78.The European Atomic Energy Community (Euratom) was established alongside the European Economic Community in 1957. The UK joined both communities in 1973. Euratom is a separate legal entity to the EU, although it is subject to the same institutions (including the European Court of Justice). In January 2017 the Government announced that, as part of the process of leaving the EU, the UK will also withdraw from Euratom.
79.Euratom was established to promote the growth of new nuclear industries, to improve the security of energy supplies, to ensure high nuclear safety standards and to prevent diversion of nuclear materials from civilian to military uses. The Euratom Treaty also established a Nuclear Common Market to enable free movement of nuclear professionals, materials, equipment and associated investment capital across the Community. Euratom also funds an extensive research and development programme. Over time Euratom’s remit has expanded, but the original Treaty remains largely unchanged.
80.The White Paper on the UK’s exit from the EU stated the Government’s intention to:
81.The Government has said that the UK’s exit from Euratom results from the decision to leave the EU because the two Communities are “uniquely legally joined”, rather than from any policy decision related to Euratom membership. The Secretary of State explained that:
We have been very satisfied with the arrangements in Euratom [ … ] The triggering of Article 50 on Euratom is not because we have a fundamental critique of the way that it works. It was because it was a concomitant decision that was required in triggering Article 50.
82.The Euratom Treaty does not have its own provisions on withdrawal. Legal opinion on the requirement to leave is divided, due to conflicting interpretations of Article 106a of the Euratom Treaty, which sets out the Treaty’s relationship with the European Union Treaty. Article 106a states that:
Within the framework of this [the Euratom] Treaty, the references to the Union, to the ‘Treaty on European Union’, to the ‘Treaty on the Functioning of the European Union’ or to the ‘Treaties’ in the provisions referred to in paragraph 1 [including Article 50 of the European Union Treaty] and those in the protocols annexed both to those Treaties and to this Treaty shall be taken, respectively, as references to the European Atomic Energy Community and to this Treaty.
According to the European Economic and Social Committee, an EU advisory body, this implies that references to the “Union” in Article 50 of the EU Treaty also apply to Euratom.
83.Several lawyers have disputed this interpretation. For example, Prospect Law argued that Article 106a creates a “similar but separate” exit process for Euratom that does not need to be triggered at the same time as leaving the EU. Rupert Cowen of Prospect Law told the Committee that the UK’s departure from Euratom “is a political issue, not a legal issue”, with the decision arising from the need to respect the jurisdiction of the European Court of Justice if we remain a Euratom member. Whilst this interpretation would not alter the Government’s reasoning for leaving Euratom, it could allow for a delayed exit.
84.The Secretary of State noted that Prospect Law’s argument is a “highly contested view”. However, when asked whether continued membership of Euratom remained an option, he did not rule this out:
I do not want to get into that, precisely because we have not started to establish, as in some of the areas that Nick [Hurd] has been talking about, the possibilities. However, the clear requirement is very evident: that we need to not only maintain but allow the expansion of our nuclear industry.
85.The Government’s objective to leave the jurisdiction of the European Court of Justice means that it is politically unfeasible for the UK to remain a member of Euratom in the long term, but a temporary extension to our membership—if legal—would allow time for new arrangements to be put in place. We are not aware of any substantive arguments in favour of leaving Euratom made either during the referendum campaign or afterwards. This outcome seems to be an unfortunate, and perhaps unforeseen, consequence of the Prime Minister’s decision to leave the jurisdiction of the European Court of Justice. Safeguarding nuclear energy is a public policy area with a unique level of risk and therefore requires a robust legal regime. We note that the necessity of leaving Euratom is subject to legal uncertainty, but that uncertainty puts the continuing operation of the nuclear industry in the UK at risk. The Government therefore has a responsibility to resolve this matter as urgently as possible.
86.Nuclear safeguards require the inspection of nuclear facilities to ensure that materials are not being diverted for non-intended (i.e. military) purposes. They are a prerequisite for international nuclear trade and research collaboration. In the UK, safeguards are currently governed and enforced by Euratom and the International Atomic Energy Agency (IAEA). Dame Sue Ion, Chair of the former Nuclear Innovation and Research Advisory Board (NIRAB), explained that:
Coming out of Euratom would not mean we were any less safe or any less compliant with any overarching international agreement, because the Euratom agreements are driven by the IAEA.
Together with David Senior of the Office for Nuclear Regulation (ONR), Dame Sue Ion further acknowledged that relinquishing our Euratom obligations could reduce the bureaucratic burden of safeguards compliance to a small extent.
87.However, leaving Euratom would also require the UK to establish new arrangements for safeguards inspections, which are mostly (and increasingly) conducted by Euratom officials. David Senior asserted that setting up alternative arrangements within the two year negotiation period would be “very challenging” because of, as Dame Sue Ion explained, the need to replace Euratom-owned infrastructure, equipment, skilled personnel and processes. Mr Senior was concerned that “we would only be in a position in the two-year period to put a basic arrangement in place”. A number of witnesses expressed concern that setting up new arrangements beyond safeguards—and specifically nuclear cooperation agreements—would not be possible within the two year negotiation. Questioned on the feasibility of setting up new arrangements in this time frame, the Secretary of State said that “[i]t is too early to make that definitive judgement”.
88.According to Chatham House, any new inspections arrangements “would add significant budgetary and staffing requirements to the UK’s Office for Nuclear Responsibility [sic]”. Euratom’s total safeguards budget was estimated at €23.1 million in 2015. The scale and number of British nuclear facilities mean that a quarter of all Euratom staff time dedicated to safeguards is spent in the UK.
89.Euratom facilitates international nuclear trade and collaboration through:
(1) the Nuclear Common Market, which provides rights for the transport of nuclear materials, goods and personnel within the Euratom Community;
(2)Nuclear cooperation agreements held between the Community and third countries. The UK does not hold any such agreements directly, but instead relies on those developed by Euratom, (which are themselves predicated on the application of Euratom’s safeguards regime).
90.On departure from Euratom, the UK will need to negotiate new agreements (and associated safeguards arrangements) before any nuclear goods can be moved between ourselves and other countries. Dame Sue Ion highlighted that:
A plethora of international agreements would have to be struck that would almost mirror those that are already in place with EURATOM, before we could even begin to move not just material but intellectual property and services—anything in the nuclear sector.
91.Some witnesses agreed that leaving Euratom could open up new trade opportunities in the long term. However, they were concerned about any potential gap between leaving Euratom and setting up new agreements, which could cause “major disruption to supply chains”. This would have potentially serious impacts on existing generation and nuclear new build, as well as international research projects. Rupert Cowen emphasised that “[i]f we cannot arrive at safeguards and other principles that allow compliance to be demonstrated, no nuclear trade will be able to continue”. The Secretary of State agreed that it was “a very high priority” to have arrangements allowing the movement of nuclear fuels in place.
92.Euratom manages its own Research and Development (R&D) programme, with an agreed budget of €1.6 billion for the period 2014–18. Benefits of participation include access to high-cost facilities outside the UK, easy movement of research materials and intellectual talent, leverage for the funding of high-cost projects, and contracts for British businesses to supply equipment. Widespread concern has been voiced about the impact that leaving Euratom may have on UK R&D. The very large scale of nuclear energy research projects means they are almost always conducted as international collaborations, so there is a risk that the UK could lose access to new developments if an agreement is not reached. Many stakeholders have called on the Government to negotiate a deal that will allow continued participation in Euratom programmes. The Secretary of State told us that:
A lot of our research into fusion, for example, combines international researchers, and it would make no sense for any of the participants to seek to dissolve very effective working arrangements.
93.In France, Euratom is building the International Thermonuclear Experimental Reactor (ITER) which will be the world’s largest fusion experiment. Tom Greatrex, Chief Executive of the Nuclear Industry Association, estimated that British businesses have received “around €500 million” to participate in ITER. Ongoing participation outside Euratom may entail an increased UK financial contribution to the project. Currently Europe funds 45% of ITER’s budget, with non-European partners each contributing 9%. The US has estimated its national contribution at between 4 and 6.5 billion USD.
94.Euratom also provides 87% of the funding (around £60 million per annum) for the Joint European Torus (JET), a precursor to ITER based in Culham. JET’s current funding contract is due to expire in 2018. The UK Atomic Energy Authority was previously in discussions with Euratom to extend JET’s funding until 2020, but it is now unclear whether and by whom the project will continue to be funded. The Secretary of State said that “[w]e very much want and intend that that [JET] should continue”.
95.Regarding the opportunities arising from departure, Dame Sue Ion said that leaving Euratom could help to open up new international research collaborations, subject to the provision of funding. Exclusion from Euratom’s research programmes could disadvantage national nuclear research, limit the UK’s future access to global developments in fusion, and reduce the substantial business opportunities for UK firms supplying Euratom research projects. The Government should explore options to maintain the benefits of our existing research cooperation with Euratom, such as third party membership. Special consideration should be given to funding arrangements that would allow continued operation of, and access to, world-leading research projects including JET and ITER.
96.The Government has yet to set out its preferred option for a future relationship with Euratom. Three feasible options were highlighted during our inquiry: complete exit at the point of EU departure; third party membership; and ongoing membership as a transitional arrangement.
97.The default option for our future relationship would be a full exit from Euratom at the point of our departure from the EU. The UK would, however, remain bound by the rules of the International Atomic Energy Agency. The burden of safeguards compliance would be slightly reduced, but we would need to establish and fund new safeguarding arrangements, including inspections previously managed by Euratom. It would be difficult, although perhaps not impossible, to set these up within the two year negotiation period. However, the UK would also need to negotiate new nuclear cooperation agreements with both Euratom Member States and our other partners in order to continue existing trade and research collaboration. Witnesses did not think that this would be possible within the two year timeframe.
98.The UK could aim to negotiate third party or associate membership of Euratom and ITER. It is unclear what level of financial contribution this would entail, and the conditions which we would have to accept. It may require the UK to comply with aspects of Euratom law, but with restricted power to influence its development. It is unclear whether third party membership could be negotiated for functions beyond R&D. Switzerland is an ‘associated state’ of Euratom’s research programme and of ITER, but not of the Community as a whole. Its Euratom association is dependent on the free movement of persons.
99.The nuclear industry has expressed strong concerns that new arrangements will take longer than two years to set up. Ministers have not been able to allay these concerns. An interval between the cessation of our Euratom membership and the entry into force of new arrangements could severely inhibit nuclear trade and research cooperation. We recommend that the Government seeks to delay our departure from Euratom. This would give the nuclear industry a realistic window for setting up alternative arrangements—including safeguards and international nuclear cooperation agreements—so as to minimise any disruptions to trade and threats to power supplies.
100.If the option of remaining a Euratom member proves untenable, we recommend that the Government seeks a transitional agreement to retain our existing arrangements until new arrangements can be put in place. The duration of this agreement may need to be longer than the three year transitional period proposed by the European Parliament.
150 [Bill 132 (2016–17) - EN] published 26 January 2017 and confirmed by , Cm 9417, published 2 February.
152 European Commission, accessed 24 April 2017; “What Brexit means for UK nuclear energy policies”, Newsweek, 31 January 2017; “” EUR-Lex, 19 October 2007; Ilina Cenevska, The European Atomic Energy Community in the European Union Context: The ‘Outsider’ Within, p 67; European Commission, , accessed 24 April 2017
153 , Cm 9417, published 2 February
154 As above
157 Consolidated version of the Treaty establishing the European Atomic Energy Community,
158 European Economic and Social Committee (Rapporteur: Mr Brian Curtis), on a Communication from the Commission - Nuclear Illustrative Programme presented under Article 40 of the Euratom Treaty for the opinion of the European Economic and Social Committee [COM(2016) 177 final], TEN/596, September 2016, para 5.5
165 In contrast, nuclear safety regulations protect the health and safety of the public and the environment.
168 European Commission, , 2015; Q126 [David Senior]; EDF Energy ()
170 Q125 [Dame Sue Ion]; Q127 [David Senior]; Q129 [David Senior]
172 Q128 [Dame Sue Ion]; Q128 [Rupert Cowen]; Q133
174 Chatham House-UKERC ()
175 European Commission, Report on the Implementation of Euratom Safeguards in 2014, 2015.
176 As above
179 Q138 [Tom Greatrex, Dame Sue Ion & Rupert Cowen]
180 Energy Institute (); Nuclear Industry Association (); Q131 [Tom Greatrex]; Q133 [Tom Greatrex]; Q138 [Rupert Cowen]
181 Nuclear Industry Association ()
182 As above
183 Q116 [Rupert Cowen]
185 “”, Council of the European Union press release 17898/13, 16 December 2013.
186 Q114, 139 [Dame Sue Ion]; Q114 [Tom Greatrex]
187 See, for example: “”, Times Higher Education, 27 January 2017; “”, The Engineer, 7 February 2017; “”, Prospect press release, 27 January 2017; “”, Nature, 27 January 2017; Nuclear Innovation and Research Advisory Board (); Institution Of Mechanical Engineers (); Q114 [Dame Sue Ion]; Q139 [Dame Sue Ion]
188 “Decision to leave Euratom ‘bonkers’, say experts: Future of UK nuclear research ‘uncertain’ after Brexit bill revelation”, Times Higher Education, 27 January 2017
189 See footnote 185
191 European Commission Research and Innovation, accessed 21 April 2017
193 This includes contributions from the EU, Euratom and Switzerland, which participates as a third country with a Euratom cooperation agreement. See European Commission Fusion for Energy, , accessed 21 April 2017.
194 US Department of Energy, , May 2016
195 See, for example: EUROfusion, accessed 21 April 2017; “Government ministers visit Oxfordshire to open research centre and highlight risks to UK science and innovation from Brexit”, BIS press release, 23 May 2016.
196 Q141 [Tom Greatrex]
199 HM Government, The United Kingdom’s exit from and new partnership with the European Union, (Cm 9417), February 2017
200 Q128 [Dame Sue Ion]; Q128 [Rupert Cowen]; Q133 [Tom Greatrex]
201 Q132 [David Senior]
202 Q132 [Rupert Cowen]; “Switzerland and EU join forces in science and research”, European Association for the Study of the Liver (EASL) press release, 14 December 2014
4 May 2017