20130117
a view supported by numerous partners like Japan4 and Australia5 and numerous global
companies like Ford6 and Nissan7.
Surrounded by a confused people, bewildered allies and discomforted businesses, Britain is
facing a third curtain call ending our power in Europe. Allies, recently offended by the UK’s
strident tone, have said: “We need reform, especially if the UK, previously central Europe’s
spiritual brother in the EU, departs to an unknown geopolitical destination, significantly
weakening its influence within the EU.”8
If it was true that the UK had no influence in the councils of Europe this would be a
reasonable step. As our report today shows Britain often leads in Europe and could do so
more often. Leaving seems like a suicidal indulgence.
Peter WildingDirector, British Influence
4 BBC News, Japan suggests UK jobs would be lost on EU exit, July 2013, http://www.bbc.co.uk/news/uk-233938565 The Daily Telegraph, EU review: Don’t quit Europe, Australia tells UK, July 2013, http://www.telegraph.co.uk/news/worldnews/europe/10197815/EU-review-Dont-quit-Europe-Australia-tells-UK.html6 The Daily Telegraph, Ford warns it would reassess UK presence if country left EU, January 2014: http://www.telegraph.co.uk/finance/economics/10572731/Ford-warns-it-would-reassess-UK-presence-if-country-left-EU.html7 BBC News,Nissan boss warns UK over possible EU exit, November 2013: http://www.bbc.co.uk/news/business-248594868 Central European Policy Institute and demos Europa, Central Europe fit for the future, January 2014, http://www.demosservices.home.pl/www/files/demos_Central%20Europe_fit_web.pdf
1110
inTroducTiondoes BriTain exercise anY influence?The perceptions of Britain’s influence on policy-making and outcomes in the European
Union are frequently polarised between two extremes. The first asserts that Britain has
little or no influence and is subjected against its will to decisions taken by others which
are not in its own interest. The second is that, from the outset of its membership in 1973,
Britain has exercised significant influence over Europe’s policy-making and has done much
to propel the European Union towards a genuine Single Market, towards enlargement to
the south and the east and towards freer and fairer world trade, all of which have been in
Britain’s own national interest as well as that of Europe as a whole. As the national debate
over Britain’s future in the European Union quickens it is surely time to subject these two
incompatible theses to critical scrutiny.
That is the rationale which has led British Influence to compile this first of an annual series
of British Influence Scorecards, looking at Europe’s policies sector by sector and seeking
to assess the degree of British influence in each and also to test whether that influence is
waxing or waning. With that kind of an evidence base for assessing British influence on a
continuing basis it should be possible to have a better-informed national debate and also
for the government of the day in particular to take remedial action. To help compile the first
of these scorecards British Influence has called on the experience of a Panel of five which
included a senior politician from each of the three main parties (the Panel’s membership
consists of Sir Menzies Campbell MP (Liberal Democrats), Charles Grant (Director of the
Centre for European Reform), Lord Hannay of Chiswick (Chair), Baroness Quin (Labour) and
Sir Malcolm Rifkind MP (Conservative)).
So far as the sectoral analysis of the policy-making is concerned the Panel decided for
simplicity’s sake and for ease of reference to follow the Government’s own sub-divisions as
set out in its Balance of Competences Review, but we have grouped them thematically for
reasons of clarity and space. In addition, a separate analysis has also been made of the
degree of British influence in the main policy-making institutions of the European Union: the
Commission, the Council and the Parliament. For value judgements the Panel has relied
on a system similar to that applied by many businesses in the form of key performance
indicators, with a green, amber, red traffic light categorisation to indicate whether the
degree of British influence was considered to be generally successful, at risk or deficient.
The scorecard raTinG sYsTem exPlainedBoth business and non-commercial organisations commonly use a system
of key performance indicators to denote whether important objectives have
been reached. In this report the Panel has used the following guidelines to
determine which indicator to adopt for a particular strand of policy:
The scorecard rating:
successfulthe UK has succeeded in meeting at
least some of its objectives
at risk
the UK has either partially succeeded
in reaching its objectives or there is a
danger that it will not do so
deficientthe UK has failed to reach its objectives
or is in danger of not doing so
1312
WhaT is influence? Any country has objectives it wishes to achieve in international relations – the promotion
of certain values, the expansion of economic opportunities for its businesses and the
protection of its security are all obvious examples. To achieve those objectives it must have
influence over those countries or organisations that have the power to enable a country
to reach its objectives. For example, the UK joined the EU at the end of a process that
began with the Macmillan Government concluding in 1961 that the UK was losing influence
in the world. The alliance with the US was essential, but British influence with the US was
declining; the Commonwealth was valuable but not a basis for British influence in the world:
and the EEC was clearly going to become increasingly important with or without Britain in
trade, economic and eventually political terms. Its members were outperforming the UK
economically and the British government could only see this situation worsening because of
its lack of authority over the direction of policy-making in the EEC.
While all countries have objectives, or interests, which they seek to achieve, the amount of
influence they have to enable them to reach these varies considerably. Influence is partly
related to economic weight, to population, to military capacity, to geographic location and
to other factors; but it is also related to the extent to which a country works effectively with
allies to achieve shared goals. Power in the twenty-first century is not just a consequence
of size, it is also critically about alliance building; the EU is arguably the most successful
example in the world today of countries working together to maximise the achievements
of their countries and their global impact. While influence does not guarantee success
in negotiations, it increases the chances. It is also true that a country’s influence waxes
and wanes over time. [Although a country’s effective exercise of its influence undoubtedly
makes a big difference, there are occasions when a country might achieve a key objective
anyway because it is in the interest of others]. In this Scorecard Report, the emphasis is on
identifying areas where British influence has (or has not) made a difference and where it will
be essential to make a difference in the future.
Influence is not easily measured; but it is real. The grand alliance in the mid-1980s between
the British government of Margaret Thatcher, the Commission duo of Jacques Delors and
Arthur Cockfield, together with Francois Mitterrand and Helmut Kohl and trade liberalising
supporters in the European Parliament, paved the way for the negotiation of the Single
European Act of 1986 and the creation of a Single Market which, for all its imperfections,
has brought major benefits to the citizens of a much enlarged European Union. Similarly, in
a less dramatic way, British influence is important across the whole range of daily European
policy-making. While the complexity of the European legislative and executive processes
often conceals the reality of how influence is exercised, it does not abolish them.
The fact that so much, but by no means all, European policy-making is subject to qualified
majority voting (QMV) has increased the need for the effective deployment of influence.
While a requirement for unanimity can, in theory at least, enable any Member State, acting
on its own, to block a proposal, that power is largely a negative one. Thus in the period
before the Single European Act increased majority voting for Single Market legislation,
virtually no national technical barriers in trade were removed. The prevalence of majority
voting and the co-decision process (that is, the agreement of both the Council of Ministers
and the European Parliament) have opened up more scope for the exercise of influence
but have also increased the risk for those who may fail to put it to effective use. In addition
to the need to recruit allies in order to influence EU legislation made under QMV, the
reluctance of Ministers to put issues to a vote and their preference for reaching agreement
by consensus means that it is important to exercise influence at an early stage before the
consensus takes final shape.
challenGes To influenceRecent moves towards greater integration in the eurozone have raised the spectre of the
“ins” ganging up against the “outs” in other but related aspects of EU policy, particularly
Single Market matters. This concern, while understandable, wrongly presumes that the
eurozone states are a homogenous group likely to be in agreement on major Single Market
legislation. Experience does not suggest that that is the correct assessment; eurozone
member countries take a variety of positions on Single Market measures and are likely to
continue to do so. With a constructive attitude and agile diplomacy the UK can overcome
this obstacle. It is in any case not a purely UK problem; there are nine other Member States
outside the eurozone and that number is not likely to fall quickly because of the reluctance
of the eurozone to accept new members easily after the difficulties of recent years. The UK
will however need to work closely with the Commission and the Parliament to protect its
interests and those of the European Union as a whole.
As one of the group of larger Member States Britain has, almost by definition, the potential
to exercise a significant degree of influence in European policy-making right across the
board; and its interests are affected by almost every decision taken at European level. In a
number of cases, such as the Single Market, trade policy, enlargement and the foundation
of a Common Foreign and Security Policy, it has in the past played a leading role and
has managed to build a European consensus around the policies it has supported. The
purpose of this first Scorecard is to gauge the extent to which this continues to be the case
and, if not, what steps are needed to remedy that.
Lord Hannay of Chiswick
1514
The sinGle markeT & economic affairs
ParT i
1716
chaPTer 1sinGle markeTovervieWBeing in the Single Market is one of the main benefits of EU membership. Access to a
free-market of 500 million consumers, across 28 countries and £12 trillion in GDP is vital
to British business, enabling companies based in the UK to sell goods and services in an
economy larger than that of the USA and Russia combined.1 Being able to shape the
rules of that market is an essential form of influence for Britain, which countries inside
the Single Market but outside the EU, like Norway, do not have. The Single Market also
ensures adequate supplies of goods and services for British companies and British citizens,
increases choice for UK consumers (companies as well as individuals), and enables
business to access skilled labour and citizens to access employment.
Britain’s major objectives in the EU at the present time include extending the Single Market
more deeply into areas such as services and energy and creating a level playing field in the
digital area, as these would be of great benefit to the UK. For example, the establishment
of a Digital Single Market by 2020 would highly advantage the UK, which is Europe’s largest
and most advanced e-commerce market and, in addition, would increase the EU’s GDP by
4 per cent.2
free movemenT of GoodsFree movement of goods means that the UK can import from or export to another Member
State easily and with low costs, as trade barriers and border controls have been abolished,
through the ending of customs tariffs and the emergence of common regulations that
ensure high quality standards. Goods exports to other EU Member States accounted for
50.65 per cent of UK’s total exports, and imports from the EU accounted for 50.85 per
1 The UK and the Single Market’, Trade and Investment Analytical Papers – Topic 4 of 18, Department for Business, Innovation & Skills and Department for International Development (2011), p.3 & IMF, World Economic Outlook, October 2012https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/43314/11-719-uk-and-single-market.pdf2 Figures from the British Government, Review of the Balance of Competences between the United Kingdom and the European Union: the Single Market, July 2013, p. 55.https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/227069/2901084_SingleMarket_acc.pdf
1918
cent of its total imports in 2012.3 The UK’s economy relies heavily on trade (whether in
goods or services), and it is ranked among the top fifteen importers and exporters of goods
according to the World Trade Organisation in 2012.4
In 2012/13 the UK was seeking to complete the work on the creation of a European-
wide patent as that would be of particular value to our economy. British applications to
the European Patent Office and the Office of Harmonisation for the Internal Market, as a
proportion of all EU applications, range from 3 per cent in trademarks, to 10 per cent in
registered designs and 16 per cent in patents.5 Given the UK’s disproportionate share of
patents in the EU, the idea of a single patent law to ensure uniform protection of intellectual
property rights across the Single Market (and a sharp reduction in costs as a patent would
only need to be registered in one place rather than in 28 individual Member States) has
been strongly supported by recent British Governments.
An agreement on the “Patent Package” was reached in November 2012 and formally
adopted by the UK and other Member States in February 2013, using the enhanced
co-operation procedure under the Treaties.6 This new single patent system will reduce the
costs for obtaining patent protection in the EU by up to 80 per cent.7 UK Government
estimates suggest that this Single Patent System will lead to direct benefits for businesses
of £40 million per year; and a new European patent court in London for
pharmaceutical and life sciences will bring at least £200 million to the UK
economy each year.8 This was an important step forward in an area of great
importance to the UK achieved by working with like-minded Member States
and using the device of enhanced co-operation to enable the 24 Member
States who wanted to go ahead with the unified patent to do so, with other
Member States able to join later.
The Single Market is one of the policy areas for which British support is generally high. The extension
of European economic activity to services has been to the benefit of the UK and 2013 saw the
approval of a unified Patent System that will signify important scale savings in the near future.
3 Figures from the Department for Business, Innovation and Skills, Review of the Internal Market: Free Movement of Goods, including the EU Customs Union and Intellectual Property Rights, p.2.https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/199780/Call_for_Evidence_v_12.pdf4 http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Country=GB&Language=S5 Figures from the Department for Business, Innovation and Skills, Review of the Internal Market: Free Movement of Goods, including the EU Customs Union and Intellectual Property Rights, p. 16. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/199780/Call_for_Evidence_v_12.pdf6 European Commission, Unitary Patent – Ratification Progress:http://ec.europa.eu/internal_market/indprop/patent/ratification/index_en.htm7 European Commission, EU Unitary Patent: European Parliament and Council Give Green Light, November 2012. http://ec.europa.eu/commission_2010-2014/barnier/headlines/news/2012/12/20121211-2_en.htm8 Press release from the Department for Business, Innovation and Skills New Bill Proposes Reformed Intellectual Property Laws in the UK, May 2013. https://www.gov.uk/government/news/new-bill-proposes-reformed-intellectual-property-laws-in-the-uk
free movemenT of PersonsThe free movement of persons means that any citizen of the EU is allowed to circulate freely
between Member States to work, study or retire and has the right to establish a business,
with certain safeguards relating particularly to social security claims. These rights, which
are reciprocal for British citizens living elsewhere in the EU, are supported by the Equal
Treatment Directive, which sets out a general framework for equal treatment in employment
and occupation of EU nationals living in another Member State.9
EU migrants account for 3.7 per cent of UK residents but they are outnumbered by non-
EU migrants, who represent 3.9 per cent of UK residents.10 A number of EU Member
States have a higher proportion of EU migrants in their population than the UK, including
Luxembourg (37.9 per cent), Cyprus (12.6 per cent), Ireland (8.5 per cent), Belgium (7 per
cent), Spain (5.1 per cent), and Austria (4.5 per cent).11
Nonetheless, the presence of EU migrants in the UK has been of concern since the
enlargement of the EU in 2004 and the accession of Romania and Bulgaria in 2007. But
research shows that, for example, British health care spending on non-active EU citizens
(that is, those who are not in work because they are students, are still in school, are retired
or are supported by a working spouse) vary from 0.7 to 1.1 per cent, according to the
estimates.12 In other words, the proportion of non-active EU citizens benefiting from the
NHS is at least three times smaller than the actual proportion of EU citizens established in
the UK. In addition, EU migrants are very unlikely to be unemployed; their unemployment
rate is only 1.2per cent.13 Furthermore, in the decade up to 2011, migrants from the EU
contributed 34 per cent more than they took out in benefits and services; over the same
period the native UK population contributed 89 per cent of what it received (i.e. a deficit).14
On 1st January 2014, following the end of the transitional period set out in the Accession
Treaties, the UK lifted working restrictions on workers from Romania and Bulgaria, which
both joined the EU in 2007. The British Government recently “acknowledged the positive
contribution that most Romanians in the UK make to the UK economy”, and considers that
9 Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32000L0078:en:HTML10 Figures from the European Commission: EU Employment and Social Situation, March 2013, p. 19.http://epp.eurostat.ec.europa.eu/portal/page/portal/population/documents/Tab/ESSQR_Mar2013_demogr_suppl_final.pdf11 Ibid. p. 1912 Ibid. p 1913 Figures from the European Commission: A fact finding analysis on the impact on the Member States’ social security systems of the entitlements of non-active intra-EU migrants to special non-contributory cash benefits and healthcare granted on the basis of residence, October 2013, p. 29. http://ec.europa.eu/employment_social/empl_portal/facebook/20131014%20GHK%20study%20web_EU%20migration.pdf14 Centre for Research and Analysis of Migration, The Fiscal Effects of Immigration to the UK, November 2013, p.27.http://www.cream-migration.org/publ_uploads/CDP_22_13.pdf
2120
the free movement of workers within the EU drives growth, competitiveness and jobs.15
However, reflecting concerns in a number of Member States that free movement of persons
rules can be abused, the UK Government has an objective of agreeing a tightening of the
EU’s social security benefit rules to deter such abuses. In April 2013 the UK, Germany,
the Netherlands and Austria signed a joint letter to the President of the Justice and Home
Affairs Council about preventing free movement abuses. After the Council in June, Home
Secretary Theresa May said: “Ministers have today acknowledged that free movement
abuse is a problem for a number of Member States and we have secured a commitment to
find EU-wide solutions to this problem”.16
In an article for the Financial Times at the end of November last year, David Cameron
outlined plans for reforming the rules on free movement.17 His agenda was in two parts:
a series of measures to address immediate public concerns about the end of transitional
controls on Bulgarians and Romanian migrants; and a longer-term set of ideas about free
movement that would be considered as part of any future enlargement of the EU.
The short-term measures seek to prevent EU migrants from gaining access to welfare
benefits within their first three months resident in the UK. This includes restricting access
to housing benefits and jobseekers’ allowance, as well as putting a six-month time-limit on
the period migrants are able to claim unemployment benefits without proving they have a
genuine prospect of employment. In addition, the Prime Minister announced the changing
of the rules relating to deporting EU migrants found sleeping rough or begging, who will be
barred from re-entry for twelve months.
In the longer-term, the Prime Minister has suggested that the free movement of people
might be restricted in a number of different ways. One such way would be, in the context
of future acceding countries (Montenegro, Serbia, Macedonia, Turkey), the UK could insist
that the transitional period could be longer than the recent practice of seven years. More
ambitiously an attempt could be made to restrict the ability to work in
another Member State until average income levels are similar. However, to
achieve such a change in the basic free movement rules, the UK will have
to win allies across the EU. Although a number of other Member States
share the UK’s concerns about benefit claims by EU migrants (notably
Germany and the Netherlands) the UK will need support from a wider
group of Member States, including some in Central and Eastern Europe, if
it is to alter the rules in significant ways.
15 Press release from the British government: UK and Romania Renew Strategic Partnership, October 2013. https://www.gov.uk/government/news/uk-and-romania-renew-strategic-partnership16 AOL Money: May to Tackle ‘Benefit Tourists’, June 2013. http://money-news.money.aol.co.uk/article/2013/06/07/may_to_tackle_benefit_tourists17 http://www.ft.com/cms/s/0/add36222-56be-11e3-ab12-00144feabdc0.html#axzz2pctkJuCz
free movemenT of servicesServices represent 70 per cent of the Single Market’s economic activity. Making cross border
trade in services easier has major potential to boost the EU economy.18 Services are even more
crucial to the UK as they account for about 80 per cent of its output and employment, spanning a
wide range of activities including financial and business services, transport and communications,
health, education, social care, retail, hotels, tourism and catering.19The UK has had a trade surplus
in services with the EU in every year since 2005: it exported €85.6 billion (around 5 per cent of
GDP) of services to the EU27 in 2012, and imported €71.3 billion (approximately 4.2 per cent of
GDP), giving an overall trade surplus in services of €14.3billion.20 The UK’s share is around 11 per
cent of intra-EU services exports and 9 per cent of intra-EU services imports in 2012.21
But the current system for the regulation of general services (financial services are regulated
separately, see below) is not working as well as it should and many barriers remain to a full
single market in services: whereas services account for 70 per cent of the EU’s economy,
it only represents 28 per cent of intra-EU trade.22 Remaining barriers have a negative effect
on the cost and quality of services, and especially harm SMEs, which cannot access cross-
border opportunities because of complex administrative and legal requirements. Whereas
they represent the majority of service-providing firms, only 8 per cent of SMEs engage in
cross-border activities in part because of such difficulties.23Also, different regulatory regimes
make it harder for qualified professionals, such as lawyers, accountants, architects or
retailers, to gain access to job vacancies in other Member States.
The UK’s ambition is to open up the market in services much further, building on the
principles of freedom of establishment and free movement of services in the Treaties and
through the important Services Directive of 2006, which sought to unburden Europe’s
booming services markets.24 It has been estimated that the removal of the remaining
unjustified restrictions on trade in services would create an economic gain of up to 2.6%
per cent of EU GDP in 5-10 years, with considerable benefits for the UK.25
18 Figures from the European Commission, A Single Market for Services: http://ec.europa.eu/internal_market/top_layer/services/19 The Daily Telegraph, ‘UK Economy: It’s Rebalancing, but Not as We Know It’, November 2013:http://www.telegraph.co.uk/finance/comment/10422712/UK-economy-its-rebalancing-but-not-as-we-know-it.html20 Department for Business, Innovation and Skills 2013, op cit, p. 6. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251659/bis-13-1254-call-for-evidence-single-market-free-movement-of-services-review.pdf21 Ibid. p. 6. 22 Ibid. p. 6. 23 Figures from the European Commission, A Single Market for Services: http://ec.europa.eu/internal_market/top_layer/services/24 Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market:http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006L0123:EN:HTML25 European Parliament: Report on the Internal Market for Services: State of Play and Next Steps, July 2013, p. 5. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2013-0273+0+DOC+PDF+V0//EN
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There was progress in 2013 on access to the professions: the European
Commission launched a review to evaluate national regulations on access to
professions and the European Council agreed that there should be an annual
report on Member States’ implementation of the Services Directive by the
Commission.26 While both of these decisions were modest steps forward, they
fell short of the UK’s ambition of opening up the services market more radically.
Ensuring that the Commission now adopts a rigorous approach to the scrutiny
of Member States’ implementation of the Services Directive to remove unnecessary barriers
to trade will be an important objective for the UK in 2014, as will the extension of the scope
of the Services Directive and the creation of a level playing field for the digital economy.
financial services and The free movemenT of caPiTalFinancial services are of vital concern to the UK because of the size and economic
impact of the sector in the country. Financial and related professional services
contributed £195 billion to the UK economy in 2011, representing 14.5 per cent of UK
GDP27, which is one of the highest shares of GDP in the OECD.28 Financial services
are highly profitable and important to the whole economy, not least because of the
sector’s contribution to UK employment (around 3.6 per cent).29 According to the Bank
of England, in the decade before the financial crisis, the financial services sector grew
at more than double the rate of the UK economy as a whole.30 The Government has
acknowledged that: “The financial services sector is critical for the UK. It plays a key
role in providing essential services to individuals and businesses and in its contributions
to growth, trade, tax revenues and employment”.31
According to the IMF, the UK is the largest net exporter of financial services, insurance
and pensions in the world, with a trade surplus that is around three times that of any other
country.32 In 2012, UK net exports in financial services were $67 billion, compared to
$23 billion in the US, $21 billion in Luxembourg, $19 billion in Switzerland and $9 billion in
26 European Council Conclusions October 2013, para. 19:http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/139197.pdf27 Economia, Right on the money, July 2013:http://economia.icaew.com/business/july-2013/right-on-the-money28 HM Treasury 2013, Single Market: Financial Services and the Free Movement of Capital, p. 7. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251514/PU1568_BoC_FSFMC_CfE_proof4.pdf29 House of Commons Library Briefing Paper, Financial services: contribution to the UK economy, August 2012, p. 1.www.parliament.uk/briefing-papers/sn06193.pdf30 Bank of England: Measuring financial sector output and its contribution to UK GDP, 2011, p. 245. http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb110304.pdf31 HM Treasury 2013, op cit. p. 6. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251514/PU1568_BoC_FSFMC_CfE_proof4.pdf32 HM Treasury 2013, op cit. p. 8.
Germany.33 The UK is now the world’s largest centre for cross-border borrowing, with 258
foreign banks operating in the UK in 2012, which is more than in any other EU country.34
Therefore, free movement of capital, which enables integrated, open, competitive and
efficient European financial markets and services, is a major asset for the UK. As a whole
UK financial and insurance services trade surplus also constitutes 63 per cent of the UK’s
total trade surplus in services; and the EU is the largest destination for UK exports of financial
services (around a third of the UK’s trade surplus in financial and insurance services in
2012).35However, financial services only account for 8 per cent of intra-EU trade in services.36
The global financial crisis has had a dramatic effect on financial services in the UK and
the wider EU, as well as more widely across the world. Cross-border investment and
financial integration, for example, have fallen dramatically since the 2007 peak, although
they are now growing again slowly.37 The EU’s approach to financial services regulation
has changed, as has that of the USA and other financial service markets, including the UK,
reflecting different international priorities since the crisis: namely the need to ensure that
such a crisis does not occur again.
The EU debate about financial services regulation after the crisis has been complicated by
the fact that, while the majority of EU Member States are also in the eurozone, 11 Member
States, including the UK, are not. The EU has had to balance the need to stabilise the
eurozone through and beyond its period of crisis alongside the global agenda to reform
and modernise financial regulation which affects all EU Member States. The UK has
found this period of intense EU regulatory activity difficult, as UK politicians, regulators and
businesses have wrestled with the often highly complex but economically significant issues
involved. For example, the UK has felt that the EU has arguably under-implemented some
new international standards, such as the definition of “regulatory capital”, and gone beyond
those standards in others, such as the regulation of banker’s bonuses.38
The UK Government’s objective of seeking proportionate regulation has led it to challenge
some of the measures that have emerged since the crisis. It is now challenging the
33 HM Treasury 2013, op cit. p. 8.34 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251514/PU1568_BoC_FSFMC_CfE_proof4.pdf p.1435 HM Treasury 2013, op cit. p. 8.36 Figures from the Department for Business, Innovation and Skills: Government’s Review of the Balance of Competences between the United Kingdom and the European Union: Call for Evidence: Single Market, Free Movement of Services Review, October 2013, p. 7. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251659/bis-13-1254-call-for-evidence-single-market-free-movement-of-services-review.pdf37 European Commission: A Single Market for growth and jobs: an analysis of progress made and remaining obstacles in the Member States, November 2013, p. 2.http://ec.europa.eu/europe2020/pdf/2014/smr2014_en.pdf38 HM Treasury 2013, op cit. p. 22.
2524
bankers’ bonuses regulation and the Financial Transactions Tax in the European Court of
Justice (although the latter is unlikely to proceed in its original form regardless).39
The UK did however achieve some of its objectives in 2013. EU Finance Ministers agreed
in June on the Bank Recovery and Resolution Mechanism, establishing a framework for the
recovery and resolution of credit institutions and investment firms.40 The Financial Secretary
to the Treasury, Greg Clark, claimed that: “The agreement represents a big success for the
UK”.41 The directive is aimed at providing national authorities with common powers and
instruments to pre-empt bank crises and to resolve any financial institution in an orderly
manner in the event of failure, whilst preserving essential bank operations and minimising
taxpayers’ exposure to losses.
There was also an important agreement connected to one of the EU’s supervisory
bodies for the financial services sector, the European Banking Authority (EBA).
There had been concern that, without special arrangements to protect the interests
of non-eurozone countries, the board of the EBA could adopt measures by
qualified majority that would disadvantage the ‘outs’. This would be of increasing
importance as the eurozone countries adopt banking union measures, bringing
their bank regulatory mechanisms under one central supervisor. A double-majority
system of voting on the EBA board will ensure that the interests of non-eurozone
countries cannot be easily overridden and in October 2013 the Finance Ministers agreed that
this arrangement would remain until such time as there were only four Member States not
participating in the eurozone and would then be reviewed.42
competition & consumeR pRotectionIn 2012 the Commission launched a package of measures with the intention of
modernising the State Aid rules. Maintaining an effective EU regime to regulate
and, if necessary, prohibit State Aid is a long-standing UK objective. In July
2013 the Council of Ministers adopted, with UK support, two regulations as
part of the modernisation process; these made provisions for a greater number
of exempt areas (“block exemptions”), including innovation, sport and natural
disasters, where State Aid can be given, provided certain conditions are met.
The second regulation is intended to speed up the scrutiny process.43
39 HM Treasury 2013, op cit. See box on p.23 for list of current challenges. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251514/PU1568_BoC_FSFMC_CfE_proof4.pdf40 Council of the European Union, Council agrees position on bank resolution, June 2013. http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/137627.pdf41 The Guardian, ‘EU agrees banks’ bail-in deal’, June 2013. http://www.theguardian.com/business/2013/jun/27/eu-agrees-banks-bail-in-deal42 Declaration at the ECOFIN Meeting 15.10.13:http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/139019.pdf43 http://europa.eu/rapid/press-release_MEMO-13-251_en.htm
chaPTer 2economic affairs
overvieWEU policy in economic affairs is of great importance to the UK, not least because of its
regulation of financial services and because of its role in leading trade negotiations on
behalf of Member States with third countries. The UK has had great success since 1973 in
influencing EU economic policy, particularly in these areas of trade and in financial services.
There were a number of major policy developments in economic affairs in the EU in 2013
where the UK Government had set out explicit goals. These included reducing the EU’s
budget over the next financial period from 2014, starting talks with the United States on an
EU-US trade agreement and blocking the passage of the financial transactions tax.
The eu BudGeTbackgRoundThe EU Budget finances six main areas of activity. Its size is determined jointly by the
Commission, who first proposes the budget, the Council of Ministers and the Parliament.
A Multiannual Financial Framework (MFF), decided by consensus within the European
Council, sets the size of the budget for a given seven year period. Working within this
framework, annual budgets are then agreed, with these subject to qualified majority
voting (QMV).
The EU has no power to deficit finance its operations (unlike the Member States) so
each year it must ensure that income and expenditure balance. Given the number of
capital projects the EU funds (through development aid or cohesion funds) this can cause
difficulties as payments are irregular. As a result, it expresses its budget in two figures:
“commitments”, meaning an undertaking by the EU to pay over several years (e.g. to a
development project); and “payments”, meaning the actual amount paid in a particular year.
The budget is financed by a combination of revenue derived from customs tariffs and a
share of the VAT income of Member States, referred to as “own resources”.
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The last MFF ran from 2007-13, meaning the budget for 2014-20 was recently up for
negotiation.
The six main areas of EU expenditure are:
1. competitiveness and cohesion – increasing competitiveness for growth and jobs within
the EU and supporting economic development through the cohesion funds;
2. natural resources – including the Common Agricultural Policy (CAP), the environment,
rural development and fisheries;
3. citizenship, freedom, security and justice;
4. the EU as a global player – the Common Foreign and Security Policy Development
Cooperation Instrument and European Neighbourhood Policy;
5. administration – financing of the EU institutions;
6. temporary payments to new Member States.
With the effect of the financial crisis forcing Member States across the EU to cut public
spending in recent years – in the cases of Greece, Portugal, Ireland, Spain and Italy
austerity measures imposed have been drastic - there were widespread calls for the
EU’s budget to be cut.44 Furthermore, there have been many calls for the budget to be
reformed, with particular criticism of the amount spent on the CAP.
In its first proposal for the 2007-13 MFF, however, the European Commission was
proposing to increase the budget. As a result, tensions were high between the
Commission and several Member States.
uk objectives— The UK’s main goals for the EU budget were to:
— limit spending and secure a real terms cut in the size of the 2014-20 MFF;
— focus spending on jobs and growth;
— decrease spending on the CAP and on EU administration.
2014-20 mffFollowing the failure to agree on the Multiannual Financial Framework for 2014-20 at a
European Council meeting in November 2012, discussions were finally concluded at a
special meeting in February 2013. The outcome of this saw a 3 per cent cut in the EU’s
budget – the first ever time a multi-year budget had seen spending go down compared to
the previous period.
44 See for instance, Government of the Netherlands, ‘Coalition Agreement: The Netherlands and the European Union’, http://www.government.nl/government/coalition-agreement/iv-the-netherlands-and-the-european-union
When reporting this to the House of Commons, Prime Minister David Cameron declared:
“By working with like-minded allies, we delivered a real terms cut in what Brussels can
spend for the first time in history.”45
The previous MFF for 2007-13 saw an agreed budget of €943bn, which represented
just under one per cent of the EU’s gross national income (GNI).46 However, the MFF for
2014-20 will see the payments limit cut to €908.4bn, a figure representing 0.95 per cent
of the EU’s GNI.47 In addition, there have been key changes in areas desired by the British
Government. CAP spending will drop by 13 per cent, while sustainable growth funding –
which will go towards increasing competitiveness for growth and jobs – will increase 37 per
cent. But no decrease was agreed in administrative costs; instead these will be 8 per cent
higher than in the 2007-13 MFF.48
Real terms fall
in next MFF –
achieved:
Focus
spending
on jobs and
growth:
2013 budgetOn the separate question of the annual budget for 2013 (the last of the previous seven-
year period), this saw total expenditure initially authorised at €150. 9bn (1.7 per cent higher
than in 2012), and payment appropriations agreed at €132.8bn (2.15 per cent lower than
in 2012). The level of own resources needed to finance the budget dropped below one per
cent of GNI to 0.98 per cent.49
While this drop may have reflected Britain’s interests, the only area of expenditure to
increase was administration, which saw a 1.8 per cent rise from 2012. Spending on
sustainable growth, meanwhile, dropped by just under 2 per cent.50
Frustratingly for Britain, several amended budgets were agreed which increased the size
of the 2013 budget. For example, in May, the UK was outvoted in the Council as an extra
45 Prime Minister David Cameron statement on the EU budget (11 February 2013), https://www.gov.uk/government/speeches/prime-minister-david-cameron-statement-on-the-eu-budget46 Council of the European Union Conclusions (19 December 2005), p.33, http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/misc/87677.pdf47 Council of the European Union Conclusions (8 February 2013), p.47, http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/135344.pdf48 http://ec.europa.eu/budget/mff/index_en.cfm49 http://eur-lex.europa.eu/budget/data/D2013/EN/GenRev.pdf, p.1.50 Ibid, p.2.
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€7.3bn was agreed.51 The result of this and subsequent amendments was a rise in the
UK’s contributions to the EU for the year.
RatingFuture objectives
To work with other Member States more effectively to ensure that in-year
amending budgets do not undermine the MFF.
Securing a real terms cut for the 2014-20 MFF was a substantial achievement and followed
the gaining of the support of like-minded, influential Member States, including Germany
and the Netherlands. Shifting a greater percentage of the EU budget towards generating
jobs and growth is in line with the Government’s own domestic priorities. However, for the
British Government, which wants to cut bureaucracy, the EU’s administrative costs are still
seen as too high. While they do represent just below 6.5 per cent of total commitment
appropriations and reflect the high cost of providing language services for EU institutions,
it is difficult to justify an increase in that area given that Member States have been making
large cuts to their own administrative budgets.
Despite payments from the 2013 annual budget decreasing, being outvoted on increases
[see above in budget 2013] implemented through amending budgets was a source of
frustration and not in line with the Government’s objectives.
exTernal Trade and invesTmenTbackgRoundIncreasing exports from the UK has been one of the four main planks of Government economic
policy since 2011.52 Expanding trade and investment opportunities through EU free trade
agreements, where the EU negotiates with third countries to open up markets, lower tariff
barriers and harmonise standards with countries outside the EU is one way of achieving the UK
Government’s objectives. In 2012, the first year after the EU concluded a free trade agreement
(FTA) with Korea, UK exports of goods and services there rose by 57 per cent.53
uk objectivesThe UK’s objectives in this field for 2013 were firstly for the EU to start talks with the United
States about a comprehensive trade and investment agreement between the EU and the
51 Council of the European Union, Economic and Financial Affairs, Press Release (14 May 2013), p.9, http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ecofin/137122.pdf52 Budget 2011: https://www.gov.uk/government/publications/plan-for-growth--5 53 British Embassy Seoul report https://www.gov.uk/government/world-location-news/report-highlights-uk-exports-growth-in-korea
USA. In terms of trade volumes and GDP growth, this agreement could have considerable
benefits for the UK. A study for the UK Government suggested that the increase in national
income would be in the range of £4-£10 billion a year, depending on how comprehensive
the FTA is, or more than £380 for every British household.54
The UK also wanted other trade talks with potential FTA countries to get under way in
2013, notably Japan (the third largest economy in the world) and Thailand (a fast growing
emerging economy with which the UK has strong ties).
Finally, the UK was keen for the EU to conclude a successful trade agreement with Canada,
a Commonwealth country. The UK is Canada’s largest trading partner in the EU.
eu tRade policy in 2013Although there were concerns about agreeing the negotiating mandate with other Member
States, the Prime Minister was able to announce the start of the negotiations for what
is now known as the Transatlantic Trade & Investment Partnership (TTIP) in June, at the
G8 summit in Lough Erne, Northern Ireland. He described it as a “once-in-a-generation
opportunity” to increase trade between the two largest economies in the world.
In October Prime Minister Harper of Canada and President Barroso of the
European Commission signed the outline EU-Canada FTA, worth an estimated
£2.3 billion a year to the UK as a result of the 29 per cent increase in exports that
could flow from the final agreement.55 The agreement still has to be finalised but
both sides welcomed the provisional agreement as being of considerable benefit
to both economies.
Opening of EU-
US trade talks:
Provisional
agreement
of EU-
Canada
FTA:
The UK achieved its key objectives for EU external trade in 2013 with the opening of the TTIP
talks, the launch of talks with Japan and with Thailand, and with the signing of the outline
EU-Canada FTA in October. But the start of the TTIP talks is the beginning of a long process
not guaranteed to result in an agreement. Although EU trade deals are negotiated by the
Trade Commissioner and his officials, Member States representatives participate through their
54 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/198115/bis-13-869-economic-impact-on-uk-of-tranatlantic-trade-and-investment-partnership-between-eu-and-us.pdf 55 https://www.gov.uk/government/news/government-welcomes-historic-eu-canada-free-trade-agreement
3130
membership of the EU’s trade policy committee. It will be important for the UK to continue to
use this forum to encourage the TTIP talks to progress at a reasonable pace.
taxationThe UK’s objectives in the field of taxation were: to take forward the Government’s agenda
to reduce international tax evasion within the EU (a key objective of the UK’s G8 presidency
in 2013); and to complete the passage of the Savings Taxation Directive, which aims to
reduce tax evasion and fraud.
The UK was fundamentally opposed to an EU-wide Financial Transaction
Tax, an idea which has now been dropped. However, other Member States
are proposing to proceed with such a tax under the “enhanced co-
operation” provision in the Treaty. The British Government is challenging
this proposal in the Court of Justice because it believes that the tax could
have damaging implications for those EU Member States that are not part
of the eurozone.
economic & monetaRy union (emu)The UK has a permanent opt-out from the euro under the Treaties so its major concerns
about EMU are the impact that it has on the UK economy and the possibility of the UK
being disadvantaged by developments within the eurozone. The UK Government has
been concerned that, as one of the 11 non-members of the euro who are inside the EU,
we might find ourselves isolated on crucial Single Market issues as a result of caucusing by
eurozone countries.
The key UK objective for 2013 was to secure voting arrangements on the
board of the European Banking Authority (EBA) to prevent that kind of
development occurring in an important regulatory body for the City.56 On
19th March 2013 agreement was reached in Council on a voting system for
the EBA so that decisions that affect the non-euro states will require a
double-majority, that is, both a majority of non-euro states as well as a
majority of euro states.57
While the UK successfully protected its interests in the EBA, this was only the first such
issue to arise from greater eurozone integration; the UK Government has to remain vigilant
in this area; for this reason this policy area is rated amber.
56 The issue was discussed in the House of Lords EU Select Committee report, European Banking Union: Key Issues & Challenges, HL Paper 88 2012/1357 http://europa.eu/rapid/press-release_MEMO-13-251_en.htm
tRanspoRtThere were two major issues in the field of transport in 2013 that particularly concerned the
UK. The first was the tightening of the regulations on aircrew flying times, which reduced
the amount of night flying aircrew can do and changed the maximum time aircrew can be
on duty from 26 hours to 16. The UK strongly supported these changes.58
The second major development was that the European Commission published
its proposals for further changes to the regulatory framework for rail services in
the EU. This is the fourth set of such deregulatory measures designed to
increase competition on the railways in both freight and passenger services.
These particular proposals seek to clarify the rules on the separation of
responsibility for tracks from train operation and on the inter-operability of rolling
stock. The package is still under negotiation but while the UK is broadly supportive, having
pioneered railway deregulation in the 1990s, it has some concerns about the detail of these
proposals. These include whether they would prohibit experiments in joint operation of
track and trains, such as those operated by Network Rail and South West Trains at present.
58 UKREP briefing note cited by Phil Bennion MEP: http://libdemmeps.com/?p=1330
EnErgy, EnvironmEnt & Food
Part II
3534
chaPTer 3enerGY & The environmenT
environmenTEU environmental policy has developed over 30 years as a response to the problem that
pollution and other threats to our environment are not limited by national boundaries. The
two main developments in 2013 were the adoption of the EU’s seventh Environment Action
Programme (EAP) and proposals from the European Commission for fresh legislation to
deal with the threat posed by invasive species.
environmenTal ProTecTion and BiodiversiTYThe seventh EAP was signed into law in 2013.59 Headline goals for the EAP, which has
nine objectives leading up to 2020, include strengthening ecological resilience, fostering
resource-efficient, low carbon growth and protecting biodiversity. The British Government
welcomed the revised EAP, but was insistent that it be consistent with the Commission’s
commitments to smart regulation. The UK was particularly enthusiastic about plans to
promote sustainable growth, so long as procedural burdens on industry were alleviated.
However, there were concerns over EU surveillance of Member States’ implementation of
EU environmental policy, raising the question of whether the subsidiarity principle had been
appropriately applied.
Further progress was made to combat the economic and ecological problems
posed by invasive species, with over 12,000 non-native species now resident in
Europe.60 The Government recognises the threat posed by invasive alien species,
both to economic prosperity and biodiversity; the economic cost to the UK alone
is thought to be around £1.8 billion per year, but could be much higher61. The
Government welcomed action at the EU level, acknowledging that the threat is
pan-European and should be addressed across borders. In particular, the
introduction of an early warning and rapid response mechanism should improve
59 http://europa.eu/rapid/press-release_MEMO-13-1020_en.htm60 http://europa.eu/rapid/press-release_IP-13-818_en.htm61 http://www.publications.parliament.uk/pa/cm201314/cmselect/cmeuleg/83-xvi/8308.htm
3736
communication across Member States, helping to combat the threat. But the Government
was keen to stress that measures should remain proportionate to the problem and
questioned whether national sensitivities had been sufficiently taken into account.
clean air and WaTerThe Commission has outlined plans for new air quality laws to reduce the
current level of pollutants by 20 per cent ahead of 2030. A revision of the
National Emission Ceilings Directive, which imposes more stringent emissions
ceilings for the main pollutants, as well as a new Clean Air Programme for
Europe, seeks to ensure long term air pollutions targets are met up to 2030.62
These proposals have yet to be agreed by the Council and the Parliament; they
will be debated later in 2014.
climaTe chanGeemissions tRading scheme (ets)The ETS was initially heralded as one of the most progressive carbon taxation systems in
the world. However, serious problems with the ETS’ efficacy were exposed this year, with a
substantial oversupply of carbon permits serving to cancel out efforts to reduce emissions
and render many of the Scheme’s benefits null and void. This was a consequence of the
2008 financial crisis, which led to a significant fall in output, which in turn reduced carbon
emissions. In turn, Europe’s market is now oversaturated with carbon permits and thus
failing to facilitate a real terms reduction in emissions, as the ETS was intended to.
The Commission initially proposed to backload the issuing of new permits over two years
ago to alleviate the problems associated with a fixed supply system through rebalancing
supply and demand. This would also serve to reduce price volatility. However, plans were
stalled over concerns about the precedent set by the Commission interfering in a market
mechanism. Tension was high over the uncertainty of the proposals; had the plans failed,
the ETS would have collapsed. A last-minute agreement in December 2013 by Member
States means that 400 million carbon permits will be withdrawn this year and 900 million
over the next three years (a third of all new permits scheduled).63 While welcome, forecasts
indicate that this will provide a much-needed boost to carbon prices in the short-term but
in the longer term prices are still too low to incentivise companies to invest in low carbon
technologies: prices have fallen to below €5 per tonne, more than a sixth under the €30
price tag analysts say is necessary for the ETS to effectively curb emissions.64
62 http://europa.eu/rapid/press-release_IP-13-1274_en.htm63 http://in.reuters.com/article/2014/01/08/eu-carbon-fasttrack-idINL6N0KI2W02014010864 http://www.theguardian.com/environment/2013/jun/25/eu-emissions-trading-scheme-energy
The failure of the ETS to result in significant emissions reductions represents
a real stalling in this policy area. However, agreement to structural reform of
the ETS is a positive step in line with UK policy objectives. The amber rating
recognises the progress that has been made from a UK perspective in saving
the ETS but recognises that much more needs to be done to secure its long-
term future.
2030 taRgetsThe UK Government’s push for a single, binding target to cut greenhouse gas emissions by
2030 would provide more flexibility in how Member States are able to cut emissions than is
currently provided for under the 2020 goals, which separate targets into three categories;
renewable energy, energy efficiency and carbon dioxide emissions. The EU’s 2008 strategy,
aptly named ’20-20-20’, aimed to secure a 20 per cent emissions cut from 1990 levels, a
20 per cent increase in energy efficiency and ensure that 20 per cent of Europe’s energy
was sourced by renewables by 2020. Though the energy efficiency target was always non-
binding, under the new 2030 strategy only the emissions target will remain binding65. The
efficiency target is not expected to change as the EU is already falling far short of its 2020
ambitions in this area. However, good progress with the other two targets means that the
goals should be met well before 2020. Significantly, renewables targets to have a 30 per
cent share by 2030 are going to be voluntary. This is a particularly pleasing result for the
UK that leaves Britain able to pursue an increase in nuclear power, as the Government is
keen to do, without compromising EU targets on renewable energy.
The only binding extension is likely to be an emissions target, anticipated to be a reduction
of 40 per cent down from 1990 levels by 2030.66 The UK, together with an alliance
including Germany, France and Italy, supported a domestic EU greenhouse gas emission
reduction target of at least 40 per cent by 2030, up from the 20 per cent reduction set for
2020. The UK supports such targets to drive forward low carbon innovation and foster
“green jobs” through harnessing green technology. This represents a highly ambitious and
commendable goal that would put the EU in excellent stead ahead of UN global
climate change negotiations in Paris next year.
The full strategy will not be adopted until after this report has gone to print but
early indications suggest that the UK has succeeded in winning over its allies
to secure a non-binding renewable energy target for 2030. With this in mind,
negotiations received a green rating as the UK’s goals look set to be met in 2013.
65 http://www.europeanvoice.com/article/imported/barroso-drops-binding-green-energy-goal/79252.aspx66
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sinGle enerGY markeTuk objectivesThe most significant aspect of the UK’s goals for the EU’s energy policy is the desire to
complete the single energy market. Indeed, this was one of the three areas of single market
reform Prime Minister David Cameron included in his speech on European policy in January 2013;
he described energy, services and the digital economy as “the engines of a modern economy”.67
A joint policy note published by the Foreign and Commonwealth Office, Department for
Business, Innovation and Skills and HM Treasury went into further detail, stating:
“The EU needs a single market in energy that is integrated, efficient and flexible in order
to make the transition to a low-carbon economy and maintain secure supplies at the
lowest cost. Without major changes, the EU will be faced with a less reliable and more
costly energy system, and declining EU competitiveness and wealth. Investment in our
energy infrastructure is a key economic opportunity for the UK and is a critical part of the
Government’s economic strategy. We believe that the same principles apply to Europe.”68
backgRoundEnergy is one of the few remaining sectors where the EU market is fragmented, a legacy of
the former nationalised industries based on a one-country supply chain. The broken market
is also emphasised by the lack of energy interconnectors within the EU, meaning power
is infrequently shared between Member States. For instance, there are just four inter-
connectors between Britain and EU members (these connect Britain with France, Ireland,
Netherlands and Northern Ireland).69
Bolstering Europe’s energy security is critical. Currently the EU, which is a net importer of
energy with a dependence on imports from Russia and the politically volatile Middle East,
is geopolitically vulnerable.70 This was demonstrated in January 2009 when a dispute
led to Russia cutting off gas supplies to Ukraine, which in turn stopped supplies to 16
EU Member States.71 Over-dependence on a limited source of supply therefore not only
dampens competition, but also has political consequences, and can be seen to have had
an influence on the EU’s timid response to Russian aggression in Georgia in 2008 out of
fears Russia could cut off its gas supply.
67 David Cameron, ‘EU speech at Bloomberg’, 23 January 2013.68 Department for Business, Innovation & Skills, Foreign & Commonwealth Office and HM Treasury, ‘Making the single market more effective’ (31 October 2012): https://www.gov.uk/government/policies/making-the-single-market-more-effective69 https://www.ofgem.gov.uk/electricity/wholesale-market/european-market70 Eurostat, ‘Main origin of primary energy imports, EU-27, 2002-2010’: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Main_origin_of_primary_energy_imports,_EU-27,_2002-2010_%28%25_of_extra_EU-27_imports%29.png&filetimestamp=2012101213185271 Oxford Institute for Energy Studies, ‘The Russo-Ukrainian gas dispute of January 2009: a comprehensive assessment’ (February 2009), p.19.The 1973 oil shock and its aftermath is a less contemporary, albeit similarly pertinent example of the negative impact that an over-reliance on energy supplies from a limited source of supply can have.
The EU’s climate change goals are a further factor influencing energy policy (see above).
By 2020, the EU has committed itself to reducing its emissions to 20 per cent below 1990
levels, with the UK leading calls for a 40 per cent reduction target by 2030.72 To achieve
this, it will be necessary to shift the power generation mix away from being so fossil fuel
based and increase the amount of energy produced from renewable sources; in 2012 38
per cent of electricity generated in the UK was from coal, with just 11 per cent coming
from renewable sources.73 With the cost of renewable, low-carbon technology being high,
establishing a single market would provide “the scale necessary for accelerating the uptake
of new and young low carbon technologies.”74
RatingEstablishing a single energy market is seen to be a big move towards to achieving these
myriad goals. The UK was an important influence in steering the EU towards this course for
two reasons. Firstly, its pioneering policy of de-nationalising its power sector demonstrated
the benefits a market-based approach to energy had for consumers and for investment in
energy infrastructure. Another key UK interest, however, was its switch from being a net energy
exporter to a net energy importer in 2004. For the previous quarter century Britain had mostly
been a net exporter, yet a decline in North Sea oil reserves has seen this trend reverse.75
In February 2011, at the European Council, the Heads of State moved towards achieving
this goal. There, they agreed that the EU needed a “fully functioning, interconnected
and integrated internal energy market with swift and full implementation of legislation by
Member States with the energy internal market completed by 2014.”76 Heads of State also
agreed on the importance of modernising and expanding energy infrastructure, including
improving the cross-border interconnectors between energy networks.77
In November 2012, the European Commission sought to give further impetus to this goal,
issuing a report which highlighted the benefits an internal energy market would have. Here,
the Commission argued “achieving the full integration of Europe’s energy networks and
systems and opening up energy markets further are essential in making the transition to a
low-carbon economy and maintaining secure supplies at the lowest possible cost.”78
By the May 2013 European Council, although commitments were again made to implement
an internal energy market, it was evident that progress towards this goal had slowed down.
72 Department of Energy and Climate Change, ‘A 2030 framework for climate and energy policies’, July 2013, pp.2-4 73 Department of Energy and Climate Change, ‘Energy Consumption in the UK’, 2013, p.3.74 Monti, M. ‘A new strategy for the single market’, May 2010, p.48.75 House of Commons Library, ‘Energy imports and exports’, 30 August 2013, pp.1-5. 76 European Council, ‘Conclusions’, 4 February 2011, pp.1-2.77 Ibid. pp.2-4.78 European Commission, ‘Making the internal energy market work’, (November 2012, p.2.
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Most notably, the commitment to complete the energy market by 2014 was replaced by a
commitment to report on implementation in early 2014.79
Failure to get this right could seriously damage Europe’s ability to maintain its competitive
edge over the next 30 years.
Although the UK’s influence in pushing for the completion of the internal energy market can
be seen to be bearing fruit and despite 2014 remaining the target date for completion of the
internal energy market, progress towards its completion has seemingly slowed.
But the UK is not absolved of responsibility for this situation. In January 2013,
the European Commission threatened Britain with daily fines for failing to
transpose EU electricity and gas directives that formed a part of the Third
Energy Package, by March 2011, and which would have helped towards
completing the internal energy market.80
Nonetheless, Britain has without doubt been a leader in this policy area, and was
one of the first countries within the EU to have fully liberalised its energy market.81
79 European Council, ‘Conclusions’, 22 May 2013, p.2.80 The Independent, ‘UK may be fined over failure to honour single market agreement’, 24 January 201381 HM Government, ‘Looking forward – what more is there to achieve through strengthening the Single Market?’ in Twenty Years On: The UK and the Future of the Single Market, Centre for Economic Policy Research, 2012, p.37.
chaPTer 4aGriculTure & fisheriesanimal healTh & WelfareArticle 13 of the Lisbon Treaty put animal welfare into the EU Treaties for the first time. This
reflected long-standing British concerns that animal welfare should be properly recognised
within the EU and taken into account in its policies.
Animal welfare is of concern to large numbers of people in Britain who feel strongly on the
issue. But there is tension between calls for high levels of animal welfare and the need
to avoid placing an expensive burden on British food producers, particularly because of
the danger that their competitors overseas will not be required by their governments to
adopt as high animal welfare standards. The UK has therefore seen having animal welfare
standards set out at EU level as an advantage to the UK because it creates an enforceable
set of obligations applying to all EU food producers that does not give other countries’
producers a competitive advantage. The UK has already succeeded in getting the EU to
adopt the UK standards for sow stalls and tethers which were previously higher than those
in other Member States.82
The major development in 2013 was the publication by the European Commission
of its proposed new Animal Health Law, designed to replace the current web of 37
different EU laws that provide legal protections for animals.83 The new law is
largely a consolidation measure rather than a major reform. The key question is
whether a new regulation will meet UK objectives of proportional regulation and
not impose excessive costs on producers.84 Despite this, the overall rating for this
area of policy reflects Britain’s success in persuading our EU partners to agree to
high standards of animal health and welfare as part of EU policy.
82 Senior European Experts group evidence to Balance of Competences review:http://www.euromove.org.uk/fileadmin/files_euromove/downloads/Balance_of_Competences_AHW_and_food_safety.pdf83 Referred to in Commission communication on the REFIT regulatory reduction proposals:http://ec.europa.eu/commission_2010-2014/president/news/archives/2013/10/pdf/20131002-refit_en.pdf84 http://www.redtapechallenge.cabinetoffice.gov.uk/proposed-eu-regulation-on-animal-health/
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food safeTYEU food safety policy is intended to ensure the safety of food across the Single Market. It
covers a wide field of activity, from animal and plant diseases to the contamination of food
and genetically modified (GM) food. The UK objective is to ensure that EU regulation is
proportional, effective and scientifically based.
The major event of 2013 was the horse meat scare, in which traces of horse DNA were found
by the Irish Food Safety Authority in beef burgers sold in the UK and Ireland.85 Initially this was
thought to be an issue for the UK and the Republic of Ireland alone but inquiries quickly found
a trail across Europe of meat being sold and then re-sold before being used by producers. In
all, traces of horsemeat were found in products in 13 European countries (but around 99 per
cent of products tested subsequently in the UK were found to have no horsemeat DNA).86
This scandal was primarily not about food safety but about labelling as horse meat is not
harmful to humans. The offence under EU legislation was one of fraud because consumers
had been led to believe that they were consuming another meat product.
New EU food labelling regulations come into force in 2014. These will require, for example,
that the country of origin of fresh meat be shown on product labels. The relevance of this
to the horsemeat scandal is unclear as the horsemeat identified in 2013 was undeclared;
the UK Government believes that any new labelling requirements going beyond those in the
new regulations must be compliant with World Trade Organisation rules and proportionate
in terms of their regulatory impact.87
It is as yet unclear what the long-term outcome will be of the 2013 horsemeat scandal.
The UK Government will continue to need to work with other Member States and the
Commission to ensure that the EU’s response is proportionate and effective.
Against the backdrop of public support for an increasingly transparent and easily
understandable supply chain, free from harmful or unknown products, previous momentum
to revisit the EU’s GM policy has weakened. The potential benefits of taking advantage of
new innovation in biotechnology to agricultural production are profound. Making use of GM
technology has the support of the British government, as well as 61 per cent of UK
farmers.88 The EU’s ban on GM technology takes an outdated view of the food chain that
fails to embrace crucial developments in biotechnology and to come to terms with the
85 http://www.fsai.ie/uploadedFiles/News_Centre/Burger_results_2013_01.pdf86 See press release issued by testing company SGS in Geneva: http://www.sgs.com/en/Our-Company/News-and-Media-Center/News-and-Press-Releases/2013/02/EU-Wide-Meat-Testing-Proposed-For-Horse-DNA.aspx and p.51 of Balance of Competences report [below].87 Discussed briefly in the Balance of Competences report on food safety, para. 3.33:https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/227367/DEF-PB13979-BalOfComp-HMG-WEB.PDF88 http://www.independent.co.uk/news/uk/politics/exclusive-the-agricultural-revolution--uk-pushes-europe-to-embrace-gm-crops-8654595.html
challenges posed by food security, sustainability and climate change. Germany,
Austria and France remain firmly opposed to lifting the ban, though the
reasoning appears to be largely emotive rather than scientific.89 Before Britain
can convince other big Member States to support innovation in GM technology
there is little chance to develop Britain’s interests in this area. This is an area
where the UK needs to build alliances with EU partners if it is to achieve its
desired goal.
common aGriculTural PolicYThe reform of the Common Agricultural Policy (CAP) to reduce its market-distorting effects,
to cut the costs of farming subsidies and to increase farming efficiency in the EU has long
been a British goal. Successive waves of reform since the MacSharry reforms of the 1980s
have partially achieved that goal; the CAP’s share of the EU budget has fallen from around
90 per cent in the mid-1980s to around 40 per cent today.90
Following agreement on the EU’s budget for the period 2014-20, a new CAP package was
needed. Political agreement was reached in the Council of Ministers in June 2013 on the
main elements of the legislation.
The UK’s ambitions for this round of negotiations were set out very clearly by the
Environment Secretary Owen Patterson MP:
“My key aims for the negotiations remain to reduce CAP expenditure and increase wherever
possible its value for money by:
— Increasing the resilience, market orientation and international competitiveness of EU
agriculture;
— Improving the CAP’s capacity to deliver environmental outcomes;
— Simplifying the CAP for farmers and authorities”.91
Ministers acknowledged that the outcome of the political agreement reached in June and the
subsequent negotiations between the Parliament and the Council did not match their hopes:
“Overall, the CAP deal was an acceptable outcome for the UK, even though it is not the
genuine reform we had hoped for. We have fought hard to secure a CAP package that is an
improvement on the original proposals. The UK has also worked closely with its allies to stop
a whole raft of regressive proposals from being adopted that would harm UK farmers”.92
89 http://www.ft.com/cms/s/0/bcdb19c0-87e5-11e2-8e3c-00144feabdc0.html#axzz2pctkJuCz90 http://www.bbc.co.uk/news/world-europe-1121606191 Letter from the Secretary of State to the House of Lords EU Scrutiny Committee, 07.03.13 reprinted in: http://www.parliament.uk/documents/lords-committees/eu-sub-com-d/CAPreform/correspondencewithministers.pdf92 Ibid. Letter dated 09.07.13.
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The more radical proposals for linking farm payments to better environmental policies
were watered down after objections from the Parliament and from some Member
States that payments will continue to tobacco farmers. But proposals from the
Parliament to extend sugar production quotas until 2020 were defeated (they will end
in 2017).93 The long-term decline of the CAP budget as a share of EU expenditure will
continue (albeit with a slight temporary rise in 2014); the European Parliament
estimates a fall of 13 per cent in the part of the CAP budget covering direct payments
(known as “Pillar 1”) and of 18 per cent for other rural support (“Pillar 2”).94
The common fisheries PolicYbackgRoundThe Common Fisheries Policy (CFP) was agreed in the early 1970s just before the UK
joined the European Community. The issue of fisheries was discussed during the UK’s
accession negotiations but it has long been accepted that the UK under-performed in
this area during those talks.95 Subsequently the UK also failed to exercise its influence
effectively as the CFP evolved.
The British Government believes that the CFP has failed in its aim of creating an
economically and environmentally sustainable fishing industry in the EU.96 Consequently it
has been negotiating with EU partners to reform the CFP since the European Commission
published its green paper on the future of the CFP in 2009.97
uk objectivesThe UK’s goals in any reform of the CFP were to:
— do away with discards;
— make the limits on fishing for particular stocks legally binding;
— de-centralise the decision-making about what is permitted in particular fisheries from the
Commission to Member States.
The Commission’s green paper and subsequent proposals for legislation recognised the
shift in opinion, not just in the UK, but more widely on the acceptability of some elements
of the CFP, particularly the requirement to discard fish surplus to quotas or from the wrong
species. The failure to halt the decline in fish stocks in certain EU fisheries also raised
questions about the efficacy of the CFP.
93 http://www.reuters.com/article/2013/06/26/eu-sugar-quotas-idUSB5N0F10012013062694 Discussed at: http://capreform.eu/the-cap-budget-in-the-mff-agreement/95 See the official account of our entry negotiations: Britain’s Entry into the European Communities: Report on the negotiations of 1970-72 by Sir Con O’Neill, Whitehall History Publishing, 2000, pp.250 et seq.96 https://www.gov.uk/government/policies/reforming-and-managing-marine-fisheries-for-a-prosperous-fishing-industry-and-a-healthy-marine-environment/supporting-pages/reforming-the-common-fisheries-policy97 Commission green paper at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2009:0163:FIN:EN:PDF
In June 2013 the Council of Ministers agreed on a new draft regulation for the CFP which
includes substantial policy changes which the UK Government argues meet their key
objectives.98 Under the proposals, expected to be adopted by the end of 2013, there will
be a ban on discarding in ‘Pelagic’ fisheries (that is, mackerel and herring) beginning on 1st
January 2015 with a further ban on discards in other fisheries starting from 1st January 2016.
For the first time in EU law there will be a legally binding commitment to fish sustainably,
achieved if possible by 2015 and by 2020 at the latest. This change means that the annual
fishing quotas for different stocks will have to be scientifically based rather than the result of
a political decision in the Council.
The EU legislation will set a framework for the reformed CFP with the delegation of many
decisions to the Member States. Regional groups of Member States will agree the
approach to be taken in their fisheries, with the Commission having a backstop role rather
than being the director of policy.
Do away
with
discards:
Legally
binding
stock
limits:
De-
centralisation
of decisions:
After a long period during which the UK had been deeply uncomfortable with several
aspects of the CFP, and had been unable to persuade other Member States of the need for
change, it has been at the heart of a successful exercise to influence first the Commission
and then other Member States that reforming the CFP was essential. As a result,
substantial progress has been made in the current round of reforms. The phasing out of
discards leaves room for some difficulties to emerge but overall the UK has been successful
in exercising its influence.
98 Richard Benyon MP, Minister for Fisheries, Hansard 17.06.13, col. 637
exTernal relaTions
ParT iii
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chaPTer 5exTernal relaTionsovervieWThe leadership and management of external relations policy within the EU has undergone
substantial change since the Lisbon Treaty of 2009. External relations policy is now
led by the Vice President of the Commission for external affairs, who is also the High
Representative of the EU for the Common Foreign & Security Policy (usually abbreviated to
HR/VP). The current holder of these two positions is Baroness Ashton, the British member
of the European Commission.
The HR/VP is supported in their role by the Commission in respect of trade, development
aid and humanitarian assistance and by the European External Action Service for foreign
and security policy matters as these latter questions are the exclusive responsibility of the
EU Council of Ministers.
This chapter looks at foreign and security policy, and development aid and humanitarian
assistance (trade was covered in Chapter 2).
The common foreiGn and securiTY PolicY (cfsP)The Foreign & Commonwealth Office (FCO) lists Britain’s foreign policy
objectives as including:
— “safeguarding Britain’s national security by countering terrorism and
weapons proliferation, and working to reduce conflict;
— building Britain’s prosperity by increasing exports and investment, opening
markets, ensuring access to resources, and promoting sustainable global
growth;
— supporting British nationals around the world through modern and efficient
consular services”.99
99 https://www.gov.uk/government/organisations/foreign-commonwealth-office/about
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More specifically, the FCO highlighted the following priorities for 2012/13:
— “promoting the British economy and lobbying for British business overseas and inward
investment into the UK;
— improving the global economic environment and advancing UK interests through trade
agreements, an effective G20 and international development;
— playing a central role in international efforts to prevent the proliferation of weapons of
mass destruction in Iran and elsewhere.”100
The first two of these priorities are largely pursued through other aspects of EU policy,
notably trade and economic policy co-operation. Preventing the proliferation of weapons of
mass destruction (WMD) is however very much part of the EU’s current foreign policy work.
The Government’s priorities are focused on other aspects of the EU’s foreign and security
policy work too: notably, combatting terrorism and the threat it poses to British citizens at
home and abroad; preventing conflict in fragile states (such as Somalia and South Sudan);
and promoting stability in Afghanistan (including a better relationship with its neighbour
Pakistan). Working for peace in the Middle East has been a long-term EU, as well as UK,
objective but the aftermath of the Arab awakening has meant a new emphasis on not just
bringing a peaceful end to the Israel-Palestine dispute but also to bringing peace, stability,
and the rule of law to the wider region and to North Africa.
The EU’s actions in 2013 played an important role in several of these policy areas,
contributing to UK policy objectives being wholly or partly met.
syria
The Syrian civil war divided the EU as some Member States felt that the scale of slaughter
perpetrated by the Assad regime was such that it could not be ignored (they were led
by Britain and France) but others were more wary of Western involvement. There was
concern that, after the Iraq invasion of 2003, any intervention by Western countries could
be misunderstood in the region and the wider Muslim world and that it would in any case
not be possible to support the anti-Assad forces without the risk of weapons falling into the
hands of Islamic fundamentalists. The governments of Britain and France subsequently
stopped the supply of arms by fear of this.
Germany was particularly reluctant to support military action, believing that such
intervention required an international mandate. The British and French view was more
nuanced; they preferred a UN mandate but believed that in certain, limited, circumstances
unilateral action may be justified, particularly where lives are being lost.
100 https://www.gov.uk/government/policies?topics%5B%5D=foreign-affairs
In addition to the EU providing humanitarian support (see below), Britain and France
believed that the EU arms embargo against all sides in Syria needed to be lifted as it was
preventing the supply of non-lethal military equipment to the rebels. This was achieved at a
meeting of EU foreign ministers on the 28th May.
Following reports of chemical weapons attacks on civilians by Assad’s forces the UK
Government’s proposal that direct military action in Syria by the UK and others should be
a policy option was rejected by the House of Commons on 29th August.101 The absence
of agreement on military action in the Commons was mirrored in the EU but there was
universal condemnation of the use of chemical weapons. The EU High Representative
called for the allegations of the use of chemical weapons to be, “immediately and
thoroughly investigated,” by the UN.102
The situation was changed by the brokering by the USA and Russia of an agreement
for Syria to admit it possessed chemical weapons, to allow them to be destroyed under
international supervision, and for Syria to accede to the Chemical Weapons Convention.
This agreement was a major step forward for the international community’s efforts, including
those of the EU, to reduce the proliferation of WMD.
iran
The international community has been seeking for more than a decade to reach
agreement with Iran on its nuclear programmes, believing that Iran has been trying to
acquire a nuclear weapons capability (something it denies).103UN sanctions prevent the
export to Iran of various goods (such as material for its nuclear research and weapons).
In addition, the EU has sanctions against Iran, which have, since the beginning of 2012,
included a ban on the import of Iranian oil by EU Member States. The EU has been co-
ordinating the work of the international contact group (made up of three EU members,
the UK, France and Germany together with China, Russia and the USA) to negotiate a
solution to the nuclear issue. Lady Ashton has been leading on behalf of the contact
group in several bilateral meetings with the Iranians.
The election of President Hassan Rouhani in August 2013, in Iranian political terms a
moderate, raised hopes that the stalemate between Iran and the international community
could be broken. The new President was keen to bring to an end at least some of the
sanctions against Iran, which have led to a disastrous devaluation of its currency, triggering
in return sharp price increases in recent years.104
101 http://www.parliament.uk/business/news/2013/august/commons-debate-on-syria/102 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/138601.pdf103 Details described in Arms Control Association briefing: http://www.armscontrol.org/factsheets/Iran_Nuclear_Proposals104 http://www.worldbank.org/en/country/iran/overview
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The pressure from sanctions, and the desire of much of the rest of the international
community to avoid the unpredictable consequences of a possible airstrike by Israel on
Iranian nuclear facilities, encouraged all sides towards an agreement in Geneva in November.
Although it is an interim agreement for six months only (with a possible extension for another
six months), this jointly agreed plan marks real progress towards a diplomatic solution.105
The Geneva agreement was a personal triumph for Baroness Ashton and a reward for
years of persistent negotiation by the EU and the three Member States most involved,
including the UK. It meets a key UK foreign policy objective of tackling nuclear proliferation
and it demonstrates the value of the UK working with EU allies in a joint approach which
enhances British security as well as that of the region.
Mali
Following the outbreak of violence in Mali, where an Islamist guerrilla force took over part of
the north of the country in late 2012 and threatened to seize control of the whole of it, the
EU has played an important part in helping to stabilise the country with the backing of the
UN. A French military force intervened at the request of the Malian Government, with the
UK Government providing logistic support.
The EU, which already had a programme of humanitarian and development aid for Mali,
provided emergency funding to deal with the consequences of the fighting; the EU has also
earmarked a further €1.25bn in aid to Mali, making it Mali’s biggest donor.106
In addition, the EU played a key role in fostering political dialogue between all parties,
supporting the political process by the developing a “roadmap” to recovery that was agreed
at an international conference hosted by the EU in May. Most recently, election observers
expressed their satisfaction both with the Presidential election and with the second round of
voting in Mali’s parliamentary elections on 15th December.
On the security side, the EU sent troops to assist with the UN-African Union mandated
mission. The UK has supported this process with the deployment in March of British
military trainers alongside personnel from other EU countries to help restructure the national
army (EUTM Mali).
The EU’s response provided both emergency assistance and support to develop a
sustainable strategy in response to Mali’s crisis. Providing a combination of development aid,
military training and policy forums, the EU was able to showcase its ability to act swiftly in the
face of crisis and provide unrivalled funds and expertise to provide on the ground support.
105 Details ibid.106 http://eeas.europa.eu/mali/
common securiTY & defence PolicY (csdP)Defence policy questions in the EU are discussed through the medium of the
Common Security and Defence Policy. Its military arrangements, including force
generation, parallel NATO’s, so there is no more question of a “European army” than
there is of a “NATO army”. Its operation, which requires unanimous agreement, suits
the UK as it is able to act as an effective support for collective EU foreign policy while
not undermining NATO as the main basis of the UK’s collective defence.
The EU’s Security Strategy was adopted a decade ago and the European Council reviewed
it at their meeting in December 2013.107 The British Government’s objective was that
defence cooperation at the EU level should continue to be on a voluntary and case-by-case
basis.108 The Council agreed to increase the “effectiveness, visibility and impact of CSDP”,
the review acknowledged the role of NATO and opted to foster existing relationships.109
develoPmenT co-oPeraTion and humaniTarian aidThe EU has taken important steps to provide for the refugees from the conflict in Syria. The
Humanitarian Aid and Civil Protection department of the European Commission (ECHO)
estimates that the number of people affected by the crisis who are in need of humanitarian
assistance was 9.3 million as of the 7th November 2013.110 The UK has provided £500
million and leads the EU countries in the amount of aid it is sending.111 ECHO is in regular
and frequent contact with the main humanitarian players (UN agencies, ICRC, NGO’s) in both
the field and in Brussels and the Commission is providing Member States with information
and advice about the humanitarian situation on the ground. The UK is taking the lead in the
aid response and will hopefully urge other countries to increase their own contributions.
neiGhBourhood PolicY & enlarGemenT neighbouRhood policyFour years since its launch in May 2009, the Eastern Partnership Programme, intended to
bring countries on the EU’s eastern borders in to a closer relationship with the EU, has been
beset by tensions with Russia. The EU had hoped to sign an Association Agreement with
Ukraine and to initial agreements with Moldova, Georgia and Armenia at a Summit in Vilnius
at the end of November 2013. However changes of heart by the Ukrainian and Armenian
Governments under heavy pressure from Russia (in the case of Ukraine possible limitations
on gas supply) frustrated this plan. The agreements with Moldova and Georgia were
however initialled as planned and are due to be signed and enter into force in 2014.
107 http://www.consilium.europa.eu/uedocs/cmsUpload/78367.pdf108 http://www.publications.parliament.uk/pa/cm201314/cmhansrd/cm140106/wmstext/140106m0001.htm109 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/140214.pdf110 http://ec.europa.eu/echo/files/aid/countries/factsheets/syria_en.pdf111 http://ec.europa.eu/echo/files/aid/countries/factsheets/syria_en.pdf
5554
The UK has been supportive of developing links with the EU’s neighbourhood. The Eastern
Partnership offers clear social and economic benefits, ranging from free trade agreements
to an easing of visa restrictions but above all greater political stability, respect for human
rights and the rule of law and increased economic growth.
Securing Ukrainian participation in an Association Agreement was a key British policy
objective in 2013. Although it has not yet been secured, the option is not closed off and it
is still possible that Ukraine will reach an agreement with the EU at a future date.
Events in countries of the southern neighborhood (Algeria, Egypt, Libya, Morocco
and Tunisia) have developed in a way unhelpful to the European Union’s basic
objectives of achieving stability, the rule of law and progress towards democracy;
and despite considerable efforts by the EU and the commitment of resources to
these objectives the situation in all these countries remains fragile.112
enlaRgementThe British Government continues to champion EU enlargement believing that the UK
benefits from a larger single market, from increased influence in the political development of
potential new Member States, and from an enlarged EU having greater influence in global
politics. However, the UK has not achieved all its goals in this regard due to other Member
States being tentative or negative over some prospective new EU states
Further enlargement is now concentrated in the Balkan countries with Croatia becoming
the 28th EU Member State in July 2013. In June the European Council agreed to start
accession negotiations with Serbia following the historic agreement between Serbia and
Kosovo brokered by Lady Ashton in April for the normalisation of relations between the two
countries; and at the same time agreed to negotiate an agreement with Kosovo.113
Turkey’s accession talks with the EU had been stalled for three years because of
objections from a number of EU Member States who do not wish Turkey to join
the EU. The Commission recommended that the talks should restart following
judicial reform and the announcement of political reforms, including improved
rights for the Kurdish minority in Turkey. A new chapter in the negotiations was
opened in November, the fourteenth since negotiations began but the first since
June 2010.114 This was a modest positive step forward for the UK in promoting
enlargement, which remains Turkey’s strongest supporter in the EU, but while the accession
negotiations are once again progressing, Turkish accession remains a distant prospect.
112 http://www.cer.org.uk/sites/default/files/publications/attachments/pdf/2013/esy_eb_arab_18dec13-8216.pdf p.11-14113 Text at: http://www.europeanvoice.com/page/3609.aspx?&blogitemid=1723114 http://europa.eu/rapid/press-release_MEMO-13-958_en.htm
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crime, JusTice & socieTY
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chaPTer 6JusTice & home affairsFrom the very outset of the European Union’s Justice and Home Affairs programme in
the 1990s Britain has been an influential player; and senior British officials, such as Rob
Wainwright (current director of Europol) and Mike Kennedy (the first president of Eurojust)
have shaped its development. It has been successful in ensuring that the main emphasis
has been on mutual recognition measures rather than harmonisation, and an operational
co-operation between law enforcement agencies. The main EU agencies (Europol, Eurojust
and Frontex – Britain does not belong to the latter as it is linked to Schengen but supports
it) are seen at least by our own law enforcement agencies as a crucial link in the fight
against serious and organised crime, which is increasingly international in its scope, and
against terrorism.
Since the entry into force of the Lisbon Treaty in 2009, which provided for majority voting
in this area and for the jurisdiction of the European Court of Justice, Britain has opted in
to nearly 50 justice and home affairs (JHA) instruments, including measures to deal with
human trafficking and airline passenger name recognition. And Britain is connecting the
Police National Computer to the EU’s Schengen Information System, enabling the police to
access vital data on border control.
In 2013 the Government had to decide whether or not to opt out of the whole body
of pre-Lisbon JHA legislation in order to avoid European Court of Justice jurisdiction
applying to that. In July Parliament decided to exercise the block opt-out but the
Government at the same time chose to apply to re-join thirty four of the measures,
including most of the more significant ones such as Europol, Eurojust and the
European Arrest Warrant and the EU’s common rules on asylum which allow Britain
to return hundreds of asylum seekers every year to other Member States to have
their claims heard. The negotiations with the Commission and the Council on Britain’s
re-insertion in these areas is just beginning and will come to a head in 2014.
The decision to exercise the block opt-out was unwelcome to our EU partners, who value
the role Britain is playing in the collective fight against international crime. The extent
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to which that decision inflicts lasting damage on Britain’s ability to influence the EU’s
JHA policies and legislation will depend to a considerable extent on the outcome of the
Commission’s negotiations and the flexibility with which the Government handles them;
and also on the Government’s attitude to new JHA measures coming forward, including
the next EU justice and home affairs work programme for the period 2015-19 due to be
adopted by the end of 2014.
chaPTer 7culTure, socieTY & reGionshealTh
The most significant development in this sector, where the EU only has limited
involvement, mostly relating to public health, was the debate on the Tobacco
Products Directive.
As Health Minister Jane Ellison noted in a Parliamentary debate, the UK is a
leader within the EU on tobacco control, with a tendency to control tobacco
more tightly than the rules within the EU regulations and a belief that while
EU regulations must be evidenced based, further EU-wide control measures would be
desirable.115 In the recent discussions with the Commission leading to its proposal on
the new directive the UK government sought: Bigger pictorial health warnings, banning
flavoured tobacco, regulation of Nicotine Containing Products (NPCs) as medicines to
restrict availability and freedom for member states to pursue higher standards (such as the
possibility of introducing standardised packaging).116
Following the vote on the first reading of the draft Tobacco Product Directive in the
European Parliament the UK government saw its position supported in: Banning packs of
less than 20 cigarettes117 (this is further than the current UK minimum of 10118, increasing
the size of health warnings (to 65 per cent) and banning the use of flavourings in tobacco
products. However in the first reading MEPs voted down regulation of e-cigarettes as
medicine119 and the banning of slim cigarettes.120
The UK will still be licensing e-cigarettes as medicines from 2016 (Crawford, 2013)121;
115 Jane Ellison MP, 2013. Parliamentary Under-Secretary of State for Health Commons Debates: Tobacco Products Directive 28th October, UK Parliament Website: http://www.publications.parliament.uk/pa/cm201314/cmhansrd/cm131028/debtext/131028-0003.htm116 Ibid.117 Ibid.118 Crawford, D., 2013. MEPs tighten anti-tobacco laws aimed at young smokers, BBC News.119 Ellison, op cit. 120 Ellison, op cit.121 Crawford, op cit.
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EU regulation does not restrict the freedom of Member States to impose their own more
rigorous controls on tobacco so national licensing of e-cigarettes is still possible.
Tourism, culTure & sPorTThe most significant development under culture in 2013 was the adoption of the new
European Cultural Programme, replacing the Creative Europe Programme, for 2014-2020.122
The Commission proposed a 37 per cent increase in the budget.123 As part of its general strategy
to keep EU budgets down whilst pursuing budgetary cutbacks at home, the UK government
opposed such an increase.124 It also opposed a proposed loan guarantee facility for SMEs in
the culture sector125, for which the Commission wanted to dedicate 1 billion Euros.126
Following negotiations the increase in the budget was constrained to around 9 per cent of
the 2007-13 figure and the guarantee facility funding was limited to 120 million euros.127
The UK performed well in participating in EU funded cultural projects in the last
year. For the first time the UK submitted more applications to EU cultural
cooperation projects than any other country.128 The UK success rate was 46 per
cent, almost double the EU average of 24 per cent and second only to Germany
of the larger EU countries.129 In total the UK won 3.3 million euros in match
funding from the EU Cultural Programme.130
sTrucTural & cohesion fundsThe UK government was keen to secure a real terms cut in the next EU budget,
including in spending on the structural and cohesion funds.131 The result of the
multiannual financial framework negotiations was that these elements of the EU
budget, the European Regional Development Fund (ERDF), the European Social
Fund (ESF) and the Cohesion Fund, will fall by 8 per cent.132 For the UK specifically
122 European Commission, Creative Europe: support programme for Europe’s cultural and creative sectors from 2014. 123 European Scrutiny Committee, Creative Europe Programme 2014-20: http://www.publications.parliament.uk/pa/cm201012/cmselect/cmeuleg/428lviii/42803.htm124 Ed Vaizey MP, 2012, Minister for Culture, Communications & Creative Industries, House of Lords - Select Committee on the European Union Inquiry on Creative Europe. 125 Ibid. 126 Blaney, M., 2013. Screen Daily - Creative Europe approved by European Parliament, 19th November 2013 127 Ibid.128 Hunt, E., 2013, ‘One in four EU cultural projects led by UK organisations’, Arts Professional 129 http://ec.europa.eu/unitedkingdom/press/frontpage/2013/13_27_en.htm130 Ibid. 131 Cable, V., 2013. Written Statement to Parliament: ERDF and ESF allocations 2014-2020: https://www.gov.uk/government/speeches/european-regional-development-fund-and-european-social-fund-allocations-2014-to-2020132 Department for Business, Innovation & Skills, 2013. GOV.UK FOI Release - Methodology for calculating ERDF/ESF allocations to LEPs for 2014-2020: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/232411/bis-foi-13-0830--erdf-and-esf-allocations-to-leps.pdf
the overall decrease is lower, with 2014-2020 UK structural funding (the UK is not eligible to
receive cohesion funding) predicted to fall by 5 per cent.133
social & emPloYmenTOn 9th October the European Parliament agreed to a revision of the EU Directive
on the Recognition of Professional Qualifications which will affect the movement of
healthcare professionals across Europe.134 The UK Government is committed to
ensuring that foreign healthcare professionals cannot work in the NHS until they prove
their competence and language skills, as there were fears that some of the original
proposals of the directive threatened to weaken safeguards against this.135 It was also
keen to ensure UK medical degrees comprising of 4 years at university plus a clinical
training year could continue.136
After three years of negotiations the Government has largely succeeded in
achieving UK priorities for the revised directive. The main successes include:
language checks, which can be taken before health professionals can practice;
a new proactive warning system where European regulators must warn each
other within three days when a professional is banned or their practice is
restricted; and finally the minimum training requirements for doctors is now 5
years and 5,500 hours down from 6 years and 5,500 hours (meaning UK
degrees outlined above can continue).137 In the negotiations relating to the revision of this
directive the UK national interest has been upheld.
research and develoPmenT (r & d)R & D is an area of exceptional UK success within the EU. In the last two
framework programmes we have been the second largest recipient of grants
after Germany. 138. The key UK objective for 2013 was to ensure that the next
seven year EU budget prioritised R & D spending; that was secured at the 2013
European Council which agreed a 37 per cent increase in resources for the part
of the budget covering innovation.139
133 The details of the funds, the way they operate and the UK’s eligibility are described in the relevant Balance of Competences background paper: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251880/bis-13-1257-balance-of-competences-review-call-for-evidence-cohesion-policy.pdf134 http://www.nhsemployers.org/EmploymentPolicyAndPractice/European_employment_policy/Pages/RecognitionofProfessionalQualifications.aspx135 Ibid. 136 Ibid. 137 Ibid.138 See http://ec.europa.eu/research/fp7/index_en.cfm?pg=country-profile 139 See: http://ec.europa.eu/budget/mff/index_en.cfm
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educaTion
Following the conclusion of budget talks the EU the new Erasmus + programme for 2014-
2020 was approved by the European Parliament on 19th November.140 This will integrate
all the former EU programmes relating to education, vocational training, youth and sport.
In the field of sport the programme will include measures to counter match-fixing and
doping and will support grassroots sport projects that cross national boundaries.141 The
UK Government supported the integration of these projects into one programme because
of the potential efficiency gains. However, Government believed that the proposed budget
of €17 billion (a 70 per cent increase on 2007-13142) was too high for the UK to support.143
The final budget was settled at 14.7 billion, a 40 per cent increase, which still amounts to a
real terms rise.144 But the House of Commons European Scrutiny Committee judged that
overall the Government had been successful in its negotiating objectives.145 The Science &
Universities Minister, David Willets MP, welcomed the programme and its potential impact
on British students, as currently British participation is too low; for every 15 foreign students
studying in the UK there is just one UK student studying abroad.146 The British Council’s
head of EU programmes Ruth Sinclair-Jones acknowledged that UK students are well
behind France, Germany and Spain in participation in Erasmus programmes147.
Erasmus+
negotiation:
Erasmus
participation by
UK students:
140 http://ec.europa.eu/unitedkingdom/press/frontpage/2013/13_131_en.htm141 Ibid.142 Jobbins, D., 2012. ‘Lords challenge UK government over Erasmus funding rise’, University World News143 http://www.publications.parliament.uk/pa/cm201314/cmselect/cmeuleg/83-xiii/8336.htm144 Ibid.145 Ibid.146 http://ec.europa.eu/unitedkingdom/press/frontpage/2013/13_131_en.htm147 Baker (2013)
insTiTuTions & accounTaBiliTY
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chaPTer 8The eu insTiTuTionsovervieWThe five institutions of the European Union (the European Council, the Council of Ministers,
the Commission, the Parliament and the Court of Justice) all have different functions and
the UK will seek to exercise influence within them in different ways (the Court of Justice is
excluded from consideration here). In this chapter we look at some specific issues relating
to each of the institutions, beginning with an over-arching issue: the number of UK nationals
working in the institutions.
euroPean commissionstaff woRking in the commissionThe low number of British nationals working in the Commission (and the other EU institutions)
is of serious concern. Officials working in the EU institutions are an important part of a
Member State’s “collective networking strength” in Brussels, as one former official has put
it.148 A House of Commons Foreign Affairs report in 2013 found that while the UK accounts
for 12.5 per cent of the EU’s total population, the number of British staff working for the
European Commission has fallen by 24 per cent to 4.6 per cent in the last seven years.149
This situation is a result, the Committee said, of people recruited in the 1970s retiring and
not being replaced. The UK also has a lower percentage than other large member states
working in the Parliament and in the Council secretariat. The entrance exam for EU officials,
the concours, is difficult to pass and made more so for British citizens by the relatively low
proportion of British students able to speak one of the necessary second languages (English,
French or German). The percentage of UK nationals passing the concours was just 2.6 per
cent in 2012.150
It is a dismal fact that none of the European Fast Streamers, the specialist group of British
civil and diplomatic trainees intended to go on to work in EU institutions, have got jobs
148 Sir Colin Budd to the House of Commons Foreign Affairs Committee; see note 3 below.149 Figures from Foreign Affairs Committee report, The UK staff presence in EU institutions, HC219, 2013/14.150 Ibid. Table 3, para 15.
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in EU institutions since the scheme was relaunched in 2010. There are other routes into
EU institutions, including the secondment of national experts to the Commission and
secondments to the European External Action Service but neither of these routes at present
involve significant number of UK officials.151
The Foreign Office established an EU Staffing Unit in May 2013 with a remit to
get 20 secondments a year for each of the next three years into EU
institutions.152 This is a valuable step forward but it is insufficient to make up for
the numbers who have retired from the permanent staff of the Commission in
recent years. The announcement of a proposed referendum on EU membership
in 2017 could add to the problems because it may deter British officials from
applying for a secondment because of uncertainty about whether the UK will still
be a member. One step that could be taken is for the Government to guarantee that any
UK official who does accept a post in an EU institution, including the Commission, would
be guaranteed a job on their return to the UK whether or not the UK stays in the EU.
the bRitish commissioneRInfluence in the Commission derives in part from the seniority of a country’s
Commissioner in Brussels, i.e. what portfolio they have, as well as their influence
in their home country, and, as outlined above, from the quality and number of
their nationals working in the Commission. Commissioners who have served as
the political head of a major government department in their home country prior
to their appointment are likely to be bigger political figures and as such to have
greater influence in Brussels.
It will be important for the UK Government to secure a heavyweight economic portfolio in
2014 in order to maximise British influence in the Commission.
euroPean ParliamenTThe Parliament has grown in importance since the Lisbon Treaty; most EU legislation
requires the approval of the Parliament as well as the Council of Ministers. The effectiveness
of British MEPs and the influence they can wield is crucial to the UK successfully shaping
EU policies. Two simple statistics published by Vote Watch Europe give an indication of
the issues: the first shows that the UK’s MEPs rank third from the bottom in terms of the
percentage of votes they participate in (UKIP MEPS turned up for only 65 per cent of votes
between 2009 and July 2013); the second shows that the most powerful group in the
Parliament is the EPP but the UK does not have any MEPs in that group.153
151 Ibid. paras 20 and 26. 152 Ibid. para 21.153 Two charts on the Vote Watch Europe website: http://www.votewatch.eu/en/political-groups-power.html . See also ‘Fears over UK influence as Ukip MEPs miss one third of votes,’ Money Marketing, 18.10.13.
Three-quarters of EU legislation requires the consent of the Parliament as part of the EU’s
legislative process. This change in the Parliament’s role since the Treaty of Lisbon has
made the Parliament a much more central player within the EU. For example, important
agricultural issues previously settled by the European Council now require the agreement
of the Parliament and the Council. The low participation rate of a significant body of British
MEPs reduces our national influence in the Parliament.
The decision of the Conservatives to establish a separate centre-right group from the EPP
has arguably already affected the UK’s ability to win its case (see European Council below).
The statistics on the relative influence of the political groups in the Parliament shows that
the European Conservatives & Reformists group (ECR), which includes British Conservative
MEPs, is less influential than the three main groups (Socialists, EPP, Liberals) and indeed
below the Greens. Its supporters might challenge a calculation of power based on the
percentage of winning votes the ECR has participated in (56.52% compared to the Green’s
67.12%) as a crude way of measuring influence and point out that it was part of the winning
majority in over 90 per cent of votes affecting the internal market and almost 80 per cent of
those concerning external trade.
Whatever has happened in the 2009-14 Parliament, it is the elections in May
2014 that will determine British influence in the Parliament in the future. A
substantial increase in the voting strength of populist, anti-EU and anti-euro
groups could result in closer co-operation between the three main groups in the
Parliament in order to muster the necessary votes to pass legislation. The
Conservatives need to ensure that they build a relationship with the EPP, both
because the 2014 elections could lead to a change in the number of potential
partners able to be in the ECR group with the British Conservatives but also to be able to
manage a major shift in the intra-group relationships in the Parliament if, as currently
predicted, the populist anti-EU groups gain ground, which could diminish the influence of
the British Conservatives further.
euroPean councilThe European Council, the meeting of the Heads of State or of Government, is a
crucial EU forum in which Britain seeks to exercise influence. The Lisbon Treaty
strengthened the role of the European Council by giving it express responsibility
for defining “the general political directions and priorities” of the EU. It also
changed the procedure for appointing the President of the European Commission
to qualified majority voting (QMV) from 2014. Britain’s influence over this
appointment can only come through working with other Member States.
Britain has not always been successful in persuading other Member States of its
arguments in the European Council. The decision of the Prime Minister to veto the
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Fiscal Compact Treaty at the December 2011 European Council because he was unable
to obtain the guarantees he believed he needed to protect the UK financial services
sector, has been seen by supporters and critics alike as a defining moment in Britain’s
relationship with the EU.
The Government does not publicly specify (understandably) detailed objectives in advance
for meetings of the European Council; to do so would undermine the Prime Minister’s ability
to negotiate on often complex issues.
At the 2013 European Council meetings the Government’s broad objectives and the
outcome were as follows:
february The key UK objective at this meeting was to obtain a real-terms cut in the
EU budget for the funding period 2014-2020. Together with its allies, notably Germany,
Sweden and the Netherlands, the UK successfully negotiated a new multi-annual financial
framework (MFF) which is £35 billion lower than that for the current period. The meeting
agreed, in line with UK ambitions, that talks should open with the USA and Japan on free
trade agreements (FTAs).
March The March meeting’s focus was mostly on economic matters, with agreement
on the need to push on and complete the Single Market programme outlined in the Single
Market Act I – a British objective. There was partial agreement on the UK request to
amend the EU arms embargo against Syria, due to expire in May, to allow a wider range
of equipment to be supplied to the anti-Assad forces this after President Hollande and the
Prime Minister secured agreement that the Foreign Affairs Council should “consider further
changes to the arms embargo to broaden support for the National Coalition”.154
May Completing the Single Market in energy by 2014 was a key British objective and
agreed by the EU in 2011. The meeting re-endorsed the target but effectively downgraded
it to a review of progress in implementing it in 2014.155 The Government wanted EU support
for a drive to exploit shale gas deposits in Europe and that was agreed. On taxation,
agreement was reached on a range of measures to tackle tax evasion, VAT fraud and, more
significantly, a common EU position on tax avoidance prior to the G8 Summit in the UK,
a key British objective. Finally, leaders discussed the situation in Syria and paved the way
for the lifting of the EU arms embargo on opposition groups a few days later at the Foreign
Ministers’ meeting, leaving Member States to decide what action to take within an EU-
agreed framework designed to protect civilians and comply with international law.
154 Written Statement in Hansard, House of Commons, 19.03.13, Col. 42WS: http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm130319/wmstext/130319m0001.htm155 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/137197.pdf
June As the Government wanted, the seven-year budget agreement was finalised but
there was an attempt to remove part the British rebate connected with agriculture spending
(proposed by France) which was rejected. It was also agreed that accession talks should
begin with Serbia no later than January 2014 and that an association agreement should be
negotiated with Kosovo; the UK welcomed these developments.156
October The October meeting was overshadowed in the media by discussions about
US interception of communications but there were substantive discussions on measures
to improve the European economy. These included a commitment to introduce annual
assessments of Member States’ reform programmes needed as part of the opening up
of the Single Market in services. The UK Government was keen to get agreement on a
programme to reduce the regulatory burden; the meeting agreed to a scorecard being
introduced to track progress in reducing red tap at both EU and national level.
In the 2013 European Councils the UK mainly achieved its objectives, working in
alliance with like-minded countries, particular on the agreement on the seven-year
budget and on taxation. There was less success on completing the Single Market
in the field of energy, but welcome progress was made in the fields of digital and
regulatory issues.
The events at the December 2011 European Council when the Prime Minister vetoed the
Fiscal Compact Treaty were exhaustively examined by the House of Commons Foreign
Affairs Committee; it is not clear that what happened then has had a long-term impact on
the UK’s relationship with its partners.157 Perhaps the real lesson of that episode was the
need to ensure that we have allies on issues of importance to us who have been properly
briefed in advance of the meeting and who, at the very least, understand the UK position,
even if they do not support it.
The practice of the political groups in the EU holding meetings immediately prior to
European Council meetings means that positions may already have been adopted
on the major issues by a number of heads of government. The absence of the British
Conservatives from the EPP meetings, for example in December 2011, meant that
David Cameron was not able to take part in the discussions on measures to stabilise the
eurozone which took place at the EPP leaders’ meeting in Marseille a few days earlier.158
Had he been there he could have raised the concerns of the UK about the Fiscal Compact
Treaty and regulation of the City.
156 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/137634.pdf157 The Future of the European Union: UK Government Policy, HC87-I, 2013-14, pp.20-31: http://www.publications.parliament.uk/pa/cm201314/cmselect/cmfaff/87/87.pdf158 http://images.europaemail.net/client_id_5328/attachments/EN_Congress_Document.pdf
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The seven-year budget deal was agreed because the UK Government built alliances with
like-minded Member States over several months and argued its case with their support.
Sudden demands on our EU partners are unlikely to be met with a favourable response.
It was a good example of how the UK can achieve important policy goals by working in a
collaborative and constructive way.
It will be of critical importance that the Prime Minister is adequately prepared for the
discussions about the Commission and European Council presidencies in 2014.
council of minisTersThe UK’s detailed objectives in each policy area have been discussed in previous chapters.
In terms of voting, which is not the only, nor necessarily the most valuable guide to
influence, in 2013 the United Kingdom voted in favour 55 times, against six times and
abstained four times in Council votes.159
The UK now votes against EU legislation more frequently than other Member States,
which appears to be a change in policy since 2010. Using figures published by Vote
Watch Europe, the percentage of yes votes by the UK has declined from 91.30 per
cent during the Brown Government to 88.35 per cent under the Cameron
Government. The percentage of no votes has doubled and the percentage of
abstentions has also increased.160 It is by no means clear in what way the UK has
gained ground by adopting this more confrontational approach. On the face of it
these statistics would seem to indicate some reduction in British influence.
159 Figures from Votewatch Europe, op cit, 31.10.13.160 Figures from Vote Watch, op cit, British Influence calculation of percentages: http://www.votewatch.eu/en/council-minority-votes-united-kingdom.html#/#6/0/2010-05-11/2014-07-14/CAB
chaPTer 9suBsidiariTY & ProPorTionaliTYovervieWEnforcing the principles of subsidiarity and proportionality, in order to regulate and limit the
scope of European Union legislation, is an important UK objective. The UK regards upholding
these principles in the drafting of legislation as crucial to reducing unnecessary regulation.
With the coming into force of the Treaty of Lisbon in 2009, national parliaments have gained
a new instrument to exert influence over the EU law-making process through the Reasoned
Opinion (“yellow card”) process. While the introduction of this system was a substantial step
forward, and has the potential to ensure greater regard for the principles of subsidiarity and
proportionality at the stage of drafting legislation, national parliaments have not yet made full
use of this potential, and Commission responses are not always satisfactory. Has subsidiarity
become part of the culture of the Commission or is it, as critics would claim, a principle that is
all too often ignored in practice?
backgRoundAccording to Article 5, Treaty on European Union (TEU), “under the principle of subsidiarity,
in areas which do not fall within its exclusive competence, the Union shall act only if and
in so far as the objectives of the proposed action cannot be sufficiently achieved by the
Member States, either at central level or at regional and local level, but can rather, by
reason of the scale or effects of the proposed action, be better achieved at Union level.”
According to Article 5 (TEU), “under the principle of proportionality, the content and form of
Union action shall not exceed what is necessary to achieve the objectives of the Treaties.”
But proportionality is not covered by the detailed Protocol on subsidiarity and national
parliaments that was included in the Treaty of Lisbon.
For proposed legislation, two subsidiarity tests are considered:
— Why can the objectives of the proposed action not be achieved sufficiently by Member
States (the necessity test)?
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— As a result of this, can objectives be better achieved by action by the Community (the
test of EU Value Added)?161
Whether the policy issue in question fulfils the criteria for EU action is determined by a
series of further questions:
— Does the issue being addressed have transnational aspects which cannot be dealt
with satisfactorily by action by Member States? (e.g. reduction of CO2 emissions in the
atmosphere)
— Would actions by Member States alone, or the lack of Community action, conflict with
the requirements of the Treaty? (e.g. discriminatory treatment of a stakeholder group)
— Would actions by Member States alone, or the lack of Community action, significantly
damage the interests of Member States? (e.g. action restricting the free circulation of goods)
— Would action at Community level produce clear benefits compared with action at the
level of Member States by reason of its scale?
— Would action at Community level produce clear benefits compared with action at the
level of Member States by reason of its effectiveness?
The idea of giving national parliaments a greater say in the EU legislative process with
regards to subsidiarity has been debated since at least the early 1990s, when the
subsidiarity principle was included in the Maastricht Treaty. But under the Maastricht
provision, the only possibility to challenge legislation proposed by the Commission on
grounds of subsidiarity lay in ex post judicial review by the European Court of Justice
(ECJ). While a number of cases were brought before the ECJ, experts suggested that a
review mechanism only coming into force after a piece of legislation had been adopted was
“largely inoperable”162; and the Commission’s 2010 Report on Better Law Making pointed
out that “the Court has yet to annul a measure for breach of subsidiarity.”163
Calls to supplement judicial control of subsidiarity with a pre-legislative mechanism came
particularly from the UK. From September 2006 the Commission provided national
legislatures with all draft legislation. Having achieved a right to information but not to take
subsequent action, Member States ensured that the Yellow/Orange Card process was
included in the 2009 Lisbon Treaty.
The Yellow/Orange Card process allows national parliaments to submit a Reasoned
Opinion to the Commission explaining why they believe that a proposed piece of legislation
breaches the principles of subsidiarity and proportionality, within an eight week period. A
161 These criteria, and the following questions, are provided by the European Commission in its “Impact Assessment Guidelines.” Cf. European Commission (2009), 22-23. The UK House of Commons follows these guidelines in its own assessments – cf. e.g. UK House of Commons - European Scrutiny Committee (2013).162 Professor Alan Dashwood; quoted in National Parliaments and EU Law-making, op cit, p. 13.163 Quoted in ibid.
‘Yellow Card’ is triggered if one-third (one-fourth for matters of justice, crime and security) of
chambers (each chamber in a bicameral parliament has a card) submit a Reasoned Opinion,
requiring the Commission to review the proposal, and then either choose to maintain it,
amend it or withdraw it. An ‘Orange Card’ is triggered if one-half of all chambers submit a
Reasoned Opinion, forcing the Commission to follow the same procedure. In this case, if the
Commission chooses to maintain a proposal it must send to the European Council and to
the Parliament a Reasoned Opinion of its own explaining why it believes subsidiarity has not
been breached, but either of these institutions has the power to strike it down. In addition,
the Commission aims to respond to all Reasoned Opinions even where the threshold has not
been reached, as part of its “political dialogue” with national parliaments.164
Yellow Cards have been triggered on two proposed pieces of legislation so far. In
May 2012, 19 chambers in 12 Member States triggered a Yellow Card, leading to the
Commission withdrawing a draft law regulating the balance between European regulation
on the freedom of movement of workers and services, and employees’ right to collective
action (what come to be known as the Monti II laws). Despite the Commission arguing that
the principle of subsidiarity had not, in fact, been breached it withdrew the proposal.
In October 2013, national parliaments issued a Yellow Card on the proposed European
Public Prosecutor’s Office, a proposal to institute a European-level prosecutor of fraud
offences relating to EU funds, with 19 chambers in 11 Member States submitting a
Reasoned Opinion. In response, the Commission rejected the subsidiarity arguments
and suggested that the proposal go ahead with the remaining Member States under the
Enhanced Cooperation process.
Considerable scope for improvement remains without the need for Treaty change. For
example, the Commission could voluntarily extend the eight weeks that national parliaments
have to respond to a legislative proposal; secondly the Commission could also agree
that once a yellow card has been issued, it will either substantially amend the proposal
or withdraw it entirely; and thirdly, it could agree to consider arguments on proportionality
when a Reasoned Opinion raises them.
The House of Commons EU Scrutiny Committee has pointed out that the Commission’s
responses to the nine Reasoned Opinions submitted by the House of Commons were slow
in coming, with an average time taken to respond of six months, and that replies lacked
detail, and failed “to focus on the detailed subsidiarity concerns contained in the Reasoned
Opinions forwarded by the Commons.”165
164 “The Commission’s Responses to the House of Commons Reasoned Opinions Received to Date,” letter sent by William Cash MP, 26th June 2013.165 Ibid.
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As of 2013, 70 reasoned opinions submitted on a total of 23 different legislative proposals
triggered only two yellow cards.166
uk aimsFirstly, the United Kingdom aspires to ensure respect for the principles of subsidiarity and
proportionality to deter EU institutions (primarily the Commission) from proposing legislation
in areas that could better be regulated elsewhere.167
Secondly, subsidiarity is related to the question of democratic accountability. Some
scholars and public policy practitioners argue that a central aspect of the notion of an EU
‘democratic deficit’ is that, “the actions of … executive agents at the European level are
beyond the control of national parliaments.”168The mechanism for ensuring that subsidiarity
is maintained serves as a potential additional check by national legislatures, reducing the
possibility of national governments enacting legislation commanding insufficient support in
national parliaments.
But it is also true that national parliaments have not yet made effective use of this new
control mechanism. As of 2013, 70 reasoned opinions submitted on a total of 23 different
legislative proposals triggered only two yellow cards.
reducinG reGulaTionCalls to reduce EU regulation have grown in recent years, partly because of concerns about
competitiveness. The Netherlands Government’s “subsidiarity review” in 2013 called for EU
regulation to be based on the principle, “Europe where necessary, national where possible”.
They went on to argue that the culture of the EU should change: they put it bluntly when
they said that the time for ever closer union in all areas of EU activity is past.169 In response
to these concerns the Commission has made a concerted effort over the past few years to
streamline legislation and reduce regulatory burdens under its REFIT (Regulatory Fitness and
Performance) programme. As President Barroso put it in his State of the Union address in
2013, ‘the EU needs to be big on big things and smaller on small things’.170 “Since 2005,
the Commission approved 660 initiatives aimed at simplification, codification or recasting of
legislation,” and more than 5,590 legal acts deemed unnecessary have been repealed.
166 European Commission, 2013, Annual Report 2012 on Subsidiarity and Proportionality. Brussels: European Commission, p.4167 In this concern, the UK does not stand alone amongst EU Member States. The most recent (Spring 2013) Eurobarometer survey of public opinion claims that 74% of European citizens agree with the statement: “The EU generates too much red tape.” Cf. TNS Opinion & Social (2013), 106.168 Follesdal, A. and Hix, S., 2006, “Why There is a Democratic Deficit in the EU: A Response to Majone and Moravcsik,” Journal of Common Market Studies, 2006, pp.533-62169 http://www.government.nl/news/2013/06/21/european-where-necessary-national-where-possible.html170 European Commission (2013) State of the Union address 2013http://europa.eu/rapid/press-release_SPEECH-13-684_en.htm
The Commission argues that the legislative process as regards subsidiarity has
fundamentally changed not only in quality but in kind: impact assessments and stakeholder
consultation are now systematically applied across policy areas. Between 2010 and
2012, the Commission claims to have “carried out 340 public and a number of social
partner consultations … in order to collect the views of citizens, social partners and other
stakeholders in business and civil society and to feed their comments into the process of
policy development and review.”171 The quality of Commission impact assessments has
been praised by independent reviewers.172
Nonetheless, Chatham House/YouGov poll last year showed that 65 per cent of respondents
believe there were too many EU laws and regulations. In the same poll, when asked which
phrase they most associated with the EU, 46 per cent answered ‘bureaucracy’.173
The REFIT programme demonstrates that the Commission is starting to listen to these
concerns from both citizens and Member States. REFIT aims to review two-thirds of
existing EU regulations to ensure they are sufficiently streamlined. The Micros Directive
exempts 1.5 million micro businesses in Britain from financial reporting requirements.174
Clearer and more concise regulation should give rise to an easier way of conducting
business for SMEs, fostering jobs and growth. Through involving sector experts more
closely in the legislative process and expanding the use of consultation documents the
Commission hopes to provide better informed and more widely endorsed legislation. The
Commission has been at pains to stress that Europe will only legislate where necessary.
The Prime Minister asked a group of leading business people to conduct a review of
EU red tape. The resulting report outlined clear principles for EU regulation but it also
expressed concern that over-regulation at both the UK and EU level is proving damaging
for innovation, trade and services alike.175 However, the report notes that two of the key
barriers actually require more rather than less EU activity; securing the Transatlantic Trade
and Investment Partnership and opening up the single market to the digital economy are
essential to getting the best out of the EU. They also pointed to the Services Directive,
where the Taskforce feels there is scope to implement it on a more even basis.
171 European Commission, Regulatory Fitness and Performance (REFIT): Results and Next Steps. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Brussels: European Commission, 2013172 Fritsch, O., 2012, Regulatory Quality in the European Commission and the UK: Old Questions and New Findings, Centre for European Policy Studies.173 Chatham House-YouGov survey, 2012, Hard Choices Ahead: British Attitudes Towards the UK’s International Priorities p. 10: http://www.chathamhouse.org/sites/default/files/public/Research/Europe/0712ch_yougov_surveyanalysis.pdf 174 http://news.bis.gov.uk/Press-Releases/Accounting-red-tape-cut-for-smallest-UK-companies-692ab.aspx175 Department for Business, Innovation & Skills Policy Paper (2013) Cut EU red tape: Report from the Business Taskforce - https://www.gov.uk/government/publications/cut-eu-red-tape-report-from-the-business-taskforce/cut-eu-red-tape-report-from-the-business-taskforce
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Although it is early days yet, REFIT certainly represents a move towards a more responsive
model; one that is more receptive and amenable to Britain’s interests.
RatingsIn this section we have adopted separate ratings for subsidiarity, proportionality and better
regulation. For subsidiarity, we have a red rating to UK efforts to maintain appropriate levels of
subsidiarity. This reflects our belief that the Commission is not consistent in its application of
the subsidiarity principle. In order to improve this, the UK needs to ensure greater respect for
the principle when the next Commission is appointed in November 2014.
The reasoned opinion process now gives national legislatures a potentially highly effective
mechanism to control the Commission where it oversteps its mandate in regards to
subsidiarity and proportionality. The UK Parliament can improve in this respect. While
the UK was one of the loudest voices for reforms to grant national parliaments a say in
Commission law-making, neither UK chamber is among the three most active Member
State legislatures in terms of submitting Reasoned Opinions (being the French Sénat,
the Swedish Riksdag and the German Bundestag – together providing almost half of all
Reasoned Opinions176).
Subsidiarity: Proportionality:Reducing
regulation:
176 European Commission, 2013, Annual Report 2012 on Subsidiarity and Proportionality. Brussels: European Commission, p.4
BioGraPhies of Panel memBers
sir menzies camPBell mPSir Menzies Campbell was elected M.P. for North East Fife in 1987, he
has retained his seat ever since. He has been Defence and Foreign
Affairs Spokesman and Deputy Leader of his party, and was Leader of
the Liberal Democrats from 2006 to 2007. He has been a member of
several House of Commons Select Committees, including the Defence
Committee, and is currently a member of the Commons Select
Committee on Foreign Affairs and Parliament’s Intelligence and Security Committee. He is
presently the leader of the United Kingdom delegation to the NATO Parliamentary
Assembly. He has honorary degrees from three Scottish Universities including St Andrews,
of which he is Chancellor.
Sir Menzies received the CBE in 1987; was appointed to the Privy Council in 1999 and
knighted in 2004 for services to parliament. He became a Companion of Honour in the
2013 Birthday Honours for public and political service.
charles GranTCharles Grant is director of the Centre for European Reform (CER)
which he helped to set up in 1996. He previously worked for
Euromoney and The Economist in London and Brussels, and his
biography of Jacques Delors (“Delors: Inside the House that Jacques
Built”) was published by Nicolas Brealey in 1994. He is the author of
many CER publications including the recent report “How to build a
modern European Union”, and is a regular contributor to the Financial Times and the New
York Times amongst others. He was a director and trustee of the British Council from
2002 to 2008. He is a member of the international advisory boards of the Moscow School
of Political Studies, the Turkish think-tank EDAM and the French think-tank Terra Nova. In
2004 he became a chevalier of France’s Ordre Nationale du Mérite, and this year a
Companion of St Michael and St George.
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lord hannaY of chisWickDavid Hannay was born in London and educated at Winchester College
and New College, Oxford. He entered the Foreign and Commonwealth
Office in 1959, and initially served in Tehran and Kabul.
From 1965 to the early 1970s, he was an official representative of the
government in negotiations that led to the UK’s 1973 entry into what
became the European Union.
He held various positions in the Foreign Office in London during the 1970s and 1980s.
He was a Minister at the British Embassy in Washington, DC, in 1984–1985, and was
then promoted to ambassador and permanent representative to the European Economic
Community from 1985 to 1990. He then spent the next five years as ambassador and
permanent representative to the United Nations.
He later served as the UK’s Special Representative for Cyprus between 1996 and 2003 and
as a member of the UN High Level Panel on Threats, Challenges and Change, reporting to
the UN Secretary-General in December 2004.
In June 2001 he was created a life peer as Baron Hannay of Chiswick, of Bedford Park in
the London Borough of Ealing and in the same year he was made Pro-Chancellor of the
University of Birmingham.
Lord Hannay was Chair of the Board of United Nations Association UK from January
2006 to January 2011. He is currently a member of the Top Level Group for Nuclear
Disarmament and Non-proliferation and the Lords EU Select Committee, chairing the Sub-
Committee on Home Affairs, Health and Education.
Baroness Quin of GaTesheadJoyce worked as a Political Researcher from 1969 to 1972, as Lecturer in
French at Bath University from 1972 to 1976, and as Tutor and Lecturer in
French and Politics at the University of Durham from 1976 to 1979.
Her political career began when she was elected to the European
Parliament as MEP for South Tyne and Wear in 1979. She subsequently
entered the House of Commons as MP for Gateshead East in 1987 and served as MP for
18 years until 2005. During her time in Parliament she had a number of Shadow Ministerial
and Ministerial roles, serving in particular as Minister of State in the Home Office (1997-
8), the Foreign Office (Minister for Europe, 1998-1999) and as Minister in the Ministry of
Agriculture Fisheries and Food from 1999-2001. She was appointed to the Privy Council
in 1998. She retired from the House of Commons at the 2005 general election and was
appointed to the House of Lords, taking the title Baroness Quin of Gateshead, in 2006.
Joyce Quin is an Honorary Fellow of the University of Sunderland and of St. Mary’s College,
University of Durham. She is also an Honorary Freeman of the Borough of Gateshead and
was awarded “Officier” of the Legion of Honour by the French Government in 2010. She
authored a book on the British Constitution, published in 2010.
sir malcolm rifkind mPSir Malcolm has been an MP since 1974. In 1979, when the
Conservatives were returned to power under Margaret Thatcher, he was
appointed a Parliamentary Under Secretary of State, at first in the Scottish
Office and then, at the time of the Falklands War, he was transferred to the
Foreign and Commonwealth Office, being promoted to Minister of State in
1983. He became a member of the Cabinet in 1986 as Secretary of State
for Scotland. In 1990 he became Secretary of State for Transport and in 1992 Secretary of
State for Defence. From 1995-97 he was Foreign Secretary. He was one of only four
ministers to serve throughout the whole Prime Ministerships of both Margaret Thatcher and
John Major. In 1997 he was knighted in recognition of his public service. He served as the
Shadow Secretary of State for Work & Pensions and Welfare Reform until December 2005
when he chose to return to the backbenches. He has been the Chairman of the Intelligence
and Security Committee since 2010.
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acknoWledGemenTs
The Scorecard was compiled and edited by Nick Kent, Director of
Research at British Influence. He would like to thank the following
for their invaluable assistance: the Panel members; Rachel Franklin,
research, editing and proof reading; Hélène Delsupexhe, Chapter
1; Stuart Smedley, Chapters 2 & 3; Will Gurney, Chapter 5; Alex
Potkins, Chapter 7; Konstantin Sietzy, Chapter 9; Guillermo Giralda
Fustes, proof reading and fact checking; Adam Nathan, media; and
Peter Wilding for the original idea.
foR geneRal enquiRies:[email protected]: @bRitinfluenceWWW.BriTishinfluence.orG
