Tuesday, 15 July 2008

European Union: Economic and monetary policy

Close coordination of economic policies and a single monetary policy, including a single currency, the euro, promote the aims of the European Union.

We advance from the current Treaty establishing the European Community to the Treaty of Lisbon.


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Article 4 of the Treaty establishing the European Community (TEC) is found in the latest consolidated version, published in the Official Journal of the European Union 29.12.2006 C 321 E/45–46:

Part One – Principles

Article 4 TEC

1. For the purposes set out in Article 2, the activities of the Member States and the Community shall include, as provided in this Treaty and in accordance with the timetable set out therein, the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition.

2. Concurrently with the foregoing, and as provided in this Treaty and in accordance with the timetable and the procedures set out therein, these activities shall include the irrevocable fixing of exchange rates leading to the introduction of a single currency, the ecu, and the definition and conduct of a single monetary policy and exchange-rate policy the primary objective of both of which shall be to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Community, in accordance with the principle of an open market economy with free competition.

3. These activities of the Member States and the Community shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.

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We look at the different stages of the treaty reform process.

First, we turn to the European Convention, the closest thing to a constituent assembly EU citizens have had. The corresponding Article is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’.

Article III-69 of the draft Treaty establishing a Constitution for Europe, OJ 18.7.2003 C 169/39:

Article III-69 Draft Constitution

1. For the purposes set out in Article I-3, the activities of the Member States and the Union shall include, as provided in the Constitution, the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition.

2. Concurrently with the foregoing, and as provided in the Constitution and in accordance with the procedures set out therein, these activities shall include a single currency, the euro, and the definition and conduct of a single monetary policy and exchange-rate policy, the primary objective of both of which shall be to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Union, in accordance with the principle of an open market economy with free competition.

3. These activities of the Member States and the Union shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a stable balance of payments.

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In the Treaty establishing a Constitution for Europe, ‘ratified’ by 18 member states, the introductory provisions on economic and monetary policy were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’.

Article III-177 is found in OJ 16.12.2004 C 310/76:

Article III-177 Constitution

For the purposes set out in Article I-3, the activities of the Member States and the Union shall include, as provided in the Constitution, the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition.

Concurrently with the foregoing, and as provided in the Constitution and in accordance with the procedures set out therein, these activities shall include a single currency, the euro, and the definition and conduct of a single monetary policy and exchange-rate policy, the primary objective of both of which shall be to maintain price stability and, without prejudice to this objective, to support general economic policies in the Union, in accordance with the principle of an open market economy with free competition.

These activities of the Member States and the Union shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a stable balance of payments.

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I found no specific mention of the economic and monetary policy in the mandate of the intergovernmental conference (IGC 2007 Mandate, Council document 11218/07, 26 June 2007).

The present TEC was to become the Treaty on the Functioning of the European Union, and the innovations as agreed in the 2004 IGC were to be inserted into the Treaty by way of specific modifications in the usual manner (points 17 and 18, pages 6 and 7).

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In Article 2, point 85 of the Treaty of Lisbon (ToL) the IGC 2007 inserted an Article 97b into the Treaty on the Functioning of the European Union (TFEU) (OJ 17.12.2007 C 306/70):

85) An Article 97b shall be inserted as the first article of Title VII, with the wording of Article 4; it shall be amended as follows:

(a) in paragraph 1, the words ‘and in accordance with the timetable set out therein’ shall be deleted;

(b) in paragraph 2, the words ‘Concurrently with the foregoing, and as provided in this Treaty and in accordance with the timetable and the procedures set out therein, these activities shall include the irrevocable fixing of exchange rates leading to the introduction of a single currency, the ecu,’ shall be replaced by ‘Concurrently with the foregoing, and as provided in the Treaties and in accordance with the procedures set out therein, these activities shall include a single currency, the euro,’.

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The TFEU table of equivalences confirms that the new Article 97b TFEU (ToL) in the original Treaty of Lisbon was later renumbered Article 119 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).

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Article 119 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/96–97:

Part Three Union policies and internal actions

Title VIII Economic and monetary policy

Article 119 TFEU
(ex Article 4 TEC)

1. For the purposes set out in Article 3 of the Treaty on European Union, the activities of the Member States and the Union shall include, as provided in the Treaties, the adoption of an economic policy which is based on the close coordination of Member States' economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition.

2. Concurrently with the foregoing, and as provided in the Treaties and in accordance with the procedures set out therein, these activities shall include a single currency, the euro, and the definition and conduct of a single monetary policy and exchange-rate policy the primary objective of both of which shall be to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Union, in accordance with the principle of an open market economy with free competition.

3. These activities of the Member States and the Union shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.

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What has been said about Article 119 TFEU?


United Kingdom

Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.4: Revised text of Part Three, Titles VII to XVII of the Treaty establishing the European Community (TEC): Other internal EC policies (Version 2, 24 October 2007) includes the current Title VII Economic and monetary policy.

Peers presented the text and numbering of Article 97b TFEU (ToL), to be renumbered Article 119 TFEU in the consolidated version, without comment (pages 4–5).

The analysis 3.3 and other useful Statewatch analyses are available through:

http://www.statewatch.org/euconstitution.htm


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The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 119 TFEU, Article 97b TFEU (ToL) in the original Lisbon Treaty (page 12):

“In substance the same as Article 4 TEC, which it updates.”

The FCO comparative table is available at:

http://www.official-documents.gov.uk/document/cm73/7311/7311.asp

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The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed ‘H. Economic and Monetary Policy’ on pages 61 to 64. The new Article 97b TFEU (ToL) was mentioned on page 61:

Article 97(b) (Constitution Article III-177) corresponds with the principles set out in Article 4 TEC in the “Principles of the Community” on the adoption of an “economic policy which is based on the close coordination of Member States’ economic policies”.

The Library Research Paper 07/86 is available at:

http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf

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The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) is a valuable resource on the Treaty of Lisbon, but it did not dwell on economic and monetary policy.

The report is accessible at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf


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Sweden

The consultation paper ’Lissabonfördraget’ was the first official Swedish description of the Lisbon Treaty amendments, and it is available at:

http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf

It was followed by the Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, published 29 May 2008:

http://www.regeringen.se/sb/d/5676/a/106277

The draft bill was given a green light by the Council on Legislation (Lagrådet):

http://www.lagradet.se/yttranden/Lissabonfordraget.pdf

The latest official government view is the ratification bill (Regeringens proposition 2007/08:168 Lissabonfördraget; 3 July 2008):

http://www.regeringen.se/content/1/c6/10/84/02/8c96cf3e.pdf

Economic and monetary policy (23.2 Ekonomisk och monetary politik) is discussed on pages 180 to 185.

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Finland

Among our standard sample of Lisbon Treaty commentaries, Finland is the first Eurozone country.

The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), discusses economic and monetary policy (Talous- ja rahapolitiikka) on pages 209 to 214.

The ratification bill briefly mentions that Article 97b TFEU (ToL), renumbered Article 119 TFEU, corresponds with Article III-177 of the Constitutional Treaty and Article 4 TEC (page 209):

”97 b artikla (uusi 119 artikla), jossa määritellään unionin talous- ja rahapolitiikan tavoitteet, vastaa perustuslakisopimuksen III-177 artiklaa ja SEY 4 artiklaa.”

The Finnish ratification bill is available at:

http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf


The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), makes the same remark under ’Ekonomisk och monetär politik’ on Article 97b TFEU (ToL), the future Article 119 TFEU, on page 212:

”Artikel 97b (blivande artikel 119), där målen för unionens ekonomiska och monetära politik definieras, motsvarar artikel III-177 i det konstitutionella fördraget och artikel 4 i EG-fördraget.”

The ratification bill in Swedish can be accessed at:

http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf

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François-Xavier Priollaud and David Siritzky offer a short introductory explanation on pages 246 and 247 of their book Le traité de Lisbonne – Commentaire, article par article, des nouveaux traités européens (TUE et TFUE) (La Documentation française, Paris, 2008).



Ralf Grahn