The Euratom Row: What's At Stake? by Edelman

THE EURATOM ROW: WHAT’S AT STAKE?

Edelman 10 July 2017

Pawel Swidlicki Brexit Analyst Pawel.Swidlicki@Edelman.com

Since the election, the Brexit debate has been blown wide open; over the past couple of days, the question of the UK’s membership of Euratom, the EU’s nuclear body, has come to the forefront with a concerted push by supporters of a ‘softer Brexit’ to put the option of continued membership back on the table. If successful, this would have wider implications for Brexit.

EURATOM SUPPORTERS PUSH BACK Despite the government’s insistence that nothing fundamental has changed as regards Brexit, last month’s inconclusive election has dramatically reopened the debate about Brexit, with space opening for a softer version of Brexit than that set out by Theresa May in her Lancaster House speech. In recent days, proponents of the UK remaining within Euratom have led a concerted effort to force the government into a rethink:

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James Chapman, former advisor to David Davis told the BBC that “I would have thought the UK would like to continue welcoming nuclear scientists who are all probably being paid six figures and are paying lots of tax. But we’re withdrawing from [Euratom] because of this absolutist position on the European court. I think she could show some flexibility in that area… if she doesn’t shift on Euratom I think the parliament will shift it for her.”

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In a joint op-ed in The Sunday Telegraph, the Conservatives’ Ed Vaizey and Labour’s Rachel reeves argued that leaving Euratom “makes no sense. The UK must remain a beacon for global talent after Brexit… We do not believe that anyone who voted leave did so because they wanted to prevent atomic researchers and their families making their lives here and contributing to our economy and society.”

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Dominic Cummings, the former campaign director of Vote Leave (known for his forthright views) tweeted that the government were “morons” for withdrawing from Euratom and that it was “near retarded on every dimension.” He added that leaving Euratom was a misinterpretation of the referendum, and that the ECJ’s role was not a significant problem.

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A number of senior nuclear scientists, including Professor Roger Cashmore, chair of the UK Atomic Energy Agency, have warned that leaving Euratom will have profound impacts on Britain’s research, energy production, and industry, with Cashmore describing it as “a mess” and “alarming”.

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The Evening Standard warned in a front-page story that thousands of cancer patients could face delays to their treatment as a result of the UK’s decision to leave Euratom, citing Dr Nicola Strickland, president of the Royal College of Radiologists, as saying that she was “seriously concerned” that such a move threatens the supply of vital imported radioactive isotopes widely used in scans and treatment.

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Labour MP Albert Owen will lead a Westminster Hall debate on the issue of the UK’s future relationship with Euratom on Wednesday morning.

WILL THE GOVERNMENT U-TURN?

WHAT WOULD BE THE IMPLICATIONS?

As things stand, the government is sticking to its guns, with Theresa May telling MPs this afternoon that “We're leaving Euratom, but what we'll be looking to put in place is another relationship with it”.

Nonetheless, for May to concede on this point would be significant, and it would have a number of knock-on consequences.

However, May has repeatedly shown herself willing to Uturn, not least in jettisoning large swathes of the Conservatives’ election manifesto. The government has also conceded on several points relating to the Brexit negotiations, most notably in accepting the EU’s insistence that “significant progress” is made on the withdrawal terms before moving on to discuss the new trading relationship. This morning Damian Green also conceded that the ECJ’s jurisdiction over the UK would not cease on the day of Brexit but continue throughout the transition period. The government simply does not have the numbers to push through a Euratom exit – only seven Tory MPs would need to vote with the opposition and according to media reports nine have indicated their willingness to do so (Edelman’s own analysis found that there are 78 Conservative MPs around a quarter of the parliamentary party – who back a softer version of Brexit. As such, a u-turn is likely, and it would arguably look better if the government made the first move rather than being forced into it by losing a vote in the Commons. The amount of pressure on the government is only likely to increase following the establishment of the All Party Parliamentary Group on EU Relations – co-chaired by the Conservatives’ Anna Soubry and Labour’s Chuka Umunna – which will channel cross-party support for ensuring the UK does not crash out of the EU without a deal, that during the talks “all options are kept on the table”, and for securing the “closest possible working relationship with the EU and its 27 member states”.

With a team of consultants from across the political parties and straddling the EU Referendum divide, Edelman’s Public Affairs team is superbly placed to give you insight, analysis and advice on the Brexit negotiations and on the new Parliament. For more information or if you think we can help you, please get in touch with our Managing Director Will Walden at Will.Walden@Edelman.com and our Head of Brexit Advice, Lucy Thomas, at Lucy.Thomas@Edelman.com. 10 July 2017

Firstly, as a number of legal experts have pointed out, given Euratom was explicitly referenced in the UK’s formal Article 50 notification letter, staying in Euratom is not a simple matter of the UK changing its mind and that being the end of it. From a purely procedural perspective, the UK would have to formally signal its change of mind on Euratom membership – this would in turn need to be accepted by the EU27. Given the unprecedented nature of Brexit there are few hard and fast legal certainties – the wording of Article 50 is vague on this point – and much will come down to political will. Either way, if the Article 50 notification has to be amended or even revoked and then re-submitted, the obvious implication is that Brexit itself is not inevitable, a fact which will make Brexit supporters very nervous (notwithstanding the fact that politically, it is very hard to see enough politicians being willing to overturn the referendum result). More broadly, forcing the government to stay in Euratom would represent the single biggest victory for the ‘softer Brexit’ coalition since the referendum and embolden its members to push on in other areas, such as securing a comprehensive transitional arrangement and a close UKEU relationship post-Brexit. It would also open avenues to compromises in other areas; if ECJ jurisdiction is acceptable when it comes to nuclear energy, why not in the area of crime-fighting and judicial co-operation? This concession could therefore also set a precedent for the UK remaining within the European Arrest Warrant for instance. Finally, as far as her own position is concerned, backing down on Euratom would mean watering down one of her self-imposed Brexit red lines; this in turn would further undermine her already weak position in the eyes of her party, parliament, the public and her EU counterparts. However, it is important not to get carried away – Euratom is a specific issue, linked to but distinct from the wider Brexit question. Because of this, it is possible for politicians who either backed Brexit or who have come to accept it to argue that staying in Euratom is compatible with the referendum result – this is particularly true for the likes of Dominic Cummings whose Brexit credentials are close to impeccable. This logic simply does not extend to – for example – staying inside the single market permanently post-Brexit.

RECAP: WHY ARE WE LEAVING EURATOM?

POTENTIAL DRAWBACKS OF LEAVING EURATOM

Euratom, or the European Atomic Energy Community in full, is a distinct legal entity that was established alongside the EU in 1957. Its key functions include:

Reduced access to nuclear fuel, ores, fissile materials and components: The European Commission’s chief negotiator Michel Barnier has warned that if the UK were to find itself outside of Euratom “overnight” it would result in the “suspension of the distribution of nuclear material to the UK”. Given that nuclear power accounts for 21% of total UK electricity generation, such an outcome would be disastrous.

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Setting out uniform safety standards across the nuclear industry and ensuring they are adhered to, including site inspections.

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Ensuring the regular supply of nuclear fuels, ores and fissile materials to utilities, operators, producers and intermediaries operating within the EU (Euratom is the legal owner of all such nuclear materials, member states only buy the right to use and consume them).

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Ensuring that civil nuclear materials are not diverted to purposes other than those for which they are intended (in particular military purposes).

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Ensuring free movement of capital for investment in nuclear energy and free movement of scientists and technicians in the sector.

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Promoting research on nuclear energy, and particularly nuclear fusion.

The government’s justification for leaving Euratom as well as the EU is that since Euratom is governed by EU institutions including the European Court of Justice, staying within it would breach Theresa May’s red lines on sovereignty and on a clean break with the ECJ. It is believed that this hard-line stance was largely influenced by May’s former chiefs of staff, Nick Timothy and Fiona Hill. The government’s Brexit white paper stated that: “We will be leaving Euratom as well as the EU… our precise relationship with Euratom, and the means by which we cooperate on nuclear matters, will be a matter for the negotiations – but it is an important priority for us – the nuclear industry remains of key strategic importance to the UK and leaving Euratom does not affect our clear aim of seeking to maintain close and effective arrangements for civil nuclear cooperation, safeguards, safety and trade with Europe and our international partners.”

10 July 2017

New UK nuclear infrastructure faces delays/cost overruns: Any disruption across the nuclear supply chain could result in delays to the construction of new reactors at Hinkley Point in Somerset, Sizewell in Suffolk, and Bradwell in Essex. CGN Power, the Chinese nuclear developer involved in all three of these new plants has warned that Brexit could entail “some risks in costs, in terms of planning”. Safety inspections: Euratom provides safeguarding inspections for all civilian nuclear facilities in the UK. The UK’s Office for Nuclear Regulation (ONR) notes that “More than 100 UK facilities or other duty holders are currently subject to Euratom safeguards, with some 220 inspections during 2014.” Clare Moody, Labour MEP for South-West England (which includes Hinkley Point) has warned that “Our own regulating authorities are not equipped to take over all of Euratom’s safeguarding work in the UK.” Higher costs of materials: The Euratom Supply Agency (ESA) aims to “ensure a regular and equitable supply of nuclear fuels to EU users”. It has exclusive right to conclude contracts - pulling out of Euratom means UK companies would have to re-negotiate contracts concerning the supply of such materials potentially leading to higher costs outside of the ESA’s bulk purchasing scheme. Participation in international fusion projects and access to EU research funds: The UK hosts the Joint European Tours (JET) – the world’s largest and most advanced operational nuclear fusion device – at the Culham Centre for Fusion Energy in south Oxfordshire. JET is a prototype for ITER, a nuclear fusion research and engineering megaproject designed to test the feasibility of fusion as a large-scale and carbon-free source of energy, currently under construction in France. Both the Culham Centre and JET specifically receive considerable funding via the EU’s Horizon 2020 research programme. JET’s contract runs out in 2018 and if an extension cannot be agreed, it could delay or prevent further ground-breaking experiments. This would not only be damaging for the UK, but it could also considerably set back the ITER project itself.

RECAP: WHY ARE WE LEAVING EURATOM?

POTENTIAL DRAWBACKS OF LEAVING EURATOM

If the UK definitively leaves Euratom – and as things stand, without a treaty amendment it will be hard for the UK to remain in Euratom whilst leaving the EU there are essentially three options.

The option that would allow for the greatest continuity would be for the UK to seek associated status within Euratom. Switzerland is currently the only country that has associated status which involves “reciprocal rights and obligations, common action and special procedures”. However, it is not clear whether this option will definitely be on the table for the UK as Switzerland’s accession to Euratom and Horizon 2020 was linked to its continued adherence of EU free movement rules even after the 2014 referendum in which Swiss voters narrowly backed curbs on EU migrants. The second option would be a third-party association agreement; Euratom already has eight such agreements of varying scope in place - with the US, Japan, Canada, Australia, Kazakhstan, Ukraine, Uzbekistan and South Africa. Unlike the reciprocal rights and obligations and common actions inherent in the associated status, a thirdparty agreement entails a somewhat looser relationship consisting of a “structured dialogue to identify a common set of research topics of mutual interest in which cooperation can take place on a shared-cost basis The final, fall back option – as set out by Brexit Secretary David Davis – entails the UK negotiating an agreement with the International Atomic Energy Agency instead on the basis that many of Euratom’s rules and regulations are derived from the IAEA anyway. When it comes to ITER specifically, it is a collaborative endeavour encompassing seven partners – the EU, China, India, Japan, South Korea, Russia and the US. It is therefore fully plausible that the UK could remain within ITER as a standalone member, but if it finds itself outside of Euratom and Horizon 2020, it will have to stump up its own contribution which could prove expensive option.

10 July 2017