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Derrick Wyatt – What can the UK reform/renegotiation package really hope to achieve?

 

 

By Professor Derrick Wyatt QC (St Edmund Hall, Oxford)

Summary of the paper presented at the seminar at the Durham European Law Institute on 17 November 2015.

 

THE CONTENT OF THE UK REFORM PACKAGE

The UK government’s commitment to reform and renegotiation, followed by a referendum, was contained in the manifesto of the Conservative Party at the last UK general election. The objectives of renegotiation have been formulated in a letter dated 10 November 2015 to the President of the European Council, Donald Tusk (“the Tusk letter”). The Tusk letter was placed in context by a speech by the Prime Minister at Chatham House shortly before it was published. The speech includes one or two objectives for change which do not figure in the Tusk letter, in particular allowing UK courts to police constitutional failure on the part of the Court of Justice of the European Union. While not a renegotiation issue, this is new, and significant, and it deserves mention.

The UK government will not be the only player in the campaign for the UK to remain in the EU, and it would be wrong to present the referendum on the UK’s EU membership as simply a vote on the success of the government’s renegotiation. Nevertheless, some voters may see it in this way. The conservative manifesto declared that “We will negotiate a new settlement for Britain in the EU. And then we will ask the British people whether they want to stay in on this basis, or leave.”

I address below some of the government’s main renegotiation objectives.

 

MIGRANTS AND WELFARE BENEFITS

(Tusk letter) “As I have said previously, we can reduce the flow of people coming from within the EU by reducing the draw that our welfare system can exert across Europe. So we have proposed that people coming to Britain from the EU must live here and contribute for four years before they qualify for in-work benefits or social housing. And that we should end the practice of sending child benefit overseas. I understand how difficult some of these issues are for other Member States and I look forward to discussing these proposals further so we can find a solution that deals with this issue.”  In his Chatham House speech, David Cameron added: “And I am open to different ways of dealing with this issue.”

The first point to make is that the tone of the Tusk letter is softer than that of the conservative manifesto. In the Tusk letter, “immigration” is the final heading of the “flour main areas where the United Kingdom is seeking reform.” The manifesto said that “Changes to welfare to cut EU migration will be an absolute requirement in the renegotiation … “ (my emphasis); there is no such wording in the Tusk letter.

As regards the substance (four years residence and contribution in the UK for EU migrants to qualify for in-work benefits or social housing, and ending entitlement to child benefits in the UK for children resident in other Member States): if the UK persuades Member States (and the EU institutions) to agree to the above changes, could they be introduced by EU secondary legislation? The short answer is “no”. Both proposals call for treatment of migrants which is directly or indirectly discriminatory on grounds of nationality. Treaty change would be necessary to allow this.

What are the prospects of all Member States consenting to a four year qualifying period for in-work benefits for EU migrants in the UK? To say that this cannot be taken for granted is probably an understatement. But failure of the UK government to achieve these changes could be fatal to the campaign to keep the UK in the EU. Opinion polls indicate that for many voters this issue will be the single most important issue in the referendum.

There is a message here for other Member States. Unless the UK government gets what it wants on this issue, UK membership of the EU will be seriously at risk. If the UK leaves the EU, EU migrants who have aspirations to work in the UK will have to accept such conditions on entry, residence and welfare benefits as the UK unilaterally determines. But the UK leaving the EU is an eventuality which neither the UK government nor the governments of the other Member States want to come about.

In his Chatham House speech, David Cameron said: “…I am open to different ways of dealing with this issue.” Could this be interpreted as a hint that he is open to dealing with this issue unilaterally by imposing a four year contribution requirement on all UK residents entering the labour market? Such an option would be problematic. Entitlement to in-work benefits is a politically sensitive issue in UK domestic politics, and for the government (a) to be seen to fail at the Brussels negotiating table and (b) to be represented as making young British working people pay for that failure, would be an unattractive and high risk platform for a campaign to remain in the EU.

Nevertheless, there are hints at flexibility in both the Tusk letter and the Chatham House speech. What sort of flexibility might allow a deal which would be regarded as credible in the eyes of those voters with concerns about immigration, while also having a chance of being acceptable to the governments of all the other Member States, not least Eastern European Member States?

The UK might have some residual goodwill to draw on from the eight former communist countries which joined the EU in 2004, whose nationals were given immediate access to the UK labour market, while virtually every other EU country imposed transitional measures for 7 years.

One potential compromise would be to limit the 4 year qualifying period for benefits for EU migrants to a transitional period. During that transitional period, the UK could undertake any adjustment which it might consider necessary to its domestic system of benefits with a view to “reducing the draw that our welfare system can exert across Europe.” This sort of temporary special arrangement would respect the integrity of the internal market. “An exceptional solution for exceptional times” might turn out to be more achievable than a permanent licence to the UK to discriminate against migrants.

The context for an argument to British voters that this would meet British needs would be that EU migration to the UK will not continue at present levels for ever.

The recent ONS population projection (quoted by the Prime Minister in the Tusk letter but only for the estimated population of 70 million “in the next decades”) forecasts a long term trend of 185,000 per year total net migration (i.e., non-EU + EU), very considerably below the current 330,000 net (most of which – just – are non EU migrants). The 185,000 net migration forecast for combined non-EU and EU migration is approximately the level of net migration in the year 2000. Voters might accept some reassurance about the prospect of falling numbers over the next decade if the government secured a deal that required a special qualifying period for EU migrants to receive benefits that would be in place over that same period.

 

EXEMPTION FROM EVER CLOSER UNION FOR THE UK

(Tusk letter) “I want to end Britain’s obligation to work towards an “ever closer union” as set out in the Treaty. It is very important to make clear that this commitment will no longer apply to the United Kingdom. I want to do this in a formal, legally-binding and irreversible way.”

The UK government wishes to remove what it describes as the UK’s commitment to “an ever closer union among the peoples of Europe”. Originally a line in the preamble to the Treaty of Rome, this now appears both in the preamble to the TEU, and in Article 1 TEU. The preamble refers to the heads of State of the Member States being “resolved to continue the process of creating an ever closer union among the peoples of Europe”, and Article 1, says that the TEU marks a “new stage” in this process. It is possible to question to question whether this general wording is sufficiently precise to create any legal obligation at all. But the wording does suggest that however close European integration is currently, it is a continuing process, and there is more to come.

The UK government’s objection to the “ever closer union” formulation seems to be that it fails to take into account the changing nature of the EU, which is a multi-speed Union (de jure and de facto a multi-currency union, with opt-outs in other areas on the one hand, and enhanced cooperation on the other), which now positively embraces de-centralising values, such as subsidiarity, and respect for national identities and essential state functions. Indeed, Article 1 TEU refers to “an ever closer union among the peoples of Europe, in which decisions are taken as openly as possible and as closely as possible to the citizen,” with my added emphasis highlighting a reference to the principle of subsidiarity. The UK government seems to be saying – the commitment to “ever closer union” no longer fits the Union which has evolved and which is evolving, at least as regards the UK, and this should be recognised.

Admittedly, and the UK government would probably not deny this, “ever closer union” is likely to be the destiny of eurozone countries in respect of the management of the euro. But, apart from those countries with eurozone opt-outs – the UK and Denmark – there are a number of other countries which show no sign of joining the euro anytime soon, e.g., Sweden, and Poland. Whatever “ever closer union” means, it does not seem to mean the same thing for everybody.

Just leaving the law for a minute, and looking at the broader context, here is some polling reformist think-tank Open Europe commented on recently (August 2015):

“A new poll from Opinium Research (which surveyed people from the UK, France, Germany, Italy, the Netherlands, Spain and Portugal) has produced some interesting findings on the issue of ever closer union… Overall, only 35% supported moving towards ‘ever closer union’ while 49% believed the EU should stay where it is in terms of integration or that it should repatriate powers to member states (20% and 29% respectively).” For a fuller account, see http://openeurope.org.uk/blog/appeal-of-ending-ever-closer-union-stretches-well-beyond-the-uk/

Returning to the legal aspect of “ever closer union”, is it merely symbolic, or has it made an actual difference to the way the EU has evolved and will evolve in the future?

I think that the aim of “ever closer union” has played a larger role in the thinking of the Court of Justice than appears on the face of the Court’s judgments. The track record of the CJEU is not all good. It has failed to police the limits on EU competence in an effective way. It has handed down numerous judgments which have expanded EU competence, under the thin guise of interpretation. One way it has done this has been by expanding the categories of restrictions on fundamental freedoms, which has in turn expanded the lawmaking competence of the EU to regulate those restrictions.

The formulation of “ever closer union” has underpinned this approach, and it cannot be described as purely symbolic. Judge Mancini, writing extra-judicially in 1994, described the Court’s “preference for Europe” as being determined by genetic code transmitted to the Court by inter alia the primary objective of the Treaty to create ‘ever closer union among the peoples of Europe.’  Judge Mancini was an influential intellectual leader within the Court. Tellingly, he refers to “ever closer union” as the primary aim of the Treaty.

Even when the Member States wrote strong de-centralising principles into the EU treaties, in particular those of subsidiarity, and respect for national identity, the Court continued to promote centralising values (such as EU citizenship), and chose to underplay de-centralising values designed to maintain a strong role for national institutions and national democracy in the EU system. It is in my view time for the Court of Justice to adopt an interpretative approach which gives the same priority to de-centralising values of the EU legal order as it has traditionally given to centralising values.[i] Whether exempting the UK from the commitment to “ever closer union” will itself bring about such a change is another matter. A different solution might have to be sought to bring about any change in this direction, and this is addressed below, under the heading “Proposed UK safeguards against judicial default in Luxembourg.”

How could the UK be exempted from the commitment to “ever closer union”? The Tusk letter refers to doing this “in a formal, legally-binging and irreversible way.” The amendments required would involve the preamble and Article 1 TEU and the preamble of the TFEU. This would require Treaty amendment by the ordinary revision procedure.

Would achieving UK exemption from the commitment to “ever closer union” be important in the referendum? One opinion poll suggested that securing this change would have little impact on voting intentions.  What the poll does not prove is that failure to secure this change would have similarly marginal effects. This proposed change has been given considerable prominence by the Prime Minister. If the change is not secured, or is secured in a “suspect” way, for example, by means of a declaration which opponents insist has no legal effects, this could damage the campaign to remain in the EU by more than the margins suggested by the poll.

 

PROPOSED UK SAFEGUARDS AGAINST JUDICIAL DEFAULT IN LUXEMBOURG

In the Chatham House speech, the Prime Minister said (emphasis added):

“So – as was agreed at the time of the Lisbon Treaty – we will enshrine in our domestic law that the EU Charter of Fundamental rights does not create any new rights…We will also examine whether we can go one step further.

We need to examine the way that Germany and other EU nations uphold their constitution and sovereignty. For example, the Constitutional Court in Germany retains the right to review whether essential constitutional freedoms are respected when powers are transferred to Europe. And it also reserves the right to review legal acts by European institutions and courts to check that they remain within the scope of the EU’s powers, … or whether they have overstepped the mark. We will consider how this could be done in the UK.”

Mr Cameron is referring to possible unilateral measures, which do not involve renegotiation of aspects of EU law, which is why they figure in the speech, but not in the Tusk letter. As regards the first point, about introducing UK legislation to ensure that the “EU Charter of Fundamental Rights does not create any new rights”, I shall be brief. The preamble to Protocol No 30 on the application of the Charter of Fundamental Rights of the European Union to Poland and to the United Kingdom states that the Charter “does not create any new rights or principles”. Article 1 (1) states that the Charter does not extend the ability of the CJEU or UK courts to find that the laws of the UK are inconsistent with the rights, freedoms and principles that it reaffirms. On the face of it, the UK is free to adopt UK legislation to the same effect.[ii]

I shall deal at greater length with the second point – ensuring that “essential constitutional freedoms are respected when powers are transferred to Europe”, and “the right to review legal acts by European institutions and courts to check that they remain within the scope of the EU’s powers…” There is no doubt that some of the case-law of the Court of Justice has been regarded by the supreme courts of Member States as exceeding the jurisdiction conferred upon it, and in so doing encroaching in an unauthorised way upon the national legal systems. UK judges have expressed concerns of precisely this kind. In my they have been right to do so.

In some cases the Court of Justice appears to have exceeded its jurisdiction under the Treaties. Examples are to be found in its jurisprudence on Union Citizenship.

The Court has branded EU Citizenship as a status “destined to be the fundamental status of nationals of member States” (first expressed in Grzelczyk[iii]). This is based on judicial policy rather than any relevant text.

In the Rottman case, The Court of Justice deduced from this fundamental status the proposition that the acquisition and loss of national citizenship is subject to review in light of EU law.[iv] There is no textual basis in the Treaties for this and it subjects the very existence of national citizenship to EU law.  The Court’s conclusion in Rottman is also inconsistent with the treaty requirement that the Union respect the national identities of the Member States,[v] and respect their essential state functions.[vi] There is no more essential a state function than determining the conditions for acquisition and loss of national citizenship.[vii] The suspicion that the Court of Justice exceeded its powers in Rottman has led UK judges to doubt that it can be applied in the UK.

In R (GI) v Secretary of State for the Home Department,[viii] Laws L.J. questioned whether any purported EU law conditions on the conferral or revocation of UK citizenship laid down by the Court of Justice could be applied in the UK. The UK Supreme Court acknowledged that this was an issue that might have to be addressed.[ix]

The Prime Minister says that the government should consider how such problems should be addressed in the UK. Two questions arise, the first is whether action is necessary, and the second is, if it is, what action might be usefully taken?

It might be said that nothing further need be done in the UK. Our national judges have things in hand. They have made it clear that in certain exceptional circumstances they will regard judgments of the CJEU as inapplicable in the UK.  The constitutional mechanism for this is interpretation of section 2(4) of the European Communities Act, the subsection which provides that UK law shall be construed and have effect subject to directly applicable/effective EU law. That provision may be held by our courts not to apply to EU law as shaped by judgments of the CJEU which cannot be regarded as valid exercises of that Court’s jurisdiction.

There is a strong case for trusting our national judges to protect the UK constitution from constitutional failure in Luxembourg, first and foremost by addressing the problem on a case by case basis should it arise in practice. 2.That need not however exhaust the action which might be taken by the national judiciary. National supreme courts, including the UK Supreme Court, might take it upon themselves to articulate their expectations of the CJEU in a more systematic way, and to affirm, publicly and collectively, their responsibilities to uphold their national constitutional orders within the framework of the EU. One might envisage a “Brighton Declaration”,[x] but one made by national judges rather than by national governments. This might comprise a joint declaration by national supreme courts, expressing their common understanding of the principles of interpretation appropriate to judges subject to the rule of law, and perhaps going so far as to express their expectations in this regard of all courts in the European Union, including the Union courts. The Union Courts might be prevailed upon to join national supreme courts in endorsing such a common statement of principles.

Leaving the protection of the UK constitution to UK judges, is not necessarily at odds with the UK government considering whether something further might be done in support of the role of the national judiciary. That “something further” might include providing statutory recognition of the limits of EU law supremacy under the European Communities Act. It is understandable that the Prime Minister might think that the present is an appropriate time for review of the UK constitutional position. But the UK government would be well advised to consult widely and publicly on these matters before deciding on the right way forward.

 

A RED CARD FOR NATIONAL PARLIAMENTS

(Tusk letter) “… I want to enhance the role of national parliaments, by proposing a new arrangement where groups of national parliaments, acting together, can stop unwanted legislative proposals…” The letter adds: “…I want to see the EU’s commitments to subsidiarity fully implemented, with clear proposals to achieve that. As the Dutch have said, the ambition should be “Europe where necessary, national where possible”.

On 13 October 2015 a poll of German public opinion showed that 64% agreed with the proposition that a group of national parliaments should be able to block new EU measures, see http://openeurope.org.uk/blog/new-poll-majority-of-german-voters-back-red-card-for-national-parliaments/

A key question is what proportion of national parliaments would it take to trigger a red-card? As the Tusk letter indicates, “the precise threshold of national parliaments will be a matter for negotiation”.

Another question is whether a red-card mechanism should apply not only to veto new proposals, but also to recall existing legislation. The Tusk letter refers to national parliaments stopping unwanted legislative proposals, so no power of recall there. The letter also refers to seeing the EU’s “commitment to subsidiarity fully implemented”, but that does not on the face of it imply a power of recall. On the other hand, in the Chatham House speech, David Cameron said that “We believe that if powers don’t need to reside in Brussels, they should be returned to Westminster. So we want to see the EU’s commitments to subsidiarity fully implemented, with clear proposals to achieve that” (emphasis added).This coupling of returning powers to Westminster with subsidiarity implies that a power of recall might be on the agenda, after all.

To date, the powers of national parliaments to intervene directly in the EU legislative process have been confined to cases where they considered that a proposal for EU legislation was contrary to the principle of subsidiarity. I shall consider subsidiarity and the present powers of national parliaments to intervene in the EU legislative process.

 

SUBSIDIARITY – WHY IT WAS INTRODUCED, AND HOW IT HAS FAILED SO FAR

 

The rationale of subsidiarity

The principle of subsidiarity was introduced by the Maastricht Treaty to establish a brake on excessive EU lawmaking. Subsidiarity aims to limit the exercise of European lawmaking powers to subject matter which clearly requires European wide action. It does this to ensure that decisions are taken as closely as possible to the citizens of the Union – see the preamble to the Protocol on Subsidiarity and Proportionality, “wishing to ensure that decisions are taken as closely as possible to the citizens of the Union.”

 

Requirements for compliance with subsidiarity

The principle of subsidiarity imposes two pre-conditions for the adoption of EU secondary legislation. The first is that the objectives of the proposed action cannot be sufficiently achieved at national level. The second is that these objectives can be better achieved at EU level.

 

The EU Lawmaking Institutions interpret subsidiarity so that all draft EU measures can be said to pass the test

The EU political institutions have been uninhibited by subsidiarity. They have interpreted it in a way which guarantees that any proposal for EU action which the EU has competence to adopt is also compliant with subsidiarity.

If a proposed measure is an internal market measure, the institutions say that only EU wide action can remove obstacles to trade between Member States. If a proposed measure is not an internal market measure, the institutions say that the aim of adopting EU wide standards can only be achieved by adopting EU wide rules. It follows that all proposals for EU action can be presented as complying with the principle of subsidiarity.[xi]  This defeats the aim of the principle to ensure that decisions are taken as closely as possible to the citizen, and deprives subsidiarity of all effect, useful or otherwise.

 

THE WEAK ROLE OF NATIONAL PARLIAMENTS UNDER PROTOCOL 2 ON SUBSIDIARITY AND PROPORTIONALITY – “YELLOW CARDS” AND “ORANGE CARDS”

A yellow card against an EU proposal requires adverse reasoned opinions from one third of the national parliaments. If there is a yellow card, the proposer (usually the European Commission) is obliged to reconsider the proposal in light of the objections which have been made. But the Commission may simply reconsider and disagree with the national parliaments, and this is what the Commission has done so far.

An orange card against an EU proposal requires adverse votes equivalent to a simple majority of national parliaments (currently 15), PLUS the support of EITHER (a) the Commission, OR (b) 55% of the Council (currently 16 Member States), OR (c) a majority in the European Parliament!

The “orange card” procedure provides nothing in the way of a safeguard for national Parliaments which will not in practice be provided through the voting rules in the EU legislative process. Under current QMV rules 13 Member States (45%) is enough to block an EU legislative proposal irrespective of populations. And votes of as few as 4 Member States can block a measure if their populations amount to more than 35% of the EU’s population.

The orange card, like the yellow card, subordinates the policy assessments and political judgments of the national Parliaments to those of the EU institutions. National parliaments have no incentive to seek to activate this procedure. It is not surprising there have been no orange cards.

 

DEFECTS IN THE STATUS QUO – NATIONAL PARLIAMENTS HAVE NO REAL POWER

The reasons for giving national parliaments powers to “police” subsidiarity were that national parliaments have strong democratic credentials, and national parliaments have a legitimate self-interest in ensuring that decisions are taken at national level rather than at EU level. While national parliaments have incentives to see subsidiarity applied more effectively, the present mechanism under Protocol No 2 gives them no actual power to bring this about

 

SO WHERE DO WE GO FROM HERE? WHAT MIGHT A RED CARD MECHANISM ACHIEVE, AND WHAT MIGHT IT LOOK LIKE?

 

A Red Card to allow national parliaments to veto EU proposals simply because they are “unwanted”?

In favour of this would be recognition of the political nature of the veto being made available to national parliaments. But it would be difficult to get agreement on a threshold of national parliamentary votes to show a red card which was lower than that of blocking minority under qualified majority voting (QMV). Critics would argue that this was just another route for Member States to block proposals they didn’t like, and an attempt to undermine the voting rules in the Council.

 

A Red Card to enforce subsidiarity and proportionality by blocking EU proposals or recalling existing EU laws?

In favour of this sort of mechanism it could be argued that while there was a large policy and political assessment involved, the object of the exercise was to monitor and regulate constitutional failure in the EU lawmaking process, and that this justified a threshold for veto lower than that needed to block a qualified majority vote.

The new mechanism could reinstate and make legally binding criteria for compliance with subsidiarity, in particular a strict requirement that an EU proposal must aim to regulate subject matter with clear transnational aspects which cannot be regulated by national measures alone. The advantage of doing this would be to incentivise subsidiarity compliant lawmaking, and to enhance the justiciability of non compliant lawmaking in the event of proceedings before the CJEU.

 

Is the Government likely to achieve its aims?

If the government seeks to enhance national parliamentary capability to police subsidiarity and/or proportionality, it is likely to achieve some measure of success, because the UK is not alone in wanting to see more direct intervention by national parliaments in the EU lawmaking process. But what would a genuinely successful outcome look like?

My own criteria for a genuinely successful outcome would be:

  • A legally binding requirement that in order to comply with subsidiarity proposed EU rules must aim to regulate subject matter with clear transnational aspects which cannot be regulated by national rules, and which for that reason require regulation at EU level.
  • Power of veto by a group of national parliaments of EU proposals incompatible with subsidiarity and/or proportionality, with a threshold lower than the QMV blocking minority threshold (say 40% of votes allotted to national parliaments, or 25% of votes allotted to national parliaments of Member States whose population comprises at least 33% of that of the EU), and lower than that in respect of criminal matters, and proposals requiring unanimous vote in the Council.
  • A power of veto not confined to the initial legislative stage, but at any stage prior to final adoption (a “late card”).
  • A power of recall of existing legislation (with the same thresholds as above).
  • No power of review by the EU institutions of the above decisions.

Treaty amendment would be necessary to achieve these changes.

 

Reform along these lines would be a real step forward

The government could rightly present this as an example of a reform which benefitted the UK and also benefitted the whole of EU, by discouraging the EU from excessive interference in the lives of the citizens of the Member States.

 

How much would achieving “red card” reform affect the referendum?

That is a more difficult question. The UK government’s stated aim of repatriating powers to the UK seems heavily dependent on securing a “red card” veto (and perhaps recall) power for groups of national parliaments. Conspicuous failure on the government’s part is likely to have a negative effect, but it is more difficult to say how positively impressed voters will be by whatever reform the government manages to achieve. The threshold for showing a red card is likely to be significant. Otherwise critics will say, with some justification, that the red card will not change the outcomes which would otherwise emerge from the QMV procedure. But genuine progress on this issue could and probably would strengthen the campaign to remain in the EU.

 


 

[i] See Wyatt, Towards a New Judicial Approach for the 21st Century, http://www.biicl.org/event/1124

[ii] See Professor Steve Peers’ Blog on this point and others, http://eulawanalysis.blogspot.co.uk/2015/11/camerons-chatham-house-speech-full.html

[iii] C-184/99 Rudy Grzelczyk

[iv]  C-135/08 Rottman paragraph 48.

[v] In force in this form at the time of the judgment in Rottman.

[vi] Lisbon version.

[vii] It follows that I agree with Laws LJ in R (GI) v Secretary of State for the Home Department [2012] EWCA Civ. 867, at para. 43, to the effect.

[viii] [2012] EWCA Civ. 867.

[ix] See also Pham v Home Secretary [2015] UKSC 19, at paras. 55-58 (Lord Carnwath), and paras. 75-76 (Lord Mance).

[x] A declaration from the 47 member states of the Council of Europe on the future of the European Court of Human Rights, and which includes expectations as to the quality of the judgments of the Court. See https://www.gov.uk/government/news/brighton-declaration-on-echr-reform-adopted

[xi] For detailed substantiation of this analysis, see Wyatt, Evidence to the Balance of Competences Review on Subsidiarity and Proportionality, pp. 3-8, file (entitled Professor Derrick Wyatt QC) accessible at

https://www.gov.uk/government/consultations/subsidiarity-and-proportionality-review-of-the-balance-of-competences

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One thought on “Derrick Wyatt – What can the UK reform/renegotiation package really hope to achieve?

  1. Pingback: Exempting Britain from ‘ever closer union’ – where are we at? | Vocal Europe

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