Monday, 30 January 2017

Leaving Euratom: a mixed bag

I still have only provisional thoughts about the UK leaving Euratom. There is more to it than anticipated and it gets messier the more you dig into it. There is room for much confusion here in that Euratom also refers to the EU research programme which is a subset of the Horizon 2020 programme. As yet, no public announcement has been made on that.

Peaceful cooperation on nuclear energy within the EU is governed by the 1957 Euratom Treaty which established the European Atomic Energy Community (Euratom). While Euratom is a separate legal entity from the EU, it is governed by the EU's institutions.

In context though, as far as the UK is concerned, leaving the EU means leaving the Euratom Treaty. The EAEC is the treaty organisation responsible and we will be terminating our participation in that. Future participation will be by way of a cooperation agreement with the EAEC.

The Euratom research programme, however, is open to non-EU members and it grants us access to various research projects which we presently finance via the EU. That will be part of the Article 50 talks, as will any wider cooperation to replace Treaty aspects.

The big issue will be grandfathering cooperation agreements the EAEC has with other countries. That will be a matter for individual signatories. Something else for the FCO to get busy with. Unusually the EAEC makes its own agreements. It shares the same institutions such as the Commission but when the Commission negotiates agreements, it does so with its "Euratom" hat on.  

As to leaving the treaty, I spoke to couple of regulatory experts in the nuclear sector today and their view was that if it were managed well there is no real downside to becoming independent - though that is the front line view paying little regard to the wider context. Curbs on freedom of movement might well complicate participation but since the industry expands beyond the confines of the EU, that's really not a big deal.

That though is a secondary consideration. Whether or not it is a good idea is not really up for debate as the decision is already made. How we go about it is what really matters. Like most other concerns, the whole system starts to implode if we walk away from the table. It will need to be done in stages and it will not happen fast.

One of the issues is what we are calling "regulatory decontamination". Taking the UK out of the EU is hard. Taking the EU out of the UK is much more problematic. Though Brussels doesn't make all our laws, our own independent laws recognise the EU as a legal entity and our laws empower certain EU decisions and bodies. All of our industry specific laws will have to be reviewed and amended. This will have to happen in conjunction with any broader repeal bill. It is a massive undertaking.

One such example is any planning applications presently in the system where permissions are granted on the proviso that they adhere to specific EU regulations and treaty obligations that will no longer be in effect. Additionally under Articles 41 and 43 of the Euratom Treaty – developers of certain nuclear projects in the UK are currently obliged to notify the Commission in advance of any investment. Given this notification requirement originally related to pre-qualification for Euratom loans it could disappear once the UK withdraws from the EU.

One thing in the UKs favour, in terms of Euratom - is that unlike many other areas, the UK is not short of regulatory expertise. As far as European nuclear is concerned France and the UK are the main drivers. We are sector leaders at the moment and we can very easily wrest the regulatory agenda away from Brussels by reinforcing global bodies. That snatches it out of the hands of the Commission and the NGOcracy. I won't lose any sleep over that.

As with everything else though, the industry might well be in for a surprise. The double coffin lid problem very much applies. As soon as you get rid of the EU you find much of the global regulation is similar or merely implemented by the EAEC. This is one of those instances where it is widely assumed that cutting out the middleman is good for the sector.

There are aspects of EU membership that seem superficially sensible and the NGOs love it, but the industry largely regards it as an expensive nuisance. I have some sympathy with that view in that it involves rounds of consultations with countries who have no direct stake.

What we can say is that remainer screeching is not founded in rational analysis. They have yet to make the distinctions between research and the wider treaty concerns. No assessment of actual value has been made. It's just a knee jerk reaction. It's not the end of the world, the nuclear sector will still be heavily regulated and Brexit might be a shot in the arm for the UK sector. That though, depends on our government not making a massive pigs ear of it. That much is still a very pressing concern.

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