EU Law Clean-Up Takes Shape in the UK
But also — Europe in Davos, China, German tanks
Hi! This is Monday, 23 January 2023, and here’s the news you need to start your week. Feel free to share this newsletter with friends and colleagues, and follow us on Twitter and Linkedin.
The Briefing
Westminster is taking a new step towards getting rid of retained EU laws. On 18 January, the House of Commons voted in favour of the government’s plan to reform or revoke remaining EU laws contained in UK legislation. Doubts remain on the feasibility of the plan and the legal risks it entails.
REUL • Despite opposition from Labour and from some Conservative dissidents, the so-called Retained EU Law (REUL) Bill was approved in its third — and final — reading in the House of Commons. This Bill plans to reform or revoke some 4,000 pieces of EU secondary legislation that are still part of the UK’s legal system, by the end of 2023.
CONTEXT • As a reminder, back in 2018, the EU Withdrawal Act brought all EU laws onto the UK’s statute book, creating a new category of retained laws. This gigantic copy and paste exercise ensured legal continuity after Brexit.
First promised by Boris Johnson in January 2022, the REUL Bill was introduced in September 2022 by the Truss Government. “We are bringing forward this Bill in order to fully realise the opportunities of Brexit, and to support the unique culture of innovation in the UK”, an official press statement reads. Rishi Sunak has made it clear he is sticking to his predecessors’ plan and deadline.
HOW IT WORKS • According to the bill, all relevant ministers have to keep (or amend) all EU laws that they deem useful, by creating new regulations. A sunset close indicates that all EU laws that haven’t been kept or amended will disappear from the UK statute book at the end of 2023. In case they’re not sure about a particular law, ministers can ask for an extension of the deadline to 23 June 2026.
The Bill puts an end to the principle of primacy of EU law, which was enshrined in the European Communities Act of 1972. It required UK courts to apply the case law and general principles of law established by the EU Court of Justice.
All the case law and general principles of EU law have been retained in the Retained Law. But UK judges will no longer have to interpret EU law in line with the decisions of the CJEU, which could add to legal instability.
LET’S GO • The task is Herculean, as it requires civil servants to examine each piece of legislation and weigh its benefits against the risks of scrapping it. In November 2022, Jacob Rees-Mogg — former Minister for Brexit Opportunities and figurehead of the Bill — notably admitted that the Business department would need 370 full-time officials to deal with 317 EU laws in 1 year.
Doubts remain about the exact amount of REUL covered by the Bill. Originally, the UK government announced a total of 2,400 laws, but the National Archives recently found 1,400 additional laws, as reported by the FT.
DEADLINE • The one-year schedule is considered unrealistic by many MPs. Some also fear that in the case where ministerial departments fail to meet the deadline, EU retained laws could be dropped without proper assessment, therefore creating immense legal uncertainty.
Scottish business groups have put pen to paper to warn about the “unnecessary uncertainty” businesses could suffer from as a result of the law. UK business investment still has not reached its pre-Brexit level.
Several MPs are also worried about the social and environmental costs the Bill could entail. Policy areas that concentrate the most REUL include environmental taxes, fisheries policies, health and safety, transports, workers rights and pensions. Labour MPs basically argue that the Bill plays “russian roulette” with citizens’ rights and protections.
SCRUTINY • The Bill is also controversial within the Conservative party itself. 60 conservative MPs abstained from voting on the Bill. A group of conservative dissidents — including former Brexit Secretary David Davis — has voiced its concerns about a lack of parliamentary scrutiny on the coming regulatory changes, as those will be mostly made at the ministerial level.
“We are being asked to sign a blank check (...) It’s not democratic, but it’s also going to be inefficient and possibly incompetent. If you don’t bring a minister [to the House of Commons] to justify what he is doing, the quality of decision goes down”, argued David Davis, who believes the Bill will create a “ministerial diktat” on REUL.
“Primary legislation is not within the scope of this bill. Anything that came out of Europe and came in through primary legislation will have to go through the floor of this House”, Rees-Mogg replied.
ELECTIONS • This is a decisive time for the Tory party. Weakened by Johnson’s resignation, Truss’ short-lived premiership and internal divisions, the Conservative party is concerned about the next general election, which should take place in December 2024. The Labour Party has been leading in the polls since late 2021.
Last month, Jacob-Rees Mogg told the FT: “We need to settle this by the 2023 deadline otherwise Labour will use this at the next election and create all sorts of stories about how we intend to scrap workplace rights and environmental regulations (...) We need to get on with it.”
WHAT NEXT? • The REUL Bill is now being examined by the House of Lords. Although constitutionally unable to overturn the Bill, the House could potentially amend it to slow down the whole process.
This could be a blessing for Rishi Sunak, as it is currently hardly feasible for his government to fight against eurosceptics on both the ongoing negotiations on the Northern Ireland protocol and the REUL bill. “That could be a convenient excuse to put on the brakes”, the FT notes.
In Case You Missed It
EU IN DAVOS • The World Economic Forum hasn’t been immune to IRA talks. Business leaders have shown their enthusiasm for Biden’s 369 billion dollars Inflation Reduction Act aimed at stimulating growth in green sectors through targeted subsidies.
“For the next 10 years, this will be an engine for growth”, Holcim chief executive said during the forum. Several US officials were present during the event, where the plan’s popularity was significant.
But not everyone spoke so highly about IRA, especially among EU nations. “Protectionism hinders competition and innovation, and is detrimental to climate change mitigation”, Olaf Scholz stressed.
While in Davos, Ursula Von der Leyen announced a new Net-Zero Industry Act aimed at creating a regulatory framework favourable to green investments, with targets for 2030. Her announcement echoes the Clean Tech Act Thierry Breton has been advocating for in the past few weeks.
Von der Leyen also talked about the EU’s plan to ease direct state aid rules and to create a separate “just transition fund”, while stressing the EU’s commitment to free trade. But doubts remain on the EU’s ability to finance massive subsidies, as emphasised by EU finance ministers who were meeting on 16 January.
DIPLO • China’s top diplomat, Wang Yi, plans to visit Germany and Belgium in February, to restore warmer relations with Europe through a diplomacy spree. Wang has been promoted from foreign minister to the Politburo, the CCP’s ruling body, and is likely to attend the Munich Security Conference and visit EU headquarters.
Potential objectives of the tour could be to relax tensions in the relationship between China and Europe, with China’s continued economic support for Moscow being a sticking point.
Chinese and European mutual diplomatic engagement has ramped up recently, with Xi meeting with Italian, Dutch and Spanish leaders during the G20 in November, Michel and Scholz travelling to Beijing in November and December, and Vice Premier Liu He currently offering a “kindler, gentler” Beijing at Davos, keen to talk about a business-as-usual approach.
TANKS • In Davos, all eyes were on Germany’s reluctance to send Leopard 2 battle tanks to Ukraine. The Ukrainian army needs modern tanks to launch a spring offensive aimed at capturing key positions.
According to senior German officials, Olaf Scholz is concerned that the conflict will become global if battle tanks are delivered by the West. As a result, Scholz wants the US to make the first move and send tanks to Ukraine. “I don’t think this is the right strategy,” Zelensky answered in a video speech in Davos. US officials stress that they cannot deliver tanks for (mainly) logistical reasons involving mobility issues.
Last Friday, speaking from the margins of the Ramstein Air Force base meeting, new German Defense Minister Boris Pistorius said that he has “given the order to check the availability and number of these tanks”. He stressed that a decision on a delivery will be made “as soon as possible”.
Finland and Poland have been particularly vocal about Germany’s reluctance. “We will not passively watch Ukraine bleed to death”, Polish Prime Minister Mateusz Morawiecki said in an interview. Finland recently announced it would send a record 400 million euros military package to Ukraine.
On January 22, during an interview on the sidelines of the celebration of the sixtieth anniversary of the Elysee Treaty, German foreign minister Annalena Baerbock said that the country would not "stand in the way" if Poland or other allies want to send German Leopards 2 tanks to Ukraine.
What we’ve been reading
Mild weather and falling energy prices are weakening Russia’s position vis-a-vis Europe, argues Charlie Cooper in Politico and Chris Giles in the FT.
Although European defence budgets are rising, writes Luigi Scazzieri for the CER, fragmentation in spending among member-states could lead to a weakening of Europe's defence industry unless better coordination is implemented.
In an LSE Blogs post, Milan Babic and Adam Dixon contend that, despite appearances, there’s been a marked increase in protectionism towards Chinese state-led investments in Germany in recent years.
This week’s newsletter is brought to you by Ysabel Chen, Battiste Murgia, Gautier Parthon de Von, Maxence de La Rochère and Augustin Bourleaud. See you next Monday!