The future of Europe: opportunities and challenges

It’s a great pleasure to be able to talk to you this evening about the future of Europe.

As a person who stills feels fairly youthful, it is a bit of a shock to realise that it was nearly 41 years ago that I was interviewed as a 16-year-old in Trafalgar Square on New Year’s Day 1973 just after the stroke of midnight, to be asked in French by French television, as to my opinion of the UK joining the EEC.

I responded with enthusiasm - and in French. This was not just the result of my Anglo French parentage or being bilingual, but the view I had that this great experiment in human co-operation was worthy of support.

Two years later, I spent 3 months of my gap year working for the Keep Britain in Europe campaign during the referendum, and was delighted with the outcome. It is with this background – some euro sceptics would say this baggage – that I speak this evening.

The European Union

As David Cameron said in his speech on the European Union in January this year:

the first purpose of the European Union - to secure peace - has been achieved.

Without doubt, that is one of the crowning achievements of the EU, as one of the key post-war European institutions.

However, as the Prime Minister made clear, the EU now faces a new challenge: how to secure prosperity.

The world has changed radically since the EU was born amidst the ashes of post-war Europe. We have witnessed the development of a truly global economy, the emergence of new economic powers such as Brazil, India and China and of course, in recent times we have also seen one of the worst global financial crises for decades.

Public attitudes to the EU - not just in the UK - have changed as well. Fifty years after the death of the famous Europhile John F. Kennedy, British citizens increasingly ask themselves not what they can do for the EU, but what the EU can do for them.

Indeed, it appears that some British citizens do not believe the EU can do anything for them at all. I want, as the Prime Minister wants, the European Union to be a success.

But I also want it to be an EU that allows the UK to continue to play a key role within it. In that regard I share the Prime Minister’s view that we need to see:

a new settlement subject to the democratic legitimacy and accountability of national parliaments where member states combine in flexible cooperation, respecting national differences not always trying to eliminate them and in which we have proved that some powers can in fact be returned to member states.

I believe that the legal framework established by the EU Treaties lies at the core of everything that the EU does and is. That framework is the source of some key opportunities but also some major challenges.

I would like to speak about some of those opportunities and challenges this evening.

The EU legal order

Let me begin by saying a few words about the EU legal order and its impact on UK law. As many of you will be aware, today that legal order is a source of much controversy in the United Kingdom. However, that has not always been the case.

Speaking in 1962, the British Lord Chancellor of the day, Viscount Dilhorne, commented:

I venture to suggest that the vast majority of men and women in this country will never directly feel the impact of the Community made law at all.

Reading those words today, they seem almost impossible to believe.

I am reminded of the words of the distinguished judge and pioneer of EU law, Lord Alexander Mackenzie Stuart. Having served as the first UK judge in the Court of Justice from 1973 and as President of the Court from 1984 until 1988, he had a unique insight into the development of the EU legal order from the outset of UK membership. In 1977, he described the EU legal order as:

a system founded on the principle that those who administer the Communities are themselves subject to limitations imposed by law and that those who are administered have rights in law which must be protected.

To my mind, Lord Mackenzie-Stuart highlighted something that - quite rightly - lies at the very heart of the EU: the rule of law.

Whatever your views about the current legal order under the Treaties, I believe that the EU can only be effective, successful and above all legitimate – if the EU is seen to respect the letter and spirit of the Treaties. In other words, the EU must respect the rule of law.


The legal order under the Treaties is important because it offers many opportunities for us to benefit from EU membership.

First, by providing a framework for adopting cross-European rules on goods and services, the Treaties have enabled the development of the Internal Market which – in my view – is one of the greatest achievements of the EU.

Grounded in the Treaties and developed over the past 20 years through an extensive EU acquis, the Internal Market gives UK businesses access to the world’s largest trading bloc with 500 million people and 21 million companies generating an estimated £11 trillion in economic activity.

By providing for a system of common rules and standards, the internal market enables a manufacturer in Warsaw to sell his or her goods in the markets of London, Lisbon or Helsinki safe in the knowledge that the same rules and standards will apply to those goods as would apply in Poland.

I am well aware that in Britain we should not under-estimate the real commercial benefits this brings, including to each of us as consumers. The Treaties also provide the mechanisms to ensure that the rules are respected and the Courts and the Commission play an important role in this regard. Indeed, the UK is a strong advocate of the effective enforcement of EU rules.

I should add in passing that the role of the Court of Justice in law enforcement is pivotal. As a supranational court it too owes its considerable authority to its legal foundations. As such, it plays a central role in upholding the rule of law within the European Union – that is, in the enforcement both of EU law and of the limits of EU law.

That is the proper role of independent courts. In discharging their heavy responsibilities, supranational courts clearly do need to be mindful of their constitutional status and the balance of authority between national and shared sovereignties. Indeed, this is the subject of close attention in UK legal circles at present, as well as in public discourse.

Of course, it is important to reflect that some of the judgments of the Luxembourg Court upheld key treaty principles in ensuring the internal market was able to function properly, and have the effect on free movement of goods and services that the Treaties intend. Perhaps the most famous of these cases are cassis de Dijon and Dassonville, which I find hard to forget, given that they involve the importation of French cassis and Scotch whisky!

The second opportunity offered by the Treaties is the opportunity to harness the EU’s collective economic strength to negotiate and agree numerous transformative trade agreements with third countries – most recently with Korea.

Those agreements have opened up major new markets for member states and have brought significant economic benefits. Currently, there are agreements in place with about 30% of the global economy and the EU is negotiating deals to raise this to 70%.

The Transatlantic Trade & Investment Partnership currently being negotiated with the US alone could be worth £10 billion to the UK economy and I very much hope that negotiations on that deal can be swiftly brought to a successful conclusion.

Third, the legal framework under the Treaties enables EU Member States to work effectively together on the types of problem which require cross-border action. Some problems – like climate change – are simply too big to solve at national level. That is where the EU can bring and has brought real value, by harnessing collective negotiating weight and by providing a legal framework for cross-border cooperation.


But, just as the legal framework under the Treaties provides opportunities, it also gives rise to some significant challenges in relation to how to ensure:

    • respect for the boundaries of EU action under the Treaties
    • respect for the boundaries between the various EU institutions – the so-called ‘inter-institutional balance’
    • respect for the boundary between action at EU and at Member State level

These boundaries matter.

They are the product of hard fought negotiations by democratically elected national leaders. The results of the referendums over the past twenty years in Denmark, the Netherlands, France and Ireland bear witness to the dangers of losing touch with people of Europe on this issue. Moreover, overstepping the boundaries under the Treaties undermines the very legitimacy of EU action.

To put it straightforwardly, the EU should only be doing what Member States signed up to. And if this doesn’t happen, its legitimacy in the eyes of the public is undermined. As the PM said in January, “democratic consent for the EU in Britain is now wafer thin”. That may in part be explained as a lack of understanding of how the EU functions.

But I have to say that it is in part a clear-sighted view of the public that the institutions generally operate to reduce the freedom of action of Member States.

We see too many cases where the EU fails to respect the boundaries under the Treaties, the inter-institutional balance or the balance between EU and Member States action.

Respecting the boundaries of EU action under the Treaties

Let me begin with respecting the boundaries under the Treaties.

I am sure we can all think of examples of cases where the EU has pushed the boundaries of its powers under the Treaties.

To take a current example, I am aware of the on-going debate within the EU about the need for, and possible shape of, a new EU mechanism to enforce the rule of law in member states. The UK is deeply committed to promoting and supporting the rule of law, both within the EU and elsewhere.

That is a goal to which I am – personally – very committed. However, like M. Legal, I remain unconvinced by the need for a new EU mechanism.

It goes without saying that the EU should not act in areas where it does not have competence. However, it is just as important that the EU respects the boundaries between the various legal bases under the Treaties. In particular, the EU must not ignore the special arrangements that pertain to some Member States under the Treaties including those in the justice and home affairs and Euro areas.

To cite a recent example, the UK has brought a number of legal challenges in respect of measures which we think should have been adopted under a Title V legal base. I need hardly say how much this matters to the UK. It is unacceptable and very damaging to the legitimacy of the EU for legal bases to be aggressively exploited by the Commission in order to side-step the opt-outs which have been negotiated by sovereign member states.

It conveys the impression of an intellectual game designed to subvert the agreements which ministers, answerable to electorates, entered into in good faith.

Of course, I recognise that the fact that the EU is tempted on occasions to push against the boundaries in the Treaties might be explained by the fact that Member States have different visions on what the EU should be doing. It is no secret that there are differences of view as to what the EU should do, what it should be and to where it should aspire. However the solution to this is not to shoe-horn proposals into inappropriate legal bases or side-step opt-ins.

Instead, I think the solution lies - at least in part - in making greater use of the flexibilities which are already provided for under the treaties.

Of course, when we use the flexibilities under the treaties, it is also important that we respect the interests of other Member States. To take the example of the Eurozone – there can be no doubt whatsoever about the need to take clear and concerted action to deal with the problems in the Eurozone.

Nobody would deny that. However, it is also important to ensure that when Eurozone states take such action, they do so in a way which does not harm the interests of other non-participating Eurozone member states or the fundamentals of the European Union that matter to all Member States - like the integrity of the Single Market.

I was particularly pleased to note the creative solution that was arrived at in respect of the voting arrangements applicable under the proposal for a single monitoring mechanism which helped to assuage the concerns of the non-participating non-Euro states.

This is a good example of how with a combination of imagination and political will practical solutions can be reached to seemingly insurmountable difficulties without impinging on member states rights under the treaties.

Unfortunately, that has not been the experience across the board. Regrettably, the UK has had to resort to litigation in the courts to defend its interests in some instances. For example, we have brought a legal challenge in relation to the European Central Bank’s new policy on the location of those institutions which act as ‘central counterparties’ for the clearing of euro-denominated instruments.

We are challenging that decision because we think it will discriminate against non-Eurozone member states. In bringing this challenge the UK is not trying to hinder efforts to shore up the Eurozone.

On the contrary, the UK has tried to assist Eurozone member states in securing amendments to the treaties to allow for the creation of the European Stability Mechanism. However, we also have an obligation to our people to ensure that the interests of non-Eurozone Member States are not damaged.

Similarly, the UK has a brought a legal challenge in respect of the proposed enhanced cooperation decision authorising the adoption of measures to implement a financial transaction tax. We have brought that case due to concerns about impacts on non-participating Member States.

Finally, the EU also needs to respect boundaries when acting at the international level. The EU is a part of the wider legal order. In Kadi 2 and the American Airlines challenge in respect of the EU Emissions Trading System the Court has – to say the least - probed the boundaries of that legal order.

This is an area where the EU needs to tread very carefully - otherwise we will lose friends, and the respect for the EU on the international stage will diminish.

The same is true of the EU’s role in international organisations. There are occasions where the collective weight of the EU can enable Member States to wield greater influence at international level and there will sometimes be a role for the EU in international organisations.

However, pushing too hard for enhanced status for the EU in international fora can use up precious political capital, alienate friendly states and undermine the EU’s broader objectives. So we need to ensure this is not an end in itself which we pursue at the expense of other priorities.

Respecting the boundary between the various EU Institutions

The EU’s role in international fora brings me on to the second type of challenge: how to ensure the inter-institutional balance within the EU is respected.

Respecting the letter and spirit of the treaties also means that we need to respect the roles of the various institutions created under the treaties: the so-called inter-institutional balance which is reflected in Article 13(2) of the Treaty on European Union. Again, this matters not just because that balance lies at the heart of the Treaties but also because it provides for a complex system to regulate its operation.

When it works well, the institutional balance can also provide an effective mechanism for harnessing the collective expertise of the EU institutions and Member States. For instance, work on the negotiation of trade agreements demonstrates how the EU institutions and Member States can work effectively together in a way which enables the EU negotiators to draw on the expertise of member states.

Moreover, even in areas of exclusive EU competence it is important that the EU Institutions recognise that Member States have an important contribution to play.

And yet, time and time again, we see cases where that institutional balance is breached – in some cases, quite flagrantly. There is far too much inter-institutional squabbling and jockeying for position to the detriment of the EU’s ability to deliver for its people. Where is the practice of “mutual sincere cooperation” promised in Article 4 of the Treaty on European Union?

The Commission is a repeat offender here, particularly in the area of external action, in frequently demonstrating disregard for the prerogatives of the Council based on its own interpretation of its role under Article 17 TEU. I was frankly astonished to hear that the Commission has recently signed an MoU with Switzerland in the absence of proper Council authorisation.

Indeed, it appears that the MoU was signed at a time when the Council was considering whether to grant such authorisation. I have to say that I find this case very troubling both as a lawyer and as a government minister.

The Council is composed of government ministers answerable to electorates through their parliaments. By-passing the Council in this way not only breaches the inter-institutional balance, but also undermines the legitimacy of EU action. This would be bad enough if it were an isolated incident. However, it is not. This case is one of many.

The Council should not stand by and allow its rights to be overridden; it needs to be more alert and robust in defending its rights. Those rights are there for good reason. To take another example, you may be aware of the challenge which the Council has brought against the Commission in relation to the latter’s decision to withdraw a regulation of the European Parliament and of the Council laying down general provisions for macro-financial assistance to third countries.

It appears that the proposal was withdrawn at a late stage of its first reading under the ordinary legislative procedure and after the Parliament and Council had in effect reached informal agreement on it.

The Council argues that the withdrawal of the proposal constitutes a breach of the principle of the distribution of powers under Article 13(2) TEU. I do not propose to comment on the detail of this particular case. However, the very fact that the Council was compelled to bring this case is of concern and provides another illustration of how the inter-institutional balance under the Treaties is being undermined. .

Second, we see too many inter-institutional wrangles which are hindering the work of the EU. I am sure you are all aware of the current debates over the use of delegated and implementing acts.

This may seem like an arcane procedural issue. However, since the entry into force of the Lisbon Treaty we have seen many key legislative dossiers (not least the EU’s Multi-annual Financial Framework) held to ransom due to inter-institutional disagreements over whether it should include powers to adopt implementing or delegated acts.

It is inevitable that these new legislative procedures will take some time to bed down. I also recognise that, unfortunately, a culture has developed whereby Member States and institutions feel that they are obliged to hold up dossiers in order to defend their interests.

However, it makes no sense for progress of major dossiers to be delayed over what are in effect turf-wars between different EU institutions. Fruitless and interminable disputes of this type, only serve to undermine the EU’s credibility even further.

The EU can only work effectively and legitimately if it plays by the rules. No one needs to resort to the Court when everyone is prepared to enter into negotiations in good faith to resolve issues. And no institution – including the Parliament – should use its powers to hold up important business in an attempt to gain more ground at the expense of other institutions.

Disputes of this sort are certainly not in keeping with the spirit of the Treaties. Perhaps even more importantly, European citizens do not care about these turf wars, whoever participates in them, and most think less of European politicians and officials for seeming to care about little else.

The boundary between action at EU and Member State level

I would like to make a few suggestions as to how we might strike the right balance between EU and Member States action.

As the Prime Minister said in January, the EU now faces a new challenge: ‘how to secure prosperity’. This is the raison d’être of the EU and implicit in its objectives. We have the NATO Alliance to provide security, the Council of Europe for dialogue and human rights, and we want the European Union to continue to provide a platform on which the people of Europe can enjoy sustainable prosperity.

In order to protect the EU’s legacy as a pioneer of prosperity across the continent, we need to ensure that when the EU makes rules, it does so in a way which enhances prosperity rather than damaging it.

First and foremost, we need to do this by completing the Internal Market. In particular, we need to see greater liberalisation in the digital, energy and services sectors. And we also need to ensure that the existing rules are properly enforced.

However, if we are really committed to making the EU truly competitive, we need to address a deeper problem: we need to find a way to ensure the principles of subsidiarity and proportionality are truly respected. I realise this is not easy.

And yet, subsidiarity and proportionality lie at the heart of the Treaties. The EU works best when its action is targeted at areas where cross-EU action is more effective than member state action. By contrast allowing the EU to act in areas where the same objectives can be achieved at member state level or allowing it to act in areas which were never contemplated by the Treaties wastes precious resources, undermines the effectiveness of the EU and contributes to the widespread sense of a lack of democratic accountability of the EU.

We need to recognise that many issues can and should remain within the remit of Member States. Indeed, just this week, my Prime Minister proposed a raft of measures which, within the parameters permitted by EU law, will discourage benefit tourism, a problem with which a number of Member States are rightly concerned.

When the EU proposes measures which appear to be disproportionate or which are better left to Member States, it damages its credibility. For instance, I am confident that the recent proposal to regulate the use of olive jugs caused as much confusion and mirth amongst lawyers as it did among members of the wider public.

It really should worry all of us in this room that 74% of Europeans believe that the EU generates too much red tape (the Commission’s own figure).

I welcome the Commission’s commitment in October to simplify existing EU laws and withdraw unnecessary ones, reduce the burden on businesses and make sure that implementation of EU laws becomes easier. Let us hope that the positive expectations created by these announcements, part of the Commission’s Regulatory Fitness and Performance Programme, do not remain purely aspirational and are transformed into firm action both by this Commission and its successors.

Equally, we are already seeing greater and improved use of impact assessments and the EU has revoked nearly 6,000 measures since 2005. That is no small achievement. However, we need to do more if we want to maintain the competitiveness of the EU on the global stage and to meet the hopes of people across Europe that the EU is changing for the better.

The UK is, because it wishes to be, at the forefront of the debate and the business-led task force on cutting EU red tape, commissioned by the Prime Minister, published its findings last month and has been welcomed around the Union. In addition to that, we are in the midst of a Review of the Balance of Competences - this is a detailed factual analysis of the balance of EU and member state competence.

Of course, the UK is not alone in having concerns about these issues. The recent subsidiarity review in the Netherlands concluded ‘European where necessary, national where possible’. Indeed, to answer Monsieur Delors’ famous prize-winning question, isn’t that exactly what subsidiarity is all about?

As well as looking at existing EU laws, Member States should be emboldened in the Council not to shy away from rejecting proposed legislation brought forward by the Commission where it cannot be justified as contributing to the EU’s prosperity and growth agenda. No legislative body like the Council should simply rubber stamp what is put in front of it.

Moreover, the Commission should ensure it protects itself from charges of arrogance or aloofness, most prominently exemplified in pushing forward significant pay increases for EU officials at a time when all Member States were cutting salaries and downsizing public services. Like the rest of us, EU institutions have to get used to doing better with less. What are the solutions?

This brings me on to my final point – the need to enhance the democratic accountability of the EU.

One of the key questions posed in the Laeken Declaration over ten years ago concerned how we can increase the democratic legitimacy and transparency of the EU institutions. That question is as valid today as it was when it was first posed back in December 2001.

As the Prime Minister said in his Bloomberg speech in January, we need to see a bigger, more significant role for national Parliaments in the business of the EU and we need to recognise that power must be able to flow back to Member States, not just away from them.

In the UK we have already legislated to require enhanced Parliamentary control over a range of EU decisions. For example, any future Treaty proposals which might result in a transfer of powers or competences from the UK to the EU will need to be approved by Act of Parliament and by the British people by referendum.

We are also looking at how to improve our own arrangements for Parliamentary scrutiny of EU business.

But what the Prime Minister was suggesting goes beyond domestic arrangements in the EU. It is about enhancing the direct role played by national Parliaments in EU decision-making.

The existing yellow card procedure under the Lisbon Treaty was a start. But as the UK Foreign Secretary William Hague said earlier this year, we should explore whether this mechanism could be strengthened or extended to give our parliaments the right to ask the Commission to start again where legislation is too intrusive, and fails the proportionality test.

And we should think about going further still and consider a red card to give national parliaments the right to block legislation that need not be agreed at the European level.

Moreover, it is critical that the EU respects the role of democratically elected national parliaments. With this in mind, I note that 14 national parliamentary chambers from 11 Member States (totalling 18 votes) sent a Reasoned Opinion to the European Commission on the grounds that the European Public Prosecutor (EPP) proposals breached the principle of subsidiarity.

Notwithstanding that, the Commission has decided that the EPP proposal complies with the principle of subsidiarity and has therefore decided to maintain the proposal. To my mind, this can only strengthen the case for finding a way to give national parliaments a bigger and more significant role in the EU. I am afraid it also illustrates to me the extent to which some in the present Commission now seem dangerously out of touch with the people of Europe they are supposed to serve.

Concluding observations

As the United Kingdom Attorney General, one of my core tasks is to support the rule of law – at domestic and international level. The rule of law is the very thing that Lord Mackenzie-Stuart so rightly observed also applies to those who administer the EU. In the current economic climate, the importance of respecting the rule of law under the Treaties is more important than ever.

No one denies the need for the EU to act promptly to deal with the problems in the Eurozone, to complete the Internal Market or to address a number of other pressing issues. But, in doing so, it is essential that the EU acts in a way which respects the letter and spirit of the Treaties, including the principles of subsidiarity and proportionality. Failure to do this damages the EU.

There will of course be cases where there are genuine disputes about the scope of the EU’s powers. That is why so many of us here are able to make a living as lawyers. But, the EU Institutions should not exploit ambiguities or legal loop-holes under the Treaties to push for action in areas never contemplated in them.

To put it bluntly, the UK plays by the rules and we expect others to do so too. This is something we take very seriously. We have brought a number of legal challenges to protect our interests and we will not shy away from doing so in future. We believe the Council should do the same. But let me be clear. When we bring legal challenges, we do not do so lightly nor are we trying to block EU action for the sake of it. It would be much better if these challenges were not necessary.

The United Kingdom wishes the EU to succeed in meeting the aspirations of Member States for a better future for their citizens. To do that, we must respect principles, rise to challenges with honest debate and not mire ourselves in bureaucratic obstructions. As my Prime Minister said in January:

Britain’s national interest is best served in a flexible, adaptable and open European Union. Such a European Union is best with Britain in it.

I thought that back in 1973 when I stood in Trafalgar Square on New Year’s Day, and I continue to believe the same today.

Thank you.