Issues that British PM Cameron must battle over to keep Britain in the EU

Britain's Prime Minister David Cameron speaks during a joint news conference with his Polish counterpart Beata Szydlo in Warsaw, Poland.
Britain's Prime Minister David Cameron speaks during a joint news conference with his Polish counterpart Beata Szydlo in Warsaw, Poland. PHOTO: REUTERS

BRUSSELS (Reuters) - British Prime Minister David Cameron faces arguments on Thursday and Friday (Feb 18 to Feb 19) with his European Union peers on the following outstanding issues in a draft reform package to help him campaign to keep Britain in the European Union:

THE EURO ZONE

One of only two EU states to neither use the euro nor be bound to adopt it in time, Britain stands alone in insisting there will never be just one currency in the bloc, and Mr Cameron demanded safeguards, particularly for London's financial sector, against being harmed by decisions taken by the euro zone.

An initial draft secured assurances to that effect but raised concern in France that different banking regulations in London and the euro zone could unfairly benefit the former.

A second draft introduces wording to strengthen the need for rules to be uniform among states inside and outside the EU banking union. Paris is still pushing for more clarity, officials said.

Mr Cameron is also pressing for Britain to able to hold up euro zone legislation if it feels its vital interests are at risk. Other states want Britain to need support from other states to trigger that move and tighter wording to ensure it has no veto.

EUROPEAN INTEGRATION

Mr Cameron has secured a repeat of an EU assurance that treaty commitments to an "ever-closer union" of the peoples of Europe are not "equivalent to the objective of political integration".

But in a nod to federalists, including Belgium and France, the amended draft says that, nonetheless, political integration "enjoys wide support in the Union".

In assuring Britain that EU states retain sole responsibility for their national security, it adds: "The benefits of collective action on issues that affect the security of all member states is recognised."

Conscious of federalist feelings in the European Parliament, which must pass some legislation to implement the deal, drafters are also looking at further clarifying the language to limit how far other states try to emulate Britain's semi-detached status.

The text already stresses that all those not in the euro zone, apart from Britain and Denmark, are obliged to join eventually.

TREATY CHANGE

Ensuring that reforms are legally binding and amount to a lasting change in the EU treaties has become a touchstone of domestic credibility for Mr Cameron. Passages of the draft text, referring to euro zone issues and that of ever closer union, which say that EU leaders agree to incorporate "the substance"of their agreements on the euro zone and sovereignty into EU treaties when next they come up for amendment remain in doubt.

EU officials say that an agreement among leaders at the summit will constitute a binding intergovernmental treaty and so a pledge to treaty change may be unnecessary. Many governments fear that a mounting euroscepticism across Europe will make it very difficult to win popular ratification for new EU treaties.

Some officials say even a mention of future "treaty change"in the proposed text may create problems of ratification and would rather it did not appear at all. However, negotiators say they recognise that it is politically important for Mr Cameron.

MIGRATION

Long seen as the trickiest of the British demands, the EU offered an "emergency brake" mechanism to help Mr Cameron fulfil promises to reduce immigration from the EU by curbing welfare benefits to EU workers for up to four years after they arrive.

Most governments have accepted that extraordinary circumstances give Britain the right to apply this "brake".

But Poland and its eastern allies want to limit to four years the period Britain can penalise their citizens. The text sets a maximum of four years during which an individual can be denied benefits. But it refers to the total period that a state can exercise the emergency brake only as "years, extendable for two successive periods of years and years".

Britain would like that to add up to at least seven - equal to the period it did not exercise its EU right to bar Eastern European workers after they joined the EU in 2004.

That early British welcome to workers from the formerly Communist east appears in the new draft, which says a right to use the emergency brake is mainly intended for countries that did not bar new members'citizens for a transition period. That wording aims to reassure those worried that states other than Britain may try to use it.

Some East European officials indicate they could accept the emergency brake being used for up to seven years - perhaps three years extendable for two years then two years.

However, they want tight limits on a proposal to let states cut child benefit for workers whose children live in poorer states by indexing them to living costs there. They want that to apply only to new migrant workers and ideally only to Britain, not the whole EU.

Britain sees the limitation to new workers as unviable. Other rich states want to be able to cut payments too.