The Pro-European case for a renegotiation of and referendum on the UK’s membership of the EU

By Steve Peers

The Prime Minister, lacking a majority in the House of Commons, is harried by his Eurosceptic backbenchers. He promises a renegotiation of the UK’s membership of the EU, followed by a referendum on whether to stay in. It’s 2014 – but it’s also 1975.

That renegotiation and referendum ultimately resulted in a landslide vote in favour of staying in the EU. While the circumstances are different in some respects in 2014, there is a strong case for repeating this process.

The argument for a referendum on the EU has so far been made either by those who are opposed to the UK’s membership of it (UKIP), or as a concession to those backbenchers who are highly critical of it (the Conservative party). On the other hand, it has been resisted by those who are most in favour of the EU.

In that light, the purpose of this post is two-fold: (a) to make a pro-European case for a referendum and (b) to describe exactly how the UK should renegotiate its membership beforehand.

The pro-European case for a referendum

The case for a referendum on EU membership should stand on its own, and should not be seen as a defensive reaction to the results of the most recent European Parliament elections.

First and foremost, since 1975 there have been five major Treaty amendments, as well as substantial enlargement of the EU. The political and economic circumstances of the country, and the EU as a whole, have clearly changed. There is therefore a principled argument for allowing the voters to give their fresh consent (or not) for these developments.  

Secondly, the continued pro-European rejection of a referendum has made it possible for critics of the EU to characterise pro-Europeans as anti-democratic. Of course, it can be argued in response that representative democracy is also a valid form of democracy, one with longer and deeper roots in British political culture, and that the UK Independence Party has never (at least to date) won a single seat in the House of Commons. But in light of the growing tradition to decide important constitutional questions by popular referendum, that counter-argument has diminishing force. After all, voters cast their vote at general elections for many reasons besides their view on membership of the EU.

More broadly, pro-European opposition to a referendum makes it look as if pro-Europeans do not have the courage of their convictions. If the EU is, as they say, such a good thing for the UK, why fear a popular vote on it? In fact, on several occasions, pro-Europeans have promised a referendum on some aspect of the EU, and then apparently (if not technically) reneged on their promise. This gives the impression that pro-Europeans cannot be trusted, and so leads some voters to question the honesty of their arguments. The longer that pro-Europeans resist the case for a referendum, the more that these negative impressions will grow. Put simply, the pro-European resistance to an in/out referendum is surely damaging the pro-European cause.

While Labour and the Liberal Democrats have promised an in/out referendum, this would only take place in the event of a new Treaty transferring powers from the UK to the EU. While it is possible that there will be negotiations for Treaty amendments in the next few years, it is inconceivable that those parties would agree to the transfer of fresh powers from the UK to the EU in that context. So that referendum promise is meaningless. The Labour and Liberal Democrat position is like promising that if I had a sex change, I would stay married to my wife. But I’m not going to get a sex change.

In any event, the very offer of an in/out referendum, even  if the conditions for it to be held are unlikely ever to be satisfied, undermines the logic of the arguments against having such a referendum.

It must be emphasised that the case for a referendum is non-partisan: advocating a referendum does not necessarily mean supporting British withdrawal from the EU, or supporting any other policy espoused by the Conservative party.  

So the pro-European response to calls for a referendum should no longer be to find an excuse not have one, to promise one and renege on that promise, or to promise one that will never be held.  It should be, simply: Bring it on.

Renegotiation of UK membership

Before examining the details of renegotiation, one critical rule must be set down at the outset. Any renegotiation position must avoid insisting upon Treaty amendment, or upon a change in EU law which necessarily involves Treaty amendment (such as complete UK control over the free movement of persons). That’s because a Treaty amendment will be far more difficult to achieve, in particular if it becomes bound up with other possible amendments to the Treaties concerning other issues. Those who demand that such renegotiation positions (such as full control over the free movement of persons) should be a ‘red line’ are essentially dishonest. If that issue is crucially important to them, they should instead call for UK withdrawal of the EU, with all of the consequences which that entails.

In fact, back in 1975, other Member States agreed to a renegotiation consisting of amendments to EU secondary legislation, and the British public ultimately accepted that deal. Again, it would be possible today to address many of the issues arising from the UK’s membership of the EU by amending secondary legislation. Indeed, Jean-Claude Piris recently argued that the negotiation demands set out by David Cameron could all be addressed by amendment of secondary EU legislation.

As discussed in a previous post, this is correct. However, there is a risk that the critics of the EU would not be entirely satisfied by it. The better strategy is therefore to aim for an intermediate course: in conjunction with amendments to EU secondary legislation, there should be a decision of the EU Heads of State and Government, meeting within the European Council, which constitutes the EU’s response to the renegotiation request.

Such Decisions have been adopted in the past, as regards Denmark and Ireland, in order to address the former Member State’s difficulties ratifying the Maastricht Treaty and the latter Member State’s difficulties ratifying the Treaty of Lisbon. In the latter case, the European Council also agreed the broader legal and political context of this decision: the decision was ‘legally binding’, it did not constitute a Treaty amendment, and its content would be set out in a Protocol to be attached to the Treaties in future. Indeed, the latter protocol was subsequently signed as promised. The UK could be offered a similar commitment.

In order to indicate more clearly how the renegotiation would work, the annex to this post suggest a possible wording for such a decision, based upon the 2009 Decision concerning Ireland, adapted to the Conservative party’s negotiating demands.

The Heads of State or Government of the 28 Member States of the European Union, whose Governments are signatories of the Treaties,

Taking note of the concerns of the British people identified by the Prime Minister of the United Kingdom,

Desiring to address those concerns in conformity with the Treaties,

Having regard to the Conclusions of the European Council of [xx date] 2017,

Have agreed on the following Decision:

Section A

Enlargement and the movement of persons

In every forthcoming enlargement of the European Union, the current Member States agree that the free movement of persons from a new Member State will be dependent on a unanimous decision of the Council, which will be taken at the latest once the income of the new Member State concerned is 75% of that of the other Member States of the European Union.

Section B

Free movement of persons and social benefits

The Heads of State and Government confirm that, in accordance with the jurisprudence of the Court of Justice of the European Union, Member States may deny benefits to nationals of other Member States who are not workers or self-employed persons.

Note: see the recent Advocate-General’s opinion in the Dano case (press release here); see also the previous post discussing the current limits on expelling persons following unemployment and/or requests for social assistance.

Section C

Powers of national parliaments

The Heads of State and Government take note of the Commission’s firm commitment that, building upon the Protocols on national parliaments and on subsidiarity and proportionality attached to the Treaties, it will withdraw any proposal which is opposed by one-third of Member States’ parliaments.

Section D

Economic reform

The Heads of State and Government [make specific commitments as regards free trade agreements and amendments to EU legislation, or refer to such agreements and treaties which have already been agreed].  

Section E

Policing and criminal law

The Heads of State and Government reaffirm the United Kingdom’s sovereign power not to opt in to proposals for new legislation on criminal law or policing pursuant to the Protocols attached to the Treaties, and the provisions of the Treaties which require respect for the national identity and legal system of every Member State.

They confirm their strong support for the ongoing process of reform of the system established by the European Convention on Human Rights.

Note: if the process of ECHR reform is completed before the UK renegotiation of its EU membership, there could be a more specific commitment to give effect to the results of that process, for instance ratifying a new protocol to the ECHR.

Section F

Reduction of EU competences

The Heads of State and Government reaffirm that In accordance with Article 48 TEU, the competences conferred upon the Union can be reduced. In accordance with Articles 2 and 4 TFEU, the European Union can choose to exercise its competences less intensively in those areas where it shares competence with its Member States.

Note: this could be accompanied by specific commitments to repeal or reduce the scope of some existing EU legislation.

Section G

‘Ever Closer Union’

The Heads of State and Government confirm that the commitment in the Treaties to ‘ever closer union’ has no specific legal effect. It does not require that further competences be conferred upon the Union, or that the Union must exercise its existing competences. Nor, in accordance with Section D, does it constrain the Member States from adopting Treaty amendments which reduce the Union’s competences, or constrain the Union from choosing to exercise its competences less intensively.

Barnard & Peers: chapter 2, chapter 5, chapter 13, chapter 25

Can Thomas Piketty reform capitalism and democracy in the European Union?

Steve Peers

A few months ago, no one would have predicted that a leftwing French economist would become the intellectual equivalent of a rock star, in particular the UK and the USA. Yet Thomas Piketty has managed this feat with Capital, a tome which suggests a radical new thesis about the link between capitalism and democracy.

Like other rock stars, Piketty cannot resist the call to lend to his name to good causes. But unlike Bono and Cher, his support for a French academic initiative for EU reform, published recently in The Guardian, is still linked back to his day job.

The EU used to be reasonably good at doing capitalism, but not very good at doing democracy; now it is not very good at doing either. So the Piketty thesis suggests a number of major reforms to address both failings.

The Piketty proposals

The first of three proposals is that France and Germany, and then other Eurozone countries ‘share’ (he means ‘harmonise’) their corporate income tax. This would entail a common tax base, a minimum rate of 20%, and a ‘federal’ rate of 10% imposed by a Eurozone authority. This would create a Eurozone capacity as regards investment programmes. There should also be automatic exchange of bank information within the Eurozone, an active policy for more progressive taxation of income and wealth and an ‘active fight’ against tax havens outside the Eurozone.

Secondly, there should be a parliamentary chamber for the Eurozone, made up of members of national parliaments, selected on the basis of political party representation in national parliaments. The numbers of representatives from each state would be (strictly?) proportionate to the population. It would start with those Eurozone members that support ‘great political, fiscal and budgetary union’, but would be open to all EU countries that share this goal. There would be a Eurozone minister of finance, and eventually a Eurozone government, answerable to this chamber.

Piketty and co reject the idea that a second chamber could be made up of heads of state, on the basis that a single individual cannot represent a state. They suggest that the European chamber could address issues such as corporate governance, childcare, training, social legislation and a price for carbon emissions.

Thirdly, there would be a debt redemption fund, paying off all debts over 60%, with the Eurozone parliament deciding on ‘the level of the common deficit’ each year.

As for how to achieve these aims, they assume that a Treaty change would be necessary. They assert that ‘the Treaties are being modified constantly’, such as in 2012. This is an apparent reference to the Treaty amendment relating to the European Stability Mechanism (ESM), the treaty between Eurozone states which created a sort of bail-out fund.

Comments

Assuming, for the purposes of argument, that Piketty’s economic analysis is valid, how feasible are the suggested remedies to address the undoubted challenges to capitalism and democracy within the European Union?

Starting with the reformers’ final point, Treaty reform is much harder than they suggest. While it is true to say that there have been several Treaty amendments in recent years, they were all minor. The four amendments agreed since the Treaty of Lisbon consist of: the single new paragraph of the Treaty relating to the ESM, which the CJEU said was not necessary anyway (Pringle); a Protocol clarifying the position of Ireland; a Protocol concerning the effects of the Charter of Rights on the Czech Republic (dropped when that country withdrew its request for it); and a Protocol on the numbers of MEPs. The latter three amendments were all leftovers from the Treaty of Lisbon, either being promises made to get it ratified (the Irish and Czech Protocols), or a transitional measure to take account of the delay in in its entry into force.

In comparison, a plan to negotiate a more significant Treaty amendment relating to economic governance collapsed in December 2011, when the UK and the other Member States could not agree whether there should be specific safeguards built in for the UK’s financial services industry. The last successful major Treaty amendment, the Treaty of Lisbon, took years to negotiate and ratify (taking into also account the efforts to drawn up and ratify the Constitutional Treaty). Perhaps Piketty and his colleagues were all on sabattical in 2005, when the French public rejected that Treaty in a referendum?

Having said that, a Treaty amendment would not be necessary as regards all of the points which they raise. Given the difficulties in agreeing any significant Treaty amendment, and the time it would take to come into force even if the effort is successful, any advocates for EU reform should consider first what reforms can be agreed within the current EU legal order, including enhanced cooperation, and/or in the form of treaties between a limited number of Member States outside the EU legal order.

As regards Piketty’s first proposal, a harmonised corporate tax base and a minimum rate could be the subject of EU law, by means of enhanced cooperation (which means using EU law to adopt measures for a minimum group of nine Member States, if not all Member States wish to participate). In fact, there is already a proposal to harmonise the corporate tax base under discussion. Alternatively, a treaty between Member States could address this issue, if it complies with other EU measures on corporate tax, as well as the Treaty requirement of non-discrimination between Member States.

However, the EU has limited powers as regards wealth and income taxes. On these issues, though, there could be a treaty among Member States, which would have to be consistent with the EU Treaty rules on non-discrimination.

There are many EU measures on the exchange of tax information an EU issue already, and the idea that a group of Member States fight against tax havens within the EU is hugely problematic due to EU free movement rules. Similarly, negotiations with non-EU tax havens can only be carried out by the EU, because to the extent that the issues concerned (like the exchange of information) have been dealt with by internal EU laws already, the EU has exclusive external competence to negotiate such treaties.

As for a Eurozone budget, it should be possible to arrange for one within or outside the Treaties, in either case without amending them.

On the other hand, Piketty’s third suggestion, the debt redemption fund, really will require Treaty reform, since it is likely to infringe the existing ‘no bail-out rule’ by making some Member States at least partly liable for the debts of other Member States.

This brings us to the institutional arrangements. While a Eurozone parliamentary chamber (and the accompanying government and ministers referred to) could be created in a treaty among Member States, any overlap between the powers of these bodies and the existing EU institutions is legally problematic, since the CJEU ruled in Pringle that treaties between Member States were also subject to the rules on the EU’s exclusive external competence. Clearly the proposals of Piketty, et al, would in part create such an overlap, since the Eurozone parliament and government would address issues such as carbon pricing and social legislation. Moreover, any powers concerning a debt redemption fund would entail an underlying Treaty amendment in the first place.

It is also unhelpful that the reform proposals ignore the very existence of the Council – the EU body which is made up of ministers from Member States (as distinct from the European Council, made up of heads of state), and which legally speaking does constitute an existing second legislative chamber (alongside the European Parliament) in the EU.

Certainly, the substance of any reform initiative could be more easily taken forward by means of reforming existing bodies, rather than creating new ones. It might be fairly quick and simple to agree on the creation of a Eurozone-only element of the European Parliament (if MEPs from non-Eurozone states agree to abstain, or if a treaty between Member States creates such a formation and gives it powers distinct from the normal powers of the European Parliament).

The one strong argument for creating a new Eurozone chamber is that such a radical step may be the only way politically to address widespread concern about the legitimacy and democracy of the EU, in particular as a response to the result of the upcoming EP elections. The particular make-up of that parliament being proposed would also address the concerns of the German Federal Constitutional Court about the current make-up of the European Parliament (ie the degressive proportionality that gives smaller Member States more MEPs per person). Again, though, the only safe way to create such a chamber legally is to ensure that its powers are clearly distinct from those of the EU institutions, for instance focussing at first on the harmonisation of taxes which the EU has not addressed, as well as supervision of the functioning of the ESM (which is mainly the subject of an international treaty).

One final consequential suggestion (although it would entail a Treaty amendment). The creation of a Eurozone parliamentary chamber would be bound to lead to disputes over exactly where to locate it. The obvious answer is Strasbourg – in return for the European Parliament finally being liberated from holding most of its plenary meetings there, and moving fully to Brussels. Surprisingly, these French reformers do not raise this issue.

Barnard & Peers: chapter 2, chapter 3, chapter 19

Is the UK's restriction on EU workers' access to benefits legal - and if not, should it be?

Steve Peers

Today the UK government has announced a new threshold for determining whether an EU citizen from another Member State is actually a 'worker' or not, for the purposes of claiming benefits. Are these rules compatible with EU law on the free movement of workers? And if not, should EU law be changed so that they are?

According to the new UK rules, to obtain 'worker' status, citizens from other Member States will have to earn £150/week for at least three months. If they manage this, then they will have access to child benefit, child tax credit, job-seekers' allowance and housing benefit. If not, then they will not be automatically denied benefits; rather their position will be subject to a case-by-case analysis.

Is this a violation of EU law? In a series of cases dating from the 1980s, the Court of Justice of the European Union (CJEU) clarifed the meaning of 'worker' for the purposes of the EU Treaties, which provide for the free movement of workers. This case law clarified that a person must be considered to be a 'worker' even if he or she works part-time, as long as the work is 'genuine and effective' and not 'marginal or ancillary'. In particular, an EU citizen claiming top-up benefits might still be considered a 'worker' (Kempf). However, there is no hard-and-fast rule in this case law determining what it takes to be an EU worker.

At first sight, the new UK rules appear to set such a hard-and-fast rule, which conflicts with the case law of the CJEU. It is certain, in light of its prior case law, that the CJEU would hold that at least some people earning an average of less than £150/week for three months were workers. It is even more certain that the CJEU would condemn the rule if it requires the worker to earn more than that amount every week for that period, rather than an average - but it is not clear if the rule goes that far.

 However, the new British rule is not as strict as that. Instead, it appears to create (at most) a rebuttable presumption that the persons earning less than that amount are not workers. Its compatibility with the free movement of workers therefore depends largely on how it is actually applied to individual situations, which might in part depend on the policy guidance which will presumably be issued by the government to the civil servants who apply it. The crucial point should be how exactly the presumption (is that is what it will be) can be rebutted.

So the answer to the first question posed above is: It depends on how the law is applied in practice. That's not a very satisfactory answer, perhaps, but it is often the only honest answer to a legal question. Having said that, it might still be worth challenging the new rules for their compatibility with EU law, via the national courts and by means of complaints to the Commission, to obtain some further clarification of the EU definition of 'worker'.

Should the EU rules on benefits for EU citizens be changed?

This brings us to the second question: Should the rules be changed? Of course, this is a political question, but it has a legal context. Since the rules are closely related to the interpretation of the concept of 'worker', a term set out in the EU Treaties, it would take a treaty amendment to change them. Such a treaty amendment would need the approval of all 28 Member States (or perhaps 29, if Alex Salmond's dreams come true).

In the normal course of events, it is unlikely that all Member States would agree to a Treaty change that would negatively affect their citizens who have moved to other Member States and taken up low-paid work. However, it is just about conceivable that they would be willing to negotiate a limited clarification on workers' access to benefits in the context of a UK bid to renegotiate the terms of its UK membership. Perhaps this change could even apply across the board, to all Member States: it would probably be welcome in some other Member States, and it might even increase public support for further EU enlargement.

It might be argued that any restriction on the established rights of EU workers is unthinkable. But consider the alternative: if the UK were asking to renegotiate its EU membership, that would mean that a Conservative government had won a majority (or very close to a majority) in the 2015 UK general election. That government would be demanding a change in the UK's EU obligations, otherwise it would lead the UK out of the EU. And that would, of course, remove any rights for EU citizens at all in the UK - subject to whatever (doubtless more limited) rights were agreed as part of the UK's hypothetical future association agreement with the EU. Moreover, a modest restriction on the benefits which low-paid workers could receive would be much a less significant restriction on free movement rights than the demand of some critics of EU membership - that the UK should be able to set a quota on the numbers of EU citizens moving to the country. Could it be time to think the unthinkable?

Barnard & Peers: chapter 13