There are almost 500 million EU consumers, so the European Union should take an interest. Perhaps we should, too.
***
Article 153 TEC
Article 153 spells out the aims of the European Community’s action in the area of consumer protection.
Consumers’ health, safety and economic interests are mentioned first.
Consumers’ right to information, education and organisation are mentioned second.
Consumer protection is seen as a horizontal activity.
Article 153(3)(a) refers to measures taken under the provisions on approximation (harmonisation) of laws, which have as their object the establishment and functioning of the internal market (Article 95 TEC).
The cooperation procedure applies to supporting, supplementing and monitoring measures mentioned in Article 153(3)(b).
Higher national standards (more stringent measures) are allowed, but not in the form of a blank cheque. Such protective measures have to be compatible with the treaty, and the Commission has to be notified by the member state.
The current Article 153 (ex Article 129a) of the Treaty establishing the European Community (TEC), as published in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/115–116:
TITLE XIV
CONSUMER PROTECTION
Article 153 TEC
1. In order to promote the interests of consumers and to ensure a high level of consumer protection, the Community shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests.
2. Consumer protection requirements shall be taken into account in defining and implementing other Community policies and activities.
3. The Community shall contribute to the attainment of the objectives referred to in paragraph 1 through:
(a) measures adopted pursuant to Article 95 in the context of the completion of the internal market;
(b) measures which support, supplement and monitor the policy pursued by the Member States.
4. The Council, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee, shall adopt the measures referred to in paragraph 3(b).
5. Measures adopted pursuant to paragraph 4 shall not prevent any Member State from maintaining or introducing more stringent protective measures. Such measures must be compatible with this Treaty. The Commission shall be notified of them.
***
Original Lisbon Treaty (ToL)
Although the Treaty of Lisbon is unreadable on its own, it spells out how the current treaties are amended.
Article 2, point 127 of the original Treaty of Lisbon (ToL) shows that Article 152 TEC underwent several specific amendments (OJ 17.12.2007 C 306/84):
CONSUMER PROTECTION
128) Article 153(2) shall become Article 6a and paragraphs 3, 4 and 5 shall be renumbered 2, 3 and 4 respectively.
***
Renumbering ToL
The Table of equivalences of the original Treaty of Lisbon tells us that Title XIV first became Title XIV in the TFEU (ToL), but renumbered Title XV Consumer protection in the consolidated version.
Paragraphs 1, 3, 4 and 5 of Article 153 TEC initially became Article 153 TFEU (ToL) before the renumbering of the treaty made it into Article 169. Paragraph 2 of Article 153 TEC, first became Article 6a TFEU (ToL), before being renumbered Article 12 TFEU in the consolidated version (OJ 17.12.2007 C 306/217).
***
Lisbon Treaty consolidated
After the explicit amendment, horizontal amendments and renumbering, we have two consolidated TFEU Articles to present.
They appear as follows in the consolidated Treaty on the Functioning of the European Union (TFEU), published in the Official Journal of the European Union, OJ 9.5.2008 C 115/54 and 124:
Article 12 TFEU
(ex Article 153(2) TEC)
Consumer protection requirements shall be taken into account in defining and implementing other Union policies and activities.
TITLE XV
CONSUMER PROTECTION
Article 169 TFEU
(ex Article 153 TEC)
1. In order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests.
2. The Union shall contribute to the attainment of the objectives referred to in paragraph 1 through:
(a) measures adopted pursuant to Article 114 in the context of the completion of the internal market;
(b) measures which support, supplement and monitor the policy pursued by the Member States.
3. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall adopt the measures referred to in paragraph 2(b).
4. Measures adopted pursuant to paragraph 3 shall not prevent any Member State from maintaining or introducing more stringent protective measures. Such measures must be compatible with the Treaties. The Commission shall be notified of them.
***
EU powers
The powers of the European Union are attributed or conferred by the member states through the treaties. The Treaty of Lisbon makes an effort to present the different categories of competence (as they are modestly called) in a systematic manner.
The categories of EU competence (taxonomy) are set out in Article 2 TFEU. The three main or general categories are exclusive competence in 2(1), shared competence in 2(2) as well as supporting, coordinating or supplementing competences in 2(5), although the exact scope and arrangements are laid out in the various treaty provisions as stated in 2(6):
Article 2 TFEU
1. When the Treaties confer on the Union exclusive competence in a specific area, only the Union may legislate and adopt legally binding acts, the Member States being able to do so themselves only if so empowered by the Union or for the implementation of Union acts.
2. When the Treaties confer on the Union a competence shared with the Member States in a specific area, the Union and the Member States may legislate and adopt legally binding acts in that area. The Member States shall exercise their competence to the extent that the Union has not exercised its competence. The Member States shall again exercise their competence to the extent that the Union has decided to cease exercising its competence.
3. The Member States shall coordinate their economic and employment policies within arrangements as determined by this Treaty, which the Union shall have competence to provide.
4. The Union shall have competence, in accordance with the provisions of the Treaty on European Union, to define and implement a common foreign and security policy, including the progressive framing of a common defence policy.
5. In certain areas and under the conditions laid down in the Treaties, the Union shall have competence to carry out actions to support, coordinate or supplement the actions of the Member States, without thereby superseding their competence in these areas.
Legally binding acts of the Union adopted on the basis of the provisions of the Treaties relating to these areas shall not entail harmonisation of Member States' laws or regulations.
6. The scope of and arrangements for exercising the Union's competences shall be determined by the provisions of the Treaties relating to each area.
***
Article 4 TFEU
As an area of shared competence between the EU and the member states, Article 4(2)(a) mentions the internal market and in Article 4(2)(f) consumer protection is specifically mentioned.
***
Summary of legislation: Consumer protection
On the Commission’s Scadplus web pages with summaries of legislation, the page Consumers: General framework and priorities offers access to consumer issues generally, including the Programme of Community action in the field of consumer policy (2007-2013):
http://europa.eu/scadplus/leg/en/s16100.htm
Protection of consumers’ economic and legal interests offers a number of links relevant to these aspects of consumer protection:
http://europa.eu/scadplus/leg/en/s16300.htm
Consumer safety issues can be accessed through:
http://europa.eu/scadplus/leg/en/s16200.htm
***
Commission activities
Because consumer health and safety are closely linked to other aspects of consumer protection, it may be a good idea to gather news and information on Commission activities from the Directorate General for Health and Consumers as a whole before surfing in either direction:
http://ec.europa.eu/dgs/health_consumer/index_en.htm
***
Consumer safety
Here are a few additional links on consumer safety.
Scientific Committees for consumer safety, public health and the environment (last update 2 May 2007):
http://europa.eu/scadplus/leg/en/lvb/l28153.htm
The precautionary principle (last update 2 November 2005):
http://europa.eu/scadplus/leg/en/lvb/l32042.htm
Programme of Community action in the field of health and consumer protection (2008–2013) (last update 8 April 2008):
http://europa.eu/scadplus/leg/en/cha/c11503c.htm
***
Consumer affairs
Here is the web page to start looking at Consumer Affairs more specifically:
http://ec.europa.eu/consumers/index_en.htm
Ralf Grahn
Showing posts with label protective measure. Show all posts
Showing posts with label protective measure. Show all posts
Monday, 22 December 2008
Sunday, 23 November 2008
EMU: Balance of payments crisis and safeguard measures
EU institutions, finance ministries, corporations and EU citizens have reason to study the possible remedies to serious balance of payments difficulties, in case matters take a turn to the worse.
“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.
There are separate transitional provisions for the EU member states with a derogation, i.e. outside the eurozone.
***
EMU safeguard measures
Current TEC
The European Community (European Union) prohibits all restrictions on the movement of capital and payments between member states and between member states and third countries, although abolishing existing restrictions with regard to third countries is a less absolute aim.
Within the context of economic and monetary union (EMU) restrictions are unthinkable, but in exceptional circumstances serious difficulties may give cause for temporary safeguard measures with regard to third countries.
The current Article 59 (ex Article 109i) 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.
***
Lisbon Treaty
The Treaty of Lisbon, still on its rocky road to possible entry into force, is the most up-to-date manifestation of what the member state governments want the treaties to say.
Article 66 of the Treaty on the Functioning of the European Union (TFEU) retains the current safeguard measures without substantial change. See the concolidated TFEU, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/73:
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.
***
Comment
We live “in interesting times” as regards the stability of the financial markets, so Article 59 TEC and 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, which are contrary to the aims of free movement of capital and payments.
In addition, six months is the maximum duration of a measure (but the wording does not exclude a new decision).
***
Transitional provisions
There are still twelve EU member states outside the eurozone. Denmark and the United Kingdom have negotiated exceptions (opt-outs) unlimited in time. The other member states with a derogation are Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia (until 1 January 2009) and Sweden.
The transitional EMU provisions take account of potential balance of payments problems at two levels, serious problems and a sudden crisis.
***
Serious balance of payments difficulties
Existing TEC
Article 119 TEC (ex Article 109h) sets out the current rules, which illustrate how the problems of one member state may have repercussions for the rest, notably through the internal market and external trade (in relation to third countries).
Primarily, if a member state (with a derogation) is seriously threatened with balance of payments problems, the member state acts, within the provisions of the TEC, to remedy the situation. Then, the Commission investigates and may issue recommendations to the state.
If the actions are insufficient, the Commission can recommend that the Council grants mutual assistance to the member state in difficulties.
If mutual assistance is not granted, or if the assistance given and the measures taken prove to be insufficient, the Commission can authorise the member state to take (exceptional) protective measures. These are subject to ex post review by the Council.
The current Article 119 TEC (in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/96-97):
Article 119 TEC
1. Where a Member State is in difficulties or is seriously threatened with difficulties as regards its balance of payments either as a result of an overall disequilibrium in its balance of payments, or as a result of the type of currency at its disposal, and where such difficulties are liable in particular to jeopardise the functioning of the common market or the progressive implementation of the common commercial policy, the Commission shall immediately investigate the position of the State in question and the action which, making use of all the means at its disposal, that State has taken or may take in accordance with the provisions of this Treaty. The Commission shall state what measures it recommends the State concerned to take.
If the action taken by a Member State and the measures suggested by the Commission do not prove sufficient to overcome the difficulties which have arisen or which threaten, the Commission shall, after consulting the Committee referred to in Article 114, recommend to the Council the granting of mutual assistance and appropriate methods therefor.
The Commission shall keep the Council regularly informed of the situation and of how it is developing.
2. The Council, acting by a qualified majority, shall grant such mutual assistance; it shall adopt directives or decisions laying down the conditions and details of such assistance, which may take such forms as:
(a) a concerted approach to or within any other international organisations to which Member States may have recourse;
(b) measures needed to avoid deflection of trade where the State which is in difficulties maintains or reintroduces quantitative restrictions against third countries;
(c) the granting of limited credits by other Member States, subject to their agreement.
3. If the mutual assistance recommended by the Commission is not granted by the Council or if the mutual assistance granted and the measures taken are insufficient, the Commission shall authorise the State which is in difficulties to take protective measures, the conditions and details of which the Commission shall determine.
Such authorisation may be revoked and such conditions and details may be changed by the Council acting by a qualified majority.
4. Subject to Article 122(6), this Article shall cease to apply from the beginning of the third stage.
***
Lisbon Treaty
Article 143 of the Treaty on the Functioning of the European Union (TFEU) takes over the substance of Article 119 TEC, but the updated wording more clearly presents the transitional character of the provision and that the provision concerns member states with a derogation.
Article 143 TFEU in the consolidated version of the Lisbon Treaty, OJ 9.5.2008 C 115/110-111:
Article 143 TFEU
(ex Article 119 TEC)
1. Where a Member State with a derogation is in difficulties or is seriously threatened with difficulties as regards its balance of payments either as a result of an overall disequilibrium in its balance of payments, or as a result of the type of currency at its disposal, and where such difficulties are liable in particular to jeopardise the functioning of the internal market or the implementation of the common commercial policy, the Commission shall immediately investigate the position of the State in question and the action which, making use of all the means at its disposal, that State has taken or may take in accordance with the provisions of the Treaties. The Commission shall state what measures it recommends the State concerned to take.
If the action taken by a Member State with a derogation and the measures suggested by the Commission do not prove sufficient to overcome the difficulties which have arisen or which threaten, the Commission shall, after consulting the Economic and Financial Committee, recommend to the Council the granting of mutual assistance and appropriate methods therefor.
The Commission shall keep the Council regularly informed of the situation and of how it is developing.
2. The Council shall grant such mutual assistance; it shall adopt directives or decisions laying down the conditions and details of such assistance, which may take such forms as:
(a) a concerted approach to or within any other international organisations to which Member States with a derogation may have recourse;
(b) measures needed to avoid deflection of trade where the Member State with a derogation which is in difficulties maintains or reintroduces quantitative restrictions against third countries;
(c) the granting of limited credits by other Member States, subject to their agreement.
3. If the mutual assistance recommended by the Commission is not granted by the Council or if the mutual assistance granted and the measures taken are insufficient, the Commission shall authorise the Member State with a derogation which is in difficulties to take protective measures, the conditions and details of which the Commission shall determine.
Such authorisation may be revoked and such conditions and details may be changed by the Council.
***
Balance of payments crisis
Protective measures
Current TEC
Article 119 TEC (and Article 143 TFEU) concerned serious balance of payments difficulties. The second level is represented by Article 120 TEC, which concerns even more serious imbalances, namely a sudden crisis, which may lead to (exceptional) protective measures:
Article 120 TEC in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/97:
Page 97
Article 120 TEC
1. Where a sudden crisis in the balance of payments occurs and a decision within the meaning of Article 119(2) is not immediately taken, the Member State concerned may, as a precaution, take the necessary protective measures. Such measures must cause the least possible disturbance in the functioning of the common market and must not be wider in scope than is strictly necessary to remedy the sudden difficulties which have arisen.
2. The Commission and the other Member States shall be informed of such protective measures not later than when they enter into force. The Commission may recommend to the Council the granting of mutual assistance under Article 119.
3. After the Commission has delivered an opinion and the Committee referred to in Article 114 has been consulted, the Council may, acting by a qualified majority, decide that the State concerned shall amend, suspend or abolish the protective measures referred to above.
4. Subject to Article 122(6), this Article shall cease to apply from the beginning of the third
stage.
***
Lisbon Treaty
The Articles 143 and 144 TFEU are closely linked. When balance of payments problems occur suddenly and on a massive scale, Article 144 TFEU with potential unilateral protective measures kicks in.
Article 144 TFEU does not change the substance of Article 120 TEC. Disturbances in the functioning of the internal market must still be minimal and the scope of the measures restricted to the strictly necessary.
These exceptional measures quickly become European Union (European Community) matters. The Commission and the Council (Ecofin) can act to grant mutual assistance to a member state hit by a balance of payments crisis, but the EU institutions also review the measures ex post.
The Lisbon Treaty wording clarifies and updates the provision. Because of the beginning of third stage of economic and monetary union (EMU), Article 144 TFEU clearly expresses that this provision directly concerns the member states with a derogation (OJ 9.5.2008 C 115/111):
Article 144 TFEU
(ex Article 120 TEC)
1. Where a sudden crisis in the balance of payments occurs and a decision within the meaning of Article 143(2) is not immediately taken, a Member State with a derogation may, as a precaution, take the necessary protective measures. Such measures must cause the least possible disturbance in the functioning of the internal market and must not be wider in scope than is strictly necessary to remedy the sudden difficulties which have arisen.
2. The Commission and the other Member States shall be informed of such protective measures not later than when they enter into force. The Commission may recommend to the Council the granting of mutual assistance under Article 143.
3. After the Commission has delivered a recommendation and the Economic and Financial Committee has been consulted, the Council may decide that the Member State concerned shall amend, suspend or abolish the protective measures referred to above.
***
The existing and the proposed treaty provisions on responses to exceptional circumstances are clearly based on the idea of an evolving de facto solidarity between the member states of the European Union.
Serious difficulties and crises have to be faced together, although there are different provisions for the eurozone as a whole and the non-euro area member states (with a derogation), still forced to fight the financial tempests individually.
Ralf Grahn
P.S. A more detailed blog article on Article 119 TEC and Article 143 TFEU was meant to precede the above post, but it got stuck in technical problems, which have to be sorted out before publication.
“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.
There are separate transitional provisions for the EU member states with a derogation, i.e. outside the eurozone.
***
EMU safeguard measures
Current TEC
The European Community (European Union) prohibits all restrictions on the movement of capital and payments between member states and between member states and third countries, although abolishing existing restrictions with regard to third countries is a less absolute aim.
Within the context of economic and monetary union (EMU) restrictions are unthinkable, but in exceptional circumstances serious difficulties may give cause for temporary safeguard measures with regard to third countries.
The current Article 59 (ex Article 109i) 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.
***
Lisbon Treaty
The Treaty of Lisbon, still on its rocky road to possible entry into force, is the most up-to-date manifestation of what the member state governments want the treaties to say.
Article 66 of the Treaty on the Functioning of the European Union (TFEU) retains the current safeguard measures without substantial change. See the concolidated TFEU, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/73:
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.
***
Comment
We live “in interesting times” as regards the stability of the financial markets, so Article 59 TEC and 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, which are contrary to the aims of free movement of capital and payments.
In addition, six months is the maximum duration of a measure (but the wording does not exclude a new decision).
***
Transitional provisions
There are still twelve EU member states outside the eurozone. Denmark and the United Kingdom have negotiated exceptions (opt-outs) unlimited in time. The other member states with a derogation are Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia (until 1 January 2009) and Sweden.
The transitional EMU provisions take account of potential balance of payments problems at two levels, serious problems and a sudden crisis.
***
Serious balance of payments difficulties
Existing TEC
Article 119 TEC (ex Article 109h) sets out the current rules, which illustrate how the problems of one member state may have repercussions for the rest, notably through the internal market and external trade (in relation to third countries).
Primarily, if a member state (with a derogation) is seriously threatened with balance of payments problems, the member state acts, within the provisions of the TEC, to remedy the situation. Then, the Commission investigates and may issue recommendations to the state.
If the actions are insufficient, the Commission can recommend that the Council grants mutual assistance to the member state in difficulties.
If mutual assistance is not granted, or if the assistance given and the measures taken prove to be insufficient, the Commission can authorise the member state to take (exceptional) protective measures. These are subject to ex post review by the Council.
The current Article 119 TEC (in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/96-97):
Article 119 TEC
1. Where a Member State is in difficulties or is seriously threatened with difficulties as regards its balance of payments either as a result of an overall disequilibrium in its balance of payments, or as a result of the type of currency at its disposal, and where such difficulties are liable in particular to jeopardise the functioning of the common market or the progressive implementation of the common commercial policy, the Commission shall immediately investigate the position of the State in question and the action which, making use of all the means at its disposal, that State has taken or may take in accordance with the provisions of this Treaty. The Commission shall state what measures it recommends the State concerned to take.
If the action taken by a Member State and the measures suggested by the Commission do not prove sufficient to overcome the difficulties which have arisen or which threaten, the Commission shall, after consulting the Committee referred to in Article 114, recommend to the Council the granting of mutual assistance and appropriate methods therefor.
The Commission shall keep the Council regularly informed of the situation and of how it is developing.
2. The Council, acting by a qualified majority, shall grant such mutual assistance; it shall adopt directives or decisions laying down the conditions and details of such assistance, which may take such forms as:
(a) a concerted approach to or within any other international organisations to which Member States may have recourse;
(b) measures needed to avoid deflection of trade where the State which is in difficulties maintains or reintroduces quantitative restrictions against third countries;
(c) the granting of limited credits by other Member States, subject to their agreement.
3. If the mutual assistance recommended by the Commission is not granted by the Council or if the mutual assistance granted and the measures taken are insufficient, the Commission shall authorise the State which is in difficulties to take protective measures, the conditions and details of which the Commission shall determine.
Such authorisation may be revoked and such conditions and details may be changed by the Council acting by a qualified majority.
4. Subject to Article 122(6), this Article shall cease to apply from the beginning of the third stage.
***
Lisbon Treaty
Article 143 of the Treaty on the Functioning of the European Union (TFEU) takes over the substance of Article 119 TEC, but the updated wording more clearly presents the transitional character of the provision and that the provision concerns member states with a derogation.
Article 143 TFEU in the consolidated version of the Lisbon Treaty, OJ 9.5.2008 C 115/110-111:
Article 143 TFEU
(ex Article 119 TEC)
1. Where a Member State with a derogation is in difficulties or is seriously threatened with difficulties as regards its balance of payments either as a result of an overall disequilibrium in its balance of payments, or as a result of the type of currency at its disposal, and where such difficulties are liable in particular to jeopardise the functioning of the internal market or the implementation of the common commercial policy, the Commission shall immediately investigate the position of the State in question and the action which, making use of all the means at its disposal, that State has taken or may take in accordance with the provisions of the Treaties. The Commission shall state what measures it recommends the State concerned to take.
If the action taken by a Member State with a derogation and the measures suggested by the Commission do not prove sufficient to overcome the difficulties which have arisen or which threaten, the Commission shall, after consulting the Economic and Financial Committee, recommend to the Council the granting of mutual assistance and appropriate methods therefor.
The Commission shall keep the Council regularly informed of the situation and of how it is developing.
2. The Council shall grant such mutual assistance; it shall adopt directives or decisions laying down the conditions and details of such assistance, which may take such forms as:
(a) a concerted approach to or within any other international organisations to which Member States with a derogation may have recourse;
(b) measures needed to avoid deflection of trade where the Member State with a derogation which is in difficulties maintains or reintroduces quantitative restrictions against third countries;
(c) the granting of limited credits by other Member States, subject to their agreement.
3. If the mutual assistance recommended by the Commission is not granted by the Council or if the mutual assistance granted and the measures taken are insufficient, the Commission shall authorise the Member State with a derogation which is in difficulties to take protective measures, the conditions and details of which the Commission shall determine.
Such authorisation may be revoked and such conditions and details may be changed by the Council.
***
Balance of payments crisis
Protective measures
Current TEC
Article 119 TEC (and Article 143 TFEU) concerned serious balance of payments difficulties. The second level is represented by Article 120 TEC, which concerns even more serious imbalances, namely a sudden crisis, which may lead to (exceptional) protective measures:
Article 120 TEC in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/97:
Page 97
Article 120 TEC
1. Where a sudden crisis in the balance of payments occurs and a decision within the meaning of Article 119(2) is not immediately taken, the Member State concerned may, as a precaution, take the necessary protective measures. Such measures must cause the least possible disturbance in the functioning of the common market and must not be wider in scope than is strictly necessary to remedy the sudden difficulties which have arisen.
2. The Commission and the other Member States shall be informed of such protective measures not later than when they enter into force. The Commission may recommend to the Council the granting of mutual assistance under Article 119.
3. After the Commission has delivered an opinion and the Committee referred to in Article 114 has been consulted, the Council may, acting by a qualified majority, decide that the State concerned shall amend, suspend or abolish the protective measures referred to above.
4. Subject to Article 122(6), this Article shall cease to apply from the beginning of the third
stage.
***
Lisbon Treaty
The Articles 143 and 144 TFEU are closely linked. When balance of payments problems occur suddenly and on a massive scale, Article 144 TFEU with potential unilateral protective measures kicks in.
Article 144 TFEU does not change the substance of Article 120 TEC. Disturbances in the functioning of the internal market must still be minimal and the scope of the measures restricted to the strictly necessary.
These exceptional measures quickly become European Union (European Community) matters. The Commission and the Council (Ecofin) can act to grant mutual assistance to a member state hit by a balance of payments crisis, but the EU institutions also review the measures ex post.
The Lisbon Treaty wording clarifies and updates the provision. Because of the beginning of third stage of economic and monetary union (EMU), Article 144 TFEU clearly expresses that this provision directly concerns the member states with a derogation (OJ 9.5.2008 C 115/111):
Article 144 TFEU
(ex Article 120 TEC)
1. Where a sudden crisis in the balance of payments occurs and a decision within the meaning of Article 143(2) is not immediately taken, a Member State with a derogation may, as a precaution, take the necessary protective measures. Such measures must cause the least possible disturbance in the functioning of the internal market and must not be wider in scope than is strictly necessary to remedy the sudden difficulties which have arisen.
2. The Commission and the other Member States shall be informed of such protective measures not later than when they enter into force. The Commission may recommend to the Council the granting of mutual assistance under Article 143.
3. After the Commission has delivered a recommendation and the Economic and Financial Committee has been consulted, the Council may decide that the Member State concerned shall amend, suspend or abolish the protective measures referred to above.
***
The existing and the proposed treaty provisions on responses to exceptional circumstances are clearly based on the idea of an evolving de facto solidarity between the member states of the European Union.
Serious difficulties and crises have to be faced together, although there are different provisions for the eurozone as a whole and the non-euro area member states (with a derogation), still forced to fight the financial tempests individually.
Ralf Grahn
P.S. A more detailed blog article on Article 119 TEC and Article 143 TFEU was meant to precede the above post, but it got stuck in technical problems, which have to be sorted out before publication.
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