Wednesday, 12 November 2008

Euro area in Lisbon Treaty

The fifteen euro area national central banks form part of the European System of Central Banks (ESCB) run by the European Central Bank (ECB). The Eurosystem handles monetary policy.

Economic policy is discussed between the eurozone member states within the informal Euro Group, which convenes before the Ecofin Council meetings.

The members of the Euro Group have felt a need for formal recognition and specific rules for decision-making.

***
Current treaty

The Lisbon Treaty provisions we are going to look at have no corresponding Articles in the current Treaty establishing the European Community (TEC). Instead, we start by looking at the European Convention and the Constitutional Treaty.

***

Draft Constitution

The European Convention proposed a new section with the aim to strengthen the autonomy of the euro area (OJ 18.7.2003 C 169/44):

SECTION 3a
Provisions specific to Member States which are part of the euro area

Article III-88 Draft Constitution

1. In order to ensure that economic and monetary union works properly, and in accordance with the relevant provisions of the Constitution, measures specific to those Member States which are members of the euro area shall be adopted:

(a) to strengthen the coordination of their budgetary discipline and surveillance of it;

(b) to set out economic policy guidelines for them, while ensuring that they are compatible with those adopted for the whole of the Union and are kept under surveillance.

2. For those measures set out in paragraph 1, only members of the Council of Ministers representing Member States which are part of the euro area shall vote. A qualified majority shall be defined as the majority of the votes of the representatives of the Member States which are part of the euro area, representing at least three fifths of their population. Unanimity of those members of the Council of Ministers shall be required for an act requiring unanimity.

***

de Poncins

Étienne de Poncins commented on the proposed Article III-88 in Vers une Constitution européenne (Éditions 10/18, 2003), page 310:

« Commentaire : cet article nouveau a fait l’oobjet de nombreuses discussions tant au sein du Præsidium que lors des sessions plénières de la Convention. Il a pour objet de répondre à la demande des pays de la zone euro, exprimée à plusiers reprises au cours de la Convention, de renforcer les élements de leur cohésion et de permettre une meilleure gouvernance de la zone euro à prendre seuls les décisions qui les concernent.

La rédaction de cet article a été sensiblement améliorée au fil des semaines dans le sens souhaité par les pays de la zone euro. Une incertitude demeure sur sa portée exacte en relation avec les dispositions qui s’appliquent de façon générale à tous les États membres, c’est-à’dire les dispositions des articles III-71 sur les grandes orientations de politique économique et III-76 sur les déficits publics excessifs. Il reviendra à la Conférence intergouvernementale de clarifier ce point essentiel. »

***

Constitutional Treaty

The intergovernmental conference (IGC 2004) agreed on the essentials of the Convention proposal in the slightly redrafted Article III-194 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/85):

SECTION 4
PROVISIONS SPECIFIC TO MEMBER STATES WHOSE CURRENCY IS THE EURO

Article III-194 Constitution

1. In order to ensure the proper functioning of economic and monetary union, and in accordance with the relevant provisions of the Constitution, the Council shall, in accordance with the relevant procedure from among those referred to in Articles III-179 and III-184, with the exception of the procedure set out in Article III-184(13), adopt measures specific to those Member States whose currency is the euro:

(a) to strengthen the coordination and surveillance of their budgetary discipline;

(b) to set out economic policy guidelines for them, while ensuring that they are compatible with those adopted for the whole of the Union and are kept under surveillance.

2. For those measures set out in paragraph 1, only members of the Council representing Member States whose currency is the euro shall take part in the vote.

A qualified majority shall be defined as at least 55 % of these members of the Council, representing Member States comprising at least 65 % of the population of the participating Member States.

A blocking minority must include at least the minimum number of these Council members representing more than 35 % of the population of the participating Member States, plus one member, failing which the qualified majority shall be deemed attained.

***

Sweden

The government of non-euro Sweden described the euro area arrangements in the draft ratification bill Lagrådsremiss Fördraget om upprättande av en konstitution för Europa (2 juni 2005), page 172. The Swedish government noted the strengthening of the decision-making in the euro area, with more formal coordination of economic policies. The government recognised the need for the euro area countries to ensure well-working decision-making in the eurozone:
”Euroområdet

Genom det konstitutionella fördraget kommer beslutsfattandet i euroområdet att stärkas. Redan i dag finns ett antal frågor där euroländerna själva fattar beslut, bl.a. sanktioner i stabilitets- och tillväxtpakten, växelkurspolitik och tekniska frågor som rör euromynten. Genom det nya konstitutionella fördraget kommer euroländerna att kunna samordna sin ekonomiska politik på ett mer formellt sätt. Artikel III-194 i det konstitutionella fördraget fastställer att euroländerna ska utarbeta riktlinjerna för den ekonomiska politiken och se till att dessa överensstämmer med de riktlinjer som har antagits för hela unionen. Det finns enligt regeringens bedömning skäl för euroländerna att på olika sätt säkerställa ett väl fungerande beslutsfattande i euroområdet.”

***

Original Lisbon Treaty

In Article 2, point 100, of the original Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) inserted a new Chapter 3a Provisions specific to member states whose currency is the euro (OJ 17.12.2007 C 306/75).

PROVISIONS SPECIFIC TO MEMBER STATES WHOSE CURRENCY IS THE EURO

100) The following new Chapter 3a and new Articles 115 A, 115 B and 115 C shall be inserted:

‘CHAPTER 3a
PROVISIONS SPECIFIC TO MEMBER STATES WHOSE CURRENCY IS THE EURO

Article 115 A TFEU (ToL)

1. In order to ensure the proper functioning of economic and monetary union, and in accordance with the relevant provisions of the Treaties, the Council shall, in accordance with the relevant procedure from among those referred to in Articles 99 and 104, with the exception of the procedure set out in Article 104(14), adopt measures specific to those Member States whose currency is the euro:

(a) to strengthen the coordination and surveillance of their budgetary discipline;

(b) to set out economic policy guidelines for them, while ensuring that they are compatible with those adopted for the whole of the Union and are kept under surveillance.

2. For those measures set out in paragraph 1, only members of the Council representing Member States whose currency is the euro shall take part in the vote.

A qualified majority of the said members shall be defined in accordance with Article 205(3)(a).

***

Renumbering

The TFEU table of equivalences confirms that Article 115a TFEU (ToL) in the original Treaty of Lisbon was to be renumbered Article 136 TFEU in the consolidated version, under the title ‘Economic and monetary policy’, renumbered Title VIII, and in the renumbered Chapter 4 ‘Provisions specific to Member States whose currency is the euro’ (OJ 17.12.2007 C 306/214).

(In the consolidated version of the Lisbon Treaty, OJ 9.5.2008 C 115, the Tables of equivalences start on page 361, but the ToL numbers have been omitted.)

***

Consolidated Lisbon Treaty: TFEU

Article 136 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 115/106:

Part Three Union policies and internal actions

Title VIII Economic and monetary policy

CHAPTER 4
PROVISIONS SPECIFIC TO MEMBER STATES WHOSE CURRENCY IS THE EURO

Article 136 TFEU

1. In order to ensure the proper functioning of economic and monetary union, and in accordance with the relevant provisions of the Treaties, the Council shall, in accordance with the relevant procedure from among those referred to in Articles 121 and 126, with the exception of the procedure set out in Article 126(14), adopt measures specific to those Member States whose currency is the euro:

(a) to strengthen the coordination and surveillance of their budgetary discipline;

(b) to set out economic policy guidelines for them, while ensuring that they are compatible with those adopted for the whole of the Union and are kept under surveillance.

2. For those measures set out in paragraph 1, only members of the Council representing Member States whose currency is the euro shall take part in the vote.

A qualified majority of the said members shall be defined in accordance with Article 238(3)(a).

***

Sweden

The ratification bill of the Swedish government, Regeringens proposition 2007/08:168 Lissabonfördraget (3 July 2008), on page 183, mentions the Lisbon Treaty’s euro group arrangements in terms almost identical with the ones used concerning the Constitutional Treaty:

”Euroområdet

Genom Lissabonfördraget kommer beslutsfattandet i euroområdet att stärkas. Redan i dag finns ett antal frågor där euroländerna själva fattar beslut, bl.a. sanktioner i stabilitets- och tillväxtpakten, växelkurspolitik och tekniska frågor som rör euromynten. Genom Lissabonfördraget kommer euroländerna att kunna samordna sin ekonomiska politik på ett mer formellt sätt. Det fastställs att euroländerna ska stärka samordningen och övervakningen av dessa staters budgetdisciplin, utarbeta riktlinjerna för den ekonomiska politiken och se till att dessa överensstämmer med de riktlinjer som har antagits för hela unionen samt se till att de övervakas (artikel 115a i EUF-fördraget). Det finns, enligt regeringens bedömning, skäl för euroländerna att på olika sätt säkerställa ett väl fungerande beslutsfattande i euroområdet. ”

***

Priollaud and Siritzky

In ‘Le traité de Lisbonne ; Commentaire, article par article, des nouveaux traités européens (TUE et TFUE)’ (La Documentation Française, 2008), François-Xavier Priollaud and David Siritzky present the Lisbon Treaty provisions of Chapter 4 (Dispositions propres aux États membres dont la monnaie est l’euro) on page 258 to 260.

The authors remark that the strengthened autonomy for the eurozone is a major step forward, but they remind that the Council (Ecofin) remains the decision-making body (not the Euro Group).

***

United Kingdom FCO

‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon (Cm 7311, 21 January 2008) offers the following comment on Article 136 TFEU (on page 13):

“New. Power to adopt measures by QMV on budgetary discipline and economic policy guidelines for Member States whose currency is the euro.”

***

UK House of Commons Library

The UK House of Commons Library presented the amending treaty in ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Communities’ (Research paper 07/86, 6 December 2007), on page 62 and 63. Note that the numbering of the Articles changed in the signed treaty (original ToL):


Articles 114, 115 and 115(a) (Constitution Articles III-194, 195 and 196), “Provisions specific to Member States whose currency is the Euro”, are new.

Article 114 allows for measures on the coordination and surveillance of budgetary discipline and economic guidelines to be set specifically for the euro area. Article 115A allows for an informal ‘euro group’ to be set up, consisting of Ministers whose currency is the euro. In practice the ‘euro group’ already exists and meets informally prior to normal ECOFIN meetings. Article 115C allows the Council to adopt decisions establishing common positions relevant to EMU within international financial institutions and conferences as well as measures to ensure unified representation within international financial institutions and conferences. These measures will only cover the euro area and will be decided by Member States of the euro area. The Deutsche Bank thought the recognition of the group as a kind of Euro-ECOFIN Council would “moderately strengthen the role of the Eurogroup and improve policy coordination within the euro area.”

***

Widipedia

With regard to the euro area generally, the Wikipedia article Eurozone offers an introduction to the single currency and a number of links (last update 7 November 2008):

http://en.wikipedia.org/wiki/Eurozone



Ralf Grahn