What EU renegotiations mean for businesses

David Cameron’s 10 November speech on the UK’s renegotiation set out four areas of reform.

David Cameron’s 10 November speech on the UK’s renegotiation of European Union membership set out four areas for reform. What do these mean for businesses and organisations seeking to influence the agenda:

Main points of the Prime Minister’s renegotiation demands

  1. Economic governance
  • Increased recognition that the EU has more than one currency
  • No discrimination and no disadvantage for any business on the basis of their country’s currency
  • The protection of the Single Market’s integrity
  • Any decision/changes made with the Eurozone should be voluntary for non-Euro countries
  • Taxpayers in non-Euro countries should never be financially liable for actions that support the Eurozone as a currency
  • Financial stability and supervision must become key areas of competence for national institutions
  • Any issues that affect all Member States must be discussed and decided by all Member States
  1. Competitiveness
  • Scaling back unnecessary regulation and relieving existing regulation
  • EU should do more to fulfil its commitment to free flow of capital, goods and services
  • A clearer, long-term commitment to boost the competitiveness of the EU
  1. Sovereignty
  • End Britain’s obligation under the Treaty to work towards an “ever closer union”
  • Empower the national parliaments through a new arrangement where groups of national parliaments can collectively halt unwanted legislative proposals
  • See the full implementation of the EU’s commitments to subsidiarity
  • Confirmation on the respect of EU institutions for the JHA Protocols in any future proposals, which set out EU Justice and Home Affairs, in particular to preserve the UK’s ability to decide whether it wishes to participate in the adoption and application of proposed measures or not. It isreferring here particularly to the scrapping of the Human Rights Act and introducing a British Bill of Rights
  1. Immigration
  • Greater control for the UK to control arrivals from within the EU as well as outside
  • Free movement should not apply to new members until their economies have converged more closely with existing Member States
  • Abuse of free movement should be tackled by implementing tougher and longer re-entry bans, stronger powers to deport criminals, and limit access to social benefits for EU immigrants for four years

For British businesses, particularly SMEs, the areas of renegotiation set forward by Cameron reads as sound and greatly beneficial for their prosperity – especially as it addresses some prominent areas of concern. Yet, for businesses operating across Europe, if not globally, there may be a number of questions that spark concern.

First, the restriction of freedom of movement can carry some impact for businesses. While Cameron argued for the continued support for freedom of capital, skills and services, it was clearly marked that immigration from both within and outside the EU needs to be restricted. Companies operating in multiple countries could find themselves facing a challenge. Certain sectors rely on the ease with which labour is gained through the Treaty and a change in immigration regulation could have an impact on their business model. This will undoubtedly be one of the most challenging aspects of the British renegotiation.

Second, the support of Member States on the rejection of the Human Rights Act in favour of a British Bill of Rights could potentially be one of the most radical proposals set forth in the renegotiation process. Cameron stated that “We will reform our relationship with the ECHR by scrapping Labour’s Human Rights Act and introducing a new British Bill of Rights”. The policy is controversial enough within British borders but it sends an equally challenging signal across Europe for Britain to argue for a separate legal process determining basic human rights. How this could impact prior and future rulings and definitions on rights and offences against human rights will profoundly shape the operations of UK business.

Third, the economic arguments are specifically put forward by Cameron to alleviate the bureaucratic burden experienced by many British companies when dealing with EU regulations. On the face of it the renegotiation should mean it will be easier for UK business to expand within the EU, should the Member States agree that there ought to be no special treatment based on currency. That in principle should be an easy argument to make. However, the degree to which Britain would be able to successfully argue an essentially pick ‘n mix of decisions made by Eurozone countries could be more problematic.