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Thursday, November 24, 2011

Trading something for nothing?

Over on Conservative Home, we take a look at the alleged deal between Angela Merkel and David Cameron (with emphasis on alleged).

We argue:
It has become clear, over the past few months, that German Chancellor Angela Merkel wants to reopen the EU Treaties in order to beef up the rules on eurozone economic governance, giving the EU institutions, including possibly the European Court of Justice, the power to impose and enforce semi-automatic sanctions when euro states break the budget rules. There’s no concrete proposal for Treaty change yet on the table, but the Germans will most certainly want to seek a “limited” change to the EU Treaties without the need for referenda across Europe.

Irrespective of the merits of the proposals, with German money necessary to keep the eurozone show on the road, you can understand why Merkel feels the need to take some sort of action. 'Never again' is the implicit lead theme. But where does all of this leave Britain?

Last week, David Cameron, who has the power to veto Merkel’s demands as they require unanimous consent, flew to Berlin, presumably to tell the German Chancellor what he wants. Both the German and British press had a field day with the alleged tensions between the two countries. German tabloid Bild – the most widely read paper in Europe – led the pack asking, “What is Britain still doing in the EU anyway?”

Vey little was given away at the post-meeting press conference, but we know that Cameron has some established objectives in ongoing EU negotiations: ensuring that decisions on the EU’s single market are agreed by all 27 members (an aim which Merkel broadly agrees with) and insulating the City of London from intrusive EU laws (a no-go for Merkel). An objective, entailed in the Coalition agreement, to revise the EU’s draconian working time rules is also now being revisited with reports suggesting that Cameron may be set to agree a Treaty change in return for just that. The reports are still pretty speculative but if they contain any truth, Cameron risks repeating the mistakes of past prime ministers who have consistently underplayed the UK’s hand in Europe (think of Tony Blair’s decision to give up a huge chunk of the UK’s EU budget rebate in return for broken promises of reform to the Common Agricultural Policy).

Here’s why: re-negotiating the Working Time Directive (WTD) – the EU law regulating working hours – would certainly be a worthy aim. But the problem is that, unlike Treaty negotiations, where the UK has a veto, the WTD is decided by qualified majority voting amongst EU minsters and subject to so called co-decision with the European Parliament, giving MEPs the opportunity to get in on the act with a whole range of demands of their own. Not only does this mean that the final outcome of EU negotiations is out of both Merkel’s and Cameron’s hands, it could even result in an even worse outcome than we have already. You don’t have to look too far back in time for evidence showing why such a strategy would be a major gamble. In 2008, the last time the WTD was up for renegotiation, in an attempt to resolve the very same problems caused by the ECJ’s rulings, MEPs voted to scrap the opt-out from the 48-hour working week. The Labour government, who pointed out that losing the opt-out would cost the UK economy billions, was forced to fight tooth and nail to keep the exemption. Meanwhile, the rulings on rest periods and ‘on-call’ time were left completely unaddressed, despite the fact that several member states in addition to the UK were seeking to overturn them.

Cameron would therefore be trading a UK veto – and spend plenty of political capital – in return for little more than the vague hope of a reformed WTD, changes that he should be pushing for anyway.

So what are the options for Cameron ahead of the key EU summit on December 9th, when Merkel, aided by EU President Herman Van Rompuy, will begin her quest for a limited Treaty change? As Open Europe research has shown, there are potentially major gains to be won from repatriating EU social and employment law, including the WTD. But admittedly, it would be difficult to achieve a comprehensive repatriation through the limited Treaty change that Merkel now is pushing for.

A better objective for the December talks is some sort of safeguard to protect the UK from harmful EU financial regulation. It is true, that if Britain over-reaches, Berlin may seek an arrangement which involves only the 17 euro members, leaving Cameron without veto and leverage. But the Germans are actually very keen to get things done at the level of all 27 member states for a whole range of reasons and it would be foolish for Cameron to fold prematurely. In a report to be published next week, Open Europe will set out what such financial safeguards could look like, and how they can be achieved, so watch this space.


MikeH said...

Does 'renegotiation' still mean getting powers back from the EU? Or now merely safeguarding against planned future impositions? I'm confused.

Looks like David Cameron is attempting to change the definition as he (belatedly) comes to realise the impossibility of gaining the agreement of other EU member countries to a meaningful return of powers.

Seems to me that saying first that we will leave the current treaty is the only way to begin discussions over a replacement deal that becomes the EU 'renegotiation' that many ideally want.

As Cameron is unlikely to do that, this is why supporting demands for an 'in-out' referendum (and campaigning for 'out plus new deal') is the only realistic strategy to force change to the extent that renegotiationists and indeed 'outists' say they want. Wouldn't you say?

Sheona said...

I suspect Mike H is correct. Cameron has done the "walking softly" bit and now needs to show the big stick he was carrying. If Britain left the EU, that would leave Germany as the only net contributor.

Rollo said...

The Acquis Communautaire guarantees there will be no re-negotiation. There is no forum for renegotiation, even. Can we imagimne all 27 saying - 'yes, of course you can have your fisheries back'? The WTD and the Agency workers directive will keep coming back in different guises. Each one will be disguised to prevent the public from having a say. We can expect Haw Haw to come back claiming another great victory while giving our nation away. Shame on anyone who voted quisling in the last election.

Andrew Smith said...

How can they change the EU Treaties to give EU institutions, including possibly the European Court of Justice, the power to impose and enforce semi-automatic sanctions when euro states break the budget rules, with only “limited” change to the EU Treaties.

Such an increase in EU power over member states and their people's democratic rights would be an enormous change.

No doubt Cameron will claim that such changes to not have any impact on the UK so he will refuse a referendum, but that would be a deceit. The UK would be severely impacted by such a change. Unified voting by the Eurozone would be only one of the important changes to the UK's terms of membership.

Lister said...

Rollo should accept the facts of political life. David Cameron's team saved us from a Lib/Lab coalition. Just think where we would be now if it had gone the other way. We would already be in the Euro and paying the bills.
No. Don't talk the man down and call names, rather work to create a dominant group within the Parliamentary Party demanding that in/out referendum. Only this will give the PM the strength to challenge the Klegg Faction and the German ambition.
The alternative is a continued leaching away of British sovereignty. The Treaties provide for new Directives through channel A. If that is blocked use channel B and if that fails use the back door. The pressure is relentless from that vast organization. Only the threat of departure with political will and parliamentary strength will succeed in opposing it.

Will Podmore said...

Cameron is giving ground on the proposed EU Treaty on economic union in the hope of saving the City of London. But giving away our sovereignty will not save the City or anything else. We must run our own finances, independently of the EU’s orders, run them as we see fit, to suit our needs.