Tel. +44 (0)20 7287 4414
Tel. +44 (0)20 7287 4414
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

The EU Constitution: Threat or Opportunity?

EU Constitution referendums to tear the EU apart
The EU Constitution: Threat or Opportunity?



The First Steps

Political and trading considerations

European 'myopia'

Non-trade issues

Conclusion: Multi-level Solutions


The proposed EU constitution has been described as a 'significant step towards the creation of a European state', threatening the independence of the United Kingdom. However, it could also present the first significant opportunity since the UK joined the European Economic Community for a fundamental reappraisal of our relationship with the countries that currently form the European Union. Under certain circumstances, it could even precipitate our withdrawal from the EU.

... Under certain circumstances, it could even precipitate our withdrawal from the EU

The reason why this opportunity is presented is because the constitutional draft, even in its own terms, is a failure, presaging a collapse of the European Union. That much is evident if it is realised is that the EU is far from being a homogenous entity, driven by a single ideology.

Although, at its heart, it retains the purity of the Monnet supranational model, this model has been substantially diluted by the intergovernmental 'pillars' introduced at Maastricht. And, as the Community has encroached more on the 'high policy' areas of foreign affairs, justice and security, the leading intergovernmental 'actors' have tended to polarise into a separate, inner group, the so-called directoire, while the powerful regions of Germany - the Länder - have been pressing for a federal model of integration which respects the autonomy of the regions.

The result, even before the constitutional convention, was an unstable coalition of interests comprising incompatible ideologies. In drawing up the draft constitution, Giscard d'Estaing had the option of choosing between the competing models and forging ahead with one or the other. Instead, he ducked the issue and sought to reconcile the irreconcilable. He has accommodated the disparate elements in a single document, thereby institutionalising rather than resolving inherent conflicts and adding to the instability.

This is reinforced by the unresolvable stresses in the Eurozone economies arising from adoption of the single currency, and the unsustainable enlargement settlement which permanently disadvantages the accession states. It also leaves unresolved the community budget question and thus creates the spectre of a growing funding crisis. What Giscard has done with his constitution, therefore, is to screw down the lid on evolutionary change and light a fire underneath. If it is allowed to continue, the resultant mess could explode, tearing the European Union apart.

If it is allowed to continue, the resultant mess could explode, tearing the European Union apart

Possibly, however, the end will come not as a dramatic 'explosion'. That might only occur if the constitutional treaty takes effect. More likely, the break-up will be gradual, occasioned by virtue of the 'safety valve' of the treaty ratification process. With twenty-five countries involved, there is a real possibility that some will not ratify the constitution. As an EU-wide instrument, therefore, it may not come into effect.

If that comes to pass, it is almost certain that some member states will adopt their own version of the constitution and splinter off to form a 'core' group. This will presage the break-up of the Union, as the 'outer circle' states will almost certainly undergo some form of realignment and progressively detach themselves from the central 'core'.

Whether the United Kingdom is allowed to join the 'core' is unlikely to be affected by our stance on the new treaty. Even if we do ratify it, the likelihood is that we will still remain outside the euro, yet membership of the single currency will almost certainly be a condition of entry to the 'core'. Therefore, the most likely scenario, therefore, is that Britain will become, by act or default, a member of the 'outer circle'.

Britain will become, by act or default, a member of the 'outer circle'

In this 'inner core - outer circle' scenario, the general situation will be complicated. The whole of what was once the European Union will still be bound by the existing consolidated treaties, since these can only be annulled if all the contracting parties to the original treaties ratify the constitutional treaty. But, if the 'core' states have made their own separate agreement, they will, in addition, be subject to whatever version of the 'constitutional' treaty they decide upon.

Quite how this is brought into being must remain a matter of conjecture at this stage, but the precedent exists from the Maastricht Treaty, where the Social Chapter was subject to an extra-treaty agreement which, with the consent of all member states, was implemented through the community institutions. Alternatively, the 'core' states may invoke the 'enhanced co-operation' provisions of the Amsterdam Treaty, as modified by Nice.

However, if the constitutional treaty agreed by the 'core' states remains in anything like the form that it currently exists as a draft, it is evident that its provisions and those of the consolidated treaties will overlap. For instance, between the sets of treaties, legislative initiatives based on certain community competences will be subject to qualified majority voting in the 'core' while requiring unanimity before enactment by the 'outer circle'. To that extent, and in other respects, the treaties will be incompatible and antagonistic.

Over a period of time, it is inevitable that the 'outer circle' will reject some initiatives passed by the 'core', by which means the once monolithic and indivisible acquis communautaire will be fractured. The two groups will progressively become subject to increasingly different legal codes. Clearly, this would be an unsustainable situation, the result being pressure for a greater separation until, de facto, those countries in the 'outer circle' will have left the EU completely.

Interestingly, that very situation is anticipated in the Vienna Convention on the Law of Treaties, which allows for termination of a treaty if 'the provisions of the later treaty are so far incompatible with those of the earlier one that the two treaties are not capable of being applied at the same time'.

Membership of the 'outer circle', therefore, could afford the UK an opportunity progressively to detach itself from the European Union, without attracting the international opprobrium of unilaterally abrogating the treaties. Progressive detachment could also have significant advantages over a 'big bang' withdrawal, occasioned by repeal of the European Communities Act 1972 (as amended), allowing for a phased replacement of community legislation, on a sector by sector basis. This gradualist approach would also afford the UK a better opportunity of exercising leadership, as alliances could be built without the pressure of major upheavals.

Nevertheless, in order to protect the national interest, events need to be anticipated, and certain actions need to be taken in advance of those events, to insure against the possibility - and even probability - of them coming to pass. In essence, the government - and the nation - needs to make plans for the contingency of the United Kingdom leaving the European Union, not as a result of a 'big bang' occasioned by a conscious decision to leave, but as part of a gradual process of realignment. We need credible and realistic alternative structures and arrangements to replace the EU, ready to put into action as the need arises.

In essence, the government - and the nation - needs to make plans for the contingency of the United Kingdom leaving the European Union, not as a result of a 'big bang' occasioned by a conscious decision to leave, but as part of a gradual process of realignment. We need credible and realistic alternative structures and arrangements to replace the EU, ready to put into action as the need arises

These issues are the subject of this paper.

The First Steps

The actual scenario postulated is that Britain's departure from the EU is not likely to encompass a clean break, or an orderly renegotiation. The clean break is in fact most unlikely as it would almost certainly require unilateral abrogation of a number of treaties, in breach of our international obligations and of commitments made in signing and ratifying the Vienna Convention. As for formal renegotiation, as long as any changes to the existing treaties require the unanimous consent of all European Union member states - which will amount to 25 countries by 1 May 2004 - the chances of the UK reaching an acceptable settlement are exceedingly remote.

More likely, the situation will be messy and uncertain, with developments occurring at an irregular pace, their consequences being unclear at the time, culminating in de facto withdrawal, achieved without any single action directed to that end.

What one might expect, with the failure of the constitutional treaty and the formation of the 'core' group, is that the 'core' community will make the running. As it becomes beset by economic difficulties and possibly public order crises, it will turn in on itself, and focus more on its own internal problems, to the exclusion of the interests and concerns of the 'outer circle'. Perforce, the 'outer circle' will be forced to look elsewhere for its salvation. It is thus the introspective 'core' which will, unwittingly, become the 'driver' for the break-up of the Union.

The first steps towards this de facto withdrawal, after the creation of the 'core', will probably comprise a partial and then increasingly complete repatriation of central policies. Almost certainly, one of these will be the Common Agricultural Policy (CAP), which is already, in fact, common in name only.

Progressive 'repatriation', to an extent, is already happening, as CAP funding shifts from direct production support (the so-called 'Pillar I') to 'Pillar II' rural development, each shift requiring more national co-funding. But, as both 'core' and 'outer circle' countries continue to resist increasing community funds, less will be available for CAP funding. As community funds fail to meet the demands of agriculture, the relative disadvantages of the policy will be perceived to be greater than the supposed advantages of central funding. Pressure for independent determination of policy will become irresistible and the grip of the 'core' over the periphery will be slackened.

This, in turn, will increase the pressure for a schism, as EU policies are interlocking and interdependent. What affects one, affects the others. In this context, while the CAP purports to be an agricultural support system, the common subsidy structure and administrative rules, in theory if not in practice, also ensure a 'level playing field' and thereby facilitate trade in agricultural produce between member states.

As 'outer circle' member states increasingly take responsibility for running their own agricultural policies, one of two possible scenarios might occur. On the one hand, these member states might decide to operate systems more generous than EU provisions, or less burdensome in respect of quality and other controls. On the other hand, governments - especially in Britain under a Labour administration - might seek to reduce national support. In either case, trade distortions will arise, in the first instance disadvantaging 'core' agriculture or, in the latter, disadvantaging 'outer circle' producers. These distortions will inevitable create pressure for protectionist measures, thus threatening the integrity of the EU's customs union.

A similar situation might apply in relation to industrial policy, again triggered by the reduction of funding from the centre, with differences arising from divergent policies that also distort trade. As a result, depending on whether 'outer circle' taxpayers are forced to be more or less generous than their 'core' counterparts, there could develop pressure for selective protection for affected 'outer circle' manufacturers, or protection for 'core' producers.

The result of such developments would almost certainly be a reduction in trade flows between the 'core' and the 'outer circle', necessitating adjustments in domestic production patterns and a more general realignment of trading arrangements, with greater reliance on third countries. By then, the European Union will be in the terminal stages of decline.

Political and trading considerations

In anticipation of such developments, putative 'outer circle' members need to consider the potential effects on their own political systems and trading arrangements. To minimise the possible damage, they should seek to predict - in relation to policy areas where progressive repatriation might occur - what necessary adjustments might need to be made to domestic production, and then what new trading alliances, if any, might have to be forged. Logically, the first such alliance might be between 'outer circle' states, independently of the 'core', along the lines of the former European Free Trade Association (EFTA).

However, it would be rash to expect the 'core' states to greet such an option enthusiastically, or to assist to any great extent in the development of an extra-EU trading bloc. The European Union has always been much more than, and to an extent not even, a trading organisation. For the EU, trade is a means to an end, that 'end' being political integration, and the 'core' states might well resist the formation of any potential rival. Historically, they have always been intolerant of rivals, typified by the French 'sabotage' of the British-inspired Free Trade Association in 1958, the destruction of the Organisation of European Economic Co-operation, and the wrecking of EFTA.

The reason for these hostile actions was the fear that alternative structures would prove so attractive to some nations of Europe that they would prejudice the integration aims of the six founder members of the EEC. In the decline phase of the EU, such fears might be intensified as an alternative bloc might be seen as a formal acknowledgement of the break-up, and hasten the demise of the residual EU.

On this basis, it is questionable whether a formal association between 'outer circle' states and the 'core' is a realistic proposition. Conventional wisdom, however, would have it that any reluctance to deal could be overcome by the simple fact that Britain runs a constant deficit with the rest of the European Union. The 'Europeans' need us more than we need them and, therefore, they would be willing to negotiate and concede to any terms we might demand.

The 'Europeans' need us more than we need them and, therefore, they would be willing to negotiate and concede to any terms we might demand

That indeed might be the case but, within the terms of already existing GATT arrangements, and those being negotiated, the 'outer circle' would have limited scope for restricting EU imports, and vice versa. On the other hand, if the schism between the 'outer circle' and the 'core' was formalised, the 'outer circle' states would be exporting to a customs union, for which special arrangements would have to be negotiated. Administrative restrictions on access to the market - not least the requirement for inspection of imported goods at Border Inspection Posts - which can validly be imposed, could substantially reduce the flow of 'outer circle' exports to the continental 'core'.

For this and other reasons, the comfortable picture of continued special trading arrangements might be changed by virtue of the formal schism. Membership of the European Union's customs union, because of the common external tariff and preferential access to community imports, has artificially inflated trade between member states and, in particular, has increased the volume of imports entering Britain from those states. Outside the union, Britain, and other 'outer circle' states, might experience substantially reduced volumes of trade with the 'core' states.

Given that instruments such as the procurement directive might no longer apply, a reduction of imports from community sources need not necessarily lead to a need for their replacement by imports from elsewhere. Indigenous production, especially in agricultural products, might fill some of the gaps, especially as we are or could easily become self-sufficient in temperate crops and animal products at present imported from the community. For other goods (and services), purchase from low cost countries, outside the EU, might be beneficial to 'outer circle' economies.

European 'myopia'

Should projections actually suggest a reduction of trade volumes between the 'core' and 'outer circle', the question must be addressed as to whether Britain, in particular, should seek a European solution for its continued trading arrangements. Britain, as a maritime nation, has a history as a global trader and a world-wide reach. Any reassessment of our trading relationships with the EU 'core', therefore, should surely address the issue of Britain's global position, and the nature and effect of current global trading patterns and alliances.

In this context, it has long been acknowledged that much of what the EEC set out to do when creating its customs union, in progressively eliminating cross-border tariffs and quotas, and non-tariff barriers, has to an extent been achieved in a much wider arena by GATT. The regional customs union is of less value now then it was when first established, diminishing what little advantage membership of the EU confers to Britain. Arguably, there is little that Britain could achieve at a European level that it could not also achieve through the mechanisms of GATT.

Nevertheless, in terms of GATT, it is widely recognised that current agreements are highly damaging to many Less Developed Countries (LDCs) and discriminate against major southern hemisphere agricultural exporters, represented by the Cairns Group. To propose either the perpetuation of the single market or a free trade agreement with the EU 'core', or even 'outer circle' states, is therefore to miss the point. The wider British and global interest is not necessarily best served by either arrangement, nor even by rushing into a NAFTA-type agreement with the United States of America.

What might be a better option for the UK is the creation of a trading alliance with the Cairns Group and selected LDCs. The aim would be to form a 'third force', calculated to break up the dominance of the EU-US axis, which currently decides the shape of international trade agreements. The result could be a more equitable share of trade for currently disadvantaged countries.

Rather than seeking a specific European solution for trade, therefore, this issue might be better managed - and indeed might have to be managed - on a global basis, creating in some cases, entirely new alliances.

Non-trade issues

Trade notwithstanding, there are many aspects on which European countries formerly co-operated - through intergovernmental agreements - which have now subsumed by the consolidated treaties and brought into the acquis communautaire, forming core EU policies. These include matters as diverse as terrorism, cross-border crime, maritime safety, civil aviation, and even human, animal and plant disease, many of which are handled by European agencies.

Here significant problems could arise. The agencies have a Europe-wide remit, which would continue to affect the 'outer circle' even if it was otherwise completely detached from the European Union. The spectre could arise where rules made by the 'core' could then be binding on the 'outer circle'. To prevent this from happening, 'outer circle' states would have to consider alternative mechanisms for dealing with the many issues requiring cross-border co-operation or co-ordination, outside the framework of the European Union. Clearly, any form of supranational organisation would be unacceptable so, where co-operation is needed, intergovernmental structures would have to be reinstated.

As with trade, however, there is an argument for considering national, global and other solutions as alternatives to the current European arrangements. There are many examples where these might apply. In this paper, three areas, which cover a wide range of European 'co-operation' have been explored. The first is in respect of the European Health Protection Agency, which has recently been established by the EU to carry out infectious disease surveillance duties formerly carried out by the World Health Organisation.

Reviewing the origins of the more recent infectious disease episodes in this context, it is germane to note that many if not all of them which have affected European countries have originated outside Europe. Salmonella enteritidis PT4 food poisoning, associated with eggs, for instance, is believed to have originated in North America. The novel food poisoning organism E. coli O157 may have originated in South America and was detected in North America before outbreaks were experienced in the UK. Similarly, pathogenic strains of Listeria monocytogenes were detected in North America before outbreaks then occurred in Europe.

Of other diseases, the AIDS pandemic is believed to have originated in Africa, from where there is an ever-present threat of exotic but deadly diseases such as Green Monkey Disease and Lassa Fever. The SARS epidemic was believed to have started in South China, moving through Hong Kong before it became pandemic, and many of the influenza strains which achieve pandemic status also originate in South China. Essentially, therefore, surveillance of infectious disease affecting humans requires global co-ordination. A European perspective is far too narrow and a reversion to pre-European agency arrangements, through the WHO, would be a better option.

The second example, which also illustrates a need to take a wider perspective, applies to police and judicial co-operation. The 'European dimension' to this issue was introduced under 'Pillar II' of Maastricht and formalised by the Council Act of 26 July 1995, drawing up the Convention on the establishment of a European Police Office, known as the 'Europol Convention'. When reviewing the functions and mode of operation of 'Europol', however, it is hard to see any difference between them and those of the much older and better established 'Interpol'. This was originally the International Criminal Police Commission, which set up its first headquarters in Vienna in 1923. The Organisation was revived after the Second World War with new statues and a General Secretariat in Paris. It now has 181 member countries, with a Sub-Directorate for Europe, providing services and assistance to 46 European countries.

Both 'Europol' and 'Interpol' deal with such issues as illicit drug production; weapons smuggling; terrorism; money laundering; crimes against children; people smuggling; payment card fraud; and IT crime, in which context it is hard to accept any rationale for the much smaller and more geographically limited 'Europol', other than as a mechanism for political integration. If, as the justification for Europol, it is claimed that many criminal activities 'take no account of national borders', then the wider the net is cast, the more effective will be the countermeasures. As with the surveillance of infectious disease, therefore, the European Union perspective is far too narrow. 'Interpol' already provides a more than adequate mechanism for police co-operation.

This notwithstanding, in relation to specific crimes or incidents with cross-border dimensions, there is also a need for direct contacts between various national police forces, so the existence of an international agency does not preclude making bilateral agreements, to serve more specific needs.

Turning to judicial co-operation component of 'Pillar II', this presents a challenge which is of topical importance. There is not only the question of the European Arrest Warrant, which supplants international agreements on extradition, but also the vexed question of 'penalty shopping', where criminals engaged in cross-border crime can arrange their affairs - or locus of operation - in states where penalties and lowest, and the judicial systems more relaxed. There is some merit, in this context, in seeking international agreement on standardising some judicial measures and procedures, for which the EU - in relation to member states - currently provides the forum.

However, once again, there are already mechanisms for judicial co-operation, many of which pre-date the European Union and its ambitions in this area, or extend beyond the limited geographical areas of its member states.

A recent example of the latter is the United Nations Convention against Trans-national Organised Crime, concluded in July 2000. Hailed as a 'major step forward in the fight against trans-national organised crime', this is a legally-binding instrument committing States which ratify it to taking a series of measures against trans-national organised crime, including the creation of domestic criminal offences to combat the problem, the adoption of new, sweeping frameworks for mutual legal assistance, extradition, law-enforcement co-operation and technical assistance and training. The intention is that states which are party to the Convention will be able to rely on one another in investigating, prosecuting and punishing crimes committed by organised criminal groups, where either the crimes or the groups which commit them have some element of trans-national involvement.

The main Convention is augmented by a series of protocols, dealing with the prevention, suppression and punishment of trafficking in persons, especially women and children; against smuggling migrants by land, air and sea, and the illicit manufacturing of and trafficking in firearms, their parts and components and ammunition.

Arguably, most European initiatives in this context seem simply to be 're-inventing the wheel' and, on the face of it, offer few if any benefits that could not be realised outside the framework of the European Union. Much the same could be said of many other EU initiatives.

The third and final example covers the area of foreign policy. Here, some difficulties might be perceived as the mechanisms for co-operation are set out in the Maastricht 'Pillar III', which allows for joint and common action. Exclusion of the UK from the 'core', and eventual departure from the European Union, might prejudice what are regarded as beneficial routine contacts between foreign ministers and leaders of the EU member states, and handicap the formulation of common policy, where thought appropriate.

What is not generally recognised, however, it that routine informal contacts between member state foreign ministers was established under an agreement in Luxembourg in 1970, subsequently formalised through what were termed 'Gymnich-type meetings', taking place in private, without officials present, the contents of which remained secret. Further agreements on co-ordination were made in a little-publicised meeting of foreign ministers which took place in London on 13 October 1981, under the chairmanship of Margaret Thatcher's Foreign Secretary Lord Carrington. Then, the ministers formulated rules for such co-operation.

The point at issue here is that informal arrangements existed for consultation and discussion between foreign ministers, before the Maastricht framework was agreed. For many years also, routine contact between leaders was managed though the European Council, which also originated outside the framework of any treaties. Then, at varying intervals, individual leaders have continued to organise bi-lateral and multi-lateral 'summits', to address specific problems, not least the 2002 invasion of Iraq, when prime minister Blair hosted a major summit in Downing Street.

Since, even through the medium of formal arrangements within the framework of the treaties, agreement on vital issues is never assured - and on many occasions has proved elusive - while any number of agreements have been reached in an informal setting, it is clear that, given a political will, common polices can be developed without needing institutional architecture. On the other hand, the existence of formal institutions, in the absence of political will, in no way assures agreement on common action.

On that basis, there seems no particular justification for a formal structure within which to conduct foreign affairs and there is no reason why multi-lateral contact cannot be made without the benefit of such arrangements. Should a formal arena be required, the Council of Europe still exists and could provide an adequate forum for discussion and negotiation, failing which there is always the United Nations. Where a common military approach is desired, the institution of Nato can still provide an adequate mechanism for co-ordinating action.

Conclusion: Multi-level Solutions

What comes over very clearly from an exploration of EU initiatives in many different fields is that they either replace or replicate other initiatives and agreements which cover wider geographical areas, many of which in any case pre-date EU action. In many instances, their sole justification seem to stem from the political ambitions of EU politicians, determined to impose a 'European dimension' on a wide range of issues, primarily aimed at furthering European integration.

Inasmuch as 'European' solutions appear often to be less adequate than other actions taken in other forums, hosted by other organisations, it can be seen that the UK and any other 'outer circle' states would have no difficulty in pursuing a wide range of agreements on international co-operation, without having to be part of the European Union, or the 'core' states.

What is also evident is that relations between nation states do not necessarily have to be formalised, or channelled through formal institutional structures. Informal or ad hoc arrangements have proved perfectly satisfactory, and could continue outside the framework of existing treaties. Should formal agreements be required, or detailed technical co-operation, there are other institutions, outside the European Union, which could provide for action at a European level.

Perhaps the only 'downside' of a post-EU world, therefore, would be that some of the predictability of current arrangements would be removed. The likelihood is that international relationships would be more fluid. Given that 'predictability' in any event, is a relative terms, and a great deal of uncertainty has often accompanied the UK's relationships with other member states of the EU, the loss would not be too great.

The one great advantage in the new 'world' would be that the 'outer circle' states would be freed from the tyranny of always having to conform with 'European solutions' for each and every problem. Solutions chosen for different problems could be selected on the basis on what was most appropriate and effective, free from integrationalist dogma. Membership of an 'outer circle', therefore, need not in any way be considered a disaster, nor even a less agreeable or less effective base from which to manage international trade and co-operation.

Clearly, as a result, many of the solutions at present addressed in the context of 'Europe' will no longer be framed exclusively in a European context. Many could be formulated on a more functional basis, which would not rely on EU institutions.

Overall, the evidence suggests that there is no single alternative to the EU; nor is one needed

Overall, the evidence suggests that there is no single alternative to the EU; nor is one needed. Some issues currently dealt with at a European level might be best handled on a global basis. Others would benefit from being dealt with nationally, while others could be subject to informal bi-lateral arrangements with specific countries, conducted on a routine or ad hoc basis as required. For those which need to be handled at a European level, there still remain alternatives to the institutional framework of the European Union. In short, the way forward will almost certainly be a 'multi-level solution', where different structures and arrangements are formulated for different issues, with no overarching, single framework.

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