Brussels E.C?

As Arthur Beesley tells us in the Irish Times about the country which still a few days ago had a driving role in the process of European integration, ”Belgian political stalemate continues as Flemish parties reject compromise”:

THE TWO largest Dutch-speaking parties in Belgium have rejected new compromise proposals to broker a power-sharing deal with their French-speaking counterparts, prolonging a political saga that has left the country in the control of a caretaker government for 208 days.

Little by little I start wondering if the European Union should acquire Brussels with surroundings and make it the European Capital (E.C.), administered as an EU territory with 23 official languages.

The non-discussions between the linguistic communities and regions of Belgium could then be limited to the rest of the country and the ”negotiations” could continue until the state falls apart from exhaustion.


Le Taurillon

Even on a more serious note, these questions are now more widely discussed. There are three recent articles worth mentioning, with viewpoints on both Belgium and Europe, in the eurozine Le Taurillon. The writers discuss Belgian as well as European aspects:

Marine Cornelis: Les difficultés gouvernementales en Belgique, quelles leçons pour l'Europe (4 January 2011)

Quel rôle pour l'UE en cas de scission de la Belgique ? 1/2

Quel rôle pour l'UE en cas de scission de la Belgique ? 2/2


Johan Vande Lanotte

The Wikipedia article ”2010-2011 Belgian government formation” follows the (non)events on the ground until two Flemish parties rejected the mediation proposal by Johan Vande Lanotte, who did not publish the proposal, so we do not know by how much the federal state would be further hollowed out even by the failed proposal.


Fallout

Bloomberg offers a picture of the background as well as of the economic fallout of the rejected proposal: Belgium's Leaders seek To Exit From Political Impasse as Bond Spreads Widen (7 January 2011)

Long term we can ask if it is possible or even reasonable to keep a couple together if one of the partners has decided to split.



Ralf Grahn



P.S. Strasbourg Observers is the legal blog team of five researchers led by Professor Eva Brems at the Human Rights Centre of Ghent University. Events these last days have shown why human and fundamental rights need constant strengthening in Europe. Here is the mission statement: Blog commenting on developments in the case-law of the European Court of Human Rights.

EU TFEU: Safeguard measures restricting free movement of capital

“Living in interesting times” as regards international financial markets, it may be good to know that the current Treaty establishing the European Community (TEC) and the Treaty on the Functioning of the European Union (TFEU) foresee temporary safeguard measures to protect economic and monetary union (EMU) in exceptional circumstances.


***

The Council’s provisional consolidated version of the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) has been available since 16 April 2008. Go to the following Lisbon Treaty web page and choose your preferred treaty language (out of 23):

http://consilium.europa.eu/cms3_fo/showPage.asp?id=1296&lang=en

***

Article 66 TFEU is presented as it stands after the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL) and provisionally consolidated by the Council of the European Union (document 6655/08; page 95), with the location of the provision added from the table of equivalences (page 460 to 462):

Part Three ‘Policies and internal actions of the Union’

Title IV TFEU (ex Title III) ‘Free movement of persons, services and capital’

Chapter 4 ‘Capital and payments’

Article 66 TFEU
(ex Article 59 TEC)

Where, in exceptional circumstances, movements of capital to or from third countries cause, or threaten to cause, serious difficulties for the operation of economic and monetary union, the Council, on a proposal from the Commission and after consulting the European Central Bank, may take safeguard measures with regard to third countries for a period not exceeding six months if such measures are strictly necessary.

***

The original unconsolidated Treaty of Lisbon (ToL) with the amendments to the Treaty on European Union and the Treaty establishing the European Community, signed at Lisbon, 13 December 2007, is available in 23 treaty languages through:

http://eur-lex.europa.eu/JOIndex.do?year=2007&serie=C&textfield2=306&Submit=Search&_submit=Search&ihmlang=en

***

Article 2 ToL (containing the TEC amendments) had no specific amendments to Article 59 TEC. Cf. point 61 and 62 (OJ 17.12.2007 C 306/56).

‘Acting by a qualified majority’ was deleted according to horizontal amendment 2(d) and the abbreviation ‘ECB’ replaced by ‘European Central Bank’ in line with horizontal amendment 2(j).

***

For the consolidated treaties in force in your preferred language version among the then 21 treaty languages (Bulgarian and Romanian missing), go to:

http://eur-lex.europa.eu/JOIndex.do?year=2006&serie=C&textfield2=321E&Submit=Search&_submit=Search&ihmlang=en

***


The current Article 59 of the Treaty establishing the European Community (TEC) is found in the latest consolidated version of the treaties (OJ 29.12.2006 C 321 E/65):

Article 59 TEC

Where, in exceptional circumstances, movements of capital to or from third countries cause, or threaten to cause, serious difficulties for the operation of economic and monetary union, the Council, acting by a qualified majority on a proposal from the Commission and after consulting the ECB, may take safeguard measures with regard to third countries for a period not exceeding six months if such measures are strictly necessary.

***

The European Convention introduced small stylistic changes in Article III-48 of the draft Treaty establishing a Constitution for Europe, but without material impact (OJ 18.7.2003 C 169/35):

Article III-48 Draft Constitution

Where, in exceptional circumstances, movements of capital to or from third countries cause, or threaten to cause, serious difficulties for the operation of economic and monetary union, the Council of Ministers, on a proposal from the Commission, may adopt European regulations or decisions introducing safeguard measures with regard to third countries for a period not exceeding six months if such measures are strictly necessary. It shall act after consulting the European Central Bank.

***

The differences between the draft Constitution and Article III-159 of the Treaty establishing a Constitution for Europe are minimal. ‘Operation’ became ‘functioning’ and the ‘Council of Ministers’ had become the ‘Council’. See OJ 16.12.2004 C 310/67.

***

We live “in interesting times” as regards the stability of the financial markets, so Article 66 TFEU may be of more than purely theoretical interest.

The provision offers the EU possibilities to safeguard the operation of economic and monetary union (EMU) with regard to third countries.

These measures can not be taken lightly. ‘Exceptional circumstances’, ‘serious difficulties’ and ‘strictly necessary’ all circumscribe recourse to such measures. In addition, six months is the maximum duration of a measure (but the wording does not exclude a new decision).


Ralf Grahn

EU TFEU: Exceptions to free movement of capital

Article 58 of the Treaty establishing the European Community (TEC) provides for exceptions to the free movement of capital and payments, and these are taken over by the Treaty of Lisbon in Article 65 of the Treaty on the Functioning of the European Union (TFEU). The Lisbon Treaty provision adds a new possibility to take restrictive measures as regards third countries.


***

Article 65 of the Treaty on the Functioning of the European Union (TFEU) is presented as it stands after the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL) and provisionally consolidated by the Council of the European Union (document 6655/08; page 94-95), with the location of the provision added from the table of equivalences (page 460 to 462):

Part Three ‘Policies and internal actions of the Union’

Title IV TFEU (ex Title III) ‘Free movement of persons, services and capital’

Chapter 4 ‘Capital and payments’

Article 65 TFEU
(ex Article 58 TEC)

1. The provisions of Article 63 shall be without prejudice to the right of Member States:

(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;

(b) to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.

2. The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with the Treaties.

3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 63.

4. In the absence of measures pursuant to Article 64(3), the Commission or, in the absence of a Commission decision within three months from the request of the Member State concerned, the Council, may adopt a decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties in so far as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.

***

The intergovernmental conference (IGC 2007) mentions Article 58 of the Treaty establishing the European Community (TEC) in Article 2, point 61, of the Treaty of Lisbon (ToL). See OJ 17.12.2007 C 306/56:

61) In Article 58, the following new paragraph 4 shall be added:

‘4. In the absence of measures pursuant to Article 57(3), the Commission or, in the absence of a Commission decision within three months from the request of the Member State concerned, the Council, may adopt a decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties insofar as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.’.

***

The latest consolidated version of the current Article 58 TEC looks like this (OJ 29.12.2006 C 321 E/64):

Article 58 TEC

1. The provisions of Article 56 shall be without prejudice to the right of Member States:

(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;

(b) to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.

2. The provisions of this Chapter shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with this Treaty.

3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article 56.

***

The European Convention made only cosmetic amendments to Article 58 TEC in Article III-47 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/35).

***

Article III-158 of the Treaty establishing a Constitution for Europe replaced the word ‘steps’ of the draft Constitution with ‘measures’ as in the current Article 58 TEC, so only the added words in the phrase ‘provisions laid down by law or regulation’ in subparagraph 1(b) remained of the cosmetic changes proposed by the draft.

But the IGC 2004 made one substantial change by adding a fourth paragraph to Article III-158, reproduced below (OJ 16.12.2004 C 310/67):

Article III-158 Constitution

1. Article III-156 shall be without prejudice to the right of Member States:

(a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;

(b) to take all requisite measures to prevent infringements of national provisions laid down by law or regulation, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.

2. This Section shall be without prejudice to the applicability of restrictions on the right of establishment which are compatible with the Constitution.

3. The measures and procedures referred to in paragraphs 1 and 2 shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments as defined in Article III-156.

4. In the absence of a European law or framework law provided for in Article III-157(3), the Commission or, in the absence of a European decision of the Commission within three months from the request of the Member State concerned, the Council, may adopt a European decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Constitution insofar as they are justified by one of the objectives of the Union and compatible with the proper functioning of the internal market. The Council shall act unanimously on application by a Member State.

***

We see that the fourth paragraph added by the Treaty of Lisbon to what becomes Article 65 TFEU is in essence the corresponding Article III-158(4) of the Constitutional Treaty. The changes in wording relate to general terminological differences between the two treaties.

This ‘parentage’ is mentioned in the German and Finnish ratification bills and in the consultation paper of the Swedish government.

Thus, the amendment fell under the general provision of the IGC 2007 Mandate regarding amendments to the EC Treaty (Council document 11218/07, page 7, point 18): The innovations agreed in the 2004 IGC will be inserted into the Treaty by way of specific modifications in the usual manner.


Ralf Grahn

EU TFEU: Free movement of capital and third countries

The preceding Article 56 of the Treaty establishing the European Community (TEC) and Article 63 of the Treaty on the Functioning of the European Union (TFEU) prohibited all restrictions on the movement of capital and on payments between member states and between member states and third countries.

But the primary goal has been to guarantee the free flow of capital within the European Community (European Union), with third countries subject to exceptions detailed in Article 57 TEC and 64 TFEU.

As regards third countries liberalisation is till professed, but derogations confessed.


***

Article 64 of the Treaty on the Functioning of the European Union (TFEU) is presented as it stands after the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL) and provisionally consolidated by the Council of the European Union (document 6655/08; page 93-94), with the location of the provision added from the table of equivalences (page 460 to 462):

Part Three ‘Policies and internal actions of the Union’

Title IV TFEU (ex Title III) ‘Free movement of persons, services and capital’

Chapter 4 ‘Capital and payments’

Article 64 TFEU
(ex Article 57 TEC)

1. The provisions of Article 63 shall be without prejudice to the application to third countries of any restrictions which exist on 31 December 1993 under national or Union law adopted in respect of the movement of capital to or from third countries involving direct investment – including in real estate – establishment, the provision of financial services or the admission of securities to capital markets. In respect of restrictions existing under national law in Bulgaria, Estonia and Hungary, the relevant date shall be 31 December 1999.

2. Whilst endeavouring to achieve the objective of free movement of capital between Member States and third countries to the greatest extent possible and without prejudice to the other Chapters of the Treaties, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt the measures on the movement of capital to or from third countries involving direct investment – including investment in real estate – establishment, the provision of financial services or the admission of securities to capital markets.

3. Notwithstanding paragraph 2, only the Council, acting in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament, adopt measures which constitute a step backwards in Union law as regards the liberalisation of the movement of capital to or from third countries.

***

The specific Lisbon Treaty amendments to Article 57 of the Treaty establishing the European Community (TEC) are mentioned in point 60 (OJ 17.12.2007 C 306/55):

CAPITAL

60) In Article 57(2), the words ‘the Council may, acting by a qualified majority on a proposal from the Commission, adopt measures’ shall be replaced by ‘the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt the measures’ and the last sentence of paragraph 2 shall become paragraph 3, reading as follows:

‘3. Notwithstanding paragraph 2, only the Council, acting in accordance with a special legislative procedure, may unanimously, and after consulting the European Parliament, adopt measures which constitute a step backwards in Union law as regards the liberalisation of the movement of capital to or from third countries.’

***

For comparison, the current Article 57 TEC looks like this (in the latest consolidated version of the treaties in force, OJ 29.12.2006 C 321 E/64):

Article 57 TEC

1. The provisions of Article 56 shall be without prejudice to the application to third countries of any restrictions which exist on 31 December 1993 under national or Community law adopted in respect of the movement of capital to or from third countries involving direct investment – including in real estate – establishment, the provision of financial services or the admission of securities to capital markets. In respect of restrictions existing under national law in Estonia and Hungary, the relevant date shall be 31 December 1999.

2. Whilst endeavouring to achieve the objective of free movement of capital between Member States and third countries to the greatest extent possible and without prejudice to the other Chapters of this Treaty, the Council may, acting by a qualified majority on a proposal from the Commission, adopt measures on the movement of capital to or from third countries involving direct investment – including investment in real estate – establishment, the provision of financial services or the admission of securities to capital markets. Unanimity shall be required for measures under this paragraph which constitute a step back in Community law as regards the liberalisation of the movement of capital to or from third countries.

____________________________________________________________________
A footnote to Article 57 TEC adds the following information: Article amended by the 2003 Act of Accession. See Appendix at the end of this publication.

***

The European Convention proposed the following Article III-46 of the draft Treaty establishing a Constitution for Europe (18.7.2003 C 169/34-35):

Article III-46 Draft Constitution

1. Article III-45 shall be without prejudice to the application to third countries of any restrictions which existed on 31 December 1993 under national or Union law adopted in respect of the movement of capital to or from third countries involving direct investment — including in real estate —, establishment, the provision of financial services or the admission of securities to capital markets.

2. European laws or framework laws shall enact measures on the movement of capital to or from third countries involving direct investment — including investment in real estate —, establishment, the provision of financial services or the admission of securities to capital markets.

The European Parliament and the Council of Ministers shall endeavour to achieve the objective of free movement of capital between Member States and third countries to the greatest extent possible and without prejudice to other provisions of the Constitution.

3. Notwithstanding paragraph 2, only a European law or framework law of the Council of Ministers may enact measures which constitute a step back in Union law as regards the liberalisation of the movement of capital to or from third countries. The Council of Ministers shall act unanimously after consulting the European Parliament.

***

Article III-157 of the Treaty establishing a Constitution for Europe added the effects of the 2003 Accession Treaty (OJ 16.12.2004 C 310/66-67):

Article III-157 Constitution

1. Article III-156 shall be without prejudice to the application to third countries of any restrictions which existed on 31 December 1993 under national or Union law adopted in respect of the movement of capital to or from third countries involving direct investment — including investment in real estate, establishment, the provision of financial services or the admission of securities to capital markets. With regard to restrictions which exist under national law in Estonia and Hungary, the date in question shall be 31 December 1999.

2. European laws or framework laws shall enact measures on the movement of capital to or from third countries involving direct investment — including investment in real estate, establishment, the provision of financial services or the admission of securities to capital markets.

The European Parliament and the Council shall endeavour to achieve the objective of free movement of capital between Member States and third countries to the greatest extent possible and without prejudice to other provisions of the Constitution.

3. Notwithstanding paragraph 2, only a European law or framework law of the Council may enact measures which constitute a step backwards in Union law as regards the liberalisation of the movement of capital to or from third countries. The Council shall act unanimously after consulting the European Parliament.

***

What, if anything, happened to Article 57 TEC during the post-Nice treaty reform cycle?

Article III-46(1) of the draft Constitution was essentially the same as Article 57(1) TEC, but the Accession Act 2003 added the last sentence on national law in Estonia and Hungary and the stand-still date of 31 December 1999 to the latest consolidated TEC version.

Article III-46(2) of the draft Constitution was arguably easier to read than Article 57(2) TEC. The European Convention proposed its general terminology concerning legislative acts – European laws or framework laws – and substantially the extension of the ordinary legislative procedure (co-decision) to the movement of capital to or from third countries.

Backsliding on achieved liberalisation regarding third countries became Article III-46(3) in the draft Constitution instead of the last sentence of Article 57(2) TEC. Unanimity in the Council was retained, but the European Parliament was to be consulted.

Compared to the draft Constitution the Constitutional Treaty inserted the last sentence on the new member states Estonia and Hungary into the first paragraph of Article III-157.

In Article III-157 Constitution ‘a step back’ became ‘a step backwards’, but otherwise the draft and the Constitution have the same wording.

The Treaty of Lisbon, Article 64 TFEU, takes over as horizontal amendments ‘Union law’ instead of ‘Community law’ and ‘the Treaties’ instead of ‘this Treaty’ from the draft Constitution and the Constitutional Treaty.

The new entrant Bulgaria is added to Estonia and Hungary at the end of paragraph 1. The dash between ‘real estate’ and ‘establishment’, mislaid by the Constitution Article II-157(1) and (2), was retained in Article 64(1) and (2) TFEU as part of the Article 57(1) and (2) TEC text.

The ordinary legislative procedure is adopted in Article 64(2) TFEU, substantially in line with the European Convention’s proposal and the agreement by the IGC 2004.

When the last sentence of Article 57(2) TEC is deleted and replaced by the third paragraph the Lisbon Treaty Article 64 TFEU adopts, the wording resembles a hybrid between all the reform stages.

***

Article 64(1) is a stand-still clause as regards capital movements to and from third countries. Its subject matter covers direct investment – including in real estate – establishment, the provision of financial services or the admission of securities to capital markets.

The stand-still date is 31 December 1993 for Union law and national law in general, except for Bulgaria, Estonia and Hungary where the date is 31 December 1999.

The Appendix to the latest consolidated version of the current treaties ‘Amendments fo primary legislation further to the accession of the Republic of Bulgaria and Romania to the European Union’ contains the following text concerning the Treaty establishing the European Community (OJ 29.12.2006 C 321 E/327):

1. The last sentence of Article 57(1) shall be replaced by the following:

‘In respect of restrictions existing under national law in Bulgaria, Estonia and Hungary, the relevant date shall be 31 December 1999.’

This has now been inserted into the Treaty of Lisbon (TFEU).

New restrictions can be introduced only according to the special legislative procedure requiring unanimity in the Council (paragraph 3).

***

As regards further reading, I refer the interested reader to yesterday’s post ‘EU TFEU: Free movement of capital’.


Ralf Grahn

EU TFEU: Free movement of capital

The current Treaty establishing the European Community as well as the Treaty on the Functioning of the European Union (following from the Treaty of Lisbon) prohibit restrictions on the movement of capital and on payments between member states as well as between member states and third countries.



***

We move to a Chapter 4 ‘Capital and payments’. Article 63 of the Treaty on the Functioning of the European Union (TFEU), is presented as amended by the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL) and provisionally consolidated by the Council of the European Union (document 6655/08; page 93), with the location of the provision added from the table of equivalences (page 460 to 462):

Part Three ‘Policies and internal actions of the Union’

Title IV TFEU ‘Free movement of persons, services and capital’

Chapter 4 ‘Capital and payments’

Article 63 TFEU
(ex Article 56 TEC)

1. Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.

2. Within the framework of the provisions set out in this Chapter, all restrictions on payments between Member States and between Member States and third countries shall be prohibited.

***

The IGC 2007 made no specific amendment to Article 56 TEC. Cf. OJ 17.12.2007 C 306/55. The provision is only renumbered.

***

The current key provision on capital and payments, Article 56 TEC, is found in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/63.

***

The European Convention preferred a shorter version of the opening provision of Section 4 ‘Capital and payments’ in the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/34):

SECTION 4
Capital and payments

Article III-45 Draft Constitution

Within the framework of this Section, restrictions both on the movement of capital and on payments between Member States and between Member States and third countries shall be prohibited.

***

The IGC 2004 adopted the wording of the draft in Article III-156 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/66).

***

We see that no substantial change has been adopted during the various stages of the treaty reform process after the Treaty of Nice, but the wording proposed by the European Convention and agreed by the IGC 2004 would arguably have been more elegant.

In this, as in many other cases, the IGC 2007 decided to save ink by preserving the current wording when the reasons for change would have been purely aesthetic.

***

Some suggestions for further reading, first two standard books:

Josephine Steiner, Lorna Woods and Christian Twigg-Flesner: EU Law (Oxford University Press, Ninth Edition, 2006), Chapter 16 Free movement of payments and capital (pages 344-354)

Paul Craig and Gráinne de Búrca: EU Law, Text, Cases, and Materials (Oxford University Press, Fourth Edition, 2007), page 723 to 727 in Chapter 20 Free movement of capital and economic and monetary union

Then a few web resources:

The Commission’s introductory web page ‘Free movement of capital’ offers a quick overview and additional links (last updated 30 May 2007):

http://ec.europa.eu/internal_market/capital/index_en.htm

The web page ‘Treaty provisions’ presents the basic rules and further links (last update 27 August 2007):

http://ec.europa.eu/internal_market/capital/framework/treaty_en.htm

The European Parliament fact sheet 3.2.4 ‘Free movement of capital’ is an alternative presentation of the basics (last updated 25 October 2006):

http://www.europarl.europa.eu/facts/3_2_4_en.htm

The Commission’s Scadplus pages offer summaries or links to introductory pages on European Community legislation. In this case the starting point could be the web page ‘Single market for capital’ with more than thirty links on different aspects (no date):

http://europa.eu/scadplus/leg/en/s70001.htm

EU Law Blog has three posts on recent ECJ cases archived under ‘Capital: Free movement’:

http://eulaw.typepad.com/eulawblog/free_movement_of_capital/index.html

An example of the Court of Justice’s reasoning about the relationship between the provision of services and free movement of capital is Case C-452/04:

http://curia.europa.eu/jurisp/cgi-bin/gettext.pl?where=&lang=en&num=79938996C19040452&doc=T&ouvert=T&seance=ARRET


Ralf Grahn

EU TFEU: Transport, banking and insurance services

Important sectors of economic activity, such as transport, banking and insurance (financial services) are treated distinctly in the context of free movement of services within the European Community (European Union).

We look at the current Article 51 of the Treaty establishing the European Community and its position in the EU Treaty of Lisbon.

Further reading is suggested for readers interested in EU law and policies concerning the transport and financial services sectors.


***

The Treaty of Lisbon (ToL) makes no specific amendment to Article 51 of the Treaty establishing the European Community (TEC). Cf. point 57 and 58 in Official Journal (OJ) 17.12.2007 C 306/55.

***

The current Article 51 TEC is found in the latest consolidated version of the treaties, TEU and TEC, in OJ 29.12.2006 C 321 E/62:

Article 51 TEC

1. Freedom to provide services in the field of transport shall be governed by the provisions of the title relating to transport.

2. The liberalisation of banking and insurance services connected with movements of capital shall be effected in step with the liberalisation of movement of capital.

***

According to the Lisbon Treaty, the provision should look like this in the Treaty on the Functioning of the European Union (TFEU) when we add the location of the Article and the future renumbering from the Tables of equivalences (OJ 17.12.2007 C 306/207-208) and note that no horizontal amendments seem to apply (Cf. OJ 17.12.2007 C 306/41-44):

Part Three ‘Policies and internal actions of the Union’

Title III (renumbered Title IV) ‘Free movement of persons, services and capital’

Chapter 3 ‘Services’

Article 51 TFEU (ToL), renumbered Article 58 TFEU

1. Freedom to provide services in the field of transport shall be governed by the provisions of the title relating to transport.

2. The liberalisation of banking and insurance services connected with movements of capital shall be effected in step with the liberalisation of movement of capital.

***

The first paragraph of Article III-31 of the draft Treaty establishing a Constitution for Europe referred to the ‘Section’ instead of the ‘title’ relating to transport, but proposed no other change (OJ 18.7.2003 C 169/33).

***

Only the referral to ‘Section 7 of Chapter III’ relating to transport differed from the other versions in Article III-146 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/63).

***

In short, between Nice and Lisbon only technical adjustments have been proposed, boiling down to the renumbering effected by the Treaty of Lisbon.

***

Article 51 TEC and ToL, renumbered Article 58 TFEU, encompasses the principle of freedom to provide services in the field of transport, but excepts transport services from the scope of the general chapter on services (Chapter 3).

TEC Title V ‘Transport’ reigns as ‘lex specialis’, meaning the current Articles 70 to 80 TEC on the common transport policy.

This corresponds with Title V ‘Transport’, Articles 70 to 80 ToL, but after renumbering these provisions are found in Title VI ‘Transport’, Articles 90 to 100 TFEU.

***

Banking and insurance are treated differently. Liberalisation of these sectors is supposed to advance in step with measures to open up the capital markets.

The second paragraph refers to the current Chapter 4 ‘Capital and payments’, Articles 56 to 60 TEC.

The corresponding ToL chapter is Chapter 4 ‘Capital and payments’, Articles 56 to 59 (with Article 61h ToL being renumbered Article 75 TFEU and moved to the provisions on the area of freedom, security and justice).

In the consolidated Lisbon Treaty Chapter 4 ‘Capital and payments’ includes the Articles 63 to 66 TFEU.

***

The interested reader can move directly to the sector specific treaty provisions mentioned above. This series of blog posts is advancing one Article at a time, so we will look at these provisions in due time.

At this stage, some further reading is suggested for interested readers.

***


Transport

A general introduction to EU transport policies is offered through the links of the European Commission’s Transport home page:

http://ec.europa.eu/transport/index_en.html

The European Commission dedicates pages 76 to 83 of its ‘General Report on the Activities of the European Union 2007’ to transport with subheadings on rail transport, road transport, maritime transport, inland navigation, air transport, intermodal approach (Galileo), international developments and Trans-European transport networks (TEN-T).

The government of Sweden publishes yearly reports to the parliament (and the public) on the activities of the European institutions: the EU, the Council of Europe and the OSCE. The depth of the EU report ‘Regeringens skrivelse 2007/08: 85 Berättelse om verksamheten i Europeiska unionen under 2007’, published 6 March 2008, is fully comparable to that of the Commission.

Part 7 (Del 7 Transporter, elektroniska kommunikationer och energi) deals with transport policy from page 163 to 180.


***

Banking and insurance (financial services; capital and payments)

A starting point for EU policies on financial services is offered through the links on the Commission’s internal market web page ‘Financial Services – General Policy:

http://ec.europa.eu/internal_market/finances/index_en.htm

Under the heading ‘Freedom to provide services and freedom of establishment’ the European Commission deals with developments concerning financial services on pages 50 to 53 of its ‘General Report on the Activities of the European Union 2007’.

Part 6 on competitiveness (Del 6 Konkurrenskraftsfrågor) of the Swedish report on EU activities in 2007 includes Chapter 29 on the free movement of services and capital (29 Fri rörlighet för tjänster och kapital), from page 139 to 142.

The UK House of Lords European Union Committee’s report ‘Single Market: Wallflower of Dancing Partner? Inquiry into the European Commission’s Review of the Single Market, Volume I: Report (HL Paper 36-I, published 8 February 2008) dedicates Chapter 7 to financial services (page 32 to 37).

The starting point of this timely assessment was the Committee’s feeling of an area in which the lack of progress has been disappointing.

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The separateness of transport services and the parallel introduction of measures concerning banking and insurance services (financial services) with liberalisation of capital markets is underlined by the fact that they are excluded from the scope of the general Services Directive, to be implemented by the member states before 28 December 2009.


See Article 1 ‘Subject matter’, Article 2 ‘Scope’ and Article 3 ‘Relationship with other provisions of Community law’ of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, OJ 27.12.2006 L 376, p. 36–68:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:376:0036:0068:EN:PDF

The express exclusion of transport services follows from Article 2(2)(d) and of financial services, such as banking and insurance from Article 2(2)(b) of the general Services Directive.


Ralf Grahn