EU Referendum

Brexit: the politics of agencies


Although the beating heart of the EU bureaucracy is the European commission, centred on its landmark Berlaymont office in Brussels, an integral part of the structure is now the decentralised agency, of which there are currently over thirty examples.

Two of the more important of these are the European Banking Authority (EBA) and the European Medicines Agency (EMA), both of which are based in London, reflecting the prestige of the capital, and also bringing over 1,000 jobs and millions in economic activity.

With the advent of Brexit, however, there are moves afoot to strip London of these agencies, with Rome and Madrid leading the race to become alternative hosts. Dublin is also making a pitch. Italy and Spain have been not only the most vocal about their intentions to bring the EBA and EMA headquarters to their territory, but have also set up special groups to start preparing their candidacies.

Italian Prime Minister Matteo Renzi has created a task force to make his case, and the mayor of Milan, Giuseppe Sala, travelled to London on 6 July to promote its city as the perfect candidate to host both agencies "thanks to its excellent infrastructure, ten universities, investments aiming to further bolster the post-Expo area and a real estate market which is in full recovery".

In Spain, Deputy Prime-Minister Soraya Saez de Santa María says that the central government will work "closely and in coordination" with the Catalonian government to "fight for Barcelona as the seat of EMA". She recalled that the city became second when London was given the agency.

However, while Euractiv and these potential bidders, plus others, are assuming that Brexit will mean the UK having to get rid of its EU agencies, this isn't necessarily so. Currently, the location of the seats of EU agencies comes Article 341 of the TFEU, which requires that they shall be determined by "common accord" (i.e., unanimity) of the governments of the Member States.

In the case of the European Medicines Agency, we saw the Agreement made on 30 November 1993, with the Agency starting operations in Canary Wharf in 1995. There is a similar agreement on file to cover the location of the seat of the EBA in 2010.

Two points emerge from these agreements and the related legislation. Firstly, the agreements are unanimous so, until the UK has formally ceased to be a member of the EU, it has a veto on any relocation. Nothing can be done without the express approval of the UK Government, and the decision must be done at head of state/government level.

Secondly, there is nothing specific in the enabling treaty or related legislation, that I can find, which specifically states that the seat of a decentralised agency must be in an EU Member State. In fact, the Commission concedes that there are no pre-established criteria for the selection of agency seats. The allocation decisions are "political", for which no detailed justification is provided.

Nevertheless, there may be jurisdictional issues which suggest that an agency is better off having its seat in a Member State, but any problems arising from a location outside the EU could doubtless be overcome.

Of equal importance, though, is the participation of the UK in EU agencies. If we withdraw and rely on the WTO Option, we automatically drop out of all the agencies, and have no further part to play in them. Under those circumstances, it would very difficult to argue for the headquarters of either the EMA of the EBA to be kept in London.

If we were to retain our membership of the EEA via Efta membership, however, there is provision for participation in the EEA Agreement for participation in EU agencies and their programmes. Part VI (Articles 78-88) applies, plus Protocol 31 and Annex II.

The big problem for the UK is that Efta/EEA participation confers only limited management rights in agency affairs, and representatives are not allowed to vote. However, these are EEA provisions (specific to Annex II) and could be amended without having to touch EU treaties or regulations – provided, of course, that the UK did decide to stay in the EEA. The negotiations would be via the EEA Council and Joint Committee.

Undoubtedly, there would be a price to pay – almost certainly in cash, but also in terms of other concessions, possibly directly to Spain and Italy. One can quite imagine Spain wanting increased access to UK fisheries as its price for relinquishing its claim.

As much to the point, the whole area of post-Brexit cooperation is one of considerable complexity. For the UK to negotiate participation, and then to broker voting and enhanced management rights, is going to require considerable political capital, and an amount of time. This further adds to the pressure on seeking to complete negotiations within the initial two-year period allowed by Article 50.

Looking at the cost element, Efta/EEA states are paying €3.22 billion over the current MFF (2014-2020), for participation in 13 EU programmes. With considerably greater participation, it is hard to see the UK having to find less that £2-2.5 billion a year for its participation.

That money, of course, would not be spent directly if we were to exclude ourselves from the formal structures. However, even outside the EEA, the Commission is not ill-disposed to third country participation, relying on memoranda of understanding with interested countries.

This would indicate that the EU might agree cross-border cooperation with the UK outside the EEA framework, making an agreement which still enabled the UK to join in agency activities. But that too would come with a substantial price tag.

These are just the sort of complications that are going to make Brexit negotiations time-consuming and expensive, but which the likes of Bernard Jenkin, Cash, Redwood and others, seem determined to ignore.

In the real world, though, Richard Bergström, head of the European Federation of Pharmaceutical Industries and Associations, says that the process of moving the EMA would be "very messy". In his view, its expertise would be damaged as "huge numbers" of people with deep institutional knowledge might quit the agency, putting at risk the quality of its regulatory work.

Avoiding that is going to take careful, meticulous negotiations. We cannot afford even this bit of Brexit to be "very messy". People's lives, jobs and a lot more besides are at stake.