The Constitution and the IGC

Written by Andrew Duff MEP and published in Briefing note for the UK Liberal Democrat European Parliamentary Party on Sat 1st May 2004

The Draft Constitution enhances the capacity of the European Union to act effectively at home and abroad. It rationalises the legal and policy instruments used by the EU and streamlines decision making. It codifies and entrenches what is valuable in the existing EU treaties, reflecting the latest case law of the European Court of Justice.

The Constitution lays down clearly the political objectives of the Union and the values and principles which inform them. It sets out in fairly simple terms the competences of the Union and the powers of the institutions. It strengthens parliamentary democracy and the rule of law.

Once ratified, the Constitution will bring the Union greater stability and legitimacy than it has ever had before. A stronger and more democratic European Union is in Britain's interest.

The Convention and the IGC

The Draft Treaty establishing the Constitution for Europe was drafted by the Convention, chaired by ValŽry Giscard d'Estaing, made up of government ministers, Members of the European Parliament (including Andrew Duff), members of national parliaments (including Lord Maclennan), and the European Commission. The Laeken European Council (under the presidency of Liberal prime minister Guy Verhofstadt) set up the Convention. It worked from February 2002 until July 2003.

The Convention transformed the constitutional development of Europe: transparent and pluralistic, it reached a fresh and large consensus about how the enlarging Union should be run. The Intergovernmental Conference (IGC) accepted the Convention's draft as the basis for negotiations. Since then, the IGC has run into trouble under the Italian presidency of the Council but has recovered its nerve under the current Irish presidency. We hope the IGC will reach a successful conclusion before the European Parliamentary elections or soon afterwards.

More democracy

The Constitution greatly enlarges (by 48 to 84 in total) the number of matters subject to the normal legislative procedure ‑ that is, co-decision between the European Parliament and the Council of Ministers, acting by qualified majority, on a proposal from the Commission (III-302). QMV is extended to the making of special Council laws in a further four cases. QMV is extended to the passing of Council executive decisions in five more cases. [1] Overall, decisions in the Union will be easier to reach and democratic control strengthened. The possibility of blockage by only one member state, often for spurious reasons, is much reduced if not entirely eliminated.

Widening the scope of QMV plus co-decision is a sign of genuine commitment to reaching common solutions to shared problems. Most notably, the Constitution will do this for the EU's structural and cohesion funds (from 2007, III-119) and the common agricultural and fisheries policy (III-127).

Single market, tax and social security

The single market would never have been created without QMV. Now, to consolidate it, the Constitution proposes the same procedures for energy policy (III-157), and commercial policy (III-217). The Parliament is also given the power of consent over any international agreement that has as its base policy areas covered by the legislative procedure (III-227). The full legislative procedure is applied to the framework programmes in research and technological development (III-149), although this has been challenged at the IGC.

The EU has no competence in the field of income tax or national insurance. The harmonisation of policy in the field of indirect taxation remains governed essentially by unanimity. However, the Convention proposes that, with respect to company taxation, turnover taxes and excise duties, and only if necessary for the functioning of the internal market and to avoid distortion of competition, the Council can decide by unanimity to take measures relating to administrative cooperation or to combat tax fraud or evasion according to the normal legislative procedure (QMV plus co-decision) (III-62.2 & III-63). The UK is contesting that at the IGC.

Even in the area of eco-taxation, an idea which the Liberal Democrats support, the Convention proposed that decisions should be taken by unanimity in the Council (III-130.2). Any change to this decision-making procedure has to be taken by unanimity.

The Constitution also introduces the legislative procedure for the provision of social security for mobile workers (III-21). It does not provide for harmonisation of social security systems. Nevertheless, the UK is contesting this at the IGC by wanting an emergency brake clause that allows any member state to unilaterally suspend the legislative procedure.

Justice and Home Affairs

The Constitution provides for reinforced integration in the field of justice and home affairs. The normal legislative procedure is extended to frontier controls (III-166), asylum (III-167), immigration (III-168), judicial cooperation in criminal matters (III-171), minimum rules for the definition of and penalties in areas of serious crime (III-172), incentive measures for crime prevention (III-173), Eurojust (III-174), police cooperation (III-176.2), Europol (III-177), and civil protection (III-184). Unanimity in the Council is retained for the establishment of the European Public Prosecutor (III-175) and operational policing (III-176.3). At the IGC the UK has challenged the extension of QMV in this area, suggesting a prevalent threat to the English common law system. It wants an emergency brake whereby the normal co-decision procedure would be terminated on the appeal of any one member state.

The Convention draft enables the Public Prosecutor to act in areas of cross border crimes as well as the protection of the financial interests of the Union (III-175). The Italian presidency proposed to limit the Prosecutor to the EU's financial interest, but installed a passerelle to widen his scope in future. Unfortunately the passerelle is linked to national ratification, thereby rather negating its purpose. In either case, the establishment of the Prosecutor requires the unanimous agreement of the Council and the consent of the European Parliament.

Other matters

The Convention made provisions for the normal legislative procedure in the fields of cultural policy (III-181), education, youth and sport (III-182), and vocational training policies (III-183) ‑ although in all such cases the harmonisation of national laws is excluded. The same exclusion applies to laws concerning cooperation in public administration (III-185).

Summary

In summary, therefore, the Draft Constitution greatly reinforces both the legislative and budgetary roles of the European Parliament.

It reforms the Council of Ministers by making it pass laws in public and by prescribing majority voting in place of unanimity over a much wider area. Despite understandable nervousness on the part of some governments, the fact is that insistence on Council unanimity in a Union of twenty-five and more member states will threaten paralysis.

Subsidiarity

National parliaments, which are in any case represented by their government's ministers in the Council, gain the right to challenge any draft law on the grounds of subsidiarity. The principle of subsidiarity means that the Union should act, in areas that do not fall within its exclusive competence, only when the objectives of the intended action cannot be sufficiently achieved nationally, regionally or locally. The UK appears to be raising once again, and contrary to the wishes of the Irish presidency, the issue of a national parliamentary veto on all EU legislation.

Commission President

The European Parliament will be able to accept or reject the candidate the European Council puts forward (by QMV) for President of the Commission. Heads of government will have to take into account the result of the European elections and hold Ôappropriate consultationsÕ with the Parliament before making their nomination (I-26).

Good governance

The Convention wrote into the Constitution a number of articles spelling out the nature of the Union's representative and participatory democracy, as well as codes of transparency and good governance. The importance of consultation with the social partners and non-governmental organisations is affirmed. The role of the Ombudsman is recognised. One million citizens are entitled to petition the Commission to initiate legislation (I-Title VI).

Rationalisation

The Constitution has rationalised the number of instruments at the disposal of the Union (I-32). Acts of a legislative nature are European laws or framework law. Acts of an executive nature are European regulations, decisions and recommendations. Acts passed under the legislative procedure are the norm. There are, however, some abnormal acts ‑ mainly Council laws ‑ where the Parliament still plays a subsidiary role.

The Constitution establishes a new form of secondary legislation - the delegated regulation (I-35). This enables the legislature (Parliament and Council) to delegate to the Commission elements of legislation that are not essential, whilst enabling either branch of the legislature to scrutinise the work of the Commission and, if necessary, to call back delegated law. This means that MEPs and ministers should be able to concentrate on the essential political choices behind law making, delegating more technical aspects to the Commission.

ÔComitologyÕ ‑ the mechanism for managing the implementation by member states of EU law ‑ will be set out in a law, jointly agreed by the Council and Parliament (I-36).

Competences

The competences allocated to the Union have been much more clearly defined than in the present Treaties into three categories of exclusive, shared, and supporting, coordinating or complementary measures (I-Title III), as follows:

Exclusive (I-12)

competition rules for internal market;

monetary policy (for the eurozone);

common commercial policy;

customs union;

marine conservation [2].

Shared (I-13)

internal market;

area of freedom, security and justice;

agriculture and fisheries [3];

transport and TENs;

energy;

social policy (as defined in III-104);

economic, social and territorial cohesion;

environment;

consumer protection;

public health safety;

R & TD, and space;

aid and development.

Supporting (I-16)

industry;

health policy;

education, vocational training, youth and sport;

culture;

civil protection.

The Constitution spells out clearly the UnionÕs acquired role in coordinating the economic and employment policies of member states (I-14). It lays down the Union's competence to define and implement a common foreign, security and defence policy (I-15). It also lays down the mutual obligation on the EU institutions and on member states to respect each otherÕs respective competences, domestic constitutions and national identities (I-5), as well as to conserve regional, cultural and linguistic diversity (I-3). Member states agree to maintain their recognition of the primacy of EU law (I-10).

A flexibility instrument (I-17) enables the Council, acting unanimously and with the consent of the Parliament, to Ôtake appropriate measuresÕ to attain one of the objectives set by the Constitution. This provision replaces existing Article 308 (TEC), which only requires the consultation of Parliament.

Financial system and budgetary process

There are three elements to the EUÕs financial system and budgetary process. First, a ceiling is put on the total amount of revenue the Union needs to raise (currently 1.27 per cent of GNI); second, a medium-term strategy puts in place the financial perspectives for the main categories of expenditure (1.12 per cent of GNI in 2004, falling to 1.09 per cent in 2006); and, third, the annual budget is agreed (in 2004, Û 111 billion, 0.98 per cent of GNI).

Own resources

Under the Constitution, the ceiling of own resources and the categories of revenue source remains decided by member states acting unanimously, after consultation with the European Parliament. The agreement then has to be ratified in all member states according to their own constitutional requirements (usually, by a vote of the national parliament) (I-53.3). However, the Convention proposed that the modalities of the own resources decision would be enacted by QMV and with the consent of the Parliament (I-53.4). In defence of its rebate, the UK is contesting that QMV element at the IGC.

Financial perspectives

The multi-annual financial framework (I-54), is to be agreed by QMV in the Council and with the consent of the European Parliament ‑ although QMV will not apply until the second round of negotiations following the entry into force of the Constitution (possibly as late as 2017). In its quest for a general corrective mechanism, the Netherlands is contesting the QMV element at the IGC.

Budget

As far as the budget is concerned, an important but arcane distinction between 'compulsory' and 'non-compulsory' expenditure has been removed and the Parliament will have full co-decision powers over the whole annual budget, including the CAP (III-310). The Constitution proposes that the Parliament should continue to have the last word on the budget. Faced with the hostility of certain finance ministers to the ConventionÕs budgetary proposals, the Italian presidency tabled a compromise which would deprive the Parliament of the effective last word on the budget but would leave nevertheless the co-decisional nature of the system intact.

Stability Pact

Associated with these institutional matters is the sensitive issue of how to deal with the Stability and Growth Pact which is losing credibility as a result of its infringement by some large member states. The IGC is considering an Italian presidency proposal to enable the Court of Justice to review infringements of the excessive deficit procedure (III-76.12). This Court procedure might be exchanged or supplemented with a new (non-binding) Declaration on better utilisation of the opportunities presented during the upward swing of the economic cycle.

The Charter of Fundamental Rights

Part Two of the Constitution contains the Charter of Fundamental Rights which was drawn up by a previous Convention in 1999-2000. It is a modern catalogue of the classical fundamental rights as well as the principles which have guided the development of EU law and policy over the years. Its purpose is to protect the citizen from any abuse by the EU of the power it exercises.

The Constitution makes the Charter binding on EU institutions and agencies and justiciable in the Courts. Respect for the provisions of the Charter will be mandatory for member state governments, regional and local authorities when and in so far as they implement EU law and policy.

The European Court of Justice in Luxembourg will develop jurisprudence in the field of fundamental rights, under the supervision of the European Court of Human Rights in Strasbourg.

The Charter does not give the EU carte blanche to dismantle Thatcherite trade union legislation in the UK. Its field of application is restricted to the competences of the Union (II-51.2); and its judicial scope is limited to laws and executive acts of the EU and by acts of member states when implementing EU law (II-52.5). The right to strike is recognised "in accordance with Union law and national laws and practices" (II-28). The Union is competent only to "support and complement the activities of the Member States" in the field of industrial relations (III-104.1); and EU legislation in this area has to be adopted by unanimity in the Council (III-104.3).

Rule of law

The Court of Justice will have enhanced supervision over all aspects of justice and home affairs, and over common foreign and security policy with respect to sanctions. Individuals will now be able to seek redress in the Court against certain regulations of direct adverse concern (III-270.4). The Commission has stronger powers, via the Court, to enforce compliance.

Common foreign, security and defence policy

The Constitution makes progress towards making a reality of the UnionÕs common foreign policy. It creates a Union Minister for Foreign Affairs, who will chair the Foreign Affairs Council as well as being a Vice-President of the Commission, with powers to initiate policy. The European Council will decide on the general strategy and mandate the Minister. The Minister will run a new joint administration which will draw on the services of the Commission, the Council and national governments. The use of QMV in the Council is limited to the implementation of consensual decisions of the European Council. Even then, any member state, for 'vital and stated reasons of national policy', may press the emergency brake and veto a decision (III-201.2). The Italian presidency has proposed an extension of QMV to proposals of the Foreign Minister.

The Convention has established the framework for the effective development of a real defence arm to the Union's foreign and security policy (I-40). The Constitution establishes a European Armaments, Research and Military Capabilities Agency in order to rationalise and coordinate arms procurement policies (III-212). It also provides for a coalition of the military capable and politically willing to form an integrated military hard core whose forces are to be made available to the Union (III-211 & 213).

The Constitution includes a solidarity clause which anticipates that member states will respond jointly in the event of an attack or natural disaster (I-42), as well as a provision for collective mutual defence, in close cooperation with NATO (I-40.7).

The Constitution accords to the Union a formal legal personality in international law (I-6). The same right has been enjoyed by the European Community for many years in commercial and economic matters: its extension will allow the EU to act as one in international negotiations in all fields, including security, and should be a spur to greater effectiveness in the UN.

Reform of the Council

The Constitution makes significant changes to the organisation of the European Council of heads of government and of the Council of Ministers (I-Title IV). The rotating six monthly presidencies, each with their own cumbersome programmes, are to disappear. A more permanent chair of the European Council will be appointed for a period of at least two and a half years. There will be team presidencies of the ordinary Councils.

A more formal multi-annual political programme will be established by the European Council on a proposal of the Commission, having consulted the European Parliament, with which the Commission's annual legislative programme will have to conform.

Enhanced cooperation

The Constitution improves the provisions whereby a group of member states may determine, as a last resort, to integrate more closely than the whole Union in a given policy sector. Authorisation of enhanced cooperation shall be taken by the Council acting by QMV, with the consent of the Parliament (I-43). At the IGC the UK originally opposed QMV for enhanced cooperation in foreign and security policy (III-325.2). The British also sought to suppress use of the passerelle provision to a widening of QMV within the core group (III-328).

Secession

Any member state that wants to leave the Union may do so in a negotiated way. The Council will act by QMV and Parliament will be required to give its consent (I-59).

Future revision

The European Parliament gains the power to propose future revisions to the constitution, alongside the Commission and member state governments. Parliament will also have to give its consent to a European Council decision not to summon a Convention to propose future constitutional amendment (IV-6.2). But all constitutional revision will have to be agreed unanimously and ratified in all member states.

To provide for more gradual constitutional evolution, the Constitution enables the European Council, acting unanimously, to convert abnormal decision-making procedures (mainly, where the Council decides by unanimity) to the normal legislative procedure (I-24.4). National parliaments will be properly consulted about such changes. The UK at the IGC is contesting this clause, known as the passerelle. The Italian presidency put forward an unfortunate amendment which would allow any one national parliament to block use of the passerelle notwithstanding the unanimous decision of the European Council.

The Patriotic Questions

Three inter-related problems have upset the equanimity of the IGC. They concern the balance of power between larger and smaller member states both within and between the three political institutions.

QMV formula

The Convention proposed that the formula for QMV in the Council should be half of member states representing 60 per cent of the population of the Union (I-24). Following much controversy from Spain and Poland, which would appear to lose out in the pecking order compared to that of the Treaty of Nice, the Irish presidency will have to come up with a new equation. 55/55 has been suggested and appears to command support, not least because it would prevent Germany, France and the UK from forming a blocking minority on their own.

It is also possible that a rendezvous clause will be introduced to permit a postponement of the switchover to the new system; and/or an emergency break provision would allow a return, in a crisis, to the Treaty of Nice.

Commission

The Draft Constitution proposes (as from 1 November 2009) a Commission of 15 members of the college plus non-voting juniors from all other member states, all selected according to the principle of equal rotation (I-25). This is deemed generally to have been an unsatisfactory proposal, not least by the Commission itself. The Irish presidency will have to come up with a superior solution. The possibility of not referring in the Constitution to any specific number of Commissioners has been mooted, as has the suppression of the principle of rotation. Another option would be to include a rendezvous clause for a decision in 2009 to delay the switchover from the present system (one full member of the college of each nationality) to the smaller Commission.

European Parliament

The European Council has established the future size and shape of the European Parliament. Some adjustment of seats per member state can always be made by the IGC in order to compensate for a loss of Council or Commission privileges. That being the case, it would be greatly preferable to settle on some logarithmic formula that settled the matter in a neutral way for all time.

Entry into force

The Constitution can only enter into force once it has been ratified by all 25 member states according to their own constitutional requirements (Article 48 Treaty on European Union and IV-8 of the Constitution). A parliamentary revolt, a judicial challenge or a failed referendum will probably delay and possibly scupper the whole Constitution.

In the event of a narrow defeat at a referendum, precedent suggests that a second vote would be held in order to get the right answer. Persistent failure of only one member state to ratify the Constitution would lead to its withdrawal from the Union and the negotiation of a looser form of association (such as the EEA agreement) (I-59). Persistent failure by multiple member states to ratify would leave the Union in deep and possibly terminal crisis.

In order to minimise the likelihood of such a crisis, it would be prudent for the IGC to revisit the question of how to give effect to the Constitution.