THE UK AND THE EU
The UK and the EU
This paper provides a European Perspective on EU and the UK, in which the UK rebates is a dispelling topic for the EU members that it divides them on their wish to grant UK the said rebate, while others would like to abolish it. It will also discuss two possible solutions prepared in a briefing by Ben Patterson. Furthermore, it will explain the reason why UK would like to continue the rebate despite of diverse opinion between the EU and how it is difficult to maintain balance between the opposing sides since, UK is on the seat for presidency and it’s welfare must also be acknowledge.
EU three or EU 3 refers to the United Kingdom (Great Britain and Northern Ireland), France and Germany, with relation to the status, power and influence of these three nations within the European Union (, 2006). European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community (EC), an economic and political confederation of European nations, and other organizations (with the same member nations) that are responsible for a common foreign and security policy and for cooperation on justice and home affairs (, 2004). In addition, the EC, which is the core of the EU, originally referred to the group of Western European nations that belonged to each of three treaty organizations—the European Coal and Steel Community (ECSC), the European Economic Community (EEC), and the European Atomic Energy Community (Euratom).
The UK rebate is possibly the most controversial and debatable aspect of the Entire EU budget. It is a topic of concern regarding rebate that’s started on 1984 wherein Margaret Thatcher won her argument. The UK rebate (, 2006) is a rebate on the United Kingdom's contribution to the EU budget paid back to the UK government by the European Union. UK Prime Minister Margaret Thatcher negotiated the rebate in 1984. The main reason for the rebate was that a high proportion of the EU budget (at that time 80%) is spent on the Common Agricultural Policy (or CAP), which benefits the UK much less than other countries as it has a relatively small farming sector as a proportion of GDP. The rebate is calculated as approximately 2/3 of the amount by which UK payments into the EU exceed EU expenditure returning to the UK. The rebate that had stood for more than 20 years was recently being questioned. According to Wikipedia, the rebate is worth £3bn (GBP) a year and the UK remains one of the largest net contributors (2006).
However, in 1984 Britain negotiated a reduction of two-thirds in its net contribution, to be paid by other EU members, on the grounds that as a relatively poor member state it paid too much and received relatively little in return. France's contribution to the UK rebate is large because Germany, Austria, the Netherlands and Sweden have negotiated a 75% reduction in their share of rebate contributions. So Italy and France together pay more than half of the cost of the UK rebate (, 2005). In other words, the other entire EU member pays a contribution to the rebate basing on the on the whole size of their economy; in exempt for Germany, pay a reduce rate in reflection of their previously high contributions to the budget leaving France the biggest contributor.
Now the other EU members, including the 10 new members mainly drawn from former communist states in Eastern Europe, want to abolish or reduce that rebate, on the grounds that Britain is no longer, one of the poorer member states, and support for agriculture is a diminishing part of the EU budget. The budget compromise still needs to be approved by the European Parliament. According to (2005), the European Parliament rapporteur on the budget for 2007-2013 has announced that the compromise will be closely scrutinized. It is still unclear whether the Parliament will follow standard practice - and largely adopt the summit agreement - given that the compromise fell a long way short of the Parliament's expectations. However, the argument in favor of approval is that the very last thing the European idea needs in the current situation is an obstructive European Parliament. The French argument centers quite simply on the fact the UK rebate is no longer justified because the UK is no longer poorer than the rest of Europe, as it was in 1984 when the rebate was agreed. A senior French official also argued that Britain's historical disadvantage due to heavy EU spending on agriculture would decrease over time, since the reform of the Common Agricultural Policy (CAP) would reduce spending on agriculture to just 35% of the EU budget by 2013 (cited in , 2005).
In a briefing prepared by , it mentioned of two proposed solutions: (1) a generalized correction mechanism, and the (2) general reform of the budget. Wherein, the generalized correction mechanism will consist of three elements: (1) when a member state has to contribute more than 0.35 per cent of its GNI to the EU budget, it will receive a refund; (2) all contributions exceeding 0.35 per cent of GNI will be refunded at a rate of 66 per cent; (3) the total refund is limited to a maximum of €7.5 billion a year (, 2004). However, the “gang of six” net current contributors – the UK, Germany, France, Sweden, the Netherlands and Austria – are demanding that the Budget be capped at 1 per cent ( 2004).
The General Reform of the Budget as an alternative solution proposed which regards to future financing and CAP reform. As for future financing, as what observes; “this is the point at which any discussion immediately grinds to a halt.” Moreover, Mr. (cited in , 2005) agreed on the future financing of the EU would be very “difficult”. He added: “I think it is difficult to see these differences being bridged.” This is with regards to the reconsiderations of the rebate and the reasons to consider the rebate. German chancellor, said “the UK’s EU budget rebate is but the one of many issues to be resolved before a deal can be reached on the bloc’s future funding (cited in 2005). In addition, she said “the question of the British rebate is one of part of the whole compendium, but we'll only be able to find a solution if we can take all the outstanding issues and address them together'. Hence, in order to resolve issues among the European nation, the concern of everybody must be well heard to create solutions appropriately and respectively. On the other hand, ’s article date on the 23rd of November wherein it states that ‘Britain’s rebates isn’t such a bid deal,’ the issue is the fair financing of the EU enlargement wherein Britain have to accept five facts; these are: (1) Britain pays less than her share of the EU budget. She pays 11% when she should pay 17% (France pays 18%). This discrepancy is due to the British rebate. (2) This situation would continue under the proposal, made by the Luxemburg EU presidency last June. As a result, Britain’s net contribution to the EU (what the UK pays minus to what she receives) would be similar to France’s. (3) Britain, the “champion” of the enlargement, is being asked only to pay her fair share of the enlargement costs, nothing else. Is this scandalous? (4) Under the Luxemburg proposal, the British rebate would continue to apply in full to all farm payments. So saying that the British rebate is an anomaly which corrects another anomaly (the CAP) is irrelevant. (5) To ask for a drastic additional reform of the CAP as a precondition for Britain paying her share of the enlargement also misrepresents the facts. The CAP has undergone tow major reforms over the past three years. Subsequently, the 2003 reform, described as “radical” by Prime Minister Tony Blair, decoupled subsidies from production with the result that 90% of the EU budget is now locates to measures which do not distort international trade. The recent reform of its sugar market is further evidence of ongoing CAP reform (cited in , 2005). These five facts are calling for the attention of the EU presidency which is UK, if it can only accept the five facts then the EU president would then make proposals that are convenient to everyone which would highlight its success.
However, Research shows that the UK's rebate, negotiated in 1984, has saved the UK hundreds of billions of pounds since then. Britain's contribution to the EU between 1973 and 2003 was 181 billion pounds with the rebate, and would have been 238 billion pounds without it. Over this period the UK paid 75.6 billion pounds more into the EU than we got out. The UK's rebate is fully justified. Although it remains unclear whether a deal will be done this evening, the real issue isn't the UK's rebate but the Common Agricultural Policy, which costs taxpayers billions and harms farmers in the developing world. The Government is right to refuse to negotiate the rebate while some countries stick by the CAP (. 2005). In the (2006), it had mentioned that there has been growing pressure in recent years from various EU member states, including France, for the rebate to be scrapped. This is partly due to the fact that the recent additional member states of the EU, which are considerably poorer than the re-2004 states, will be a considerable expense on the CAP and the EU budget in general. Many put the view forward; that this makes the UK rebate harder to accommodate within the EU budget. The issue of what the EU should actually be funding is equally high on the agenda. At present, most money goes on agriculture and regional development, but the UK is keen to make this less central to the EU’s activities. Countries such as Germany and France, it is argued, should be funding their own regional programmes and subsidizing their own farmers as necessary, rather than relying on EU funds for these projects (, 2005). Holding the Presidency, the UK had both to chair the meeting and promote agreement but also to defend the UK’s national interest – not an easy task.
However, an agreement was reached during the December Council 2005 negotiations, under which the UK retains the rebate but with a gradual reduction from the level the rebate would have been had it been left unamended over the period 2007-2013. This will end the anomaly of the UK securing a rebate on expenditure made in the poorer Member States who joined in 2004. The effect of the agreement is that the UK will lose around 20% of the rebate it would have received under the present system over the course of the 2007-2013 (, 2006). Then again, the event of the UK rebate suppression would not only increase the already existing euro-skepticism among Britons but it would undermine the upcoming British referendum on the European Constitution ( 2005).
Conclusion:
The problem with the UK rebate is often seen fairly in optimistic and simplistic view of points. However, it would seem obviously unjust that every other nation has to contribute funds to the UK. The UK is one of the wealthiest nations in the world in regards to income per capita; nevertheless, the likes of Slovenia, Lithuania and Malta are all contributing to the rebate. Furthermore, it can be argued that the rebate is not necessary for the benefit of UK alone; France receives an amount greater than the UK rebate credited to the Common Agricultural Policy (CAP). This, it has been suggested, is France’s own rebate, simply by a different name. Besides, what is ideal to be done is to compromise such as the suggested solutions, which are the generalized correction mechanism, and the general reform of the budget. This was implemented in December 22, 2005 as reported by Werner Becker that the medium-term EU financial perspective essentially maintains the existing spending structures - with their focus on agricultural expenditure - for the time being. But a start has been made on the road to reform of the future spending structure, with greater priority being given in future to innovative, growth-promoting expenditure. This is also important because Europe's budget is relatively small at 1% of GNI. This is the only way that the EU budget can help to boost competitiveness in global markets and the EU can regain the trust of its citizens following the disastrous referenda in France and the Netherlands. A growth-oriented rethink of budget priorities means higher spending on innovation, research and education. This - and not agricultural expenditure - should be the most important budget item in the long term. In spite of that, the December Council has given the EU a framework that conserved the UK rebate up to 2013 which supports further CAP reform. This also, as of my opinion unfair on the part of those newly joined countries since it is agreed that their payment for the rebate would be the same of the countries who joined earlier in the EU. CAP was the first common policy for what was at the time a growing and developing political entity that brought some problems that needs adjustments. Though, its goal was to feed the whole Europe that became a major hit; but with the continuous decline on the farming population the call forth an adjustment that must be tailored to the changing environment. This is the main reason why Britain would want to reform CAP; on the other hand CAP reform was not a plan at all by France, UK’s major opponent on the UK rebates.
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