The elites who wrote the Lisbon Treaty

The launch of Libertas has led to increased volumes of distortion about the EU’s Treaty of Lisbon.

How unelected were the elites who wrote the Lisbon Treaty?

The draft Treaty establishing a Constitution for Europe was written by the European Convention. In addition to the Chairman and two Vice-Chairmen appointed by the European Council (national leaders) there were:

• 15 representatives of the Heads of State or Government of the Member States (one from each Member State),
• 13 representatives of the Heads of State or Government of the candidate States (1 per candidate State),
• 30 representatives of the national parliaments of the Member States (two from each Member State),
• 26 representatives of the national parliaments of the candidate States (two from each candidate State),
• 16 members of the European Parliament,
• 2 representatives of the European Commission.

Out of 105 delegates, 38 represented the national governments, 56 the national parliaments and 16 the directly elected European Parliament.

The only ones who remotely resembled unelected Brussels bureaucrats were two who represented the European Commission, which is nominated by the heads of state or government and approved by the European Parliament.

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During the intergovernmental conference 2003─2004 the national governments of the EU member states watered down the Convention’s proposal to reach agreement on the Constitutional Treaty.

Where were the supranational bureaucrats?

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The bleaker Treaty of Lisbon resulted from a new round of negotiations between the governments of the member states.

Where were the “unaccountable” Brussels bureaucrats, who by the way are held to account by the member states’ governments in the Council and by the European Parliament?

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How truthful and accountable is Libertas?


Ralf Grahn

European Central Bank IIb: Legal materials on Article III-79 draft Constitution

Having made a textual comparison of the main institutional framework of the European System of Central Banks (ESCB) and the European Central Bank (ECB) in the current Treaty establishing the European Community (TEC) and in the draft Constitution, we turn to some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.

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de Poncins

Étienne de Poncins presented the proposed text of Article III-78 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), on page 303─304. His comment leads us to believe that the European Convention really intended the European Parliament to participate fully in the simplified revision procedures mentioned in paragraph 5:

« Commentaire : le paragraphe 5 autorise la modification du statut de la Banque centrale européenne. Actuellement cette législation requiert l’unanimité du Conseil et l’avis conforme du Parlement européen. La procédure législative sera d’application, le Conseil se prononçant à la majorité qualifié. »

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Sweden

Sweden remains outside the third phase of economic and monetary union (EMU), without an opt-out, but following the 14 September 2003 referendum. Still, the normal EU/EC institutions operate, in case of simplified revisions of the ESCB Statute or complementary legislation according to Article 42 of the Statute, which means that the member states with a derogation participate in the Council. In principle, these member states are seen as future participants in the Eurosystem.

I found no mention of Article III-79 in the Swedish government’s memorandum on the draft Constitution, ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003).

***

Sweden

Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden made a reference to technical the participation of the European Parliament in certain matters pertaining to the ESCB Statute, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 49 (in the last quoted sentence):

”Europeiska centralbankens tillsynsbefogenheter och stadgar

Konventet föreslår att beslutsregeln för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB) skall ändras. I dag krävs enhällighet i rådet och samtycke av Europaparlamentet. Förslaget innebär att rådet skall besluta med kvalificerad majoritet och att Europaparlamentet skall ges medbeslutande för en sådan överföring. Vidare föreslås att Europaparlamentet ges medbeslutande beträffande vissa frågor i stadgan för Europeiska centralbankssystemet.”

The Swedish government admitted the reasons for functioning decision-making within the eurozone and the interest of euro area members to effective representation in international financial institutions, but in between the government expressed its will to be included in the coordination processes generally (on page 50):

”Det kan finnas skäl för euroländerna att på olika sätt säkerställa ett väl fungerande beslutsfattande i euroområdet. Det är dock viktigt att samordningsprocesserna behåller sin gemensamma karaktär. Det är också förståeligt att euroländerna vill uppnå en effektiv representation av euroområdet i internationella finansiella institutioner.”


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United Kingdom

The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).
Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:

“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.

75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”

***

Finland

Finland is part of Euroland.

The Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), mentioned the adoption of the (normal) legislative procedure concerning amendments to certain Articles of the ESCB Statute in draft Constitution Article III-79. The Finnish government remarked on the proposal to extend qualified majority voting in the Council of Ministers to amendments proposed by the Commission, not only the ECB. This had raised fears of weakening the position of the central bank, and the Finnish Convention delegates had resisted this amendment (page 66):
”Perustuslaillisella sopimuksella muutetaan myös joitakin päätöksentekomenettelyjä talous- ja rahapolitiikan alalla. Lainsäädäntömenettely ulotetaan kattamaan myös rahoituslaitosten valvontaa koskevien erityistehtävien siirtäminen EKP:lle (III-77 artikla) sekä EKP-järjestelmän perussäännön tiettyjen artiklojen muuttaminen (III-79 artikla). EKP:lle voidaan normaalia lainsäädäntömenettelyä noudattaen antaa erityistehtäviä jotka koskevat luottolaitosten sekä muiden rahoituslaitosten kuin vakuutusyritysten toiminnan vakauden valvontaa. Nykysopimuksessa tämä edellyttää neuvostossa yksimielisyyttä. Suomen taholta ei yhdistetyn valvontavastuun tavoittelua unionissa ole pidetty tarkoituksenmukaisena, koska kyse on erittäin herkkäluonteisista kysymyksistä joilla on myös taloudellisia vaikutuksia. EKP:n keskuspankin perussääntöä voidaan puolestaan jatkossa muuttaa ministerineuvostossa määräenemmistöllä myös komission, ei vain EKP:n aloitteesta. Tämän on pelätty heikentävän keskuspankin asemaa. Suomen edustajat konventissa vastustivatkin näitä muutoksia.”

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The attentive reader, with an eye for detail, may have noticed that my initial text comparison did not bring all the aspects to the fore. Neither did the researched documents individually, but using several sources gives us a fuller picture of the Article studied.

We will follow the Article III-79 proposed by the European Convention as it reappears after the intergovernmental conferences leading to the signing of the Constitutional Treaty and the Treaty of Lisbon.

.
Ralf Grahn

European Central Bank IIa: Article III-79 draft Constitution

The European System of Central Banks (ESCB) and the European Central Bank (ECB) were part of the all-encompassing draft Treaty establishing a Constitution for Europe.

But did the European Convention propose any material or stylistic change to the existing provisions?

We look at the contents of the institutional basics in draft Constitution Article III-79.

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Article III-79 of the draft Constitution, proposed by the European Convention, corresponds with Article 107 of the Treaty establishing the European Community (TEC), and it is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.

Article III-79 draft Treaty establishing a Constitution for Europe is found in OJ 18.7.2003 C 169/42─43:

Article III-79 Draft Constitution

1. The European System of Central Banks shall be composed of the European Central Bank and of the national central banks.

2. The European Central Bank shall have legal personality.

3. The European System of Central Banks shall be governed by the decision-making bodies of the European Central Bank, which shall be the Governing Council and the Executive Board.

4. The Statute of the European System of Central Banks is laid down in the Protocol on the Statute of the European System of Central Banks and the European Central Bank.

5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a) and 36 of the Statute of the European System of Central Banks and the European Central Bank may be amended by European laws:

(a) either on a proposal from the Commission after consultation of the European Central Bank;

(b) or on a recommendation from the European Central Bank after consultation of the Commission.

6. The Council of Ministers shall adopt the European regulations and decisions laying down the measures referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the System of European Central Banks and the European Central Bank. It shall act after consulting the European Parliament:

(a) either on a proposal from the Commission after consulting the European Central Bank;

(b) or on a recommendation from the European Central Bank after consulting the Commission.

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Texts compared

The following differences can be noted between the current Article 107 TEC and Article III-79 draft Constitution:

The draft Constitution spells out the acronyms ESCB and ECB in full, for ease of reading.
In paragraph 4, the draft Constitution defined more exactly in which Protocol the ESCB Statute lay hidden; namely ‘the Protocol on the Statute of the European System of Central Banks and the European Central Bank’.

In paragraph 5, the simplified revision of certain provisions of the ESCB Statute referred to the existing Articles. This left the detailed work to the coming intergovernmental conference, if changes to the Statute were to be made. The Convention, preoccupied by the main institutional building-blocks of the European Union, left only a rudimentary collection of eight draft protocols and declarations in all.

The legal instruments to be used were defined as European laws. The two-pronged approach, either a recommendation from the ECB or a proposal from the Commission, was maintained, although they were mentioned in reverse order. No mention was made of the European Parliament, whereas the assent of the EP is required currently. On the other hand, paragraph 5 did not say that the Statute amendments were to be adopted by the Council (alone).

Was it a slip to drop the words ‘by the Council’, or did the Convention really mean to introduce the ordinary legislative procedure (European laws, with no qualification) for these enumerated simplified changes to the ESCB Statute?

On the other hand, although the potential scope for changes looked insignificant, when we studied Article 107(5) TEC, the ESCB Statute is, in principle, a treaty level document, so any exemption to normal treaty amending procedures (IGC and ratifications) might be seen as a serious matter.

The more important complementary legislation in paragraph 6 was re-written in the same manner as the preceding paragraph, but here the European regulations and decisions were to be adopted by the Council of Ministers, after consulting the European Parliament (as currently).

***
The next post is going to look at some legal materials concerning the European Convention proposal. With luck, we might even find an answer to the baffling legislative ‘minutiae’ mentioned above.


Ralf Grahn

Euro banknotes and coins IIb: Comparison Article III-78 draft Constitution

We compare the proposal of the European Convention (Article III-78) with the current Article 106 of the Treaty establishing the European Community (TEC) concerning the issue of euro banknotes and euro coins.

After that we look at some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.

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Texts compared

Article III-78(1) of the draft Constitution wrote the European Central Bank in full, and it added the word ‘euro’ before banknotes. The third sentence was slightly rephrased, and ‘Union’ replaced ‘Community’. Similar editorial changes were made to the second paragraph, but the European Parliament was downgraded by the move from the cooperation procedure to the consultation procedure.

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de Poncins

Étienne de Poncins presented the proposed text of Article III-78 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), without comment, on page 302─303.

***

Sweden

Sweden remains outside the third phase of economic and monetary union (EMU), without a derogation, but following the 14 September 2003 referendum.

I found no mention of Article III-78 in the Swedish government’s memorandum on the draft Constitution, ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003).

***

Sweden

Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden made a passing reference to technical specifications regarding euro coins, which are decided by the Eurogroup, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 48:

”Redan idag finns ett antal frågor där euroländerna själva fattar beslut, bl.a. sanktioner i stabilitets- och tillväxtpakten, växelkurspolitik och tekniska frågor som rör euromynten. Konventet föreslår att euroländerna, inom det ordinarie rådet, skall kunna samordna sin politik ytterligare genom att de ges möjlighet att själva besluta om särskilda bestämmelser för euroländerna när det gäller riktlinjer för den ekonomiska politiken samt förfarandet vid alltför stort underskott.”

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United Kingdom

The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).
Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:

“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.

75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”

***

Finland

Finland is part of Euroland.

The Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), listed the procedure in Article III-78 among the non-legislative acts to be adopted by the Council after consulting the European Parliament (Muut kuin lainsäätämisjärjestyksessä hyväksyttävät säädökset; 3.21Määrenemmistö neuvostossa ja Euroopan parlamentin kuuleminen; page 88).

***

We will see that the European Convention initiated some of the changes of terminology, later to appear in the Constitutional Treaty and the Treaty of Lisbon.

Downgrading the role of the European Parliament to mere consultation concerning the detail of denominations and technical specifications of euro coins did not elicit much comment, but it underlined the intergovernmental character of EU economic and monetary union (EMU) in combination with the particular autonomy of the European Central Bank with regard to monetary policy.


Ralf Grahn

Euro banknotes and coins IIa: Article III-78 draft Constitution

Did the European Convention have anything to say about issuing euro banknotes and coins, the only legal tender within the euro area?

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Article III-78 of the draft Constitution, proposed by the European Convention, corresponds with Article 106 TEC, and it is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.

First, we present the proposed contents. In the draft Treaty establishing a Constitution for Europe, Article III-78 on the issue of euro banknotes and euro coins is found in OJ 18.7.2003 C 169/42:

Article III-78 Draft Constitution

1. The European Central Bank shall have the exclusive right to authorise the issue of euro bank notes in the Union. The European Central Bank and the national central banks may issue such notes. Only the bank notes issued by the European Central Bank and the national central banks shall have the status of legal tender within the Union.

2. Member States may issue euro coins subject to approval by the European Central Bank of the volume of the issue. The Council of Ministers, on a proposal from the Commission, may adopt European regulations laying down measures to harmonise the denominations and technical specifications of all coins intended for circulation to the extent necessary to permit their smooth circulation within the Union. The Council of Ministers shall act after consulting the European Parliament and the European Central Bank.


***

The next post is going to look at some legal materials concerning the European Convention proposal.


Ralf Grahn

EU: Monetary policy IIb ECB and prudential supervision

Has European Community (European Union) monetary policy, based on the single currency (euro), advanced during the protracted treaty reform process since the 2001 Treaty of Nice?

In particular, given the present financial turmoil, did the European Convention offer anything, which could have prevented or mitigated the problems of today concerning the lack of European level prudential supervision?

We compare the proposal of the European Convention (Article III-77) with the current Article 105 of the Treaty establishing the European Community (TEC) on the objectives and the basic tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB).

After that we look at some legal materials and descriptions of the proposal of the European Convention in the draft Constitution.

Would the government positions in 2008 remain what they were in 2003?

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Texts compared

There are some (material) differences in the referrals and the text between Article III-77 of the draft Constitution and the existing Article 105 of the Treaty establishing the European Community (TEC).

Price stability was retained as the primary objective, but the Union’s general objectives in Article I-3 had been reformulated with regard to Article 2 TEC.

The second referral in paragraph 1 underwent a change, too. The contents of Article 4 TEC and Article III-69 were practically identical, but what had been guiding principles for the European Community (former European Economic Community, EEC) generally, became the introductory principles for economic and monetary policy ─ a policy area ─ within the context of the unified European Union (which would have abolished the EC ─ EU duality).

In paragraph 2, the foreign exchange operations consistent with Article 111 TEC moved the Article referred to from the section on monetary policy to the chapter on international agreements (Chapter VI).

The real difference was that the legal base concerning prudential supervision of credit institutions and other financial institutions, in paragraph 6, underwent a change. The draft Constitution replaced unanimous Council decisions by European laws.

The European Convention started the practice to replace the acronyms ESCB and ECB by the European System of Central Banks and the European Central Bank.

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Convention Working Group

For a look at the background, you can read the Final report of Working Group VI on Economic Governance, CONV 357/02 (21 October 2002. The remarks give an indication of the discussion on monetary policy (page 3):

"A large number of members of the group consider that the tasks, mandate and statute of the European Central Bank should remain unchanged, and should not be affected by any new treaty provisions. However some consider that its mandate should be widened to include the objectives of growth and employment

The group also discussed the accountability and transparency of the ECB. Some consider that there is scope for improving the accountability of the ECB, and have put forward ideas such as enhancing the ECB's reporting to the European Parliament, giving the EP a greater role in the designation of ECB Board members, and providing for the obligatory publication of ECB minutes. Others consider that the ECB has already demonstrated a commitment to increased openness, and do not therefore think that any changes are necessary.

The group agrees on the importance, in the light of enlargement, of amending Article 10 paragraph 2 of the ECB statutes relating to the working methods of the ECB's Governing Council, and invites the ECB and/or the Commission to make use of the enabling clause included in the Treaty of Nice to make proposals for amending Article 10 paragraph 2 of the ECB statute as soon as the Nice Treaty enters into force."

The Working Group Report is available at:

http://register.consilium.eu.int/pdf/en/02/cv00/00357en2.pdf

***

de Poncins

Étienne de Poncins presented the proposed text of Article III-77 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), and he remarked on the changed legal base concerning prudential supervision, on page 302:

« Commentaire : le paragraphe 6 permet de confier à la Banque centrale européenne des missions particulières avant trait au contrôle prudentiel. Aujourd’hui cette décision requiert l’unanimité du Conseil et l’avis conforme du Parlement européen. La procédure législative ordinaire sera d’application, le Conseil se prononçant à la majorité qualifiée. »

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Sweden

Sweden remains outside the third phase of economic and monetary union (EMU), without a derogation, but following the 14 September 2003 referendum.

The government of Sweden briefly mentioned the proposed amendment on prudential supervision in the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003). The relevant passage is on page 55:

“Vidare föreslås ändrade beslutsregler för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB).

On page 56 the government noted the favourable opinion of Sveriges Riksbank (Sweden’s central bank) regarding the abandonment of the unanimity rule concerning prudential supervision:

”Sveriges riksbank stödjer konventets förslag om att frångå kravet på enhällighet vid beslut om att ge ECB särskilda uppgifter i samband med tillsynen av kreditinstitut och andra finansinstitut. Riksbanken har inte heller några invändningar mot förslaget om att ändra beslutsordningen för justering av ECB-stadgan.”

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Sweden

Ahead of the intergovernmental conference (IGC 2003─2004), but after the euro referendum, the government of Sweden described the proposed provision on prudential supervision, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on page 49:

”Europeiska centralbankens tillsynsbefogenheter och stadgar

Konventet föreslår att beslutsregeln för överföring av tillsynsbefogenheter för den finansiella sektorn till Europeiska centralbanken (ECB) skall ändras. I dag krävs enhällighet i rådet och samtycke av Europaparlamentet. Förslaget innebär att rådet skall besluta med kvalificerad majoritet och att Europaparlamentet skall ges medbeslutande för en sådan överföring. Vidare föreslås att Europaparlamentet ges medbeslutande beträffande vissa frågor i stadgan för Europeiska centralbankssystemet.”

On page 50 the Swedish government revealed its own ‘farsighted’ position. Supervision of financial markets is a matter for the member states. According supervisory functions to the European Central Bank should continue to be ruled by unanimity:

”Medlemsstaterna bör även fortsättningsvis själva kunna avgöra hur de organiserar övervakningen av de finansiella marknaderna. Det är därför inte lämpligt att släppa på kravet om enhällighet för överföring av tillsynsbefogenheter från medlemsstaterna till ECB.”


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United Kingdom

The United Kingdom has opted out of the third stage of economic and monetary union (EMU). (In the latest consolidated version of the treaties, Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, OJ 29.12.2006 C 321 E/299).

Between the European Convention and the intergovernmental conference, the UK government presented its general approach ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:

“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.

75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”

***

Finland

Finland has adopted the euro currency, but relinquishing unanimity when transferring prudential supervision to the European Central Bank did not find favour with the Finnish government in 2003.

In the view of the Finnish government, in ‘Valtioneuvoston selonteko Eduskunnalle konventin tuloksista ja valmistautumisesta hallitusten väliseen konferenssiin’ (VNS 2/2003 vp), joint supervision was not appropriate, given the sensititvity of these questions and their economic repercussions (page 66):

”Perustuslaillisella sopimuksella muutetaan myös joitakin päätöksentekomenettelyjä talous- ja rahapolitiikan alalla. Lainsäädäntömenettely ulotetaan kattamaan myös rahoituslaitosten valvontaa koskevien erityistehtävien siirtäminen EKP:lle (III-77 artikla) sekä EKP-järjestelmän perussäännön tiettyjen artiklojen muuttaminen (III-79 artikla). EKP:lle voidaan normaalia lainsäädäntömenettelyä noudattaen antaa erityistehtäviä jotka koskevat luottolaitosten sekä muiden rahoituslaitosten kuin vakuutusyritysten toiminnan vakauden valvontaa. Nykysopimuksessa tämä edellyttää neuvostossa yksimielisyyttä. Suomen taholta ei yhdistetyn valvontavastuun tavoittelua unionissa ole pidetty tarkoituksenmukaisena, koska kyse on erittäin herkkäluonteisista kysymyksistä joilla on myös taloudellisia vaikutuksia. EKP:n keskuspankin perussääntöä voidaan puolestaan jatkossa muuttaa ministerineuvostossa määräenemmistöllä myös komission, ei vain EKP:n aloitteesta. Tämän on pelätty heikentävän keskuspankin asemaa. Suomen edustajat konventissa vastustivatkin näitä muutoksia.”

***

We have seen that in 2003 none of our sample of three governments wanted to approve the proposal by the European Convention to facilitate the creation of joint financial supervision at European level, under the auspices of the European Central Bank.

In the following instalment we look at how the IGC 2004 and the Constitutional Treaty treated the proposals in the draft Constitution.

What was, and given the current financial crisis, what should have been the response in 2004 and later?


Ralf Grahn

EU: Monetary policy IIa

Did the European Convention have anything to say about the basic objectives and tasks of the European System of Central Banks (ESCB) and the European Central Bank (ECB)?

***

Article III-77 of the draft Constitution, proposed by the European Convention, corresponds with Article 105 TEC, and it is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 2 ‘Monetary policy’.

First, we present the proposed contents. In the draft Treaty establishing a Constitution for Europe, Article III-77 on the objectives and basic tasks of the European System of Central Banks and the European Central Bank is found in OJ 18.7.2003 C 169/42:

Article III-77 Draft Constitution

1. The primary objective of the European System of Central Banks shall be to maintain price stability. Without prejudice to this objective, the European System of Central Banks shall support the general economic policies in the Union in order to contribute to the achievement of its objectives as laid down in Article I-3. The European System of Central Banks shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article III-69.

2. The basic tasks to be carried out through the European System of Central Banks shall be:

(a) to define and implement the Union's monetary policy;

(b) to conduct foreign-exchange operations consistent with Article III-228;

(c) to hold and manage the official foreign reserves of the Member States;

(d) to promote the smooth operation of payment systems.

3. Paragraph 2(c) shall be without prejudice to the holding and management by the governments of Member States of foreign-exchange working balances.

4. The European Central Bank shall be consulted:

(a) on any proposed Union act in its fields of competence;

(b) by national authorities regarding any draft legislative provision in its fields of competence, but within the limits and under the conditions set out by the Council of Ministers in accordance with the procedure laid down in Article III-79(6).

The European Central Bank may submit opinions to the Union institutions, bodies or agencies or to national authorities on matters in its fields of competence.

5. The European System of Central Banks shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system.

6. European laws may confer upon the European Central Bank specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions with the exception of insurance undertakings. Such laws shall be adopted after consultation of the European Central Bank.

***

The next post is going to look at some legal materials concerning the European Convention proposal.


Ralf Grahn

EU: Excessive government deficits IIb

We look at some legal materials and descriptions of the proposal of the European Convention in the draft Constitution concerning the avoidance of excessive government deficits and the related procedures.

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Texts compared

Here are the material differences between Article III-76 of the draft Constitution and the existing Article 104 of the Treaty establishing the European Community (TEC):

In paragraph 5, the Commission addresses an opinion (“first warning”) directly to the member state concerned (instead of to the Council).

In paragraph 6, the Council acts on a proposal from the Commission (instead of a recommendation). Consequently, the Council would have to act unanimously to amend the proposal, which would have given it “backbone”. The text added “overall assessment” and incorporated the text of the current paragraph 7, thus dealing with both the existence of an excessive deficit and the recommendations issued as a consequence. The second subparagraph defined the qualified majority, excluding the “sinner”.

In the new paragraph 7, the Council was to make its later decisions concerning a “persistent sinner” on a recommendation from the Commission, in other words preserving the Council’s opportunities to deviate from the Commission’s view.

The current paragraph 10 on inadmissibility of actions was removed to become paragraph 12; consequently the current paragraph 11 was renumbered 10 and paragraph 12 became paragraph 11.

Decision-making on Commission recommendations had been set out in the draft Constitution (above), so the current paragraph 14 became paragraph 13.

The date for the first detailed rules and definitions (1 January 1994) was dropped. The European Parliament was still only to be consulted concerning implementing rules (subparagraph 3).

Thus, there was no paragraph 14 in the draft Constitution.

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Convention Working Group

For a look at the background, you can read the Final report of Working Group VI on Economic Governance, CONV 357/02 (21 October 2002. Here are some relevant remarks (page 5):

“The Working Group is of the opinion that budgetary and financial coordination of the Member States with the objective of monetary stability as a basis for sound economic growth is of utmost common concern.

Therefore, as far as the Treaty provisions on excessive deficit procedures (Article 104) are concerned, a majority of the Group wish to see these amended in order to allow the Commission to issue first warnings on excessive deficits directly to the Member State concerned. Some members consider that, in the subsequent phases, the Council should take decisions by QMV on the basis of a Commission proposal, always excluding from voting the Member State concerned.”

The Working Group Report is available at:

http://register.consilium.eu.int/pdf/en/02/cv00/00357en2.pdf

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de Poncins

Étienne de Poncins presented the proposed text of Article III-76 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), with a lengthy and illuminating comment on page 300:

« Commentaire : cet article III-76 sur la procédure des déficits excessifs est essentiel. Il peut conduire à l’instauration des sanctions à l’égard de l’État membre qui ne se conformerait pas à une décision l’enjoignant de réduire son déficit public. Pour la mise en œuvre de cet article, tous les États membres prennent part à la décision, qu’ils soient ou non membres de la zone euro, à l’exception des décisions prises sous les paragraphes 9 et 10 (mise en demeure et éventuelles sanctions financières) pour lesquels, en vertu de l’article III-91, seuls les États membres de la zone euro prennent part au vote, en présence des autres.

Les ministres de la zone euro ont demandé que cette liste soit étendue aux paragraphes 6, 7, 8 et 11 afin que les États membres de la zone euro puissent se prononcer seuls sur ensemble de la procédure. Ils n’ont pas eu gain de cause. Une disposition particulière leur a été proposée en échange avec l’insertion d’un nouvel article III-88 propre à la zone euro. Le débat devrait reprendre lors de la Conference intergouvernementale afin notamment de clarifier l’articulation entre le nouvel article III-88 et les dispositions générales de cet article III-76.

À noter également que, conformément aux conclusions du groupe de travail sur la gouvernance économique et à l’orientation prise par la Convention, les pouvoirs de la Commission sont renforcés au paragraphe 6. À l’heure actuelle, le Conseil se prononce sur la base d’une recommandation de la Commission (qu’il peut modifier à la majorité qualifiée) pour constater un déficit excessif. La Convention propose qu’il statue à l’avenir sur la base d’une proposition de la Commission. Elle ne pourrait donc être modifiée qu’à l’unanimité des États membres. Pour la mise en œuvre d’éventuelles sanctions, le Conseil continuera à se prononcer sur base d’une recommandation. »

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Sweden

The government of Sweden presented the main proposals on economic governance in the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003). The relevant passage is on page 55:

“Konventets förslag

Inom den ekonomiska politiken föreslås att kommissionen bl.a. skall få möjlighet att utfärda varningar till medlemsstater som inte bedöms följa de allmänna riktlinjer som rådet enats om rörande varje medlemsstats offentliga finanser. Konventet föreslår också att den berörda medlemsstatens röst inte skall räknas vid beslut om att utfärda en rekommendation när en medlemsstat inte efterlever de allmänna riktlinjerna eller vid beslut huruvida en medlemsstat har ett alltför stort underskott i de offentliga finanserna.”


In other words, the Swedish government mentioned the proposal to allow the Commission to issue warnings and the exclusion of the member state concerned from votes on recommendations or assessments of excessive deficits.

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Sweden

Ahead of the intergovernmental conference (IGC 2003─2004), the government of Sweden described the proposed economic policy provisions, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on pages 48:

”Kompetensfördelningen mellan institutionerna

Konventet föreslår inte några genomgripande förändringar i regelverket eller kompetensfördelningen på det ekonomisk-politiska området. En viss förskjutning föreslås i riktning mot mer inflytande för kommissionen och Europaparlamentet. Flera av dessa förslag syftar till att säkerställa genomförandet av medlemsstaternas åtaganden.

Kommissionen skall till exempel få möjlighet att utfärda ”de första varningarna” till medlemsstater som inte bedöms efterleva de allmänna riktlinjerna för den ekonomiska politiken och till medlemsstater som bedöms kunna få ett alltför stort underskott i de offentliga finanserna. För närvarande har rådet denna befogenhet. Enligt konventets förslag skall kommissionen få möjlighet att lägga ett förslag när det gäller beslut huruvida ett land har ett alltför stort underskott och även ett förslag till rekommendation om åtgärd för landet i fråga. Det innebär en stärkt roll för kommissionen eftersom det krävs enhällighet i rådet för att ändra i kommissionens förslag. Konventet föreslår också att den berörda medlemsstatens röst inte skall räknas vid beslut om att utfärda en rekommendation när en medlemsstat inte efterlever de allmänna riktlinjerna eller vid beslut huruvida en medlemsstat har ett alltför stort underskott i de offentliga finanserna.”

According to the government of Sweden, the proposed amendments were not sweeping, but it noted some movement towards added influence for the Commission and the European Parliament. The Commission would be allowed to issue “first warnings” to member states with excessive government deficits, and the Commission would propose the assessment and the measures, meaning that the Council would have to act unanimously to counter the proposals. The member state in question would be excluded from voting.

On pages 49─50 the Swedish government stated the importance of functioning economic policy coordination in order to manage the cross-border effects of member states’ economic policies and for the sake of monetary union. The government gave its approval to the existing basic legal framework and the competences, but some strengthening could be in order to ensure member states’ compliance. Still, economic policy was primarily a matter for national competence:

”En väl fungerande ekonomisk-politisk samordning är viktig för att unionen skall kunna hantera gränsöverskridande effekter av medlemsstaternas ekonomiska politik och för att valutaunionen skall fungera väl. Det nuvarande ramverket och kompetensfördelningen för den ekonomisk-politiska samordningen är i grunden bra. Instrumenten för genomförande och uppföljning kan dock behöva stärkas, bl.a. för att befästa medlemsstaternas åtaganden. Det är därför positivt att konventet lägger förslag som går i denna riktning. En viktig princip är att den ekonomiska politiken är nationell och faller inom medlemsstaternas befogenhet även om viss samordning är av gemensamt intresse.”

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United Kingdom

Between the European Convention and the intergovernmental conference, the UK government presented its view ─ most British ─ in ‘A Constitutional Treaty for the EU; The British Approach to the European Union Intergovernmental Conference 2003’ (Cm5934, September 2003), under Economic Governance on pages 34─35:

“74. Many of the issues discussed in the European Convention and raised in the draft Constitutional Treaty could have significant consequences for the future performance of EU economies. The draft Constitutional Treaty proposed by the Convention has proposed changes to the EU’s existing system of economic governance and other aspects of the EU fiscal framework; the institutional balance between the Union and Member States in economic policy coordination; and the role of the Eurogroup, the informal grouping of euro area finance ministers. The Government will oppose any such proposals which might lead to unnecessary rigidities or undermine the central role of Member States in determining their economic policies. It will work to ensure outcomes that will bolster stability, promote flexibility and enhance the ability of European countries to raise productivity and employment levels.

75. The draft Treaty does not alter the terms of the UK’s Economic and Monetary Union protocol (allowing the UK to decide whether or not to join the euro). This will need formally to be re-adopted on the conclusion of the IGC.”

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In the following instalment we look at excessive government deficits in the Constitutional Treaty.


Ralf Grahn

EU: Excessive government deficits IIa

Did the European Convention have anything to say about avoiding excessive government deficits, an important part of economic and monetary union (EMU), as elaborated in the Stability and Growth Pact?

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Article III-76 of the draft Constitution, proposed by the European Convention, corresponds with Article 104 TEC, and it is 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’.

In the draft Treaty establishing a Constitution for Europe, the ‘monster’ clause on excessive government deficits (Article III-76) is found in OJ 18.7.2003 C 169/41─42:

Article III-76 Draft 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;

(ii) or, 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 report of the Commission 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 shall formulate an opinion on the report of the Commission.

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.

6. The Council of Ministers 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, according to the same procedures, 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 of Ministers shall act without taking into account the vote of the representative of the Member State concerned, and a qualified majority shall be defined as the majority of the votes of the other Member States, representing at least three fifths of their population.

7. The Council of Ministers, 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 representative of the Member State concerned, and a qualified majority shall be defined as the majority of the other Member States, representing at least three fifths of their population.

8. Where it establishes that there has been no effective action in response to its recommendations within the period laid down, the Council of Ministers may make its recommendations public.

9. If a Member State persists in failing to put into practice the recommendations of the Council of Ministers, the Council of Ministers may adopt a European decision giving notice to the Member State to take, within a specified time-limit, steps for the deficit reduction which is judged necessary by the Council of Ministers in order to remedy the situation.

In such a case, the Council of Ministers 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 of Ministers may decide to apply or, as the case may be, intensify one or more of the following measures:

(a) to require the Member State concerned to publish additional information, to be specified by the Council of Ministers, before issuing bonds and securities;

(b) to invite the European Investment Bank to reconsider its lending policy towards the Member State concerned;

(c) to require the Member State concerned to make a noninterest-bearing deposit of an appropriate size with the Union until the Council of Ministers considers that the excessive deficit has been corrected;

(d) to impose fines of an appropriate size.

The President of the Council of Ministers shall inform the European Parliament of the measures adopted.

11. The Council of Ministers shall abrogate some or all of the measures referred to in paragraph 6 and paragraphs 8 to 10 if it considers the excessive deficit in the Member State concerned to have been corrected. If the Council of Ministers has previously made public recommendations, it shall state publicly, as soon as the decision under paragraph 8 has been abrogated, that there is no longer an excessive deficit in the Member State concerned.

12. The rights to bring actions provided for in Articles III-265 and III-266 may 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 described in this Article are set out in the Protocol on the excessive deficit procedure

A European law of the Council of Ministers shall lay down the appropriate measures to replace the said Protocol. The Council of Ministers shall act unanimously after consulting the European Parliament and the European Central Bank.

Subject to the other provisions of this paragraph, the Council of Ministers, 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.

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The next post is going to look at some legal materials concerning the European Convention proposal.


Ralf Grahn

EU: Economic crisis management II

We turn to the European Convention, the closest thing to a constituent assembly EU citizens have had since the 1950s and 1980s. The proposed Article corresponding to Article 100 TEC is 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’.

Article III-72 of the draft Treaty establishing a Constitution for Europe, OJ 18.7.2003 C 169/40:

Article III-72 Draft Constitution

1. Without prejudice to any other procedures provided for by the Constitution, the Council of Ministers, on a proposal from the Commission, may adopt a European decision laying down the measures appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products.

2. Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council of Ministers, on a proposal from the Commission, may adopt a European decision granting, under certain conditions, Union financial assistance to the Member State concerned. The President of the Council of Ministers shall inform the European Parliament of the decision adopted.

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The draft Constitution followed the current TEC text closely, with the customary terminological differences and a few stylistic changes.

The government of Sweden ─ a country outside the Eurozone ─ presented its views on the draft Constitution in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003), but I found no comment regarding the essentially unchanged Article III-72.


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Ahead of the intergovernmental conference (IGC 2003─2004), the government of Sweden stated its positions on economic policy provisions, in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), on pages 49─50, but there was no comment on Article III-72.

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Étienne de Poncins presented the proposed text of Article III-72 of the draft Constitution in ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), page 294─295, without comment.

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In the following instalment we look at the corresponding text on severe economic difficulties in the Constitutional Treaty.


Ralf Grahn

EU: Broad economic policy guidelines II

Has the treaty reform process tried to improve the provisions on economic policies as a matter of common concern, or more specifically the broad economic policy guidelines?

First, we turn to the European Convention, the closest thing to a constituent assembly EU citizens have had since the 1950s and 1980s. The corresponding Article is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 1 ‘Economic policy’.

Article III-71 of the draft Treaty establishing a Constitution for Europe, OJ 18.7.2003 C 169/39-40:

Article III-71 Draft Constitution

1. Member States shall regard their economic policies as a matter of common concern and shall coordinate them within the Council of Ministers, in accordance with Article III-70.

2. The Council of Ministers, on a recommendation from the Commission, shall formulate a draft for the broad guidelines of the economic policies of the Member States and of the Union, and shall report its findings to the European Council.

The European Council, on the basis of the report from the Council of Ministers, shall discuss a conclusion on the broad guidelines of the economic policies of the Member States and of the Union. On the basis of this conclusion, the Council of Ministers shall adopt a recommendation setting out these broad guidelines. It shall inform the European Parliament of its recommendation.

3. In order to ensure closer coordination of economic policies and sustained convergence of the economic performances of the Member States, the Council of Ministers, on the basis of reports submitted by the Commission, shall monitor economic developments in each of the Member States and in the Union, as well as the consistency of economic policies with the broad guidelines referred to in paragraph 2, and shall regularly carry out an overall assessment.

For the purpose of this multilateral surveillance, Member States shall forward information to the Commission on important steps taken by them in the field of their economic policy and such other information as they deem necessary.

4. Where it is established, under the procedure referred to in paragraph 3, that the economic policies of a Member State are not consistent with the broad guidelines referred to in paragraph 2 or that they risk jeopardising the proper functioning of economic and monetary union, the Commission may address a warning to the Member State concerned. The Council of Ministers, on a recommendation from the Commission, may address the necessary recommendations to the Member State concerned. The Council of Ministers, on a proposal from the Commission, may decide to make its recommendations public.

Within the scope of this paragraph, the Council of Ministers shall act without taking into account the vote of the representative of the Member State concerned, and a qualified majority shall be defined as the majority of the votes of the other Member States, representing at least three fifths of their population.

5. The President of the Council of Ministers and the Commission shall report to the European Parliament on the results of multilateral surveillance. The President of the Council of Ministers may be invited to appear before the competent committee of the European Parliament if the Council of Ministers has made its recommendations public.

6. European laws may lay down detailed rules for the multilateral surveillance procedure referred to in paragraphs 3 and 4.

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The draft Constitution followed the current TEC text closely, with the customary terminological differences and a few stylistic ones, but in paragraph 4 the Convention introduced two novelties: In the first subparagraph, the Commission, instead of the Council, was authorised to address a warning to a member state. The second subparagraph excluded the member state concerned, when voting on a recommendation or its publicity concerning the erring state.

The government of Sweden ─ a country outside the Eurozone ─ made the following remarks in ‘Europeiska konventet om EU:s framtid’ (Utrikesdepartementet, Departementsserien (Ds) 2003:58, 2003), page 55:

”Inom den ekonomiska politiken föreslås att kommissionen bl.a. skall få möjlighet att utfärda varningar till medlemsstater som inte bedöms följa de allmänna riktlinjer som rådet enats om rörande varje medlemsstats offentliga finanser. Konventet föreslår också att den berörda medlemsstatens röst inte skall räknas vid beslut om att utfärda en rekommendation när en medlemsstat inte efterlever de allmänna riktlinjerna eller vid beslut huruvida en medlemsstat har ett alltför stort underskott i de offentliga finanserna. [---]

The Swedish government noted both the possibility for the Commission to issue warnings and exclusion of the member state concerned from voting.

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Ahead of the intergovernmental conference (IGC 2003─2004), the government of Sweden, in line with the European Convention, supported some strengthening of the instruments for multilateral surveillance of economic policies, although the government underlined the national character of economic policy; in ‘Europeiska konventet om EU:s framtid’ (Regeringens skrivelse 2003/04:13, den 2 oktober 2003), pages 49─50:

“En väl fungerande ekonomisk-politisk samordning är viktig för att unionen skall kunna hantera gränsöverskridande effekter av medlemsstaternas ekonomiska politik och för att valutaunionen skall fungera väl. Det nuvarande ramverket och kompetensfördelningen för den ekonomisk-politiska samordningen är i grunden bra. Instrumenten för genomförande och uppföljning kan dock behöva stärkas, bl.a. för att befästa medlemsstaternas åtaganden. Det är därför positivt att konventet lägger förslag som går i denna riktning. En viktig princip är att den ekonomiska politiken är nationell och faller inom medlemsstaternas befogenhet även om viss samordning är av gemensamt intresse.”

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Étienne de Poncins highlighted the proposed shift to the ordinary legislative procedure (co-decision) in his commentary ‘Vers une Constitution européenne’ (Éditions 10/18, 2003), page 294 :

« Commentaire : le paragraphe 6 de cet article sur la surveillance multilatérale relève dans les traités actuels de la procédure de coopération entre le Parlement et le Conseil. Cette procédure disparaissant dans la Constitution, la procédure législative ordinaire sera d’application. Le Parlement gagne là des pouvoirs importants sur un thème sensible pour les gouvernements. »

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In the following instalment we look at the corresponding economic policy coordination text of the Constitutional Treaty.


Ralf Grahn

EU Treaty of Lisbon: Legal personality

Much virulent criticism of the Treaty of Lisbon seems to be based on misconception, misconstruction or misrepresentation. Legal personality for the European Union (EU) is one example.

The European Community (EC) already has express legal personality, and the EC has concluded hosts of international treaties and agreements within its powers.

The current state of affairs is described in a UK House of Commons Library Research Paper in the following way (p. 72):

“This means that only the Community, represented by the Commission, currently has rights and obligations under international law. The Commission negotiates international agreements, such as trade and commercial agreements, on behalf of the Community with the authorisation of the Council. Member States decide the negotiating mandate by unanimity or QMV, depending on the policy area in question, and approve any final agreement on the same basis. The EU has no express legal personality at present, but Articles 24 and 38 TEU provide a treaty negotiation procedure on the basis of which treaties have been signed in the name of the EU.”

The Lisbon Treaty abolishes the EC and the pillar structure. The EC is succeeded by the EU. Therefore, legal personality is expressly conferred upon the EU. This can be likened to taking down a partitioning wall, creating a wider space.

The exercise of the European Union’s rights and duties under international law is still subject to the competences (powers) conferred upon the EU by the Treaties. The member states have agreed on a declaration to that effect.

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We arrive at the Final provisions (Title VI) of the Treaty on European Union, as amended by the Treaty of Lisbon. We can take an introductory look at what the intergovernmental conference (IGC 2007) set out to do according to its Mandate (Council document 11218/07):

“Final Provisions (VI)

16. Title VI (former Title VIII of the existing TEU) will be amended as agreed in the 2004 IGC. There will in particular be an Article on the legal personality of the Union (8), an Article on voluntary withdrawal from the Union and Article 48 will be amended so as to bring together the procedures for revising the Treaties (the ordinary and the two simplified procedures). This Article, in its paragraph on the ordinary revision procedure, will make it clear that the Treaties can be revised to increase or reduce the competences conferred upon the Union. In Article 49, on conditions of eligibility and the procedure for accession to the Union, the reference to the principles will be replaced by a reference to the Union's values and the addition of a commitment to promoting such values, an obligation to notify the European Parliament and national parliaments of an application for accession to the Union and a reference to take into account the conditions of eligibility agreed upon by the European Council (see Annex 1, Title VI). The usual final provision will also be adapted (territorial scope, duration, ratification and authentic texts and translations).(9)”

Footnote 8 added: The IGC will agree on the following Declaration: "The Conference confirms that the fact that the European Union has a legal personality will not in any way authorise the Union to legislate or to act beyond the competences conferred upon it by the Member States in the Treaties."

Footnote 9 stated: Articles 41, 42, 46 and 50 of the TEU will be deleted, Article 47 being placed, as amended in the 2004 IGC, in the CFSP Chapter.

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The intergovernmental conference (IGC 2007) agreed on the following, mercifully short, provision at the beginning of the new Title VI Final provisions (OJ 17.12.2007 C 306/37):

55) The following new Article 46 A shall be inserted:


Article 46a

The Union shall have legal personality.

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The nearest antecedent in the existing Treaties is Article 281 of the Treaty establishing the European Community (TEC)(latest consolidated version OJ 29.12.2006 C 321 E/170):

Article 281

The Community shall have legal personality.

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The Convention proposed the following provision in the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/9):

Article I-6
Legal personality

The Union shall have legal personality.

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The IGC 2004 agreed on the following provision in the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/13):

Article I-7
Legal personality

The Union shall have legal personality.

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We can see that the European Community (EC) has legal personality.

The Convention, the Constitutional Treaty and the Lisbon Treaty all confer this explicit legal personality on the European Union.

Since the EC becomes history by being merged into the EU, legal personality follows. See Article 1(3) of the Reform Treaty TEU:

“Article 1(3)

The Union shall be founded on the present Treaty and on the Treaty on the Functioning of the European Union (hereinafter referred to as “the Treaties”). Those two Treaties shall have the same legal value. The Union shall replace and succeed the European Community.”

Only lawyers and official documents seem to have upheld the existing distinction between the EC and the EU. Media, politicians and citizens have subsumed everything under the EU heading a long time ago. Thus, the end result with only the EU should be clearer and easier for citizens.

The refounded EU replaces and succeeds the EC. This includes legal personality.

As a legal person the European Union is a subject of international law, with rights and duties. It can bring international claims, make treaties and conclude agreements and enjoy privileges and immunities from national jurisdictions, within the competences (powers) conferred upon it by the member states.


Ralf Grahn


Source:

House of Commons Library Research Paper 07/80, 22 November 2007: The EU Reform Treaty: amendments to the Treaty on European Union;
http://www.parliament.uk/commons/lib/research/rp2007/rp07-080.pdf

Convention for the Protection of Human Rights

The Convention for the Protection of Human Rights and Fundamental Freedoms was signed by the member states of the Council of Europe on 4 November 1950.

Subsequently the Convention has been amended according to various protocols, which have given the Convention more scope and instituted the supranational European Court of Human Rights, with jurisdiction extending to all matters concerning the interpretation and application of the Convention and the protocols thereto.

The Court may receive applications from any person, non-governmental organisation or group of individuals claiming to be the victim of a violation of one of the member states of the rights set forth in the Convention or the protocols.

The member states have undertaken to abide by the final judgments of the Court. Final judgments of the Court are transmitted to the Committee of Ministers of the Council of Europe, and the Committee supervises their execution.

The member states have promised to secure to everyone within their jurisdiction the rights and freedoms defined in the Convention.

An overview of the substantive rights guaranteed by the Convention, as amended by Protocol No. 11:

Right to life
Prohibition of torture
Prohibition of slavery and forced labour
Right to liberty and security
Right to a fair trial
No punishment without law
Right to respect for private and family life
Freedom of thought, conscience and religion
Freedom of expression
Freedom of assembly and association
Right to marry
Right to and effective remedy
Prohibition of discrimination

Most articles declare a right in principle, and then mention the formalities, conditions, restrictions or penalties, which are allowed (subject to the evolving interpretations of the Court).

There are some general clauses concerning these rights:

Derogations in time of emergency
Restriction on political activity of aliens
Prohibition of abuse of rights
Limitation on use of restrictions on rights

Substantive rights added by protocols are:

Protection of property
Right to education
Right to free elections
Prohibition of imprisonment for debt
Freedom of movement
Prohibition of expulsion of nationals
Prohibition of collective expulsion of aliens
Abolition of the death penalty (in peace time)
Procedural safeguards relating to expulsion of aliens
Right of appeal in criminal matters
Compensation for wrongful conviction
Right not to be tried or punished twice
Equality between spouses
General prohibition of discrimination
Abolition of the death penalty

Protocol No. 14, amending the control system of the Convention, has not entered into force, because it is still one ratification short of the 46 ratifications needed.

The European Convention for the Protection of Human Rights and Fundamental Freedoms and its control system headed by the European Court of Human Rights try to guarantee the basic human rights for 800 million individuals in Europe.

Ralf Grahn