Foreign Affairs CommitteeWritten evidence from Nigel Farage MEP on behalf of the UK Independence Party (UKIP)

Summary

What is the relationship between the new “fiscal compact” Treaty and the EU’s acquis?

The Fiscal Union Treaty stands outside the Treaties and in the absence of agreement by the UK cannot form part of the acquis or permit use of EU institutions under it.

Should the UK Government support the incorporation of the “fiscal compact” Treaty into the EU Treaties?

No, because the means by which this is to be done sets a dangerous precedent inconsistent with future UK interests.

If it should, what demands and safeguards, if any, should it make its condition for doing so?

We doubt that any safeguards and conditions would be honoured, given our prior experience of such.

Should the UK embrace a formalised two (or more)-tier EU and start to develop ideas for multiple forms of EU membership?

No. We believe that this would still involve an unacceptable loss of sovereignty and would be far too complex to establish and administer.

Between now and 2020, what institutional architecture and membership should the UK seek for the EU?

If the UK remains a member, then the relationship should be confined to trade and access to the single market with a concomitant architecture. UKIP’s policy is clear, however: only withdrawal is the means of securing the exclusive national interests of the UK.

What impact might the conclusion of the “fiscal compact” Treaty have on other aspects of the EU and its policies, such as the EU budget, enlargement, or the Common Foreign and Security Policy?

We believe that this will be a signal for the EU to increase its budget, raise more of its own resources and to enforce harmonised tax rates across the Union. Enlargement is on hold. The clamour for an EU foreign policy and defence force will grow.

To what extent should the December 2011 European Council and its outcome be seen as a watershed in the UK’s EU policy and place in the Union?

With the deft sidestep by the Commission of the “veto”, this was no watershed.

In the first instance we feel that a more helpful order for the questions posed in the Committee’s rubric is to follow the order we have used below.

What is the relationship between the new “fiscal compact” Treaty and the EU’s acquis?

As a matter of international law, the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union (“The Fiscal Union Treaty” or “FUT”) is a Treaty within the meaning of the Vienna Convention on the Law of Treaties and therefore has all the attributes of a Treaty in international law.

It is signed by 25 sovereign nations who are, coincidentally, also members of the European Union. It is not, however, a European Union Treaty. The Treaties—now consolidated as The Treaty on European Union (TEU) and The Treaty on the Functioning of the European Union (TFEU)—are those to which 27 sovereign nations have acceded.

Two sovereign nations which are EU members, The UK and the Czech Republic, having declined to sign this Treaty, the Fiscal Union Treaty has no legal nexus to TEU/TFEU.

Since the EU is not a signatory to the FUT and two of its members have not assented to be bound by it, the EU is not itself bound by the FUT. Nor does the Fiscal Union Treaty have any lawful impact on any Treaty or other agreement which is itself linked to TEU/TFEU.

One should be mindful of Article 5 TEU by which “the limits of Union competences are governed by the principle of conferral”. The full 27 member states have not granted to the EU any of the competences which are set out in the FUT.

This has significant consequences. For example, Article 81 of the FUT makes provision for use of the ECJ in certain circumstances. Given that the FUT Group legally lies wholly outwith the structures of the EU, it is difficult to see how Article 8 might legally be deployed, given the jurisdiction of the ECJ as set out in Article 19 TEU.

The jurisdiction of the ECJ is the “interpretation and application of the Treaties” [ie TEU and TFEU] and, “in accordance with The Treaties”, ruling on actions brought by “a member State” or “an institution” (ie an institution of the EU as defined by the Treaties) or a natural or legal person; giving preliminary rulings on the interpretation of Union law; ruling on other cases provided for “in the treaties”. The FUT falls outside that jurisdiction.

We submit that neither the FUT, nor any organization set up thereunder and nor any contracting party has any locus standi to bring actions before the ECJ. The contracting parties may say whatever they wish in their own Treaty: the Treaties make it clear that the jurisdiction of the ECJ is limited.

Article 8.3 of the FUT pretends to the notion that referring matters to the ECJ under the FUT is a “special agreement” for the purposes of Article 273 TFEU. Yet Article 273 only grants jurisdiction to the ECJ in any dispute between Member States which relates to the subject matter of the Treaties. The FUT is not part of the subject matter of the Treaties.

Nor can this be claimed as an act of enhanced co-operation under Article 20 TEU (which applies to non-exclusive competences) since the subject matter is the Euro, an exclusive competence of the EU.

Notably, The United Kingdom has in no way consented whatsoever to any institution—such as the European Court of Justice (ECJ)—or mechanism of the EU being used by the FUT group or UK Taxpayer’s money being thus deployed. UKIP MEP Stuart Agnew, substitute member on the European Parliament’s Constitutional Affairs Committee, has repeatedly asked what the legal basis for any such use might be: no satisfactory and compelling answer has been proffered.

Her Majesty’s Government has itself no power to permit use of the ECJ by outside organisations or otherwise acquiesce in such use. No such power was granted by The European Communities Act 1972 nor any subsequent Act which makes such permission or acquiescence lawful under UK law. We therefore contend that any expenditure of British Taxpayer’s money on such use of the ECJ would quite simply be illegal.

Whilst the 25 may have agreed that as far as this arrangement is concerned, “this Treaty shall be applied and interpreted by the Contracting Parties in conformity with the Treaties on which the European Union is founded”, that is entirely a matter for them. Such does not bind the UK.2

We also feel it imperative that this Committee considers in this regard two other matters:

The intimate relationship between the FUT and the Treaty Establishing the European Stability Mechanism (ESM). Implicitly, at the very least, each of the treaties is intimately linked the one with the other. There is an on-going case before the Irish Courts initiated by Independent MEP Thomas Pringle which has this relationship at its heart, challenging the lawfulness under EU law of the ESM and calling for a Referendum on the ESM.

Continuing developments in Europe. We respectfully suggest that the Committee cannot properly come to any settled conclusion until the issue of further amendments to the FUT is resolved. France’s new President Hollande has called for major changes. Greece faces an uncertain future which may have major implications for the FUT. The Netherlands soon has a general election which may produce a call for yet further amendments or even a refusal to ratify. Six months from now the architecture of the EU may look very different.

Should the UK Government support the incorporation of the “fiscal compact” Treaty into the EU Treaties?

For the reasons set out here, we believe that to do so would be wrong and would set a potentially very damaging precedent.

It will be recalled that very soon after the Prime Minister had indicated Her Majesty’s Government’s unwillingness to sign this Treaty, the Deputy Prime Minister (DPM) spoke, on 9 January 2012, of the FUT being “folded into” the existing Treaties:

U.K. Deputy Prime Minister Nick Clegg called for changes to the way euro-area countries monitor each other’s spending to be “folded into” existing treaties to prevent multiple rulebooks governing members of the 27-nation European Union.

“We believe that it should, over time, be folded into existing treaties so that you don’t get permanent two parallel treaties working separately from each other,” Clegg told reporters in London today following talks with leaders from European liberal parties, which included EU Economic and Monetary Affairs Commission Olli Rehn and Dutch Prime Minister Mark Rutte. “We all see this as a temporary arrangement.”3

As an aside, one is bound to wonder who the DPM meant by “we” here.

It is a matter of note that the DPM was speaking of the FUT being “folded into” existing Treaties. One wonders if he had been talking to his erstwhile colleagues at The Commission and had been privately alerted as to how the Commission saw the FUT becoming EU law.

We would point to the observations of a Mr. Romero, a legal expert from the Commission, who spoke to a joint meeting of the Constitutional Affairs Committee and Economic Affairs Committee of the European Parliament on 12 January 2012 at Strasbourg.

A video of his contribution can be found here: http://youtu.be/WfSvvgCmvbo.

In summary, Mr. Romero was making it plain that making the FUT part of EU Law did not, as far as they were concerned, require a Treaty change of any kind. It would all be done by means of what Mr. Romero calls “secondary legislation” which we take to mean by way of the whole gamut of Directives, Regulations, Delegated acts and implementing acts.

Within about a month of the Prime Minister claiming having to have vetoed the FUT, the Commission had found a way round that little local difficulty and thus rendered the so-called veto nugatory.

One might properly infer that The DPM knew all of this when he spoke. For whom, then, was he speaking? Her Majesty’s Government or the Commission?

We strongly submit that this means of eliding external agreements into EU should be fiercely resisted by HMG and that there should be no question of the UK supporting the stealthy insertion of such via the back passage of directives, regulations and the like. Once this exercise has been done once, it will be repeated. British MEPs might in such instances vote against it but the UK stands to be over-ruled at every turn. What is proposed thus represents a serious threat to the UK’s interests and must be resisted, involving as it does a considerable further loss of sovereignty, power and influence within the EU.

That is quite apart from our grave concerns that this particular enterprise is both the template for and harbinger of a further strong drive towards Federalism. It contains within it a powerful impulsion towards overall control by the EU of harmonising a wide range of taxes and control over national budgets into which we fear the United Kingdom will be sucked. The degree to which the power of Sovereign States to draw up budgets and set their own tax rates independently is gravely threatened by this Treaty and Her Majesty’s Government should have nothing to do with such an anti-democratic step.

This is a major step towards “ever closer union”. Whilst the UK remains outside much of this closer integration—for the moment—the United Kingdom remains bound to EU Treaties which call for an ever-closer union whose currency is the Euro. The grave danger is that we shall be pulled headlong into such union by the maelstrom of the collapse of the Euro and its consequences.

We believe that the People of the United Kingdom desire—and demand—that we travel in an entirely opposite direction.

In addition the emergence of a nascent proto-government for the Eurozone is bad for the members of the Eurozone in terms of democracy. This Treaty is profoundly undemocratic, placing as it does so large a degree of control over national budgets in the hands of the EU. Given the ineptitude displayed during the Euro crisis by its leaders at all levels, it is not unreasonable to be pessimistic about Europe’s prospects for growth and competitiveness.

That would be deeply damaging to the UK’s interests. Having as a major trading partner a sclerotic group of countries becoming ever less competitive by the day—thus inhibiting growth—is hardly likely to enhance the UK’s trade. With so many of our eggs in this basket, that can only be against our vital interest.

If it should, what demands and safeguards, if any, should it make its condition for doing so?

We have set out above our view that it should not be supported under any circumstances. If that means we become fully-declared opponents of the great European Project, so be it. We doubt that any safeguards and conditions would be honoured, given our prior experience of such.

Should the UK embrace a formalised two (or more)-tier EU and start to develop ideas for multiple forms of EU membership?

The problem we foresee with the suggestion of a two- or multi-tier EU is that it will inevitably involve concession of an unacceptable degree of Sovereignty. More than that it is very difficult to see how such a complex arrangement could be made to work.

We now have 40 years’ experience of how a single-tier EU is administered and its anti-democratic tendencies, of which the overthrowing of the results of National Referendums and the insertion of EU-approved Technocrats as national leaders are but part. We have also had ample evidence of the poor performance of the unelected and unaccountable officials of the EU who are immune to the norms of democratic life.

Why should a two- or multi-tier EU be any different?

We consider that the notion of a two –speed or multi-speed EU is simply a non-starter. The notion of any significant powers being repatriated—after the EU has spent 55 years in the careful and assiduous accretion thereof—is risible. A genuine two-tier relationship is very unlikely to be on offer on any terms that are actually advantageous. The attitude of the new French President to the UK ought to make that abundantly plain.

Between now and 2020, what institutional architecture and membership should the UK seek for the EU?

Whilst the UK remains part of the EU, it should seek the loosest possible architecture for the EU and to be bound by the least political commitments possible. We should take this opportunity to disengage ourselves, above all, from all the non-trading elements (especially the political ones) of the EU and look to concentrate only on our access as a trading nation to the Single Market and our trading relationship with Europe which, we say, is all the People of the UK have ever assented to by way of the 1975 Referendum.

What impact might the conclusion of the “fiscal compact” Treaty have on other aspects of the EU and its policies, such as the EU budget, enlargement, or the Common Foreign and Security Policy (CFSP)?

As far as enlargement is concerned, we believe that this process will be placed in abeyance for the time being. A new entrant is required to adopt the Euro. The next countries in line, in no particular order, are the likes of Serbia, Albania, Macedonia, Bosnia-Herzegovina and Montenegro. It will be some time before we can assess the impact of Croatia’s accession. Given the state of the economies of the prospects, further enlargement is unthinkable for the time being. Greece may yet leave or be ejected from the EU. We could not, with the problems that now face us, contemplate trying to digest Turkey or any of the Balkan states. Enlargement is at best on hold.

The new agreement is highly unlikely, we believe, to promote growth and prosperity for its members.

What it will do is provide the impetus to the EU to introduce new ways of raising EU taxes (“own resources”) and harmonising tax rates across the EU. The EU’s appetite for spending other people’s money will never diminish but will continue to rise. We already know how many of the EU states greatly resent Ireland’s low corporation taxes. France calls stridently for a Financial Transaction Tax.

As far as the CFSP is concerned, the diminishing ability of member states to afford proper defence spending will lead to greater efforts to impose the creation of a European defence force, thus further diminishing the UK’s independence and ability to protect its own interests.

We believe that this agreement will be a disaster for UK vital interests.

To what extent should the December 2011 European Council and its outcome be seen as a watershed in the UK’s EU policy and place in the Union?

It is not the case that the supposed “veto” of the Prime Minister represents a watershed. As we have seen above, the EU plans to sidestep it almost without moving a muscle and the use of secondary legislation to “fold” the FUT into EU law will happen, in a stark demonstration of the impotence and marginality of the UK’s MEPs.

In reality it was not a veto at all but simply a spur to the EU to find a way of thwarting UK policy and getting on with the business of integration as fast as possible. Having thus revealed the utter contempt of our so-called partners for the UK’s position and interests, it may be thought a watershed in that the UK must now admit to and contemplate the fact of our impotence and lack of influence at the heart of Europe. Those who would claim otherwise must stand adjudged of mere hollow bluster.

If we have no influence, then what is the point of our membership?4

22 May 2012