The plan includes “solutions” in all the areas requested by Prime Minister David Cameron in his original letter to Tusk in November. On top of that the draft decision of European leaders restates the opt-outs the UK already has in a number of areas (including the euro and Schengen) and tries to broadly clarify the UK’s position in the EU.

Below, Open Europe lays out the key proposals in each section and the likely perceived strengths and weaknesses of each. In terms of the renegotiation, Open Europe will reserve judgement until the final agreement is reached (as noted, this is far from being guaranteed as the final deal). But our initial reaction is that based on this proposal the change secured from the renegotiation is likely to be a step in the right direction but unlikely to be transformative.

1) Economic governance

The main proposal in this section is improving the safeguards for non-Eurozone members. A set of principles has been laid out which should be safeguarded to ensure that there are equal rights for those inside and outside the Eurozone. There is also a mechanism to enforce these principles. If a number of members outside the banking union (exact number yet to be defined) believe any of said principles are being overridden by a certain piece of legislation it can request further discussion of the issue. The rotating Presidency of the Council of Ministers will then seek to find an agreement that takes account of the member state’s concerns. However, this process will take place “without prejudice to the normal operation of the Union legislative procedure”, meaning that the legislation can ultimately continue even if consensus is not found.

There are additional points included such as clarifying and confirming that the UK will not be involved in any future Eurozone bailouts and if EU-wide mechanisms are used that the UK and other non-euro members will be compensated. It also confirms financial supervision and macro-prudential remain under the UK’s control. An interesting point is that there could be flexibility in terms of secondary law implementing EU rules inside and outside the Banking Union. This could allow some differentiation in implementing things such as the rulebook on banks.

• Strengths: The Government will likely argue that this provides the UK with a clear mechanism to protect its interests against Eurozone caucusing. 
• Weaknesses: The mechanism ultimately does not amount to a full stop on the legislation but only a halt and a discussion. 

2) Competitiveness

This section takes the form of a declaration from the EU to continue to work towards greater single market integration – with specific mentions for services, digital and energy – as well as expanding the number of free trade agreements. There are also commitments on better regulation and subsidiarity, though these remain quite vague. There is a commitment to look at “feasible burden reduction targets in key sectors”.

• Strengths: A big question is how significantly the EU contributes to the UK’s prosperity and growth as well as what the burden to business is from EU regulation. This attempts to address some of those concerns.
• Weaknesses: It’s not clear how much further these proposals go than what is already happened or what already should be happening in the Commission. Ultimately, this will be seen largely as a restatement of what is already included in the EU treaties. Everything will lie in the hands of the Commission.

3) Sovereignty (ever closer union and red card)

There is a long section clarifying what “ever closer union” means. Including that it does not amount to “an equivalent to the objective of political integration” and does not “require that further competences be conferred upon the EU”. It recognises the UK is “not committed to further political integration into the EU” and that the Treaties provide for “different paths” of integration that “do not compel all member states to aim for a common destination.” The substance of this will be “incorporated into the Treaties at the time of their next revision”.

• Strengths: This could be seen as a useful clarification of the UK’s position in the EU and what EU membership looks like for those outside the Eurozone and Schengen. At its strongest this could be seen as a commitment by the EU not to drag the UK into further integration.
• Weakness: Given that it won’t be incorporated into the Treaties until they are next opened there will be concerns over how exactly this will apply. Furthermore, it remains unclear how exactly the European Court of Justice will interpret these conditions and the overall aims of the EU.

The deal includes a proposal for a “red card” which would allow 55% of national parliaments (based on votes assigned under the current yellow/orange card procedures) to object to draft legislation if the objection is submitted within 12 weeks. EU ministers agree to drop the legislation if the concerns of national parliaments are not met.

• Strengths: A binding role for national parliaments in the EU decision making process for the first time, bringing it closer to citizens.
• Weaknesses: Threshold set very high and would require a number of parliaments to ‘rebel’ against their governments for it to be triggered. 

4) Social benefits and free movement

The proposal explicitly acknowledges that “diversely structured” social security systems “may lead members of the workforce to be attracted to certain territories without this being a natural consequence of a well-functioning market” – a key argument made by the UK to address access to its unique system of in-work benefits. It further notes that if “overriding reasons of public interest, such as encouraging recruitment, reducing unemployment… averting the risk of seriously undermining the sustainability of social security systems, make it necessary, free movement of workers may be restricted by measures proportionate to the legitimate aim pursued.”

The four-year restriction on access to in-work benefits will be introduced via an ‘emergency brake’ that will be incorporated in the EU legislation on free movement and social security. The Commission has said that it is satisfied that “the type of exceptional situation that the proposed safeguard mechanism is intended to cover exists in the United Kingdom today. Accordingly, the United Kingdom would be justified in triggering the mechanism in the full expectation of obtaining approval.”

The Commission has pledged to bring forward proposals that would reduce the cost of paying child benefit to children who live abroad.

• Strengths: Fundamentally, the UK will be able to treat its own nationals differently to nationals from other EU member states for a specified time period – this is a significant precedent. It also means that the UK has not had to go down the potentially toxic route of denying in-work benefits to young British nationals which seemed to be on the cards at one stage. 
• Weaknesses: It is not a complete ‘ban’ in the sense that migrants’ access to benefits over the four years must be graduated to reflect their integration into the labour market. 

What legal form do the proposals take?

Donald Tusk has tabled a ‘draft decision’ of EU leaders, which would come into force the moment the UK confirms its intention to remain in the EU after the referendum. Such a decision of EU leaders taken under unanimity can only be reversed under unanimity, meaning the UK has a veto on any future changes. It will be lodged at the United Nations so that it is legally binding under international law and it commits EU leaders and the European Commission to instituting the various changes, some of which would be in place immediately after the referendum but others would require further action. [...]

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