Europe ‘à la carte’: The whats and whys behind UK opt-outs

Since becoming a member in 1973, the United Kingdom has negotiated opt-outs on key parts of EU legislation, and a sizeable rebate from the EU annual budget. But do they really serve the best interests of the UK and Europe?

Background

The UK is not the only country to which EU legislation selectively applies, but – with exceptions in four key areas – it is the member state with the most opt-outs.

Perhaps, most notably, the UK is not a member of the euro. Alongside Denmark, it is one of only two countries not to have signed up to the Economic and Monetary Union (EMU).

Neither is the UK part of the border-free Schengen area. The agreement, which allows travel across the EU without the need for visas or passports, doesn’t extend across the English Channel (or the Irish Sea). Neither the UK, nor Ireland, are part of the Schengen zone.

From the Lisbon Treaty, Britain also secured opt-outs from justice and home affairs legislation.

More technical, but no less important, the UK is not a signatory to the Fundamental Charter of Human Rights.

None of these opt-outs mean the UK cannot opt-in to legislation in these regulatory areas. But new laws in these areas do not automatically apply to the UK.

Issues

Economic and Monetary Union (EMU)

Protocol 25 of the Maastricht treaty cleared the UK and Denmark from the chapters related to the Economic and Monetary Union, exempting them from using the euro currency.

For both countries, this means monetary policy remains a domestic issue.

When the financial crisis broke out in 2008, this allowed the UK to introduce quantitative easing much earlier than the the eurozone. Britain is also allowed to run a much higher budget deficit than other member states, as it not subject to the Stability and Growth Pact, which caps public deficits at 3% of GDP.

Former Prime Minister Tony Blair was interested in joining the euro when he first came to power in 1997. But it failed the five economic tests to prove it was in the national interest as laid out by the then-Chancellor of the Exchequer, Gordon Brown.

While none of the major political parties currently want to join the euro, being out also has its downsides.

This became particularly obvious during the eurozone debt crisis, when leaders of countries using the single currency held regular meetings between themselves, leaving Britain outside of the room.

This fuelled concern in Britain that eurozone members would club together and skew the EU single market to their advantage, leaving the UK missing out on the benefits of what it regards as the most important aspect of EU membership.

Yet, this isolationism is also largely self-inflicted. On monetary matters, the UK is unbound by decisions made the European Central Bank or the European System of Central Banks. In return, the UK’s voting rights in the European Council are suspended for issues relating to eurozone matters.

Specifically, the UK has no say over the fixing of exchange rates, as countries join the euro. It also has no say on the appointment of the six executive members of the ECB board, including the president and vice-president.

Schengen agreement (with Ireland)

Britain is not a member of the Schengen area. Unlike when traveling across the rest of the EU, passports must still be checked when crossing the UK border.

Ireland also didn’t sign up to the Schengen zone. It chose to continue with the Common Travel Area instead. The common travel area created a borderless crossing between the Republic of Ireland and Northern Ireland and around the rest of the UK. Partly due to concerns over the peace process Ireland opted out of the Schengen zone and, like the UK, has no plans to change the current arrangement.

Under Protocol 19 of the Lisbon Treaty the UK has three months to react to any EU proposal submitted under the Schengen agreement. If it doesn’t alert the Council it wishes to opt-out it is automatically bound by the new ruling.

Charter of Fundamental Human Rights (with Poland)

The Charter is divided into seven ‘titles’ entitled ‘Dignity’, ‘Freedoms’, ‘Equality’, ‘Solidarity’, ‘Citizens’ Rights’, ‘Justice’ and ‘General Provisions’.

The final text came about after seven years of negotiations and takes into account the previous case law of the European Court of Justice (ECJ), elements of the European Convention on Human Rights and other EU documents including the European Social Charter (ESC).

The UK obtained a “clarifying protocol” which states the Charter “does not extend” the ability of the European Court of Justice to find UK law inconsistent with the Charter.

This exemption was obtained because of fears the Charter would infringe on UK labour law.

Freedom, security and justice (with Denmark and Ireland)

The UK has the right to opt-out of legislation relating to what is known as justice and home affairs.

Protocol 36 of the Lisbon Treaty grants the UK has the right to opt-in/out of individual pieces of legislation coming under a Title V legal base.

There has been recent controversy over exactly what the UK deems JHA and what the EU do. For example upcoming legislation on legal highs, which are an area dealt with domestically by the UK Home Office will not be under Title V. Instead they will come under rules governing the single market.

Home Secretary Theresa May has accused the European Commission of “gaming” the JHA issue and deliberately putting legislation under different legal bases to try and circumvent the UK’s opt-out. However a House of Lords review found no evidence of this.

The disagreements relate to the use of the term “pursuant to” in the treaty. UK government lawyers have repeatedly claimed a different interpretation of the term, which gives a broader definition. They claim it means any legislation with JHA content.

This has been regularly overturned by the European Court of Justice.

Earlier this year, Lord Anderson accused the government of being in “splendid isolation” with its interpretation. The then Justice Minister, Chris Grayling said the government was upholding the intention of the protocol. Marise Cremona, Professor of European Law at the European University Institute said the government’s position was “misconceived, legally speaking.”

As with other opt-outs the UK has three months to decide if it wants to utilise it. If it decides to opt-out it can opt back in again at any time. However, once legislation is opted-in to it cannot be opted out of again.

The UK originally had an opt-out from the social chapter of the Maastricht Treaty, which covers areas such as worker’s pay and health and safety. However, following Labour’s landslide victory in the 1997 general election, Tony Blair opted-in to the chapter.

Positions

To proponents, the reason the UK enjoys so many opt-outs is partly logistical. As islands, the logic of the Schengen area extending to the UK and Ireland is less obvious. British citizens also don’t carry ID cards, making border checks more important.

Most member states operate systems of civil law, whereas the UK and Ireland have common law systems, which grant more power to judicial precedents and interpretations.

“The UK and Irish opt-out to the Lisbon Treaty are nothing new,” explains Camino Mortera, research fellow at the Centre of European Reform.

“The EU project is based on the idea of differentiated integration or 'variable-geometry', by which the EU project is based on the idea that integration can be done at different levels and speeds, due to the irreconcilable differences between member states,” she said.

So, despite objections to membership “a la carte” such principles are part of the system.

Open Europe's Peter Cleppe agrees. “Ireland, Denmark and the Czech Republic have received opt-outs, sometimes de facto and not de jure," he said. "Sweden and Poland enjoy de facto opt-outs from the euro, given how keen some member states are for them to join.”

However, there are problems associated with opt-outs, and the UK’s in particular.

Of recent concern has been the definition of these opt-outs and where they apply. In particular to those concerning Justice and Home Affairs legislation and Protocol 21 of the Lisbon Treaty that grants it.

The UK was granted a block opt-out of all JHA legislation that came into force before the Lisbon treaty, 130 measures in total. Last year, the UK chose to opt back in to the 35 of those including the European Arrest Warrant and Europol.

“Other member states got infuriated by the UK’s sudden change of heart,” says Mortera. “Spain argued that those 35 measures could not be decoupled from the others, so that the UK should be all in or out.”

In this instance, a compromise was found. However it hints at underlying issues. While such opt-outs are legal and have been properly negotiated, there is the potential for them to breed resentment between member states.

The European Commission has repeatedly expressed its opposition to so called ‘a la carte’ membership of the EU. It argues allowing the freedom to pick and choose policies would lead to the negation of the European project.

According to Open Europe, allowing some flexibility in the single market does have some benefits. Instead of individual countries being granted opt-outs, these should apply to groups of countries in what they call “reinforced cooperation” to help liberalising services in Europe.

“We demonstrated that if only those 12 countries who expressed in a letter in 2012 their desire to do so would open up their services markets to each other, we’d achieve already around half of the benefits of services liberalization across all EU member states,” says Cleppe.

“This would also mean that France and Germany would not be forced to open up their borders in case they still don’t want to and would enjoy an opt-out.”

Timeline

  • 7 May 2015: UK General Election
  • 2017: Potential referendum on EU membership, following a "renegotiation" of Britain's relations with the EU.

Further Reading