How the Commission will respond to Cameron

Officials will put forward EU-UK reform proposals aimed at avoiding a long political battle.

The European Commission plans to respond quickly to U.K. Prime Minister David Cameron’s list of EU reform demands expected as early as next week, aiming for a swift solution that avoids treaty changes or a prolonged political battle.

According to a diplomat familiar with the talks, negotiators will offer to focus on legally binding decisions that assuage Britain’s concerns but are also considered acceptable to the EU’s other 27 countries, which will need to approve them.

The Commission proposal includes giving national parliaments more power to block or amend EU legislative proposals; clarification of the meaning of the words “ever closer union” in the EU treaty; a say for the U.K. and other non-euro countries in eurozone economic policy; and stricter limits on the free movement of labor from new EU member countries.

The diplomat provided the first glimpse of the Commission’s strategy heading into a critical month for Europe’s efforts to keep Britain in the bloc. Leaders of the EU’s 28 national governments will meet at a December summit for their first substantive discussion on the reforms they will try to agree to before Cameron calls an in-or-out vote on EU membership.

Cameron told EU leaders that he would provide his reform proposals in writing by early November. Commission President Jean-Claude Juncker has warned Cameron not to be too specific on paper, and has suggested that the prime minister instead offer broad themes in four policy “baskets,” the EU diplomat said.

The focus on broad strokes, rather than specific demands, is a strategy to prevent Cameron from looking weak ahead of the U.K. the U.K referendum and avoid the perception that he struck a bad deal.

Cameron has already broadly outlined his four themes — competitiveness, sovereignty, eurozone integration, and migration and social benefits — and there is a risk that sticking to such general themes will antagonize other EU leaders, who are growing impatient with Cameron, and British Euroskeptics, who say Brussels is avoiding any real reforms.

But even though EU countries have for weeks been pushing Cameron to spell out his demands in detail, the Commission argues otherwise.

“The Commission has said do not put it in writing,” said the EU diplomat. “It should be an interactive process, be careful of being too specific.”  

The Denmark model

Once the talks get under way, the Commission hopes to replicate the process it followed after Denmark’s rejection of the Maastricht Treaty in 1992, when it granted the country legally binding exceptions to the accord that defined its EU membership.

Two people key to that renegotiation effort will be deeply involved in the U.K. talks: Juncker, who at the time was finance minister of Luxembourg, and Jeppe Tranholm-Mikkelsen, then an official in the Danish Foreign Ministry and now secretary general of the EU Council.

According to the EU diplomat, the two brokers for the institutions have mapped a plan to settle the British matter based on the Danish playbook — by re-interpreting the existing language of the Lisbon Treaty rather than making wholesale changes. These re-interpretations would still require unanimous approval of EU countries at a summit, but not the much more arduous process of treaty change, which requires national parliamentary approval and, in many cases, referendums.

The idea is to forge agreements that Cameron can sell at home as legally binding — the U.K. has said it will submit the new rules to the United Nations in order to enshrine them as international law — while streamlining the process by cutting out the co-decision of the European Parliament.

“There’s a precedent,” said the EU diplomat. “There’s a feeling that this can be done again.”

The Commission is expecting to receive theme-like “baskets” from Cameron next week, according to an EU diplomat. Officials are optimistic that the first three “baskets” of competitiveness, sovereignty and eurozone integration can be easily agreed by the other EU countries before May 2016, but they’re still bracing for a drawn out debate on welfare and migration.

‘Basket’ cases

On the first theme of competitiveness, the Commission has already defined its legislative priorities for 2016 in a way that appeals to the Conservative British government. There is less focus on detailed regulation and more on initiatives like a capital markets union, the digital single market and free trade agreements.

Cameron already started selling the idea that he’s been able to convince Brussels to rein in its regulatory zeal.

“This is firmly in Britain’s interests and it’s proof of how we can persuade the European Commission to focus on actions that will create growth and jobs here at home,” Cameron said in a statement this week after the Commission unveiled its priorities for next year. 

To tackle Cameron’s demands on sovereignty, specifically reforming the phrase “ever closer union” in the Lisbon Treaty, the Commission will propose a decision that would spell out legally that for the U.K. “ever closer union” does not mean integration, according to the EU diplomat. However, they will also propose adding a guarantee that the U.K. cannot prevent further integration by the other countries in the bloc.

“David can say ‘I defended our right,'” according to the diplomat.

To meet Cameron’s expected demand to give national parliaments more of a say in the EU legislative process, the Commission will propose a “red card system” that gives countries the power to force the Council to stop working on legislation — but only if a clear majority of legislatures vote to block it. 

Cameron has also made clear he wants a way to keep eurozone countries from acting on their own to increase economic integration with policies that affect London’s financial sector. To address this concern, the Commission will propose enshrining into law a rarely used agreement that could let non-euro countries delay certain proposals by forcing the Council to re-examine them.

The issues of social welfare and migration are expected to be more difficult to work out. Several countries, led by Germany, are expected to push the U.K. to relinquish its firm grip on the EU budget, which it has blocked every year from expanding, in exchange for limits on free movement of labor.

The Commission will need to spend €10 to €20 billion over the next 10 years to deal with the refugee crisis, according to the EU diplomat, and will need an agreement from Britain to increase the EU budget accordingly. In exchange, the official said, EU leaders will offer to create a transition clause that restricts the ability of citizens of possible future new EU members such as Serbia and Albania to work elsewhere in the EU.

Currently the EU places restrictions on the free movement of labor for seven years after a country joins the bloc, but this could be increased to as much as 20 years, the official said.

“We’ve been clear on the issues we need to be addressing as part of our negotiation,” a U.K. government spokesperson said. “The Prime Minister will be writing to [European Council President Donald] Tusk in early November to set out those issues, but we’re not going to give a running commentary on the negotiations.”