Does the Constitutional Treaty differ from the draft Constitution with regard to excessive government deficits?
Let us see what our legal materials have to say.
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Draft Constitution Article III-76 and Constitution Article III-184 compared
Materially, in paragraph 6, if an excessive deficit exists, the IGC dropped that the Council shall adopt, “according to the same procedures,” and added, “without undue delay, on a recommendation from the Commission,” recommendations addressed to the Member State concerned.
In other words, the Commission’s opinion (“first warning”) directly to the member state was retained (paragraph 5) as was the Commission’s proposal on whether an excessive deficit exists (paragraph 6). These two amended the current Article 104 TEC.
But the Commission’s role was downgraded to a recommendation, when the Council was to make the crucial decision on recommendations to a “sinning” member state. Thus, the intergovernmental conference (IGC 2004) repelled one ‘communitarian’ advance, leaving the intergovernmental character of the excessive deficit procedure essentially intact, despite tinkering with the earlier stages.
In the Constitution text, the second to fourth subparagraph of paragraph 6 elaborated on the qualified majority and the blocking minority.
The same elaborations were made in paragraph 7 of the Constitutional Treaty concerning later decisions.
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The Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52, December 2004) described the signed Constitutional Treaty.
Article III-184 was discussed in the context of provisions excluding the member state concerned from voting in the Council (page 135):
”I ett antal artiklar i fördraget förutses omröstning i frågor där inte alla medlemsstater deltar. I dessa artiklar klargörs att kvalificerad majoritet skall bestämmas med ovannämnda procentsatser avseende de av medlemsländerna som ingår i sådant beslutsfattande. Det klargörs också hur stor en blockerande minoritet skall vara i detta sammanhang. Föreskrifter av detta slag finns exempelvis i artiklarna I-44.3 om fördjupade samarbeten, I-59.5 om tillfälligt upphävande av vissa rättigheter som följer av medlemskap i unionen, I-60.4 om frivilligt utträde ur unionen, III-179.4 om allmänna riktlinjer för medlemsstaternas och unionens ekonomiska politik, III-184.6 om offentliga underskott samt III-312.3 om permanenta strukturerade samarbeten.”
The Swedish government referred to the importance of the Stability and Growth Pact, as confirmed by joint Declaration (No. 17) on Article III-184 (pages 239─240):
“I en gemensam förklaring (17) till artikel III-184 bekräftar regeringskonferensen bl.a. att stabilitets- och tillväxtpakten är ett viktigt instrument för att uppnå en ökning av tillväxten och ett säkerställande av sunda offentliga finanser.”
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On the whole, the Swedish draft ratification bill ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (2 June 2005) reiterated the remarks made in the memorandum mentioned above.
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The government of Finland laid out the Constitutional Treaty in its ratification bill ‘Hallituksen esitys Eduskunnalle Euroopan perustuslaista tehdyn sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 67/2006 vp). On page 183 the government remarked that Article III-184 is essentially the same as Article 104 TEC, except for the provisions on voting and qualified majority in paragraphs 6 and 7:
”III-184 artikla, joka velvoittaa jäsenvaltioita välttämään julkisen talouden liiallisia alijäämiä, vastaa SEY 104 artiklaa lukuun ottamatta artiklan 6 ja 7 kohdissa olevia äänestys- ja määräenemmistösäännöksiä.
Artiklan 6 ja 7 kohdissa on määräyksiä neuvoston menettelystä, kun se päättää liiallisen alijäämän olemassaolosta sekä siihen liittyvistä seuraamuksista. Määräykset päätöksentekomenettelystä näissä asioissa ovat uusia. Kun neuvosto päättää liiallisen alijäämän olemassaolosta, asiassa osallisena olevan jäsenvaltion edustaja saa osallistua keskusteluun, mutta hänellä ei ole äänioikeutta. Päätöksenteossa sovelletaan III-179 artiklan yhteydessä selostettua määräenemmistön määritelmää.”
***
The same remarks appear in Swedish in ’Regeringens proposition till Riksdagen med förslag om godkännande av Fördraget om upprättande av en konstitution för Europa och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen (RP 67/2006 rd), page 187:
”Artikel III-184, som ålägger medlemsstaterna att undvika alltför stora underskott i den offentliga sektorns finanser, motsvarar artikel 104 i EG-fördraget med undantag för bestämmelserna om omröstning och kvalificerad majoritet i artikel III-184.6 och III-184.7.
Artikel III-184.6 och III-184.7 innehåller bestämmelser om rådets förfarande när det avgör om underskottet är alltför stort samt om påföljderna därav. Bestämmelserna om beslutsförfarandet i dessa frågor är nya. När rådet avgör om underskottet är alltför stort får företrädaren för den berörda medlemsstaten delta i diskussionen, men han saknar rösträtt. Vid beslutsfattandet tillämpas den definition av kvalificerad majoritet som förklaras i samband med artikel III-179.”
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Klemens H. Fischer in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005), included the text of Declaration No. 17 on Article III-184. He first made the observations that „Artikel III-184 EUVV korrespondiert mit Artikel 104 EGV“ and „Artikel III-184 EUVV korrespondiert mit Artikel III-76 VVE“ (page 315).
He then added an interesting paragraph on the dealings during the intergovernmental conference:
„Das Verfahren bei übermäßigem Defizit sollte während der gesamten Regierungskonferenz ─ neben dem institutionellen Paket ─ einen der Brennpunkte darstellen; nicht zuletzt durch die prekäre Haushaltssituation in Deutschland, aber auch in Frankreich. Diesen beiden Staaten gelang es jedoch nicht, die Kernbereiche dieses Verfahrens aufzuweichen, da sich einige Nettozahlerstaaten, allen voran die Niederlande und Österreich, vehement dagegen zur Wehr setzten. Die von der Regierungskonferenz angenommene Erklärung No. 17 zeugt aber dennoch von der immanenten Gefahr der Aufweichung des Stabilitäts- und Wachstumspaktes, dessen hervorragende Bedeutung in der Erklärung erneut betont wird; eine Garantie für die strikte Beibehaltung des Paktes ist diese Erklärung aber sicherlich nicht.“
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The UK Foreign and Commonwealth Office (FCO) ‘White Paper on the Treaty establishing a Constitution for Europe’ (Cm 6309, September 2004) remarked generally on government achievements during the IGC 2004 concerning economic governance (page 29):
“58. The Government secured changes during the IGC to make it clear that Member States remain responsible for determining and co-ordinating their economic policies. Ministers within the ECOFIN Council will continue to have the greatest and final say in setting out broad economic policy guidelines as a framework for co-ordination. A provision giving the Commission power to propose economic policies for Member States with an excessive deficit has been dropped.”
***
The next instalment turns to the IGC 2007 and the Lisbon Treaty.
Ralf Grahn
Showing posts with label Article III-184. Show all posts
Showing posts with label Article III-184. Show all posts
Thursday, 9 October 2008
EU: Excessive government deficits IIIa
A single currency, a single market, but 27 economic policies. A singular mess.
What, if anything, did the Constitutional Treaty do to sort it out?
We look at the clause on excessive government deficits in the context of economic and monetary union (EMU).
***
In the Treaty establishing a Constitution for Europe the provisions on economic 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’, Section 1 ‘Economic policy’.
The clause concerning excessive government deficits is found in Article III-184, OJ 16.12.2004 C 310/78─81:
Article III-184 Constitution
1. Member States shall avoid excessive government deficits.
2. The Commission shall monitor the development of the budgetary situation and of the stock of government debt in the Member States in order to identify gross errors. In particular it shall examine compliance with budgetary discipline on the basis of the following two criteria:
(a) whether the ratio of the planned or actual government deficit to gross domestic product exceeds a reference value, unless:
(i) either the ratio has declined substantially and continuously and reached a level that comes close to the reference value, or
(ii) alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value;
(b) whether the ratio of government debt to gross domestic product exceeds a reference value, unless the ratio is diminishing sufficiently and approaching the reference value at a satisfactory pace.
The reference values are specified in the Protocol on the excessive deficit procedure.
3. If a Member State does not fulfil the requirements under one or both of these criteria, the Commission shall prepare a report. The Commission's report shall also take into account whether the government deficit exceeds government investment expenditure and take into account all other
relevant factors, including the medium‑term economic and budgetary position of the Member State.
The Commission may also prepare a report if, notwithstanding the fulfilment of the requirements under the criteria, it is of the opinion that there is a risk of an excessive deficit in a Member State.
4. The Economic and Financial Committee set up under Article III-192 shall formulate an opinion on the Commission's report.
5. If the Commission considers that an excessive deficit in a Member State exists or may occur, it shall address an opinion to the Member State concerned and shall inform the Council accordingly.
6. The Council shall, on a proposal from the Commission, having considered any observations which the Member State concerned may wish to make and after an overall assessment, decide whether an excessive deficit exists. In that case it shall adopt, without undue delay, on a recommendation from the Commission, recommendations addressed to the Member State concerned with a view to bringing that situation to an end within a given period. Subject to paragraph 8, those recommendations shall not be made public.
Within the scope of this paragraph, the Council shall act without taking into account the vote of the member of the Council representing the Member State concerned.
A qualified majority shall be defined as at least 55 % of the other 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 other 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.
7. The Council, on a recommendation from the Commission, shall adopt the European decisions and recommendations referred to in paragraphs 8 to 11.
It shall act without taking into account the vote of the member of the Council representing the Member State concerned.
A qualified majority shall be defined as at least 55 % of the other 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 other 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.
8. Where it adopts a European decision establishing that there has been no effective action in response to its recommendations within the period laid down, the Council may make its recommendations public.
9. If a Member State persists in failing to put the Council's recommendations into practice, the Council may adopt a European decision giving notice to the Member State to take, within a specified time-limit, measures for the deficit reduction which the Council judges necessary to remedy the situation.
In such a case, the Council may request the Member State concerned to submit reports in accordance with a specific timetable in order to examine the adjustment efforts of that Member State.
10. As long as a Member State fails to comply with a European decision adopted in accordance with paragraph 9, the Council may decide to apply or, as the case may be, intensify one or more of the following measures:
(a) require the Member State concerned to publish additional information, to be specified by the Council, before issuing bonds and securities;
(b) invite the European Investment Bank to reconsider its lending policy towards the Member State concerned;
(c) require the Member State concerned to make a non-interest-bearing deposit of an appropriate size with the Union until the Council considers that the excessive deficit has been corrected;
(d) impose fines of an appropriate size.
The President of the Council shall inform the European Parliament of the measures adopted.
11. The Council shall repeal some or all of the measures referred to in paragraph 6 and paragraphs 8, 9 and 10 if it considers the excessive deficit in the Member State concerned to have been corrected. If the Council has previously made public recommendations, it shall state publicly, as soon as the European decision referred to in paragraph 8 has been repealed, that there is no longer an excessive deficit in the Member State concerned.
12. The rights to bring actions provided for in Articles III-360 and III-361 shall not be exercised within the framework of paragraphs 1 to 6 or paragraphs 8 and 9.
13. Further provisions relating to the implementation of the procedure laid down in this Article are set out in the Protocol on the excessive deficit procedure.
A European law of the Council shall lay down the appropriate measures to replace the said Protocol. The Council shall act unanimously after consulting the European Parliament and the European Central Bank.
Subject to the other provisions of this paragraph, the Council, on a proposal from the Commission, shall adopt European regulations or decisions laying down detailed rules and definitions for the application of the said Protocol. It shall act after consulting the European Parliament.
***
The next post is going to compare the draft Constitution with the Constitutional Treaty and look at some legislative materials on the Constitution.
Ralf Grahn
What, if anything, did the Constitutional Treaty do to sort it out?
We look at the clause on excessive government deficits in the context of economic and monetary union (EMU).
***
In the Treaty establishing a Constitution for Europe the provisions on economic 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’, Section 1 ‘Economic policy’.
The clause concerning excessive government deficits is found in Article III-184, OJ 16.12.2004 C 310/78─81:
Article III-184 Constitution
1. Member States shall avoid excessive government deficits.
2. The Commission shall monitor the development of the budgetary situation and of the stock of government debt in the Member States in order to identify gross errors. In particular it shall examine compliance with budgetary discipline on the basis of the following two criteria:
(a) whether the ratio of the planned or actual government deficit to gross domestic product exceeds a reference value, unless:
(i) either the ratio has declined substantially and continuously and reached a level that comes close to the reference value, or
(ii) alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value;
(b) whether the ratio of government debt to gross domestic product exceeds a reference value, unless the ratio is diminishing sufficiently and approaching the reference value at a satisfactory pace.
The reference values are specified in the Protocol on the excessive deficit procedure.
3. If a Member State does not fulfil the requirements under one or both of these criteria, the Commission shall prepare a report. The Commission's report shall also take into account whether the government deficit exceeds government investment expenditure and take into account all other
relevant factors, including the medium‑term economic and budgetary position of the Member State.
The Commission may also prepare a report if, notwithstanding the fulfilment of the requirements under the criteria, it is of the opinion that there is a risk of an excessive deficit in a Member State.
4. The Economic and Financial Committee set up under Article III-192 shall formulate an opinion on the Commission's report.
5. If the Commission considers that an excessive deficit in a Member State exists or may occur, it shall address an opinion to the Member State concerned and shall inform the Council accordingly.
6. The Council shall, on a proposal from the Commission, having considered any observations which the Member State concerned may wish to make and after an overall assessment, decide whether an excessive deficit exists. In that case it shall adopt, without undue delay, on a recommendation from the Commission, recommendations addressed to the Member State concerned with a view to bringing that situation to an end within a given period. Subject to paragraph 8, those recommendations shall not be made public.
Within the scope of this paragraph, the Council shall act without taking into account the vote of the member of the Council representing the Member State concerned.
A qualified majority shall be defined as at least 55 % of the other 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 other 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.
7. The Council, on a recommendation from the Commission, shall adopt the European decisions and recommendations referred to in paragraphs 8 to 11.
It shall act without taking into account the vote of the member of the Council representing the Member State concerned.
A qualified majority shall be defined as at least 55 % of the other 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 other 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.
8. Where it adopts a European decision establishing that there has been no effective action in response to its recommendations within the period laid down, the Council may make its recommendations public.
9. If a Member State persists in failing to put the Council's recommendations into practice, the Council may adopt a European decision giving notice to the Member State to take, within a specified time-limit, measures for the deficit reduction which the Council judges necessary to remedy the situation.
In such a case, the Council may request the Member State concerned to submit reports in accordance with a specific timetable in order to examine the adjustment efforts of that Member State.
10. As long as a Member State fails to comply with a European decision adopted in accordance with paragraph 9, the Council may decide to apply or, as the case may be, intensify one or more of the following measures:
(a) require the Member State concerned to publish additional information, to be specified by the Council, before issuing bonds and securities;
(b) invite the European Investment Bank to reconsider its lending policy towards the Member State concerned;
(c) require the Member State concerned to make a non-interest-bearing deposit of an appropriate size with the Union until the Council considers that the excessive deficit has been corrected;
(d) impose fines of an appropriate size.
The President of the Council shall inform the European Parliament of the measures adopted.
11. The Council shall repeal some or all of the measures referred to in paragraph 6 and paragraphs 8, 9 and 10 if it considers the excessive deficit in the Member State concerned to have been corrected. If the Council has previously made public recommendations, it shall state publicly, as soon as the European decision referred to in paragraph 8 has been repealed, that there is no longer an excessive deficit in the Member State concerned.
12. The rights to bring actions provided for in Articles III-360 and III-361 shall not be exercised within the framework of paragraphs 1 to 6 or paragraphs 8 and 9.
13. Further provisions relating to the implementation of the procedure laid down in this Article are set out in the Protocol on the excessive deficit procedure.
A European law of the Council shall lay down the appropriate measures to replace the said Protocol. The Council shall act unanimously after consulting the European Parliament and the European Central Bank.
Subject to the other provisions of this paragraph, the Council, on a proposal from the Commission, shall adopt European regulations or decisions laying down detailed rules and definitions for the application of the said Protocol. It shall act after consulting the European Parliament.
***
The next post is going to compare the draft Constitution with the Constitutional Treaty and look at some legislative materials on the Constitution.
Ralf Grahn
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