Not many people would have heard of the European Atomic Energy Community (Euratom) until recently and even fewer will have had it in the front of their minds when voting on the UK’s membership of the EU. And yet the current furore over nuclear cooperation has the potential to cause a chain reaction that derails Brexit, or at least fundamentally alters its shape.

As most people now presumably know, Euratom is effectively a mini-EU which applies the principles of the Single Market specifically to the nuclear sector. Its functions include promoting research, establishing and applying safety standards, facilitating investment, supervising trade in nuclear materials, guaranteeing free movement of specialist workers, and negotiating agreements with non-EU countries and international organisations. In common with other EU institutions, it is subject to the jurisdiction of the European Court of Justice (ECJ).

Euratom has risen to prominence because of the UK government’s announcement that, as part of the process of leaving the EU, it would also withdraw from Euratom. This announcement was made back in January and most of the current concerns were raised at the time. But these fears have now resurfaced as doubts about the government’s ability to get a good deal in the Article 50 negotiations have grown. Indeed, the risks associated with quitting Euratom are being seen by many as a perfect illustration of those posed by the entire Brexit project, especially in the event of ‘no deal’.

There are essentially three concerns. Top of many lists is access to medical isotopes which the UK must import from other EU member states, including France, Belgium and the Netherlands. Euratom currently has an important role in monitoring this trade and the fear is that cancer patients, in particular, might be denied treatment if this trade is disrupted.

Second, a significant part of the UK energy industry is dependent on imports of nuclear fuel both from the EU and further afield, including Australia, Canada and Kazakhstan. This trade is covered by the cooperation agreements that Euratom has negotiated with these countries and, on paper at least, could also be disrupted if the UK leaves.

Third, Euratom is heavily involved in several important research projects. This includes the world’s largest fusion experiment, the International Thermonuclear Experimental Reactor (ITER), located in France. But there is also a smaller version, known as the Joint European Torus (JET), which is based in Culham near Oxford and is largely funded by the EU. So far, the UK government has only promised to underwrite its share of this facility’s running costs until 2020.

This may well prompt you to ask – as many are – why the UK is leaving Euratom at all. The government has argued that this is a legal necessity because memberships of the EU and of Euratom are inseparable. Some lawyers have disputed this, including in evidence to the House of Commons Business, Energy and Industrial Strategy Committee. But whatever the legal niceties, the bigger issue is probably that continued membership of Euratom on the current terms would conflict with at least two of Prime Minister May’s ‘red lines’: free movement of workers and jurisdiction of the ECJ.

In reality, it is hard to see why some way cannot be found to get around this. For a start, almost everyone – including other EU countries who benefit from nuclear trade with the UK and sharing of expertise – agrees that the UK’s continued participation in the activities of Euratom would be a good thing and in the interests of all parties.

What’s more, full membership is not necessary to gain these benefits (just as you do not have to be a member of the EU’s Single Market to have access to it). Euratom already has many non-EU partners with whom it cooperates closely, including Switzerland (which has associate member status) and more distant countries including Uzbekistan and South Africa. Non-EU participants in ITER already include China, India, Japan, Korea, Russia and the US.

To be clear, it will be difficult to get everything done by March 2019. The Nuclear Industry Association has summarised the challenges well. In particular, leaving would require the UK to establish new arrangements for safety inspections currently undertaken by Euratom officials, and the rapid renegotiation of cooperation agreements with non-EU countries.

Nonetheless, as the UK is already an active member of Euratom and has substantial nuclear expertise of its own, it should be much more straightforward to replicate the existing arrangements so that the current relationships continue after Brexit than if the UK were starting from scratch. Preparations to establish a UK nuclear safeguards regime have already begun.

Consistent with this, the UK’s position paper on ‘Nuclear materials and safeguards issues’, published today, correctly notes that the UK is a leader in nuclear safety and has been a strong and active member of the International Atomic Energy Agency (IAEA) since 1957 – well before joining Euratom. The paper also underlines the UK’s intention to develop Nuclear Cooperation Agreements with non-EU states, including the US, Canada, Australia and Japan, and ensure that existing contracts for the supply of nuclear material will remain valid after Brexit. This is an ambitious agenda within the March 2019 timetable, but not impossible.

The exact form of any future relationship with Euratom itself will depend on how firmly the UK government wishes to hold to the ‘red lines’. Switzerland is obliged to accept the free movement of specialist workers and the jurisdiction of the ECJ, though this would hardly be a huge burden on the UK if confined to the nuclear sector. If the government really felt that these concessions would be the thin end of a dangerous wedge, copying the sort of deal that Euratom has with, for example, the United States, would be a viable alternative.

But let’s suppose that this view is complacent and that a rethink is required. One option would simply be to remain a full member of Euratom permanently. However, it is hard to see how this could achieved given that no other non-EU country has this status. Perhaps more importantly, withdrawing the UK’s application to leave Euratom could create an open goal for those arguing that it is not too late to reverse the decision to leave the EU itself. Some Remain-supporting scientists have already argued that Euratom is ‘the perfect test case for revoking Article 50’. This would then have the potential to derail Brexit altogether.

A more palatable option might be some sort of transitional period where the current arrangements continue until new arrangements can be put in place. This might mean a Swiss-style associate membership as a stepping stone to something more tailored to the UK’s needs. That would be less than ideal, but would at least allow the UK to avoid a cliff-edge departure which could affect trade and investment in the nuclear sector and many other areas, from energy supply to healthcare.

Overall, the worries of experts in the field should never be dismissed lightly – but scare stories about the end of cancer treatment on the NHS have taken ‘Project Fear’ to new lows. Viewed more positively, a successful resolution of the concerns over Euratom could be a template for fixing a lengthy list of other potential problems – including the ‘Open Skies’ agreement, the regulation of pharmaceuticals, and cooperation in respect of the SIS crime database – where ‘Project Fear’ is also still at work.

And in all of this, it is important not to lose sight of the long-term benefits that Brexit should bring, including more open trade with the rest of the world and better (not always less) regulation. The prospect of a few years of hard work on the departure terms – including the UK’s relationship with Euratom and deals with nuclear partners in the rest of the world – should not blind us to potential gains extending many decades into the future.

 

Julian Jessop is Chief Economist at the IEA. He has thirty years of experience as a professional economist in the public and private sectors, including senior positions at HM Treasury, HSBC and Standard Chartered Bank. Prior to joining the IEA in March he was a Director and Chief Global Economist at the leading independent consultancy, Capital Economics. Julian has a First Class degree in economics from Cambridge University and post-graduate qualifications in both economics and law.

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