EB000095

2009 EDITION
BA-AA-08-001-EN-C
Fact Sheets on the European Union – 2009 EDITION

The European Union at a glance
The aim of these fact sheets is to provide
those new to the subject with an overview
of the process of European integration and
the European Parliament’s role in this
development.
New fact sheets on topical issues and the
developments of the last few years have recently
appeared online, for example: the institutional
reforms undertaken in preparation for the
accession of Bulgaria and Romania; the new
financial perspective; gender equality; asylum,
and immigration policy; management of external
borders; judicial cooperation in civil and criminal
matters; sports policy; the Lisbon strategy;
the European neighbourhood policy (ENP);
Fact Sheets on the

the South Caucasus (Armenia, Azerbaijan and
Georgia) and central Asia.
With access to around 165 fact sheets, readers
will find that this is one of the best sources of
information about the Union’s institutions and
policies.
The content of these fact sheets covers six main
European Union
areas: how the EU works, citizens’ Europe, the
internal market, common policies, economic and
monetary union and the EU’s external relations.
Regular updates are made to the English,
French and German versions of the fact sheets
on the European Parliament’s website
(http://www.europarl.europa.eu/).
Price (excluding VAT) in Luxembourg: EUR 40

*4#/
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How to obtain EU publications
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2009 Edition
Fact Sheets on the

European Union
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Illustration sources:
‘Map’ picture: © Digital Vision – Col. Antique maps
‘Scales of Justice’ picture: «Vignettes typographiques» Deberny et cie
‘Mercury’ picture: BNF/Gallica – «La métamorphose d'Ovide figuré», 1557
‘Column’ picture: BNF/Gallica – «L'arquitecture ou Art de bien bastir, de Marc Vitruve Pollion», 1547
‘Coins’ picture: BNF/Gallica – «Le billon d'aur et d'argent», 1552
‘Ships’ picture: BNF/Gallica – Illustrations de «Nova typis transact navigatio…», 1621
Manuscript finished in August 2008
The publication is available in English, French, German, Italian, Polish and Spanish
It is not binding on the European Parliament in any way whatsoever
Author of the publication: European Parliament
Official responsible: OLIVARES MARTÍNEZ Ismael, Director
Editors: ANDREANELLI Moira, ANDREICA Dana Maria, ANGELIDIS Angel, ANTOINE-GRÉGOIRE Jean-Louis, APAP
Johanna, ASIKAINEN Aila, BAHR Christine, BATTA Denis, BAUER Lothar, BAVIERA Saverino, BOEHNE Thomas,
BOSCHE Lars, BRAUN Judith Marion, BURSI Camilla, CALERS Hélène, CAMENEN François-Xavier, CAPRILE Anna,
CASALPRIM-CALVÉS Eva, CHAMBERS Graham, COMFORT Anthony, CRANFIELD Mairead, CSASZI Levente,
DALSGAARD Jens, D’ANGELO Sandro, DANKLEFSEN Nils, DELAUNAY Dominique, DOUAUD Armelle, DUDRAP
Thomas, EFTHYMIOU Maria, ENGSTFELD Paul, FULMINI Azelio, GADZHEVA Maya, GENTA Claire, GHIATIS
Georgios, GONZÁLEZ MONTES Ángela, GOOSEENS Yanne, GROTTI Marie-Claude, GYÖRFFI Miklos, HEINZEL
Huberta, HERNANDEZ-SANZ Ivan, HYLDELUND Karin, IBORRA MARTIN Jesús, IPEKTSIDIS Charalampos, ITZEL
Constanze, JAVELLE François, KAMERLING Josina, KAMMERHOFER Christa, KARAPIPERIS Théodoros, KATSAROVA
Ivanna, KAUFFELD Karin, KOWALKOWSKA Beata, KRAUSS Stefan, KRISTOFFERSEN Niels, LEHMANN Wilhem,
LENSEN Anton, LOPEZ-ALVAREZ Olalla, LUCCHESE Anna, MACEDO Gonçalo, MAKIPAA Arttu, MASSOT MARTI
Albert, MC AVOY Robert-Francis, MECKLENBURG Karsten, MENEGHINI Gianpaolo, MUSTAPHA-PACHA Mourad,
NEVES Pedro, NUTTIN Xavier, OFFERMANN Klaus, OIKARINEN Jarmo, OLIVEIRA-GOUMAS Béatriz, OLIVERT-
AMADO Ana, OSTA-GAMEZ Rafaël, PABST Rheinhart, PACHECO Jose-Luis, PALINKAS Peter, PANIZZA Roberta,
PATTERSON George, QUILLE Gérard, RICHARD Pierre, RICHTER Jochen, ROSE Bryan, SCHELLING Margret,
SCHULZ Stefan, SOAVE Piero, SOSA IUDICISSA Marcello, SOURANDER Dag, SPINEI Cristina, SUBBAN Andréa,
TALSMA Adrian, TRONQUART Jean-François, TROUVÉ-TEYCHENNÉ Odile, VALENTINI Maria Rosaria, VENTUJOL
Philippe, VITREY Anne, WELIN Monika, WERNER Helmut, WINTHER Pernille, WITTENBERG John
Coordinators: ERHOLM Jari, GONZÁLEZ GARCÍA Isaac
Assistants: BISCAUT Jackie, MACIAS LASO Beatrice
Europe Direct is a service to help you find answers to your questions about the European Union
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More information on the European Union is available on the Internet (http://europa.eu).

Cataloguing data can be found at the end of this publication.
Luxembourg: Office for Official Publications of the European Communities, 2009
ISBN 978-92-823-2469-1
© European Communities, 2009
Reproduction is authorised provided the source is acknowledged.
Printed in Spain
Printed on white chlorine-free paper
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Note to readers
T his 2009 edition of the Fact Sheets on the European Union is the 12th since the publication
first appeared in 1979 for the first direct elections to the European Parliament. As with
previous editions, every effort has been made to ensure that the fact sheets fulfil their
purpose of providing non-specialists with an overview of European integration and of the
European Parliament’s contribution to that process by keeping them simple, clear and
concise and using a format that is as consistent and straightforward as possible.
The number of fact sheets (165) and structure of the publication have been modified only
slightly since the previous edition. We have naturally included developments that have
occurred over recent years, such as the reform of the common agricultural policy, climate
change and the development of the single market.
Each fact sheet is identified by a number, the first two parts of which refer to the section and
chapter to which the fact sheet belongs. This numbering scheme is also used for cross
references. At the beginning of the publication, the contents pages list all fact sheets by
section and chapter and indicate the start page for each.
Where reference is made to articles of the treaties (Treaty establishing the European
Community and Treaty on European Union), only the new numbering system introduced by
the Nice Treaty has been used. Nevertheless, we also refer to the changes introduced by the
Lisbon Treaty.
This new publication reflects the legislative situation as it stood in August 2008, the cut-off
date for drawing up the revised texts.
In addition to bringing the fact sheets up to date, we hope that we have further improved
their readability and thus also their value to readers as a quick but sufficiently
comprehensive overview of progress on the main points of European integration. Readers
wishing to go into greater detail are referred to more specialist works, particularly those
produced by the European Parliament’s Secretariat.
Regular updates are made to the English, French and German versions of the Fact Sheets on
the European Union on the European Parliament’s website (http://www.europarl.europa.eu/).
Lastly, please note that a CD-ROM containing the fact sheets in 21 official EU languages is
available from the Office for Official Publications of the European Communities.
Secretariat of the European Parliament

March 2009
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4
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Fact Sheets on the European Union
The European Union at a glance
T he aim of these fact sheets is to provide those new to the subject with an overview of the process of
European integration and the European Parliament’s role in this development.
New fact sheets on topical issues and the developments of the last few years have recently appeared
online, for example: the institutional reforms undertaken in preparation for the accession of Bulgaria and
Romania; the new financial perspective; gender equality; asylum, and immigration policy; management
of external borders; judicial cooperation in civil and criminal matters; sports policy; the Lisbon strategy;
the European neighbourhood policy (ENP); the South Caucasus (Armenia, Azerbaijan and Georgia) and
central Asia.
With access to around 165 fact sheets, readers will find that this is one of the best sources of
information about the Union’s institutions and policies.
The content of these fact sheets covers six main areas: how the EU works, citizens’ Europe, the internal
market, common policies, economic and monetary union and the EU’s external relations.
How the European Union works Common policies
1 The European Union (EU) has its own

legislature and executive and an
4 In order to speak with one voice, the EU has
developed several policies and measures
independent judiciary, which are supported that all Member States endeavour to apply.
and complemented by an additional set of These ‘common policies’ concern the entire
institutions and bodies. The EU’s rules and Union and are designed to achieve common
decision-making procedures are laid down in objectives.
the Treaties. In order to achieve its objectives,
the Union has its own budget. Economic and monetary union
Citizens’ Europe 5 Economic and monetary union (EMU) is the
2 For EU citizens, the right to travel, live and

work throughout the Union can easily be
result of a long process aimed at
harmonising the economic and monetary
policies of the European Union Member
taken for granted. However, in order for them States and introducing a single currency: the
to be able to enjoy this right fully, an euro. So far, 16 Member States have adopted
effective system to protect fundamental the euro, which is used on a daily basis by
rights within the EU needs to be put in place over half the EU’s population.
and maintained.
The EU’s external relations
3
The internal market
Following the dismantling of previous
6 The EU’s economic, commercial and financial
weight makes it a leading player on the
barriers, goods, services and capital move as international scene. It has signed a series of
freely throughout Europe as inside a Member bilateral and multilateral agreements with
State. The removal of obstacles and the most countries and regions of the world. The
opening up of national markets means that common foreign and security policy (CFSP) is
more companies can compete with one one of the instruments of the European
another. Union’s external relations.
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6
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Contents
1 How the European Union works

1.1. Historical evolution of European 1.3. European Union institutions and 1.3.11. The European Economic and Social
integration, 13 bodies, 38 Committee, 61
1.1.1. The first Treaties, 13 1.3.1. The European Parliament: historical 1.3.12. The Committee of the Regions, 63
1.1.2. Developments up to the Single background, 38 1.3.13. The European Investment Bank, 64
European Act, 14 1.3.2. The European Parliament: 1.3.14. The European Ombudsman, 67
1.1.3. The Maastricht and Amsterdam powers, 40
Treaties, 18 1.3.3. The European Parliament: 1.4. Decision-making procedures, 69
1.1.4. The Treaty of Nice and the organisation and operation, 42 1.4.1. Supranational decision-making
Convention on the Future of 1.3.4. The European Parliament: electoral procedures, 69
Europe, 21 procedures, 44 1.4.2. Intergovernmental decision-making
1.1.5. The Treaty establishing a 1.3.5. The European Parliament: relations procedures, 72
Constitution for Europe, 25 with the national parliaments, 46 1.4.3. The budgetary procedure, 74
1.1.6. The Treaty of Lisbon, 28 1.3.6. The Council, 48 1.5. Financing, 78
1.3.7. The European Council, 50
1.2. Main characteristics of the 1.5.1. The Union’s revenue and
Community legal system, 32 1.3.8. The Commission, 53 expenditure, 78
1.3.9. The Court of Justice and the Court 1.5.2. The multiannual financial
1.2.1. Sources and scope of European of First Instance, 56
Union law, 32 framework, 80
1.3.10. The Court of Auditors, 60 1.5.3. Implementation of the budget, 84
1.2.2. The principle of subsidiarity, 35
1.5.4. Budgetary control, 86
2 Citizens’ Europe
2.1. Respect for fundamental rights 2.3. Freedom of movement for 2.5. The right of petition, 101
in the EU, 91 persons, 95
2.2. The citizens of the Union and 2.4. Voting rights and eligibility, 100
their rights, 94
3 The internal market

3.1. Principles and general 3.2.4. The free movement of capital, 119 3.4.1. Public procurement contracts, 135
completion of the internal 3.4.2. Company law, 137
market, 107 3.3. Rules of competition, 122
3.4.3. Financial services: establishment
3.3.1. General competition policy and and practical application of the
3.2. The main freedoms of the concerted practices, 122 Lamfalussy process, 141
internal market, 110 3.3.2. Abuse of a dominant position and 3.4.4. Financial services: key legislation,
3.2.1. The free movement of goods, 110 investigation of mergers, 125 143
3.2.2. Free movement for workers, 113 3.3.3. State aid, 127 3.4.5. Intellectual, industrial and
3.2.3. Freedom of establishment and 3.3.4. Public undertakings and services of commercial property, 146
freedom to provide services and general interest, 131
mutual recognition of diplomas, 116
3.4. Approximation of legislation, 135
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4 Common policies
4.1. The Lisbon strategy, 151 4.6.6. Air transport: competition and 4.10.5. Water protection and
passenger rights, 223 management, 311
4.2. Common agricultural policy, 154 4.6.7. Air transport: air traffic and safety 4.10.6. Air and noise pollution, 314
4.2.1. The Treaty of Rome and the rules, 226 4.10.7. Climate change and the
foundations of the CAP, 154 4.6.8. Sea transport: access to the market environment, 318
4.2.2. Reform of the common agricultural and competition, 228 4.10.8. Biodiversity, nature and soil, 323
policy, 156 4.6.9. Sea transport: traffic and safety 4.10.9. Chemicals, 326
4.2.3. The first pillar of the CAP: rules, 230 4.10.10. Integrated product policy and
I. The single common market 4.6.10. Inland waterway transport, industrial technologies, 329
organisation, 159 intermodality and logistics, 233
4.2.4. The first pillar of the CAP: 4.11. Consumer protection and public
II. Direct aid to farms, 162 4.7. Trans-European networks, 236 health, 332
4.2.5. The second pillar of the CAP: rural 4.7.1. Trans-European networks — 4.11.1. Consumer policy: principles and
development policy, 164 guidelines, 236 instruments, 332
4.2.6. Financing of the CAP, 167 4.7.2. Financing the trans-European 4.11.2. Consumer protection measures, 334
4.2.7. External aspects of the CAP: WTO networks, 239 4.11.3. Public health, 338
Agreement on Agriculture, 170 4.8. Industrial policy, 242
4.2.8. The DOHA Round and 4.12. An area of freedom, security and
agriculture, 173 4.8.1. General principles of EU industrial justice, 341
policy, 242 4.12.1. An area of freedom, security and
4.2.9. The CAP and the Treaty of
Lisbon, 176 4.8.2. The steel industry, 244 justice: general aspects, 341
4.2.10. The CAP in figures, 178 4.8.3. Shipbuilding, 247 4.12.2. Asylum and immigration
4.8.4. The automobile industry, 249 policies, 344
4.3. Forestry policy, 183 4.8.5. The chemicals and pharmaceuticals 4.12.3. Management of the external
4.3.1. The European forestry strategy: industries, 252 borders, 349
framework, 183 4.8.6. The aerospace industry, 254 4.12.4. Judicial cooperation in civil and
4.3.2. The European forestry strategy: 4.8.7. The audiovisual industry, 258 criminal matters, 352
principles and action, 185 4.8.8 Information technologies, 262 4.12.5. Police and customs cooperation, 356
4.4. Common fisheries policy, 187 4.8.9. The biotechnology industry, 266 4.13. Energy policy, 359
4.8.10. The defence industry, 269
4.4.1. The common fisheries policy:
origins and development, 187 4.14. Policy for research and
4.9. Social and employment technological development, 363
4.4.2. Fisheries resources conservation, 189 policy, 271
4.4.3. Fisheries structural assistance, 192 4.9.1. Social and employment policy: 4.15. Small and medium-sized
4.4.4. International fisheries relations, 194 general principles, 271 enterprises, 368
4.4.5. Fisheries control and 4.9.2. The European Social Fund, 276
enforcement, 197 4.9.3. Employment policy, 278 4.16. Tourism, 371
4.4.6. The European fishing industry in 4.9.4. Social security cover in other 4.17. Culture and education, 374
figures, 199 Member States of the Union, 282
4.17.1. Education and vocational training
4.5. Regional and cohesion policy, 201 4.9.5. Health and safety at work, 285 policy, 374
4.9.6. Social dialogue, information, 4.17.2. Youth policy, 378
4.5.1. Economic and social cohesion, 201 consultation and participation of
4.5.2. The European Regional workers, 287 4.17.3. Language policy, 380
Development Fund (ERDF), 204 4.9.7. Equality between men and 4.17.4. Cultural policy, 383
4.5.3. The Cohesion Fund, 206 women, 291 4.17.5. Audiovisual and media policy, 387
4.5.4. The Solidarity Fund, 208 4.9.8. Anti-discrimination and social 4.17.6. Sports policy, 390
inclusion of vulnerable groups, 294 4.17.7. Communication policy, 393
4.6. Transport policy, 211
4.6.1. Transport policy: general 4.10. Environment policy, 298 4.18. Tax policy, 396
principles, 211 4.10.1. Environment policy: general 4.18.1. General tax policy, 396
4.6.2. Land transport: market access, 213 principles, 298 4.18.2. Value added tax (VAT), 399
4.6.3. Land transport: harmonisation of 4.10.2. Implementation of Community 4.18.3. Excise duties: alcohol and
legislation, 216 environmental law, 301 tobacco, 403
4.6.4. Road traffic and safety 4.10.3. Sustainable development and 4.18.4. Taxation of energy, 406
provisions, 220 environmental concerns, 303 4.18.5. Personal and company taxation, 409
4.6.5. Air transport: market access, 222 4.10.4. Natural resources and waste, 307
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5 Economic and monetary union
5.1. The development of economic 5.3. European monetary policy, 422 5.5. Framework for fiscal policies, 429
and monetary union, 415
5.4. Coordination of economic
5.2. The institutions of economic and policies, 425
monetary union, 419
6 The EU’s external relations

6.1. Common foreign and security 6.3.3. The European neighbourhood 6.4.11. The countries of south Asia and the
policy (CFSP), 435 policy (ENP), 462 Indian subcontinent, 495
6.1.1. Foreign policy: aims, instruments 6.4.12. ASEAN and the Korean
6.4. Relations with certain countries peninsula, 500
and achievements, 435 and regions, 465
6.1.2. Defending human rights and 6.4.13. Australia and New Zealand, 504
democracy, 438 6.4.1. The western Balkan countries, 465
6.4.2. The Russian Federation, 470 6.5. General development policy, 507
6.1.3. Security and defence policy, 441
6.4.3. The South Caucasus (Armenia, 6.5.1. A general survey of development
6.2. Economic policy and external Azerbaijan, Georgia), 473 policy, 507
trade, 445 6.4.4. Central Asia, 475 6.5.2. Trade regimes applicable to
6.2.1. The European Union as a trade 6.4.5. The southern and eastern developing countries, 509
power, 445 Mediterranean countries, 478 6.5.3. Humanitarian aid, 511
6.2.2. The European Union and the World 6.4.6. Arabian peninsula, Iraq and Iran, 481 6.5.4. Relations with the countries of
Trade Organisation (WTO), 450 6.4.7. Transatlantic relations: the USA and Africa, the Caribbean and the
Canada, 485 Pacific: from the Yaoundé and
6.3. Framework for relations with Lomé Conventions to the Cotonou
certain groups of countries, 454 6.4.8. Latin America, 487
6.4.9. Japan, 490 Agreement, 514
6.3.1. The enlargement of the Union, 454
6.4.10. The People’s Republic of China and
6.3.2. The European Economic Taiwan, 492
Area (EEA), 459
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10
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How the European Union
1
1 works 4 Common policies
Economic and monetary

2 Citizen’s Europe 5 union
3 The internal market 6 The EU’s external relations
How the European Union works

The powers conferred on the EU institutions derive from the founding Treaties, which were
negotiated by the Member States and ratified by each of them. The Treaty establishing the
European Community mentions five European institutions in the strict sense of the term. Three
of these are responsible for drafting policies and taking decisions. They are the European
Parliament, the Council of the European Union and the European Commission (the ‘institutional
triangle’). The Court of Justice of the European Communities ensures the upholding of
Community law. The Court of Auditors examines the legality and regularity of Union revenue
and expenditure and ensures sounds financial management. Several other bodies and agencies
are responsible for carrying out specific tasks. In order to achieve the objectives set out in the
Treaties, the EU has its own budget.
1.1. Historical evolution of European 1.3.5. The European Parliament: relations

integration, 13 with the national parliaments, 46
1.1.1. The first Treaties, 13 1.3.6. The Council, 48
1.1.2. Developments up to the Single 1.3.7. The European Council, 50
European Act, 14 1.3.8. The Commission, 53
1.1.3. The Maastricht and Amsterdam 1.3.9. The Court of Justice and the Court of
Treaties, 18 First Instance, 56
1.1.4. The Treaty of Nice and the Convention 1.3.10. The Court of Auditors, 60
on the Future of Europe, 21 1.3.11. The European Economic and Social
1.1.5. The Treaty establishing a Constitution Committee, 61
for Europe, 25 1.3.12. The Committee of the Regions, 63
1.1.6. The Treaty of Lisbon, 28 1.3.13. The European Investment Bank, 64
1.2. Main characteristics of the 1.3.14. The European Ombudsman, 67
Community legal system, 32 1.4. Decision-making procedures, 69
1.2.1. Sources and scope of European Union 1.4.1. Supranational decision-making
law, 32 procedures, 69
1.2.2. The principle of subsidiarity, 35 1.4.2. Intergovernmental decision-making
1.3. European Union institutions and procedures, 72
bodies, 38 1.4.3. The budgetary procedure, 74
1.3.1. The European Parliament: historical 1.5. Financing, 78
background, 38
1.5.1. The Union’s revenue and
1.3.2. The European Parliament: expenditure, 78
powers, 40
1.5.2. The multiannual financial
1.3.3. The European Parliament: organisation framework, 80
and operation, 42
1.5.3. Implementation of the budget, 84
1.3.4. The European Parliament: electoral
1.5.4. Budgetary control, 86
procedures, 44
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How the European Historical evolution of
1 Union works 1 European integration
1.1. Historical evolution of European

integration
1.1.1. The first Treaties

The disastrous effects of the Second World War and the constant threat of an East–West confrontation rendered Franco-
German conciliation an essential priority. The sharing of the coal and steel industry by six European countries established
by the Treaty of Paris in 1951 was very symbolic of the creation of a common purpose and represented the first steps
towards European integration. The Treaties of Rome of 1957 strengthened the foundations of this integration and
reinforced the idea of a common future for the six European countries.
Legal basis movement of goods, persons, capital and services and the
— The Treaty of the European Coal and Steel Community gradual convergence of economic policies.
(ECSC), or Treaty of Paris, was signed on 18 April 1951 and — The aim of Euratom was to coordinate the supply of fissile
came into force on 24 July 1952. For the first time, six materials and the research programmes on the peaceful
European States agreed to work towards integration. This use of nuclear energy, already under way or being
Treaty made it possible to lay the foundations of the prepared in the Member States.
Community by setting up an executive known as the
— The preambles of the three Treaties reveal a unity of
‘High Authority’, a Parliamentary Assembly, a Council of
purpose behind the creation of the Communities, namely,
Ministers, a Court of Justice and a Consultative
the conviction that the States of Europe must work
Committee. Concluded for a limited period of 50 years, in
together to build a common future as this alone will
accordance with its Article 97, the ECSC Treaty expired on
enable them to control their destiny.
23 July 2002. In accordance with the protocol annexed to
the EC Treaty, the net worth of the ECSC’s assets at the
time of its dissolution was allocated to research in the Main principles
sectors related to the coal and steel industry through a The European Communities (the ECSC, EEC and Euratom) were
Research Fund for Coal and Steel. The coal and steel born of a gradual process of thinking about Europe, an idea
sectors are now completely under the ordinary regime that was closely bound up with the events that had shattered
set up by the EC Treaty. the continent. In the wake of the Second World War the major
industries, in particular the steel industry, needed reorganising.
— The Treaties of the European Economic Community (EEC)
The future of Europe, threatened by East–West confrontation,
and the European Atomic Energy Community (EAEC,
lay in Franco-German reconciliation.
otherwise known as ‘Euratom’), or the Treaties of Rome,
were signed on 25 March 1957 and came into force on A. The appeal made by Robert Schuman, the French Foreign
1 January 1958. In contrast to the ECSC Treaty, the Treaties Minister, on 9 May 1950 may be considered as the starting
of Rome were concluded ‘for an unlimited period’ (Article point for the Community. At that time, the choice of coal and
240 of the EEC Treaty and Article 208 of the EAEC Treaty), steel was highly symbolic: in the early 1950s coal and steel
which gives them almost a constitutional character. were vital industries, the basis of a country’s power. In addition
to the clear economic benefits to be gained, the pooling of
— The six founding countries were Belgium, Germany, France,
French and German resources was to mark the end of
Italy, Luxembourg and the Netherlands.
antagonism between the two countries. On 9 May 1950
Robert Schuman declared: ‘Europe will not be built in a day nor
Objectives as part of some overall design; it will be built through practical
— The avowed intentions of the founders of the ECSC were achievements that first create a sense of common purpose’. It
that it should be merely a first stage towards a ‘European was on the basis of that principle that France, Italy, Germany
Federation’. The common market in coal and steel was to and the Benelux countries (Belgium, the Netherlands and
be an experiment which could gradually be extended to Luxembourg) signed the Treaty of Paris, of which the main
other economic spheres, culminating in a ‘political’ Europe. points were:
— The aim of the European Economic Community was to — the free movement of products and free access to sources
establish a common market based on the four freedoms of of production;
13
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— permanent monitoring of the market to avoid distortions To achieve these objectives the EEC Treaty laid down
which could lead to the introduction of production quotas; guiding principles and defined the framework for the
— respect for the rules of competition and price transparency; legislative activities of the Community institutions. These
involved common policies: the common agricultural policy
— support for modernisation and conversion of the coal and (Articles 38 to 43), transport policy (Articles 74 and 75) and a
steel sectors. common commercial policy (Articles 110 to 113).
B. Following the signing of the Treaty, although France was The common market was to allow the free movement of
opposed to the reconstitution of a German national military goods and the mobility of factors of production (free
force, René Pleven envisaged the formation of a European movement of workers and enterprises, the freedom to provide
army. The European Defence Community (EDC) negotiated services and the free movement of capital).
in 1952 was to have been accompanied by a political
Community (EPC). Both plans were shelved following the 2. The Euratom Treaty laid down highly ambitious
French National Assembly’s refusal to ratify the treaty on 30 objectives, including the ‘speedy establishment and growth of
August 1954. nuclear industries’. However, owing to the complex and
delicate nature of the nuclear sector, which touched on the
C. Efforts to get the process of European integration under vital interests of the Member States (defence and national
way again following the failure of the EDC took the form of independence), the Euratom Treaty had to scale down its
specific proposals at the Messina Conference (in June 1955) on ambitions.
a customs union and atomic energy. They culminated in the
signing of the EEC Treaty and EAEC Treaty, known as the D. The agreement on certain joint institutions, which was
‘Euratom’ Treaty. signed and entered into force at the same time as the Treaties
of Rome, stipulated that the Parliamentary Assembly and Court
1. The EEC Treaty’s provisions included: of Justice would be common institutions. It only remained to
— the elimination of customs duties between Member States; merge the ‘executives’, and the Treaty establishing a single
Council and a single Commission of the European
— the establishment of an external Common Customs Tariff;
Communities of 8 April 1965, known as the ‘Merger Treaty’,
— the introduction of a common policy for agriculture and thereby completed the unification of the institutions.
transport;
— the creation of a European Social Fund; g Roberta Panizza
July 2008
— establishment of a European Investment Bank;
— the development of closer relations between the Member
States.
1.1.2. Developments up to the Single European Act

The main developments of the first Treaties are related to the creation of the own resources of the Community, the
reinforcement of the budgetary powers of Parliament, the election by direct universal vote and the set up of the European
Monetary System. The entry into force of the Single European Act in 1986, substantially altering the Treaty of Rome,
reinforces the idea of integration by creating a large internal market.
I. Main achievements in the first stage quotas and phasing out internal customs ended as early as
1 July 1968. By the same date Europe had adopted a
common external tariff for trade with third countries.
— Article 8 of the Treaty of Rome provided for completion of
a common market over a transitional period of 12 years, in
three stages ending on 31 December 1969. — ‘Green Europe’ was the second major project for European
integration. The first regulations on the CAP were adopted
— Its first aim, the customs union, was completed more and the European Agricultural Guidance and Guarantee
quickly than expected. The transitional period for enlarging Fund (EAGGF) was set up in 1962.
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— Meanwhile the Court of Justice interpreted the regulations III. Developments in comprehensive plans
on the transitional period in such a way that, when it
ended, a number of Treaty provisions took direct effect,
for integration
such as Articles 13, 30, 48, 52 and 59 (3.2.3).
Encouraged by the initial successes of the Economic
— Even so, at the end of the transitional period there were still Community, the aim of also creating political unity for the
major obstacles to freedom of movement; the single Member States resurfaced in the early 1960s, despite the
market was not complete. failure of the plans for the European Defence Community
(EDC) in August 1954.
II. First amendment of the Treaties A. Failure of an attempt to achieve political union
1. The Fouchet plan
A. Improvements to the institutions At the 1961 Bonn Summit the Heads of State or Government
1. The first institutional change came about with the Merger of the six founding Member States of the European
Treaty of 8 April 1965, which merged the executive bodies. Community asked an intergovernmental committee, chaired
This took effect in 1967, setting up a single Council and single by the French ambassador Christian Fouchet, to put forward
Commission of the European Communities (the ECSC, EEC and proposals on the political status of a union of European
EAEC) and introducing the principle of a single budget. peoples. This research committee tried vainly, on two
occasions between 1960 and 1962, to present the Member
2. The Council decision of 21 April 1970 set up a system of
States with a draft treaty that was acceptable to all. Fouchet
the Community’s own resources, replacing financial
based his plan on strict respect for the identity of the Member
contributions by the Member States (1.5.1).
States, thus rejecting the federal option. The negotiations
3. Budgetary powers failed on three objections: uncertainty as to the place of the
United Kingdom, disagreement on the issue of a European
— The Treaty of Luxembourg of 22 April 1970 granted the defence system aiming to be independent of the Atlantic
European Parliament (EP) certain budgetary powers Alliance, and the excessively intergovernmental nature of the
(1.3.1). institutions proposed, which was likely to undermine the
— The Treaty of Brussels of 22 July 1975, gave the EP the supranational aspect of the existing Community institutions.
right to reject the budget and to grant the Commission a 2. After the failure of the Fouchet proposals there were no
discharge for implementing the budget. The same Treaty further attempts at a fundamental review of the Community
set up the Court of Auditors, a body responsible for Treaties until the Spinelli initiative in 1984. The debate on the
scrutinising the Community’s accounts and financial form that a future political union might take continued at a
management (1.3.10), which began work on 25 October more pragmatic level in a number of reports and resolutions.
1977.
3. In the absence of a political community, its substitute took
— The EP systematically used its budgetary powers to the form of European political cooperation, or EPC (6.1.1). At
develop the Community’s action. the summit conference in The Hague in December 1969 the
4. The Act of 20 September 1976 had given the EP a new Heads of State or Government decided to look into the best
legitimacy and authority by introducing its election by direct way of making progress in the field of political unification. The
universal suffrage by Community citizens. The first election Davignon report, adopted by the foreign ministers in October
took place in June 1979 (1.3.1). 1970 and subsequently amplified by further reports, formed
the basis of EPC until the Single European Act entered into
B. Enlargement force.
Meanwhile the Community was getting larger. The UK joined B. The 1966 crisis
on 1 January 1973, together with Denmark and Ireland; the
A serious crisis arose when the tricky issue of moving on to
Norwegian people had voted against accession in a
the third stage of the transition period (due on 1 January
referendum. Greece became a member in 1981; Portugal and
1966) began to emerge. At this stage voting procedures in the
Spain joined in 1986.
Council were to change, with a move from unanimous to
C. A
fter this first round of enlargement there were calls for qualified majority voting in certain areas. The change of
greater budgetary rigour and reform of the CAP. The 1979 voting method reflected greater emphasis on a supranational
European Council reached agreement on a series of approach in the Community. France opposed a range of
complementary measures. The Fontainebleau agreements Commission proposals, which included measures for
of 1984 obtained a sustainable solution, based on the financing the common agricultural policy, and stopped
principle that adjustments could be made to assist any attending the main Community meetings (its ‘empty chair’
Member State with a financial burden that was excessive in policy). In exchange for its return it demanded a political
terms of its relative prosperity. agreement on the role of the Commission and majority
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voting, which would involve a complete review of the treaty forward a proposal for a ‘European Act’ covering a range of
system. Eventually, on 30 January 1966, agreement was subjects: political cooperation, culture, fundamental rights,
reached on the celebrated Luxembourg compromise (1.3.6), harmonisation of the law outside the fields covered by the
which stated that when vital interests of one or more Community Treaties, and ways of dealing with violence,
countries were at stake members of the Council would terrorism and crime. It was not adopted in its original form, but
endeavour to reach solutions that could be adopted by all some parts of it resurfaced in the ‘Solemn declaration on
while respecting their mutual interests. European union’ adopted in Stuttgart on 19 June 1983. This
text forms an important part of the backcloth to the Single
C. The increasing importance of European ‘summits’ European Act (SEA).
Meanwhile, although they were outside the Community
institutional context, the conferences of Heads of State or E. The Spinelli project
Government of the Member States were induced to provide A few months after its first direct election in 1979 Parliament
some political impetus and settle the problems that the ran into a serious crisis in its relations with the Council, over
normal Council could not handle. After early meetings in 1961 the budget for 1980. At the instigation of Altiero Spinelli MEP,
and 1967 the conferences took on increasing significance with founder of the European Federalist Movement and a former
the Hague Summit of 1 and 2 December 1969, which allowed Commissioner, a group of nine MEPs met at the Crocodile
negotiations to begin on enlarging the Community and restaurant in Strasbourg in July 1980 to discuss ways of
agreed on the Community finance system. The October 1972 relaunching the operation of the institutions. In July 1981 the
Paris Summit went on to reach the decision to use the Treaty EP set up an institutional Affairs Committee, with Spinelli as its
provisions, including Article 235 (now Article 308), as widely as coordinating rapporteur, to draw up a plan for amendment of
possible in the fields of environmental, regional, social and the existing Treaties. The Spinelli group and the subsequent
industrial policy; while the Fontainebleau Summit in committee rapidly decided to formulate plans for what was to
December 1974 took major political decisions on direct become the European Union. The draft Treaty was adopted by
elections, the European Regional Fund and the Council’s a large majority on 14 February 1984. It was a major leap
decision-making procedure. At that point it also decided to forward, providing for the transfer of new responsibilities in
meet three times a year as the ‘European Council’ to discuss essential fields. Legislative power would come under a twin-
Community affairs and political cooperation (1.3.7). chamber system akin to that of a federal state. The system
To revive the process of European integration the Belgian aimed to strike a balance between the EP and the Council.
Prime Minister Leo Tindemans was given the task of drawing This was how the process leading to the SEA got off the
up a report on European union. Presented on 29 December ground.
1975, his report put forward a series of proposals on external
relations, economic and monetary policy and the citizens’
Europe. But it did not result in any specific reforms.
IV. Developments up to the Single
D. Towards the end of the 1970s there were various reactions
European Act
in the Member States to the worsening economic crisis, and Having settled the Community budget dispute of the early
this affected efforts to bring their economic and fiscal policies 1980s, the European Council decided at its Fontainebleau
into line. The Heads of State or Government decided in 1978 to meeting in June 1984 to set up an ad hoc committee of the
set up a committee of three ‘Wise Men’, Mr Biesheuvel, Mr Dell personal representatives of the Heads of State or Government,
and Mr Marjolin, to consider ‘adjustments to the machinery known as the Dooge Committee after its chairman. The
and procedures’ of the institutions, so as to provide for the committee was asked to make proposals for improving the
harmonious operation of the Communities and further functioning of the Community system and of political
progress on the road to European union. However, the cooperation. It drew up an interim report for the European
committee confined itself to practical suggestions on Council meeting in Dublin in December 1984. The report
organising Council business and relations with the proposed a major step forward in qualitative terms, particularly
Commission and Parliament, but only some of them were in the institutional sphere. The Dublin European Council said
taken up. the committee should continue to work towards a consensus,
To solve the problem of monetary instability and its adverse as 3 of the 10 representatives had expressed serious
effects on the CAP and cohesion between Member States, the reservations about the text of the report. But the European
Bremen and Brussels European Councils in 1978 set up the Council in Milan in June 1985 decided by a majority vote (of 7
European Monetary System (EMS). Established on a voluntary to 3, an exceptional procedure in that body) to convene an
and differentiated basis (the UK decided not to participate in Intergovernmental Conference to consider the powers of the
the exchange-rate mechanism), the EMS depended on the institutions, the extension of Community activities to new
existence of a common accounting unit, the ECU (5.1.0). areas and the establishment of a ‘genuine’ internal market.
At the London European Council in 1981 the foreign ministers The Intergovernmental Conference met during the summer
of Germany and Italy, Mr Genscher and Mr Colombo, put and autumn of 1985 and, as a result of a number of
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disagreements, submitted a set of somewhat disparate texts to 1. This replaced unanimity in four of the Community’s
the European Council meeting in Luxembourg on 2 and 3 existing responsibilities:
December 1985. With some difficulty, the Council adopted — amendment of the Common Customs Tariff,
conclusions and the foreign ministers knocked them into
shape on 27 January 1986. — freedom to provide services,
— the free movement of capital, and
V. The Single European Act (SEA): — the common sea and air transport policy.
an important stage 2. It was introduced for several new responsibilities:
On 17 February 1986 nine Member States signed the SEA, — the internal market,
followed later by Denmark (after a referendum voted in — social policy,
favour), Italy and Greece on 28 February 1986. The Act was
ratified by Member States’ parliaments during 1986, but — economic and social cohesion,
because a private citizen had appealed to the Irish courts its — research and technological development, and
entry into force was delayed for six months, until 1 July 1987.
— the environment.
The SEA was the first substantial change to the Treaty of Rome. 3. It formed the subject of an amendment to the Council’s
A. Extension of the Union’s powers internal rules of procedure, so as to comply with the
Presidency’s declaration on Article 149(2) of the EEC Treaty in
1. Through the creation of a large internal market
the Final Act of the SEA. This states that in future a vote may be
This was to be completed by 1 January 1993. The creation of called in the Council not only on the initiative of its President,
the internal market consisted in taking up and broadening the but also at the request of the Commission or a Member State if
objective of the common market introduced in 1958 (3.1.0). a simple majority of the Council’s members are in favour. They
2. Through establishing new powers must receive two weeks’ notice of such a request.
These were: C. Growth of the role of the European Parliament
— monetary capability, The EP’s powers were strengthened by:
— social policy, — making Community agreements on enlargement and
association agreements subject to Parliament’s assent;
— economic and social cohesion,
— introducing a procedure for cooperation with the Council
— research and technological development,
(1.4.1) which gives Parliament real, if limited, legislative
— the environment, and powers. It applied to about a dozen legal bases at the time
and marked a crucial point in the transformation of the EP
— cooperation in the field of foreign policy
as co-legislator, on an equal footing with the Council.
B. Improvement in the decision-making capacity of the
Council of Ministers g Wilhelm Lehmann
Qualified majority voting July 2008
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1.1.3. The Maastricht and Amsterdam Treaties
The Treaty on European Union alters the former European Treaties and creates a European Community based on three
pillars: the European Communities, the common foreign and security policy (CFSP) and cooperation in the field of justice
and home affairs (JHA). Owing to enlargement of the Union, the Treaties of Amsterdam and Nice aimed to make the
adjustments needed to enable a 15-member Europe to function effectively.
I. The Maastricht Treaty A. The European Community (first pillar)

The Community’s task is to promote throughout the
The Treaty on European Union, signed in Maastricht on 7 Community a harmonious, balanced and sustainable
February 1992, entered into force on 1 November 1993. development of economic activities, a high level of
employment and of social protection, equality between men
The Union’s Structures and women, sustainable and non-inflationary growth, a high
degree of competitiveness and convergence of economic
By instituting a European Union, the Maastricht Treaty marks a
performance, a high level of environmental protection, the
new step in the process of creating an ‘ever-closer union
raising of the standard of living and quality of life, economic
among the peoples of Europe’. The Union is based on the
and social cohesion and solidarity among Member States. The
European Communities (1.1.1 and 1.1.2) and supported by
Community pursues these objectives, acting within the limits
policies and forms of cooperation provided for in the Treaty on
of its powers, by establishing a common market and related
European Union. It has a single institutional structure,
measures set out in Article 3 of the Treaty establishing the
consisting of the European Parliament, the European Council,
European Community (EC) and by initiating the economic and
the Council of Ministers, the European Commission, the Court
single monetary policy referred to in Article 4. Community
of Justice and the Court of Auditors. The European Council’s
activities must respect the principle of proportionality and, in
task is to define general political guidelines. The European
areas that do not fall within its exclusive competence, the
Parliament, Council, Commission, Court of Justice and Court of
principle of subsidiarity (Article 5 EC).
Auditors (strictly speaking the only Community institutions)
exercise their powers in accordance with the Treaties. The B. The common foreign and security policy (CFSP)
Parliament, Council and Commission are assisted by an (second pillar)
Economic and Social Committee and a Committee of the The Union has the task of defining and implementing, by
Regions, which both have advisory powers. A European System intergovernmental methods, a common foreign and security
of Central Banks and a European Central Bank have been set up policy (6.1.1). The Member States must support this policy
under the provisions of the Treaty in addition to the existing actively and unreservedly in a spirit of loyalty and mutual
financial institutions in the EIB group, namely the European solidarity. Its objectives are:
Investment Bank and the European Investment Fund.
— to safeguard the common values, fundamental interests,
independence and integrity of the Union, in accordance
The powers of the Union with the principles of the United Nations Charter;
The Union created by the Maastricht Treaty was given certain
— to strengthen the security of the Union in all ways;
powers by the Treaty, which are classified into three groups
and are commonly referred to as ‘pillars’. — to preserve peace and strengthen international security, in
accordance with the principles of the United Nations
— The first ‘pillar’ consists of the European Community,
Charter as well as the principles of the Helsinki Final Act
providing a framework within which the powers for which
and the objectives of the Paris Charter, including principles
sovereignty has been transferred by the Member States in
relating to external borders;
the areas governed by the Treaty are exercised by the
Community institutions. — to promote international cooperation;
— The second ‘pillar’ is the common foreign and security — to develop and consolidate democracy and the rule of law
policy laid down in Title V of the Treaty on European Union. and respect for human rights and fundamental freedoms.
— The third ‘pillar’ is cooperation in the fields of justice and C. Cooperation in the fields of justice and home affairs
home affairs laid down in Title VI of the Treaty on European (third pillar)
Union.
The Union’s objective is to develop common action in these
Titles V and VI provide for intergovernmental cooperation using areas by intergovernmental methods (4.12.1) to provide
the common institutions, with certain supranational features citizens with a high level of safety within an area of freedom,
such as associating the Commission and consulting Parliament. security and justice.
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It covers the following areas: office, the ‘Secretary-General of the Council responsible
— rules and the exercise of controls on crossing the for the CFSP’, and a new structure, the ‘Policy Planning
Community’s external borders; and Early Warning Unit’. With regard to security, a
reference to Petersburg missions defines the scope of any
— combating terrorism, serious crime, drug trafficking and future joint action.
international fraud;
— In the area of external economic policy, the Council has
— judicial cooperation in criminal and civil matters; been empowered to extend the field of application to
— the creation of a European Police Office (Europol) with a services and intellectual property rights.
system for exchanging information between national
B. A stronger position for Parliament
police forces;
1. Legislative power
— combating unauthorised immigration; and a. The co-decision procedure has been extended to 15
— a common asylum policy. legal bases which were in the EC Treaty:
— Article 12: prohibition of discrimination,
II. The Amsterdam Treaty
— Article 18: free movement of EU citizens,
The Treaty of Amsterdam amending the Treaty on European — Article 42: free movement of workers,
Union, the Treaties establishing the European Communities
and certain related acts, signed in Amsterdam on 2 October — Article 47(1): recognition of qualifications,
1997, entered into force on 1 May 1999. — Article 67: visa procedures,
A. Increase in EU powers — Article 71: transport policy, including air transport,
1. European Community — Article 141(3): implementation of equal pay for equal work,
— With regard to objectives, special prominence has been — Article 148: implementation of the European Social Fund
given to balanced and sustainable development and a (ESF),
high level of employment.
— Article 150(4): vocational training measures,
— A mechanism has been set up to coordinate Member
States’ policies on employment, and there is a possibility of — Article 153(4): consumer protection,
some Community measures in this area. — Article 156: trans-European networks (‘other measures’),
— The agreement on social policy has been incorporated into — Article 162: implementation of the European Regional
the EC Treaty with some improvements (removal of the Development Fund (ERDF),
opt-out).
— Article 172: implementation of framework research
— The Community method now applies to some major areas programmes,
which hitherto came under the ‘third pillar’, such as asylum,
immigration, crossing external borders, combating fraud, — Article 175(3): environment protection measures,
customs cooperation and some of the cooperation under — Article 179: development cooperation;
the Schengen Agreement, which the EU and Communities
and to eight new legal bases:
have endorsed in full.
— Article 129: measures to promote employment,
2. European Union
— Intergovernmental cooperation in the areas of police and — Article 135: customs cooperation,
judicial cooperation has been strengthened by defining — Article 137(2): social policy,
objectives and precise tasks and creating a new legal
instrument similar to a directive. — Article 152(4): health protection, veterinary and plant
health measures,
— There are changes in the policy areas of the environment,
public health and consumer protection. — Article 255: principles governing access to documents,
— There are new provisions with regard to specific problems — Article 280: combating fraud,
such as general interest services, cultural diversity and the — Article 285: Community statistics,
use of languages and measures applicable to very remote
— Article 286: establishment of a body to monitor protection
and island regions and overseas countries and territories.
of individuals with regard to data processing.
— The instruments of the common foreign and security
It therefore applies to most areas of legislation.
policy were developed later, in particular by creating a
new instrument, the common strategy, which should b. Excepting only agriculture and competition policy, the
normally be implemented by a majority decision, a new co-decision procedure applies to all the areas where the
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Council may take decisions by qualified majority. In four cases way as to ensure that this new factor in the process of
(Articles 18, 42 and 47 and Article 151 on cultural policy, which integration will remain exceptional and, at all events, can
remains unchanged) the co-decision procedure is still only be used to move further towards integration and not to
combined with a requirement for a unanimous decision in the take retrograde steps.
Council. The other legislative areas where unanimity is required
are not subject to co-decision (qualified majority decisions are D. Simplification
now required under Article 166 on framework research The Amsterdam Treaty removes from the European Treaties all
programmes, which was previously subject to unanimity). provisions which the passage of time has rendered void or
obsolete, while ensuring that this does not affect the legal
C. Under the simplified co-decision procedure (Article 251), effects which derived from them in the past. It also renumbers
Parliament and the Council have become co-legislators on a the Treaty articles. For legal and political reasons the Treaty was
practically equal footing, in particular because it is now possible signed and submitted for ratification in the form of
to adopt an act at first reading if there is agreement between amendments to the existing Treaties.
the two branches of the legislative authority, and because the
power of the Council unilaterally to impose its decision at third E. Institutional reforms with a view to enlargement
reading has been removed. However, there is still no 1. The Amsterdam Treaty has set the maximum number of
satisfactory solution to the problems raised by delegating members of the European Parliament, in line with
implementing acts, as Declaration 31 confines itself to calling Parliament’s request, at 700 (Article 189).
on the Commission to submit a new proposal on comitology. 2. Composition of the Commission and the question of
2. Power of control weighted votes are covered by a ‘Protocol on the institutions’
— As well as its vote to approve the Commission as a body, attached to the Treaty. This provides that, in a Union of up to
Parliament also has a vote to approve in advance the 20 Member States, the Commission will comprise one national
person nominated as President of the future Commission of each Member State, provided that by that date, weighting
(Article 214). of the votes in the Council has been modified. At all events, at
— The Amsterdam Treaty expressly confirms the protection of least a year before the 21st Member State joins, a new
fundamental rights through the application of Community Intergovernmental Conference (IGC) must comprehensively
law, which until then had been a matter for Court of Justice review the Treaties’ provisions on the institutions.
case-law. The Treaty adds a system of political sanctions 3. There is certainly provision for the Council to use qualified
which may be decided on in the event of serious and majority voting in a number of the legal bases newly
persistent violation by a Member State of the founding established by the Amsterdam Treaty (see above and the
principles of the EU (freedom, democracy, human rights decisions on employment guidelines (Article 128(2)) and on
and the rule of law). very remote regions (Article 299(2)). However, of the existing
3. Election and Statute of Members Community policies, only research policy has new provisions
on qualified majority voting, at Articles 166 and 172. In the EC
With regard to the procedure for elections to Parliament by
Treaty alone, 44 articles still require unanimity, of which 20
direct universal suffrage (Article 190), the Community’s power
concern legislative areas such as tax harmonisation (Article 93),
to adopt common principles has been added to the existing
approximation of laws (Article 94), culture (Article 151),
power to adopt a uniform procedure. A legal basis making it
industrial policy (Article 157), the Structural Funds (Article 161)
possible to adopt a single statute for MEPs has been included
and some aspects of environmental policy (Article 175).
in the same article. However, there is still no provision allowing
measures to develop political parties at European level (cf.
Article 191).
F. Other matters
— A protocol covers Community procedures for
C. Closer cooperation implementing the principle of subsidiarity.
For the first time, the founding Treaties contain general
— New provisions on access to documents (Article 255) and
provisions allowing some Member States under certain
greater openness in the Council’s legislative work
conditions to take advantage of common institutions to
(Article 207(3)) have improved transparency.
organise closer cooperation between themselves. This
option is in addition to the closer cooperation covered by
specific provisions, such as economic and monetary union, Role of the European Parliament
creation of the area of freedom, security and justice and Consultation before an IGC is called. Parliament is also involved
incorporating the Schengen provisions. The areas where in the IGCs according to ad hoc formulas; during the last three
there may be closer cooperation are the third pillar and, it was represented, depending on the case, by its President or
under particularly restrictive conditions, matters subject to by two of its members.
non-exclusive Community competence. The conditions
which any closer cooperation must fulfil and the planned g Roberta Panizza
decision-making procedures have been drawn up in such a July 2008
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1.1.4. The Treaty of Nice and the Convention on the

Future of Europe
The ‘Amsterdam leftovers’ were meant to be resolved by the Treaty of Nice. However, this Treaty prepared the European
Union only partially for the important enlargements to the east and south of 1 May 2004 and 1 January 2007. Hence, the
European Convention, chaired by Valéry Giscard d’Estaing, made an effort to produce a new legal base for the Union in
the form of the Treaty establishing a Constitution for Europe.
I. Treaty of Nice the Finnish Presidency, the Helsinki European Council set the
agenda for the IGC as follows: the three items of ‘Amsterdam
The Treaty was signed on 26 February 2001 and entered into leftovers’ plus all the changes required in preparation for
force on 1 February 2003. enlargement.
A. Objectives C. Content
The conclusions of the Helsinki European Council (10 and 11 The IGC opened on 14 February 2000 and completed its work
December 1999), confirmed at Nice in December 2000, in Nice on 10 December 2000, reaching agreement on the
required the EU to be able, by the end of 2002, to welcome the above institutional questions and a range of other points,
new Member States which were ready for accession. In the namely:
event the European Union opened its doors to 10 new — a new distribution of seats in the European Parliament;
Member States on 1 May 2004. The presence of these
countries, which have a low or moderate level of population, — more flexible enhanced cooperation;
increased the total relative weight of countries with a smaller — monitoring of fundamental rights and values within the EU,
population in comparison with the most populous countries and
(only two of the new Member States are more populous than
the previous Member State average). The Treaty of Nice thus — strengthening of the EU’s judicial system.
sought to: 1. Weighting of votes in the Council
— make the Community institutions more efficient and Right from the start of the IGC it was clear that the key to any
legitimate; other agreement would be the nature of the qualified majority
voting system to be used in future in the Council. Taking
— prepare the EU for its major enlargement to include
together the system of voting in the Council, the composition
countries from eastern Europe.
of the Commission and, to some extent, the distribution of
B. Background seats in the European Parliament, the European Council
realised that the main imperative at this summit was to
A number of institutional issues had been addressed by the
change the relative weight of the Member States and their
Intergovernmental Conferences of Maastricht and Amsterdam
ability to wield their influence, a subject which no IGC had
(1.1.3) but not satisfactorily resolved (unfinished business
addressed since the Treaty of Rome.
referred to as the ‘Amsterdam leftovers’): the size and
composition of the Commission, weighting of votes in the The protocol on the institutions annexed to the Treaty of
Council, extension of qualified majority voting. The protocol on Amsterdam had envisaged two methods of defining qualified
the institutions annexed to the Treaty of Amsterdam stipulated majority voting: a new system of weighting (modified from the
that, in the case of enlargement entailing the accession of not present one) or the application of a dual majority (of votes and
more than five countries, the Commission ‘shall comprise one population), the solution proposed by the Commission and
national of each Member State, provided that, by that upheld by Parliament.
[accession] date, the weighting of the votes in the Council has
The IGC chose the former option and decided that the
been modified’ (no provision was made for the eventuality of
number of votes allocated to each Member State would be
more than five new members joining).
changed with effect from 1 January 2005. In a declaration
The Cologne European Council (3 and 4 June 1999) thus annexed to the Treaty it also set out a common position to be
decided that a further Intergovernmental Conference (IGC) adopted by the Union for determining, in the course of
would have to be convened in early 2000 and completed by accession negotiations, the number of votes to be given to
the end of that same year. Its remit would be those the applicant countries. In a Union of 15, a qualified majority
institutional questions still unresolved after Amsterdam and was to require 169 votes out of 237, or 71.3 % of the votes. In
the new Treaty amendments which would be necessary in this a Union of 27, a qualified majority requires 255 votes out of
context. Further to this decision and on the basis of a report by 345, or 73.9 % of the votes. The previous requirement was 62
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votes out of 87, or 71.27 %. In the course of the enlargement 3. European Parliament
process the threshold for qualified majority voting thus a. Composition
became higher. The Treaty of Amsterdam had set the maximum number of
Moreover, when a measure is being adopted, a Member State MEPs at 700, once and for all in principle. At Nice the European
may request verification that the qualified majority represents Council thought it necessary, with an eye to enlargement, to
at least 62 % of the total population of the Union. If it does not, revise the number of MEPs for each Member State together
the decision will not be adopted. with the total number of MEPs. The new composition of the EP
has also been used to counterbalance the weighting of votes
The breakdown of votes was fixed as follows: 29 for Germany,
in the Council.
France, Italy and the United Kingdom; 27 for Spain and Poland;
14 for Romania; 13 for the Netherlands; 12 for Belgium, the The Treaty of Nice set the maximum number of MEPs at 732. For
Czech Republic, Greece, Hungary and Portugal; 10 for Bulgaria, the 2004–09 parliamentary term each of the 25 Member States
Austria and Sweden; 7 for Denmark, Ireland, Lithuania, Slovakia was allocated a number of seats equal to the sum of the seats
and Finland; 4 for Estonia, Cyprus, Latvia, Luxembourg and allocated to them in Declaration No 20 annexed to the Final Act
Slovenia; 3 for Malta (total 345). of the Treaty plus the number of seats resulting from distribution
of the 50 seats which will not be going to Bulgaria and Romania.
Although the number of votes has increased for all Member The number of seats for the existing Member States has been cut
States, the share of the most populous Member States by 91 (from 626 to 535). Only Germany and Luxembourg retain
decreased: previously 55 % of the votes, it fell to 45 % when their current complement of MEPs. This reduction will apply in
the 10 new members joined and to 44.5 % on 1 January 2005. the first instance to the European Parliament elected in 2009.
This is where the new provisions such as the demographic
‘safety net’ should prove their worth. Since new Member States joined the Union in the course of
the 2004–09 parliamentary term, a temporary exceeding of
2. Commission the maximum number of 732 seats in the EP is permitted in
a. Composition order to accommodate MEPs from the new countries entering
Since 2005 the Commission has just one Commissioner for Parliament after the European elections in 2004.
each Member State. Once the Accession Treaty is signed for b. Powers
the 27th Member State and if the Treaty of Lisbon does not
enter into force, the Council will decide, acting unanimously: The EP may, like the Council, Commission and Member States,
institute a legal challenge to acts of the Council, Commission
— on the number of Commissioners; or ECB on grounds of lack of competence, infringement of an
— on the arrangements for a rotation system, given that essential procedural requirement, infringement of the Treaty
Member States are treated on an equal footing with regard establishing the European Community or of any rule of law
to determining the sequence of, and the time spent by, relating to its application, or misuse of powers.
their nationals as Members of the Commission, and given Following a proposal by the Commission, Article 191 is
too that each Commission must reflect the demographic transformed into a legal base for operations enabling
and geographical range of the Member States. regulations governing political parties at European level and
b. Nominations the rules regarding their funding to be adopted using the co-
decision procedure. The regulations and general conditions
The President of the Commission will henceforth be
governing MEPs will be approved by the Council acting by
nominated by a qualified majority vote of the European
qualified majority, except for measures relating to the taxation
Council. Once this nomination is approved by the EP, the
of current or former MEPs.
Council will also vote by qualified majority to nominate the
other Members of the Commission, by agreement with the The EP’s powers have been increased, with a slight broadening
President. Following a fresh vote by the EP approving the of the scope of the co-decision procedure and by the
membership of the Commission as a whole, the Council will requirement that the EP must give its assent to the
officially appoint the President and Members of the establishment of enhanced cooperation in areas covered by
Commission by qualified majority. co-decision. The EP will also be asked for its opinion when the
Council pronounces on the risk of a serious breach of
c. Internal organisation
fundamental rights in a Member State.
The Treaty of Nice continues a development begun in
Amsterdam, giving wide powers to the Commission President 4. Reform of the judicial system
on how the Commission is organised. The President will a. Court of Justice
allocate responsibilities to the Commissioners and may The Court of Justice will have one judge for each Member
redistribute these in the course of a term of office. He chooses State, as in the past. But it will henceforth meet in a number of
the Vice-Presidents and decides how many there shall be. The different ways: it may sit in chambers (consisting of three or
new Treaty thus creates a hierarchy of power within the five judges), in a Grand Chamber (11 judges) or as a full Court.
Commission. The Council, acting unanimously, may increase the number of
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advocates-general, which remains at eight. The Court of fundamental rights by a Member State, to cover cases where a
Justice retains jurisdiction over questions referred for a patent breach of fundamental rights has not actually occurred
preliminary ruling, but it may under its statute refer types of but there is a ‘clear risk’ that it may occur. The Council, acting by
matters other than those listed in Article 225 of the EC Treaty a majority of four fifths of its members and after obtaining the
to the Court of First Instance. assent of the European Parliament, determines the existence
b. Court of First Instance of the risk and addresses appropriate recommendations to the
Member State in question.
The powers of the Court of First Instance are increased to
include certain categories of preliminary rulings. Judicial D. Role of the European Parliament
panels will be established by unanimous decision of the As at the earlier Intergovernmental Conferences, the EP was
Council. A declaration asks for the establishment as swiftly as actively involved in preparations for the 2000 IGC, giving its
possible of a judicial panel with jurisdiction to deliver views on the conference agenda and its progress and
judgments in first instance on disputes between the objectives in resolutions adopted on 3 February and 13 April
Community and its servants. All these operating provisions, 2000. Parliament also expressed its opinion on the substance
notably the powers of the Court of First Instance, are and judicial implications of the Charter of Fundamental Rights
henceforth set out in the Treaty itself. by adopting a resolution and a decision (resolution on the
5. Legislative procedures drafting of a European Union Charter of Fundamental Rights
Although a considerable number of new policies and and decision of 14 November 2000 approving the draft
measures (27) now require qualified majority voting in the Charter of Fundamental Rights of the European Union).
Council, co-decision has been extended only to a few minor In its resolution of 31 May 2001 on the Treaty of Nice and the
areas (Articles 13, 62, 63, 65, 157, 159 and 191 of the EC Treaty; future of the Union, the EP was very critical of the Treaty,
assent is required for Article 161). accusing it above all of not having prepared adequately for the
6. Enhanced cooperation forthcoming round of new accessions. It did, however, express
The basic idea in Nice was to compensate for the inadequate its satisfaction at the substantial reforms made to the structure
extension of qualified majority voting and prevent blockages and operation of the judicial system, which were intended to
in decision-making after enlargement. preserve the unity of Community law, thus consolidating the
Union’s judicial role.
Like the Amsterdam Treaty, the Treaty of Nice contains general
provisions which apply to all areas of enhanced cooperation The EP thought that the smooth functioning of the EU would
and provisions specific to the pillar concerned. But whereas depend on the outcome of the debate on the future of Europe
the Amsterdam Treaty provided for enhanced cooperation announced in a declaration annexed to the Treaty and that this
under the first and third pillars only, the Treaty of Nice provides debate would culminate in a Treaty reform in 2004. Apropos of
for it under all three pillars. this, Parliament insisted that the next IGC should proceed
along lines radically different from the traditional model: it
As before, enhanced cooperation must be a last resort. On should be a transparent process, with the involvement of
this point, however, the Treaty of Nice makes two changes: members of the European Parliament and national
previously the rule was that enhanced cooperation ‘is only parliaments, the Commission, and input from ordinary people,
used where the objectives of the said Treaties could not be and it should culminate in the production of a constitution-
attained by applying the relevant procedures laid down type document.
therein’ (Article 43 TEU); in future, enhanced cooperation can
only be used ‘when it has been established within the
Council that the objectives of such cooperation cannot be II. Convention on the Future of Europe
attained, within a reasonable period of time, by applying
the relevant provisions of the Treaties’. So referral to the A. Basis
European Council will no longer be possible, and the concept In accordance with Declaration No 23 of 11 December 2000
of ‘a reasonable period of time’ clarifies the overly flexible annexed to the Treaty of Nice, the Laeken European Council
wording of Article 43 TEU. decided to organise a Convention bringing together the main
The EP’s role in the authorisation procedure has been parties concerned for a debate on the future of the European
strengthened. Under the third pillar, Parliament’s right to be Union.
informed becomes a requirement that it be consulted. Under B. Objectives
the first pillar, consultation remains the general rule but the
To prepare the next IGC in as transparent a manner as possible,
EP’s assent is required in all areas where enhanced cooperation
addressing the four main issues raised by the further
relates to a question covered by the co-decision procedure.
development of the EU: a better division of competences,
7. Protection of fundamental rights simplification of the Union’s instruments of action, increased
A paragraph was added to Article 7 TEU, concerning decisions democracy, transparency and efficiency, and the drafting of a
to be taken in the event of a ‘serious and persistent breach’ of Constitution for Europe’s citizens.
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C. Structure — a ‘listening phase’ in which the Convention sought to
1. The Convention: identify the expectations and needs of Member States and
— 1 Chairman (Mr Giscard D’Estaing); Europe’s citizens;
— 2 Vice-Chairmen (Mr Amato and Mr Dehaene); — a phase in which the ideas expressed were studied;
— 15 representatives of the Member State Heads of State or — a phase of drafting recommendations based on the
Government; essence of the debate.
— 30 members of the national parliaments (2 per Member State); The first phase began with the launch of the Convention in
— 16 members of the European Parliament; February 2002 and ended on 14 June 2002 with the creation of
11 working groups designed to pursue further a number of
— 2 Members of the European Commission.
themes which could not be addressed in detail in meetings of
The countries which had applied to join the Union may also the full Convention.
take part in the debate on an equal footing, but they could not
At the end of 2002 the working groups (on ‘subsidiarity’, ‘charter/
block any consensus emerging among the Member States. The
ECHR’, ‘legal personality’, ‘national parliaments’, ‘complementary
Convention thus had a total of 105 members.
competencies’, ‘economic governance’, ‘external action’, ‘defence’,
2. The Convention Praesidium ‘simplification’, ‘freedom, security and justice’ and ‘social Europe’)
In addition to the chairman and vice-chairmen, the Praesidium presented their findings to the Convention. The Praesidium for
comprised nine members of the Convention: its part presented the preliminary draft of a European
— representatives of all governments holding the Council Constitution on 28 October 2002.
Presidency during the lifetime of the Convention (Spain, During the first half of 2003, the Convention drew up and
Denmark and Greece); debated, in several stages, a text which became the draft
— 2 members of national parliaments (Mr Bruton and Mrs Treaty establishing a Constitution for Europe. In the course of
Stuart); 26 full meetings of the Convention, the Praesidium heard
1 812 contributions from members; the Convention’s website
— 2 members of the European Parliament (Mr Hänsch and Mr
received 692 250 visits, 97 000 of them in the month of June
Méndez de Vigo);
2003 alone; and 5 995 amendments were put forward by
— 2 Members of the European Commission (Mr Barnier and members of the Convention to the text of various articles.
Mr Vitorino).
Part I (principles and institutions, 59 articles) and Part II (Charter
It also included an ‘invited representative’ chosen by the of Fundamental Rights, 54 articles) were laid before the
applicant countries to attend meetings of the Convention (Mr Thessaloniki European Council on 20 June 2003. Part III
Peterle, member of the Slovene parliament). The Praesidium (policies, 338 articles) and Part IV (final provisions, 10 articles)
had the role of lending impetus to the Convention, providing were presented to the Italian Presidency on 18 July 2003. There
it with a basis on which to work. are also five protocols and one declaration.
3. The Convention Secretariat The Intergovernmental Conference adopted this text on 18
The Secretariat was made up of a Secretary-General, a Deputy June 2004 with a number of amendments, notably to the
Secretary-General, a spokesman, an Office of the Chairman (2 provisions governing the institutions and the areas of
officials) and 15 officials drawn from the staff of the EP, Council application of the qualified majority. Nevertheless, the basic
and Commission. It provided assistance to the members of the structure of the Convention’s draft was retained.
Convention on all issues arising in the course of their work.
4. Organisation of the work of the Convention g Wilhelm LEHMANN
The work of the Convention comprised three phases: July 2008
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1.1.5. The Treaty establishing a Constitution for Europe

Signed by the 25 Member States on 29 October 2004, the Treaty establishing a Constitution for Europe reinforces the
powers of the European institutions and brings important amendments to the distribution of competences and to several
European policies. Despite the importance that this Treaty presents for the future of the European Union, it was not ratified
by France and the Netherlands and could not come into force.
The Treaty, which was signed on 29 October 2004 and finances of the Union, together with the rules for
approved by the European Parliament on 12 January 2005, has membership
to be ratified by each Member State in accordance with its
— Part II: the Charter of Fundamental Rights
own constitutional requirements (Article IV-447). It is planned
to come into force, subject to a successful ratification process, — Part III: the internal and external policies and functioning
either on 1 November 2006, or at the start of the second of the Union
month following the final ratification. — Part IV: general and final provisions
3. Two annexes and 36 protocols
Objectives and background
4. Fifty declarations
1.1.4. I.
B. More effective institutions
Contents 1. A European Parliament with greater powers
Although the nature of the document, with its title of ‘Treaty The European Parliament’s legislative and budgetary powers
establishing a Constitution for Europe’, has given rise to various and its functions of political scrutiny and consultation have
political interpretations, there is no longer any doubt about its once again been extended (Article I-20).
legal status: the text constitutes the same type of Treaty as the The introduction of the ‘ordinary legislative procedure’ (Article
earlier Treaties which it replaces (Article IV-437). Three key III-396), which corresponds to the current co-decision
elements prove this: the provisions on its entry into force procedure with the Council acting by a qualified majority,
(requiring the agreement of each Member State), on its reaffirms the EP’s role as co-legislator. The scope of this
revision (requiring unanimous approval, Article IV-443(3)) and procedure has been increased to 34 areas (including
on the possibility given to the Member States to withdraw agriculture, asylum and immigration) and, with a few minor
from the Union (Article I-60). All three show that the Union is differences, now also covers the budgetary procedure
still answerable to the Member States. (1.4.3). The abolition of the distinction between compulsory
Although the new text puts an end to the concept of ‘pillars’, it and non-compulsory expenditure means that the EP will be
still maintains the hybrid structure of the EU. Certain able to negotiate the adoption of the entire Community
Community-level (supranational) elements have been budget on an equal footing with the Council (Article III-404).
strengthened, particularly in the areas of justice and home As for the other legislative procedures, the ‘cooperation
affairs (JHA), while other fields like the common foreign and procedure’ has been abolished, while ‘assent’ continues to exist
security policy (CFSP) remain an intergovernmental matter as ‘consent’ and will apply to the arrangements concerning the
(1.4.1, 1.4.2). The Treaty nevertheless contains certain EU’s own resources (Article I-54), among other things. Only the
important new elements, both in its general provisions and consultation procedure remains unchanged. The EP will now
policies and in relation to institutional reform. These include: be consulted in the area of diplomatic and consular
protection, for example.
— recognition of the EU’s legal personality (Article I-7);
Regarding the EP’s powers of supervision and appointment,
— the incorporation of the Charter of Fundamental Rights,
it should be noted that the EP has a new right to elect the
which marks a major step forward for the protection of
Commission President on a proposal from the European
citizens’ rights in the EU;
Council, which chooses the candidate by a qualified majority
— the election of a President of the European Council; taking account of the outcome of the European elections. The
— the creation of a post of Union Minister for Foreign Affairs. EP also approves the Commission as a whole.
As for Parliament’s internal organisation, the maximum
A. Basic structure number of MEPs has been set at 750. By the time of the 2009
1. Preamble elections the European Council must decide, on an initiative
2. Four main sections containing 448 articles: from Parliament and with its consent, how the seats are to be
— Part I: fundamental provisions on the objectives, distributed. The system will be based on the current
competences, institutions and bodies, democratic life and ‘degressively proportional’ representation system, with a
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minimum of 6 and a maximum of 96 seats for each Member the number of Commissioners, but after vehement objections
State. from the smallest Member States, this idea was abolished by
the IGC, and it was agreed that there would be ‘one
2. A more important European Council
Commissioner per Member State’ until 2014. After that date
The Treaty for the first time recognises the European Council as the Commission will have a number of members
an EU institution (Article I-19). It is principally responsible for corresponding to two thirds of the number of Member States,
providing the Union with the ‘impetus necessary for its selected on the basis of a system of equal rotation between
development’ and for defining its general political priorities the Member States.
(Article I-21), and thus appears to have greater capacity to
influence crucial political choices within the EU. The new rules With the same aim of promoting more coherent and effective
on its internal organisation support this idea. The current work, the role of the Commission President has been
rotating Presidency will now be replaced by a permanent considerably enhanced (Article I-27), and his election by the EP
President, elected by a qualified majority of the members of will give him greater legitimacy. He will also be able to decide
the European Council for a term of two and a half years, on the internal organisation of his institution (appointment of
renewable once. In order to make the European Council work Commissioners, distribution of portfolios, requesting
more coherently and efficiently, the President must above all Commissioners to resign).
create a climate that facilitates consensus, which remains the 5. The Union Minister for Foreign Affairs
general rule for adopting decisions within the institution. The Minister, a new institutional position, will be appointed by
Furthermore, the President must also ensure the external a qualified majority of the European Council with the
representation of the Union on issues concerning its common agreement of the President of the European Commission
foreign and security policy, without prejudice to the powers of (Article I-28). He will be responsible for the EU’s common
the Union Minister for Foreign Affairs. foreign and security policy as a whole, and has the power to
3. The EU Council of Ministers put forward proposals relating to it. He will chair the Foreign
The EU Council of Ministers continues to exercise legislative, Affairs Council and will at the same time be one of the Vice-
budgetary and coordinating functions (Article I-23). As a Presidents of the Commission (‘double-hatting’).
general rule, it takes decisions by a qualified majority. In order A European External Action Service, comprising staff from
to facilitate decision-making in an enlarged Council, the the General Secretariat of the Council and the Commission
weighting system for voting laid down in the Nice Treaty has and national diplomats, will be set up to ensure the continuity
been reformed. The issue was heavily disputed throughout the and coherence of the Minister’s work (Article III-296).
reform process, but the IGC finally opted for the following
solution: from 1 November 2009, a double majority system C. Simplified instruments and procedures
(Member States and population) is to be introduced. A 1. Clearer distribution of competences
decision will be adopted in the Council if it has the agreement For the first time the Treaty sets out a list which clearly divides
of at least 55 % of the Member States accounting for at least competences into three separate groups (Article I-12):
65 % of the EU population. A blocking minority must include
— areas of exclusive competence (Article I-13): the Union
at least four Member States. Where a proposal from the
alone can legislate, and Member States implement the EU’s
Commission is not necessary, or where a decision is not
legislation;
adopted on a proposal from the Minister for Foreign Affairs,
the majority required is greater (72 % of Member States and — areas of shared competence (Article I-14): the Member
65 % of the population). States can legislate and adopt legally binding measures
where the Union does not do so;
As for the organisation of its work, meetings of the specialist
formations of the Council will now be divided into two: these — areas of supporting competence (Article I-17): the EU
meetings will be public when deliberating on legislation, but adopts measures to support or complement Member
in camera when discussing non-legislative issues. A Foreign States’ policies.
Affairs Council will be set up, chaired by the Union Minister for 2. Reduction in the number of legal instruments
Foreign Affairs. The Council Presidency will continue on the A new ‘hierarchy of norms’ simplifies how these competences
basis of equal rotation, but from now on there will be team are exercised by reducing the number of EU legal instruments.
presidencies in order to ensure better continuity of work. The Treaty divides acts into two groups (Article I-33):
4. The European Commission a. legislative acts (Article I-34), which are generally adopted
The European Commission keeps its traditional functions through the ordinary legislative procedure:
(Article I-26): it promotes the general interest of the Union,
ensures the application of Community law and exercises — European laws are directly applicable and binding in their
coordinating, executive and management functions. In order entirety,
to ensure that the decision-making process runs smoothly in a — European framework laws are binding on each Member
larger Commission, the Convention had proposed to reduce State to which they are addressed as to the result to be
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achieved, while leaving it to the national authorities to a. Protocol 1 — The role of national parliaments in the European
choose the methods; Union promotes greater involvement of the Member States’
parliaments in the EU’s political process by giving them
b. non-legislative acts (Article I-35), which will be adopted
information and monitoring rights, including:
by the European Council, the Council of Ministers, the
Commission, or other institutions, where appropriate: — the direct forwarding to the national parliaments of draft
legislative acts and other documents from the European
— European regulations are regulatory acts of general institutions;
application,
— a six-week period between a draft legislative act being
— European decisions have individual or general application, forwarded and the date when it is put on the agenda for
— recommendations and opinions express points of view and the Council, and 10 days between its being placed on the
are not binding. agenda for the Council and its adoption.
b. Protocol 2 — The application of the principles of subsidiarity
D. Democratic life, citizens’ rights and transparency and proportionality requires the European institutions to take
A whole series of provisions are designed to do more to these two principles into consideration when drafting
promote democratic rights and citizens’ rights at European legislative acts. It gives national parliaments the right:
level (2.1 to 2.5). — to say whether they think both principles have been
Regarding the EU’s democratic foundations, the Treaty refers applied correctly (‘early warning system’); if one third of
for the first time to the three fundamental principles of the parliaments (or one quarter where the proposal is in
democratic equality, representative democracy and the JHA field) feel that there has not been adequate
participatory democracy. Participatory democracy includes the compliance with the principles, the Commission must
possibility of a citizens’ initiative (Article I-47): 1 million reconsider its proposal and decide whether to withdraw,
European citizens from a number of Member States can sign a maintain or amend it, giving precise reasons for doing so;
petition asking the Commission to put forward proposed — to bring proceedings before the Court of Justice, through
legislation on a particular subject. their Member States, for infringement of the principle of
In the area of the protection of fundamental rights, the subsidiarity by a legislative act.
rights of European citizens will now be more comprehensively 2. Flexibility
guaranteed than ever before (Article I-9). This can be seen not a. ‘Bridging clauses’ and ‘emergency brakes’
just in the plans for the EU to accede to the European
Despite the more widespread application of qualified majority
Convention for the Protection of Human Rights and
voting (Article I-23), decisions in the Council of Ministers still
Fundamental Freedoms, but above all in the inclusion of the
require unanimity in certain important areas. To make work run
Charter of Fundamental Rights in the Treaty, giving the Union
more smoothly in future, a general bridging clause (Article
a list of rights that will be legally binding on its institutions
IV-444) has been included in the Treaty. This will enable the
and bodies and on the Member States when applying
European Council, acting by unanimity and after obtaining the
European law.
consent of the European Parliament, to allow a qualified
In order to try to make the EU’s political system more majority vote instead of a unanimous vote, or, where
transparent, Parliament and the Council will now be required appropriate, an ordinary legislative procedure instead of a
to meet in public when considering and voting on a legislative special legislative procedure for any area mentioned in Part III
act (Article I-50). Citizens will also have a constitutional right of of the Treaty, except for decisions with military implications or
access to documents of the EU’s institutions, bodies, offices in the area of defence. However, a single national parliament
and agencies. may prevent the decision from coming into force by
expressing its opposition within six months to the use of the
E. The policies of the Union bridging clause. In addition to the general bridging clause,
Of the provisions relating to the Union’s internal and external there are also specific bridging clauses which apply to clearly
policies (Part III of the Treaty), the main changes from previous defined areas such as social policy (Article III-210) or the CFSP
Treaties primarily concern the fields of justice and home affairs (Articles I-40 and III-300). ‘Emergency brakes’ have been
(4.11.1), economic and monetary policy (5.1 to 5.5) and introduced in several fields so that if a Member State considers
the CFSP (6.1.1). that draft legislation or a procedure would undermine the
fundamental principles of its legal system, it can call on the
F. Other provisions European Council to look at the case in question.
1. The role of the national parliaments and the principles b. Enhanced cooperation
of subsidiarity and proportionality In areas where the EU has non-exclusive competence, a
The desire to bring Europe closer to its citizens is reflected in number of Member States may establish enhanced
major changes to two protocols annexed to the Treaty (1.2.2). cooperation between themselves in order to attain the
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objectives of the Union (Articles I-44 and IV-416 to IV-423). Role of the European Parliament
Such cooperation may be undertaken only as a last resort and The EP was one of the main driving forces in the ‘post-Nice’
must involve at least one third of the Member States. It is reform process, demanding additional reforms before
authorised by the Council acting unanimously on a proposal enlargement to 25 Member States and putting forward
from the Commission and after obtaining the consent of specific proposals on how the reforms should be prepared and
Parliament. Decisions taken by the Member States involved what they should involve.
will apply only to themselves.
This process proved to be a notable success for Parliament,
3. Revision of the Treaty which managed to achieve a considerable number of its initial
As well as the introduction of simplified revision through the objectives, particularly concerning the hierarchy of norms, the
bridging clause mechanism, two provisions pave the way for ordinary legislative procedure, the extension of qualified
the Treaty to be revised: majority voting, the division of competences, the election of
the Commission and the incorporation of the Charter of
a. a n ordinary revision procedure (Article IV-443), which Fundamental Rights. In its resolution of 12 January 2005 on the
includes two innovations: Treaty, Parliament rightly welcomed the Treaty as a ‘vast
— the EP can now submit proposals for revising the Treaty; improvement’.
— the President of the European Council can decide to However, it should also be pointed out that some fields are still
convene a Convention in order to prepare for an IGC; he largely outside of its sphere of influence, such as revisions of
does not have to do so, however; the European Council the Treaties, institutional reforms, the CFSP and defence policy.
may decide by a simple majority and with the EP’s consent During the reform process, the EP took considerable
not to convene a Convention; advantage of the working methods of the Convention, which,
in the early stages at least, relied on open deliberation rather
b. a simplified procedure (Article IV-445), which applies only
than closed diplomatic negotiation, the traditional IGC
to the Union’s internal and external policies referred to in
method. Similarly, the EP was able for the first time to
Title III of Part III of the Treaty. This enables the European
participate fully in all phases of the IGC.
Council to amend the Treaty without having to convene an
IGC. All amendments are adopted by a unanimous decision
of the Council after consulting the EP and the Commission, g Wilhelm Lehmann
and they must be ratified by all the Member States. November 2005
1.1.6. The Treaty of Lisbon

This chapter presents the background and essential provisions of the Treaty of Lisbon. The objective is to provide a
historical context for the emergence of this latest fundamental EU text from those which came before it (1.1.5). The
specific provisions (with article references) and their effects on European Union policies are explained in more detail in the
following fact sheets dealing with particular policies and issues.
Legal Base primary law with a modernised legal foundation for the
European Union.
Treaty of Lisbon amending the Treaty on the European Union
and the Treaty establishing the European Community (OJ C Yet after more than five years of constitutional debate and
306, 17.12.2007). negotiations another Treaty amending the existing primary
law was signed. As is well known, this change of strategy came
History about as a result of the negative outcome of two referendums
on the Treaty establishing a Constitution for Europe
The Lisbon Treaty started as a constitutional project at the end (Constitutional Treaty) in May and June 2005, in response to
of 2001 (European Council Declaration on the Future of the which the European Council decided to have a two-year
European Union, or Laeken Declaration), and was followed up ‘period of reflection’. In March 2007, the German Presidency
in 2002 and 2003 by the European Convention (1.1.5). An was able to revive the reform effort at a celebratory event
important goal of this endeavour was to replace existing EU marking the 50th anniversary of the Treaties of Rome. The
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Berlin Declaration, adopted by all Member States, enshrined 4. The disappearance of the pillars
their common resolve to agree on a new Treaty in time for the a. Legal personality of the EU
2009 European elections.
The Lisbon Treaty gives the EU full legal personality. Therefore,
On the basis of the Berlin Declaration, the European Council of the Union obtains the ability to sign international treaties in
21 to 23 June 2007 adopted a detailed mandate for a the areas of its attributed powers or join an international
subsequent Intergovernmental Conference (IGC) under the organisation. Member States may only sign international
Portuguese Presidency. The IGC concluded its work in October agreements that are compatible with EU law.
2007. The Treaty was signed at the European Council of Lisbon
b. Area of freedom, security and justice (FSJ)
on 13 December 2007 and is meant to be ratified by the
Member States and enter into force before the European The Treaty of Lisbon completes the absorption of the
Parliament elections in June 2009. remaining pillar three aspects of FSJ (police and judicial
cooperation in criminal matters) into pillar one. Its
intergovernmental structure ceases to exist by making the acts
Content adopted in this area subject to the ordinary legislative
A. Objectives and legal principles procedure (qualified majority and co-decision) and using the
1. Purpose of the reform legal instruments of the Community method (regulations,
directives and decisions), unless otherwise specified.
To enhance the legitimacy, efficiency and transparency of the
EU, the Treaty of Lisbon returns to the traditional method of 5. Revision of the Treaties
changing the existing Treaties. The Treaty establishing the The European Parliament will be able to propose amendments
European Community is renamed the ‘Treaty on the Functioning to the Treaties, as is already the case for the Council, a Member
of the European Union’ and the term ‘Community’ is replaced by State government or the Commission. Normally, such an
‘Union’ throughout the text. The Union takes the place of the amendment would require the convocation of a Convention. It
Community and is its legal successor. The Lisbon Treaty does not will, however, be possible to revise the Treaties without
create State-like Union symbols like a flag or an anthem. Terms convening an IGC, through simplified revision procedures
such as ‘constitution’, ‘law’ or ‘foreign minister’, used in the concerning the internal policies and actions of the Union
Constitutional Treaty, have also disappeared. Although the new (Articles 48(6) and 48(7) TEU). The European Parliament’s
text is hence no longer a Constitutional Treaty by name, it consent is required in order to decide not to convene a
preserves most of its substantial achievements. Convention if this is deemed to be justified by the scope of the
No additional exclusive competences are transferred to the proposed amendments.
Union by the Lisbon Treaty. However, it changes the way the B. Enhanced democracy and better protection of
Union exercises its existing powers and some new (shared) fundamental rights
powers by enhancing citizens’ participation and protection,
creating a new institutional set-up and modifying the 1. Participatory democracy
decision-making processes for increased efficiency and The Treaty of Lisbon expresses the three fundamental
transparency. A higher level of parliamentary scrutiny and principles of democratic equality, representative democracy
democratic accountability is therefore attained. and participatory democracy. Participatory democracy takes
the new form of a citizens’ initiative: 1 million European citizens
2. Supremacy of Union law from a ‘significant’ number of Member States (to be
Unlike the Constitutional Treaty, the Lisbon Treaty contains no determined by regulation) can request the Commission to put
article formally enshrining the supremacy of Union law over forward a legislative proposal.
national legislation, but a declaration was attached to the
Treaty to this effect (Declaration No 17), referring to an opinion 2. The Charter of Fundamental Rights
of the Council Legal Service which reiterates consistent case- The Charter of Fundamental rights will not be incorporated
law by the Court. directly into the Lisbon Treaty but acquires a legally binding
character through Article 6(1) TEU, giving the Charter the same
3. The limits of Union competences
legal value as the Treaties. As the Charter itself makes clear, it
The Lisbon Treaty for the first time organises and clarifies the does not extend to competences of the Union as defined by
powers of the Union. It distinguishes three types of the Treaties. A protocol introduces specific measures for the
competences: exclusive competence, where the Union alone United Kingdom and Poland concerning exceptions to the
can legislate, and Member States only implement the EU’s justiciability of the Charter before national courts.
legislation; shared competence, where the Member States can
legislate and adopt legally binding measures if the Union has 3. The European Convention for the Protection of Human
not done so; supporting competence, where the EU adopts Rights (ECHR)
measures to support or complement Member States’ policies. The EU will accede to the European Convention once the 14th
Union competences can now be handed back to the Member protocol to the ECHR enters into force, which allows not only
States in the course of a Treaty revision. States but also international organisations to become
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signatories of the ECHR. Still, the accession act must be ratified Secretariat of the Council, the Commission and national
by all EU Member States. diplomatic services, to provide the resources necessary for an
effective foreign policy.
C. A new institutional set-up
1. The European Parliament 4. The Council of Ministers
Pursuant to Article 14(2) TEU the EP now ‘shall be composed of The fundamental structure of the contested voting reforms
representatives of the Union’s citizens’, not of representatives of provided by the Constitutional Treaty will remain in place,
‘the peoples of the States’, as in Article 189 EC. especially the principle of double majority (citizens and
Member States). However, the current voting rules shall remain
The EP’s legislative and budgetary powers have been in place until 2014; between 1 November 2014 and 31 March
increased through both the new ‘ordinary legislative 2017 the new rules shall apply but the use of existing voting
procedure’ corresponding to the former co-decision weights can be requested by any Member State.
procedure, and the abolition of the distinction between
compulsory and non-compulsory expenditure. Furthermore, Qualified majority is reached when 55 % of Member States,
the ordinary legislative procedure will apply to more than 40 representing at least 65 % of the population, support a
new policy areas, raising the total number to 73. The assent proposal. When the Council is not acting on a proposal from
procedure continues to exist as ‘consent’ and the consultation the Commission or the High Representative, the necessary
procedure remains unchanged. majority of Member States increases to 72 % (Article 238(2)
TFEU). To block legislation, at least four countries have to vote
The new budgetary procedure creates full parity between against a proposal. A new scheme inspired by the ‘Ioannina
Parliament and the Council for approval of the annual budget. compromise’ will allow 75 % (55 % from 1 April 2017) of the
The multiannual financial framework has to be agreed by Member States to ask for reconsideration of a proposal during
Parliament (consent). a ‘reasonable time period’ (Declaration No 7 attached to the
The EP now elects the Commission President by a majority of Treaty).
its members on a proposal from the European Council, which In the future, the Council will meet in public when it
is obliged to select a candidate by qualified majority, taking deliberates and votes on a draft legislative act. To this end,
into account the outcome of the European elections. The EP each Council meeting is divided into two parts dealing
continues to approve the Commission as a college. respectively with legislative acts and non-legislative activities.
The maximum number of MEPs has been set at 751. The The Council Presidency will continue to rotate on a six-month
maximum number of seats per Member State will be basis but there will be 18-month group presidencies of three
decreased to 96, the minimum number increased to six. Member States in order to ensure better continuity of work. As
2. The European Council an exception, the Foreign Affairs Council will be continuously
The Lisbon Treaty formally recognises the European Council as chaired by the HR for Foreign Affairs and Security Policy.
an EU institution, responsible for providing the Union with the 5. The Commission
‘impetus necessary for its development’ and for defining its To make sure that decision-making runs smoothly in a larger
‘general political directions and priorities’. The European EU, in 2014 the number of Commissioners will be reduced to
Council has no legislative functions. two thirds of the total of Member States. According to the
A long-term Presidency will replace the current system of six- principle of geographical equilibrium, equal treatment of all
month rotation. The President is elected by a qualified majority Member States should be attained.
of the European Council for a renewable term of 30 months.
Since the President of the Commission will be chosen and
This should improve the continuity and coherence of its work.
elected by taking into account the outcome of the European
The President will also represent the Union externally, without
elections, his or her political legitimacy will be increased. The
prejudice to the duties of the High Representative of the
President is responsible for the internal organisation of the
Union for Foreign Affairs and Security Policy (see below).
college (appointment of Commissioners, distribution of
3. The High Representative (HR) for common foreign and portfolios, request to resign under particular circumstances).
security policy (CFSP)
6. The Court of Justice of the European Communities
The HR of the Union for Foreign Affairs and Security Policy
The jurisdiction of the European Court of Justice is extended to
will be appointed by a qualified majority of the European
all activities of the Union with the exception of CFSP. The
Council with the agreement of the President of the European
number of advocates-general is increased from 8 to 11.
Commission. The HR will be responsible for the EU’s common
Specialised courts can be set up with the consent of
foreign and security policy and will have the right to put
Parliament. Access to the Court is facilitated for individuals.
forward proposals. Besides chairing the Foreign Affairs
Council he or she will also be Vice-President of the A European Public Prosecutor’s Office is set up in order to
Commission (double hat). The HR will set up a European investigate, prosecute and bring to judgment offences against
External Action Service, comprising staff from the General the Union’s financial interests.
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D. More efficient and democratic policymaking must submit its opinion to the legislator, along with the
1. Increased flexibility and enhanced cooperation opinions of the national parliaments. The legislator may then
decide by a majority of 55 % of the members of the Council or
Several so-called ‘passerelle clauses’ allow a change from
a majority of the votes cast in the European Parliament that
unanimous decision-making to qualified majority voting and
the proposal is not to be given further consideration.
from the consultation procedure to co-decision (Article 31(3)
TEU, Article 81, 312 and 333 TFEU, plus some passerelle-type 3. New powers
procedures concerning judicial cooperation in criminal A certain number of new or extended policies have been
matters). In order to use such a passerelle a unanimous introduced in environmental policy, which now includes the
decision must be taken by the European Council and a fight against climate change, and energy policy, which makes
majority of the EP. Matters with military implications are new references to solidarity and the security and
excluded. Moreover, any such change can be blocked if one interconnectivity of supply. Furthermore, intellectual property
national parliament voices its opposition within six months of rights, sport, space, tourism, civil protection and administrative
the date of notification. cooperation are now the possible subject of EU lawmaking.
In areas where the Union has no exclusive powers, at least nine 4. Common security and defence policy (CSDP)
Member States can establish enhanced cooperation between In CSDP the Lisbon Treaty introduces a mutual defence clause
themselves. Authorisation to proceed with enhanced which provides that all Member States are obliged to provide
cooperation must be granted by the Council after obtaining help to a Member State under attack. A solidarity clause
the consent of the European Parliament. In CFSP, the Council provides that the Union and each of its members have to
must approve any enhanced cooperation by unanimity. Acts provide assistance by all possible means to a Member State
adopted in the framework of enhanced cooperation bind only affected by a human or natural catastrophe or by a terrorist
the participating Member States. attack.
2. The role of national parliaments A ‘permanent structured cooperation’ is open to all Member
The Lisbon Treaty considerably strengthens the principle of States who commit themselves to taking part in European
subsidiarity by involving the national parliaments in the military equipment programmes and to providing combat
decision-making process. The protocol on the role of national units that are available for immediate action. To establish such
parliaments in the European Union ensures that they are cooperation, it is necessary to have a qualified majority vote by
regularly informed of new legislative proposals. the Council after consultation with the HR.
The protocol on the application of the principles of subsidiarity

Role of the European Parliament
and proportionality allows national parliaments eight weeks to
study a legislative proposal and, if a parliament wishes to do See 1.1.4 and 1.1.5 for Parliament’s contributions to the
so, give a reasoned opinion stating why it considers that the European Convention and its implication in previous IGCs.
text does not comply with the subsidiarity principle. If one With respect to the 2007 IGC, leading to the signature of the
third (or one quarter, if the proposed measure concerns Treaty of Lisbon, Parliament for the first time sent three
freedom, justice and security) consider the proposal representatives (no longer called ‘observers’) to the conference
incompatible with the principle of subsidiarity, the under the Portuguese Presidency. According to Parliament’s
Commission will have to review the measure (yellow card). President, at his inaugural speech in February 2007, ensuring
Should it decide to maintain it, the Commission must give a ‘that the substance of the Constitutional Treaty, including the
reasoned opinion to the Union legislator (Council and chapter on values, becomes a legal and political reality by the
Parliament) as to why it considers the measure to be next European Parliament elections’ was one of Parliament’s
compatible with subsidiarity. highest priorities for the second half of its sixth term.
If a simple majority of the Member State parliaments are
against the proposal, it must once again be reviewed (orange g Wilhelm Lehmann
card). If the Commission decides to maintain the proposal, it July 2008
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1.2. Main characteristics of the Community
legal system
1.2.1. Sources and scope of European Union law

In the European Union there are several sources of law contributing to the creation of a Community legal order. The
different nature of these sources has imposed a hierarchy among them. At the pinnacle of this hierarchy we find the
primary Community law and the unwritten Community law followed by the international treaties concluded by the
Community, and the secondary Community law.
Legal bases declarations and acts on the organisation and running of the
— Treaty on European Union. institutions, the designation, structure and legal effects of
which stem from the individual provisions of the Treaties or
— Treaty establishing the European Community. the overall context of law embodied in the Treaties.
— Derived or secondary acts of Community law (Article 49 of Furthermore, the legal character of a measure taken by an
the EC Treaty). institution of the Union does not depend on its official
designation, but on its object and material content. As
— Unwritten Community law. preliminaries to the adoption of legal acts, White Papers, Green
— International treaties. Papers and action programmes are also significant. It is
through these documents that the Union institutions and
more specifically the Commission usually agree on longer-
Objectives term objectives (e.g. the White Paper on the single market).
Creation of a legal order for the Union to achieve the
objectives stipulated in the Treaties. 2. The various legal acts under secondary Community
law
a. Regulations
Achievements
They have general application, are binding in their entirety and
A. Primary Community law
are directly applicable in all Member States. As ‘Community
1.1.1 to 1.1.3. law’, regulations must be complied with fully by those to
whom they apply (private persons, Member States, Union
B. Secondary Community law
institutions). Regulations apply directly in all the Member
1. General points States, without requiring a national act to transpose them. As
The Community’s forms of action under Article 249 of the soon as they enter into force (on the date stipulated or, failing
Treaty establishing the European Community (EC) are this, on the 20th day following their publication in the Official
regulations, directives, decisions, recommendations and Journal of the European Union) they become part of national
opinions. These are original legal instruments in Community legal orders.
law, with no connection to national or international legal
instruments. These legal actions may be undertaken by the Regulations serve to ensure the uniform application of
institutions of the Union only if they are empowered to do so Community law in all the Member States. At the same time,
by a provision of the Treaties (principle of attribution of they prevent the application of national legal rules which are
powers). Individual legal acts (with the exception of incompatible with their substantive clauses. Implementing
recommendations and opinions, which have no binding force) provisions adopted by Member States may not amend or
must be based on actual provisions of the Treaties (including supplement the scope and effectiveness of regulations
what are known as implied powers). If a specific power is not (principle of sincere cooperation: Article 10 EC).
provided by the Treaties, in certain circumstances recourse b. Directives
may be had to the subsidiary rule regarding competence in
Article 308 of the EC Treaty. The list of legal actions in i. Nature and scope
Article 249 of the EC Treaty is not exhaustive; there are, in They are binding, as to the result to be achieved, upon the
addition, various forms of action, such as resolutions, Member States to whom they are addressed. However, those
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How the European Main characteristics of the
1 Union works 2 Community legal system
Member States are left the choice of form and methods to directly invoke against another individual (the ‘horizontal
achieve their objectives. Directives may be addressed to effect’) the direct effect of an untransposed directive (see
individual, several or all Member States. In order to ensure that consistent case-law, Faccini Dori case [1994] ECR I-3325 et seq.
the objectives laid down in directives become applicable to at point 25).
individual citizens, an act of transposition (or ‘national iii. Responsibility for failure to transpose a directive
implementing measure’) by national legislators is required,
According to Court case-law (Francovich case, [1991] ECR 5357
whereby national law is adapted to the objectives laid down in
et seq.), an individual citizen is entitled to claim compensation
directives. Individual citizens are given rights and bound by
from a Member State which has not transposed a directive or
the legal act only when the directive is transposed into
has done so inadequately where:
national law. Since the Member States are only bound by the
objectives laid down in directives, they have some discretion — the directive is intended to confer rights on individuals;
in transposing them into national law, in taking account of — the substance of the rights can be ascertained on the basis
specific national circumstances. Transposition must be effected of the directive; and
within the period laid down in a directive. In transposing
directives, the Member States must select the national forms — there is a causal connection between the breach of the
which are best suited to ensure the effectiveness of duty to transpose the directive and the loss sustained by
Community law (Article 10 EC). Directives must be transposed the individual.
in the form of binding national legislation which fulfils the Fault on the part of the Member State does not then have to
requirements of legal certainty and legal clarity and establishes be demonstrated in order to establish liability. If the Member
a position whereby individuals can rely on the rights derived State has powers of discretion in transposing the law, the
from the directive. Regulations which have been adopted as a violation must also, in addition to the three above criteria,
result of EC directives may not subsequently be amended qualify as defective or non-existent transposition: it must be
contrary to the objectives of those directives (‘blocking’ effect substantial and evident (judgment of the Court of Justice of 5
of directives). March 1996, Brasserie du Pêcheur/Factortame, Cases 46/93 and
ii. Possible direct applicability 48/93, [1996] ECR I-1029).
Directives are not directly applicable, in principle. The Court of c. Decisions
Justice of the European Communities, however, has They are binding in their entirety. Where those to whom
nevertheless ruled that individual provisions of a directive may, they are addressed are stipulated, they are binding only on
exceptionally, have a direct effect in a Member State without them. These may be Member States or natural or legal
requiring an act of transposition by that Member State persons. Decisions serve to regulate actual circumstances
beforehand (consistent case-law since 1970: ECR 1213 et seq.) vis-à-vis specific entities addressed thereby. Like directives,
where the following conditions are satisfied: decisions may include an obligation on a Member State to
— the period for transposition has expired and the directive grant individual citizens a more favourable legal position. In
has not been transposed or has been transposed this case, as with directives, an act of transposition on the
incorrectly; part of the Member State concerned is required as a basis
for claims by individuals. Decisions may be directly
— the provisions of the directive are imperative and applicable under the same preconditions as the provisions
sufficiently clear and precise; of directives.
— the provisions of the directive confer rights on individuals. d. Recommendations and opinions
If these requirements are fulfilled, individuals may cite the They have no binding force, that is to say they do not establish
provisions of the directive against all agencies in whom State any rights or obligations for those to whom they are
power is vested. Such agencies are organisations and addressed, but do provide guidance as to the interpretation
establishments which are subordinate to the State or on which and content of Community law.
the State confers rights that exceed those arising from the law
on relations between private persons (Court judgment of 22 3. System of competence, procedures, enforcement and
June 1989 in Case 103/88 Fratelli Costanzo). The case-law is application of legal acts
mainly justified on the principles of effet utile and the uniform a. Legislative competence, right of initiative and legislative
application of Community law. But even when the provision procedure
concerned does not seek to confer any rights on the 1.3.6, 1.3.8 and 1.4.1.
individual, and only the first and second conditions are
satisfied, the Court’s consistent case-law says the Member b. Enforcement of legislation:
State authorities have a legal duty to comply with the Under primary law, the EC has only limited powers of
untransposed directive. This case-law is mainly justified on the enforcement itself, as EC law is usually enforced by the
grounds of effet utile, the penalisation of violations of the Treaty Member States (duty of loyal cooperation under Article 10 of
and legal protection. On the other hand, an individual may not the EC Treaty). In fact the Treaty of Lisbon states (Article 291(1)
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of the consolidated version of the Treaty on the Functioning of D. Unwritten Community law
the European Union) that Member States shall adopt all These are the general principles of Community law,
measures of national law necessary to implement legally particularly:
binding Union acts.
— the fundamental rights guaranteed by the European
c. Actual application of the various forms of action: Convention for the Protection of Human Rights and
Fundamental Freedoms and the constitutional traditions of
In many cases the Treaties lay down the required form of legal the Member States recognised at Union level by Article 6(2)
action (e.g. directive in Article 94 of the EC Treaty). In many of the Treaty on European Union (TEU) as general
other cases, however, no specific type of legal action is principles of Community law: the right to defence, the
Article 71(1)(d) stipulated (e.g. ‘any other appropriate right to respect for one’s private life, etc.;
provisions’ in of the EC Treaty ) or an alternative is at least
permitted (e.g. ‘directives or ... regulations’ in Article 40, — the principle of a Community based on the rule of law;
introductory paragraph, and Article 83 of the EC Treaty ). In — the principles of proportionality, legitimate expectations,
exercising such discretion, however, the Community etc.
institutions must take due account of the principles of
proportionality and subsidiarity (1.2.2). E. International treaties concluded by the European
Community
C. EU non-Community law (outside the scope of the EC The Community has partial international personality and may
Treaty) therefore, within the sphere of its competence, conclude
international treaties with other States or international
Under the second and third pillars, the Union does not operate
organisations. The treaties thus concluded by the Community
using the traditional legal instruments of Community law, but
are binding on the Community and the Member States
by means of original legal acts.
pursuant to Article 300(7) of the EC Treaty and are an integral
— In the second pillar of the Treaty on European Union part of Community law.
(common foreign and security policy (CFSP)), these
instruments are essentially political in nature: the common F. Ancillary Community law
strategies, common actions and common positions. This is made up of rules contained in intergovernmental
treaties which have been concluded between the Member
— In the third pillar (police and judicial cooperation in States and which further the objectives of the Community. The
criminal affairs ), the Union acts by means of: common conclusion of such international treaties is partly provided for
positions, which are more political than legal in nature and in Article 293 of the EC Treaty and, since the introduction of
which ‘[define] the approach of the Union to a particular the third pillar by the Treaty of Maastricht, in the field of police
matter’; framework decisions, which are similar instruments and judicial cooperation in criminal affairs (Article 34(2) TEU).
to Community directives and are used for the
approximation of laws; decisions for any purpose other G. Hierarchy within Community law
than the approximation of laws, which have no direct Primary Community law is at the pinnacle of the hierarchy of
effect; and the traditional instrument of international law. The provisions of primary law are fundamentally of equal
agreements between Member States. rank; this also applies to unwritten Community law, in other
words general legal principles. However, international treaties
The Treaty of Lisbon abolishes the pillar structure of the Union concluded by the Community rank below primary and
which has existed since the Treaty of Maastricht. As a result, unwritten Community law. These are duly followed by
when the Treaty of Lisbon enters into effect, the use of the secondary Community law, i.e. to be valid, such legal acts must
legal acts described in Article 249 EC (Article 288 of the be compatible with hierarchically superior law.
consolidated version of the Treaty on the Functioning of the
European Union) shall include all Union policies, including The Treaty of Lisbon introduces a hierarchy for secondary law
police and judicial cooperation in criminal affairs, which by drawing a clear distinction between legislative acts,
constitutes the third pillar at the present time. delegated acts and implementing acts. Legislative acts are
legal acts which are adopted through ordinary or special
The only exceptions are common foreign and security and legislative procedures. Delegated acts for their part are non-
defence policies, which will continue to be subject to legislative acts with a broad scope which supplement or
intergovernmental procedures. Instruments which may be amend certain non-essential parts of a legislative act. The
adopted to achieve these policies shall retain their political power to adopt these acts may be delegated to the European
nature but have a new classification: common strategies, Commission by the legislative act itself, which sets out the
common actions and common positions will be replaced with objectives, content, scope and duration of the delegated
‘general guidelines’ and by ‘decisions defining’ actions to be authority. Competence to adopt implementing acts is
undertaken and positions to be adopted by the Union and normally vested in the Commission by the legally binding act
arrangements for the implementation thereof. when uniform conditions are required to implement this act.
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Legislative, delegated and implementing acts may be adopted the Parliament and the Council considerably, by describing it
as regulations, directives or decisions but the adjective henceforth as the ‘ordinary legislative procedure’. When the
‘delegated’ and the word ‘implementing’ will be included in the Treaty of Lisbon enters into effect, Parliament will be the co-
title of the relevant act. legislator in 95 % of Union legislation.
Moreover, anxious to improve the application of Union law in
Role of the European Parliament the Member States and of increasing the acceptance of
Community law by its citizens, Parliament is taking action to
Under the procedures laid down in Article 250 et seq. of the EC
simplify the legislative process, improve the drafting of
Treaty, Parliament has certain rights to participate in the
legislation and secure more effective penalties for those cases
enactment of legislation (1.4.1). However, despite the
where Member States fail to comply with Union law.
widening of its powers in the Treaty on European Union
(1.1.2), it continues to have limited influence as far as policies
which are not subject to the co-decision procedure are g Roberta Panizza
concerned. The Treaty of Lisbon expands co-decision between July 2008
1.2.2. The principle of subsidiarity

In the framework of the shared competences between the Community and the Member States the principle of subsidiarity,
enshrined by the EC Treaty, defines the circumstances in which the Community is empowered to act with priority in respect
of the Member States.
Legal basis circumstances make it absolutely necessary’. Although it was

The second paragraph of Article 5 of the Treaty establishing not referred to by name, a subsidiarity criterion was included
the European Community (EC), in conjunction with the 12th in Article 130r of the EEC Treaty, on the environment, by the
recital of the preamble to and the second paragraph of Single European Act in 1987. The Court of First Instance of the
Article 2 of the Treaty on European Union (TEU). European Communities ruled in its judgment of 21 February
1995, ECR II-289, point 331, that the subsidiarity principle was
not a general principle of law, against which the legality of
Objectives Community action should be tested, before the EU Treaty
In areas other than those in which the European Community entered into force.
has exclusive competence, the principle of subsidiarity seeks,
on the one hand, to protect the capacity to take decisions and Without changing the wording of the subsidiarity criterion in
action of the Member States and, on the other, authorises the the second paragraph of Article 5 of the EC Treaty, the Treaty of
intervention of the Community when the objectives of an Amsterdam annexed to the EC Treaty the ‘Protocol on
action cannot satisfactorily be achieved by the Member States application of the principles of subsidiarity and proportionality’.
‘due to the scale and effects of the proposed action’. The The overall approach to the application of the subsidiarity
purpose of including it in the European Treaties is also to principle agreed in Edinburgh in 1992 thus became legally
ensure that powers are exercised as close to the citizen as binding and subject to judicial review via the protocol on
possible. subsidiarity.
Achievements The Lisbon Treaty repealed Article 5 of the EC Treaty and

incorporated the principle of subsidiarity into Article 5 of the
A. Origin and history EU Treaty, which, while upholding the terms of the repealed
The principle of subsidiarity was formally recognised in article, adds an explicit reference to the regional and local
Community law by the Maastricht Treaty, which included it in dimension of the principle of subsidiarity. Furthermore, the
the second paragraph of Article 5 of the Treaty establishing the Lisbon Treaty replaces the 1997 protocol on the application of
European Community. However, we can see traces of this the principles of subsidiarity and proportionality by a new
principle in Article 5 of the ECSC Treaty (1951), under which protocol with the same name, the main difference being the
the Community shall ‘take direct action with respect to new role of the national parliaments in ensuring respect for
production and the operation of the market only when the principle of subsidiarity.
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B. Definition The lack of any clear dividing line for applying the principle of
1. The general aim of the principle of subsidiarity is to subsidiarity continues to result in different interpretations of
guarantee a degree of independence for a lower authority in this principle. At the same time, however, the Community
relation to a higher body or for a local authority in respect of a clearly has the aim of limiting Community action to the
central authority. It therefore involves the sharing of powers objectives of the Treaties and ensuring that decisions on new
between several levels of authority, a principle which forms the action are taken as closely as possible to the citizen. Particular
institutional basis for federal states. emphasis is also placed on this connection between the
principle of subsidiarity and closeness to the citizen in the
2. When applied in a Community context, the principle of actual preamble to the EU Treaty.
subsidiarity serves to regulate the exercise of shared powers
between the Community and the Member States. On the one Once it comes into force, the Lisbon Treaty should put an
hand, it prohibits Community intervention when an issue can end to the different interpretations of the scope of
be regulated effectively by Member States at central, regional application of the principle of subsidiarity. The new Treaty in
or local level. On the other, it means that the Community fact defines the areas that come under the exclusive
exercises its powers when Member States are unable to competence and shared competence of the Union.
achieve the objectives of the Treaties satisfactorily. Article 4(2) of the consolidated version of the Lisbon Treaty
3. Under the second paragraph of Article 5 of the EC Treaty lists the following policies as having shared competence:
there are three preconditions for intervention by Community internal market; social policy; economic, social and territorial
institutions in accordance with the principle of subsidiarity. cohesion; agriculture and fisheries, excluding the
conservation of marine biological resources; environment;
a. It must not be an area which comes under the exclusive
consumer protection; transport; trans-European networks;
competence of the Community.
energy; area of freedom, security and justice; common safety
b. T he objectives of the proposed action cannot be concerns in public health matters.
sufficiently achieved by the Member States.
3. Where it applies
c. T he action can therefore, by reason of its scale or effects, be
implemented more successfully by the Community. The principle of subsidiarity applies to all EU institutions. The
rule has practical significance for the Parliament, Council and
C. Scope
Commission in particular. The Lisbon Treaty strengthens the
1. Principle of application role of both the national parliaments and the Court of Justice
In general terms, the application of the principle of subsidiarity in monitoring respect for the principle of subsidiarity..
may be seen from two points of view. In areas in which the
Treaty gives responsibility to the Community — shared with D. Scrutiny by national parliaments
the Member States — the principle is a yardstick for measuring
that responsibility (limiting the exercise of powers). And in The Lisbon Treaty introduces an early warning mechanism
areas in which the Treaty does not give the European whereby national parliaments have eight weeks in which to
Community responsibility, the principle does not create submit opinions to the Commission on draft legislative acts,
additional competence (no allocation of powers). which it must send to them at the same time as to the
2. Demarcation problems European Parliament and the Council. If one third of the
national parliaments contest the conformity of a draft
The principle of subsidiarity applies only to areas shared
legislative act with the principle of subsidiarity, in a reasoned
between the Community and the Member States. It therefore
opinion, then the Commission must re-examine the draft and
does not apply to areas which fall within the exclusive
explain why it is maintaining it (the ‘yellow card’ procedure).
competence of the Community or those which fall within
This threshold must be one quarter of the national parliaments
exclusively national competence. The dividing line is blurred,
for draft legislation relating to the area of freedom, security
however, because, for example, Article 308 of the EC Treaty
and justice. In addition, if a simple majority of national
may extend the Community’s areas of competence if, for
parliaments challenges the conformity of a draft legislative act
instance, action by the Community proves necessary to attain
with the principle of subsidiarity (‘orange card’) and the
Treaty objectives. The demarcation of the areas of exclusive
Commission maintains its proposal, the matter is referred to
Community competence continues to be a problem,
the European Parliament and Council, which issue a decision
particularly because it is laid down in the Treaties not by
at first reading. If they believe that the legislative proposal is
reference to specific fields but by means of a functional
incompatible with the principle of subsidiarity, they may reject
description.
it subject to a 55 % Council majority or a majority vote in the
In a number of decisions, for example, the Court has defined European Parliament.
and recognised certain competences (stemming from, but not
explicitly regulated by, the Treaties) as exclusive, but it has not This notification right is granted to all national houses of
laid down a definitive list of such competences. parliament.
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E. Judicial reviewability 2. Agreement on interinstitutional cooperation

Under the second paragraph of Article 5 of the EC Treaty, the The debate triggered by Parliament resulted (supported by the
principle is in theory subject to judicial testing. Where its conclusions of the Edinburgh Council on subsidiarity,
application is concerned, however, the EU’s institutions have transparency and democracy and Parliament’s resolution of 18
wide discretion regarding the form that this takes, which the November 1992) on 25 October 1993 in the conclusion of an
Court of Justice is bound to respect. In general terms, it can be Interinstitutional Agreement between Parliament, the Council
said that the extent of the Court’s jurisdiction is in inverse and the Commission. This gave expression to decisive steps by
proportion to the extent to which the Member States are the three institutions in this area. They are thus required to
effectively involved in a decision on the substance and scale of respect the principle of subsidiarity.
measures under consideration, that consideration of the The aim of the agreement is to use procedures for
question of necessity has been thorough and has done justice implementing the principle of subsidiarity to regulate the
to the interests involved, and the institutions and legal entities details of the powers conferred on the Community institutions
concerned (including those below national level) have been by the Treaties, so that the objectives laid down in the Treaties
fully consulted. can be attained. It includes the following provisions.
In its judgments of 12 November 1996 in Case C-84/94, ECR — In exercising its right of initiative, the Commission will take
I-5755 and of 13 May 1997 in Case C-233/94, ECR I-2405, the into account the principle of subsidiarity and show that it
Court found that compliance with the principle of subsidiarity has been observed. The same applies to Parliament and
was one of the conditions covered by the requirement to state the Council, in accordance with the powers conferred on
the reasons for Community acts, under Article 253 of the EC them by Articles 192 and 208, respectively, of the EC Treaty.
Treaty. This requirement is met even if the principle is not
expressly mentioned in the act’s recitals but it is clear from — The explanatory memorandum for any Commission
reading these recitals as a whole that the principle has been proposal will include a justification of the proposal under
complied with. the principle of subsidiarity.
The Lisbon Treaty, in its protocol on the application of the — Any amendment which may be made to the Commission’s
principles of subsidiarity and proportionality, states that as part text by the Council or Parliament must be accompanied by
of the scrutiny of the legality of legislative acts, the Court has a justification regarding the principle of subsidiarity if it
the power to issue rulings in proceedings for annulment for entails a change in the sphere of EU intervention.
violation of the principle of subsidiarity. These proceedings The three institutions will regularly check, under their internal
may be instigated by a Member State on behalf of its procedures, whether the action envisaged complies with the
parliament if necessary, if their constitution permits. provisions concerning subsidiarity as regards both the choice
The Committee of the Regions also has the right to do this of legal instruments and the content of the proposal.
where provision is made for it to be consulted. Accordingly, under Rule 34 of Parliament’s rules of procedure,
‘During the examination of a legislative proposal, Parliament
shall pay particular attention to respect for fundamental rights
Role of thE European Parliament and the principles of subsidiarity and proportionality’.
1. Ongoing work In addition to this agreement, at the European Council in
Parliament has defended the principle of subsidiarity for many Edinburgh the Commission undertook, inter alia, to provide
years, and was the instigator of this concept when, on 14 justification for all its proposals for legal acts in the light of the
February 1984, in adopting the draft Treaty on European application of the principle of subsidiarity, to withdraw or
Union, it included a provision stipulating that where the Treaty revise certain proposals and to review existing legislation. It
conferred on the Union competence which was concurrent was also envisaged that the Commission would draw up an
with that of the Member States, the Member States could act annual report on observance of the principle.
so long as the Community had not legislated. Moreover, it
In its resolution of 13 May 1997 on the Commission reports on
stressed that the Community should only act to carry out
application of the subsidiarity principle in 1994, 1995 and 1996,
those tasks which could be undertaken more effectively in
Parliament drew attention to the binding, constitutional nature
common than by individual States acting separately.
of the subsidiarity principle, which was subject to
The European Parliament was to reincorporate these interpretation by the Court, and pointed out that it should not
proposals on the principle of subsidiarity into many obstruct the legitimate exercise of the powers of the Union.
resolutions (e.g. resolutions of 23 November and 14 Neither should it in any way be used as pretext to call into
December 1989, 12 July and 21 November 1990 and 18 May question the acquis communautaire. In its resolution of 8 April
1995), in which it reaffirmed its support for this principle in 2003, Parliament considers that differences with regard to
the context of the European Union and called for a debate to implementing the principles of subsidiarity and proportionality
be opened on the interpretation and application of the should preferably be settled at the political level, on the basis
principle of subsidiarity. of the Interinstitutional Agreement of 25 October 1993, but
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notes the proposals currently under consideration by the This early warning system was effectively incorporated within
Convention on the Future of Europe, whereby national the Lisbon Treaty, as described in section D.
parliaments should take on a role in monitoring subsidiarity
issues through an ‘early warning’ system. It underlines that it is
g Roberta Panizza
up to EU institutions and Member States, both at central and July 2008
at regional and local levels, to keep a permanent watch on the
application of the subsidiarity and proportionality principles.
1.3. European Union institutions and

bodies
1.3.1. The European Parliament: historical background

The ECSC Common Assembly becomes common to all the three Communities and acquires the name of ‘European
Parliament’. Over time, this institution recorded numerous changes that make it nowadays notably an equal partner to
the Council in the legislative procedure. This institutional role will be significantly extended through the entry into force of
the Lisbon Treaty.
Legal Basis adopted a new draft, on the basis of which the Heads of State
or Government, after settling a number of differences, reached
— The original Treaties (1.1.1).
agreement at their meeting of 12 and 13 July 1976.
— Decision and Act concerning the election of the
representatives of the European Parliament by direct The Decision and Act on European elections by direct
universal suffrage (20 September 1976), as amended by the universal suffrage were signed in Brussels on 20 September
Council Decision 2002/772/EC, Euratom of 25 June and 23 1976. After ratification by all the Member States, the text came
September 2002. into force on 1 July 1978. The first elections took place on 7
and 10 June 1979.
Three Communities, one Assembly

Subsequent enlargements
Following the creation of the EEC and Euratom, the ECSC
Common Assembly was expanded to cover all three When Denmark, Ireland and the United Kingdom joined the
Communities. With 142 members, the Assembly met for the European Communities on 1 January 1973 (the first
first time in Strasbourg on 19 March 1958 as the ‘European enlargement), the number of MEPs was increased to 198.
Parliamentary Assembly’, changing its name to ‘European
Parliament’ on 30 March 1962. For the second enlargement, with the accession of Greece on
1 January 1981, 24 Greek members were delegated to the EP
by the Greek parliament, to be replaced in October 1981 by
From appointed assembly to elected Parliament directly elected members. The second direct elections were
Before direct election, MEPs were appointed by each of the held on 14 and 17 June 1984.
Member States’ national parliaments. All members thus had a
On 1 January 1986, with the third enlargement, the number of
dual mandate.
seats rose from 434 to 518 with the arrival of 60 Spanish and
The summit conference in Paris on 9 and 10 December 1974 24 Portuguese members, appointed by their national
decided that direct elections ‘should take place in or after parliaments and subsequently replaced by directly elected
1978’ and asked Parliament to submit new proposals to replace members. The third direct elections were held on 15 and
its draft Convention of 1960. In January 1975 Parliament 18 June 1989.
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How the European European Union institutions
1 Union works 3 and bodies
Following German unification, the composition of the With the accession of Bulgaria and Romania on 1 January 2007
European Parliament was adapted to demographic change. In the number of seats in the European Parliament was
accordance with Parliament’s proposals in a resolution on a temporarily raised to 785 in order to accommodate MEPs from
scheme for allocating the seats of its members, the number of these countries. After the 2009 elections the number of seats
MEPs elected in June 1994 increased from 518 to 567. After the will be reduced to 736. However, the Treaty of Lisbon would
fourth EU enlargement, the number of MEPs increased to 626, provide for a maximum number of 751 members.
with a fair allocation of seats for the new Member States, in
line with the resolution mentioned above. Gradual increase in powers
The Intergovernmental Conference in Nice introduced a new Replacement of Member States’ contributions by the
distribution of seats in the European Parliament, which was Community’s own resources (1.5.1) led to a first extension of
applied at the European elections in 2004. The maximum Parliament’s budgetary powers under the Treaty of
number of members (previously set at 700) was increased to Luxembourg, signed on 22 April 1970. A second Treaty on the
732. The number of seats allocated to the 15 old Member same subject, strengthening Parliament’s powers, was signed
States was reduced by 91 (from 626 to 535). The 197 remaining in Brussels on 22 July 1975 (1.1.2).
were distributed among all old and new Member States on a
The Single European Act enhanced Parliament’s role in certain
pro rata basis.
legislative areas (cooperation procedure) and made accession
and association treaties subject to its consent.
Since 1 January 2007, membership of the European The Maastricht Treaty, by introducing the co-decision
Parliament has been as follows: procedure in certain areas of legislation and extending the
cooperation procedure to others, marked the beginning of
Belgium 24 Parliament’s metamorphosis into the role of co-legislator. It
Bulgaria 18 gave Parliament the power of final approval over the
Czech Republic 24 membership of the Commission, which was an important step
Denmark 14 forwards in Parliament’s political control over the European
Germany 99 executive.
Estonia 6 The Treaty of Amsterdam extended the co-decision procedure
Ireland 13 to most areas of legislation and reformed the procedure, putting
Greece 24 Parliament as co-legislator on an equal footing with the Council.
Spain 54 With the appointment of the President of the Commission
being made subject to Parliament’s approval, Parliament further
France 78
increased its control over the executive power.
Italy 78
The Treaty of Nice extended the scope of the co-decision
Cyprus 6
procedure in seven provisions of the EC Treaty: measures to
Latvia 9 support antidiscrimination action of the Member States
Lithuania 13 (Article 13 EC), certain measures for issuing visas
Luxembourg 6 (Article 62(2)(b)(ii) and (iv) EC), measures on asylum and on
Hungary 24 certain refugee matters (Article 63 EC), measures in the field of
Malta 5 judicial cooperation in civil matters (Article 65 EC), support
Netherlands 27 measures in the industrial field (Article 157 EC), actions in the
field of economy and social cohesion (Article 159 EC), and
Austria 18
regulations governing political parties at European level and in
Poland 54 particular the rules regarding their funding (Article 191 EC).
Portugal 24
The Treaty of Lisbon represents a further important extension
Romania 35
of both the application of qualified majority in the Council
Slovenia 7 (using a new principle) and of the application of the co-
Slovakia 14 decision procedure to some 45 new legislative domains. Co-
Finland 14 decision thus becomes the most-used decision-making
Sweden 19 procedure and would cover especially important subjects such
United Kingdom 78 as the common agricultural policy and justice and security
policies.
Total 785
(absolute majority: 393)
g Wilhelm Lehmann
August 2007
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1.3.2. The European Parliament: powers
The assertion of Parliament’s institutional role in European policymaking is a result of the exercise of its different functions.
Respect of democratic principles at the European level is ensured through its participation in the legislative process, its
budgetary and control powers and its right to intervene before the Court of Justice of the European Communities.
Legal basis reading; if they do not agree, the act can only be adopted after
successful conciliation.
Articles 189 to 201 of the Treaty establishing the European
Community (EC). B. Consultation
The consultation procedure continues to apply to agriculture,
Objectives taxation, competition, harmonisation of legislation not related
to the internal market, aspects of social and environmental
As an institution representing the citizens of Europe,
policy (subject to unanimity), some aspects of the area of
Parliament forms the democratic basis of the Community. If
freedom, security and justice, and adoption of general rules
the Community is to have full democratic legitimacy,
and principles for ‘comitology’. This procedure also applies to a
Parliament must be fully involved in the Community’s
new ‘framework decision’ instrument created by the
legislative process and exercise political control on the public
Amsterdam Treaty under the third pillar (Article 34(2)(b) TEU)
behalf over the other Community institutions.
for the purpose of approximation of laws and regulations.
Constitutional-type powers and powers of C. Cooperation

ratification The cooperation procedure (Article 252 EC) was introduced by
the SEA and extended under the Maastricht Treaty to most
Since the Single European Act (SEA), all treaties marking the areas of legislation where the Council acts by majority. This
accession of a new Member State and association treaties are procedure obliges the Council to take into account at second
subject to Parliament’s assent. The SEA also established this reading those of Parliament’s amendments that were adopted
procedure for international agreements having important by an absolute majority, insofar as they have been taken over
budgetary implications for the Community (replacing the by the Commission. This marked the beginning of real
conciliation procedure established in 1975). The Maastricht legislative power for Parliament. Its importance has been
Treaty introduced it for agreements establishing a specific diminished by the general use of the co-decision procedure
institutional framework or entailing modifications to an act under the Amsterdam Treaty. It survives only in four provisions
adopted under the co-decision procedure. Parliament must of economic and monetary policy (Articles 98 et seq.).
also give its assent to acts relating to the electoral procedure
(since the Maastricht Treaty). Since the Amsterdam Treaty, its D. Assent
assent is further required if the Council wants to declare that a Since the Maastricht Treaty, the assent procedure applies to
clear danger exists of a Member State committing a serious the few legislative areas in which the Council acts by
breach of the European Union’s fundamental principles, before unanimous decision, limited since the Amsterdam Treaty to
addressing recommendations or penalties to this Member the Structural Funds and Cohesion Fund (Article 161 EC).
State. On the other hand, the draft statute for members of the
European Parliament has to receive the assent of the Council. E. Right of initiative
The Maastricht Treaty also gives Parliament the right of
legislative initiative, but this is limited to asking the
Participation in the legislative process Commission to put forward a proposal.
Parliament takes part in the drafting of Community legislation
to varying degrees, according to the individual legal basis. It Budget powers (1.4.3)
has progressed from a purely advisory role to co-decision on Parliament is one of the two arms of the budgetary authority,
an equal footing with the Council. and has the last word on non-compulsory expenditure (Article
272 EC).
A. Co-decision
Since the Treaty of Nice came into force, the simplified co- It is involved in the budgetary process from the preparation
decision procedure (Article 251 EC) applies to 46 legal bases in stage, notably in laying down the general guidelines and the
the EC Treaty that allow for the adoption of legislative acts type of spending (Articles 269 et seq. EC).
(1.3.1). It may therefore be considered a standard legislative When debating the budget it has the power to table amendments
procedure. It puts Parliament, in principle, on an equal footing to non-compulsory expenditure but only to propose
with the Council. If they agree, the act is adopted at first modifications to compulsory expenditure (Article 272 EC).
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It finally adopts the budget and monitors its implementation judicial cooperation (Articles 21 and 39 TEU). Implementation
(Articles 272, 275 and 276 EC). of the Interinstitutional Agreement on budgetary discipline
and sound financial management (2006/C 139/01) has
It discusses the annual general report (Article 200 EC).
improved CFSP consultation procedures as far as financial
It gives a discharge on implementation of the budget (Article aspects are concerned.
276 EC).
After the entry into force of the Lisbon Treaty almost all aspects
The Lisbon Treaty will eliminate the distinction between of police and judicial cooperation as well as other policies in
compulsory expenditure and non-compulsory expenditure the area of freedom, justice and security will be subject to the
and put Parliament at an equal level with the Council in the general legislative procedure (co-decision). As to foreign
annual budgetary procedure. policy, the creation of the new High Representative of the
Union for Foreign Affairs and Security Policy will enhance
Control over the executive Parliament’s influence because (s)he will also be Vice-President
of the Commission.
Parliament has several powers of control.
A. Investiture of the Commission Appeals to the Court of Justice

Parliament began informally approving the investiture of the Parliament has the right to institute proceedings before the
Commission in 1981 by approving its programme. However, it Court of Justice in cases of violation of the Treaty by another
was only when the Maastricht Treaty came into force (1992) institution.
that its approval was required before the Member States could
It has the right to intervene, i.e. to support one of the parties
appoint the President and Members of the Commission as a
to the proceedings, in cases before the Court. It exercised this
collegiate body. The Amsterdam Treaty has taken matters
right in the Isoglucose judgment (Cases 138 and 139/79 of 29
further by requiring Parliament’s specific approval for the
October 1980). In its ruling, the Court declared a Council
appointment of the Commission President, prior to that of the
regulation invalid because it was in breach of its obligation to
other Members. According to the Lisbon Treaty the candidate
consult Parliament.
for Commission President will have to be chosen according to
the results of the European elections. In an action for failure to act (Article 232 EC), Parliament may
institute proceedings against an institution before the Court
B. The motion of censure for violation of the Treaty, as in Case 13/83, in which judgment
The Treaty of Rome made provision for a motion of censure was found against the Council because it had failed to take
against the Commission (Article 201 EC). It requires a two measures relating to the common transport policy (4.6.1).
thirds majority of the votes cast, representing a majority of
Under the Treaty of Amsterdam the Parliament could bring an
Parliament’s component members, in which case the
action to annul an act of another institution only for the
Commission must resign as a body. There have been only
purpose of protecting its prerogatives. The Treaty of Nice
eight motions of censure since the beginning and none has
amended Article 230 EC: the Parliament doesn’t have to
been adopted, but the number of votes in favour of censure
demonstrate specific concern and therefore is able to institute
has steadily increased. However, the last motion (vote on 8
proceedings in the same way as the Council, the Commission
June 2005) obtained only 35 votes to 589, with 35 abstentions.
and the Member States. The Parliament may be the defending
C. Parliamentary questions party in an action against an act adopted under the co-
decision procedure or when one of its acts is intended to
These take the form of written and oral questions with or
produce legal effects vis-à-vis third parties. Article 230 EC thus
without debate (Article 197 EC) and questions for Question
upholds the Court’s rulings in Cases 320/81, 294/83 and 70/88.
Time. The Commission and Council are required to reply.
It is finally able to seek a prior opinion from the Court of
D. Committees of inquiry Justice on the compatibility of an international agreement
Parliament has the power to set up a temporary committee of with the Treaty (Article 300 EC, modified by the Treaty of Nice).
inquiry to investigate alleged contraventions or
maladministration in the implementation of Community law Petitions
(Article 193 EC).
When EU citizens exercise their right of petition, they address
E. Control over common foreign and security policy and their petitions to Parliament (Article 194 EC) (2.5.0).
police and judicial cooperation
Appointing the ombudsman
Parliament is entitled to be kept informed in these areas and
may address questions or recommendations to the Council. It Parliament appoints the Ombudsman (Article 195 EC) (1.3.14).
must be consulted on the main aspects and basic choices of
the common foreign and security policy and on any measure g Wilhelm Lehmann
envisaged apart from the common positions on police and July 2008
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1.3.3. The European Parliament: organisation and
operation
The organisation and the operation of the European Parliament are governed by its rules of procedure. The management
bodies, committees, delegations and political groups guide Parliament’s activities. Its composition usually changes after
treaty revisions and enlargements.
Legal basis threshold will rise to 25 MEPs from at least seven Member
— Articles 189 to 201 of the Treaty establishing the European States. The political groups hold regular meetings during the
Community (EC). week before the part-session and during the part-session
week, as well as seminars to determine the main principles of
— European Parliament’s rules of procedure. their Community activity. Several political groupings have
founded political parties that operate at European level, e.g.
Membership the European People’s Party, the Party of European Socialists,
the European Green Party and the European Liberal Democrat
There are at present 785 members, allocated as follows:
and Reform Party. They work in close cooperation with the
Germany 99; France, Italy and the United Kingdom 78; Spain
corresponding political groups within Parliament.
and Poland 54; Romania 35; the Netherlands 27; Belgium, the
Czech Republic, Greece, Hungary and Portugal 24; Sweden 19; D. European political parties
Bulgaria and Austria 18; Denmark, Slovakia and Finland 14; The European political parties’ importance in forming a
Ireland and Lithuania 13; Latvia 9; Slovenia 7; Estonia, Cyprus European awareness and in expressing the political will of the
and Luxembourg 6; Malta 5. citizens of the Union is recognised in Article 191 EC,
introduced by the Maastricht Treaty. Parliament recommends
Organisation the creation of an environment favourable to their continued
development, including the adoption of framework legislation.
A. Management bodies The Treaty of Nice supplemented Article 191 with a legal base
They comprise the Bureau (the President and 14 Vice- which allowed the adoption via the co-decision procedure of
Presidents); the Conference of Presidents (President and a statute of European level political parties and particularly of
political group chairmen); the six (after July 2009 five) rules concerning their funding. Since the entry into force of
Quaestors responsible for members’ administrative and this regulation ((EC) No 2004/2003), in 2004, several new
financial business; the Conference of Committee Chairmen; political parties have been founded, raising their total number
and the Conference of Delegation Chairmen. The term of to 10.
office of the President, Vice-Presidents and Quaestors is two
and a half years.
Operation
B. Committees and delegations Under the Treaty, Parliament organises its work independently.
Members are assigned to 20 committees, two subcommittees, It adopts its rules of procedure, acting by a majority of its
interparliamentary delegations and delegations to joint members (Article 199 EC). If the Treaties do not provide
parliamentary committees. There is also the Joint Assembly set otherwise, Parliament acts by an absolute majority of the votes
up under the agreement between the African, Caribbean and cast (Article 198). It decides the agenda for its part-sessions,
Pacific (ACP) States and the EU. which primarily cover the adoption of reports by its
committees, questions to the Commission and Council, topical
Each committee or delegation elects its own ‘bureau’ and urgent debates and statements by the Presidency. Plenary
comprising a chairman and four (after July 2009 three) vice- sittings are held in public.
chairmen.
C. The political groups Seat and places of work

Members do not sit in national delegations but according to From 7 July 1981 onward, Parliament has adopted several
their political affinities, in transnational groups. Under the rules resolutions on its seat, calling on the governments of the
of procedure a political group shall comprise members elected Member States to comply with the obligation incumbent
in at least one fifth of the Member States. After accession of upon them under the Treaties to establish a single seat for the
Bulgaria and Romania the minimum number of members institutions. Since they failed to respond, it took a series of
required to form a political group was 20, coming from at least decisions concerning its organisation and places of work
six Member States (Rule 29). After the 2009 elections this (Luxembourg, Strasbourg and Brussels).
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At the Edinburgh European Council of 11 and 12 December confirmed that it had determined the seat of Parliament in
1992 the Member States’ governments reached agreement on accordance with Article 289 EC. The substance of this decision
the seats of the institutions, whereby: was included in the Treaty of Amsterdam in a protocol
annexed to the Treaties, which Parliament regretted.
— Parliament should have its seat in Strasbourg, where the 12
monthly part-sessions, including the budget session, Parliament draws up its annual calendar of part-sessions on
should be held; the proposal of the Conference of Presidents. In general,
Parliament holds 12 four-day part-sessions in Strasbourg and
— additional plenary part-sessions should be held in Brussels; six two-day part-sessions in Brussels. On 18 December 2006
— the parliamentary committees should meet in Brussels; Parliament held for the first time a supplementary plenary
sitting in Brussels directly after the European Council of 15 and
— the Parliament’s secretariat and departments should 16 December 2006. In future, this practice will be consolidated.
remain in Luxembourg.
This decision was criticised by Parliament. However, the Court g Wilhelm Lehmann
of Justice (judgment of 1 October 1997 — C 345/95) July 2008
Membership of parliament by group and Member State

EPP-ED PES ALDE UEN Greens/ GUE/ IND/ NI
ALE NGL DEM
Belgium 6 7 6 2 3 24
Bulgaria 5 5 5 3 18
Czech Republic 14 2 6 1 1 24
Denmark 1 5 4 1 1 1 1 14
Germany 49 23 7 13 7 99
Estonia 1 3 2 6
Ireland 5 1 1 4 1 1 13
Greece 11 8 4 1 24
Spain 24 24 2 3 1 54
France 17 31 11 6 3 3 7 78
Italy 24 15 14 13 2 7 3 78
Cyprus 3 1 2 6
Latvia 3 1 4 1 9
Lithuania 2 2 7 2 13
Luxembourg 3 1 1 1 6
Hungary 13 9 2 24
Malta 2 3 5
Netherlands 7 7 5 4 2 2 27
Austria 6 7 1 2 2 18
Poland 15 9 5 20 3 2 54
Portugal 9 12 3 24
Romania 15 10 6 4 35
Slovenia 4 1 2 7
Slovakia 8 3 3 14
Finland 4 3 5 1 1 14
Sweden 6 5 3 1 2 2 19
United Kingdom 28 19 11 5 1 10 4 78
Total 285 215 102 44 42 41 24 32 785
EPP-ED: Group of the European People’s Party (Christian Democrats) and European Democrats Greens/ALE: Group of the Greens/European Free Alliance
PES: Socialist Group in the European Parliament GUE/NGL: Confederal Group of the European United Left/Nordic Green Left
ALDE: Group of the Alliance of Liberals and Democrats for Europe IND/DEM: Independence and Democracy Group
UEN: Union for Europe of the Nations Group NI: non-attached members
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1.3.4. The European Parliament: electoral procedures
The electoral procedures in the European Parliament are governed both by European legislation defining rules common to
all Member States, such as those related to incompatibilities and to the introduction of the principle of proportional
representation, and by specific national provisions which vary from one State to another.
Legal basis 3. Incompatibilities

Article 190(1) and (2) of the Treaty establishing the European The office of member of the European Parliament is
Community (EC). incompatible with that of Member of the Commission, judge,
advocate-general or registrar of the Court of Justice, Member
of the Court of Auditors, member of the Economic and Social
Common rules Committee, member of committees or other bodies set up
A. Principles pursuant to the Community Treaties for the purpose of
The founding Treaties stated that members of the European managing the Communities’ funds or carrying out a
Parliament would initially be appointed by the national permanent direct administrative task, member of the Board of
parliaments but made provision for election by direct universal Directors, Management Committee or staff of the European
suffrage, based on a project drawn up by Parliament itself. It Investment Bank, and active official or servant of the
was only in 1976 that the Council decided to implement this institutions of the European Communities or of the specialised
provision by the Act of 20 September (now incorporated in the bodies attached to them.
EC Treaty at Article 190(1)). The 2002 Council decision added further incompatibilities:
In 1992, the Maastricht Treaty inserted a provision into the EC Member of the Court of First Instance, member of the Board of
Treaty (Article 190(4)) stating that elections must be held in Directors of the European Central Bank, Ombudsman of the
accordance with a uniform procedure in all Member States European Communities and, of course, member of a national
and Parliament should draw up a proposal to this effect, for parliament.
unanimous adoption by the Council. However, the Council
was unable to agree on a uniform procedure, in spite of the Arrangements subject to national provisions
various proposals presented by Parliament. In addition to these common rules, the electoral arrangements
To resolve this deadlock, the Treaty of Amsterdam are governed by national provisions that are at times quite
introduced into the EC Treaty the possibility, failing a uniform different.
procedure, of ‘common principles’ with a view to enhancing A. Electoral system
the democratic legitimacy of the EP and the feeling of being a
Pursuant to the 2002 Council decision, all of the Member
citizen of the European Union. On this basis it was possible to
States must now use a system based on proportional
modify the 1976 act by Council Decision 2002/772/EC,
representation. Lists failing to obtain, for example, 5 % of the
Euratom of 25 June 2002 and 23 September 2002. This
vote in Germany or France, or 4 % in Austria or Sweden, are
decision introduced the principles of proportional
excluded from the allocation of seats. Until the 1994 elections
representation and incompatibility between national and
the United Kingdom used the first-past-the-post system
European mandates.
(except in Northern Ireland, where proportional representation
B. Application: common provisions in force was already in use). Most major new Member States apply the
1. Right of non-nationals to vote and to stand as a 5 % or 4 % threshold.
candidate B. Constituency boundaries
According to Article 19 of the EC Treaty, ‘every citizen of the Until 2003, in 11 Member States (Germany, Denmark, Greece,
Union residing in a Member State of which he is not a national Spain, France, Luxembourg, the Netherlands, Austria, Portugal,
shall have the right to vote and to stand as a candidate in Finland and Sweden) the whole country formed a single
elections to the European Parliament in the Member State in electoral area. In four Member States (Belgium, Ireland, Italy
which he resides’. The arrangements for implementing this and the United Kingdom) the national territory was divided
right were adopted on 6 December 1993 in Directive 93/109/ into a number of constituencies. Most new Member States
EC. have introduced single electoral areas (e.g. the Czech Republic
2. Electoral system and Hungary). Poland has 13 regional constituencies.
The elections must be based on proportional representation Since the 2002 Council decision, a number of the old Member
and use either the list system or the single transferable vote States have amended or are amending national laws. France
(Council Decision 2002/772/EC, Euratom). has abandoned the use of a single electoral constituency and
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has established eight large regional constituencies: North- and most new Member States; 21 in Belgium, the Czech
West, West, East, South-West, South-East, Massif Central, Île-de- Republic, Ireland, Greece, Lithuania, Poland, Slovakia and the
France and Overseas. In Germany, although the electoral United Kingdom; 23 in France; and 25 in Italy.
legislation will not be changed, parties are allowed to present
2. Residence
lists of candidates at either Land or national level. Similarly, in
Finland parties may present their lists at either constituency or In Luxembourg, since the new electoral law of 18 February
national level. 2003, at least five years’ residence is required (previously 10
years) to enable a Community national to stand for election to
C. Entitlement to vote the European Parliament. Moreover, a list may not comprise a
1. Vote of non-nationals in the host country majority of candidates who do not have Luxembourgish
Voting age is 18 in all the Member States. Citizens of the Union nationality.
residing in a Member State of which they are not nationals E. Nominations
now have the right (Article 19 EC) to vote in elections to
Parliament in the Member State in which they reside, under In some Member States (the Czech Republic, Denmark,
the same conditions as nationals of that State. However, the Germany, Greece, Estonia, the Netherlands and Sweden) only
concept of residence still varies from one national electoral political parties and political organisations may submit
system to another. nominations. In the other countries nominations may be
submitted if they are endorsed by the required number of
Some countries require voters either to have their domicile or signatures or electors, and in some cases (Ireland, the
customary residence on electoral territory (France and Finland), Netherlands and the United Kingdom) a deposit is also
or customarily to stay there (Belgium, Germany, Greece, Spain, required. In Ireland and Italy candidates may nominate
Luxembourg, Portugal and Italy), or to be registered on the themselves if they are endorsed by the required number of
electoral roll (Denmark, Ireland, Hungary, the Netherlands, signatures.
Austria, Poland, Sweden and the United Kingdom).
F. Election dates
To be entitled to vote in Luxembourg, Community citizens
must also prove a minimum period of residence. This was In accordance with national traditions, the voting takes place
reduced, however, with the entry into force of the new on:
electoral law on 18 February 2003. Since then, the obligatory — Thursday in Denmark, Ireland, the Netherlands and the
period of residence in the territory of Luxembourg has been United Kingdom,
five years, although this period does not apply to Community
electors who do not have the right to vote in their Member — Sunday in all other countries.
State of origin, because they are resident outside that State or The last elections were held on 10 and 13 June 2004. The next
because of the period of that residence. will take place on 4 and 7 June 2009.
2. Vote of non-resident nationals in the countries of
G. Voters’ option to alter the order of candidates on lists
origin
In the United Kingdom the right to vote of citizens resident In some States (Germany, Greece, Spain, France and Portugal)
abroad is confined to civil servants, members of the armed voters cannot alter the order in which candidates appear on a
forces and citizens who left the country less than five years list. In others (Belgium, Denmark, Italy, Luxembourg, the
before, provided they submit a declaration to the appropriate Netherlands, Austria, Finland and Sweden) the order on the
authorities. Denmark, the Netherlands, Austria and Portugal list may be changed using transferable votes. In Luxembourg
only grant the right to vote to their nationals living in an EU voters may vote for candidates from different lists. In Sweden,
Member State. Belgium, Greece, Spain, France, Italy and voters may also add names to the lists or remove them. The
Sweden grant their nationals the right to vote whatever their list system is not used in Ireland, Malta or the United
country of residence. Germany grants this right to citizens who Kingdom.
have lived in another country for less than 10 years. In Ireland H. Allocating seats
and Hungary the right to vote is confined to EU citizens
domiciled on the national territory. Most Member States have adopted the d’Hondt rule for
allocating seats. Germany uses the Hare–Niemeyer method
D. Right to stand for election and Luxembourg a variant of the d’Hondt method, the
Apart from the requirement of nationality of an EU Member Hagenbach-Bischoff method. In Greece seats are allocated by
State, which is common to all the Member States, conditions the weighted method of proportional representation known
vary from one to another. as Eniskhimeni Analogiki, in Ireland by the single transferable
vote method, in Italy by the whole electoral quota and largest
1. Minimum age remainder method, and in Sweden by the Sainte-Laguë
The minimum age is: 18 in Denmark, Germany, Spain, the method (division by successive odd numbers but modified to
Netherlands, Luxembourg, Austria, Portugal Finland, Sweden make the largest common divisor 1.4).
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I. Verification of the result and rules on election Role of the European Parliament
campaigns Since the 1960s Parliament has repeatedly voiced its opinion
There is provision for the EP to verify the election results in on issues of electoral law in reports, resolutions and in written
Denmark, Germany and Luxembourg, and for the courts to do and oral questions and has put forward proposals in
so in Belgium, Ireland, France, Italy, Austria, Finland and the accordance with Article 138 of the EEC Treaty. Parliament
United Kingdom, while both are provided for in Germany. In adopted three resolutions, in 1991, 1992 and 1993, on
Spain the result is verified by the Junta Electoral Central; in establishing a uniform electoral procedure, but the Council did
Portugal and Sweden by a verification committee. not consider them as proposals within the meaning of
Contrary to the practice in national elections, no special rules Article 138 and in any case adopted only the proposal
on election campaigns have been laid down. For a long time, concerning the allocation of seats among the Member States.
political parties at the European level received no direct Article 190 of the EC Treaty, modified by the Amsterdam Treaty,
allowances for election campaigns. Recently, however, a provides for Parliament to draw up a proposal for elections in
system for the funding of European political parties was accordance with a uniform procedure in all Member States or
established (Regulation EC (No) 2004/2003), which also in accordance with principles common to all Member States.
allowed the establishment of political foundations at the In 1997, Parliament’s Committee on institutional Affairs
European level. decided to draw up a report which resulted in a resolution on
a proposal for a uniform electoral procedure. Council Decision
J. Filling of seats vacated during the electoral term 2002/772/EC, Euratom of 25 June 2002 and September 2002
In some Member States (Denmark, France, Italy, Luxembourg, incorporates the substance of the EP’s proposal but does not
the Netherlands, Austria, Portugal and Finland) seats falling take over the proposal for the establishment of a single
vacant following ‘open’ resignation are allocated to the first European constituency for the election of 10 % of the seats.
unelected candidates on the lists (possibly after permutation
The continuing lack of a genuine uniform procedure for
to reflect the votes obtained by the various candidates). In
election to the European Parliament shows how difficult it is to
Belgium, Germany, Ireland and Sweden vacant seats are
harmonise different national traditions. The Amsterdam
allocated to substitutes. In Germany and Spain, if there are no
Treaty’s option of adopting common principles has to some
substitutes account is taken of the order of candidates on the
extent made it possible to overcome these difficulties. The
lists. In the United Kingdom by-elections are held. In Greece
Treaty of Lisbon would provide a legal base for the adoption of
vacant seats are allocated to substitutes on the same list; if
a uniform procedure, requiring the consent of the European
there are not enough substitutes, by-elections are held. The
Parliament.
European Parliament is currently preparing a resolution on
changing its rules applying to MEPs in the event of maternity
or paternity, taking into account national legislation on the g Wilhelm Lehmann
filling of seats. July 2008
1.3.5. The European Parliament: relations with the national

parliaments
The progress of European integration has changed the role of national parliaments. Various instruments of cooperation
between the European Parliament and national parliaments have been created in order to establish effective democratic
control of European legislation at all levels.
Objectives (NPs) as legislative, budgetary and controlling authorities. The

transfer of responsibilities from national level to European level
A. Rationale for cooperation has largely been to the Council, and the European Parliament
The very process of European integration involves transferring has not acquired all the powers that would have enabled it to
some responsibilities that used to be exercised by the national play a full parliamentary role in Community affairs. There is
governments to joint institutions with decision-making thus a structural ‘democratic deficit’.
powers, thus diminishing the role of the national parliaments
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Both the EP and the NPs have deplored this democratic deficit Laeken (2001). It also played an important role during the
and endeavoured to reduce it. debates of the Convention on the Future of Europe (1.1.4),
where it was the subject of one of the 11 working groups. The
— The NPs have gradually become concerned at their loss of
Convention finally adopted a protocol on the role of national
influence and have come to see better national control
parliaments in the European Union, which was attached to the
over their governments’ European activities and closer
Treaty establishing a Constitution for Europe. In May 2006, the
relations with the European Parliament as a way of
European Commission agreed to transfer electronically all new
restoring lost influence and ensuring together that Europe
proposals and consultation papers to the national parliaments.
is built on democratic principles.
The Treaty of Lisbon would introduce a new mechanism for
— On its side, the EP has generally taken the view that
national parliaments to watch over the respect of the
substantial relations with the NPs would help to strengthen
subsidiarity principle in new legislative proposals. It would give
its legitimacy and bring Europe closer to the citizen.
a majority of chambers the possibility to block a new
B. The evolving context of cooperation Commission proposal. However, the final decision would be
up to the legislative authority (European Parliament and
The role of the NPs has continued to decline as European
Council of Ministers). The Treaty also contains new articles
integration has progressed, with the strengthening of
clarifying the role of national parliaments in the European
Community fiscal and budgetary powers in 1970 and 1975,
institutional set-up (Articles 10 and 12 TEU).
the rise of majority voting in the Council and of the EP’s
legislative powers following the Single European Act in 1987
and the Maastricht Treaty in 1993, the latter also creating the Achievements: the instruments of cooperation
common foreign and security policy (CFSP) and cooperation in
A. Conferences of presidents of the parliamentary
the spheres of justice and home affairs (CJHA), and a further
assemblies of the European Union
increase in the EP’s legislative powers in the Amsterdam Treaty
of October 1997. Following meetings held in 1963 and 1973, the conferences
were introduced in 1981. Comprising the presidents of the NPs
Until 1979 the EP and the NPs were linked organically, since and the EP, they were held initially every two years. They are
MEPs were appointed from within the NPs. Direct elections to prepared by meetings of secretary-generals and discuss
the EP broke those ties, and for some 10 years relations ceased precise questions of cooperation between the NPs and the EP.
altogether. The need to restore them became apparent after
1989, when contacts were made and attempts were set in During recent years, the presidents have met every year.
train to replace the original organic ties. The Maastricht Treaty Important recent conferences were held in Athens, from 22 to
helped by including two declarations (Nos 13 and 14) on the 24 May 2003 (on the role of the European parliaments in an
subject, which provide in particular for: enlarged Europe) and in Lisbon, on 20 and 21 June 2008 (on
the EU beyond the Treaty of Lisbon).
— respecting the NPs’ involvement in the activities of the
European Union (their respective governments must Since 1995 the EP had maintained close relations with the
inform them ‘in good time’ of Community legislative parliaments of the associate and accession countries. The
proposals and joint conferences must be held where presidents of the European Parliament and these parliaments
necessary); have repeatedly met to discuss accession strategies and other
topical questions.
— cooperation between the EP and the NPs, by stepping up
contacts, holding regular meetings and granting reciprocal B. The ECPRD
facilities. The grand conference in Vienna in 1977 set up the European
Centre for Parliamentary Research and Documentation
The NPs have recently acquired a measure of control over their
(ECPRD), a network of documentation and research services
governments’ Community activities, as a result of
that cooperate closely to facilitate access to information
constitutional reforms, government undertakings or
(including national and Community databases) and
amendment of their own operating methods. Their
coordinating research so as to avoid duplication. It centralises
committees specialising in European affairs have played a
and circulates research and has created a website to improve
major role in this development, in cooperation with the EP.
exchanges of information. Its directory facilitates contact
The protocol on the role of national parliaments annexed to between the member parliaments’ research departments. The
the Treaty of Amsterdam encourages greater involvement of Centre is jointly administered by the EP and the Parliamentary
national parliaments in the activities of the EU and requires Assembly of the Council of Europe.
consultation documents and proposals to be forwarded
promptly so the NPs can examine them before the Council C. Conference of parliaments of the Community
takes a decision. The role of national parliaments is This idea took practical shape in Rome in 1990 under the name
furthermore dealt with in a declaration to the Nice Treaty of ‘European assizes’. Its theme was ‘the future of the
(2000) and in the Declaration of the European Council in Community; the implications, for the Community and the
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Member States, of the proposals concerning economic and parliaments in the European Union particularly states that
monetary union and political union and, more particularly, the COSAC may make any contribution it deems appropriate for
role of the national parliaments and of the European the attention of the institutions of the European Union.
Parliament’ and there were 258 participants, 173 from the NPs However, contributions made by COSAC in no way bind
and 85 from the EP. There has not been another one since. national parliaments or prejudge their position.
D. Conference of the Community and European Affairs E. Cooperation

Committees of the Parliaments of the European Union Most of the EP’s standing committees consult their national
(COSAC) counterparts through bilateral or multilateral meetings and
Proposed by the President of the French National Assembly, visits by chairmen and rapporteurs.
the conference has met every six months since 1989, bringing
Contacts between the EP’s political groups and the NPs’
together the NPs’ bodies specialising in European Community
equivalents have developed to differing degrees, depending
affairs and six MEPs, headed by the two Vice-Presidents
on the country or political party involved.
responsible for relations with national parliaments. Convened
by the parliament of the country holding the Presidency of the Administrative cooperation is developing in the form of
Council and prepared jointly by the EP and the parliaments of traineeships in the European Parliament and exchanges of
the Presidency ‘troika’, each conference discusses the major officials. Reciprocal information on parliamentary work,
topics of European integration. especially in legislation, is of increasing importance.
COSAC is not a decision-making but a consultation and
coordination body that adopts its decisions by consensus. The g Wilhelm Lehmann
protocol to the Treaty of Amsterdam on the role of the national July 2008
1.3.6. The Council

Together with the European Parliament, the Council is the institution that adopts EU legislation through regulations and
directives and prepares decisions and non-binding recommendations. In its areas of competence, it takes its decisions by
simple majority, qualified majority or unanimity, according to the importance of the act needing its approval.
Legal basis B. Budget

In the European Union’s single institutional framework, the The Council is one of the two branches (the other being the
Council exercises the powers conferred on it by Articles 3 and European Parliament) of the budgetary authority which adopts
5 of the Treaty on European Union (TEU) and Articles 202 to the Community budget (1.4.3).
210 of the Treaty establishing the European Community (EC).
C. Other powers
1. Community external policy
Role The Council concludes the Community’s international
A. Community legislation agreements (which are negotiated by the Commission and
On the basis of proposals presented by the Commission, the require Parliament’s assent in some cases).
Council adopts Community legislation in the form of 2. Appointments
regulations and directives, either jointly with the European The Council, acting by qualified majority (since the Treaty of
Parliament in accordance with Article 251 EC or alone after Nice), appoints the Members of the Court of Auditors, the
consultation of the European Parliament (1.4.1). The Council Economic and Social Committee and the Committee of the
also adopts individual decisions and non-binding Regions.
recommendations (Article 249 EC) and issues resolutions. The
Council establishes requirements for exercising the 3. Economic policy
implementing powers conferred on the Commission or The Council ensures coordination of the economic policies of
reserved to the Council itself. the Member States (Article 145 EC) and, without prejudice to
the powers of the European Central Bank, takes political
decisions in the monetary field. The decision to admit a
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Member State to the single currency is taken by the Council Foreign Affairs and Security Policy for the term of his or her
meeting at the level of Heads of State or Government. mandate.
4. Common foreign and security policy and cooperation B. Operation
in the fields of justice and home affairs Depending on the area concerned, the Council takes its
In these fields of competence, created by the Treaty on decision, by simple majority, qualified majority or unanimously
European Union, the Council does not act as a Community (1.4.1 and 1.4.3).
institution but according to specific intergovernmental rules.
1. Simple majority
In the field of foreign and security policy, it adopts common This means that a decision is taken when there are more votes
positions and joint actions and also draws up conventions. The for than against. Each member of the Council has one vote.
troika formula has changed after the Treaty of Amsterdam: the The simple majority is applicable when the Treaty does not
Presidency of the Council is now assisted in the field of the provide otherwise (Article 205(1) EC). It is thus the decision-
common foreign and security policy by the Council general making process found in ordinary law. In practice it applies to
secretariat, whose General-Secretary exercises the functions of only a small number of decisions: internal Council rules,
High Representative for Common Foreign and Security Policy, organisation of the Council secretariat, and the rules governing
and the Member State that will hold the next Presidency. The committees provided for in the Treaty.
Council and Presidency are also assisted by a policy planning
2. Qualified majority
and early warning unit, which was set up under a declaration
annexed to the Final Act of the Amsterdam Treaty. a. Mechanism
In many cases the Treaty requires decisions by qualified
Since the Treaty of Amsterdam, the Council has also adopted
majority, which entails more votes than a simple majority. In
framework decisions on approximation of legislation in the
that case there is no longer equality of voting rights. Each
fields of justice and home affairs (4.12.1).
country has a certain number of votes in line with its
population (Article 205(2) EC).
Organisation
Before the accession of the 10 new Member States in 2004, the
A. Composition situation was the following: Germany, France, Italy and the
1. Members United Kingdom 10 votes; Spain 8 votes; Belgium, Greece, the
Netherlands and Portugal 5 votes; Austria and Sweden 4 votes;
The Council consists of a representative of each Member State,
Denmark, Ireland and Finland 3 votes, and Luxembourg 2
at ministerial level, ‘authorised to commit the government of
votes. The total was 87 with 62 needed for a decision. In the
that Member State’ (Article 203 EC).
event of a decision without a Commission proposal, the 62
2. Presidency votes must have been cast by at least 10 Member States.
The Council acting by a qualified majority (since the Treaty of With the accession of the 10 new Member States, the total
Nice) is chaired by the representative of the Member State number of votes in the Council rose to 124 during a
that holds the Council Presidency: this changes every six transitional period (1 May to 31 October 2004). The required
months, in the order decided by the Council acting qualified majority was 88 (70.97 %).
unanimously (Article 203 EC). The Treaty of Nice did not
From 1 November 2004, a new weighting of votes was
change this six-monthly rotation. In order to give new
introduced and qualified majority will be obtained if (with 27
Member States the time to prepare for their Presidency the
Member States):
previous rotation order was continued until the end of 2006.
On 1 January 2007 the following order was decided: Germany — the decision receives at least 255 votes of a new total of
and Portugal in 2007, Slovenia and France in 2008, the Czech 345 (73.91 %),
Republic and Sweden in 2009, Spain and Belgium in 2010, — the decision is approved by a majority of Member States,
Hungary and Poland in 2011, Denmark and Cyprus in 2012, and
Ireland and Lithuania in 2013, Greece and Italy in 2014, Latvia
and Luxembourg in 2015, the Netherlands and Slovakia in — the decision is approved by at least 62 % of the EU’s
2016, Malta and the United Kingdom in 2017, Estonia and population (the check on this latter criterion must be
Bulgaria in 2018, Austria and Romania in 2019, and Finland in requested by a Member State).
the first half of 2020. If a proposal does not come from the Commission, adoption of
The Treaty of Lisbon would change the system of rotating an act of the Council shall require at least 255 votes in favour,
presidencies. It would formalise the practice of 18-month team cast by at least two thirds of the members.
presidencies in a draft decision of the European Council to be The Treaty of Lisbon would discard the system of weighted
adopted after the entry into force of the Treaty and create a votes and follow a simple rule of double majority (55 % of the
long-term Presidency for the foreign affairs Council, which members of the Council, comprising at least 15 of them and
would be chaired by the High Representative of the Union for representing Member States comprising at least 65 % of the
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population of the Union). However, this new system would not France and the other Member States that developed in 1965
come into force before 1 November 2014. when France refused to move from unanimity to the qualified
b. Scope majority voting laid down for certain decisions by the Treaty of
Rome. France then refused to sit on the Council for six months.
The Treaty of Nice extended the scope of decision-making by The text of the compromise reads: ‘Where, in the case of
qualified majority. There are 27 provisions that change decisions which may be taken by a majority vote on a proposal
completely or partly from unanimity to qualified majority, from the Commission, very important interests of one or more
among them Article 18 EC (measures to facilitate freedom of partners are at stake, the Members of the Council will
movements for the citizens of the Union), Article 65 (judicial endeavour, within a reasonable time, to reach solutions which
cooperation in civil matters) and Article 157 (industrial policy). can be adopted by all the Members of the Council while
Qualified majority is now required for the appointment of the respecting their mutual interests and those of the Community,
President and the Members of the Commission, for the in accordance with Article 2 of the Treaty’. This has no legal
Members of the Court of Auditors, the Economic and Social force in that it does not modify the Treaty but the resulting
Committee and the Committee of Regions (1.4.1 and 1.4.3). tendency to seek unanimity has in the past considerably
The Treaty of Lisbon increases the number of legal bases slowed down decision-making.
requiring qualified majority by 45, including many former third
pillar areas.
Coreper
3. Unanimity
Unanimity is required by the EC Treaty for only a small number A committee consisting of the permanent representatives of
of decisions, but they are some of the most important the Member States prepares the Council’s work and carries out
(taxation, social policy, etc.). the tasks that it assigns to it (Article 207(1) EC).
It should be noted that the Council tends to seek unanimity
even when it is not required. This goes back to the 1966 g Wilhelm Lehmann
Luxembourg compromise. This ended the dispute between July 2008
1.3.7. The European Council

The European Council formed by the Heads of State or Government of the Member States provides the necessary impetus
to the development of the European Union and defines the general political guidelines. The European Council is linked
with the Commission as the Commission President is part of the European Council. The President of the European
Parliament is also present at European Council’s meetings.
Legal basis European integration and ensuring that Community activities

Articles 4, 13, 17 and 40 of the Treaty on European Union (TEU). were properly coordinated.
C. Tasks
History The Solemn Declaration on European Union adopted by the
A. Summits Heads of State or Government in Stuttgart in 1983 defined the
tasks of the European Council as:
The European Council is the present form of summit conferences
of Heads of State or Government of the Community Member — defining approaches to further the construction of Europe;
States. The first of these ‘European summits’ took place in Paris in
— issuing guidelines for Community action and political
1961. There have been several since then at fairly regular
cooperation;
intervals, becoming more frequent since 1969.
— initiating cooperation in new areas; and
B. How the name arose
— expressing the common position in questions of external
The Paris European Summit in February 1974 decided that
relations.
such meetings of Heads of State or Government should be
held regularly in future under the name of ‘European Council’, The Lisbon Treaty would make the European Council an
enabling a general approach to be taken to the problems of institution of the European Union. Its tasks would be to
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‘provide the Union with the necessary impetus for its The same applies when the Treaty on European Union (Article
development and define the general political directions and 7) gives the Council, meeting in the composition of Heads of
priorities thereof’ (Article 15 TEU as amended). State or Government, the power to start the procedure
suspending the rights of a Member State as a result of a
D. Incorporation in the Treaties serious breach of the Union’s principles.
The Single European Act (1986) included the European Council
in the body of the Community Treaties for the first time, defining B. Relations with the other institutions
its composition and convening its meetings twice a year. The European Council takes decisions with complete
The Treaty of Maastricht (1992) formalised its role in the independence; unlike the Community system, its decisions do
European Union’s institutional process. not involve a Commission initiative or Parliament’s
participation.
The Treaty of Lisbon will make the European Council a full
institution of the European Union (Article 13 TEU as amended). But the Treaty does provide an organisational link with the
Commission, since its President forms part of the European
Council, which is also assisted by another Commissioner.
Organisation Moreover, the European Council often asks the Commission to
A. Composition submit reports in preparation for its meetings.
The European Council brings together the Heads of State or The only link with Parliament laid down by the Treaty is that in
Government of the Member States and the President of the Article 4 TEU, requiring the European Council to submit to
Commission, assisted by the foreign ministers and a Member Parliament:
of the Commission.
— a report after each of its meetings,
B. Operation — a yearly written report on the progress of the Union.
The European Council meets at least twice a year. It is chaired
by the Head of State or Government of the country holding But Parliament can exercise some informal influence:
the Council Presidency. It normally takes decisions — by the presence of its President at European Council
unanimously. Since 2002 one European Council meeting per meetings, which has become current practice,
Presidency has been held in Brussels. When the Union
— by the resolutions it adopts on items on the agenda for
comprised 25 members, all formal European Council meetings
meetings, on the outcome of meetings and on the formal
started to be held in Brussels. The presidencies are
reports submitted by the European Council.
nevertheless free to organise informal European meetings
wherever they like. Under the Lisbon Treaty the new High Representative of the
Under the Lisbon Treaty a long-term Presidency would be Union for Foreign Affairs and Security Policy would become an
introduced. The President would have a mandate of 30 additional component proposing and carrying out foreign
months, renewable once. policy on behalf of the European Council.
C. Powers
Role 1. General
A. Place in the Union’s institutional system The European Council provides the Union with ‘the necessary
Under Article 3 TEU, the European Council forms part of the impetus for its development’ and defines the ‘general political
‘single institutional framework’ of the Union. But it is the source guidelines’ (Article 4 TEU).
of a general political impetus rather than a decision-making 2. Foreign and security policy matters
body in the legal sense. It only takes decisions with legal The European Council defines the principles of and general
consequences for the Union in exceptional cases (see point 2 guidelines for the common foreign and security policy (CFSP)
below). In essence it is an intergovernmental body, taking and decides on common strategies for its implementation
decisions unanimously. (Article 13 TEU).
It is not yet a Community institution. When the Treaty It decides whether to recommend to the Member States a
establishing the European Community entrusts a decision to move towards a common defence, under Article 17(1).
the Heads of State or Government, they act as a Council in the
Community sense of the word and not as the European If a Member State intends to oppose the adoption of a
Council. This applies to: decision for important reasons of national policy, the
Council may decide by a qualified majority to refer the
— decisions as the ultimate authority for allowing closer
matter to the European Council for a unanimous decision
cooperation in the Community sphere, under Article 11(2) EC;
(Article 23(2) TEU). The same procedure can apply if Member
— choosing the Member States which fulfil the conditions for States decide to establish enhanced cooperation in this field
access to the single currency, under Article 121(4) EC. (Article 27c(2) TEU).
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3. Police and judicial cooperation in criminal matters The Luxembourg European Council in December 1997 took
At the request of a member of the Council, the European decisions enabling accession negotiations to be launched with
Council decides whether enhanced cooperation in an area the countries of central and eastern Europe and Cyprus.
related to this field can be established (Article 40a(2) TEU) The Helsinki European Council (December 1999) decided to
(4.12.1 and 4.12.2). The Lisbon Treaty introduces several new begin accession negotiations with Bulgaria, Latvia, Malta,
bridging clauses enabling the European Council to change the Romania and Slovakia, and to recognise Turkey as an applicant
decision rule in the Council from unanimity to majority. country, thus marking the transition to a new phase of
enlargement.
Achievements The Copenhagen European Council (12 and 13 December
A. General assessment 2002) decided the accession as from the 1 May 2004 of the
The creation of the European Council was a step forward in the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary,
process of European integration, which was thus sufficiently Malta, Poland, Slovenia and Slovakia. Bulgaria and Romania
advanced to warrant a regular meeting of the Member States’ joined the Union on 1 January 2007.
highest political authorities. On 3 October 2005 in Luxembourg, the Council approved a
The European Council has been effective in adopting general framework for negotiations with Croatia and Turkey on their
guidelines for action by the Union, and also in overcoming accession to the EU. Negotiations began immediately
deadlock in the Community decision-making process. afterwards.
But its intergovernmental constitution and decision-making 3. Institutional reform

procedures may be curbing the federal development of The European Council meetings of Madrid (June 1989),
European integration in general, and even putting at risk the Strasbourg (December 1989), Dublin I (April 1990) and Dublin II
supranational achievements of the Community system. (June 1990) were important stages in the process leading to
economic and monetary union and the Treaty on European
B. Sectoral contributions Union. The Dublin European Council of April 1990 decided that
1. Foreign and security policy the Intergovernmental Conference on EMU would start work
Since the beginning of the 1990s foreign and security policy in December 1990, and that a second conference would be
has been an important item at the European Council’s summit called on the subject of political union.
meetings. Decisions taken in this area have included: Again, the special meeting at Turin in March 1996 marked the
— international security, disarmament and the fight against official opening of the Intergovernmental Conference, which
terrorism; led to the Treaty reforms approved by the Amsterdam
European Council in June 1997.
— transatlantic relations;
The European Council meeting at Tampere (15 and 16 October
— relations with Russia;
1999) decided on the arrangements for drafting the EU Charter
— relations with the Mediterranean countries; of Fundamental Rights (2.1). The Helsinki European Council
(December 1999) convened the Intergovernmental
— relations with Asia and Latin America;
Conference in preparation for the Treaty of Nice.
— the settlement of conflicts in the former Yugoslavia and the
Middle East. The Laeken European Council (14 and 15 December 2001)
decided to convene a Convention for the Future of Europe
On 10 and 11 December 1999 in Helsinki, the European (1.1.4) in order to pave the way for the next
Council decided to reinforce the CFSP by developing military Intergovernmental Conference as broadly and openly as
and non-military crisis management capabilities, in particular possible. The Convention presented its draft ‘Treaty
the means to launch and conduct EU-led military operations in establishing a Constitution for Europe’ to the European Council
response to international crises. in Thessaloniki in June 2003. After a short Intergovernmental
A European security strategy was approved by the European Conference, the Treaty establishing a Constitution for Europe
Council in Brussels on 12 December 2003. was signed by the Heads of State or Government in Rome in
October 2004 (1.1.5).
2. Enlargement
After two and a half years of institutional stalemate the
The European Council has set the terms for each round of
European Council of 21 and 22 June 2007 adopted a detailed
enlargement of the European Union. At Edinburgh in 1992 it
mandate for the Intergovernmental Conference leading to the
decided to start accession negotiations with several EFTA
signature of the Lisbon Treaty.
Member States. At Copenhagen in 1993 it laid the foundations
for a further wave of accessions (Copenhagen criteria).
Meetings in subsequent years further specified the criteria for g Wilhelm Lehmann
admission and the institutional reforms required beforehand. July 2008
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1.3.8. The Commission

The Commission is the European institution that has the monopoly on legislative initiative. It is the one executive body of
the European Community and it is formed by a college of Commissioners which brings together until 2009 one
Commissioner per Member State. The committees and working groups set up by the Council may be associated with the
Commission’s implementing powers.
Legal basis — After approval the Member States appointed the other
Articles 211 to 219 of the Treaty establishing the European Commissioners by common accord with the nominated
Community (EC). President.
— Finally, there was a further round of parliamentary approval
History and the Commissioners were appointed.
The Commission is the Community’s one executive body. To The Treaty of Nice introduced the following changes.
begin with, each Community had its own executive: the High
— It is the Council, acting by a qualified majority, which
Authority for the European Coal and Steel Community of 1951,
nominates the person it intends to appoint as President of
and a Commission for each of the two Communities set up by
the Commission. The Lisbon Treaty stipulates that the
the Treaty of Rome in 1957, the EEC and Euratom. These three
results of the European elections have to be taken into
bodies merged into a single European Commission under the
account for the selection of the candidate. The nomination
Treaty of 8 April 1965, which took effect on 1 July 1967 (1.1.2).
must be approved by the European Parliament.
Composition and legal status — The Council, acting by a qualified majority and by common
accord with the nominee for President, adopts the list of
A. Number of Members the other persons whom it intends to appoint as Members
The Commission was for a long time composed of at least one of the Commission in accordance with the proposals made
and not more than two Commissioners per Member State. In by each Member State.
practice the five most populous countries returned two — The President and the other Members of the Commission
Commissioners and the others one, including the 10 new must be approved as a body by the European Parliament
Member States since 1 May 2004. and appointed by the Council, acting by a qualified
Since 1 November 2004 the Commission has consisted of one majority.
Commissioner per Member State. When the Union reached the
number of 27 Member States on 1 January 2007 the number of C. Legal status
the Commissioners should have become smaller than the 1. Term of office
number of the Member States. The Members of the Since the Treaty of Maastricht a Commissioner’s term of office
Commission will be selected on the basis of a rotation system has matched Parliament’s legislative term of five years. It is
based on the principle of equality. This new system will only be renewable.
introduced with the new Commission to be appointed in 2009.
2. Personal accountability (Articles 213(2) and 216 EC)
The Lisbon Treaty would provide for a number of Commission Members of the Commission are required:
Members of two thirds of Member States. However, this would
only be applied from 1 November 2014 and the European — to be completely independent in the performance of their
Council would still have the right to change the number of duties, in the general interest of the Community; in
Commissioners unanimously. The Members of the Commission particular, they may neither seek nor take instructions from
shall be selected from among the nationals of the Member any government or other external body;
States on the basis of a system of equal rotation, reflecting — not to engage in any other occupation, whether it is
satisfactorily the demographic and geographical range of all gainful or not.
the Member States (Article 17 of the Treaty on European Union
(TEU), as amended). Commissioners can be dismissed by the Court of Justice, at the
request of the Council or the Commission itself:
B. Method of nomination
— if they break any of these obligations,
Under the Treaty of Amsterdam the nomination of the
Commission took place as follows. — if they cease to fulfil the conditions required for the
performance of their duties,
— The Member States’ nominee for Commission President
was first put to Parliament for approval. — if they are guilty of serious misconduct.
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3. Collective accountability the aspects of the 1966 ‘Luxembourg compromise’. This
The Commission is collectively accountable to Parliament document, which is a declaration with no legal value (1.1.2
under Article 201 EC. If Parliament adopts a motion of censure and 1.3.6), expresses the wish that where proposals are of a
against the Commission, all of its Members are required to particularly delicate nature (of ‘particular importance’) the
resign. Commission will contact the governments of the Member
States before drafting begins, but it does add that such
consultation must not affect the Commission’s right of
Organisation and operation
initiative.
A. Allocation of tasks and administrative organisation b. Budgetary initiative
The Commission works under the political guidance of its
President, who decides on its internal organisation in order to The Commission draws up the preliminary draft budget, which
ensure that the Commission acts consistently, efficiently and is put to the Council under Article 272(2) and (3) EC (1.4.3).
on the basis of collegiality. c. Initiative in Community relations with third countries
The President allocates the sectors of its activity among the The Commission is responsible for negotiating international
Members. This gives each Commissioner responsibility for a agreements under Articles 133 and 300 EC, which are then put
specific sector and authority over the administrative to the Council for conclusion.
departments concerned. 2. Limited initiative: the power of recommendation or
After obtaining the approval of the college, the President opinion
appoints the Vice-Presidents from among its Members. A This form of initiative differs from the previous kind because,
Member of the Commission has to resign if the President so firstly, it does not always give the Commission exclusive rights
requests and after obtaining the approval of the college. and, secondly, it does not form the only basis for decision-
The Commission has a Secretariat-General consisting of 27 making by the authority concerned.
directorates-general and 19 specialist departments, including a. In the context of economic and monetary union
the European Anti-Fraud Office, the Legal Service, Eurostat (the
The Commission has an important role in setting up EMU. For
statistical office) and the Publications Office.
the move to the third stage, in 1999, it was asked to report to
B. Method of decision-making the Council on whether the Member States had fulfilled the
With one or two exceptions, the Commission takes decisions conditions for access and to make recommendations for the
by a majority vote, under Article 17 of the Merger Treaty. This access of individual Member States, under Article 121 EC. It will
establishes the principle of collegiate responsibility. have the same task with the access of further countries.
The Commission has a role in managing EMU. It submits to the
Powers Council:
As it acts in the common interest, the Commission is — recommendations for draft broad guidelines of the
responsible for launching Community action and ensuring economic policies of the Member States, under
that it is carried out. Article 99(2);
— reports reviewing economic developments in the Member
A. Power of initiative
States, under Article 99(3);
As a rule the Commission has a monopoly on the initiative in
Community decision-making. It draws up proposals for a — recommendations on the attitude to be taken on Member
decision by the two decision-making institutions, Parliament States which are not complying with the broad guidelines,
and the Council. under Article 99(4);
1. Full initiative: the power of proposal — proposals for measures in the event of serious economic
The power of proposal is the complete form of the power of difficulties in the Community or a Member State, under
initiative, as it is always exclusive and is relatively constraining Article 100(1) and (2);
on the decision-making authority, which cannot take a — opinions and recommendations in the event of an
decision unless there is a proposal and must base it on the excessive government deficit in a Member State, under
proposal as presented. Article 104(5) and (6);
a. Legislative initiative — proposals for conferring on the European Central Bank
specific tasks for prudential supervision of credit
The Commission draws up and submits to the Council and
institutions, under Article 105(6);
Parliament any legislative proposals (regulations or directives)
that are needed to implement the Treaties (1.4.1). In drawing — proposals (in the absence of proposals from the Bank) for
up such proposals the Commission normally takes account of amending the statute of the European System of Central
the national authorities’ guidelines. This concern was one of Banks, under Article 107(6);
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— recommendations for the exchange rate between the As part of these ‘requirements’ the Council has taken to setting
single currency and the other currencies and for general up ‘committees’ composed of national civil servants which are
orientations for exchange-rate policy, under Article 111; associated with the Commission’s implementing powers. While
some of these committees are only advisory, others make it
— recommendations on measures to be taken if a Member
possible to curb the Commission’s powers (in the case of
State is in balance-of-payments difficulties, under Article
management committees) or even absorb them (in the case of
119.
regulatory committees). With respect to the competition rules
b. U
nder the common foreign and security policy and police applying to companies — concerted practice and abuse of a
and judicial cooperation dominant position — Council regulatory acts have conferred
considerable implementing powers on the Commission
In these areas, not only is the Commission fully involved in the (3.3.1 and 3.3.2).
Council’s work, but it may also — in the same way as the
Member States — consult the Council on any proposal, under Parliament has repeatedly criticised the adverse effects of this
Articles 22 and 34(2) EU. The High Representative of the Union ‘comitology’, which was increasingly inappropriate as the co-
for Foreign Affairs and Security Policy provided for by the decision procedure spread into general use (see in particular
Lisbon Treaty will be Vice-President of the Commission. Hence, Parliament’s resolution of 13 December 1990). The Council
the Commission will have a stronger role in foreign policy. As decision of 1999 ‘laying down the procedures for the exercise
to former third pillar areas, most of them will be transferred to of implementing powers conferred to the Commission’
the general legislative procedure improved the involvement of the European Parliament in the
comitology procedures by acknowledging a right to
B. Powers to monitor the implementation of Community information and a right to review.
law
After long negotiations between the three institutions, a new
The Community Treaties require the Commission to ensure committee procedure (‘regulatory procedure with scrutiny’)
they are properly implemented, together with any decision was introduced by Council Decision 2006/512/EC of 17 July
taken to implement them (secondary law). This is its role as 2006. Parliament changed its rules of procedure accordingly
guardian of the Treaties. It does so mainly through the (resolution of 14 December 2006). This new procedure entitles
‘failure to act’ procedure under Article 226 EC: if it considers Parliament and the Council to scrutinise quasi-legislative
that a Member State has failed to fulfil an obligation under the measures implementing an instrument adopted by co-
Treaty, it can initiate proceedings by requiring the State decision and to reject such measures.
concerned to submit its observations. If these do not satisfy
the Commission it delivers a reasoned opinion requiring the D. Regulatory powers
matter to be put right by a specific date; after that date it can The Treaties seldom give the Commission full regulatory
ask the Court of Justice to settle the matter. powers.
C. Implementing powers 1. ‘Obsolete’ provisions

1. Conferred by the Treaties — Establishing levies on undertakings under the ECSC Treaty.
The main ones are: — Pacing the abolition of taxes and measures having an
equivalent effect to customs duties or quantitative
— implementing the budget, under Article 274 EC; restrictions during the transitional period of the Treaty of
— authorising the Member States to take safeguard measures Rome, setting up the customs union.
laid down in the Treaties, particularly during transitional 2. Provisions that remain in force
periods; Applying Community rules to public undertakings and public
— enforcing the competition rules, particularly in monitoring service undertakings, under Article 86(3) EC.
State subsidies, under Article 88(2).
E. Consultative powers
2. Delegated by the Council The Treaties give the Commission a general power of
Articles 124 EAEC and 211 EC state that the Commission must recommendation and opinion, under Article 211 EC.
exercise the powers conferred on it by the Council for the They also provide for it to be consulted on certain decisions,
implementation of the rules laid down by the Council. The such as on the admission of new Member States to the Union,
Single European Act amended the EC Treaty, in Article 202, so under Article 49 TEU.
as to require the Council to confer such powers, but it also
allowed the Council: Lastly, the Commission is consulted on the statute for MEPs
and the statute for the Ombudsman.
— to reserve the right to exercise implementing powers itself,
— when conferring such powers on the Commission, to g Wilhelm Lehmann
impose certain requirements. July 2008
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1.3.9. The Court of Justice and the Court of First Instance
The European Union’s jurisdiction is the responsibility of the Court of Justice of the European Communities, the Court of
First Instance of the European Communities and, from 2 November 2004, the European Union Civil Service Tribunal. These
bodies ensure the correct interpretation and application of primary and secondary law in the European Union.
I. Court of Justice of the European Their immunity may only be waived by a unanimous decision
of the Court.
Communities
3. Obligations (statute)
Judges and advocates-general:
Legal basis
— take an oath (independence, impartiality and preservation
Articles 220, 226, second paragraph, 227, 230, 232, 234 to 237
of secrecy) before taking up their duties;
and 300 of the Treaty establishing the European Community
(EC). — may not hold any political or administrative office or
engage in any occupation;
Article 136 of the Euratom Treaty.
Protocol, annexed to the Treaties, on the statute of the Court of — give an undertaking that they will respect the obligations
Justice. arising from their office.
Certain international agreements.

Organisation and operation (Article 223 and
Statute)
Composition and statute
A. Internal organisation
A. Composition
The judges elect the President from among their number for a
1. Number (Articles 221 and 222) renewable period of three years.
One judge per Member State, so there are currently 27.
The Court appoints its registrar.
Eight advocates-general, which may be increased by the
Council if the Court so requests. B. Operation
2. Conditions to be met (Article 223) The Court establishes its rules of procedure, which require the
They will be chosen from persons: approval of the Council, acting by a qualified majority.
— who possess the qualifications required for appointment to The Court sits in chambers (of three or five judges), in a Grand
the highest judicial offices in their respective countries or Chamber (11 judges) or in a full Court (these various
who are jurisconsults of recognised competence; formations were introduced by the Treaty of Nice: (1.1.4).
— whose independence is beyond doubt.

Responsibilities
3. Appointment procedure (Article 223)
Judges and advocates-general are appointed by common A. Fundamental role
accord of the governments of the Member States. Ensuring that ‘in the interpretation and application of the
Treaties the law is observed’ (Article 220).
B. Characteristics of the office
1. Duration (Article 223 and statute) B. Responsibilities
Six years. 1. Direct proceedings against Member States or
Community institutions
Partial replacement every three years:
The Court gives a ruling on the proceedings against the States
— 14 and 13 judges replaced alternately, or institutions that have not fulfilled their obligations under
— half of the advocates-general replaced alternately. Community law.
Retiring judges and advocates-general may be reappointed. a. P

roceedings against the Member States for failure to fulfil
an obligation
2. Privileges and immunities (statute)
These actions are brought either by:
Judges and advocates-general are immune from legal
proceedings. After they have ceased to hold office, they — the Commission, after a preliminary procedure (Article 226):
continue to enjoy immunity in respect of acts performed by opportunity for the state to submit its observations,
them in their official capacity. reasoned opinion (1.3.8), or
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— another Member State after it has brought the matter The Court also has the jurisdiction to review decisions made
before the Commission (Article 227). by judicial panels (see below, Civil Service Tribunal) or by the
Court of First Instance on preliminary issues. The review
Role of the Court:
procedure is an exceptional procedure, limited to cases where
— to confirm that the State has failed to fulfil its obligations, there is a serious risk of the unity or consistency of Community
in which case the State is required to take the necessary law being affected.
measures to comply with the Court’s judgment;
If the Court’s ruling might affect the decision on the
— if the Commission considers that the Member State proceedings that were the subject of the decision at first
concerned has not taken such measures, it may (after a instance; it is not however an appeal ‘in the interest of the law’.
preliminary procedure, as provided for above) propose to
the Court of Justice that it impose a lump sum or penalty
payment on the Member State in question, the amount
Achievements
being determined by the Court on the basis of a The Court of Justice has shown itself to be a very important
Commission proposal (Article 228 of the EC Treaty). factor — some would even say a driving force — in European
integration.
b. P
roceedings against the Community institutions for
annulment and for failure to act 1. In general
Subject: cases where the institutions have adopted acts that Its judgment of 15 July 1964 in the Costa/Enel case was
are contrary to Community law (annulment: Article 230) or, in fundamental in defining European Community law as an
infringement of Community law, have failed to act (failure to independent legal system taking precedence over national
act: Article 232). legal provisions. Similarly, its judgment of 5 February 1963 in
the Van Gend & Loos case established the principle that
Referral: actions may be brought by the Member States, the Community law was directly applicable in the courts of the
institutions themselves or any natural or legal person if it Member States. Other significant decisions concern the
relates to a decision addressed to them. protection of human rights: judgment of 14 May 1974 in the
Role of the Court: the Court declares the act void or declares Nold case, in which the Court stated that fundamental human
that there has been a failure to act, in which case the rights are an integral part of the general principles of law that
institution at fault is required to take the necessary measures it upholds (1.5.1).
to comply with the Court’s judgment (Article 233).
I. In specific matters
c. Other direct proceedings
a. T he right of establishment: judgment of 8 April 1976 in the
Actions against Commission decisions imposing penalties on Royer case, in which the Court upheld the right of a
firms (Article 229). national of a Member State to stay in any other Member
State independently of any residence permit issued by the
Actions for compensation for damages caused by the
host country.
institutions or their servants (Article 235).
Actions by Community officials and servants against their b. T he free movement of goods: judgment of 20 February
institutions (Article 236) — competence currently devolved to 1979 in the Cassis de Dijon case, in which the Court ruled
the Civil Service Tribunal (see below). that any product legally manufactured and marketed in a
Member State must in principle be allowed on the market
Actions relating to contracts concluded by the Community of any other Member State.
(Article 238).
c. T he external jurisdiction of the Community: AETR
2. Indirect proceedings: question of validity raised before judgment of 31 March 1971, in the Commission/Council
a national court or tribunal (Article 234) case, which recognised the Community’s right to conclude
The national courts are normally responsible for applying international agreements in spheres where Community
Community law in cases relating to the implementation of the regulations apply.
law. However, when an issue relating to the interpretation of
d. R
ecent judgments establishing an obligation to pay
the law is raised before a national court or tribunal, the court
damages by Member States that have failed to transpose
or tribunal may seek a preliminary ruling from the Court of
directives into national law or failed to do so in good time.
Justice. If it is a court of last instance, it is compulsory to refer
the matter to the Court. e. V
arious judgments relating to social security and
3. Responsibility at second instance competition.
The Court has the jurisdiction to review appeals limited to f. R
ulings on breaches of Community law by the Member
points of law in rulings of the Court of First Instance. The States, which are vital for the smooth running of the
appeals do not have suspensory effect. common market.
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One of the great merits of the Court has been its statement of B. Operation
the principle that the Community Treaties must not be In agreement with the Court of Justice, the Court of First
interpreted rigidly but must be viewed in the light of the state Instance establishes its rules of procedure, which require the
of integration and of the objectives of the Treaties themselves. approval of the Council.
This principle has allowed the Community to legislate in areas
where there are no specific Treaty provisions, such as the fight The Court sits in chambers of three or five judges. Its rules of
against pollution (in a judgment of 13 September 2005 (Case procedure determine when the Court sits as a full Court, in a
C-176/03 European Communities v Council of the European Grand Chamber or is constituted by a single judge. The latter
Union), the Court in fact authorised the European Community applies in particular to cases concerning Community officials,
to take measures relating to criminal law where ‘necessary’ in contracts concluded by the Community and actions brought
order to achieve the objective as regards environmental by individuals against the institutions, where there is no
protection). difficulty regarding the question of law or fact raised and the
cases are of limited importance.
II. Court of First Instance
Responsibilities
Legal Basis A. Responsibilities of the Court of First Instance

(Article 225)
Articles 224 and 225 of the EC Treaty, Article 40 of the Euratom
The Court has jurisdiction to hear at first instance actions
Treaty;
concerning the following aspects, unless the actions are
Protocol, annexed to the Treaties, on the statute of the Court of brought by Member States, Community institutions or the
First Instance (Title IV). European Central Bank, in which case the Court of Justice has
The Court of First Instance was created through the Council sole jurisdiction (Article 51 of the statute):
decision of 1988 in accordance with the Single Act (1986), — actions for annulment or for failure to act brought against
which provided for its creation. It was incorporated into the EC the institutions (Articles 230 and 232);
Treaty by the Treaty of Maastricht (1991). The Treaty of Nice did
away with its status as a court ‘attached’ to the Court of Justice — actions for the reparation of damage caused by the
and extended its jurisdiction. institutions (Article 235);
— disputes concerning contracts concluded by the
Composition and statute (Article 224 EC) Community (Article 238).
A. Composition The statute may extend the Court’s jurisdiction to other areas.
1. Number The judgments given by the Court at first instance may be
One judge per Member State, so there are currently 27. subject to a right of appeal to the Court of Justice, but this is
limited to points of law.
The judges may be called upon to perform the task of
advocate-general. B. Responsibility at first and last instance
2. Conditions to be met The Court of First Instance has the jurisdiction to give
They must possess the ability required for appointment to preliminary rulings (Article 234) in the areas laid down by the
high judicial office. statute. However, these decisions may exceptionally be subject
to review by the Court of Justice ‘where there is a serious risk of
They must be persons whose independence is beyond doubt. the unity or consistency of Community law being affected’.
3. Appointment procedure The review does not have suspensory effect.
The judges are appointed by common accord of the It is not, however, an appeal in the interest of the law if the
governments of the Member States. Court’s ruling is likely to have an impact on the decision on the
proceedings that were the subject of the Court’s ruling.
B. Characteristics of the office
Identical to those of the Court of Justice. — In cases of reviews of decisions of the Court of First
Instance ruling on the decisions of judicial panels (see
below), the Court of Justice refers the matter to the Court
Organisation and operation of First Instance, which is bound by the points of law laid
A. Internal organisation down by the Court of Justice. However, the Court of Justice
itself decides the case if the decision on the proceedings is
The judges elect the President from among their number for a
based on the same evidence as that brought before the
renewable period of three years.
Court of First Instance, taking into account the review of
The Court appoints its registrar. the Court of Justice.
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— In cases of reviews of decisions of the Court of First natural and legal persons against regulatory acts will be
Instance on preliminary issues, the Court of Justice’s answer facilitated.
to the question referred replaces that of the Court of First
— The scope of cases brought for failure to act is extended to
Instance (Article 62 of the Court’s rules of procedure).
include the European Council, the European Central Bank
C. Responsibility for appeals and other EU bodies and organisms that fail to act.
If the Council decides to make use of the option to create — The Court of Justice will have jurisdiction to review judicial
judicial panels to hear and determine at first instance certain cooperation in criminal matters and police cooperation,
classes of actions, the decisions of these panels may be subject but not to review the validity or proportionality of police
to a right of appeal before the Court of First Instance. operations or the exercise of the responsibilities incumbent
upon Member States with regard to the maintenance of
III. European Union Civil Service Tribunal law and order and the safeguarding of internal security.
— Although the Court still does not have jurisdiction over the
In order to relieve the Court of First Instance of some of its
acts adopted in the area of the common foreign and
proceedings, Article 225a of the EC Treaty, introduced by the
security policy, it has jurisdiction to review the legality of
Treaty of Nice, provides for the possibility of establishing
restrictive measures against natural or legal persons.
‘judicial panels’ with the jurisdiction to hear certain categories
of actions ‘in certain specific areas’ at first instance. In Significant progress is also made in the area of infringements:
accordance with this provision, the Council decision of 2 when the Commission brings a case before the Court of
November 2004 establishes a ‘European Union Civil Service Justice against a Member State that has failed to fulfil its
Tribunal’ (OJ L 333, 9.11.2004, p. 7). obligation to notify measures transposing a directive, it may,
This decision stipulates that the decisions of this Tribunal are when it deems appropriate, specify to the Court the amount of
subject to appeals to the Court of First Instance. These appeals the lump sum or penalty payment to be paid by the Member
do not have suspensory effect, are limited to points of law and State.
must lie on the grounds of lack of jurisdiction of the Civil Finally, the changes to the Court’s Statue will be subject to the
Service Tribunal, a breach of procedure before it that adversely ordinary legislative procedure, rather than unanimity in the
affects the interests of the party concerned and the Council.
infringement of Community law.
The Lisbon Treaty
Since a 1990 ruling on a case by Parliament brought as part of
The entry into force of the Lisbon Treaty would introduce the legislative procedure on the adoption of health measures
changes with regard to the following points. to be taken following the Chernobyl nuclear accident, the
— The appointment of candidates for the posts of judge and Court has granted the European Parliament the right to bring
advocate-general by the Member States will first be before the Court actions to have decisions declared void
subject to an examination by a panel of seven persons, one (Article 230 EC) for the purpose of safeguarding its
of whom will be proposed by the European Parliament. prerogatives under the legislative procedure.
— The legality of acts of the European Council and of bodies The Treaty of Nice extends the European Parliament’s capacity
or organisms (agencies, offices, etc.) intended to produce to bring such decisions before the Court, which is no longer
legal effects vis-à-vis third parties will henceforth be limited to defending its prerogatives.
reviewed.
— Taking into account the development of case-law, the g Claire Genta
conditions governing the admissibility of cases brought by July 2008
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1.3.10. The Court of Auditors
The European Court of Auditors is in charge of the audit of EU finances. As the EU’s external auditor it contributes to
improving EU financial management and acts as the independent guardian of the financial interests of the citizens of the
Union.
Legal basis — they may not engage in any other professional activity,
Articles 246 to 248, 279 and 280 of the Treaty establishing the whether paid or not;
European Community (EC). — if they infringe these conditions the Court of Justice can
The Treaty on European Union raised the Court of Auditors to remove them from office.
the rank of Community institution by amending Article 7 of C. Organisation
the EC Treaty accordingly.
The Court elects its President from among its Members for a
renewable term of three years.
Structure
A. Composition Powers
1. Number A. The Court’s audits
One member per Member State (the Nice Treaty formalised 1. Scope
what had hitherto only been the recognised procedure), thus
The Court’s remit covers examination of any revenue or
currently 27.
expenditure accounts of the Community or any Community
2. Qualifications body, unless precluded by that body’s constitution. It carries
They must: out its audits in order to obtain a reasonable assurance as to:
— belong or have belonged in their respective countries to — the reliability of the annual accounts of the Communities;
external audit bodies, or be especially qualified for this — the legality and regularity of the underlying transactions;
office; and
— show that their independence is beyond doubt. — the soundness of financial management.
3. Nomination 2. Methods of investigation
Members of the Court are appointed: The Court’s audit is continuous; it may be carried out before
— by the Council, by qualified majority; the closure of accounts for the financial year in question.
— on the recommendation of each Member State regarding It is based on records and may also be carried out on the spot,
its own seat; in:
— after consulting Parliament. — Community institutions;
B. Type of mandate — any body which manages revenue or expenditure on the

Community’s behalf;
1. Term
Six years, renewable. The term of office of the President is three — the premises of any natural or legal person in receipt of
years, renewable. payments from the Community budget.
2. Status In the Member States the audit is carried out in liaison with the
competent national bodies or departments.
Members enjoy the same privileges and immunities that apply
to judges of the Court of Justice. These bodies are required to forward to the Court any
document or information it considers necessary to carry out its
3. Duties
task.
Members must be ‘completely independent in the
performance of their duties’. This means: 3. Main publications
Following its audits the Court provides Parliament and the
— they must not seek or take instructions from any external
Council with a yearly statement of assurance (‘DAS’ for
source;
déclaration d’assurance in French) as to the reliability of the
— they must refrain from any action incompatible with their accounts and the legality and regularity of the underlying
duties; transactions.
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It draws up an annual report, which it forwards to the assurance). The DAS was always qualified by reservations over
Community institutions and publishes in the Official Journal of recent years and has been criticised repeatedly by the EP,
the European Union together with the institutions’ replies to the notably in its discharge resolutions in which it made concrete
Court’s observations. proposals as to how to arrive at a positive DAS. The Court of
The Court may comment at any time on specific issues, Auditors reacted by suggesting the development of a
particularly in the form of special reports. Community internal control framework with common
principles and standards to be used at all levels of
B. Advisory powers administration in the institutions and Member States alike
The other institutions may ask the Court for its opinion (Court of Auditors’ Opinion No 2/2004 on the ‘single audit’
whenever they see fit. model).
The Court’s opinion is mandatory when the Council: The Commission has taken this up and developed the
‘roadmap to an integrated internal control framework’
— adopts financial regulations specifying the procedure for
(adopted by the Commission on 15 June 2005). The EP has
establishing and implementing the budget and for
welcomed this in its discharge resolution of April 2006 with
presenting and auditing accounts;
respect to the implementation of the 2004 budget.
— determines the methods and procedure whereby the
The Interinstitutional Agreement of 17 May 2006 on budgetary
Community’s own resources are made available to the
discipline and sound financial management (see ‘the
Commission;
multiannual financial framework’ 1.5.2) stipulates under
— lays down rules concerning the responsibility of financial ‘Ensuring effective and integrated internal control of
controllers, authorising officers and accounting officers; or Community funds’: ‘The institutions agree on the importance
— adopts anti-fraud measures. of strengthening internal control without adding to the
administrative burden for which the simplification of the
underlying legislation is a prerequisite. In this context, priority
Role of the European Parliament will be given to sound financial management aiming at a
The Court of Auditors was created in 1977 at the initiative of positive statement of assurance, for funds under shared
the European Parliament. Since then, it has assisted the management.’
European Parliament and the Council in exercising their role of
controlling the implementation of the budget.
g François Javelle
A bone of contention has been the absence of an unqualified Helmut Werner
positive DAS (i.e. the Court of Auditors’ annual statement of July 2008
1.3.11. The European Economic and Social Committee

The European Economic and Social Committee is a consultative body of the European Union. It is composed of 344
members. Its opinions are required as a mandatory consultation in the fields established by the Treaties or as a voluntary
consultation by the Commission, Council or Parliament. The Committee may also issue opinions on its own initiative.
Legal basis — 21 for Spain and Poland;

Articles 257 to 262 of the Treaty establishing the European — 15 for Romania;
Community (EC) (Articles 301 to 304 of the Lisbon Treaty).
— 12 for Belgium, Bulgaria, the Czech Republic, Greece,
Hungary, the Netherlands, Austria, Portugal and Sweden;
Composition
— 9 for Denmark, Ireland, Lithuania, Slovakia and Finland;
A. Number and national allocation of seats (Article 258)
— 7 for Estonia, Latvia and Slovenia;
The Committee currently has 344 members, divided between
the Member States as follows: — 6 for Cyprus and Luxembourg;
— 24 for Germany, France, Italy and the United Kingdom; — 5 for Malta.
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B. Method of appointment (Article 259) — agricultural policy (Article 37);
Members are appointed by the Council by qualified majority (it — free movement of persons and services (Part Three, Title III);
used to be unanimously, before the Treaty of Nice), on the
basis of proposals by the Member States in the form of lists — transport policy (Part Three, Title V);
containing twice as many candidates as there are seats allotted — harmonisation of indirect taxation (Article 93);
to their nationals. The Council consults the Commission on
— approximation of laws for the internal market (Articles 94
these nominations. They must ensure that the various
and 95);
categories of economic and social activity are adequately
represented. In practice one third of the seats go to employers, — employment policy (Part Three, Title VIII);
one third to employees and one third to other categories — social policy, education, vocational training and youth
(farmers, retailers, the liberal professions, consumers, etc.). (Part Three, Title XI);
C. Type of mandate (Article 258) — public health (Article 152);
Members are appointed for four years, renewable (five years — consumer protection (Article 153);
according to the Treaty of Lisbon). The Treaty on European
Union stipulates that members must be completely — trans-European networks (Article 156);
independent in the performance of their duties, in the general — industrial policy (Article 157);
interest of the Community (the form of words used for — economic and social cohesion (Part Three, Title XVII);
Members of the Commission and the Court of Auditors).
— research and technological development (Part Three,
Title XVIII);
Organisation and procedures
The EESC is not one of the Community institutions listed in — environment (Title XIX).
Article 7 of the Treaty, but it does have a large degree of 2. Voluntary consultation
autonomy in its organisation and operation, which the EU The Committee may also be consulted by the Commission,
Treaty has increased. Council or Parliament on any other matter as they see fit.
— It appoints its President and its Bureau from among its When the Council or Commission consult the Committee
members, for a two-year term. (whether on a mandatory or voluntary basis) they may set it a
— It adopts its own rules of procedure. time limit (of at least one month), after which the absence of
an opinion cannot prevent them from taking further action.
— It may meet on its own initiative, but it normally meets at
the request of the Council or Commission. B. Issuing an opinion on its own initiative
— To help prepare its opinions, it has specialised sections for The Committee may decide to issue an opinion whenever it
the various fields of Community activity and can set up sees fit.
subcommittees to deal with specific subjects.
— It has its own secretariat. Relations between the European Parliament and the
Committee
Powers The two bodies are often required to comment on the same
proposed legislation, so contacts have naturally grown up
The EESC has an advisory power. Its purpose is to inform the
between them. These informal contacts occur in various ways,
institutions responsible for Community decision-making of the
such as: regular exchanges of views and efforts to coordinate
opinion of the representatives of economic and social activity.
work; meetings between the Presidents of the two bodies or
A. Opinions issued at the request of Community between committee and section members; or joint
institutions conferences.
1. Mandatory consultation
In certain areas the Treaty stipulates that a decision may be g Hélène Calers
taken only after the Council or Commission has consulted the July 2008
EESC:
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1.3.12. The Committee of the Regions

The Committee of the Regions is formed of 344 members representing the regional and local authorities of 27 Member
States of the Union. It gives its opinions in the cases of mandatory consultation established by the Treaty, voluntary
consultation and on its own initiative, whenever it seems fit.
Legal basis qualified majority on a proposal from the respective Member

Articles 263 to 265 of the Treaty establishing the European States (the Treaty of Lisbon stipulates that the appointment of
Community (EC), introduced by the Treaty of Maastricht. Committee members should be based on a proposal by the
Commission). The term of office is renewable. In practice those
appointed are usually locally or regionally elected
Objectives representatives.
The Committee of the Regions is an advisory body
representing regional and local authorities in the Union. It B. Structure (Article 264)
speaks on behalf of their interests in dealings with the Council The Committee elects its chairman and officers from among its
and Commission, to which it addresses opinions. members for a term of two years (two and a half years
The creation of the Committee of the Regions was an according to the provisions of the Treaty of Lisbon). It adopts
implementation of the resolve expressed in the preamble to its rules of procedure and submits them to the Council for
the Treaty on European Union ‘to continue the process of approval.
creating an ever closer union among the peoples of Europe, in
which decisions are taken as closely as possible to the citizen Powers
in accordance with the principle of subsidiarity’.
A. Opinions issued at the request of other institutions
In order to fulfil this role better, the Committee is seeking the
right to refer to the Court of Justice cases where the principle 1. Mandatory consultation
of subsidiarity is infringed. It is hoping that future revisions of The Council or the Commission are required to consult the
the Treaty will confer this right. Article 8 of the ‘Protocol on the Committee of the Regions before taking a decision on certain
application of the principles of subsidiarity and proportionality’ issues:
annexed to the Treaty on the Functioning of the European
Union would indeed open this possibility for the Committee. — education, vocational training and youth (Article 149);
— culture (Article 151);
Organisation
— public health (Article 152);
A. Composition (Article 263)
— trans-European transport, telecommunications and energy
1. Number and national allocation of seats
networks (Article 156);
The Committee of the Regions is made up of 344 members
and an equal number of substitutes, broken down between — economic and social cohesion:
the Member States as follows:
• specific actions (Article 159),
— 24 for Germany, France, Italy and the United Kingdom;
• d
efining the tasks, priorities and organisation of the
— 21 for Spain and Poland; Structural Funds (Article 161),
— 15 for Romania;
• implementing decisions relating to the European
— 12 for Belgium, Bulgaria, the Czech Republic, Greece, Regional Development Fund (Article 162).
Hungary, the Netherlands, Austria, Portugal and Sweden;
2. Voluntary consultation
— 9 for Denmark, Ireland, Lithuania, Slovakia and Finland;
The Parliament, Council or Commission may also consult the
— 7 for Estonia, Latvia and Slovenia; Committee on any other matter they see fit.
— 6 for Cyprus and Luxembourg; When the Council or the Commission (this provision also
— 5 for Malta. includes the European Parliament under the Treaty of Lisbon)
consult the Committee (whether on a mandatory or voluntary
2. Nomination basis) they may set it a time limit (of at least one month), after
Members are appointed for four years (five years according to which the absence of an opinion cannot prevent them taking
the Treaty of Lisbon, Article 305), by the Council acting by further action.
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B. Issuing an opinion on its own initiative — trans-European networks;
1. When the Economic and Social Committee is being — the tourist industry;
consulted
— Structural Funds;
When the Council or the Commission are consulting the
Economic and Social Committee they must also inform the — health (the fight against drugs);
Committee of the Regions, which may issue an opinion on the
— industry;
matter if it considers that regional interests are involved.
— urban development;
2. General practice
As a general rule the Committee may issue an opinion — training programmes;
whenever it sees fit. — the environment.
3. For example, the Committee has issued opinions on its
own initiative in the following areas: g Claire Genta
— small and medium-sized enterprises (SMEs); July 2008
1.3.13. The European Investment Bank

The European Investment Bank ensures the long-term financing of the European Union. It also represents a source of
financing for the States or groups of States with which the EU has concluded an agreement. Its capital is subscribed by the
Member States and by borrowing operations, mainly in the form of public bond issues.
Legal basis — decide whether to increase the subscribed capital;

— Articles 266 and 267 of the Treaty establishing the — commit the Bank to financing outside the Union;
European Community (EC).
— appoint the members of the Board of Directors, the
— A protocol annexed to the EC Treaty lays down the Bank’s Management Committee and the Audit Committee.
statute.
2. The Board of Directors
a. Composition
Organisation and operation
Twenty-eight members are appointed by the Board of
A. Legal status Governors for five years; one for each Member State
The EIB is not a Community institution within the meaning of nominated by the countries and one by the Commission.
Article 7 of the EC Treaty, but it is a financial body governed by
b. Role
public law, with legal personality (Article 260 EC) and an
administrative structure separate from that of the other Meeting around 10 times a year, it has exclusive responsibility
Community institutions. for deciding on loans, guarantees and borrowing, and interest
rates on loans.
B. Structure
3. The Management Committee
Its governing bodies listed below.
a. Composition
1. The Board of Governors
One President and eight Vice-Presidents appointed for a
a. Composition
renewable period of six years by the Board of Governors on a
Twenty-seven ministers appointed by the Member States proposal from the Board of Directors.
(generally the finance ministers).
b. Tasks
b. Tasks
As the Bank’s executive body, it is responsible for:
Its tasks are to:
— managing current business;
— lay down general directives for the Bank’s credit policy;
— preparing and implementing the Board of Directors’
— approve the accounts and the annual report; decisions.
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4. The Audit Committee A. Within the European Union

a. Composition 1. Regional development and economic and social
cohesion
Three members appointed by the Board of Governors for a
In 2005, the Bank granted loans of almost EUR 28 billion in the
renewable term of three years.
25-member Union for projects to assist regions lagging behind
b. Tasks in their economic development (Objective 1 regions) or
grappling with structural difficulties (Objective 2 regions), or
— It verifies that the Bank’s operations have been conducted
suffering from both, which is equivalent to 84 % of total
and its books kept in a proper manner on the basis of work
individual loans in the EU. Global loans to financial
carried out by internal and external monitoring and audit
intermediaries, for on-lending in support of small and medium-
bodies.
scale investments in assisted areas, reached EUR 5.9 billion,
— It ensures that the Bank’s operations comply with the bringing total lending for economic and social cohesion to some
statutory procedures. EUR 34 billion in 2005, 80 % of all lending in the EU last year.
C. Resources 2. Protection and improvement of the environment

The EIB is involved in environmental protection, either directly
1. Capital
by specific investment or indirectly by ensuring that projects
The EIB’s capital is subscribed by the Member States in submitted for funding comply with national and Community
accordance with their respective economic weight. The environmental legislation. It has set itself the objective of
significant increase in operations in the European Union, the allocating between a quarter and a third of its individual loans
arrival of 10 new Member States on 1 May 2004 and two new to projects aimed at protecting and improving the
Member States on 1 January 2007 resulted in an increase in environment. Individual loans for environmental investment
the EIB’s capital to EUR 164 billion from 1 January 2007. The 12 projects totalled EUR 10.9 billion in the European Union,
new Member States have subscribed to the Bank’s capital accounting for 33 % of direct lending. In addition, most global
according to the subscription key applied to the current loans have multiple objectives, including environmental
Member States. protection, and the EIB also provides dedicated environmental
2. Borrowing operations global loans. In 2005, the EIB advanced EUR 210 million for two
such loans in Germany and Austria.
The EIB raises the greater part of its resources by borrowing
operations, mainly through public bond issues. 3. Support for small and medium-sized enterprises
The EIB is one of the principal international borrowers and its The Bank supports investment by SMEs in a decentralised way
bonds are quoted on the world’s major stock exchanges. It by means of global loans granted through banks. In 2005,
borrows on the capital markets the funds it needs to grant its global loans in the EU amounted to EUR 8.9 billion, of which
loans. It is not a profit-making institution and it therefore sells EUR 4.2 billion benefited an estimated 20 000 small and
on its resources at interest rates that reflect the cost at which it medium-sized enterprises. Most of these loans supported
collected them. other core objectives of the Bank as well. A considerable part
went to SME investment fostering economic and social
In 2005 approved projects totalled EUR 51 billion. A total of cohesion. EIB-financed research and development by
EUR 52.7 billion was raised after swaps, and had been achieved innovative SMEs helped to implement the Lisbon agenda.
through 330 transactions across 15 currencies.
a. The ‘Innovation 2010’ (i2i) initiative
The Bank plays a key role in the development of the capital
As part of this initiative launched following the Lisbon
markets of the new and future Member States.
European Council in March 2000, which aims to build a Europe
based on knowledge and innovation, the EIB has granted
Goals and achievements loans totalling around EUR 17 billion. An additional
The EIB is the European Union’s long-term financing institution. EUR 20 billion has been earmarked for the period 2003–06.
In accordance with Article 267 of the EC Treaty, its task is to Since it set up i2i in 2000, the EIB has advanced loans for
contribute, through use of the capital markets and its own innovative investment projects worth EUR 34.8 billion, of
resources, to the balanced and smooth development of the which EUR 10.4 billion in 2005 alone. The overall quantified
common market in the interest of the Community. To this end, objective is to lend a minimum of EUR 50 billion under the i2i
through loans and guarantees and without any profit-making programme over the current decade.
goal, it facilitates the funding of projects in all sectors of the b. Improvement of trans-European networks (TENs) and other
economy. infrastructures
In carrying out its role, the EIB facilitates the financing of The EIB is one of the main sources of funding for the trans-
investment programmes in conjunction with the Structural European networks (TENs) for transport, telecommunications,
Funds and other Community financial instruments. energy and related infrastructure.
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c. Education and training the projects approved had a regional focus, while the other
In 2005, 30 loans for investment in education and training three targeted Algeria, Morocco and Syria.
under the i2i umbrella amounted to almost EUR 2.2 billion. d. W
estern Balkan countries (Albania, Bosnia and
Herzegovina, and the former Yugoslav Republic of
B. Outside the EU Macedonia)
1. Scope
Total lending in the western Balkans reached EUR 399 million.
The EIB assists States or groups of States with which the EU has
Lending in Bosnia and Herzegovina ran to EUR 211 million,
concluded agreements.
while EUR 35 million was advanced in Albania. Projects in
a. A
frican, Caribbean and Pacific (ACP) countries and overseas Serbia and Montenegro amounted to EUR 153 million. EIB
countries and territories (OCTs) lending takes place in close cooperation with other donors,
The Cotonou Agreement, which replaced the Lomé such as the European Commission, the European Agency for
Convention with effect from 1 April 2003, provides the Reconstruction and the World Bank.
framework for EIB financing. An ‘investment facility’ totalling e. Forms of intervention
EUR 2 200 million has been agreed by the Member States for
The Bank’s operations take the form of loans on own resources,
the following five years. This will be supplemented by
sometimes accompanied by interest subsidies, financed by the
investment from the Bank’s own resources (EUR 1 700 million).
EU budget. It may also manage, under mandate, risk capital
b. Latin American and Asian countries finance provided from budgetary resources. It keeps within the
The current EIB mandate for lending in Asia and Latin America limits laid down in the relevant agreements.
(ALA) provides for up to EUR 2 480 million in loans between C. The EIB Group
2000 and January 2007. Under the mandate, EUR 256 million
Established following the Lisbon European Council (March
was lent in 2005, and it is expected that the resources will be
2000), the EIB Group is composed of the EIB and the EIF
fully utilised by the end of the mandate.
(European Investment Fund). Created in June 1994, the EIF’s
c. C
ountries belonging to the Euro-Mediterranean majority shareholder is the EIB (60.5 % of the capital), the other
partnership (Algeria, Egypt, Gaza/West Bank, Israel, Jordan, shareholders being the European Commission (30 %) and
Lebanon, Morocco, Syria, Tunisia and Turkey) various major European financial institutions. All risk capital
The first operational year of the FEMIP (Facility for Euro- activities are concentrated within the EIF, thereby making it
Mediterranean Investment and Partnership) Trust Fund was one of the leading sources of risk capital within the Union. The
2005. Created in mid-2004 and so far having EUR 33.5 million EIF also continues to undertake guarantee operations
at its disposal, donated by 15 Member States and the involving its own resources or those of the EU budget. The EIB
European Commission, the Trust Fund complements the Group is thus able to play a predominant role in boosting the
Technical Assistance Fund by focusing on upstream technical competitiveness of European industry.
assistance and risk capital operations in the Mediterranean
partner countries. Over the course of the year, seven g Wilhelm Lehmann
operations were approved for a total amount of January 2007
EUR 3.4 million. In terms of geographical distribution, four of
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1.3.14. The European Ombudsman

Created by the Treaty of Maastricht, the European Ombudsman conducts inquiries on the cases of maladministration by
Community institutions or bodies. He acts on his own initiative or on the basis of complaints from EU citizens. Appointed
by the European Parliament, his term of office corresponds to the Parliament’s term.
Legal basis 2. Mandate

Articles 21 and 195 of the Treaty establishing the European a. Length
Community (EC). The Ombudsman is appointed by Parliament after each
election for the duration of the term of office. The mandate is
Objectives renewable.
Created by the Maastricht Treaty (1992) as an element of b. Duties
European citizenship, the institution of the European The Ombudsman:
Ombudsman aims to:
— must be completely independent in the performance of
— improve the protection of citizens in cases of his duties, in the interest of the Union and its citizens;
maladministration by Community institutions and bodies;
and thereby — may not seek or take instructions from any body;
— must refrain from any act incompatible with his office;
— to enhance the openness and democratic accountability in
the decision-making and administration of the — may not engage in any other political, administrative or
Community’s institutions. professional occupation, whether gainful or not.
3. Dismissal
Achievements The Ombudsman may be dismissed by the Court of Justice at
As laid down in the Treaty, the regulations and duties of the the request of the Parliament if he no longer fulfils the
Ombudsman were spelt out by the European Parliament conditions required for the performance of his duties or is
decision of 9 March 1994, after consulting the Commission guilty of serious misconduct.
and with the approval of the Council of Ministers. On the basis
B. Role
of that decision, the Ombudsman adopted implementing
provisions which took effect on 1 January 1998. The 1. Scope
procedures for appointing and dismissing the Ombudsman The Ombudsman deals with cases of maladministration by
are laid down in rules 194 to 196 of Parliament’s rules of Community institutions and bodies.
procedure. a. Maladministration may consist of administrative
irregularities, discrimination, the abuse of power, refusal to
A. Regulations disclose information, unwarranted delays, etc.
1. Appointment b. Exceptions
a. Requirements The following matters fall outside his terms of reference:
The Ombudsman must: — action by the Court of Justice and the Court of First
Instance in their judicial role, in cases that are being or have
— meet the conditions required for the exercise of the
been considered before a court of law;
highest judicial office in the country or have the
acknowledged competence and experience to undertake — any cases which have not previously been through the
the duties of the Ombudsman; appropriate administrative procedures within the
organisations concerned;
— offer every guarantee of independence.
— cases dealing with labour relations between the
b. Procedure Community bodies and their staff, unless the opportunities
Nominations are submitted to Parliament’s Committee on for internal application and appeal have been exhausted
Petitions, which considers their admissibility. first.
A list of admissible nominations shall then be submitted to a 2. Referrals
vote by Parliament. The vote is held by secret ballot on the In accordance with his duties, the Ombudsman shall conduct
basis of the majority of votes. inquiries for which he finds grounds either on his own initiative
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or on the basis of complaints submitted to him by EU citizens C. Administration
or any natural or legal persons residing or having their The Ombudsman is assisted by a secretariat, whose staff are
registered office in a Member State, directly or through a subject to the rules of the European civil service. The
member of the European Parliament, except where the alleged Ombudsman appoints the head of the secretariat.
facts are or have been the subject of legal proceedings.
D. Activities
3. Powers of inquiry
The first Ombudsman, Mr Jacob Söderman, served two terms
The Ombudsman can request information from: of office from July 1995 to 31 March 2003. During his mandate
— Community institutions and bodies, which must comply the Ombudsman’s Office received more than 11 000
and provide access to the files concerned, unless they are complaints of which about 30 % were declared admissible. In
prevented from doing so on duly substantiated grounds of more than 5 000 cases, the complaints were transferred to a
secrecy; competent body or the citizens were advised whom to
address for help. Almost 1 500 investigations were opened,
— officials and other staff of Community institutions and including 19 own initiatives. In more than 500 cases, the
bodies, who are required to testify at the request of the institution in question settled the matter to the complainant’s
Ombudsman, though speaking on behalf of and under benefit. In more than 200 cases, a critical remark was issued to
instruction from their administrations and continuing to be promote better administration in similar situations in the
bound by their duty of professional secrecy; future. Friendly solutions, recommendations and special
— the Member States’ authorities, who must comply unless reports have been used increasingly. In only a handful of cases
such disclosure is prohibited by law or regulation; but even have the institutions rejected what the Ombudsman
in such cases, the Ombudsman can obtain the information proposed. In about 700 cases, the Ombudsman found, after an
if he undertakes not to pass it on. investigation, that no maladministration had occurred.
If he does not obtain the assistance he requests, the Among the Ombudsman’s achievements, the following can be
Ombudsman will inform Parliament, which will take cited: the ‘Code of good administrative behaviour’ (approved
appropriate action. by the EP in 2001), a procedural code for complainants under
the Article 226 infringement procedure (adopted by the
The Ombudsman can also cooperate with his counterparts in Commission in 2002), the abolition of age limits in recruitment
the Member States, subject to the national law concerned. to the institutions and bodies, and the draft recommendation
The Ombudsman and his staff are required not to pass on to the European Commission in complaint 116/2005/MHZ
information that they obtain in the course of their inquiries, concerning public access to documents.
particularly if it could harm the complainant or any other At the plenary sitting of 15 January 2003, Mr Nikiforos
person concerned. Diamandouros was elected European Ombudsman by the
European Parliament for the remainder of the current
However, if the information appears to be a matter of criminal
parliamentary term. Seven candidates were interviewed at the
law, the Ombudsman will immediately notify the competent
public hearing for the post of European Ombudsman, held by
national authorities and the Community institution to which
the Committee on Petitions on 25 and 26 November 2002.
the official or member of staff is answerable.
4. Outcome of inquiries E. Revision of the Ombudsman’s statute
Wherever possible, the Ombudsman will act in concert with On 11 July 2006, the Ombudsman submitted to the President
the institution or body concerned to find a solution that will of Parliament a proposal for adaptation of his statute of
satisfy the complainant. 9 March 1994. The Committee on Petitions supported this
proposal in its report on the Ombudsman’s annual report 2005
Where the Ombudsman establishes an instance of (EP resolution of 16 November 2006) and Parliament finally
maladministration, he shall refer the matter to the institution approved Anneli Jäätteenmäki’s report proposing
or body concerned, which shall have three months in which to amendments to the statute on 22 April 2008. These
inform him of its views. amendments were approved by the Council on 12 June 2008.
The Ombudsman shall then forward a report to the European They seek primarily to:
Parliament and the institution or body concerned on the
outcome of his inquiries. — allow the Ombudsman to consult any document he needs
in the course of his inquiries and to lift the secrecy
Finally, the Ombudsman shall inform the complainant of the exception, while clarifying and strengthening the
result of the inquiry, the opinion delivered by the institution or provisions for the Ombudsman to maintain the
body concerned and any recommendations of his own. confidentiality of documents disclosed to him;
At the end of each annual session, the Ombudsman shall — extend the cooperation of the European Ombudsman
submit a report to Parliament on the outcome of his inquiries. (already established with the national ombudsmen) to the
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How the European Decision-making procedures
1 Union works 4
bodies in charge of the promotion and protection of has very close relations with Parliament, which is exclusively
human rights in the Member States; responsible for his appointment and dismissal, regulates his
— amend the wording of the provision concerning the duties, assists with his investigations and receives his reports.
testimony of officials who do not speak on a personal basis, On the basis of several annual reports on the activities of the
but as officials (the original formulation referred to European Ombudsman, the Committee on Petitions reiterated
speaking ‘in accordance with instructions from their that the European Ombudsman and his national and regional
administrations’); opposite numbers should work with the committee and the
— request the Ombudsman to notify the European Anti- Parliament to ensure that what emerges from the current
Fraud Office (OLAF) if in the course of his inquiries he modifications of the Treaties maximises the access,
receives information that might fall within OLAF’s remit. transparency and accountability of the European Union.
Role of the European Parliament g Claire Genta

July 2008
Although entirely independent in the performance of his
duties, the Ombudsman is a parliamentary ombudsman. He
1.4. Decision-making procedures
1.4.1. Supranational decision-making procedures

The Member States of the European Union have agreed, as a result of their membership of the EU, to transfer some of their
powers to the EU institutions in specified policy areas. Thus, EU institutions make supranational binding decisions in their
legislative and executive procedures, the budgetary procedures, the appointment procedures and the quasi-constitutional
procedures.
History (1.1.1 to 1.1.6) areas and strengthening Parliament’s role in appointing the
Commission.
The Treaty of Rome gave the Commission powers of proposal
and negotiation, mainly in the fields of legislation and external Following this approach, the Treaty of Nice considerably
economic relations, and allocated powers for decision-making increased Parliament’s powers. On the one hand, the co-
to the Council or, in the case of appointments, representatives decision procedure (in which Parliament has the same powers
of the Member States’ governments. It gave Parliament a as the Council) will apply to almost all new areas where the
consultative power. Council decides by qualified majority. On the other hand,
Parliament now has the same powers as the Member States in
Parliament’s role has gradually grown in the budgetary terms of referring matters to the Court of Justice. The Treaty of
domain with the reforms of 1970 and 1975, in the legislative Lisbon would be a further qualitative step towards full equality
domain with the Single European Act and in the area of with the Council in EU legislation and finance.
appointments with the Treaty of Maastricht. The Single
European Act also gave Parliament the power to authorise Legislative procedures
ratification of accession and association treaties; Maastricht
extended that power to other international treaties of certain A. Co-decision procedure (Article 251 of the EC Treaty)
kinds. The Treaty of Amsterdam made substantial progress 1. Scope
down the road to democratising the Community, by Since the entry into force of the Treaty of Nice, this procedure
simplifying the co-decision procedure, extending it to new has applied to no less than 32 legal bases (1.1.4). It now
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covers all of the areas requiring a qualified majority in the g. Conclusion of the procedure
Council with the exception of the common agricultural policy — The Council and Parliament have six weeks to approve it.
and commercial policy. However, it does not apply to several The Council acts by a qualified majority and Parliament by
important areas that require unanimity in the Council, for an absolute majority of the votes cast.
example fiscal policy. The Lisbon Treaty would bring about a
massive extension of co-decision (which would be called the — The act is adopted if Council and Parliament approve the
general legislative procedure) to many existing and new legal joint text.
bases, in particular in the area of justice, freedom and security — If either of the institutions has not approved it by the
and in agriculture. deadline, the procedure stops and the act is not adopted.
2. Procedure
B. Cooperation procedure (Article 252 of the EC Treaty)
a. Commission proposal
1. Scope
b. First reading in Parliament
The cooperation procedure is now limited to certain decisions
Parliament gives its opinion by a simple majority. relating to economic and monetary union.
c. First reading in the Council 2. Procedure
The Council adopts a ‘common position’ by a qualified majority, At a first reading Parliament delivers an opinion on the
except in the fields of culture, freedom of movement, social Commission proposal. The Council, acting by a qualified
security and coordination of the rules for carrying on a majority, then adopts a common position and forwards it to
profession, which are subject to a unanimous vote. Parliament, enclosing all the information required and its
d. Second reading in Parliament reasons for adopting the common position.
Parliament receives the Council common position and has Parliament has three months to take a decision: it can adopt,
three months to take a decision. It may thus: amend or reject the common position. In the latter two
instances it must do so by an absolute majority of its members.
— expressly approve the proposal as amended by the If Parliament rejects the proposal the Council can only take a
common position or take no decision by the deadline; in decision at second reading unanimously. Within a period of
both cases, the act as amended by the common position is one month, the Commission reconsiders the proposal on
adopted; which the Council adopted its common position and forwards
— reject the common position by an absolute majority of its the reconsidered proposal to the Council. It has discretion to
members; the act is not adopted and the procedure ends; incorporate or exclude the amendments proposed by
Parliament.
— adopt, by an absolute majority of its members,
amendments to the common position, which are then put Within a period of three months, which can be extended by a
to the Commission for its opinion; the matter then returns maximum of one month, the Council may, acting by a
to the Council. qualified majority, adopt the proposal as reconsidered by the
Commission or, acting unanimously, amend the reconsidered
e. Second reading in the Council proposal or adopt amendments not taken into account by the
— If the Council, voting by a qualified majority on Parliament’s Commission. As long as the Council has not acted, the
amendments, and unanimously on those which have Commission may alter or withdraw its proposal at any time.
obtained the Commission’s negative opinion, approves all
of Parliament’s amendments no later than three months C. Consultation procedure
after receiving them, the act is adopted. Before taking a decision, the Council must take note of the
opinion of Parliament and, if necessary, of the European
— Otherwise, the conciliation committee is convened within
Economic and Social Committee and the Committee of the
six weeks.
Regions. It is required to do so, as the absence of such
f. Conciliation consultation makes the act illegal and capable of annulment
— The conciliation committee consists of an equal number of by the Court of Justice (see judgment in Cases 138 and
Council and Parliament representatives, assisted by the 139/79). When the Council intends to substantially amend the
Commission. It considers the common position on the proposal, it is required to consult Parliament again (judgment
basis of Parliament’s amendments and has six weeks to in Case 65/90).
draft a joint text.
D. Assent procedure (where applicable to the legislative
— The procedure stops and the act is not adopted unless the field)
Committee approves a joint text by the deadline. 1. Scope
— If it does so, the joint text goes to the Council and The assent procedure applies in particular to the basic
Parliament for approval. legislation relating to the Structural Funds (1.3.2).
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1 Union works 4
2. Procedure — Parliament’s role:

Parliament considers a draft act forwarded by the Council; it • a ssent for agreements under Article 310 (association
decides whether to approve the draft (it cannot amend it) by agreements) and for agreements creating a special
an absolute majority of the votes cast. The Treaty does not give institutional framework, having significant budgetary
Parliament any formal role in the preceding stages of the implications or involving the amendment of an act
procedure to consider the Commission proposal; but as a adopted under the co-decision procedure;
result of interinstitutional arrangements it has become the
practice to involve Parliament informally. (For conditions for • consultation in other cases.
implementing this procedure under the EU Treaty: 1.4.2). — Decision: Council, by a qualified majority except in fields
requiring unanimity for the adoption of internal regulations
Budget procedure (1.4.3) and for agreements under Article 310.
B. System of own resources

Appointment procedures — Proposal: Commission.
A. The Council, acting by qualified majority, appoints: — Parliament’s role: consultation.
— the President and other Members of the Commission
— Decision: Council, unanimously, subject to adoption by the
(Article 214 of the EC Treaty) after:
Member States in accordance with their respective
• t he Council, meeting at Heads of State or Government constitutional requirements.
level, has nominated the Commission President by
qualified majority; C.. Provisions for election of Parliament by direct
universal suffrage:
• Parliament has approved the nomination;
— Proposal: Parliament.
• t he Council, acting by qualified majority and by
— Decision: Council, unanimously after obtaining Parliament’s
common accord with the nominated President, has
assent, subject to adoption by the Member States.
nominated the other Members of the Commission;
• Parliament has approved the college of Commissioners; D. Adoption of the statute for members of the European
Parliament and the statute for the Ombudsman:
— the Members of the Court of Auditors (Article 247 of the
— Proposal: Parliament.
EC Treaty) after consulting Parliament and in accordance
with the proposals put forward by the Member States; — Commission’s role: opinion.
— the members of the Committee of the Regions and the — Council’s role: assent (by qualified majority except in
European Economic and Social Committee (Articles 259 relation to rules or conditions governing the tax
and 263 of the EC Treaty) on a proposal by the Member arrangements for members or former members, in which
States’ governments (after consulting the Commission in case unanimity applies).
the case of the EESC). — Decision: Parliament.
B. The governments of the Member States appoint by E. Amendment of the protocol on the statute of the
common accord: Court of Justice
— the President, Vice-President and other members of the — Proposal: Court of Justice.
Executive Board of the European Central Bank (the
governments meet at Heads of State or Government level — Commission’s role: consultation.
to act on a Council recommendation after consulting — Parliament’s role: consultation.
Parliament);
— Decision: Council, unanimously.
— the judges and advocates-general of the Court of Justice
and Court of First Instance (Articles 223 and 224).
C. Parliament appoints the Ombudsman (Article 195). At the 2000 IGC, Parliament made several proposals to extend
the areas to which the co-decision procedure would apply.
Quasi-constitutional procedures Parliament also repeatedly voiced its opinion that, if there was
a change from unanimity to qualified majority, co-decision
A. Conclusion of international agreements
should apply automatically. The Treaty of Nice endorsed this
— The Commission presents recommendations to the
position but did not fully align qualified majority and co-
Council and conducts negotiations.
decision.
— The Council defines the mandate for the negotiations.
As a result, the issue of simplifying procedures was one of the
— Proposal for conclusion: Commission. key elements addressed at the Convention on the Future of
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Europe. It was proposed that the cooperation and consultation legitimation by Parliament. However, some progress has been
procedures be abolished, that the co-decision procedure be made with the move from unanimity to qualified majority for
simplified and extended to cover the entire legislative field, the appointment of the Commission President. According to
and that the assent procedure be limited to the ratification of the Lisbon Treaty this appointment would have to take into
international agreements. Many of these improvements would account the result of the European elections and would hence
be implemented if the Lisbon Treaty came into force (1.1.6). underline the political accountability of the European
In the field of appointments, the Treaty of Nice failed to put an Commission.
end to the unjustifiably wide range of different procedures, the
continued general insistence on unanimity, which is always g Wilhelm Lehmann
likely to provoke political disputes, or the lack of genuine July 2008
1.4.2. Intergovernmental decision-making procedures

In the common foreign and security policy and in judicial cooperation in criminal matters, as well as in several other fields,
the decision-making procedure is different from the one provided in the Treaty establishing the European Community. The
dominant feature in these fields is intergovernmental cooperation although this would change for former third pillar
policies under the Lisbon Treaty.
Legal basis — Role of the Governing Council of the European Central

Bank: consultation in the event of institutional changes in
— Articles 7, 11, 23, 24, 34, 43, 44, 48 and 49 of the Treaty on
the monetary field.
European Union (TEU).
— Article 11 of the Treaty establishing the European — Decision: common accord of the governments on
Community (EC). amendments to the Treaties, which are then put to the
Member States for ratification in accordance with their
constitutional requirements.
Description
The Treaty on European Union lays down a number of rules B. Accession procedure (Article 49 TEU)
and procedures of a constitutional nature. For the common — Applications: from any European State which complies
foreign and security policy and police and judicial cooperation with the Union’s principles (see Article 6).
in criminal matters it sets up a special form of
— Commission’s role: consultation; it takes an active part in
intergovernmental cooperation in the guise of action by
preparing and conducting negotiations.
supranational institutions. These procedures are distinct from
those covered by the Treaty establishing the European — Parliament’s role: assent, by an absolute majority of its
Community. component members.
A. Procedure for amendment of the Treaties — Decision: by the Council, unanimously; the agreement
(Article 48 TEU) between Union Member States and the applicant State,
— Proposal: any Member State or the Commission. setting out the terms of accession and the adjustments
required, is put to all the Member States for ratification in
— Commission’s role: consultation and participation in the accordance with their constitutional requirements.
Intergovernmental Conference.
C. Sanctions procedure for a serious and persistent
— Parliament’s role: consultation before the
breach of Union principles by a Member State
Intergovernmental Conference is convened (the
(Article 7 TEU)
conferences themselves involved Parliament on an ad hoc
basis but with increasing influence: for some time it was 1. Main procedure
represented either by its President or two of its members, — Proposal for a decision determining the existence of a
at the last Intergovernmental Conference it provided three serious and persistent breach: one third of the Member
representatives). States or the Commission.
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1 Union works 4
— Parliament’s assent: adopted by a two thirds majority of the the Interinstitutional Agreement on financing the CFSP this
votes cast, representing a majority of its members. consultation process is an annual event on the basis of a
— Decision determining the existence of a breach: adopted Council document.
by the Council at Heads of State or Government level, 2. Common strategies, joint actions and common
unanimously, without the participation of the Member positions (Article 23 TEU)
State concerned, after inviting the State in question to — Recommendation for common strategy: adopted
submit its observations on the matter. unanimously by the Council.
— Decision to suspend certain rights of the State concerned: — Decision on common strategy: European Council,
adopted by the Council by a qualified majority (without unanimously.
the participation of the Member State concerned).
— Adoption of joint actions, common positions or other
2. The Treaty of Nice supplemented this procedure with a decisions: on the basis of a common strategy, adoption of
precautionary system decisions implementing a joint action or common position:
— Proposal for a decision determining a clear risk of a serious by the Council, acting by a qualified majority, unless a
breach of Union principles by a Member State: on the Member State opposes it for important reasons of national
initiative of one third of the Member States, of the policy. If so the Council, acting by a qualified majority, may
Commission or of the European Parliament. request referral of the matter to the European Council for a
— Parliament’s assent: adopted by a two thirds majority of the unanimous decision.
votes cast, representing a majority of its Members. — Adoption of common positions or joint actions not
— Decision: adopted by the Council by a four fifths majority covered by a common strategy: the Council, unanimously.
of its members, after hearing the State in question. 3. International agreements (Article 24 TEU)
D. Closer cooperation procedure — Authorisation to open negotiations: Council.
1. Cooperation in the Community sphere (Article 11 EC) — Negotiations conducted by the Council Presidency,
— Proposal: exclusive right of the Commission; Member assisted by the Commission as appropriate.
States which intend to establish enhanced cooperation — Agreement concluded by the Council on a
can apply to the Commission to that effect. recommendation from the Presidency;
— Parliament’s role: opinion only, or consent when enhanced
— Where the agreement relates to a matter on which
cooperation relates to an area covered by the co-decision
unanimity is required for the adoption of internal decisions,
procedure.
the Council acts unanimously. In the reverse case or where
— Decision: Council, acting by a qualified majority. However, a the agreement relates to implementing a joint action or
member of the Council may request that the matter be common position, the Council acts by a qualified majority
referred to the European Council, after which the Council in accordance with Article 23.
will in turn act by a qualified majority.
F. Procedure for decisions on police and judicial
2. Cooperation in the fields of justice and home affairs cooperation in criminal matters (Article 34 TEU)
(Article 40 TEU)
— Proposal: any Member State or the Commission;
— Application to the Commission by the Member States
concerned. — Parliament’s role: consulted before the adoption of
framework decisions, decisions (excluding common
— Proposal from the Commission or not less than eight
positions) or conventions; the Presidency and the
Member States.
Commission must regularly inform Parliament of the
— Consultation of the European Parliament. progress in these areas.
— The Council acts by a qualified majority. — Decision: by the Council, unanimously, or by a qualified
— The procedures for the Council’s decision and, if necessary, majority when adopting measures to implement ‘decisions’.
for referral to the European Council are similar to the Measures implementing conventions can be adopted by a
preceding case. majority of two thirds of the contracting parties.
E. Procedure for decisions in foreign affairs Role of the European Parliament

1. In general:
In the run-up to the 1996 Intergovernmental Conference,
— Proposal: any Member State or the Commission (Article 22 Parliament had already called for ‘communitisation’ of the
TEU). second and third pillars, so that the decision-making
— Parliament’s role: regularly informed by the Presidency and procedures applicable under the Treaty establishing the
consulted on the main aspects and basic choices. Under European Community also applied to them. However, the
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Treaty of Amsterdam only made minor changes in these areas. The Lisbon Treaty would considerably extend supranational
But they needed reforming if Union policy in this regard was decision-making into the former third pillar (justice and home
not to face complete paralysis, particularly after enlargement. affairs) and make the qualified-majority rule and the co-
The entry into force of the Treaty of Nice on 1 February 2003 decision procedure generally applicable in EU legislation
brought some progress on this dossier in that, as we have (1.1.6).
seen, it made the qualified majority procedure generally
applicable and, in particular, extended it to the second and
g Wilhelm Lehmann
third pillars. Yet, it can still be applied only in certain, well- July 2008
defined cases.
1.4.3. The budgetary procedure

Since the Treaties of 1970 and 1975, Parliament’s role in the budgetary process is enhanced. Parliament and the Council
equally decide the adoption of the EU budget. The current distinction between the ‘non-compulsory expenditure’, for
which Parliament has the final say, and the ‘compulsory’ expenditure, for which it can only make amendments, would be
abolished by the Lisbon Treaty.
Legal basis Before 1970, budgetary powers were vested in the Council
— Article 272 of the Treaty establishing the European alone; Parliament had only a consultative role.
Community (EC); Article 177 of the Euratom Treaty. The Treaties of 22 April 1970 and 22 July 1975 increased
— Articles 31 to 47 of the Financial Regulation (Council Parliament’s budgetary powers.
Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on
— The 1970 Treaty, which followed on from the introduction
the Financial Regulation applicable to the general budget
of the Community’s own resources, gave Parliament the
of the European Communities (OJ L 248, 16.9.2002), as
last word on what is known as ‘non-compulsory
amended by Regulation (EC, Euratom) No 1995/2006 of 13
expenditure’.
December 2006 (OJ L 390, 30.12.2006)).
— Interinstitutional Agreement of 17 May 2006 on budgetary — The 1975 Treaty gave it the right to reject the budget as a
discipline and sound financial management (OJ C 139, whole.
14.6.2006). Budgetary decisions now have to be taken jointly by
— EP’s rules of procedure, Annex IV — Implementing Parliament and the Council with Parliament having a decisive
procedures for examination of the general budget of the role to play: it has the last word on non-compulsory
European Union and supplementary budgets. expenditure, which now accounts for a majority of all
expenditure (approximately 67 % of commitment expenditure
respectively 65 % of payment expenditure in the general
Objectives
budget for 2008), and it finally adopts the budget and can also
The exercise of budgetary powers consists firstly in reject it as a whole.
determining the nature of the expenditure, then establishing
the annual amount of such expenditure and the revenue B. The stages in the procedure
necessary to cover it, and finally exercising control over the The budgetary procedure is set out in Article 272 of the EC
implementation of the budget. The budgetary procedure itself Treaty, which stipulates the sequence of stages and the time
involves the preparation and adoption of the budget (see limits which must be respected by the two arms of the
1.5.3 for details on implementation and 1.5.4 for details on
budgetary authority: the Council and Parliament. The
control). budgetary procedure, as defined in the Treaty, extends from
1 January to 31 December of the year preceding the budget
Achievements year in question.
A. Background In practice, however, a ‘pragmatic’ timetable has been applied
Parliament has gradually become the second arm of the by the three institutions since 1977, completed by the
budgetary authority. provisions on budgetary discipline in the Interinstitutional
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1 Union works 4
Agreement and improvements to the budgetary procedure. acting by a qualified majority, expressly reject or alter it,
The different stages are now as follows. failing which it will be deemed accepted; if the
1. Stage 1: establishment of the preliminary draft budget proposed modification would lead to an increase, the
by the Commission Council must, again acting by a qualified majority,
expressly accept it, failing which it will be deemed
The Parliament and the Council lay down guidelines which are
rejected;
discussed in the course of a trialogue on the priorities for the
budget and an ad hoc conciliation procedure on compulsory • it can alter the amendments (relating to the non-
expenditure. The Commission draws up the preliminary draft compulsory expenditure) adopted by Parliament, or
budget and forwards it to the Council and Parliament by accept them.
1 September at the latest (by the end of April, according to the The draft budget as amended is returned to Parliament around
pragmatic timetable). Since 2002, an annual policy strategy 22 November.
(APS) decision has preceded the adoption of the preliminary
draft budget. 5. Stage 5: second reading by Parliament and adoption
of the budget
The Commission may modify the preliminary draft budget at a
Parliament has 15 days in which to complete the second
later stage by means of a letter of amendment, to take account
reading.
of new developments.
— If it does not state its position within that period, the
2. Stage 2: establishment of the draft budget by the
budget is deemed adopted together with the
Council
amendments modified by the Council.
At first reading, and after conciliation with a Parliament
delegation, the Council, acting by a qualified majority, adopts — If, acting by a majority of its members and three fifths of
the draft budget and forwards it to Parliament by 5 October the votes cast, it amends or rejects the changes which the
at the latest (by the end of July according to the pragmatic Council has made to its initial amendments, in so doing it
timetable). While this reading is going on, the ad hoc winds up the procedure and the President of Parliament
conciliation procedure is initiated on the compulsory declares that the budget has been finally adopted and it
expenditure to be entered in the budget, leading to a second can then be implemented.
trialogue meeting between the institutions in late June. — Parliament may also, acting by a majority of its members
3. Stage 3: first reading by Parliament and two thirds of the votes cast, reject the budget as a
Parliament has 45 days in which to state its position. whole. Should it do so, the procedure must begin again
from the start, on the basis of a new draft, and, until the
Within that period, it may either adopt the draft budget or latter is adopted, the Community must operate with
decline to state a position, in both of which cases the budget monthly appropriations calculated on the basis of one
is deemed finally adopted, or else modify it either: twelfth of the budget for the previous financial year
— in the form of amendments to non-compulsory (known as the ‘provisional twelfths’ system).
expenditure; these must be adopted by an absolute 6. Supplementary and amending budgets
majority of the component members of Parliament In the event of unavoidable, exceptional or unforeseen
(qualified majority); or circumstances, the Commission may propose during the year
— in the form of proposed modifications to compulsory that the budget as adopted be amended; it does this by
expenditure; these must be adopted by an absolute submitting preliminary draft amending budgets.
majority of the votes cast (simple majority). Amending budgets are also used to enter the balance from
Thus altered, the draft is then referred back to the Council. the previous year in the budget for the current year.
4. Stage 4: second reading by the Council These amending budgets are subject to the same rules as the
The Council has 15 days in which to conduct its second general budget.
reading, which generally takes place during the third week of
C. Compulsory expenditure and non-compulsory
November. It may:
expenditure
— accept all of Parliament’s amendments and proposed (1.5.1) (This distinction is to be abolished by the Lisbon
modifications, in which case the budget will be deemed Treaty.)
adopted; or
1. Compulsory expenditure (CE)
— not accept them, in which case: The distinction between ‘compulsory’ expenditure (i.e.
• it takes a final decision on the proposed modifications obligatory expenditure as derived from the Treaties) and ‘non-
(relating to the compulsory expenditure): if a proposed compulsory’ expenditure (the rest) determines the division of
modification would not increase the overall power over the budget between Parliament and the Council.
expenditure of any of the institutions, the Council must, Parliament has the last word on non-compulsory expenditure
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(67 % of the budget 2008) and the Council on compulsory members of the EP, will be convened, unless within 10 days
expenditure (33 % of the budget 2008). the Council communicates to the EP that it accepts its
amendments.
Parliament may only propose modifications to compulsory
expenditure, on which the Council has the last word. However, The conciliation committee will have 21 days to agree on a
as we saw above, if Parliament’s proposals would not increase common text. If this deadline is met, both institutions will then
the overall expenditure of any of the institutions, the Council have 14 days to approve the common text, failure to act
must act by a qualified majority in rejecting them, failing meaning approval. If they both reject it (or if no agreement
which they will be deemed accepted. This arrangement had been reached in the conciliation committee) the
enables Parliament to exert influence even over compulsory procedure will be ended and a new draft budget will have to
expenditure. be presented by the Commission. The same will happen if just
2. Non-compulsory expenditure (NCE) Parliament rejects it, even if the Council approves it. But if the
Council rejects it, while the EP approves it, the EP will still have
Parliament has the last word on this type of expenditure (67 %
the possibility of confirming the amendments it had adopted
of the budget 2008), in that it takes the final decision at last
in its reading (acting by a majority of its members and three
reading on the amendments which it adopted previously.
fifths of the votes cast) which have not been accepted by the
However, its powers are restricted by the maximum rate of
Council. Should it fail to do so, the amounts contained in the
increase in expenditure.
joint text (of the conciliation committee) will be retained and
3. The (maximum) rate of increase in non-compulsory the budget deemed adopted on this basis.
expenditure
Article 272 of the EC Treaty, which sets out the budgetary Role of the European Parliament
procedure, allows Parliament, in certain circumstances, to
increase the amount of non-compulsory expenditure by A. The powers conferred by the Treaty (Article 272)
amending the Council’s draft budget subject to a maximum Since the Brussels Treaty of 1975, Parliament has shared
rate of increase in relation to the previous financial year. This budgetary decision-making power with the Council.
maximum rate of increase is calculated by the Commission on Parliament and the Council constitute the two arms of the
the basis of various macroeconomic data and may be budgetary authority. Parliament has the last word on non-
exceeded only if the Council agrees. It constitutes Parliament’s compulsory expenditure, can reject the budget and grants the
margin for manoeuvre under the terms of the Treaty. In reality, Commission discharge.
since the Interinstitutional Agreements came into force, the
limit imposed by the ceiling of the financial perspective has Article 272 has remained unchanged since then; Parliament
replaced the maximum rate of increase within the framework has rejected the budget twice (December 1979 and December
of the annual procedure. 1988); the proportion of non-compulsory expenditure has
risen from 8 % of the budget in 1970 to 57 % in 2005, and 67 %
4. The new budgetary procedure according to the Treaty of commitment appropriations in the 2008 budget.
of Lisbon
The Treaty of Lisbon substantially modifies the budgetary Parliament’s granting discharge to the Commission for year n-2
procedure in the framework of the new structure it defines for according to Article 276 of the EC Treaty, (1.5.4), implies
the finances of the Union. The new procedure will be both examining the implementation of the budget, and
simplified and rendered more transparent. Parliament’s recommendations expressed in the discharge
resolution should help the Commission to improve the
The modifications derive mainly from the elimination of the implementation of the budget.
distinction between compulsory expenses and non-
compulsory expenses, which allows for the treatment of all the The Treaty of Lisbon enhances the position of the EP as one of
expenditure under the same procedure. the two branches of the budgetary authority. In fact, due to
the elimination of the distinction between compulsory and
The procedure is further simplified as there will be only one
non-compulsory expenditure Parliament will decide on an
reading in each institution, based on the draft budget
equal footing with the Council on all the expenses of the
presented by the Commission (up to 1 September). The draft
Union. Indeed, the position of the EP will even be stronger
budget is first dealt with by the Council, which must adopt its
than that of the Council, as the Council may never impose a
position by 1 October. After the communication of the
budget against the will of the EP, while the EP may in some
Council’s position to the Parliament, the latter has 42 days to
circumstances have the last word and impose a budget
approve the Council’s position (failure to act meaning
against the will of the Council (see Achievements C.4 above).
approval) or to adopt amendments to it (by the majority of its
However, this seems to be a rather exceptional situation, and it
component members).
would be more appropriate to say that, in general, the new
Should the EP adopt amendments to the position of the budgetary procedure is based on a real (although specific)
Council, a conciliation committee, composed of the co-decision between Parliament and the Council, on an equal
representatives of the Member States and an equal number of footing, covering all the expenses of the Union.
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1 Union works 4
B. The Interinstitutional Agreements on budgetary Although multiannual financial frameworks do not replace the
discipline (Interinstitutional Agreements, multiannual annual budgetary procedure, the Interinstitutional
financial frameworks) (1.5.2) Agreements have introduced a form of budgetary co-decision
Following the budgetary crises in the 1980s (referral to the procedure, which allows Parliament to assert its role as a fully
Court of Justice, delays in the adoption of the budget, fledged arm of the budgetary authority, to consolidate its
rejection of the budget by Parliament, the use of provisional credibility as an institution and to orientate the budget
twelfths), the legal, political and institutional balance of the towards its political priorities.
1970s had deteriorated. The institutions tried to overcome The Treaty of Lisbon will institutionalise the multiannual
these difficulties with the joint declaration in 1982, prefiguring financial framework (Article 312 of the Treaty on the
the Interinstitutional Agreements: of 1988 on implementation Functioning of the European Union, consolidated version),
of the Single European Act (1988–92); of 1993 for the period which will become a legally binding act adopted through a
1993–99; of 1999 for the period 2000–06; and of 2006 for the special legislative procedure: it will be adopted by the Council
period 2007–13. by unanimity after receiving the consent of the Parliament (by
These successive agreements meant that the recurrent the majority of its component members). This article also
confrontations were replaced with an interinstitutional stipulates that, throughout the whole procedure, the
reference framework for the annual budgetary procedures. institutions ‘shall take any measure necessary to facilitate its
adoption’, which reinforces the role of the EP in relation to
They considerably improved the way the budgetary procedure traditional assent procedures and enhances the possibility of a
worked by: final agreement.
— formalising interinstitutional collaboration through Moreover, the same article allows that in the future the
trialogues and conciliation between the various stages of multiannual financial framework (MFF) be approved by the
establishing the budget; Council by qualified majority, provided that a previous
unanimous decision of the European Council authorises it.
— providing special provisions in certain areas of conflict, Regarding its content, the future legally binding MFF will be
such as the classification of expenditure, the inclusion of roughly similar to the present Interinstitutional Agreement. Its
the financial provisions in legislative instruments, the legal lifetime will be at least five years, which will allow for moving
bases and the pilot projects and preparatory actions towards a rough parallelism with the term of Parliament and of
(initiatives of the Parliament with no legal basis), the Commission, as required by the democratic principle.
expenditure relating to the fisheries agreements, financing
of the CFSP, etc.; The Lisbon Treaty also establishes a clear hierarchy between
the basic financial acts of the Union: the MFF must respect the
— limiting the role of the maximum rate of increase rule; ceiling established in the decision on own resources; the
— setting up decision-making mechanisms for additional annual budget must respect the ceilings defined in the MFF.
resources, such as the flexibility instrument, the emergency
aid reserve, the European Globalisation Fund, the European g Jose-Luis Pacheco
Solidarity Fund or the revision of the ceilings of the Helmut Werner
multiannual financial framework. July 2008
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1.5. Financing
1.5.1. The Union’s revenue and expenditure

Revenue is determined by the Council after ratification by national parliaments of the Member States. The budget
expenditure is approved jointly by the Council and Parliament.
Legal basis — agricultural levies and sugar production levies;

— Treaties: — customs duties.
• t ax revenues: Articles 268 to 280 of the Treaty
B. The VAT levy
establishing the European Community (EC); Article 173
of the Euratom Treaty; Although provided for in the 1970 decision, this levy was not
applied until the VAT systems of the Member States were
• loans: Article 308 EC; Articles 172 and 203 of the
harmonised (1979). It consists in the transfer to the
Euratom Treaty.
Community of a percentage of the VAT collected by the
— Council Decision 2000/597/EC, Euratom of 29 September Member States. The VAT levy accounted for 16 % of the budget
2000 (OJ L 253, 7.10.2000, p. 42). in 2008.
— Council Regulation (EC, Euratom) No 2028/2004 of 16
November 2004 amending Regulation (EC, Euratom) No C. ‘Other’ own resources
1150/2000 implementing Decision 94/728/EC, Euratom on Other revenue includes taxes paid by EU staff on their salaries,
the system of the Communities’ own resources (OJ L 352, contributions from non-EU countries to certain EU
27.11.2004). programmes and fines to companies that breach competition
— Financial regulation: Council Regulation (EC, Euratom) or other laws. These miscellaneous resources amount to
No 1605/2002 of 25 June 2002 on the Financial Regulation roughly 1 % of the budget.
applicable to the general budget of the European D. The GNI-based resource
Communities (OJ L 248, 16.9.2002), as amended by Council
This ‘fourth own resource’ was created by the decision of 1988
Regulation (EC, Euratom) No 1995/2006 of 13 December
and consisted of the levy on the Member States’ GNP of a
2006 (OJ L 390, 30.12.2006), especially Articles 40 to 47.
percentage set by each year’s budget. To date in 2008 it
consists of a rate of 0.5896 % on the Member States’ gross
Objectives national income (GNI), pursuant to Article 2(1)(d) of Council
To provide the European Union with financial autonomy Decision 2000/597/EC, Euratom of 29 September 2000.
within the bounds of budgetary discipline. Originally it was only to be collected if the other own resources
did not fully cover expenditure, but now it finances the bulk of
Achievements the EU budget. In 2008, the GNI-based resource represented
67 % of the general budget of the EU.
The Parliament and the Council authorise expenditure, whilst
revenue is set by a Council decision following ratification by E. The correction mechanism
the parliaments of the Member States.
Correcting the budgetary imbalances between Member States’
contributions is also part of the own resources system. The
I. Revenue ‘British rebate’ agreed in 1984, which amounts to a reduction in
the United Kingdom’s VAT and GNP contributions, is financed
A. ‘Traditional’ own resources by all the other Member States, although Germany, the
These were created by the decision of 1970 and have been Netherlands, Austria and Sweden benefit from a reduction in
collected since then. In 2008 they represented 16 % of the their contribution by one quarter. The December 2005
budget. They consist of: European Council confirmed these arrangements although it
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How the European Financing
1 Union works 5
provides for a slow phasing out of the UK abatement, and The unity rule is not fully adhered to either, owing to the fact
foresees, for the period 2007–13 only, a reduction of the GNI that European Development Fund appropriations are not
contribution of EUR 605 million annually for the Netherlands included in the budget. Parliament in its resolutions has
and of EUR 150 million annually for Sweden. Subsequently and repeatedly requested that the EDF be integrated into the
following a proposal of the Commission of 8 March 2006 general budget.
(COM(2006) 99) the Council decided on 7 June 2007 on the
system of own resources to cover these adjustments (this B. Budget structure based on the characteristics of the
decision is currently in the process of ratification and is to take appropriations
effect retroactively as from 1 January 2007). 1. Nature of the appropriations: compulsory
expenditure/non-compulsory expenditure (see also
F. Borrowing and lending operations 1.4.3)
The Euratom Treaty expressly empowers the Community to
Article 272 of the EC Treaty sets out two types of expenditure:
contract loans. Although the EC Treaty does not, Article 308
‘compulsory’ expenditure enabling the obligations resulting
thereof has been applied for this purpose and loans have
from the Treaty or from acts adopted in accordance with it to
greatly increased in volume since 1978.
be fulfilled, and ‘non-compulsory’ (all other) expenditure. It also
The new Interinstitutional Agreement on budgetary discipline sets out two different procedures.
and sound financial management of May 2006 provides for
Compulsory expenditure essentially consists of:
extended recourse to such ‘new financial instruments’. The
Commission and the European Investment Bank (EIB) have — agricultural price support expenditure (EAGGF —
been invited, in their respective spheres of competence, to Guarantee Section);
make proposals:
— international agreements, including the fishing
— in accordance with the conclusions of the European agreements;
Council of December 2005, to increase the EIB’s capacity
for research and development loans and guarantees up to — reserves for loan guarantees and reserves for emergency
EUR 10 billion in the period 2007–13, with an EIB aid;
contribution of up to EUR 1 billion from reserves for risk- — officials’ pensions.
sharing financing;
2. Operating expenditure/administrative expenditure/
— to reinforce the instruments in favour of trans-European individual activity budgets
networks (TENs) and small and medium-sized enterprises
The general budget is divided into eight sections, one for each
up to an approximate amount of loans and guarantees of
institution. While the other institutions’ sections consist
EUR 20 billion and EUR 30 billion, respectively, with an EIB
essentially of administrative expenditure, the Commission
contribution of up to EUR 0.5 billion from reserves (TENs)
section (Section III) consists of operational expenditure to
and up to EUR 1 billion (competitiveness and innovation)
finance actions and programmes and the administrative costs
respectively.
of implementing them (technical assistance, agencies, and
human resources).
II. Expenditure
As part of its administrative reform, the Commission has
A. Basic principles introduced a new budget nomenclature by establishing
individual activity budgets grouping together expenditure on
The Community budget obeys the nine general rules of unity,
a particular measure, thus making it easier to assess the cost
budgetary accuracy, annuality, equilibrium, unit of account
and effectiveness of each Community policy (activity based
(the euro), universality, specification (each appropriation is
budgeting).
allocated to a particular kind of expenditure), sound financial
management and transparency, according to Articles 3 to 30 3. The multiannual financial framework (1.5.2)
of the Financial Regulation. Since 1988, Community expenditure has been placed in a
Nonetheless, the annularity rule has to be reconciled with the multiannual framework known as the ‘financial perspective’,
need to manage multiannual actions, which have grown in which breaks the budget down into headings with
importance within the budget. The budget therefore includes expenditure ceilings. The multiannual financial framework
differentiated appropriations consisting of: indicates the scale and composition of the Community’s
forecast expenditure and reflects the main budgetary priorities
— commitment appropriations, covering the total cost during for the period covered (generally seven years, but ‘at least five
the current financial year of legal obligations contracted for years’ with the Lisbon Treaty which would allow
activities lasting a number of years; synchronisation with the term of the Commission and the
— payment appropriations, covering expenditure in legislative term). This is important for the regulations
connection with implementing commitments contracted governing the different EU programmes to be set in
during the current financial year or previous ones. conformity with the MFF. These regulations are essential for
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the implementation of the budget, together with the Financial — The Lisbon Treaty opens the way in this direction (Article 311
Regulation (1.5.3). of the TFEU (consolidated version) replacing Article 279 EC).
It maintains that the budget be financed wholly from own
The MFF does not replace the annual budgets.
resources and provides that the Council adopt unanimously
and after consulting Parliament a decision on the system of
Role of the European Parliament own resources of the Union, including the possibility of
establishing new categories of own resources and
A. Revenue
abolishing existing ones. Such a decision would need to be
Parliament has in several resolutions (e.g. its resolution of 11 ratified by the Member States. However, the implementing
March 1999, its resolution of 8 June 2005 on policy challenges measures of such decision can be adopted by the Council
and budgetary means of the enlarged Union 2007–13 and its only after obtaining the consent of Parliament. This can be
resolution of 17 May 2006 on the Interinstitutional Agreement) seen as a step in the direction of a communitarian method
drawn attention to the inadequacy of revenue and expressed also in the area of the Union’s own resources.
its support for reform of the own resources system. It has put
forward proposals to ensure that the Union is financially B. Expenditure (1.4.3)
independent and to make revenue collection more visible to From the start, Parliament has opposed the distinction
citizens and more democratic. between compulsory and non-compulsory expenditure,
The resolution of 29 March 2007 on the future of the European regarding it as restricting its powers. Although technical in
Union’s own resources (based on the own initiative report by nature, the criterion has major institutional implications
Mr Lamassoure, who consulted EU national parliaments with a because it determines the division of budgetary powers
view to reach a consensus on a coherent approach on the between the Council and Parliament, and it also constitutes
future of EU’s own resources) provided common guidelines for the basis for structuring Parliament’s budgetary powers.
the Commission’s review work in 2008/09, thus giving a clear It has made several appeals to the Court of Justice. However,
signal to the Heads of State or Government of what their the institutional agreement on budgetary discipline of 17 May
parliaments’ concepts for the future may be. This resolution, 2006 maintains the distinction between compulsory and non-
after pointing out the shortcomings of the current financing compulsory expenditure but confirms and develops the
system, advocated a two-step approach to the reform. principle of budgetary co-decision between Parliament and
— In a first phase full equality and solidarity between Member the Council.
States are to be achieved. As is further outlined in the fact sheet on the budgetary
— The second phase of the reform would see a new system procedure (1.4.3), the current distinction between the non-
of own resources, with the following principles as compulsory expenditure, for which Parliament has the final
cornerstones: full respect for the principle of fiscal say, and the compulsory expenditure, for which it can only
sovereignty of the Member States; fiscal neutrality; make amendments, would be abolished by the Lisbon Treaty.
progressive phasing-in of the new system which must not
increase overall public expenditure nor the tax burden for g Helmut Werner
citizens. July 2008
1.5.2. The multiannual financial framework

In order to improve the budgetary procedure, the European institutions conclude, since 1988, Interinstitutional Agreements
covering the budget process and the distribution of the budget. These agreements are established for several years, and
bear the name of ‘financial perspective’. After Delors I, Delors II and Agenda 2000, a fourth agreement has been designed
for the period 2007–13.
Legal basis by the Treaties but it is set up by Interinstitutional Agreements

of Parliament, the Council and the Commission, currently:
Community (EC) form only the background. The multiannual — the Interinstitutional Agreement of 17 May 2006 on
financial framework or ‘financial perspective’ is not stipulated budgetary discipline and sound financial management (OJ
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1 Union works 5
C 139, 14.6.2006); its Annex I was amended by Decision 1999 and one of its main challenges was reconciling the
2008/29/EC of the European Parliament and the Council of common agricultural policy (4.2.2) and enlargement (6.3.1).
18 December 2007 (OJ L 6, 10.1.2008).
In February and July 2004 the Commission proposed a new
agreement and a new financial perspective for the period
Objectives 2007–13, which in a series of intense negotiations (see below)
As from the 1980s, the political and institutional balance of the led to the new Interinstitutional Agreement of 17 May 2006
Community’s financial arrangements came under mounting providing for EU spending of up to EUR 864.3 billion over the
pressure from three types of difficulties: period 2007–13.
— a climate of conflict in relations between the institutions; It is devised in three parts:

— Part I contains a definition and implementing provisions for
— the question of budgetary imbalances;
the financial framework, as well as the multiannual
— a growing mismatch between resources and requirements. expenditure framework, by heading.
Therefore the Community institutions were prompted to agree Sectoral distribution total for 2007–13 (in million euro
on a method designed to improve the budgetary procedure in — 2004 prices, figures as of 17 May 2006):
order to ensure budgetary discipline, to agree on a medium- • Heading 1: Sustainable growth 382 139 (44.2 %)
term programming of the main budgetary priorities for the
following period and, lastly, to translate these priorities into a • H
eading 1a: Competitiveness for growth and
financial framework in the shape of the financial perspective. employment 74 098 (8.6 %)
This will allow the EU to design and implement multiannual • H

eading 1b: Cohesion for growth and employment
policy programmes more consistently. 308 041 (35.6 %)
The Treaty of Lisbon recognises and confers a legally binding • H

eading 2: Preservation and management of natural
status to the MFF, which will ‘absorb’ most of the substance of resources 371 344 (43.0 %)
the current Interinstitutional Agreement. Indeed, Article 312 of • H
eading 3: Citizenship, freedom, security and justice
the Treaty on the Functioning of the European Union 10 770 (1.2 %)
establishes the MFF ‘shall ensure that Union expenditure
• Heading 3a: Freedom, security and justice 6 630 (0.8 %)
develops in an orderly manner and within the limits of its own
resources’, and that ‘[...] the annual budget of the Union shall • Heading 3b: Citizenship: 4 140 (0.5 %)
comply with the multiannual financial framework’, thus laying • Heading 4: EU as a global player 49 463 (5.7 %)
down the cornerstone of financial discipline.
• Heading 5: Administration: 49 800 (5.8 %)
Moreover, that article establishes that the MFF shall ‘determine
the amounts of the annual ceilings on commitment • H
eading 6: Compensations (to new Member States):
appropriations by category of expenditure and of the annual 800 (0.1 %)
ceiling on payment appropriations’. It adds that the MFF shall • T otal for 2007–13: EUR 864 316 million (100.0 %)
also ‘[...] lay down any other provision required for the annual (commitment appropriations)
budgetary procedure to run smoothly’, thus largely meeting
— Part II ‘Improvement of interinstitutional collaboration
the objectives of the current Interinstitutional Agreement.
during the budgetary procedure’ and Part III ‘Sound
financial management of EU funds’ cover the following
Achievements points.
The first Interinstitutional Agreement was concluded in 1988. It • T he qualitative elements are at least as important as the
covered the 1988–92 financial perspective, known as the quantitative ones.
Delors I package, which was intended to provide the resources
needed for the budgetary implementation of the Single • It provides the possibility for the Commission to
European Act. present a report on the Interinstitutional Agreement if it
deems necessary.
Since the balance sheet of the first Interinstitutional
• T here is a possibility for the newly elected Parliament to
Agreement and financial perspective was positive, the
assess the functioning of the Interinstitutional
institutions followed the same procedure in concluding a new
Agreement by the end of 2009 on the basis of a report
Interinstitutional Agreement on 29 October 1993, with the
to be presented by the Commission.
financial perspective for the period 1993–99, the Delors II
package, which enabled the Structural Funds to be doubled • B
etter political and financial control of the common
and the own resources ceiling to be increased (1.5.1). The foreign and security policy (CFSP): such meetings are
third Interinstitutional Agreement on the financial perspective planned jointly between the Foreign Affairs/Budgets
for the period 2000–06, Agenda 2000, was signed on 6 May Committees of Parliament and the Council Presidencies.
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• F reedom, security and justice: the Council and — It provides for flexibility and rapid reaction by the European
Commission accept a unilateral Parliament declaration Union Solidarity Fund, the flexibility instrument, the
to discuss the second pillar (Justice and home affairs) at European Globalisation Adjustment Fund and the
each trialogue. emergency aid reserve.
• C
ertification (internal control): The text of the — It provides for a better and flexible alignment of legislative
Interinstitutional Agreement is a major step forward for acts and financial programming.
ensuring the sound financial management of EU funds. The Commission has been invited to undertake a full, wide-
• F inancial regulation: There is a reference in the ranging review covering all aspects of EU spending, including
Interinstitutional Agreement to principles that should the common agricultural policy, and of resources, and to
simplify the access to EU funds for potential report in 2008/09. That review should be accompanied by an
beneficiaries. assessment of the functioning of the Interinstitutional
Agreement. The European Parliament will be associated with
• F inancial programming: The joint declaration of July the review at all stages of the procedure.
2000 is now integrated in the Interinstitutional
Agreement (Part III). It allows the Committee on
Budgets to follow-up with more accuracy the impact of Role of the European Parliament
the legislation in force. A. The process of negotiation of the multiannual financial
A major advantage of the Interinstitutional Agreements on framework 2007–13
budgetary discipline has been that they allow for consistent The process of adoption of the financial perspective may be
multiannual programming (1.4.3). Following the agreement summarised as follows.
on the Interinstitutional Agreement the Commission adopted — The proposal was made by the Commission in February
on 24 May 2006 a legislative package including 26 revised and and July 2004.
5 new proposals, covering the majority of EU programmes and
policy areas. — In September 2004, Parliament set up a temporary
committee on the financial perspective which concluded
The conclusion of this new Interinstitutional Agreement and set its negotiating position by the resolution of 8 June
presents major achievements. 2005 entitled ‘Policy challenges and budgetary means of
— Continuity of the EU legislative process: 90 % of the enlarged Union 2007–13’.
Community programmes were due to terminate at the end — The common position of the European Council was
of 2006. The functioning of the programmes is guaranteed. presented (conclusions of the European Council of 15 and
16 December 2005 — the summit of June 2005 having
— It represents the first financial framework for 27 Member
been inconclusive).
States for the coming seven years.
— Negotiations took place between the European Parliament,
— There is a fair balance of powers between institutions and
the Council and the Commission on the new
the principle of co-decision.
Interinstitutional Agreement (trialogues of 23 January 2006,
— It allows for the development of EU policies and for 21 February 2006, 21 March 2006 and 4 April 2006 when
mobilisation of additional means if necessary. agreement was finally reached).
— It guarantees room for manoeuvre within the annual — The Council approved the agreement on 15 May 2006,
budgetary procedures. Parliament voted in favour on 17 May 2006, and the
agreement was signed the same day.
— It provides for a review on the basis of the Commission’s
assessment of the current Interinstitutional Agreement in B. European Parliament has strengthened its role
2009 and a full involvement of Parliament in the wide- For the first time, the EP has adopted a negotiating position
ranging mid-term review. prior to the Council’s conclusions.
— It contributes to answer the EP’s requests for improving the — The EP has insisted on negotiating the qualitative
quality of implementation of the budget. elements, despite the Council’s reluctance, in order to
— Active use is made of new financial instruments through secure the improvement of the quality of the
co-financing with the European Investment Bank (EIB). implementation of the EU budget (new Part III of the
Interinstitutional Agreement).
— It safeguards Parliament’s budgetary and legislative
— The EP has opposed the Council’s (governmental)
prerogatives and strengthens the democratic scrutiny in
approach on ceilings and percentages and focused on an
external programmes and CFSP.
approach based on programmes (citizens approach). It has
— There is support for emergency events, although financed obtained that the additional amount be allocated to its
mostly outside the financial framework. priorities and directly to programmes.
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1 Union works 5
— The Parliament has played a major role in enabling the the adoption of this fundamental act programming the
budgetary means for launching Galileo, the EU satellite evolution of the expenses of the Union is formally
navigation system (4.8.6). Consequently, Decision recognised. Parliament may have preferred a co-decision
2008/29/EC of the European Parliament and the Council of procedure instead of the consent procedure. However, the
18 December 2007 (OJ L 6, 10.1.2008) amended Annex I to fact that the new Treaty stipulates that throughout the
the Interinstitutional Agreement of 17 May 2006 (OJ C 139, procedure the institutions ‘shall take any measure
14.6.2006). necessary to facilitate its adoption’ reinforces its role.
— The recognition by the Treaty of Lisbon that in the future
the MFF will be a legally binding act adopted through a
g Jose-Luis Pacheco
special legislative procedure which requires the consent of Anne Vitrey
the EP by the majority of its component members implies Helmut Werner
that the role of the EP as an equal partner of the Council in July 2008
FINANCIAL FRAMEWORK 2007–13 (revised)

(EUR million — 2004 prices)
Total
Commitment appropriations 2007 2008 2009 2010 2011 2012 2013
2007–13
1. Sustainable growth 51 267 52 913 54 071 54 860 55 379 56 845 58 256 383 591
1a. Competitiveness for growth and
employment 8 404 9 595 10 209 11 000 11 306 12 122 12 914 75 550
1b. Cohesion for growth and
employment 42 863 43 318 43 862 43 860 44 073 44 723 45 342 308 041
2. Preservation and management of
natural resources of which: 53 478 54 322 53 666 53 035 52 400 51 775 51 161 369 837
market related expenditure and direct
payments 43 120 42 697 42 279 41 864 41 453 41 047 40 645 293 105
3. Citizenship, freedom, security and
justice 1 199 1 258 1 380 1 503 1 645 1 797 1 988 10 770
3a. Freedom, security and justice 600 690 790 910 1 050 1 200 1 390 6 630
3b. Citizenship 599 568 590 593 595 597 598 4 140
4. EU as a global player 6 199 6 469 6 739 7 009 7 339 7 679 8 029 49 463
5. Administration (1) 6 633 6 818 6 973 7 111 7 255 7 400 7 610 49 800
6. Compensations 419 191 190 800
TOTAL COMMITMENT
APPROPRIATIONS 119 195 121 971 123 019 123 518 124 018 125 496 127 044 864 261
as a percentage of GNI 1.10 % 1.08 % 1.07 % 1.04 % 1.03 % 1.02 % 1.01 % 1.048 %
TOTAL PAYMENT
APPROPRIATIONS 115 142 119 805 112 182 118 549 116 178 119 659 119 161 820 676
as a percentage of GNI 1.06 % 1.06 % 0.97 % 1.00 % 0.97 % 0.97 % 0.95 % 1.00 %
Margin available 0.18 % 0.18 % 0.27 % 0.24 % 0.27 % 0.27 % 0.29 % 0.24 %
Own resources ceiling as
a percentage of GNI 1.24 % 1.24 % 1.24 % 1.24 % 1.24 % 1.24 % 1.24 % 1.24 %
(1) The expenditure on pensions included under the ceiling for this heading is calculated net of the staff contributions to the relevant scheme, within the limit of
EUR 500 million at 2004 prices for the period 2007–13.
Source: Decision 2008/29/EC of the European Parliament and the Council of 18 December 2007 (OJ L 6, 10.1.2008) amending Annex I to the Interinstitutional Agreement
of 17 May 2006 (OJ C 139, 14.6.2006).
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1.5.3. Implementation of the budget
The Commission implements the budget on its own responsibility and in cooperation with the Member States following
the rules of the Financial Regulation, having regard to the principles of sound financial management.
Legal basis Commission powers for the implementation of the rules which
Articles 202, 274, 275 and 279 of the Treaty establishing the the Council lays down by means of comitology (Article 202 EC
European Community (EC). and Council Decision 1999/468/EC of 28 June 1999 laying
down the procedures for the exercise of implementing powers
Article 179 of the Euratom Treaty. conferred on the Commission (OJ L 184, 17.7.1999), as
amended by Council Decision 2006/512/EC of 17.7.2006 (OJ
Objectives L 200, 22.7.2006), i.e. with the help of advisory, management
The Commission must comply with the Treaties, of which it is and regulatory committees composed of representatives of
the guardian, and with provisions and instructions set out in the Member States and chaired by a representative of the
the Financial Regulation and in specific regulations, decisions Commission.
or directives. Moreover, it is important that expenditure be Poor implementation of the budget by Member States is
undertaken within policy guidelines. The Commission penalised through the clearance of accounts procedure for
implements the budget on its own responsibility (Article 274) agricultural spending, whereby corrections to receipts of
but is subject to the political control of the EP (1.5.4) and to national governments from the budget are made following
control by the Court of Auditors (1.3.10). The Member States controls by the Commission. A similar arrangement has been
shall cooperate with it to ensure that the appropriations are introduced to ensure that only eligible expenditure is financed
used in accordance with the principles of sound financial by the Structural Funds.
management, i.e. economy, efficiency and effectiveness.
This kind of implementation may also give rise to difficulties
between the Council and the EP. In effect, the Council may
Operation decide to reserve for itself the right to commit expenditure or
A. Basic mechanism the power to amend the Commission’s commitment decision,
should the competent committee consisting of
Implementation of the budget is made up of two main
representatives of the Member States deliver an opinion
operations, commitments and payments: in the first instance,
conflicting with that decision.
commitment of expenditure, a decision is taken to use a
particular sum from a specific budgetary line in order to Implementation of the budget in particular sectors has been
finance a specific activity; then, after the corresponding legal the subject of frequent criticism by the Court of Auditors
commitments (e.g. contracts) have been established and the (1.3.10). Since the resignation of the Commission in March
contractual service, work or supplies delivered, the 1999 in response to the first report of the Committee of
expenditure is authorised and the sums due are paid. Independent Experts, which denounced inefficiencies and
maladministration, a chain of administrative and political
B. Implementing bodies responsibility as well as standards of financial management
The budget may be implemented through centralised have been established within the Commission.
management (by Commission services), shared management
(by Commission and national bodies), joint management (with C. Implementation rules
international organisations) and by delegated management 1. The Financial Regulation
(via executive agencies created by Community decision), The process of recasting the Financial Regulation, in which
according to Article 54 of the Financial Regulation. Parliament played a major role by means of its budgetary
In practice, a large proportion of the budget is implemented powers, was a key element in the administrative reform of the
on a day-to-day basis by the Member States, especially for Commission. The previous regulation (dating from 1977) was
those sections of the budget involving agriculture (EAGGF governed by the system of prior control by the central
4.2.6) and the Structural and Cohesion Funds (the European financial controller of each institution. This system has given
Regional Development Fund 4.5.2, the European Social Fund way to a decentralised system of ex ante and a posteriori
4.9.2, the European Fisheries Fund (EFF) 4.4.3 and the controls, which enables the authorising officer within the
Cohesion Fund 4.5.3), and by candidate countries as part of directorate-general to undertake the expenditure without
pre-accession aid (6.3.1). requiring the prior approval of the financial controller, but
which is then subjected to various types of controls, including
In some specific cases, the Council may directly exercise its those related to the internal audit. The Financial Regulation
implementation capacity but generally it confers on the (Council Regulation (EC, Euratom) No 1605/2002 of 25 June
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1 Union works 5
2002 on the Financial Regulation applicable to the general Furthermore, in virtually all policy areas, the EP influences the
budget of the European Communities (OJ L 248, 16.9.2002), as implementation of the budget through its legislative and non-
amended by Council Regulation (EC, Euratom) No 1995/2006 legislative activities, e.g. by reports and resolutions or simply
of 13 December 2006 (OJ L 390, 30.12.2006), should be read by addressing oral or written questions to the Commission.
together with its implementing rules (Commission Regulation Over the last few years, Parliament has strengthened its
(EC, Euratom) No 2342/2002 of 23 December 2002 laying political control over the Commission by introducing
down detailed rules for the implementation of Council instruments which enable an exchange of information on the
Regulation (EC, Euratom) No 1605/2002 (OJ L 357, 31.12.2002), implementation of funds and the amount of commitments
as amended by Commission Regulation (EC, Euratom) outstanding, i.e. legal commitments which have not yet been
No 1261/2005 of 20 July 2005 (OJ L 201, 2.8.2005). honoured by payment. Outstanding commitments can
The Commission’s main tool for implementing the budget and become a problem if accumulated over longer time periods.
for monitoring its execution is its computerised accounting Parliament is therefore pushing the Commission to keep these
system ABAC (accruals based accounting). The Commission under control.
has adjusted the system to the obligations laid down in the New tools are being developed that should allow for better
new Financial Regulation. This includes the transition from monitoring of the implementation and to improve the ‘value
‘cash oriented’ accounting to modern ‘accrual’ accounting, for money’ of EU programmes. For this purpose, the EP
which allows accounting events (e.g. entering into a legal supports high standard activity statements (prepared by the
commitment) to be recorded when they occur, rather than Commission in preliminary draft general budget working
only when cash is received or paid. Furthermore, the documents) and regular cost effectiveness analyses of
Commission has taken actions to meet the highest Community programmes.
international accounting standards, in particular the
International Public Sector Accounting Standards (IPSAS) Finally, it should be mentioned that the European Parliament
established by the International Federation of Accountants has strongly supported and influenced the new revision of the
(IFAC). Financial Regulation, as well as the Interinstitutional
Agreement of 17 May 2006 on budgetary discipline and sound
2. The procurement rules financial management (multiannual financial framework
An important aspect of budgetary implementation is 1.5.2). Key elements are the improvement of the
compliance with Community legislation applicable to public implementation of the budget, increasing the visibility and the
procurement contracts (supply, works and services, 3.4.1). benefits of Community funding to the citizen and achieving
the right balance between the protection of financial interests,
Role of the European Parliament the proportionality of administrative costs and user-friendly
Firstly, the EP, as one of the two arms of the budgetary procedures. According to Article 44 of the aforementioned
authority, has a prior influence on the implementation of the Interinstitutional Agreement, priority will be given to sound
Community budget, by means of the amendments and financial management aiming at a positive statement of
decisions taken in the context of the budgetary procedure assurance by the Court of Auditors (1.3.10 and 1.5.4).
(1.4.3) to allocate funds. The EP may ask to make use of the As mentioned above, the comitology decision (1999/468/EC)
reserve mechanism of the budget: during the budgetary of 28 June 1999 was amended by Council Decision 2006/512/
procedure the Commission may propose to transfer funds for EC of 17 July 2006 (OJ L 200, 22.7.2006). The new ‘regulatory
expenditure of whose justification, sufficiency or procedure with scrutiny’ entitles Parliament to scrutinise quasi-
implementation conditions it is not convinced in a reserve legislative measures implementing an instrument adopted by
(‘Provisions’ title, Article 43 of the Financial Regulation). Both co-decision and to reject such measures by an absolute
the EP and Council are required to approve proposals for majority of MEPs. Thus it strengthens Parliament’s power of
transfers (Article 24 of the Financial Regulation). control.
Moreover, the discharge procedure (1.5.4), although Article 317 of the Lisbon Treaty (consolidated version)
concerning the financial year which ended two years underlines more clearly than Article 274 EC, which it would
previously, allows the EP to control and influence current replace, the control and audit obligations of the Member
budgetary implementation. Many of the questions put to the States in the implementation of the EU budget.
Commission by the Committee on Budgetary Control in the
framework of the discharge procedure concern the
implementation of the budget, and the discharge resolution, g Anne Vitrey
Helmut Werner
which is an integral part of the discharge decision, contains July 2008
many obligations and recommendations addressed to the
Commission, the proper execution of which is monitored in
follow-up reports.
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1.5.4. Budgetary control
Budgetary control is performed in each EU institution and at Member State level. Important control work is carried out by
the Court of Auditors and by the Parliament. Each year the latter examines the implementation of the budget with a view
to granting discharge to the European Commission.
Legal basis — special reports on specific issues;

Articles 274, 275, 276, 279 and 280 of the Treaty establishing — specific annual reports relative to EU agencies and bodies.
the European Community (EC).
The ECA also reports on lending and borrowing operations
Articles 180b and 183 of the Euratom Treaty. and the European Development Fund.
3. Control at political level: by the European Parliament:
Objectives
Within Parliament, the Committee on Budgetary Control is in
To verify the legality, accuracy and financial soundness of charge of:
budget operations in the broad sense.
— the control of the implementation of the budget of the
Union;
Achievements
— the closure, presenting and auditing of the accounts and
A. Control at national level
balance sheets of the Union, its institutions and any bodies
Initial control of income to the EU budget and expenditure is financed by it;
exercised partly by national authorities. These have kept their
powers, particularly on traditional own resources (1.5.1), for — monitoring the cost-effectiveness of the various forms of
they have the necessary machinery for collecting and Community financing in the implementation of the Union’s
controlling these sums. In fact, 25 % of traditional own resources policies;
are retained by Member States as a ‘collection fee’ (this figure — consideration of fraud and irregularities in the
was 10 % before the ‘own resources decision’ (2000/597/EC, implementation of the budget of the Union, measures
Euratom) of 29 September 2000, which came into force on aiming at preventing and prosecuting such cases, and the
1 March 2002. Collection of traditional own resources is protection of the Union’s financial interests in general.
nevertheless a matter of great importance to EU institutions. It
was in this connection that the EP established a Committee of It also prepares the decisions on discharge.
Inquiry on Transit (see below). Operational expenditure under
The discharge procedure
the European Agricultural Guidance and Guarantee Fund
(EAGGF) and the Structural Funds is also controlled in the first Once a year, Parliament, on the Council’s recommendation,
instance by the authorities of the Member States, which often gives discharge to the Commission on the implementation of
have to bear part of the cost of such interventions. the budget for the year n — 2, after having examined the
ECA’s annual report and the replies from the Commission and
the other institutions to its questions (Article 276 EC Treaty).
B. Control at Community level The Commission and the other institutions are obliged to take
1. Internal action on Parliament’s observations in its discharge resolution
In each institution, control is exercised by authorising officers (Article 147 of the Financial Regulation).
and accountants and then by the institution’s internal auditor.
Similarly, the EP gives discharge annually to the other
2. External: by the Court of Auditors (1.3.10) institutions as well as to the agencies. The EP gives discharge
External control is carried out by the European Court of to the Commission separately for the implementation of the
Auditors (ECA), which submits each year to the budgetary European Development Funds as these are not yet integrated
authority detailed reports in accordance with Article 248 of the into the general budget. The EP’s discharge decision and
Treaty. These are: resolution concerning the implementation of the EU general
budget Section I — European Parliament is addressed to the
— the declaration of assurance as to the reliability of accounts President of the EP.
and the legality and regularity of the underlying
transactions (known as the DAS); Parliament considers the discharge reports in plenary in April.
— the annual report relating to implementation of the Thus the votes on the granting of the discharge are taken
general budget, including the budgets of all institutions during the April part-session and, in the event of their being
and satellite bodies; held over, during the October part-session.
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1 Union works 5
If a proposal to grant discharge is not carried by a majority, or if which the discharge motion was rejected, a group of five
Parliament decides to defer its discharge decision, Parliament independent experts was established, which reported on
informs the institutions or agencies concerned about the accusations of fraud, mismanagement and nepotism against
reasons for refusing to grant discharge. They are required to the European Commission; the Commissioners then resigned
take measures without delay to eliminate the obstacles to the en bloc on 16 March 1999.
discharge decision.
Individual members of the Committee on Budgetary Control
Then, within six months, the Committee on Budgetary Control specialise in particular Community policies and prepare the
submits a fresh report containing a new proposal to grant or EP’s response to ECA special reports in their field, often in the
refuse discharge. form of working papers for the guidance of the general
rapporteur on the discharge.
4. Anti-fraud measures: by OLAF
The European Anti-Fraud Office (known as OLAF) was As stated above, the Commission, the other institutions and
established in 1999 (Commission Decision 1999/352/EC, ECSC, the agencies must report on the measures taken in the light of
Euratom). It is competent to carry out investigations the observations of the discharge resolutions. The Member
independent of the Commission. At the instigation of the EP it States must inform the Commission on the measures they
has been reinforced. Its role is to protect the Union’s financial have taken following the EP’s observations and the
interests, with a responsibility for fighting fraud involving EU Commission must take these into account when writing its
funds in all institutions and for coordinating the bodies follow-up report (Article 147 of the Financial Regulation).
responsible in the Member States. As described in the fact sheet on the Court of Auditors
Within the framework of Regulations (EC) No 1073/1999 and (1.3.10), following the absence of an unqualified positive
(Euratom) No 1074/1999 regarding OLAF’s investigations, on statement of assurance by the Court of Auditors for many
25 May 1999 Parliament, the Council and the Commission years in a row the European Parliament has fostered the
signed an Interinstitutional Agreement regarding internal development of an integrated control framework comprising
investigations. This agreement stipulated that each institution also the management shared with the Member States.
should establish common internal rules intended to ensure
C. Other instruments
the smooth running of OLAF’s investigations. A part of these
rules which is now integrated into the EU institutions’ Staff Parliament’s specialised committees are also contributing to
Regulations oblige staff to cooperate with OLAF and include a ensure that Community funds are spent in an efficient way in
certain amount of protection for staff members who divulge the best interest of the European taxpayer.
information regarding possible fraud or corruption. This is also On a number of occasions, the members of the Committee on
known as protection of ‘whistleblowing’. Budgetary Control have also held discussions with
Article 280 of the EC Treaty concerns fraud and the EU’s representatives of the corresponding committees of
financial interests; it requires close and regular cooperation parliaments in the Member States, with national auditing
between Member States and the Commission, as well as authorities and with representatives of customs departments;
opening the way to specific Council measures to afford on-the-spot enquiries have also been carried out by individual
equivalent and effective protection in the Member States for members to ascertain the facts underlying particular problems.
the EU’s financial interests. In December 1995 the EP exercised for the first time its right
acquired under the Treaty to establish a Committee of Inquiry.
Role of the European Parliament This committee reported on allegations of fraud and
maladministration under the Community transit system. The
A. Development of powers committee’s 38 recommendations received wide support. The
From 1958 to 1970 the EP was simply kept informed of Committee on Budgetary Control has followed up on their
decisions on discharge given by the Council to the implementation. In this context the new computerised transit
Commission on its implementation of the budget. In 1971, it system (NCTS) has been developed.
won the power to grant the discharge together with the
Following the fact that several EU officials who had divulged
Council. Since 1 June 1997, when the Treaty of 22 July 1975
information on possible fraud, corruption or mismanagement
entered into force, it alone has given the discharge on the
had not been adequately protected by the aforementioned
accounts, after the Council has given its recommendation.
whistleblowing protection rules, the EP’s Committee on
B. Use of the discharge Budgetary Control has suggested to the Commission that
these rules be revised.
The EP may decide to defer discharge where it is dissatisfied
with particular aspects of the Commission’s management of The Lisbon Treaty strengthens the control facilities oriented
the budget. Refusal of discharge is considered as tantamount on results achieved by the EU programmes implemented
to requiring resignation of the Commission. This threat was put using the Union’s finances. Article 318 TFEU (consolidated
into effect in December 1998: following a vote in plenary at version; replacing Article 275 EC) obliges the Commission to
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submit such comprehensive evaluation report to the
Parliament and the Council and in the follow-up of their
indications as given in the annual discharge procedure.
g Helmut Werner
July 2008
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2

Citizen's Europe
Citizens’ Europe incorporates various aspects including fundamental rights, citizenship of the
Union, free movement of persons within the Union, the right to vote and stand in European and
local elections and the right to petition the European Parliament.
2.1. Respect for fundamental rights in the EU, 91

2.2. The citizens of the Union and their rights, 94
2.3. Freedom of movement for persons, 95
2.4. Voting rights and eligibility, 100
2.5. The right of petition, 101
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BAAA08001ENC_cap01-02.indd 90 18/2/09 11:49:08
Citizen’s Europe Respect for fundamental
2 1 rights in the EU
2.1. Respect for fundamental rights

in the EU
The legal basis for fundamental rights in the EU is primarily the European Convention for the Protection of Human Rights
and Fundamental Freedoms, to which reference is made in the EU Treaty. The Charter of Fundamental Rights will only
becoming legally binding when the Lisbon Treaty has entered into force. Court of Justice case-law has also greatly
contributed to respect for human rights in the EU.
Legal basis Objectives

The protection of fundamental rights is one of the basic tenets To ensure that fundamental freedoms are protected in the
of European Community law. However, none of the Treaties drafting, application and interpretation of Community law. In
contains a written list of these rights. Only the principle of their traditional defensive role the Community’s fundamental
equal pay for men and women has from the start been rights protect the individual from the erosion of sovereignty by
codified in Article 19 of the Treaty establishing the European Community bodies.
Community (EC).
The Court of Justice of the European Communities recognised Achievements
the existence of fundamental rights at Community level at an A. Case-law of the Court of Justice
early stage, and has steadily extended them. Under the Court’s 1. Development of rights
continuing case-law, they form part of the general principles
The Court decided back in 1974 that fundamental rights form
of Community law and are equivalent to primary law in the
part of the general principles of Community law that it is
Community legal hierarchy.
required to uphold, and that in safeguarding such rights it
The source of recognition of these general legal principles is should be guided by the constitutional traditions of the
now Article 6(2) of the Treaty on European Union (TEU), Member States. Accordingly, no measure may have the force
which commits the EU to respect fundamental rights, as of law unless it is compatible with the fundamental rights
guaranteed by the European Convention for the Protection recognised and protected by the Member States’ constitutions
of Human Rights and Fundamental Freedoms of 4 November (Court of Justice [1991] ECR I-2925, point 41). The main specific
1950 and as they result from the constitutional traditions rights recognised so far by the Court are:
common to the Member States, as general principles of — human dignity (Casagrande [1974] ECR 773);
Community law.
— equal treatment (Klöckner-Werke AG [1962] ECR 653);
The Treaty of Amsterdam introduced Article 13 of the EC
Treaty to combat discrimination and Article 7 of the Treaty on — non-discrimination (Defrenne v Sabena [1976] ECR 455);
European Union stipulating that the Council, meeting in the — freedom of association (Union syndicale, Massa et al. [1974]
composition of the Heads of State or Government and acting 917, 925);
by unanimity on a proposal by one third of the Member — freedom of religion and confession (Prais [1976] ECR 1589,
States or by the Commission and after obtaining the assent of 1599);
the European Parliament, may determine the existence of a
serious and persistent breach by a Member State of principles — privacy (National Panasonic [1980] ECR 2033, 2056 et seq.);
mentioned in Article 6. In this case, the Council, acting by a — medical secrecy (Commission v Federal Republic of Germany
qualified majority, may decide to suspend certain of the rights [1992] ECR 2575);
deriving from the application of the Treaty to the Member
— property (Hauer [1979] ECR 3727, 3745 et seq.);
State in question. The Treaty of Nice supplemented this
mechanism with a new procedure relating to a clear risk of a — freedom of profession (Hauer [1979] 3727);
serious breach by a Member State of these principles — freedom of trade (International Trade Association [1970]
(Article 7(1) TEU). 1125, 1135 et seq.);
The Lisbon Treaty enshrines the legal value of the Charter of — freedom of industry (Usinor [1984] 4177 et seq.);
Fundamental Rights and establishes a new legal basis for the
EU’s accession to the European Convention on Human — freedom of competition (France [1985] 531);
Rights. — respect for family life (Commission v Germany [1989] 1263);
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— entitlement to effective legal defence and a fair trial — civil rights: human rights and the right to justice, as
(Johnston v Chief Constable of the Royal Ulster Constabulary guaranteed by the European Convention of Human Rights
[1986] 1651 et seq., 1682; Pecastaing v Belgium [1980] 691 adopted by the Council of Europe;
et seq., 716);
— political rights deriving from the European citizenship
— inviolability of residence (Hoechst AG v Commission [1989] established by the Treaties;
2919);
— economic and social rights, incorporating the rights set
— freedom of expression and publication (VBVB, VBBB [1984] 9 out in the Community Charter of the Social Rights of
et seq., 62). Workers, adopted on 9 December 1989 at the Strasbourg
Summit by the Heads of State or Government of 11
2. Scope of protection Member States in the form of a declaration.
If a fundamental right is found to be breached, the Court of
Justice declares the act concerned to be void, with retroactive These rights are not new: the charter represents ‘established
and universal effect. law’, i.e. it gathers together in one document the fundamental
rights recognised by the Community Treaties, the Member
However, under the case-law of the Court there are limits to States’ common constitutional principles, the European
the protection of fundamental rights. Convention of Human Rights and the EU and Council of
— Such rights must be compatible with the Community’s Europe Social Charters. However, the document aims to
structure and objectives. They must always be considered respond to problems arising from current and future
with regard to the social function of the protected activity developments in information technology or genetic
(Internationale Handelsgesellschaft [1970] ECR 1125). engineering by establishing rights such as personal data
protection or rights in connection with bioethics. It also
— The principle of proportionality and the guarantee of responds to the legitimate contemporary demands for
essential content are further constraints. Consequently, transparency and impartiality in the functioning of the
where the Community intervenes in the protected sphere Community administration, incorporating the right of access
of a fundamental right it may neither violate the principle of to the Community institutions’ administrative documents and
proportionality nor affect the essential content of that right the right to good administration, which sums up Court of
(Schräder v Hauptzollamt Gronau [1989] ECR 2237 at 15). Justice case-law in this area.
It is the European Community that is committed to respecting b. Presentation of rights
fundamental rights. The Member States are only required to
The charter consolidates all personal rights in a single text,
comply with the minimum standards which the rights lay
thus implementing the principle of the indivisibility of
down when they are implementing Community law (Article
fundamental rights. It breaks the distinction that European and
10(5) of the EC Treaty) (cf. Kremzow v Austrian Republic,
international texts had drawn until then between civil and
judgment of 29 May 1997, ECR I-2629 at 15 et seq., 19).
political rights on the one hand and economic and social
When adopting acts of secondary Community law affecting rights on the other, and lists all the rights grouped according
fundamental rights, the Community institutions must also to the basic principles of dignity, freedoms, equality, solidarity,
comply with international provisions on human rights, and citizens’ rights and justice.
particularly the standards of the European Convention on
c. Beneficiaries
Human Rights.
Under the principle of universality, most of the rights listed in
B. Charter of Fundamental Rights the charter are conferred on all people, regardless of their
1. Working methods nationality or place of residence. However, rights linked
— To draw up the draft European Charter of Fundamental directly to citizenship of the Union are conferred only on
Rights, the European Council decided to set up an ad hoc citizens (such as the right to take part in elections to the
body made up of representatives of various established European Parliament or municipal elections) and some rights
institutions (meeting in Tampere in October 1999). are for certain categories of people (e.g. children’s rights and
some social rights of workers).
— This body, which decided to call itself a ‘convention’, broke
new ground by publishing its working documents and The charter aims only to protect the fundamental rights of
debates. individuals with regard to action undertaken by the EU
institutions and by the Member States in application of the EU
— The charter was proclaimed by the Commission, the Treaties.
Council and Parliament on 7 December 2000 at the Nice
3. Scope
European Council.
The question of the legal status of the charter for the Member
2. Substance States and the Community institutions has yet to be resolved
a. The charter covers rights in three areas: even though the Commission and Parliament have stated that
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Citizen’s Europe Respect for fundamental
2 1 rights in the EU
they consider it to be binding and the Court of Justice has political institutions (EP, Council and Commission) on 5 April
already invoked some of its provisions. The charter was 1977 and expanded in 1989.
included in Part II of the Treaty establishing a Constitution for In 1994, it drew up a list of the fundamental rights guaranteed
Europe. by the Union.
An article in the Lisbon Treaty refers to the charter — which is It has given special attention to the drafting of the charter by
not itself incorporated in the Treaty — and makes it legally making it ‘one of its constitutional priorities’ and stipulating its
binding. A protocol lays down derogations for Poland and the requirements, notably that:
United Kingdom.
— the document should have fully binding legal status by
C. EU accession to the European Convention on Human being incorporated into the Treaty on European Union (‘A
Rights and Fundamental Freedoms Charter … constituting merely a non-binding declaration
The Treaty establishing a Constitution for Europe stated that and … doing no more than merely listing existing rights
the Union would accede to the Convention (Article I-9). would disappoint citizens’ legitimate expectations’); it thus
The Lisbon Treaty enshrines this accession. called for the charter to be incorporated into the Treaty
establishing a Constitution for Europe;
D. A European Union Agency for Fundamental Rights — any amendment should be subject to the same procedure
The European Monitoring Centre on Racism and Xenophobia, as its original drafting, including the formal right of assent
created in 1997 and established in Vienna, has been converted for Parliament;
into the European Union Agency for Fundamental Rights
following the European Council decision in December 2003. — it should contain a clause requiring the consent of
Parliament whenever fundamental rights are to be
The agency’s powers will be limited to Community aspects, restricted;
however.
— it should recognise that fundamental rights are indivisible,
Concerning its role in dealing with areas of police and judicial by making the charter applicable to all the institutions and
cooperation in criminal matters (Title VI of the Treaty on bodies of the EU and all its policies, including those
European Union), the Council agreed that the Union contained in the second and third pillars in the context of
institutions and Member States could, as appropriate and on a the powers and functions conferred upon it by the Treaties;
voluntary basis, make use of the agency’s expertise within
these areas as well. The Council will, before 31 December 2009, — it should be binding on the Member States when applying
reconsider the possibilities for empowering the agency to or transposing provisions of Community law (resolutions of
pursue its activities in the areas covered by Title VI. 16 September 1999 and 23 October 2002).
The Council regulation of 15 February 2007 setting up the Finally, it has regularly called for the EU to accede to the
agency entered into force on 1 March 2007. European Convention on Human Rights, stressing that this
accession would not duplicate the role of a binding
On 28 February 2008 the Council adopted Decision 2008/203/ Community charter.
EC establishing a multiannual framework for the agency that
defines its areas of action and priorities for 2007–12 (OJ L 63, It has called for the creation of an agency for fundamental
7.3.2008). Morten Kjaerum of Denmark was appointed the rights on several occasions. In a resolution on 26 May 2005
director of the agency in March 2008 and took up his post on constituting a demand for legislation to be initiated in
1 June 2008. accordance with Article 192 of the EC Treaty, it stresses that the
agency must follow the development of the implementation
of the charter and the provisions of the Treaty. It should ensure
Role of the European Parliament the quality and coherence of the EU’s human rights policy. The
1. General attitude agency must be independent. An informal trialogue has been
The European Parliament (EP) has always given priority to set up between the European Parliament, Council and
respect for fundamental rights in the Union. Since 1993, it has Commission to define the agency’s structure and mandate.
held a debate and adopted a resolution on this issue every The European Parliament has stressed the need for the agency
year on the basis of a report by its Committee on Citizens’ to be able to carry out its activities in areas covered by Title VI
Freedoms and Rights, Justice and Home Affairs. of the Treaty on European Union and police and judicial
2. Specific actions cooperation in criminal matters.
The EP has in particular upheld the importance of codifying
fundamental rights in a binding document. g Jean-Louis Antoine Grégoire
It was responsible for the declaration of principle on the July 2008
definition of fundamental rights adopted by the EU’s three
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2.2. The citizens of the Union
and their rights
Consecrated by the Treaty establishing the European Community in its Article 17, European citizenship is the primary tool
that assists the development of a European identity. The main difference with the citizenship of the Member States, that
European citizenship completes, is that the rights granted to citizens are not yet matched with duties.
Legal Basis 2. Substance of citizenship

Articles 17 to 22 of the Treaty establishing the European For all citizens of the Union, citizenship implies:
Community (EC). — the right to move and reside freely within the territory of
the Member States (2.3);
Objectives — the right to vote and to stand as a candidate in elections to
Inspired by the freedom of movement for persons envisaged the European Parliament and in municipal elections in the
in the Treaties, the introduction of a European citizenship with Member State in which they reside, under the same
precisely defined rights and duties was considered as long ago conditions as nationals of that State (2.4);
as the 1960s. Following preparatory work which began in the — the right to diplomatic protection in the territory of a third
mid-1970s, the Treaty on European Union (TEU), adopted in country (non-EU State) by the diplomatic or consular
Maastricht in 1992, gave as an objective for the Union ‘to authorities of another Member State, if their own country
strengthen the protection of the rights and interests of the does not have diplomatic representation there, to the same
nationals of its Member States through the introduction of a extent as that provided for nationals of that Member State;
citizenship of the Union’. A new part of the EC Treaty (Articles
17 to 22) is devoted to this citizenship. — the right to petition the European Parliament and the right
to apply to the Ombudsman appointed by the European
Like national citizenship, citizenship of the Union is intended Parliament concerning instances of maladministration in
to describe a relationship between the citizen and the the activities of the Community institutions or bodies;
European Union which is defined by the citizen’s rights, these procedures are governed by Articles 194 and 195 of
duties and political participation. This is intended to bridge the EC Treaty (1.3.14 and 2.5);
the gap between the increasing impact of Community
action on citizens of the Community, and the safeguarding — the right to write to any Community institution or body in
of rights and duties and participation in democratic one of the languages of the Member States and to receive
processes, which remains an almost exclusively national a response in the same language (Article 21, third
matter. The aim is to increase people’s sense of identification paragraph, EC);
with the EU and to foster European public opinion, a — the right to access European Parliament, Council and
European political consciousness and a sense of European Commission documents, subject to certain conditions
identity. (Article 255 EC).
Moreover, there is to be stronger protection of the rights and The Treaty of Lisbon further emphasises the principal rights of
interests of Member States’ nationals (third indent of Article 2 citizens of the Union by listing them in Article 20(2) TFEU
TEU). (consolidated version).
3. Scope
Achievements With the exception of electoral rights, the substance of Union
1. Definition of EU citizenship citizenship achieved to date is to a considerable extent simply
According to Article 17 of the EC Treaty (the Treaty of Lisbon a systematisation of existing rights (particularly as regards
also makes provision for this definition to be included in Article freedom of movement, the right of residence and the right of
8 of the Treaty on European Union), every person holding the petition), which have now been enshrined in primary law on
nationality of a Member State is a citizen of the Union. the basis of a political idea.
Nationality is defined according to the national laws of that By contrast with the constitutional understanding in European
State. Citizenship of the Union is complementary to national States since the French Declaration of Human and Civil Rights
citizenship but does not replace it, and it comprises a number of 1789, no specific guarantees of fundamental rights are
of rights and duties in addition to those stemming from associated with citizenship of the Union. Article 6(2) of the
citizenship of a Member State. Treaty on European Union states that the ‘Union’ will ‘respect’
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Citizen’s Europe Freedom of movement for persons
2 3
fundamental rights in accordance with the European Community basis, so that EU citizens would have an
Convention on Human Rights and the ‘constitutional traditions independent status. In addition, from the start it advocated
common to the Member States’, as general principles under the incorporation of fundamental and human rights into
Community law but it does not make any reference to the primary law and called for EU citizens to be entitled to
legal status of Union citizenship (for fundamental rights in the bring proceedings before the Court of Justice when those
European Union, 2.1). rights were violated by EU institutions or a Member State
(resolution of 21 November 1991).
Union citizenship does not as yet entail any duties for citizens
of the Union, despite the wording to that effect in Article 17(2) — During the negotiations on the Treaty of Amsterdam,
of the EC Treaty, which constitutes a major difference between Parliament again called for the rights associated with EU
it and citizenship of the Member States. citizenship to be extended, and it criticised the fact that
the Treaty did not make any significant progress on the
Article 22, second paragraph, of the EC Treaty and Article 48 of
content of EU citizenship, with regard to either individual
the Teatry on European Union provide opportunities to develop
or collective rights. One of Parliament’s demands that is still
citizenship of the Union gradually and thus provide citizens of
outstanding is the adoption of measures by a qualified
the Union with an enhanced legal status at European level. The
majority to implement the principle of equal treatment
Treaty of Lisbon also makes provision, in Article 11 of the Treaty
and ban discrimination (resolution of 11 June 1997). It
on European Union (consolidate verision), for a new right for
should be noted, however, that since the Treaty of
citizens of the Union: ‘Not less than 1 million citizens who are
Amsterdam the co-decision procedure that applies to the
nationals of a significant number of Member States may take
measures has made it easier to exercise the rights
the initiative of inviting the Commission, within the framework
associated with EU citizenship (Article 18(2)).
of its powers, to submit any appropriate proposal on matters
where citizens consider that a legal act of the Union is required — In accordance with Parliament’s requests, the Treaty
for the purpose of implementing the Treaties’. establishing a Constitution for Europe of 18 July 2003,
drawn up by the Convention on the Future of Europe,
stipulated that any natural or legal person may institute
proceedings against an act addressed to that person or
— In electing the European Parliament by direct suffrage, EU which is of direct and individual concern to him or her, and
citizens are exercising one of their essential rights in the EU: against a regulatory act which is of direct concern to him
that of democratic participation in the European political or her and does not entail implementing measures. This
decision-making process. provision is reiterated in the Treaty of Lisbon.
— Parliament has always wanted to endow the institution of
Union citizenship with comprehensive rights. It advocated g Claire Genta
the determination of Union citizenship on an autonomous July 2008
2.3. Freedom of movement for persons

The free movement of persons inside the EU involves the removal of internal border controls. It is governed by the
Schengen agreements incorporated into the EC Treaty and by European Parliament and Council Directive 2004/38/EC.
Several directives govern the legal regime applicable to third-country nationals.
Legal basis — Title IV (Article 61 et seq. EC): ‘Visas, asylum, immigration

— Article 14 of the Treaty establishing the European and other policies related to free movement of persons’
Community (EC): establishing the internal market, free (4.11.2 and 4.11.3 for measures related to third-country
movement of persons. nationals).
— Article 18 EC: Union citizens have the right to move and

reside freely within the territory of the Member States. Objectives
— The Treaty of Accession signed on 16 April 2003, Part IV: Freedom of movement for persons and the abolition of
Temporary Provisions. controls at internal frontiers form part of a wider concept, that
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of the internal market, in which it is not possible for internal Not all Schengen members are members of the EU. Ireland
frontiers to exist or for individuals to be hampered in their and the UK are not Schengen members but have an
movements. The concept of the free movement of persons has opportunity to ‘opt in’ to the application of selected parts of
changed in meaning since its inception. The first provisions on the Schengen body of law.
the subject referred merely to the free movement of On 1 January 2007 two new countries (Bulgaria and Romania)
individuals considered as economic agents, either as became members of the EU. The two new Member States
employees or providers of services. (3.2.2 and 3.2.3). The have not automatically become fully operational members of
concept has gradually widened to encompass all EU citizens, the Schengen cooperation. Membership of the Schengen
irrespective of their economic activity, as well as nationals of cooperation is a process in two steps. During the accession
third countries, because after controls were abolished at negotiations the new Member States accepted the Schengen
internal borders people could no longer be checked for acquis. For the internal border controls to be lifted there has to
nationality. be a separate verification and a specific European Council
decision.
Achievements
Switzerland signed the Schengen Convention on 26 October
A. Changes introduced by the Treaty of Amsterdam 2004. It will have full membership to the Schengen system
1. The Schengen area following a European Council decision. This procedure is
similar to what happened when the Nordic countries became
The most significant development in setting up the internal
full members of Schengen
market without obstacles to the free movement of persons
has been the conclusion of the two Schengen agreements: Cyprus and non-EU member Switzerland hope to join this year
the Schengen Agreement of 14 June 1985 and the Schengen and Romania and Bulgaria by 2011.
implementing convention of 19 June 1990 which came into c. Scope
force on 26 March 1995.
— Abolition of internal border controls for all people.
The Schengen rules apply among most European countries,
covering a population of over 400 million and a total area of — Measures to strengthen and harmonise external border
4 268 633 km². controls:
a. Incorporation of the Schengen system and other parts of • a ll EU citizens may enter the Schengen area merely by
cooperation in the fields of justice and home affairs (CJHA) showing an identity card or passport;
in the ‘Community pillar’ • c ommon visa policy: nationals of third countries
Initially, the Schengen implementing convention formed part included in the common list of non-member countries
of the cooperation in the fields of justice and home affairs whose nationals need an entry visa are entitled to a
(CJHA) within the European Union. This meant that it was not single visa valid for the entire Schengen area; however,
part of Community law but took the form merely of Member States may require a visa for other third
intergovernmental cooperation. A protocol to the Amsterdam countries.
Treaty provides for transfer of the ‘Schengen acquis’ into a new — Harmonisation of the treatment of asylum-seekers: This
Title IV, comprising Articles 61 et seq. EC on ‘Visas, asylum, was taken over by the Dublin Convention, which entered
immigration and other policies related to free movement of into force on 1 September 1997 for the 12 original
persons’. Many of the areas covered by Schengen have signatories, on 1 October 1997 for Austria and Sweden, and
therefore now been transferred to the Community sphere. As on 1 January 1998 for Finland. As of 1 September 2003, the
most of Schengen is now part of the EU acquis, at the time of Dublin II regulation provides the legal basis for establishing
the last EU enlargement of 1 May 2004 it was no longer the criteria and mechanism for determining the State
possible for accession countries to ‘opt out’ (Article 8 of the responsible for examining an asylum application in one of
Schengen protocol). the Member States of the EU (excluding Denmark) and in
b. Participating countries Iceland and Norway by a third-country national. However,
from that date, the Dublin Convention remains in force
There are currently 24 full Schengen members and Monaco between Denmark and the other Member States of the EU
(treated as part of France): Belgium, Germany, France, Greece, and Iceland and Norway.
Italy, Luxemburg, the Netherlands, Portugal, Spain, Austria,
Denmark, Finland, Iceland, Norway, Sweden, Poland, the Czech — Police and judicial cooperation: police forces assist each
Republic, Slovakia, Hungary, Estonia, Latvia, Lithuania, Malta other in detecting and preventing crime and will have the
and Slovenia. For nine of the Member States joining in May right to pursue fugitive criminals into the territory of a
2004 (Cyprus did not meet the criteria) internal land and sea neighbouring Schengen State.
border checks on persons were abolished as of 21 December The Schengen information system (SIS) is essential for effective
2007, while restrictions on air borders were lifted on 30 March operation of the Convention: it supplies information on the
2008. entry of third-country nationals, the issue of visas and police
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2 3
cooperation. Access to the SIS is primarily restricted to the police reside with a national of a Member State who is employed
and the authorities responsible for border checks. In addition, in the territory of another Member State (Regulation (EEC)
the present Schengen information system (SIS) database has No 1612/68, Directive 73/148/EEC, Directive 90/364/EEC,
limited capacity. A new system, SIS II, should be in place by 31 Directive 90/365/EEC, Directive 93/96/EEC).
December 2008. Due to the delays in the SIS II deployment,
These directives require Member States to grant the right of
Portugal offered a modified version of its SIS 1+ system, which it
residence to those persons and to some of their family
called ‘SIS one4all’. ‘SIS one4all’ is a temporary solution designed
members (including in certain cases family members in the
to enable the EU Member States who acceded in 2004 (the
ascending line), provided that they have adequate resources
Czech Republic, Estonia, Latvia, Lithuania, Hungary, Malta,
so as not to become a burden on the social assistance
Poland, Slovenia and Slovakia) to join Schengen.
schemes of the Member States and are covered by sickness
d. institutional consequences insurance. However, the rights of the family members are
— With the entry into force of the Treaty of Amsterdam, the derivative and not independent of the right of the EU citizen in
Council replaced the Executive Committee of the the respective family; the latter must actually have exercised
Schengen Convention. The Council also had, pursuant to his or her own right of free movement. If the family members
Title IV of the EC Treaty, to adopt measures within a period are not EU citizens they may be required to hold an entry visa
of five years ‘to establish progressively an area of freedom, by the Member State of their residence.
security and justice’ in the field of visas, asylum, In 2004, the Union adopted a directive on the right of citizens
immigration and other policies related to free movement of the Union to move and reside freely within the Member
of persons, to ensure that Union citizens and third-country States: Directive 2004/38/EC of the European Parliament
nationals are not checked when crossing internal borders. and of the Council of 29 April 2004 on the right of citizens of
It is also responsible for regulating standard measures for the Union and their family members to move and reside freely
checks on persons at external borders and standard rules within the territory of the Member States amending
for issuing visas and granting freedom of travel within the Regulation (EEC) No 1612/68 and repealing Directives 64/221/
Member States’ territory to third-country nationals. The EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/
Council focused on these accompanying measures of EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC.
secondary legislation in its resolution of 18 December 1997
laying down the priorities. b. Current legislation
— Following the transfer of parts of CJHA to the Community Directive 2004/38/EC brings together the piecemeal measures
sphere, the Court of Justice has received new powers, as found in the complex body of legislation that has governed
measures under the new Title IV of the EC Treaty are this matter to date. The new measures are designed, among
actionable in the Court, provided that they do not concern other things, to encourage administrative formalities to the
the abolition of frontier controls, the maintenance of law bare essentials, to provide a better definition of the status for
and order or the safeguarding of internal security under family members and to limit the scope for refusing entry or
Article 68(2). terminating the right of residence. It also broadens the
definition of family to include non-married partners. Within the
2. European Union area scope of Directive 2004/38/EC, family members include: the
As the Schengen Convention is not yet being effectively spouse; the registered partner, if the legislation of the host
applied in all the EU Member States, Union territory as a whole Member State treats registered partnerships as equivalent to
should be considered separately from the Schengen area. marriage; the direct descendants who are under the age of 21
a. EU nationals and their families or are dependants and those of the spouse or partner as
defined above; the dependent direct relatives in the ascending
With the aim of transforming the Community into an area of line and those of the spouse or partner.
genuine freedom and mobility for all Community citizens, the
Council had guaranteed rights of residence to persons other This directive has been transposed into national law and has
than workers: started to be implemented by all Member States since 30 April
2006. It has now replaced all the aforementioned legal
— retired persons: employees and self-employed persons measures.
who have ceased their occupational activity (Directive
90/365/EEC); c. T ransitional period for workers from new EU Member
States
— students: exercising the right to vocational training
(Directive 90/366/EEC); The Treaty of Accession signed on 16 April 2003 (Act of
Accession, Part IV: Temporary Provisions) allows the ‘old’
— others: all persons who do not already enjoy a right of
EU-15 Member States to introduce the so-called ‘transitional
residence (Directive 90/364/EEC).;
arrangements’ to nationals from the 10 Member States that
— family members (spouses and children under 21, acceded in 2004 except for the particular cases of Cyprus and
irrespective of their nationality): these have the right to Malta. The Treaty of Accession signed on 25 April 2005 allows
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the EU-25 Member States to introduce those arrangements to — Secondly, by 2009 the European Commission will draft a
nationals from the two EU Member States that acceded in report, which will be the basis for a review by the Council
2007. of Ministers of the functioning of the transitional
arrangements. The Member States must notify the
The transitional periods are divided into three different stages.
Commission whether they plan to continue with national
For the Czech Republic, Estonia, Hungary, Latvia, Lithuania, measures for the next period of up to three years or allow
Poland, Slovenia and Slovakia they are as follows. free movement of workers.
— During the first stage, between 2004 and 2006 the free — Finally, by 2012 there should be free movement of
movement of workers was left exclusively in the hands of workers. However, any of the 25 Member States can ask the
the EU-15 Member States. Ireland, the United Kingdom and Commission for authorisation to continue to apply national
Sweden have been the only three Union members not measures for a further two years if it is experiencing serious
closing transitionally doors for mobility into their labour disturbances on its labour market. Therefore, from 2014
markets. As required by the Treaty of Accession, the — seven years after accession — there will be complete
Commission drafted a report on the first stage of the freedom of movement for workers from new Member
transitional arrangements, which was submitted to the States.
Council of Ministers on 8 February 2006. Following the
Council’s review of the Commission’s report, EU-15 d. Third-country nationals
Member States had until 30 April 2006 to notify the In the provisions of the Treaty of Amsterdam, third-country
Commission whether or not they plan to retain the barriers nationals have finally found their place in Community law.
on the free movement of workers from the new Member Certain categories of third-country nationals already benefited
States or to continue applying the bilateral agreements for from the protection of Community law. These are:
up to a further three years (i.e. 2009). Currently, 10 of the
EU-15 Member States have opened their labour markets — members of the family of an EU national;
completely: Ireland, Greece, Spain, Italy, Luxembourg, the — nationals of States connected to the EU by an association
Netherlands, Portugal, Sweden, Finland and the United or cooperation agreement;
Kingdom. Belgium, Denmark, Germany and France have
simplified their procedures or have reduced restrictions in — workers of a company based in one Member State on
some professions. whose behalf they carry out services in another Member
State (see Court of Justice of the European Communities
Hungary still applies reciprocal measures. Slovenia ceased to
(CJ) ruling in the Vander Elst case — CJ Case C-43/93
apply reciprocity on 25 May 2006 and Poland on 17 January
whereby the CJ decided that third-country nationals
2007. None of the eight new EU Member States applied for
participating in the freedom to provide services enjoyed by
permission to restrict access by workers from other new
their employer, do have a right to enter other Member
Member States.
States in order to fulfil their labour contracts).
— Finally, by 2009 all the national legislations should not
apply any transitional measures limiting the access to their The main EU legislative measures to extend free movement
labour markets. Yet, any of these Member States facing rights to third-country nationals are:
particular difficulties that may lead to ‘disturbances of the — Council Directive 2003/86/EC of 22 September 2003 on the
labour market or a threat thereof’ can ask the Commission right to family reunification (OJ L 251, 3.10.2003);
for a further two-year extension based on exceptional or
unexpected circumstances. — Council Directive 2003/109/EC of 25 November 2003
concerning long-term resident third-country nationals to
Therefore, for a period of up to seven years (what has been extend their free movement rights, on the basis of
officially qualified as ‘the 2 + 3 + 2 formula’), which may Article 63(4) of the EC Treaty (OJ L 16, 23.1.2004);
potentially last until 2011, not much will change for workers
and service providers from the eight new Member States who — Council Directive 2004/114/EC of 13 December 2004 on
may wish to exercise fully their free movement rights and the conditions of entry and residence of third-country
fundamental freedoms. nationals for the purpose of studies, unremunerated
training or voluntary service (OJ L 375, 23.12.2004);
During a transitional period of up to seven years after
accession of two Member States on 1 January 2007 (Bulgaria — a Council directive and two proposals for
and Romania), certain conditions may be applied that restrict recommendations on the admission of third-country
the free movement of workers: nationals to carry out scientific research in the European
Union (COM(2004) 178 of 16 March 2004);
— Firstly, between 2007 and 2009 access to the labour
markets of the 25 Member States will depend on national — Directive 2005/36/EC of the European Parliament and of
measures and policies, as well as bilateral agreements they the Council of 7 September 2005 on the recognition of
may have with the new Member States. professional qualification (OJ L 255, 30.9.2005);
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2 3
— Council Directive 2005/71/EC of 12 October 2005 on a temporary protection, but subject to prior unanimous
specific procedure for admitting third-country nationals for adoption of common framework legislation on asylum.
the purposes of scientific research (OJ L 289, 3.11.2005); According to the statement signed by the Heads of State or
— Commission Regulation (EC) No 635/2006 of 25 April 2006 Government, the shift to qualified majority voting and co-
repealing Regulation (EEC) No 1251/70 on the right of decision would take place as of 1 May 2004 (without the need
workers to remain in the territory of a Member State after for a unanimous decision) for:
having been employed in that State (OJ L 112, 26.4.2006); — Article 62 of the EC Treaty, for measures setting out the
— Council Directive 2006/100/EC of 20 November 2006 conditions for free circulation of non-Member State
adapting certain directives in the field of freedom of nationals legally resident on EU territory;
movement of persons, by reason of the accession of — Article 63 of the EC Treaty, for illegal immigration and the
Bulgaria and Romania (OJ L 363, 20.12.2006); repatriation of illegally resident persons.
— Council Decision of 18 December 2006 appointing Italian,
Maltese and Swedish members and alternate members of Role of the European Parliament
the Advisory Committee on Freedom of Movement for
Parliament wants to secure the greatest possible measure of
Workers (OJ C 320, 28.12.2006);
freedom to travel for all persons within the Union’s internal
— Commission Regulation (EC) No 1430/2007 of 5 December frontiers. In its view, this is an essential condition for the
2007 amending Annexes II and III to Directive 2005/36/EC operation of the internal market.
of the European Parliament and of the Council on the Parliament warmly welcomed Directive 2004/38/EC as its
recognition of professional qualifications (OJ L 320, correct and quick transposition into the national legislations of
6.12.2007); the Member States would involve very beneficial
— Commission Decision 2007/172/EC of 19 March 2007 improvements. The barriers still facing citizens wishing to
setting up the group of coordinators for the recognition of exercise their rights would almost disappear. Moreover,
professional qualifications (OJ L 79, 20.3.2007); Parliament believes there should be no distinction within the
internal frontiers between freedom of movement for
— a proposal for a Council directive on a single application
Community nationals and that of third-country nationals.
procedure for a single permit for third-country nationals to
Freedom of movement is a fundamental human right; any
reside and work in the territory of a Member State and on a
restriction on that freedom hinders third-country nationals’
common set of rights for third-country workers legally
access to the internal market. While the abolition of internal
residing in a Member State (SEC(2007) 1393) (SEC(2007)
borders requires some accompanying measures, this must not
1408); and
be a pretext for introducing systematic controls in border areas
— a proposal for a Council directive on the conditions of entry or hermetically sealing off external borders.
and residence of third-country nationals for the purposes
Parliament is adamant that, in the post-Nice process, the co-
of highly qualified employment (SEC(2007) 1382)
decision procedure is extended to all areas within justice and
(SEC(2007) 1403).
home affairs, including the rights of third-country nationals. It
e. Restrictions on freedom of movement believes that it is vital to ensure a balance between the aims of
freedom, security and justice, taking account of fundamental
Freedom of movement for people is subject to limitations
rights and citizens’ freedoms. To this end, the European
justified on grounds of public policy, public security or public
Parliament supports very much the developments which the
health (Articles 39(3), 46(1) and 55 EC). These exceptions must
Treaty on the Functioning of the European Union, as amended,
be strictly interpreted and the limits to their exercise and
particularly its Article 294 would bring to the field of freedom,
scope are set out by the general principles of law such as the
security and justice, such as co-decision powers in almost all
principles of non-discrimination, proportionality and
area of freedom, security and justice (AFSJ) matters. Moreover
protection of fundamental rights.
most decisions in the Council would be taken by qualified
B. Changes introduced by the Treaty of Nice majority voting which would accelerate the speed of
Under the Treaty of Nice, visa, asylum and immigration policy development of the AFSJ.
are to be decided mainly by the co-decision procedure. The
shift to qualified majority voting is provided for under Article g Joanna Apap
63 of the EC Treaty for matters concerning asylum and July 2008
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2.4. Voting rights and eligibility
The Maastricht Treaty recognises European citizens’ right to vote and stand as candidates in European Parliament
elections and in local elections in the Member State in which they reside. These rights are covered by Council Directive
94/80/EC for the municipal elections and Council Directive 93/109/EC for elections to the European Parliament
Legal basis invoked by Member States in which the proportion of non-

Articles 19 and 189 to 191 of the Treaty establishing the national EU citizens who are eligible to vote and to stand as
European Community (EC). candidates exceeds 20 % of the total electorate; this currently
applies in Luxembourg and to certain local government units
in Belgium. However, Belgium has never invoked this
Objectives derogation.
Since 1976 (Act of 20 September 1976, as amended by Council At national level, there are ongoing debates concerning third-
Decision 2002/772/EC, Euratom of 25 June 2002 and 23 country nationals’ right to vote. Since the Treaty of Maastricht,
September 2002), EU citizens have had the right to elect their two situations have coexisted within the Union: countries
representatives in the European Parliament in the State of where third-country nationals have the right to vote in
which they are nationals. In addition to this, the Treaty of municipal elections (Denmark, Ireland, the Netherlands,
Maastricht gave all citizens of an EU Member State the right to Sweden and Finland); and countries where this right is not
vote and stand as a candidate in elections to the European recognised (Belgium, Germany, Greece, Spain, France, Italy,
Parliament and local elections in the Member State in which Luxembourg, Austria, Portugal and the United Kingdom).
they reside — whether they have its nationality or not — with
the same conditions that apply to nationals of the country of B. Elections to the European Parliament (for the common
residence. By abolishing the nationality condition that most rules and national provisions, see 1.3.4)
Member States had previously attached to the exercise of the Directive 93/109/EC of 6 December 1993 laying down detailed
right to vote or stand as a candidate, this right improves the arrangements for the exercise of the right to vote and to stand
integration of Union citizens in their host country. as a candidate in elections to the European Parliament gives all
citizens of the Union the opportunity to choose whether to
Achievements participate in elections to Parliament (by voting or by standing
as a candidate) in their State of origin or their State of
A. Rights relating to municipal elections residence within the EU, if these are not the same. Participation
1. Principle in European Parliament elections in the State of residence is
Council Directive 94/80/EC of 19 December 1994 (as amended governed by the same conditions that apply to nationals of
by Directive 96/30/EC of 13 May 1996) on rights relating to that State. Derogations may be invoked by Member States in
municipal elections grants all citizens of the Union the right to which the proportion of non-EU nationals is substantially
vote and to stand as a candidate in municipal elections in the above the average (around 20 % of the total electorate). In this
Member State in which they reside, without substituting this case a longer period of residence may be required than for
for electoral rights in their State of origin, which naturally gives nationals.
them greater freedom.
2. Limitations Role of the European Parliament
In order to protect their own sovereign interests, Member A. Rights relating to municipal elections
States may stipulate that only their own nationals are eligible to
In its resolutions on the draft directive on rights relating to
be elected to offices within the executive body of a basic local
municipal elections, Parliament endeavoured to keep to a
government unit. Under some national election provisions, this
minimum the permitted exceptions to the rule of equal
participation in executive bodies includes ballots in individual
treatment with nationals regarding the right to vote and to
referendums, which are seen as distinct from general elections
stand as a candidate.
to the local authority. However, the opportunity for nationals of
other Member States to exercise their right to stand as a B. Elections to the European Parliament
candidate must not be unduly affected. As far as participation
In several resolutions, Parliament had expressed its regret that
in municipal elections is concerned, all citizens of the Union are
it only had the right to be consulted, and had no power of
basically treated as nationals.
co-decision, concerning the legal acts to be adopted pursuant
Derogations, e.g. a longer minimum period of residence as a to Article 19(2) of the EC Treaty. This situation has not changed.
condition for participation in municipal elections, may be However, the Lisbon Treaty would provide for the possibility of
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Citizen’s Europe The right of petition
2 5
adopting a ‘uniform procedure in all Member States or a Moreover, Parliament has long called for a uniform system for
procedure in accordance with principles common to all elections to the European Parliament, to take the place of the
Member States’, after having been approved by the Member national electoral laws for such elections (1.3.4).
States in accordance with their respective constitutional
requirements (Article 223 of the Treaty on the Functioning of
g Wilhelm Lehmann
the European Union, as amended). July 2008
2.5. The right of petition

Under the Treaty of Maastricht, each EU citizen has the right to submit a petition to the European Parliament in the form
of a complaint or a request on an issue which falls within the field of activity of the European Union. The petition will be
examined by the European Parliament’s Committee on Petitions, which will decide on its admissibility and which will be in
charge of its treatment in collaboration with the European Commission.
Legal basis 2. Material admissibility

Articles 21 and 194 of the Treaty establishing the European Petitions which meet these conditions are sent to the
Community (EC), added by the Treaty of Maastricht (1993). Committee on Petitions, which first decides whether they are
admissible by checking that the matter comes within the
European Union’s fields of activity. If it does not, the
Objectives Committee declares the petition inadmissible and informs
The right to petition was introduced to provide European petitioners accordingly, giving the reasons and often
citizens and EU residents with a simple way of contacting EU suggesting they apply to another national or international
institutions with requests or complaints. authority.
In 2005 the Committee declared 628 petitions admissible and
Achievements 318 inadmissible.
A. Principles (Article 194) 3. Consideration of petitions
1. Those entitled to petition Parliament The Committee on Petitions then generally asks the
Any citizen of the European Union, and any natural or legal Commission to provide relevant information or give its opinion
person residing or having its registered office in a Member on the points raised by the petitioner. It sometimes also
State, may petition Parliament, either individually or in consults other parliamentary committees, particularly in the
association with others. case of petitions seeking a change in existing laws. The
Committee on Petitions may also hold hearings or send
2. Scope members on fact-finding missions. (There were three fact-
To be admissible, petitions must concern matters which come finding missions in 2005 — to Malta, Madrid and Poland.)
within the European Union’s fields of activity and affect the
When sufficient information has been collected the petition is
petitioners directly. This latter condition is given a very wide
put on the agenda for a committee meeting, to which the
interpretation.
Commission is invited. At the meeting the Commission makes
B. Procedure an oral statement and comments on its written reply to the
issues raised in the petition. Members of the Committee on
The procedure for petitions is laid down in Rules 191 to 193 of
Petitions then have an opportunity to put questions to the
Parliament’s rules of procedure, which confer responsibility on
Commission representative.
a parliamentary committee, at present the Committee on
Petitions. 4. Further action
1. Formal admissibility This depends on the case.
Petitions must state the name, nationality and address of each — If the petition is a special case requiring individual
petitioner and be written in one of the official languages of treatment, the Commission may contact the appropriate
the EU. authorities or put the case to the permanent representative
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of the Member State concerned, as this approach is likely As a result the European Parliament set up a committee of
to settle the matter. In some cases the committee asks the inquiry.
President of Parliament to contact the national authorities. 3. The Lyons–Turin rail tunnel
— If the petition concerns a matter of general importance, for The residents of the Susa valley, supported by the local
instance if the Commission finds that Community law has authorities, presented a petition expressing concern about the
been infringed, the Commission can institute legal environmental and health effects of the building of the high-
proceedings, and this is likely to result in a ruling by the speed Lyons–Turin rail line. A delegation from the Committee
Court of Justice to which the petitioner can then refer. on Petitions visited and MEPs urged the drawing up of more
— The petition may result in political action by Parliament or detailed independent environmental impact assessments.
the Commission. These assessments were then considered at a joint meeting of
the Committee on Petitions and the Committee on Transport
In every case the petitioner receives a reply setting out the and Tourism, with Mr Barrot, Member of the Commission, and
result of the action taken. the petitioners. The conclusions and assessments were then
sent to the Italian government. The file remains open and work
C. Some examples
continues, in cooperation with the Committee on Transport
1. The report on multiple sclerosis and the Committee on the Environment.
In August 2001, Louise McVay addressed a letter to the
4. Non-compliance of the urban development law in
President of the European Parliament concerning the
Valencia, Spain
disparity of treatment afforded by EU countries to persons
who have been diagnosed with multiple sclerosis. She Over 15 000 people signed petitions against an urban
wanted to obtain some recognition for her personal situation development law adopted by the autonomous region of
and for the thousands of other people who were suffering Valencia (the so-called LRAU law), which they felt violated their
from such inequality of treatment, many of whom were still rights as property owners. The Committee on Petitions sent
being denied their fundamental human rights of access to two fact-finding missions. The Committee on Petitions’
proper medical support. Although the Commission said that activities persuaded the Valencian authorities to amend the
this case had nothing to do with European legislation, the legislation and Parliament was even invited to make
Committee on Petitions invited the petitioner to state her recommendations. The recommendations were the subject of
case at one of its meetings, at which various associations and a resolution in December 2005.
multiple sclerosis sufferers were also present. The Committee 5. M30 motorway project in Madrid
on Petitions then drew up a report, in close cooperation with In June 2006 there was a fact-finding visit to Madrid following
the Committee on Employment and Social Affairs, to provide several petitions concerning a planned extension to the M30
a clear set of answers for the petitioner and set out what it motorway in Madrid. The petitioners’ main complaint
believes to be a clear and necessary European strategy for concerned the lack of environmental impact studies that
combating this debilitating disease for which there is still no should have been carried out for a project of this kind and
known cure. scale in view of its location. Such studies are required under
2. The Equitable Life case in the United Kingdom Council Directive 97/11/EC amending Directive 85/337/EEC
There were two petitions in which policyholders of the on the assessment of the effects of certain public and private
Equitable Life Assurance Society described the losses they had projects on the environment (the petition was still open in
suffered because the company ran into financial difficulties. July 2008).
The petitioners alleged that United Kingdom had not
adequately implemented European legislation on insurance g Claire Genta
companies. July 2008
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Citizen’s Europe The right of petition
2 5
Annual number of petitions received by Parliament

Parliamentary year Total Admissible Inadmissible
2000 908 578 330
2001 1 132 812 320
2002 1 601 1 186 415
2003 1 315 858 457
2004 1 002 623 379
2005 1 032 628 318
2006 1 021 667 354
2007 1 506 980 526
The 10 general topics mentioned most frequently in petitions received in 2007
Environment, water management, etc. 288

Fundamental rights 226
Social matters and discrimination 207
Internal market and consumers 192
Urban development 131
Health 105
Education and culture 103
Justice 99
Transport and infrastructures 88
Law governing property and restitution 72
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3

The internal market

In 1993, the single market was the EU’s greatest achievement. In order for it to become reality,
the EU institutions and the Member States put a great deal of work into drafting and adopting
the hundreds of directives necessary to remove the technical, regulatory, legal and cultural
barriers preventing free trade and movement within the Union. The creation of the internal
market encouraged EU Member States to liberalise the monopolistic public utility markets that
had been protected until that point. By aligning national legislation, the Member States set
about harmonising rules and standards within the EU.
3.1. Principles and general completion 3.3.2. Abuse of a dominant position and
of the internal market, 107 investigation of mergers, 125
3.3.3. State aid, 127
3.2. The main freedoms of the internal
3.3.4. Public undertakings and services of
market, 110
general interest, 121
3.2.1. The free movement of goods, 110
3.2.2. Free movement for workers, 113 3.4. Approximation of legislation, 135
3.2.3. Freedom of establishment and 3.4.1. Public procurement contracts, 135
freedom to provide services and 3.4.2. Company law, 137
mutual recognition of diplomas, 116 3.4.3. Financial services: establishment and
3.2.4. The free movement of capital, 119 practical application of the Lamfalussy
process, 141
3.3. Rules of competition, 122 3.4.4. Financial services: key legislation, 143
3.3.1. General competition policy and 3.4.5. Intellectual, industrial and commercial
concerted practices, 122 property, 146
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The internal market Principles and general completion of
3 1 the internal market
3.1. Principles and general completion of the internal

market
The idea of a single market was preceded by that of a common market enshrined in the Treaty of Rome. It already aimed
at liberalising trade among the Member States. The Single European Act of 1986 reinforces the elimination of the internal
borders throughout the integration to the Treaty establishing the European Community of the concept of internal market.
Legal basis 2. Implementation

Articles 3c, 14, 18, 94 and 95 of the Treaty establishing the The customs union, achieved on 1 July 1968 (3.2.1), the
European Community (EC). abolition of quotas, the freedom of any EU national to look for
and take a job in another Member State under the same
conditions as the nationals (3.2.2) and some tax harmonisation
Objectives
with the general introduction of VAT (1970) (3.4.5) were
The common market created by the Treaty of Rome in 1958 was achieved before the end of the transition period (1 January 1970).
intended to eliminate trade barriers between Member States
with the aim of increasing economic prosperity and contributing In contrast, the freedom of trade in goods and services and
to ‘an ever closer union among the peoples of Europe’. freedom of establishment remained restricted by continuing
anti-competitive practices imposed by the public authorities,
The Single European Act of 1986 included in the EEC Treaty the such as exclusive production or service rights and State aid
objective of the internal market defining it as ‘an area aimed to maintain frontiers which were either physical (checks
without internal frontiers in which the free movement of on persons and goods at internal customs posts), technical (a
goods, persons, services and capital is ensured’. whole range of national rules), tax related (maintenance of
Nowadays, the whole bulk of the internal market legal framework indirect taxes at very varied rates, leading to slow and costly
is in place and the debate concentrates on the effectiveness and cross-border formalities) or merely administrative. The reduction
the impact of EU regulation concerning sectors covered by that of measures that had an effect equivalent to quantitative
legislation and involves almost the majority of policies restrictions and of national technical rules for products (3.2.1)
mentioned by the EC Treaty. It asks for an approach focused on and the free movement of services or the freedom of
the topics of complete transposition, implementation and establishment, except for certain professions such as doctors,
enforcement of internal market rules, going beyond the still remained not completely attained by the mid-1980s.
debate on the normative procedures and the infringement
B. The launching of the internal market in the 1980s and
procedures and moving towards what could be called the
the Single European Act
‘management’ of the internal market and the ‘partnership’
between EU institutions and national authorities, every day 1. The internal market
cooperation on strategies and decisions, to share these ‘common The lack of progress and the stagnation in the achievement of
responsibilities’ vis-à-vis the European citizens. the common market, largely attributed to the choice of a too
detailed legislative harmonisation method and to the
unanimity rule required for Council decisions to be taken, had
Achievements
a considerable economic cost — ‘the cost of non-Europe’
A. The common market of 1958 (Cecchini report, presented in March 1988) — estimated at
1. Aim of the common market 4.25 % to 6.5 % of GDP.
The common market, the Treaty of Rome’s main objective, was The political debate led the EEC in the mid-1980s to consider a
intended to amalgamate the economies of the Member States more thorough approach to the objective of removing trade
as far as possible by: barriers: the internal market. The green light was given in
— a customs union with a common external tariff; Brussels in March 1985, when the European Council set the
end of 1992 as the date for completing the internal market
— free movement of goods, persons, especially employed and asked the Commission to prepare a programme with a list
persons, services and, to a certain extent, capital; of acts to be adopted and a timetable for implementation.
— elimination of quantitative restrictions (quotas) and The Commission adopted in 1985 its White Paper, approved by
measures having an equivalent effect. the European Council in Milan, where most of the legislative
This objective was supported by the exclusive competence of measures to be taken, approximately 300, were listed, grouped
the Community on competition. under three main objectives:
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— the elimination of physical frontiers, abolishing checks on 3. New efforts
goods and persons at internal frontiers; Since 1993 the Commission regularly submitted reports
— the elimination of technical frontiers, breaking down reviewing the results obtained and launched actions and
national barriers on products and services, by programmes to complete those projects still pending. Apart
harmonisation or mutual recognition; from the annual reports on the state of progress and operation
of the single market, it is worth mentioning:
— the elimination of tax frontiers, overcoming the obstacles
created by differences in indirect taxes, by harmonisation — the communication of 2 June 1993 on improving the
or approximation of VAT rates and excise duty. effectiveness of the single market, and the strategic
programme of 22 December 1993;
The new approach aimed to get away from the systematic
technical harmonisation of national rules method, which was — the communication of 30 October 1996 on ‘The impact
to be reserved only for essential requirements (such as security and effectiveness of the single market’, and the ‘Action plan
and health), and introduced the mutual recognition principle. for the single market’ of 4 June 1997; the progress chart
continues to be published twice a year;
The Single European Act, which entered into force on 1 July
1987, incorporated the specific concept of the internal market — the ‘Strategy for Europe’s internal market’ action plan,
in the EEC Treaty, set a precise deadline for its completion of 31 launched on 24 November 1999, which combined
December 1992 (Article 18 EC) and gave strength to the medium- and short-term perspectives, laying down
internal market decision-making machinery by introducing strategic objectives to be achieved up to 2004 by means of
qualified majority voting for subjects such as the Common ‘targeted measures’ reviewed annually;
Customs Tariff, free provision of services, free movement of — the Commission document of 7 January 2003, ‘The internal
capital, approximation of national legislation (respectively market — 10 years without frontiers’;
Articles 26, 49, 60, 94 and 95 EC Treaty).
— the Commission communication ‘Internal market strategy
2. The situation in 1993 priorities 2003–06’.
By the deadline, over 90 % of the legislative projects listed in While providing this impetus the Commission also took
the 1985 White Paper had been adopted, largely by using the repressive actions under Article 226 of the EC Treaty for
majority rule. They included: prosecuting infringements by the Member States for delayed
— liberalisation of capital movements (3.2.4); transposition of directives, incorrect transposition and bad
— almost total abolition of checks on goods at internal implementation.
frontiers (3.2.1); C. Towards a shared responsibility to achieve the internal
— abolition of routine checks on national citizens at internal market
frontiers (2.3); and The European internal market, the world’s largest common
— major progress in introducing freedom of establishment space of almost 500 million consumers, strongly contributed to
and freedom to provide services, through harmonisation the prosperity and integration of the European economy,
and mutual recognition (banking and insurance, diplomas increasing intra-Community trade (by about 15 % per year over
for access to the regulated professions) and by opening up 10 years), increasing productivity and reducing costs (through
public markets. the abolition of customs formalities, harmonisation or mutual
recognition of technical rules and lower prices as a result of
There remained some serious failures. competition), generated extra growth of 1.8 % in the last 10
— The 10 % of scheduled legislation not yet adopted years and created around 2.5 million more jobs, while reducing
included some very important topics, such as total the differences in income levels between Member States.
abolition of controls on persons, the statute for the A new internal market strategy, running from 2003 to
European company, full liberalisation of transport services, 2006 focused on the need to facilitate the free movements of
and tax harmonisation; in addition, some proposals not goods, integrate the services markets, reduce the impact of tax
contained in the 1985 programme but added later, such as obstacles, simplify the regulatory environment and meet the
liberalisation of public service sectors, telecommunications, demographic challenge.
electricity, gas, postal services and the establishment of
trans-European networks, were not adopted. Particularly worth noting are the substantial progress in
completing the legislative programme (EC law opened up
— A significant part of the adopted directives were not transport and telecommunications services, caused a significant
transposed correctly. opening up of other ‘public service’ sectors (electricity, gas and
— Finally, acts properly transposed were often badly postal services) and strengthened supervision of mergers) and
implemented by national administrations (Sutherland in transposition, measured by the ‘transposition deficit’, which is
report of October 1992). the percentage of directives not transposed in all the Member
States; this deficit fell to 1.6 % in 2005.
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The internal market Principles and general completion of
3 1 the internal market
The number of current prosecutions, (at various stages of the and asked for a debate which goes beyond the common rules
infringement proceedings, which start with a default notice on the four freedoms, on fundamental rights and on
and may continue with a reasoned opinion and then referral to competition. Parliament underlined, notably, the need:
the Court of Justice), nevertheless rose from approximately — to improve the effectiveness of control by the Commission
700 in 1992 to over 1 600 in May 2005. of the correct transposition and implementation of EC and
Some serious gaps remain as essential legislative projects are EU law, including the ex ante scrutiny of national draft
still pending, like the full freedom of movement for persons, regulations, and the procedures opened by complaints
tax harmonisation and certain directives not yet transposed in and by petitions;
all Member States on public contracts, transport and — for Member States to ensure that they are not causing new
intellectual property. implementation problems by imposing additional
The debate on the effective achievement of the internal requirements (‘gold-plating’);
market focuses nowadays on its complete transposition and — to improve the central role of Parliament in monitoring
implementation as well as on the need that all EU policies be Member States’ implementation of, and compliance with,
finalised and executed taking into account their Community law and supervising the Commission, also via
interdependence and complementariness with the objective the new ‘regulatory procedure with scrutiny’;
of the so-called ‘European home market’.
— to strongly increase the involvement of national
In other words, the debate on the European home market parliaments;
focuses, at the moment, on the best way to fit all the EU
policies into the perspective of a single domestic space, and all — for a common approach to better regulation, based on
discussions and decisions related to the various objectives, regulatory principles, namely subsidiarity, proportionality,
policies and their implementation are to be discussed and accountability, consistency, transparency and targeting,
taken in cooperation between EU and national authorities as and the constitution of ‘better regulation’ task forces,
much as possible, under a shared responsibility principle. accompanying all proposals with a ‘better regulation
checklist’, with references to any relevant study or impact
The requirements of European integration suggest that the assessment, in particular in relation to internal market
internal market should eventually culminate in a fully integrated legislation;
home market: a ‘European home market’. Its features would
— for the Commission, as the classic method of regulation is
include numerous objectives and policies going beyond the
not always the most appropriate, to provide in the annual
four freedoms, mutual recognition, the single currency and fair
work programme a list of those proposals which may be the
competition as a harmonised tax system, a unique space based
subject of alternative regulation; Parliament must be
on freedom and security, with complete freedom of movement
provided with a list of policy measures in which the
for persons and an unconditional right of residence throughout
Commission has used alternative means of regulation,
the Union, a regulated system for public procurement and
including an evaluation of the failure or success of such
services of public interest, as well as in the media and
means of regulation, their impact on the situation in practice
information society and e-commerce, company law and
— and more specifically on employees’ and consumers’
contract law, corporate governance, the financial markets,
rights, social cohesion, fair competition, the stimulation of
intellectual property, data protection, mutual recognition, legal
growth and the EU’s competitive position — as well as clear
instruments to enable businesses to operate effectively
objectives and defined deadlines for actions, as well as
throughout the market, completion of the trans-European
sanctions for non-compliance (Interinstitutional Agreements
transport, energy and telecommunications networks, and the
of 16 December 2003 on ‘better law-making’ and of
creation of a free market for services (3.2.3).
22 December 1998 on ‘quality of drafting EU legislation’);
Role of the European Parliament — to have more transparent and effective stakeholder
consultation, in view of the importance of participative
Parliament was a driving force in the process that led to the democracy;
launching of the internal market. Particular mention should be
made of its resolution of 9 April 1984. It vigorously supported — that the Commission must continue to consolidate,
the White Paper in 1985 and regularly supported the simplify and codify Community legislation to improve
Commission’s efforts. In particular, it has backed the idea of accessibility and legibility;
transforming the internal market into a fully integrated home — that the Commission’s reports on implementation must
market by 2002 (resolution of 20 November 1997). not be confined to a legal analysis and should evaluate in
In recent resolutions (among many others: 12 February 2006, practice the application of the legislation in question.
14 February 2006, 16 May 2006, 6 July 2006) Parliament has
supported the idea that the internal market is a common g Zelio Fulmini
framework and point of reference for many EC and EU ‘policies’ June 2006
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3.2. The main freedoms of the internal
market
3.2.1. The free movement of goods

The free movement of goods is ensured through the elimination of customs duties and quantitative restrictions, as well as
through the prohibition of measures having equivalent effect to that of customs duties or quantitative restrictions. The
principle of mutual recognition, the elimination of physical and technical barriers and standardisation were added to
sustain the completion of the internal market.
Legal basis a product imported from a Member State to the exclusion of a

Articles 3 (1)(a) and (c), 14, 23 to 31 and 90 of the Treaty similar domestic product has, by altering its price, the same
establishing the European Community (EC). effect upon the free movement of products as a customs duty
and may be regarded as a charge having equivalent effect,
regardless its nature or form (Cases 2/62 and 3/62,
Objectives 14 December 1962, and 232/78, 25 September 1979).
The free movement of goods originating in the Member
States, or originating in third countries and in free circulation in B. Prohibitions of measures having an effect equivalent
the Member States, is one of the fundamental principles of the to quantitative restrictions: Articles 28 and 29 EC
Treaty (Article 23, second subparagraph, EC).
The concept of a measure equivalent to a quantitative
At the beginning, the free movement of goods was seen as restriction is vague. The Court of Justice, therefore, in the
part of a customs union between the Member States, Dassonville judgment, took the view that all trading rules
involving the abolition of customs duties, quantitative enacted by Member States which are capable of hindering,
restrictions on trade and equivalent measures, and the directly or indirectly, actually or potentially, intra-Community
establishment of a common external tariff for the Community. trade are to be considered as measures having an effect
Later on, emphasis was put on eliminating all remaining equivalent to quantitative restrictions (Cases 8/74, 11 July
obstacles to free movement, with the aim of creating the 1974, and C-320/03, 15 November 2005, points 63 to 67).
internal market — an area without internal frontiers, in which The measures in question are generally those which affect
goods (among other things) could move as freely as on a imported products more than domestic ones (Case
national market (3.1). C-441/04, 23 February 2006, point 23). However, in the
Cassis de Dijon judgment (Case 120/78, 20 February 1979),
Achievements the Court enlarged this notion ruling that a measure could
The elimination of customs duties and quantitative restrictions be deemed to have equivalent effect even without
(quotas) between Member States, which was due to be discrimination between imported and domestic products. In
completed by the end of the transitional period, was in fact particular, the technical rules of the importing State
accomplished by 1 July 1968, i.e. one and a half years early. This imposed on products from other Member States may be
deadline was not met in the case of supplementary objectives considered as an equivalent measure, if not justified, as the
— the prohibition of measures having an effect equivalent to imported products are penalised by being forced to
that of customs duties and of quantitative restrictions, and undergo cost adjustments. The lack of Community
harmonisation of the relevant national laws. These objectives harmonisation cannot be used to justify this attitude, if it
became central in the ongoing effort to achieve freedom of effectively hinders freedom of movement. The Court
movement. The plans for a single market gave a new impetus. therefore laid down the principle that any product legally
manufactured and marketed in a Member State in
A. Prohibition of charges having an effect equivalent to accordance with the fair and traditional rules and
that of customs duties: Articles 23(1) and 25 EC manufacturing processes of that country must be allowed
Since there is no definition of this concept in the Treaty, case- on to the market of any other Member State. This is the
law has had to provide one. The Court of Justice considers that principle of mutual recognition by the Member States of
any charge, whatever called or applied, which, imposed upon their respective rules in the absence of harmonisation.
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The internal market The main freedoms of the internal
3 2 market
To prevent the emergence of further obstacles a directive was both guaranteeing the free circulation of goods and products
adopted in 1983 (replaced by Directive 98/34/EC of 22 June and respecting the other Treaty establishing the European
1998) requiring Member States to inform the Commission of Community objectives, such as the environment, consumers
all projected technical regulations. National standardisation and competition.
bodies are for their part required to forward their work
Harmonisation was often extremely arduous at the beginning
programmes and draft standards.
as directives were dealing with all the technical specifications
C. Exceptions to the prohibition of measures having an and required unanimity in the Council. Nevertheless their
effect equivalent to that of quantitative restrictions impact was positive. In case C-421/04 the CJ stated that:
Article 30 of the EC Treaty allows Member States to take ‘According to settled case-law, in a field which has been
measures having an effect equivalent to quantitative exhaustively harmonised at Community level, a national
restrictions when these are justified by general, non- measure must be assessed in the light of the provisions of that
economic considerations (public morality, public policy or harmonising measure and not of those of primary law’
public security, the protection of health and life of humans, (paragraph 20).
animals or plants, the protection of national treasures and the Harmonisation was then facilitated by the introduction of the
protection of industrial and commercial property). Control qualified majority rule, required for most directives relating
over the use made of this possibility is of course exercised by the completion of the single market (Article 95 EC as modified
the Court of Justice. Such an exception to a principle must be by the Maastricht Treaty) and by the adoption of a new
strictly interpreted and national measures cannot constitute a approach aimed at avoiding onerous and detailed
mean of arbitrary discrimination or disguised restriction on harmonisation, proposed in the Commission White Paper of
trade between the Member States. In Case C-421/04, June 1985.
paragraph 28, the CJ stated that: ‘According to settled case-law,
in the context of the application of the principle of the free E. Completion of the internal market
movement of goods, the Treaty does not affect the existence The creation of the single market implies the elimination of all
of rights recognised by the legislation of a Member State in remaining obstacles to free movement. The Commission White
matters of intellectual property, but only restricts, depending Paper of June 1985 set out the physical and technical obstacles
on the circumstances, the exercise of those rights.’ Exceptions to be removed and the measures to be taken by the
are no longer justified if Community legislation has come into Community to this end. Most of these measures have now
force in the same area and does not allow them. Finally, the been adopted.
measures must have a direct bearing on the public interests to 1. Elimination of checks at internal borders (physical
be protected and must not go beyond the necessary level barriers)
(principle of proportionality).
a. Customs formalities
The Court of Justice has recognised (Cassis de Dijon case) that, These were simplified during the period 1985–92 (single
over and above the rules set out in Article 30, the Member administrative document, common border posts,
States may make exceptions to the prohibition of measures simplification of Community transit procedures) before being
having an equivalent effect on the basis of mandatory abolished on 1 January 1993.
requirements (relating, among other things, to the
effectiveness of fiscal supervision, fairness of commercial b. Border controls
transactions, consumer protection and protection of the These were abolished on 1 January 1993. Checks, particularly
environment). in connection with animal and plant health, may be carried
out inside a Member State, without discrimination based on
Member States have to notify national exemption measures to
the origin of the goods or the mode of transport, in the same
the Commission. In order to facilitate supervision of such
way as such checks are made on domestic products.
national exemption measures procedures for the exchange
of information and monitoring mechanism were 2. Elimination of technical barriers
introduced, as stated in Articles 95 and 97 of the EC Treaty, After the removal of customs formalities and border controls,
Decision No 3052/95/EC of the European Parliament and technical barriers became the chief remaining obstacle to
Council of 13 December 1995 and Council Regulation (EC) No complete freedom of movement. They are numerous, highly
2679/98 of 7 December 1998. diverse and constantly changing. There are two main ways in
which they can be eliminated.
D. Harmonisation of national provisions
Since the late-1970s, the Community has made considerable a. Monitoring of compliance with the principle of mutual
efforts in this respect: more than 250 directives on a great recognition of national rules (Article 28 EC Treaty)
variety of subjects related to the internal market have been b. Legislative harmonisation
adopted. The adoption of Community harmonisation laws The new approach and the global approach were based on
enabled the obstacles created by national provisions to be the Council resolution of 7 May 1985, confirmed in the Council
removed as inapplicable and stated common rules aimed at resolution of 21 December 1989 and Council Decision 93/465/
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EEC. Under this approach the guiding principle is the identification of the principle of mutual recognition also in
mutual recognition of national rules. Community the absence of harmonisation.
harmonisation must be restricted to essential
As consequence, the Member States, even in the absence of
requirements and is justified when national rules cannot
European harmonisation measures (secondary EC law), are
be considered equivalent and create restrictions.
obliged to allow goods which are legally produced and
Directives adopted under this new approach have the dual marketed in one Member State to circulate and be placed on
purpose of ensuring the free movement of goods, through their market, unless mandatory requirements subsisted. In this
technical harmonisation of entire sectors, and of guaranteeing case, any measure taken must be scrutinised under the
a high level of protection of public interest objectives referred principles of necessity and proportionality.
to in Article 95(3) EC. For example, they include those dealing
with simple pressure vessels, toys, building materials, The action plan for the single market, adopted in June 1997,
machines, gas appliances and telecommunications terminal made the application of the principle of mutual recognition a
equipment. cornerstone to improve the effectiveness of the internal market.
3. Standardisation
The need for European standards arising from the new
approach has led to major development of the European Parliament supported the completion of the internal market
standardisation system. Standardisation is a voluntary process (3.1) and the role of the European standardisation bodies,
based on consensus amongst different economic actors and and has always given particular backup to the ‘new approach’
carried out by independent standards bodies acting at in connection with the free movement of goods, clarifying its
national, European and international levels. The European definition in a report in 1987. It has made a strong legislative
Standardisation System, originally based on two bodies (CEN, contribution to the harmonisation directives.
set up in 1961, and Cenelec, set up in 1962), was relatively Parliament also supported the need for stronger cooperation
inactive, and was revived in the early 1980s by Directive between European and national authorities in order to
83/189/EEC (replaced by Directive 98/34/EC). Three improve the quality of the European legislation, to identify the
organisations now exist: CEN, Cenelec and ETSI. legislation in need of simplification or codification, in
Harmonisation directives referred at the beginning to the accordance with the goal to put more effort into better
industrial standards which are not mandatory as they are not regulation, prompt transposition and correct implementation.
laid down by the national authorities. This made the Parliament often called on the other institutions to support,
production of European standards considerably suitable. The when possible, co-regulation and voluntary agreements in
process was still hampered by its slowness and the practice of order to respect the same principle of better law-making.
transposing European standards into national ones.
Nevertheless, for the Parliament, ‘better regulation’ does not
In the course of the 1990s further discussions improved the necessarily mean ‘no regulation at all’ and it amended several
quality and efficiency of European standardisation, in particular legislative acts introducing rules to prevent the risk for
by replacing consensus with majority voting for adopting consumers to be misled into buying cheaper goods without
standards and by the direct application of European standards being informed about buying a smaller volume or quantity. In
(no need for national transposition). this respect Parliament has always strongly supported the need
Manufacturers refer nowadays to the European standards for clear and complete information for consumers to be
laid down by European standardisation bodies. The validity of included in all pre-packed goods under free movement, as well
the remaining national standards is covered by the mutual as for their ‘certification of origin’, clear indication of prices,
recognition principle. mandatory nominal quantities or pack size for most pre-packed
goods, readable weight and volume indications on product
F. The principle of mutual recognition labelling, and respect of national rules for typical products.
The Court’s reasoning developed the ‘Cassis de Dijon’
Parliament strongly supported, in this respect, a strategy at
jurisprudence, laying down the principle that any product
European level for a comprehensive and high-quality impact
legally manufactured and marketed in a Member State in
accordance with its fair and traditional rules, as well as assessment policy on European legislation.
manufacturing processes of that country, must be allowed
on to the market of any other Member State. This was the g Zelio Fulmini
basic reasoning which animated the debate towards the May 2007
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3 2 market
3.2.2. Free movement for workers

One of the four freedoms for European citizens is the free movement of workers. It involves workers’ rights of movement
and residence, right of entry and residence for family members and right to work in another EU Member State.
Nevertheless, these rights are associated with restrictions, notably concerning the rights of entry and residence and the
right of taking up jobs in the public service and the new Member States for some countries.
Legal basis 1. Workers’ rights of movement and residence

a. Movement
In general
Based on the directive on residence for EU citizens (2004/38/
Articles 3(1)(c), 14 and 39 to 42 of the Treaty establishing the
EC) the only requirement for Union citizens is that they possess
a valid identity document or passport for stays of less than
In particular three months. The host Member State may require registering
their presence in the country within a reasonable and non-
Regulation (EEC) No 1612/68 of 15 October 1968 (as amended
discriminatory period of time.
by Regulations (EEC) No 312/76 and (EEC) No 2434/92) and
Directive 2004/38/EC. Directive 2004/38/EC introduces EU citizenship as the basic
status for nationals of the Member States when they exercise
their right to move and reside freely on EU territory. Previously,
Objectives
there were various Community instruments that dealt
Freedom of movement of workers, one of the founding separately with employed and self-employed persons,
principles of the European Community in 1957 is laid down in students and other unemployed persons. The rights of
Article 39 of the EC Treaty and, hence, is a fundamental right of members of workers’ families are thus incorporated into the
workers. It permits nationals of one European Economic Area new system.
(EEA) country to work in another EEA country on the same
b. Residence
conditions as that Member State’s own citizens
The right of residence for migrant workers for more than six
Current data show that very few Europeans work abroad. The months remains subject to certain conditions.
percentage of Europeans residing in an EU country other than
their country of origin has remained stable at around 1.5 % c. Applicants
over the last 30 years. As for job mobility, in nine countries of Applicants must either:
the European Union 40 % of workers have been in the same
— be engaged in economic activity (on an employed or self-
job for more than 10 years. Workers’ mobility, in both
employed basis); or
geographic and occupational terms, has been specifically
pinpointed as one of the instruments for helping to — have sufficient resources and sickness insurance to ensure
implement the Lisbon objectives. It has also been stressed in that they do not become a burden on the social services of
the most recent employment guidelines contributing to the the host Member State during their stay; the Member
strengthening of the labour markets in Europe, and as an States may not specify a minimum amount which they
instrument for anticipating the effects of economic deem sufficient, but they must take account of personal
restructuring. circumstances; or
— be following vocational training as a student; or
Achievements
— be a family member of a Union citizen who falls into one of
A. Current general arrangements on freedom of the above categories.
movement Union citizens acquire the right of permanent residence in the
Any national of a Member State has the right to look for a job host Member State after a five-year period of uninterrupted
in another Member State in conformity with the relevant legal residence, provided that an expulsion decision has not
regulations applicable to national workers. He or she will been enforced against them.
receive from the national employment offices the same
This right of permanent residence is no longer subject to any
assistance as nationals of the host Member State without any
conditions. The same rule applies to family members who are
discrimination on the grounds of nationality.
not nationals of a Member State and who have lived with a
This right is recognised to apply equally to workers on Union citizen for five years. The right of permanent residence is
permanent contracts, seasonal and cross-border workers and lost only in the event of more than two successive years’
those who are providing services. absence from the host Member State.
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Certain advantages specific to Union citizens who are workers They have the same social and tax benefits as national workers.
or self-employed persons and for family members, which may Nationals of one Member State working in another are entitled
allow these persons to acquire a right to permanent residence to equal treatment in respect of exercising trade union rights,
before they have resided five years in the host Member State, including the right to vote and to be eligible for the
should be maintained as these constitute acquired rights
administration or management posts of a trade union. They
(Regulation (EEC) No 1251/70).
have the right of eligibility for workers’ representative bodies
To be a genuine vehicle for integration into the society of the within undertakings. However, they may be excluded from the
host Member State in which the Union citizen resides, the management of bodies under public law and from the
right of permanent residence, once obtained, should not be exercise of an office under public law.
subject to any conditions. Permanent residence permits are
b. Right to remain in the host country after stopping work
valid indefinitely and are renewable automatically every 10
years. They must be issued no more than three months after Based on the EC Treaty, this right was laid down in Regulation
the application is made. Citizens can use any form of evidence (EEC) No 1251/70, which allows workers to remain
generally accepted in the host Member State to prove that permanently in the State where they last worked, provided
they have been continuously resident. they have worked and lived there for three years or have
reached the age of retirement or suffer from permanent
2. Rights of entry and residence for family members disability. The same rule applies for the members of their family
Directive 2004/38/EC has amended Regulation (EEC) No living with them.
1612/68 with regard to family reunification.
B. Restrictions on freedom of movement
Firstly it extends the definition of ‘family member’, which was
1. Restrictions on the right of entry and right of residence
formerly limited to spouse, descendants aged under 21 or
dependent children and dependent ascendants, to include The Treaty allows Member States to refuse an EU national the
registered partners if the host Member State’s legislation right of entry or residence on their territory on grounds of
considers a registered partnership as the equivalent of a public policy, public security or public health.
marriage. Measures affecting freedom of movement and residence must
For periods of less than three months, members of a family be based on the personal conduct of the individual
from a Member State may thus exercise their own concerned. Previous criminal convictions do not automatically
fundamental rights and stay freely on the territory of another justify such measures.
Member State. For periods of more than three months their Such conduct must represent a sufficiently serious and present
rate of residence is dependent on the fact that they are threat which affects the fundamental interests of the State. The
members of the family of a worker who is an EU citizen. They mere fact that the entry documents used by the individual
no longer need a residence permit but they must register with concerned have expired does not constitute grounds for
the authorities concerned. expulsion.
Family members from a non-EU country have the same rights In any event, before taking an expulsion decision, the Member
as the EU citizen whom they are accompanying but may be State must assess a number of factors such as the period for
required to obtain a short-stay visa or the equivalent. For which the individual concerned has been resident, his or her
periods over three months, they must apply for a residence age, degree of integration and family situation in the host
permit for family members of Union citizens. These are valid for Member State and links with the country of origin. Only in
at least five years and, in principle, may not be withdrawn. exceptional circumstances, where there are imperative
All members of a family, no matter what their origin, have the grounds of public security, should an expulsion measure be
same right of permanent residence after an uninterrupted taken against Union citizens who have resided in the host
period of five years. This right is lost in the event of absence country for 10 or more years or if the citizen is a minor.
from the host country for a period of more than two years. Procedural safeguards should be specified in detail to ensure a
They are also entitled to social security and to engage in high level of protection of the rights of Union citizens and their
economic activity on an employed or self-employed basis. family members in the event of their being denied leave to
3. Employment enter or reside in another Member State. The decision must be
a. Taking up employment and treatment at work notified by giving the grounds for the decision, by informing
of the appeal procedures available and the time limits
Workers who are nationals of a Member State may not be
applicable. In substantiated cases of urgency, the time allowed
treated differently from national workers in the territory of the
to leave the territory should not be less than one month from
host Member State as regards working and employment
conditions (in particular taking up employment, dismissal and the date of notification.
remuneration) because of their nationality. Equal treatment Lifelong exclusion orders cannot be issued under any
also applies concerning occupational training and retraining circumstances. Persons concerned by exclusion orders can
measures. apply for the situation to be reviewed after a maximum of
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3 2 market
three years. The directive also makes provision for a series of (1 May 2009 to 30 April 2011), but only if an EU-15 Member
procedural guarantees. State experiences serious disturbances in its labour markets.
2. Restrictions on taking up jobs in the public service The timetable for Bulgaria and Romania differs by starting
According to Article 39(4) of the EC Treaty, free movement of the first phase on 1 January 2007 and ending the third on
workers does not apply to employment in the public sector. 31 December 2013.
Access to the public service may be restricted to only nationals
C. Measures to encourage freedom of movement
of the host Member State.
1. Mutual recognition of training
However, this derogation has been interpreted in a very As a basic principle, any EU citizen should be able to freely
restrictive way by the Court of Justice of the European practice his or her profession in any Member State. However,
Communities and, therefore, only those posts in which the the practical implementation of this principle is often hindered
exercise of public authority and the responsibility for by national requirements for access to certain professions in
safeguarding the general interest of the State is involved may the host country.
be restricted to their own nationals (for example the internal or
external security of the State). These criteria must be evaluated In the past, the EU set up a system for the mutual recognition of
in a case-by-case approach in view of the nature of the tasks certificates and diplomas for professional purposes between
and responsibilities covered by the post in question (Case Member States to overcome these differences. A distinction was
66/85, 3 July 1986). made between regulated professions (professions for which
certain qualifications are legally required) and professions that
The Commission listed the activities that it considered as part are not legally regulated in the host Member State.
of the ‘public service’ (statement 5 January 1988): firstly, the
specific functions of the State and allied bodies, such as the Recently, the system for recognition of professional
armed forces, the police and the other forces of order, the qualifications was reformed to help make labour markets more
judiciary, the tax authorities and the diplomatic service; flexible and encourage more automatic recognition of
secondly, employment in government departments, regional qualifications. The new directive on the recognition of
authorities and other similar bodies, and central banks, where professional qualifications (2005/36/EC), which entered into
staff (officials and other employees) who carry out activities on force in October 2007 (3.2.3) consolidates and modernises 15
the basis of a public legal power of the State or of another existing directives covering all recognition rules, except those
legal person governed by public law are involved. applicable to lawyers, activities in the field of toxic substances,
and commercial agents. The directive distinguishes between
3. Restrictions on the freedom of movement of nationals ‘freedom to provide services’ and ‘freedom of establishment’ on
of the new Member States the basis of criteria such as duration, frequency, regularity and
During a transitional period of up to seven years after continuity of the provision of services.
accession of 10 Member States to the EU on 1 May 2004
(Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Recognition can take place through the general system for the
Hungary, Malta, Poland, Slovenia and Slovakia) and of two recognition of professional qualifications, or the system of
Member States on 1 January 2007 (Bulgaria and Romania), automatic recognition of qualifications attested by professional
certain conditions may be applied that restrict the free experience (i.e. craft, commerce and industry sector), or the
movement of workers from, to and between these Member system of automatic recognition of qualifications for specific
States. These restrictions only concern the freedom of professions (i.e. doctors, nurses, dentists, midwives, veterinary
movement for the purpose of taking up a job and may differ surgeons, pharmacists and architects).
from one Member State to another. 2. The EURES network (European employment services)
Three phases of the transitional period allow the EU-15 The Commission is aiming to reinforce and consolidate EURES
Member States to open the labour market to workers of the as a fundamental instrument by networking the employment
aforementioned countries. However, the transitional services of the EEA countries. Occupational and geographical
arrangements cannot be extended beyond an absolute mobility has thus become a key element of the European
maximum of seven years. employment strategy (EES) and of the action plan on skills and
mobility (4.9.3).
For the new Member States that acceded to the EU in 2004:
After the first phase from 1 May 2004 to 30 April 2006, the 3. Other activities to strengthen workers’ mobility
Commission published a report on the transitional provisions The European Union has made major efforts to create an
(February 2006) and concluded that national restrictions have environment conducive to worker mobility:
little effect on controlling migration movements and depend — an action plan on skills and mobility from 2002 to 2005;
more on factors associated with supply and demand
conditions. The EU-15 Member States had to notify as to their — a European health insurance card since 2006;
intention for the second phase (1 May 2006 to 30 April 2009). — the coordination of social security schemes speeded up
National measures may be extended for further two years with the adoption of Regulation (EC) No 883/2004 (4.9.4);
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— a proposal for a directive on the portability of Workers from other Member States should be treated in the
supplementary pension rights; same way as workers from the host country, in particular
regarding the principle of equal pay for equal work. This
— a European Year of Workers’ Mobility (2006) to raise
fundamental principle has been challenged by the Court of
awareness of the rights of workers to free movement, to
Justice of the European Communities in a series of recent
opportunities and to instruments which have been
judgments regarding Directive 96/71/EC on the posting of
introduced to promote freedom of mobility (EURES); workers, known as the Viking, Laval and Rüffert cases.
— exchanges between young workers to encourage freedom Already in 2006, Parliament expressed concerns in the
of movement by Member States through joint resolution on the application of Directive 96/71/EC on the
programmes (PETRA programme from 1988 to 1994; now posting of workers (P6_TA(2006)0463) that the directive is not
integrated in the Leonardo da Vinci strand of the lifelong being implemented properly in some Member States to
learning programme from 2007 to 2013) (4.17.1). prevent social dumping. Many difficulties result from
differences of interpretation of key concepts, such as worker,
Role of the European Parliament minimum salary and subcontracting. The Commission
The European Parliament, which considers all employment- considered the information provided and the concerns
expressed by Parliament in the communication on posting of
related topics to be among the European Union’s main
workers in the framework of the provision of services
priorities, has always stressed that the European Union and its
(COM(2007) 304)
Member States should coordinate their efforts and promote
the free movement of workers. The free movement of workers With the Lisbon Treaty entering into force, Articles 39, 40 and
is one of the objectives of the completed internal market. The 41 of the EC Treaty on freedom of movement of workers will not
European Parliament has always played a dynamic role in the be modified. They become Articles 45, 46 and 47, respectively.
establishment and improvement of the internal market and it
has always energetically supported the Commission’s efforts in g Christa Kammerhofer
this area. August 2008
3.2.3. Freedom of establishment and freedom to provide

services and mutual recognition of diplomas
Provisions in the EC Treaty concerning the freedom of establishment and the freedom to provide services are reinforced by
case-law, notably in the Ryners and Van Binsbergen judgments. Provisions in the EC Treaty and different European
decisions on the harmonisation and mutual recognition of diplomas and qualification were also adopted as a means to
facilitate the effectiveness of the two freedoms.
Legal basis State (freedom of establishment: Article 43) or offer and

Articles 3(1)(c), 14 and 43 to 55 of the Treaty establishing the provide their services in other Member States on a temporary
European Community (EC). basis while remaining in their country of origin (freedom to
provide services: Article 49). This implies eliminating
discrimination on the grounds of nationality and, if these
Objectives freedoms are to be used effectively, the adoption of measures
The EC Treaty lays down the principle that the self-employed to make it easier to exercise them, especially harmonisation of
(whether working in commercial, industrial or craft national access rules or their mutual recognition.
occupations or the liberal professions) economic operators,
established in the territory of a Member State, may exercise an Achievements
economic activity in all Member States in two ways. Self-
employed persons and professionals or legal persons, within A. Liberalisation in the Treaty
the meaning of Article 48 of the EC Treaty, who are legally 1. Two ‘fundamental freedoms’
acting in one Member State, may carry on an economic The right of establishment includes the right to take up and
activity in a stable and continuous way in another Member pursue activities as self-employed persons and to set up and
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3 2 market
manage undertakings, for a permanent activity of a stable and by a restrictive interpretation: exclusions can cover only those
continuous nature, under the same conditions laid down by specific activities and functions which imply the exercise of the
the law of the Member State of establishment for its own authority; a whole profession can be excluded only if the entire
nationals. activity is dedicated to the exercise of official authority, or the
Restrictions on freedom to provide services within the part that is dedicated to the exercise of the public authority is
Community shall be prohibited in respect of nationals of a inseparable from the rest.
Member State who are established in a State of the Exceptions enable Member States to exclude the production
Community other than that of the person for whom services of or trade in war material (Article 296(1)(b) EC) and retain
are intended. All those services normally provided for rules for non-nationals in respect of public policy, public
remuneration shall be considered as ‘services’, insofar as they security or public health (Articles 46(1) and 55 EC).
are not governed by the provisions relating to freedom of
movement for goods, capital and persons. As long as B. Implementation of Articles 43 and 49 of the EC Treaty
restrictions on freedom to provide services have not been Two general programmes adopted on 18 December 1961
abolished, each Member State shall apply such restrictions made provision for directives to abolish restrictions to freedom
without distinctions on grounds of nationality or residence to of establishment and provision of services for various activities.
all persons providing ‘services’. The person providing a ‘service’ Although the Council adopted a good number of directives,
may, in order to do so, temporarily pursue her/his activity in the work was far from being completed in 1974 when the
the State where the service is provided, under the same Court decided that, despite omissions or lack of secondary EC
conditions as are imposed by that State on its own nationals. law (mainly directives and regulations), under the terms of the
Treaty, the two freedoms had a direct effect from the end of
Activities such as transport, insurance and banking are also
the transition period, i.e. from 1 January 1970. These rulings
affected by this freedom but are dealt with in separate fact
were the Reyners judgment of 21 June 1974 (2/74) on
sheets (3.4.2, 3.4.3 and 4.5.1).
freedom of establishment and the Van Binsbergen judgment
These provisions have direct effect from the end of the of 3 December 1974 (33/74) on freedom to provide services.
transition period, i.e. from 1 January 1970 (the Reyners
judgment of 21 June 1974 (2/74) on freedom of establishment The direct effect of the two freedoms means that Community
and the Van Binsbergen judgment of 3 December 1974 nationals are entitled to be treated as nationals. A Member
(33/74) on freedom to provide services). The direct effect of State must allow nationals of other Member States to establish
the two articles of the EC Treaty means that Community themselves or provide services on its territory under the same
nationals are entitled to be treated as nationals and that they conditions as its own nationals. Any discrimination on the
can require competent national jurisdictions to apply Articles grounds of nationality is thus prohibited. Nevertheless,
43 and 49 of the EC Treaty. Any discrimination on the grounds national rules concerning the conditions of access to and the
of nationality is prohibited. This means that Member States exercise of the activities still leaves barriers for non-nationals,
must modify national rules that restrict these two freedoms, eventually obliged to engage in further studies to obtain the
including also the national rules which are indistinctly national qualifications required or to cover extra costs and
applicable to domestic and foreign operators if they hinder or burdens. Community measures aimed to facilitate the exercise
render their exercise less attractive, with delays and additional of the two freedoms remained, then, still worthwhile and they
costs. mainly aim to secure mutual recognition of the national rules
and, possibly, harmonise them. In some cases they abolish
Articles 43 and 49 of the EC Treaty cannot be interpreted as other collateral restrictions on movement, such as Council
conferring on companies a right to transfer their central Directives 73/148/EEC (repealed by Directive 2004/38/EC) and
management and control their central administration to 93/96/EEC on the right of residence or Directive 96/71/EC on
another Member State while retaining their status as posting of workers in the framework of the provision of
companies incorporated under the legislation of the Member services. Under Directive 2004/38/EC Member States will grant
State of origin.
the right of permanent residence to nationals of other
The European Commission and Court of Justice of the Member States who establish themselves within its territory in
European Communities are responsible for ensuring the order to pursue activities as self-employed persons, when the
implementation and the respect of EC rules. The Commission restrictions on these activities have been abolished. A
has the power to open infringement procedures against those ‘residence permit for a national of a Member State of the EC’ is
Member States who do not comply with their obligations, issued and may not be withdrawn solely on the grounds that
under Article 226 of the EC Treaty (3.4.2 and 3.4.3). she/he is no longer in employment. The right of residence for
2. The exceptions persons providing and receiving services is of equal duration
The Treaty excludes activities connected with the exercise to the period during which the services are provided.
of official authority from freedom of establishment and An important step toward the effectiveness of the exercise of
provision of services (Article 45(1) EC). This exclusion is limited these two fundamental freedoms is Council Regulation (EC)
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No 2157/2001 on the statute for a European company, October 2007 at the latest, combining the regulated professions
completed by Council Directive 2001/86/EC. of doctors, dentists, nurses, veterinary surgeons, midwives and
pharmacists as well as architects in one legislative text.
C. Harmonisation and mutual recognition of
qualifications and diplomas The directive specifies, among many other things, how the ‘host’
Article 47(1) of the EC Treaty provides that the mutual Member States should recognise professional qualifications
recognition of the diplomas and other qualifications, required obtained in another (‘home’) Member State. The recognition of
in each Member State for access to the regulated professions, professionals includes both a general system for recognition as
can be used to facilitate freedom of establishment and well as specific systems for each of the abovementioned
provision of services (Council Decision 85/368/EEC and the professions. The recognition focuses amongst many other
Council resolution of 28 October 1999). Article 47(2) addresses things on the level of qualification, training (general and
the need to coordinate national rules on the taking-up and specialised respectively) and professional experience.
pursuit of a profession, involving a minimum of harmonisation The directive also applies to professional qualifications within
of the rules, especially on the training for the qualifications the transport sector, insurance and intermediaries and
required. Article 47(3) subordinates the mutual recognition, in statutory auditors. These professions were regulated under
cases where such harmonisation is a difficult process, to the other directives.
coordination of the conditions for their exercise in the various b. Mutual recognition without harmonisation
Member States.
When, for other professions, the differences between national
The harmonisation process has evolved through a number of rules have prevented harmonisation, mutual recognition has
directives from the mid-1970s. On these bases, legislation on made less progress. The diversity of legal systems has prevented
mutual recognition is adjusted to the needs of different the full mutual recognition of diplomas and qualifications that
situations. It varies in completeness according to the would have secured immediate freedom of establishment on
profession concerned and has recently been adopted under a the basis of the country of origin’s diploma. Council Directive
more general approach. 77/249/EEC of 22 March 1977 permitted the freedom to provide
1. The sector-specific approach (by profession) occasional services for lawyers; free establishment otherwise
a. Mutual recognition after harmonisation required the host country’s diploma. Directive 98/5/EC of 16
February 1998 was a significant step forward stating that lawyers
Harmonisation went faster in the health sector, for the obvious
holding a diploma of any Member State may establish
reason that professional requirements, and especially training
themselves in another Member State to pursue their profession,
courses, did not vary much from one country to another (unlike
with the proviso that the host country can require them to be
other professions), meaning that it was not difficult to
assisted by a local lawyer when representing and defending
harmonise them. This harmonisation developed through a
their clients in court. After three years’ work on this basis, lawyers
number of directives from the mid-1970s to the mid-1980s
acquire the right (if they so wish) to full exercise of their
which regulated, with regard to establishment and freedom of
profession under the host country’s diploma without having to
services, many professions: doctors (Directives 75/362/EEC and
take a qualifying examination.
75/363/EEC of 16 June 1978 (codified by Directive 93/16/EEC of
5 April 1993 and modified by Directive 97/50/EC of 6 October Other directives applied the principle to other professions such
1997)); dentists (Directives 78/686/EEC and 78/687/EEC of 24 as road haulage operators (Directives 74/561/EEC and 74/562/
August 1978); nurses (Directives 77/452/EEC and 77/453/EEC of EEC of 12 November 1974 and 77/796/EEC of 12 December
27 June 1977); veterinary surgeons (Directives 78/1026/EEC and 1977), insurance agents and brokers (Directive 77/92/EEC of 13
78/1027/EEC of 23 December 1978); midwives (Directives December 1976), hairdressers (Directive 82/489/EEC of 19 July
80/154 and 80/155 of 21 January 1980 (these directives have 1982) and architects (Directive 85/384/EEC of 10 June 1985).
been supplemented and amended by Council Directives 2. The general approach
81/1057/EEC and 89/594/EEC)); pharmacists (Directives 85/432/ Drafting of legislation for mutual recognition sector by sector,
EEC and 85/433/EEC); and self-employed commercial agents sometimes with more extensive harmonisation of national rules,
(Directive 86/653/EEC of 18 December 1986). was always a long and tedious procedure. For that reason a
The Lisbon European Council of 23 and 24 March 2000 general system of recognition of the equivalence of diplomas,
launched economic reforms to make the EU the most dynamic valid for all regulated professions that have not been the subject
and competitive knowledge-based economy in the world by of specific Community legislation, came up. The new general
2010. This led the Commission to adopt a communication approach changed the perspective (see the Council resolution
entitled ‘An internal market strategy for services’ in December of 10 November 2003). Before it, the ‘recognition’ was
2000 and, on 7 March 2002, to propose a directive on the subordinated to the existence of EC rules concerning
recognition of professional qualifications. The proposed directive ‘harmonisation’ in the specific regulated profession or activity.
aimed to clarify, simplify and modernise existing directives and After it, ‘mutual recognition’ is almost automatic, under the
combine them all into one directive. This led to Directive established rules, for all regulated professions concerned
2005/36/EC of 7 September 2005, to be transposed by 20 without any need for sector-specific secondary legislation.
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From that moment, ‘harmonisation’ and ‘mutual recognition’ duration than in the host country, a certain length of
methods went on under a parallel system, with possible professional experience or may require, if the training differs
situations where they have been used under a complementary substantially, an adaptation period or aptitude test, at the
system using at the same time a regulation and a directive (see discretion of the applicant, unless the occupation requires
the Council resolutions of 3 December 1992 and 15 July 1996 knowledge of the national law.
on transparency of qualifications and vocational training
certificates). Role of the European Parliament
The new system was set up in three stages. Here again, Parliament has been instrumental in liberalising
— In 1990, higher education diplomas awarded on the activities of the self-employed. It has ensured strict
delimitation of activities that may be reserved for nationals
completion of professional education and training of at
(e.g. those relating to the exercise of public authority). It is
least three years’ duration were recognised (Directive
also worth mentioning the case Parliament brought before
89/48/EEC of 21 December 1988).
the Court of Justice against the Council for failure to act with
— In 1992, the system was expanded to diplomas, certificates regard to transport policy. That case, brought in January
and qualifications that are not part of long-term higher 1983, led to a Court judgment (13/83 of 22 May 1985)
education, with two levels: condemning the Council for failing to ensure free provision
• shorter post-secondary or professional courses, of international transport services and to lay down
conditions under which non-resident carriers may operate
• secondary courses (Directive 92/51/EEC of 18 June 1992). transport services within a Member State. This was in breach
— In 1999 a system was introduced for the mutual of the Treaty. The Council was thus obliged to adopt the
recognition of qualifications for access to certain necessary legislation (4.5.1).
commercial, industrial or craft occupations not yet covered The role of Parliament has grown with the application of the
by the previous directives (textiles, clothing, leather, wood, co-decision procedure (as provided for in the Maastricht
etc.) (Directive 1999/42/EC of 7 June 1999). Treaty) to most aspects of freedom of establishment and
In all three cases, the host Member State may not refuse access provision of services.
to the occupation in question if applicants have the
qualifications required in their country of origin. However, it g Zelio Fulmini
may demand, if the training they received was of a shorter September 2006
3.2.4. The free movement of capital

Beginning in 1960, even before the creation of the single market, European Member States took measures in favour of
instituting the free movement of capital. In 1988, Directive 88/361/EEC succeeded in the creation of a general liberalisation
between the EU Member States. Economic and monetary union continued the liberalisation by the abolition of the
safeguard clause inside the euro area.
Legal basis It should also encourage economic progress by enabling

Articles 56 to 60 of the Treaty establishing the European capital to be invested efficiently.
Community (EC).
Achievements
Objectives A. First endeavours (before the single market)
Removing all restrictions on capital movements between 1. The first Community measures
Member States, then between Member States and third These were limited in scope.
countries (in the latter case with the option of safeguard
measures in exceptional circumstances). A 1960 directive amended in 1962 unconditionally liberalised:
Liberalisation should help to establish the single market by — direct investment;

encouraging other freedoms (the movement of persons, — short- or medium-term lending for commercial
goods and services). transactions;
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— purchases of securities that are dealt in on the stock — safeguard measures for no more than six months in the
exchange. event of serious difficulties for the operation of economic
2. Unilateral national measures and monetary union;
Some Member States decided not to wait for Community — urgent measures following a decision under the common
decisions and abolished virtually all restrictions on capital foreign and security policy to reduce economic relations
movements. with a country;
— The Federal Republic of Germany did so in 1961. — action in support of national measures against a country
for serious political reasons or in an emergency.
— The United Kingdom did so in 1979.
The only restrictions on capital movements in general,
— The Benelux countries did so, between themselves, in 1980. including movements within the Union, which Member States
B. Further liberalisation and its completion under the may decide to apply, are:
single market — measures to prevent infringements of national law,
1. Further progress particularly in the field of taxation and the prudential
It was not until the single market was launched, almost 20 supervision of financial services;
years later, that the progress begun in 1960–62 was resumed. — procedures for the declaration of capital movements for
Two directives, in 1985 and 1986, extended unconditional administrative or statistical purposes;
liberalisation to:
— measures justified on grounds of public policy or public
— long-term lending for commercial transactions; security.
— purchases of securities that are not dealt in on the stock Article 226 of the EC Treaty provides that ‘if the Commission
exchange. considers that a Member State has failed to fulfil an obligation
2. General liberalisation under this Treaty; it shall deliver a reasoned opinion on the
Liberalisation was completed by Directive 88/361/EEC of matter after giving the State concerned the opportunity to
24 June 1988, which scrapped all remaining restrictions on submit its observations. If the State concerned does not
comply with the opinion within the period laid down by the
capital movements between residents of the Member States
Commission, the latter may bring the matter before the Court
on 1 July 1990. As a result, liberalisation was extended to
of Justice’. Enforcement of Court decisions is governed by
monetary or quasi-monetary transactions which were likely to
Article 228 of the EC Treaty.
have the greatest impact on national monetary policies, such
as loans, foreign currency deposits or security transactions. 2. Recent infringement cases concern special rights of
public authorities in private companies/sectors
The directive did include a safeguard clause enabling
Member States to take protective measures when short-term a. Infringement proceedings against Spain regarding the
capital movements of exceptional size seriously disrupted the law amending functions of the Spanish electricity and gas
conduct of monetary policy. But such measures only applied regulator
to restrictively identified transactions and could not last for The law in question includes provisions that require an
more than six months. authorisation from the regulator concerning acquisitions of
over 10 % of share capital or any other percentage giving
It also allowed some countries to maintain permanent significant influence, in a company that engages directly or
restrictions, mainly on short-term movements, but only for a indirectly in regulated activity. The law includes the reasons on
specific period: Spain, Ireland and Portugal until 31 December which basis the regulator may grant or refuse such
1992; and Greece until 30 June 1994. acquisitions; however, the Commission thinks these reasons
C. The definitive system are vague and so give the regulator wide discretionary powers
and therefore may unduly restrict the freedom of capital
1. Principle
movement (Article 56).
The Treaty on European Union introduced provisions in the
Treaty of Rome establishing the new system. The main b. Hungarian privatisation laws
principle (Article 56) prohibits all restrictions on the movement The European Commission has decided to formally ask
of capital and payments. Hungary to amend its privatisation framework law of 1995
which it considers incompatible with European law. During EU
Exceptions are largely confined to movements with third
accession negotiations Hungary had agreed to amend its
countries and these are subject to a Community decision. Apart
privatisation law by the date of its accession and a bill had
from the option to maintain the national or Community
been presented to the Hungarian parliament in spring 2004.
measures in force on 31 December 1993 concerning direct However, since then, nothing further has happened. The State
investment and certain other transactions, the Council may take: can through a golden share veto certain strategic
— new measures concerning these transactions; management decisions and could dissuade companies from
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3 2 market
other Member States from investing in the companies a single payments area in the EU by 2010. The aim is to make
concerned. cross-border payments as easy, secure and cheap as national
c. Infringement proceedings against Greece and Sweden payments. The proposed directive has been extensively
reviewed in the ECON committee and is due for first reading in
The European Commission has taken action against Sweden
October 2006 in Parliament; main points of discussion
and Greece to ensure that they implement internal market
concerned the scope of the directive, its efficiency and
laws correctly. The Commission will formally request Sweden
application to payment service providers.
to modify an aspect of its taxation legislation requiring foreign
financial institutions that are not formally established in
Sweden to provide the Swedish tax authorities with annual Role of the European Parliament
information on any business they do with Swedish residents. Parliament has strongly supported the Commission’s efforts
The Commission considers that this requirement tends to to encourage the liberalisation of capital movements.
dissuade foreign financial institutions from providing cross- However, it has always taken the view that such liberalisation
border services in Sweden and is therefore incompatible with should be more advanced within the Union than between
EC Treaty rules on free movement of services and free the Union and the rest of the world, to ensure that European
movement of capital. The Commission will also formally savings treat European investment as a priority. It has also
request Greece to modify its legislation on company law pointed out that capital liberalisation should be backed up
rendering valid decisions on capital increases in public limited by full liberalisation of financial services and the
liability companies taken by the Greek government. The harmonisation of tax law in order to create a unified
Commission considers this to be incompatible with EU European financial market. It was thanks to its political
company law, which requires these decisions to be taken at a pressure that the Commission launched the legislation on
general meeting. harmonisation of domestic and cross-border payments
(resolution of 17 June 1988).
D. Consequences of economic and monetary union
1. Abolition of the safeguard clause Parliament in its last non-legislative resolution of 7 July 2005
Since 1 January 1999 and the beginning of the third phase of (T6-0301/2005) supports the goal of an efficient, integrated
economic and monetary union, the articles relating to the and safe market for clearing and settlement of securities in
safeguard clauses to remedy crises in the balance of payments the EU. It believes that the creation of efficient EU clearing
(Articles 119 and 120 EC) are no longer applicable to those and settlement systems will be a complex process, and notes
Member States having adopted the single currency. On the that true European integration and harmonisation will
other hand, they remain applicable to the Member States require the combined efforts of different stakeholders and
which do not belong to the euro area. that the current public policy debate should focus on: (a)
bringing down the cost of cross-border clearing and
2. Payments settlement; (b) ensuring that systemic or any other remaining
a. Harmonisation of the cost of domestic and cross-border risks in cross-border clearing and settlement are properly
payments managed and regulated; (c) encouraging the integration of
Regulation (EC) No 2560/2001 of 19 December 2001 clearing and settlement by removing distortions of
harmonised the costs of domestic and cross-border payments competition; and (d) ensuring proper transparency and
within the euro area. governance arrangements.
b. New legal framework for payments
The Commission proposed in December 2005 a directive that g Josine Kamerling
will bring down existing legal barriers to enable the creation of September 2006
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3.3. Rules of competition
3.3.1. General competition policy and concerted practices

Competition policy and concerted practices are governed by Regulation (EC) No 1/2003, in force since 1 May 2004. The EC
Treaty regulates competition policy in its Article 81, which prohibits agreements between undertakings which have as
their object or effect the restriction or distortion of competition.
Legal basis Member States are prohibited and automatically void.

Chapters 5 and 6 of Title I of the EAEC Treaty for the nuclear Examples include:
power industry. — price fixing;
Article 3 point (g) and Articles 81 to 85 of the Treaty establishing — limiting or controlling production, markets, technical
the European Community (EC) for all other industries. development or investment;
— sharing markets or sources of supply;
Objectives
— applying dissimilar conditions to equivalent transactions;
The Community’s competition rules are not an end in
themselves; they are primarily a condition for achieving a free — making the conclusion of contracts subject to
and vibrant internal market, acting as one instrument among supplementary obligations that have no connection with
many in the promotion of economic welfare. The Treaty does the subject of the contracts.
make competition a principal goal, albeit not elaborating on 2. Possibilities of exemption (Article 81(3))
the concept as such. As stated in Article 3 point (g) of the EC Agreements that help to improve the production or
Treaty, the aim is ‘a system ensuring that competition in the distribution of goods or to promote technical or economic
internal market is not distorted’. In the three areas of progress may be exempted, provided that:
application of the rules (concerted practices, abuse of
dominant position and State aid), prohibition is limited to — consumers are allowed a fair share of the resulting benefit;
practices that have an impact on trade between Member and
States and excludes those that solely affect trade within a State — the agreement does not impose unnecessary restrictions,
(Article 81). However, Article 81 of the EC Treaty also allows or aim to eliminate competition for a substantial part of the
anti-competitive practices in exceptional cases where they products concerned.
benefit the economy. Essentially, this can be allowed if the pro-
competitive effects of these practices outweigh their anti- 3. The role of the Commission (Article 85)
competitive effects (Article 81(3)). The Commission is responsible for application of the rules. It
investigates cases on application by a Member State or on its
Competition law in the European Union has recently been in own initiative. If it finds infringements, it proposes measures to
transition toward policy based on market-centred economic bring them to an end. Pending the entry into force of rules for
considerations, rather than pure administrative ‘legal form’. application (in the form of Council regulations and directives,
After 40 years of European competition rules, the Community as laid down in Article 83), the Member States have their own
implemented a ‘modernised’ enforcement procedure in 2004 concurrent powers pursuant to Article 84.
(Council Regulation (EC) No 1/2003).
B. Implementing rules
Achievements These were the subject of Council Regulation No 17/62 of 6
February 1962, on the basis of Article 83 of the Treaty, which
A. Provisions in the EC Treaty (Articles 81 and 85) enhanced and clarified the Commission’s role in investigating
1. Prohibition in principle (Article 81(1) and (2)) and settling competition cases by individual or joint decisions.
All agreements between undertakings (including associations Special regulations have been adopted for transport (4.6.1 to
and concerted practices) which may affect trade between 4.6.10). Regulation No 17/62 has been replaced by Council
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The internal market Rules of competition
3 3
Regulation (EC) No 1/2003 of 16 December 2002 on the 10 June 1999), each relating to certain categories of agreement.
implementation of the rules on competition laid down in The Commission uses block exemptions to this end.
Articles 81 and 82 of the Treaty.
C. Practice
1. Individual decisions On the basis of the Treaty and the implementing rules, over
The Commission can take the following decisions on some 40 years the Commission has developed a substantial
concerted practices. policy on concerted practices.
a. Infringements 1. Wide use of block exemptions
Any infringement of the rules in Article 81(1) means that the a. Horizontal or cooperation agreements
agreement or practice automatically becomes void and has to Among the horizontal or cooperation agreements (between
be ended immediately. The Commission may impose fines on companies in competition), the main beneficiaries have been:
undertakings of up to 10 % of their turnover. It may also
impose periodic penalty payments not exceeding 5 % of the — specialisation agreements (Regulation (EC) No 2658/2000);
average daily turnover in the preceding business year per day and
and calculated from the date appointed by the decision until — research and development agreements (Regulation (EC)
the infringement has ended. No 2659/2000).
National bodies (specialised authorities and courts) may also The Commission evaluated (January 2002) the functioning of
impose penalties for infringements, as the provisions of Regulation (EC) No 240/96 concerning application of
Article 81(1) and (2) have direct effect. The national courts, competition rules to technology transfer agreements. As a
but not the Commission, may grant damages to companies result, Commission Regulation (EC) No 772/2004 of 27 April
that have been affected. But the national courts must 2004 on the application of Article 81(3) of the Treaty to
withdraw from a case once the Commission begins categories of technology transfer agreements was adopted.
proceedings. Since 1 May 2004, all national competition
b. Distribution or vertical agreements
authorities are also empowered to apply fully the provisions
of the Treaty in order to ensure that competition is not Distribution or vertical agreements (concluded between
distorted or restricted. National courts may also apply directly undertakings at different levels of the same production chain)
these prohibitions so as to protect the individual rights were subject to separate exemption rules for each type of
conferred to citizens by the Treaty. agreement and each sector but are now covered by a single
system granting a general exemption for agreements, as long
b. Exemptions as the companies in question do not dominate the market;
Although a company’s dealings infringe the prohibition in this condition has resulted in the setting of ceilings (a turnover
Article 81(1), this company can escape penalty under of not more than EUR 50 million for the parties to the
Article 81(3). Exemptions are issued exclusively by the agreement and not more than 30 % of the market share for
Commission at the company’s request. They are granted for a the distributor), and certain serious restrictive practices are in
fixed period and may be subject to modification of certain any case excluded (Regulation (EC) No 2790/1999 of 22
aspects of the agreements or practices concerned. December 1999).
In these individual cases the Commission can act on its own A notable block exemption concerns motor vehicles.
initiative on the basis of information available, e.g. following its Commission Regulation (EC) No 1400/2002 of 31 July 2002,
own inquiries. It can also do this on the companies’ initiative replacing Regulation (EC) No 1475/95, removes important
(requests for negative clearance or exemptions) or following a regulatory constraints in distribution. It is valid for eight years
complaint by any party with an interest in taking action and will allow, inter alia, competing brands in the same
against an agreement (other companies, public authorities or showroom, increased access to original parts and competition
individuals). During an investigation, the Commission can ask among retail outlets.
the companies for information and carry out checks on the
2. Agreements of minor importance
spot. It can carry out investigations in a sector as well as in
The Commission on the other hand has concluded that
individual cases.
although certain agreements do not fulfil the conditions of
2. Block decisions Article 81(3) and thus are not entitled to an exemption, they
These are designed to simplify the Commission’s should not be regarded as infringing the prohibition. These are
administrative task so it does not have to deal individually with agreements of minor importance (the de minimis principle),
too many concerted practice cases and to make it easier for considered inherently incapable of affecting competition at
companies to fulfil their obligations by giving certain types of Community market level but useful for cooperation between
action a general prior exemption on the basis of Article 81(3). small and medium-sized enterprises. As a result the
The Commission was granted this facility under several Council undertakings do not have to notify them and obtain a ruling
regulations (in particular 19/65/EEC of 2 March 1965, (EC) No on compatibility with the Treaty. These agreements were for a
2821/71 of 20 December 1971 and (EC) No 1215/1999 of long time defined by market share and annual turnover
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ceilings for all the undertakings concerned. At the end of 2001 On the basis of this analysis, the Commission proposed radical
the Commission further relaxed this definition; the turnover changes which, after consultation with Parliament (resolution
criterion has been removed and the market share ceiling rose of 6 September 2002), were adopted on 16 December 2002 by
to 10 % for horizontal agreements and 15 % for vertical the Council as Regulation (EC) No 1/2003, replacing Regulation
agreements. The Article 81 rules do not generally apply to: No 17/62. The regulation came into force on 1 May 2004. The
main differences brought in by the new regulation are:
— relations between an undertaking and its commercial
agents or a company and its subsidiaries; — to decentralise the system:
— cooperation agreements; • b
y replacing the principle of ‘prior authorisation’ of
restrictive agreements with that of ‘legal exemption’,
— subcontracts.
which would make agreements legal and therefore
3. Agreements prohibited without exception enforceable as soon as they are concluded if they are
Despite this complex provision, designed to ease the restrictions compatible with the Treaty (Article 81);
on companies and not hinder practices favourable to the • b
y consequently giving direct effect to the provisions of
economy or without substantial market impact, certain types of Article 81(3), i.e. enabling the Member States’ courts
agreement are still considered by the Commission as harmful to and competition authorities to apply them;
competition and thus prohibited without exception. They are
usually presented in public blacklists. They include: — at the same time as ensuring that the rules are applied
uniformly;
— among the horizontal agreements:
• o
nly those practices which may affect trade between
• price fixing, Member States would be subject to Community law;
• joint sales offices, • t he Commission would retain the power of decision on
• production or delivery quotas, important matters, such as block exemptions, individual
decisions (rulings on infringement or inapplicability),
• sharing of markets or supply sources;
formulating guidelines and taking over cases from
— among the vertical agreements: national authorities;
• fixing the resale price, • t he Commission’s ability to carry out on-site inspections
• absolute territorial protection clause. would be increased;
A particularly significant example was the Volkswagen case • t here is provision for systematic cooperation between
(1998), in which the Commission fined Volkswagen AG national authorities and between them and the
EUR 102 million for agreements aiming to prevent Volkswagen Commission.
dealers in Italy from selling vehicles to buyers who were not
resident in Italy. The fine was subsequently reduced by the Role of the European Parliament
Court to EUR 90 million. Parliament’s principal role is scrutiny of the executive.
Commissioners are called to account for controversial
D. Reform of the implementing rules
decisions at question time in plenary and the Commissioner
The Commission conducted a review of the system for applying responsible for competition appears several times a year
the rules on competition (Regulation (EC) No 1/2003), which before the Committee on Economic and Monetary Affairs to
had been in existence since 1962 (Regulation No 17/62). This explain his policy and discuss individual decisions.
review highlighted the disadvantages of the obligation on
undertakings to notify it of any agreements in order to obtain Parliament is involved in competition legislation only through
negative clearance or exemption. This is a heavy burden for the the consultation procedure. Its influence is thus limited in
undertakings and means that the Commission has to examine a favour of that of the Commission and Council. Annually,
number of files which often do not raise problems with regard Parliament adopts a resolution on the Commission’ annual
to the applicable rules but involve so much work that it has no report on competition policy. At various occasions in this
time to reach well-founded decisions. It resorts to ‘administrative context, it has demanded competition legislation to be
letters’ which close the case on the basis of a presumption of brought under the scope of the co-decision procedure (most
non-infringement of the rules but do not have legal effect. recently April 2006).
Moreover, the Commission is unable to devote sufficient time
and effort to investigating the most serious infringements of g Arttu Makipaa
which, it may be supposed, it will not receive notification. September 2006
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3 3
3.3.2. Abuse of a dominant position and investigation of

mergers
Article 82 of the EC Treaty and Regulation (EC) No 1/2003 prohibit abuses by companies in a dominant position on the
market that may affect trade between Member States. Mergers and acquisitions of Community dimension are governed
by Regulation (EC) No 139/2004 and may, in some cases, be prohibited by the Commission.
Legal basis 3. The concept of abuse

Article 82 of the Treaty establishing the European Community Article 82 of the Treaty does not define dominance, but merely
(EC) (abuse of a dominant position). gives examples of ‘abusive practice’:
— imposing unfair prices or other unfair trading conditions;
Articles 81, 82 and 235 of the EC Treaty (mergers).
— limiting production, markets or technical development to
Article 83 of the EC Treaty (adoption of regulations and the prejudice of consumers;
directives).
— applying dissimilar conditions to equivalent transactions
Article 85 of the EC Treaty (Commission’s investigative powers). with other trading parties;
— imposing supplementary obligations which have no
Objectives connection with the purpose of the contract.
The aim is to prevent companies with a dominant position in In its judgment on the Hoffmann-LaRoche case (85/76 of 13
their economic sector from abusing this position and from February 1979), the Court stated that abusive exploitation of a
distorting competition in intra-Community trade. This aim dominant position was ‘an objective concept’. It was ‘recourse
requires preventive intervention to investigate company to methods different from those which condition normal
mergers, since these may create dominant positions. competition in products and services on the basis of the
transactions of commercial operators’, with the effect of further
Achievements reducing competition in a market already weakened by the
presence of the company concerned.
I. Abuse of a dominant position Abusive practices may take various forms. Those mentioned in
the Treaty are only the main ones, and the Commission and
A. Basic Treaty provision Court have identified others:
Article 82 of the EC Treaty does not prohibit dominant
— geographical price discrimination;
positions as such, merely the abuse of such a position in a
specific market when it is likely to affect trade between — loyalty rebates which discourage customers from using
Member States. competing suppliers;
1. The concept of the dominant position — low pricing with the object of eliminating a competitor;
This was defined by the Court of Justice in the United Brands — unjustified refusal to supply;
case (27/76 of February 1978): a dominant position is ‘a — refusal to grant licences.
position of economic strength enjoyed by an undertaking
which enables it to prevent effective competition being 4. Effect on intra-Community trade
maintained in the relevant market by giving it the power to Abuse of a dominant position must adversely affect trade
behave to an appreciable extent independently of its between Member States, or be likely to do so. This means that
competitors, customers and ultimately of consumers’. The main behaviour which only affects a national market is excluded
indicator of dominance is a large market share; other factors from consideration under the EC Treaty’s competition rules.
include the economic weakness of competitors, the absence
B. Implementing procedures
of latent competition and control of resources and technology.
1. The system at present
2. The market concerned The reform of the implementing procedures of rules on
Under the Treaty, dominant positions are assessed throughout concerted practices (3.3.1) through Council Regulation (EC)
the Community market, or at least a substantial part of it. How No 1/2003 of 16 December 2002, which replaced Regulation
much of the market to take into account will depend on the No 17/62 and came into force on 1 May 2004, also applies to
nature of the product, substitute products and consumers’ the abuse of a dominant position. The aim of this reform is as
perceptions. follows.
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— It is to enable more effective application of Community amended by Regulation (EC) No 1310/97 of 30 June 1997,
competition law with a decentralised system for which took effect on 1 March 1998.
implementation by both the Commission and the
competition authorities and the courts of the Member B. The present regulations
States. The regulation introduced a system of legal The rules under Council Regulation (EEC) No 4064/89, as
exception, whereby agreements not contravening the amended by Regulation (EC) No 1310/97 and Commission
competition rules are automatically considered lawful, Regulation (EC) No 447/98 of 1 March 1998, allowed prior
replacing the current system based on the principle of investigation and thus prevented mergers that would give rise
prohibition. The Commission no longer issues ‘negative to an abuse of a dominant position on the Community market.
clearances’. These rules have been replaced by Council Regulation (EC)
No 139/2004 of 20 January 2004 on the control of
— At the same time the regulation ensures that the rules are concentrations between undertakings (the EC merger
applied uniformly: regulation). The new legislation states that a concentration
• b
y subjecting to Community law only abuses which which would significantly impede effective competition in the
have an effect beyond the national level; common market or in a substantial part of it, in particular by
the creation or strengthening of a dominant position, shall be
• b
y the Commission retaining important decision-
declared incompatible with the common market.
making powers to refer individual cases for rulings on
infringements, cessation of infringements or 1. Scope
inapplicability, and to take over a case from the national Investigation applies to companies in all economic sectors
authorities; when they are proposing a concentration, which means an
• b
y increasing the Commission’s powers to carry out operation to integrate previously separate companies:
on-site inspections; — by merger of two or more previously independent
• b
y making provision for systematic cooperation among undertakings or parts of undertakings;
the national authorities and between them and the — by acquisition by one or more persons already controlling
Commission. at least one undertaking, or by one or more undertakings,
whether by purchase of securities or assets, by contract or
II. Merger investigation by any other means, of direct or indirect control of the
whole or parts of one or more other undertakings; or
A. The problem and initial legal vacuum
— by creating a joint company having the nature of an
Company mergers, by concentration or acquisition, can autonomous economic entity, if the aggregate
obviously create or strengthen a dominant position which Community-wide turnover of each of at least two of the
may give rise to abuse. This risk justifies the Community undertakings concerned is more than EUR 250 million,
authority in exercising prior control on merger operations.
But while the ECSC Treaty had granted the Commission provided that such a concentration has a Community
exclusive power, under Article 66, to authorise or prohibit dimension, and so is likely to affect the European market.
mergers between coal or steel companies, the EEC Treaty A concentration has a Community dimension where:
made no such provision. The increase in mergers as a result
(a) the combined aggregate worldwide turnover of all the
of completion of the common market led to a need for
undertakings concerned is more than EUR 5 000 million;
Community intervention. At first this took the form of
and
interpreting the existing provisions, in which the Court led
the way. In the Continental Can judgment of 1973, the Court (b) the aggregate Community-wide turnover of each of at
ruled that there is abuse of a dominant position when a least two of the undertakings concerned is more than
company already holding such a position strengthens it by EUR 250 million;
acquiring a competitor. In 1987, in the BAT–Philip Morris case, unless each of the undertakings concerned achieves more
it went so far as to acknowledge that in the absence of a than two thirds of its aggregate Community-wide turnover
dominant position, an acquisition of this kind could be within one and the same Member State.
penalised as forming an anti-competitive agreement under
Article 81. A concentration that does not meet the thresholds set out
above has a Community dimension where:
On the basis of this interpretation, the Commission set up an
informal system for investigating mergers. But this only (a) the combined aggregate worldwide turnover of all the
allowed for investigation after the event, and so, as long ago as undertakings concerned is more than EUR 2 500 million;
1973, the Commission proposed a formal regulation. The (b) in each of at least three Member States, the combined
Council did not adopt it until 1989, in the shape of Regulation aggregate turnover of all the undertakings concerned is
(EEC) No 4064/89 of 21 December 1989, subsequently more than EUR 100 million;
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3 3
(c) in each of at least three Member States included for the investigations), the basic deadline expires after a further 90
purpose of point (b), the aggregate turnover of each of at working days, extended automatically by 15 working days
least two of the undertakings concerned is more than when commitments are offered towards the end of the
EUR 25 million; and investigation. In complex cases, the deadline may also be
(d) the aggregate Community-wide turnover of each of at extended by a maximum of 20 additional days, at the parties’
least two of the undertakings concerned is more than request or with their approval.
EUR 100 million; C. Practice
unless each of the undertakings concerned achieves more Since the regulations entered into force in 1990, the
than two thirds of its aggregate Community-wide turnover Commission has examined over a thousand proposed
within one and the same Member State. mergers, and the numbers have risen from 131 notifications in
2. Procedure and powers 1996 to 249 in 2004. Most of these cases end in authorisation.
Outright prohibitions are very rare; since 1990 they represent
a. Powers
less than 1 % of all notified transactions. The most notable
Companies proposing mergers within the terms defined
cases include the Aérospatiale/Alenia merger with de
above must notify the Commission, which will consider
Havilland, which was prohibited in 1991, and the Boeing
whether the proposal creates or strengthens a dominant
merger with McDonnell Douglas, which was authorised
position on the relevant market. If it does so, the operation is
subject to certain commitments by Boeing in 1997.
prohibited. If not, the Commission confirms that it is
compatible with the common market and authorises the
merger, possibly on certain conditions. Furthermore, merging Role of the European Parliament
parties may request the referral of a case to the Commission or Parliament has generally favoured extending the Community’s
to a Member State (or Member States) prior to its notification powers on abuse of a dominant position. In particular, it
at the national or Community level, an option not currently supported the Commission proposal for reducing the
available; merging parties may request the referral of a case to thresholds for launching a merger investigation. In July 2002 it
the Commission if it is notifiable in at least three Member adopted a report on the Commission’s Green Paper of
States; if all competent Member States agree, the Commission December 2001 on a review of Council Regulation (EEC)
acquires exclusive jurisdiction for the case. Finally, the criteria No 4064/89 (the merger regulation). That report accepted
to be fulfilled for referral have been simplified in comparison most of the Commission’s proposals, especially with regard to
with the past. the division of responsibility between the Commission and the
b. Procedure Member States. Parliament has been consulted on the draft
The normal Phase 1 deadline now expires after 25 working merger regulation, which came into force on 1 May 2004.
days. This period is extended by 10 working days when
commitments are offered or when a Member State requests g C. Ipektsidis
the referral of the case. For Phase 2 cases (in-depth November 2005
3.3.3. State aid

The EC Treaty declares incompatible with the common market State aid granted in favour of certain companies or
products which involve restrictions on competition. Some exemptions may exceptionally be granted.
Legal basis principle prohibits any form of State aid that is likely to distort
Articles 87 to 89 of the Treaty establishing the European intra-Community competition, on the grounds that it is
Community (EC). incompatible with the common market. However, an absolute
ban would be untenable: even under a strictly liberal system, it
is hard to imagine any government willingly divesting itself
Objectives entirely of the opportunity to provide funding for certain
Competition can be restricted not only by businesses (3.3.1 economic activities. To do so would be to fail in one of its basic
and 3.3.2) but also by governments, if they grant public responsibilities, namely to ensure that people’s basic needs are
subsidies to businesses. For this reason, the Treaty of Rome in supplied by correcting imbalances or helping out in
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emergencies. For this reason the EC Treaty provides for a — aid to promote culture and heritage conservation (with the
number of exceptions to the principle prohibiting aid. same proviso);
— other categories as may be specified by the Council.
Achievements
B. The administrative framework: procedure under
A. The legal framework provided by the EC Treaty: the Article 88 EC
ground rules (Article 87) To apply the ground rules that it lays down, and in particular
1. General prohibition, under Article 87(1) the various possibilities for exemption, the Treaty sets up a
An extremely wide-ranging ban covers: complete system for Community-level processing of State aid.
This gives the Commission the main responsibility, with the
— not only aid granted directly by the Member States but
option of intervention by the Council and ultimate control by
also aid that uses State resources, which includes any
the Court of Justice. The basic principle of this administrative
agencies that might distribute aid on the basis of
and legal procedure is to ensure that no aid is granted without
government funding, such as local authorities, public
the Commission’s agreement.
establishments and various statutory organisations;
1. Review of existing aid under Article 88(1)
— resources ‘in any form whatsoever’, which means not only
This means aid that already existed before the common
non-repayable subsidies but also loans on favourable terms
market was created, or aid already authorised by the
and low-interest loans, and forms of subsidy in which the
Commission. The Commission carries out the review in
donated element is less apparent, such as duty and tax conjunction with the Member State concerned and may
exemptions, loan guarantees, the supply of goods or suggest that it takes certain action. If it finds that the aid is
services on preferential terms and even public not compatible with the common market, it initiates
shareholdings in companies, which: infringement proceedings, although this does not have the
• distort or merely threaten to distort competition; and effect of suspending application of the aid schemes
concerned.
• a re granted not only to undertakings but also to favour
the production of certain goods (this includes support 2. Treatment of new aid under Article 88(3)
to a specific industry). New aid must be notified in advance: Member States are
required to inform the Commission of any plans to grant or
However, the aid must be such as to ‘affect trade between
alter aid, so that it can submit comments. It follows that the
Member States’, which rules out any aid that only has internal
Member States do not have the right to put these plans into
consequences within a Member State.
effect if they have not received Commission authorisation, and
2. Exemptions that aid granted through plans which have not been notified is
Laid down by law, under Article 87(2); Exemptions apply illegal and must be repaid.
automatically to: If the Commission considers that an aid plan is incompatible
— aid having a social character granted to individual with the common market, it initiates infringement
consumers, provided it is granted without discrimination proceedings. This suspends application of the measures
related to the origin of the products concerned; proposed until there is a final decision.
— aid to make good the damage caused by exceptional 3. Infringement proceedings under Article 88(2)
events, such as natural disasters; The Commission formally serves notice on the Member State
charged with the offence, requiring it to comment within a
— aid for certain areas of the Federal Republic of Germany given period (normally one month).
affected by the division of Germany.
If the comments fail to satisfy the Commission, the latter may
Possible in some circumstances, under Article 87(3); Such decide that the State must alter or abolish the aid within a
exemptions ‘may be considered’ and hence are not automatic. given period (normally two months).
They cover:
If the Member State fails to comply with the Commission
— aid to underdeveloped regions; decision by the deadline, the Commission, or any other State
— aid to promote the execution of a major project of involved, may refer the matter to the Court of Justice.
European interest or remedy a serious disturbance in the The State concerned may itself apply to the Court within the
economy of a Member State; specified period.
— aid to facilitate the development of certain economic At the same time, the Member State concerned may apply to
activities or areas, provided it does not adversely affect the Council for a decision on whether the aid is compatible
trading conditions to an extent contrary to the common with the common market. Such an application results in
interest; suspension of any infringement proceedings under way, but if
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3 3
the Council has not made its attitude known within three the EC Treaty, concerning the motor vehicle sector and the
months, the Commission has to give a decision. synthetic fibres sector, was issued. The criteria for exemption are
shown in points i and ii below.
C. Implementation
1. General view i. Territorial criteria
The EC Treaty gives the Commission, if not discretionary For exemption under point (a) (aid to promote the economic
powers, at least very wide scope for exercising its judgment in development of areas where the standard of living is
applying the provisions of the Treaty, both with regard to the abnormally low or where there is serious underemployment),
basic rules (the exemptions allowed under Article 87(3)) and to the aid must go to regions with a per capita GDP below 75 %
procedure (Article 88). It states, however, that Council of the Community average (Level 2 regions of the
regulations may be introduced to implement the provisions. Nomenclature of Territorial Statistical Units — NUTS). For
This option was not taken up until very recently, with the result exemption under point (c) (aid to facilitate the development of
that implementation of the aid procedure was for a long time certain economic activities or areas but not having a
an entirely administrative and judicial matter. significant adverse effect on trading conditions), the aid must
Until the early 1970s the issue of State aid did not take on go to regions corresponding to Level 3 of NUTS forming
special importance. It began to do so after the recession of compact zones of at least 100 000 inhabitants each, to regions
1974 and 1975, and particularly after 1980, when the with a population density of under 12 inhabitants per km2, or
considerable growth of aid led to a very marked rise in cases to regions eligible under the Structural Funds, all within an
referred to the Commission. The Commission tried to ease this overall ceiling for the number of aid recipients laid down at
increasing workload by establishing criteria for application of Community level and divided between the Member States.
the ground rules and procedures, which it decided should be ii. Criteria for objective and volume
made public in the form of various types of texts: framework
In principle, aid cannot be used to help run businesses, but only
documents, communications, guidelines, sometimes just
for investment (start-up or creating additional jobs). It must not
letters, but also directives and regulations. But this piecemeal
exceed a certain proportion of investment; in general, 50 % for
approach at the purely administrative level did not provide
exemption under point (a) and 20 % under point (c).
sufficient legal certainty or clear and effective administrative
management. Legislation was therefore needed and was b. Sector-specific aid
adopted in 1998 for the ground rules and 1999 for the The exemption criteria have been laid down in several texts for
procedural rules. In Commission Regulation (EC) No 794/2004 each of the main sectors: steel, shipbuilding, automobiles and
of 21 April 2004, implementing Council Regulation (EC) synthetic fibres (4.7.2 and 4.8.2 to 4.8.4). These include various
No 659/1999 laying down detailed rules for the application of types of texts, but for shipbuilding they are Council directives
Article 93 of the EC Treaty, new detailed provisions concerning on the basis of Article 87(3)(e). Transport and agriculture are
the form, content and other details of notifications and annual subject to a specific legal system involving Articles 87 to 89
reports referred to in Regulation (EC) No 659/1999 are set out. and ad hoc provisions (4.2 and 4.6). The same is true for
The new regulation also sets out provisions for the calculation State enterprises and public services (3.3.4).
of time limits in all procedures concerning State aid and of the
These texts have one common theme: to be acceptable, aid
interest rate for the recovery of unlawful aid.
must not tend to preserve the status quo by maintaining over-
2. Application of the ground rules capacity but must aim to restore long-term viability by
As there is by definition no obligation to notify aid which is resolving structural problems, including by reducing capacity;
automatically exempt (Article 87(2)), the Commission’s work it should be degressive and proportional.
consists of applying the rules on exemption laid down by the
Guidelines for application of competition rules to different
Treaty for certain types of aid (Article 87(3)) and thus
sectors are regularly issued. Recent communications refer to
establishing for each of them a set of exemption criteria.
environmental protection, risk capital, advertising of
a. Regional aid (Article 87(3)(a) and (c)) agricultural products, public service broadcasting and
The current system is laid down by the ‘guidelines’ of March restructuring of the steel sector.
1998, which brought together several previous c. Horizontal aid
communications. In March 2002, the Commission issued a
This is aid which is likely to benefit all sectors of the economy:
multi-sectoral framework on regional aid for large investment
research and development, SMEs, environmental protection,
projects that covers regional aid intended to promote initial
salvage and restructuring of failing enterprises, and
investment, including associated job creation. This framework
employment.
was modified by the Commission communication of November
2003 on the modification of the multi-sectoral framework on Until now, horizontal aid, like the other forms of aid, has been
regional aid for large investment projects (2002) with regard to covered by various piecemeal texts (framework documents,
the establishment of a list of sectors facing structural problems. guidelines, etc.) laying down the exemption criteria for each
A proposal of appropriate measures pursuant to Article 88(1) of type of aid.
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On 7 May 1998, horizontal aid became subject to the first The ‘State aid register’, first published in March 2001, provides
Council regulation ((EC) No 994/98) on the basis of Article 89 summary information on notifications and Commission
for the application of Article 87(3). This gives the Commission decisions. The State aid scoreboard, launched in July 2001 and
the power to adopt regulations exempting certain categories updated twice annually, provides indicators of the situation
on the principle of declaring certain aid compatible a priori and control procedures in each Member State.
with the common market and thus exempt from the
obligation to notify. This is applicable to aid for SMEs, research D. Reform
and development, environmental protection, employment In June 2005, the Commission launched the State aid action
and training and to certain types of regional aid. The plan (SAAP). Instead of dealing with all areas separately, the
exempting regulations must specify the purpose of the aid, Commission proposed a comprehensive and consistent
the categories of beneficiaries and the thresholds. In January reform with uniform principles applied in all instruments.
2001, the Commission adopted three new regulations on the Also, State aid should be better supporting the Lisbon
application of the competition rules to training aid, as strategy as aid in areas contributing to growth and
amended by Commission Regulation (EC) No 363/2004 of 25 employment would be facilitated (R & D, innovation and risk
February 2004, on the de minimis rule and on State aid to small capital). State aid should incorporate a refined economic
and medium-sized enterprises, as amended by Commission approach and be better targeted at types of intervention
Regulation (EC) No 364/2004 of 25 February 2004. In where financial markets are more reluctant to lend money.
November 2002, the Commission adopted a further block Furthermore, through the SAAP, State aid is also adapted to
exemption for employment aid. the needs of an enlarged Europe. The overall objective is to
achieve less and better targeted aid.
3. Procedure
In order to guarantee coherence, stability and efficiency as laid
down in Article 89 of the Treaty, the Commission has adopted
a number of procedural rules, for example with regard to Parliament has adopted many reports in the area of State aid
deadlines or to reimbursement of aid which had not been (most recently State aid in the form of public service
notified. Regulation (EC) No 659/1999, adopted on 22 March compensation of 22 February 2005, State aid as a tool for
1999 and amended by Commission Regulation (EC) regional development of 15 December 2005, State aid for
No 794/2004 of 21 April 2004, incorporates a number of innovation of 27 April 2006). The publication of the State aid
existing practices. It seeks to clarify and rationalise these, in scoreboards and surveys on State aid every six months has
particular by specifying the deadlines applicable to the various provided the focus for Parliament’s work in this area, for which
stages of the process and by setting strict rules on the the Committee on Economic and Monetary Affairs is
suspension and recovery of aid incompatible with the Treaty. It responsible. The Parliament has called upon the Member
establishes the Commission’s methods of investigation (in States to live up to the commitment they made at the
particular, making provision for on-site monitoring visits) and Stockholm and Barcelona European Councils of March 2001
the Member States’ obligation to cooperate (in particular and 2002 to reduce State aid as a proportion of GNP and
through annual reports on all existing aid systems). reallocate aid to horizontal objectives. Furthermore, on
14 February 2006 the Parliament adopted a resolution on State
The gradual clarification of the rules and reinforcement of the aid reform (SAAP) supporting the plan in general and stating
principle of suspension and provisional recovery of non- that it would like decisions on competition policy to be under
notified aid has increased the number of notifications. the co-decision procedure.
4. Transparency
During 2001, the Commission introduced two new g Arttu Makipaa
instruments to promote transparency in the area of State aid. August 2006
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3.3.4. Public undertakings and services of general interest

Public undertakings, public services and services of general interest are structures over which the public authority has a
dominant power. Competition rules are also applicable to them. Nevertheless, competition rules may be set aside in favour
of services of general economic interest (SGEIs) to the extent that such rules would hinder the accomplishment of the
mission of the SGEIs.
Legal basis The Commission can address decisions and directives of a

Public undertakings and undertakings to which Member regulatory nature to the Member States and supervise them to
States have granted special or exclusive rights: Articles 31, 86 ensure that State aid and the exercise of exclusive rights are
and 295 of the Treaty establishing the European Community compatible with the EC Treaty.
(EC). A. Public undertakings and undertakings to which
Public services, services of general interest and SGEIs: Articles Member States have granted special
16, 30, 46, 73, 86(2) and (3), 87, 88 and 95 of the Treaty or exclusive rights
establishing the European Community (EC). 1. Notions
A public undertaking is an undertaking over which the
Objectives public authorities directly or indirectly exercise dominant
influence when they: (a) hold the major part of the
To create an effective and complete common space in which
undertaking’s subscribed capital; (b) control the majority of the
the internal market rules and the rules on fair competition
votes attached to shares issued by the undertaking; or (c) are
apply to almost all economic activities, whatever the nature or
in a position to appoint more than half the members of the
the essence of the specific activity, be it public or private.
undertaking’s administrative, managerial or supervisory body.
Article 295 of the EC Treaty is neutral on the public or private
Achievements nature of an undertaking’s shareholders.
Public undertakings, undertakings to which special or Undertakings to which Member States have granted
exclusive rights have been granted or specific tasks of public special rights or an exclusive right or a monopoly are
interest (e.g. public services and services of general interest) private or public operators authorised to exercise a given
have been assigned by public authorities, as well as public economic activity of general interest, for which authorisation
services and general interest services, are examples of fields has been granted by public authorities respectively to several
where continuous dialogue between EU institutions and the operators or only to them.
Member States aims to carefully interpret and combine rules
and objectives included in the EC Treaty with existing 2. The principle and the exceptions
national rules. As a matter of principle the economic activities of these
undertakings are subject to the same rules as other businesses.
The commitments for the EU to take full account of the
Article 86 of the EC Treaty prohibits Member States from
specific role of services of general interest in the policies
adopting or maintaining in force any measure contrary to the
and activities falling within its sphere of competence
rules contained in the EC Treaty, particularly the rules on the
(which may stem from general interest considerations such
internal market and the competition rules.
as security of supply, environmental protection, economic
and social solidarity, regional planning, promotion of Nevertheless, the second paragraph of that article provides
consumers’ interests, and economic, social and territorial that undertakings ‘entrusted with the operation of services of
cohesion, under the guiding principles of continuity, general economic interest or having the character of a
equality of access, universality and transparency) has been revenue-producing monopoly’ are subject to the rules on
included in the EC Treaty by the Maastricht and Amsterdam competition ‘insofar as the application of such rules does not
Treaties. obstruct the performance, in law or in fact, of the particular
tasks assigned to them’. Opportunities for exempting such
This shared responsibility is aimed, nowadays, at ensuring that
undertakings are allowed only if necessary to enable them to
users have access to high-quality and affordable services of
perform the particular assigned tasks.
general interest in the European Union, in line with the
principles of better regulation, prior assessment of the impact Article 31 of the EC Treaty provides that national monopolies
of major initiatives, respect of the competence of national, of a commercial character have to ensure that no
regional and local authorities to define, organise, finance and discrimination between nationals of Member States exists,
monitor services of general interest, and, of course, respect of whether the monopoly was exercised by the State itself or
the other rules of the EC Treaty. delegated to one or more organisations or businesses.
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The regimes based on special and exclusive rights may be 30 and 46 (free movement of goods and services) and Articles
maintained under two conditions: that the application of the 81(3) and 87 (competition rules) of the EC Treaty.
competition rules would prevent the performance of the Article 16 of the EC Treaty, as modified by the Treaty of
particular tasks assigned to the undertaking; and that trade is Amsterdam, acknowledges the place occupied by SGEIs
not disrupted to an extent that would be contrary to the among the shared values stating that: ‘Without prejudice to
Community’s interests. Articles 73, 86 and 87, and given the place occupied by
B. Public services, services of general interest and services of general economic interest in the shared values of
services of general economic interest (SGEIs) the Union as well as their role in promoting social and
territorial cohesion, the Community and the Member States,
1. Notions
each within their respective powers and within the scope of
Public services (services of public interest or public utility,
application of this Treaty, shall take care that such services
such as electricity, gas and water supply, transport, postal
operate on the basis of principles and conditions which enable
services and telecommunications) are economic activities of them to fulfil their missions.’
general interest set up by the public authorities and operated
by them or by delegated separate operators (public or private). Article 36 of the Charter of Fundamental Rights of the
European Union requires the Union to recognise and respect
The concept of public service does not correspond to the access to SGEIs to promote the social and territorial cohesion
concept of public sector. The concept of public service is a of the Union.
twofold one: it embraces, wrongly, both bodies providing
services and the general interest services they provide. It therefore follows that almost all services offered can be
considered ‘economic activities’ within the meaning of
General-interest services are services assured by public Articles 43 and 49 of the EC Treaty.
authorities, in the general interest and submitted to specific
public-service obligations. The classic case is the obligation to The EC Treaty leaves to Member States the freedom to define
provide a given service throughout the territory of a country at missions of general interest and to establish the organisational
affordable tariffs and on similar quality conditions, irrespective principles of the services intended to accomplish them.
of the profitability of individual operations. They contribute to However, Member States must take account of Community
achieving the objectives of solidarity and equality and include: law as any activity consisting of supplying goods and services
(a) non-market services (i.e. compulsory education, social in a given market by an undertaking constitutes in principle an
protection); (b) obligations of the State (i.e. security and economic activity, regardless of the legal status of the
justice); (c) SGEIs (i.e. basic electricity, telecommunications, undertaking and the way in which it is financed (Pavlov and
postal services, transport, water and waste removal services others cases, C-180/98 to C-184/98). The Treaty does not
and energy). Article 86 of the EC Treaty does not apply to the require the service to be paid for directly by those benefiting
categories (a) and (b). from it (Bond van Adverteerders case, C-352/85).
SGEIs are not defined by EC law but are normally considered C. Development of Community policy
as commercial services of general economic utility on which For a long time, faced by a lack of rules in the EEC Treaty, EC
the public authorities therefore impose specific public institutions were sensitive not to be seen to infringe the
service obligations (transport, postal services, energy and requirement of neutrality on the ownership of undertakings, as
communications). The definition of services considered to laid down by Article 295 of the EC Treaty, and to respect
be of general economic interest is essentially left to the activities essentially connected with public interest, within the
Member States. exclusive competence of the Member States. Questions
Public service obligations may be imposed by the public materialised in the mid-1980s when the compatibility of the
authorities on the body providing a service. modalities of accomplishing a mission of public or general
interest by these subjects was scrutinised under the rules on
In this context, the term concessions and the rules competition and internal market and concern rose on the links
concerning their award, as well as the application of the existing between public authorities and the undertakings they
provisions of public contracts relating to the creation of mixed own or control and the aid that public authorities were able to
capital entities whose objective is to provide a public service grant to such undertakings.
(institutionalised PPPs), should be clarified.
The Commission, using its special powers under Article 86(3)
2. The principle and the exceptions of the EC Treaty, required, with Directive 80/723/EEC of 25 June
The Treaty of Rome, as modified, does grant a place to SGEIs 1980 on the transparency of financial relations between
and provides an opportunity to exempt them from the rules Member States and public undertakings (as amended by
on the internal market and competition insofar as it is Directive 2000/52/EC), Member States to provide information
necessary to enable the undertakings responsible for such on financial assistance granted to public undertakings and
services to perform their tasks (Article 86(2) EC), as well as on other information concerning the activities of the public
the basis of particular aspects of general interest under Articles undertakings. They also have to submit annual reports.
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3 3
The Commission then started to put forward the view that, this mission which would not have been incurred by an
even if the infrastructure itself remains under exclusive enterprise operating solely according to market criteria. As
ownership, the monopolist owner must grant access to third the Court declared that such effective compensations are
parties wishing to compete with regard to supply of transport, not a State aid (Ferring case, C-53/00, and Altmark Trans
services or energy via that network (i.e. telephone case, C-280/00), the Commission (OJ L 312, 29.11.2005,
communications or electricity) and, from the early 1990s, pp. 67–73) decided to establish thresholds and criteria to
started to challenge special and exclusive rights, either by consider the compensation received by the vast majority
taking actions under Article 226 or by proposing directives of services as compatible with the competition rules if the
aimed to apply the principles of the internal market to the services in question have, in advance and by legal act,
specific sectors. The Commission, in various communications been attributed with a mission of general interest.
(OJ C 281, 26.9.1996 and OJ C 17, 19.1.2001) aiming to establish
— Regulation of the market: Where private operators
a European public service policy, acknowledged the
provide such a service, whether or not linked by a public
importance of public services and proposed to insert the
services contract, Member States may impose ‘public
concept into the Treaty and to establish instruments to
service obligations’, but only if such obligations are
evaluate and coordinate national regulatory bodies and to
necessary, justified, not discriminatory, applied
develop trans-European networks. At the European Council
indiscriminately, based on objective criteria, known in
held in Lisbon in March 2000, the Heads of State or
advance and proportionate (Analir case, C-205/99).
Government acknowledged the key role of services of general
interest and called for more rapid liberalisation in the gas, Some examples on exclusive rights (the import and wholesale
electricity, transport and postal services sectors. The 2003 marketing of alcoholic beverages and the tobacco monopoly
Green Paper and the 2004 White Paper on services of general in Austria, the retail sale of alcohol in Sweden and Finland, and
interest defined the elements of a horizontal strategy to ensure the de minimis aid granted to transports by rail, road and inland
that all citizens and firms in the Union have access to quality waterways under Regulation (EEC) No 1191/69) illustrate the
general-interest services at affordable prices. flexibility in the application of the Treaty when it comes to
recognising the inherent missions of these services’ missions of
In this sense, EC legislation wishes to promote the supply of
general interest.
high-quality general-interest services, as concerns network
activities such as telecommunications, electricity, gas and The EC provisions applicable to specific sectors are dealt with by
railways, with the aim of opening up markets by limiting special the following laws: for the transport sector, Article 73 of the EC
or exclusive rights, or cutting them back substantially, identifying Treaty, which allows State aid if intended to compensate for ‘the
the ‘public service’ as a ‘social obligation’ or a ‘universal service’ discharge of certain obligations inherent in the concept of a
and to encourage public authorities to be clear about the public service’; Directive 97/67/EC on postal services, which
correspondence between the burdens or obligations associated began to open up the sector to competition but also required
with the mission and the restrictions on access to the market Member States to provide a minimum level of services for users’
necessary to allow these organisations to perform properly. benefit under the terms of ‘universal service’ and ‘reserved
service’; the directive of 10 June 2002, which opened up the
The public authorities and the operators cooperate most
market for mail weighing more than 100 g, from 2003, and more
frequently under these situations. Directive 2004/18/EC applies
than 50 g, from 2006; Directive 2003/55/EC, which has made a
in the following instances.
significant contribution towards the creation of an internal
— Delegation: When the public authorities decide to market for gas; and the Community definition of ‘universal
delegate a mission of general interest to an external service’ in the field of communications, under which users must
partner, Community law on public contracts and be able to have access at a fixed location to international and
concessions comes into play and the principles of national calls, as well as emergency services. Other Community
transparency, equal treatment and proportionality apply. policy instruments and actions share the same consumer
— The management of a service under a public–private protection objectives, namely: the implementation of the trans-
partnership (PPP): This is increasingly used to provide European networks programme, the initiative for the creation of
services of general interest. Directive 2004/18/EC applies as a European research area, the action plan on consumer policy
soon as a public authority intends to conclude a contract and the e-Europe action plan. Horizontal consumer protection
for pecuniary interest with a legally distinct enterprise. legislation, dealing with issues such as unfair contract terms and
Significant clarifications on the distinction between distance selling, also applies the mentioned principles related to
‘internal’ and ‘third party’ entities have been brought by the services of general interest.
Court in the Stadt Halle judgment (Case C-26/03).
— Use of public financial compensation: A public authority Role of the European Parliament
may decide to pay compensation to an external body for Parliament has linked the need to respect and support ‘public
the performance of a mission of general interest, intended services’ and ‘services of general interest’ with the need to
to refund for any expenditure involved in accomplishing increase competition for the benefit of consumers and citizens.
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In its resolution of 14 January 2004 on services of general aspects, as well as a mapping out of the policy alternatives that
interest, Parliament reiterated the fundamental importance of are available to the legislator in that scenario.
the subsidiarity principle, the competence of the national Services of general interest (such as education, public health,
authorities to make their choice of missions, organisation and public and social housing and SGEIs assuming functions of
financing arrangements for services of general interest and social security and social inclusion) are not considered to fall
services of general economic interest, the task at Community within the scope of EU competition law. The services of
level to guarantee their exercise within the internal market, to general interest and the services of general economic interest
act in support of projects of general European interest and, have been recently excluded from the application of the draft
notably, to ensure that public service obligations are ‘services directive’ following an amendment by Parliament.
compatible with competition rules. Parliament considers that
the EU must lay down common principles concerning In connection with the sector-specific legislation on network
universality and equality of access, continuity, security and activities, its recent resolutions include, inter alia, electricity
adaptability, quality, efficiency and affordability, transparency, and gas (6 July 2001, 20 December 2001, 13 March 2002 and 7
stability, duration and equitable risk-sharing, protection of June 2005) railway networks (13 January 1998, 30 May 2002
disadvantaged social groups, protection of users, consumers and 14 January 2003) air transport networks (19 February 1998,
and the environment, and citizen participation, taking into 15 June 1998 and 6 July 2000) telecommunications (20
account circumstances which are specific to each sector. February 1997, 18 September 1997 and 26 October 2000, 1
March 2001, 13 June 2001) and postal services (14 December
Parliament proposed some criteria to be used to distinguish 2000 and 13 March 2002).
economic from non-economic services, such as: commercial
or non-commercial purpose; percentage of public funding; General statements of position with regard to public
level of investment; profit-motive, and covering costs; benefits; services include: resolutions of 6 May 1994, 17 December 1997,
commitment to guarantee social rights; and furtherance of 13 January 2001, 13 November 2001, 21 November 2002 and
social inclusion and integration. It underlined the fundamental 22 February 2005; the resolutions adopted in the process of
obligation on the public sector to apply fair and appropriate drafting the Treaty of Amsterdam, in order to secure a revision
tendering procedures and the need to control the other forms recognising the place of public services (15 May 1995,
of exercise of SGEIs by public authorities, such as concessions 14 December 1995 and 13 March 1996).
and PPPs. It finally welcomed the liberalisation achieved, A recent improvement of Parliament’s role in this area is the
notably in the telecommunication and energy sectors, and modification of Decision 1999/468/EC laying down the
rejected the option of European regulators at sectoral level procedures for the exercise of implementing powers conferred
calling for the strengthening of coordination and cooperation on the Commission (resolution of 6 July 2006 for the decision
with and between the authorities responsible for national on the conclusion of an Interinstitutional Agreement
regulations. introducing the new ‘regulatory procedure with scrutiny’)
It called for assessments to be conducted horizontally in an when the co-decision procedure applies.
integrated manner and, in particular, qualitatively oriented.
‘Impact assessment’ is a straightforward mapping out of the g Azelio Fulmini
consequences on social, economic and environmental June 2006
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The internal market Approximation of legislation
3 4
3.4. Approximation of legislation
3.4.1. Public procurement contracts

Public authorities conclude contracts to ensure the completion of works supply or services delivery. These contracts,
concluded in exchange for remuneration with one or more traders, are called public contracts and represent an important
part of the EU’s gross domestic product (GDP).
Legal basis for invitations to tender and on objective criteria to scrutinise

Articles 14, 28, 47(2), 49, 50, 55 and 95 of the Treaty tenders. The Community decided, after various normative acts
establishing the European Community (EC). adopted since the 1960s, to simplify and coordinate public
procurement legislation and adopted four directives
(92/50/EEC, 93/36/EEC, 93/37/EEC and 93/38/EEC).
Objectives
Public procurement contracts play a significant role in the As proposed in the Green Paper of 27 November 1996, the first
economy of Member States. They are estimated to be equivalent three of those directives were merged, with the aim of
to more than 16 % of EU GDP. Prior to the implementation of simplification and clarification, into Directive 2004/18/EC on
Community legislation, only 2 % of public procurement contracts public works contracts, public supply contracts and public
were awarded to non-national undertakings. These contracts service contracts, and Directive 2004/17/EC on the water,
play a key role in certain sectors, such as construction and public energy, transport and postal services sectors, since rectified by
works, energy, telecommunications and heavy industry, and are, Directive 2005/75/EC that replaced Directive 93/38/EEC. Some
traditionally, characterised by a preference for national suppliers, annexes to both directives have been modified by Directive
based on statutory or administrative rules. This lack of open and 2005/51/EC.
effective competition was one obstacle to the completion of the These directives do not apply, or apply under limitations: to
single market, pushing up costs for contracting authorities and contracts permitting the contracting authorities to provide or
inhibiting, in certain key industries, the development of exploit public telecommunication networks or to provide to the
competitiveness. public one or more telecommunication services (covered by
The application of the principles of the internal market (in Directive 93/38/EEC), nevertheless, they apply to voice
particular freedom to provide services and freedom of telephony, telex, mobile telephone, paging and satellite services;
competition) to these contracts secures a better allocation to contracts covered by State security or secrecy, national
of economic resources and a more rational use of public essential interests and international agreements (Decision
funds (public authorities obtaining products and services of 94/800/EC); to contracts related to services co-financed by
the highest available quality at the best price under keener research and development programmes; to contracts related to
competition). Giving preference to the best-performing immovable property; to contracts related to specific audiovisual
undertakings across the European market encourages the services in the field of broadcasting, but they apply to contracts
competitiveness of European firms (who are therefore able to related to the supply of technical equipment production and
step up their size and develop their outlets) and reinforces the broadcasting; to contracts awarded on the basis of an exclusive
respect of the principles of transparency, equal treatment, right; to contracts related to arbitration and conciliation services;
genuine competition and efficiency, while reducing the risks to contracts related to service concessions; to contracts related
of fraud and corruption. A genuinely open single market to central bank services and financial services; to contracts
would be achieved only when all firms can compete for these regulating simply the employment conditions; to contracts
contracts on an equal footing. related to Regulations (EEC) No 3975/87 and (EEC) No 3976/87
(air transport); and to contracts related to those bus transport
Achievements services excluded by Directive 93/38/EEC.
The Community equipped itself with legislation aimed at Concerning Directive 2004/17/EC, the ‘special arrangements’
coordinating national rules imposing obligations on publicity provided for by Directives 93/38/EC, 94/22/EC and 90/531/EEC
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and Decisions 93/676/EEC, 97/367/EC, 2002/205/EC, 2004/73/ and efficiency. The respect of these principles is compulsory
EC, as well as the limitations or the exclusions concerning also in the case of public procurement contracts signed by a
‘special or exclusive rights’, ‘affiliated undertakings’ and ‘joint third party, whether public or private, which has been granted
ventures’, shall still apply. Directive 2004/17/EC shall not apply by a contracting authority special or exclusive rights to carry
to work and service ‘concessions’ awarded simply for carrying out a public service. National rules on public morality, public
out the specific concerned activities. policy, public security, health, human and animal life,
‘Public contracts’ are defined as being contracts concluded in employment conditions and safety at work, safety of the
transaction of information via electronic means, security,
writing between one or more economic operators and one or
confidentiality, privacy, certification, environment, misconduct,
more contracting authorities having as their object the
rules concerning the conditions for the pursuit of activities or a
execution of works, supply or services in exchange for
profession, etc. can be applied but they have to respect
remuneration.
existing EU law.
‘Contracting authorities’ means the State, regional or local
The Commission is keen to develop an electronic public
authorities, as well as bodies governed by public law and
procurement system and will propose measures in order to
associations formed by one or several of such authorities or
ensure a well-functioning internal market through the use of
one or several of such bodies governed by public law, which
an electronic public procurement system, to improve the
are established for the specific purpose of meeting needs of
governance of the public procurement system, and to achieve
general interest, not having an industrial or commercial
greater efficiency towards an international framework for
character, having legal personality and financed by or subject
electronic procurement. Directives 1999/93/EC and
to management supervision of the ‘contracting authorities’.
2000/31/EC shall apply.
They are all listed in the annexes.
Specific rules concern ‘public work concessions’, service design
‘Concessions’ are contracts similar to a public service contract
contests, subcontracting, framework agreements, dynamic
but which consists either solely in the right to exploit the
purchasing systems, and public work contracts with subsidised
service or in this right together with payment.
housing schemes.
A. Procedures
B. Criteria for the award of the contract
Calls for tender have to correspond to three types of
A choice is allowed between: (a) the lowest price and (b) the
procedure, to be used on the basis of a threshold system,
most economically advantageous bid (a criterion containing
combined with the methods for calculating the estimated
several elements such as quality, price, technical merit,
value of each public contract and the indications for the
environmental elements, time limit on delivery, and
procedures to be used, compulsory or indicative, as stated by
profitability).
the directives. The threshold system is to be updated every
two years. In the ‘open procedure’ any interested economic The chosen criteria have to be specified in the call for tender
operator may submit a tender. In the ‘restricted procedure’ and the attached documents.
only invited candidates may submit a tender. In the
C. Rules on publicity and transparency
‘negotiated procedure’ the contracting authorities may
consult the economic operators of their choice and Public contracts whose values exceed the thresholds stated in
negotiate the terms of contract with one or more of them. A the directives have to be published in accordance with
‘competitive dialogue’ (a procedure in which any economic standard forms. In certain contracts the publication of an
operator may request to participate and where the information notice (e.g. notice of a design contest) is
contracting authorities may conduct a dialogue with the compulsory, while in others it is not compulsory (e.g. prior
admitted candidates, aimed to develop more suitable information notice).
alternatives capable of meeting its requirements and, The forms of publicity, as well as the time limits, the rules
consequently, invite to tender only chosen candidates) is applicable to communication and exchange of information
suitable, within the framework of Directive 2004/18/EC, for and the conduct of the procedure are stated in the two
complex contracts. directives and their annexes, as well as in Regulation (EC) No
As a general principle, all rules to be applied to the tender on 1564/2005.
procedure, admission, quantifiable features, auction process Decision 2005/15/EC stated detailed rules concerning the
and technical specifications, subcontracting, obligations, procedure for establishing whether a given activity is directly
conditions for performance, economic, financial and technical exposed to competition; this procedure is provided for in
capacities, qualifications and award of the contract have to be Article 30 of Directive 2004/17/EC.
clarified in the ‘call for tender’ and the annexed ‘specifications’. Each contracting authority shall duly inform tenderers on the
All procedures have to respect the principles of EU law with decisions reached concerning the procedure and the award of
regard to transparency, non-discrimination, competition, free contracts, as soon as possible. Any unsuccessful candidate
movement, mutual recognition, proportionality, confidentiality shall be informed of the reasons for rejection.
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3 4
D. Transposition and review ‘constitutional relevance’ in most Member States, in order to

In order to facilitate the transposition of the two directives, to be fulfil their institutional duties. Many differences exist in the
transposed by the Member States by 31 January 2006, Regulation Member States with regard to both the distribution of powers
(EC) No 2195/2002 provides for a ‘common procurement and the procedures related to the execution of those public
vocabulary’ (CPV). In April 2006, the majority of Member States tasks via contracts with third parties, whether covered by
had not completely transposed the two directives and the private or public law. All contracts concerning the provision of
Commission is prepared to open the procedures for infringement services or the execution of works are covered by European
against some Member States. An action plan for the competition and public procurement legislation, with the
implementation of the two directives is under discussion. exception of ‘excluded cases’ and ‘in-house’ activities, i.e.
activities performed directly by the public body itself.
Member States shall ensure the implementation by effective,
Consequently, problems arise on such questions as, for
available and transparent mechanisms and may use the help of
example, the suitable regime that should govern ‘inter-
an independent body. In order to further develop public
communal cooperation’ or ‘public–private partnership’. In fact,
procurement within the Union, the Commission will review the
public services such as local water management, road
situation and report on the results achieved by the end of 2007.
maintenance, distribution of energy, waste management,
The Member States shall submit a statistical report on public
social housing, sports and cultural infrastructures, crematoria
procurement to the Commission, by 31 October each year.
and public transport are not simply economic activities and it
may not be suitable to simply submit them to mere principles
Role of the European Parliament of the internal market. The definition of ‘control exercised by
Parliament succeeded in having environmental and social the public body over the undertaking’ also has its critics.
criteria (including health and safety and access by disabled Parliament is interested in considering possible adjustments to
persons), as well as monitoring mechanisms, clearer contract the actual legislation and has organised a public hearing on
award criteria and transparency, reflected at all stages of public these grounds for 20 April 2006.
procurement procedures.
Public procurements are strictly related to the attribution of g Azelio Fulmini
powers among the national bodies, a system which has a September 2006
3.4.2. Company law

After many years of unsuccessful attempts to create a single Community framework for enterprises, two legislative
instruments adopted by the Council in 2001 led to the creation of the European company. New rules were adopted for
associations, cooperative and mutual societies. A European Economic Interest Grouping was also created.
Legal basis office is located. The first system is found in the United
Article 44(2)(g) of the Treaty establishing the European Kingdom and the Netherlands, and the second in Belgium,
Community (EC) provides that, in order to attain freedom of Germany, France and others.
establishment, the Council must act by means of directives in
accordance with the co-decision procedure to provide the Articles 94, 95, 293 and 308 of the EC Treaty also allow
necessary degree of coordination of the safeguards which, for Community intervention in company law but play only a
the protection of the interests of members and others, are secondary role.
required by Member States of companies or firms within the
meaning of the second paragraph of Article 48 of the EC
Treaty, with a view to making such safeguards equivalent
Objectives
throughout the Community. — Because of its position in the text of the EC Treaty, there is
Article 48 enshrines in the EC Treaty the two systems that exist no doubt that the primary objective of the harmonisation
in the Community for attaching a company or firm to the legal of company law is to promote the attainment of freedom
system of a Member State. Companies may come under the of establishment by removing obstacles which the
incorporation system, which is typical of common law, or be different national legal systems are likely to present for
subject to the law of the country in which their registered companies operating across borders.
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— The aim is also to guarantee legal certainty by requiring all of said companies, Directive 77/91/EEC was amended by
companies subject to the jurisdiction of the Member States Directive 2006/68/EC. This directive allows Member States
to fulfil a minimum set of common obligations in an to waive certain specific obligations, subject to certain
undistorted system of competition. conditions, as far as companies are concerned, which
— A further aim is to remove the legal obstacles to company involve information disclosure and facilitating the
development on a European scale: the single market restructuring of share ownership. It also makes provision
for harmonised guarantees for creditors in the event of a
implies the creation of Europe-wide companies, which
reduction in the share capital.
must be able to act throughout the Community in the
same way as in their own country. This will result in the 2. Company operation
implications of several national legal systems being The first directive ensures the validity of the company’s
removed. undertakings towards third parties acting in good faith; a
subject which, apart from the 12th Council directive (89/667/
Achievements EEC of 21 December 1989) on single-member private limited
liability companies, is so far covered only by proposals.
A. A minimum set of common obligations Adoption of the third proposal for a fifth directive in 1991
1. Setting up a company on the structure of public limited liability companies and the
Certain conditions must be complied with when a company is powers and obligations of their bodies has been blocked
set up. because of its provisions on worker participation (4.9.6). The
(a) A first Council directive (68/151/EEC of 9 March 1968) laid ninth directive on affiliated undertakings, i.e. under law
down substantial disclosure requirements for setting up relating to groups of companies, has not even reached the
companies with share capital and private limited liability proposal stage.
companies to ensure that third parties are given full details As far as the system of taxation for companies is concerned,
of the new company. Preventive control when a company Council Directive 90/435/EEC of 23 July 1990 (as amended by
is formed is also required. As such controls are not infallible, Directive 2003/123/EC) on the common system of taxation
provision is made in certain cases for nullity of companies applicable in the case of parent companies and subsidiaries of
that have been constituted irregularly. different Member States introduces tax rules which are neutral
This was amended by Directive 2003/58/EC of the from the point of view of competition for groups of companies
of different Member States. It abolishes the double taxation of
European Parliament and of the Council of 15 July 2003,
dividends distributed by a subsidiary in one Member State to
which gives the public easier and faster access to
its parent company in another.
information on companies, while at the same time
simplifying the disclosure requirements for the companies. 3. Company restructuring
The documents and particulars required can now be filed Efforts were made to give shareholders and third parties the
in paper form or by electronic means, and interested same guarantees during restructuring in the third Council
parties may then obtain a copy in either form. Furthermore, directive (78/855/EEC of 9 October 1978) on national mergers
companies continue to disclose their documents and of public limited liability companies and the sixth directive
particulars in the language or one of the languages of their (82/891/EEC of 17 December 1982) on the division of public
Member State, but may also voluntarily disclose them in limited liability companies. Both these directives were
other European Union languages in order to improve amended by Directive 2007/63/EC regarding the requirement
cross-border access to information about them. of an independent expert’s report in the event of the merger
(b) A second Council directive (77/91/EEC of 13 December or division of public limited liability companies.
1976) added to this body of law, but relates only to public Following Parliament’s rejection of an amended proposal for a
limited liability companies. The constitution of such 13th directive on takeover bids in July 2001, a new proposal
companies requires a minimum amount of authorised presented in October 2002 led to the adoption of Directive
capital as security for creditors and a counterpart to the 2004/25/EC of the European Parliament and of the Council of
limited responsibility of shareholders. There is also a 21 April 2004 on takeover bids. This aims to establish minimum
minimum content requirement for public limited liability guidelines for the conduct of takeover bids for the securities of
companies’ instruments of incorporation. In order to companies governed by the laws of Member States, where
prevent misuses of Directive 77/91/EEC, Council Directive some or all of those securities are admitted to trading on a
92/101/EEC amended it so that it also includes companies regulated market. It also aims to provide adequate protection
covered by Directive 68/151/EEC and those coming under for shareholders within the Community by establishing a
the jurisdiction of a non-Community country and having a framework of common principles and general requirements
comparable legal form. With a view to simplifying the which Member States are to implement through more
arrangements for constituting public limited liability detailed rules in accordance with their national systems and
companies and for maintaining and modifying the capital their cultural contexts.
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3 4
4. Guarantees concerning the financial situation of Special measures also apply to cooperatives. The directive
companies specifies the minimum content of the common cross-border
After a certain period, authorised capital required for the merger project and in order to protect the interests both of
constitution of a public limited liability company no longer shareholders and of third parties, provision is made, for each
gives creditors a guarantee of security. Thus, the second company involved in a merger, for both the cross-border
directive contains provisions to ensure that authorised capital merger project and the actual cross-border merger to be
is available throughout a company’s existence. To ensure that publicised in an entry in the appropriate public register.
information provided in accounting documents is equivalent In addition, Directive 2005/19/EC of 17 February 2005
in all Member States, the fourth, seventh and eighth directives amending Directive 90/434/EEC introduces a common system
(78/660/EEC of 25 July 1978, 83/349/EEC of 13 June 1983 and of taxation applicable to mergers, divisions, transfers of assets
84/253/EEC of 10 April 1984) require company accounts and exchanges of shares concerning companies of different
(annual accounts, consolidated accounts and approval of Member States.
persons responsible for carrying out statutory audits) to give a
Finally, Directive 2007/36/EC on the exercise of certain rights of
true and fair view of the company’s assets, liabilities, financial
shareholders in listed companies abolishes the main obstacles
position and profit or loss. Regulation (EC) No 1606/2002 of
to a cross-border vote in listed companies which have their
the European Parliament and of the Council of 19 July 2002 on
registered headquarters in a Member State, by introducing
the application of international accounting standards
specific requirements for a certain number of shareholder
harmonises the financial information presented by publicly
rights at the general meeting.
traded companies in order to guarantee protection for
investors. 2. The operation of European-scale companies
Directive 2006/43/EC of 17 May 2006 on statutory audits of There has not been much development other than on tax
annual accounts and consolidated accounts amends (4.18.5) and social rules (4.9.6). The 11th Council directive
Directives 78/660/EEC and 83/349/EEC and repeals Directive (89/666/EEC of 21 December 1989) on disclosure requirements
84/253/EEC. It aims to improve the reliability of the financial in respect of branches opened in a Member State by certain
statements of companies by establishing minimum types of company governed by the law of another State or
even a non-Community country enables persons resident in a
requirements for the statutory audit of annual and
country where a branch is established to obtain a minimum
consolidated accounts. In addition, the directive widens the
amount of information on branches in other Member States.
scope of EU legislation in force (Directive 84/253/EEC), by
An international bankruptcy convention was signed on
specifying the role of statutory auditors, the fact that they
23 November 1995, under which European-scale undertakings
must demonstrate their independence and the code of ethics
will be declared bankrupt at European level, instead of
which they must adhere to, and introduces external quality
undergoing the multiple bankruptcies that were hitherto the
assurance requirements.
case.
B. Regulations for companies with a Community 3. Community statutes
dimension a. Aim
1. Removal of barriers to company development on a To allow companies that want to act or establish themselves
Community scale beyond their national frontiers the option of being subject to
The first aim was to make it easier for companies to operate in one set of laws and not several as is the case at present.
Member States other than their country of origin. This was the
aim of the convention of 29 February 1968 on the mutual b. Long period of stalemate
recognition of companies, which has still not come into force The efforts to bring about this Community legislation are not
as it has not been ratified by all the Member States. new, as the Commission presented its first proposal for a
regulation on a statute for a European company in 1970, but
Directive 2005/56/EC on cross-border mergers of companies this proposal (which has been amended on numerous
with share capital is intended to facilitate cross-border mergers occasions) became permanently stalled because of its
between companies with share capital. It introduces a simple provisions on worker participation; some Member States
framework which is strongly derived from rules for national totally rejected such participation, while others made it a
mergers and which will avoid the liquidation of the company condition for accepting the very idea of a European company.
being taken over. The directive applies to mergers of
companies with share capital which are constituted in In order to break the deadlock, the Commission presented
accordance with the legislation of a Member State and whose (1989) a new proposal which had a legal basis providing for
statutory headquarters, central administration or main adoption by the Council acting by a qualified majority, and no
establishment is within the Community, if at least two of them longer unanimously, and which was divided into two parts so
are subject to the legislation of different Member States. It as to split off the provisions on worker participation:
applies to all companies with share capital apart from bodies — a proposal for a regulation on the operation of the
involved in collective investment in transferable securities. European company (based on Article 96);
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— a proposal for a directive on the role of workers (Article 44). participation rights exist within one or more companies
The deadlock persisted, however. It was not even broken, as establishing an SE, they are preserved through their transfer to
the Commission had hoped, with the adoption on 22 the SE, once established, unless the parties involved decide
otherwise within the ‘special negotiating body’ which brings
September 1994 of Directive 94/45/EC on European works
together the representatives of the employees of all the
councils (4.9.6).
companies concerned.
c. Breaking the deadlock
The draft statutes for a European association, cooperative
The Commission therefore made a fresh effort. Within the
society and mutual society (proposals for regulations and
framework laid down by a communication of November 1995
directives, July 1993) have undergone the same fate as the
(COM(95) 547), a group of experts chaired by Étienne
statute for a European company for the same reason.
Davignon proposed a system allowing considerable freedom
of choice as to the method of worker participation. Although the legislative procedure has still to be completed as
regards the statutes for a European association and mutual
On the basis of their report (May 1997) the Council resumed its society, Regulation (EC) No 1435/2003 on the statute for a
work and an agreement on the involvement of employees European cooperative society (SCE) introduces the SCE and
reached during the Nice European Council in early December organises a genuine single legal statute for it. It enables a
2000 enabled the deadlock to be broken after 30 years of cooperative to be established by persons resident in different
negotiation. In October 2001 the Council adopted definitively Member States or by legal entities established under the laws
the two legislative instruments necessary for the of different Member States. With a minimum capital of
establishment of a European company, namely the regulation EUR 30 000, these new SCEs can operate throughout the
on the statute for a European company ((EC) No 2157/2001) single market with a single legal personality, set of rules and
and the directive supplementing the statute with regard to the structure. They can extend and restructure their cross-border
involvement of employees in the European company operations without having to set up a network of subsidiaries,
(2001/86/EC), both of which form an indissociable whole. which costs both time and money. In addition, cooperatives in
Under the regulation on the statute for a European several different countries can now merge to form an SCE.
company ((EC) No 2157/2001, which entered into force on Finally, a national cooperative with activities in a Member State
8 October 2001), a company may be set up within the territory other than where it has its head office may be converted into a
of the Community in the form of a public limited liability European cooperative without first having to go into
company, known by the Latin name Societas Europaea (SE). The liquidation.
SE will make it possible to operate at Community level while
being subject to Community legislation directly applicable in Directive 2003/72/EC of 22 July 2003 supplements this statute
all Member States. Several options are made available to with regard to the involvement of employees in the SCE in
undertakings of at least two Member States which want to set order to ensure that that the establishment of an SCE does not
themselves up as an SE: merger, establishment of a holding entail the disappearance or reduction of practices of employee
company, formation of a subsidiary or conversion into an SE. involvement existing within the companies participating in
The statute will enable a public limited liability company with the establishment of the SCE.
a registered office and head office within the Community to The Council was also able to adopt Regulation (EEC) No
transform itself into an SE without going into liquidation. The 2137/85 of 25 July 1985 on the creation of the European
SE will be entered in a register in the Member State in which it economic interest grouping (EEIG). This enables companies
has its registered office. Every registered SE will be published in in one Member State to cooperate in a joint venture with
the Official Journal of the European Union. The SE will have to companies or legal persons in other Member States, the profits
take the form of a company with share capital. In order to being shared between the members. Such groupings have
ensure that such companies are of reasonable size, a minimum legal capacity. However, Article 3 of the regulation states that
amount of capital is set at not less than EUR 120 000. the purpose of a grouping is to facilitate or develop the
economic activities of its members and to improve or increase
The directive on the involvement of employees in the
the results of those activities, but not to make profits for itself.
European company (2001/86/EC, which entered into force on
Its activity must not be more than ancillary to the economic
8 October 2001) is aimed at ensuring that the establishment of
activities of its members. An EEIG may not offer its securities to
an SE does not entail the disappearance or reduction of
the public.
practices of employee involvement existing within the
companies participating in the establishment of an SE. In view
of the great diversity of rules and practices in the Member Role of the European Parliament
States as regards the manner in which employees’ Parliament has been able to get some of its amendments
representatives are involved in decision-making within incorporated in legislation. It has strongly defended worker
companies, there are no plans for a single European model. participation in companies (4.9.6). It was for this reason that it
Employee information and consultation procedures at refused to deliver an opinion on the proposal for a 10th
transnational level are nevertheless ensured. If and when directive on cross-border mergers of public limited companies,
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thus preventing its adoption until the question of worker in a Member State to establish a European private company
participation had been settled at Community level. (EPC) on Community territory, subject to and in accordance
Parliament was behind proposals for a European statute for with a procedure which will have to be set out in a regulation.
undertakings in the mutual sector, following a report putting It therefore requests the Commission to submit to Parliament a
forward the idea of a European cooperative society and a legislative proposal on the statute for a European private
resolution of 13 March 1987 advocating a European statute for company, which shall take into account the recommendations
associations. It was a parliamentary intergroup that presented included in the resolution on the arrangements regarding
the Commission with a draft European statute for associations formation, capital stock, organisation, content of articles of
on 14 April 1985. association, liability of the executive director, annual accounts,
possibilities for conversion and dissolution, liquidation,
More recently, on 1 February 2007, Parliament adopted a
insolvency and suspension of payments.
resolution which included recommendations for the
Commission regarding the European private company statute.
Parliament is of the opinion that it should be possible for one g Roberta Panizza
or more natural or legal persons who do not necessarily reside July 2008
3.4.3. Financial services: establishment and practical

application of the Lamfalussy process
The Lamfalussy process is designed to simplify and speed up EU legislation on financial services by means of a four-level
approach.
Under the process, the EU institutions, with the Commission taking the lead, simply adopt framework legislation, whilst
detailed technical implementing provisions are the responsibility of the Commission, assisted by four specialist
committees.
Legal basis — 5 November 2003: Commission Decision 2004/6/EC

establishing the Committee of European Insurance and
— 11 May 1999: the European Commission adopts the
Occupational Pensions Supervisors (CEIOPS).
financial services action plan (COM(1999) 232).
— 6 June 2001: Commission Decision 2001/528/EC — 9 March 2005: Directive 2005/1/EC of the European
establishing the European Securities Committee (ESC). Parliament and of the Council amending Council Directives
73/239/EEC, 85/611/EEC, 91/675/EEC, 92/49/EEC and
— 6 June 2001: Commission Decision 2001/527/EC 93/6/EEC and Directives 94/19/EC, 98/78/EC, 2000/12/EC,
establishing the Committee of European Securities 2001/34/EC, 2002/83/EC and 2002/87/EC of the European
Regulators (CESR). Parliament and of the Council in order to establish a new
— March 2002: the European Council approves the introduction organisational structure for financial services committees.
of the Lamfalussy process for the securities sector.
— 17 July 2006: Council Decision 2006/512/EC amending
— December 2002: the European Council decides to extend Decision 1999/468/EC laying down the procedures for the
the Lamfalussy process to the entire financial sector. exercise of implementing powers conferred on the
— 5 November 2003: Commission Decision 2004/10/EC Commission.
establishing the European Banking Committee (EBC).
— 5 November 2003: Commission Decision 2004/5/EC Establishment of the process
establishing the Committee of European Banking
In July 2000, recognising that the existing legal and regulatory
Supervisors (CEBS).
framework was impeding the growth and competitiveness of
— 5 November 2003: Commission Decision 2004/9/EC European securities markets, the Ecofin Council set up a
establishing the European Insurance and Occupational Committee of Wise Men chaired by Baron Alexandre
Pensions Committee (EIOPC). Lamfalussy to review the situation.
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The committee proposed a range of reform measures, Commission. Their function is purely consultative in relation to
based on a four-level approach that came to be known as technical implementing measures. The work of the specialist
the Lamfalussy process. The process was introduced in committees is known as level 2 of the process.
order to simplify and speed up EU legislation on financial The Lamfalussy process has also entailed the creation of
services. In March 2002, with a view to meeting deadlines committees of experts responsible for the exchange of
for the implementation of the financial services action plan supervisory information, for consistency in the
(FSAP), the European Council approved the application of implementation of European law through the introduction of
the Lamfalussy process to legislation for the securities standards and guidelines, and for harmonisation of
sector. supervisory practices in the European financial services
In December 2002 the Council decided to extend the market. The work of these committees of experts is known as
Lamfalussy process to the entire EU financial sector, thus level 3 of the process.
embracing banking, insurance and occupational pensions. The committees of experts are composed of high-ranking
The specialist committees set up for the purposes of the representatives from the national supervisory authorities. The
process are composed of high-ranking representatives from Committee of European Banking Supervisors also includes
the national finance ministries under the auspices of the representatives from the national central banks.
Specialist committees (level 2) Committees of experts (level 3)

Sector
Securities European Securities Committee (ESC) Committee of European Securities Regulators (CESR)
Banking European Banking Committee (EBC) Committee of European Banking Supervisors (CEBS)
Insurance and occupational European Insurance and Occupational Committee of European Insurance and Occupational
pensions Pensions Committee (EIOPC) Pensions Supervisors (CEIOPS)
Practical application influence. These clauses restricted the Commission’s

implementing powers by imposing a time limit for their
A. Level 1: framework legislation
exercise: the powers lapsed (unless they were extended by
Parliament and the Council, on a proposal from the Parliament and the Council) four years after the entry into force
Commission, jointly adopt legislation under the co-decision of the framework measure.
procedure (1.4.1).
C. Level 3: implementation of measures laid down at
B. Level 2: implementing measures levels 1 and 2
Implementing measures are planned within the parameters The committees of experts (CESR, CEBS and CEIOPS) coordinate
laid down at level 1 and adopted — with the help of the the consistent and fair implementation in the Member States of
specialist committees set up for the purpose — under the the rules made at levels 1 and 2: to that end they produce
modified comitology procedure (1.3.8). standards and guidelines for harmonising supervisory practices
The Commission maintains a close exchange of information in the European market for financial services.
with the European Parliament (EP) at this level and ensures
that its interests are properly reflected. D. Level 4: supervising the application of measures laid
down at levels 1 and 2
The comitology reform of 2006 meets the EP’s basic demand In the event of an infringement of Community law, the
that measures adopted at level 2 should be subject to more Commission will take steps to ensure compliance. This
effective democratic scrutiny. The EP considered this surveillance function is designated as level 4 of the Lamfalussy
necessary because the comitology process increasingly
process.
included the adoption not only of implementing provisions
but also of measures potentially at odds with the substance
of basic acts. Evaluation
There are conflicting views on experience with the Lamfalussy
In practice, the reform added to the existing three comitology
process so far. Its practical implementation has thrown up
procedures by introducing a fourth (known as ‘regulatory
certain problems, which are outlined below.
procedure with scrutiny’), giving the EP co-decision powers in
respect of implementing measures. A. Adhering to the FSAP timetable
Before the reform, the EP had used the insertion of so-called In order to speed up its work at level 2, the European Securities
‘sunset clauses’ in framework legislation as a means of exerting Committee (ESC), for example, has often received its terms of
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reference before the relevant framework legislation has been division of responsibility between level 1 and the subsidiary
definitively adopted at level 1 and this means that negotiations levels could upset the balance of power among the EU
at levels 1 and 2 have taken place simultaneously. This approach institutions if the Council and Parliament are involved only in
has had the effect of advancing discussions with market level 1 legislation whilst it is left to the Commission, with the
operators. It has come under severe criticism, however, because help of the specialist committees, to determine technical
implementing measures cannot be planned (at level 2) before details.
the aim, scope and substance of the framework legislation has
been precisely and finally determined (at level 1). D. Degree of detail in framework legislation
Deciding what should fall within the respective remits of levels
B. Adequate consultation with market operators 1 and 2, on the basis of the degree of regulatory detail
Market operators take the view that the market has no effective involved, is not straightforward.
say, that they are insufficiently involved in level 2 discussions
In particularly technical areas the degree of detail at level 1 is
and that they do not have enough input into the preparation of
growing, with the result that framework legislation may
new rules. They also claim that insufficient attention is paid to
include technical aspects that might have been expected to
the impact of such rules, especially the costs they entail.
be delegated to level 2. Including too much detail at level 1
Consultation times are often considered too short and this also undermines the aim of accelerating the legislative process
makes it harder to win the agreement of market operators. It is and making it more flexible.
claimed that the quality of legislation suffers because too
much emphasis is placed on accelerating the process. The broader the formulation of framework legislation and the
greater the delegation of detailed decision-making to level 2,
Recently there has been more intensive consultation with the easier it will become — other things being equal — to
market operators at levels 1 and 2. The EU institutions have adapt measures to market developments and to new
many formal and informal forums for communication with demands on legislators. This implies, however, that as much of
market experts, and it is therefore possible to obtain the work as possible will be removed from the ordinary law-
information and opinions throughout the legislative process. making process, with a resulting reduction in the direct
C. Specific legal and institutional problems (choice of influence of the European Parliament and Member States on
legal instruments/EP influence) the shaping of legislation for the financial markets.
Debate has focused particularly on the questions of
democratic supervision and the democratic legitimacy of the g Judith Marion Braun
level 3 committees of experts. There is concern that the July 2008
3.4.4. Financial services: key legislation

In May 1999 the Commission set out the financial services action plan (FSAP), with a timetable and concrete measures for
creating an effective single market in financial services. It contained a total of 42 provisions for harmonising Member
States’ rules on securities trading, banking, insurance, pensions and other financial services. The measures are
implemented in accordance with the so-called Lamfalussy process (3.4.3). The Council regards the FSAP as an integral
part of the Lisbon Agenda.
Legal basis — 13 November 2007: Directive 2007/64/EC on payment

services in the internal market, amending Directives
— 11 May 1999: the Commission adopts the financial services 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and
action plan (COM(1999) 232). repealing Council Directive 97/5/EC.
— 21 April 2004: Directive 2004/39/EC on markets in financial
instruments, amending Council Directives 85/611/EEC and Banking
93/6/EEC and Directive 2000/12/EC of the European
A. Capital requirements directive (CRD)
Parliament and of the Council, and repealing Council
Directive 93/22/EEC. 1. Aim
The CRD aims to introduce a modern risk-sensitive framework
— 14 June 2006: Directive 2006/49/EC on the capital for credit institutions and investment companies in the EU, in
adequacy of investment firms and credit institutions. accordance with the Basel II rules on capital adequacy.
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Implementation of the directive is intended to assist the EU duties of payment-service users and providers, and technical
economy and also to create greater financial stability, with minimum standards to improve transparency and legal
benefits for both companies and consumers. certainty in the payments sector.
2. Content 3. Evaluation
The CRD transposes the Basel II framework accord on credit Critics of the new legislation say that it complicates monetary
institutions’ capital adequacy into EU law. movements in the EU and makes them less secure. For
A component of the financial services action plan, the directive example, payment recipients are identified by an IBAN number
brings European capital-adequacy rules up to date, making and banks are no longer required to check the number with
them more comprehensive and risk sensitive by promoting the name of the account holder. This means that under the
tighter risk management on the part of financial institutions. For SEPA rules a transfer may go ahead even if the recipient’s name
example, it provides for the first time for the explicit and account number do not match. Nor does the system
measurement of operational risk, and makes improvements in entitle customers to place an upper limit on direct-debit
risk management more visible through an authorisation scheme authorisations. Similarly, a customer cannot countermand a
for internal rating systems. Flexibility is a key characteristic of the payment once it has been approved by the payment-service
new framework: institutions are thus allowed to choose the provider. There is also a real concern that the shortened
approach that best suits their specific circumstances and the deadline for effecting payment transactions (transfers must be
level of development of their risk-management systems. credited to the recipient’s account on the next business day)
will result in new charges being imposed on customers.
B. Payment services directive (PSD)
1. Aim Securities market
This directive aims to facilitate electronic payments
A. Markets in financial instruments directive (MiFID)
throughout the EU and to pave the way for a single euro
payments area (SEPA). Improving consumer protection is also 1. Aims
an important consideration. As well as establishing an EU-wide This directive aims to introduce uniform Europe-wide
payments area, the directive seeks to make the banking sector standards for securities trading, to boost competition and to
more competitive by opening up financial markets, to create a afford investors greater protection. It therefore includes new
harmonised framework for new entrants to the payments stipulations on investor protection, greater transparency
market from outside the banking sector, and to introduce a regarding commission payments to investment advisors and
range of information obligations. The intention is to offer a better integration in the way financial services are provided.
consistent, technology-neutral legal environment for MiFID stipulates that investors must be advised about all the
payment-service providers in the EU and to promote the charges associated with a transaction and, before concluding a
modernisation of infrastructure. contract, must receive information about the product in
2. Content question and its risks. It is hoped that this regulatory
The directive’s provisions are organised in a two-pillar framework will help to boost investors’ confidence and thus
structure. increase the inflow of international capital to Europe.
The first pillar is concerned with the introduction of ‘payment 2. Content

institutions’ as a new category of payment-service providers, — ‘Best execution’: securities firms and bank advisors
aiming to give them equal access to the market and thus to engaging in securities contracts must seek out the
promote competition. In practical terms this means that, as marketplace where the best possible result can be
well as banks and post-office giro services, any individual or achieved for the customer in terms of both costs and the
legal entity licensed to provide financial services in the EU may probability and rapidity of executing the order.
operate as a payment institution. — Advisors must document and record all investment advice
The directive also provides for the introduction of the so-called given, so that they can prove compliance with the rules on
‘single passport’ system. This means that provided a payment advising customers.
institution is licensed by the authorities in one Member State it — Securities firms and bank advisors must disclose
can operate throughout the Community. investment companies’ or other product suppliers’
Payment institutions may offer payment services as well as commission and bonus payments.
operational and closely related ancillary services (ensuring the 3. Evaluation
execution of payment transactions, foreign exchange services, Investor-protection bodies complain, for example, that
etc.) but they are not entitled to take deposits or to issue investors bear the burden of proof in cases where banks have
electronic money. given misleading or incomplete advice, although it is the
The directive’s second pillar introduces standard obligations investment advisor who is required to document such advice.
with regard to information, harmonised rules on the rights and Also, breaches of regulatory provisions cannot give rise to a
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claim under civil law, so investors are not entitled to intensify competition, leading in turn to a higher incidence of
compensation. bankruptcy and a decline in customer confidence.
In the short term, Solvency II could also result in reduced
Insurance and occupational pensions insurance protection for those branches of the industry that
cover long-term high risks, because the demands placed on
A. Solvency II
them will be greater in quantitative terms. It is possible, too,
1. Aim that insurers will decide to restrict cross-subsidising, with the
This directive will radically overhaul the financial supervision of result that some types of premium will rise. There is a further
insurance firms, replacing the former static model of risk that the planned system of supervision will accelerate the
supervision with a dynamic, risk-based approach in order to already established trend towards consolidation, increasing
afford consumers and companies better protection. It will the current pressure of competition on small and medium-
promote deeper integration of the EU insurance market and sized insurers.
protect insurance firms and claimants more effectively.
Ultimately this should make EU insurance and reinsurance
Supervision
companies more able to compete internationally.
The Lamfalussy process (3.4.3) changed the way that the
2. Content supervision of Europe’s financial market is structured, by
a. Ratio of capital to risk-weighted assets introducing committees of experts at level 3 with the aim of
Under the Solvency I rules there was a static system of achieving uniform supervisory practice and regulation
calculating a company’s solvency margin: it was assessed throughout the EU.
against overall trading volume, and the calculation simply A high level of convergence in supervisory practice in all the
reflected the size of the balance-sheet or profit and loss EU Member States is a basic precondition for completion of
figures. the internal market.
By contrast, the Solvency II system is more concerned with There is a problem, however, with the transposition of
actual risk and the focus of supervision will be the individual European directives into national law and the quality of the
risk level of each company. The principle is that calculation of implementation process. There is a risk that market operators
the solvency margin should reflect all relevant and quantifiable will be treated differently in different Member States, with
risks, and at least the four major categories: market risk, credit damaging consequences for fair competition and effective
risk, technical insurance risk and operational risk. The new integration of financial services markets.
supervisory system will thus mean that insurance firms’ capital
resources are adequate for meeting their risks.
Although it is so strongly risk orientated, Solvency II also
The European Parliament (EP) has shown a particularly high
includes safety mechanisms. A key concept here is the
degree of commitment in the most recent rounds of
minimum capital requirement (MCR), a safety-net level below
legislation for financial services markets. Not only has its
which a company’s available capital should never fall. pursued its co-legislative role, but it has also steadily
b. Capital management supported the work of the Commission, moving discussions
Under the Solvency II rules, an insurance company’s board will forward on many occasions and taking its own initiatives to
be responsible for developing and implementing its make its position clear.
investment strategy. The aim will be to manage assets so By virtue of its proactive approach, the EP is prominently
prudently that obligations such as capital adequacy or a involved both in current discussions at the Council, the
specific risk/return profile are met at all times. Commission and other international institutions about
3. Evaluation development of the supervisory structure for financial markets
Solvency II offers practical benefits to companies with at EU level and in exploring how to avoid systemic risk.
relatively large sums of money at their disposal, helping them
to invest and to compete in increasingly global markets. g Judith Marion Braun
Supervisory authorities fear, however, that a livelier market will July 2008
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3.4.5. Intellectual, industrial and commercial property
Consisting of trade marks, patents, designs and models, designations of origin and copyrights, intellectual property is
protected through various Community regulations. The fight against counterfeiting has become one of the priorities of the
Office for Harmonization in the Internal Market and of the European Patent Office.
Legal Basis up a Community trade mark office, the ‘Office for

Article 30 of the Treaty establishing the European Community Harmonization in the Internal Market (Trade Marks and
(EC) includes ‘... the protection of industrial and commercial Designs)’; the Office, which was established in Alicante,
property’ in the grounds for exemption from the free became operational in 1996. Regulation (EC) No 40/94 was
movement of goods. ‘Industrial and commercial property’ is amended by Council Regulation (EC) No 422/2004 of 19
applicable to all rights of industrial or intellectual property, February 2004, which contributes to improving the operation
including copyright, patents, trade marks, designs and models of the Community trade mark system.
and designations of origin. Directive 98/71/EC of 13 October 1998 approximates national
legislation on the legal protection of designs.
Industrial or intellectual property also comes under the
provisions on free competition (Articles 81 and 82 EC) insofar Regulation (EC) No 6/2002 of 12 December 2001 institutes a
as it may give rise to concerted practices or abuse of a Community system for the protection of designs.
dominant position. Council Decision 2006/954/EC of 18 December 2006,
The Treaty of Lisbon introduces a new legal basis which approving the accession of the European Community to the
legitimises direct intervention by the Union in the field of Geneva Act of the Hague Agreement concerning the
intellectual property. According to Article 118 of the international registration of industrial designs, adopted in
consolidated version of the Treaty on the Functioning of the Geneva on 2 July 1999, and Council Regulation (EC) No
European Union, the European Parliament and the Council 1891/2006 of 18 December 2006 amending Regulations (EC)
shall establish measures for the creation of European No 6/2002 and (EC) No 40/94 to give effect to this accession
intellectual property rights to provide uniform intellectual aim to link the Union system for the registration of designs to
property rights protection throughout the Union and for the the World Intellectual Property Organisation international
setting up of centralised Union-wide authorisation, registration system for industrial designs.
coordination and supervision arrangements. 2. Copyright
The Paris and Berne Conventions signed in the late 19th a. Main Community measures
century, to which the Member States are parties, did not Council Directive 91/250/EEC of 14 May 1991 on the legal
establish international rights to intellectual property. protection of computer programs (see below).
Directive 92/100/EEC of 19 November 1992, on the borrowing
Objectives and lending of works of art.
As exclusive rights, intellectual, industrial and commercial Directive 93/83/EEC of 27 September 1993 on radio
property rights are still dependent on the various national broadcasting and cable retransmission.
laws. The Member States have never seriously envisaged the
prospect of total and absolute unification of such laws. They Directive 93/98/EEC of 29 October 1993 harmonising the
settled for a compromise of setting up rights at Community duration of copyright and related rights.
level, to which undertakings could have recourse as a Commission Green Paper of 19 July 1995 on copyright and
complement or alternative to national rights. related rights in the information society, adopted on 19 July
1995.
Achievements Directive 2001/29/EC of 22 May 2001 on the harmonisation of
A. Legislative harmonisation certain aspects of copyright and related rights in the
information society.
1. Trade marks and designs
Directive 89/104/EEC of 21 December 1988 approximates Directive 2001/84/EC of 27 September 2001 on the resale right
national laws by laying down common rules on signs for the benefit of the author of an original work of art.
constituting trade marks, grounds for refusal or nullity, and Directive 96/9/EC of 11 March 1996 on the legal protection of
rights conferred by trade marks. databases.
Regulation (EC) No 40/94 of 20 December 1993 created a Directive 2004/48/EC of 29 April 2004 on the enforcement of
Community trade mark alongside national trade marks and set intellectual property rights.
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Directive 2006/115/EC of 12 December 2006 on rental right other means’. It stipulates that databases shall be protected both
and lending right and on certain rights related to copyright in by copyright, covering the intellectual creation involved in their
the field of intellectual property. selection or the arrangement of their content, and by a sui
Directive 2006/116/EC of 12 December 2006 on the term of generis right protecting investment (of money, human resources,
protection of copyright and certain related rights. effort and energy) in the obtaining, verification or presentation
of the contents. The directive does not apply to computer
b. Approval of international treaties programs used in the making or operation of databases nor to
On 16 March 2000 the Council approved the World Intellectual the works and other materials that they contain. Nor does it
Property Organisation (WIPO) Copyright Treaty and the WIPO affect the legal provisions for, in particular, patent rights, trade
Performances and Phonograms Treaty (WPPT). These treaties marks and design rights and unfair competition.
will help to ensure a balanced level of protection for works of
Protection of biotechnological inventions by Directive
art and other protected objects and allow public access to
98/44/EC of 6 July 1998.
content available on networks.
Directive 98/84/EC of the European Parliament and of the
By Decision 94/800/EC of 22 December 1994 the Council
Council of 20 November 1998 on the legal protection of
approved the agreement on trade-related aspects of
services based on, or consisting of, conditional access covers
intellectual property rights (TRIPS) concluded in the Uruguay
all services to which access is conditional, including pay-TV
Round negotiations. The agreement provides that the States
and radio, video and audio services on demand, electronic
parties shall apply among themselves the rules of ‘national
treatment’ and ‘most-favoured-nation treatment’. publishing and a wide range of online services offered to the
public on a subscription or pay-as-you-use basis.
3. Patents
Council Regulation (EC) No 873/2004 amends Council Regulation
a. Initial attempt at creating a Community patent
(EC) No 2100/94 instituting a system of Community protection
For a long time a Community system of patents had been for plant varieties in such a way as to bring its provisions into line
deemed necessary to prevent the unfair competition resulting with the requirements of Regulation (EC) No 2100/94 and
from national patents’ territorial limits. This was the aim of the Directive 98/44/EC on the protection of biotechnological
Luxembourg agreement of 15 December 1989 on the creation inventions. Regulation (EC) No 873/2004 provides that
of a Community patent issued by the European Patent Office ‘Compulsory licences shall be granted to one or more persons by
(EPO) and effective uniformly and simultaneously throughout the Office, on application by that person or those persons, but
the European Union. The agreement has never come into force only on grounds of public interest’ (Article 1(1)).
as not all the Member States have ratified it.
A draft directive on the patentability of computer-
b. Partial improvements implemented inventions proposed by the Commission on
i. Harmonisation of national rules 20 February 2002 was rejected by the European Parliament at
Commission Regulation (EC) No 240/96 of 31 January 1996 its second reading on 6 July 2005.
harmonised and simplified the rules applicable to patent The Commission has proposed an amendment to Directive
licences and know-how licences, to encourage the 98/71/EC with the aim of freeing up the trade in component
dissemination of technical know-how in the Union and parts for motor vehicles. On 12 December 2007 the European
promote the manufacture of technically improved products; Parliament amended the draft directive which was intended to
ii. Community protection of certain sectors amend Directive 98/71/EC at first reading of the co-decision
procedure. Specifically, Parliament approved an amendment
Council Directive 87/54/EEC of 16 December 1986 on the legal
requiring consumers to be informed of the source of parts
protection of topographies of semiconductor products.
through the use of a trade name or any other appropriate form
Council Directive 91/250/EEC of 14 May 1991 on the legal to enable them to make an informed choice from rival
protection of computer programs (amended by Council products offered for the repair. The amended proposal is
Directive 93/98/EEC of 29 October 1993): This directive requires awaiting first reading by the Council.
the Member States to protect computer programs by
copyright, as literary works within the meaning of the Berne c. New plan for a Community patent
Convention for the Protection of Literary and Artistic Works. On 1 August 2000 the Commission presented a new draft
regulation on the Community patent (COM(2000) 412).
Supplementary protection certificate for plant protection According to this draft, the Community patent will coexist with
products created by Regulation (EC) No 1610/96 of 23 July 1996. the national patents. Legal protection will be guaranteed by a
Directive 96/9/EC of the European Parliament and of the Council special court. The European Parliament approved the draft on
of 11 March 1996 provides for the legal protection of databases 9 April 2002 with a series of amendments concerning language
— a database being defined as ‘a collection of independent provisions, the role of national patent offices vis-à-vis the
works, data or other materials arranged in a systematic or European Patent Office, and legal arrangements. The Council has
methodical way and individually accessible by electronic or not yet secured the unanimous approval required for this draft.
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4. Efforts to combat counterfeiting guarantee to consumers that the product has the same origin’,
Counterfeiting, piracy and attacks on intellectual property a definition later expanded in the Hoffmann-Laroche
generally constitute an ever-growing phenomenon that has judgment, ‘by enabling [them] without any possibility of
already assumed international proportions, seriously threatening confusion to distinguish that product from products which
national economies and the authority of the Member States. Yet have another origin’ (102/77 of 23 May 1978).
differences among national systems for penalising such offences 2. Theory of the ‘exhaustion’ of rights
impede the Member States in their efforts to combat a. Definition
counterfeiting and piracy effectively. For these reasons the
This is the theory that the proprietor of an industrial and
Commission has submitted a draft directive and a draft
commercial property right protected by the law of one Member
framework decision on measures to combat infringements of
State cannot invoke that law to prevent the importation of
intellectual property rights, including criminal-law penalties, with
products which have been put into circulation in another
a view to stepping up the fight against counterfeiting and piracy.
Member State (see its application to designs in the judgment in
The new proposals are intended to complement Directive Keurkoop v Nancy Kean Gifts, 144/81 of 14 September 1982). This
2004/48/EC of 29 April 2004 on the enforcement of intellectual theory applies to all domains of industrial property, but may in
property rights, which provides for measures, procedures and the case of trade marks undergo adjustment as a result of the
compensation solely under civil and administrative law. judge’s consideration of the ‘essential function of the trade mark’,
However, the Commission has withdrawn the draft framework which is ‘to guarantee the identity of the origin of the marked
decision and has presented an amended proposal for a product to the consumer’ (HAG II judgment in Case C-10/89).
directive of the European Parliament and of the Council on The proprietor of a trade mark is justified in preventing a
criminal measures aimed at ensuring the enforcement of product from being marketed on his territory by a third party if
intellectual property rights (COM(2006) 168). On 25 April 2007 the importer’s conduct — such as reprocessing the product or
the European Parliament approved this proposal for a directive affixing a different trade mark — has made it impossible for the
at first reading of the co-decision procedure although first consumer to identify the origin of the marked product with
reading by the Council is still pending. certainty (Centrafarm v American Home Products judgment, 3/78
of 10 October 1978).
B. Court of Justice case-law
b. Limits
1. Existence and exercise of intellectual property rights
The theory of exhaustion of Community rights does not apply
(a) The distinction between the existence and exercise of a
in the case of marketing of a counterfeit product, or of
right was drawn in connection with the application of the
products marketed outside the European Economic Area. This
Treaty’s competition rules to the exploitation of industrial
is stipulated in Article 6 of the agreement on intellectual
property rights. First raised in the Consten-Grundig judgment (56
property rights concluded under the Uruguay Round (TRIPS,
and 58/64 of 13 July 1966), on the granting of a trade mark, it
trade-related aspects of intellectual property rights).
was subsequently restated in the important Parke Davis
judgment (24/67 of 29 February 1968). The distinction was In July 1999 the Court ruled, in its judgment in Sebago et
made between matters covered by the ‘existence’ of industrial Ancienne Maison Dubois et Fils v GB-Unic SA (C-173/98) that the
property rights, governed by Article 30, and matters relating to Member States may not provide in their domestic law for
the ‘exercise’ of such rights, which could not exclude the exhaustion of the rights conferred by the trade mark in respect
principle of free movement (see also the Deutsche Grammophon of products put on the market in non-member countries.
judgment, 78/70 of 8 June 1971).
(b) The ‘existence’ of a right is, however, an imprecise concept Role of the European Parliament
and too dependent on the intentions of national legislators. It In its various resolutions on intellectual property rights, and
was the concept of the ‘specific subject-matter’ which made it particularly on the legal protection of databases,
possible to determine what might be covered by the legal biotechnological inventions and copyright, Parliament has
status of any industrial or intellectual property right without argued for the gradual harmonisation of intellectual, industrial
damaging the principle of free movement. and commercial property rights. It has also opposed the
In the field of patents, the ‘specific subject-matter’ consists, in patenting of parts of the human body.
the Court of Justice’s view, in ‘the exclusive right to use an Parliament has similarly opposed the patenting of inventions
invention with a view to manufacturing industrial products capable of being implemented on a computer, its concerns
and putting them into circulation for the first time ... as well as here being to avoid obstructing the spread of innovation and
the right to oppose infringements’ (judgment in Centrafarm v to afford SMEs free access to software created by major
Sterling Drug, 15/74 of 18 October 1974). international developers.
It took longer to define the ‘specific subject-matter’ of a trade
mark. In the Terrapin judgment (119/75 of 22 June 1976), the g Roberta Panizza
Court found that ‘the basic function of the trade mark [is] to July 2008
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4

Common policies
These policies are the lines of action the Community decides to follow in certain areas in order
to achieve the general objectives it has set. They are known as ‘common’ policies because they
concern all Member States of the Union. This harmonised action provides a leverage effect that
makes it possible to obtain better results.
Such policies include: the common agricultural policy (CAP), regional and cohesion policy,
transport policy, social and employment policy, environment policy and the policy on research
and technological development.
4.1. The Lisbon strategy, 151 4.4.4. International fisheries relations, 194
4.4.5. Fisheries control and
4.2. Common agricultural policy, 154
enforcement, 197
4.2.1. The Treaty of Rome and the
4.4.6. The European fishing industry in
foundations of the CAP, 154
figures, 199
4.2.2. Reform of the common agricultural
policy, 156 4.5. Regional and cohesion policy, 201
4.2.3. The first pillar of the CAP: I. The single 4.5.1. Economic and social cohesion, 201
common market organisation, 159 4.5.2. The European Regional Development
4.2.4. The first pillar of the CAP: II. Direct aid Fund (ERDF), 204
to farms, 162 4.5.3. The Cohesion Fund, 206
4.2.5. The second pillar of the CAP: rural 4.5.4. The Solidarity Fund, 208
development policy, 164
4.2.6. Financing of the CAP, 167 4.6. Transport policy, 211
4.2.7. External aspects of the CAP: WTO 4.6.1. Transport policy: general principles, 211
Agreement on agriculture, 170 4.6.2. Land transport: market access, 213
4.2.8. The DOHA Round and 4.6.3. Land transport: harmonisation of
agriculture, 173 legislation, 216
4.2.9. The CAP and the Treaty of Lisbon, 176 4.6.4. Road traffic and safety provisions, 220
4.2.10. The CAP in figures, 178 4.6.5. Air transport: market access, 222
4.6.6. Air transport: competition and
4.3. Forestry policy, 183 passenger rights, 223
4.3.1. The European forestry strategy: 4.6.7. Air transport: air traffic
framework, 183 and safety rules, 226
4.3.2. The European forestry strategy: 4.6.8. Sea transport: access to the market and
principles and action, 185 competition, 228
4.4. Common fisheries policy, 187 4.6.9. Sea transport: traffic
4.4.1. The common fisheries policy: origins and safety rules, 230
and development, 187 4.6.10. Inland waterway transport,
4.4.2. Fisheries resources conservation, 189 intermodality and logistics, 233
4.4.3. Fisheries structural assistance, 192
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4.7. Trans-European networks, 236 4.10.8. Biodiversity, nature and soil, 323
4.7.1. Trans-European networks — 4.10.9. Chemicals, 326
guidelines, 236 4.10.10. Integrated product policy and
4.7.2. Financing the trans-European industrial technologies, 329
networks, 239
4.11. Consumer protection and public
4.8. Industrial policy, 242 health, 332
4.8.1. General principles of EU industrial 4.11.1. Consumer policy: principles and
policy, 242 instruments, 332
4.8.2. The steel industry, 244 4.11.2. Consumer protection measures, 334
4.8.3. Shipbuilding, 247 4.11.3. Public health, 338
4.8.4. The automobile industry, 249
4.12. An area of freedom, security and
4.8.5. The chemicals and pharmaceuticals justice, 341
industries, 252
4.12.1. An area of freedom, security and
4.8.6. The aerospace industry, 254 justice: general aspects, 341
4.8.7. The audiovisual industry, 258 4.12.2. Asylum and immigration
4.8.8. Information technologies, 262 policies, 344
4.8.9. The biotechnology industry, 266 4.12.3. Management of the external
4.8.10. The defence industry, 269 borders, 349
4.9. Social and employment 4.12.4. Judicial cooperation in civil and
policy, 271 criminal matters, 352
4.9.1. Social and employment policy: general 4.12.5. Police and customs cooperation, 356
principles, 271 4.13. Energy policy, 359
4.9.2. The European Social Fund, 276
4.9.3. Employment policy, 278 4.14. Policy for research and technological
development, 363
4.9.4. Social security cover in other Member
States of the Union, 282 4.15. Small and medium-sized
4.9.5. Health and safety at work, 285 enterprises, 368
4.9.6. Social dialogue, information,
4.16. Tourism, 371
consultation and participation of
workers, 287 4.17. Culture and education, 374
4.9.7. Equality between men and women, 291 4.17.1. Education and vocational training
4.9.8. Anti-discrimination and social inclusion policy, 374
of vulnerable groups, 294 4.17.2. Youth policy, 378
4.10. Environment policy, 298 4.17.3. Language policy, 380
4.10.1. Environment policy: 4.17.4. Cultural policy, 383
general principles, 298 4.17.5. Audiovisual and media policy, 387
4.10.2. Implementation of Community 4.17.6. Sports policy, 390
environmental law, 301 4.17.7. Communication policy, 393
4.10.3. Sustainable development and 4.18. Tax policy, 396
environmental concerns, 303
4.18.1. General tax policy, 396
4.10.4. Natural resources and waste, 307
4.18.2. Value added tax (VAT), 399
4.10.5. Water protection and
4.18.3. Excise duties: alcohol and tobacco, 403
management, 311
4.18.4. Taxation of energy, 406
4.10.6. Air and noise pollution, 314
4.18.5. Personal and company taxation, 409
4.10.7. Climate change
and the environment, 318
150
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Common policies The Lisbon strategy
4 1
4.1. The Lisbon strategy

At the Lisbon European Council on 23 and 24 March 2000, the Heads of State or Government resolved to make Europe’s
economy the most competitive knowledge in the world, working on increasing jobs and on economic growth until 2010.
The disappointing results of the mid-term review of this strategy has required its revitalisation and refocusing in 2005.
Legal basis Government of the 15 countries of the EU defined a new

There is no legal basis, but the conclusions of the European strategic objective in order to strengthen employment,
Council meetings set down a blueprint for strategic economic reform and social cohesion. Faced with the dramatic
development. changes resulting from globalisation and the challenges of a
new knowledge-driven economy, the European Council put in
place an overall strategy aimed at:
Objectives
— preparing the transition to a knowledge-based economy
Today, the overall ambition of the ‘Lisbon agenda’ or ‘strategy’ is
and society by better policies for the information society
often quoted in European Union (EU) literature: ‘to become the
and R & D, by stepping up the process of structural reform
most competitive and dynamic knowledge-based economy in
for competitiveness and innovation and by completing the
the world, capable of sustainable economic growth with more
internal market;
and better jobs and greater social cohesion’ (Presidency
conclusions, Lisbon European Council, 23 and 24 March 2000) — modernising the European social model, investing in
‘and a sustainable environment’. This last objective was added people and combating social exclusion;
in the course of the Gothenburg Summit in June 2001. The
achievement is set for 2010. — sustaining the healthy economic outlook and favourable
growth prospects by applying an appropriate
macroeconomic policy-mix.
Achievements
The Lisbon European Council of 2000 considered that the
A. General context overall aim of these measures should be, on the basis of the
At the Lisbon Summit on 23 and 24 March 2000, European available statistics, to raise the employment rate from an
leaders agreed to aim for an average economic growth of 3 % average of 61 % at that time to as close as possible to 70 % by
and the creation of 20 million jobs by 2010. They defined the 2010 and to increase the number of women in employment
main measures needed — at European and national level — from an average of 51 % at that time to more than 60 % by
to achieve these objectives. Following the adoption of the 2010. Given their different starting points, Member States had
Lisbon strategy in 2000, the European Council focused on to consider setting national targets for an increased
assessing progress towards ‘making Europe the most employment rate. This, by enlarging the labour force, would
competitive knowledge-based economy in the world’. The reinforce the sustainability of social protection systems.
Commission published its ‘spring report’ as a basis for the 25
and 26 March 2004 spring summit in Brussels, where the The former Prime Minister of the Netherlands, Wim Kok, was
former Dutch Prime Minister Wim Kok was chosen to head an appointed chairman of a group of experts charged with
independent expert group to review the first five years of the reviewing the Lisbon strategy. The group’s work proved
implementation of the Lisbon strategy. decisive in drawing up the 2005 strategy. On 2 February 2005,
the Commission proposed a new start for the Lisbon strategy,
Five years after the Lisbon strategy was launched, results have focusing the EU’s efforts on two principal tasks — delivering
been mixed. stronger, lasting growth, and more and better jobs. From that
There have been obvious shortcomings and delays, and it has point on, the institutions of the EU began to turn the new
therefore been vital to relaunch the Lisbon strategy without momentum for a relaunch into concrete action. The European
delay, refocusing priorities on growth and employment to Council of March, as well as the European Parliament and the
make the EU the most competitive economy in the world by European social partners, gave full support to the
2010. Commission’s proposal to relaunch and refocus the Lisbon
strategy.
B. Lisbon strategy: phase I (2000–05)
The new strategy focuses on:
At the extraordinary meeting of the European Council of 23
and 24 March 2000 in Lisbon, the Heads of State or — support for knowledge and innovation in Europe;
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— reform of State aid policy; Role of the European Parliament
— improvement and simplification of the regulatory 1. The European Parliament and its involvement in the
framework in which business operates, and the completion Lisbon process
of the internal market for services; In July 2000, the European Parliament adopted a resolution,
— the removal of obstacles to free movement in the areas of after the Feira European Council meeting, welcoming the
transport, labour and education; consensus on the policy-mix set out by the Council
conclusions but calling for an interinstitutional agreement. The
— development of a common approach to economic
following year, Parliament examined the Council’s preparatory
migration;
work for the spring Council and expressed doubts on Member
— support for efforts to cope with the social consequences of States’ ability to deliver the Lisbon commitments. Though
economic restructuring. Parliament saw an environmental dimension for the Lisbon
strategy, it warned against setting too many targets and
At the European Council of March 2005, all the Member States
underlined the need for more widespread consultation with
made a commitment to draw up, by October 2005 and under
interested parties, including applicant countries. In its May
their own responsibility, national reform programmes based
2001 resolution Parliament again stressed its right to be
on the integrated guidelines. The reform programmes take
involved in any follow-up to the Lisbon strategy and called for
into account the diversity of situations and policy priorities at
the open coordination method established by the Lisbon
national level.
European Council.
C. Lisbon strategy: phase II (2005–08) In reply to the conclusions of the Gothenburg European
Particular attention needs to be paid to the delivery of the Council, Parliament supported the emphasis on sustainable
Lisbon agenda. In order to achieve the objectives of growth development, but regretted that the Council had only agreed
and employment, the EU must do more to mobilise all the on the general principle while failing to take concrete
resources at national and Community levels so that their actions.
synergies can be put to more effective use. To this end, the
broad economic policy guidelines (BEPGs) reflect the new start Following the 2003 spring Council, Parliament analysed the
for the Lisbon strategy and concentrate on the contribution of overall Lisbon achievements and stressed the need for further
economic policies to higher growth and more jobs. Section A progress in the four priority objectives set out by the Council.
of the BEPGs deals with the contribution that macroeconomic The Commission was asked to prepare a roadmap to achieve
policies can make in this respect. Section B focuses on the the Lisbon goals by 2010. Parliament reiterated its criticisms of
measures and policies that the Member States should carry the coordination method and called for effective mechanisms
out in order to boost knowledge and innovation for growth to bring about the required structural changes. In June 2003,
and to make Europe a more attractive place to invest and Parliament asked for an interinstitutional agreement that
work. would secure Parliament’s role in defining objectives and
indicators and guarantee the development of a Community
In line with the conclusions of the Brussels European Council method.
(22 and 23 March 2005), the BEPGs, as a general instrument for
coordinating economic policies, should continue to embrace In a second resolution following the December 2003 European
the whole range of macroeconomic and microeconomic Council, Parliament reiterated its concerns about Member
policies, as well as employment policy insofar as this interacts States’ substantial failure to follow up the Lisbon strategy and
with those policies; the BEPGs will ensure general economic asked for better monitoring, underlining the need for
consistency between the three strands of the strategy. The structural reforms to restore Europe’s competitiveness,
existing multilateral surveillance arrangements for the BEPGs generate growth and increase employment, taking into
will continue to apply. account the multiple aspects of the European social model.
These guidelines are applicable to all Member States and to In the wake of the 2004 spring Council, Parliament emphasised
the Community. They should foster coherence of reform that the full implementation of agreed commitments was
measures included in the national reform programmes crucial and called for political action rather than the setting-up
established by Member States and will be complemented by of high-level groups and called for structural reforms to
the Lisbon Community programme 2005–08 covering all increase employment to achieve the 70 % employment rate
actions to be undertaken at Community level in the interest of necessary to cope with an ageing population.
growth and employment. Implementation of all relevant
Finally, Parliament presented its views on the findings of the
aspects of these guidelines should take into account gender
Kok report by underlining the need to focus on both
mainstreaming.
structural reforms and macroeconomic actions in order to
The Brussels European Council (23 and 24 March 2006) stimulate growth and employment, and warned that the
confirmed that the integrated guidelines 2005–08 for jobs and stability and sustainability of public finances should not be
growth remain valid. jeopardised.
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Common policies The Lisbon strategy
4 1
2. Coordination Group on the Lisbon Strategy: January and 1 February 2006, highlighted the need to define
composition, objectives and Parliament resolution 2005 the Lisbon strategy in more specific and realistic terms. The
In December 2004, the Coordination Group on the Lisbon benefits of the ‘flexicurity’ model proposed by the new Lisbon
Strategy was set up to create a forum for discussion, actions agenda received general approbation and it was
and interinstitutional dialogue. It is made up of 33 acknowledged that social cohesion is unsustainable without
representatives from the different political groups representing competitiveness, and competitiveness is not viable without
the 10 parliamentary committees most concerned by the social cohesion.
Lisbon strategy and is chaired by Mr Joseph Daul, President of Finally, in December 2005, the Coordination Group on the
the Conference of Committee Chairs. It provides a forum for Lisbon Strategy organised a public hearing to discuss
regular open debate and support for the legislative work of competitiveness, research and eco-design. The hearing
the different committees and increases communication with boosted discussions on the role of stakeholders in the
national representatives. implementation process of the Lisbon objectives and on
On 9 March 2005, the European Parliament adopted a creating a sound competitive and research area in Europe.
resolution on the ‘Mid-term review of the Lisbon strategy’ (P6_ 5. 2007 developments
TA(2005)0069) supporting an effective refocusing of the Lisbon
At the beginning of 2007, the European Commission
strategy, identifying key policy areas, such as innovation,
published its yearly report on the status of implementation in
reducing bureaucracy, and important proposals, such as
all Member States of the national reform programmes. The
REACH or the services directive and emphasising economic
European Parliament continues to closely monitor
growth, the environment and social cohesion.
implementation through the activities of its Lisbon G33
3. Parliament resolution 2006 Group.
On 15 March 2006, the European Parliament adopted a
The group’s mandate was extended for another year at the
resolution on the ‘Preparations for the European Council: the
coordinator’s meeting in September 2006, where it was also
Lisbon strategy (P6_TA(2005)0069), demanding the objective
decided to appoint two co-rapporteurs to prepare the
analysis of the national action plans, concrete proposals
European Parliament resolution which will be voted on in
responding to future demographic challenges and addressing
advance of the European spring Council. Emphasis will be
the strategic role of energy policies.
placed on benchmarking, the integrated guidelines for growth
4. Interparliamentary dialogues and jobs and the critical issue of energy in the EU.
The European Parliament places great importance on the role
of national parliaments and focuses on the strengthening of a
g Olalla López Alvarez
bilateral dialogue. Debates at the second joint parliamentary Gianpaolo Meneghini
meeting between the European Parliament and the national Jochen Richter
parliaments, ‘The parliaments on the way to Lisbon’, on 31 September 2006
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4.2. Common agricultural policy
4.2.1. The Treaty of Rome and the foundations of the CAP

Following the entry into force of the Treaty of Rome, mechanisms for national agricultural policy were replaced by
intervention mechanisms at Community level. Articles 33 and 131 of the EC Treaty laid the foundations of the common
agricultural policy, which has since been amended on numerous occasions.
Legal basis the global supply of farming produce very rigid; on the other,
food demand is inelastic, in other words, it reacts little to price
fluctuations. Since supply is inflexible in the short term, it is
Community (EC), based on the new numbering introduced by
demand that determines market prices, but because demand
the Treaty of Amsterdam (1997).
is inelastic, an abundant supply will bring down prices,
whereas a short supply will force them up. All of these factors
Objectives create permanent market instability. In this situation,
governments have always tended to regulate agricultural
A. Reasons for the CAP: background and specific
markets and to support farming income, a tendency inherited
characteristics of agricultural supply and demand
by the CAP.
When the Treaty of Rome established the common market in
1958, agriculture in the six founding Member States was Although agriculture today accounts for only a small part of
strongly affected by State intervention, particularly with regard developed economies, even in the EU (4.2.10, Table II), State
to the orientation and control of supply, price guarantees, intervention has increased of late with agro-rural policies
direct income support for farmers, marketing and/or which have added new dimensions to support for the
agricultural structures. For agricultural produce to be included traditional function of the primary activity, namely food
in the free movement of goods while maintaining State production. These new dimensions include sustainable
intervention in the agriculture sector, national intervention development, land management, town and country planning,
mechanisms which were incompatible with the common diversification and renewal of the rural economy and the
market had to be removed and transferred to Community production of energy and biomaterials. Support for non-
level; this is the fundamental reason for the creation of the market aspects of agriculture — in other words, those not
common agricultural policy. rewarded by the market — has thus become a key strand of
today’s agricultural and rural policies, including the CAP.
Several Member States and all the farmers’ professional
organisations wanted to maintain strong State intervention in B. Objectives
agriculture. In addition, intervention in agriculture was based Article 33 of the EC Treaty sets out the specific objectives of
on the principle, widespread at the time, of the specific nature the CAP:
of this sector, with its dependence on climate and geography
and systemic imbalances between supply and demand a. t o increase agricultural productivity by promoting
leading to strong fluctuations in prices and income. technical progress and ensuring the optimum use of the
factors of production, in particular labour;
Agriculture is in fact characterised by its relationship with
natural resources. It derives products from these resources as b. to ensure a fair standard of living for farmers;
part of a natural cycle designed to satisfy that most basic c. to stabilise markets;
human need: to eat. Agriculture is thus an economic activity
d. to assure the availability of supplies;
existing within the natural environment. It maintains and
cultivates the land, but is also penalised by a wide range of e. to ensure reasonable prices for consumers.
climate conditions and geographical constraints.
These objectives are both economic (a, c and d) and social (b
Agriculture must also cope with market instability: on the one and e) and are intended to safeguard the interests of producers
hand, the length of production cycles and fixed inputs make and consumers. In practice, the objectives of the CAP have
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Common policies Common agricultural policy
4 2
remained unchanged since the Treaty of Rome, worded in such Current instruments of the CAP
a way as to prove extremely flexible and able to embrace the 1. Overall view
countless reforms witnessed since the 1980s (4.2.2). It is
Since the major CAP reform in 2003, implemented in several
noteworthy that, as evidenced by existing case-law, the
stages (see 4.2.2), the main instruments of the CAP are based
objectives of the CAP cannot all be fully achieved at the same
on five basic texts:
time. The Community legislator therefore has considerable room
for manoeuvre when it comes to choosing the instruments and — Council Regulation (EC) No 1782/2003 of 29 September
scope of the reforms, depending on the market and the 2003 establishing common rules for direct support
priorities set by the Community institutions at any given time. schemes under the common agricultural policy and
establishing certain support schemes for farmers (OJ L 270,
Alongside the specific objectives of the CAP set out in Article
21.10.2003) (4.2.4);
33, several provisions of the Treaty have added other
objectives applicable to all policies and actions of the — Council Regulation (EC) No 1783/2003 of 29 September
European Union. In this respect, public health (Article 152(1)), 2003 amending Regulation (EC) No 1257/1999 on support
consumer protection (Article 153(2)), economic and social for rural development from the European Agricultural
cohesion (Article 159) and environmental protection (Article Guidance and Guarantee Fund (EAGGF) (OJ L 270,
175) are becoming objectives of the CAP in their own right. 21.10.2003) (4.2.5);
Furthermore, at a time of market liberalisation and — Council Regulation (EC) No 1290/2005 of 21 June 2005 on
globalisation, Article 133 sets out the principles of the the financing of the common agricultural policy (OJ L 209,
common commercial policy applicable to trade in 11.8.2005) (4.2.6);
agricultural products. Finally, the principles of competition
policy make an exception for the production of and trade in — Council Regulation (EC) No 1698/2005 of 20 September
agricultural products, in view of the unique structure of the 2005 on support for rural development by the European
primary sector (Article 36). Agricultural Fund for Rural Development (EAFRD) (OJ L 277,
21.10.2005) (4.2.5 and 4.2.6);
Overall results — Council Regulation (EC) No 1234/2007 of 22 October 2007
establishing a common organisation of agricultural
The CAP produced spectacular results. The Community was
markets which codified the regulatory mechanisms of 21
soon able to overcome the food shortages of the 1950s,
previous sectoral OCMs (OJ L 299, 16.11.2007) (4.2.3).
achieving self-sufficiency and then generating cyclical and
structural surpluses due to a number of reasons: huge 2. The agricultural decision-making process: the most
technical advances, price guarantees for producers, the prominent bodies playing a role in applying the CAP
ongoing enlargement of the EU and, finally, increasing market Article 37(2) and (3) of the EC Treaty sets out the procedure
liberalisation. Financial constraints as well as changes in for the preparation and implementation of the CAP, based on a
Community and world agriculture during the 1980s led to a proposal of the Commission, the opinion of the European
root-and-branch reform of the CAP. Under guidelines Parliament and if necessary the Economic and Social
proposed in 1985 in the Green Paper (the Commission’s Committee and the decision of the Council by qualified
discussion paper on the prospects for the CAP), the measures majority vote. This is a simple consultation procedure for the
introduced by the Single European Act (1986), decisions European Parliament which, despite the new procedures
adopted by the Council in February 1988 and the 1992 and (cooperation and co-decision) introduced by the Single
1999 reforms (Agenda 2000) (4.2.2), under the aegis of the European Act, the Maastricht Treaty and the Amsterdam Treaty,
World Trade Organisation’s 1994 Agreement on Agriculture has never been modified.
(4.2.7), new tools were provided for the CAP. However, there are other bodies which are involved in the
In Luxemburg on 26 June 2003, the Council of Agricultural implementation of the CAP as part of the ‘committee
Ministers of the European Union reached an agreement on a procedure’. Since 1961, when the first common organisations
radical reform of the CAP, based on the Commission proposals of the market were established, several committees have
presented on 23 January 2003 (4.2.2). Many reasons, both been set up. The Commission had proposed to give itself wide
internal and external, justified this substantial change, in decision-making powers for running the COMs; some Member
particular the need to consolidate the ‘European agricultural States felt, however, that this power should remain with the
model’ in an enlarged EU, to satisfy the greater demands made Council. The committees were a compromise between the
by society, to bring farmers and taxpayers together again by two positions: management was entrusted to the Commission,
involving them in a joint project characterised by more but it had to consult a committee consisting of representatives
acceptable costs and less bureaucratic management, to of the Member States, using the qualified majority procedure.
improve the economic efficiency of the instruments of Three main types of committee take part in designing and
agricultural policy and, finally, to seek to achieve compatibility implementing the common agricultural policy: management
with the WTO agreements, thereby ensuring a greater degree committees (dealing with market organisation), regulatory
of legitimacy at international level. committees (dealing with rules to be applied in general areas)
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and other committees (socioeconomic advisory committees using non-binding methods like use of own initiative reports
or scientific committees). and resolutions through mainly consultation procedures.
As part of the consultative committee procedure, professional Since the European Council declaration in 1997 in favour of a
organisations in the EU, through the Committee of European agricultural model, the European Parliament has
Professional Agricultural Organisations (COPA) of the European on several occasions demonstrated its commitment to a
Union and the General Committee for Agricultural Cooperation multifunctional European agricultural (and food) model,
in the European Union (Cogeca), are indirectly involved in the spread across the entire territory of the enlarged Union and
Community decision-making process. compatible with the liberalisation and globalisation of the
markets. This is evident by the recent CAP reform (resolutions
Role of the European Parliament of 30 May 2002 and of 7 November 2002) and multilateral
negotiations on agriculture within the WTO (Doha Round),
A. Scope for action which are still ongoing (resolutions of 13 March 2001,
As mentioned earlier, since the origin of the CAP, Parliament 25 October 2001, 13 December 2001 and 12 February 2003)
has only had advisory powers on agriculture. However, (4.2.8).
according to European case-law, the opinion of the European
In this context, the European Parliament has also indicated
Parliament is an essential requirement and failure to obtain it
that it is in favour of the integration of new objectives within
invalidates the instrument concerned. In addition, the
the CAP with a view to responding to the new challenges of
European Parliament, according to the cooperation principle,
agriculture, such as product quality, public health, sustainable
cannot delay issuing an opinion on an agricultural proposal
development, economic and social cohesion, environmental
from the Commission which it knows to be urgent.
protection and tackling climate change.
B. Influence
Having no decision-making powers, Parliament has exercised a g Albert Massot Martí
strong influence over the CAP since the Treaty of Rome by August 2008
4.2.2. Reform of the common agricultural policy

The common agricultural policy has undergone over time four major reforms, the most recent of which occurred in 2003.
Since November 2007, a new reform has been under way (the ‘health check’), which should culminate in a Council
agreement by December 2008.
Legal basis — maintaining a sustainable agricultural sector, incorporating

environmental and planning objectives;
Community (EC). — strengthening rural development (4.2.5), allowing the
creation of additional income and jobs in agriculture and
Objectives contributing to the economic and social cohesion of the
Union;
The objectives laid down for the CAP in the Treaty are still
perfectly valid (4.2.1). However, the following CAP reforms — increasing the EU’s negotiating position during World Trade
adapted different mechanisms and principles used in order to Organisation (WTO) talks (4.2.7 and 4.2.8);
attain those goals more successfully. The latest reforms — simplifying administrative provisions relating to market
initiated by Agenda 2000, particularly with the 2003 mid-term management and payments made to producers;
review, introduced some new objectives into the CAP:
— incorporating the agricultural sectors of the new Member
— improving competitiveness by gearing agriculture more to States into the single market.
the market;
— producing safe, good quality food in line with the Achievements
expectations and needs of society; A. First steps: the limited success of combating surpluses
— stabilising farmers’ incomes while covering budgetary costs From the time it was introduced in 1962 the CAP has fulfilled
(4.2.4); its objectives for ensuring secure food supplies. Then, with its
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4 2
policy of support prices that were very high compared with — There were specific measures for livestock production,
the world market prices and an unlimited buying guarantee, which included a significant reduction in the price of beef
the CAP started to produce more and more surpluses. In the and a headage payment compensating livestock farmers
early 1980s, priority was given to closing the widening gap for loss of earnings, again entered in the WTO’s ‘blue box’
between supply and demand and controlling the burden of (4.2.7). Payment of beef premiums was subject to a
agricultural expenditure on the EU budget. To improve the maximum number of livestock per hectare of forage area
situation, the Commission published a Green Paper (COM(85) to encourage extensive farming.
333) recommending a more restrictive pricing policy to bring — There were accompanying measures which supplemented
EU prices into line with world prices, to freeze spending and the market-related measures, an optional early retirement
to accommodate the lower prices caused by surpluses. scheme for farmers over the age of 55, agro-environmental
Measures aimed at controlling supply and budgetary measures for farmers committed to using environment-
‘stabilisers’ were introduced into several markets (with milk friendly methods, and afforestation aid for farmland.
quotas first of all in 1984, followed by co-responsibility levies
on cereals in 1986, and the introduction of guaranteed C. Agenda 2000: a new stage in the 1992 reform
maximum quantities (GMQs) for herbaceous crops in 1987 At the end of the 1990s, following the completion of the 1992
and 1988). reform, the prospect of EU enlargement triggered fears that
In February 1988, the Brussels European Council decided to the adoption of the CAP by new members would translate by
take further steps, since the previous action had not been the return of surpluses and by an explosion in agricultural
successful in reducing either expenditure or surpluses. The expenditure. In this context, the WTO’s 1994 Agreement on
most important measures taken were: the application of a Agriculture (4.2.7) governed the management instruments of
framework of budgetary discipline for the period 1988–92, the CAP and limited the possibility of reorientation and of
limiting the rise in agricultural spending to growth in GDP; subsidised exports. In addition, the financial framework for the
extension of the budgetary stabilisers to virtually all sectors Union from 2000–06 had made the stabilisation of the CAP
(reduction in prices and aid once production reaches a budget a priority.
predetermined ceiling); voluntary set aside of arable land; On this basis, the Commission proposed reducing production
incentives for the extensification of production and conversion incentives by lowering guaranteed prices further (COM(97)
of surplus products; direct income support for small producers 2000). By approximating world prices, this would also reduce
who are the worst affected by the reforms. export subsidies. In addition, Agenda 2000 had adopted the
conclusions of the Cork Conference in 1996 in favour of
B. The 1992 reform: the great turning point
strengthening rural development policy, on the one hand to
In view of the persistence of surpluses and the burden on the
make agriculture contribute more towards land use planning,
budget, in 1991 the Commission published two discussion
and on the other to reconcile agriculture with the
papers on the future of the CAP (COM(91) 100 and COM(91)
environment and encourage complementary or alternative
258). In addition, the resolution of the GATT panel on oilseeds
activities to farming.
(contrary to European interests) and ongoing negotiations in
the Uruguay Round (4.2.7) called for a reorganisation of The 1997 Luxembourg European Council, which declared
existing market mechanisms. On 21 May 1992, the Council that agriculture in Europe had to be multifunctional,
reached a political agreement on the proposed reform. This sustainable, competitive and located throughout the territory,
brought about radical changes in the CAP, replacing a system set the strategic objective for the reform. Following the
of protection through prices with a system of compensatory agreement reached at the end of the Berlin European
income support. The reform was phased in from 1993 Council (24 and 25 March 1999), the reform mainly
onwards, but only applied to certain products: herbaceous concerned the following aspects:
crops (cereals, oilseeds and proteins), beef and, to a lesser — a new alignment of EU prices with world prices, partly
extent, sheepmeat and goatmeat and tobacco. The Council’s offset by direct aid;
decisions were based on three strands.
— on a voluntary basis, the introduction by Member States of
— There were specific measures for crop production, which environmental cross-compliance as a condition for
included a significant reduction in guaranteed cereal prices granting aid and the option of reducing this (modulation)
and the abolition of institutional prices for oilseeds and to finance rural development measures;
proteins, and compensation for the resulting loss of
income by direct aid per hectare of herbaceous crops. — an increase in existing socio-structural and accompanying
This aid, which was not calculated based on quantity measures, particularly agro-environmental measures,
produced but by surface area multiplied by a fixed yield, within a new rural development policy, from now on
was entered in the WTO’s ‘blue box’ (4.2.7). These known as the ‘second pillar of the CAP’ (4.2.5);
payments were also conditional, except for small — a six-year, three-part financial framework: EUR 40.5 billion
producers, on a compulsory set aside of 15 %. on average per year for the first pillar of the CAP (market
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policy and aid); EUR 14 billion earmarked for financing the — flexible management of the CAP, with the possibility of
second pillar (new rural development policy) and veterinary Member States applying a whole series of parameters of
and plant health measures; EUR 250 million for the the new CAP in a variety of different ways: the introduction
Instrument for Structural Policies for Pre-Accession (ISPA). of the new single payment scheme; partial decoupling for
some production to avoid abandonment in the most
D. The reform of June 2003: towards a new CAP vulnerable regions and prevent imbalances in certain
At the 1999 Berlin Summit, the 15 Member States, adopting sectors; percentage of payments to be allocated to the
the proposals of Agenda 2000, invited the Commission to carry national reserve; application of the historic decoupling
out a mid-term review in 2002 to assess the impact of the model or regional model, with the option of introducing
latest CAP reform, which, in principle, would cover the period hybrid models, and so on;
2000–06.
— financial discipline: a principle subsequently enshrined in
This mid-term review would end up becoming the most the 2007–13 financial perspective (OJ C 139, 14.6.2006),
ambitious reform of the CAP thus far, with four key whereby, faced with the challenges of enlargement, the
objectives: linking European agriculture to global markets; budget of the first pillar of the CAP was frozen and annual
preparing for EU enlargement; satisfying the new demands of compulsory ceilings imposed; to comply with these,
society in terms of environmental protection and product Community institutions could make linear reductions in
quality (public opinion having been troubled by a series of existing aid;
food crises such as bovine spongiform encephalopathy — so-
— finally, progressivity: the 2003 reform was the first
called ‘mad cow disease’ — and foot-and-mouth disease);
milestone in a gradual process unfolding under the aegis
making the CAP more compatible with the demands of third
of the 2007–13 financial perspective. In fact, once the basic
countries in the context of the Doha Round negotiations
principles had been established (decoupling, cross-
launched in 2001 (4.2.8).
compliance, flexible management, financial discipline, etc.),
Based on the Commission proposals (COM(2002) 394 and it was used as a reference to carry out further sector
COM(2003) 23), on 26 June 2003 EU agriculture ministers reforms. The first reform in 2003 covered the main
meeting in Luxembourg reached an agreement on seven texts common market organisations (CMOs) (4.2.3), particularly
(Regulations (EC) No 1782/2003 to (EC) No 1788/2003, OJ L in the cereals, rice, dried fodder, and milk and milk products
270, 21.10.2003) which effectively overhauled the CAP and sectors; the second reform, in April 2004, covered the so-
introduced a series of new principles and/or mechanisms: called ‘Mediterranean package’ for olive oil, raw tobacco,
— the decoupling of aid from the volumes produced in order hops and cotton sectors (Regulations (EC) No 864/2004
to have market-oriented production and to reduce and (EC) No 865/2004, OJ L 161, 30.4.2004); the third major
distortions in production and agricultural markets; this reform took place in 2006 (Regulations (EC) No 318/2006 to
decoupled aid would from now on be a single fixed (EC) No 320/2006, OJ L 58, 28.2.2006) and 2007
payment, aimed at guaranteeing income stability and (Regulations (EC) No 1260/2007 to (EC) No 1264/2007, OJ L
calculated according to direct aid received in the past 283, 27.10.2007) in the sugar sector; the reform of the fruit
(historical base); and vegetables sector was then implemented in 2007
(Regulation (EC) No 1182/2007, OJ L 273, 17.10.2007); and,
— cross-compliance, which made the single payments finally, the reform of the wine sector was approved in 2008
conditional on a whole series of criteria concerning the (Regulation (EC) No 479/2008, OJ L 148, 6.6.2008). The
environment, public health, animal welfare, etc., in ‘health check’, in the process of being adopted in 2008
response to the expectations of European citizens; and which deepens the 2003 reform for all sectors, is the
— compatibility with WTO rules, insofar as the decoupling final stage in this ongoing reform process.
of aid had the end goal of allowing the single payment
scheme to be entered in the ‘green box’ of the WTO Role of the European Parliament
Agreement on Agriculture (4.2.7);
On the whole, the European Parliament (EP) has supported all of
— public redistribution of payment entitlements allocated the CAP reforms. It adopted most of the Commission guidelines
to farms on historical bases using three mechanisms: for the 2003 reform while declaring itself in favour of partial
modulation, allowing funding to be transferred between decoupling and rejecting the idea of degressive aid (T5-
the two pillars of the CAP to increase rural development 0256/2003 of 5 June 2003, OJ C 68, 18.3.2004). The European
covered by the new Feader; national reserves of payment Parliament recommended a partial decoupling of aid for two
entitlements, established on the basis of a percentage of sectors only: arable crops and male cattle. MEPs also modified
national single payment budgets, to cope with exceptional the Commission proposals on modulation and degressive aid,
problems or special situations; the potential application of agreeing to some reduction in direct payments for farmers
a regional decoupling model to allow harmonisation of receiving more than EUR 7 500 a year. These reductions should
payments per hectare allocated according to regional vary from 6 % a year in the most vulnerable regions to 8 % in
criteria; other areas. Conversely, the concept of degressive modulation
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4 2
was rejected. Finally, Parliament renewed its calls for full co- During the preparatory debate on the ‘health check’,
decision on agricultural policy, an aim which will only be Parliament on the whole supported the key themes of the
achieved once the Lisbon Treaty comes into force (4.2.9). mid-term review proposed by the Commission in its
The EP also emphasised, in its resolution of 22 April 2004 (T5- communication of 20 November 2007 (P6_TA-
0367/2004, OJ C 104, 30.4.2004) that it is not bound by the PROV(2008)0093 of 12 March 2008). The final decision of the
decision taken by the Brussels Council on agricultural Council on the legislative proposals is expected by the end of
spending until 2013, and reaffirmed its support for 2008.
strengthening rural development policy. Furthermore, it
expressed reservations concerning the seven-year period for g Albert Massot Marti
the 2007–13 financial perspective. August 2008
4.2.3. The first pillar of the CAP: I. The single common

market organisation
The common market organisations (CMOs) govern the production and sale of European products. Since 2003, direct
support for these products has fallen under Regulation (EC) No 1782/2003, outside the CMOs. In addition, in 2007 a single
CMO replaced all the market regulation schemes in force with a single text.
Legal basis the 2007 reforms of the fruit and vegetable sector
(Regulation (EC) No 1182/2007, OJ L 273, 17.10.2007) and the
The market policy — based on Article 32 of the Treaty
2008 reforms of the wine market (Regulation (EC) No
establishing the European Community (EC) and on basic
479/2008, OJ L 148, 6.6.2008) will soon be incorporated into
regulations founded on that article governing the various
Regulation (EC) No 1234/2007; on the other hand, the cotton
common market organisations (CMOs) — was the oldest
sector, which is governed by protocols annexed to the
instrument in the CAP and, until the 2003 reform, it was the
Accession Treaties for Greece and Spain, will remain outside
most important. Since then, the majority of the direct aid
the regulation; the same applies to bananas, since the most
schemes for CMOs have been transferred to Regulation (EC)
recent reform in this sector removed the regulation of
No 1782/2003 (OJ L 270, 21.10.2003) (4.2.4). In 2007, as part of
banana production from the CAP and inserted it into the
the CAP simplification process that was then under way, a
programmes for the outermost regions (POSEI) (Regulation
single common market organisation for all agricultural
(EC) No 2013/2006, OJ L 384, 29.12.2006).
products was put in place to replace the existing 21 CMOs
(Regulation (EC) No 1234/2007, OJ L 299, 16.11.2007). This
made it possible to repeal about 50 Council instruments. Achievements
A. Scope of the CMOs
Objectives The first CMOs, and the instrument that funds them, the
The market policy aims to guide agricultural production and EAGGF, were introduced in 1962. Shortly afterwards, the range
stabilise markets. It works by placing products or groups of of products placed under CMOs was expanded to cover all the
products under a particular regime, the common market agricultural products listed in Annex II to the Treaty, the two
organisation (CMO), in order to govern their production and major exceptions being alcohol and potatoes. Although the
trade, in compliance with the basic principles of the CAP (i.e. CMOs are often similar in structure, they vary in organisational
the single market, Community preference and financial detail. They offer guarantees which vary according to the
solidarity) and in accordance with common rules and special economic and agricultural characteristics of the
appropriate mechanisms. The latter had been set out in basic products concerned and are grouped under two main
regulations for each product until the entry into force of the headings:
single CMO, which codified the market regulation systems in
— an internal or ‘internal market’ heading, with common
force.
price systems, measures to control supply and stocks,
With regard to the sectoral reforms following the measures to support production and measures for the
establishment of the single CMO: the provisions adopted in organisation or regulation of the market;
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— an external heading, with an external system of protection — milk sector: asymmetric price cuts (the intervention price
against third countries, rules for the administration of tariff for butter was reduced by 25 % over four years, which is an
quotas, safeguard clauses and, possibly, export refunds (for additional price cut of 10 % compared with the Agenda
cereals, rice, sugar and animal products). 2000 reform; a 15 % reduction over three years was
Thus, for the most important products, the CMOs are a decided on for skimmed milk powder); increases in the
combination of common price systems, direct aid (whether milk quotas approved for certain countries;
decoupled from or coupled to production), a system of trade — cereals: reduction of the monthly increments for storage by
with third countries, supplemented, in some cases, by half; the intervention price was maintained, except for rye;
instruments for organising production and marketing via special payments were established and incorporated into
producer groups or professional agreements, or various Regulation (EC) No 1782/2003 (4.2.4);
measures relating to quality standards and marketing. For
other products, the CMOs contain only a direct aid scheme or — rice: single reduction of the intervention price for rice by
a border protection system. 50 % with a maximum intervention amount;
— other: special payments were established for nuts (with a
B. The process of reforming the CMOs
maximum area), starch potatoes (with a part decoupled
The market support policy and the mechanisms associated with from and another part coupled to production) and dried
it, having suffered the effects of currency fluctuations and of fodder (once again, with a part decoupled and a part
difficulties resulting from the structural production surpluses coupled); the first two have been incorporated into
which had occurred in most sectors, were reformed in 1988, Regulation (EC) No 1782/2003; aid for fodder has remained
1992 and 1999 (4.2.2) in favour of a progressive reduction in in the single CMO.
institutional prices offset by the granting of direct aid and the
establishment of stabilising mechanisms, in some cases giving The sectoral reforms which followed in 2004 (for cotton,
entitlement to production quotas (through the consolidation of tobacco, olive oil and hops) adopted the total or partial
national quotas for sugar and dairy products) or guaranteed decoupling system of aid in these sectors (Regulations (EC) No
prices for producers (through maximum guaranteed quantities 864/2004 and (EC) No 865/2004, OJ L 161, 30.4.2004). The 2006
(MGQs) or maximum guaranteed areas (MGAs)). sugar reform reduced the price support to the sector and
significantly altered the national production quotas system, in
When the new reform of the CAP decided on by EU farm
order to take account of the commitments in the CMO
ministers on 26 June 2003 was implemented, most forms of
(Regulations (EC) No 318/2006 to (EC) No 320/2006, OJ L 58,
direct aid were made subject to the principle of decoupling
28.2.2006).
(single farm payment (SFP)), which Member States will be able
to apply, either in full or in part, in certain sectors and subject Developments in the contribution made by the EAGGF Guarantee
to certain conditions (4.2.4). This aid has been taken out of Section show the extent to which the CAP was transformed as a
the corresponding CMOs. At the same time, the 2003 reform result of these reforms, and is now an income support policy (with
modified certain CMOs: direct aid, decoupled from or coupled to production).
Table 1 — Contribution of the EAGGF Guarantee Section (%)

Measures 1989 2006
Direct aids (reforms of 1992, 1999 and 2003) — 69
Market support Export refunds 38 5
Intervention 62 11
Other (accompanying measures — rural development) — 15
A reform of the fruit and vegetable sector was adopted in The most recent reform adopted was the reform of the wine
2007. It brought in: sector, in 2008. The broad outlines of the reform were as
follows:
— the inclusion of the existing aid for processed fruit and
vegetables in the SFP; — the phasing-out of distillation schemes;
— a simplification and strengthening of the producer — the introduction of a decoupled single farm payment for
organisations system, in which they are given responsibility each wine grape holding; it will also be possible for aid for
for crisis management under a co-financing system; the use of must to be changed into decoupled payments;
— the introduction of measures to promote consumption, — the implementation of a voluntary grubbing-up scheme;
including encouragement for the consumption of fruit and — the abolition of planting rights by the end of 2015 (or,
vegetables in educational establishments. possibly, 2018, at national level);
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4 2
Table 2 — P
roducts listed by type of intervention price (Regulation (EC) No 1234/2007: single CMO) and direct
support system (Regulation (EC) No 1782/2003)
1. Products with 2. Products with
CMO 3. Products without 4. Products with
CMOs at common CMOs at common
regulated prices and customs CMOs or
Support prices with automatic prices and conditional
direct aid only without CMOs
intervention intervention
A. Products with Cereals (except rice, Exceptional measures Rye, sheepmeat and
decoupled aid (SFP) durum wheat and rye) to support markets goatmeat, oilseeds,
in cases of animal processed fruit and
diseases for all livestock vegetables, regional
production (Article 44) premiums, hops, seeds,
Beef and veal (male flax and hemp
bovine animals)
B. Products with Rice Protein crops, dried
decoupled aid (SFP) fodder, durum wheat,
and aid coupled to olive oil, cotton, legumes,
production tobacco, starch potatoes
C. Products with Sugar and milk Wine products Nuts, silkworms, red fruits, Poultry and eggs
direct aid coupled (sectors with national (distillations), fresh bananas, energy crops, (health crises)
to production production quotas ) fruit and vegetable apiculture, drying aid,
(withdrawals) quality products
D. Products without Pigmeat Processed agricultural
direct support products (PAPs), live
plants and cut flowers,
some fresh fruit and
vegetables, potatoes,
ethyl alcohol
NB: This classification does not take into account private storage measures or products with partial optional decoupling.
— the creation of national aid allocations for adjusting the 2. CMOs with common prices and conditional intervention
sector to changing demand; These CMOs lay down a guaranteed price scheme, although it
— the transfer of distillation funds to the rural development of is applicable only in the event of a serious market crisis, to be
wine-growing regions; initiated by the Commission. The sectors concerned are wine
(in distilled form), animal products in the event of health
— the revision of existing wine-making practices and the crises or to some fresh fruits and vegetables (from 2008 in
improvement of labelling rules. the form of withdrawals for which producer organisations are
responsible). In terms of direct support, some of these sectors
C. CMO classification by support mechanism
receive SFPs (beef and veal); others are entitled to aid coupled
Changes in the aims and means of organising the markets to production. There are also products with mixed support
resulting from the 1992, 1999 and 2003 reforms have changed schemes (decoupled and coupled).
the design of the CMOs, which may now be classified in four
categories according to the price mechanisms of the single 3. CMOs with direct production aids only
CMO used, on the one hand, and the direct support regimes There is a long list of products that only receive aid (coupled,
established for the same products by Regulation (EC) No decoupled or mixed), following the latest reforms.
1782/2003, on the other hand (Table 2). 4. CMOs without support
1. CMOs with reference prices and automatic Certain products (flowers and plants, some fresh fruit and
intervention vegetables, and processed agricultural products) only receive
All cereals still apply common prices under an automatic customs protection. Other products, such as poultry and eggs,
intervention scheme, complemented by SFPs. Sugar and dairy also have customs CMOs but, exceptionally, can receive aid for
products also have a reference price system paid to producers by serious market crises. Finally, there are products without CMOs
public intervention agencies in exchange for delivery of their (in particular, ethyl alcohol and potatoes).
products, where market prices are too low. These two sectors,
which at the same time still have national production quota g Albert Massot Marti
systems, receive specific compensatory aid (linked to production). August2008
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4.2.4. The first pillar of the CAP: II. Direct aid to farms
The 2003 reform decoupled the majority of direct aid and transferred it to the new single payment scheme (SPS).
Regulation (EC) No 1782/2003 brings together in a single document the SPS and other specific aid schemes, still linked to
the area cultivated or to production.
Legal basis B. Measures

Articles 32 to 38 of the Treaty establishing the European 1. The single payment scheme (SPS) and methods of
Community (EC). application
Council Regulation (EC) No 1782/2003 (OJ L 270, 21.10.2003). Aid for production received in the past constitutes a reference
amount for each Member State, subject to a ceiling (national
single payment envelopes). On the basis of this amount, firstly
Objectives the unit value of a single payment entitlement (SPE) was
Citing a mid-term review of the CAP adopted at the Berlin calculated — one entitlement per hectare — and secondly
Summit in 1999 (Agenda 2000, 4.2.2), in 2002 the the number of SPEs — the number of hectares eligible. The
Commission proposed an ambitious reform designed to Member States must set up a national reserve by applying a
shake up the CAP in its entirety. A key point in the final linear deduction percentage (up to 3 %) to their national single
compromise, adopted in June 2003 (4.2.2), was the payment envelope. The national reserves are used on a priority
introduction of a new horizontal regulation dealing with basis for farmers without any entitlements (newly established)
the common provisions applicable to direct aid schemes for and those with unusually low entitlement amounts.
European farmers. The new text (Regulation (EC) No
A farmer from a Member State now has a single payment
1782/2003), which repealed and replaced Regulation (EC) No
entitlement that corresponds to the aid he received during a
1259/1999, became the nucleus of the 2003 reform and the
past reference period and to the number of hectares that he
obvious reference point for the sectoral reforms that followed
farmed and which entitled him to direct payments during that
up until 2008 (4.2.2 and 4.2.3).
period. However, permanent crops, fruit and vegetables and
potatoes are excluded from single payments. Farmers in
Content of Regulation (EC) No 1782/2003 receipt of single payments can determine their production in
line with the needs of the market, while being assured they
A. Overview
will receive the same amount of aid as in the past, regardless
Support from the CAP has traditionally been linked to the of the quantity they produce. This decoupling model, known
amounts produced by farms, and was thus based on a as the historic model, has been chosen by Belgium, Ireland,
production-oriented philosophy. The 2003 reform of the CAP Greece, Spain, France, Italy, the Netherlands, Austria, Portugal
consisted in converting the majority of direct market aid, and, within the United Kingdom, Scotland and Wales.
previously granted by the hectare and/or head of livestock,
into a single farm payment (SFP) defined using a historical In some countries (Malta, Slovenia), the reference amounts
approach (the amounts received in the past for each product) have been calculated on a regional and not an individual basis.
and decoupled from the selection of products and amounts They correspond to the total aid received by the farmers in the
offered. The main aim of the SFP is to provide greater income relevant region during the reference period. All the farmers in
stability to farmers. It has now become the primary aid scheme the region therefore receive the same aid per hectare (fixed
in the new CAP (29 % of total expenditure by the EAGGF rate or basic aid). This approach, known as the regional
Guarantee Section in 2006, 4.2.6). In addition to the SFP, decoupling model, involves a certain amount of redistribution
specific aid schemes, still linked to production, have been of payments between farmers, in contrast to the historic
maintained for various products. model.
All these direct support schemes are governed by Regulation The Member States also have the choice of a hybrid model:
(EC) No 1782/2003, which has thus become something akin to they can apply different calculation systems in different
a single, complete code in this sphere. In addition, the text also regions of their territories (as, for example, in the United
lays down: a cross-compliance regime, mandatory for the Kingdom). They can also calculate the single payments using
receipt of aid; a budgetary discipline mechanism designed an approach that is partially historic and partially based on a
to keep CAP expenditure below the annual ceilings set in the fixed rate. Finally, these systems may vary over time, beginning
multiannual financial framework (4.2.6); a scheme for the with an application of the SPS and its full implementation, and
modulation of aid with a view to strengthening rural then leading to dynamic hybrid models (as in Denmark,
development policy (4.2.5); a farm advisory system; and an Germany, Finland and England) or static hybrid models (as in
integrated administration and control system. Luxembourg, Sweden and Northern Ireland).
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4 2
Since the new Member States did not have any historic maintenance; (b) Community standards in force relating to
reference points for setting the single payments, a simplified public health, animal health, the environment and animal
single area payment scheme (SAPS) was set up and 10 of welfare (19 standards in total listed in Annex III to Regulation
the 12 new Member States have applied it. It involves the (EC) No 1782/2003).
payment of uniform amounts per eligible hectare of If a farmer does not abide by the cross-compliance rules, the
agricultural land, up to a national ceiling that derives from the direct payments he can claim will be partially reduced or
accession agreements, which is gradually increased during the totally removed.
transitional period, until the aid of the 12 new Member States
is fully aligned with the level of aid of the EU-15. 4. Farm advisory system
An agricultural audit system is provided for farmers, who
Full decoupling is the general principle of the 2003 reform.
receive information on how to apply certain standards and
However, the Member States have the option to maintain a
good practices to production processes. The service, which is
percentage of support for production within the framework of
optional for the Member States, should help producers to
the SPS in order to avoid production abandonment or severe
abide by the cross-compliance rules.
market disturbance as a result of moving to the SPS. This
partial decoupling, which is optional, applies to arable crops 5. New financial instruments: the budgetary discipline
(up to 25 % of single payments remain coupled to the mechanism and modulation
hectare), beef and veal (a proportion of the premiums per A budgetary discipline mechanism applies in order to keep
head of livestock), sheep and goats (up to 50 % of the expenditure on the first pillar of the CAP below the annual
premiums), olive oil (40 % of aid remains coupled), cotton budget ceilings set within the multiannual financial framework
(35 % of aid is coupled), seeds (for certain varieties), tobacco (4.2.6). An adjustment to the direct payments will be
(within the framework of the move towards full decoupling) proposed when forecasts indicate that the total forecast
and hops (up to 25 % remaining coupled). expenditure has been exceeded in a given financial year.
The Member States may keep up to 10 % of the national Within the framework of the Agenda 2000 reform (4.2.2), the
envelopes for granting to particular types of agriculture Member States had the option to apply a modulation of direct
considered to be important in terms of environmental aid, on an optional basis, in order to reinforce the second pillar
protection or product quality. This is therefore a kind of of the CAP (4.2.5). With the entry into force of Regulation (EC)
‘recoupling’ of the single payments to provide specific No 1782/2003, the modulation becomes compulsory. It
support to some sectors. This system has been used by Greece applies to all farmers in the 15 older Member States, apart from
(for durum wheat, quality beef, sheep’s milk and goats’ milk, small farmers (receiving less than EUR 5 000). With a view to
quality tobacco and olive oil), Spain (for beef and veal, aid for reinforcing the Member States’ rural development
the dairy sector, tobacco, cotton and sugar), Italy (for durum programmes, all the direct payments (single payments and
wheat, beef and veal, sheepmeat, sugar and energy crops), other aid coupled to production) have been reduced (by 3 %
Portugal (for cereals, beef and veal, sheepmeat, olive oil and in 2005; by 4 % in 2006; and by 5 % from 2007 until 2012).
sugar), Slovenia (for beef and veal), Sweden (for the Each Member State receives at least 80 % of the appropriations
improvement of quality certification systems), Finland (for that it has acquired through modulation (for Germany, 90 %,
winter cereals and beef and veal) and the United Kingdom (for because of the crisis in the rye sector). The remaining amounts
quality beef ). are distributed between the 15 Member States in line with
2. Maintenance of support systems linked to production objective criteria: area farmed, agricultural employment and
Alongside products that may be subject to partial decoupling, GDP per capita in terms of purchasing power.
Regulation (EC) No 1782/2003 maintains a range of specific Two countries, Portugal and the United Kingdom, may add to
support systems, still linked to production: quality premium this an optional modulation.
and supplement for durum wheat, premium per hectare for
protein crops, area aid for rice, aid for nuts, aid for seeds, aid for 6. Integrated administration and control system
energy crops, aid for starch potatoes, dairy premiums, aid for Each Member State creates an integrated administration and
grain legumes, aid for the drying of cereals, aid for flax and control system which includes the following elements: a
hemp and aid for sugar beet. computerised database, an identification system for
agricultural parcels, a system for the identification and
3. Cross-compliance registration of single payment entitlements, aid applications,
The provisions on cross-compliance are one of the key new an integrated control system and a single system to record the
elements of the 2003 reform, which made the single payments identity of each farmer who submits an aid application.
subject to compliance by farmers with: (a) environmental
and agricultural conditions laid down by the Member States C. Reform of Regulation (EC) No 1782/2003: the 2008
(whether or not they actually produce from their land) ‘health check’
designed to restrict soil erosion, maintain soil structure and soil As part of the ‘health check’ of the CAP (to be adopted, in
organic matter levels and ensure a minimum level of principle, by January 2009), the Commission proposed that
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existing coupled aid be eliminated (partial decoupling plus jeopardise the survival of many farms; it would result in large
specific support systems) by making it part of the single national and regional disparities in the calculation of the single
payment system. Exceptions are, however, envisaged in payments, leading to distortions of the market; it would bring
relation to the suckling cow premium, the premiums in the about the renationalisation of the CAP; and it would be
sheepmeat and goatmeat sector and aid for cotton. In these detrimental to Parliament’s prerogatives, since, without any
cases, the proposal is to allow the Member States to maintain real participation by Parliament, the Member States might
coupled aid (as it is) in order to support economic activity in increase the amounts allocated to rural development, which
regions where there are few opportunities for economic are classified as non-compulsory expenditure and over which
diversification. the European Parliament has a high level of decision-making
power (4.2.6). MEPs also considered that the Commission
The proposals are also intended to: simplify the cross- ought to submit new proposals regarding the financing of the
compliance system; extend the scope of recoupling to second pillar as part of the 2008 CAP ‘health check’ (T6-
sensitive production in certain regions (in particular, milk, rice, 0036/2007 of 14 February 2007).
beef and veal and sheepmeat), to areas undergoing
restructuring and/or agricultural development programmes, As the Commission refused to withdraw its proposal, it was
and to measures to manage risk (harvest and animal disease referred back to the committees. In addition, Parliament
insurance); and reinforce modulation in favour of rural suspended 20 % of the allocations entered in the 2007 budget
development. for rural development pending the withdrawal of the proposal.
Following a unanimous political agreement, which restricted
optional modulation to two countries (the United Kingdom
Role of the European Parliament and Portugal), the reserve was lifted and the regulation was
The European Parliament put forward significant amendments adopted (Regulation (EC) No 378/2007, OJ L 95, 5.4.2007).
to the reform proposals submitted by the Commission in With regard to the ‘health check’, still under negotiation,
January 2003 (T5-0256/2003, 5.6.2003, OJ C 68, 18.3.2004). In Parliament suggested a progressive modulation model,
particular, it developed the concept of ‘partial decoupling’, distinct from that put forward by the Commission in its
which was in the end adopted by the Council. It also changed communication of 20 November 2007 (P6_TA-
the modulation system and repeated its demand for full co- PROV(2008)0093, 12.3.2008). This idea was taken up by the
decision in the realm of agricultural policy. Commission in the legislative proposals of May 2008.
The European Parliament rejected the proposal regarding the
rules applicable to optional modulation up to 20 %. MEPs g Albert Massot Marti
opposed the proposal for the following reasons: it would August 2008
4.2.5. The second pillar of the CAP: rural development policy

Rural development, now the second pillar of the CAP, has undergone several reforms over time. These reforms were intended
to make agriculture and forestry more competitive, to strengthen the links between primary activity and the environment, to
improve the quality of life in rural areas and to promote a diversification of the economy in rural communities.
Legal basis European agriculture that would be closely linked to the

Articles 36 and 37 of the Treaty establishing the European balanced development of rural land, which covers 90 % of the
Community (EC). Community’’s territory (4.2.10, Table II). Agricultural and rural
policy plays a key role nowadays in the territorial, economic
Regulations (EC) No 1257/1999 (OJ L 160, 26.6.1999), (EC) No and social cohesion of the Union and in the protection of the
1783/2003 (OJ L 270, 21.10.2003) and (EC) No 1698/2005 (OJ L environment (4.2.10, Table III). Alongside market measures
277, 21.10.2005) and Council Decision 2006/144/EC (OJ L 55, (first pillar), rural development policy (second pillar) has
25.2. 2006). become an essential component of the European agricultural
model.
Objectives
The aim of the CAP reform adopted by the Berlin Summit The 2003 reform only confirmed its indispensable role in the
under Agenda 2000 (4.2.2) was to establish a model for new CAP. Its main aim is to create a cohesive and sustainable
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4 2
framework safeguarding the future of rural areas, based in 2. The reform of the Structural Funds
particular on agricultural multifunctionality — in other words, its The 1992 reform of the Structural Funds introduced, in
ability to provide a range of services going beyond the mere Objectives 1 and 5b, new measures such as the promotion of
production of foodstuffs — and on the ability of the rural high-quality products, the prevention of natural disasters in
economy to create new income and employment whilst the most remote regions, the renovation and development of
conserving the culture, environment and heritage of rural areas. villages and the promotion and conservation of the rural
heritage. Like the earlier measures, they were supported by the
Achievements EAGGF Guidance Section through co-financing.
A. The origin of a rural development policy — first social D. Agenda 2000

and structural measures 1. General objective
The first Community rural development measures to be Despite attempts to merge the Community’s structural
implemented were based on three 1972 directives on farm agricultural policy with economic and social cohesion,
modernisation, measures to encourage the cessation of Agenda 2000 retained its specific identity within an
farming and on socio-economic guidance and occupational integrated framework, now known as ‘rural development’,
training for farmers. In 1975, a directive on mountain and hill and remained anchored within the CAP. The primary aim of
farming and less-favoured areas was added. In 1985, those four Agenda 2000 was to adapt agriculture increasingly to the
directives were replaced by Council Regulation (EC) No 797/85 market (4.2.2). However, although direct income support
on improving the efficiency of agricultural structures, which was increased, the changes to the market support
introduced measures to promote investment in agricultural mechanisms affected the economies of rural areas generally
holdings, installation of young farmers, forestation, land use and not just farmers’ resources. In addition, the diversification
planning and support for mountain and hill farming and less- of activities in rural areas could be used to supplement farm
favoured areas. All those measures were co-financed by the incomes (through the development and marketing of high-
Guidance Section of the European Agricultural Guidance and quality products, rural tourism, conservation of the
Guarantee Fund (EAGGF) and by the Member States. environment or cultural heritage) and could also open up
new prospects for rural life.
B. The 1988 reform of the Structural Funds
Agenda 2000 therefore altered the existing approach and
Since that reform, structural agricultural policy has been part
created an integrated and sustainable rural development
of a regional policy where rural development is no longer
policy that would make rural development (second pillar of
financed solely by the EAGGF Guidance Section but also by
the CAP), price policy and market policy (first pillar of the CAP)
the other Structural Funds (4.1). The Community structural
more cohesive. That new approach was established by Council
measures had several objectives at that time, of which
Regulation (EC) No 1257/1999 (OJ L 160, 26.6.1999), which,
Objective 1 (regions whose development is lagging behind),
moreover, replaced a dozen or so former regulations.
Objective 5a (adjustment of agricultural structures) and
Objective 5b (development of rural areas) were directly 2. Implementation
applicable to rural development. The new Regulation (EC) No 1257/1999 made provision for
nine distinct measures, most of them already in force and
C. The 1992 reforms amended on several occasions, with the Community
1. The reform of the CAP contributing a varying percentage of the financing according
The 1992 reform of the CAP emphasised the environmental to the type of measure and geographical location:
dimension of agriculture, a sector characterised by its links with — investments in agricultural holdings to help improve
natural resources, which is the biggest user of land and water, as agricultural incomes and living, working and production
well as the number-one producer of biomass for energy conditions;
purposes (4.2.10, Table III). The reform introduced major
changes in the system of support for CAP sectors (4.2.2) and — setting-up aid for young farmers;
measures (known as accompanying measures because they — support for vocational training;
supplemented the market policy) to offset the reduction in
farmers’ income as a result of the reform. The measures — support for early retirement;
concerned conservation of the environment, reforestation and — compensation for less-favoured areas and for areas with
the early retirement scheme. It should be noted that for the first environmental restrictions;
time the Guarantee Section of the EAGGF was financing
— support for farming practices designed to safeguard the
measures not directly market related. Indeed, the 1992 reform
environment;
broke with the traditional notion of the CAP based on a clear
distinction between price and market policy and structural — rationalisation of processing and marketing of agricultural
policy. From then onwards, structural measures were regarded products to help increase their competitiveness and added
as supplementary to guarantee mechanisms. value;
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— support to improve the economic, ecological and social was released as from 2007 and allocated to Member States
functions of forests; to provide funding for new accompanying measures.
— promoting the adaptation and development of all the — Irrespective of the modulation, the 2003 reform placed
Community’s rural areas: a residual scheme comprising a particular emphasis on the content of the second pillar by
broad range of measures (land reparcelling, setting up of extending the scope of the instruments contained in
farm relief and farm management services, encouragement Regulation (EC) No 1257/1999. Six categories of
for tourist and craft activities, restoring agricultural measures were therefore either introduced or improved
production potential damaged by natural disasters, etc.) within new Council Regulation (EC) No 1783/2003 (OJ
based on experience with the programmes implemented L 270, 21.10.2003). They are listed below.
in the regions whose development is lagging behind or a. Food quality
rural areas with conversion difficulties (former Structural
The first measure envisaged relates to improving food quality,
Funds Objectives 1, 6 and 5b) and which did not fit into
which is of course greatly encouraged by the European Union
any of the other eight measures provided for under
but did not previously benefit from any specific aid scheme.
Regulation (EC) No 1257/1999.
Farmers taking part in programmes to improve product quality
Under the new Structural Funds regulation ((EC) No 1260/1999 and production processes will receive, provided certain
(OJ L 161, 26.6.1999)), the source of Community funding for guarantees are given to consumers, a ‘quality’ aid up to a
rural development measures differed according to the territory maximum amount of EUR 3 000 per farm per year. Information
concerned: and promotion campaigns by producers’ groups will be able to
— in Objective 1 areas they were integrated into the receive funding of up to 70 % of eligible costs.
measures aiming to promote regional development, b. Compliance with standards
financed by the EAGGF Guidance Section; It is possible to give temporary and progressively decreasing
— in Objective 2 areas they accompanied the support support to farmers to help them to adapt to the strict
measures, financed by the EAGGF Guarantee Section; and Community standards regarding the environment, public
health, animal and plant health, animal welfare and safety in
— in the remaining territory they were to be integrated into the workplace. This aid is payable for five years and will be
the planning for rural development schemes (except in the subject to a maximum amount of EUR 10 000 per farm per
case of ‘accompanying measures’, which were financed by year.
the EAGGF Guarantee Section throughout the
Community). c. Farm advisory service
Farmers will be able to receive support at the rate of 80 % of
Mention should also be made of the Leader+ community the cost of this type of service, up to a maximum amount of
initiative, financed by the EAGGF Guidance Section, which EUR 1 500.
promoted the implementation of integrated local
development strategies. d. Animal welfare
Aid is granted to farmers who undertake to improve the
It was decided by the Berlin European Council that the average
welfare of their farm animals, beyond the level required by
maximum amount available each year for rural development
normal good farming practice, based on the additional costs
and for accompanying measures in the period 2000–06 would
and loss of earnings. This aid is subject to a maximum amount
be about EUR 4 300 million.
of EUR 500 per livestock unit per year.
E. The 2003 reform of the CAP: Regulation (EC) e. Areas with environmental restrictions
No 1783/2003 Regulation (EC) No 1783/2003 makes provision for the
The reform passed in June 2003 (4.2.2) confirmed that rural allocation of aid to areas with environmental restrictions in the
development was one of the fundamental elements of the context of the Natura 2000 programme (4.2.10, Table III) for
CAP. Consequently, the Council legislated to strengthen it by the protection of birds and their habitats.
increasing the total amount of funding and extending the
f. Young farmers
scope of the second pillar.
There has been a substantial increase in both the amount of
— In addition to the specific sums allocated to rural aid given to help young farmers enter the profession and the
development under Objective 2 of the economic and intensity of support.
social cohesion policy, it was decided to transfer funds
from the first pillar of the CAP to the second pillar by F. The financial and planning framework for rural
means of a progressive reduction (modulation) in direct development for the period 2007–13
payments to large farms (those receiving more than The enlargement of the European Union in 2004 increased the
EUR 5 000 in direct payments). By applying a progressive diversity of circumstances in rural areas while enhancing the
rate of 3 % in 2005, 4 % in 2006 and 5 % from 2007 scale and intensity of rural development. The utilised
onwards, an additional overall amount of EUR 1 200 million agricultural area (UAA) of the 25 Member States has risen to
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4 2
163 million ha (compared with 145 million ha for the EU-15). — When drawing up their national or regional strategy, the
The number of farms has risen by more than a million with the competent domestic authorities must adopt an integrated
10 new countries, most of them operating on a semi- approach that makes appropriate use of spatial planning
subsistence basis. The number of farmers has also risen, by a and maximises the synergy between and within the
total of 3 million (4.2.10, Table II). different axes.
With a view to meeting these new challenges, and as part of — Complementarity must likewise be ensured between the
the preparatory work on the new financial perspective for various Community instruments, promoting synergy between
2007–13, the European institutions established in 2005 a structural, employment and rural development policies.
single fund for the second pillar of the CAP, the EAFRD The national and regional rural development programmes for
(European Agricultural Fund for Rural Development), bringing the period 2007–13 were approved by the Commission during
together all the previous measures (Regulation (EC) No the first half of 2008.
1698/2005, OJ L 277, 21.10.2005) (4.2.6).
In addition to the 2007–13 multiannual financial framework, Role of the European Parliament
Council Decision 2006/144/EC set out Community strategic The European Parliament has always maintained that rural
guidelines for rural development in the new programming development policy should reinforce, supplement and adapt
period (Decision 2006/144/EC, OJ L 55, 25.2.2006). These the CAP to protect the European agricultural model. In 2005
guidelines identify key actions for achieving the Community’s the EP welcomed the establishment of a single fund for rural
priorities, particularly as concerns the Gothenburg sustainable development but it proposed a different financial distribution
development objectives and the renewed Lisbon strategy for for the priority axes (T6-0215/2005 of 7 June 2005, OJ C 124,
growth and employment established by the Gothenburg 25.5.2006). The Members stated in the same resolution that the
European Council (15 and 16 June 2001) and the Thessaloniki desire to incorporate Natura 2000 into the new Regulation (EC)
European Council (20 and 21 June 2003) respectively. Four No 1698/2005, without earmarking additional funds, was
new axes are set out: highly problematical. They therefore called for the resources
— improving the competitiveness of the agricultural and available for commitment under the EAFRD to be raised to
forestry sectors (axis 1); EUR 95 750 million at 2004 prices for the new 2007–13
programming period (4.2.10, Table I).
— improving the environment and countryside (axis 2);
As far as the rural development policy strategic guidelines are
— improving the quality of life in rural areas and encouraging
concerned, the European Parliament approved the broad
diversification of the rural economy (axis 3);
thrust of the Commission’s proposals but pointed out that
— building local capacity for employment and diversification more emphasis should be placed on the modernisation of the
(axis 4 — Leader). agricultural sector and the needs of young farmers (T6-
Key actions for each axis are suggested to the Member States 0062/2006 of 16 February 2006).
for their national or regional rural development programmes
for 2007–13. In addition, the Council decision establishes some g Albert Massot Marti
programming criteria. August 2008
4.2.6. Financing of the CAP

The CAP has traditionally been financed by a single fund, the EAGGF (European Agricultural Guidance and Guarantee
Fund). The Guarantee Section was mainly used to finance market support measures and income aid whilst the Guidance
Section financed measures involving structural improvements and rural development. The EAGGF was replaced on
1 January 2007 by the EAGF and the EAFRD.
Legal basis Development of the agricultural financial

Article 34 (3) of the Treaty establishing the European framework
Community (EC) .
Since January 1962, the CAP has been implemented via the
Regulations (EC) No 1290/2005 (OJ L 209, 11.8.2005) and (EC) European Agricultural Guidance and Guarantee Fund
No 1698/2005 (OJ L 277, 21.10.2005). (EAGGF). In 1964 this was split into two sections: the
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Guarantee Section and the Guidance Section, which were The latest multiannual financial framework for 2007–13 was
governed by different rules. approved in 2006 (OJ C 139, 14.6.2006). It includes the heading
‘Preservation and management of natural resources’,
— The Guarantee Section, which was by far the larger of the which includes the agricultural and rural budget, the
two, had the purpose of funding expenditure resulting environment and fisheries. The regulation of agricultural
from application of the market and price policy. The chief markets and direct payments represents 33.9 % of total
characteristic of such expenditure was its unpredictability planned commitments, in other words EUR 293 billion for the
(insofar as the amount depended on numerous variables EU-27 (4.2.10, Table I(A)(1)). In addition, rural development
such as the vagaries of climate and health, changing measures represent 8 % thereof, EUR 69 750 billion in other
demand, and international prices) and, consequently, it words (4.2.10, Table I(A)(2)). Thus the planned agricultural and
was amended during the course of the financial year so rural budget for 2013 stands at EUR 49.8 billion, equivalent to
that forecast appropriations could be adjusted to meet 39.3 % of the total, below the percentage allocated to the CAP
actual requirements, through supplementary or amending at the start of the financial perspectives (44.5 % in 2007)
budgets. The Guarantee Section was one of the (4.2.10, Table I(B)). The CAP budget is in fact strictly controlled
compulsory expenditures in the Community budget by budgetary discipline and any reform must therefore be
(Article 272 EC), directly resulting from the Treaty or acts financed as part of a financial allocation which is more or less
formulated pursuant thereto. The Council, the top level of unchanging.
the Community budget authority, still has the last word on
compulsory expenditures today in the procedure to A review of provisions for financing the common agricultural
determine the annual budget. As a general rule, the EAGGF policy is also included in the context of preparatory debates
Guarantee Section financed market intervention measures on the 2007–13 perspectives.
in full. — Regulation (EC) No 1290/2005 (OJ L 209, 11.8.2005) has
— The Guidance Section helped to finance operations replaced Regulation (EC) No 1258/1999. On the basis of
involving the structural policy and the development of this new regulation, on 1 January 2007 the EAGGF became
rural areas. All this expenditure was classified as non- two separate funds, the European Agricultural
compulsory. The European Parliament still has decision- Guarantee Fund (EAGF) to finance market measures and
making powers today for non-compulsory expenditure revenue support, and the European Agricultural Fund
within the limits of a maximum threshold of increase for Rural Development (EAFRD). The EAGF, with an
calculated by the Commission on the basis of economic annual budget in the region of EUR 41 billion for the period
parameters. Unlike the EAGGF Guarantee Section, the 2007–2013 (4.2.10, Table I(A)(1)), finances or occasionally
EAGGF Guidance Section is based on the principle of co- co-finances the following with the Member States:
financing. • s ingle CMO expenditure (4.2.3): export refunds and
Since 1988, in order to curb the increase in CAP expenditure, interventions to regulate agricultural markets;
the funds available have been subject to strict budgetary • d
irect payments under Regulation (EC) No 1782/2003
discipline following the introduction of a multiannual (4.2.4);
agricultural guideline (Decision 88/377/EEC, supplemented
by the Interinstitutional Agreement of 22 June 1988, as part of • t he Community’s financial contribution to initiatives to
the Delors Package I) (4.2.2). provide information about and to promote agricultural
products on the internal market and in third countries;
Following the Treaty of Maastricht and the Edinburgh
• t he Community share of the following actions:
European Council (December 1992), the financial framework
veterinary, collection and the use of genetic resources
was overhauled (Delors Package II). The Interinstitutional
and also agricultural accounting information systems,
Agreement of 1988 was superseded by a new agreement on
among other ad hoc expenditure.
budgetary discipline for the period 1993–99 (OJ C 331,
7.12.1993). It extended the principles of 1988 whilst at the — Regulation (EC) No 1290/2005 was accompanied by
same time improving the position of the European Parliament Regulation (EC) No 1698/2005 (OJ L 277, 21.10.2005) on
as far as compulsory expenditure was concerned. Since then support for rural development by the EAFRD, because of
the EP has had a right of scrutiny guaranteed by a conciliation the financial and programming characteristics of the
procedure prior to the budget being passed. For its part, second pillar of the CAP (4.2.5). The EAFRD has taken over
Decision 88/377/EEC was superseded by Decision 94/729/EC part of the EAGGF Guarantee Section budget (involving
(OJ L 293, 12.11.1994), which confirmed the principle whereby support measures), the EAGGF Guidance Section and the
financial discipline would apply to all common policies. Leader+ initiative (which plays an important role in rural
Agenda 2000 (4.2.2) extended the agricultural guideline development by encouraging local strategies based on
within the 2000–06 financial perspectives (OJ C 172, 18.6.1999). partnership and experience-sharing networks). The EAFRD
In parallel, the financing of the CAP was laid down in a new co-finances measures to improve competitiveness in the
regulation ((EC) No 1258/1999) (OJ L 160, 26.6.1999). agricultural and forestry sectors, agricultural and
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4 2
environmental measures, measures to improve the quality B. Allocation by expenditure category and by sector
of life in rural areas and encourage the diversification of the The expenditure for the first pillar (EUR 49.8 billion in 2006)
rural economy and establish local capabilities (4.2.5). (4.2.10, Table IV.1) consists of 80.7% of direct aids to farmers
(EUR 34 billion). The sharp increase in direct aids since 1992 has
Legal framework of Regulation (EC) No 1290/2005 resulted in a parallel decrease in other EAGGF Guarantee
Section expenditure: export subsidies stand at just 5.9 %
The new regulation ((EC) No 1290/2005) stipulates the
(EUR 2.4 billion) and the other market subsidies (buying at
conditions which allow the Commission to manage the
guaranteed prices, guidance aids, distillations) stand at just
agricultural budget and also clarify the cooperation obligations
EUR 5.6 billion (11.3 % of the total). However, support
incumbent on Member States. Provision is made within this
measures for the rural development policy, which is the
framework for Member States to agree to paying agencies, as
responsibility of the EAGGF Guarantee section stands at 15.4 %
well as coordination bodies responsible for centralising
(EUR 7.7 billion).
information which has to be provided to the Commission.
In the past the top three sectors which benefited from the
The filing of annual accounts must be accompanied by a EAGGF Guarantee Section were arable crops (cereals, oilseed
statement of assurance from the head of the paying agency as and proteins), beef and milk products. After the 2003 reform
well as a document certifying that the accounts which have (4.2.2 and 4.2.4) and the resultant decoupling of aids in
been filed are complete, accurate and truthful. Commission relation to production, the top expenditure item was single
oversight involves an accounts clearance procedure in two payments to farms (29.1 % of the EAGGF Guarantee Section
stages (accounting and compliance). In order to protect the total in 2006), followed by direct aids once again linked to the
financial interests of the Community, the Commission ensures production of arable crops (17.5 %), beef sector subsidies
that sums paid out erroneously are recovered. Without prejudice (6.6 %), direct aids for the production of olive oil (4.6 %) and
to checks carried out by the domestic authorities, the direct aids to the dairy sector (2.9 %).
Commission can arrange for checks to be performed in situ.
The new regulation includes rules on budgetary discipline, C. Distribution by country
which involves determining the amounts available on an As shown in Table IV(1) for the 2006 financial year (4.2.10),
annual basis for EAGF expenditure, forecasts regarding France is the largest beneficiary of the EAGGF Guarantee
compliance with payment timescales which States must abide Section in absolute terms (20.1 %), followed by Spain (13.3 %),
by and rules on the possible reduction and suspension of Germany (13.1 %), and Italy (10.9 %). As far as the EAGGF
monthly or quarterly payments. In order to ensure that budget Guidance Section is concerned, Spain is the top beneficiary
ceilings are not exceeded, the Commission is relying on a (22.15 %), followed by Italy (14.0 %) and Germany (13.1 %). The
warning system which monitors EAGF expenditure on a little influence new Member States have had on the EAGGF
monthly basis. Guarantee Section should be noted (8.9 %) given the gradual
alignment process of direct payments which is still in progress.
In order to carry out Fund activities, Commission departments However, the new Member States already receive a significant
are assisted by the Committee on the Agricultural Funds share of the EAGGF Guidance Section (22.1 %) in accordance
whose members include representatives of Member States. with the priority given to the modernisation of agricultural
Post-auditing of the management of agricultural credits is facilities and the development of rural areas in these countries.
carried out by the Court of Auditors and also by the
European Parliament’s Committee on Budgetary Control. Table IV(2) (4.2.10) also shows the uneven distribution of CAP
direct aid at farm level: 82.12 % of CAP recipients in the EU-25
receive less than EUR 5 000 per year, with a total amount
The changing nature of agricultural and rural equivalent to 15.5 % of the total for direct aid paid out by the
expenditure EAGF. Yet the percentage of farms that receive more than
A. General overview EUR 100 000 is very small (23 000 of a total of 7.3 million,
0.31 % in other words), with a total amount equivalent to
The share of agricultural expenditure in the European Union EUR 4.4 billion (13.3 % of the total for direct aid paid in 2006).
budget has decreased constantly in recent years. Whereas the Countries with a higher percentage of large farms which
CAP represented 66 % of the Community budget in the early benefit from the CAP are the Czech Republic, the United
1980s, it is likely to account for just 39 % of it in 2013 (4.2.10, Kingdom, eastern Germany and Slovakia. This situation
Table I). Since 1992, the date of the first significant overhaul of obviously raises certain issues as far as the legitimisation of
the CAP and the explosion in direct aid, agricultural CAP aid is concerned given the values of European citizens as
expenditure has remained stable in real terms, apart from in a whole.
1996 and 1997 (because of the BSE crisis and the accession of
three new Member States). The budget cost of the CAP
compared with the GDP of the EU has therefore decreased, Role of the European Parliament
from 0.54 % in 1990 to 0.47 % in 2007 (0.44 % forecast for 2013) The Interinstitutional Agreements of 1988, 1993, 1999 and
(4.2.10, Table I). 2006 have enabled the European Parliament to somewhat
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increase its impact on compulsory expenditure. As part of a of the regions on it, to facilitate dialogue between the regions
consultation procedure, Parliament indicates its position on and the Member State. Parliament also takes the view that the
the total amount of EAGGF appropriations and how they are Commission’s estimates of expenditure for the budget are not
allocated by product and activity but the final decision lies precise enough, and it therefore intends to take a closer look at
with the Council. Parliament’s main contributions to the this area of the EAGGF Guarantee Section to monitor the level
operation of the EAGGF include its firm support for the of discrepancy between estimated and actual spending. It has
amendment of Regulation (EC) No 1258/1999 on the funding also requested that Commission financial reports be submitted
of the CAP and rural development as a way of preventing the to the Council at the same time as to Parliament and it
disputes arising from dialogue exclusively between the suggested that the planned timescales for recovering
Member States’ national departments and those of the regions expenditure provided for in Regulation (EC) No 1290/2005 be
concerned (T6-0193/2005 of 26 May 2005, OJ C 117, amended.
18.5.2006). Parliament’s Committee on Agricultural and Rural
Development argued that there is a need to set up a g Albert Massot Marti
conciliation body in each Member State, with representatives August 2008
4.2.7. External aspects of the CAP: WTO Agreement on

Agriculture
At an external level the CAP is now governed by WTO rules and more specifically by its Agreement on Agriculture of 15 April
1994, which provided for a programme of gradual liberalisation involving agricultural production and trade.
Legal basis waivers granted under the generalised system of preferences

In the context of the General Agreement on Tariffs and Trade (GSP). These preferential agreements must also be compatible
(GATT), signed in Geneva in 1947, and the Agreement with WTO rules and they explain the high quality of EU
establishing the World Trade Organisation (WTO), signed in agricultural imports from developing countries (4.2.10, Table V).
Marrakesh in 1994 (OJ L 336, 23.12.1994), the European Union
and its Member States are governed by the following articles WTO agreement on Agriculture
of the consolidated Treaty establishing the European
Community (EC). The GATT of 1947 did apply to agriculture, but it was
incomplete. So much so that signatory States (or ‘contracting
— 133 (common commercial policy); parties’) actually excluded this sector from the scope of the
— 300 (negotiation and conclusion of international principles stated in the general agreement in practice. The
agreements); so-called Uruguay Round, which began in Punta del Este in
1986, included this sector in multilateral trade negotiations.
— 310 (agreements establishing an association involving
After 8 years of tough talks and the signing of the Marrakesh
reciprocal rights and obligations, common actions and
Agreement, a new multilateral framework to encourage the
special procedures).
gradual liberalisation of agriculture was set up within the
World Trade Organisation.
External aspects of the CAP — General framework
All of the WTO’s agreements and memoranda of
On this legal basis the entire CAP has been subject to WTO
understanding on trade in goods signed in 1994, which
discipline since 1995. A Dispute Settlement Body (DSB) with a
entered into force on 1 January 1995, apply to agriculture.
stringent procedure for disputes has also been set up to ensure
However, agriculture is special in that it has its own specific
that signatory States comply with the new multilateral rules.
agreement, the Agreement on Agriculture, whose provisions
In addition, the CAP is influenced by agricultural concessions prevail. In addition, some provisions of the Agreement on the
which a wide range of countries are entitled to under several Application of Sanitary and Phytosanitary Measures (SPS)
multilateral and bilateral agreements (with the ACP and of the Agreement on Trade-Related Aspects of
countries, Mercosur, the Euro-Mediterranean area, the European Intellectual Property Rights (TRIPS) also involve agricultural
Economic Area, Chile, Mexico, etc.) and also by unilateral production and trade.
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4 2
It should be pointed out that there is a certain degree of cattle (in the case of ‘compensatory aids’ approved by the
flexibility as regards implementation for both developing CAP in 1992) (4.2.2). They were moreover protected from
country members (special and differential treatment) and any challenge before the WTO Dispute Settlement Body
least-developed and net food-importing developing countries (DSB) by a ‘peace clause’ lasting 9 years, which expired on
(special provisions). 31 December 2003. However, the amount of support
On the basis of the Agreement on Agriculture, WTO Member under the AMS and aid in the blue box category (‘total
States have undertaken to implement a programme for the AMS’) for each product must not exceed total support
reform of agricultural policies in force (over the period 1995– granted during the 1992 marketing year.
2000 for developed countries and 1995–2004 for developing — The ‘green box’ includes two support groups. The first
countries). This programme lays down specific binding involves public services programmes (e.g. research,
commitments in three major areas which have had a training, extension, inspection, marketing, promotion,
significant impact on the CAP. infrastructures, domestic food aid or public food security
stocks). The second involves direct payments to
A. Market access
producers which are fully decoupled from production.
The Agreement on Agriculture seeks to improve access to These mainly involve income guarantee and security
markets by requiring: programmes (natural disasters, State financial
— the conversion of all border protection measures into contributions to crop insurance and so on), programmes
customs duties (tariff equivalents) and to then gradually directed at adjusting structures (incentives for the
reduce them (by 36 % in 6 years, 1995–2000, compared cessation of farming, withdrawal of production resources,
with the reference period of 1986–88); investment aid) and environmental protection
programmes. All green box aid which is deemed to be
— for specific products which are not subject to tariffication,
compatible with the WTO framework is totally exempt
undertakings for ‘minimum access’ to third countries by
from reduction commitments.
opening up tariff quotas to be established, representing
5 % of the 1986–88 base period consumption for each C. Export subsidies
group of products by the end of 2000;
The Agreement on Agriculture allows agricultural exports to
— maintenance of the so-called ‘current access’: import tariff receive subsidies. Permission is only granted once WTO
concessions which were already in force in 1995 must be members have undertaken to reduce their subsidies, however.
kept at least at their 1986–88 level; Export support measures must therefore be reduced by 21 %
— the introduction of a safeguard clause, which is triggered in terms of volume and 36 % in terms of budget over 6 years
either when the volume of imports exceeds a certain compared with the 1986–90 base period level (except for beef
threshold or import prices fall below a certain level. products where the period covers 1986–92). In the European
Union this linear reduction was carried out for 20 groups of
B. Domestic support products. For processed products only the budgetary
The Agreement on Agriculture makes provision for a reduction reduction applies.
in support volumes which varies depending on the nature of
the aid, which is categorised in different ‘boxes’ depending on Impact of the Agreement on Agriculture on the CAP
the effect they have in terms of distorting trade on agricultural
markets, measured by the degree of ‘decoupling’ involved in The aim of the CAP reform in May 1992, in addition to its
relation to production. domestic objectives, was partly to facilitate the signing of the
Agreement on Agriculture as part of the Uruguay Round. As a
— The ‘orange box’, also known as the aggregate measure result the European Union has to a large extent complied with
of support (AMS), combines price support and aid the undertakings signed in Marrakesh.
coupled with production which is not exempt from
reduction obligations. It must be reduced by 20 % over A. Market access
6 years compared with the reference period 1986–88. In Undertakings involving EU consolidated rights involve 1 764
addition, all WTO members may apply the ‘de minimis tariff lines. The average consolidated customs duty for food
clause’, which allows any support amounting to less than products, which stood at 26 % at the start of the
5 % of the value of the product under consideration implementation period, was only 17 % at the end of the
(specific aids) or of total agricultural production (non- period. In addition, the EU applied zero or minimal duty to 775
specific aids) to be excluded from the current AMS. This lines out of the total 1 764. Only 8 % of the tariff lines have a
ceiling is set at 10 % for developing countries. customs duty in excess of 50 %. These tariff peaks apply to
— The ‘blue box’ includes aids linked to supply control dairy products, beef, cereals and cereal-based products, sugar
programmes which are exempt from reduction and sweeteners. Negotiations which are currently in progress
undertakings, e.g. direct aids based on area and output for the Doha Round (4.2.8) are likely to focus on these
which are fixed and allocated for a quantity of heads of products in particular.
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As far as tariff quotas are concerned, the European Union has Role of the European Parliament
established a total of 87 quotas, 37 of which come under
The European Parliament (EP) has always watched the progress
‘minimum access’ and 44 under ‘current access’.
of multilateral negotiations in general and agricultural
B. Subsidised exports negotiations in particular extremely closely. Several resolutions
demonstrate this interest: those of 15 December 1999 on the
About 90 % of subsidised exports notified to the WTO
third WTO Ministerial Conference in Seattle (OJ C 296,
originate from the European Union. But it should be borne in
18.10.2000), 25 October 2001 on openness and democracy in
mind that a number of practices used by our main
international trade (OJ C 112, 9.5.2002), 13 December 2001 on
competitors involving food aid, export credits and
the WTO meeting in Doha (OJ C 177, 25.7.2002), 25 September
commercial State enterprises, which involve substantial
2003 on the fifth WTO Ministerial Conference in Cancún (OJ C
sums, are not subject to WTO discipline. In addition, the
77, 26.3.2004), 12 May 2005 on the assessment of the Doha
European Union has deployed considerable efforts to reduce
Round (OJ C 92, 20.4.2006), 1 December 2005 on the
this type of support, which has a strong agricultural trade-
preparations for the sixth WTO Ministerial Conference in Hong
distorting capacity. The share of export refunds in the
Kong (OJ C 285, 22.11.2006), 4 April 2006 on the assessment of
Community agricultural budget (EAGGF Guarantee Section)
the Doha Round (OJ C 293, 2.12.2006) and 24 April 2008 on
decreased from 29.5 % in 1993 (EUR 10 159 billion), when
towards a reform of the World Trade Organisation (P6_TA-
there were 12 Member States, to 5 % (EUR 2 494 billion) in
PROV(2008)0180)
2006, when there were 25 Member States. Undertakings have
been stringent for some Community products: these include The EP has always called on the Commission to safeguard the
butter, rapeseed, cheese, fruit and vegetables, eggs, pork, interests of European producers and consumers as well as the
beef, poultry and wine. interests of producers in those countries with which the EU
has historically had particularly close relations (the ACP
C. Domestic support countries). In 1999, at the start of the so-called Millennium
Domestic support has changed considerably during the Round, it expressed its support for the approach adopted by
course of the implementation period for the Agreement on the Community’s negotiators in championing the European
Agriculture. The orange box (AMS) has decreased sharply, agricultural model based on the multifunctionality of the
from EUR 81 billion at the start of the period covered by the agricultural business. The resolutions of 2001 reiterated this
agreement to EUR 30.8 billion in 2003. Some of this support support by also highlighting the importance of expressly
was initially converted to the blue box. But the CAP reform acknowledging non-trade concerns and taking into account
in 2003, which decoupled most of the existing direct aid, the public’s demands regarding food safety, environmental
and retrospective reforms (on olive oil, tobacco, cotton, protection, food quality and animal welfare.
sugar, fruit and vegetables and wine) have allowed most of
The EP also expressed regret about the failure of the Seattle,
the blue box to be converted to the green box. In addition,
Cancún and Hong Kong Conferences by supporting the efforts
the full implementation of these reforms could result in the
made by the EU to pursue Doha Round negotiations.
AMS being reduced by up to EUR 20 billion in the next few
years. Finally, in the latest EP resolution of 24 April 2008, MEPs
emphasised the need for a large scale overhaul of the WTO. In
It should be pointed out that although Europe has actually
particular they felt it was necessary to improve the coordination
reduced its support, the United States, has increased
of WTO activities with those of other international organisations
agricultural aid with strong trade distorting effects, whilst
such as the ILO, FAO, UNEP, UNDP and WHO.
using support measures which are not covered by an actual
WTO framework (e.g. aids to counter the trade round, granted
on the basis of a very loose interpretation of the ‘de minimis g Albert Massot Marti
clause’). August 2008
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4 2
4.2.8. The DOHA Round and agriculture

Today, multilateral agricultural trade is governed by the Uruguay Round agreements, and in particular the Agreement on
Agriculture. The Doha Ministerial Conference of 14 November 2001 established a new comprehensive negotiating agenda.
At present, it is unlikely that these negotiations will produce a short-term consensus, but an agreement remains possible.
Legal basis commitment to the WTO to do so); the fifth session of the
The framework for the present agricultural negotiations was Ministerial Conference (held in Mexico in September 2003)
defined by Article 20 of the Marrakesh Agreement on for the presentation of the comprehensive draft
Agriculture. Under the terms of this article, WTO members commitments; and 1 January 2005 for the conclusion of
confirmed that reducing agricultural support and protection the negotiating agenda as a whole.
was an ongoing and gradual process. They also agreed that
negotiations for continuing the process would begin on The current negotiations
1 January 2000. Furthermore, Article 20(c) specifies that the
A. Progress
negotiations should take account of non-trade concerns (such
as environmental protection, food safety, rural development Thus far, the deadlines agreed upon have barely been met.
and animal welfare) and special and differential treatment for 1. The negotiations on the modalities for the commitments
developing countries. were not concluded by the deadline of 31 March 2003. The
substantial differences between the WTO members resulted
Objectives in them rejecting the compromise text presented by the
The talks began in March 2000, in line with the provisions of chairman of the agriculture negotiations. In the meantime,
Article 20 of the Agreement on Agriculture. However, it was members launched negotiations more modest in remit with
the fourth WTO Ministerial Conference, held in Doha a view to reaching an agreement on the modalities at the
(Qatar) in November 2001, that truly launched the Cancún Ministerial Conference in September 2003.
agricultural negotiations. 2. Under the Doha mandate, the fifth Ministerial Conference
The Conference’s final declaration confirmed the aims of the held in Cancun from 10 to 14 September 2003 was
preparatory work, clarified the general framework for negotiations supposed to mark a point much closer to the end of the
— which are now held as part of the Doha Development negotiations. It was intended to assess the progress made
Agenda (DDA) — and established a new timetable. since the Doha Conference on the 20 or so chapters on the
negotiating table (including agriculture). Moreover, on the
— The objective of the negotiations continues to be the basis of an agreement on the modalities, members were to
establishment in the long term of a fair and market- table their offers or ‘comprehensive draft commitments’. In
orientated trading system through a programme of the end, the Cancún Conference also ended in failure. This
fundamental reform comprising strengthened rules and was due to several factors: the delay in agreeing the
specific commitments on agricultural support and protection modalities of the negotiations; the lack of political will to
by the State, the aim being to correct and prevent restrictions reconcile members’ positions and the controversy
and distortions in world agricultural markets. surrounding the ‘Singapore issues’ (trade and investment,
— To achieve this, and without prejudging the outcome, WTO competition policy, transparency in government
members have committed themselves to negotiations procurement and trade facilitation). However, if agricultural
aimed at substantial improvements in market access, issues (including the cotton initiative tabled by four African
reducing, with a view to phasing out, all forms of export countries) were a major stumbling block, in the end it was
subsidies, and substantial reductions in trade-distorting the refusal of the developing countries to discuss the
domestic support, by ensuring that special and differential ‘Singapore issues’ that left its mark on the conference. After
treatment for developing countries is an integral part of all Cancún, the negotiations on agriculture were suspended
elements of the negotiations and by taking into account until the end of 2003, along with proceedings regarding all
the non-trade concerns mentioned in the proposals for the matters included on the Doha agenda.
negotiations submitted by WTO members. The 3. The process was resumed at the beginning of 2004, with a
negotiations take place at special sessions of the WTO number of political initiatives from Australia, Brazil, India,
Committee on Agriculture. the United States and the EU. In May of that year, the EU
— There were three key deadlines in this process: 31 March announced some substantial concessions, agreeing, in
2003 for establishing the ‘modalities’ (the methods to be particular, to negotiate a date for the abolition of all forms
applied in the ultimate aim of bringing members to reduce of export subsidy for agricultural products. The result was
their tariffs and cut back subsidies and to make a binding the General Council Framework Agreement of 1 August
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2004, which set out the key principles for the negotiation minimum cut of 54 %, and from 33.3 % to 44–48 % for
modalities. This decision also removed three of the developing countries. The least developed countries (LDCs)
‘Singapore issues’ from the DDA: trade in relation to would be exempt from any cut.
investment, competition policy and transparency in — ‘Sensitive products’ (for all countries) and ‘special
government procurement. products’ (for developing countries) would be subject to
4. Having failed to meet the original deadline of 1 January smaller cuts. However, the reductions for sensitive products
2005, WTO members set themselves the unofficial goal of could be offset by preferential tariff quotas and special
concluding the negotiations before the end of 2006, a goal products could be exempt from all cuts.
that, once again, they failed to meet. The Hong Kong — The ‘special safeguard clause’ (4.2.7) would gradually be
Ministerial Conference of December 2005 went some abolished in developed countries. Developing countries
way towards smoothing out the differences between would benefit from a new special safeguard mechanism
members, but on some points they remained irreconcilable (SSM) applicable to 2.5 % of tariff lines, which would allow
and the Director-General, Pascal Lamy, suspended the customs tariffs to be increased temporarily to help them
negotiations in 2006. At the beginning of 2007, a new set of cope when import volumes rise or prices fall.
draft modalities was circulated by the chairman of the
Negotiating Group on Agriculture, Crawford Falconer, and c. Export competition
amendments were made to it in August 2007. The — Export subsidies (4.2.7) would be abolished by the end
negotiations that followed led to the drafting of several of 2013, including those subsidies disguised as export
working documents by the chairman. Finally, three new credits in areas such as State trading export enterprises and
revised sets of draft modalities were tabled (on 8 February, food aid in non-emergency situations. Half of all export
19 May and 10 July 2008), providing an outline pending the subsidies would be abolished by 2010.
final agreement to be decided in Geneva at the meeting of — On 29 July 2008, after nine days of talks, the WTO Director-
the Trade Negotiations Committee at the end of July. General, Pascal Lamy, confirmed the failure of the
5. The so-called July 2008 package, based on the revised discussions on the draft modalities for the negotiations on
draft document of 10 July produced by Mr Falconer (TN/ agriculture. There had in fact been an alignment of
AG/W/4/Rev.3), concerned the following matters. positions on most of the points discussed, but differences
over the special safeguard mechanism (SSM) for the
a. Domestic support developing countries, which would allow them to offset a
— ‘Trade-distorting domestic support’ (amber box + blue rise in food imports, proved insurmountable.
box + de minimis provision) (4.2.7) would be reduced by
— Roughly speaking, the disagreement was between those (the
75–85 % for the EU, by 66–73 % for the United States and
United States, in particular) who wanted a higher trigger
Japan and by 50–60 % for other members (over a period of
threshold (40 %, making a sharp increase in imports
5 years for developed countries and 8 years for developing
necessary to trigger the additional customs tariffs) to prevent
countries). An immediate reduction of 33 % would be
the mechanism being activated by normal trade growth, and
applied in the case of the United States, the EU and Japan,
those (China and India in particular) in favour of a lower
and 25 % for all other countries.
trigger threshold (10 %) to make the SSM easier to use.
— The ‘amber box’ (or AMS) (4.2.7) would be reduced by
— Other matters besides the SSM remained unresolved when
70 % overall for the EU, 60 % for the United States and
the negotiations were suspended: cotton (a strategic
Japan and 45 % for other countries. Prices and support for
product for some African exporting countries); issues
individual products would be capped at the average
related to geographical indications and biodiversity
amber box support recorded for the 1995–2000 period.
(intellectual property proposals on designations of origin
— The ‘blue box’ (4.2.7) would be expanded, but would be and patent reforms with regard to genetic materials and
restricted to 2.5 % of production for developed countries and traditional knowledge); and bananas (which, in theory,
5 % for developing countries, with caps set for each product. was to be settled by a separate agreement between the
— The ‘de minimis provision’ (4.2.7) would remain capped at EU, Latin American suppliers and the ACP States).
2.5 % of production for developed countries and 6.7 % for — In principle, negotiations aimed at overcoming these
developing countries (but there would be no cuts for support obstacles should resume in 2009, following the elections in
provided mainly to subsistence or resource-poor farmers). the United States and India.
— The ‘green box’ condition (4.2.7) would be tightened. B. Positions
b. Market access The latest failure in Geneva in July 2008 demonstrates that the
— Tariffs would be cut according to a formula prescribing current multilateral negotiations are as delicate as those under
steeper cuts on higher tariffs. For developed countries, the the Uruguay Round, subject to the interplay of oppositions and
cuts would range from 50 % for tariffs under 20 % to 66– alliances and in which the EU, the Cairns Group and United
73 % for tariffs higher than 75 %, meaning an average States and the developing countries are the key players.
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4 2
1. The European Union which maintain a high level of subsidies. It is especially critical
Relying at times on the group of countries that share some of of the EU, which it holds responsible for the detrimental effects
its ideas (the ‘friends of multifunctionality’), the EU is seeking a of the CAP on the agricultural world and the limited access to
better organised and more market-oriented multilateral Community markets. It is keen to see the elimination of export
trading system, but is concerned about social, economic and subsidies, and very reluctant about the concept of agricultural
environmental sustainability. It refers to efforts made and to be multifunctionality favoured by Europe.
made in future in the areas of domestic support (1992, 1999 4. The developing countries
and 2003 CAP reforms (see (4.2.2)) and market access
Representing three quarters of WTO members, developing
(‘Everything but arms’ initiative, 6.5.2).
countries have become distrustful and seek to defend their
The latest EU proposals on the modalities for commitments own agricultural production and non-trade concerns (food
agree to an average tariff reduction of 60 % to improve market security, means of subsistence, poverty, rural employment,
access, which is undoubtedly the most sensitive area for Union etc.). They also call for special and differential treatment
agriculture. EU proposals on market access are strictly adapted to their specific situation. During the Cancún
conditional on further clarification from other developed Ministerial Conference, they organised themselves into new
countries on the elimination of their forms of export support. alliances in order to promote their interests more successfully.
US commitments on food aid and export credits are not yet
— The alliance of 20 countries (G20) formed in 2006 has grown
sufficient. Australia, Canada and New Zealand need to provide
to 22, led by Brazil, China and India, and strives to protect
further commitments on the reform of their State trading
both the millions of peasant farmers in their countries and
enterprises. The EU also seeks real discipline on the most trade-
distorting US farm payments (counter-cyclical payments). their flourishing industry from too sharp a reduction in
customs tariffs. Also opposed to agricultural subsidies, the
Moreover, the EU reaffirmed its desire for balance in the group is calling in particular for the abolition of export
continued reform of the agricultural trading system by subsidies and stricter rules for food aid and export credits.
ensuring special treatment for developing countries, specific
commitments for sensitive products and due regard for non- — A new alliance was formed in 2003 among the African
trade concerns (environmental considerations, rural Union, the ACP countries and the least-developed countries
development, animal welfare and effective protection of (G90) over a range of common negotiating positions on
designations of origin). agriculture, market access for non-agricultural products, the
Singapore issues and development. The African countries
2. The United States denounced, in particular, the poor access for their products
The USA is campaigning within the WTO for a fundamental to the markets of developed countries and the importance
reform of world agricultural trade. Ignoring the criticisms of tariff and non-tariff barriers. They also criticised the
concerning the level and forms of its domestic support policy, agricultural subsidies in developed countries (United States,
it seems to be prepared to reduce trade-distorting domestic EU and Japan), stating that they were one of the most
support substantially. questionable aspects of the Doha Round.
The most recent US proposal aims to cut agricultural — Finally, an alliance of developing countries (G33) was
subsidies to less than USD 15 billion a year, a slight formed to promote recognition of strategic products
improvement on its previous offer of USD 17 billion. Crawford (‘special’ products designated by the beneficiaries
Falconer has asked the United States to bring down its themselves and exempt from reductions or quotas) and a
subsidies to between USD 13 billion and USD 16.4 billion special safeguard mechanism for developing countries.
dollars. Brazil, representing the emerging countries, considers
that US subsidies would still be too high at that level. In 2007
the United States paid its farmers some USD 8 billion in
subsidies. The US offer would therefore allow Washington to The European Parliament (EP) has voiced its opinion on the
increase its domestic support by USD 7 billion. However, the Doha Round negotiations on several occasions. In ensuring
US negotiators insist that the relatively low level of support compliance with the negotiating mandate granted to the
granted last year was down to the rocketing prices of primary Commission, the EP has always supported the efforts of
agricultural products on the world markets. US subsidies are European representatives to aid progress in the negotiations in
largely counter-cyclical and are used to pay the difference the aim of producing a balanced agreement (1).
between world prices and the price producers receive. This
means that the US government may have to pay out more
g Albert Massot Marti
money to its farmers should prices fall. August 2008
3. The Cairns Group
(1) Resolutions of 13 December 2001 (OJ C 177 E, 25.7.2002, p. 290),
Bringing together 17 exporting countries whose common
25 September 2003 (OJ C 77 E, 26.3.2004, p. 393), 12 May 2005 (OJ C 92 E,
interest is to reduce obstacles that are harmful to agriculture, 20.4.2006, p. 397), 1 December 2005 (OJ C 285 E, 22.11.2006, p. 126) and
this group is very bitter towards the developed countries, 4 April 2006 (OJ C 293 E, 2.12.2006, p. 155).
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4.2.9. The CAP and the Treaty of Lisbon
The Treaty of Lisbon was signed on 13 December 2007. It contains some significant changes on agriculture with respect to
the existing Treaties and secondary legislation. However, the new agricultural provisions will not come into force until the
texts proposed by all the Member States of the Union have been ratified.
Introduction Presidents of the European Parliament, the Council and the

The Treaty of Lisbon is a complete and exhaustive reformulation Commission a reasoned opinion regarding the compliance of a
of the two ‘founding’ Treaties, namely the Treaty on European draft legislative act on agriculture with the subsidiarity principle.
Union (TEU) and the Treaty establishing the European B. Introduction of the co-decision procedure in the field
Community (EC), renamed the ‘Treaty on the Functioning of of agriculture
the European Union’ (TFEU) (OJ C 115, 9.5.2008) (1.1.6). The agricultural chapter of the TFEU (in the first paragraph of
The new TFEU introduces some formal changes to the Article 42 and Article 43(2)) recognises co-decision as the
agricultural chapter of the EC Treaty. In the first instance, ‘ordinary legislative procedure’ for the CAP, replacing the
without changing its structure, it renumbers the provisions in current consultation procedure (4.2.1). That represents a
force (ex Articles 32 to 38 become new Articles 38 to 44). It major change in the CAP since it assigns to the European
also introduces the concept of the ‘internal market’ to replace Parliament a real role as joint legislator on agriculture.
references to the ‘common market’. On the other hand, the new Nevertheless, the new Treaty raises major problems of
Treaty does not decouple the ‘common agricultural policy’ from interpretation to the extent that exceptions to the ordinary
the ‘common fisheries policy’. Also, it does not go so far as to procedure are introduced in favour of the Council. Indeed, the
adapt the objectives and founding principles of the common second paragraph of Article 42, in the context of competition
agricultural policy (CAP) to the new demands of citizens on rules, provides that the ‘Council, on a proposal from the
agricultural activity (as regards sustainable development, Commission, may authorise the granting of aid: (a) for the
product quality, public health and consumer protection, rural protection of enterprises handicapped by structural or natural
development and land use, consolidation of a multifunctional conditions; (b) within the framework of economic development
agriculture throughout the Union or, finally, the contribution of programmes’. In addition, Article 43(3) stipulates that the
agriculture to combating climate change). Nevertheless the new ‘Council, on a proposal from the Commission, shall adopt
TEU opens the door to the future updating of the agricultural measures on fixing prices, levies, aid and quantitative limitations’.
chapter by way of a ‘simplified revision’ procedure (Article 48(6)
TEU). And, despite its insufficiencies, the TFEU will involve major In the absence of a clear delimitation of the legislative
changes to the CAP, in particular at the legislative, competences of the European Parliament and the Council on
implementing and financial levels. agriculture, legal and political problems may arise, even if case-
law eventually establishes a restrictive interpretation of the
exceptions. Currently, it is unthinkable for the European
Changes to the legislative procedure Parliament to accept general implementing reservations in
A. The new ‘nature’ of the CAP: competence shared favour of the Council which could qualify, indeed effectively
between the Union and the Member States invalidate, the co-decision powers acquired under the new
A general classification of competences into three categories Treaty, particularly in the context of fundamental reforms of
has been incorporated into the TFEU (Title I). These are the CAP in which the fixing of aid levels and prices would play
exclusive competences, shared competences, coordination a key role. An interinstitutional legislative cooperation
competences and support actions. In this context, agreement is thus needed in order to clarify the decision-
Article 4(2d) recognises competence shared between the making levels and structure of agricultural acts.
Union and the Member States in the field of agriculture,
contrary to general opinion in the doctrine and legal services Changes at the level of implementation
of the Commission (SEC(1992) 1990 of 27 October 1992) which A. The new distinction between delegated powers and
hitherto have regarded policy on markets (first pillar of the implementing powers
CAP) as an exclusive competence of the Union.
According to the new Article 290 of the TFEU, a legislative act
New Article 4(2d) of the TFEU will have effects on legislative may delegate to the Commission the power to adopt non-
work in the field of agriculture to the extent that the European legislative acts of general application to supplement or amend
institutions will apply the subsidiarity principle in areas which certain non-essential elements of the legislative act. In that
do not fall within the exclusive competence of the Union case, the legislative act will explicitly define the objectives,
(Article 5(3) and Article 12 TEU). In this connection it should be content, scope and duration of the delegation and will lay down
noted that the national parliaments will be able to send to the the conditions under which it can be revoked by Parliament or
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4 2
the Council. There is a distinct risk of a profusion of delegated 1. The first vote, by a qualified majority, concerns the
acts in the field of agriculture, in particular in the context of the amendments to the DB. The TFEU says nothing about the
single market organisation (4.2.3), especially if the institutions conduct of this vote in plenary, which would establish the
do not get round to clarifying the limits of legislative position of the EP on all appropriations and would
competence between the European Parliament and the Council. conclude the first reading stage.
Article 291 of the TFEU makes provision for implementing 2. The second vote, by a simple majority, concerns the
powers to be conferred on the Commission or the Council outcome of the Conciliation Committee, grouping
where uniform conditions for implementing legally binding representatives of the Council and an equal number of
Union acts are needed. In this context, amendments will need members representing the European Parliament, which is
to be made to the existing regulatory provisions on convened in the event of disagreement on the amended
‘comitology’ (Decision 1999/468/EC, OJ L 184, 17.7.1999) draft budget. The Conciliation Committee is one of the main
(4.2.1) after the entry into force of the new Treaty. innovations in the annual budgetary procedure of the TFEU.
It embodies the dialogue between the two arms of the
Agricultural financial aspects of the TFEU budgetary authority. If the EP and the Council do not
The Treaty of Lisbon contains significant changes at the succeed in approving a ‘joint text’ in 21 days, the
financial level with respect to the existing Treaties and Commission is obliged to present a new draft budget (DB).
secondary legislation. It introduces a new Title II in the TFEU The TFEU does not define the exact number of members or
with six chapters and 15 articles. Most of the new financial the level of representation of the Council: two very sensitive
provisions are general in scope. However, they have specific subjects which will need to be negotiated by the EP and the
effects on the area of agricultural expenditure which, it should Council and to be formalised through an Interinstitutional
be remembered, even now still accounts for the major part of Agreement. Otherwise, some decisions to be taken only
the Community budget (4.2.10, Tables I and IV). concern the European Parliament: for example, the scope of
the mandate from the plenary for the EP representatives on
A. Removal of the distinction between compulsory the Conciliation Committee and the margin of discretion
expenditure and non-compulsory expenditure conferred in the negotiation process; the leadership of the
In order to simplify the procedure for the adoption of the annual European Parliament delegation; the election of its
budget, the TFEU eliminates the distinction between representatives; or relations between the Conciliation
‘compulsory expenditure’ (CE) and ‘non-compulsory expenditure’ Committee and the EP Committee on Budgets and the
(NCE) (4.2.6) in its new Articles 314 and 315 (replacing other specialised committees (in our case, in particular, the
Articles 272 and 273 TEC). Henceforth, the two arms of the Committee on Agriculture and Rural Development).
budgetary authority (European Parliament and Council) will 3. A third vote option should be added for the specific
jointly decide on all budgetary expenditure. Hence the Council eventuality of the rejection of the joint text by the Council. In
acquires decision-making powers on NCE and the European this latter hypothesis, the EP vote would decide to confirm
Parliament acquires them on CE (in particular, agricultural all or some of the amendments adopted during the single
expenditure). Nevertheless, the distinction between CE and NCE reading. That said, the EP would, by dint of a reinforced
remains in the Interinstitutional Agreement on budgetary qualified majority (majority of members plus three fifths of
discipline and sound financial management (OJ C 139, the votes cast), have the last word on the annual budget.
14.6.2006) and in the general financial regulations (Regulation
(EC) No 1605/2002, OJ L 248, 16.9.2002), which will have to be C. Consolidation of the multiannual financial framework
adjusted after the ratification of the Treaty of Lisbon. and budgetary discipline
B. The new annual budgetary procedure The provisions on budgetary discipline are introduced in a new
Article 310(4) TFEU, which also mentions the ‘multiannual
The TFEU introduces a new Chapter 3 ‘The Union’s annual
financial framework’. In fact the Treaty repeats and updates most
budget’ in Title II ‘Financial provisions’, which amends and
of the provisions on the multiannual financial perspectives in
simplifies the existing budgetary procedure. New Article 314
force under the Interinstitutional Agreement on Budgetary
TFEU replaces Article 272 TEC and creates a special legislative
Discipline and Sound Financial Management. That said, the
procedure for the adoption of the annual budget jointly by the
‘multiannual financial framework’ and its rules are integrated for
European Parliament and the Council. Following the abolition of
the first time in primary legislation by way of Article 312 TFEU.
the preliminary draft budget (PDB), the two current readings will
be replaced by a single reading: the Commission presents its These provisions of the Treaty of Lisbon confirm the duration
proposed draft budget (DB) not later than 1 September, and of the multiannual financial framework (five years). They
the Council subsequently adopts its position and forwards it to establish the ‘special legislative procedure’ for the adoption of
the EP not later than 1 October stating the reasons which led it the regulation which will set the amounts of the annual
to adopt its position. It must be remembered that currently the ceilings for appropriations and, finally, they formalise the
Council gives no reasons for the reductions it adopts. From then content of the financial perspectives on the basis of
on, the new procedure provides for three votes in Parliament: expenditure categories representing the main sectors of the
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Union’s activity. It should be remembered that the CAP Constitution for Europe. However, following its rejection by
remains the leading Community policy in financial terms, France and the Netherlands, the approach based on replacing
despite the freezing of its budget and the compulsory annual the Treaties with a Constitution was abandoned in favour of
ceilings imposed. Within the framework of the last financial the amendment of the existing Treaties. The draft Treaty of
perspectives for 2007–13 (4.2.10, Table I), the first pillar of the Lisbon is the fruit of that effort and continues to enjoy the
CAP (market policy and aid) amounts to 33.9 %. The second support of Parliament (P6_TA-PROV(2008)0055) pending its
pillar (rural development) accounts for 8 % of the total in the ratification by the Member States.
same period. Moreover, the scope of the ‘budgetary discipline’ Once the TFEU comes into force, the European institutions will
principle is well known in the agricultural field, where it has take steps to formulate the new legislative procedures, to
even been integrated in secondary legislation (Article 11 of determine any interinstitutional cooperation procedures
Regulation (EC) No 1782/2003, OJ L 270, 21.10.2003). necessary and to revise the relevant texts in force.

g Albert Massot Martí
The European Parliament was one of the driving forces behind August 2008
the Convention which drew up the Treaty establishing a
4.2.10. The CAP in figures

The tables below present the basic figures of Community agriculture (II) and the main indicators of the agriculture–
environment relationships (III). Tables I and IV relate to the common agricultural policy (CAP) financing and Table V relates
to agri-food trade by geographical zone.
Table I — The CAP in the 2007–13 financial framework

Commitment appropriations 2007 2008 2009 2010 2011 2012 2013 Total
(million EUR at 2004 constant prices) 2007–13
A. Total multiannual commitment 120 702 121 473 122 564 122 952 124 007 125 527 127 091 864 316
appropriations EU‑27, of which: (100 %) (100 %) (100 %) (100 %) (100 %) (100 %) (100 %) (100 %)
1. Agriculture — policy on markets and 43 120 40 645 293 105
42 697 42 279 41 864 41 453 41 047
direct aid, of which: (35.7 %) (32 %) (33.9 %)
39 928 33 826 257 525
EU-15 38 710 37 723 36 735 35 775 34 828
(33.0 %) (26.6 %) (29.7 %)
35 580
EU-12 (new members) 3 192 3 987 4 556 5 129 5 678 6 219 6 819
(4.1 %)
2. Agriculture — rural development, of 10 710 9 253 69 750
10 447 10 185 9 955 9 717 9 483
which: (8.8 %) (7.3 %) (8.0 %)
36 740
EU-15 — — — — — — —
(4.2 %)
33 010
EU-12 (new members) — — — — — — —
(3.8 %)
53 830 53 144 52 464 51 819 51 170 50 530 49 898 362 855
B. Total agriculture (1 + 2)
(44.5 %) (43.7 %) (42.8 %) (42.1 %) (41.2 %) (40.2 %) (39.3 %) (41.9 %)
Total multiannual commitment
appropriations (A) as a percentage 1.10 % 1.08 % 1.07 % 1.04 % 1.03 % 1.02 % 1.01 % 1.048 %
of GNP (EU‑27)
Total commitment appropriations
for agriculture (B) as a percentage 0.49 % 0.47 % 0.46 % 0.43 % 0.42 % 0.41 % 0.39 % 0.44 %
of GNP (EU-27)
Sources: Prepared on the basis of the following documents: European Commission, Working Document of the Commission Services: Indicative breakdown of expenditure within
individual headings and sub-headings, after the trilogue of 4 April 2006 (Fiche No 94 REV1, 11 April 2006); Interinstitutional Agreement on budgetary discipline and sound financial
management (OJ L 139, 14.6.2006, Annex I); and Council Decision 2006/493/EC laying down the amount of Community support for rural development (OJ L 195, 15.7.2006).
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4 2
Table II — Basic figures of Community Agriculture

Number of UAA per Employment Production Share UAA classed
farms farm in the sector of the sector of agriculture as less-favoured
(1 000 farms) (ha) (agriculture, of agricultural of GDP/GVA area (%)
forestry, hunting, activity (%)
fishing) (1 000 (million EUR)
people)
2006 2005 2005 2006 2006 2006 2000–03
BE 1 382.0 52 26.9 83 6 827 0.7 20.4
BG 5 190.0 535 5.1 252 3 471 6.2 —
CZ 3 566.0 42 84.2 182 3 567 0.8 50.4
DK 2 699.0 48 53.6 87 8 133 1.1 1.1
DE 16 951.0 390 43.7 844 40 070 0.6 49.6
EE 762.0 28 29.9 32 542 1.7 39.8
EL 3 254.0 834 4.8 533 10 470 3.1 82.7
ES 25 359.0 1 079 23.0 944 37 327 2.3 81.3
FR 29 538.0 567 48.6 977 60 645 1.4 44.0
IE 4 307.0 133 31.8 117 5 498 0.9 52.8
IT 14 710.0 1 729 7.4 982 43 076 1.7 51.0
CY 169.0 45 3.4 15 618 2.3 90.5
LV 1 856.0 129 13.2 122 851 1.9 72.7
LT 2 791.0 253 11.0 187 1 612 2.3 43.7
LU 129.0 2 52.7 4 244 0.3 100.0
HU 5 809.0 715 6.0 188 6 001 2.5 19.2
MT 10.0 11 0.9 3 127 1.2 100.0
NL 1 899.0 82 23.9 259 22 110 1.7 11.1
AT 3 240.0 171 19.1 217 5 699 1.0 75.3
PL 15 957.0 2 477 6.0 2 304 16 173 2.4 51.2
PT 3 767.0 324 11.4 604 6 767 1.8 86.7
RO 14 117.0 4 256 3.3 2 843 14 365 7.2 —
SI 491.00 77 6.3 92 1 064 1.5 73.9
SK 1 939.0 69 27.4 101 1 770 1.1 50.2
FI 2 301.0 71 32.1 114 3 756 0.5 100.0
SE 3 150.0 76 42.1 98 4 382 0.4 52.1
UK 16 761.0 287 55.4 382 21 558 0.4 47.1
EU-15 145 404.0 5 843 21.4 6 244 276 562 1.1 57.4
EU-25 162 796.0 9 688 16.0 9 468 308 888 1.2 55.1
EU-27 182 103.0 14 479 11.9 12 564 326 725 1.2 —
Sources: European Commission, ‘Agriculture in the European Union — Statistical and economic information — 2007’; European Commission, ‘Rural development in the
European Union — Statistical and economic information — Report 2007’, November 2007.
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Table III — Basic agri-environmental indicators
(a) (b) (c) (d) (e) (f) (g)
UAA classed Territory Risk of erosion UAA used Production Production of UAA of
as Natura classed as (loss of land for organic of renewable renewable energy extensive
2000 area nitrate from water) farming (%) energy from from forests grazing (%)
(%) vulnerable (t/ha/year) agriculture (wood and residues)
zone (%) (kTe) (kTe)
2006 2005 2004 2005 2005 2005 2005
BE 3.07 23.6 1.07 1.66 0.9 423.0 0.0
BG — — 0.56 0.52 0.0 743.0 0.0
CZ n.a. 36.6 1.31 7.17 119.8 1 537.0 31.7
DK 7.57 100.0 2.29 5.18 64.0 1 282.0 0.0
DE 4.07 100.0 0.89 4.74 1 595.2 6 906.0 6.4
EE 4.84 7.0 0.16 7.21 6.3 706.0 53.5
EL 25.68 10.6 5.77 7.25 2.7 957.0 2.4
ES 24.03 12.6 2.41 3.25 234.3 4 176.0 31.2
FR 5.01 44.1 1.55 2.00 523.3 9 430.0 8.6
IE 6.26 100.0 0.11 0.83 0.0 215.0 0.0
IT 12.15 8.3 3.11 8.42 361.2 1 790.0 25.5
CY 0.42 8.1 — 1.12 0.9 9.0 0.0
LV 11.98 12.5 0.11 6.97 11.2 1 987.0 58.4
LT 0.13 100.0 0.33 2.31 10.8 722.0 47.5
LU 6.94 100.0 0.54 2.45 0.0 15.0 0.0
HU 0.51 46.5 0.41 3.01 19.5 1 000.0 17.2
MT 4.78 100.0 — 0.14 1.8 n.a. 0.0
NL 5.93 100.0 0.08 2.49 4.4 505.0 0.0
AT 7.58 100.0 0.46 11.03 76.6 3 507.0 43.5
PL 0.75 1.7 0.67 0.56 125.7 4 166.0 10.3
PT 22.26 1.2 4.59 6.34 0.9 2 713.0 55.6
RO — — 0.44 0.63 0.0 3 229.0 37.5
SI n.a. 100.0 0.87 4.84 7.2 469.0 69.2
SK n.a. 33.6 1.29 4.80 70.3 398.0 32.6
FI 34.05 100.0 — 6.52 7.2 6 672.0 20.3
SE 48.02 15.2 — 6.98 86.0 7 937.0 49.9
UK 4.01 38.4 0.31 3.82 45.9 604.0 25.1
EU‑15 ( )1
12.22 44.9 1.00 4.28 3 002.6 46 917.0 19.3
EU‑25 ( )2
10.47 41.4 1.64 3.97 3 376.0 58 126.0 20.1
EU‑27 ( )3
10.47 41.4 1.52 3.65 3 376.0 62 099.0 21.2
(1) (c) EU-15 except SE and FI; (f) Except MT.
(2) (a) Except CZ, SI and SK; (b) EU-10, 2007 data; (c) except CY, MT, FI and SE; (f) except MT.
(3) (a) Except BG, RO, CZ, SL, SK; (b) EU-10 2007 data; (c) except CY, MT, FI and SE; (f) except MT.
Sources: European Commission ‘Rural development in the European Union —Statistical and economic information — Report 2007’, November 2007.
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4 2
Table IV — CAP spending by Member State (2006)

1. Distribution by Member State 2. % of farms benefiting from direct
Member Aid and markets/rural development aid under the EAGGF — Guarantee
States
(EU-25) EAGGF Guarantee % of EU-25 EAGGF Guidance % of EU-25 With aid With aid With aid
(million EUR) total (million EUR) total ≤ EUR 5 000 ≤ EUR 20 000 ≥ EUR 100 000
BE 943.7 1.89 8.6 0.20 44.3 84.53 0.16
CZ 517.3 1.04 75.3 1.79 74.1 87.83 3.51
DK 1 162.2 2.33 3.5 0.08 52.5 79.58 1.08
DE 6 543.4 13.12 552.4 13.19 51.0 83.92 1.33
EE 87.7 0.17 25.1 0.59 94.9 98.69 0.05
EL 3 070.6 6.15 505.9 12.08 90.6 99.51 0.00
ES 6 654.5 13.34 927.7 22.15 77.3 94.76 0.30
FR 10 044.6 20.14 143.0 3.41 34.0 67.69 0.84
IE 1 723.2 3.45 26.2 0.62 45.9 88.97 0.19
IT 5 461.0 10.95 586.7 14.01 91.3 98.37 0.13
CY 50.9 0.10 0.0 0.0 99.3 99.97 0.00
LV 160.7 0.32 34.8 0.83 98.9 99.81 0.00
LT 346.1 0.69 49.2 1.17 99.1 99.84 0.01
LU 44.7 0.09 0.4 0.0 25.0 68.00 0.50
HU 826.1 1.65 135.3 3.23 94.4 98.80 0.22
MT 11.2 0.02 1.8 0.04 99.0 100.0 0.00
NL 1 209.6 2.42 18.8 0.44 66.7 91.62 0.14
AT 1 271.5 2.55 21.8 0.52 66.9 97.05 0.05
PL 2 033.5 4.08 515.9 12.32 99.3 99.86 0.01
PT 946.4 1.89 326.3 7.79 92.5 98.08 0.23
SI 142.6 0.28 10.2 0.24 99.6 99.98 0.00
SK 294.0 0.58 78.3 1.87 84.8 91.52 1.89
FI 817.1 1.63 44.8 1.07 47.9 93.22 0.05
SE 923.9 1.85 25.6 0.61 63.0 89.12 0.37
UK 4 287.2 8.59 69.5 1.65 49.4 74.11 2.89
EU ( )
1
291.5 0.58 6.0 0.14 — — —
EU-10 4 470.2 8.96 925.8 22.11 — — —
EU-25 49 865.2 100.0 4 187.0 100.0 82.12 94.52 0.31
(1) Commission spending.
Sources: 1. European Commission, EU budget 2006 Financial Report; 2. European Commission, ‘Indicative figures on the distribution of aid, by size-class of aid, received in
the context of direct aid paid to the producers according to Council Regulation (EC) No 1259/1999 and Council Regulation (EC) No 1782/2003 (Financial year 2006)’.
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Table V — Trade in agricultural and food products in the EU-25 by geographical zone (2006)
(a) (b)
Country / Group of countries % of 3 % of 3 alance (b – a)
Imports (million EUR) Exports (million EUR)
1. Total (2 + 3) 278 806 — 285 835 — 7 029
2. Intra-EU 211 068 — 213 570 — 2 502
3. Extra-EU 67 738 100.0 72 265 100.0 4 527
Candidate countries (2006) ( ) 1
4 633 6.8 4 331 6.0 – 302
Switzerland 2 417 3.6 4 683 6.5 2 266
Norway 372 0.5 2 142 3.0 1 770
Russia 607 0.9 6 641 9.2 6 034
Mediterranean Basin ( ) 2
7 235 10.7 8 396 11.6 1 161
Gulf Arab States (3) 249 0.4 3 255 4.5 3 006
India 1 396 2.1 348 0.5 – 1 048
China 2 862 4.2 1 375 1.9 – 1 487
Japan 138 0.2 4 083 5.7 3 945
ASEAN ( ) 4
5 565 8.2 2 529 3.5 – 3 036
NAFTA ( ) 5
8 407 12.4 17 503 24.2 9 096
United States of America 6 496 9.6 14 624 20.2 8 128
Mercosur ( ) 6
14 552 21.5 805 1.1 – 13 747
Brazil 9 129 13.5 630 0.9 – 8 499
Argentina 4 830 7.1 107 0.1 – 4 723
ACP (Lomé Convention) 8 905 13.1 5 048 7.0 – 3 857
Australia 1 821 2.7 1 438 2.0 – 383
New Zealand 2 203 3.3 196 0.3 – 2 007
(1) Romania, Bulgaria, Croatia, Turkey.
(2) Morocco, Algeria, Tunisia, Turkey, Egypt, Israel, Lebanon, Syria, Libya, Jordan, West Bank and Gaza Strip, Canaries, Ceuta, Melilla, Yugoslavia, Albania, Croatia, Bosnia and
Herzegovina, Serbia and Montenegro, former Yugoslav Republic of Macedonia.
(3) Saudi Arabia, Kuwait, Bahrain, Oman, Qatar, United Arab Emirates.
( ) Myanmar, Thailand, Laos, Vietnam, Indonesia, Malaysia, Brunei, Singapore, Philippines and Cambodia.
4
(5) Signatory countries to the North American Free Trade Agreement (NAFTA).
(6) Brazil, Paraguay, Uruguay and Argentina.
Source: European Commission, ‘Agriculture in the European Union — Statistical and economic information, 2007’.
g Albert Massot Martí

August 2008
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Common policies Forestry policy
4 3
4.3. Forestry policy
4.3.1. The European forestry strategy: framework

The European Union (EU) has substantial forest resources, which have increased with every new accession. At present the
Treaty does not provide a specific legal basis for this policy but its legal status is established under the provisions applicable
to neighbouring policies and various European action plans and rules.
The EU has the sixth largest forest area in the world and has The average size of public forests in the EU-15 is over 1 000 ha,
varied, well-managed forests with a strong economic potential. whereas private forests have an average size of 13 ha. Private
The lack of an appropriate legal basis for forestry in treaties forests are managed by over 15 million owners; these are
does, however, hamper the development of a genuine mostly small non-industrial owners who manage their forests
European forestry policy. The European forestry strategy, which on the basis of sustainability. The forestry–wood–paper
has developed despite the absence of its own legal basis, sector represents 4.3 % of jobs in the primary sector and 3.7 %
emphasises sustainable management and calls upon various of jobs in the secondary sector, or 2.5 % of the total number of
instruments which are part of other Community policies such jobs in the EU, the equivalent of the main industrial sectors
as rural development, environmental protection, development (chemical, mechanical, construction, transport, etc.). It provides
cooperation, the harmonisation of legislation, research and more than 3.5 million jobs, often in rural areas, which make a
statistics. decisive contribution to maintaining the vitality of rural areas
that are often disadvantaged and which have very limited
The importance of forestry in the European Union economic options. The forestry–wood–paper sector
contributes 2.2 % of the European GDP and has an annual
The EU is one of the main players in world forestry. The turnover of over EUR 300 billion, although this figure is
accession of Austria, Finland and Sweden in 1995 doubled its probably an underestimate in view of the wide range of wood-
forest area (which rose to 113 million ha, 87 million ha of which processing industries.
were productive forest), while the average rate of afforestation
increased from 21 % to 31 %. With the enlargement of 2004, The forest cover shows an overall increase in the enlarged EU
the EU-25’s forest area increased by 20 % and exceeded (contrary to the trend in agricultural land, which is steadily
148 million ha, taking only productive forests into account. It decreasing): more than 450 000 ha of additional forest every
exceeded 160 million ha if all forests and other woodland areas year. This is the result of forestation and reforestation policies
are taken into account. The EU-25 represents the sixth world implemented a few decades ago and an undeniable European
forest area, the equivalent of China or Indonesia. Romania and savoir faire in forestry. This surplus of forest resources makes
Bulgaria, which joined the EU in 2007, brought the EU-27 the EU an exception as far as the rest of the world is
about 10 million ha of additional forest. concerned, given that forests in the world are regressing at an
alarming rate of some 15 million ha a year (traditionally tropical
The simple division between non-coniferous (55 % of the total)
forests and more recently boreal forests).
and coniferous (45 % of the total) species indicates the variety
of ecological conditions with a gradient depending on the The EU-25 represents 20 to 25 % of world production and
latitude and altitude. From the Arctic Circle to the forests in consumption of timber and derived products, depending on
French Guiana, most of the great forest ecosystems in the the product. The EU is the world’s second largest consumer of
world (temperate, boreal, alpine, Mediterranean, subtropical, tropical wood in the world after Japan. The EU traditionally has
tropical, etc.) are represented within the EU. Reflecting natural a trade deficit in timber with the rest of the world; its trade
conditions, agricultural, grazing and forestry practices and deficit has fallen from EUR 21 billion to EUR 7 billion with
social pressures, the structure of forest stands and their place recent enlargements.
in the landscape indicates the changing social demands and
multifunctional needs in goods and services. The variety of The EU is also an important player in international forestry
ownership patterns — with 35 % in private ownership and cooperation. The EU is the first world contributor in
65 % in public ownership — allows a large range of development cooperation in the forestry sector (over EUR 600
management and silvicultural options. million a year — in terms of the contribution by European
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funds (EDF) and headings in the EU annual budget and the This has not prevented the European Community from taking
Member States’ budgets) — or 40 % of public development action in relation to forests. However, various Community
aid for sustainable forestry management. Furthermore, with measures on behalf of forestry since 1957 have found their
33 % of the votes, it is the leading group in the International legal basis in relation to other policies, such as the common
Tropical Timber Organisation. agricultural policy, regional policy, industrial policy,
environment policy and development cooperation policy. The
Overall the EU’s forestry resources are healthy and represent
following EC Treaty provisions have been used:
the wealth of several centuries of complex relations between
man and nature. Over 85 % of European forests are managed — for Community forests:
and 50 % of them are certified. Over two thirds of European • Articles 37, 158 to 162 and 174;
forests are classified as semi-natural, almost 12 % of them are
considered to be protected, and 30 % of the Natura 2000 areas — for tropical forests:
are forest. Europe’s celebrated forestry schools have helped • A
rticle 310 for cooperation with the African, Caribbean
train a great number of foresters and technicians. They in their and Pacific countries and the Asian and Latin American
turn have imparted their knowledge of sustainable forest countries associated with the Community,
management all over the world. • A
rticle 133 for Community participation in the
The EU plays an active role in the Strasbourg and Helsinki pan- International Tropical Timber Agreement.
European process for the protection and sustainable
management of forests. It is also — directly or through its
Member States — a partner in all international agreements on On several occasions the European Parliament has tried to
the environment: UN Intergovernmental Forum on Forests, remedy this deficit, notably in 1993 with the ‘Eurofor’ project
United Nations Framework Convention on Climate Change that resulted in the publication of the study Europe and the
(FCCC) and the Kyoto Protocol annexed to the aforementioned forest. This study was behind the European Parliament’s first
Convention. The EU ratified the Kyoto Protocol on 31 May 2002 legislative initiative pursuant to Article 138b of the Maastricht
Treaty (Thomas report as amended and adopted at the
and each Member State undertook to comply with objectives to
January 1997 plenary in Strasbourg). Following this Parliament
reduce greenhouse gas emissions. In order to achieve this, the
initiative, in 1998 the Commission presented a report and at
EU set up the greenhouse gas emission allowance trading
the end of 1998 the Council adopted Resolution 1999/C 56/01
scheme, which requires certain sectors to restrict their emissions
of 15 December 1998 on a forestry strategy for the European
to a certain number of allowances (Directive 2003/87/EC of 13
Union (OJ C 56, 26.2.1999, p. 1).
October 2003). However, although deforestation on a global
scale is responsible for approximately 20 % of global greenhouse This EP resolution also made provision for a ‘forestry’
gas emissions, at present the greenhouse gas emission subcommittee to be set up under the aegis of Parliament and
allowance trading scheme does not take the forestry sector into for the Commission to report to the Council and the European
account and does not make provision for carbon storage by Parliament on the implementation of the forestry strategy
forest ecosystems to be promoted in any way either. within five years. On 3 December 2003 the Commission
presented a guidance document and questionnaire for
The Commission recently proposed an amendment to preparation of this report and on 13 August 2004 the
Directive 2003/87/EC to improve and extend the greenhouse Commission launched a consultation procedure with
gas emission allowance trading system (COM(2008) 16 of 23 professional bodies and other players in the forestry sector on
January 2008), a proposal which continues to exclude the the same subject.
forestry sector from the scope of that directive. Finally, the EU
took part in the work undertaken at the conference of parties On 10 March 2005 the Commission presented its report on the
to the UNFCCC, which was held from 3 to 14 December 2007 implementation of the EU forestry strategy (COM(2005) 84
in Bali. The issue of introducing a mechanism to reward efforts final), accompanied by a Commission working document
to combat deforestation and for the sustainable management (SEC(2005) 333), which described in detail the measures and
of forests was widely debated at the conference, although a initiatives implemented during the period 1999–2004. The
consensus on the issue could not be reached. Commission communication is based on the legal framework
defined by Council Resolution 1999/C 56/01 of 15 December
1998 and highlights the importance of good governance for
Legal basis the protection and sustainable management of forests and the
The lack of an appropriate legal basis for forestry in the Treaty need to improve intersectoral cooperation, coordination and
of Rome (with the exception of cork, timber and other forestry consistency between forestry policy and other policies that
products are not mentioned in Annex II of the Treaty) has been have repercussions on forests and forestry. Moreover, the
the main obstacle to the creation of a common forestry policy, Commission working document analyses the contribution of
contrary to the situation for agriculture (common agricultural forests and forestry to the objectives of sustainable economic
policy) and fisheries (common fisheries policy). growth and competitiveness formulated in Lisbon and the
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Common policies Forestry policy
4 3
Gothenburg objectives of safeguarding the quantity and the tailored to the specific nature of forests in the Member States.
quality of the natural resource base. Parliament regretted that the Commission communication on
the implementation of the EU forestry strategy did not devote
In its communication, the Commission proposed establishing
special attention to the issue of fires, ignoring the fact that
an EU action plan for the sustainable management of forests
they are the main cause of the deterioration of forests.
from 2006. At its meeting of 30 and 31 May 2005, the Council
Parliament called for the forestry action plan to contain
supported the Commission proposals, particularly with regard
provision for a possible European fire fund or European forest
to the need for an action plan and it stressed that this plan
fund, which could be used to support action intended to
should offer a framework capable of ensuring consistency
conserve and restore the mountain and forest areas included
between the various measures in support of forests and
in the Natura 2000 network.
should act as a coordination instrument.
The forestry action plan was finally adopted on 15 June 2006.
The Parliament’s evaluation study of the Commission report,
Over a period of five years (2007–11), the action plan defines a
entitled ‘European forestry strategy: outlook’ (PE 355.366 of 4
common vision, general and specific principles and objectives
July 2005), presented to the Committee on Agriculture in July
to be achieved by 18 key actions, divided into four groups,
2005, recommended a clarification and renovation of the legal
which the Commission proposes to implement jointly with the
basis for the European forestry strategy and put forward 10
Member States. It also makes provision for additional measures
specific proposals for a genuine Europe of forests. Parliament’s
that may be carried out by the Member States in the light of
study also emphasised the fact that the Commission report fell
their specific requirements and priorities with the aid of
short on the analysis of certain topical matters such as the
existing Community instruments, even if the national
sharp increase in forest fires in southern EU Member States
instruments may also prove necessary. However, the action
and the alarming decrease in tropical forests.
plan does not have a financial statement and consequently
The Kindermann report (INI/2005/2054), adopted in plenary on has been criticised for being an ‘empty’ plan by professionals in
16 February 2006 in Strasbourg, also recommended that the the forestry sector. The 2007 progress report on the
Council and Commission should give objective consideration implementation of the forestry plan (internal Commission
to the possibilities of creating a specific legal basis for forests in document) reports on certain advances which are for the most
the EU Treaties or in the draft European Constitution and part limited to the launch of studies (on forest dieback for
proposed 11 ‘strategy elements’ based on the study’s example), the holding of conferences (on timber industry
conclusions. competitiveness) and the creation of new working groups.
Cooperation with the Subsidiary Body for Scientific and
In the ‘Capoulas Santos report’ (INI/2005/2195) — see also the
Technical Advice of the United Nations Framework Convention
‘Estrela report’ (INI/2005/2192) and the ‘Galeote report’
on Climate Change has, however, been stepped up.
(INI/2005/2193) — on natural disasters (fires, droughts and
floods), the European Parliament stressed the need for a
specific Community forest protection programme, based on g Angel Angelidis
prevention and management of the risk of forest fires and June 2008
4.3.2. European forestry strategy: principles and action

The European forestry strategy, established from 1999 onwards, is based on a few fundamental principles and it is
embodied in actions and measures in several areas.
Principles — recognition of the multifunctional role of forests and the

need for ‘sustainable forest management’;
The basic principles of the European forestry strategy as set
out in the Council Resolution 1999/C 56/01 of 15 December — consideration that forestry and forest-based commercial
1998, are: activities fall within the open sector of the economy and
that their commercial functions should be guided primarily
— subsidiarity (given that the Treaty establishing the by market forces;
European Community makes no provision for a specific
common forestry policy and that responsibility for forestry — active participation by the EU and the Member States in all
policy lies with the Member States); international processes related to the forest sector;
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— the implementation of international commitments, — the environment (protection of forests against fires and air
principles and recommendations through national or sub- pollution, protection and conservation of biodiversity,
national forest programmes or appropriate instruments promotion of eco-certification, the Natura 2000 network,
developed by the Member States; EU involvement in the pan-European process and
— the need for coordination at administrative level international debates for the protection of forests, etc.);
(Commission, Member States) and by those working in the — the competitiveness of forest-based industry (support for
sector. SMEs and other action under the EU industrial policy);
— the harmonisation of legislation (forest reproductive
Action material, forestry tractors, etc.);
The main activities and measures of the European forestry — research;
strategy, as set out in Council Resolution 1999/C 56/01 of 15
December 1998, are in the following main areas. — statistics (EFICS, Eurostat, etc.);
— rural development (rural development programmes put — development cooperation (programmes and projects for
forward by Member States which promote investment in the conservation and sustainable management of tropical
forests with the aim of preserving and enhancing their forests in the ACP and DCLAA countries, PFLEGT, etc.).
economic, social and ecological value, promoting NB: Regulation (EC) No 2494/2000 of the European
reforestation and forestry development, etc.); Parliament and of the Council of 7 November 2000, which
NB: 1. In the period 2000–06, EAGGF expenditure on is based on the conservation and sustainable
forestry amounted to EUR 4 800 million or about 10 % of development of tropical forests, followed on from
the overall budget for rural development. During the same Regulation (EC) No 3062/95 and provided a budget of
period, expenditure under the Sapard programmes for EUR 249 million for the period 2000–06. Regulation (EC)
forests in seven central and east European countries No 2494/2000 was repealed by Regulation (EC) No
(Bulgaria, Estonia, Latvia, Poland, Romania and Slovakia) 1905/2006 of the European Parliament and of the Council
reached EUR 167 million or about 5 % of the total. of 18 December 2006 establishing a financing instrument
for development cooperation (OJ No L 378, 27.12.2006,
2. Since 2005, the rural development policy has been
pp. 41–71), which makes provision for a budget of
governed by Council Regulation (EC) No 1698/2005 of 20
EUR 16 897 million for implementation from 2007–13.
September 2005 on support for rural development by the
European Agricultural Fund for Rural Development (EAFRD) However, the total specifically allocated to forestry was
(OJ L 277, 21.10.2005, pp. 1–40). EUR 88.29 billion was not specified.
awarded to rural development for the period 2007–13 (OJ
L 142, 5.6.2007, p. 21). However, the funds allocated to g Angel Angelidis
forestry and to the forest-based sector are not specified. June 2008
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Common policies Common fisheries policy
4 4
4.4. Common fisheries policy
4.4.1. The common fisheries policy: origins and

development
Fisheries policy has been inserted in the Treaty of Rome. Initially it was linked to agricultural policy, but over time it became
increasingly independent. The common fisheries policy (CFP), as reformed in 2002, has the primary goal of operating in a
sustainable fisheries and to guarantee incomes and stable jobs to fishermen. The Treaty of Lisbon makes several
amendments to the fisheries policy.
Legal basis resources from an environmental, economic and social point of

Articles 32 to 37 of the Treaty establishing the European view in a balanced manner. Sustainability has to be based on
Community (EC); Articles 38 to 43 of the Lisbon Treaty (not yet sound scientific advice and on the precautionary principle (in
in force). line with Article 174 of the EC Treaty). The new CFP basic rules
came into force on 1 January 2003.
The Lisbon Treaty provides some innovations concerning the
involvement of Parliament on legislation in the field of
common fisheries policy (CFP) resulting from the new Article Achievements
37 and Article 188N. A. Background
The most important element is that legislation necessary for the The common fisheries policy originally formed part of the
pursuit of the objectives of the CFP shall be adopted with the common agricultural policy, but it gradually developed a
legislative ordinary procedure (this is the co-decision separate identity as the Community evolved due to the
procedure from now on). Parliament then will become co- adoption of exclusive economic zones (EEZ) by Member States
legislator. However, there is an exception for ‘measures on fixing since 1970 and the new membership of countries with
prices, levies, aid and quantitative limitations and on the fixing substantial fleets. The Community had to tackle specific
and allocation of fishing opportunities’ (Article 43(3) of the Lisbon fisheries problems, such as access to common resources,
Treaty) that will remain as in the EC Treaty, where they have to be conservation of stocks, structural measures for the fisheries
adopted by the Council on a proposal from the Commission. fleet and international relations.
With regard to the ratification of international fisheries 1. Beginnings
agreements, the Lisbon Treaty provides that they will be It was not until 1970 that the Council adopted legislation to
ratified by the Council after consent of the Parliament (Article establish a common organisation of the market for fisheries
188N(10) of the Lisbon Treaty). products and put in place a Community structural policy for
fisheries.
Objectives 2. First development
Fisheries are a natural, renewable, movable and common Fisheries played a significant role in the negotiations leading to
property that are part of our common heritage. The Treaty of Denmark Ireland and the United Kingdom joining the EC in
Rome made provisions for a common fisheries policy: Article 1972. This resulted in a move away from the fundamental
33(1) sets out the objectives for the common agricultural policy, principle of freedom of access; exclusive coastal fishing rights
which are shared by the common fisheries policy, since Article were extended from a 12-mile to a 200-mile zone. Member
32 defines agricultural products as ‘the products of the soil, of States agreed to leave the management of their fisheries
stock-farming and of fisheries and products of first-stage resources in the hands of the European Community.
processing directly related to these products’. Fisheries are a
common policy, meaning that common rules are adopted at EU 3. Reforms of the CFP
level and applied to all Member States. The CFP’s original a. 1983 regulation
objectives were to preserve fish stocks, protect the marine In 1983, after several years of negotiations, the Council adopted
environment, to ensure economic viability of European fleets Regulation (EEC) No 170/83, establishing the new generation
and to provide consumers with quality food. The 2002 reform CFP, which enshrined commitment to EEZs, formulated the
added to these objectives the sustainable use of living aquatic concept of relative stability and provided for conservatory
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management measures based on total allowable catches (TACs) multiannual management plans for other stocks. In this way
and quotas. After 1983, the CFP also had to adapt to the fishermen could also plan their activities better. Multiannual
withdrawal of Greenland from the Community in 1985, the plans will take a precautionary approach and will be based on
accession of Spain and Portugal in 1986 and the unification of the recommendations of competent scientific bodies. If there is
Germany in 1990. These three events have had an impact on the a serious threat to the conservation of resources, emergency
size and structure of the Community fleet and its catch potential. measures may be taken by the Commission for a period of six
b. 1992 regulation months which may be renewed for a further six months. If a
Member State disagrees with the measures, it may refer the
In 1992, Regulation (EEC) No 3760/92, which contains provisions
matter to the Council. Member States can also establish, under
governing fisheries policy until 2002, endeavoured to remedy
certain conditions, conservation and management measures in
the serious imbalance between fleet capacity and catch
their 12-mile zone for a period of three months.
potential. The remedy it advocated was to reduce the
Community fleet and alleviate the social impact with structural b. Reorientation of public aid to the fleet
measures. A new concept of ‘fishing effort’ was introduced, In order to avoid aggravating the imbalance between the
with a view to restoring and maintaining the balance between overcapacity of the fleet and the actual fishing possibilities, as
available resources and fishing activities. Access to resources from 2005 aid was to be used exclusively to improve safety
should be regulated through an effective licensing system. and working conditions on board and product quality, or
c. 2002 reform to switch to more selective fishing techniques, or to equip
vessels with satellite vessel monitoring systems (VMS). This
However, these measures were not effective to halting overfishing
new system will gradually replace the old multiannual
and the depletion of many fish stocks continued at an even faster
guidance programmes (MAGPs), which have not solved the
rate. The major challenge of this reform was tackling
problem of the overcapacity of the Community fleet. A
simultaneously the risk of collapse of certain stocks, the impact
‘scrapping fund’ was created to help the sector to achieve the
on marine ecosystems, significant economic losses for the
reductions in fishing effort required under the stock recovery
industry, the fish supply to EU markets and the loss of jobs. This
plans. It will allocate premiums that are 20 % higher than those
critical situation resulted in a new reform being adopted at the
available for decommissioning under the Financial Instrument
end of 2002. This reform came into force on 1 January 2003.
for Fisheries Guidance (FIFG). Financial aid is also available for
B. The new common fisheries policy the permanent transfer of EU vessels to third countries
1. The legislative dimension of the reform including through the creation of joint enterprises with third-
country partners. Member States will be entrusted with greater
This consists of three regulations which were adopted by the
responsibilities in order to achieve a better balance between
Council in December 2002 and entered into force on 1 January
the fishing capacity of their fleet and the available resources.
2003:
c. Socioeconomic measures to support the industry during the
a. framework Regulation (EC) No 2371/2002 on the conservation
transition period
and sustainable exploitation of fisheries resources (repealing
Regulations (EEC) No 3760/92 and (EEC) No 101/76); — Aid for the temporary cessation of activities, designed to
support fishermen and vessel owners who have to stop
b. R
egulation (EC) No 2369/2002 laying down the detailed their fishing activity temporarily, has been extended.
rules and arrangements regarding Community structural
assistance in the fisheries sector (amending Regulation (EC) — Aid for early retirement and the retraining of fishermen in
No 2792/1999); other professional activities allows them to continue
fishing on a part-time basis if they wish to do so.
c. R
egulation (EC) No 2370/2002 establishing an emergency
d. Access to waters and resources
Community measure for scrapping fishing vessels.
In order to preserve the most sensitive areas under the
2. Reorientation of the objectives traditional fisheries, there is a restricted 12-mile zone lasting
The primary objective of the new CFP is to ensure a sustainable until 2012 when the regime will be evaluated. Other access
future for the fisheries sector by guaranteeing stable incomes restrictions are for example the Shetland Box. The principle of
and jobs for fishermen while preserving the fragile balance of relative stability, based on a defined share of the stocks for
marine ecosystems and supplying consumers. The new CFP is each Member State, has been maintained.
an integral part of the Community’s policy on sustainable
e. More effective, transparent and fair controls
development and gives equal priority to the environmental,
economic and social aspects. These will be carried out by national and Community
inspectors as part of the new Community control and
3. Details of the innovations of the reform enforcement system. Member States will continue to be
a. Long-term approach to fisheries management and emergency responsible for the application of sanctions for infringements
measures if necessary but cooperation among them will be strengthened. To this
The long-term approach was set out in multiannual recovery end, a Community Fisheries Control Agency (CFCA) has
plans for stocks outside safe biological limits and of been created, and is based in Vigo (Spain).
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4 4
f. More direct involvement of fishermen in the decisions that — an action plan to counter the social, economic and
affect them regional consequences of the restructuring of the EU
To this end, regional advisory councils (RACs) consisting of fishing industry;
fishermen, scientific experts, representatives of other sectors — a Community action plan to reduce discards of fish; and
related to fisheries and aquaculture, regional and national
authorities, environmental groups and consumers from the — the creation of a single inspection structure, the
maritime or fishing zone in question were be set up. The Community Fisheries Control Agency.
RACs may be consulted by the Commission, submit In addition, two important Commission communications
recommendations and suggestions or inform the complement the new CFP:
Commission or the Member State concerned about
— a communication on fisheries partnership agreements
problems concerning the implementation of CFP rules in
with third countries; and
their area. Each RAC will cover sea areas under the
jurisdiction of at least two Member States. It will establish its — a communication on improving scientific advice for
own procedures. Following the reform, seven regional fisheries management; as well as
advisory councils were set up in 2004 to promote better — a compliance work plan and scoreboard to comply with
governance within the CFP and closer involvement of the the rules of the CFP.
various interests in the sector in its development. Areas
covered by the regional advisory councils include the Baltic
Sea, the Mediterranean Sea and the North Sea, the Atlantic
Ocean, the high seas and pelagic stocks. A. Competence
4. Accompanying measures — Fisheries legislation: consultative role.
As part of the reform, the Commission also presented a series — EU membership of international conventions and
of Community action plans which aim to clarify some aspects conclusion of agreements having significant financial
of the CFP, in particular: implications: assent.
— a Community action plan on fisheries in the B. Role
Mediterranean;
The reports and opinions on Commission’s proposals for new
— a Community action plan to integrate environmental legislation and policies have given Parliament the opportunity
protection requirements into the CFP; to express its own model for the CFP.
— a Community action plan for the eradication of illegal,
unreported and unregulated (IUU) fishing; g Ana Olivert-Amado
— a strategy for the sustainable development of European July 2008
aquaculture;
4.4.2. Fisheries resources conservation

Conservation of fisheries resources involves the need to ensure sustainable exploitation of these resources, and a long-term
viability for the sector. To achieve this objective, several European standards govern access to Community waters, the
allocation and use of resources, the total allowable catches and effort limitations.
Legal basis Achievements

Articles 32 to 37 of the Treaty establishing the European A. Basic principles on access to waters and resources
Community (EC); Articles 38 to 43 of the Lisbon Treaty (not yet 1. Access to Community waters
in force). a. The principle of equal access
The general rule is that Community fishing vessels have equal
Objectives access to waters and resources in all Community waters.
The main objective is to guarantee the long-term b Restrictions in the 12-nautical-mile zone
viability of the sector through sustainable exploitation of This is an exception to the principle of equal access to
resources. Community waters that falls within 12 nautical miles from
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the baselines, where Member States may retain exclusive B. Fisheries resource conservation
fishing rights. This derogation is based on preserving the 1. Total allowable catches (TACs) and effort limitations
most sensitive areas by limiting fishing effort and protecting a. Limiting catches
traditional fishing activities on which the social and
TACs, based on the scientific opinions of the International
economic development of certain coastal communities
Council for the Exploration of the Sea (ICES) and the Scientific,
depends. The measures establishing the conditions of access
Technical and Economic Committee on Fisheries (STECF),
to waters and resources are adopted on the basis of the
continue to be calculated annually so that they can be
biological, socioeconomic and technical information
readjusted in accordance with the development of stocks.
available. A review of the current provisions is due to take
However, within the framework of the multiannual
place in 2012 (Article 17 of Regulation (EC) No 2371/2002).
management of resources, they will be more stable and will
c. Other access restrictions beyond the 12-nautical-mile zone enable fishermen to plan their activities better.
The Commission issued a communication in 2005 (COM(2005) b. Limiting the fishing effort
422) on the review of certain access restrictions in the These measures may be applied as part of the plans for the
common fisheries policy, referring to the Shetland Box and the recovery of stocks that are at risk. They will consist, for example,
Plaice Box. The communication is a response to the obligation of an authorised number of fishing days per month. This
to assess the justification for restrictions on access to waters number may vary according to the gear used, the fishing zone
and resources outside of the 12-nautical-mile zone. visited (according to the ICES divisions), the species targeted,
The Shetland Box was set up to control access to species the state of the stock and possibly the power of the vessel.
which are of special importance in the region and which are With a view to ensuring greater flexibility, the Member State
biologically sensitive, while the Plaice Box was established to may transfer these days among the various units of their fleet.
reduce the level of discards of flatfish, particularly plaice in c Technical measures
North Sea fisheries. In general terms, they aim to prevent catches of juveniles, non-
According to the aforementioned communication, the commercial species and other marine animals. They are
Shetland Box will keep the restricted access measures for determined in relation to the target species and associated
another three years, while no date has been set for the Plaice species (in the case of mixed fisheries), the operating zone and
Box as there is uncertainty over the length and extent of the the type of gear used. The most current types of technical
study needed. measures are related to:
2. Allocation of resources and sustainable exploitation — fishing gear; the setting of minimum mesh size for nets,
structure and number on board;
a. The principle of relative stability
Fishing opportunities are allocated among the Member — the composition and limit of accidental catches of by-
States in such a way as to ensure the relative stability of the catches on board;
fishing activities of each Member State for each stock — the use of selective fishing gear to reduce the impact of
concerned. This principle of relative stability is based in fishing activities on marine ecosystems and non-target
particular on historical catch levels and implies the species;
maintenance of a fixed percentage of authorised fishing
— delimitations of zones and periods in which fishing
effort for the main commercial species for each Member
activities are prohibited or restricted, including for the
State. Fishing effort should be generally stable in the long
protection of spawning and nursery areas; and
term, taking account of the preferences to be maintained for
traditional fishing activities and regions that are most — setting a minimum size for species that may be retained on
dependent on fishing. board and/or landed.
b. Sustainable exploitation In the case of a serious threat to the conservation of living
Conserving resources by adjusting fishing capacity to catch aquatic resources, or to the marine ecosystem resulting from
possibilities is one of the priorities of the common fisheries fishing activities and requiring immediate action, the
policy (CFP). To achieve sustainable exploitation, fish stocks Commission and the Member States (or the latter on their own
have to be managed applying the maximum sustainable initiative) may adopt emergency measures to protect fish
yield (MSY). To this end, the CFP bases its decisions on the stocks and to restore the balance of marine ecosystems that
best scientific advice available and applies the precautionary are in danger.
approach, whereby the absence of sufficient scientific Alternatively, Member States may adopt conservation and
information should not be used as a reason for postponing or management measures applicable to all fishing vessels
failing to take measures to conserve species on the brink of within their 12-mile zone provided that these measures are
collapse. Sustainable exploitation also means to progressively not discriminatory and that consultations with the
implement the ecosystem-based approach to fisheries Commission, other concerned Member States and the relevant
management. regional advisory council (RAC) have taken place.
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4 4
Also, when these measures are no less stringent than Role of the European Parliament
Community legislation, Member States may apply them solely Parliament has always been concerned about respect for the
to fishing vessels flying their flag in waters under their principles of precaution and sustainable resources. Of note are
sovereignty and jurisdiction. its recent reports on the following subjects.
Finally, it is worth mentioning that experimental fishing — The Johannesburg Summit on Sustainable Development,
projects serve to promote conservation and the investigation that laid down a worldwide goal of ‘reducing the rate of
of selective fishing techniques to be implemented. loss of biodiversity by 2010’; one of the basic demands of
2. Long-term strategy for fisheries resources this strategy was the elimination of destructive fishing
management practices. Although this problem requires a specific
a. Multiannual stock management plans seek to maintain approach in the fisheries sector, the EP in its report A6-
the volume of stocks within safe biological limits. These 0183/2008, supports the approach of tackling the problem
plans lay down maximum catches and a series of technical in an integrated manner, in the light of the conclusions of
measures, taking into account the characteristics of each the Green Paper on European maritime policy.
stock and fisheries (species targeted, gear used, state of — The report on the communication from the Commission
stocks concerned) and the economic impact of the on the review of the management of deep-sea fish
measures on the fisheries in question. stocks (A6-0103/2008): the EP calls for more protection of
b. M
ultiannual stock recovery plans will be implemented deep sea species starting by improving the available
for fish stocks that are in danger. They are based on scientific information.
scientific advice and provide for limits on the fishing effort — The report on a policy to reduce unwanted by-catches
(that is, the number of days vessels are at sea). They ensure and eliminate discards in European fisheries (A6-
‘that the impact of fishing activities on marine ecosystems 0495/2007), where the EP sees as a positive change the
is kept at sustainable levels’. expansion of the definition of discards to include both
3. Fleet management commercial and non-commercial species that are dumped
over the side.
Fleet management is a way of adjusting fishing capacity in
order to bring about a stable and enduring balance between — Other important aspects where the EP has given its
such fishing capacity and their fishing opportunities. Some opinion, such as, inter alia, in report A6-0408/2007 on the
ways to achieve this are: proposal for a Council regulation establishing a
multiannual recovery plan for blue fin tuna in the
— fixing the number of vessels and type authorised to fish
eastern Atlantic and Mediterranean.
(e.g. by fishing licences);
— The proposal for a Council regulation on the conservation
— fleet register as a means to control and monitor fishing and sustainable exploitation of fisheries resources
capacity; under the common fisheries policy (A5-0392/2002).
— entry:exit schemes and overall capacity reduction; — The proposal for a Council regulation amending Regulation
— reduction of fishing effort; (EC) No 973/2001 laying down certain technical measures
for the conservation of certain stocks of highly
— reference levels;
migratory species (A5-0015/2003).
— Member States’ obligation to report on their fleet capacity;
— European Fisheries Fund (EFF) instruments to adjust fishing g Ana Olivert-Amado
capacity. July 2008
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4.4.3. Fisheries structural assistance
Initially funded by the Financial Instrument for Fisheries Guidance (FIFG), the European fisheries policy will be funded by
the European Fisheries Fund (EFF) for the period 2007–13. In fulfilling its objective, the EFF takes into account the
environmental aspect and the necessity of diversifying the activities of fishermen. Other financial instruments, such as
State aid, are also used for the funding of this policy.
Legal basis As part of the common fisheries policy (CFP) reform,

Articles 32 to 37 and 158 of the Treaty establishing the Regulations (EC) No 1263/1999 and (EC) No 2792/1999 laying
European Community (EC); Articles 38 to 43 of the Lisbon down the detailed rules and arrangements regarding
Treaty (not yet in force). Community structural assistance in the fisheries sector were
amended by Regulations (EC) No 2371/2002, (EC) No
2369/2002, (EC) No 179/2002, (EC) No 1421/2004 and (EC) No
Objectives 485/2005. A simpler system to limit the fishing capacity of the
The main objective of the fisheries structural policy is to adjust Community fleet in order to match it with the available
fleet capacity to potential catches in order to relieve the resources was adopted. Following the reform and approval of
problem of overfishing so that the sector has a long-term future. the financial perspective (2007–13), the European Fisheries
To this end, efforts are being made to modernise the fleet and Fund (EFF) was set up and replaced the FIFG. It is intended to
make it competitive by removing surplus capacity and orienting facilitate implementation of sustainable fishing measures and
the industry towards support for, and full development of, diversification of economic activities in fishing areas.
coastal regions which are heavily dependent on fisheries.
B. Structural policy instruments
1. The multiannual guidance programmes (MAGP), ran
Achievements from 1983 to 2002 in four phases and was a key element of
A. Background structural policy. It was intended to adjust the size of the
fleet in the EU Member States and adapt fishing effort to
The fisheries structural policy originated in 1970 with the
available resources. To achieve this goal each Member
decision to apply to the European Agriculture Guidance and
State had to calculate the reduction of capacity (tonnage
Guarantee Fund (EAGGF) — Guidance Section, for support for
and engine power) and, later, fishing effort (capacity times
construction, modernisation, marketing and processing within
activity) for each segment of the fleet according to an
the fisheries sector.
established method of weighting targeted stocks. The
In 1992, the Edinburgh European Council decided to Council approved the MAGP’s reduction objectives and the
incorporate fisheries structural policy into the Structural Commission then approved the national programmes.
Funds with its own objective, Objective 5a (adaptation of However, the MAGP system to restructure the fleet proved
fisheries structures), and its own financial instrument, the FIFG, to be ineffective mainly due to:
by Council Regulation (EEC) No 2080/1993. As a response to
— the very low ambition of the objectives agreed by the
the socioeconomic implications of restructuring in the sector,
Council;
additional measures were adopted in parallel with the FIFG.
The PESCA community initiative to provide financial support — the inconsistency with the parallelism of aid to exit and
for fisheries-dependent areas was put in place for the period aid to construction;
1994–99, together with accompanying measures such as early — the difficulties to measure engine power of vessels;
retirement and premiums for young fishermen.
— no account being taken of the impacts of technological
Agenda 2000 introduced new approaches, including bringing progress; and
the structural problems of fisheries-dependent areas into the
new Structural Funds Objective 2 (Council Regulation (EC) No — the introduction of fishing effort reduction (the
1260/1999 of 21 June 1999) and not renewing the PESCA weighting of effort reduction objectives was overly
initiative in 2000. Council Regulation (EC) No 1263/1999 complex and led to perverse effects). Further, reduction
established the new FIFG framework for intervention for the objectives were watered down since Member States
period 2000–06, with a view to achieving a sustainable could achieve their targets by either the permanent
balance between fisheries resources and their exploitation, withdrawal of vessels or by the temporary cessation of
strengthening the competitiveness of fisheries structures and fishing activities (vessel tie-ups).
the development of viable enterprises, promoting fisheries 2. Vessel scrapping accounted for 94 % of the total
and aquaculture products, and revitalising areas dependent on number of vessels withdrawn with assistance from the
these sectors FIFG during the period 1994–97, and around two thirds
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4 4
of the total tonnage and engine power was withdrawn. — promoting environment-friendly fishing and production
The remainder has been withdrawn through assistance methods;
to joint enterprises or export of vessels to third — providing adequate support for those employed in the
countries. sector;
3. The 2002 CFP reform spelled out an end to the MAGP — facilitating diversification of economic activity in areas
and a simpler system was introduced for limiting the dependent on fishing.
capacity of the European fleet. This system gave the
Member States more responsibility for the management of 2. Types of action
their fleets. There are four main aspects. To ensure the economic, environmental and social
sustainability of fishing, the EFF concentrates on these five
— the capacity of the fleet of each Member State must
priority areas.
comply with a reference level (based on the final MAGP
objectives of each fleet in 2002); — Measures for the adaptation of the Community fishing fleet:
Fishermen and the owners of vessels affected by the
— the use of strict entry:exit ratios for capacity of fleets: measures taken to combat overexploitation of resources may
the applicable ratio depends on whether public aid is obtain aid for permanent or temporary withdrawal of fishing
involved or not and the size of the vessel; vessels or for training, reconversion or early retirement.
— the conditions for granting public aid to the fleet are — Aquaculture, processing and marketing: The acquisition
reviewed; and use of gear and methods that reduce the impact of
— aid for construction of vessels: export to third countries fishing on the environment will be promoted. The aid will
and setting up of joint ventures was discontinued at be concentrated on small and micro enterprises.
the end of 2004. — Measures of common interest: Projects that help
Aid for modernisation of vessels continues under sustainable development or the conservation of
certain conditions: vessels must be at least five years old resources, the strengthening of markets in fishery
and the aid must be used for specific purposes (use of products or the promotion of partnerships between
more selective fishing methods; installation of satellite scientists and operators in the fisheries sector will be
vessel monitoring systems (VMS); better product eligible for aid.
processing and quality on board and better working and — Sustainable development of fisheries areas: Measures and
safety conditions). initiatives aimed at diversifying and strengthening
Member States only receive indirect encouragement economic development in areas affected by the decline in
to adjust fleets (capacity or effort) in relation to effort fishing activities will be supported.
management regimes under recovery plans or to — Technical assistance: Action relating to preparation,
reduction in fishing opportunities (TACs). monitoring, administrative and technical support,
evaluation, audit and control necessary for implementing
C. The European Fisheries Fund (EFF)
the proposed regulation.
The EFF has replaced the FIFG and will run during 2007–13.
However, many FIFG measures are included in the new fund. The Member States are responsible for allocation of the
financial resources between these five priorities.
1. Objectives
The EFF provides financial support for social, economic and 3. Resources
environmental objectives. The fund supports the sector in For the period 2007–13 the total EFF budget amounts to
efforts to adapt fleets whose competitiveness needs to be EUR 3.849 million of which EUR 2.908 million will go to the
strengthened and encouraged by measures to protect and convergence areas and EUR 941 million to the non-convergence
improve the environment. The EFF will also help the fishing areas. Funding will be available for all sectors of the industry —
communities most severely affected by these changes to sea and inland fisheries, aquaculture businesses, producer
diversify their economic activities. organisations, and the processing and marketing sectors.
The EFF has five priorities: D. Other financial aid to the fisheries sector
— supporting the main objectives of the common fisheries a. State aid: General State aid guidelines for all industries are
policy (CFP), especially those established under the 2002 not a subsidy according to WTO rules. This includes grants
reform; this means ensuring sustainable exploitation of and tax exemptions.
fisheries resources and a stable balance between these b. De minimis aid: A type of State aid implying EUR 30 000
resources and the capacity of the EU fishing fleet; per company over a three-year period. It has no distortive
— increasing the competitiveness and economic viability of effect on the internal market or competition.
operators in the sector; c. Fuel aid: A type of State aid addressed to alleviate fuel crises.
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d. Fisheries partnership agreements: EU to third-country — Parliament supported the EFF budget provided for in the
payment for access to fisheries. Some costs are recoverable agreement on the financial perspective (2007–13). In its
from vessels owners. The main beneficiary is Spain. legislative report on the regulation on the EFF
e. Minimum fish price guarantee: A common market (A6/0217/2005), Parliament proposed reform of the system
organisation instrument meaning direct aid in the case of of providing financial aid for fishermen. Members approved
government intervention, or self-financed when supported the principle of the reform and the conservation of fishery
by producers’ organisations. resources but thought the social and economic impact
should also be taken into account. There were some
Role of the European Parliament compromises: the permanent withdrawal of fishing vessels,
Parliament has always been in favour of incorporating the the financing of fishing gear and investment in aquaculture.
fisheries structural policy into the Structural Funds. Report A6/0340/2005 also dealt with additional funding for
the EFF. Finally, concerning the current fuel crisis, on 19 June
— It recommended the creation of an autonomous Objective
2008, MEPs passed a resolution supporting the fishermen
6 (1993 reform) for fisheries within the Structural Funds.
and suggesting ways to help the beleaguered industry. In
— It closely monitored the creation of the FIFG, paying particular the EP called on the EU Commission to reconsider
special attention to certain problems which were its rules of State aid (outlawed by EU law) and allow a
excluded from or not adequately covered by the
maximum of EUR 100 000 for aid per boat rather than per
Commission proposals, such as the social impact of
fishing company.
restructuring in the sector, support for small fisheries, aid
for experimental fishing campaigns, and improvement of
distribution channels (Resolutions: A4-0298/1997, A5- g Ana Olivert-Amado
0396/2002, A5-0162/2003). July 2008
4.4.4. International fisheries relations

To gain access to key fishing areas of the world or to combat illegal fishing, the European Union (EU) has concluded 20
international fisheries agreements for 2007. The European Community (EC) concludes bilateral agreements such as
partnership or reciprocity agreements, or multilateral agreements, such as international conventions or agreements, with
regional fisheries organisations.
Legal basis — To provide fish supply to European markets and to provide
employment.
Articles 32 to 37 and 300 of the Treaty establishing the European
Community (EC); Articles 38 to 43 of the Lisbon Treaty (not yet in — To contribute to the sustainable development of world
force). On the basis of Articles 37, 300 and 310 of the EC Treaty, fisheries.
Parliament’s assent is required for the adoption of international — To tackle destructive fishing practices.
fisheries agreements. In addition, the European Parliament (EP)
must be immediately and fully informed of any decision — To improve scientific research and data collection.
concerning the provisional application or the suspension of — To combat illegal, unregulated and unreported (IUU) fishing.
agreements. With regard to the ratification of international
— To strengthen control and inspections under the regional
fisheries agreements, the Lisbon Treaty provides that they will
fisheries organisations.
be ratified by the Council after consent of the Parliament (Article
188N(10) of the Lisbon Treaty).
Achievements
Objectives A. Role and importance
1. Raison d’être
— To ensure appropriate EU access to the world’s main
fishing zones and resources. Bilateral and multilateral fishing agreements became necessary
after many non-member countries established exclusive
— To enhance bilateral and regional cooperation. economic zones (EEZs) of 200 nautical miles in the mid-1970s.
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4 4
Later, in 1982, the United Nations adopted the Convention on were adopted by the Council conclusions (11485/1/04) on the
the Law of the Sea (Unclos), aimed at being a constitution for Commission communication on an integrated framework for
the oceans, recognising coastal States’ rights to control the fish fisheries partnership agreements with third countries. The
harvest in adjacent waters. Although EEZs cover only 35 % of underlying idea is to become a partner with the third country
the total area of the seas, they contain 90 % of the world’s fish for the development of sustainable and responsible fisheries
stocks. Not only EEZs but the high seas are governed by the and for the enhancement of the value of fisheries products.
Unclos and that encourages States to cooperate with each FPAs are also meant to underpin coherence with other policies
which other in the conservation and management of living such as development cooperation, environment, trade and
resources (including marine mammals) in the high seas by the health. All FPAs consist of a fisheries agreement and a protocol
establishment of regional fisheries organisations (RFOs). Unclos (e.g. defining the conditions of the agreement).
implied that distant water fishing fleets (DWFF) ´needed to
Under these agreements the European fleet gets access rights
enter into international agreements and/or other
to the fisheries surplus in the EEZ of mostly ACP countries (also
arrangements in order to get access to fisheries resources in
Greenland). In December 2007 the EU had 17 FPAs in force. The
either third countries’ EEZs or in the high seas covered by an
financial terms are based on a lump sum paid by the EC and
RFO. The principle of the freedom of the seas was over.
fees from private shipowners. In addition to the financial
2. Financial investment and benefits for the European compensation, agreements can include access to the
fleet European market at lower customs tariffs. The Community’s
The budget allocated to international fishing agreements financial contribution is justified by a mutual interest of the
increased from EUR 5 million in 1981 to almost 300 million in two parties to invest in sustainable fisheries policy and not just
1997 (0.31 % of the total Community budget and nearly 30 % as a payment for access rights. Under current WTO rules this
of the resources allocated to the fisheries sector). The high arrangement is not considered a subsidy. The contribution
level of investment was maintained in 1998 and 1999, but mainly covers expenses linked to management costs, scientific
slackened off when the agreement with Morocco (totalling assessment of fish stocks, fisheries management, control and
about EUR 90 million) was not renewed. In 2003, the amount monitoring of fishing activities, and expenses for the follow-up
allocated for fishing agreements was less than EUR 200 million and evaluation of a sustainable fishing policy. Unilateral
and no increase was planned in the 2004 budget. In 2002, commercial preferences granted by the EU under the Cotonou
catches under the international agreements accounted for Agreement to ACP countries (and authorised by the WTO)
20 % of all Community catches and were valued at terminated at the end of 2007. A new scheme called economic
approximately EUR 1 billion. The agreements provide for direct partnership agreements (EPAs), focusing mainly on commercial
employment for about 30 000 people and generate aspects (e.g. rules of origin, market access and sanitary and
considerable economic activity in sectors and regions heavily phytosanitary standards), was introduced as from 1 January
dependent on fishing. At the moment the most important 2008.
agreement in terms of financial compensation and access
FPAs are particularly important for tuna fisheries (Cape Verde,
rights is with Mauritania with EUR 86 million/year giving access
Comoros, Côte d’Ivoire, Gabon, Kiribati, Madagascar, Mauritius,
to about 200 European vessels. Spain is historically the biggest
Micronesia, Mozambique, São Tomé and Príncipe, Seychelles
beneficiary of external fishing agreements.
and the Solomon Islands). Other agreements for mixed
3. Geographical extension fisheries are in force with Greenland, Guinea, Guinea-Bissau,
Since the first agreement was signed with the United States in Mauritania and Morocco. In general, the duration of the
1977, 29 agreements have been signed in all, 26 of which were protocol varies, from country to country, from two to six years.
in force in the period 1993–99, mainly with African and Indian
b. Reciprocal agreements
Ocean countries (15) and countries in the north Atlantic (10);
These agreements involve an exchange of fishing
only one was signed with a Latin American country (Argentina).
opportunities between EU fleets and third countries. Norway,
At the end of 2002, 21 fishing agreements were in force. In 2007,
the Faroe Island and Iceland have had this type of agreement
the EC had 20 fisheries agreements in force with coastal States
over the years. The reference base to guarantee an equal
in Africa (13), the Pacific (3) and northern countries (Iceland,
Faroe Islands, Greenland and Norway). Regarding high seas exchange is the ‘cod equivalent’ (one tonne of cod represents
fishing, the European fleet operates in the Atlantic, x tonnes of another species in exchange).
Mediterranean, Indian Ocean, Pacific Ocean and Antarctic, For fishing agreements with countries in the north, catch
through arrangements with RFOs covering these areas. landings by the Community fleet fluctuated over the period
1993–97 between 300 000 and 370 000 tonnes per year. The
B. Types of fishing agreement main ‘industrial’ species (used primarily for the manufacture of
1. Bilateral fisheries agreements fishmeal) made up more than 70 % of catch landings; the main
a. Fisheries partnership agreements (FPAs) species in terms of value is cod. Denmark, with 82 % of the
FPAs are an outcome of the 2002 reform of the CFP and the catch, is the biggest producer. Germany, Sweden and the
Johannesburg Summit on Sustainable Development. They United Kingdom share 15 % of the volume. The agreement
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with Norway represents more than 60 % by value, followed by the Eastern Central Atlantic); WECAFC (Western Central
Greenland (27 % of the total). Atlantic Fishery Commission); SEAFO (South-East Atlantic
Fisheries Organisation); IOTC (Indian Ocean Tuna Commission);
2. Multilateral agreements
GFCM (General Fisheries Commission) for the Mediterranean);
a. Agreements with regional fisheries organisations (RFOs) WCPFC (Western and Central Pacific Fisheries Commission);
The aim of these agreements is to strengthen regional CCAMLR (Commission for the Conservation of Antarctic
cooperation to guarantee conservation and sustainable Marine Living Resources).
exploitation of fish resources on high seas, and straddling
stocks. Importantly, they also aim to deter IUU fishing. RFOs are The EU only has observer status in conventions agreed
varied in nature; some were created under the FAO, others between individual Member States.
independently; some manage biological resources in a certain b. International conventions
zone, while others focus on a stock or groups of stocks. Some Conventions and other agreements are used to create a legal
apply only on the high seas, some in exclusive economic order for the seas and oceans and promote their peaceful use,
zones and others in both areas. the equitable and effective utilisation of their resources, the
When the EU Commission enters into negotiations with RFOs, conservation of their living resources, and the protection and
its actions are twofold: becoming a member of the preservation of the marine environment. The EU is party to the
organisation (either as a contracting party or observer) and Unclos and has also collaborated in the development of other
issuing regulations implementing into Community law the instruments to further develop the Unclos, including:
conservation and management measures adopted by the — the FAO agreement to promote compliance with
organisations. RFOs generally set up a commission responsible international conservation and management measures by
for scientific research and publish the results and fishing vessels on the high seas (1993);
recommendations for managing stocks. These may remain as
recommendations or become mandatory if no objections are — the FAO code of conduct for responsible fisheries (1995);
made within a certain period. — the FAO New York Agreement on straddling fish stocks and
They generally act in: highly migratory fish stocks.
— limiting catches by two methods: a global quota or

national quotas; Role of the European Parliament
— introducing prohibited zones of periods; Basic position
Parliament has several times stressed the importance of
— banning or regulating fishing gear.
international fisheries agreements for Community fish
RFOs are also very active in establishing measures for the supplies, for the EU regions most dependent on fishing and for
control and monitoring of fishing activities such as the employment in the sector. Furthermore, Parliament has
adoption of joint inspection schemes in the North-East addressed the question of the consistency of the agreements
Atlantic Fisheries Commission (NEAFC), North-West Atlantic with other EU external policies (environment and
Fisheries Commission (NAFO) and the Commission for the development cooperation). It has declared its support for the
Conservation of Antarctic Marine Living Resources (CCMALR). eradication of vessels flying flags of convenience and
The EU is contracting party in: NAFO (North-West Atlantic condemned the growing use of private agreements outside
Fisheries Organisation); NEAFC (North-East Atlantic Fisheries the control of the EU authorities.
Commission); NASCO (North Atlantic Salmon Conservation
Organisation); ICCAT (International Commission for the g Ana Olivert-Amado
Conservation of Atlantic Tunas); CECAF (Fishery Committee for July 2008
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4.4.5. Fisheries control and enforcement

Fisheries control and enforcement aims to ensure good application of regulations regarding fisheries and to impose
compliance with these rules where necessary. In this respect, competences and responsibilities are shared among Member
States, the Commission and the operators. Member States which do not comply with these rules can be prosecuted in
accordance with the infringement procedure.
Legal basis b. C
larification of competences of the players in the fisheries
sector
Article 32 to 37 of the Treaty establishing the European
Community (EC); Articles 38 to 43 of the Lisbon Treaty (not yet — Member States are responsible for the
in force). implementation of CFP rules on their territory and in
their waters and also for the vessels flying their flags
operating outside these waters. Member States are also
Objectives
responsible for placing observers on board and taking
The control policy seeks to ensure fisheries regulations are decisions, including the prohibition of fishing activities.
observed and where necessary to enforce compliance. In
short, adoption of the measures is the responsibility of the — The Commission must ensure that the Member States
Community bodies, while the Member States are responsible meet their obligations equally in terms of equity and
for implementing the measures and applying sanctions in effectiveness. Every three years, it shall draw up an
cases of infringements in their area of jurisdiction. evaluation report to be submitted to the European
Parliament and the Council on its action on the
application of the CFP rules by the Member States.
Achievements
— The operators involved in all fisheries activities, from
A. Background catching to marketing, transporting and processing,
1. Control and enforcement systems before the 2002 must comply with the specifications of domestic law in
common fisheries policy (CFP) reform each stage of the production.
The control and enforcement of fishing activities by Member c. More harmonised application of the rules: Sanctions
States before the 2002 reform was hindered by poor within Member States continue to vary and this acts as a
enforcement of the rules, modest compliance and overfishing. constraint to the uniform achievement of common level of
This was the result of an ineffective control system, the main compliance. The Council shall draw up a list of sanctions to
problem being the lack of uniformity in the way Member be applied by Member States for serious infringements.
States were enforcing the CFP, e.g. different administrative d. Ensuring commitment by Member States: The reform
services, legislation and judicial proceedings. At the EU level has granted more autonomy to the Commission in the
there were some bottlenecks as well; there was no list of control of Member States’ fishing activities (e.g.
sanctions to be applied by Member States in the case of Community inspectors can now undertake inspections
serious infringements of CFP rules, nor did the Commission on fishing vessels and premises of businesses or other
inspectors have powers beyond the inspectors of the Member bodies related to the CFP without being accompanied by
States. At the international level, there was a need to better an inspector of the Member State concerned and the
define the competences of the Commission and the Member Commission can deduct fishing quota when Member
States within regional fisheries organisations (RFOs). States have failed to cease overfishing). There is another
2. Control and enforcement systems after the 2002 CFP measure (the CFP compliance scoreboard) that, by raising
reform public awareness on the performance of Member States
The reformed CFP (Regulation (EC) No 2371/2002) brought in their control and enforcement activities, aims to
new changes aiming at overcoming these deficiencies by the achieve better compliance.
adoption of the following measures. B. Cooperation, control and inspection
a. Greater cooperation in enforcement and creation of a EU fishing vessels operate in EU waters, in the waters of third
joint inspection structure (JIS): This was provided for in countries and on the high seas. Member States are
the action plan for the uniform and effective responsible to enforce CFP rules on all vessels fishing in their
implementation of the CFP (COM(2003) 130). The JIS was to waters and on vessels flying their flag outside their waters.
ensure the pooling of Community and national inspection Member States shall cooperate with EU inspectors and with
and monitoring resources through the Community other Member States to ensure compliance with the rules of
Fisheries Control Agency (CFCA). the CFP.
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1. Cooperation between Member States and the C. Enforcement and infringement procedures
Commission 1. Harmonisation of the rules
Member States may collaborate with EU inspectors in the Setting up common obligations to be applied to all Member
undertaking of their duties and shall report to the Commission States is a step towards better enforcement. These are some of
on diverse aspects such as resources allocated to monitoring, the measures in place.
breakdown of surveillance activities and number and types of
a. Traceability: In order to reduce infringements during
violations and sanctions applied.
fishing operations or after landing, it also provides
2. Cooperation between Member States in inspection consumers with extra information on the fisheries
Member States shall be authorised to: products at every stage of the distribution chain. There
— exchange inspectors; are some obligations related to traceability, thus, a
number of documents shall accompany fisheries
— inspect vessels flying their flag in all Community waters products for their identification from the net to the plate.
except the 12-mile zone of another Member State; Fishing vessels, including third-country vessels, operating
— inspect vessels of another Member State in all in EU waters shall be equipped with satellite tracking
Community waters, after authorisation of the coastal devices such as a VMS to facilitate stricter monitoring of
Member State concerned or where a specific monitoring their activities.
programme has been adopted (Article 34c of Regulation b. List of types of behaviour that seriously infringe the
(EEC) No 2847/93);
rules of the CFP: The breaking of fisheries rules is not only
— inspect vessels of another Member State in international limited to fishing activities at sea, but also includes those
waters. involved in landing, selling, storing, transporting and
In other cases, Member States must authorise each other to importing fish. Types of behaviour that seriously infringe
carry out inspections. EU rules are listed in Regulation (EC) No 1447/1999. In the
NAFO area, there is an agreement between the contracting
3. Joint inspection structure parties on what constitutes serious violations.
Access to Community waters and resources is limited to
fishing vessels in possession of a fishing licence and 2. Enforcement by Member States
authorisation to fish. They are also required to have tracking In line with their reporting obligations, enforcement achieved
devices properly installed and functioning on board, such as by Member States on fisheries rules is public via the CFP
a vessel monitoring system (VMS). Masters of fishing vessels compliance scoreboard. The yearly reports submitted to the
shall report catches and landings. They shall cooperate with Commission by the Member States are related to:
inspectors on board their vessels and comply with conditions — catch reporting obligations;
for landing, trans-shipment, marking and identification of
— quota overruns;
vessels and fishing gear among others. Regarding the
marketing of fisheries products, they can only be sold from — fishing effort declarations;
fishing vessels to registered buyers or auctions. All these — fleet register, compliance with entry:exit regime framed by
activities are to be controlled and inspected by Member the reference levels and other obligations related to fishing
States and Commission inspectors. The JIS aims at organising vessels;
a joint deployment of national means of control and
inspection according to an EU strategy to tackle enforcement — the use of structural aid;
of fisheries rules. — environmental issues (e.g. authorised vessels using
a The Community Fisheries Control Agency (CFCA): driftnets, shark finning).
This was set up in 2005 as a key element to improve 3. Infringement procedures
compliance with the CFP rules. It will improve uniform This heading covers any procedure adopted by the
and effective enforcement by pooling EU and national Commission and formally initiated against a Member State for
means in the control, inspection and monitoring of failure to comply with Community law. The most procedures
fishing activities and coordinating them (joint common are due to:
deployment plans). This operational coordination will
help tackle the shortcomings in enforcement resulting — overfishing, quota overruns, unauthorised fishing;
from the disparities in the means and priorities of the — misreporting of data on catch and fishing effort;
control systems in the Member States. The CFCA does
— lack of control of technical conservation measures (e.g. use
not affect the distribution of competences of the
of driftnet to catch tuna after the ban and the catch and
Member States and the Commission, where Member
States remain responsible for control and enforcement of marketing of undersized fish);
the CFP rules. — ineffective control and inspection of the fishing industry.
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4 4
Role of the European Parliament Community fishing vessels outside Community waters
The European Parliament has always supported the adoption and the access of third-country vessels to Community
of effective control and enforcement measures and the waters (A6-0072/2008). The EP supports this proposal,
reports indicated below concern these matters. which is part of the ‘simplification’ of the CFP, setting up
general rules for applying/issuing licences to fish,
— Report on the proposal for a Council regulation clarifying the responsibilities of the Commission and the
establishing a Community system to prevent, deter and Member States and specifying the reporting
eliminate illegal, unreported and unregulated (IUU) requirements of fishing activities. It also contains
fishing (A6-0193/2008). The EP made a number of innovative ideas that would improve compliance with the
demands, such as: improved implementation of the CFP terms of fisheries agreements and bring greater
provisions to reduce IUU fishing by EU vessels; a ban on transparency to the activities of EU vessels in third-
trade in IUU fish; the requirement that the legal origin of country waters. Although it is not clear to what extent the
fish be demonstrated before being offloaded or imported proposal will be modified in the Council, and whether
into the EU; the creation of a Community register of IUU certain aspects will end up included in the ‘control
vessels; common minimum penalties for infringements; regulation’, Parliament considers that the provisions of
and a ban on the entry into EU ports of IUU vessels and this proposal are very important to maintain.
their fish.
— Report on the proposal for a Council regulation g Ana Olivert-Amado
concerning authorisation for fishing activities of July 2008
4.4.6. The European fishing industry in figures

In 2005 the EU was in third place in the world, after China and Peru, in terms of fishing production and aquaculture, with
4 % of world production. However, the EU makes 6 % of world catches. Five Member States (Denmark, Spain, France, the
Netherlands and the United Kingdom) take 60 % of EU catches but Denmark uses most of its production to manufacture
fishmeal. The Community fleet is gradually declining in size. Aquaculture production seems to have levelled off although
the production of new species may still grow. In spite of its own production level the European Union is a net importer of
fisheries products.
Catches Kingdom is only 6 %. In Spain, France and the Netherlands, all
production is intended for human consumption. Catch
Following a period of continuous growth, world catches seem values and employment in the fisheries sector are an
to have reached a ceiling, at 145 million tonnes. Despite the accurate reflection of this situation. For example, the unit
European Union’s enlargement EU production has been value of landings in Spain is seven times higher than that of
gradually declining (by 21 % between 1992 and 2006) and is Danish landings.
now 5.3 million tonnes. At the start of the 1990s, EU catches
represented 7 % of world fisheries, which made the EU the The enlargement of 2004 caused a 9 % increase in EU
third largest world producer after China and Peru. In 2005, catches. Of the catches by the 10 States which acceded to the
Community production accounted for only 6 % of world European Union in 2004, 97 % are shared by the four countries
catches. In 2006, 75 % of Community catches were caught in which border the Baltic Sea. Of these four States, only in
the North-East Atlantic, 11 % in the Mediterranean and Black Lithuania had catches remained stable over the previous
Sea, 8 % in the mid-eastern Atlantic and 3 % in the western decade. In contrast, catches in Poland had fallen by 54 %,
Indian Ocean. those in Estonia by 34 %, and those in Latvia by 21 %.
In 2006 five Member States (Denmark, Spain, France, the

Netherlands and the United Kingdom) accounted for 60 % of
The fleet
Community production. There are structural differences In spite of the 2004 enlargement, between 1997 and 2004, the
between these five countries. In Denmark, 69 % of EU’s fishing fleet has been reduced by 15 %, from 102 404 to
production is for industrial use, mainly the production of 87 004 vessels. The reduction in the fleet’s tonnage was 3 %
fishmeal, whereas the corresponding figure in the United and the reduction in its engine power was 12 %.
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The enlargement of 2004 caused an 8 % increase in the same period, the value of production increased by 48 %. In
number of vessels (bringing it to a total of 92 422), an 8 % 2005 aquaculture represented 24 % of the volume of catches.
increase in the engine power of the fleet and a 12 % increase Community aquaculture is mostly concentrated on four
in its tonnage. Of the number of vessels belonging to the new species: mussels, trout, salmon and oysters. However, the
Member States, 53 % belonged to the four countries bordering production of species such as sea bass, sea bream and turbot
the Baltic, and those same four countries accounted for 85 % is growing. Five countries (France: 20 %, Spain: 17 %, Italy: 14 %,
of the tonnage and 66 % of the engine power of the fleet of UK: 14 % and Greece: 8 %) account for 74 % of Community
the new Member States. aquaculture production by volume. Bivalve molluscs (mussels,
oysters and clams) predominate in Spain, France and Italy, but
In 2006, Greece owned 21 % of the total number of fishing
species vary from one State to another. The United Kingdom,
vessels, followed by Italy (16 %), Spain (15 %) and Portugal
for its part, produces largely salmon and trout, whereas Greece
(10 %). Those four countries plus France and the United
processes mainly other sea fish species. Differences in species
Kingdom represented 62 % of the fishing vessels of the
distribution explain the different production values for
European Union of 27 Member States.
aquaculture. France represents 19 % of the value of
Spain represents 25 % of the total tonnage of the Community aquaculture production, while Italy and the United Kingdom
fleet (481 000 tonnes), followed by the United Kingdom each represent 17 %, Greece 12 % and Spain 10 %.
(216 000 tonnes or 11 %), France (209 000 tonnes or 11 %), Italy
(206 000 tonnes or 10 %), and the Netherlands (195 000 tonnes External trade
or 9 %). Member States in the south represent 57 % of the total
tonnage but 74 % of the number of vessels, owing to the The European Union is a net importer of fishery products, with a
predominance of smaller vessels. negative trading balance which in 2006 amounted to 3.9 million
tonnes, with a value of EUR 13.8 billion. Both imports and
With the exception of Belgium and the Netherlands, where exports are showing a tendency to rise, though this is more
large vessels predominate, all Member States’ fleets have pronounced in the case of imports. In 2006, the European Union
relatively similar structures. In Greece, Ireland, France, Poland imported 6 236 330 tonnes with a value of EUR 17.298 billion. In
and the United Kingdom more than 50 % of vessels are less the same year, the EU exported 1 328 390 tonnes with a value of
than 12 metres in length, reflecting the importance of coastal EUR 2.525 billion. The average unit price of exports was
fishing in those countries. EUR 1.5/kg, while that of imports was EUR 2.8/kg.
If we take vessels of less than 12 metres in length as being the
coastal fishing fleet, after the 2004 enlargement the number of Employment
EU vessels was 16 % and tonnage 21 % of the figure for the At present, Member States submit data on employment in the
fishing fleet as a whole However, the total engine power for fisheries sector to Eurostat on a voluntary basis, without being
vessels less than 12 metres long increased by 3 %. subject to any restrictive legislation. However, this information
is not harmonised and therefore does not allow any coherent
Aquaculture analysis of employment figures.
Between 1993 and 2005 Community aquaculture production
increased by 27 %, though at the end of the 1980s it seemed g Jesús Iborra Martin
to have reached a ceiling of 1.4 million tonnes. During the July 2008
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Common policies Regional and cohesion policy
4 5
4.5. Regional and cohesion policy
4.5.1. Economic and social cohesion

The EU’s regional policy began in 1975 with the creation of the ERDF, although solidarity mechanisms such as the ESF and
the EAGGF have existed since the Treaty of Rome. This policy has been financed by several instruments including the ERDF,
the Delors I package, the Delors II package and Agenda 2000; its aim is to reduce differences between regional
development levels.
Legal basis B. The growth of regional policy (1988–99)

Articles 158 to 162 of the Treaty establishing the European 1. Impetus given by the Single Act
Community (EC) (Title XVII), established by the Single The Single Act (1986) gave the Community new competence for
European Act. economic and social cohesion and set its objectives and means.
The foremost of these means was systematic use of the Structural
Funds, which entailed a reform of their operational rules.
Objectives
1. Main aims That reform was introduced by way of Council Regulation
(EEC) No 2052/88 (the implementing provisions being laid
Economic and social cohesion, as defined by Article 158, is
down in Regulation (EEC) No 4253/88). The fundamental
needed for the Community’s ‘overall harmonious development’
principles of the new rules were the following.
and requires a reduction of the ‘disparities between the levels
of development of the various regions’, i.e. the ‘backwardness — Funds are concentrated under objectives and regions.
of the least favoured regions’, which include rural areas. — The Commission, the Member States and the regional
2. Means authorities work in partnership to plan, implement and
In order to achieve these aims, the Treaty makes provision for: monitor use of the Funds.
— coordination of economic policies; — Measures are programmed.
— implementation of Community policies, in particular the — The additionality of Community and national contributions
single market; is observed.
These new rules went together with a major financial boost.
— use of the existing Structural Funds (European Agricultural
During the same year, 1988, the Council gave its agreement in
Guidance and Guarantee Fund — Guidance Section;
principle to a series of economic measures known as the
European Social Fund; European Regional Development
‘Delors I package’, which provided for a doubling of the
Fund) and the creation of a Cohesion Fund.
amount allocated to the Structural Funds over the following
five years (see the summary table at the end of the text).
Achievements
2. Developments following the Maastricht Treaty
A. Background a. Contribution of the Treaty
The Treaty of Rome makes no provision for regional policy but The Maastricht Treaty provides for:
only for solidarity mechanisms in the form of two Structural
Funds: the European Social Fund (4.9.2) and the European — submission by the Commission of a report to the Council
Agricultural Guidance and Guarantee Fund — Guidance and Parliament every three years on the progress made
Section (4.2.5). towards achieving economic and social cohesion (second
paragraph of Article 130b);
Regional policy was only put in place after the Community’s
— the possibility of ‘specific actions’ outside the Structural
first enlargement (1973), with the creation of the European
Funds (third paragraph of Article 130b);
Regional Development Fund (ERDF) in 1975. But for a long
time it had only modest resources, which prevented it from — the creation of a Cohesion Fund (second paragraph of
having any real impact. Article 130d).
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It also reformed the decision-making procedures, making the — increase their efficiency through better evaluation and
vote on the general rules subject to the assent procedure (first monitoring;
paragraph of Article 130d).
— consolidate the principle of additionality.
b. A new and substantial increase in the amount of the Structural On the same occasion, the Financial Instrument for Fisheries
Funds Guidance (FIFG, 4.4.3) became a separate fund — the
Just after the Maastricht Treaty was signed, the Commission European Fisheries Fund.
proposed a considerably higher level of funding, known as the
‘Delors II package’. The European Council, meeting in 2. A new financial effort
Edinburgh in December 1992, approved only part of the At the same time, the Berlin Council approved the allocation
proposals and planned to stagger the expenditure. of EUR 213 billion to structural measures for the period 2000–
Nevertheless, it signed up to a sizeable increase. The budget 06, including EUR 7 billion for the new ‘Instrument for
allocated to the whole package of structural measures for the Structural Policies for Pre-Accession’ (ISPA). This instrument was
six years 1994–99 was set at ECU 208 billion. approved by the Council in December 1997 in the context of
Agenda 2000, which was intended, inter alia, to help the
c. A major reform of the Structural Funds central and east European applicant countries to adapt to the
Adopted through a Council decision in July 1993 (Regulation requirements of EU membership (6.3.1).
(EEC) No 2081/93 amending Regulation (EEC) No 2052/88),
this reform had a twin scope: integration of all structural D. Strategic guidelines for cohesion policy after 2007
measures into the overall strategy to combat unemployment (4.5.2)
and development of the least favoured regions. It included the With an overall budget of EUR 308 billion, the new reform of
following changes: cohesion policy is intended to make structural measures:
— adjustment of the Funds’ priority objectives to current — more closely centred on priority objectives (Lisbon and
economic change and revision of the ESF in respect of Gothenburg commitments on a competitive and
political guidelines and adoption of a strategic approach; sustainable knowledge-based economy and European
— revision of the procedure for establishing lists of areas employment strategy);
eligible under Objectives 2 and 5b; — more focused on the least favoured regions, while
— simplification of planning procedures (single programming anticipating developments in the rest of the EU;
documents); — more decentralised and implemented more simply,
— greater partnership, with special attention to cooperation transparently and effectively.
with economic and social representatives; E. Changes introduced by the Lisbon Treaty
— stronger ex ante analysis, monitoring and ex post analysis of The Treaty signed in Lisbon on 13 December 2007, which has
structural measures; yet to be ratified, introduces the following changes (as
— increased attention to the principle of additionality; reflected by the consolidated versions of the Treaty on
European Union (TEU) and the Treaty on the Functioning of
— greater concentration on environmental protection, in line the European Union (TFEU)):
with the principle of sustainability;
— introduction of the concept of ‘territorial cohesion’ and
— encouraging equal treatment for men and women; recognition of this as an objective of the Union (third
— increased involvement by Parliament in the enactment of paragraph of Article 3 TEU);
structural policy. — inclusion of ‘territorial cohesion’ among the shared
d. Creation of the Cohesion Fund responsibilities of the Union (Article 4(2)(c) TFEU);
This Fund, which is provided for under the Maastricht Treaty, — substitution of the assent procedure with the ordinary
was set up in March 1994 (4.5.3). legislative procedure (co-decision) (Article 177 TFEU) for
the vote on the general rules on the Structural Funds;
C. Recent decisions and prospects
1. A new reform of the Structural Funds — recognition in the Charter of Fundamental Rights
(although this was not taken over in the Treaty) of the
On the basis of the Commission’s broad guidelines set out in
‘national identities of the Member States and the
‘Agenda 2000’ (July 1997) and detailed in its March 1998
organisation of their public authorities at national, regional
proposals, the Council meeting in Berlin in March 1999
and local levels’;
approved a new reform of the Structural Funds (Council
Regulation (EC) No 1260/99). This reform aimed to: — application of the principle of subsidiarity not only in the
definition of relations between the European institutions
— concentrate aid further;
and Member States, but also to local and regional
— simplify and decentralise the way the Funds operated; authorities (Article 5(3) TEU);
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4 5
— introduction of a provision concerning actions before the Thanks to its cooperative approach, the EP was able to obtain
Court of Justice for violation of the principle of subsidiarity, an increase in financial resources for territorial cohesion for the
which lays down that ‘the Committee of the Regions may period 2007–13, an objective of prime importance in the
also bring such actions against legislative acts for the context of enlargement. It also put forward several proposals
adoption of which the Treaty on the Functioning of the that helped enhance the text of the new Regulation ((EEC) No
European Union provides that it be consulted’ (Article 8 of 1083/2006) by stressing:
Protocol No 2 on the application of the principles of — the need to make funds more accessible to disabled people;
subsidiarity and proportionality);
— the strengthening of the partnership principle: namely that
— strengthening of the provisions relating to the outermost any appropriate body representing civil society,
regions (Article 107(3)(a) TFEU) in view of their structural, environmental partners, non-governmental organisations
economic and social situation. and bodies responsible for promoting equality between
men and women can take part in the Structural Funds
Role of the European Parliament partnership negotiations;
The European Parliament (EP) has invariably supported — the strengthening of the environmental aspect in
economic and social cohesion as an essential precondition for managing the Structural Funds, particularly sustainable
solidarity in order to maintain EU values, and has thereby development, and the introduction of a new article
facilitated consolidation of its position as an essential aspect of ensuring that this dimension is always taken into account.
European integration, on a par with the single market and The EP played an active role in all the preliminary phases
monetary union. In this connection, it has promoted the idea leading up to the signing of the Lisbon Treaty. It obtained
that the amounts allocated must be of a sufficiently high level satisfaction on many issues, including:
to ensure its effectiveness. The EP has always vigorously — introduction of the concept of ‘territorial cohesion’;
supported the proposals, which it considers the minimum
necessary, to increase allocations to the Structural Funds. — substitution of the assent procedure with co-decision for
the vote on the general rules on the Structural Funds;
It therefore took a hand in the 1993 reform, stressing the
— fleshing-out of the definition of the principle of
need for sufficient funding. It persuaded the European
subsidiarity;
Commission in July 1993 to accept a code of conduct on
implementing structural policy which binds it closely to the — strengthening of the specific provisions relating to the
establishment of ‘Community support frameworks’ (4.5.2) and outermost regions.
to their implementation and evaluation. The code of conduct The EP has therefore managed to consolidate its legislative
has given rise to an ongoing dialogue in which Parliament has powers, which have increased over time:
given its support to two Commission projects: a system for — Single Act: cooperation with the Council for the vote on
publicising Structural Fund measures and a regulation on the general rules on the Structural Funds;
recovery of sums invested in the event of irregularities.
— Maastricht Treaty: assent procedure for the vote on the
Parliament was also able to influence the 1999 reform thanks general rules;
to its new power to give assent for the general rules on the — Amsterdam Treaty: co-decision with the Council for the
Structural Funds. It expressed its position in particular in its vote on the implementing measures applicable to the
resolution of 19 November 1998, and the Council took most of general rules;
its views into account, so that Parliament was able to give its
assent on 6 May 1999. With regard to the vote on the — Lisbon Treaty: co-decision with the Council for the vote on
implementing measures, it secured in advance application of the general rules.
the co-decisional powers granted to it by the Amsterdam Treaty.
The code of conduct with the Commission has been extended g Ivana Katsarova
to include all the structural instruments (6 May 1999). July 2008
Trend in the allocation to the structural funds

1988–92 1993–99 2000–06 2007–13
(EU‑12) (EU‑12/EU‑15 (1)) (EU‑15/EU‑25 (2)) (EU‑25/EU‑27 (3))
EU budget (billion EUR) 481 683 687 862
Structural Fund budget (billion EUR) 111 208 213 308
Structural Fund budget compared with the EU
budget (%) 24 31 31 35.7
(1) Accession of Austria, Finland and Sweden in 1995.
(2) Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia in 2004.
(3) Accession of Bulgaria and Romania in 2007.
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4.5.2. The European Regional Development Fund (ERDF)
The ERDF is the main regional policy instrument; it is intended to reduce regional imbalances. It has been reformed several
times. It has three main objectives for the period 2007–13: convergence, regional competitiveness and employment and
European territorial cooperation.
Legal basis — interregional cooperation,

Articles 158 to 162 of the Treaty establishing the European — employment and manpower,
Community (EC).
— industrial development,
Objectives — very remote regions,

To help redress regional imbalances through participation in: — urban policy,
— the development and structural adjustment of regions — rural development.
whose development is lagging behind;
b. Main programmes
— the conversion of declining industrial regions (Article 160). Interreg, which supports cross-border cooperation projects
between regions at the Community’s internal and external
Achievements borders, in very varied fields.
A. History URBAN, which applies to problematic urban areas (high
The ERDF was set up in 1975 and has become the main unemployment, run-down buildings, poor housing and
instrument of the Community’s regional policy. inadequate social network).
1. Main operating principles Konver, which encourages the arms industry to convert to
The main principles by which it currently operates were laid civilian activities.
down by the general reform of the Structural Funds in 1988
B. The regulation of 1999 (4.5.1)
(4.5.1). ‘Community support frameworks’ negotiated
between the Commission, the Member States and the regional 1. Objectives
authorities lay down the broad outline of the measures that The regulation adopted in 1999 for the period 2000–06
commit the Member States and the Community jointly and (Council Regulation (EC) No 1261/1999 of 21 June 1999) limits
provide a reference framework for operational programmes the ERDF to two objectives.
submitted by the Member States. The Commission has the
a. Objective 1
final decision on co-financing these programmes.
This remains unchanged: development and structural
2. The four objectives of 1993 adjustment of regions whose development is lagging behind.
The regulations reforming the Structural Funds in 1993 (4.5.1) However, it now includes the areas which were eligible under
gave the ERDF the following four objectives for the period Objective 6 and the very remote regions.
1994–99:
b. Objective 2
— Objective 1, development and structural adjustment of This is new: economic redevelopment and development of
regions whose development is lagging behind; areas with structural problems. It covers the former Objectives
— Objective 2, redevelopment of regions severely affected by 2 and 5b and extends them to other areas: urban areas in
industrial decline; difficulty, crisis-hit areas dependent on fisheries and areas
heavily dependent on services.
— Objective 5b, development of rural regions;
— Objective 6, fostering the Arctic regions (this objective was 2. Eligible regions
included when Sweden and Finland joined). a. Under Objective 1
In all, 80 % of the Fund’s resources are reserved for Objective 1. — Regions whose GNP is less than 75 % of the Community
average, a list of which is drawn up by the Commission.
3. Community initiatives
These are projects which affect the whole Community, for — Very remote regions (French overseas territories, the
which the Commission alone is responsible. Azores, Madeira and the Canary Islands).
a. Relevant sectors — Regions covered by Objective 6.

The 1993 regulations laid down the relevant sectors: All these regions represent about 20 % of the EU population.
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4 5
b. Under Objective 2 enlargement); they will benefit from transitional,

There are four types of region for Objective 2: industrial, rural, specific and decreasing financing;
urban and fishery-dependent. The Commission in close — for the Cohesion Fund: Member States whose per capita
cooperation with the Member States concerned will draw up a gross national income (GNI) is below 90 % of the
list of these regions. They cover about 18 % of the EU Community average and which are running economic
population. convergence programmes;
3. Transitional arrangements — for specific ERDF funding: the very remote regions; the aim
There are transitional assistance arrangements for regions is to facilitate their integration into the internal market and
which were eligible under Objectives 1, 2 and 5b in 1999 but to take account of their specific constraints (such as
are no longer eligible in 2000. compensation of excess costs due to their remote
4. Community initiatives location).
The relevant sectors are: b. Regional competitiveness and employment
— transfrontier, transnational and interregional cooperation This objective aims to strengthen the competitiveness,
to stimulate development and coordinated, balanced employment and attractiveness of regions other than those
planning; which are the most disadvantaged. It will be financed by the
ERDF and the ESF. The eligible regions are:
— rural development;
— regions which fell under Objective 1 during the period
— transnational cooperation on new practices to deal with
2000–06, which no longer meet the regional eligibility
any kind of discrimination or inequality in access to
criteria of the convergence objective, and which
employment.
consequently benefit from transitional support; the
5. Programmes Commission will produce a list of these regions which,
The number of programmes has been reduced to four: once adopted, will be valid from 2007 to 2013;
Interreg, URBAN, Leader and EQUAL. Their funding has been
— all other regions of the Community not covered by the
cut back to 5.3 % of the total for the Structural Funds.
convergence objective.
6. Allocation of responsibilities
c. European territorial cooperation
This has been spelt out more clearly.
This new objective aims to strengthen cross-border,
— The Commission underwrites the strategic priorities. transnational and interregional cooperation and is based on
— Programme management is more decentralised, with a the existing Interreg initiative. It will be financed by the ERDF.
greater role played by regional and local authorities and Regions eligible for funds are those regions at NUTS 3 level
the economic and social partners. that are situated along internal land borders, certain external
land borders and certain regions situated along maritime
C. Prospects for the period 2007–13 borders separated by a maximum of 150 km. The Commission
In July 2004 the Commission presented a proposal for a will adopt a list of eligible regions.
regulation on the ERDF, which was adopted in July 2006. The 2. Provisions specific to the three objectives
new regulation ((EC) No 1080/2006) came into force on
Resources are not transferable between the objectives. In all,
1 January 2007.
0.3 % of the total is allocated for technical assistance. For the
1. Three new objectives convergence and regional competitiveness and employment
A total of EUR 308 billion will be allocated to fund measures objectives, 3 % of the total constitutes a ‘quality and
under the three new objectives. performance reserve’. In no case may the annual allocation of
a. Convergence resources exceed 4 % of the GDP of the Member State in
question. Provision has also been made for a new ‘national
This objective, which is similar to the current Objective 1, aims
contingency reserve’ to supply extra assistance in the event of
to accelerate the convergence of the least developed Member
an unforeseen sectoral or local crisis due to the effects of
States and regions by improving growth and employment
economic and social restructuring or trade opening. It is
conditions. It will be financed by the ERDF, the ESF and the
constituted by the Member States by taking 1 % of the
Cohesion Fund. The following regions and Member States will
convergence contribution and 3 % of the competitiveness
be eligible:
contribution.
— for the Structural Funds (ERDF and ESF):
• r egions where per capita GDP is below 75 % of the Role of the European Parliament
Community average; they must be at NUTS 2 level; The code of conduct adopted with the Commission in 1993
• r egions where per capita GDP would have been below and expanded in 1999 requires Parliament to be kept regularly
75 % of the Community average (the statistical effect of informed of the Fund’s activities. Under the 1999 reform,
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Parliament also succeeded in retaining the URBAN programme Because of its spirit of cooperation, Parliament was successful
as one of the Community initiatives. in obtaining the changes required concerning environmental
Despite the cost of the 2004 enlargement, the increased protection. Its voice has been heard in the areas of partnership
number of less-developed regions and the extra efforts that where, under the general regulation, greater involvement of
have to be made if the structural policies are to succeed, for civil society and NGOs is foreseen.
the period 2007–13 the ERDF will have resources that are
0.04 % less than the amount proposed by the European g Ivana Katsarova
Commission with the support of Parliament. January 2007
Summary table
2000–06 2007–13
Objectives Financial instruments Objectives Financial instruments
Cohesion Fund Cohesion Fund ‘Convergence’ ERDF
Objective 1 ERDF — Cohesion Fund
— ESF — —
EAGGF — Guarantee and
— — —
EAGGF — Guidance
— FIFG — —
Objective 2 ERDF ‘Regional competitiveness ERDF
— ESF and employment’ regional ESF
level — national level:
Objective 3 ESF European employment —
strategy
European territorial
Interreg ERDF ERDF
cooperation
URBAN ERDF — —
EQUAL ESF — —
Leader+ EAGGF — Guidance — —
Rural development and EAGGF — Guarantee — —
restructuring of fisheries
FIFG — —
outside Objective 1
9 objectives 6 instruments 3 objectives 3 instruments
4.5.3. The Cohesion Fund

The Cohesion Fund was set up in 1994. It provides funding for environmental projects and trans-European network and
transport infrastructure projects. It also finances preparatory studies associated with these projects and technical support
measures.
Legal basis — environment;

Article 161 of the Treaty establishing the European Community — trans-European networks in the area of transport
(EC), introduced by the Maastricht Treaty. infrastructure.
Objectives Achievements
The Treaty states that the Fund ‘shall provide a financial Initially the Council set up (1 April 1993) a ‘cohesion financial
contribution to projects’ in the fields of: instrument’ (Regulation (EEC) No 792/93). The Cohesion Fund
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4 5
replaced it on 16 May 1994 (Regulation (EEC) No 1164/94, C. Volume of aid

modified by Regulations (EC) No 1264/99 and (EC) No 1. The Fund’s resources
1265/99). a. 1993–99
A. Field of application The total volume of resources that could be committed under
the Fund was just over ECU 15 billion.
1. Eligible countries
The Fund is reserved for Member States whose per capita GNP Regulation (EC) No 1264/1999 allocated funds between the
is less than 90 % of the Community average and who have set beneficiary Member States, on a purely indicative basis:
up a programme aiming to meet the criteria set by — Spain: 61 to 63.5 %;
Article 104c of the Treaty; this concerns excessive government
— Greece: 16 to 18 %;
deficits in the context of coordinating economic policies as
part of economic and monetary union. Four Member States — Portugal: 16 to 18 %;
qualify: Ireland, Greece, Spain and Portugal. — Ireland: 2 to 6 % (Ireland has not been eligible since
2. Eligible projects 1 January 2004).
In the two areas of action laid down by the Treaty, the Fund b. 2000–06:
may assist: Regulation (EC) No 1264/1999 set the total resources available
— environmental projects contributing to achieving the for commitments at EUR 18 billion at 1999 prices.
objectives of Article 174 (130r) of the Treaty in the Following the Union’s enlargement on 1 May 2004, the
following areas: quality of the environment, human health, Cohesion Fund applied to the 10 new Member States until the
utilisation of natural resources and regional or worldwide end of 2006, as well as to the three Member States eligible at
environmental problems; these projects include those the end of the period 2000–06 (Greece, Spain and Portugal).
resulting from measures taken under Article 175 Spain was no longer eligible after 1 January 2007.
(ex Article 130s) and are in line with the priorities given to
Community environmental policy by the fifth programme The act concerning the conditions of accession of the 10 new
Member States granted a total of EUR 7.59 billion in
of policy and action in relation to environment and
commitment appropriations at 1999 prices for those countries
sustainable development;
between 1 May 2004 and 31 December 2006. How the overall
— transport infrastructure projects of common interest resources of the Fund were allocated among the Member
financed by Member States, within the framework of the States depended on a number of criteria: each country’s
guidelines referred to in Article 155 (ex Article 129c) of population and area, its per capita GNP and socioeconomic
the Treaty; however, other trans-European network factors such as its infrastructure. However, the total amount
projects contributing to achieving the objectives of that these Member States received from the Cohesion Fund
Article 154 (ex Article 129b) of the Treaty may be each year, together with the assistance they received from the
financed until the Council adopts appropriate guidelines Structural Funds, could not exceed 4 % of their GDP.
(4.7.2).
c. Programming period 2007–13
— preparatory studies related to eligible projects; The new regulation ((EC) No 1084/2006) sets out the general
— technical support measures and related studies. provisions for the operation of the Cohesion Fund and lays
down that it contributes to the convergence objective (4.5.2)
B. Aid mechanism covering less developed Member States and regions through
1. Scale of funding financial participation in the convergence objective’s
The level of funding is between 80 % and 85 % of public operational programmes.
expenditure on a project, depending on the type of operation. The accession of new Member States on 1 May 2004, all of
If a project receives other Community aid as well as assistance which are eligible for the Cohesion Fund and which face new
from the Fund, the total amount of assistance may not exceed and important financing needs, justifies an extension of both
90 % of the total expenditure, except for preparatory studies, the Fund’s area of intervention and of the budget of
which may receive 100 % funding. EUR 18 billion (for the period 2000–06) to EUR 61 billion for the
2. Procedure new programming period (EUR 58 billion plus EUR 3 billion for
The Commission, in agreement with the beneficiary Member specific transitional support).
State, takes the decision to fund a project. Decisions must The Fund can therefore also finance actions in support of
maintain a balance between the two areas (environment and sustainable development, where these have a clear
transport infrastructure). The Commission presents an annual environmental dimension, such as energy efficiency or
report on the activities of the Fund to Parliament, the Council, renewable energy. Beyond the trans-European transport
the Economic and Social Committee and the Committee of networks, this also allows for financing of rail, navigable
the Regions. maritime and river waterways, multi-modal transport actions
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and their interoperability, road and air traffic management, Parliament also stressed the contribution that the Fund has
clean urban transport, and communal transport. This extension made to job creation in the beneficiary countries: more than
of the area of intervention is in accordance with the 57 000 jobs created directly and more than 17 000 indirectly in
corresponding provisions in the Treaty, and is in line with the 1996, according to Commission estimates.
priorities decided by the European Council in Lisbon (March
The European Parliament was actively involved in drawing up
2000) and Gothenburg (June 2001).
the new regulation ((EC) No 1084/2006), which covers the
period 2007–13. It put forward several proposals that helped
Role of the European Parliament enhance the text, with an emphasis on:
The creation of the Cohesion Fund in 1994 was Parliament’s — environmental protection;
first opportunity to use the new power of assent on the
Structural Funds conferred on it by the Maastricht Treaty — the disabled;
(Article 130d). It was able to ensure that regional and local — simplification of procedures and transparency;
authorities were involved in monitoring projects financed by
— a stronger role for regional actors and the introduction of a
the Fund; its assent also had a bearing on the way the Fund
premium system (in the form of a Community quality and
operates.
performance reserve, which in the period 2000–06 was
In subsequent years, Parliament’s influence on cohesion provided only for the Structural Funds).
policy increased. In particular, it was opposed to the way the
The Council did not think it appropriate to accept all these
conditionality clause on government deficits penalised
proposals.
countries which had already fulfilled the criteria, considering
that this did not mean that these countries had succeeded in
removing regional and social disparities, as is apparent from g Ivana Katsarova
the conclusions to the first three-yearly report on cohesion. January 2007
4.5.4. The Solidarity Fund

The Solidarity Fund enables the EuropeanUnion to provide financial support to a Member State or region in the event of a
major natural disaster. Under the new Commission proposal setting up a new EU Solidarity Fund, Commission assistance
may not exceed 50 % of the total cost of eligible actions.
Legal basis of a Member State or a country applying for accession. A

natural disaster is considered as ‘major’ if:
The third paragraph of Article 159 and Article 308 of the Treaty
establishing the European Community (EC). — in the case of a State, it results in damage estimated either
at over EUR 3 billion (2002 prices), or at more than 0.6 % of
its gross national income;
Objectives
— in the case of a region, if the 0.6 % threshold is not reached,
The Solidarity Fund is intended to provide a Member State or a
it results in damage affecting the major part of its
region with speedy, effective and flexible support in dealing
population, with serious and lasting repercussions on living
with the damage caused by a disaster that has entailed public
conditions and economic stability; in this context,
expenditure.
particular attention is paid to remote and isolated regions,
for example the outermost and island regions.
Achievements
In these specific cases, the annual amount available is limited
The Solidarity Fund was set up under Council Regulation (EC) No to no more than 7.5 % of the annual amount allocated to the
2012/2002 of 11 November 2002 to deal with natural disasters. Solidarity Fund (i.e. EUR 75 million).
A. Scope B. Assistance mechanism

The Solidarity Fund is used mainly in cases of major natural 1. Eligible actions
disasters with serious repercussions on living conditions, the Assistance from the Fund takes the form of a single and
natural environment or the economy in one or more regions global grant, with no necessary co-financing,
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4 5
complementing the public efforts of the beneficiary State. 6. Insufficient financial resources
Intended to finance measures alleviating non-insurable On 1 October each year, at least one quarter of the annual
damage in principle, the urgent actions eligible for the amount allocated to the Solidarity Fund should remain
Fund are: available in order to cover needs arising at the end of the year.
— immediate restoration to working order of infrastructure In exceptional cases and if the remaining financial resources of
and plant in the fields of energy, drinking water, the Fund prove insufficient, the Commission may decide to
wastewater, telecommunications, transport, health and use part of the amount foreseen for the following year.
education;
C. Amount of aid
— providing temporary accommodation and funding rescue At 15 June 2006, the following amounts had been mobilised
services to meet the immediate needs of the population under the Solidarity Fund:
concerned;
— EUR 728 million for regions devastated by floods, divided in
— immediate securing of preventive infrastructures and the following way: EUR 444 million for Germany, EUR 134
measures of immediate protection of the cultural heritage; million for Austria, EUR 129 million for the Czech Republic
— immediate cleaning up of disaster-stricken areas, including and EUR 21 million for France (Decision 2002/1010/EC of
natural zones. the European Parliament and of the Council of 21
November 2002);
2. Submission of the application
— EUR 48.539 million for regions in Portugal affected by fires
No later than 10 weeks after the first damage caused by the
(Decision 2003/786/EC of the European Parliament and of
disaster, the State affected should submit an application to the
the Council of 9 October 2003);
Commission for assistance from the Fund. It should provide all
possible information on the damage caused by the disaster — EUR 56.25 million for regions in Italy (affected by a natural
and its impact on the population and the economy. It must disaster) and regions in Spain (damage caused by the
estimate the cost of the foreseen assistance and indicate any Prestige oil tanker) (Decision 2003/785/EC of the European
other sources of national, Community and/or international Parliament and of the Council of 9 October 2003);
funding.
— EUR 21.9 million for regions struck by fires in Spain and
3. Payment of the subsidy and recovery regions affected by floods in Malta and France (Decision
Beneficiary Member States must seek all possible 2004/323/EC of the European Parliament and of the
reimbursement from third parties. On the basis of this Council of 30 March 2004);
information, the Commission will decide if the Solidarity — EUR 5.67 million for Slovakia, following a storm that had
Fund may be mobilised and, if that is the case, to accord a catastrophic effects (Decision 2005/706/EC of the
grant to be paid immediately and in a single instalment. If European Parliament and of the Council of 7 September
the final estimation of the damage is substantially lower than 2005);
the first forecasts on the basis of which the State demanded
the grant, the Commission will ask for reimbursement of the — EUR 92.88 million for Estonia, Latvia, Lithuania and Sweden
difference. following a storm that had catastrophic effects (Decision
2006/12/EC of the European Parliament and of the Council
4. Implementation of 17 November 2005).
The beneficiary State is responsible for the implementation of
the grant and, where applicable, for the coordination with D. New Commission proposal
other Community funds in order to ensure their The proposal for a European Parliament and Council regulation
complementarity. However, it is not possible for the actions of 6 April 2005 establishing the European Union Solidarity
undertaken by the Solidarity Fund to be double financed by Fund (COM(2005) 108 final) is intended to provide a more
the Structural Funds, the Cohesion Fund, the European appropriate response to acts of terrorism and public health
Agricultural Guidance and Guarantee Fund (EAGGF), ISPA or emergencies. The Commission drew up this proposal in
Sapard. response to the revision clause in Regulation (EC) No
2012/2002 scheduled for the end of 2006. The new regulation
5. Use of the subsidy
was due to enter into force in January 2007.
The grant must be used within one year of the date on which
it has been disbursed. The beneficiary State must reimburse 1. Scope
any part of the grant remaining unused. Six months after the The new financial instrument provides financial assistance to
expiry of this period, it is to present a report on the financial the Member States and the countries currently negotiating EU
execution to the Commission. This document should detail the membership. The use of the Fund to assist countries that are
expenditure eligible for the Solidarity Fund as well as all other not (yet) Member States is based on a specific provision in the
funding received, including insurance settlements and Treaty of Nice governing economic and financial cooperation
compensation from third parties. with non-EU countries.
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Community financial assistance is provided in cases where the d. Annual report
extent of the damage caused by a disaster is such that it Before 1 July every year, the Commission will present a report
hampers a country’s ability to respond effectively. The extent to the Parliament and the Council setting out the activities of
of a disaster is determined according to: the Solidarity Fund.
— a quantitative criterion, when the amount of direct
damage is estimated to be either EUR 1 billion or more (in Role of the European Parliament
2007) or 0.5 % of the affected country’s gross national The European Parliament gave its views at first reading on 18
income; regional and local disasters causing damage at a May 2006 (T6-0218/2006). It made the following
level below this threshold are the responsibility of the improvements to the original proposal.
Member State concerned, although they may be eligible
for assistance from other Community funds; — Definition of the term ‘disaster’: any major destructive
event that occasions serious harm to the population and
— a political criterion, which will allow the Commission to the environment, including events, such as terrorist attacks,
propose the Fund be used for emergencies in cases where caused by people.
the material damage alone would not normally qualify for
assistance; this is particularly useful for dealing with the — Reducing the damage threshold: reducing the damage
consequences of acts of terrorism. threshold from 0.6 % of the GNI to 0.5 %, or from
EUR 3 billion to EUR 1 billion.
Having a single fund focusing solely on large-scale disasters
will ensure the aid is as effective as possible. — Financing: under the Interinstitutional Agreement on the
financial perspective, the Solidarity Fund should be
2. Assistance mechanism financed outside the financial framework with a maximum
a. Eligible actions amount of EUR 7 billion over seven years. It should also
Assistance is granted to finance emergency measures by public should be included in the flexibility reserve.
authorities or bodies in Member States. Eligible actions include: — Political assessment: the Commission may, in exceptional
— restoring essential infrastructure for power generation, and duly justified circumstances, recognise that a major
water supplies and sewage, telecommunications, transport, disaster has occurred on a specific territory of an eligible State.
health and education; — Scope: Parliament extended the scope of the financial
— immediate medical assistance and measures to protect assistance to: essential operations to restore the operation
against imminent health threats, mainly by providing of infrastructure and installations relating to energy,
drugs, medical products and vaccines; drinking water and wastewater, telecommunications,
transport, health and education; immediate medical
— providing temporary accommodation and immediate assistance and measures to protect the population in the
disaster-relief measures for victims; event of a major health crisis; essential emergency
— setting up emergency preventive systems; operations for the immediate tackling of natural disasters;
immediate medical assistance to the direct victims of
— emergency measures to protect the local culture and
major disasters and terrorist attacks.
environment;
— Time limit: in view of the difficulties of assessing all the
— emergency clean-up operations in the disaster area;
damage rapidly, Parliament asked that in certain cases the
— medical, psychological and social assistance for direct time limit should be extended to 10 weeks.
victims of terrorism and their families.
— Polluter pays principle: the Solidarity Fund should not be
b. Making a request and payment of the aid used to relieve those responsible of their responsibility for a
To receive aid, eligible countries must send a request to the disaster. The Member States should therefore be advised to
Commission within 10 weeks of the disaster. create an effective legal framework and legal system to
ensure that, as far as possible, those responsible are held
The Commission will determine the appropriate amount of
liable for industrial accidents.
aid, which can never be more than 50 % of the total cost of the
eligible operations, and ask the budgetary authority to release It also asked that particular attention should be given to
these funds. They can be paid as soon as the amounts have isolated, island or outlying regions.
been entered in the Community budget and an The European Parliament is awaiting the common position of the
implementation agreement concluded between the Council. A majority of the Council currently opposes a revision of
beneficiary country and the Commission. the current rules and negotiations have not been resumed since
c. Advance the first quarter of 2006, during the Austrian Presidency.
There is also a new fast-track relief mechanism by which an
advance of 5 % of the estimated amount (no more than g Ivana Katsarova
EUR 5 million) can be paid for the most urgent measures. January 2007
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Common policies Transport policy
4 6
4.6. Transport policy
4.6.1. Transport policy: general principles

Transport policy is one of the first policies included in the Treaty of Rome. Alongside the opening of transport markets and
the creation of fair conditions of competition, the model of ‘sustainable mobility’ in particular has increasingly gained
significance in recent years.
Legal basis coming to terms with increased traffic and the minimisation of
Article 3(1)(f ) and Title V of the Treaty establishing the European subsequent consequences such as traffic accidents, respiratory
Community (EC) (Treaty of Lisbon: Article 4(2)(g) and Part Three, diseases, noise, environmental damage or traffic jams.
Title VI, of the Treaty on the Functioning of the European Union). Using this model involves an integrated approach to
optimise the efficiency of the transport system, transport
Objectives organisation and safety as well as to reduce energy
consumption and environmental repercussions. The
In the Treaties of Rome, Member States had already stressed
cornerstones of this model include improving the
the importance of a common transport policy with its own
competitiveness of environmentally friendly modes of
title. Transport was therefore one of the first common policy
transport, the creation of integrated transport networks used
areas of the Community. The first priority was the creation of
by two or more modes of transport (combined transport and
a common transport market, in other words the realisation
intermodality) as well as the creation of fair conditions of
of freedom of services and the opening of transport markets.
competition between modes of transport through fair
To a great extent, this goal has been reached. One exception
charging for external costs caused by them.
has proved to be rail transport, for which the completion of
the single market was brought about only in part.
Achievements
In the process of opening the transport markets, it is also a
matter of creating fair conditions for competition as much for A. General policy guidelines
individual modes of transport as between them. For this The 1985 White Paper on the completion of the internal
reason, the harmonisation of national legal and market made recommendations for ensuring the freedom to
administrative regulations, including the prevailing provide services and set out the guidelines for the common
technological, social and tax conditions, has gradually taken on transport policy. In November 1985, the Council adopted three
an ever-increasing importance. main guidelines: the creation of a free market (without
quantitative restrictions) by 1992 at the latest; increasing
The successful completion of the European internal market,
bilateral and Community quotas; and eliminating distortion of
the discontinuation of internal borders and falling transport
competition. It also adopted a ‘master plan’ of goals to be
prices due to the opening and liberalisation of transport
reached by 31 December 1992 for all modes of transport (land,
markets as well as changes in production systems and in
sea, air). This included the development of infrastructure of
storage have led to a constant growth in transport. The
Community interest, the simplification of border controls and
transport of people and goods has more than doubled over
formalities as well as improving safety.
the last 30 years. Nevertheless, the economic view of a very
successful and dynamic transport sector is juxtaposed with On 2 December 1992, the Commission adopted the White
increasing social and ecological ramifications. Increasingly, the Paper on the future development of the common transport
model of ‘sustainable mobility’ gains in significance. policy. The main emphasis was on the opening of transport
This model is in a tug of war between two different sets of markets. At the same time, the White Paper represented a
goals. On one hand, it is a question of safeguarding fairly priced turning point towards an integrated approach, embracing all
and efficient mobility for people and goods as the central modes of transport, based on the model of ‘sustainable mobility’.
element of a competitive EU internal market and as the basis for The Commission Green Paper of 20 December 1995
the free movement of people. On the other hand, there is the entitled ‘Towards fair and efficient pricing in transport’
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(COM(95) 961) dealt with the external costs of transport. In this B. Implementation
paper, the Commission strove for the creation of an efficient Despite the Commission’s efforts, the common transport
and fair charging system for the transport sector to reflect policy made only stuttering progress until the second half of
these costs, thereby reducing distortions of competition the 1980s. The way forward to Community legislation was only
within and between the different modes of transport. Tax cleared by the European Parliament’s proceedings initiated
measures in particular were discussed in this context. In the against the Council because of its failure to act. In the 22 May
subsequently published White Paper of 22 July 1998 entitled 1985 judgment in Case 13/83, the Court of Justice of the
‘Fair payment for infrastructure use: a phased approach to a European Communities urged the Council to act on the
common transport infrastructure charging framework in the transport policy. Only after this was the wind put back in the
EU’ (COM(98) 466) the Commission drew attention to the large European transport policy’s sails
differences between Member States in terms of the imposition
Many of the measures announced in the 1992 and 2001 White
of transport charges, which led to various intra- and
Papers have since been implemented or introduced (see the
intermodal distortions of competition. Furthermore, the
following chapters).
existing charging systems did not sufficiently take into account
the ecological and social aspects of transport. Furthermore, the EU has launched some ambitious
technological projects in this period, such as the satellite
In the White Paper ‘European transport policy for 2010:
navigation system Galileo, the European rail traffic
time to decide’ (COM(2001) 370), the Commission first
management system (ERTMS) and the SESAR programme to
analysed the problems and challenges of the European
improve air traffic control infrastructure. These large European
transport policy — in particular with regard to the then projects are intended to contribute in the future to more
upcoming eastern enlargement of the EU. It predicted a efficient and safer traffic management.
massive rise in traffic, which went hand-in-hand with traffic
jams and overloading, especially in the case of road and air In June 2006, the Commission published a provisional appraisal
transport, as well as increasing health and environmental costs. of the most recent White Paper (COM(2006) 314). Despite various
This seriously threatened endangering the EU’s advances in European transport policy it holds the opinion that
competitiveness and climate protection goals. In order to the measures planned in 2001 are not sufficient in order to
overcome these tendencies and to contribute to the creation achieve the formulated objectives. For this reason, it announced
of an economically efficient but equally environmentally and further measures to reach these goals, or it had already put such
socially responsible transport system, the Commission put measures in place. These include amongst others: (a) a plan of
forward a package of 60 measures. They were designed to action for goods transport logistics; (b) the promotion of
break the link between economic and traffic growth and intelligent transport systems and new technologies for a more
combat the unequal growth of the various modes of transport. environmentally friendly and efficient mobility; (c) European
approaches to mobility in urban areas; (d) a plan of action for the
According to the Commission, the imbalance in the promotion of inland waterway transport; and (e) a programme
development of individual modes of transport is one of the for environmentally friendly fuels in road transport.
biggest challenges. The goal of the White Paper is to stabilise
the environmentally friendly modes of transports’ share of the
total traffic volume at 1998 levels. This purpose should be Role of the European Parliament
served by measures taken to revive rail transport, to promote 1. Powers
sea and inland waterway transport and to promote the Up until the Treaty of Maastricht came into force, legislation
interlinking of all the modes of transport. concerning transport came under the consultation process.
Subsequently, the cooperation procedure was used for nearly all
Furthermore, the Commission announced a revision of the
aspects of the common transport policy (the co-decision
guidelines for trans-European networks (TEN-T, 4.6.1), to adapt
procedure was used to establish the guidelines for trans-European
them to the enlarged EU and to push forward more strongly
transport networks). Since the Treaty of Amsterdam, European
than previously the elimination of cross-border ‘bottlenecks’.
legislation on transport policy (apart from a few exceptions) has
Thirdly, the White Paper puts the rights and responsibilities of been adopted using the co-decision procedure. As an equal
transport users under the spotlight. Among the announced co-legislator, the EP has played a crucial role in shaping the EU’s
measures was a plan of action for improving road transport transport policy through numerous legislative procedures.
safety, improvement of user rights and the creation of accurate
The Treaty of Lisbon will not result in any substantial changes
costing for all modes of transport by harmonising the
to the European transport policy.
principles of infrastructure charging. Fourthly, the Commission
stresses the need to tackle the consequences of globalisation 2. General attitude
in the transport sector. To better serve the interests of the EU, it A large majority of MEPs have long since demanded an
proposed that the Community’s role should be stronger in integrated global approach to the common transport policy.
international organisations such as the International Maritime Parliament’s aforementioned legal action against the Council did
Organisation and the International Civil Aviation Organisation. much to bring the common transport policy into being.
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4 6
Alongside fundamental support for the liberalisation of the the achievements in some transport policy fields and
transport markets carried out, the European Parliament welcomed in principle the further measures envisaged by the
continued to stress the necessity of implementing this alongside Commission in this mid-term review. However, it also pointed
an all-embracing harmonisation of the prevailing social, tax and out numerous existing challenges for the EU transport policy
technological conditions and of safety standards. Moreover, the and drew up a comprehensive list of measures.
European Parliament regularly supported the model of
In its resolution of 11 March 2008 the European Parliament drew
sustainable mobility with specific proposals and demands.
up numerous recommendations for environment-, climate- and
On 12 February 2003, Parliament adopted a resolution on the energy-policy action under the European transport policy.
Commission’s White Paper ‘European transport policy for Parliament proposed a policy mix of technological improvements,
2010: time to decide’. The resolution stressed that the idea of market-based instruments and flanking measures to reconcile
sustainability must be the foundation and the standard for the environmental, transport and energy policies. Among other
European transport policy. Parliament shared the Commission’s things, it called for demand management measures (for example
analysis as regards the magnitude of problems relating to congestion charges and road pricing), emissions-based
transport and the unequal growth of the modes of transport. It differential take-off and landing charges at airports, and the
stressed the importance of creating an integrated global reduction of CO2, SO2 and NOx emissions from shipping.
transport system. The shift of emphasis towards
environmentally friendly modes of transport, whilst maintaining On 9 July 2008 the European Parliament adopted a resolution
the competitiveness of road transport, was approved as was on the Commission Green Paper ‘Towards a new culture for
the fair charging of infrastructure and external costs for each urban mobility’. Parliament called for the development at
mode of transport. Additionally, Parliament demanded that European level of an integrated global approach to urban
transport should be given the political and budgetary mobility intended to serve as a common frame of reference for
consideration warranted by its strategic character and its role as European, national, regional and local players (municipalities,
a service of general interest. Parliament supplemented this citizens, businesses and industry). Parliament highlighted the
general approach with a multitude of specific demands and following areas, among others: the importance of integrated
proposals for each individual mode of transport, transport and comprehensive sustainable urban mobility plans (SUMPs)
safety, the schedule, and financing of the European transport with an emphasis on long-term city planning and spatial
network as well as better coordination with other EU policy planning; research and development in the field of
areas. The same applies for the further transport-related topics sustainable transport; and the EU’s role in the development
of intermodality, research, development and new technologies. and promotion of intelligent transport systems (ITS) and in
The Commission has already taken up many of these themes in funding innovative technologies.
its most recent legislative proposals.
In its resolution of 12 July 2007 on the mid-term review of the g Nils Danklefsen
transport White Paper, the European Parliament acknowledged July 2008
4.6.2. Land transport: market access

Land transport concern the fields of road transport, railways, urban, suburban and regional transport. Numerous
regulations and directives were adopted at EU level to create a single European market for transport.

Title V of the Treaty establishing the European Community A. Road transport
(EC), and in particular Article 71 (Treaty of Lisbon: Title VI, and 1. Opening up the freight transport market
in particular Article 91 of the Treaty on the Functioning of the
a. International freight transport
European Union).
Regulation (EEC) No 881/92 of 26 March 1992 consolidated
existing legislation on international transport between
Objectives Member States and laid down definitive arrangements on
To create a single transport market by facilitating the exercise, access to the international freight transport market. The rules
in practice, of freedom of establishment and freedom to apply to transport from or to a Member State or to transport
provide services throughout the Community. passing through one or more Member States. Whereas,
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previously, transport between two Member States had only operator, in order to prevent distortions of competition and to
been possible on the basis of bilateral agreements and had guarantee more effective, more uniform application of the
also been subject to restrictions, the new regulation abolished rules (COM(2007) 263).
all quantitative restrictions (quotas) and price regulations as of The Commission proposals are currently going through the
1 January 1993. Since then, access to the market has been legislative procedure between the Council and Parliament.
subject only to qualitative requirements that have to be met in
order for a carrier to be granted a Community authorisation, 2. Opening up the passenger transport market
which is issued by the Member State in which the company is a. International passenger transport
established and which must be recognised by all the other In contrast to road freight transport, progress in opening up
Member States. the market for passenger transport services has been slower.
Regulation (EEC) No 3916/90 of 21 December 1990 introduced Regulation (EEC) No 684/92 of 16 March 1992 helped open up
a ‘crisis mechanism’ in the event of serious disruption of the the market for international coach and bus services by
market. permitting all carriers from the Community to operate
international passenger transport services between Member
b. Cabotage
States. The regulation was supplemented and revised by
Rules on so-called ‘cabotage’, i.e. the operation of transport Regulation (EC) No 11/98 of 9 January 1998, which introduced
services within a Member State by a carrier established in a Community licence for commercial carriers that are entitled
another Member State, have been laid down separately in to carry persons by coach and bus in their country of
Council Regulation (EEC) No 3118/93 of 25 October 1993. This establishment. Carriers must keep the Community licence with
regulation entitles companies holding a Community licence them as proof that they are entitled to operate services in their
granted by a Member State to provide freight transport home country. International regular services also require
services in another Member State — albeit on condition that authorisation, which is issued under a simplified procedure.
these services be provided only temporarily. However, in the
case of Member States acceding in 2004 (with the exception b. Cabotage
of Malta, Cyprus and Slovenia), the Accession Treaties provided Regulation (EC) No 12/98 of 11 December 1997 has opened
for staggered transitional periods of up to five years. up the market for occasional services (by coach and bus),
regular special services covered by a contract between the
c. New Commission proposals organiser and the carrier (such as for the transport of workers
The above legal framework created the conditions for a or students) and regular services operated as part of an
liberalised road freight transport market in the European international service.
Union. However, in order to create fair conditions of
The market has not as yet been opened up for the following
competition, further harmonisation was needed in terms of
services: national services operated independently of an
social, technical and fiscal conditions (see 4.6.3).
international service and urban, suburban and regional
Owing to difficulties in implementing and controlling the services, even when supplied as part of an international
concept of temporary cabotage and a degree of legal service. Non‑resident carriers may be refused permission by
uncertainty arising from the unequal application of certain the competent authorities to operate such services.
national rules, the Commission proposed, in May 2007, a recast
c. New Commission proposal
of the rules for access to the international road haulage market
(COM(2007) 265). The substantial modifications proposed by In May 2007 the Commission proposed a simpler, faster
the Commission include: procedure for the authorisation of international regular
services and for a simplified, standardised Community licence
— a simpler, clearer and enforceable definition of ‘cabotage’ (COM(2007) 264). The proposal is currently being discussed in
(three transport operations consecutive to an international the Council and Parliament.
journey and within seven days);
B. Rail transport
— a simplified format for the Community licence;
1. Legislation
— enhanced procedures for communication between a. Access to infrastructure
Member States with regard to infringements by carriers Directive 91/440/EEC of 29 July 1991 on the development of
and the obligation on the part of Member States to issue a the Community’s railways requires the Member States to:
warning in the case of serious infringements or repeated
minor infringements. The option of deciding to withdraw — afford railway undertakings the status of independent
Community licences, certified copies or driver attestations operators and ensure that they are commercially managed;
is also provided. — separate the accounts for the operation of infrastructure
At the same time, the Commission proposed completing and and the provision of transport services.
further harmonising the rules concerning the conditions to be It lays down the principle of the right of a railway undertaking
complied with to pursue the occupation of road transport in a Member State to have access to the infrastructure in other
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4 6
Member States. The rail market has also been further opened railway undertakings were also laid down. The third rail
up by three so-called ‘rail packages’. package, through Directive 2007/58/EC, added a number of
provisions to Directive 2001/14/EC that should facilitate long-
Directive 91/440/EEC has been amended by Directive
term investment, for example, in high-speed railway lines.
2001/12/EC of 26 February 2001. The directive provided for
access, from March 2003, by international freight transport 2. Outlook: revitalising the railways
services to the trans-European rail freight network. From 15 In 1996 the Commission already formulated a strategy for
March 2008 the whole of the European network for revitalising the railways, which was reinforced in September
international rail freight services was to be opened up. In 2001 by the publication of the White Paper entitled ‘European
addition, the directive provided for the introduction of transport policy for 2010: time to decide’. This comprises the
separate organisational units for the provision of rail transport following main elements:
services and the operation of infrastructure, as well as
— the opening up of national freight markets to cabotage;
introducing separate accounting for passenger and freight
transport services. The aim was to ensure that the allocation of — the establishment of a high safety level;
infrastructure capacity, the levying of charges for use and the — the development of interoperability;
granting of authorisations is carried out independently of the
provision of transport services, and to ensure balanced, non- — the gradual opening up of international passenger services;
discriminatory access to rail infrastructure. Under the second — the promotion of measures relating to quality of services
rail package, the opening up of the market was taken a step and strengthening of customer rights;
further by Directive 2004/51/EC of 29 April 2004. The full
— the creation of a European agency for safety and
opening up of the freight transport market, including
interoperability.
cabotage, should have taken place from 1 January 2007. The
agreement on the second rail infrastructure package included Thanks to the adoption of the three railway packages,
a declaration by the European Parliament and the Council of significant progress has been made in recent years in
Ministers that the aim was to open up the market for revitalising the railways. Many of the obstacles in the way of an
international rail passenger services by 2010. The necessary integrated European railway area have been gradually
legal bases for this opening of the market were created by removed. However, European railways still face considerable
Directive 2007/58/EC of the European Parliament and of the challenges if they are to maintain their current share of total
Council of 23 October 2007 in adopting the so-called third traffic volume and increase it in the medium term. In the area
rail package. The opening of the market for international of rail freight transport this will depend on legislation already
passenger transport services until the 1 January 2010 also adopted being properly transposed into national law and
includes the right to convey passengers between any train applied in all of the Member States. The Commission should
station located on the route of an international transport present a report on the implementation of the
service, including stations located in the same Member State. abovementioned Directive 2007/58/EC in 2012. This report
Under certain circumstances, however, the Member State may should propose, if appropriate, complementary measures and
limit this right. further steps in relation to the opening of the national rail
passenger transport markets.
b. Allocation of infrastructure capacity
Directive 95/19/EC of 19 June 1995 aimed to guarantee fair C. Urban, suburban and regional services
and non-discriminatory access to infrastructure. An important Urban, suburban and regional rail and road transport services
aspect was the requirement to set up a system for the frequently entail public service obligations in the Member States
charging of infrastructure fees based on actual costs, with the and are often provided by public companies. The main
fees being collected by an independent body. As part of the legislation governing this area was Regulation (EEC) No 1191/69
first railway package, this directive was replaced by Directive of 26 June 1969 (as amended by Regulation (EEC) No 1893/91 of
2001/14/EC of 26 February 2001, which gives a more precise 20 June 1991). A Commission proposal of 26 July 2000 proposed
definition of railway undertakings’ rights in relation to the the recasting of this regulation. This was aimed at developing
allocation of infrastructure capacity and introduces a competition in public passenger transport services, in particular
procedure for alleviating capacity constraints. With the public local and regional transport services, with the help of
adoption of the second railway package, this directive and compulsory public tendering. The proposal was replaced in July
Directive 95/18/EC were amended by Directive 2004/49/EC of 2005 by a new Commission proposal (COM(2005) 319). In May
29 April 2004. The aim was to harmonise the legislative 2007, the Council of the European Union and the European
framework in the Member States and to develop common Parliament finally agreed on the restructuring of public
safety targets and methods. A system was introduced for the passenger transport in the form of Regulation (EC) No
issuing, content and validity of safety certificates, and the 1370/2007. In addition to the tendering of transport services this
principle of an independent technical investigation in the regulation permits, in certain circumstances, the direct awarding
event of accidents was established. The key elements of of services to small and medium-sized enterprises as well as the
common safety systems for infrastructure managers and so‑called ‘in-house businesses’. Hence cities and regions may
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decide to provide public passenger transport services making a major contribution to strengthening rail transport,
themselves. The principle of subsidiarity was clearly emphasised which is an environmentally friendly mode of transport;
throughout. In addition, the new regulation covers further — in its resolution of 12 July 2007 on the implementation of
elements, including: (a) the prohibition of service providers from the first rail package, the Parliament urged the full
protected markets operating in other markets; (b) provisions for implementation of this package and called for prompt
the establishment of social standards and quality criteria; and (c) legislative steps to be taken against Member States who
provisions in order to limit the duration of public service fail to comply with their obligations of implementation.
contracts. The Parliament also considered the separation of railway
networks and railway operations to be a key issue of rail
Role of the European Parliament policy and stressed the need for an independent and
In the area of road transport, Parliament has called for, and transparent regulating body. Furthermore, it drew attention
supported, the gradual opening up of the market for road in this resolution to numerous examples of distortion of
freight and passenger transport operations in numerous competition that still exist in rail transport.
resolutions. At the same time, it has repeatedly emphasised Regarding the opening up of the market for urban, suburban
that liberalisation must go hand in hand with harmonisation, and regional services, Parliament, in November 2001,
including in the area of social aspects and transport safety. substantially amended the Commission proposal concerning
In the area of rail transport, Parliament has also repeatedly such services by placing stronger emphasis on the subsidiarity
principle and freedom of choice in favour of direct award and
advocated the gradual opening up of national markets, taking
the self-provision of transport services locally by the
proper account of social aspects, and urged the Member
competent authorities and softening the compulsory
States to step up their efforts. Specifically:
tendering requirement. The Commission subsequently
— during the legislative procedures for all of the three railway submitted a new proposal (COM(2005) 319) in July 2005. In the
packages, Parliament successfully pressed for rail transport subsequent legislative procedure to the new regulation ((EC)
markets to be opened up more quickly than originally No 1370/2007), Parliament succeeded in carrying through
envisaged by the Council of Ministers; substantial parts of its original position.
— Parliament has supported and shaped the other key
elements of the strategy for revitalising the railways and g Nils Danklefsen
creating an integrated European railway area with a view to July 2008
4.6.3. Land transport: harmonisation of legislation

A single European market for transport cannot be created without harmonisation of the legal provisions in the Member
States. These alignments are, in particular, fiscal, social, technical, administrative and political.
Legal basis individual Member States with regard to technical

4.6.1.
requirements, safety rules, signalling, track gauge and
control systems continue to stand in the way of creating a
legally and technically integrated European railway area,
Objectives and are making it more difficult for the railway industry to
A common transport policy aimed at establishing fair compete with other modes of transport. Gradual
conditions of competition and guaranteeing freedom to harmonisation of these technical requirements is
provide services implies the need to harmonise Member indispensable in order to establish interoperability between
States’ transport legislation. This particularly applies to taxation the individual national rail systems.
(VAT, vehicle taxes and fuel taxes), technical specifications
(maximum authorised dimensions and weights, safety
Different authorisation procedures and measures on
standards), social provisions and rules concerning other forms
environmental and consumer protection also necessitate a
of State intervention, such as subsidies.
degree of harmonisation in order to avoid distortion of
In the area of rail transport, this above all concerns competition and make it easier for new companies to access
technical requirements. Significant differences between the the network.
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4 6
Achievements harmonises the maximum dimensions of buses in the

European Union.
A. Road transport
1. Tax harmonisation b. Roadworthiness tests
a. VAT and excise duty Directive 96/96/EC of 20 December 1996 concerns the
General agreement has been reached on the levying of VAT on approximation of the Member States’ legislation relating to
transport services. There has also been some harmonisation of roadworthiness tests for motor vehicles and their trailers It
excise duties on fuels, with the adoption of Council Directives provides for regular compulsory testing of motor vehicles for
92/81/EEC and 92/82/EEC of 19 October 1992. the transport of passengers or goods. Such tests include
exhaust emissions and speed limitation devices where these
b. Charging of infrastructure costs are compulsory. Directive 2000/30/EC of 6 June 2000
Directive 1999/62/EC of 17 June 1999 on the charging of introduces unannounced technical roadside inspections, in
heavy goods vehicles for the use of certain infrastructures laid order to detect irregularities that may be covered up in
down provisions on tolls and charges for the use of motorways anticipation of the annual test.
and multi-lane roads, bridges, tunnels and mountain passes,
3. Administrative harmonisation
with minimum and maximum rates. This directive was
amended by Directive 2006/38/EC of 17 May 2006 (known as a. Drivers’ legal obligations
the ‘infrastructure charging directive’ or ‘Eurovignette Directive 91/439/EEC of 29 June 1991 on driving licences
directive’). Apart from harmonisation of rates in all Member harmonised the format of licences and categories of vehicles,
States and uniform methods for calculating infrastructure introduced the principle of mutual recognition and laid down
costs, the new directive places far greater emphasis on the basic requirements in respect of health and competence.
‘polluter pays’ principle and the internalisation of external Directive 96/47/EC of 23 July 1996 provided for an alternative
costs. It provides for greater differentiation between charges, ‘credit card’ format for driving licences. The recast directive on
taking account of environmental aspects or congestion, and driving licences, Directive 2006/126/EC of 20 December 2006,
consequently provides the Member States with an instrument makes this credit card format compulsory from 2013 for all
for traffic management. In certain regions additional toll new Community driving licences. In addition, at the latest 26
charges may be levied in order to tackle the problem of years after the directive comes into force, all existing driving
environmental damage, including poor air quality, or to invest licences must also comply with the new plastic card format.
in more environmentally friendly modes of transport such as Throughout the EU there are at present approximately 110
railways. On 8 July 2008 the Commission presented a package different driving licence formats. This harmonisation should
of initiatives to make transport greener (‘greening transport’ improve transparency for the public, police services and
package) (COM(2008) 433). This brought it into compliance driving licence authorities, and make driving licences more
with a stipulation of the infrastructure charging directive that, difficult to forge. The directive also contains elements aiming
two years following entry into force, it was to present a to combat the widespread phenomenon of driving licence
generally applicable, transparent and comprehensible model tourism. It stipulates that each individual can hold only one
for the assessment of all external costs, including environment, driving licence, and that issue of a licence must be refused if
noise, congestion and health-related costs, to serve as the the applicant’s licence has been restricted, suspended or
basis for future calculations of infrastructure charges. This is to withdrawn in another Member State.
be accompanied by a strategy for the stepwise
Regulation (EC) No 484/2002 of 1 March 2002 introduced a
implementation of the model for all modes of transport. In
uniform driver attestation. The attestation confirms that a lorry
addition to a strategy for the internalisation of external costs
driver engaged in international freight transport is employed
for all modes of transport (COM(2008) 435) and further
in accordance with the legislation and administrative
initiatives, the Commission proposed an amendment of the
regulations of the Member State in which the carrier is
infrastructure charging directive as a key element (COM(2008)
436). This envisaged the establishment of a framework established. The driver attestation is aimed at countering social
enabling Member States to calculate and vary tolls according dumping and distortion of competition.
to traffic-based air and noise pollution and traffic volume. Directive 2003/59/EC of 15 July 2003 lays down minimum
2. Technical harmonisation standards for the initial qualification and periodic training of
drivers of certain goods or passenger transport vehicles. The
a. Maximum authorised dimensions and weights
aim is to ensure that drivers are able to adapt to the changing
Directive 96/53/EC of 25 July 1996 laying down maximum conditions in their field of work.
dimensions and weights settled an issue which is a
fundamental one for competition between transport b. Vehicle registration
operators. In addition, Directive 97/27/EC concerning the Council Directive 99/37/EC of 29 April 1999 harmonises vehicle
masses and dimensions of certain categories of motor vehicles registration documents and simplifies checks on ownership
and their trailers was adopted on 22 July 1997. Directive and transfers between residents of two different Member
2002/7/EC of 18 February 2002 amending Directive 96/53/EC States. Council Regulation (EC) No 2411/98 of 3 November
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1998 on the recognition of the distinguishing sign of the telematic applications for freight services, qualifications of staff
Member State in which motor vehicles are registered makes it engaged in international transport operations, and noise
compulsory for number plates to show the European flag and problems.
the international abbreviation for the Member State of
The two directives have been amended by Directive 2004/50/
registration.
EC of 29 April 2004 and brought up to date with the latest
4. Social harmonisation developments in technology. At the same time, the scope of
a. Working time the directive on the conventional rail system has been
The transport sector was excluded from Directive 93/104/EC of extended to include the whole of the European rail network, in
23 November 1993 on working time. Directive 2002/15/EC of order to meet the demands posed by the full opening up of
11 March 2002 on the organisation of the working time of the rail network to freight transport services scheduled for
persons performing mobile road transport activities is aimed 2007. Directive 2008/57/EC combines Directive 96/48/EC on
at establishing minimum requirements in relation to working the interoperability of the trans‑European high‑speed rail
time in order to improve the health and safety of drivers. system and Directive 2001/16/EC on the interoperability of the
Under the directive, average weekly working time is 48 hours. trans-European conventional rail system. The core element of
This may be increased to 60 hours provided that an average of the directive is the principle of mutual recognition. When a
48 hours per week is not exceeded in any four‑month period. vehicle has already been placed in service in one Member
State, other Member States can only invoke national rules to
b. Driving time impose additional requirements and further verifications if this
Regulation (EC) No 3820/85 of 20 December 1985 laid down is strictly necessary for verifying or guaranteeing the technical
rules on driving time, including maximum authorised periods compatibility of the vehicle with the relevant network. The
of continuous driving, rest periods and driving time per week. national authorities can only refuse an authorisation for
It has been replaced by Regulation (EC) No 561/2006 of 15 placing in service if the existence of a ‘substantial safety risk’
March 2006, which amended the rules on driving and rest can be demonstrated. In March 2005 representatives of the rail
periods for professional drivers in favour of the introduction of industry and the Commission signed a memorandum of
more frequent rest periods, a reduction in exemptions and understanding on the deployment of the European rail traffic
improved, simplified checking and penalty measures. In management system (ERTMS). The ERTMS is designed to
addition, the new regulation amended Regulation (EC) No harmonise European signalling systems and introduce a
3821/85 of 20 December 1985, definitively introducing the uniform automatic speed control system, based on the latest
digital tachograph and making it easier for checks to be developments in telecommunications technology. A timescale
made on infringements in future. of 10 to 12 years has been set for universally introducing the
Directive 2006/22/EC of 15 March 2006 is an accompanying ERTMS.
measure which lays down minimum requirements and the b. European Railway Agency
minimum number of checks to be carried out by Member
In order to assist the Commission and the Member States in
States in connection with monitoring compliance with the
improving the interoperability and safety of the European rail
above regulations.
network, a European Railway Agency, with its seat in Lille and
c. Users Valenciennes in France, was set up under Regulation (EC) No
The Council has adopted Recommendation 98/376/EC of 881/2004 of 1 May 2004, within the framework of the second
4 June 1998 on a parking card for disabled people. Since 1 railway package. The main task of the Agency is the gradual
January 1999 this has entitled card-holders to use special harmonisation, registration and monitoring of TSIs and the
parking spaces throughout the Community. preparation of common safety targets for European railways.
The Agency itself has no decision-making powers, but, with
B. Rail transport the assistance of groups of experts, draws up draft decisions
1. Technical harmonisation for the Commission. A proposal to extend the competences of
a. Interoperability the Agency in the field of interoperability (COM(2006) 785) is
With the adoption of Directive 96/48/EC of 23 July on the currently going through the legislative procedure between the
interoperability of the trans‑European high‑speed rail system Council and Parliament.
and Directive 2001/16/EC of 19 March 2001 on the 2. Social harmonisation
interoperability of the trans‑European conventional rail system,
Directive 2005/47/EC of 18 July 2005 lays down the working
the EU began a process designed to enable the through use of
conditions of mobile workers engaged in interoperable cross-
the different railway systems in the Member States and to
border services in the railway sector. It is based on an
allow a smooth, safe passage from one Member State network
agreement between the European social partners in the rail
to another. In order to implement this legislation, a number of
industry.
technical solutions (so-called ‘technical specifications for
interoperability’ or TSIs) have already been drawn up, focusing Directive 2007/59/EC, adopted as part of the third railway
initially on key aspects such as control/command, signalling, package, aims to harmonise the minimum qualification
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4 6
requirements and thus the certification of locomotive drivers for a licence to be granted, and the licensing procedure, were
in the EU. A train driver’s licence issued by one Member State laid down.
must be recognised by the other Member States. This mutual
recognition of harmonised train drivers’ licences is regarded Role of the European Parliament
as an essential component in creating a European railway
area. The directive specifies the tasks for which the Parliament has used its legislative powers to support, in
competent authorities of the Member States, train drivers principle, most of the Commission’s proposals for
and other stakeholders in the sector, in particular railway harmonisation, whilst at the same time emphasising certain
undertakings, infrastructure managers and training centres, aspects to which it attaches particular importance.
are responsible. — During the legislative procedure on the infrastructure
charging directive in 2005, Parliament successfully pressed
The directive states that all train drivers must hold a licence
for the scope of the directive to be extended to include all
demonstrating that they satisfy minimum conditions as
vehicles over 3.5 tonnes, and for the environmental aspects
regards medical requirements, basic education and general
of the directive to be strengthened. In negotiations with
professional skills. They must also hold additional certificates
the Council of Ministers, Parliament was able, in particular,
attesting that they have received specific training relating to
to successfully argue that the new directive should include
the routes operated, the equipment used and the operational
a roadmap for the internalisation of external costs for all
and safety procedures specific to a particular company.
modes of transport. The new Commission proposals on
3. Passenger rights greening transport are in large part due to the pressure
Also as part of the third railway package, in autumn 2007 the exerted by the European Parliament in the field of
Council and Parliament adopted Regulation (EC) No environmental policy.
1371/2007 on rail passengers’ rights and obligations. This — In the area of social legislation, Parliament made a
regulation establishes rules on such matters as compensation substantial contribution to improving and simplifying the
in the event of substantial delays and undertakings’ liability for regulation on driving and rest time. In addition, Parliament
passengers and their luggage in the event of accidents. When secured a significant increase in checks on driving and rest
the regulation comes into force at the end of 2009, passengers time. In the negotiations on the working time directive,
who suffer delays will be entitled to a 25 % reduction on the Parliament successfully argued that the provisions should
ticket price for a 60 minute delay, and a 50 % reduction for a apply not only to employed drivers but also, from 2009, to
delay of 120 minutes or more. Railway undertakings will also self-employed drivers, who make up some 40 % of all
be responsible for providing comprehensive information to drivers.
passengers on such matters as passenger rights, timetables,
fastest journeys, lowest fares, accessibility, access conditions — With regard to the rights of rail passengers, extending the
and availability of facilities for the disabled. Railway scope of the directive was among Parliament’s
undertakings must also introduce non-discriminatory access achievements. Apart from the possible exemptions
rules for the transport of disabled people and people with described above, this will give passengers clear rights and
reduced mobility. However, under certain conditions, national entitlement to compensation not only on cross-border rail
long-distance rail services and urban, suburban and regional services but also on domestic services.
services may be exempt from the regulation. — In its resolution of 15 June 2006, Parliament expressly
4. Administrative harmonisation supported the introduction of the ERTMS/ETCS rail
signalling system and put forward many proposals on the
a. Admission to the occupation (operating licences) transition to this system and its financing.
Directive 95/18/EC of 19 June 1995 provides that, in order to
be allowed to exercise its right of access to the infrastructure in — In its resolution of 12 July 2007 on implementation of the
all of the Member States, a railway undertaking must have an first railway package, Parliament called for further revision
operating licence. The licence is issued by the Member State in of the directive on HGV charges and took the view that, to
which the company is established, subject to compliance with achieve fair intermodal competition, tariffs for road
certain common conditions (good repute, financial fitness and transport should be adjusted in line with the rail route
professional competence), and is valid throughout the pricing system, tolls should be made mandatory for all
Community. The directive has been amended by Directive lorries over 3.5 tonnes on all roads in the EU without
2001/13/EC of 26 February 2001, which extended the loopholes, and external costs should be internalised.
provisions on the issuing of licences to cover almost all railway
undertakings with just a few exceptions. In addition, the safety, g Nils Danklefsen
economic and financial conditions required to be met in order July 2008
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4.6.4. Road traffic and safety provisions
Improving road safety is a prime objective of EU transport policy. Technical measures taken by the EU include regulations
and directives on making vehicles safer, safer transport of dangerous goods, and road infrastructure safety.
Legal basis 2. Technical condition of vehicles

Article 71 Treaty establishing the European Community (EC) Harmonisation of national legal provisions on the technical
(Treaty of Lisbon: Article 91 of the Treaty on the Functioning of condition of vehicles concerns mainly the following points.
the European Union). — Vehicle testing (Directive 77/143/EEC of 29 December
1976, repeatedly modified).
Objectives — Compulsory use of seat belts in motor vehicles under
The aim is to improve road safety and in this way contribute to 3.5 tonnes (Directive 91/671/EEC of 16 December 1991).
long-term sustainable mobility. Every year in the EU there are This directive was modified by Directive 2003/20/EC of 8
still more than 40 000 people killed and 1.7 million injured in April 2003, which provides for children to be protected by
1.3 million accidents. There are two different areas of the use of special child restraint systems. It also stipulates
application of the safety concept: in relation to road users and that seat belts must be worn in all vehicles in which they
people on board vehicles (passengers and staff ), and in are fitted, which affects coaches, for example.
relation to goods transport and people and places involved
— Directive 92/6/EEC of 10 February 1992 introduced
with the transport of dangerous goods.
compulsory installation of speed limitation devices in
motor vehicles over 3.5 tonnes. Directive 2000/30/EC of
Achievements 6 June 2000 introduced the possibility of roadside technical
1. General inspection of commercial vehicles. Directive 2002/85/EC of
5 November 2002 extended the obligation to use speed
In June 2003 the Commission published the ‘European road limitation devices to all vehicles over 3.5 tonnes.
safety action programme 2003–10’. In 1993 and 1997 the
Commission had already proposed action programmes for — Directive 2003/102/EC of 17 November 2003 on the
road safety. The new action programme endorsed the protection of pedestrians and other vulnerable road users
objective set out in 2001 in the White Paper on transport before and in the event of a collision provided for less
policy, to halve the number of road deaths in the EU by 2010. dangerous frontal structures on new vehicles from 2005.
The action programme envisages a package of measures in Directive 2005/66/EC of 26 October 2005 on the use of
various areas, including: frontal protection systems on motor vehicles aims to
provide better protection for road users in the event of a
— improving road users’ behaviour, by pursuing efforts to collision with a vehicle fitted with a frontal protection
combat dangerous practices, increased enforcement of the system. In mid-2008, the Council of Ministers and the
rules and harmonisation of penalties, and dissemination of European Parliament agreed another regulation to increase
exemplary practices; protection for cyclists and pedestrians even further (not yet
— technical measures to make vehicles safer, in particular published in the Official Journal). In addition to passive
making it compulsory to wear seat belts in coaches, a safety features such as an improved design of the frontal
standardised system for fixing child seats, improved crash structure on motor vehicles, the new regulation also
protection in vehicles, using modern communications and includes provisions for the introduction of brake assist
information technologies (‘eSafety’) to develop traffic systems.
management and information systems, and automatic — Directive 2003/97/EC of 10 November 2003 stipulates that
emergency calls when accidents occur; from 1 January 2007 all HGVs registered in the EU must be
— technical measures to improve the safety of road fitted with additional rear-view mirrors or devices to
infrastructure. ensure vision in the ‘blind spot’. Directive 2007/38/EC
provides for many HGVs that are already registered to be
In February 2006 the Commission published a communication fitted with these mirrors.
on the mid-term review of the European road safety action
programme (COM(2006) 74). This shows that, despite a 3. Transport of dangerous goods
reduction in the number of road deaths, considerable further Directive 94/55/EC of 21 November 1994 extended to national
efforts are needed if the main aim of the action programme transport the rules for international transport in the European
— halving the number of road deaths by 2010 — is to be Agreement concerning the International Carriage of
achieved. Dangerous Goods by Road (ADR). Directive 95/50/EC of 6
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4 6
October 1995 introduced uniform procedures for checks. comparative studies of the circumstances in which accidents
Directive 2001/26/EC of 7 May 2001 modified Directive 95/50/ occur and facilitates dissemination of information and
EC to introduce uniform procedures for checks on the proposed solutions.
transport of dangerous goods by road. In its recommendation 2001/115/EC of 17 January 2001 to
Council Directive 96/35/EC of 3 June 1996 on the appointment the Member States on the maximum permitted blood
and vocational qualification of safety advisers for the transport alcohol content for drivers, the Commission proposed a
of dangerous goods by road, rail and inland waterway obliges maximum of 0.5 mg/ml for all vehicle drivers and 0.2 mg/ml
every undertaking concerned with this transport to appoint for HGV drivers.
one or more suitably qualified safety advisers to monitor
In its Recommendation 2004/345/EC to the Member States,
compliance with the rules.
the Commission proposed procedures for enforcement of
In December 2006 the Commission submitted a proposal to the rules on drink-driving, speeding and the use of seat
update and harmonise the existing legislation (COM(2006) belts.
852).
4. eSafety Role of the European Parliament
In its communication ‘Information and communications In many resolutions the European Parliament has underlined
technologies for safe and intelligent vehicles’ (COM(2003) 542) the importance of road safety in the Community. It expressed
of 15 September 2003, the Commission expresses its intention its views in its resolution of 29 September 2005 on the
of supporting the development, large-scale deployment and Commission’s latest action programme. Parliament endorsed
use of modern safety systems based on new information and the Commission’s guiding principles for this programme and
communications technologies. On this basis, what is known as called for further measures such as a Europe-wide road safety
the eSafety initiative was introduced. Intelligent vehicle campaign, more uniform road signs and increased use of new
safety systems include automatic speed adjusters, devices to technologies such as: (a) seat belt reminders; (b) advanced
prevent involuntary lane departures, collision warning devices restraint systems; (c) electronic speed limitation systems;
and automatic emergency call systems in the event of an (d) ‘alcolocks’ which block the car if the driver is drunk; and
accident (eCall). (e) new cars to be fitted with an automatic emergency call
5. Safety of road infrastructure system (eCall) from 2009.
Directive 2004/54/EC of 29 April 2004 lays down minimum Parliament also called on the Commission to propose
safety requirements for tunnels in the trans-European road legislative measures with regard to maximum alcohol limits
network. These rules are concerned with the organisational, (in line with Parliament’s recommendation of 0.5 mg/ml for
technical and operational aspects of tunnels. The directive adults and 0.2 mg/ml for new drivers). In its resolution of
aims to impose new and harmonised safety rules on all tunnels 18 January 2007 on the mid-term review of this programme,
longer than 500 metres that are in use, under construction or Parliament once more adopted an extensive list of
being planned. demands.
In mid-2008, the Council of Ministers and the European In the context of its legislative powers, Parliament basically
Parliament agreed a directive on the safety management of supported the Commission proposals, and at the same time
road infrastructure (not yet published in the Official Journal). contributed a number of proposals for improvements to the
The directive obliges the Member States to evaluate the legislation. For example in the negotiations on the directive on
transport safety of road construction schemes and to carry out safety in tunnels, Parliament improved the provisions on
safety audits. The new directive also contains regulations on emergency exits, lighting and escape routes. In addition the
safety management in the road network and on road safety directive takes account of Parliament’s calls for more attention
checks. The directive also lists various measures for making to be paid to the needs of disabled people in the construction
sections of roads with accident black spots safer. of emergency exits.
6. Miscellaneous
The Commission has introduced a databank on road traffic g Nils Danklefsen
accidents (CARE), which makes it possible to undertake July 2008
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4.6.5. Air transport: market access
Since 1997 the EU enjoys an internal European market of air transport. The Community aviation policy aims at
harmonising access to professions relating thereto, ensuring free access to the market and concluding agreements with
third countries for opening airspaces. In 2007 an ‘open skies’ agreement has been signed between the EU and the USA.
Legal basis B. Open skies agreements with third countries

Article 80 of the Treaty establishing the European Community Following the emergence of the internal aviation market in
(EC) (Treaty of Lisbon: Article 100 of the Treaty on the 1992, the Commission was of the opinion that Member
Functioning of the European Union). States should cease to conclude bilateral agreements with
third countries. Since 1994, the United States had been
seeking ‘open skies’ agreements with other countries.
Objectives
Following a case brought by the Commission, the Court of
— Creating an internal aviation market on Community Justice of the European Communities Cruled on 5 November
territory. 2002 that sections of the bilateral ‘open skies’ agreements
— Taking account of the global aspect of air transport by eight EU Member States had concluded with the United
means of a coherent Community aviation policy towards States were incompatible with Community law. It also stated
third countries. that Member States were not authorised to enter into
obligations with third countries in areas in which common
— Improving the competitiveness of European airlines.
rules applied, if the agreements in question would affect
those common rules. The Court’s judgment provided the
Achievements basis for Regulation (EC) No 847/2004 of 29 April 2004 on the
negotiation and implementation of air service agreements.
A. Internal aviation market
Ensuring a harmonised approach in the negotiation,
Following the adoption and entry into force of a total of three implementation and application of bilateral agreements is an
‘liberalisation packages’, a Community aviation market has been integral part of the regulation. Provision is made for standard
in place since 1997. The third package consisted of three clauses to guarantee the agreements’ compliance with
regulations. Regulation (EEC) No 2407/92 of 23 July 1992 set out Community law. In addition, under the so-called horizontal
requirements for awarding air carrier licences. In particular, air mandate the Commission can negotiate Community
operators must be based in an EU Member State, be directly or agreements with third countries. A horizontal agreement
indirectly monitored by a Member State or national authorities of aligns the provisions of all agreements between EU Member
a Member State, and provide air transport as their main activity. States and a given third country in a single agreement. In the
Regulation (EEC) No 2408/92 of 23 July 1992 abolished the last few years, several agreements of this kind have been
restrictions regarding cabotage with effect from 1 April 1997, signed or concluded (for instance with Australia, Chile,
permitting air carriers from all Member States access to all intra- Croatia, Georgia, Lebanon, Malaysia, Mexico, Morocco, New
Community routes for the domestic and international Zealand, Singapore and Ukraine).
transportation of passengers, cargo and mail. Regulation (EEC)
After more than four years of negotiations, the EU and the USA
No 2409/92 also regulated the liberalisation of air fares. In July
signed an ‘open skies’ agreement at the end of April 2007. This
2006, the Commission proposed a revision of the third
pivotal aviation agreement aims to provide European airlines
liberalisation package (COM(2006) 396), the aim being to adapt
with better access to the US market by lifting restrictions on
the existing regulations (outlined above), which date from
route rights. The same applies to US airlines wishing to land at
1992, to the current circumstances of the aviation sector, and to
an EU airport. Following approval by the European Parliament,
consolidate them into one single regulation. In mid-2008 the
the agreement entered into force on 30 March 2008.
Council and the European Parliament agreed on the new
Negotiations on a second phase of this agreement began
regulation (not yet published in the Official Journal). This
in May 2008.
regulation covers areas such as the financial conditions for
granting an operating licence and also the regular assessment A central pillar of the EU’s external aviation policy currently
of the financial performance of air carriers. It sets out criteria for focuses on concluding further ‘open skies’ agreements with
the suspension and revocation of operating licences, as well as other important countries (for example Canada, India, China
rules on traffic distribution between airports, and covers the and Australia). ‘Open skies’ agreements aim at much closer
proper application of social legislation and the imposition of cooperation than normal aviation agreements. They cover not
public service obligations. Furthermore, it improves price only cooperation in the fields of competition rules and market
transparency for the passenger by prohibiting the practices of opening but also other areas such as aviation safety and
false bait advertising and confusing price information. environmental impact.
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4 6
C. Additional achievements and the extension of access rights, including to cabotage (see
1. Access to the ground-handling market its resolution of 14 February 1995 on the Commission
The ground-handling market is governed by Directive 96/67/EC communication ‘The way forward for civil aviation in Europe’).
of 15 October 1996. Prior to this, the provision of ground- At the same time, it has recommended that liberalisation
handling services at airports within the EU was a monopoly should proceed at a cautious pace to take into account its
controlled by a small number of service providers. With the effects with regard to safety, quality of service, fare
entry into force of this directive, these services were gradually transparency and employee working conditions. In its
opened up to competition and full liberalisation was achieved in resolution of 4 May 2000, Parliament insisted that safety
December 2002. The directive is primarily concerned with concerns should remain an underlying principle in all
introducing free market access for the providers of ground- measures and policies in air transport.
handling services. Furthermore, for certain categories of service The recently concluded aviation agreements with third
there must be a choice of at least two providers at the larger countries were approved by the European Parliament. However,
airports in the EU. The Commission presented a report on the in its resolution of 17 January 2006 on air transport relations
application of the directive (COM(2006) 821) in January 2007. with Russia, Parliament stressed that no comprehensive
2. Reservation systems agreement should be concluded without the immediate and
complete abolition of Russian overflight charges.
a. Computer reservation systems (CRS)
Computer reservation systems (hereinafter ‘CRS’) are crucial to In its resolution of 17 January 2006 on Community external
the efficiency of air transport. There is strong interest from aviation policy, Parliament insisted on the need for a coherent
passengers wishing to find the best-value fares as well as from strategy for developing a common external aviation policy and
smaller companies anxious to have access to the system. outlined the requirements in terms of market opening, safety
Regulation (EEC) No 2299/89 of 24 July 1989 on a code of standards, social policy and the environment.
conduct for computerised reservation systems was, therefore, The European Parliament played a crucial role in shaping the
adopted. The code of conduct was established to promote recast of the regulation on common rules for the operation of air
transparency and to prevent any market abuses or distortions of transport services in the Community (not yet published in the
competition. Council Regulation (EC) No 323/1999 of 8 February Official Journal). One of Parliament’s particular achievements
1999 adapted the code of conduct to new market conditions. was to put an end to the practices of false bait advertising and
The code of conduct regulates how travel bookings are confusing price information (on the Internet, for example). In
managed by air carriers and rail transport operators, CRS and future, the final price payable, including all applicable taxes and
travel agents. In November 2007 the most recent developments charges, surcharges and fees, must be displayed at the start of
in the aviation market and information technology, and also the the booking process. Furthermore, ‘optional price supplements’,
development of alternative distribution channels, led the such as for checking in additional hold baggage, must be
Commission to propose further adapting this code of conduct communicated in a clear, transparent and unambiguous way at
for CRS to promote greater competition (COM(2007) 709). the start of any booking process, and their acceptance by the
customer must be on an ‘opt-in’ basis.
Parliament has supported the development of the Community g Nils Danklefsen
aviation market. It therefore argued in favour of code sharing July 2008
4.6.6. Air transport: competition and passenger rights

In order to ensure fair competition in the air transport field, several regulations were adopted governing relevant areas
such as business practices, State aid, prices, emissions trading and airport charges. Passenger rights are also protected by
the equivalent legislation.

Article 80(2) of the Treaty establishing the European The objective is to lay down the procedure for implementing
Community (EC) (Lisbon Treaty: Article 100(2) of the Treaty on the Treaty’s provisions on competition to air transport, taking
the Functioning of the European Union), completed by the into account the unique features of the sector, which to an
general provisions on consumer protection, competition and extent is still characterised by State aid for national airlines and
on the freedom to provide services (3.2.3). airports and also by cartel-related problems caused by the
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formation of global alliances. As well as the creation of fair 3. Tariffs
conditions of competition, the competition policy is intended The matter is currently governed by Council Regulation (EEC)
to encourage airlines to provide passengers with a cost- No 2409/92 on fares and rates for air services (for intra-
efficient and high-quality service. Recently, the European air Community routes alone), part of the ‘air transport package’
transport policy has concentrated on the strengthening of adopted in June 1992. As a rule, airlines can set their own
consumer rights with regard to safety or overbooking. prices, but the regulation contains a number of safeguard
clauses to avoid overly high or low (dumping) prices.
Achievements 4. Allocation of timetable slots
A. Competition The continuous growth of air transport over the past decade
1. Agreements and business practices has increased the pressure on airport capacity. Regulation
(EEC) No 95/93 of 18 January 1993 was the first step towards
This subject is governed by the regulations of 14 December
establishing non-discriminatory rules for the allocation of time
1987 ((EEC) No 3975/87 laying down the procedures for the
slots for take-offs and landings at Community airports. As the
application of the rules on competition to undertakings in the
procedure was not regulated sufficiently clearly and was not
air transport sector and (EEC) No 3976/87 on the application of
uniformly applied in the Member States, there was a pressing
Article 85(3) of the Treaty to certain categories of agreements
need for an amendment. The new regulation of 21 April 2004
and concerted practices in the air transport sector). Through
((EC) No 793/2004) aimed primarily at redefining these time
these provisions, the Commission was empowered to grant
slots as a right of usage. According to the regulation, slots
exceptions to various categories of agreement and concerted
represent a right to use the airport infrastructure for take-offs
practices, subject to certain conditions designed so that
and landings at specified times and on specified days, with no
competition is not eliminated or unduly restricted. These
right of ownership. A coordinator, appointed by the particular
regulations have been changed over time and adapted to
airport, is responsible for the allocation of slots. Whilst taking
current developments (including Regulations (EEC) No
into account the interests of established airlines, this regulation
2410/92 and (EEC) No 2411/92 of 23 July 1992 as well as
facilitated market access for new competitors, as 50 % of time
Regulation (EC) No 1/2003 of 16 December 2002).
slots were to be made available to them.
The Community took the global aspect of air transport into
5. Airport capacities and charges
account in Regulations (EC) No 411/2004 of 26 February 2004
and (EC) No 868/2004 of 21 April 2004. It thereby created the As part of the ‘airport package’, the Commission presented a
necessary legal basis for the application of the rules of air draft directive in January on airport charges, which is currently
traffic competition between the Community and third being discussed in the European Parliament. In the proposal,
countries, in order to avoid distortion to competition in the the Commission puts forward a range of mandatory principles
form of State aid or dishonest pricing policies from third- governing the setting of airport charges (COM(2006) 820).
country companies. In the same context of the ‘airport package’, the Commission
2. State aid has presented a communication setting out an action plan for
airport capacity, efficiency and safety at European airports
In 1984, the Commission established the criteria for the
(COM(2006) 819). The communication concentrates in
evaluation of State aid to airlines. In 1993, a committee of civil
particular on: (a) optimising the use of existing airport
aviation experts was set up which issued recommendations on
capacities; (b) encouraging complementarity between air and
State aid in its report of 1 February 2004. According to these
rail transport; (c) airports’ environmental dimension,
recommendations, the provision of State aid must meet
particularly as regards flight noise; and (d) the development of
certain conditions.
cost-effective technological solutions.
— It must be a ‘one-off’ measure.
6. Emissions trading in air transport
— It must be linked to a restructuring plan, which will be In its proposal of 20 December 2006 (COM(2006) 818), the
assessed and monitored by independent experts Commission calls for aviation activities to be included in the
appointed by the Commission, and should ultimately lead scheme for greenhouse gas emissions trading within the
to privatisation. Community. The emissions trading system operates as
— The relevant government must undertake to refrain from follows: enterprises receive certificates, which entitle them to
interfering in the commercial decisions of the airline, which discharge a precise volume of greenhouse gases. If they
in turn must not use the aid to finance new capacities. achieve the targets with their own measures, enterprises can
sell certificates they do not require on the market.
— The interests of other airlines must not be adversely
Alternatively, they must buy extra certificates on the market if
affected.
they discharge more greenhouse gases than are covered by
In September 2005, the Commission approved guidelines on certificates. In June 2008 the European Parliament and
financing airports and on granting start-up aid for airlines Council of Ministers were able to agree a compromise on a
departing from regional airports. ‘directive on including aviation activities in the scheme for
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4 6
greenhouse gas emission allowance trading within the 3. Rights of passengers with reduced mobility
Community’. All flights landing at and taking off from The Council of Ministers and the European Parliament agreed
European airports are accordingly to be included in this on a series of rights for passengers with reduced mobility in
scheme from 2012. Distortions of competition should Regulation (EC) No 1107/2006 of 5 July 2006. The regulation
therefore be eliminated and the environmental efficiency of includes the following elements.
air transport improved. Unlike the situation to date, allocation
is no longer based on historic emissions, but on a uniform — The creation, in all airports with over 150 000 passengers,
European benchmark. Airlines already using efficient aircraft of designated points which people with reduced mobility
today are thus being rewarded. In the initial period (2012), can approach to request assistance. They cannot be
emissions should be reduced by 3 % compared with the refused boarding, except in a few very strictly defined
period 2004–06 and by 5 % in the second period (from cases.
1 January 2013). — The airport operators are responsible for the provision of
these services free of charge. Those affected cannot be
B. Passenger rights
charged for any additional costs. The request for assistance
1. Overbooking, denied boarding, delays (for example to and from the aircraft) must be made
The first common rules for a system of compensation payment known by the persons concerned at least 48 hours before
in the case of denied boarding on scheduled flights were set departure.
out in Regulation (EEC) No 295/91 of 4 February 1991. Package
flights were governed by Directive 90/314/EEC. — All airlines (according to their passenger share) are to
contribute to the financing of these services.
On 17 February 2005, Regulation (EC) No 261/2004 of 11
February 2004 came into force, establishing common rules on 4. Insurance requirements for aircraft operators
compensation and assistance to passengers in the event of The objective of Regulation (EC) No 785/2004 of 21 April 2004
denied boarding, and of cancellation or long delay of flights. It was the harmonisation of the level of insurance in air transport,
was aimed at securing a higher level of protection for establishing the minimum levels of insurance cover per
passengers and as these events can cause serious passenger and per item of luggage. The minimum level of
inconvenience, passengers have the right to claim insurance in respect of third-party liability was also established.
compensation. In the event of denied boarding due to The rules are equally valid for Community airlines as for non-
overbooking or cancellation of flights, passengers’ rights EU aircraft operators and apply to damage occurring in flight
include reimbursement of their tickets, a free return flight to and on the ground. As well as accidents, insurance must also
the point of departure or a later flight to their destination, or cover the risks of war, hijackings, acts of terrorism and
compensation (staggered up to EUR 600 for flights of over sabotage. Aircraft operators are obliged to present insurance
3 500 km). Additionally, meals, refreshments, means of certificates to the competent Member State authorities.
telecommunication and hotel accommodation if necessary
must also be made available. In the event of a delay, Role of the European Parliament
passengers have the right to compensation depending on the
In numerous reports and statements, the European Parliament
length of the delay.
(EP) emphasised the significance of a common air transport
2. Black list of unsafe airlines policy as well as stronger competition between airlines. In the
The Council and the European Parliament drew up a blacklist resolution of 4 May 2000, Parliament put forward the opinion
of unsafe airlines in Regulation (EC) No 2111/2005 of 14 that the development of the internal market for European air
December 2005, thus strengthening passengers’ right to transport had contributed positively to competition and that
information. The EU-wide blacklist will be updated at least passengers now have at their disposal an extensive range of
every three months. It contains the names of all airlines where flights at often cheaper prices. However, other elements such
there is evidence of serious safety defects or where it has as delays and overbooking must not be permitted to impair
become clear that the authorities responsible for an airline are the benefits of liberalisation. With regard to State aid, the EP
unwilling or unable to implement safety norms or oversee an welcomed the end, as announced by the Commission, of the
aircraft. Airlines on this blacklist are prohibited from flying in transition period for State aid for airlines and put forward the
EU territory. It will no longer be possible for an aircraft which view that State airlines should be made to exist within an
has been banned from taking off or landing in one Member entirely commercial environment.
State to fly to another Member State.
On the subject of time slot allocation, the EP requested in the
The ticket vendor is required — regardless of how the booking same resolution that the Commission submit a proposal for
is made — to inform passengers of the identity of the airline the revision of the relevant regulation. In the subsequent
with which they will fly, as soon as it has been determined. legislative procedure, the Parliament supported the
Passengers have the right to reimbursement or an equivalent Commission’s proposal in principle. However, it secured
flight, in the event of the reserved airline being added to the improvements for example with regard to the empowerment
black list after the booking was made. and independence of the coordinator and to market entry
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chances for new competitors, as well as the introduction of passengers with reduced mobility, the EP insisted successfully
sanctions in the event of misuse of a time slot. during the legislative procedure that the blind, visually
In 2005, the EP successfully pushed through the EU-wide black impaired, deaf, those with impaired hearing and the mentally
list of unsafe airlines. The Commission’s proposal originally handicapped should be included amongst those who must be
planned 25 different lists, one per individual Member State. given help at an airport.
Under pressure from Parliament, this regulation also
considerably strengthened passenger rights with regard to g Nils Danklefsen
information and compensation. For the transport of July 2008
4.6.7. Air transport: air traffic and safety rules

Several actions relating to the rules of traffic and safety of air transport were taken at the European level. The Galileo and
SESAR project and the creation of the single European sky are among the most important in this area.
Legal basis examines amendments to regional plans to be submitted to

the International Civil Aviation Organisation (ICAO) and sets
Article 80(2) of the Treaty establishing the European
and collects route charges on behalf of the contracting States.
Community (EC) (Treaty of Lisbon: Article 100(2) of the Treaty
on the Functioning of the European Union). On 8 October 2001, the European Community signed a
protocol providing for its accession to Eurocontrol. The
Objectives accession aims to ensure consistency between the two and to
improve the regulatory framework for air traffic management.
The creation of a single aviation market requires a first-rate air
transport system that allows Community air transport to 2. Single European sky
operate safely, smoothly and efficiently. This in turn On 10 October 2001, the Commission presented an action
necessitates the application of high uniform safety standards programme for the creation of the single European sky. In the
by airlines, optimum use of European airspace capacity and a ensuing legislative process, the Council and the European
high uniform level of air transport safety. Parliament agreed on the ‘single sky package’. This legislation
represents the most significant reform of EU aviation policy
At the end of the 1990s, pressure grew on the Community to
thus far. It includes a framework regulation setting out overall
improve the existing air transport system. The reasons for this
goals, as well as three detailed regulations on the organisation
were the steady rise in air travel, the fragmentation of
and use of airspace, the provision of air navigation services and
European airspace, shrinking airport capacity, the increasing
the interoperability of the European air traffic management
severity of delays and the use for military purposes of a large
network. The aim was to turn Europe’s sky into an integrated
section of the airspace. There was, therefore, a particular need
airspace governed by the same principles and rules by
for (a) higher safety standards, (b) better overall efficiency of air
December 2004. Framework Regulation (EC) No 549/2004 of
transport and (c) better use of airspace capacity.
10 March defines the overall goals. These include optimising
the use of airspace, establishing Community air traffic
Achievements management, creating larger and more efficient operational
1. International framework airspace blocks and increasing flexibility with regard to civil
and military use of airspace.
On 13 December 1960, five European countries signed the
International Convention relating to Cooperation for the Safety Service provision Regulation (EC) No 550/2004 of 10 March
of Air Navigation, to which 17 countries have now acceded. 2004 is intended to ensure the uniform application of
Extensive amendments to the convention in 1981 led to the common standards for air navigation services and lays down
emergence of the European Organisation for the Safety of Air rules for the certification of air navigation service providers.
Navigation, which includes the Permanent Commission and Airspace Regulation (EC) No 551/2004 of 10 March 2004
the Agency. The term ‘Eurocontrol’ refers to both the establishes common procedures for the design, planning and
convention and the organisation. The organisation is management of air traffic. It restructures the upper airspace
responsible for setting long-term objectives, coordinating according to operational and practical criteria, so that airspace
national policies and promoting vocational training. It also blocks are distinct from the borders of Member States.
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4 6
Interoperability Regulation (EC) No 552/2004 of 10 March When an aircraft from a third country lands at a Community
2004 governs the interoperability of the individual systems airport, a safety inspection may be carried out even in the
within the European air traffic management network. absence of any grounds for suspicion. Airlines operating
3. European Aviation Safety Agency aircraft that have repeatedly been identified in the past as
having safety flaws should be subject to more frequent
Regulation (EC) No 1592/2002 of 15 July 2002 established the
inspections. In the event of the discovery of safety flaws,
European Aviation Safety Agency (EASA). The EASA is an
aircraft could be grounded. To ensure the best possible
executive agency of the European Union, based in Cologne,
monitoring of safety standards, the information gathered by a
Germany. It is responsible for adopting safety rules applicable
Member State during an inspection must be passed on to the
to products, persons and organisations and for conducting
Commission and the other Member States.
inspections and investigations to ensure that these rules are
being observed. Further tasks of the EASA include awarding 7. European air traffic controller licence
airworthiness certificates, giving expert opinions and Directive 2006/23/EC of 5 April 2006 introduced common
supporting the Commission in the drafting of legislative requirements for the granting of a Community air traffic
proposals in the field of air transport. Regulation (EC) No controller licence. The rules on the training and licensing of air
216/2008 extended the EASA’s tasks to cover air operations, traffic controllers were also harmonised. This should ensure the
pilots’ licences and — within the limits set by the Chicago mobility of air traffic controllers within the EU.
Convention — the safety of third-country aircraft. 8. Air security
4. Galileo and SESAR Following the attacks of 11 September 2001, Regulation (EC)
The Commission first presented its proposal on the satellite No 2320/2002 of 16 December 2002 was adopted, establishing
navigation system Galileo in February 1999. The aim of the common standards, measures and procedures in the field of
programme is to equip the EU with independent technology civil aviation security. Some of the areas covered by the
that can be used for a broad range of activities, in particular in regulation are passenger security checks, security restricted
the transport field. Galileo, which was set up by Council areas at airports, staff checks, cockpit security, training and
Regulation (EC) No 876/2002 of 21 May 2002 as a joint air-to-ground communication. The regulation requires each
undertaking (by the Commission and the European Space Member State to adopt a national civil aviation security
Agency (ESA)), was due to be ready for use by 2008. Because of programme. In September 2005, the Commission presented a
difficulties in the negotiations on the Galileo concession, the proposal to revise the regulation (COM(2005) 429). In early
Council of Ministers called on the Commission in June 2007 to 2008 the European Parliament and the Council agreed on the
present alternative proposals for the financing of the project new regulation ((EC) No 300/2008 of 11 March 2008). This
by September 2007. regulated, among other things, in-flight security measures,
A technological component of the single European sky, the such as entry to the flight crew compartment, the carriage of
SESAR programme aims to develop a new generation of weapons on board and the deployment of in-flight security
European air traffic management. The project is to be carried out officers (‘sky marshals’).
in three stages: the definition phase (2005–07), the development 9. Dealing with accidents
phase (2008–13) and the deployment phase (2014–20). Directive 94/56/EC of 21 November 1994 establishing the
5. Technical requirements and administrative procedures fundamental principles governing the investigation of civil
for civil aviation (EU-OPS) aviation accidents and incidents seeks to provide the
To ensure high safety standards, Regulation (EEC) No 3922/91 competent authorities with an appropriate legal framework.
of 16 December 1991 set out to harmonise technical The Warsaw Convention, which governs air carriers’ liability in
requirements and administrative procedures in the field of civil the event of an accident, covers only international transport.
aviation. At the beginning of 2006, the Council and Parliament On 9 October 1997, the Community adopted Regulation (EC)
agreed to proceed with a revision of this regulation. This No 2027/97. It is applicable to accidents that befall Community
makes the technical requirements and administrative air carriers on domestic or international routes, in which
procedures (JAR-OPS) drawn up by the Joint Aviation passenger injury occurs. The liability limit is higher than that of
Authority part of Community law as ‘EU-OPS’. The regulation the Warsaw Convention. This regulation was then amended by
sets out detailed rules in a variety of areas, such as flight and Regulation (EC) No 889/2002 of 13 May 2002. With regard to
duty time limitations and rest requirements, instruments and airline liability in the event of an accident, Community law was
equipment, communication and navigation equipment, the brought fully into line with the Montreal Convention of 28 May
transport of dangerous goods and rules on cabin crew. 1999. This ensures the uniform application of certain rules
6. Safety of third-country aircraft regarding international air transport.
Directive 2004/36/EC of 21 April 2004 introduced a 10. New Commission proposals: single European sky II
harmonised procedure for the monitoring of the compliance In June 2008 the Commission presented the second single
of third-country aircraft with safety standards. European sky package (COM(2008) 389). It has four
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components. Firstly, it proposes several additions to the the option of carrying out spot checks on a non-discriminatory
original legislation on the single European sky (COM(2008) basis, even in the absence of any justifiable suspicion.
388). These include, in particular, binding performance targets Parliament was also able to prevent the Council from curbing
for air navigation service providers, a European network the Commission’s powers to take Community-wide measures
management function and binding deadlines for improving against foreign operators with inadequate safety standards. If a
Member States’ performance on ‘functional airspace blocks’. A Member State informs the Commission that it has banned a
further priority is the SESAR programme: the introduction of given air carrier from landing at its airports, the Commission
the second phase of SESAR (development phase, 2008–13). can now choose to extend that ban to the whole of the Union.
Thirdly, the Commission proposes extending the competence
With regard to the harmonisation of technical requirements
of the EASA to aerodromes and air traffic management and air
and administrative procedures in civil aviation, Parliament
navigation services (COM(2008) 390). Fourthly, the Commission
supported the Commission proposal. In addition, it insisted on
proposes to tackle the problem of insufficient airport capacity
practical rules for express freight services and detailed
and infrastructure. The airport slots allocated to aircraft
minimum requirements for cabin staff.
operators should be better coordinated with air traffic
management operations, and an observatory on airports Parliament believes that the interoperability of new
capacity should be set up. technologies and support for Europe-wide initiatives in
research and technological development (e.g. Galileo) for the
Role of the European Parliament creation of intelligent air transport systems should be made a
top priority. In its resolution of 3 October 2001 on Galileo,
Parliament has always closely monitored issues relating to air
Parliament emphasised the technical and industrial
safety. In particular, it has advocated the establishment of a
importance of the Galileo programme for European
single control authority. The European Parliament called for
aeronautics and telecommunications.
and supported the creation of a ‘single European sky’ (see, for
example, its resolution of 6 July 2000). In the legislative process In the negotiations on the new air safety regulation,
on this matter, Parliament was able to secure better civil– Regulation (EC) No 300/2008, the European Parliament was
military cooperation and closer cooperation in air traffic able to push through, among other things, strict rules on the
management between national troops, in spite of initial deployment of in-flight sky marshals.
resistance from Member States.
In the legislative process on the safety of third-country aircraft, g Nils Danklefsen
Parliament was able to ensure that Member States retained July 2008
4.6.8. Sea transport: access to the market and competition

European regulations for sea transport focus on the application in this sector of the principle of free movement of services
and the correct application of competition rules. The purpose of the application of these rules is to ensure a fair
competition at the Community level in the sea transport field.
Legal basis unfair competition from the merchant fleets of third countries
Article 80(2) of the Treaty establishing the European and against protectionist trends. The Community is particularly
Community (EC) (Treaty of Lisbon: Article 100(2) of the Treaty concerned to ensure that the principal maritime transport
on the Functioning of the European Union), supplemented by routes are kept open to all operators.
the Treaty’s general provisions on competition and the
freedom to provide services (3.2.3). Achievements
Objectives A. General
The aim is to apply the Treaty principle of freedom to provide Sea transport was the subject of a 1985 Commission
services to the Union’s sea transport industry and ensure that memorandum entitled ‘Progress towards a common transport
competition rules are complied with. This policy is based on policy — Maritime transport’ and a 1996 communication
the Community’s need to defend itself against the threat of ‘Towards a new maritime strategy’.
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4 6
The Commission Green Paper on sea ports and maritime against unfair pricing practices adopted by certain third-
infrastructures (COM(97) 678) contained a detailed review country shipowners.
of the industry and took a close look at the problems of port
Regulation (EEC) No 479/92 granted a further block exemption
charges and market organisation. It also discussed
in favour of ‘consortia’ between liner shipping companies
integrating ports into the trans-European networks and
(further details of which have been decided on a number of
maximising their role as transhipment points in the
occasions over the years).
intermodal transport chain.
In 2004, the Commission also submitted revised guidelines for
B. Market access State aid to maritime transport communication (COM(2004)
1. First action to apply the principle of freedom to 43). This indicated what aid — particularly for the purpose of
provide services promoting the entry of vessels in the registers of the Member
Regulation (EEC) No 4055/86 of 22 December 1986, applying States or a return to registration under their flags — was
the principle of freedom to provide services to maritime compatible with Community law.
transport between Member States and third countries, In February 2001 the European Commission submitted a
abolished the restrictions on EU shipowners after a transitional
package of measures to establish clear rules and to set up an
period. It prohibited future cargo-sharing arrangements with
open and transparent procedure for access to services in
third countries other than for liner shipping in exceptional
ports — the ‘ports package’ (COM(2001) 35). The purpose
circumstances.
of the proposal was to open up port services to competition
Regulation (EEC) No 4058/86 of 22 December 1986, on and thereby realise the fundamental freedoms guaranteed
coordinated action to safeguard free access to cargoes in by the EC Treaty and comply with its competition rules, both
ocean trade, enables the Community to take retaliatory at individual sea ports and between them. This was intended
measures if EU shipowners or ships registered in a Member to increase the efficiency of sea ports. In addition, the
State encounter restrictions on the free access to cargoes. financial relationships between sea ports or port systems and
2. The free market: liberalisation of cabotage providers of port services on the one hand and the State
In June 1992 the Council adopted a package of measures to authorities on the other hand were to be rendered
phase in the liberalisation of cabotage, i.e. access for carriers transparent. After the European Parliament had rejected the
not resident in a given Member State to the maritime proposal at third reading on 20 November 2003, the
transport market between the ports of that Member State. Commission made a fresh attempt to tackle the matter and
Council Regulation (EEC) No 3577/92 of 7 December 1992 laid on 13 October 2004 submitted a new proposal (COM(2004)
down definitively the principle of liberalisation of cabotage 654), which was intended to overcome certain criticisms of
from 1 January 1993 for Community shipowners operating points in the original, failed proposal. However, the European
vessels registered in a Member State. The liberalisation process Parliament also rejected the new proposal, this time at first
was completed on 1 January 1999. reading, on 18 January 2006, and some time later the
Commission withdrew it.
C. Competition rules
The Commission then carried out a comprehensive
On 22 December 1986 the Council adopted Regulations consultation process, which resulted in its submission in
(EEC) No 4056/86 and (EEC) No 4057/86 as part of the October 2007 of the considerably broader ‘Communication on
maritime package. The first of these regulations laid down a European ports policy’ (COM(2007) 616). In it the
the procedures for applying the rules on competition to
Commission again discusses the framework conditions of
international maritime transport to or from one or more
competition law within and between the ports and announces
Community ports and aimed to ensure that competition
guidelines for State aid to ports, for example. In addition, the
was not distorted by means of agreements. It exempted
communication also deals with other challenges, however,
certain technical agreements and, in some cases, liner
such as efficiency and future capacities required by the ports,
conference agreements from the rules on competition laid
as well as the necessary connections with the hinterland,
down in Articles 81 and 82 of the Treaty (a ‘block
environmental concerns and the far-reaching change in sea
exemption’). On 13 October 2004, the Commission adopted
transport.
a White Paper on the review of Regulation 4056/86,
applying the EC competition rules to maritime transport D. Working conditions
(COM(2004) 675). There it concluded that there was no Directive 1999/63/EC of 21 June 1999 was based on an
longer any justification for retaining the exemption for liner agreement between the European Community Shipowners’
conferences, as price stability could also be achieved by Associations (ECSA) and the Federation of Transport Workers’
means of other forms of cooperation which would distort Unions in the EU. It concerns the organisation of the
competition less. working time of seafarers on board ships flying the flag of an
The second regulation, Regulation (EEC) No 4057/86, provided EU Member State. Directive 1999/95/EC of 13 December 1999
for a redressive duty to protect Community shipowners complements it, applying to ships flying the flag of a third
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country which call at Community ports. The aim is to ensure called for clarification of the legal status of second registers
that the same health and safety rules apply to all seafarers. and for a Community register.
The International Labour Organisation (ILO) accepted the With reference to the Green Paper on sea ports, the
Maritime Labour Convention on 23 February 2006 to create a European Parliament called on the Commission in its
single, self-contained instrument comprising all the current resolution of 13 January 1999 to submit a study of the
standards relating to maritime labour. The convention structures of sea ports in order to help restore transparency of
combines in a single consolidated text the current agreements competitive conditions between and within European sea
and recommendations on maritime labour accepted to date ports. The European Parliament (EP) also called on the
by the ILO. According to the convention, all seafarers have the Commission to supervise all sea ports and port undertakings
right to a safe, secure job in accordance with current safety effectively and in the same way with reference to aid and
standards, as well as to appropriate employment conditions, compliance with competition rules. Parliament proposed that
humane working and living conditions and health protection, public financing of port and maritime transport infrastructure
medical care, social measures and other forms of social should be assessed on the basis of three categories:
protection. The convention obliges the Member States to — public port infrastructure measures,
ensure that seafarers’ employment and social rights are fully
implemented in line with the convention’s requirements. The — undertaking-related port infrastructure measures,
agreement should serve as a basis for the first International — undertaking-related port superstructure measures.
Maritime Labour Code.
In Parliament’s opinion, the proposals for directives on
In July 2008 the Commission put forward a proposal for market access in ports submitted after the Commission
implementing the agreement concluded by the European Green Paper were not suitable for regulating competition in
Community Shipowners’ Associations (ECSA) and the European and between ports. Accordingly, the EP rejected these
Transport Workers’ Federation (ETF) on the Maritime Labour proposals, as described above, and thus brought these
Convention, 2006 (COM(2008) 422). legislative procedures to a halt.
In its resolution of 12 April 2005 on short sea shipping, the EP
Role of the European Parliament called for short sea shipping to be promoted more strongly, for
Parliament’s resolution of 24 April 1997 welcomed the administrative procedures to be reduced as much as possible,
Commission communication ‘Towards a new maritime for the development of high-quality corridors between Member
strategy’ and ‘consider[ed] it vital, with international States and for priority to be given to investment in infrastructure
competition at its present level, to provide support for the in order to improve access to ports from both land and sea. The
European shipping industry to offset the undeniable extra cost resolution also contained numerous proposals and requests
incurred by Community shipowners if they respect the social concerning (a) introducing a uniform system of liability,
and safety standards applying in the Union’. This plea is a (b) intermodal loading units, (c) electronic communication,
counterweight to other statements in the same resolution in (d) customs, (e) support structures for short sea shipping,
favour of a more open market. Parliament also attached value (f ) environmental aspects and (g) motorways of the sea.
to seafarers’ social protection in accordance with international
agreements, with which Parliament considered that vessels g Nils Danklefsen
flying flags of convenience should also comply. Parliament also July 2008
4.6.9. Sea transport: traffic and safety rules

A number of EU directives and regulations have recently improved the standards for safety in the field of sea transport.
These include the legislative packages Erika I and Erika II in particular, which were adopted after the disasters involving the
ships Erika and Prestige.

Title V of the Treaty establishing the European Community (EC), Safety at sea to protect passengers and crew members and
and in particular Article 71(1)(c) and Article 80(2) (Treaty of also to protect the marine environment and coastal regions is
Lisbon: Title VI, and in particular Article 91(1)(c) and Article 100(2) a fundamental objective of sea transport policy. The global
of the Treaty on the Functioning of the European Union). dimensions of sea transport necessitate the development by
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4 6
the IMO (International Maritime Organisation) of safety Directive 98/41/EC of 18 June 1998 on the registration of
standards which should be as uniform as possible and persons sailing on board passenger ships makes it possible
recognised worldwide. The principal international agreements to monitor the number of passengers and thus improve the
include the International Convention for the Prevention of effectiveness and speed of rescue operations in the event of
Pollution from Ships (Marpol), the International Convention an accident.
for the Safety of Life at Sea (SOLAS) and the International
4. Port State control
Convention on Standards of Training, Certification and
Watchkeeping for Seafarers (STCW). The aim of Directive 95/21/EC of 19 June 1995 is to enforce
international environmental and safety standards more
The prompt amendment of Community law to take account effectively by means of compulsory regular inspections at
of these international agreements is an essential objective of Community ports (port State control). As a result, enforcement
the EU’s sea transport policy. In the past, however, not all IMO of safety standards and inspections of living and working
measures have proved adequate to improve safety at sea. It conditions on board ships are no longer left purely to the flag
was therefore equally necessary both for Member States and/ States but have partly become a matter for the competent
or the Community to participate in the further development authorities at EU ports. The directive was amended as part of
and improvement of these international agreements and to the Erika I package (see below).
adopt additional measures at EU level.
5. Ship inspection and survey organisations
(classification societies)
Achievements Council Directive 94/57/EC of 22 November 1994 lays down
A. Fundamental legislation common rules and standards for ship inspection and survey
As there are international rules to regulate safety at sea, the organisations (classification societies). It was likewise amended
Community’s main contribution has been to transpose them as part of the Erika I package.
into Community law, ensuring that they have legal force and B. Developments after the Erika and Prestige disasters
uniform application throughout the Member States. In the
After the accidents involving the Erika and Prestige, EU
1990s, considerable progress was made in this regard.
maritime safety standards were again tightened up
1. Training of seafarers considerably. In March and December 2000 the Commission
Directive 94/58/EC of 22 November 1994 on minimum training put forward the so-called Erika I and II packages to bring about
conditions for seafarers gave the 1978 IMO Convention on the necessary improvements. The following measures were
Standards of Training, Certification and Watchkeeping for adopted as a result.
Seafarers (STCW) the force of Community law. It has been 1. The Erika I package
amended a number of times in accordance with new
Directive 2001/105/EC of 19 December 2001 stepped up and
international requirements, and the various provisions were
simplified the Community rules and standards laid down in
consolidated by Directive 2001/25/EC of 4 April 2001. A
the original directive concerning ship inspection and survey
proposal to recast this directive (COM(2007) 610) is currently
organisations (classification societies). Its aim was uniform
going through the legislative procedure between the Council
compliance with standards, more stringent quality
of Ministers and the European Parliament.
requirements applicable to classification societies, greater
2. Ships’ equipment transparency of findings and making classification societies
Directive 96/98/EC of 20 December 1996 concerning on-board more independent of shipowners or shipbuilding companies.
equipment aims to ensure uniform application of the SOLAS The directive provides for the competent authorities of the
Convention on marine equipment for commercial vessels and Member States to monitor classification societies. If their
enforce the IMO resolutions deriving from it. performance is shown to be inadequate, their recognition can
be temporarily suspended or withdrawn altogether. In the
3. Safety of passenger craft event of proven negligence, a classification society can under
On 8 December 1995 the Community adopted Regulation (EC) certain circumstances be held liable for the consequences of
No 3051/95 on the safety management of roll-on/roll-off an incident involving a ship.
passenger ferries (‘ro-ro’ ferries). This laid down that safety
Directive 2001/106/EC of 19 December 2001 made port State
management systems must be established and maintained.
control compulsory for certain potentially hazardous vessels.
The safety of vessels providing scheduled services Member States are required to carry out inspections more
between two Community ports is the subject of Directive frequently and more thoroughly and to conduct more
98/18/EC of 17 March 1998. In addition to compulsory safety extensive inspections of certain high-risk vessels such as gas,
standards, the directive provides for regular inspections of oil and chemical tankers. In addition, the directive introduced a
ships and certification by means of safety certificates. This so-called blacklist. It became possible to deny access to EU
directive was amended by Directive 2003/24/EC of 14 April ports to ships sailing under the flag of a blacklisted State (the
2003 and Directive 2003/75/EC of 29 July 2003. blacklist being published in the annual report of the Paris
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Memorandum of Understanding) if previous inspections at independent quality control system for eliminating the
other ports had shown safety on board to be inadequate. flaws that still exist in the inspection and certification
Regulation (EC) No 417/2002 of 18 February 2002 laid down a procedures for the world fleet;
fixed timetable for phasing out the use of single-hull oil — a directive on investigations after accidents at sea
tankers and provided for them to be replaced by 2015 at the containing the common principles for carrying out
latest with safer double-hull vessels, the deadlines depending investigations at sea as well as a system for pooling the
on the size, type and age of the vessel. After the Prestige oil results;
tanker disaster, the timetable was again accelerated — a regulation on liability and compensation for personal
considerably by Regulation (EC) No 1726/2003 of 22 July 2003. injury caused by accidents at sea;
The use of single-hull tankers to carry particularly toxic heavy
oil to and from Community ports was banned immediately. — a directive on the third-party liability of shipowners.
2. The Erika II package These proposals are currently passing through the legislative
procedure at the Council and the European Parliament. The
Directive 2002/59/EC of 27 June 2002 established a Community
Council of Ministers and the European Parliament are expected
vessel traffic monitoring and information system
to reach an agreement by the end of 2008/beginning of 2009.
(SafeSeaNet). The operator of any vessel wishing to call at a port
in a Member State must, in advance, supply various information C. Hazard control on ships and in port facilities
to the relevant port authority, particularly concerning dangerous In response to the terrorist attacks on 11 September 2001, the
or polluting cargoes. The vessel must be fitted with an so-called ISPS code was adopted at the Diplomatic
automatic identification system (AIS), and a timetable was laid Conference of the IMO in 2002, as were various amendments
down for the compulsory fitting of vessels with voyage data to other international agreements. The aim is to improve the
recording systems (VDR systems or ‘black boxes’). The directive protection of ships and port facilities, particularly against
gave Member States greater powers of intervention and terrorist attack. Regulation (EC) No 725/2004 of 31 March 2004
authorised the competent authorities to forbid vessels from is intended to ensure uniform interpretation and
departing in bad weather conditions. It also required Member implementation of these IMO decisions. The regulation
States to adopt plans for giving refuge to vessels in distress. requires Member States, inter alia, to carry out security
Regulation (EC) No 1406/2002 of 27 June 2002 established the assessments at their port facilities and to monitor compliance
European Maritime Safety Agency (EMSA). Its task is to with security regulations.
provide scientific and technical advice to the Commission and
D. Environmental standards for shipping
to monitor the implementation of legislation in the field of
maritime safety. Its remit has recently been expanded to In recent years, numerous measures have been taken to
include new duties in the field of pollution control. protect the marine environment. These include:
3. New Commission proposals — Regulation (EC) No 782/2003 of 14 April 2003 on the

prohibition of organotin compounds on ships; these
On 23 November 2005, the Commission submitted a third
compounds are mainly used as anti-fouling products on
package of legislative measures on maritime safety
ships’ hulls and are highly polluting;
(COM(2005) 585), which comprises the following seven
proposals: — Directive 2005/33/EC of 6 July 2005 on reducing the
sulphur content of marine fuels;
— a directive on the fulfilment of flag State obligations, which
aims to monitor compliance with the international — Directive 2000/59/EC of 27 November 2000 on port
regulations by ships sailing under the flag of a Member reception facilities for ship-generated waste and cargo
State more effectively; the proposal is regarded as a first residues, which provides for compulsory disposal of oil, oily
step towards a future European flag; mixtures, ships’ waste and cargo residues at EU ports and
enforcement of the rules on this subject;
— a recasting of the directive on port state control with the
aim of ensuring more effective and more frequent — Directive 2005/35/EC of 7 September 2005 on ship-source
inspections, particularly of ships at risk, through new pollution and on the introduction of penalties for
monitoring mechanisms subject to risk profiles; infringements, which contains precise definitions of the
infringements and also stipulates that these are ‘subject to
— an amendment to the directive on the Community’s vessel
effective, proportionate and dissuasive penalties, which
traffic monitoring and information system, which focuses,
may include criminal or administrative penalties’. Acting
among other things, on improving the legal framework
upon a judgment of the Court of Justice of the European
conditions relating to emergency moorings for ships in Communities of October 2007, in March 2008 the
distress and the further development of the SafeSeaNet; Commission proposed defining certain infringements
— an amendment to the directive on classification societies, across the EU as offences and inflicting penalties for these
particularly with regard to the introduction of an offences with effective, appropriate and dissuasive
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4 6
sanctions (COM(2008) 134). This harmonisation should In the final report of this committee, which was adopted in
ensure that ships committing pollution offences are April 2004, the EP made many recommendations for future
penalised in the same way in all the Member States and measures in the field of safety at sea. It called for a
that offences within the EU are not able to escape comprehensive and coherent policy for maritime transport,
prosecution. based, inter alia, on the following additional measures: a ban
on non-compliant ships, the introduction of a system of
liability covering the entire maritime transport chain, and
improvements to the living and working conditions and
Parliament has strongly supported the initiatives relating to training for seafarers. Parliament also called for the
safety at sea and has helped to make progress in this field by establishment of a European coastguard, compulsory pilotage
means of initiatives of its own. in environmentally sensitive and navigationally difficult sea
After the Erika tanker disaster, Parliament urged the areas, and a clear decision-making and command structure in
Commission, in its resolutions of 20 January 2000 and 2 March Member States for dealing with maritime emergencies, in
2000, to submit concrete proposals for improving safety at sea. particular as regards the mandatory assignment of an
emergency mooring or port. Parliament took the view that EU
The Erika I and Erika II shipping safety packages which the action, such as the banning of flags of convenience from
Commission subsequently submitted received Parliament’s European territorial waters, might be necessary, and called
support. Parliament urged that the legislative procedure be upon the Commission to investigate the scope for introducing
concluded swiftly and also secured important improvements. mandatory insurance for vessels in European waters. The
For example, despite the initial resistance of some EU Commission has already taken account of many of these
governments, Parliament inserted a provision requiring ships requests in its proposed third package of measures to promote
to be equipped with voyage data recording systems (VDR safety at sea. In the subsequent legislative procedure,
systems or ‘black boxes’), which provide information for use in Parliament issued a reminder that this package should be dealt
investigations after an accident. with speedily at the Council of Ministers.
After the Prestige oil tanker disaster off the coast of Spain in
2002, the European Parliament (EP) decided to set up a g Nils Danklefsen
Temporary Committee on Improving Safety at Sea (MARE). July 2008
4.6.10. Inland waterway transport, intermodality

and logistics
The promotion of what is referred to as intermodal transport logistics is a key element of European transport policy. It
involves the creation of technical, legal and economic framework conditions as well as innovative concepts relating to
logistics for the optimum integration of the different modes of transport for a ‘door-to-door’ service. It particularly
concerns the integration of environmentally friendly modes of transport, such as rail, inland waterways and short-haul
maritime links, into the transport chain.
Legal basis safest modes of transport. The Community has more than
35 000 km of inland waterways linking many towns and areas
4.6.1. of industrial concentration. Inland waterways exist in 18 out
of the 25 Member States. The modal share of inland
Objectives waterway transport currently accounts for 7 % of total inland
transport in the European Union. In the hinterland of the
Together with rail and short sea shipping, inland waterway largest seaports, the modal share of inland waterway
transport is considered to be a mode of transport which can transport can reach up to 43 %.
contribute to sustainable mobility and help improve the
sustainability of the transport system. Per tonne-kilometre, Besides safeguarding the proper application of the legislation
inland waterway transport is extremely energy-efficient and on market access and competition as well as the
is regarded as one of the most environmentally friendly and harmonisation of specific legal provisions, attention has
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recently focused on the promotion of inland waterway d. Competition rules
transport. In line with the objectives set out in the Council Directive 96/75/EC of 19 November 1996 introduced a
Commission’s transport White Paper, the intention is to system of free chartering and pricing, thus ending the system
promote and improve the competitiveness of inland waterway of minimum compulsory tariffs from 1 January 2000.
transport in the freight sector. The aim is to achieve further and
better integration of inland waterway transport into the 2. Harmonisation of legal provisions
intermodal logistics chain. a. Overcapacity
The promotion of intermodal transport logistics is a core The problem of existing overcapacity was addressed by
element of the Commission’s 2001 transport White Paper. Here, Regulation (EEC) No 1101/89 of 27 April 1989. The ‘structural
the aim is to create the technical, legal and economic improvements’ in inland waterway transport provided for in
parameters for optimal integration of various modes of the regulation comprise:
transport for a door-to-door service. A particular focus is the — the payment of premiums for the scrapping of vessels;
integration of more environmentally friendly modes of
transport, such as rail, inland waterway transport and short sea — the obligation that the owner of the vessel to be brought
shipping, into the transport chain. into service scraps a tonnage of carrying capacity
equivalent to the new vessel (‘old-for-new’ rule), or pays
into a scrapping fund a special contribution equal to the
Achievements scrapping premium fixed for a tonnage equal to that of the
A. Inland waterway transport new vessel.
1. Market access and competition Commission Regulation (EC) No 336/2002 of 22 February 2002
Since 1 January 2000, the inland waterway transport market introduced amended ‘old-for-new’ ratios in order to maintain
has been regarded as fully liberalised. the overall balance, without reversing the structural
improvements.
a. Market access for international goods transport
b. Technical requirements
Council Regulation (EC) No 1356/96 of 8 July 1996 aims to
ensure that any operator is allowed to transport goods or Council Directive 76/135/EEC of 20 January 1976 requires
passengers by inland waterway between Member States and Member States to recognise navigability licences for inland
in transit through them without discrimination provided that waterway vessels issued by another Member State.
he is properly established in a Member State. The regulation Most of the provisions of Council Directive 76/135/EEC were
does not affect the rights of third-country operators under the amended by the provisions of Council Directive 82/714/EEC of
Revised Convention for the Navigation of the Rhine 4 October 1982. It also introduced a Community inland
(Mannheim Convention) and the Convention on Navigation navigation certificate, valid on all Community waterways
on the Danube (Belgrade Convention). except the Rhine, attesting the compliance of vessels with the
b. Freedom for non-resident carriers to operate inland waterway common technical requirements. For the Rhine, a valid
transport services in a Member State (cabotage) certificate issued pursuant to Article 22 of the Revised
Convention for the Navigation of the Rhine applies, which is
This was introduced by Council Regulation (EEC) No 3921/91
valid on all Community waterways.
of 16 December 1991. Since 1 January 1993, carriers who are
properly established and licensed in a Member State have c. Harmonised river information services (RIS) on inland
been able to transport goods or passengers by inland waterways in the Community
waterway in a Member State in which they are not established Directive 2005/44/EC of the European Parliament and of the
(‘cabotage’). Council of 7 September 2005 on harmonised river information
c. Harmonisation and mutual recognition of occupational services (RIS) on inland waterways in the Community provides
qualifications a comprehensive framework for the establishment and further
development of harmonised, interoperable RIS on the
Council Directive 87/540/EEC of 9 November 1987 regulates
Community’s inland waterways. The directive imposes an
access to the occupation of carrier of goods by waterway in
obligation on those Member States through which certain
national and international transport and the mutual
Community inland waterways flow to establish these
recognition of diplomas, certificates and other evidence of
information services in line with the principles and
formal qualifications for this occupation.
specifications set forth in the directive. The technical
Reciprocal recognition of national boatmasters’ certificates for specifications should be developed within a specific
the carriage of goods and passengers by inland waterway in timeframe. With these interoperable information services
the Community was achieved with Council Directive 91/672/ based on modern information and communications
EEC of 16 December 1991. Council Directive 96/50/EC of technology, the aim is to integrate inland waterway transport
23 July 1996 harmonised the conditions for obtaining these more effectively into the intermodal logistics chain. Among
national boatmasters’ certificates. other things, RIS will provide fairway and traffic information as
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4 6
well as strategic traffic information for time and journey the Marco Polo programme for the period 1 January 2003 to
planning. This will also open up new opportunities for better 31 December 2006 was EUR 75 million. The aim of the
freight and fleet management. programme is to shift international road freight traffic to short
sea shipping, rail and inland waterways as well as to promote
3. Promotion of inland waterway transport
innovative projects.
On 17 January 2006, the Commission proposed a multiannual
integrated European action programme for inland waterway Regulation (EC) No 1692/2006 of the European Parliament and
transport (NAIADES) (COM(2006) 6 final). It recommends of the Council of 24 October 2006 establishes a ‘Marco Polo II’
action to be taken between 2006–13 with the aim of fully programme. Relying on the proven mechanisms of the current
exploiting the market potential of inland navigation and programme, Marco Polo II includes two new actions: (a) larger
deploying the ample free capacities of inland waterway geographical scope for intermodal transport solutions and
transport more effectively. The programme provides for alternatives to road transport, including outside the EU, and (b)
numerous legislative, coordination and support measures, and motorways of the sea, which are intended to encourage a
focuses on five strategic areas: shift towards short sea shipping. During the negotiations on
the financial perspective, the EP and the Council agreed a total
— creating favourable conditions for services and the budget of EUR 450 million for ‘Marco Polo II’ for the period
development of new markets; this includes (a) testing and 2007–13.
introduction of new logistical concepts, (b) supporting
scheduled services for intermodal transport, (c) facilitating 2. Intermodal loading units
access to capital for SMEs, and (d) improving the In April 2003, the Commission presented a proposal for a
administrative and regulatory framework; directive on intermodal loading units (COM(2003) 155). It aims
to create new uniform technical norms for a European
— incentives for the modernisation of the fleet, e.g. by intermodal loading unit which can be used in all modes of
developing and promoting the use of innovative concepts transport. This would greatly simplify the process of
and technologies for the construction of new vessels; transhipment and make intermodal transport more
— measures to address the skills shortage, e.g. by competitive. An amended proposal by the Commission has
improving working and social conditions, greater mutual now been published after the European Parliament, but not
recognition of qualifications, and securing the existence of the Council, gave its opinion on this proposal.
education and training institutions; 3. Freight transport logistics
— promotion of inland navigation as a successful partner In June 2006, the Commission published its communication
in business, e.g. through more intensive publicity work or entitled ‘Freight transport logistics in Europe — the key to
by setting up and expanding a European inland waterway sustainable mobility’ (COM(2006) 336). It defines a strategy
transport promotion and development network; to improve the framework conditions in which to increase the
efficiency of individual modes of transport and their
— provision of appropriate infrastructure through the
combinations. The aim is to utilise fewer units of transport,
improvement and maintenance of the European waterway
such as vehicles, wagons and vessels, to carry more freight.
network and development of transhipment facilities, and
by supporting and coordinating the development and
introduction of RIS. Role of the European Parliament
The European Parliament has regularly voiced support for
B. Intermodality and logistics
inland waterway transport and measures to promote
Intermodal transport is defined as ‘a transport system whereby intermodal transport. In its resolution of 12 February 2003 on
at least two different modes are used in an integrated manner the Commission’s transport White Paper, the European
in order to complete a door-to-door transport sequence’. A Parliament called for the substantial expansion of the Marco
priority, in this context, is to integrate the more Polo programme with significant additional funding. It also
environmentally friendly modes of transport — rail, inland called for increased EU co-financing for key inland waterway
waterway and short sea shipping — into the transport chain projects undertaken within the framework of the TENs in a
more effectively. Impediments and friction costs arise primarily manner compatible with the requirements of EC
when there is a change of mode during a journey. This may environmental legislation, and called on the Commission to
result in higher prices, longer journeys and more delays, and submit a proposal for harmonised technical provisions for the
may have an impact on the competitiveness of intermodal implementation of river information services (RIS). It also called
transport. To that extent, improving the logistical quality and for a significant increase in the number of transport centres
efficiency of intermodal transport is a key objective. and logistical centres and put forward specific proposals to
1. Marco Polo programme improve and promote intermodality.
On 22 July 2003, the European Parliament and the Council The Commission’s proposal for a directive on intermodal
adopted Regulation (EC) No 1382/2003 on the Marco Polo loading units was adopted by the European Parliament on
programme. The financial framework for implementation of 12 February 2004, subject to certain amendments.
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In its resolution of 26 October 2006, the European Parliament demand-based investments and innovative concepts in the area
supported the Commission’s initiative for an integrated of logistics, technology and the environment.
European action programme for inland waterway transport
The Commission communication on freight transport logistics is
(‘NAIADES’). In addition, Parliament called in particular for:
currently being examined by Parliament. In a proposed resolution
(a) further development of national measures to stimulate
for plenary, in July 2008 the European Parliament’s Committee on
inland waterway transport; (b) improved access to financial
Transport and Tourism unanimously advocated giving higher
resources — particularly risk capital for start-ups; (c) particular
priority to freight transport and reserving at least 40 % of the
attention for the development of connections with the new
respective EU funds for the rail transport infrastructure.
Member States in central and eastern Europe; (d) stricter
Community limits for SOx, particulate matter (PM), NOx and CO2
emissions in 2007; and (e) also in 2007, a proposal for a European g Nils Danklefsen
Waterway Transport Innovation Fund for the financing of new July 2008
4.7. Trans-European networks
4.7.1. Trans-European networks — guidelines

The Maastricht Treaty provides for the implementation of trans-European networks in transport, energy and
telecommunications in order to connect islands, landlocked and peripheral regions to the central regions of the EC. The
networks are tools that should contribute to the development of the internal market, while respecting environmental
issues and sustainable development goals.
Legal basis Union contributes substantially to the development of these

networks by acting as a catalyst and by providing financial
Title XV of the Treaty establishing the European Community
support, particularly at the outset, for infrastructures of
(EC) or Titles XVI and XXI of the Lisbon Treaty.
common interest.
Article 154 of the EC Treaty, incorporated in Article 170 and
Objectives
Article 194(1)(d) (which relate to energy) of the Lisbon Treaty,
The Maastricht Treaty gave the Union the task of establishing provides a solid legal basis for the TENs. To this end, the Union
and developing infrastructure for the trans-European lays down guidelines under the co-decision procedure or the
networks (TENs) in the areas of transport, ordinary legislative procedure (Lisbon Treaty) between the
telecommunications and energy, in order to help develop European Parliament and the Council, identifying eligible
the internal market, reinforce economic and social cohesion ‘projects of common interest’ and ‘priority projects’ and
and to link island, landlocked and peripheral regions with the covering the objectives, priorities and broad lines of measures.
central regions of the Union. The establishment of the TENs
relates to Community-wide collaboration, the improvement of
the interoperability of national networks and facilitating access
Results
to them. A. General guidelines and general ideas
In line with the principle of subsidiarity, the Community has no The Commission White Paper on growth, competitiveness
exclusive competence for developing, financing or building and employment, presented to the Brussels European
the infrastructures. The main responsibility for these tasks Council in December 1993, emphasised the fundamental
continues to lie with the Member States. Nevertheless, the importance of the TENs for the internal market. The White
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Common policies Trans-European networks
4 7
Paper referred in particular to the contribution made to job Est in France of PPs 4 and 17 entered into service in 2007;
creation, not only in building the infrastructure itself, but also and in 2008 the Madrid–Barcelona high-speed railway line.
through its subsequent role in economic development. It
— The transport projects were forced to comply with EU
identified 26 priority projects for transport, eight for energy
environmental legislation, particularly through a strategic
and nine for a data highway system. The Brussels European
environmental impact assessment as a complement to the
Council adopted the White Paper in December 1993 and set
conventional environmental impact assessment.
up two working groups, whose recommendations were
approved by the European Councils of Corfu and Essen in — The new concept of motorways of the sea, based on
1994 (foreseeing 14 priority projects for transport and 10 for intermodality, was introduced to make certain sea routes
the energy sector). more efficient and to integrate short sea shipping with rail
transport, by providing high-quality and frequent
B. Sectoral legislative measures alternatives to road transport. Four corridors were defined
1. Transport for the implementation of the motorways of the sea
a. The 1996 guidelines project to 2010 (Baltic Sea, western Europe via the Atlantic,
Decision No 1692/96/EC of 23 July 1996 on Community eastern and western Mediterranean).
guidelines for the development of the trans‑European — Six ‘European coordinators’ for particularly important
transport network (TEN-T) sets out broad lines for the projects were appointed in July 2005. They are important
measures necessary to set up the network. The decision European figures who act as mediators in order to facilitate
established characteristics of the networks for each mode of the contacts with the national decision-making authorities,
transport, eligible projects of common interest and priority transport operators and users, and representatives of civil
projects. Emphasis was placed on environmentally friendly society. They also lay the groundwork for the EIB’s
modes of transport, in particular rail projects. The TEN-T investment decisions.
encompasses all modes of transport and the entire territory of
the Union and they may extend to the EFTA countries, the — A Trans-European Transport Network Executive Agency,
countries of south-eastern Europe and the Mediterranean based in Brussels, was set up in October 2006. It is responsible
countries. Initially, this decision incorporated 14 projects of for the technical and financial preparation and monitoring of
common interest that were adopted by the Essen Council. the decisions on the projects managed by the Commission.
Decision No 1346/2001/EC of 22 May 2001 amending the — By 2020 the TEN-T should cover 100 345 km of roads and
TEN-T guidelines with regard to seaports, inland ports and 106 845 km of railways, including 30 000 km of high‑speed
intermodal terminals subsequently added criteria for these railways (at least 200 km/h). In addition, 14 630 km of
remaining elements missing from the TEN-T, thereby providing inland waterway networks, 120 inland waterway ports, 23
for a Community ‘transport development plan’ encompassing inland/seaports and 264 Class A seaports (of international
all modes of transport. importance), as well as 407 airports are part of the trans-
European network. Completion of the TEN-T implies the
b. Revision of the TEN guidelines construction of the ‘missing links’, i.e. building or improving
The enlargements of the EU in 2004 and 2007, coupled with on the road network that existed in 2005 with 20 300 km of
serious delays and financing problems in the realisation of the motorways or high-quality roads, and 18 975 km of high-
TEN-T — particularly cross-border sections — led to the need speed railway lines (new or improved conventional lines).
for a thorough revision of the TENs guidelines. On the basis of In addition, 3 500 km of roads, 12 300 km of railways and
proposals made by a specially appointed working group 1 740 km of inland waterways are to be modernised.
headed by former European Commissioner Karel van Miert,
this revision was eventually adopted in the form of Decision — In May 2008 the Commission estimated the total costs at
No 884/2004/EC of 29 April 2004, amended by Council around EUR 900 billion for the period 1996–2020, EUR 500
Regulation (EC) No 1791/2006 of 20 November 2006. The million of which has yet to be invested between 2007 and
revision comprised the following main elements. 2020. On the basis of the latest data provided by the
Member States in April 2008, the costs of the priority
— A list of priority projects (PP) was increased to sections of 28 PPs — excluding the Galileo project and the
approximately 30, 18 of which relate solely to rail transport, motorways of the sea — amount to EUR 397 billion, an
3 to road transport, 4 to multimodal transport, primarily rail increase of 16.8 % compared with the 2004 estimate of
and road, 2 to internal waterways and 1 to the so-called EUR 340 billion (for more on the financing of the TENs, see
‘motorways of the sea’. Some of the projects have already fact sheet 4.7.2.).
been completed, e.g. the Øresund fixed link (between
Sweden and Denmark, 2000), Malpensa airport (Italy, 2001) 2. Energy
and the Betuwe railway line (between Rotterdam and the a. The 1996 guidelines
German border, 2007). Significant sections of some of the At the Essen Summit of December 1994, several energy
other projects have also been completed: the Nürnberg– projects were awarded priority status. Decision No 1254/96/EC
Ingolstadt section of PP 1 in 2006; the first phase of the TGV of 5 June 1996 laid down a series of guidelines for trans-
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European energy networks (TEN-E). They contained an (integrated services digital network) as a trans-European
action plan by which the Community might identify eligible network. The decision defined the objectives, priorities and
projects of common interest and help create a framework to common-interest projects for developing a range of services
encourage their implementation. They also laid down sectoral based on the Euro-ISDN with a view to a future European
objectives for electricity. broadband communications network.
b. New guidelines Decision No 1336/97/EC of 17 June 1997 laid down guidelines
The Union adopted new guidelines to update the trans- for the trans-European telecommunications networks (TEN-
European energy networks through Decision No 1364/2006/ Telecom). This set out the objectives, priorities and broad lines
EC of 6 September 2006, thereby repealing the old guidelines of the measures envisaged. The priorities adopted included
of 1996 and 2003. applications contributing to economic and social cohesion
and the development of the basic networks, particularly
The objectives of the new guidelines are to diversify supplies,
satellite networks. These guidelines were modified slightly by
to increase security of supply by strengthening links with third
Decision No 1376/2002/EC of 12 July 2002.
countries (accession countries or other countries in the
Mediterranean Sea, Black Sea and Caspian Sea basins, and in These guidelines identified projects of common interest as
the Middle East and the Gulf ) and to incorporate networks in well as the procedure and criteria for their selection. In the
the new Member States. In addition, access to the TEN-E by same context, the Community programme eTEN, a key
insular, landlocked and peripheral regions strengthens in instrument of the eEurope 2005 action plan ‘An information
particular territorial cohesion within the EU. society for all’, built on the Euro-ISDN programme. Completed
in 2006, it sought to support the trans-European deployment
With these new guidelines, the EU has indicated the projects
of services based on the telecommunications networks.
that are eligible for Community financing and divided them
into three categories: projects of common interest relating to Community investment is currently focusing on modernising
electricity and gas networks displaying potential economic the existing networks. In addition, the Commission, while
viability; priority projects, which are given priority when underlining the disparities between urban and rural areas, has
Community funding is granted; and projects of European invited the Member States to ‘bridge the broadband gap’ by
interest, which are also priority projects and are of a cross- 2010.
border nature or have a significant impact on cross-border
transmission capacity. Role of the European Parliament
The priorities for the trans-European energy networks must be The European Parliament (EP) has strongly supported the
compatible with the goals of sustainable development. These trans-European network policy and, at the same time, regularly
priorities include: (a) using renewable energies and ensuring drawn attention to delays in implementation of priority
better connections between the facilities that produce them; transport projects, called for firm timetables for their realisation
(b) using more effective technologies that limit the and called on the Member States to increase substantially the
environmental losses and risks; (c) establishing energy budgetary resources available, particularly for the trans-
networks in island and ultraperipheral regions through European transport networks (TEN-T). The EP has ensured that
diversification and renewable energy sources; and priority is given to the promotion of those projects which
(d) interoperability of EU networks with the networks of the clearly demonstrated positive and long-term effects on the
new Member States and third countries. Annex I to the environment and employment and which helped to remove
decision identifies 32 projects of European interest for bottlenecks in the TEN-T, particularly in rail and combined
electricity and 10 for gas, while Annexes II and III list 164 transport. Parliament also called for a range of administrative
projects of common interest for electricity and 122 for gas. changes to improve implementation of the TENs. For example,
In the 2007–13 financial perspective a total of EUR 155 million the Commission was asked to come forward with new
has been allocated to the TEN‑E. guidelines for the trans-European energy networks. In this
connection, the EP has criticised delays to the original plans.
Four European coordinators were appointed in September
2007 to monitor a project of European interest and help to During the revision of the guidelines for the TEN-T, Parliament
resolve any technical, political and financial problems relating was able to make a number of amendments in the
to the most complex projects, such as the high-voltage line negotiations with the Council in April 2004. Among other
between France and Spain (former Commissioner Monti). things, the guidelines’ environmental rules were strengthened
and the concept of a strategic environmental impact
The new title on energy in the Lisbon Treaty (Article 194(1)(d))
assessment was introduced as a binding requirement, under
provides a solid legal basis for promoting energy network
pressure from the EP. Parliament also obtained a change to the
interconnections.
list of priority projects. Under pressure from Parliament, the
3. Telecommunications (4.8.7 and 4.8) realisation of priority projects was more strongly linked to a
Decision No 2717/95/EC of 9 November 1995 established a timetable than the Member States had envisaged. For the first
series of guidelines for the development of the Euro-ISDN time, the possibility of removing the status of ‘priority project’
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4 7
was created. This was intended as an added incentive for When the decision establishing new guidelines for the TEN-E
Member States to ensure prompter realisation of projects. was being adopted in 2006, the EP pointed out that the
With the adoption of the own-initiative report ‘Keeping Europe declaration of European interest and the possibility of
moving — sustainable mobility for our continent’ on 12 July appointing coordinators were essential tools for achieving a
2007, the EP took stock of the situation and laid down new genuine internal gas and electricity market and ensuring
objectives in the TEN-T sector. It stressed in particular that the security of supply, and it called for an improvement in
completion of the entire trans-European network is the best network interconnections. Moreover, it emphasised that in
way to create the conditions needed to make the most of the order to obtain Community funding the priority projects
different modes of transport through an approach called ‘co- should be compatible with the objectives of sustainable
modality’, and that a redistribution of the balance between the development and improve the EU network’s security of
modes of transfer (‘modal transfer’) is needed to reduce the supply.
environmental impact of transport. In this regard, the EP
encourages transfers to rail, bus and maritime transport, which g Piero Soave
still have only a small share of the market. July 2008
4.7.2. Financing the trans-European networks

The trans-European networks (TENs) are partly funded by the European Community and partly by the Member States.
Financial support from the Community serves as a catalyst, the Member States being required to provide the bulk of the
aid. The financing of TENs can also be complemented by Structural Fund assistance, aid from the EIB or contributions from
the private sector.
Legal basis a. Conditions

Title XV of the Treaty establishing the European Community Community aid for projects may take one or several of the
(EC) and Title XVI of the Treaty of Lisbon. Under Article 155 of following forms:
the EC Treaty, incorporated by Article 171 of the Treaty of — co-financing of studies related to projects, including
Lisbon, EU aid may be granted to projects of common preparatory, feasibility and evaluation studies, and other
interest that meet the requirements laid down in the technical support measures for these studies (in general
guidelines. not exceeding 50 % of the total cost of a study);
— contributions towards fees for guarantees for loans from
Objective the European Investment Fund or other financial
To contribute to the establishment of trans-European networks institutions;
(TENs) in the fields of transport, energy and
— interest subsidies for loans granted by the European
telecommunications through targeted EU support (4.7.1).
Investment Bank or other public or private financial bodies;
— direct grants to investments in duly justified cases;
Results
— possibly in a combination of forms; however, regardless of
A. Direct financing through the Community budget the form of intervention chosen, the total amount of
Generally, EU funding serves as a catalyst for starting up Community aid under Regulation (EC) No 2236/95 may not
projects. Member States must raise most of the funding, exceed 10 % of the total investment cost;
except in the case of Cohesion Fund aid, where the EU makes
— for the telecommunications and energy networks, aid must
a substantial contribution.
not cause distortions of competition between businesses
1. Principles in the sector concerned.
The principles governing funding are set out in Council b. Selection criteria
Regulation (EC) No 2236/95 of 18 September 1995 laying
The following project criteria must be applied:
down general rules for the granting of Community financial
aid in the field of trans-European networks. — the degree of help in achieving the networks’ objectives;
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— demonstration that the project is potentially economically comprises at least two seven-year budget periods and the
viable; expected life of the new infrastructure is at least a century.
— the maturity of the project; the stimulative effect of B. Other financing possibilities
Community intervention on public and private finance and
1. EU Structural and Cohesion Funds
the soundness of the financial package;
In the period 2000–06, these funds contributed approximately
— direct or indirect effects on the environment and EUR 26 billion to TEN projects — particularly through the
employment; Cohesion Fund in Greece, Ireland (until 2003), Portugal and
— coordination of the timing of different parts of the project, Spain and in the Member States that joined in 2004. These new
for example, in the case of cross-border projects; Member States that joined the EU in 2004 were allocated
EUR 2.48 billion in pre-accession aid. In addition, for the period
— compliance with Community law and Community policies, 2004–06 these countries were allocated EUR 4.24 billion from
in particular in relation to environmental protection, the Cohesion Fund and EUR 2.53 billion from the other
competition and the award of public contracts. Structural Funds (4.5.2 and 4.5.3). Of this total, approximately
Regulation (EC) No 2236/95 covers the period 1995–2000 and 50 % of the pre-accession aid and aid from the Cohesion Fund
has been amended by, among others, Regulation (EC) in 2004–06, or EUR 39 billion, was allocated to TEN-T projects.
No 1655/1999 of 19 July 1999 for the period 2000–06, as well 2. European Investment Bank (EIB) aid
as by Regulation (EC) No 788/2004 of 21 April 2004 and
Regulation (EC) No 807/2004 of 21 April 2004. Regulation (EC) No territorial restrictions apply to EIB loans. They are granted
No 680/2007 of 20 June 2007 lays down general rules for the on the basis of banking criteria. These include the financial
granting of Community financial aid for the period 2007–13. (ability to repay), technical and environmental feasibility of the
The latest regulations introduced a range of new elements, project. In the period 1995–2005, the EIB granted loans for
notably: TENs projects totalling approximately EUR 65 billion.
— multiannual and annual programmes in the fields of Regulation (EC) No 680/2007 introduces the loan guarantee
transport and energy for granting Community financial aid instrument as a form of Community financial aid for
to the selected projects; guarantees to be issued by the EIB on its own resources. The
EIB itself manages the Community contribution to the loan
— the amount of Community aid granted to studies is 50 %, guarantee instrument (Article 6(1) and Annex).
irrespective of the project of common interest concerned,
and the amount granted to priority projects is from 10 % to 3. Private sector contribution
30 % in the field of transport (with a maximum of 30 % for On 30 April 2004, the Commission published a Green Paper
cross-border sections of priority projects); (COM(2004) 327) on public–private partnerships (PPPs), which
examines PPPs in the light of Community law on public
— each year, the Commission shall submit a report on the contracts and concessions .
activities undertaken; in the implementation of the
regulation, it is assisted by a normative committee, In addition, on 7 March 2005, the Commission published a
composed of representatives of the Member States, which communication on the design of an EU loan guarantee
meets in the appropriate composition for the subject instrument for TEN-transport projects (COM(2005) 76). The
being discussed (transport, energy or telecommunications); instrument is intended to provide support for specific types of
PPPs. The aim is to stimulate private sector investment in
— inclusion of risk capital in EU financial aid; priority TEN-T projects by providing credit assistance.
— the financial contribution to the provisioning and capital
allocation for guarantees must be issued by the EIB from its C. The new financial framework for 2007–13
own resources under the loan guarantee instrument; For the new financing period 2007–13, the Commission, with
Parliament’s support, initially proposed EUR 20.35 billion for
— the financial framework for the period 2007–13 allocates
TEN-T and EUR 340 million for TEN-E. However, the Council
EUR 8 168 million to the TENs, EUR 8 013 million of which is
insisted on a drastic reduction of these funds. The agreement
for transport (TEN-T) and EUR 155 million for energy
between the Council and Parliament on the new TENs financial
(TEN-E) (see Section C);
framework provided for EUR 8 013 million in the area of
— taking into account that the estimated TEN-T investment in transport and EUR 155 million in the area of energy. Thus, the
priority projects far exceeds the amount of financial aid for amounts laid down in the financial framework represent only
transport for the period 2007–13, the Commission should, 40 % of the amount originally proposed in the area of
with the help of European coordinators, support and transport and 45 % of the amount for energy. The European
coordinate Member States’ efforts to finance and complete Parliament and the Council therefore agreed a revision of
the TEN-T network in line with the timetable laid down. It Regulation (EC) No 2236/95 laying down general rules for the
should also study and solve the long-term financial granting of Community financial aid in the field of trans-
problem, bearing in mind that the TEN-T building period European transport and energy networks. The new regulation
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4 7
((EC) No 680/2007), applicable from 1 January 2007, stipulates funding. Thus, the percentage share of funding for transport
that, in order to complement national (public or private) infrastructure projects was fixed in such a way as to devote at
sources of financing, these limited Community resources least 55 % to railway projects (including combined transport)
should be focused on certain categories of projects which will and a maximum of 25 % to road projects. Furthermore,
provide the greatest added value for the network as a whole. Parliament emphasised the need for the Commission to
These include in particular cross-border sections and projects ensure coordination and coherence of completed projects
aimed at removing bottlenecks. In addition, the rates of with those financed by contributions from the Community
support should be modified for certain categories of projects budget, the EIB, the Cohesion Fund, the ERDF or other
(e.g. for certain waterways, ERMTS/ETCS or the SESAR Community financing instruments.
programme).
In its resolution of 8 June 2005 on the financial framework for
In addition, the contribution to TEN-T made by the cohesion 2007–13, Parliament welcomed the Commission proposal on
policy operational programmes adopted by the Commission TEN-E and on TEN-T priority projects. However, Parliament
was EUR 43 billion, including the contribution for ports and noted that the resources allocated for 30 transport priority
airports (approximately EUR 34.6 billion comes from the projects constitute a minimum amount which must be
Cohesion Fund and EUR 8.3 billion from the Structural Fund). regarded as subject to upward revision. It also declared its
As well as trans-European networks, the satellite navigation willingness to examine innovative financing instruments such
systems (EGNOS and Galileo programmes) are also financed by as loan guarantees, European concessions, European loans and
the EU. The amount allocated to the deployment phase of the an interest relief fund, or EIB facilities.
Galileo programme in particular is EUR 3 405 million for the After the Council had agreed massive reductions to the
period 1 January 2007 to 31 December 2013. original Commission proposal at the end of 2005, Parliament,
in the subsequent negotiations on the financial perspective,
Role of the European Parliament urged that the amount allocated to the TENs be increased. In
the final agreement with the Council, Parliament obtained an
The European Parliament has the right of scrutiny over the
increase of EUR 500 million as well as extra EIB funding for the
Commission’s financing proposals. In the course of the
realisation of the TENs.
legislative procedure on the adoption of Regulation (EC) No
2236/95, Parliament requested amendments intended In its resolution of 12 July 2007, the EP calls on the Commission
primarily to improve criteria, objectives and procedures in to make proposals about the possible extension of new
order to provide Member States and businesses with more alternative and innovative ways of financing and to provide
certainty and transparency and to develop partnership extra resources for transport and the related research during
between the public and private sectors. the review of the financial framework in 2008 (paragraph 6).
In the subsequent legislative procedure on amendment of this
regulation, Parliament urged that more environmentally g Piero Soave
friendly modes of transport be given priority in terms of July 2008
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4.8. Industrial policy
4.8.1. General principles of EU industrial policy

Industrial policy was incorporated into EU legislation by the Maastricht Treaty. This policy is governed by co-decision and it
affects many aspects of environmental policy, the policy relating to the single market and competition policy. Several
communications adopted by the Commission also aim to establish conditions favourable to industrial competitiveness.
Legal basis the Lisbon strategy. Constant upgrading of workers’ skills

and quality helps meet demand in the labour market and
Since the Treaty of Maastricht, Article 157 of the Treaty
contribute to the knowledge-based economy.
establishing the European Community (EC) has laid down
initiatives for industrial policy by which the Commission can — Consumer protection and public health policy are
coordinate the actions of Member States. This article, which essential preconditions for consumer confidence, which is
was amended by the Treaty of Nice, is governed by co- the basis for stable and growing demand.
decision, giving Parliament the role of co-legislator.
— Environmental protection may need to restrict or even
ban the use of certain inputs or technologies, which can
Objectives raise production costs in the short term. In the longer term,
EU industrial policy aims to speed up the adjustment of however, it can help EU companies gain a competitive
industry to structural changes, encourage initiative, edge at the global level and create new markets for clean
development and cooperation between undertakings and products and technologies.
foster the industrial potential of innovation, research and
technological development.
Achievements
A number of policies already well-integrated with industrial
1. Overall conception
policy can contribute to its objectives.
Industrial policy is horizontal in nature and aims at securing
— Greater openness of the world trading system, framework conditions favourable to industrial competitiveness.
specifically, the opening of protected third-country Its instruments, which are those of enterprise policy, aim to
markets to EU producers and service suppliers, gives EU create the general conditions within which entrepreneurs and
producers cheaper access to foreign inputs while businesses can take initiatives, and exploit their ideas and
subjecting them to increased competition from third opportunities.
countries. It both enables and forces them to improve their
competitiveness; Industrial policy should take into account the specific needs
and characteristics of individual sectors. Many products, such
— Single-market-related policies generally have a positive
as pharmaceuticals, chemicals and automobiles, are subject to
impact on competitiveness, in particular by fostering
detailed sector-specific regulations matching their inherent
liberalisation of markets and harmonisation of rules.
characteristics or use.
— R & D policy reinforces the knowledge base and focuses
on key enabling technologies; 2. Major documents
The initiatives taken to complete the internal market
— Competition policy induces firms to enhance their
announced in the Commission’s 1985 White Paper entitled
efficiency and better enable their survival within their
‘Completing the internal market’ (COM(85) 310), gave EU
markets. It also helps to prepare EU companies for the
industrial policy a major boost. An integrated market should
challenge of third-country markets.
give industry the advantages already enjoyed by its American
— Social and employment policies, including vocational and Japanese competitors in their substantial internal markets,
training, have a key role in ensuring that the promotion of including opportunities for mass production, specialisation,
competitiveness is part of the balanced implementation of economies of scale, transnational cooperation among
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Common policies Industrial policy
4 8
enterprises, technical harmonisation, research, innovation, innovation and entrepreneurship, improved investment in
investment and EU-wide tendering. sustainable development and lastly the recognition of
The 1990 Commission communication entitled ‘Industrial changing societal demands. The Commission proposes that
policy in an open and competitive environment’ (COM(90) all these challenges be met through the promotion of
556) proposed a coherent industrial policy strategy aimed at innovation, knowledge and research, of entrepreneurship,
creating general conditions for enterprise to improve and of sustainable industrial production.
competitiveness of EU industrial policy and compensate The communication entitled ‘Fostering structural change: an
where necessary for market failure. The instruments provided industrial policy for an enlarged Europe’ (COM(2004) 274)
by various other EU policies were to be used. Industrial policy follows on from the December 2002 communication entitled
strategy has been refined and re-examined in the ensuing ‘Industrial policy in an enlarged Europe’ and the November
years. 2003 communication entitled ‘Some key issues in Europe’s
The 1993 Commission White Paper entitled ‘Growth, competitiveness — Towards an integrated approach’, which
competitiveness, employment — The challenges and had sketched out an analysis of the problem of
ways forward into the 21st century’ (COM(93) 700) referred deindustrialisation. The Commission proposes three types of
to the particular importance of expanding research and action to accompany structural change. Firstly, the EU must
technological development, adjusting education and training continue its efforts at better legislation and creating a
systems and accelerating the installation of trans-European regulatory framework that is favourable to industry. Secondly,
networks, especially in the areas of transport, the synergies between different Community policies having an
telecommunications and energy, in a partnership between the impact on industry’s competitiveness need to be better
public and private sectors. exploited. Thirdly, the Union must continue to develop the
sectoral dimension of industrial policy.
The 1995 Commission ‘Report on the implementation of
Council resolutions and conclusions on industrial policy’ The Commission communication on industrial policy,
(SEC(95) 437 final) showed that action taken by the EU on announced as part of the EU’s Lisbon programme in July 2005,
industrial policy contributes to a general improvement in aims to strengthen the European Union’s industrial sector by
competitiveness. The Commission reviews the state of developing a more integrated approach to industrial policy
competitiveness of EU industry in annual reports. The 2002 (COM(2005) 474). The health of manufacturing industry is
report on European competitiveness (SEC(2002) 528) essential for Europe’s ability to grow. This communication aims
examined issues such as the role of human capital in to extend and complete the existing framework of EU
economic growth, productivity in services, sustainable industrial policy by focusing on its practical application in the
development in manufacturing industry, and links between various sectors.
industrial policy and competition policy.
In December 1995, the Commission adopted the Green Paper Role of the European Parliament
on innovation (COM(95) 688 final), which identified factors that The Maastricht changes to the EC Treaty dealt with the
encourage or hamper innovation in the EU, and proposed, at question of industrial policy for the first time, an achievement
all decision-making levels, practical measures to step up the that can be attributed to initiatives by Parliament which
EU’s overall innovation capacity, with special emphasis on helped stimulate the reorganising of the steel sector and
SMEs. In 1996, Parliament endorsed the main principles of the called for a more dynamic industrial policy. Parliament
Commission’s conclusions on innovation. adopted numerous resolutions, including those listed below.
The Commission communication entitled ‘The — The resolution of 14 May 1998 on the Commission paper
competitiveness of European enterprises in the face of on ‘Competitiveness of European industry’ identified
globalisation’ (COM(98) 718) invited industry, trade unions weaknesses in the European economy (e.g. inadequate
and the EU institutions to define a new industrial policy and presence in new areas of information technologies, low
proposed measures for improving the competitiveness of EU investment, unfriendly tax systems causing company
companies in the global market. relocations, a fragmented single market coupled with a
lack of a European company identity) and called on the
The Commission considered it necessary to examine the
Commission to come forward with a genuine European
future of EU industrial policy in view of European
industrial policy based on a mix between incentives to
enlargement. In 2002, its communication entitled
encourage investments, loans or direct financial aid to
‘Industrial policy in an enlarged Europe’ (COM(2002) 714)
underlined the key role of knowledge and innovation in a help old industries modernise and the use of venture
global economy. EU industry is faced with the challenge of capital.
globalisation, which requires EU industry to respond quickly — The resolution of 15 January 1999 called on the
to unanticipated developments, and an increased Commission for a detailed analysis of the effects of the
convergence on regulatory issues. Other challenges include international financial crisis on EU industry, especially for
technological and organisational changes, improved textiles, steel and shipbuilding.
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— The resolution of 13 June 2002 assessed the Commission — The resolution of 5 July 2006 on ‘A policy framework to
communication of 8 November 2001 entitled ‘Sustaining the strengthen EU manufacturing — Towards a more
commitments, increasing the pace’ (COM(2001) 641) and in integrated approach for industrial policy’ (2006/2003(INI))
particular reiterated its support for the objective of the welcomed the Commission communication, which set out
Lisbon European Council in 2000 of making the EU, by 2010, a policy framework and an enhanced work programme for
‘the most competitive and dynamic knowledge-based the manufacturing industries for the coming years and
economy in the world, capable of sustainable growth with considers this communication a major building-block for
more and better jobs and greater social cohesion’. shaping a sound and balanced industrial policy by
— The resolution of 9 June 2005 welcomed the Commission’s combining concrete sectoral actions with cross-sectoral
decision to make industrial policy a priority on the EU policy initiatives.
agenda and supported the promotion of a proactive
industrial policy to foster and anticipate structural changes g Miklos Györffi
and develop a sound and competitive industrial base. September 2006
4.8.2. The steel industry

Since the expiry of the ECSC Treaty, the trade of coal and steel is governed by the provisions of the EC Treaty. Currently, the
EU is the second largest steel producer in the world, after the USA. It holds the group Arcelor, which is the largest steel
company in the world in terms of revenue and production.
Legal basis Thus, since the Treaty of Maastricht, Article 157 of the EC Treaty
Fifty years after entering into force, the Treaty on the European constitutes the legal basis for the steel industry. This article is
Coal and Steel Community, as the legal base for steel industry, governed by co-decision, giving Parliament the role of co-
expired as planned on 23 July 2002. Before its expiry, it had legislator.
been amended on various occasions by the following Treaties:
the Merger Treaty (Brussels 1965), Treaties amending certain Objectives
financial provisions (1970 and 1975), the Treaty on Greenland The EU is the world’s second largest steel producer after China,
(1984), the Treaty on European Union (TEU, Maastricht, 1992), with total production of crude steel of 143 million tonnes in
the Single European Act (1986), the Treaty of Amsterdam 2004 (30 % of world production). The European steel industry
(1997), the Treaty of Nice (2001) and the Treaties of Accession comprises some 300 enterprises — almost all of them large.
(1972, 1979, 1985 and 1994). They account for about 1.8 % of the value added and 1.5 % of
At the beginning of the 1990s, following extensive debate, its employment in EU manufacturing. There has been a rapid
expiry was considered the best solution as opposed to growth in steel production elsewhere in the world — mainly
renewing the Treaty or a compromise solution. Thus, the in Asia — leading to a sharp decline in the EU’s traditional
Commission proposed a gradual transition of these two surplus in iron and steel. EU imports have increased from 15.4
sectors into the Treaty establishing the European Community. million tonnes in 1997 to 26.6 million tonnes in 2001. The EU is
The rules of this Treaty have applied to the coal and steel trade second to the USA in trading power, with Japan third.
since the expiry of the ECSC Treaty.
The Luxembourg-based Arcelor Group, created in February
A protocol on the financial consequences of the expiry of the 2002 following the merger of three steel producers — Aceralia,
ECSC Treaty and on the research fund for coal and steel is annexed Arbed and Usinor — became the world’s second largest
to the Treaty of Nice. This protocol provides for the transfer of all steelmaking group, with 5 % of the market. In 2006 following a
assets and liabilities of the ECSC to the European Community and bid of Mittal Steel, based in The Netherlands, a new group
for the use of the net worth of these assets and liabilities for called ArcelorMittal has been formed, which is the world’s
research in the sectors related to the coal and steel industry. leading steel company, by both revenue and production. The
company operates 61 plants across 27 countries, employing
Some decisions of February 2003 contain the necessary
some 320 000 employees.
measures for the implementation of the provisions of the
protocol, the financial guidelines and the provisions relating to EU tariffs for steel products are relatively low. The average
the research fund for coal and steel. consolidated bound rate was around 2 % in 2000, and all tariffs
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4 8
disappeared in 2004 in line with the EU’s commitments in the US steel safeguards. Their arguments included the following
GATT Uruguay Round. Imports from many countries enter the points.
EU at preferential rates under bilateral agreements. Imports of — The USA hit a wide diversity of steel products on the basis
steel products from all countries except Russia, Ukraine and of an arbitrary definition of like-products.
Kazakhstan enter the EU freely without facing quantitative
restrictions or similar barriers. — The US action was not justified by sudden, recent, sharp
and significant increase in imports.
Naturally, the global economic situation has had a great
impact on demand for steel. World export prices for a tonne of — The USA failed to ensure that the injury caused by other
commonly traded hot-rolled coil rose to USD 400 during 2003, factors is not attributed to imports.
up from USD 260 in 2002 and USD 175 in 2001. The rises have — As a result, the US measures are disproportionate because
sparked anger on the part of big steel users like Caterpillar, the they go beyond the extent necessary to remedy the injury
US maker of construction machines, and Emerson, a leading caused by imports.
electronics equipment producer. Since January 2002, the
— The USA excluded imports from certain WTO members
shares of Ispat, Corus, Nucor and Arcelor (some of the largest
from the measures, in a manner incompatible with relevant
steelmaking companies in the world) have risen 85 %, 31 %,
WTO provisions.
28 % and 22 % respectively, relative to world stock markets.
However, while demand in the EU and the United States is — The USA failed to observe the obligation to grant equal
decreasing rapidly, China comes to the rescue of the world’s treatment in excluding developing members from their
steelmakers. Unexpected surges in demand of as much as protectionist measures.
10 % in 2002 pulled global steel consumption to a record level The tariffs affected two thirds of the EU’s steel exports and the
in 2002. The high demand is primarily a result of the country’s Commission rapidly took action, imposing additional customs
booming construction industry. duties on imports of certain US products. On 12 July 2002, the
To reduce costs and increase competitiveness, many large total number of steel products exempted from the tariffs was
steel producers are collaborating on the improvement of 250, or about 6 %. Most of the exempted products were
production technologies. In 2002, Eurostrip, an Arcelor, smaller speciality items, which are not sold in large volumes in
ThyssenKrupp and Voest Alpine consortium, set up two test the USA. Retaliatory sanctions from the EU towards the USA
plants in Germany and Italy, producing steel by a thin-strip could amount to as much as EUR 378 million. Pascal Lamy, the
method called Castrip, based on technology originally EU Trade Commissioner at the time, said the decision on
developed by BHP, an Australian mining and steel concern. The whether to retaliate or not would depend on how many
partners are currently attempting to license this technology, European steel companies gained exemptions from the tariffs.
which they say could lead to steel plants making 500 000 Climbing steel prices affect in particular the automotive
tonnes a year with half the costs of conventional mills. industry. In Russia, car producers have had to break contract
In March 2002, US President Bush announced tariffs for three relations with regional steel producers and start building new
years of up to 30 % on imported steel, guided by Section 201 ones with foreign suppliers, whose products can be cheaper.
of the Trade Act, a safeguard clause in US trade legislation. This Russia exports steel worth up to EUR 460 million a year to the
decision was made in order to protect the country’s ailing steel USA, but its exports are currently severely affected by the US
industry during a restructuring of the American industry. tariffs. However, the decrease in exports to the USA is being
President Bush had followed the International Trade partly compensated for by an EU–Russia trade agreement,
Commission’s recommendation from 2001 to impose signed on 9 June 2002, designed to increase imports of certain
significant tariffs of between 20 % and 40 % on 17 steel Russian steel products into the EU. The agreement increased
products for three years in order to remedy the steel crisis in quantitative limits for the import of steel products such as flat
the USA. Under WTO rules, countries can impose temporary and long products into the EU for 2002 to 2004. Similar
increases in tariffs, known as safeguards, to give time for a agreements have been made with both Ukraine and
domestic industry to restructure to improve competitiveness. Kazakhstan.
The EU Commission, however, claims the US action breaks From an environmental viewpoint the industry remains an
WTO rules. It is particularly concerned that there has been no important emitter of carbon dioxide (CO2), accounting for
overall increase in steel imports — a precondition for around 30 % of all industrial CO2 emissions in the EU. During
safeguard actions — and that some of the moves target the the last 20 years, the energy required to produce a tonne of
wrong steel products. Two thirds of EU steel exports were steel has fallen by 40 %, and throughout the 1990s there was a
affected by President Bush’s actions, which came into force reduction of 20 % in CO2 emissions for the industry. Steel is
two weeks after the announcement. 100 % recyclable with no downgrading in quality. This makes
In June 2002, the WTO’s Dispute Settlement Body accepted steel the most recycled material in the world.
the request by the Commission and by other world producers In many of the new Member States the steel industry is of
that a panel should be established to judge the legality of the great importance. In March 2002, representatives from the
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Czech Republic held meetings with the EU on the Council Regulation (EC) No 1031/2002 established additional
restructuring of the Czech steel industry. Poland is seeking a customs duties on imports of certain products originating in
privatisation of the industry with help from foreign investors. the USA. Additional duty of 100 % was imposed on certain
Polish production in the first quarter of 2002 fell 11.3 % from products such as some dried vegetables, fruits, juices and
the same period of 2001, and in the second quarter fell a clothing. Parliament expressed its concern in two resolutions
further 16 %, producing 8.8 million tonnes of steel compared in February 2003 about the continuing US tariffs and the
with 10.5 million tonnes in 2000. Nearly half of Poland’s 25 overall crisis in the steel industry, pointing to the decision of
steel mills have been privatised since 1990, and over EUR 1 000 the steel giant, Arcelor, to close hot rolling lines in all the
million has been invested in modernisation programmes over group’s continental sites, which will lead to thousands of job
the same period. Romania is attempting to retain its privileged losses throughout Europe. The Commission was asked to
status under the association agreement with the EU. pursue through both the OECD and the WTO stricter
multinational rules against unfair competition.
For some time now, the EU has been pressed by Japan to
allow the new Member States of central Europe to prolong the Enlargement has affected the agreements with a number of
favourable terms which they accord to foreign investment. countries. The customs duties applied to all of the new EU
Japanese companies are concerned that their investment Member States and Turkey will be gradually reduced. Similarly,
advantages will be lost if Poland, the Czech Republic, Hungary the Council has amended its agreements with Ukraine
and other new EU members abolish the preferential rules (Decision 2004/521/EC), Russia and Kazakhstan, which all relate
designed to attract foreign capital. So far, the EU has insisted to trade in certain steel products.
on an end to the practice as a condition of EU membership.
The European Commission has also taken a more firm position
on imports originating from countries such as Russia, India,
Achievements Ukraine, China and other major non-European producers by
After the expiry of the ECSC Treaty, the Eurostat statistics system introducing a set of anti-dumping duties.
on the steel industry was meant to expire. However, both the
steel industry and the Commission requested a prolongation of
the system until the end of 2002, since statistics have shown to
be an important aid in the decision-making process for both The European Parliament has on several occasions sought to
policymakers and the industry. In 2003, Regulation (EC) defend Europe’s iron and steel industry.
No 48/2004 of the European Parliament and of the Council — In its resolution of 12 February 2004, Parliament states that
established a common framework for the statistics on the it is necessary to ensure that a strong and modern steel
production of steel industry for the period 2003–09. Each year sector is maintained in the EU, in order to meet the
the Member States forward their aggregated data to the requirements of lasting development and job creation. It
Commission, which within five years of the entry into force of urges the Commission to act firmly within the WTO and
the regulation must submit a report to the European Parliament OECD to guarantee that there is a level playing field in the
and the Council on its implementation. global steel market. It also welcomes the efforts made by
As a response to the US tariffs, a resolution of the ECSC Commissioner Lamy in the steel conflict with the USA and
Consultative Committee was adopted unanimously in April expresses its concern about the steady loss of market share
2002. The Consultative Committee, whilst recognising that the of Italian and European steel production.
USA steel industry is faced with economic, social and regional
— In its resolution of 24 February 2005, Parliament invited the
problems, firmly contested that these problems were caused
Commission, after the expiry of the ECSC Treaty, to present
by imports, since the volume of imports into the US in 2001
a strategy for the future prospects of the steel sector in
alone fell by more than 23 %. The Consultative Committee
order to promote independent European capacity in this
doubted that there were sufficient grounds for taking
sector. It also called on the Commission to work for a
measures under Article 201 of the US Trade Act. The first steps
decision at WTO and OECD level that would ensure the
had already been taken in January 2002, when the
protection of the Union’s steel industry on the international
Commission adopted Regulation (EC) No 76/2002 introducing
market.
prior surveillance of imports of certain iron and steel products
covered by the ECSC and EU Treaties originating in certain
third countries as a response to the already worsened situation g Miklos Györffi
of the steel industry and the possibility of US-imposed tariffs. September 2006
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4.8.3. Shipbuilding
The European shipbuilding industry is governed by Article 157 of the EC Treaty, related to the industrial policy. Japan,
followed by South Korea, is currently the largest shipbuilding country. On a European level, the Norwegian group Aker
Yards stands at fourth place in the world.
Legal basis without capacity restrictions in return. The devaluation of the

South Korean currency gave the yards an additional
Since the Treaty of Maastricht, Article 157 of the Treaty
competitive advantage. In 1999, prices from the South Korean
establishing the European Community (EC) has laid down
yards had been reduced to down to 40 % below production
initiatives for industrial policy by which the Commission can
costs, according to an EU Commission report. And since the
coordinate the actions of Member States. This article, which
EU was pursuing a policy to reduce the State aid granted to
was amended by the Treaty of Nice, governed by co-decision,
European shipbuilding companies, the lower prices of the
giving Parliament the role of co-legislator also serves as the
Asian companies meant significant market shares for the
legal basis for the shipbuilding industry.
South Korean shipyards. Thanks to a historically high level of
ordering in 2000, prices recovered to some extent, but the
Objectives significant drop in orders in 2001 led to a new reduction in
In 2004, Japan was the world’s largest shipbuilding country, prices (total orders were 21 % lower in 2001 than in 2000
followed by South Korea. Today the EU only accounts for 13 % based on cgt). While the decline in the world economy in 2001
of world tonnage (2002). The largest European shipbuilding mainly affected the liquid bulk and the container segments,
group is the Norwegian Aker Yards Group, the world’s fourth the events of 11 September had a strong impact on the cruise
largest, with more than 10 shipyards. The industry in Europe industry, which saw three bankruptcies and a significant drop
covers the highest technological segment of world in bookings.
production: advanced container vessels, ferries and ro-ro ships, Up to May 2001, the Commission tried to engage South Korea
multipurpose and shuttle tankers, offshore platforms and in talks aiming to stabilise the world shipbuilding market
FPSO, chemical and gas carriers, sophisticated fishing vessels through market instruments. The investigation into subsidies
and small, specialised ships. carried out under the trade barrier regulation (TBR) established
The shipbuilding industry has for some time been facing major that substantial subsidies had been granted to South Korean
problems due to an imbalance of supply and demand. Past shipyards through both export and domestic programmes,
expansion of shipyards, mainly in Korea but increasingly in which contradicted the WTO’s 1994 Subsidies Agreement.
China too, has resulted in prices decreasing rapidly. The global These efforts took place on a bilateral level and in the OECD.
economic situation has led to a sharp decline in demand; in However, no progress was achieved, as the South Korean
2001, only the segment of liquefied natural gas (LNG) carriers government claimed that it had no influence on the shipyards
saw an increase in absolute order volume. However, this is a or on the financial institutions supporting them, and further
niche market as it only represents around 8 % of world orders said that it was convinced business was conducted along free
in compensated gross tonnes (cgt). Korean yards took 79 % of market principles.
new LNG carrier orders in 2001, without holding any patents After the fruitless talks between South Korea and the EU, the
on the requisite key technologies. Daewoo Shipbuilding, the Commission drew up a TBR report in May 2001. It found that
world’s second largest, is the world’s largest constructor of LNG Korean State aid to shipyards included, in particular, aid
carriers, taking half of world LNG tonnage orders in 2000. totalling EUR 2 600 million to Daewoo and EUR 1 700 million
Along with semiconductors and steel, shipbuilding was the to Sambo. In October 2000, the Committee of European Union
major driver of South Korea’s economic growth in 2001. Shipbuilders’ Associations (CESA) lodged a complaint under
the TBR in order to eliminate certain trade practices caused by
In the 1990s, South Korean shipyards tripled their shipbuilding
the subsidising of commercial shipbuilding in South Korea and
capacities, while ignoring demand levels in order to achieve
adversely affecting EU sales of commercial vessels. The report
market leadership, which they achieved in 1999. This led to
found subsidies in the form of the advance payment
overcapacity and destructive prices for the international
guarantees and loans provided by the State-owned Export–
shipbuilding market. Even the economic and financial crisis in
Import Bank of Korea (KEXIM), which were not consistent with
South Korea, which began in 1997, did not lead to a change of
WTO regulations, debt forgiveness and interest relief by
course, although the country had been granted substantial
government-owned and government-controlled banks, and
international financial support under the condition that it
special tax concessions.
incorporated the principles of a free market economy.
Shipyards that were heavily indebted and had been declared In the middle of the trade dispute with the EU, South Korea
bankrupt were not closed down, but freed of debt by the State unveiled an ambitious programme on 17 June 2002 to extend
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the country’s leadership in the industry, ignoring foreign needed to be cleared up before EU entry. It employs about
pressure to reduce capacity. The programme — suggested at a 7 500 people, and had revenue worth EUR 300 million in 2005.
meeting of government officials and shipbuilders — called for
USD 170 million to develop new technology over the next 10 Achievements
years. At the meeting, the South Korean shipbuilders agreed to
As regards the Republic of Korea and the EU, the Commission
raise their global market share from 30 % in 2001 to 40 % in
is claiming that the South Korean shipbuilding industry is
2010. It was suggested that high-end and high-margin vessels
contravening the WTO’s 1994 Subsidies Agreement. Also in
such as cruise ships and supply vessels should account for
1994, Council Regulation (EC) No 3286/94 (the TBR) was
35 % of total production in 2010 compared with 13 % in 2001.
adopted. This regulation sought to establish the necessary EU
Furthermore, they promised to boost exports of shipbuilding
procedures in the field of common commercial policy to
equipment and parts to USD 2 000 million by 2010 from
enable the EU to exercise its rights under international trade
USD 370 million in 2001. In 2001, ship exports accounted for
rules, in particular those established under WTO auspices. On
6.4 % of South Korea’s total exports. The programme also
24 October 2000, the Committee of European Union
highlighted concerns about Japanese shipbuilders who were
Shipbuilders' Associations (CESA) filed an official complaint
teaming up to compete with South Korean rivals through under the TBR.
mergers and strategic partnerships. Still, the South Korean
shipbuilders had enough construction orders to keep them With a view to achieving a quick settlement of the dispute, on
busy until the end of 2003. In May 2002, the world’s largest 18 and 19 July 2000 the EU and Korea held a first round of
shipbuilder, Hyundai Heavy Industries, won USD 400 million consultations on shipbuilding in Seoul. The EC and South
worth of orders from four shipping firms to build 12 petroleum Korea adopted minutes on that occasion with a view to
carriers. At that time, Hyundai had captured orders for 22 ships promoting fair and competitive conditions and stabilising the
worth about USD 800 million, bringing its backlog to 110 market. In accordance with these minutes, the South Korean
ships, enough to occupy its shipyards for the next two and a government agreed to refrain from any direct or indirect
half years. intervention to underwrite loss-making South Korean
shipyards and to apply internationally accepted financial and
In order to further increase sales in the EU, South Korean accounting principles to ensure that South Korean shipyards
shipbuilders have been holding talks with several Dutch set prices that reflected market conditions. The EU ended
companies, which are said to be very strong in fields like operating aid in the form of subsidies to European shipbuilders
navigation, consulting and high-tech equipment. Furthermore, on 31 December 2000 because the Commission was
the Netherlands has the asset of the Port of Rotterdam, which convinced that State aid was in principle a factor that distorted
has grown to become one of the busiest in the world. In 2001, competition and did not necessarily help the industry to
the Netherlands was the second largest investor in South improve its competitiveness.
Korea, after the USA. Korean shipbuilders are also highly
interested in the Czech Republic, which they hope to use as an Given the failure of the negotiations between the EU and
entry point to the EU market. The country was ideal for South Korea, on 25 July 2001 the EU proposed adopting a
investments just before it became a part of the EU, since there Council regulation imposing a temporary defensive
were many advantages for foreign investors: cheap labour, mechanism of providing EU shipbuilders with subsidies in
order to make them competitive once more. It was one
10-year tax holidays, job creation grants and duty-free import
element of the Commission’s two-stage strategy, which
of machinery. Furthermore, the country’s steel production is
consisted of proposing a temporary defensive mechanism
known by shipbuilders worldwide to be of high quality.
and then initiating dispute settlement proceedings. Mario
As far as the new Member States are concerned, the Monti, Competition Commissioner at the time, stated that
Commission carried out a study in 2000, in which it is stated the proposal in no way aimed to reintroduce operating aid to
that east European yards need cash aid in order to withstand shipbuilding, which came to an end on 31 December 2000,
the competition after their accession to the EU. Bulgaria but was simply a way of bringing back the competitiveness
requires financial support from outside the EU because of the of the European industry. The proposal was adopted on 27
weakness of the country’s banking system, according to the June 2002, with the EU firstly aiming to resolve the dispute
report. However, low labour costs bring hope for the industry amicably, after which it would immediately launch
in the future. The Slovakian sector is having the same problems procedures for the establishment of a panel of experts
and is furthermore still suffering significantly from the Kosovo responsible for preparing the EU–Korea case within the WTO
conflict. There are positive signs in Latvia and Lithuania, with and activate the temporary defensive mechanism for
the four Lithuanian yards expanding beyond their traditional European shipbuilding, disregarding the reservations of
east European customer base to Scandinavia and western Denmark, Finland, Sweden and the UK. France decided to
Europe. Europe’s third-largest shipbuilder, Poland’s Gdansk back the Commission’s proposal at the meeting of the EU
Shipyard, filed for bankruptcy in 2002, with debts of USD 448 Industry Council on 6 June 2002 in Luxembourg, thus
million. However, the company reopened with fewer workers helping to create the qualified majority in the Council
with the help of the Polish government, since the industry required for the process. A year earlier, the Commission had
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4 8
already proposed reintroducing subsidies temporarily for Given the prospect of enlargement, the Commission proposed
European shipyards, but disagreement among the 15 States a new programme, LeaderSHIP 2015, which defines the future
had blocked the plan. This time, Competition Commissioner of the European shipbuilding and ship repair industry. This
Mario Monti said that the compromise plan would reduce programme was drawn up within the framework of the
the amount of subsidies from the originally proposed 14 % industrial policy in an enlarged Europe. LeaderSHIP 2015,
and that it would also limit their duration and scope. The which seeks to promote safe and environment-friendly
Commission will now hold a series of further negotiations shipbuilding together with a European approach to the needs
with the Korean authorities in an attempt to restore normal of the shipbuilding industry, is the equivalent of ‘G10
trading practices. The proposal for the defensive mechanism medicines’ for the pharmaceuticals industry and ‘STAR 21’ for
was limited to those market segments in which the the aerospace industry.
Commission and the Council found that the EU industry had
been considerably injured by unfair South Korean trade Role of the European Parliament
practices, namely container ships and tankers carrying
Parliament has for a long time defended the European
products in general and chemicals in particular.
shipbuilding sector, particularly in light of the competition
Seeing that the negotiations broke down between the EU and from South Korea. In its resolution of 30 May 2002, in which it
South Korean authorities in September 2002, the Commission states that, as early as November 2001, it approved the
stated in its communication on the world shipbuilding Commission proposal for a Council regulation concerning a
industry (sixth report) of November 2002 that it had again temporary defensive mechanism for shipbuilding, Parliament
initiated WTO action against South Korea through the dispute ‘recalls that it asked the Commission to amend its proposal to
settlement procedure. include other market segments, namely gas tankers (LNG and
On 11 June 2003, the Community called on the Dispute LPG carriers), ferries and ro-ro vessels, as these ship types are
Settlement Body (DSB) to establish a panel on the unfair also referred to in the complaint lodged with the WTO’.
practices of South Korea’s shipbuilding sector. As Regulation Parliament also reiterated its demand that the proposed
(EC) No 1177/2002 was due to expire on 31 March 2004 and as temporary defensive mechanism should accompany the
the Republic of Korea had not yet implemented the measures Community’s actions against South Korea in the WTO and that
decided upon in the ‘agreed minutes’ and the discussions in it should apply only for the duration of the WTO proceedings.
the WTO had little chance of finishing before that date, it was
decided that the temporary defensive mechanism would be g Miklos Györffi
extended to 31 March 2005. September 2006
4.8.4. The automobile industry

The automobile industry is not currently regulated by specific provisions of the Treaty establishing the European
Community (EC). This area is indirectly regulated by the provisions relating to the environment, competition, State aid or
the internal market. However, a number of EU directives have been adopted to govern the functioning of motor vehicles.
Legal basis effective internal market and global regulatory framework as

well as promoting the interests of industry in other areas such
Although the Treaty of Rome contained no specific provisions
as transport, the environment, competition, trade and
on a common policy for the automobile industry, the Treaty’s
enlargement.
provisions on competition, State aid (Articles 81 to 89) and the
internal market empower the Commission to intervene in the
automobile market. It may be authorised to negotiate with third Achievements
countries (external policy). Article 157 of the Treaty provides the
legal basis generally used for the EU industrial policy. At the beginning of 2005 the Commission launched the high-
level group CARS 21 (‘Competitive Automotive Regulatory
System for the 21st Century’), which brought together all the
Objectives representatives of the car sector: from manufacturers to oil
The EU is focused on strengthening the competitiveness of companies and consumer associations. The task of this group
the European automotive industry by implementing an was to reflect upon the future of Europe’s automobile sector,
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which employs more than 2 million people and is the world The Commission is concerned with the safety of pedestrians
leader in this field. By the end of 2005 the group produced its and cyclists through the voluntary agreement signed with the
final report in which it has determined the regulatory automobile industry. This system will eventually be
measures required over the next 10 years. Its objectives supplemented with a directive on the frontal protection of
include better lawmaking and simplification of the legislation vehicles. The text is currently being examined and Parliament
that exists. has completed its first reading.
In addition to the aim of making the industry more B. Competition policy
competitive, the EU made an overview of priorities in road In promoting industrial cooperation to assist small suppliers of
safety (COM(2000) 125) and policies on pollutant emissions. motor vehicle components, the Commission adopted
A. Internal market Regulation (EC) No 1475/95 on the application of the
competition rules of the Treaty to certain categories of motor
Harmonisation of technical requirements on motor vehicles
vehicle distribution and service agreements valid for a seven-
has been achieved for three categories of vehicles: passenger
year period. It provides an instrument to reduce price
cars, motorcycles and tractors. In total, over 100 directives are
differentials within the EU for cars, opening up the possibility
in place regulating the construction and functioning of motor
of parallel trade. The Commission periodically publishes
vehicles:
surveys of car price differentials between Member States.
— motor vehicles: Directive 70/156/EEC on type-approval of
motor vehicles and their trailers, amended 19 times since C. Research and development policy
1970, lastly by Directive 2003/97/EC; The car industry is a significant recipient of the EU funding set
aside for research and development under the sixth framework
— motorcycles: Directive 2002/24/EC on type-approval of two programme (2002–06). In the seventh framework programme
or three-wheeled motor vehicles and tractors; (2007–13) the industry will also receive significant funding,
— tractors: Directive 2003/37/EC on type-approval of however, in a way to be able to respond to critical events and
agricultural or forestry tractors, their trailers and attached challenges of future transportation systems, for example novel
equipment entered into force in July 2003. transport and vehicle concepts, automation, mobility or
organisation.
The EU whole vehicle type-approval (WVTA) system has been
mandatory for passenger cars and motorcycles since October D. External trade policy
1998 and June 1999, respectively. As a result, the The EU’s external trade policy is designed to protect its
manufacturers have only one set of rules to consider (the automobile market and to improve its industry’s access to
relevant European type-approval directives) before marketing third countries through trade policy measures.
their products anywhere in the EU.
The Council’s 1994 measures establishing the EU’s import
Optional harmonisation has been achieved for tractors since system and rules governing external trade defence
1990. For this category, manufacturers may choose between instruments gave the EU a set of rules that enables it to deal
applying the EU directives and obtaining a WVTA, or with unfair trade practices more effectively than before.
requesting a national type-approval based on the technical
requirements of a Member State. In 1991 the EU concluded a trade agreement with Japan
aimed particularly at gradually opening the EU market to
Partial harmonisation has been achieved for the remaining Japanese cars and light commercial vehicles during a
vehicle categories, i.e. heavy goods vehicles. A directive has transitional period ending on 31 March 1999 and precluding
been proposed to make the WVTA principle compulsory for market disruptions that such imports might cause. Both
these types of vehicles in stages, from 2007 to 2013. Japanese and South Korean markets have been opened
The principle of type-approval implies that each authority further to European imports. During 1998, the Commission
granting an approval for a vehicle, a system, a component or a continued to ensure correct application of the EU–Japan
technical unit is and remains solely responsible for ensuring arrangement for Japanese exports of cars and light
the conformity of production during the whole period of commercial vehicles.
validity of the approval. Global technical harmonisation is a key factor in strengthening
In the field of vehicle safety, a number of directives have been the competitiveness of the European automotive industry
adopted, i.e. protection of motor vehicle occupants in the worldwide.
event of a frontal and side impact (Directives 96/79/EC and The EU and its Member States have always been at the
96/27/EC respectively), frontal under-run protection of heavy forefront of international harmonisation efforts by actively
goods vehicles (Directive 2000/40/EC), liquid-fuel tanks and supporting the work within the revised 1958 agreement of the
rear under-run protection of motor vehicles and their trailers UN Economic Commission for Europe (UNECE) on
(Directive 2000/8/EC), and roadworthiness tests for motor international technical harmonisation in the motor vehicle
vehicles and their trailers (Directive 99/52/EC). sector. The EU became a contracting party to the agreement
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4 8
on 24 March 1998 and over 100 regulations have been CO2 emission figure for new passenger cars of 140 g CO2/
developed under its auspices. There is a very strong analogy km by 2008/09;
between EU legislation and some of these regulations in terms — labelling of cars with information on fuel economy and CO2
of their technical provisions. The EU has adopted 78 emissions of new passenger cars offered for sale or lease in
regulations to date, most of which are considered to be the EU to enable consumers to make an informed choice;
equivalent to their corresponding EU directives. As a result,
type-approvals based on these regulations are accepted in the — the promotion of car fuel efficiency by fiscal measures. The
EU as equivalent to type-approvals based on the respective Environment Council in October 1999 reiterated the need
separate directives. to study the possibility of establishing a reference
framework for fiscal incentives.
In addition, the EU negotiated, through the UNECE, a new
global agreement of 1998 to allow non-contracting parties to The EU established a programme on air quality, road traffic
the 1958 global agreement, such as the USA, to be associated emissions, fuels and engine technologies (the auto-oil
more closely with the international harmonisation process. programme) in 1997. Its objective is to develop an enhanced
Both instruments have the same scope with regard to methodology to assess measures to reduce noxious emissions
harmonising technical regulations on motor vehicles and from road transport and other sources. This technical input will
parts, but the 1998 agreement does not provide for the mutual help develop vehicle emission and fuel quality standards and
recognition of approvals granted on the basis of global other measures to achieve the air quality standards and related
technical regulations. As regards decision-making, the 1998 objectives at least possible cost.
agreement is based on consensus, whereas the 1958 A study on emission control technology for heavy-duty
agreement relies on majority voting of regulations. In addition, vehicles, delivered in May 2002 by a consortium of six
unlike the regulations adopted under the 1958 agreement, organisations, will assist the Commission in the development
those adopted under the global agreement do not have direct of future legislation.
effect in the contracting parties’ legal systems.
The auto-oil II programme was reviewed by the Commission in
E. Environment policy its communication COM(2000) 626.
As far as environmental protection is concerned, significant Provisions to ensure that new passenger cars and light-duty
progress has been made in reducing pollutant emissions, trucks up to 3 500 kg are designed to comply with required
greenhouse gases and waste. minimum rates with respect to their reusability, recyclability
— Directive 70/220/EEC on measures to be taken against air and recoverability have been included in Directive 2005/64/EC
pollution by emissions from motor vehicles lays down the of the European Parliament and Council of 26 October 2005.
limit values for motor vehicle carbon monoxide and
unburnt hydrocarbon emissions. Role of the European Parliament
— Commission Directive 77/102/EEC added limit values for The EP has always taken a close interest in the EU automobile
emissions of nitrogen oxides (NOx). industry. It has supported the Commission and encouraged it
to establish a common automobile market, to promote the
— Directive 88/436/EEC introduced limit values for particulate
general competitiveness of the automobile industry and to
emissions from diesel engines.
ensure a better balance of trade with third countries. Much
— Directive 94/12/EC introduced more stringent limit values attention has also been devoted to problems relating to air
and provided for a 50 % reduction in the most harmful pollution by emissions.
vehicle emissions compared with 1991 levels.
As far as CARS 21 is concerned, on 6 October 2005 Parliament
— Directive 98/69/EC introduced yet more stringent values to held a public hearing, organised jointly by the Committees on
apply from 2000 and 2005, according to the type of vehicle. the Internal Market, Transport and the Environment. The
The EU strategy to reduce CO2 emissions from passenger cars hearing examined the competitiveness of the car industry and
and improve fuel economy (COM(1995) 689 final) was issues concerning road safety and environmental protection.
endorsed by the Council in 1996. It aims to achieve an average Two members of the European Parliament participated in the
specific CO2 emission figure for all passenger cars of 120 g CO2/ CARS 21 high-level group as Parliament’s representatives in the
km by 2010 at the latest. The objective is to be achieved by group: Garrelt Duin (PSE) and Malcolm Harbour (EPP-ED).
three instruments:
— commitments by the automobile industry on fuel g Miklos Györffi
economy improvements, to achieve an average specific September 2006
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4.8.5. The chemicals and pharmaceuticals industries
European Treaties do not currently contain a specific legal basis for the chemicals industry, pharmaceuticals or cosmetics.
These areas are regulated by the existing provisions regarding competition, public health or completion of the internal
market. The REACH directive, the European Chemicals Agency and the European Medicines Agency are instruments that
treat directly this area.
Legal basis — Directive 76/769/EEC on marketing restrictions on

dangerous substances.
The Treaty of Rome does not contain any specific provisions for
the chemicals and pharmaceuticals industries. However, the There is consensus on using these instruments more efficiently
EU may undertake certain actions within the framework of and implementing and enforcing them more rigorously.
competition policy (Articles 81 to 89), the mandate of 30 May A 2001 Commission White Paper proposed a strategy on future
1980, which empowers the Commission to put forward EU chemicals policy with the overriding goal of sustainable
proposals particularly on industrial policy (Article 308), the development. In order to achieve this, the Commission
common commercial policy and the completion of the identified a number of objectives to achieve sustainable
internal market (Article 95), and, in certain cases, on the basis development in the chemicals industry within the framework
of Article 152 on public health. Article 157 provides for the of the single market, namely:
possibility of coordination by the Commission of Member
States’ initiatives on EU industrial policy. — protection of human health and the environment;
— maintenance and enhancement of the competitiveness of
Objectives the EU chemicals industry;
The EU attempts to create favourable conditions for a single — prevention of fragmentation of the internal market.
market, to have a unified commercial policy and to stimulate This White Paper gave rise to the Commission’s REACH
investment in this sector. proposal concerning the registration, evaluation and
authorisation of all existing chemicals. This proposal for a
Achievements directive seeks to find a balance between the competitiveness
of the chemicals industry and environmental and health
A. Chemicals industry protection by testing and registering almost 30 000 chemical
Chemicals are used in all of today’s consumer products: food substances. A European Chemicals Agency is also planned.
production, medicines, textiles, cars, etc. They also contribute 2. Competition policy
to the economic and social well-being of citizens in terms of
Under the terms of the EU’s competition policy, any agreement
trade and employment. The global production of chemicals
among chemicals firms to restructure the market requires prior
has increased from 1 million tonnes in 1930 to 400 million
authorisation from the Commission. The Commission used its
tonnes today. In 2003, the EU chemicals industry was the
investigative powers when it suspected price-fixing in the EU
world’s largest, followed by that of the USA, with 34 % of
plastics market early in 1987. State aid for the chemicals
production value and a trade surplus of EUR 60 billion.
industry has also to be authorised (see annual reports on
The chemicals industry is also Europe’s third largest competition policy). EU legislation, such as the block
manufacturing industry. It employs 1.8 million people directly exemption regulations on specialisation, research and
and up to 3 million jobs are dependent on it. As well as several development and patent licensing, is particularly important for
leading multinationals, it comprises around 36 000 SMEs, this industry.
which represent 96 % of the total number of enterprises and Commission communication COM(96) 187 set out a
account for 28 % of chemical production. framework for action to strengthen the chemicals industry’s
1. Internal market long-term competitiveness on the basis of specific actions:
improving the regulatory framework; ensuring effective
The current system of EU chemicals legislation consists of four
competition; encouraging intangible investment and
legal instruments:
developing industrial cooperation.
— Directives 67/548/EEC and 1999/45/EC on classification, 3. Research and development policy
packaging and labelling of dangerous substances and
The bulk of investment in the chemicals industry relates to
preparations;
R & D. The principal pioneering sector is biotechnology, i.e. the
— Regulation (EEC) No 793/93 on the evaluation of the application of scientific and engineering principles to the
existing substances; treatment of matter with biological agents. Innovation is also
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4 8
taking place in a second field, that of new materials (advanced procedures for the marketing authorisation of medicinal
composite materials, plastics, ceramics, etc.), which have products, the Commission proposed amending Directives
themselves led to significant breakthroughs in 2001/83/EC and 2001/82/EC. This revision was implemented
microelectronics and biotechnology. Many chemicals firms through Directives 2004/27/EC and 2004/28/EC.
have taken part in projects sponsored under the framework
Alongside this revision, Regulation (EC) No 726/2004 amended
programme of EU research and technological development
the operation of the European Agency for the Evaluation of
activities. Not only does the programme provide financial
Medicinal Products (EMEA) and changed it to the European
contributions to meet 50 % of research costs, it also pools the
Medicines Agency. The changes to the centralised procedure
research carried out by various institutes and regions, opening
(Regulation (EC) No 2309/93) are corrections of certain
up new market opportunities.
operating methods and adjustments to take account of
B. Pharmaceuticals industry scientific and technological developments as well as the
The sector is characterised by: enlargement of the EU.
— the high cost of research; 2. Competition policy

There are great price disparities for medicines in the
— concentration of the industry; Community. Governments also intervene decisively to
— market fragmentation, especially in price terms. influence price levels and the conditions governing market
access. As regards prices, harmonisation will depend upon the
1. Internal market
way in which national social security systems are administered
In order to remove obstacles to the internal market in and an equalisation of income levels.
pharmaceuticals while at the same time ensuring a high level
of public health protection, the EU has, since 1965, gradually Council Directive 89/105/EEC related to the transparency of
developed a harmonised legislative framework for medicinal measures regulating the pricing of medicinal products for
products. The current system is based on two separate human use and their inclusion in the scope of national health
procedures for marketing authorisation. insurance systems. Given that medicines are highly innovative
products that take a long time to develop, it is not possible to
— The centralised procedure leads to a single marketing secure a profitable return on investments without a period of
authorisation valid throughout the EU based on a scientific patent protection, because imitations quickly appear on the
evaluation by the committees created within the European market.
Agency for the Evaluation of Medicinal Products (EMEA) in
London. This procedure is mandatory for certain medicinal 3. Research and development policy
products developed by means of biotechnological In implementing communication COM(93) 718 on the outlines
processes, and optional for certain other categories of of an industrial policy for the pharmaceuticals sector, the
medicinal products, such as those that contain new active Commission noted signs of weakness in the EU industry,
substances, and those presenting a significant innovation. particularly as regards its capacity to finance R & D of
innovative therapeutic drugs, and reviewed the prospects for
— For those medicinal products not eligible for the
concentration and restructuring, since these were likely to
centralised procedure, or where the applicant chooses not
reshape the industry up to the turn of the century.
to follow the centralised procedure, the system provides
for a mutual recognition procedure. This procedure has to C. Cosmetics industry
be used by the applicant whenever an application for In the early 1970s the EU decided to harmonise Member
marketing authorisation for a medicinal product concerns States’ national cosmetics regulations to enable the free
two or more Member States. circulation of these products. Following intensive discussions,
Regulation (EEC) No 2309/93 introduced the centralised Directive 76/768/EEC on cosmetic products was adopted. This
procedure, which entered into force in 1995. Within six years, directive takes into account the needs of the consumer while
the Commission was obliged to report on the experience encouraging commercial exchange and eliminating barriers to
acquired in Chapter III of Directive 75/319/EEC on medicinal trade. One of its objectives is to give clear guidance on what
products for human use and in Chapter IV of Directive 81/851/ requirements a safe cosmetic product should fulfil in order to
EEC on medicinal products for veterinary use. The circulate freely within the EU, without pre-market
pharmacovigilance chapters of the latter were amended by authorisation. The safety of products is taken into
Directives 2000/38/EC and 2000/39/EC respectively. These consideration in the composition, packaging and information
amendments are now integrated into Directives 2001/82/EC and it falls under the responsibility of the producer or the
and 2001/83/EC, which, to improve clarity and rationality, importer.
codify and consolidate in a single text all EU legislation on
Commission Directive 95/17/EEC lays down detailed rules for
medicinal products for human and veterinary use.
the application of Directive 76/768/EEC as regards non-
In view of the experience gained from 1995 to 2000 and the inclusion of one or more ingredients on the list used for the
Commission’s analysis report on the operation of the labelling of cosmetic products. This legislative framework was
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completed by an ‘Inventory and common nomenclature of B. Pharmaceuticals
ingredients employed in cosmetic products’ established by In the discussion about the pricing of medicinal products
Commission Decision 96/335/EC. (proposal for a directive (COM(86) 765)), the EP proposed in
Directive 76/768/EEC has already undergone seven March 1988 that a data bank be created by the Commission in
amendments and 44 technical adaptations to take account of order to improve competition in the pharmaceuticals sector
scientific progress. and insisted upon transparency of transfer prices. The
Commission accepted all the amendments tabled by the EP at
The most recent amendment (Directive 2003/1/EC) related to first reading of this proposed directive.
the eventual ban on animal testing for cosmetic products.
These products will no longer be tested on animals in the EU On 14 November 1994 the EP adopted two resolutions dealing
after 2009, and products tested on animals outside the EU will with the specific research programmes (in the fourth
not be authorised for sale in the Union after 2013. framework R & D programme) on ‘biotechnology’ and
‘biomedicine and health’.
Role of the European Parliament The resolutions adopted by the EP in April 1996 on the
communication on the outlines of an industrial policy for
A. Chemicals
the pharmaceuticals industry stressed the need to ensure
The EP has stressed that the restructuring of the European the industry’s innovation capacity, the reduction in the time
petrochemicals industry should be European rather than required for the approval of new medicines and the cost
national, bearing in mind the international context in which it effectiveness of research. In response to Parliament’s
has to operate. The EP advocated an approach in which the resolution and the internal market Council conclusions of 18
Commission should monitor the situation closely. There is a need May 1998, the Commission published a communication on
to increase specialisation of product ranges in which European the single market in pharmaceuticals (COM(98) 588)
firms enjoy a comparative advantage. On 13 March 1997 the EP outlining an agenda of possible approaches and specific
adopted a resolution on the chemicals industry stressing the measures to complete a single European pharmaceuticals
elimination of excessive regulations and the conclusion of market.
multinational agreements for the protection of investment.
In its capacity as co-legislator, Parliament has participated in
Parliament also adopted a resolution on the REACH proposal
all of the revisions of the directives on human and animal
on 17 November 2005 in which it approves an amended
pharmaceutical products and the European Medicines
version of the Commission proposal. In addition to the
Agency.
parliamentary and legislative work on REACH, Parliament
organised a public hearing on REACH in January 2005 on the
joint initiative of the Committees on Industry, the Environment g Miklos Györffi
and the Internal Market. September 2006
4.8.6. The aerospace industry

The innovations in the European aerospace industry as well as the further development and exploitation of European
flagship space initiatives such as Galileo and GMES (global monitoring for the environment and security), and satellite
communication applications allow the EU to position itself as a global leader in this field. The EU is now moving forward
rapidly on the development of its European space policy coordinating more effective space programmes between the EU,
ESA and their respective Member States and bringing in industrial players, other space stakeholders and end users.
Legal basis generally used for actions in the field of industrial policy. The
Lisbon Treaty foresees a new legal basis (Article 189 TFEU) for a
Air transport policy is based on Article 80(2) of the Treaty coherent space policy.
establishing the European Community (EC), (Article 100(2) of
the Treaty on the Functioning of the European Union (TFEU)).
Aircraft construction is based on Article 308 EC (Article 352 Objectives
TFEU), which covers the cases in which the Treaty does not Aerospace is vital to Europe’s objectives for economic growth,
make explicit provision for means of attaining one of the EU’s security and quality of life. It is influenced by a broad range of
objectives. Article 157 EC (Article 173 TFEU) is the legal basis European policies such as trade, transport, environment,
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4 8
security and defence. European aerospace must maintain a public representative, the leaders of integrated technology
strong competitive position in the global aerospace demonstrators (ITDs) and the associate members of the
marketplace, a condition for achieving the EU’s economic and individual ITDs. It is also open to new members. The Clean Sky
political objectives. Joint Undertaking will rely on a number of external advisory
The new European space policy aims to foster better bodies, involving national States and the ACARE European
coordination of space activities between the EU, ESA and their technology platform for aeronautics. The maximum
respective Member States, thus enabling Europe to exert a Community contribution to the Clean Sky Joint Undertaking
global leadership in the space sector. covering running costs and research activities will be EUR 800
million paid from the budget appropriation allocated to the
theme ‘Transport’ of the FP7 specific programme ‘Cooperation’.
Achievements
The European aerospace industry is one of the world’s leaders A. The aircraft industry
in large civil aircraft, business jets and helicopters, aero- 1. Competition policy
engines and defence electronics, accounting for one third of The Council resolution of 1975 and declaration of 1977 laid
all aerospace business turnover worldwide, compared with the foundations for coordinating Member States’ aircraft
almost half for US industry. construction policies given that aerospace technology is
advancing rapidly and becoming increasingly expensive,
According to the July 2002 report of the European Advisory
requiring extensive cooperation. The Airbus programme is
Group on Aerospace ‘Strategic Aerospace Review for the 21st
exemplary in this respect. Launched in 1968 as an economic
Century’ (STAR 21), which consists of seven aerospace industry
interest grouping, Airbus Industrie is now one of the most
chairmen, five European Commissioners, the EU High
important players in Europe’s aeronautical industry. Other
Representative for the Common Foreign and Security Policy
cooperative projects are the Tornado, Alpha Jet and Transall
and two members of the European Parliament, the following
programmes, which, together with joint space projects,
features give the industry its distinctive character:
greatly increase the competitiveness of the European
— close links between civil and defence activities; manufacturers. In 1985 a number of EU countries agreed to
— the cyclical nature of the industry; pool their resources in developing the EFA or ‘Eurofighter’ for
the 1990s.
— high level of capital intensity;
In its 1997 communications on the European aerospace and
— consolidation;
defence-related industries, the Commission recognised that
— privatisation; the industry was too fragmented to face up to international
— EU–US relationships. competition and that restructuring was going too slowly.
Accompanying measures were needed — actions under the
In response to the STAR 21 report, the Commission has fifth European framework programme for research, the
published a communication (COM(2003) 600), which proposes application of public procurement rules, the adoption of a
a coherent framework for the aerospace industry. European company statute, uniform certification by a
The ‘Clean Sky’ joint technology initiative for aeronautics European civil aviation authority and European standardisation
and air transport, one of the first of the new JTIs to get off — to avoid a de facto US monopoly.
the ground under FP7, is a public–private partnership that will In its 1999 communication ‘The European airline industry: from
bring together EU-funded projects and major industrial single market to worldwide challenges’, the Commission
stakeholders in the aeronautics and aerospace sectors with the assessed the progress of the European airline industry and
goal of providing a step forward in the technology capability identified policies to safeguard its competitiveness.
of ATS environment-friendly systems. Clean Sky received a
positive vote from the European Parliament and was formally With a view to ensuring the competitiveness of Europe’s
adopted by the Council of Ministers in December 2007. Clean industries, the communication ‘Industrial policy in an Enlarged
Sky is the largest European research project ever, at EUR 1.6 Europe’ (COM(2002) 714) mentioned the aerospace sector as
billion equally shared between the European Commission and one of the sectors that required a clear commitment on the
industry, over the period 2008–13. For the implementation of part of the EU and the Member States to improve
the Clean Sky JTI, Council Regulation (EC) No 71/2008 sets up a competitiveness.
joint undertaking (based in Brussels) for the period up to 31 Following the United States’ withdrawal from the 1992 bilateral
December 2017 (Clean Sky Joint Undertaking) which will EU–US agreement and the initiation of WTO dispute
contribute to the implementation of the seventh framework settlement procedures against the EU, the EU for its part on
programme and in particular Theme 7, Transport (including 6 October 2004 decided to mirror the US steps by initiating
aeronautics), of the specific programme ‘Cooperation’. The WTO dispute settlement procedures regarding various US
members of the Clean Sky Joint Undertaking will be the federal, State and local subsidies benefiting Boeing. A WTO
European Community represented by the Commission as panel was set up thereafter.
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Following a broad consultation process including an open Community trade and competition to the sector, including
consultation, in January 2007 the Commission presented ‘An also large parts of the aerospace industry. Since the
agenda for sustainable future in general and business emblematic success of the Ariane launcher, space activities
aviation’ (COM(2007) 869) through which the Commission is have evolved from being a research endeavour to offering a
calling on all interested stakeholders to pursue a dialogue on unique and critical technology enabling Europe to address
the future of this sector in Europe. The Commission will, in and achieve a large number of policy goals related to
particular, focus on the following actions: building a basic set economic growth, the information society, transport
of data regarding European general and business aviation; infrastructure, environmental protection and peace-keeping.
being particularly vigilant to proper application of the Space has the potential to become an integral component of
principles of proportionality and subsidiarity; taking into the EU’s core policies. The first benefits of such a development
consideration the needs of all airspace and infrastructure users are already highlighted by the Galileo and GMES initiatives,
in capacity planning and optimisation; promoting new respectively in the field of navigation by satellite and global
technologies allowing the European industry to maintain its monitoring for environment and security.
competitive edge and to untap regional and local capacity in a
Following the 2000 communication ‘Europe and space: turning
cost-efficient way; facilitating general and business aviation
to a new chapter’, endorsed by subsequent EU and ESA
access to foreign markets; ensuring environmental
Council resolutions, the Commission and the ESA Executive set
sustainability of general and business aviation.
up a joint task force. Its aims were to further develop and
2. Research and development policy implement the European strategy for space, reporting to the
The progress made in aerospace research and industry owes EU and ESA Councils and the European Parliament at the end
more to intergovernmental action and cross-border projects of 2001. In December 2001 the Commission communication
launched by aerospace enterprises than EU intervention. In ‘Towards a European space policy’ gave an analysis and
1988 the major aircraft manufacturers published a report recommendations for the space sector, highlighting in
entitled ‘Euromart’ (European cooperative measures for particular the need to cooperate with the European Space
aeronautical research and technology), which focused on a Agency. In the Green Paper on European space policy
programme of cooperative research and development. It (COM(2003) 17), the Commission, together with the ESA,
called for the promotion of a strategic programme for the began a consultation process with a view to launching a
aeronautics industry, similar to that for the electronics sector debate on the medium and long-term use of space for the
(Esprit). In June 1995 the Commission set up an aeronautics benefit of Europe. These discussions resulted in the publication
task force to coordinate research projects in the industry. of a White Paper and an action plan (White Paper ‘Space: a new
Aeronautics and space research have been designated as frontier for an expanding Union — An action plan for
research priorities of the sixth (2002–06) and seventh (2007– implementing the European space policy’ (COM(2003) 673)).
13) R & D framework programme. As a follow-up to the publication of the Green Paper and the
B. The space industry White Paper on the European space policy, a framework
agreement (Council Decision 2004/578/EC) between the
1. Towards a European space policy
European Community and the European Space Agency was
European governments began cooperating in the space sector
adopted in 2003 which set the origin of European institutional
through the European Space Agency (ESA) with banks and
cooperation in outer space affairs. The cooperation under this
industrial enterprises also being involved. The Ariane
framework agreement aims at:
programme, involving 10 European countries, was launched in
1983. In 1987 the ESA Council of Ministers said that if Europe — securing Europe’s independent and cost-effective access to
wanted to maintain its role in space in the future, ESA’s 13 space and the development of other fields of strategic
Member States should agree the broad-based development of interest necessary for the independent use and application
the Ariane programme. The future of the European aerospace of space technologies in Europe;
industry depended on European cooperation, since no — ensuring that the overall European space policy takes into
European country had sufficient financial and economic particular account the general policies pursued by the
resources to implement major space projects on its own. In European Community;
1996 the Commission proposed a European space strategy
fostering applications in telecommunications, satellite — supporting Community policies by using space
navigation and Earth observation. The measures proposed technologies and space infrastructures where appropriate
were based on existing resources (the RTD framework and promoting the use of space systems in support of
programme, trans-European networks, national and ESA sustainable development, economic growth and
programmes, EIB–EIF financing), the alignment of trade employment;
positions and better coordination. The 1996 and 1997 — optimising the use of expertise and available resources and
communications on defence-related industries proposed the contributing to the consolidation of the close cooperation
application of EU rules on the award of public contracts, intra- between the European Community and the ESA, thereby
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linking the demand and supply of space systems within a is managed by the ESA and the Commission manages the
strategic partnership; development of GMES services through FP7 and assures
— achieving greater coherence and synergy of research and optimal integration of data from in-situ monitoring.
development in order to optimise the use of resources — applications of satellite telecommunications to provide
available in Europe, including the network of technical centres. affordable and economically viable services to the largest
It also made provision for joint and concomitant meetings of possible customer base;
the Council of the European Union and the ESA Council at — security aspects (complementary to security research and
ministerial level. Since then, the so-called ‘Space Council’ has to GMES activities);
met several times (25 November 2004, 7 June 2005 and 28 — exploration of space;
November 2005) for the adoption of jointly-endorsed
orientations for space. In May 2005 the Commission set out — RTD for strengthening space foundations (space
the preliminary elements of Europe’s space policy in a technology and space sciences).
communication (COM(2005) 208). On 22 May 2007 the The EU Member States have earmarked EUR 1.43 billion for
European Space Council adopted the resolution on the funding the space element over the duration of FP7.
European space policy through which the European Union,
3. Galileo — the flagship EU satellite navigation system
ESA and their Member States have for the first time a common
political framework for space activities in Europe that will Finding your way around a large building, tracking pollutants
benefit all citizens and keep European industry strong and and dangerous goods, monitoring animal migration, allowing
competitive. The new European space policy highlights the the location of stolen property, or lost pets or individuals or
importance of the space sector as a strategic asset for the allowing near real-time reception of messages in case of
independence, security and prosperity of Europe, makes emergency are only a few examples of the benefits Galileo
specific reference to defence and security applications, aiming could provide. The Galileo satellite radio navigation system
to support increasing synergies between military and civil is an initiative launched by the European Union and the
space programmes, calls for ensuring sustainable funding for European Space Agency which aims to be the first satellite
space applications and provides for a specific coordination positioning and navigation system in the world specifically
mechanism for such international cooperation. designed for civil purposes. The EGNOS programme, which is
also a part of the European satellite radionavigation policy,
At a time when new world players, such as China or India, are aims to improve the quality of signals from the American GPS
now becoming significant competitors in establishing space and the Russian Glonass systems to ensure reliability over a
projects, the Lisbon Treaty foresees a new legal basis (Article vast geographical area. In light of the changes in the course of
189 TFEU) for a coherent space policy to promote scientific the Galileo programme since the start of 2007 and in particular
and technical progress, industrial competitiveness and the the fact that the European Community will now assume
implementation of its policies. To this end, the Union will responsibility for the deployment of the system and the
promote joint initiatives, support research and technological resulting additional cost for the Community budget during the
development, coordinate the efforts needed for the 2007–13 financial framework, the Commission put forward a
exploration and exploitation of space and establish any proposal for a regulation on the further implementation of the
appropriate relations with ESA. The European Parliament and European satellite radionavigation programmes (EGNOS and
the Council will have shared competences and will adopt the Galileo) to amend its initial proposal (COM(2004) 477). The
necessary measures in accordance with the so-to-be-called current proposal abandons the concession contract with the
‘ordinary legislative procedure’ excluding any harmonisation of private sector and the principle of public–private partnership
the laws and regulations of the Member States. for the deployment phase. The European Parliament realises
2. Research and development policy the technological, political and economic importance of the
For many years, Europe’s public financial support for space programme and has consistently given its full support. The
research and development was channelled through national main innovations which will strengthen the role of the EP are:
space organisations and the ESA, although several space- the application of the regulatory procedure, with scrutiny on
related R & D technology projects have been financially the most important aspects of the decision-making, and the
supported under the sixth and seventh EU research framework introduction of a new institutional mechanism for monitoring
programmes. The seventh framework programme (FP7) (2007– the programmes: the Galileo Interinstitutional Panel (GIP).
13) is supporting a European space programme focusing on
applications such as: Role of the European Parliament
— global monitoring for environment and security (GMES) — a In January 2002 Parliament stated that it ‘welcomes the
European initiative to combine satellite and other drafting of a coherent European strategy for space and
observation data in order to provide value-added emphasises the importance of close and effective cooperation
information services dealing with environment and security; between the Commission and the European Space Agency on
under FP7 the development of the GMES space component this initiative’.
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In October 2003 Parliament adopted a resolution reaffirming European interests in space. It also underlines the need for
the need for Europe to play a leading role on the international space assets in order that the political and diplomatic
stage and be able to gain access to space through its own activities of the European Union may be based on
efforts, and to develop the necessary technologies, actively independent, reliable and complete information in support
involving the countries that have joined the Union. It of its policies for conflict prevention, crisis management
emphasised in this connection the fact that independent operations and global security, especially the monitoring of
access to space for Europe is fully in keeping with the Lisbon proliferation of weapons of mass destruction and their means
process seeking to make Europe the world’s most competitive of transportation and verification of international treaties, the
area through the acquisition and development of a high level transnational smuggling of light weapons and small arms,
of industrial and technological know-how. the protection of critical infrastructure and of the European
Union’s borders and civil protection in the event of natural
In January 2004, in a resolution on the implementation of the and man-made disasters and crises. The resolution welcomes
space policy, Parliament stated that the European Union must the endorsement of the European space policy and draws
make a supreme financial effort, including in particular the attention to the fact that the EGNOS and Galileo programmes
development of space applications relating to global security. should be considered as one of the major pillars of the future
European space programme.
In July 2008 Parliament adopted a resolution on space and
security where it notes the importance of the space
dimension to the security of the European Union and the g Maya Gadzheva
need for a common approach necessary for defending August 2008
4.8.7. The audiovisual industry

The switchover from analogue to digital broadcasting brings many advantages: a better image and sound quality, lower
transmission costs, more efficient spectrum usage, fully interactive applications. At the same time digital technology
allows for the convergence of broadcasting with traditionally separate media such as telecommunications and the
Internet into a single multimedia product combining text, sound, video and voice. Mobile TV and access to TV
broadcasting on the Internet are already nowadays a reality and the process of convergence is expected to accelerate over
the coming decade.
Legal basis — To establish a more competitive European audiovisual sector

— Article 157 of the Treaty establishing the European through support mechanisms in the form of different EU
Community (EC) (industry), (Article 173 of the Treaty on the actions and programmes; easier access to finance, in
Functioning of the European Union (TFEU) (proposed)). particular for SMEs and the distribution of the audiovisual
content in a converging market (that includes telecoms,
— Articles 23, 25, 28 and 29 EC (free movement of goods, digital radio and TV and next generation networks).
including audiovisual products), (Articles 28, 30, 34 and 35
TFEU). — To promote cooperation and facilitate discussion between
EU and other international organisations concerning the
— Articles 39 to 60 EC (free movement of people, services and audiovisual sector.
capital), (Articles 45 to 66 TFEU).
— Articles 81 to 89 EC (rules on competition), (Articles 101 to
Achievements
109 TFEU).
— Article 95 EC (approximation of laws), (Article 114 TFEU). A. Regulation of audiovisual content
— Article 149 EC (education), (Article 165 TFEU); Article 151 EC Under the Treaty of Rome the audiovisual field was not defined
(culture), (Article 167 TFEU). as a separate policy. The growing economic importance of the
audiovisual sector over the years and its very great sociological
and cultural implications prompted the first attempts to open
Objectives up the audiovisual market to competition in the Member
— To strengthen the internal market for broadcasting and States at the beginning of 1980s. In 1984 the Commission
audiovisual services. adopted a ‘Green Paper on the establishment of a common
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market in broadcasting, especially by satellite and cable’ and in nonlinear audiovisual media services) which are defined as ‘an
1987 a ‘Green Paper on the development of the common audiovisual media service provided by a media service
market for telecommunication services and equipment’. It was provider for the viewing of programmes at the moment
in 1989, with the adoption of the Council Directive 89/552/EEC chosen by the user and at his individual request on the basis of
on the coordination of certain provisions laid down by law, a catalogue of programmes selected by the media service
regulation or administrative action in Member States provider’. The aim of the directive is to deepen the internal
concerning the pursuit of television broadcasting activities — market for nonlinear/on-demand audiovisual services
known as the TV without frontiers directive — that a (minimum harmonisation with regard to protection of minors,
common audiovisual policy began to take shape. The hate speech, commercial communication) and to modernise
Maastricht Treaty or the Treaty on European Union, which was the rules, especially advertising rules, for linear/broadcast
signed in 1992 and entered into force on 1 November 1993, services. Jurisdiction will continue to be determined on the
added a specific reference to the audiovisual sector in basis of the country-of-establishment principle but the
Article 128, which deals with culture: ‘Action by the directive contains a procedure which allows a Member State
Community shall be aimed at encouraging cooperation to oblige a television broadcast directed wholly or mostly
between Member States and, if necessary, supporting and towards a Member State other than the one where the
supplementing their action’ in such fields as ‘artistic and literary broadcaster is established to comply with its own national
creation, including in the audiovisual sector’. Furthermore, the rules. The directive keeps the basic principles of the current
Community should take cultural aspects into account in its directive as well as amending and introducing new rules
action under other provisions of this Treaty. The Treaty of including those listed below.
Amsterdam, which was signed on 2 October 1997 and entered — Access to short news reports: Member States must
into force on 1 May 1999, was accompanied by a protocol on ensure that any broadcaster established in the Community
the system of public broadcasting. It confirmed the has access on a fair, reasonable and non-discriminatory
importance attached by the Member States to the role of basis to events of high interest to the public which are
public broadcasting, which is linked to the democratic, social transmitted on an exclusive basis for the purpose of short
and cultural needs of each society as well as to the need to news reporting.
safeguard plurality in the mass media.
— European works in on-demand audiovisual media
Television without frontiers directive (TVWF directive) services: Member States shall ensure that on-demand
The 1989 TWF directive was modified in 1997 to clarify certain audiovisual media services provided by media service
of its provisions and to bring it up to date with technological providers under their jurisdiction promote, where
developments such as teleshopping and sponsoring. It practicable and by appropriate means, the production of
regulates television broadcasting services and includes and access to European works.
traditional TV, pay-per-view and near-video-on-demand but
— Product placement: In principle it is prohibited but
not video-on-demand and on-demand information services.
exemptions to this principle are provided for certain types
The directive’s current version contains provisions, inter alia, on
of programme (films, series, sports, light entertainment)
the country of origin principle, promotion of European works
subject to certain conditions. In any event programmes for
(the so-called ‘quotas’ regime), advertising and sponsorship,
children are not allowed to contain product placement.
broadcasting of major events of major importance for society
and the right to reply. The directive set up a contact — Protection of minors in on-demand audiovisual media
committee which is composed of representatives of the services: Programmes which might seriously impair the
responsible authorities from the Member States. physical, mental or moral development of minors should
only be made available in such a way that ensures that
The audiovisual media services directive
minors will not normally hear or see such on-demand
Meanwhile the new and fast developing information and audiovisual media services.
communication technologies combined with other
developments in the broadcasting markets are set to — Co- and self-regulation: Member States must encourage
transform the European audiovisual landscape. Consequently media service providers to develop codes of conduct
on 13 December 2005 the Commission proposed a directive towards children, for example to preclude junk food
on audiovisual media services amending the TVWF directive commercials aimed at children.
(COM(2005) 646). Directive 2007/65/EC adopted on — Advertising: A core of ‘qualitative’ rules on audiovisual
11 December 2007 amends the television without frontiers commercial communication is applied to all audiovisual
directive and renames it ‘audiovisual media services media services. The rules which apply only to linear
directive’ (AVMSD). It entered into force on 19 December services have been simplified and streamlined. Commercial
2007 and the deadline for implementation by the Member breaks are only allowed once every 30 minutes in TV films
States is 19 December 2009 at the latest. In the meantime the (excluding series, serials and documentaries),
TVWF directive remains fully applicable. The scope of the new cinematographic works and news programmes. In
directive is extended to cover on-demand services (i.e. children’s programmes, commercial breaks will be allowed
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provided that the scheduled duration of the programme is General: Education and Culture (responsible for the majority of
greater than 30 minutes. Religious services cannot be the programmes entrusted to the agency), Information Society
interrupted. The proportion of television advertising spots and Media (responsible for the MEDIA Plus and MEDIA Training
and teleshopping spots is not allowed to exceed 20 % of programmes), EuropeAid Co-operation Office (responsible for
one hour. EU external cooperation programmes).
— Right of reply: There is no change from the TVWF With Council Decision 1999/784/EC of 22 November 1999 the
directive. Recital 53 stresses that the right of reply could Community decided to become a member of the European
also be applied as a legal remedy in the online Audiovisual Observatory. Based in Strasbourg and
environment and recalls the recommendation on the established in 1992 within the legal framework of the Council
protection of minors and human dignity and on the right of Europe, it is a unique non-profit public service body which
to reply. contributes to the strengthening the competitiveness of the
— Report: The Commission must submit a report to the audiovisual industry by collecting and disseminating
European Parliament, the Council of the European Union information on the audiovisual sector in Europe. Decision No
and the European Economic and Social Committee on the 2239/2004/EC extended the Community’s participation in the
application of the directive not later than 19 December Observatory until the end of 2006. Subsequently, the
2011, and every four years thereafter. Community’s participation was further extended until 2013
with Decision No 1718/2006/EC, which established the MEDIA
Media programmes 2007 programme, to cover the whole duration of the
MEDIA 2007: A successor to four previous programmes, it programme.
was established by Decision No 1718/2006/EC, has a budget
of EUR 755 million and covers the period 2007–13. In contrast B. The EU regulatory framework for electronic
to MEDIA II (1996–2000) and MEDIA Plus/MEDIA Training communications networks and services —
(2001–06), it is conceived as a single programme. Like its Implications for broadcasting
forerunners, MEDIA 2007 is intended to strengthen the The EU regulatory framework for electronic communications
audiovisual sector economically, thereby enabling it to play a networks and services apply to all transmission infrastructures,
more effective cultural role. The global objectives of the irrespective of the types of services carried over them (the
programme are: to preserve and enhance European cultural so-called ‘horizontal’ approach). It covers all electronic
and linguistic diversity as well as Europe’s cinematographic communications networks, associated facilities and electronic
and audiovisual heritage and to guarantee its accessibility to communications services, including those used to carry
the public; to increase the circulation and viewing of broadcasting content such as cable television networks,
European audiovisual works inside and outside of the terrestrial broadcasting networks and satellite broadcasting
European Union; to strengthen the competitiveness of the networks. Of particular importance or specific to the
European audiovisual sector within an open and competitive broadcasting sector are provisions that provide the links
framework and to promote links between audiovisual between transmission and content regulation, concerning,
professionals. In order to achieve these objectives the inter alia: allocation and assignment of radio spectrum;
programme will support the acquisition and improvement of authorisation of networks and services; must-carry obligations;
skills in the audiovisual field and the development, access to networks and associated facilities, including access
distribution and promotion of European audiovisual works to application programme interfaces (API) and electronic
and pilot projects to ensure that the programme adjusts to programme guides (EPG) for interactive digital television
market developments. (4.8.8.).
Previous programmes include: the MEDIA programme C. Switchover to digital broadcasting
(1991–95), MEDIA II (1996–2000), MEDIA II Training (1996–
The transition from analogue to digital technology constitutes
2000), MEDIA Plus — Development, Distribution and
the next major revolutionary change after the transition from
Promotion (2001–06) and MEDIA Training (2001–06).
black and white to colour TV broadcasting. Digital broadcasting
Bodies and agencies means huge advantages in terms of more efficient spectrum
The Education, Audiovisual and Culture Executive Agency usage and increased transmission possibilities. Digital
(EACEA) was established by Decision 2005/56/EC of 14 convergence and multiplatform access have revolutionised the
January 2005 for the management of more than 15 transmission of information and are still subject to a process of
Community funded programmes and actions in the fields of continuous evolution and improvement affecting all segments
education and training, youth, active European citizenship, of society as they will lead to wider consumer choice, greater
cultural and audiovisual fields. The agency is located in Brussels flexibility and enhanced competition. Consumers will benefit
and will be operational for a fixed period running from 1 from new and improved broadcasting services such as
January 2005 to 31 December 2015. It is managed by a additional programming, programme-related enhancements,
steering committee and a director appointed by the better audio and picture quality including features such as
Commission. The agency reports to three parent Directorates- widescreen and high definition TV, interactive digital television
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services, mobile TV and future new services that differ from spectrum will bring the greatest benefits and which actions
today’s fixed or mobile offerings. The digital switchover will need to be taken at EU level.
have a significant impact on the EU economy, driving
Related acts
innovation, job growth and productivity.
— Communication of 2 February 2006 from the Commission
The switchover from analogue to digital TV broadcasting in to the Council, the European Parliament, the European
Europe, expected by 2012, will release significant spectrum Economic and Social Committee and the Committee of the
known as the ‘digital dividend’. In its communication of Regions on reviewing the interoperability of digital
13 November 2007 entitled ‘Reaping the full benefits of the interactive television services pursuant to communication
digital dividend in Europe: A common approach to the COM(2004) 541 of 30 July 2004 (COM(2006) 37).
use of the spectrum released by the digital switchover’,
the European Commission defines the digital dividend as ‘the — Communication of 29 September 2005 from the
spectrum over and above the frequencies required to support Commission to the Council, the European Parliament, the
existing broadcasting services in a fully digital environment, European Economic and Social Committee and the
including current public service obligations’ — meaning part Committee of the Regions on EU spectrum policy priorities
of the frequency bands from 174 to 230 MHz (VHF) and from for the digital switchover in the context of the upcoming
470 to 862 MHz (UHF). Due to digital compression systems the ITU Regional Radiocommunication Conference 2006 (RRC-
same amount of spectrum needed for one analogue TV 06) (COM(2005) 461).
channel can be used for six to eight standard digital TV — Communication of 24 May 2005 from the Commission to
channels. The 27 Member States do not have a common the Council, the European Parliament, the European
timetable to switch to fully digital broadcasting. In many Economic and Social Committee and the Committee of the
Member States plans for the digital switchover are hardly Regions on accelerating the transition from analogue to
developed, while in a few others, Sweden and Finland, the digital broadcasting (COM(2005) 204).
switchover has already taken place.
— Communication of 30 July 2004 from the Commission to
The Commission also proposed freed-up frequencies to be the Council, the European Parliament, the European
arranged into clusters for the three most common types of Economic and Social Committee and the Committee of the
networks. Regions on interoperability of digital interactive television
— Unidirectional high power networks (i.e. mainly for fixed services (COM(2004) 541).
broadcasting services): This part of the UHF should be used
— Communication of 17 September 2003 from the
both to ensure the continuation of existing TV
Commission to the Council, the European Parliament, the
programmes in digital format (which is formally outside of
European Economic and Social Committee and the
the scope of the digital dividend) as well as to deploy
Committee of the Regions on the transition from analogue
appropriate resources to accommodate new
to digital broadcasting (from digital ‘switchover’ to
broadcasting needs fitting this traditional structure of
analogue ‘switch-off’) (COM(2003) 541).
networks.
Mobile TV is a product of the convergence of media, telecom
— Unidirectional medium to low power networks (i.e.
and information technologies and it has the potential to
typically for mobile multimedia services, and newer forms
provide personalised, time-shifted and on-demand audiovisual
of converged broadcasting and communications services).
content, anytime, while on the move. Several bearer
— Bi-directional low power networks (i.e. typically for fixed technologies currently dominate the mobile TV landscape
and mobile broadband access services): This cluster could with DVB-H being a clear contender to become a single
also possibly include other applications such as innovative standard in the EU market. The potential market for mobile TV
low power broadcasting services. is substantial but the take-up of services in Europe remains
slow in comparison with the USA and Asia as multiple
A different degree of spectrum planning coordination is
technical standards may hamper the emergence of a strong
envisaged: national management for unidirectional high
internal market for mobile TV. In response, in its
power networks; national management combined with
communication entitled ‘Strengthening the internal market for
optional EU coordination for unidirectional medium to low
mobile TV’ (COM(2007) 409 of 18 July 2007) the European
power networks; and EU harmonisation on a flexible basis for
Commission identified the Digital Video Broadcasting
bi-directional low power networks.
Handheld (DVB-H) standard as the most suitable for the future
Considering both the amount of spectrum available after the development of terrestrial mobile TV in Europe and
switchover and the desirability of UHF spectrum for a variety of announced its intention to push for a single standard and a
applications for both broadcasters and telecom operators, the consistent regulatory regime across Member States to achieve
Commission’s proposals for the digital dividend will be the economies of scale and flexibility for users. The Commission
focus of intense debate in the European Parliament and in the communication on the digital dividend proposes that one of
Member States regarding to which services the freed the identified sub-bands ‘unidirectional medium to low power
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networks’ could provide an opportunity for cost-effective convergence. The EP also affirms that the new audiovisual
deployment of mobile TV. technologies should allow the broadcasting of pluralist
information and quality programmes, accessible to an ever
Role of the European Parliament increasing number of citizens. The discussions in the EP call for
the need for a wide-ranging public debate on the subject,
Several resolutions have been adopted by the European ensuring the best social, cultural and economic value in terms
Parliament (EP) on the implementation of the TVWF directive of an enhanced and geographically wider offer of services to
in general and on the implementation of its provisions on the citizens, and in particular broadband applications designed to
promotion of distribution and production of television overcome the so-called ‘digital divide’.
programmes. The most recent ones have systematically
stressed the need to revise the directive to take account of
technological developments and changes in the structure of g Maya Gadzheva
the audiovisual market and in particular of media August 2008
4.8.8. Information technologies

The introduction and rapid development of information and communications technologies (ICTs), such as the Internet,
mobile phones and fibre optics and the convergence of computing, telecommunication and satellite technology in recent
years alters the way in which people interact with each other, companies conduct their business and societies set their
economic and human development agendas. ICT research takes up the single largest share (over EUR 9 billion) of the EU’s
seventh framework programme for research (2007–13), paving the way for Europe’s global leadership in ICT.
Legal basis broadcasting networks. The ubiquitous nature of IT will be

critical to improve the competitiveness of the European
The Treaties (and the proposed Lisbon Treaty will not bring any
industry and to meet the demands of Europe’s citizens,
change) do not contain any special provisions for information
businesses and governments. A key element of the renewed
technology (IT), although Article 157 of the Treaty establishing
Lisbon agenda for growth and jobs in Europe, ICT is at the very
the European Community (EC) (Article 173 of the Treaty on the
core of the knowledge and information-based society and a
Functioning of the European Union (TFEU)) provides a legal
key enabler for productivity, growth and better quality of life.
basis for an EU industrial policy. However, the EU may
undertake certain actions within the framework of many
sectoral and horizontal policies at international, EU, Member Achievements
State and local levels, such as competition policy (Articles 81 to A. Internal market
89 EC, Articles 101 to 109 TFEU), trade policy (Articles 131 to
1. The current European regulatory framework for
134 EC, Articles 206 to 207 TFEU), trans-European networks
electronic communications networks and services
(TENs) (Articles 154 to 156 EC; Articles 170 to 172 TFEU),
research and technological development (Articles 163 to Directive 96/19/EC opened up the telecommunications
173 EC), research and technological development and space market to full competition on 1 January 1998 and included 23
(Articles 179 to 190 TFEU) and approximation of laws measures spanning the whole of the telecom area. The 1999
(Article 95 EC; Article 114 TFEU). communications review launched a broad consultation on the
regulatory framework and put forward the essentials of a
thoroughly revised framework for electronic communications
Objectives infrastructure and associated services. This review led to the
Strictly speaking, IT simply means computer hardware and adoption in April 2002 of a new regulatory package for the
software but it is often used interchangeably with information broadened scope of electronic communication services, whilst
and communication technologies (ICT), a term which covers substantially reducing the number of regulatory measures.
both information technology and telecommunications The revised regulatory framework has been applied in all
equipment and services. The two technology sectors, originally Member States since 25 July 2003 and consists of one general
worlds apart, have converged substantially in recent years and and four specific directives, namely: Directive 2002/21/EC on a
the converged communication and service infrastructure will common regulatory framework for electronic communications
gradually replace the current fixed, mobile, Internet and networks and services (framework directive); Directive
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2002/20/EC on the authorisation of electronic rights, basic access and quality of service (‘net neutrality and
communications networks and services (authorisation freedoms’), one day number portability, access to freephone
directive); Directive 2002/19/EC on access to, and numbers from abroad; more responsibility to operators and
interconnection of, electronic communications networks and NRAs with respect to the security and integrity of networks
associated facilities (access directive); Directive 2002/22/EC and services; and the establishment of a new telecoms body.
on universal service and users’ rights relating to electronic
To become law, the Commission’s proposals will need to be
communications networks and services (universal service
approved by the European Parliament and the Council of the
directive); Directive 2002/58/EC concerning the processing of
European Union.
personal data and the protection of privacy in the electronic
communications sector (e-privacy directive). Directive 3. Other initiatives
2002/77/EC on competition in the markets for electronic In light of the excessive roaming charges that consumers and
communications networks is also considered part of the business travellers have so far endured while abroad in other
regulatory framework. So are the radio spectrum decision EU countries, on 12 July 2006 the Commission launched a
(No 676/2002/EC) and the amended decision (2004/641/EC) proposal for a separate regulation for roaming charges on
establishing the European Regulators Group for Electronic public mobile networks within the Community, to reduce
Communications Networks and Services (2002/627/EC). roaming charges (COM(2006) 382). The EU roaming
regulation ((EC) No 717/2007) became binding law in all 27
2. The 2007 review
Member States on 30 June 2007. It only applies to voice calls
Article 25 of the framework directive requires that a review of
within the EU and expires on 30 June 2010. Consumers will
the framework has to commence no later than 25 July 2006.
benefit from the ‘Eurotariff’ that sets a maximum limit for calls
The Commission launched the consultation process in two
made and received when abroad in an EU country and carriers
phases — at the end of 2005 as a ‘call for input’ which paved
are expected to compete below this cap. The Eurotariff rates
the way for a second consultation launched by the
will gradually decrease from 2007 to 2009. Wholesale charges
Commission on 29 June 2006. According to the Commission,
(the prices that operators charge each other for roaming) are
despite improved competition in some areas a substantial
also capped. The Commission shall review the functioning of
reform of the 2003 regulatory framework is considered
this regulation and report to the European Parliament and the
necessary as its assessment shows that there is a continued
Council no later than 30 December 2008. On 7 May 2008 the
lack of a single market for electronic communications and
Commission launched a public consultation on the
increasing divergence of regulatory approaches in the
functioning and effects of the EU roaming regulation as well as
enlarged EU.
on specific issues such as inadvertent roaming, the effect of
The Commission’s proposals were adopted on 13 November the regulation on smaller operators and on domestic prices,
2007 and include: a proposal for a directive amending the the issue of actual and billed minutes, the need for a
framework, access and authorisation directives (better regulation for data roaming services and SMS and the duration
regulation directive); a proposal for a directive amending the of the EU roaming regulation.
universal service and e-privacy directives (citizens rights
Radio frequency identification (RFID) is an emerging
directive); a proposal for a regulation establishing the
technology with great potential for the European industry,
European Electronic Communications Market Authority
citizens and society in general and the forerunner of the
(EECMA regulation). In addition, the three legislative reform
emerging ‘Internet of Things’, a vision of the future where
proposals are accompanied by an impact assessment, a
everyday objects have individual digital presence and are
communication setting out the outcome of the review and
networked. From March to October 2006 the Commission
summarising the reform proposals and a second edition of the
conducted a series of high-level workshops and a first public
recommendation on relevant product and service markets
consultation. In November 2006 the Commission issued a
according to which the number of markets susceptible to ex
decision on harmonisation of the radio spectrum for RFID
ante regulation is reduced from 18 to 7. The Commission has
devices operating in the ultra-high frequency (UHF) band. In
also presented a communication entitled ‘Reaping the full
March 2007 the Commission adopted a communication
benefits of the digital dividend in Europe: A common
entitled ‘Radio frequency identification (RFID) in Europe:
approach to the use of the spectrum’.
steps towards a policy framework’ (COM(2007) 96). An RFID
The main proposed changes to the current framework are, Expert Group was established in June 2007. From 21 February
inter alia, the following: a spectrum management reform, to 25 April 2008 the Commission launched a public
including the introduction of the principles of technological consultation, in the form of an online questionnaire on the
and service neutrality, and spectrum trading; a stronger draft text of a Commission recommendation on the
control role for the Commission in remedies and the implementation of privacy, data protection and information
introduction of functional separation (forced separation of security principles in applications supported by RFID. As part
activities without divestiture of assets) as a possible remedy for of the review of the e-privacy directive in the context of the
national regulatory authorities (NRAs); measures aimed at 2007 EU telecom reform the Commission proposed
strengthening and improving consumer protection and user amendments to the e-privacy directive with respect to RFID
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applications. By mid-2008 the Commission expects to adopt proposed in the Tunis Agenda for the Information Society and
a legal instrument on RFID. defined as a non-binding forum for multi-stakeholder policy
discussion. As was the case in the first Internet Governance
In June 2007 the European Parliament commissioned a study
Forum in Athens in 2006 the European Parliament sent an ad
on RFID and identity management in everyday life —
hoc delegation to the second meeting of the IGF in Rio de
Striking the balance between convenience, choice and
Janeiro in November 2007, which focused on the themes of
control.
critical Internet resources, access, diversity, openness, security
B. Information society and Internet development. The European Parliament
resolution of 17 January 2008 on the second Internet
The Lisbon European Council (March 2000) set the target for
Governance Forum highlights several important issues: the
the EU to become the most competitive and dynamic
need to secure an open and independent Internet in the
knowledge-based economy in the world by 2010. Stimulating
future, based on the initiatives and needs of the stakeholders
the development of technologies and applications in Europe is
as well as freedom of expression; the means of making the
seen to be at the heart of the transition to an information
Internet more accessible to more people, e.g. competition
society in order to increase the competitiveness of European
between operators and service providers, technology
industry and allow European citizens the possibility of
neutrality and development of ICT; the importance of raising
benefiting fully from the development of the knowledge-
the parliamentary profile of the IGF process; the importance of
based economy. The relaunch of the Lisbon strategy in 2005
‘local’ IGFs whereby the President of the EP is requested to
reiterated the importance of ICT and the information society.
offer facilities for a preparatory event to a ‘European IGF’ before
The EU strategic framework i2010 — A European
mid-2009 to reinforce the European dimension of the whole
information society for growth and employment is a key
IGF/WSIS process. The European Parliament calls on the EU
element of the renewed Lisbon partnership for growth and
institutions concerned to take the Tunis Agenda for the
jobs and builds upon the eEurope 2002 and eEurope 2005
Information Society into consideration in their legislative work,
action plans. Through regulatory actions, policy coordination
such as the revision of the electronic telecommunications
actions and support through financial instruments at
framework, the revision of the i2010 initiative and any
Community level the i2010 strategy aims at three priorities for
upcoming ICT legislative proposals.
Europe’s information society and media policies: the
completion of a single European information space; Information society-related programmes
strengthening innovation and investment in ICT research; and — ‘Safer Internet plus’ (2005–08) is a four-year programme
achieving an inclusive European information society, better aiming to promote safer use of the Internet and new online
public services and quality of life. technologies, particularly for children, and to fight against
During 2007, two years after the launch of i2010 on 1 June illegal, harmful content and content unwanted by the end-
2005, the Commission reviewed the i2010 approach and the user (Decision No 854/2005/EC). The programme succeeds
results were published in April 2008. The Commission the ‘Safer Internet’ action plan which ran from 1999 to 2004.
communication ‘Preparing Europe’s digital future — i2010 In February 2008 the Commission adopted a proposal for a
mid-term review’ (COM(2008)1999) identifies a new set of new Safer Internet programme (2009–13) to further
actions for 2008–09 which aim to address further remaining enhance the safety of children using the Internet and other
challenges such as the transition to next-generation networks communication technologies. It will have to undergo a
and the future Internet of Things, more efficient spectrum process of co-decision in the European Parliament and the
management, the launch of joint technology initiatives as the Council of the European Union. It takes into account the
first true Europe-wide public–private research partnerships results of a public online consultation carried out by the
and addressing consumer concerns for privacy and data Commission between April and June 2007 and includes
protection stemming from new converging services in the recommendations made on the Safer Internet Day in
future ubiquitous information society. February 2008.
The World Summit on the Information Society (WSIS) was — ‘eContent plus’ (2005–08) is a four-year programme
originally endorsed in a UN General Assembly resolution in aiming to make digital content in Europe more accessible,
2001 (567183) and was held in two phases. The first phase of usable and exploitable (Decision No 456/2005/EC). The
WSIS took place in Geneva from 10 to 12 December 2003 and programme succeeds the eContent programme which ran
175 countries adopted a declaration of principles and a plan of from 2001 to 2004.
action. The second phase was held in Tunis from 16 to 18
— IDABC (2005–09) stands for interoperable delivery of
November 2005 and efforts were made to put the plan of
European e-government services to public administrations,
action into motion by setting up working groups to find
businesses and citizens (Decision 2004/387/EC). The
solutions and reach agreements in the fields of Internet
programme builds on the previous IDA programmes.
governance and financing mechanisms. The European
Parliament participated in the Tunis Summit and is actively — The competitiveness and innovation framework
taking part in the Internet Governance Forum (IGF) programme (CIP) (2007–13) will bring together specific
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4 8
Community support programmes into a common approximately 2 500 new .eu domain names being registered
framework (COM(2005) 121). One of the three specific each business day, the EU top-level domain is a real promoter
programmes in the CIP framework is the ICT policy support of an EU Internet identity.
programme (the two others are the entrepreneurship and
The 112 single European emergency call number was
innovation programme and the intelligent energy-Europe
established by Council Decision 91/396/EEC of 29 July 1991
programme). The ICT policy support programme will build
and reinforced through Article 26 of the universal service
on the aims of the previous e-TEN, Modinis and eContent
directive. Today 112 is available in all but one EU Member
programmes and will support the objectives of the
State. Member States are also obliged to make sure that
integrated strategy i2010 — European information
emergency services are able to establish the location of the
society 2010. The ICT programme has a budget of
person calling 112. From 2010 onwards all new cars should be
EUR 730 million and will stimulate the new converging
equipped with an e-call system that will send accident data,
markets for electronic networks, media content and digital
including the car’s location in the case of emergency.
technologies. It will test solutions to the bottlenecks that
delay wide European deployment of electronic services. It On 15 February 2007 the Commission adopted Decision
will also support the modernisation of public sector 2007/116/EC on reserving the national numbering range
services to raise productivity and improve services. beginning with ‘116’ for harmonised numbers for harmonised
services of social value such as the 116000 hotline to report
— The ‘e-Inclusion: be part of it!’ campaign was formally missing children. In October 2007 the decision was amended
launched in December 2007 following the adoption on 8 to include the numbers 116111 and 116123. which should be
November 2007 of the communication ‘European i2010 used as helplines for children and adults in need of support
initiative on e-Inclusion — to be part of the information (2007/698/EC).
society’. The communication also proposes a strategic
framework for action to implement the Riga ministerial C. ICT and research
declaration ‘ICT for an inclusive society’ of June 2006, by In the context of the research framework programmes (FPs)
enabling the conditions for everyone to take part in the information technologies have been given substantial
information society by bridging the broadband, attention. The seventh framework programme (FP7)
accessibility and tackling competences gaps, accelerating (2007–13), as a natural successor of the fifth framework
effective participation of groups at risk of exclusion and programme (FP5) (1998–2002) and the sixth framework
improving quality of life and integrating e-Inclusion actions programme (FP6) (2002–06), again includes ICT as one of
to maximise lasting impact. the 10 central thematic areas under ‘Cooperation’, one of the
four specific programmes, and again proposes ICT as one of
— Intelligent car initiative — ‘Raising awareness of ICT for
the most highly prioritised areas as regards budget allocation.
smarter, safer and cleaner vehicles’ is a programme
A total of EUR 9.1 billion is earmarked for funding ICT over the
launched in February 2006 by the Commission to remove
duration of FP7, making it the largest research theme in the
bottlenecks in rolling out intelligent systems and to speed
‘Cooperation’ programme, which is itself the largest specific
the development of smarter, safer and cleaner transport for
programme of FP7, with a budget of EUR 32 billion. The aim is
Europe. It is a flagship initiative of the EU’s i2010 strategy
to enable the EU to master and shape future developments in
and is intended to promote the use of ICTs in cars and
ICT to meet the demands of the society and the economy,
transport infrastructure. On 19 June 2008 the first
drive growth and sustainable development and boost
‘Intelligent car’ report, entitled ‘Towards Europe-wide safer,
innovation, creativity and industry competitiveness. Actions
cleaner and efficient mobility’, was discussed and voted on
have been decided to strengthen Europe’s scientific and
by the European Parliament plenary in first reading.
technological base in ICT, stimulate innovation through ICT
On 3 January 2008 the Commission adopted a communication use and ensure that ICT progress is rapidly dispersed and
on creative content online in the single market, which deployed. The joint technology initiatives (JTIs), which stem
launched a public consultation in preparation for the adoption primarily from the work of European technology platforms
of a recommendation on creative content online. A (ETPs), are a new concept in FP7. They are proposed as a new
stakeholders’ discussion and cooperation platform, the so- way of realising public–private partnerships in fields of key
called ‘Content online platform’, will work on the four main, importance for industrial research and development at
horizontal challenges identified by the Commission: availability European level and would have particular relevance in the ICT
of creative content, multi-territory licensing for creative domain.
content, interoperability and transparency of digital rights
management (DRM) systems, legal offers and piracy. Role of the European Parliament
On 7 April 2008 the EU top-level domain celebrated its The European Parliament advocates a robust and advanced
second anniversary since it became available to the general ICT policy. As the area is largely subject to co-decision, the
public within the EU (Regulation (EC) No 733/2002). With more European Parliament has been very active in the adoption of
than 2.8 million registered .eu domain names, and legislative acts. However, it has also constantly helped to keep
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focus on the issues of information and communications such as health, education and government. The European
technology through the adoption of a host of oral and written Parliament stresses the importance of ICT as a vital component
questions, own-initiative reports, opinions and resolutions, and to narrow social differences, to prevent the digital divide
through calls for greater coordination of national efforts for the within the EU, to encourage social and territorial cohesion and
development of pan-European services, enhanced EU support to promote democratic discourse and pluralism in Europe.
for ICT research and more attention to consumer issues. As ICT
can make it easier to respond to future social service needs the
g Maya Gadzheva
European Parliament considers that more investment is August 2008
necessary in the exploitation of ICT in public sector services
4.8.9. The biotechnology industry

The biotechnology industry is not directly regulated by the provisions of the EC Treaty. The industrial policy provisions are
sometimes used as a legal basis in this area. By virtue of its great economic, social and environmental potential, this policy
occupies an important place among the European policies.
Legal Basis — Life sciences and biotechnology offer opportunities to

address many global needs relating to health, ageing, food
The Treaty does not contain any special provisions for
and the environment, and to sustainable development.
biotechnology. Article 157 however provides a legal basis for
an EU industrial policy. The EU may undertake certain actions — Broad public support is essential, and ethical and societal
within the framework of many sectoral and horizontal policies implications and concerns must be addressed.
at international, EU, Member State and local levels, such as
competition policy (Articles 81 to 89), the mandate of 30 May — The scientific and technological revolution is a global
1980, which empowers the Commission to put forward reality which creates new opportunities and challenges for
proposals on industrial policy (Article 308), trade policy and all countries in the world.
the completion of the internal market (Article 95).
A. Internal market
The importance of the sector has also been addressed in the 1. Genetically modified organisms (GMOs), including
decision on competitiveness of industry and enterprises: seeds, GM food and feed
competitiveness and innovation framework programme (CIP),
2007–13, based on the proposal by the Commission, proposal Recent food scares such as BSE and dioxins have reinforced the
for a decision of the European Parliament and of the Council change in public policy focus and resulted in strengthening of
establishing a competitiveness and innovation framework regulations and safety criteria in the food and feed sectors. In
programme (2007–13). the White Paper on food safety (COM (1999) 719), the
Commission drew attention to the issue of securing
consumers’ and trading partners’ confidence in the EU food
Objectives supply. This was reconfirmed in the general food law proposal
The biotechnology industry is becoming an important sector which established the European Food Authority (COM (2000)
for the EU because of its economic, social and environmental 716 final) and which lays down the general objectives of EU
potential. In this field it is important that EU countries should food law and a number of principles, including precaution,
cooperate with one another, since challenges and needs in the traceability, liability and protection of consumers’ interests.
sector remain very large. The early regulatory framework for biotechnology was
founded on a ‘horizontal’ approach, which took account of the
Achievements protection of both human health and the environment across
relevant sectors.
The scientific and technological advances made in the area of
life sciences and biotechnology continue at a hectic pace. The Directive 90/220/EEC governs the deliberate release into the
Commission proposed a strategy for Europe and an action environment of genetically modified organisms (GMOs) and
plan in its communication ‘Life sciences and biotechnology’ the placing on the market of products containing or consisting
(COM (2002) 27, which draws attention to three major issues. of GMOs for use as foods, feed, seeds and pharmaceuticals.
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4 8
Directive 90/219/EEC governs work activities involving the Outside the EU, cotton is already a major GM crop. Cotton does
contained use of genetically modified micro-organisms not have any food use in Europe beyond the small (and
(GMMs) (extended by the majority of Member States to economically irrelevant) quantities consumed as cotton seed
include all use of GMOs under contained conditions in oil. Fibre and wood/paper will probably remain the main
national laws). candidates in this category for some time. There are other
plants that have dual uses. Conventional rape is already used
As individual sectors have continued to expand, a move
for diesel production, apart from feed and oil. If a food/feed
towards a more sector-based approach has developed,
plant is genetically modified to replace petroleum products by
particularly in terms of the commercialisation of products. For
producing fine chemicals, but not to be used for food/feed, it
example:
will need approval under Directive 2001/18/EC. If it were also
— Regulation (EEC) No 2309/93 largely governs pharmaceutical used for food or feed, further approval under the proposed GM
and medicinal applications. It laid down procedures for the food and feed regulation would also be necessary. A further
authorisation and supervision of medicinal products for example is a plant modified to contain and be consumed as a
human and veterinary use and established the European pharmaceutical compound, for example a plant vaccine. This
Medicines Agency (EMEA) in London. modification would have to be approved by EMEA, which
— Regulation (EC) No 258/97 governs GM foods and GM would also have to perform an environmental risk assessment
seeds under the various seed directives (66/401/EEC, equivalent to that under Directive 2001/18.
66/402/EEC, 66/403/EEC, 69/208/EEC, 70/457/EEC and 4. Pharmaceuticals
70/458/EEC on the marketing of seeds). Biotechnology is a key driver of progress in the pharmaceuticals
This sector-based legislation has introduced provisions to sector, whose end-user benefits are easy to identify.
specifically address risk and other issues although the Biotechnology makes possible the development of new cures; it
environmental elements come under Direrctive 2001/18/EC, also permits yields and quality to be improved and enables
which replaced Directive 90/220/EEC in 2002. existing pharmaceutical products to be manufactured with a
lesser impact on the environment. The pharmaceuticals sector is
Directive 2001/18/EC introduces appropriate implementing highly regulated and is already covered by substantial EU
measures and guidance; ensures a harmonised framework for legislation; new pharmaceutical products are subject to
authorising and labelling feed consisting of, containing or regulation under Directive 65/65/EEC and its supporting
produced from GMOs; sets up a comprehensive labelling legislation, notably Regulation (EEC) No 2309/93. Any product
regime to allow consumers/users to fully exercise their choice; (whether or not a biotechnology product) that makes medicinal
and addresses the issue of liability with respect to significant claims is required to meet stringent standards of quality, safety
environmental damage arising from contained use of and efficacy; under Regulation (EEC) No 2309/93 all new
genetically modified micro-organisms (GMM) (within the scope products with a major biotechnological component are subject
of Directive 90/219/EEC) and deliberate release into the to centralised assessment by the EMEA. Given the considerable
environment of GMOs. It also ensures that the Biosafety Protocol barriers to market entry of these products, the regulatory system
to the 2000 Convention on Biological Diversity signed by the EU should seek to avoid unnecessary difficulties that would impede
(COM(2000)182) is appropriately implemented in EU legislation. biotechnology companies’ efforts to compete and bring
2. Industrial biotechnology and bioremediation pharmaceuticals products to market. It costs an estimated EUR
Europe is a world leader in harnessing GMMs to produce 250 million to develop a new drug. Consequently
pharmaceutical compounds and industrial enzymes. The main pharmaceutical companies tend to concentrate on potential
pharmaceutical uses are production of therapeutic protein best-sellers that can be sold to millions of people: there is
products such as insulin and growth hormones, while the relatively little research into ‘orphan drugs’ (treatments for rare
industrial uses are mainly in the food and detergent industries diseases) and drugs to treat diseases that are common only in
and bioremediation. This is done in sealed systems, and the low-income countries. However, changes in legal constraints
final product is neither a GMM nor directly derived from one. can create incentives for pharmaceuticals companies to develop
The approval procedure for these activities is covered by ‘orphan drugs’: in 2000 the Commission introduced an orphan
Directive 90/219/EEC on contained use of genetically modified drug directive, which, though still in the early stages, is already
micro-organisms. To the extent that GMOs are released into having a positive impact on the use of biotechnology.
the environment, e.g. for bioremediation purposes, they have
B. Competition policy
to be approved under Directive 2001/18/EC.
Biotechnology focuses on solving specific problems. The
3. Non-food agricultural and sylvicultural biotechnology Commission also paid special attention to building up the
Non-food agricultural GMOs also need approval under Directive competitiveness of EU industries by improving the potential to
2001/18/EC. Trees have been developed but not yet planted create SMEs, whose activity is based on research and the spirit
commercially, with the aim of producing paper more efficiently. of enterprise. These new industries, founded on scientific
Such trees are subject to prior authorisation under Directive knowledge, are a source of industrial competitiveness,
1999/105/EC on the marketing of forest reproductive material. technological innovation for investment and job creation.
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Directive 98/44/EC on the legal protection of biotechnological Role of the European Parliament
inventions establishes a sound legal framework concerning In a number of own-initiative reports the EP called for greater
criteria for obtaining a patent in this field. In addition, the coordination of national efforts, enhanced EU support for
proposed Community patent regulation will increase the industrial RTD activities and a common policy on
competitiveness of EU companies in providing for effective, biotechnology. The EP significantly influenced the content
affordable and legally sound protection and counter the and funding of the fourth framework programme
present trend of biotechnology companies which prefer to (EUR 13.125 million) consisting of three thematic
patent in the USA. programmes related to life sciences and biotechnology:
biotechnology, biomedicine and health, agriculture and
C. Research and development policy
fisheries. The EP outlined its ideas on innovation, European
The success of any knowledge-based economy rests upon the science and technology policy and its monitoring of the FP4
generation, dissemination and application of new knowledge. in a resolution of November 1996.
EU investment in research and development lags behind that
of the USA. The Commission aims to restore EU leadership in In December 1998 Parliament approved the budget for the
life sciences and biotechnology research. The sixth framework following specific programmes in FP5 (EUR 14 960 million) for
programme for research (2002–2006) gives this area first 1998–2002:
priority in order to provide a solid platform for constructing, — quality of life and management of living resources:
with the Member States, a European research area. Europe’s EUR 2 413 million;
research agenda for life sciences should address emerging
— competitive and sustainable growth: EUR 2 705 million.
needs and strengthen links to other EU policies (health, food,
environment, biotechnology, competitiveness, etc.). The EP approved the budget in June 2002 for the following
thematic programmes under FP6 (EUR 17 500 million) for
D. Ethical implications 2002–06:
Life sciences and biotechnology address issues involving the life — life sciences, genomics and biotechnology for health:
and death of living organisms. They raise fundamental questions EUR 2 255 million;
of human existence and life on Earth, the very factors that have
shaped the deepest religious, ethical and cultural heritage of — food quality and safety EUR 685 million.
humanity. The EU is a community of law and of shared On 21 November 2002 the European Parliament adopted a
fundamental values and human rights while respecting non-legislative resolution on biotechnology, addressing the
differences in cultural and ethical values and public morality. need to enhance and broaden public debate and access to
This is also reflected in the EU Charter on Fundamental Rights. objective information. Consumers must have the
Consideration of ethical issues and respect for cultural and opportunity to address questions to scientists and to receive
ethical values are an integral part of EU action. answers from them. On international cooperation,
The Commission’s main contribution has been the Parliament stated that biotechnology alone will not help to
establishment of the European Group on Ethics in Science and overcome hunger in the world and that other methods, for
New Technologies, support for research in bio-ethics and the example a better distribution of available food, are currently
introduction of ethical principles and evaluation for EU more important. However, given the ever-increasing world
research support. The European Group on Ethics has population it might also be necessary to use genetically
contributed actively to clarifying public debate, dialogue with modified crops to produce enough food. Should a
Member States and other interested parties, and giving developing country wish to use biotechnology, the EU and
specific advice to guide the EU legislative process. Cross- Member States ought to provide support so that it can
border cooperation on research in ethics has initiated a true strengthen its own capacities.
reflection on fundamental values and the reasons for diversity
of viewpoints in Europe, leading to better mutual g Marcelo Sosa Iudicissa
understanding. November 2005
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4 8
4.8.10. The defence industry

The defence industry is governed by Articles 157 and 308 of the EC Treaty and it presents economic and technological
components that are important factors in the competitiveness of the European industry. Created in 2004, the European
Defence Agency contributes actively to the development of this industry.
Legal basis against those applied in the EU, with particular reference to
SMEs.
EU action in this field must be based on Article 308 which
provides for cases in which the European Treaties do not make 2. Research and development policy
explicit provision for the action needed to attain one of the The EU R & D framework programme is aimed solely at civil
EU’s objectives. Article 157 provides a legal basis for EU objectives. Some of the technological areas covered (e.g.
industrial policy. However, progress towards applying internal materials, information and communication technologies —
market rules on the defence equipment market have been ICT) can contribute to the improvement of the defence
restrained by Article 296(1) of the Treaty establishing the technological base and the competitiveness of this industry.
European Community (EC) that states ‘any Member State may One should therefore examine the best way to reflect defence
take such measures as it considers necessary for the protection industry needs in the implementation of EU research policy.
of the essential interests of its security which are connected
3. Intra-EU transfers and public procurement
with the production of or trade in arms, munitions and war
material’. The EU needs to simplify and harmonise the rules on intra-EU
transfers of defence products and equipment. A second
fundamental task is to simplify and harmonise EU rules for
Objectives public procurement. It is important to have the guidelines in
The defence industry has been important for the EU because order to establish an EU framework in this area.
of its technological and economic policy aspects. The 4. Exports
competitiveness of the European defence industry is vital to A common regime for dual-use goods and technologies
the credibility of the nascent European security and defence export control was adopted by the Council, based on
policy. It is important that the EU Member States cooperate Regulation (EC) No 1334/2000 (amended by (EC) No
with one another in order to end policies and practices that 2432/2001) and Joint Action 401/2000/CFSP under the CFSP
prevent European defence companies from working together concerning the control of technical assistance related to
more efficiently. certain military end-users, which together form an integrated
system. This regime reflects the international arrangements to
Achievements prevent proliferation of weapons of mass destruction.
The EU defence industry is important for the European Regarding conventional arms exports, a major step was
economy as a whole. It employs around 800 000 people and achieved in June 1998 with the adoption of an EU code of
over recent years has contributed between 2 and 2.5 % of EU conduct on arms export. Its aim is to improve transparency,
GDP. Like all other industrial activities, the defence industry is prevent unfair competition and clarify the rules applicable to
required to deliver increased efficiency to provide value for common projects. The Council assesses implementation of the
money to its customers and, at the same time, to protect its code on an annual basis. In June 2000 the Council adopted the
shareholders’ interests. common list of equipment covered by the code of conduct.
B. EU defence industry policy

A. Background issues
1. Initial developments
1. Standardisation In January 1996, a Commission communication outlined the
A 1999 study on the defence industries in the EU and the USA challenges facing EU defence-related industries and put
recommended formulating specifications in a common forward suggestions to enable the sector to maintain its short-
manner in Europe to facilitate common procurement. As a term competitiveness. It proposed to subject the sector as far
follow-up, a Commission conference ‘European defence as possible to EU law on public procurement, intra-EU trade
procurement in the 21st century’ in November 2000 and the monitoring of competition with particular regard to
investigated options for the reform of defence standards in aid. Research and standardisation, both civil and military,
European defence procurement. The Commission began work needed better coordination and import duties better
on a review of benchmarking US defence procurement harmonisation. Distortions of competition resulting from
practices and its implications for European defence industries. differences in import and export control policies should also
This exercise involves comparing US procurement practices be eliminated. This warning did not trigger action and the
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need to implement an EU strategy to keep up with major defence equipment policy’ adopted by the Commission at the
changes in the EU defence-related industries was becoming beginning of 2003. The aim is to achieve more efficient use of
more pressing every day. In December 1997, another resources in the area of defence and to raise the
Commission communication entitled ‘Implementing European competitiveness of the industry in Europe, as well as to help
Union strategy in the field of defence-related industries’ called bring about improvements in military equipment within the
for urgent restructuring in the EU defence industry and for a context of European security and defence policy. The Green
single market for defence products. This ground-breaking Paper puts forward, for discussion, that the existing derogation
document encouraged the Council to adopt a common pursuant to Article 296 of the EC Treaty could be clarified by an
position on the framing of a European armaments policy. Interpretative communication from the Commission, which
2. Towards a defence equipment policy could define more precisely contracts covered by the
exemption under Article 296; it also suggests a directive could
More recently, in an effort to take this agenda a step further
be drawn up to coordinate the procedures for awarding
the Commission has been deeply involved in examining
contracts falling within the scope of rules on exemption set
different aspects of the state of play of the defence market and
out in Article 296; and finally it notes the arguments by some
defence industrial policy. This work is also supported by
that a voluntary code of conduct could be established in this
external experts such as in the July 2002 report ‘Strategic
sector overseen by the European Defence Agency.
aerospace review for the 21st century’ (STAR 21) by the
European Advisory Group on Aerospace. In a communication 4. A European defence equipment agency
dated 11 March 2003 and entitled ‘Towards an EU defence In June 2003 the European Council met at Thessaloniki and
equipment policy’, the Commission identified seven priority committed to create [...] in the course of 2004, an
areas of action: standardisation, monitoring of defence-related intergovernmental agency in the field of defence capabilities
industries, intra-Community transfers, competition, development, research, acquisition and armaments. On 12 July
procurement rules, export control of dual-use goods and 2004 Joint Action 2004/551/CFSP was adopted by the Council
research. In pursuit of this action it concluded by listing the that established the European Defence Agency. It had four
ongoing activities to achieve progress: main functions: to develop defence capabilities in the field of
— provide financial assistance for a ‘European standardisation crisis management; to promote and enhance European
handbook’ to be ready in 2004; armaments cooperation; to work towards strengthening the
European defence industrial and technological base (EDTIB),
— monitor defence-related industries;
and for the creation of an internationally competitive
— launch an impact assessment study in 2003 as the basis, if European defence equipment market (EDEM); and to enhance
appropriate, for elaborating at the end of 2004 the the effectiveness of European defence research and
necessary legal instrument to facilitate intra-Community technology (R & T).
transfer of defence equipment;
5. European security research programme
— continue its reflection on the application of competition
rules in the defence sector in respect of the provisions of In parallel, the European Commission, following on from
Article 296 of the EC Treaty; existing work during the 1990s and more recently under its
Green Paper on defence procurement, began to accelerate its
— initiate a reflection on defence procurement at national work under security research. Since the communication dated
and EU levels; 11 March 2003 and entitled ‘Towards an EU defence
— raise, in the appropriate Council working groups, the issue equipment policy’ (2004/213/EC), the Commission made
of the Commission’s involvement in export control progress to establish a security/defence research programme
regimes; under a new preparatory action (OJ L 67, 5.3.2004, pp. 18–22).
Between 2004 and 2006, a budget of EUR 65 million was
— launch a preparatory action for advanced research in the earmarked for the Preparatory Action, which, the Commission
security field; hoped, would lead to a full European security research
— pursue work on a possible EU defence equipment programme starting in 2007. The Commission’s work in this
framework overseen by an agency (or agencies). This past area was supported by the establishment of an expert group,
point has now been overtaken by a new European the so-called ‘Group of Personalities’ (GoP) tasked ‘with the
Defence Agency. primary mission [….] to propose principles and priorities of a
European security research programme in line with the EU’s
3. Green Paper on defence procurement
foreign, security and defence policy objectives and its
Furthermore, in September 2004 the Commission presented a ambition to construct an area of freedom, security and justice.’
Green Paper on defence procurement (COM(2004) 608), with
the objective of contributing to ‘the gradual creation of a The product of the group’s work was a report entitled
European defence equipment market (EDEM) which is more ‘Research for a secure Europe’. Its key conclusion was that
transparent and open between Member States’. The Green security research is an essential pillar of future European
Paper forms part of the strategy ‘Towards a European Union security and as such should require substantial appropriate
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Common policies Social and employment policy
4 9
resources to the tune of EUR 1 billion (reaching up to EUR 1.8 also encourages the Commission’s efforts to contribute to the
billion) per year. Whilst meeting EU security needs it would gradual creation of a European defence equipment market
also help the EU meet the Lisbon economic criteria and (EDEM) which is more transparent and open between Member
Barcelona target of 3 % spending on R & D of all Community States. The report pays particular attention to the role of
research spending. It has yet to be seen if such a large figure Article 296 and argues against its continued use and for efforts
will be met under the financial perspectives 2007–13. to focus on its removal. It also urges the Commission to work
closely with the EDA on the establishment, in parallel, of a
comprehensive action plan with accompanying measures in
Role of the European Parliament related areas, such as security of supply, transfer, exports, State
aid and off-sets, which are necessary in order to create a level
In a resolution in April 2002 on European defence industries,
playing-field for fair intra-European competition. The report
the EP reiterated its view that a strong, efficient and viable
also notes the lack of a ‘two-way’ street in transatlantic defence
European armaments industry and an effective procurement
procurement, which needs to be addressed.
policy were vital to the development of ESDP. This was
repeated in a more recent report on the Green Paper on
defence procurement (2005/2030(INI)) in response to the g Gerrard Quille
Commission’s Green Paper consultation. The Parliament report May 2006
4.9. Social and employment policy
4.9.1. Social and employment policy: general principles

The social dimension of European integration has been greatly developed through the years and is a key aspect of the
Lisbon strategy, which aims at boosting European competitiveness and economic growth while creating ‘more and better
jobs and greater social cohesion’.

— Article 2 of the Treaty on European Union (TEU). A. From the Treaty of Rome to the Maastricht Treaty
— Articles 2, 3, 13, 39 to 42, 125 to 130 and 136 to 148 of the In order to allow workers and their families to take full
Treaty establishing the European Community (EC). advantage of the right to move and seek employment freely
throughout the common market, Article 42 (originally
Article 51) of the Treaty of Rome already provided for the
Objectives
Council to adopt the necessary measures for the coordination
The promotion of employment, improved living and working of the social security systems of the Member States. This was
conditions, proper social protection, dialogue between the legal basis for the adoption of two Council regulations in
management and labour, the development of human resources 1958, replaced later by Regulation (EEC) No 1408/71, which
with a view to lasting high employment and the combating of has been for long time the main EC law instrument in this field
exclusion are the common objectives of the Community and (4.9.4). Social aspects connected with the integration of
the Member States in the social and employment fields, as European labour markets were also dealt with in Title III of Part
described by Article 136 of the EC Treaty. III of the Treaty of Rome. Under Articles 136 and 140
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(ex Articles 117 and 118) Member States expressed the belief Intergovernmental Conference, however, it proved impossible
that improved working and living conditions would arise from to come to an agreement by all 12 Member States on the
the functioning of the common market and they committed innovations to be introduced in the chapter on social policy in
themselves to cooperate in the areas of employment, labour the EC Treaty. The UK, in particular, was not in favour of
law and working conditions, vocational training, social security, significant changes. The other 11 Member States decided to
occupational health and safety, and social dialogue. Article 141 move ahead by concluding an agreement on social policy and
(ex Article 119) enshrined the principle of equal pay for men signing, together with the UK, Protocol No 14 of the Treaty on
and women for an equal work and it was to be recognised European Union to which the agreement was annexed and
with direct applicability by the Court of Justice. The European which stated that ‘11 Member States [...] wish to continue
Social Fund, provided for in Articles 146 to 148 (ex Articles 123 along the path laid down in the 1989 Social Charter’, thereby
to 125), should be devoted to improving workers’ mobility and exempting the UK from participation. The agreement
professional opportunities (4.9.2). contained some significant innovations, such as a more
ambitious formulation of the objectives of social policy and a
The expectations of general well-being spreading from the major boost for the role of social partners at Community level
common market were very soon reversed by a growing (4.9.6). The Council was endowed with the power to adopt
awareness of the structural unbalances and unevenness of directives laying down minimum requirements in several new
growth that affected the employment situation in Europe, sectors. It was to act in accordance with the cooperation
which led to a more proactive social policy at Community procedure in the areas of improvements in the working
level. In 1974, the Council adopted the first programme of environment to protect employees, working conditions,
social action. A number of directives on health and safety at information and consultation of workers, equal opportunities
work, equal treatment between women and men and for men and women on the labour market and equal
employment protection rights were subsequently adopted, treatment at work and occupational integration of people
but unanimity voting in the Council paralysed progress in excluded from the labour market, while unanimous decision
other areas. was required while deciding on social security and social
The Single European Act (SEA) introduced Article 137 (118A), protection of workers, protection of workers where their
which provided for the harmonisation of health and safety employment contract is terminated, representation and
conditions at work, mainly with a view to avoiding ‘social collective defence of the interests of workers and employers,
dumping’. Acting by qualified majority in cooperation with the conditions of employment for third-country nationals legally
European Parliament, the Council adopted some directives residing in the Community and financial contributions for
laying down minimum requirements in this area. The SEA also promotion of employment and job-creation, without
introduced the possibility for social partners at European level prejudice to the provisions relating to the Social Fund.
to negotiate collective agreements and established a
Community policy for economic and social cohesion. B. The Amsterdam and Nice Treaties
The uncomfortable situation of a double legal basis for action
As December 1992 approached, consensus grew around the in the area of social policy within the European Community
need to pay more attention to the social aspects connected was finally overcome by the signing of the Amsterdam Treaty,
with the completion of the internal market. After long debates, when all Member States, including the UK, agreed upon the
the Community Charter of the Fundamental Social Rights of integration of the agreement on social policy in the text of the
Workers (Social Charter) was adopted at the Strasbourg EC Treaty with some slight changes (Articles 136 to 145). The
Summit in December 1989 by the Heads of State or co-decision procedure replaced cooperation in Article 137.
Government of 11 Member States, with the United Kingdom Under a new paragraph in Article 137(2), measures designed
opting out. Based on the Council of Europe’s Social Charter to encourage cooperation between Member States in order to
and the conventions of the International Labour Organisation combat social exclusion could be adopted by co-decision. The
(ILO), it was adopted in the form of a political declaration, but scope for Community action promoting equal opportunities
required the Commission to set out a social action programme between men and women was expanded.
to accompany it. The action programme, which proposed 47
separate initiatives, was implemented slowly, particularly as The co-decision procedure was also extended to provisions
regards binding legal acts. Council Directive 91/533/EEC on relating to the European Social Fund (4.9.2), the free
the obligation of employers to inform employees of the movement of workers and social security for Community
conditions applicable to their employment relationship and migrant workers (4.9.4).
some directives concerning the health and safety of
employees at work (4.9.5) are worth recalling. The new Article 13 of the EC Treaty conferred on the
Community the competence to ‘take appropriate action to
With the signature of the Maastricht Treaty, the promotion of a combat discrimination based on sex, racial or ethnic origin,
high level of employment and social protection was officially religion or belief, disability, age or sexual orientation’, requiring
introduced as one of the tasks conferred to the European the Council to act unanimously after consulting the European
Community by the Member States. During the Parliament. On this basis, two directives were soon adopted:
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Directive 2000/43/EC on implementing the principle of equal was proclaimed by EU leaders, the European Commission and
treatment between persons irrespective of racial or ethnic origin the European Parliament. The summit also marked an
and Directive 2000/78/EC on establishing a general framework important step in the development of a European Union
for equal treatment in employment and occupation. strategy against poverty and social exclusion.
Among major innovations introduced by the Amsterdam C. The social and employment policy within the Lisbon
Treaty was also the launch of the European employment agenda
strategy (EES). In the early 1990s several Member States had
experienced very high levels of unemployment, which While agreeing upon a strategy aimed at making the European
threatened to develop into a persistent feature of European Union the most competitive economy in the world and
labour markets. Heads of State or Government had then achieving full employment by 2010 during the extraordinary
realised the need to look jointly for solutions and during the meeting of the European Council in Lisbon in March 2000, the
European Council meeting in Essen in December 1994 they Heads of State or Government also recognised that economic
had committed themselves to better coordinate their national growth was not in itself sufficient to fight against poverty or
policies. The Amsterdam Treaty added the promotion of a high the danger of social exclusion and committed themselves to
level of employment to the list of the EU objectives and improve cooperation in this area; they decided that suitable
conferred on the European Community the responsibility to objectives should be set by the Council by the end of the year
support and complement the activities of the Member States, and agreed that policies for combating social exclusion should
to encourage cooperation between them and to develop a be based on an open method of coordination combining
‘coordinated strategy’. national action plans and a programme presented by the
Commission to encourage cooperation in this field. At the
The EES (Articles 125 to 130 EC) is based on an open method same time, the European Council underlined that European
of coordination whose key components are the common social protection systems should be modernised so as to
employment guidelines (adopted by the Council on a ensure their sustainability and called for greater cooperation in
Commission proposal following conclusions of the European the area of pensions.
Council on the employment situation in the Community and
after Parliament’s consultation), the national programmes on Later that year, at the Nice Summit, a European social policy
the implementation of such guidelines, a joint annual report agenda was adopted up to 2005, based on Commission
by the Council and the Commission on the employment communication COM(2000) 379, with a view to converting the
situation and on the implementation of the employment political commitments made at Lisbon into concrete action
guidelines and, if considered appropriate, Council and modernising the European social model. At the heart of
recommendations to Member States (4.9.3). During the the agenda was the idea to ‘ensure the positive and dynamic
Amsterdam Summit in June 1997 it was decided that the new interaction of economic, employment and social policy’. It was
provisions on the EES would be immediately applied, without decided that progress on implementation of the agenda
waiting for the entry into force of the whole amending Treaty should be examined by the European Council every year at its
and the employment guidelines for 1998 were adopted by the spring meeting. The Heads of State or Government also
Council after the special Luxembourg ‘Job summit’ in approved the objectives adopted by the Council in the fight
November 1997. against poverty and social exclusion and invited the Member
States to submit by June 2001 their national action plans
The signature of the Nice Treaty was quite deceiving for those covering a two-year period and to define indicators and
expecting major progress in the social sector. In fact, a Social monitoring mechanisms capable of measuring progress.
Protection Committee was created (Article 144) to promote
cooperation on social protection policies between Member In 2003 it was decided to extend the open method of
States and with the Commission, but all proposals to expand coordination to health and long-term care and to endeavour
the co-decision procedure were rejected. Only a few minor to streamline the three cooperation processes ongoing in the
changes were introduced, including the so-called passerelle field of social protection into one single exercise, the social
clause under Article 137 allowing the Council to unanimously protection and social inclusion process, with one
decide to apply co-decision to the fields of the protection of comprehensive annual report and some overarching
workers where their employment contract is terminated, the objectives.
representation and collective defence of the interests of
workers and employers, and the conditions of employment for Following the mid-term review and the reform of the Lisbon
third-country nationals legally residing in Community territory. strategy, the social and employment policies have also
The modernisation of social protection systems was added to undergone some adaptations. From 2005 the employment
the list of sectors where the Community shall encourage guidelines were streamlined into the integrated guidelines for
cooperation between the Member States. growth and jobs together with the broad economic policy
guidelines. The process was reorganised around a three-year
During the Nice Summit, moreover, a Charter of Fundamental cycle, during which guidelines stay unchanged in order to
Rights of the European Union, drafted by a special convention, allow for a medium-term approach.
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With a view to enhancing the quality and the coherence of the access and solidarity in 21st century Europe’, with a view to
overall socioeconomic governance of the EU, the timetable of adapting the European social policy to emerging challenges
the social protection and social inclusion process has also (COM(2008) 412). Seven priority areas are identified where the
been re-oriented around the schedule set for the Treaty-based means of Community action should be revised: children and
instruments for economic and employment policy youth, especially as concerns education and protection from
coordination, with full synchronisation starting from 2006. the risk of poverty; the promotion of employment in an
National strategies on social protection and social inclusion international global context; mobility; equal access to quality
will now cover the same three-year time span as the national healthcare for an ageing population; combating poverty and
reform programmes, starting from 2008–10. social exclusion through active measures; fighting
A new social agenda 2006–10 was adopted in order to discrimination and promoting gender equality; defending
accompany the revamped Lisbon strategy and promote the European values on the international scene. The
social dimension of economic growth (COM(2005) 33). The communication was accompanied by a proposal for a Council
agenda focused on two priority areas: moving towards more directive on implementing the principle of equal treatment
and better jobs (through the EES, the ESF, social dialogue and between persons irrespective of religion or belief, disability,
modernising Community legislation in the areas of information age or sexual orientation outside the field of employment and
and consultation of workers, social security and health and a proposal for a directive on the application of patient’s rights
safety at work) and realising a more cohesive society (by in cross-border healthcare.
strengthening the effectiveness of the open method of It should be recalled that 2007 was celebrated as the European
coordination (OMC), fighting social exclusion and promoting Year of Equal Opportunities for All, while 2010 has been
diversity and non-discrimination). declared the European Year of Combating Exclusion and
Poverty.
D. The latest developments
Steps have also been taken in the context of the relaunched The Lisbon Treaty would allow for further progress in
Lisbon strategy for growth and jobs to introduce greater consolidating the social dimension of European integration.
consistency in EC funding in the field of employment and The draft Treaty on the European Union emphasises the key
social affairs. A Community programme for employment and role of human rights and democratic values in the EU
social solidarity, called Progress, has been established for the (Article 2), as well as its social objectives, among which full
period 2007–13 to support the implementation of the employment, solidarity between generations and protection
objectives of the European Union in the social field through of the rights of the child are mentioned (Article 3); Article 6
analytical activities, mutual learning, awareness and recognises the Charter of Fundamental Rights with the same
dissemination projects or support to actors whose work binding force as the Treaties. In the Treaty on the
contributes to the implementation of the European social Functioning of the European Union a ‘horizontal social
policy. Progress covers the following five areas of clause’ is introduced which reads: ‘In defining and
intervention: (i) employment, (ii) social inclusion and implementing its policies and activities, the Union shall take
protection, (iii) working conditions, (iv) anti-discrimination into account requirements linked to the promotion of a high
and (v) gender equality, with an overall allocation of level of employment, the guarantee of adequate social
EUR 743.25 million for the indicated period. It has replaced protection, the fight against social exclusion, and a high
pre-existing Community programmes and budget lines in level of education, training and protection of human health’
these sectors and it complements the European Social Fund (Article 9).
action by supporting initiatives with a clear European
dimension or added value. Role of the European Parliament
In 2007 a European Globalisation Adjustment Fund was The European Parliament (EP) has always been active in the
created to provide support for workers who have been made development of Community action in the field of employment
redundant due to changing global trade patterns; it co- and social policy, with a view to strengthen the European
finances active employment measures such as job search and capacity to combat unemployment, improve working and
mobility allowances, counselling, training and aid for self- living conditions for the poor and the socially excluded and
employment or business creation. ensure equal opportunities for women and men. Although the
EP’s role has long been only a consultative and supervisory
At the 2008 spring European Council (Brussels, 13 and 14 one, it adopted many resolutions during the 1960s, 1970s and
March 2008) the second cycle of the renewed Lisbon strategy 1980s. Parliament supported the Commission’s different
was launched and both pre-existing integrated guidelines for proposals while calling for a more active Community policy in
growth and jobs and common objectives of the OMC for social the social field to counterpart the increasing Community
protection and social inclusion were confirmed for the period importance in the economic area. The EP was more closely
2008–10. involved in the preparation of the Treaty of Amsterdam than in
In July 2008 the European Commission published a proposal previous Treaty revisions. The social provisions in the
for a renewed social agenda for 2008–10, ‘Opportunities, Amsterdam Treaty reflect many of the recommendations in
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these resolutions, such as the inclusion of the social agreement element in people’s integration into society, a sound social
in the Treaty and the insertion of an employment chapter, and policy is nonetheless needed to safeguard the right of all to
constitute a successful outcome of the EP’s work. social protection and the cohesion of the societies of the
Member States.
In 2003, when the Commission presented the third scoreboard
on implementing the social policy agenda, the EP underlined In October 2005, in a own-initiative report on the OMC on
that social security was vital to reduce the risk of poverty. It social protection and social inclusion, Parliament called on
asked the Commission to provide new initiatives, inter alia with the Council and Commission to open negotiations for an
a view to incorporating a social dimension in competition interinstitutional agreement setting out the rules for
policy, drafting a directive on social protection for new forms selecting the areas of policy to which the open method of
of employment and adopting an initiative making it easier to coordination is to be applied and for Parliament’s
reconcile work and family life. participation in the setting of objectives and indicators and
The EP has often called on the Commission and Member access to documents, participation in meetings, observation
States to ensure the correct, full and timely implementation of and supervision of progress, as well as information on reports
EC anti-discrimination legislation. and best practices. In the same year, the EP approved an
own-initiative report on a ‘European social model for the
The EP played an active role in the mid-term review of the future’ and, after identifying the values associated with such
Lisbon strategy. In its resolution of 9 March 2005, Parliament model (equality, solidarity, individual rights and
insisted on detailed consultation and on the establishment of responsibilities, non-discrimination and redistribution with
joint programming with the European Commission. It recalled access for all citizens to high-quality public services, and the
that a high level of social protection was central to the Lisbon high social standards already achieved), recognised that
strategy and that it is unacceptable that people should be ‘there is no alternative to urgently reforming economic and
living below the poverty line and in a position of social social systems where they fail to meet the criteria of
exclusion; the EP called for the reinforcement of policies to efficiency and socially sustainable development, and where
combat poverty and social exclusion, with a view to renewing they are inadequate to tackle the challenges of demographic
the commitment for the elimination of poverty by 2010, and change, globalisation and the IT revolution’.
asked for an ambitious social agenda.
In a resolution on the social dimension of globalisation of
In May 2005 the EP adopted an own-initiative report on the November 2005, the European Parliament called for a social
social agenda 2006–10, which criticised the lack of practical policy agenda aimed at developing an inclusive and cohesive
measures in the programme presented by the Commission society, based on gender equality and the combating of all
and expressed concerns that ‘the attainment of the ambitious forms of discrimination and taking account of all groups. The
Lisbon strategy is not being tackled as vigorously as has been report on ‘social reality stocktaking’ approved in November
claimed elsewhere’; it therefore invited the Commission to 2007, reminded the Member States of the need to make
draw up a genuine social policy agenda, with specific policy optimal use of the social OMC and encouraged them to
proposals, a timetable and a procedure for monitoring its introduce a decent living minimum wage. The EP had also
implementation and insisted on the specification of clear asked the Council of the European Union to strengthen the
targets and indicators to measure the results of the social social dimension of the employment guidelines for 2008–10.
inclusion strategy. The EP also considered that the agenda
should provide for the annual monitoring of the safeguarding
of fundamental social rights by the Union. Parliament took the g Moira Andreanelli
view that, although having employment is the most important August 2008
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4.9.2. The European Social Fund
The European Social Fund (ESF) was set up by the Treaty of Rome with a view to improving workers’ mobility and
employment opportunities in the common market through financial support for vocational training programmes to be
organised by the Member States. Its tasks and operational rules have subsequently been revised so as to reflect the
developments in the economic and employment situation in the Member States, as well as the evolution of the political
priorities defined at Community level.
Legal basis 2. 1994–99

Articles 146 to 148, 158 to 159, 161 and162 of the Treaty The Treaty of Maastricht expanded the scope for ESF support
establishing the European Community (EC). as described in Article 146 in order to include ‘adaptation to
industrial changes and to changes in production systems’.
Objectives For the following programming period 1994–99, funding
allocated for economic and social cohesion was doubled
Regulation (EC) No 1081/2006 describes the European Social
(ECU 141 billion); the ESF resources contributed throughout
Fund’s role as twofold: it shall strengthen economic and social
the Community to the achievement of Objective 3 (supporting
cohesion by improving access to quality employment for all
the occupational integration of unemployed persons exposed
and trying to reduce national, regional and local employment
to long-term unemployment, young people and persons
disparities, while at the same time supporting the
exposed to exclusion from the labour market and promoting
implementation of the European employment strategy.
equal opportunities for men and women) and Objective 4
Achievements (training and support for workers affected by industrial change
and changes in production systems). In addition, when the
A. Background Fund granted assistance in the eligible regions under
1. The early stages Objectives 1, 2 and 5b, it could be called upon to support
employment growth and stability, boost human potential in
The ESF was the first Structural Fund. During the transitional
research and, limited to Objective 1 areas, facilitate the
period (until 1970), it reimbursed the Member States 50 % of
strengthening of education and training systems or contribute
the costs of vocational training and resettlement allowances
to development through the training of public officials.
for workers affected by economic restructuring. In total, it
assisted over 2 million people during this period. After some pilot experience in the previous programming
period, Community initiatives were confirmed and allocated a
In 1971 a Council decision increased the Fund’s resources
more substantial budget (9 % of the total resources of the
substantially and reviewed the system by replacing retroactive
Funds). The ESF co-financed two such programmes aimed at
funding with new rules requiring applications for assistance to
supporting innovative transnational projects: Adapt, which
be submitted in advance by the Member States.
was meant to help employers and workers anticipate industrial
In 1983 a new reform (Council Decision 83/516/EEC of change and deal with its effects, and Employment, whose four
17 October 1983) produced greater concentration of the strands promoted labour market integration for vulnerable
Fund’s interventions, which were to be directed mainly to the groups (Horizon for disabled people, Now for women,
fight against youth unemployment and to the regions most in Youthstart for young workers and Integra for the most
need. disadvantaged).
By including in the EC Treaty the objective of economic and 3. 2000–06
social cohesion within the Community, the Single European In the context of Agenda 2000, the overall framework of the
Act (1986) set the scene for a comprehensive reform Structural Funds was simplified for the programming period
(regulations of 24 June and 19 December 1988), which was 2000–06.
basically intended to introduce a coordinated approach in the
programming and operating of the Structural Funds. For the As far as the ESF is concerned, for the first time it was entrusted
period 1989–93 co-financing by the ESF supported vocational with the responsibility of contributing both to the cohesion
training measures, aids for employment and the creation of policy and to the implementation of the European
self-employed activities throughout the Community to employment strategy (4.9.3) and its scope of intervention
combat long-term unemployment (Objective 3) and integrate was redesigned accordingly:
young people into working life (Objective 4). In the eligible
— developing active labour market policies to:
regions, the Fund could also co-finance interventions under
the other objectives of the cohesion policy. • combat unemployment,
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• prevent long-term unemployment, supplemented by the EU employment recommendations

• f acilitate the integration of the long-term unemployed which provide country-specific priorities’.
and the integration of young people; The Fund co-finances seven-year national or regional
— promoting equal opportunities, with particular emphasis operational programmes, proposed by the Member States and
on those exposed to social exclusion; approved through a Commission decision, to be implemented
in areas falling under the convergence or competitiveness and
— promoting and improving education and training as part employment objectives.
of lifelong learning, with a view to supporting
employability and mobility; According to Regulation (EC) No 1081/2006, the ESF can
contribute to the achievement of both objectives by
— promoting a skilled and adaptable workforce,
supporting actions in the Member States under the following
innovation and adaptability in work organisation,
priorities:
developing entrepreneurship and job creation and
boosting human potential in research and technology; a. increasing adaptability of workers, enterprises and
— improving women’s access to the labour market. entrepreneurs;
The ESF, endowed with a EUR 60 billion allocation, could b. e nhancing access to employment for job seekers and
provide assistance under each of the three new objectives of inactive people by supporting active and preventive
the cohesion policy, including ESF-specific Objective 3 measures and favouring the participation of women and
(supporting the adaptation and modernisation of policies and migrants in the labour market;
systems of education, training and employment in areas not
c. r einforcing the social inclusion of disadvantaged people,
covered by Objective 1).
through the promotion of pathways to integration and
The Fund should mainly finance assistance to persons in the re-entry into employment and the fight against
form of education and vocational training measures, support discrimination in the workplace;
for rehabilitation in employment, measures to promote
employability, employment aids, aids for self-employment and d. e nhancing human capital by supporting the design and
aid to the development of new sources of employment; co- introduction of reforms in education and training systems
financing by the Fund could also be envisaged in order to and the networking of higher education institutions and
support the strengthening of education, training and research centres;
employment structures and systems, as well as for e. p
romoting partnerships, pacts and initiatives through
accompanying measures such as information and publicity. networking of relevant stakeholders in order to mobilise for
EQUAL was the only Community initiative co-financed by the reforms in the field of employment and labour market
ESF in the programming period 2000–06 and it fostered inclusiveness.
transnational cooperation to promote new means of
In addition, under the convergence objective alone, the ESF
combating all forms of discrimination and inequalities in
can also co-finance operations aimed at:
connection with the labour market.
a. e xpanding and improving investment in human capital, by
B. The current programming period promoting the implementation of reforms in education
For the programming period 2007–13 the European Social and training systems, increased participation in education
Fund has an overall allocation of about EUR 76 billion. The legal and training throughout the life cycle and the
texts setting the framework and scope for ESF intervention are development of human potential in research and
Council Regulation (EC) No 1083/2006 of 11 July 2006 laying innovation;
down general provisions on the European Regional
Development Fund, the European Social Fund and the b. s trengthening institutional capacity of public
Cohesion Fund and Regulation (EC) No 1081/2006 of the administrations and, where relevant, social partners and
European Parliament and of the Council of 5 July 2006 on the non-governmental organisations, aimed at improving
European Social Fund and repealing Regulation (EC) policy and programme design and delivery in the relevant
No 1784/1999. sectors.
The Council decision of 6 October 2006 on ‘Community Under the new ‘one programme, one fund’ rule, an operational
strategic guidelines on cohesion’, which is the basic programme is only concerned with one of the three objectives
programming document guiding Member States while and only benefits from the funding of a single fund. To allow
drafting their national strategic reference frameworks and for more flexibility, however, the ESF, as well as the ERDF, can
operational programmes, stresses the double role of the ESF finance in complementary and limited ways activities related
by recalling that ‘in the sphere of employment and human to the scope of assistance of the other fund (within 10 % of the
resources the priorities of the Community strategic guidelines credit facilities allocated by the Community to each
on cohesion are those of the European employment strategy operational programme’s key priorities).
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The co-financing by the ESF may vary between 50 % and 85 % to give its assent to the general provisions governing the
of the total cost of interventions. Transnational cooperation is Funds, whereas since the Treaty of Amsterdam the adoption of
now an integrated feature of the ESF. implementing rules for the ESF is subject to the co-decision
procedure.
At the end of the programming exercise in May 2008 the
breakdown of the ESF appropriations by priority under the The EP takes the view that the ESF is the Union’s most
new operational programmes was reported as follows important instrument for combating unemployment. It has
(COM(2008) 301): about EUR 14 billion have been allocated to therefore always advocated the efficient operation of the Fund.
help strengthen the ability of companies and workers to It has often criticised the complexity of the Funds, which,
anticipate and manage change and nearly EUR 26 billion will especially in the past, involved too many objectives and too
be invested in improving the quality and availability of many Community initiatives together with burdensome
education and training; some EUR 19 billion will be spent to management, resulting in complications and delays in
assist in removing barriers to employment, in particular for payment of support to beneficiaries.
women, young people, older and low-skilled workers, while
While approving the Commission proposal for a regulation on
support for migrants will profit from a EUR 1.2 billion
the European Social Fund in 2005, the European Parliament
contribution; EUR 10 billion will be invested to help those
emphasised the need for the social mandate of the ESF not to
facing poverty and social exclusion and having the biggest
be neglected and stressed the role of the Fund in combating
difficulties in returning to the job market and EUR 2 billion in
inequalities between men and women, discrimination and
improving public administration and services; some EUR 1.2
social exclusion. The EP also expressed strong support in
billion have been allocated in the convergence regions to
favour of the capitalisation of the lessons learned through the
improve the social partners’ role and an additional EUR 1 billion
‘Equal Community’ initiative as regards partnership, innovation
will support the development of employment pacts and
and the participation of the target groups and asked for a
networking initiatives; finally, an allocation of some EUR 3
higher co-financing rate for innovative and transnational
billion will co-finance for transnational cooperation initiatives
actions. Parliament called for simpler legislation and
building on the EQUAL programme.
procedures, which could improve the effectiveness and quality
With the Lisbon Treaty entering into force, the ordinary of ESF interventions. The report also stressed the need for
legislative procedure would be required for the adoption of information and awareness-raising measures to be
general rules applicable to the Structural Funds. implemented by the Member States in order to fight
discrimination in the workplace and society.
The EP’s influence over the European Social Fund has been g Moira Andreanelli
growing through the years: since the Treaty of Maastricht it has August 2008
4.9.3. Employment policy

Improving employment policy and tackling unemployment are among the main goals of the Lisbon strategy. The
European employment strategy with employment guidelines and programmes, as Progress and EURES, are designed to
contribute to growth and jobs.
Legal basis trained and adaptable workforce and labour markets

responsive to economic change.
Articles 2, 3, 125 to 130, 136, 137, 140, 143 and 145 to 148 of
the Treaty establishing the European Community (EC).
Achievements
Objectives A. The early stages
Important principles, objectives and activities mentioned in 1. The Coal and Steel Community Treaty
the Treaty include promotion of a high level of employment Workers have benefited from re-adaptation aid in the
throughout the Community by developing a coordinated European Coal and Steel Community (ECSC) since the
strategy, particularly with regard to the creation of a skilled, 1950s. Aid was granted to workers in the coal and steel sectors
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4 9
whose jobs were threatened by industrial restructuring. The 2. The Essen process (1994)
European Social Fund (4.9.2), created in the early 1960s, was In order to fight unemployment, the European Council of Essen
the principal weapon in combating unemployment. in December 1994 agreed on five key objectives to be pursued
2. Actions in the 1980s by Member States: (i) to invest in vocational training; (ii) to
In the 1980s and early 1990s, action programmes on increase employment intensive growth; (iii) to reduce non-wage
employment focused on specific target groups: ERGO labour costs; (iv) to increase active labour market policies; and (v)
(long-term unemployed), LEDA (local employment to fight youth and long-term unemployment. Member States
development) and ELISE (helping SMEs). In the same period a should ensure they translate these recommendations into
number of observatory and documentation systems were multiannual programmes monitored by the Commission and
established. The European Commission and the ministries of the Council. The European Council was informed annually on
employment of the Member States decided in 1982 to set up the result of the Commission’s and the Council’s review. The
MISEP (mutual information system on employment policies in Essen process contributed to raising awareness of high
Europe). Sysdem (Community system of documentation on unemployment in the Member States at EU level.
employment) was established in 1989. At the end of 1989 the 3. The contribution of the Amsterdam Treaty (1997)
Council called upon the Commission and the Member States The new ‘Employment’ title in the Amsterdam Treaty set up
to set up a European Employment Observatory (EEO). The third the European employment strategy and the permanent,
EEO network, Resnet (research network), was established in Treaty-based Employment Committee with advisory status
1997. to promote coordination of the Member States’ employment
3. EURES and labour market policies.
To encourage free movement and help workers to find a job in The Treaty has not changed the basic principle of the Member
another Member State, the former SEDOC system was States having sole competence for employment policy, but
improved and renamed EURES (European employment the Member States have committed themselves to coordinate
services) in 1992. their employment policies at Community level. The Treaty
EURES is a cooperation network designed to facilitate the free entrusts the Council and the Commission with a much
movement of workers within the European Economic Area stronger role and new tasks and tools. The European
(EEA) and Switzerland. The reform (2002) improves EURES’ Parliament has been involved more closely into the decision-
institutional framework by decentralising decisions to the making process, too. The responsibilities of the social partners
members of the network. Partners in the network, which is and their possibilities to contribute are also enhanced through
coordinated by the European Commission, include public the inclusion of the social protocol into the Treaty.
employment services, trade unions and employers’
organisations. C. The European employment strategy (EES) 1997–2004
The extraordinary Luxembourg job summit in November 1997
Based on the EURES Charter and three-year activity plans,
anticipated the entry into force of the Amsterdam Treaty in
EURES’ main objectives are to inform, guide and provide advice
1998 and launched the EES, the so-called Luxembourg
to potentially mobile workers on job opportunities and living
process.
and working conditions in the EEA, to assist employers to
recruit workers from other countries, and to provide advice It created the framework for the annual cycle for coordinating
and guidance to workers and employers in cross-border and monitoring national employment policies. The
regions. coordination of national employment policies at EU level is
based on the commitment of the Member States to establish a
In this context, 2006 was proclaimed as the European Year of
set of common objectives and targets. The strategy was built
Workers’ Mobility (3.2.2) to raise awareness and increase
around the following components.
understanding of the benefits of working in a new country
and/or occupation, as well as highlighting how the EU can — Employment guidelines: based on a proposal from the
help workers move. Commission, the Council agreed every year on a series of
guidelines setting out common priorities for Member
B. Towards a more comprehensive employment policy States’ employment policies.
1. The White Paper on growth, competitiveness and
employment (1993) — National action plans: each Member State drew up an
annual national action plan describing how these
The high level of unemployment in most EU countries
guidelines are implemented into practice at national level.
contributed to release the White Paper on growth,
competitiveness and employment under President — Joint employment report: the Commission and the Council
Jacques Delors (1993). It launched the debate on the jointly examined the national action plans and presented a
European economic and employment strategy by bringing joint employment report to the European Council. Based
the issue of employment to the top of the European agenda on this analysis, the Commission presented a proposal for
for the first time. the employment guidelines for the following year.
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— Recommendations: the Council may decide, by qualified relaunched in 2005 with a focus on growth and jobs, and with
majority, to issue country-specific recommendations upon the aim of simplifying and streamlining it.
a proposal by the Commission.
The proposal led to a complete revision of the EES, based on a
The EES is committing the Member States and the Community multiannual time framework (the first cycle 2005–08) and a
to achieve a high level of employment as one of the key more streamlined presentation of the strategy in form of the
objectives of the European Union and, for the first time in implementation package. The new process is as follows.
1997, was set at the same footing as the macroeconomic
objectives of growth and stability. Employment has become — The Commission presents in January the conclusions of its
an issue of ‘common concern’. Member States and the review of the national reform programmes in the form of
Community are committed to work towards developing a the implementation package, together with its spring
coordinated strategy for employment at Community level by report to the spring European Council. The spring report
using the newly introduced open method of coordination presents the Commission’s strategic policy priorities for the
(OMC). The OMC is based on five key principles, i.e. EU. The implementation package includes: (i) the
subsidiarity, convergence, management by objectives, country implementation report of the broad economic policy
surveillance and an integrated approach. guidelines; (ii) the draft joint employment report; and
(iii) the implementation report on the internal market
The first set of 19 guidelines was adopted in 1998 and strategy, with a detailed assessment of implementation in
organised around the four pillars of employability, these policy areas.
entrepreneurship and job creation, adaptability, and
equal opportunities. — Following the general political orientations given by the
spring European Council, the Commission presents its
In 2000, the Lisbon European Council agreed on the new proposals for further action in these policy areas in a single
strategic goal of making the EU ‘the most competitive and document, the ‘Guidelines package’, composed of the
dynamic knowledge-based economy in the world’, broad economic policy guidelines (5.4), the employment
capable of sustaining economic growth with more and better guidelines and, possibly, employment recommendations.
jobs and greater social cohesion. It embraced full employment Subsequent to further consultation of the European
as an overarching objective of employment and social policy Parliament, the relevant Council formations adopt the
and set concrete targets to be achieved in 2010, i.e. increase broad economic policy guidelines, the employment
the overall employment rate to 70 % and the women’s guidelines and recommendation, and the June European
employment rate to more than 60 %. In 2001, another target Council draws up conclusions.
was added to raise the employment rate for older workers (55
to 64 years) to 50 % by 2010. — The new cycle starts when Member States present their
national reform programmes to the European Commission
To reflect these conclusions, five new ‘horizontal objectives’ in autumn.
were introduced in the 2001 guidelines: realising full
employment, stimulating lifelong learning, promoting the role 2. The employment guidelines 2005–08 and 2008–10
of social partners, ensuring a proper policy-mix between the The integrated guidelines 2005–08 and 2008–10 contain a
four pillars, and developing common indicators in order to total of 23 guidelines, of which eight are devoted specifically
assess progress. The improvement of the quality in work was to employment, i.e. guidelines 16 to 23, to boost the Lisbon
added in 2002. strategy. The eight employment guidelines are essential to
reach the three priorities for action in the field of employment:
D. The renewed EES since 2005 (i) attract and retain more people in employment, increase
1. Relaunch of the EES in 2005 labour supply and modernise social protection systems; (ii)
The EES was reviewed in 2002, five years after its launch. improve adaptability of workers and enterprises; and (iii)
Despite the Commission’s assessment ‘Taking stock of five increase investment in human capital through better
years of the European employment strategy’ (COM(2002) 416) education and skills. The main target is to increase the
that the EES fostered convergence of national employment employment rate to 70 % by 2010.
policies towards the employment guidelines and that it
The employment guidelines 2008–10 remain unchanged
supported a new proactive labour market policy with
compared with the previous cycle. They shall contribute to
preventive measures, the Employment Taskforce’s ‘Jobs, jobs,
foster full employment, to improve quality and productivity at
jobs — Creating more employment in Europe’ report, 2003,
work and to strengthen social and territorial cohesion by
the so-called ‘Kok-report’, identified economic and social
keeping the three priorities for action and quantitative targets
problems with a low overall rate of economic growth and a
as agreed for the cycle 2005–08. The EU and its Member States
high unemployment rate on the eve of enlargement and
must better adapt its existing policies and instruments to face
recommended focusing on implementation of the strategy.
globalisation and fast changing social realities (demographic
As progress was insufficient and intermediate employment change, longer working lives, increasingly diverse family
rate targets for 2005 were missed, the Lisbon strategy was structure, and new patterns of mobility and diversity).
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Role of the European Parliament enhance the role of parliaments, not the European Parliament,
but also national parliaments, which play a full role in setting
A. General and achieving national targets (‘Report on a European social
The EP considers employment as one of the most model for the future’ (A6-0238/2006)). Furthermore, it called on
important priorities for the EU and believes that the EU and Member States to fully implement the revised strategy and to
Member States have to coordinate their efforts. Working set concrete targets for employment.
towards full employment should be made an explicit goal of
the Member States and the EU. Since April 1983, the EP has Regarding the employment guidelines 2008–10 Parliament
adopted many resolutions on the issue. shares the view that the renewed Lisbon strategy is
beginning to deliver results. The employment guidelines do
The role of the European Parliament has been gradually further not need a complete revision but rather need to be
developed and, since the Amsterdam Treaty, Parliament has to amended on very particular points, in particular related to
be consulted on the employment guidelines (Article 128(2)) strengthening the social dimension of the Lisbon strategy
before being drawn up annually by the Council, regardless of and the quality of employment. The Lisbon strategy is not
the multiannual cycle. delivering for all European citizens as it may have delivered
more jobs but not always better jobs. The fact that there are
B. Detailed actions
14 million working poor in the EU shows that the Lisbon
In 1994, a special Temporary Committee on Employment strategy for growth and jobs is not delivering on social
was created. The EP stressed in the report in 1995 that the EU inclusion. The common social objectives of Member States
and the Member States should adopt an integrated strategy should be better taken into account within the Lisbon
dedicated to job creation, encompassing all policies which agenda, in order to ensure the continuing support for
have an impact on employment. European integration by the Union’s citizens. Parliament
During the 1996 Intergovernmental Conference, the EP recommends integrating a balanced ‘flexicurity’ approach in
ensured that employment policy got a much higher priority in the employment guidelines.
the Amsterdam Treaty by calling for a specific employment The Lisbon Treaty will raise the employment objective by
chapter in the Treaty. Many of the EP’s proposals on introducing full employment and social progress as a goal
employment policy were considered in the Treaty of (Article 3(3)).
Amsterdam and by the Luxembourg European Council on
Employment in October 1997. Title VIII, Articles 145 to 150, will become the employment
chapter but remain unchanged except in Article 130(1) where
Already in its resolution of June 2003 on the employment the Employment Committee will be established by simple
guidelines, the EP called for streamlining and better majority in the Council.
coordination between broad economic policy guidelines,
employment guidelines, social inclusion strategy and The Charter of Fundamental Rights will become legally
sustainability strategy. It also stressed the need for better binding by respecting the principle of subsidiarity according
involvement of all relevant actors (e.g. social partners and to general provisions of Title VII of the Charter and contribute
national parliaments) and quantitative targets to be developed to strengthen employment and social policies.
to measure progress on quality at work. An integrated The social clause in the draft Lisbon Treaty (Article 5(a)) will
approach on equal opportunities and gender equality in the contribute to strengthen the employment policy as it states ‘In
labour market should be developed and all Member States defining and implementing its policies and activities, the
should aim at halving the number of working poor by 2010. Union shall take into account requirements linked to the
The new employment guidelines 2005–08 were backed by promotion of a high level of employment, the guarantee of
Parliament. It supported ‘the economic and social principles adequate social protection, the fight against social exclusion,
that define the integrated guidelines’ but called on the and a high level of education, training and protection of
Member States to adopt ambitious national reform human health.’
programmes that are coherent with the guidelines. The EP
insisted repeatedly in involving more national parliaments in g Christa Kammerhofer
the Lisbon strategy. The open method of coordination should August 2008
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4.9.4. Social security cover in other Member States of the
Union
The regulation of social protection is needed to support the free movement of people within the territory of the EU. Two
regulations adopted in 1971 and 1972 have been governing the regime applicable to employees and other categories of
persons residing lawfully on the territory of a Member State but a fundamental reform of the whole legislative system is
ongoing at the moment.
Legal basis benefits. The aggregation principle means that the competent
Articles 42, 63 and 308 of the Treaty establishing the European Member State must take account of periods of insurance and
Community (EC). employment completed under another Member State’s
legislation in deciding whether a worker satisfies the
requirements regarding the duration of the period of
Objectives insurance or employment. As regards the right to membership
The basic principle enshrined in the Treaty of Rome is the of unemployment or sickness funds, for example, application
removal of obstacles to freedom of movement for persons of the aggregation principle means that the person can be
between the Member States (3.2.2). To achieve this, it is transferred directly from a fund in one Member State to a fund
necessary to adopt social security measures which prevent EU in another Member State.
citizens working and residing in a Member State other than
their own from losing some or all of their social security rights. 3. Prevention of overlapping of benefits
This principle is intended to prevent anyone obtaining undue
Achievements advantages from the right to freedom of movement.
Contributing to social security systems in two or more
In 1958, the Council issued two regulations on social security
Member States during the same period of insurance does not
for migrant workers which were subsequently superseded by
confer the right to several benefits of the same kind.
Regulation (EEC) No 1408/71, supplemented by
implementing Regulation (EEC) No 574/72. Nationals from 4. Exportability
Iceland, Liechtenstein and Norway are also covered by way of
This principle means that social security benefits can be paid
the European Economic Area (EEA) Agreement, and
throughout the Union and prohibits Member States from
Switzerland by the EU–Swiss Agreement. In 2004, the
reserving the payment of benefits to people resident in the
coordination regulation ((EC) No 883/2004) was adopted to
country, but it does not apply to all social security benefits.
replace Regulation (EEC) No 1408/71. However, the new
Special rules apply to the unemployed, for example. Different
regulation can only be applied when its implementing
rights apply to exporting cash benefits (e.g. sickness benefit or
regulation (replacing Regulation (EEC) No 574/72) will have
pensions) and benefits in kind (e.g. medical assistance). Cash
been adopted (expected in 2009).
benefits are usually paid in accordance with the rules of the
A. The four main principles of Regulation (EEC) No country in which the person entitled to them lives or is staying.
1408/71 Generally speaking, benefits in kind are governed by the rules
1. Equal treatment of the country in which the fund member is staying. If the
Workers and self-employed persons from other Member States competent State is not the State of residence, the competent
must have the same rights as the host State’s own nationals. State must reimburse the State of residence or stay for its
For the principle of equal treatment to apply, three conditions expenditure on benefits in kind.
must be met: equivalence of facts, aggregation of periods and
B. Persons covered
retention of rights. In other words, a Member State may not
confine social security benefits to its own nationals. The right Originally, Regulation (EEC) No 1408/71 only covered workers
to equal treatment applies unconditionally to any worker or but, with effect from 1 July 1982, its scope was extended to
self-employed person from another Member State having cover the self-employed too (see Regulation (EEC) No
resided in the host State for a certain period of time. 1390/81). The regulation also covers members of workers’ and
self-employed persons’ families and their dependants, as well
2. Aggregation
as Stateless persons and refugees (see Article 2(1)).
This principle applies where, for example, national legislation
requires a worker to have been insured or employed for a By Council Regulation (EC) No 1606/98 of 29 June 1998 the
certain period of time before he is entitled to certain benefits, Council extended the scope of Regulation (EEC) No 1408/71 in
e.g. sickness, invalidity, old-age, death or unemployment order to set civil servants on an equal footing with the rest of
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4 9
the population as regards the general statutory pension rights (EEC) No 1408/71. It is still based on the same four principles of
provided in the Member States. Regulation (EEC) No 1408/71. However, the aim of the new
Regulation (EC) No 307/1999 of 8 February 1999 extended the regulation is to simplify the existing Community rules for the
scope of the regulation to include all insured persons, coordination of Member States’ social security systems by
particularly students and persons not in gainful strengthening cooperation between social security
employment. institutions and improving the methods of data exchange
between them. The obligation on administrations to
Council Regulation (EC) No 895/2003 of 14 May 2003 extended cooperate with one another in social security matters should
the scope of the regulation to cover nationals of third be improved and the movement from one Member State to
countries provided they are legally resident on Union another, whether for professional or private purposes, without
territory. any loss of social security entitlements will be facilitated.
C. Benefits covered For example, in the area of old-age pensions, it is necessary to
Article 4(1) of Regulation (EEC) No 1408/71 lists the social specify what steps the insured person must take in order to
security benefits covered by the regulation and the provisions apply for payment of his/her pension, to which institution the
which seek to prevent migrant workers and self-employed claim must be submitted (in a case where the insured person
persons from suffering losses because they work or have has worked in several Member States), how the institutions will
worked in one or more Member States: exchange information to ensure that the insured person’s full
career is taken into account, and how each institution will
— sickness and maternity/paternity benefits;
calculate the pension to be paid for the relevant period.
— invalidity benefits intended for the maintenance or
improvement of earning capacity; However, the new rules on coordination in Regulation (EC)
No 883/2004 cannot be applied until the corresponding
— old-age benefits; implementing regulation has been adopted to replace the
— survivors’ benefits; implementing regulation ((EEC) No 574/72).
— benefits in respect of accidents at work and occupational The proposal to revise the implementing regulation was
diseases; tabled by the Commission in January 2006 (COM(2006) 16).
— unemployment benefits; The EP adopted the first reading in July 2008 and the Council is
still in the process of negotiation. It is expected that the
— family benefits. implementing regulation will be adopted by the European
Pre-retirement benefit schemes do not fall within the scope of Parliament and the Council in 2009.
the regulation. According to Regulation (EEC) No 1408/71, The proposal completes the modernisation work done by
insured persons resident in another Member State for a short Regulation (EC) No 883/2004 and is intended to clarify the
period may avail themselves of emergency medical services rights and obligations of the various stakeholders as it defines
there. Where non-emergency services are concerned, the the necessary measures for the persons covered to travel, stay
relevant insurance fund must first give its approval. Two or reside in another Member State without losing their social
judgments by the Court of Justice in the Decker (C‑120/95) and security entitlements. The proposal contains general principles
Kohll (C-158/96) cases suggest that all insured persons might to allow the coordination to function. These principles include
in the future be able to obtain medical treatment or medical single applicable legislation, assimilation of the facts, and
products anywhere in the Union, provided that this does not equal treatment. Member States are required to comply with
result in an excessive rise in costs. these but have exclusive competence in defining, organising
D. Future outlook and financing their national social security systems.
1. Prospects for the reform of Regulation (EEC) No The following elements will be covered by Regulation (EC) No
1408/71 883/2004 and its implementing regulation.
Since 1971 Regulation (EEC) No 1408/71 has been amended
— Improvement of the rights of insured persons by the
on numerous occasions in order to take into account
extension of coverage in respect of persons and scope
developments at Community level, changes in legislation at
in respect of social security areas covered: The
national level and the case-law of the Court of Justice. As the
population covered by the regulation will include all
regulation was a complex and rather impractical piece of
nationals of Member States who are covered by the
legislation the Commission presented a proposal for a
social security legislation of a Member State. Hence, not
fundamental reform of the whole legislative system at the
only employees, self-employed, civil servants, students and
end of 1998 (COM(98) 779).
pensioners but also persons who are not part of the
2. Towards better coordination of social security systems active population will be protected by the coordination
The European Parliament and the Council approved rules. That simplifies and clarifies the rules determining the
Regulation (EC) No 883/2004 in order to replace Regulation legislation applicable in cross-border situations.
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— Expansion of the fields of social security subject to Role of the European Parliament
the coordination system in order to include pre- The European Parliament has always shown a keen interest in
retirement legislation: The material coverage of the the problems encountered by migrant workers, frontier
regulation is extended to statutory pre-retirement workers, the self-employed and nationals of third countries
schemes, which means that the beneficiaries of such working in other Member States, and has adopted various
schemes will be guaranteed payment of their benefits, resolutions with a view to improving their lot. The European
will be covered for medical care and will be entitled to Parliament has on several occasions deplored the persistence
draw family benefits even when they are resident in of obstacles to full freedom of movement and has called on
another Member State. the Council to adopt pending proposals, such as those
— Amendment of certain provisions relating to intended to bring early retirement pensions within the scope
unemployment: There is the retention for a certain period of Regulation (EEC) No 1408/71, to extend the right of
(three months which can be extended up to a maximum unemployed persons to receive unemployment benefit in
of six months) of the right to receive unemployment another Member State and to widen the scope of Regulation
benefit by persons moving to another Member State in (EEC) No 1408/71 so as to include all insured persons. Some of
order to seek employment. these demands will be met by the final adoption of the
radically revised version of Regulation (EEC) No 1408/71. The
— The general principle of equal treatment: This will be EP is seeking to improve the situation of frontier workers,
strengthened. especially as regards their social security and taxation
— Strengthening of the principle of exportability of (resolution of 17 January 2001).
benefits: Insured persons temporarily staying in another Regarding the implementing regulation ((EC) No 883/2004),
Member State will be entitled to healthcare which may the EP underlined in the first reading the importance and need
prove medically necessary during their stay. for proportionate data collection and urges reinforcement
— Introduction of the principle of good administration: of the requirements regarding data protection.
There is an obligation on the institutions of Member States With the Lisbon Treaty entering into force, the ordinary
to cooperate with one another and provide mutual legislative procedure will be applied and social security
assistance for the benefit of citizens. rights for workers will be voted by qualified majority in
3. European health insurance card Council the first time. It will become Article 48.
European citizens who travel within the European Economic However, one Member State can ask to refer the draft
Area (EEA) may henceforth use the European health insurance legislative act to the European Council if the Member State
card. This card facilitates access to medical care on a visit to ‘declares the draft legislative act would affect important
another EEA country for personal or professional reasons. aspects of its social security systems, including its scope, cost
Previously individuals had to carry a paper form with them: or financial structure, or would affect the financial balance of
E110 for international hauliers, E111 for tourists, E119 for that system’.
jobseekers looking for work in another Member State or E128 The draft legislative act will thus be suspended. The European
for employees on temporary assignments in another Member Council shall, within four months of this suspension, either
State and for students. (i) refer the draft back to the Council, which shall terminate the
Since 1 January 2006, the European health insurance card is suspension of the ordinary legislative procedure, or (ii) take no
replacing the aforementioned paper forms and is recognised action, or (iii) request the Commission to submit a new
by all EU-27 Member States, three EFTA countries (Iceland, proposal; in that case, the act originally proposed shall be
Liechtenstein and Norway) and Switzerland. deemed not to have been adopted.
The card is issued for free by the institution of the competent Another important change is the explicit inclusion of self-
State or State of residence. In order to facilitate acceptance of employed as beneficiaries of the provisions on social security
cases and refund of the costs of care provided, the three main in the framework of the freedom of workers’ movement.
entities involved — the insured persons, the providers of care
and the institutions — must recognise the single model and g Christa Kammerhofer
the uniform specifications of the card. August 2008
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4.9.5. Health and safety at work

Improving health and safety at work has become a priority concern of European authorities since the 1980s. Legislation
standards for minimal protection for workers have been set at the European level but the provisions adopted shall not
prevent any Member State from maintaining or introducing more stringent measures for the protection of workers. The
Charter of Fundamental Rights reinforces the importance of this policy in European legislation.
Legal basis 2. The Single European Act

Articles 71, 94, 95, 136, 137 and 308 of the Treaty establishing With the adoption of the Single European Act in 1987, health
the European Community (EC). and safety at work was introduced for the first time in the EEC
Treaty in its new Article 118a laying down minimum
requirements and allowing the Council to adopt occupational
Objectives
health and safety directives by qualified majority. The
On the basis of Article 137, the EU encourages improvements provisions adopted under Article 118a shall not prevent any
in the working environment in order to protect workers’ health Member States from maintaining or introducing more
and safety by harmonising working conditions. To this end, stringent measures for the protection of workers. The main
minimum requirements are laid down at EU level, allowing objective of Article 118a was to improve workers’ health and
Member States to introduce a higher level of protection at safety at work, to harmonise conditions in the working
national level if they so wish. Such directives shall avoid environment; to prevent ‘social dumping’ as the internal
imposing administrative, financial and legal constraints in a market was completed, and to prevent companies from
way which would hold back the creation and development of moving to areas with a lower level of protection to gain a
small and medium-sized undertakings. competitive edge.
Article 100, also relevant for occupational health and safety,
Achievements was the complementary side aiming at removing barriers to
A. Background trade in the single market and at ensuring the placing of safe
products on the market, including machines and personal
1. The early stages
protective equipment for professional use. Member States are
Within the framework of the European Coal and Steel not permitted to set higher requirements for their products
Community (ESCS), created by the Treaty of Paris in 1951, than those laid down by the directives.
various research programmes were carried out in the field of
health and safety at work. The initial aim of reducing the The so-called ‘Social Charter’ (i.e. ‘The Community Charter
significant number of explosions and fires in coalmines was of the Fundamental Social Rights of Workers’ of 1989),
extended to other extractive industries, for example to surface though not legally binding, affirms that ‘the same importance
and underground mineral-extracting industries, in subsequent must be paid to the social aspects as to the economic aspects
years. of the single market’.
The need for a global approach to occupational health and 3. Contribution of the Treaty of Amsterdam (1997)
safety became more manifest with the establishment of the The Amsterdam Treaty strengthened the status of
European Economic Community (EEC) by the Treaty of Rome employment issues by introducing the ‘Employment’ title and
in 1957. This area received Community attention through the social agreement. Minimum directives in the field of
recommendations on occupational medicine and on the protection of health and safety at work and concerning
adoption of a European list of occupational diseases. working conditions are adopted the first time in co-decision
The Advisory Committee for Safety, Hygiene and Health with the European Parliament. The scope of the notion of
Protection at Work was set up in 1974 to assist the Commission ‘working conditions’ in Article 118 A was a highly controversial
in the preparation and implementation of activities in this field. issue and diverging approaches were taken by Parliament, the
The aim to complete the single European market enforced the Council, the Commission and the Member States. In its
need to complement the single market by minimum judgment of 12 November 1996 (Case No C-84/94) the Court
requirements for occupational health and safety leading to the of Justice of the European Communities ruled that Article 118
adoption of a few directives, for example Directive 82/605/EEC A should not be interpreted restrictively.
(replaced by Directive 98/24/EC) on protection against the
B. Main steps
risks associated with metallic lead, Directive 83/477/EEC (as
last amended by Directive 2003/18/EC) on asbestos, and 1. Framework Directive 89/391/EEC
Directive 86/188/EEC (as last amended by Directive 2003/10/ Since the Treaty of Nice of 2003, Article 137 is the basis for the
EC) on noise. improvement of the working environment to protect workers’
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health and safety. One of the cornerstones in the development the organisation of working time; Directive 1999/95/EC on
of the safety and health of work was the adoption of the working time provisions in maritime transport; Directive
framework directive (89/391/EEC) with a particular focus on 2000/34/EC concerning certain aspects of the organisation
the principles of prevention. The framework directive aims to of working time to cover sectors and activities excluded
improve the protection of workers from accidents at work and from that directive (road, air, sea and rail transport, inland
occupational diseases by providing preventive measures, waterways, sea fishing, other work at sea and the activities of
information, consultation, balanced participation and training doctors in training); Directive 94/33/EC on the protection of
of workers and their representatives. It covers all workers in the young people at work; and Council Regulation (EC)
EU, employed by private companies and public institutions/ No 2062/94 establishing the European Agency for Health
organisations. Self-employed and domestic servants are not and Safety at Work.
covered by the framework directive. The framework directive is
2. European Agency for Health and Safety at Work
the basis for in total 19 ‘daughter directives’ on:
The agency, set up in 1996 in Bilbao (Spain), aims to bring
— requirements for working places (Directive 89/654/EEC); together and share knowledge and information and to
— the use of work equipment (Directive 89/655/EEC, as contribute to promoting a culture of risk prevention. It is
amended by Directive 2001/45/EC); represented through a network of focal points in Member
States. Among other tasks, the agency is in charge of the
— the use of personal protective equipment (Directive
European Week for Safety and Health at Work. This annual
89/656/EEC);
information campaign is backed by all Member States,
— work with display screen equipment (Directive Parliament and the European Commission, trade unions and
90/270/EEC); employers’ federations. It provides an opportunity to focus on
— manual handling (Directive 90/269/EEC); the importance of safety and health at work in a certain area of
safety and health at work.
— exposure to carcinogens (Directive 90/394/EEC);
In 2008, the campaign focused on the healthy workplace
— temporary or mobile construction sites (Directive
initiative: ‘Good for you. Good for business’; in 2007 it focused
92/57/EEC);
on musculoskeletal disorders ‘Lighten the load’; in 2006 on
— provision of safety and health signs at work (Directive ‘Safe start’ to raise awareness in young workers; in 2005 on
92/58/EEC); noise at work, with the slogan ‘Stop that noise!’; and in 2004 on
— pregnant workers (Directive 92/85/EEC); safety in the construction sector.
— mineral-extracting industries (drilling) (Directive 92/91/EEC); C. Community action programmes and strategies on
health and safety at work
— mineral-extracting industries (Directive 92/104/EEC);
Since the early stages with the European Coal and Steel
— fishing vessels (Directive 93/103/EC);
Community, research programmes (from 1951 to 1997) were
— chemical agents (Directive 98/24/EC, as amended by established in the field of safety and health at work. They
Directive 2000/39/EC); focused on, for example, industrial hygiene and safety in the
— minimum requirements for improving the safety and mining industry, the control of nuisances and ergonomics in
health protection of workers potentially at risk from steel plants.
explosive atmosphere (Directive 1999/92/EC); The Advisory Committee played a major role in drawing up
— the protection of workers from risks related to exposure to the first action programme of the European Communities on
biological agents at work (Directive 2000/54/EC); safety and health at work from 1978 to 1982, with the
agreement of both sides of industry, focusing on the causes of
— the protection of workers from the risks related to exposure occupational accidents and diseases; the second programme
to carcinogens or mutagens at work (Directive (1983–87) dealt with training, information statistics and
2004/37/EC); research; the third (1988–92) with social aspects of the
— the minimum health and safety requirements regarding development of the internal market; the Community
the exposure of workers to the risks arising from physical programme (1996–2000) with the impact of rapid change in
agents on vibration (Directive 2002/44/EC), noise the way people work through the revolution in information
(Directive 2003/10/EC), electromagnetic fields (Directive technology.
2004/40/EC) and artificial optical radiation (Directive The European Social Agenda (adopted in 2000) contributed
2006/25/EC). to a more strategic approach on health and safety at work at
The framework directive has had an impact on other legislative EU level with the objectives of: consolidating, adapting and,
acts, and in particular on: the Commission’s proposal to amend where appropriate, simplifying existing standards; promoting
Directive 91/383/EEC on temporary agency workers; the the application of legislation in small and medium-sized
proposal to amend Directive 2003/88/EC on certain aspects of enterprises (SMEs) — taking into account the special
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4 9
constraints to which they are exposed — by means of a The European Parliament supports the Commission’s activities
specific programme; developing from 2001 onwards, to increase the provision of information to SMEs. Work must
exchanges of good practice and collaboration between labour be adapted to people’s abilities and needs and not vice
inspection institutions. versa. Working environments should be developed to take
greater account of the special needs of disabled and older
Subsequently, the Community strategy 2002–06 adopted a
workers. Parliament urges the Commission to investigate new
global approach to well-being in the workplace. It emphasised
emerging risks not yet covered by current legislation, e.g.
the culture of risk prevention, the combination of a variety of
stress, burnout, violence and harassment in the workplace.
political instruments and the building of partnerships between all
the players on the safety and health scene. It pointed at the fact Parliament called on the Commission to amend the directive
that an ambitious social policy is a factor in the competitiveness on the protection of workers from risks related to exposure to
equation and that, conversely, having a ‘non-policy’ engenders biological agents at work (Directive 2000/54/EC) to protect
costs which weigh heavily on economies and societies. health workers from blood-borne infections due to needle-
The current Community strategy for the period 2007–12 stick injuries (resolution of 6 July 2006, P6_TA(2006)0305) and
focuses on prevention. It aims to achieve a continuous, to amend the directives related to musculoskeletal disorders.
sustainable and homogeneous reduction of occupational The extension of the scope of the framework directive
accidents and diseases in the EU, in particular through defining (89/391/EEC) to excluded groups of workers such as the
and implementing national strategies based on a detailed military, the self-employed, domestic workers and home
evaluation of the national situation and improving and workers is another key request. It also calls for a directive laying
simplifying existing legislation as well as enhancing its down minimum standards for the recognition of occupational
implementation in practice through non-binding instruments diseases.
such as the exchange of good practices, awareness-raising
campaigns and better information and training. The Repeatedly, Parliament has been pleading for better
Commission’s target to reduce 25 % of work accidents across implementation of existing directives.
the EU was welcomed by the European Parliament. With the Lisbon Treaty entering into force, the ordinary
legislative procedure will be applied, but the characteristics
Role of the European Parliament of the co-decision procedure remain unchanged. Furthermore,
the Charter of Fundamental Rights will become legally binding
The European Parliament has frequently emphasised the need
by respecting the principle of subsidiarity according to the
for optimal protection of workers’ health and safety. In many
general provisions of Title VII of the Charter.
resolutions, it has called for all aspects directly or indirectly
affecting the physical or mental well-being of workers to be
covered. Until now, the European Parliament has had significant g Christa Kammerhofer
influence on directives improving working conditions. August 2008
4.9.6. Social dialogue, information, consultation and

participation of workers
Social dialogue and employee participation are fundamental components of the European social model that have
gained full recognition in the EC Treaty with the Amsterdam reform. Social partners thus contribute actively to design the
European social policy and the Community shall complement Member States’ activities in the areas of information and
consultation of workers.
I — SOCIAL DIALOGUE Objectives

Under Article 136 of the EC Treaty, the promotion of dialogue
Legal basis between management and labour is recognised as a common
Articles 136 to 140 of the Treaty establishing the European objective of the European Community and the Member States.
Community (EC). Social dialogue also improves European governance through
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the involvement of social partners in decision-making and in — they may conclude an agreement and jointly request the
the implementation process. Commission to propose that the Council adopt a decision
on implementation; or
Achievements — having concluded an agreement between themselves,
A. Bipartite social dialogue they may prefer to implement it in accordance with the
procedures and practices specific to the social partners and
According to the original wording of Article 140 of the EC
to the Member States; or
Treaty as it appeared in the Treaty of Rome (Article 118), one of
the Commission’s tasks in the social field was to promote close — they may be unable to reach an agreement.
cooperation between Member States in regard to the right of
In the last case, the Commission will resume work on the
association and collective bargaining between employers and
proposal in question.
workers.
From 1998, following a Commission decision of 20 May 1998
It was only after many years, however, that this provision
(98/500/EC) to establish specific bodies, sectoral social
started to be implemented.
dialogue was also strongly developed. Several committees
Set up in 1985 at the initiative of the Commission’s President were created in the main economic fields and they produced
Jacques Delors, the Val Duchesse social dialogue process valuable results, including collective agreements such as those
aimed to involve the social partners, represented by the in the transport sector.
European Trade Union Confederation (ETUC), the Union of
Industrial and Employers’ Confederations of Europe (UNICE) The incorporation of the agreement on social policy into the
and the European Centre of Enterprises with Public EC Treaty (Articles 137 to 145), following the Treaty of
Participation and of Enterprises of General Economic Interest Amsterdam, finally allowed for a unique framework to apply to
(CEEP), in the internal market process. A number of joint social dialogue within the European Union.
statements on employment, education and training and other Cross-industry results of this process were the adoption of
social issues resulted from the meetings of the social partners’ framework agreements on parental leave (1995), on part-time
representatives. In 1992, the Social Dialogue Committee (SDC) working (1997) and on fixed-term work (1999). Sectoral social
was established as the main forum for bipartite social dialogue dialogue produced three European agreements: on the
at European level; the SDC currently meets three to four times organisation of working time for seafarers (1998); on the
a year and comprises 64 members (32 employers and 32 organisation of working time of mobile workers in civil aviation
workers) either from European secretariats or national (2000); and on certain aspects of the working conditions of
organisations. mobile workers assigned to interoperable cross-border
Meanwhile, Article 118b was incorporated into the EC Treaty services in the railway sector (2005). These agreements were
by the Single European Act, creating a legal basis for the implemented by Council decision, monitored by the
development of a ‘Community-wide social dialogue’: the Commission.
promotion of such dialogue became one of the Commission’s The agreement on telework concluded in May 2002 was
official tasks and collective agreements at Community level implemented for the first time in accordance with the
were made possible. procedures and practices specific to the social partners and
In October 1991, UNICE, ETUC and CEEP adopted a joint the Member States. ‘Autonomous agreements’ were also
agreement which called for mandatory consultation of the concluded by the social partners on work-related stress and on
social partners on the preparation of legislation in the area of the European licence for drivers carrying out a cross-border
social affairs and a possibility for the social partners to interoperability service in 2004, as well as on harassment and
negotiate framework agreements at Community level. This violence at work in April 2007.
request was acknowledged in the agreement annexed to the Negotiations between the social partners on a framework
Maastricht protocol on social policy, which was signed by all agreement on temporary agency work ended in failure in May
Member States with the exception of the United Kingdom. 2001. Thus, in March 2002 the Commission adopted a proposal
At national level, the social partners were thereby given the for a directive based on the consensus which emerged among
opportunity of implementing directives by way of collective the social partners. Similarly, the pending proposal on the
agreement. revision of Directive 2003/88/EC concerning certain aspects of
the organisation of working time was adopted by the
At Community level, the Commission must consult the social
European Commission after the social partners had expressed
partners before taking any action in the social policy field. On
their unwillingness to engage in negotiations.
such occasions, the social partners may express their
willingness to negotiate among themselves an agreement on The ‘agreement on workers’ health protection through the
the subject of the consultation and stop the Commission’s good handling and use of crystalline silica and products
initiative. The negotiation process may take up to nine months containing it’, signed in April 2006 was the first multi-sector
and the social partners have the following possibilities: outcome of the European social partners’ negotiations.
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4 9
In May 2008 employers’ and workers’ representatives from the and the two subsequent Presidencies, the European
maritime shipping industry signed an agreement on labour Commission and the social partners. The three Council
standards in the sector, which aims to apply certain provisions Presidencies are normally represented by the Heads of State
of the International Labour Organisation’s 2006 Maritime or Government and the ministers in charge for labour and
Labour Convention and, upon request, the European social affairs; the European Commission has also two
Commission proposed in July 2008 that the Council adopt a representatives, who are usually its President and the
directive for the implementation of the agreement. member responsible for employment and social affairs. The
social partners’ members are divided into two delegations of
Following the changes introduced by the Treaty of
equal size, comprising 10 workers’ representatives and 10
Amsterdam, the consultation process has become even more
employers’ representatives, with special attention to be paid
important, since it covers all the fields now falling under
to the need to ensure a balanced participation between
Article 137.
men and women. Each group shall consist of delegates of
With the entry into force of the Lisbon Treaty, a new article European cross-industry organisations either representing
(Article 152 TFEU) would be inserted between current general interests or more specific interests of supervisory
Articles 137 EC (151 TFEU) and 138 EC (153 TFEU), stating: ‘The and managerial staff and small and medium-sized
Union recognises and promotes the role of the social partners businesses at European level.
at its level, taking into account the diversity of national
systems. It shall facilitate dialogue between the social partners, Technical coordination is provided for the workers’ delegation
respecting their autonomy.’ Article 153 TFEU would also give by the European Trade Union Confederation (ETUC) and for
the Member States the possibility to entrust the social partners the employers’ delegation by the Union of Industrial and
with the implementation of a Council decision adopted on Employers’ Confederations of Europe (UNICE).
ratification of a collective agreement signed at European level. If ratified, the Lisbon Treaty would entail inclusion of the
Tripartite Social Summit for Growth and Employment in the
B. Tripartite social dialogue Treaty on the Functioning of the European Union under the
From the very start of the European integration process, it was new Article 152.
considered important to involve economic and social
stakeholders in drawing up Community legislation. The
Consultative Committee for Coal and Steel and the European
Economic and Social Committee bear witness to this. The European Parliament (EP) has always supported the
development of the social dialogue and has made a practical
Since the 1960s a number of advisory committees have
contribution by extending frequent invitations to the social
existed whose role is to support the European Commission on
partners at EU level to present their views before the
the formulation of specific policies. In general, these
Committee on Employment and Social Affairs delivers a report
committees, such as the Committee on Social Security for
on any relevant proposals. The EP considers it vital to promote
Migrant Workers, the Committee on the European Social Fund
and ensure the broadest possible participation by
and the Committee on Equal Opportunities for Women and
organisations representing the social partners, particularly at
Men, are made up of representatives of national employers’
the level of small and medium-sized enterprises.
and trade unions’ organisations, as well as representatives of
the Member States. The EP has also often reminded the Commission of the need
for a coherent industrial policy at European level, in which the
From 1970 the key tripartite social dialogue forum at European
social partners should play a key role.
level was the Standing Committee on Employment, composed
of 20 representatives of the social partners, equally divided It must be recalled that the Lisbon Treaty has foreseen a clear
between trade unions and employers’ organisations. Reformed right for the EP to be informed on the implementation of
in 1999, the Committee was fully integrated into the collective agreements concluded at Union level (Article 155
coordinated European employment strategy. TFEU) and on the initiatives taken by the Commission to
encourage cooperation between the Member States under
On the basis of a joint contribution of the social partners to the
Article 156 TFEU, including matters relating to the right of
Laeken Summit in December 2001, the Council launched a
association and collective bargaining between employers and
tripartite social summit for growth and employment in March
workers.
2003 (2003/174/EC). The tripartite social summit has replaced
the Committee on Employment and facilitates ongoing
consultation between the Council, the Commission and the II — INFORMATION, CONSULTATION
social partners on economic, social and employment AND PARTICIPATION OF WORKERS
questions. It meets at least once a year and one of its meetings
must be obligatorily held before the spring European Council. Legal basis
Formalising a process that had been developing since 1997, Articles 44, 94, 95 and 137 of the Treaty establishing the
the summit consists of the current EU Council Presidency European Community (EC).
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Objectives protected to the same extent as laid down in the directive
The Community supports and complements Member States’ on the transfer of undertakings.
activities relating to the information and consultation of — Council Directive 94/45/EC of 22 September 1994 on the
workers with a view to contributing to the achievement of the introduction of European works councils: This directive was
core objectives of the European social policy set out in adopted in accordance with the agreement on social
Article 136 of the EC Treaty. policy and extended to the United Kingdom in 1997. It
introduced an innovation in that, unlike previous directives
Achievements in this area, it does not address specific situations but
contains general rules to ensure that workers in large
A. Background multinational companies and merging undertakings are
Information, consultation and participation of workers have informed and consulted. Workers have also been
been a key theme in European debate since the first social recognised certain rights to information and consultation
action programme was adopted by the Council in 1974. The in regard to the working environment. A proposal for
Social Charter stresses the desirability of promoting employee revising this directive has been adopted by the European
participation. Commission on 2 July 2008.
The Commission’s proposals in this area, however, have often — Directive 2002/14/EC of the European Parliament and of
encountered resistance. It should be remembered that the EC the Council of 11 March 2002 establishing a general
Treaty only provides a proper legal basis for Community framework for informing and consulting employees in the
legislation in the field of information and consultation of European Community: This directive lays down minimum
workers since the Amsterdam Treaty has integrated the common requirements for national provisions on
agreement on social policy into the text of the EC Treaty protecting the right of workers to be informed and
(Article 137, with co-decision applying). Previously adopted consulted on the economic and employment situation
legislation was mainly based on either Article 44 or Articles 94 affecting their workplace.
to 95 of the EC Treaty, providing for Community measures
aimed at attaining freedom of establishment or the — Council Directive 2001/86/EC of 8 October 2001
approximation of laws in the common or internal market. supplementing the statute for a European company with
regard to the involvement of employees: The statute for a
Council Directive 94/45/EC was adopted in accordance with European public limited-liability company, adopted by
the agreement on social policy and extended to the United Council Regulation (EC) No 2157/2001, is complemented
Kingdom in 1997. by an indissociable directive establishing rules on the
B. Legislation in force participation of workers in decisions concerning the
strategic development of the company.
Most of the directives adopted by the Council deal with the
right of workers to be informed and consulted on a number of — Council Directive 2003/72/EC of 22 July 2003
important issues concerning the economic performance, the supplementing the statute for a European cooperative
financial soundness and plans on the company’s future society (Council Regulation (EC) No 1435/2003) with regard
developments that could affect employment. However, these to the involvement of employees: This directive sets rules
directives do not contain any provision conferring on on the mechanisms to be foreseen in European
employees the right to participate in decision-making. cooperative societies to ensure that employees’
representatives may exercise an influence on the running
— Council Directive 75/129/EEC of 17 February 1975 on
of the undertaking.
collective redundancies, as amended by Directives 92/56/
EEC and 98/59/EC: Under this directive, employers must The proposals for Council regulations on a ‘European
enter into negotiations with workers in the event of mass association’ and a ‘European mutual society’, together with the
redundancy, with a view to identifying ways and means of proposals for Council directives containing supplementary
avoiding collective redundancies or reducing the number provisions on the involvement of workers (COM(93) 252) were
of workers affected and mitigating the consequences. finally withdrawn by the European Commission in 2006.
— Council Directive 2001/23/EC of 12 March 2001 on the
safeguarding of employees’ rights in the event of transfers Role of the European Parliament
of undertakings, businesses or parts of undertakings or
Parliament has adopted several resolutions calling for workers
businesses (consolidating Directives 77/187/EC and 98/50/
to have the right to be involved in company decision-making.
EC): Under this, workers must be informed of the reasons
The EP’s position is that workers should not only be entitled to
for the transfer and its consequences.
be informed and consulted but that they should also have the
— Council Directive 78/855/EEC of 9 October 1978 on right to participate in decision-making. The right to
mergers of public limited liability companies: Pursuant to information, consultation and participation in decision-making
this directive workers in companies which merge are should apply in both national and transnational companies
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irrespective of their legal status. The EP believes that workers Community legislation concerning information and
should be involved in company decision-making concerning consultation of workers, especially on collective redundancies
the introduction of new technology, changes in the and safeguarding employees’ rights in the event of transfers of
organisation of work, production and economic planning. undertakings and, in particular, it insisted on the need to
speed up the long-awaited revision of the European works
In a resolution of 5 June 2003 on the Commission
council directive (94/45/EC).
communication on a framework for the promotion of
employee financial participation (COM(2002) 364), the EP Parliament also asked the Commission to take action to ensure
reaffirmed its support for the participation of employees in that Community legislation on information and consultation of
profits and enterprise results. workers is fully implemented in the Member States, especially
as regards Directive 94/45/EC.
More recently, in a resolution on strengthening European
legislation in the field of information and consultation of
workers of 10 May 2007 (P6_TA(2007)0185) the European g Moira Andreanelli
Parliament called on the Commission to review and update August 2008
4.9.7. Equality between men and women

Equality between women and men is one of the objectives of the European Union. Over time, legislation, jurisprudence
and modifications to the Treaties have contributed to reinforce this principle and its implementation in the EU.

To ensure equal opportunities and treatment for men and
Since 1957 and the Rome Treaty, the principle that men and
women through legislation, mainstreaming and positive
women should receive equal pay for equal work has been
actions.
enshrined in the EC Treaties. However, the first directives
implementing this principle were not adopted on this basis
but on the basis of Article 308 (supplementary powers), Achievements
Article 94 (the approximation of laws) and Article 137 (workers’
A. The first directives on equality
health and safety).
From the mid-1970s, the European Community adopted
The Treaty of Amsterdam made the principle of equality legislation aimed at ensuring equality between men and
between men and women an objective and a fundamental women in the workplace:
Community principle (Article 2). Article 3(2) also gives the — approximation of laws in the Member States relating to the
Community the task of integrating equality between men and application of the principle of equal pay for men and
women into all its activities (also known as ‘gender women (Directive 75/117/EEC of 10 February 1975);
mainstreaming’). The Treaty of Amsterdam also expanded the
legal basis for promoting equality between men and women — implementation of the principle of equal treatment for
and introduced new elements of major importance. The new men and women as regards access to employment,
Article 13 makes provision for combating all forms of vocational training and promotion and working conditions
discrimination and Articles 137 and 141 allow the EU to act not (Directive 76/207/EEC of 9 February 1976);
only in the area of equal pay but also in the wider area of equal — progressive implementation of the principle of equal
opportunities and treatment in matters of employment and treatment for men and women in matters of social security
occupation. Within this framework, Article 141 authorises (Directive 79/7/EEC of 19 December 1978);
positive discrimination in favour of women.
— implementation of the principle of equal treatment for
men and women in occupational social security schemes
The Treaty of Lisbon reinforces the principle of equality
(Directive 86/378/EEC of 24 July 1986, as amended by
between women and men by including it in the values and
Directive 96/97/EEC of 20 December 1996);
objectives of the Union (Articles 2 and 3(3) of the Treaty on
European Union) and by providing for gender mainstreaming — application of the principle of equal treatment between
in all EU policies (Article 8 of the Treaty on the Functioning of men and women engaged in an activity including
the European Union). agriculture, in a self-employed capacity, and on the
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protection of self-employed women during pregnancy and b. The Daphne III programme (2007–13)
motherhood (Directive 86/613/EEC of 11 December 1986); The Daphne programme is a Community programme aimed
— introduction of measures to improve the safety and health to prevent and combat violence against children, young
at work of pregnant workers and workers who have people and women and to protect victims and groups at risk.
recently given birth or are breastfeeding (Directive 92/85/ It follows on from the Daphne (2000–03) and Daphne II (2004–
EEC of 19 October 1992). 06) programmes and has a budget of EUR 116.85 million for
the period 2007–13.
B. Progress in case-law of the Court of Justice of the
2. Legislation recently adopted
European Communities (CJ)
— Directive 2002/73/EC of 23 September 2002 amending
The CJ has played an important role in the promotion of
Directive 76/207/EEC of 9 February 1976 on the
equality for men and women. The most notable judgments are
implementation of the principle of equal treatment for
listed below.
men and women as regards access to employment,
— Defrenne II judgment of 8 April 1976 (Case 43/75): The vocational training and promotion, and working
Court recognised the direct effect of the principle of equal conditions: This directive provides a Community definition
pay for men and women and ruled that that principle not of direct and indirect discrimination, harassment and
only applied to the action of public authorities but also sexual harassment. It also encourages employers to take
extended to all agreements which are intended to regulate preventive measures to combat sexual harassment,
paid labour collectively. reinforces the sanctions for discrimination and provides for
— Bilka judgment of 13 May 1986 (Case 170/84): The Court the setting up within the Member States of bodies
felt that a measure excluding part-time employees from an responsible for promoting equal treatment between
occupational pension scheme constituted ‘indirect women and men.
discrimination’ and was therefore contrary to Article 119 if it — Regulation (EC) No 806/2004 of 21 April 2004 provides for
affected a far greater number of women than men, unless gender mainstreaming in EU cooperation and
it could be shown that the exclusion was based on development policy as a whole and the adoption of
objectively justified factors unrelated to any discrimination specific measures to improve the situation of women.
on grounds of sex.
— Directive 2004/113/EC of 13 December 2004 provides for
— Barber judgment of 17 May 1990 (Case 262/88): The implementing the principle of equal treatment between
Court decided that all forms of occupational pension women and men in the access to and supply of goods
constituted pay for the purposes of Article 119 and the and services.
principle of equal treatment therefore applied to them. The
Court ruled that men should be able to exercise their — Directive 2006/54/EC on the implementation of the
pension rights or survivor’s pension rights at the same age principle of equal opportunities and equal treatment
as their female colleagues. of men and women in matters of employment and
occupation (recast): In order to contribute to legal
— Marschall judgment of 11 November 1997 certainty and clarity in the implementation of the principle
(Case C-409/95): The Court declared that a national rule of equal treatment, this directive merges:
which, in a case where there were fewer women than men
in a sector, required that priority be given to the promotion • Directive 75/117/EEC on equal pay,
of female candidates (‘positive discrimination’) was not • D
irective 76/207/EEC, as amended by Directive
precluded by Community legislation, provided that that 2002/73/EC,
advantage were not automatic and that male applicants
• D
irective 86/378/EEC, as amended by Directive 96/97/
were guaranteed consideration and not excluded a priori
EC, on equal treatment in social security schemes, and
from applying.
• D
irective 97/80/EC on the burden of proof in cases of
C. Recent developments discrimination based on sex.
The European Union’s most recent actions in the field of
3. A roadmap for equality between women and men
equality between men and women are indicated below.
(2006–10)
1. The financial framework In March 2006, the Commission presented its ‘Roadmap for
a. The Progress programme (2007–13) equality between women and men’ (COM(2006) 92). It
The EU actions in the field of gender equality are funded under builds on the experience of the framework strategy for
the Community programme for employment and social equality between women and men for the period 2001–05
solidarity (Progress). Gender equality is one of the five fields of and outlines six priority areas for EU action on gender equality
activity of this programme. A minimum of 12 % of its almost for the period 2006–10: equal economic independence for
EUR 658 million budget will be devoted to actions in this field women and men; reconciliation of private and professional life;
over the period 2007–13. equal representation in decision-making; eradication of all
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4 9
forms of gender-based violence; elimination of gender matters of employment and occupation (Article 141(3) of
stereotypes; and promotion of gender equality in external and the EC Treaty, as amended by the Treaty of Amsterdam);
development policies. The roadmap represents the the Parliament thus played a significant role in the
Commission’s commitment in the field of equal opportunities adoption of Directive 2002/73/EC of 23 September 2002
between women and men. on the implementation of the principle of equal treatment
for men and women as regards access to employment,
4. The 2006 European Pact for Gender Equality
vocational training and promotion, and working
The European Pact for Gender Equality, initiated by the Czech, conditions;
Danish, Spanish, French, Finnish and Swedish governments
was adopted by the spring European Council in March 2006. — Community incentive measures to support actions taken
Its main purpose is to encourage actions by the Member by the Member States to combat discrimination
States and the EU to enhance women’s participation in the (Article 13(2) of the EC Treaty, as amended by the Treaty of
labour market, to improve work–life balance for women and Nice).
men, and to promote gender mainstreaming. The pact builds The Treaty of Lisbon extends further the application of co-
on already existing objectives, targets and instruments within decision to the adoption of measures in combating trafficking
the Lisbon process and reinforces the implementation of in women and children.
national reform programmes (4.9.3) to raise the employment
In addition, Parliament contributes not only to the overall policy
rate of women.
development on equality between women and men (for
5. The European Institute for Gender Equality example by adopting resolutions on the report the
The European Parliament and the Council established in Commission presents each year to the spring European Council
December 2006 a European Institute for Gender Equality on developments in gender equality in the EU), but also to the
with the overall objective to contribute to and strengthen the development of Community policy in more specific areas.
promotion of gender equality, including gender The European Parliament has notably focused, through its
mainstreaming in all Community and national policies. It will own-initiative reports which allow it to draw the attention of
also fight against discrimination based on sex and raise other institutions to specific problems, on the following issues
awareness of gender equality by providing technical assistance over recent years:
to the Community institutions by collecting, analysing and
disseminating data and methodological tools. — the fight against trafficking in women (see the resolution of
17 January 2006);
Role of the European Parliament — the fight against violence against women (see the
resolution of 2 February 2006); and
The European Parliament has played a significant part in
supporting the equal opportunities policy, particularly since it — gender equality in external relations (see for example the
established its Committee on Women’s Rights and Gender resolution of 1 June 2006 on the situation of women in
Equality in July 1984. armed conflicts or the resolution of 16 November 2006 on
women in international politics).
Parliament’s action has been facilitated by the extension of the
application of the co-decision procedure in the following Through its Committee on Women’s Rights and Gender
areas: Equality, the European Parliament has also developed dialogue
and cooperation with the national parliaments on equal
— measures to promote equality between men and women opportunities within the network of parliamentary
with regard to labour market opportunities and treatment committees for equal opportunities for women and men in
at work (Article 137 of the EC Treaty, as amended by the the European Union (NCEO) since it was set up in 1997.
Treaty of Amsterdam);
— measures aimed at applying the principle of equal g Hélène Calers
opportunities and equal treatment of men and women in July 2008
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4.9.8. Anti-discrimination and social inclusion of vulnerable
groups
By supporting the Member States in the fight against discrimination and social exclusion, the European Community aims
to reinforce the inclusiveness and cohesion of European society and to allow all citizens to enjoy equal access to available
opportunities and resources.
Legal basis — The second directive (2000/78/EC), the ‘employment

Articles 13, 125 to 130 and 136 to 145 of the Treaty establishing equality directive’, focuses on discrimination in
the European Community (EC). employment and occupation, as well as vocational training.
It deals with direct and indirect discrimination, as well as
harassment and instructions to discriminate, on the
Objectives grounds of religion or belief, disability, age and sexual
Article 13, which is listed among the ‘principles’ on which the orientation. It includes important provisions concerning
EC Treaty is based, allows the Community to take action to reasonable accommodation, with a view to promoting the
fight discrimination by both offering juridical protection for access of persons with disabilities to employment and
potential victims and establishing incentive measures. The training.
general prohibition of discrimination on the grounds of sex,
Many of the definitions and legal concepts used in the two
race, religion or other personal conditions is a provision
directives have been inspired by gender equality legislation
common to all national legal systems and international
and/or the case-law of the Court of Justice of the European
agreements based on or aiming at the safeguard of human
Communities in the field of gender equality.
rights.
In July 2008 the European Commission adopted a proposal for
The combating of social exclusion of the most disadvantaged
a Council directive on implementing the principle of equal
is one of the specific goals of the Community and the Member
treatment between persons irrespective of religion or belief,
States in the social policy field.
disability, age or sexual orientation outside the field of
employment. The proposal covers access to goods and
Achievements services, social protection, healthcare and education. It only
A. Anti-discrimination addresses commercial transactions and does not cover purely
private transactions between individuals. This proposal was
Based on the experience of contrasting sex discrimination, a
accompanied by a communication entitled ‘Non-
consensus emerged in the mid-1990s around the need for the
discrimination and equal opportunities: A renewed
European Community to tackle discrimination on a number of
commitment’ (COM(2008) 420) that proposes actions to give
additional grounds. The result of this process was the inclusion
new impetus to the dialogue on non-discrimination policy
of a new Article 13 in the EC Treaty, following the entry into
and to make more effective use of the instruments available,
force of the 1997 Amsterdam Treaty. Article 13 empowered the
both in general and with particular emphasis on promoting
Council, acting unanimously, to take action to deal with
the social inclusion of Roma.
discrimination on a whole new range of grounds, including
racial or ethnic origin, religion or belief, age, disability and B. Anti-discrimination and social inclusion of vulnerable
sexual orientation. This article was subsequently modified by groups within the Lisbon agenda
the Nice Treaty, in order to allow for the adoption of incentive Fighting discrimination and promoting participation of the
measures by co-decision and qualified majority voting in the most vulnerable groups is a key component of European
Council. employment and social policy within the Lisbon strategy.
In 1999 the European Commission took the necessary steps to 1. The European employment strategy
implement Article 13 and came forward with a package of If the EU is to attain the Lisbon strategy goals by 2010, it needs
proposals. This led to the adoption by the Council in 2000 of to dramatically raise the employment levels of groups that are
two directives. currently under-represented in the labour market, which
— Council Directive 2000/43/EC (the ‘racial equality directive’) means raising the employment rate of older workers and
bans direct and indirect discrimination, as well as women, as well as achieving a significant reduction in the
harassment and instructions to discriminate, on grounds of unemployment gaps for people at a disadvantage, such as
racial or ethnic origin. It covers employment, training, people with disabilities, ethnic minorities and migrants. As has
education, social security, healthcare, housing and access often been recalled by all players involved, including the
to goods and services. European Parliament, fighting discrimination keeping people
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4 9
away from the labour market is not only a matter of inclusion policies, with three general objectives and specific
safeguarding human rights, but it also contributes to targets for each of the three existing strands.
enhancing productivity and growth.
The overarching objectives of the OMC for social protection
This was already acknowledged in the employment guidelines and social inclusion are to promote: (a) social cohesion, equality
for 1999, where the ‘employability pillar’ focused on ‘promoting between men and women and equal opportunities for all
a labour market open to all’ and, based on the consideration through adequate, accessible, financially sustainable, adaptable
that ‘many groups and individuals experience particular and efficient social protection systems and social inclusion
difficulties in acquiring relevant skills and in gaining access to, policies; (b) effective and mutual interaction between the
and remaining in, the labour market’ and that ‘a coherent set of Lisbon objectives of greater economic growth, more and better
policies promoting the integration of such groups and jobs and greater social cohesion, and with the EU’s sustainable
individuals into the world of work and combating development strategy; and (c) good governance, transparency
discrimination is called for’, asked the Member States to ‘give and the involvement of stakeholders in the design,
special attention to the needs of the disabled, ethnic implementation and monitoring of policy.
minorities and other groups and individuals who may be
The current goals specific to the OMC on eradication of
disadvantaged, and develop appropriate forms of preventive
poverty and social exclusion are described as follows: access
and active policies to promote their integration into the labour
for all to the resources, rights and services needed for
market’ (guideline 9).
participation in society, preventing and addressing exclusion,
The employment guidelines for 2005–07 and 2008–10 further and fighting all forms of discrimination leading to exclusion;
clarify the relationship between the economic and social the active social inclusion of all, both by promoting
implications of open labour markets: they underline that ‘equal participation in the labour market and by fighting poverty and
opportunities and combating discrimination are essential for exclusion; ensuring that social inclusion policies are well-
progress [...] Member States should aim towards active coordinated and involve all levels of government and relevant
inclusion of all through promotion of labour force actors, including people experiencing poverty, and that they
participation’, recall that ‘raising employment levels is the most are efficient and effective and mainstreamed into all relevant
effective means of generating economic growth and public policies.
promoting socially inclusive economies’ and therefore ask the Interaction between the three OMC strands is, however,
Member States to ‘increase the employment rates of older especially evident when considering social policies to support
workers and young people’ and promote the ‘active inclusion the most vulnerable target groups such as the elderly and the
of those most excluded from the labour market’ (guideline 17). disabled. Cooperation on ‘adequate and sustainable pensions’ is
2. The open method of coordination in the social sector meant to guarantee adequate retirement incomes for all and
Building on the conclusions of the Lisbon Council in March access to pensions which allow people to maintain, to a
2000, later that year the Nice European Council decided that reasonable degree, their living standard after retirement and the
the cooperation on policies designed to combat social financial sustainability of public and private pension schemes.
exclusion should be based on an open method of The third OMC strand on ‘Accessible, high-quality and
coordination (OMC) combining national action plans and sustainable healthcare and long-term care’ aims to ensure access
Commission initiatives promoting cooperation. The method is for all to adequate health and long-term care and that the need
built around: (i) common aims in the fight against poverty and for care does not lead to poverty and financial dependency.
social exclusion, (ii) national action plans for fighting against As foreseen by the EC Treaty, under Article 144, a Social
poverty and social exclusion, (iii) joint reports on social Protection Committee has been established to promote
inclusion and regular monitoring, joint evaluation and peer cooperation between Member States and with the
review, and (iv) common indicators to measure progress and Commission on social protection policies. The Committee is
compare good practices. Member States agreed to regularly composed of two delegates from each Member State and the
prepare national action plans against poverty and social Commission.
exclusion starting in June 2001. These were to be informed by
the objectives identified by the Council, namely: to facilitate C. Incentive measures
participation in employment and access by all to resources, Between 1975 and 1980, in the framework of its first anti-
rights, goods and services; to prevent the risks of exclusion; to poverty programme, the European Economic Community
help the most vulnerable; to mobilise all relevant players. conducted an initial set of pilot projects and pilot studies
designed to combat poverty and exclusion. This first
The OMC was also applied in parallel to other social protection
programme was followed by two others (1985–89 and 1989–
sectors, i.e. on providing adequate and sustainable pensions
94). Community action in this area, however, was continually
and on ensuring accessible, high-quality and sustainable
being contested in the absence of a legal basis.
healthcare and long-term care. In 2005, the European
Commission proposed to streamline the ongoing processes Such a problem was solved with the entry into force of the
into a new framework for the OMC of social protection and Treaty of Amsterdam, which enshrined the eradication of
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social exclusion as an objective of Community social policy. In for the integration of people with disabilities in various ways.
December 2002, the European Parliament and the Council The resolution prepared Decision 2000/750/EC establishing
adopted Decision No 50/2002/EC establishing a programme of the Community action programme to combat discrimination
Community action encouraging cooperation between for the period 2001–06.
Member States to combat social exclusion. The programme
The year 2003 was nominated the European Year of People
covered the period 2002–06 and was allocated a budget of
with Disabilities (Council Decision 2001/903/EC). As a follow-
EUR 75 million.
up, a disability action plan was established to ensure a
Meanwhile, a specific Community action programme to coherent policy for people with disabilities. It constitutes an
combat discrimination had been established, based on operational framework for actions to be developed at EU level
Article 13(2); it covered all of the grounds set out in Article 13 between 2004 and 2010. Regular, biannual updates of the
with the exception of sex, which was dealt with separately by disability action plan and continual dialogue with the main
the European Community’s gender equality programme. stakeholders ensure that actions carried out by the
In 2007 all EC funding programmes existing in the area of Commission are relevant and targeted. The communication
employment and social affairs were integrated into a unique ‘Situation of disabled people in the European Union: the
framework with the adoption of the new Progress programme: European action plan 2008–09’ (COM(2007) 738) is the most
covering a period of seven years, Progress is meant to recent update of the EU disability action plan.
rationalise expenditure and improve the impact of actions People with disabilities are hard hit by unemployment. One of
supported by the European Community. Progress has a global the key issues of Community initiatives is to broaden their job
budget of EUR 743.25 million, of which 30 % is allocated to prospects and to change attitudes towards people with
social inclusion and social protection and 23 % to non- disabilities in the area of employment. Disability aspects are
discrimination. included in the national reform programmes and in the
While Progress is meant to support projects with a clear national strategies for social protection and social inclusion.
European dimension or added value, the European Social Fund 2. The elderly
(ESF) makes Community funding available to co-finance
actions aimed at combating discrimination and help the most In 2000, more than 60 million people (16.4 % of the EU
disadvantaged access the labour market. population) were aged 65 or over and this rate is expected to
increase to 25 % by 2020. The rise in life expectancy is set to
It should also be recalled that 2010 has been declared the continue; combined with falling birth rates, this will accelerate
‘European Year of Combating Exclusion and Poverty’. the ageing of the population. Recent data demonstrate that
the elderly are specially hit by poverty.
D. European strategies for specific groups: the disabled
and the elderly Having been one of the first regions in the world to be
The EU follows a double approach in supporting the social affected by the problem of an ageing population, Europe has
inclusion of vulnerable groups, by both fighting all forms of developed a whole raft of strategic responses. Since 1984 the
discrimination and designing targeted strategies. Community has conducted a number of studies and seminars
focusing on the contribution of the elderly to economic and
1. The disabled
social life. The first action programme for the elderly began
In pursuance of the United Nations resolution of 1993 entitled back in 1991.
the ‘Standard rules for the equalisation of opportunities for
persons with disabilities’, the Commission adopted The response to ageing developed by the EU is set in the
communication COM(96) 406 in July 1996. The Community context of an overarching strategy which consists in
disability strategy set forth in that communication was based formulating mutually reinforcing policies and covers the
on equal rights and non-discrimination and on mainstreaming economic, social and employment implications of ageing. The
disability issues into all appropriate EU policies, such as social EU approach is designed to mobilise the full potential of
policy, education and training, research, transport, people of all ages. The basic principle is that the search for
telecommunications and public health. While responsibility in effective responses to the problem of an ageing population
this field lies with the Member States, the communication must go beyond a narrow focus on the interests of today’s
emphasised that the European Community would make a oldest generations. To this end, new active policies and active
significant contribution to the promotion of cooperation ageing strategies have to be adopted.
between Member States. Two communications from the European Commission,
In 1996, a High-level Group on Disability was set up to monitor ‘Towards a Europe for all ages — Promoting prosperity and
national policies and priorities, to pool information and intergenerational solidarity’ (COM(99) 221) and ‘Europe’s
experience and to advise the Commission. The resolution on response to world ageing — Promoting economic and social
equal employment opportunities for people with disabilities progress in an ageing world’ (COM(2002) 143), identify the
adopted by the Council on 17 June 1999 calls on Member following priorities: tackling the economic effects of ageing
States to develop, evaluate and review support programmes with a view to maintaining growth and sound public finances;
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4 9
adapting successfully to a situation in which the labour force is groups in the media and advertising, physical access to
older and fewer in number; guaranteeing appropriate, viable information for people with disabilities, telecommunication,
and flexible pensions; ensuring that everyone has access to electronic communication, transport modes and public spaces,
high-quality healthcare while guaranteeing the financial social advantages and access to and supply of goods and
viability of health services. The Green Paper ‘Confronting services which are available to the public’. The report also called
demographic change: a new solidarity between the on the Commission and the Member States to mainstream
generations’ (COM(2005) 94) underlines that the EU is facing equal opportunities and non-discrimination in the Lisbon
unprecedented demographic changes that will have a major strategy for growth and employment, the guidelines for the
impact on the whole of society. To meet this challenge, the open method of coordination on social inclusion, and national
Lisbon agenda needs to be implemented and people should reform programmes and the regulations governing the
work longer; it is also necessary to continue modernising social Structural Funds.
protection systems, especially pensions, to ensure their social
The EP has often adopted resolutions with the aim of
and economic sustainability and to enable them to cope with
improving conditions for the socially excluded, the elderly and
the effects of demographic ageing.
people with disabilities. It emphasises that the Community
In March 2008 the European Commission organised a must show greater solidarity with these groups and work for
conference on ‘Protecting the dignity of older persons — The their integration into society. In this context, it has urged the
prevention of elder abuse and neglect’, bringing together Member States to set minimum incomes so that the most
experts and policymakers to raise awareness and trigger an disadvantaged groups obtain the necessary means to achieve
open debate on a widespread problem. a reasonable standard of living and are guaranteed social
protection and adequate healthcare.
Role of the European Parliament In 1993, the EP initiated the organisation of a senior citizens’
The European Parliament (EP) was an active player in the parliament. The EP held a European conference entitled ‘Older
debate that led to the inclusion of Article 13 in the EC Treaty. people in the 21st century — a new lease of life’ in October
The Lisbon Treaty would endow the Parliament with a power 1998 and, in November 2003, organised a European
of consent when adopting non-discrimination legislation parliament of disabled people. Together with the Commission,
under Article 13(1) (new Article 19 of the Treaty on the Parliament has celebrated 3 December as the European Day of
Functioning of the European Union). Disabled People every year since 1993.
It has often called on the Commission and Member States to In an own-initiative report on social reality stocktaking of
ensure the correct, full and timely implementation of the November 2007, the EP stressed that access to goods and
directives adopted on the basis of Article 13 of the Treaty: the services should be a right for every EU citizen. The EP also
Commission should not hesitate in pursuing infringement invited the Commission and the Member States, in
actions against Member States in this regard. cooperation with organisations representing the disabled, to
develop national, regional and local initiatives to promote
An own-initiative report on progress made in equal
feasible employment opportunities for people with a
opportunities and non-discrimination in the EU, approved by
disability. The report also asked the Commission and the
the EP on 20 May 2008, called for a commitment by the
Member States to provide adequate resources to facilitate
Commission to carry out a substantial review of the
access to lifelong learning programmes as a means of
implementation of Directives 2000/43/EC and 2000/78/EC and
limiting the exclusion of elderly people, among others, from
to issue a proposal for a new directive which should be relating
employment and to foster their continuous participation in
to all areas not already covered by instruments adopted on the
social, cultural and civic life.
basis of Article 13 of the Treaty and should cover ‘all the areas
that fall within the Community’s competence as well as
education, lifelong learning, social protection including social g Moira Andreanelli
security, housing and healthcare, images of discriminated August 2008
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4.10. Environment policy
4.10.1. Environment policy: general principles

Created in 1972, environmental policy is governed by Articles 174 and 176 of the Treaty establishing the European
Community. The sixth action programme for the environment, ‘Environment 2010: our future, our choice’ establishes a
strategic framework for this policy until 2012. Several instruments, such as: EEA, LIFE+, eco-labelling and eco-audit, and
SCALE, have also been set up for the protection of the environment.
Legal basis the EU’s main objectives. Article 6 (ex Article 3c) of the EC
Treaty explicitly mentions the need to integrate protection of
European environmental law dates back to a conference of
the environment into all Community sectoral policies. This new
Heads of State or Government in October 1972 which decided
clause has widespread application; by moving it from an article
that a Community environmental policy was essential. Since
on the environment to an important position at the beginning
1972 the Community has adopted some 250 pieces of
of the Treaty, the EU’s leaders underlined their commitment to
legislation, chiefly concerned with limiting pollution by
the objective of sustainable development, and the final act
introducing minimum standards, notably for waste
noted the Commission’s undertaking to draw up impact
management, water pollution and air pollution. A number of
assessment studies when putting forward proposals that were
action programmes provide the framework for this legislation.
likely to have significant environmental implications.
The entry into force of the Single European Act in 1987, adding
a title specifically on this subject to the Treaty establishing the Article 95(3) (ex Article 100a) of the EC Treaty expressly states
European Community (EC), is generally acknowledged as a that ‘health, safety [and] environmental protection’ must take
turning point for the environment. Since the Rome Treaties as a base ‘a high level of protection, taking account in
were revised by the Treaties of Maastricht and Amsterdam, the particular of any new development based on scientific facts.
legal basis for Community environment policy has been Within their respective powers the European Parliament and
Articles 174 to 176 (ex Articles 130r to 130t) of the EC Treaty. the Council will also seek to achieve this objective’. The Union
Under Article 174(2) (ex Article 130r) of the EC Treaty, thus pursues an active policy to protect the soil, water, climate,
Community environment policy rests on the principles of air, flora and fauna. But in accordance with the subsidiarity
precaution, prevention, rectifying pollution at source and principle (1.2.2), the Union will tackle environmental
‘polluter pays’. Commission communication COM(2000) 1 problems only when it can deal with them more effectively
establishes clear and effective guidelines for the application of than national or regional government.
the precautionary principle, as it had not been defined in the
EC Treaty or in other Community instruments. Achievements
Directive 2004/35/EC on environmental liability with regard to 1. Community environment programmes
the prevention and remedying of environmental damage The sixth Community environment action programme
establishes a framework of environmental liability based on ‘Environment 2010: our future, our choice’ (Decision No
the ‘polluter pays’ principle. The directive applies to 1600/2002/EC), provides a strategic framework for the
environmental damage or to an imminent threat of such Community’s environmental policy for 2002–12 and is
damage caused by pollution of a diffuse character, where it is regarded as the central environmental component of the
possible to establish a causal link between the damage and Community’s sustainable development strategy. It is based
the activities of individual operators. particularly on the ‘polluter pays’ principle, the precautionary
principle and preventive action, and the principle of
rectification of pollution at source. It focuses on four priority
Objectives
areas for action: climate change; biodiversity; environment
The Treaty of Amsterdam heightened the profile of European and health; and sustainable use of natural resources and
Union environment policy. Changes to the preamble and management of waste. Five priority avenues of strategic
Article 2 (ex Article B) of the EU Treaty strengthened the action are proposed: improving the implementation of
principle of sustainable development, so that it is now one of existing legislation; integrating environmental concerns into
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Common policies Environment policy
4 10
other policies; working more closely with the market; on environment legislation linking the Member States and the
empowering people as private citizens and helping them to Commission). Member States are obliged to inform the agency
change behaviour; and taking account of the environment in of the main component elements of their national
land-use planning and management decisions. The environment information networks. The agency is also open to
Commission publishes annually a review of environmental countries that are not members of the European Union.
policy; the last review was the ‘2005 environment policy
4. The Community eco-label award scheme
review’ (COM(2006) 70).
and eco-audits
The programme required the European Commission to According to Regulation (EEC) No 880/92 (revised by
prepare thematic strategies (TS) covering seven areas. All Regulation (EC) No 1980/2000) on a Community eco-label
seven TS were adopted in the course of 2005 and 2006: air award scheme, the EU eco-label may be awarded to products
pollution, prevention and recycling of waste, protection and available in the Community which meet certain environmental
conservation of the marine environment, soil protection, requirements and specific eco-label criteria. The criteria are set
sustainable use of pesticides, sustainable use of resources, and and reviewed by the European Union Eco-Labelling Board
urban environment. (EUEB), which is also responsible for the assessment and
The TS represent the next generation of environment policy. verification requirements relating to them. They are published
They work with themes rather than with specific pollutants or in the Official Journal of the European Union.
economic activities as has been the case in the past and take a The Community eco-label award scheme is designed to
longer-term perspective in setting clear environmental promote products which have a reduced environmental
objectives to around 2020, and will thus provide a stable policy impact compared with other products in the same product
framework. Finally, they focus on identifying the most group and to provide consumers with accurate and
appropriate instruments to deliver European policy goals in scientifically based information and guidance on products. The
the least burdensome and most cost-effective way possible. Commission and the Member States must promote the use of
2. Impact assessment the eco-label by means of awareness-raising actions and
information campaigns. They must ensure coordination
An impact assessment is defined as a mapping out of the
between the Community eco-label scheme and existing
potential consequences of a decision across its social,
national schemes. In 2005, the Commission finished the
economic and environmental aspects, its potential short-term
evaluation process of the eco-label scheme, as required under
and long-term costs and benefits, and its regulatory as well as
the eco-label regulation, and published final
budgetary implications. It explores a range of legislative and
recommendations, research findings and an executive
non-legislative options available to policymakers in order to
summary. In February 2006 the Commission adopted a
meet clear defined objectives. Environmental assessment is
decision establishing the Community eco-label working plan.
automatically required for plans and programmes which are
In June 2007 the Commission adopted a decision of
prepared for town and country planning, land use, transport,
establishing the ecological criteria for the award of the
energy, waste management, water management, industry,
Community eco-label to soaps, shampoos and hair
telecommunications, agriculture, forestry, fisheries and
conditioners..
tourism.
Regulation (EC) No 761/2001 (replacing Regulation (EEC) No
3. European Environment Agency (EEA)
1836/93), allowing voluntary participation by organisations in
In 1990 the Council adopted a regulation establishing the EEA
a Community eco-management and audit scheme (EMAS), set
and the European environment information and observation
up a new scheme to improve industrial environmental
network (Regulation (EEC) No 1210/90 and amended
protection by introducing a form of environmental
Regulation (EC) No 933/1999). It defines the agency as a
management.
central Community body. The EEA’s objective is to protect and
improve the environment in accordance with the provisions of The objective of this regulation is to promote improvements in
the Treaty and Community environment action programmes, the environmental performance of organisations in all sectors.
with a view to establishing sustainable development within The EMAS was evaluated by the Commission in 2005 through
the Community. To achieve this, the agency must provide the the EVER study (Evaluation of EMAS and eco-label for their
Community and the Member States with information which is revision). On 24 January 2006, Parliament signed a ‘European
objective, reliable and comparable at European level and Parliament environmental statement’ which expresses that the
which will enable them to take the measures required to European Parliament will ensure that its activities are
protect the environment, evaluate the implementation of consistent with current best practice in environmental
those measures and ensure that the public is properly management.
informed on the state of the environment. 5. LIFE+: a financial instrument for the environment
The agency may cooperate in the exchange of information In 2004, the Commission proposed a new single instrument for
with other bodies, including the IMPEL network funding environmental work, called LIFE+ (COM(2004) 621).
(‘Implementation of environment law’ — information network This instrument, replacing existing financial programmes such
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as LIFE, the ‘Urban’ programme, the ‘NGO’ programme and The Commission’s ‘better regulation’ exercise is aimed at
forest focus, will cover the period 2007–13. In March 2007, facilitating growth and job creation, while maintaining high
political agreement was reached between Parliament and the levels of both social and environment protection, in line with
Council on LIFE+, bringing the total funding to nearly EUR 2 the EU’s sustainable development strategy. This was
billion for the period 2007–13 (see 4.10.8). underlined in ‘Better regulation for growth and jobs in the EU’
(COM(2005) 97), a contribution to the effective
6. International environmental cooperation implementation of the Lisbon strategy. A major effort in this
The European neighbourhood policy strategy paper context has been the preparation and adoption of the seven
(COM(2004) 373) contains recommendations on the thematic strategies (TS). In those areas where there is existing
development of regional cooperation and integration, as a policy and legislation, such as air and waste, the TS aim at
means to address certain issues arising at the enlarged EU’s simplification, clarifying definitions, removing ambiguities and
external borders, including environmental issues. suggesting ways to facilitate improved implementation. To the
extent possible, the TS use existing instruments and policies,
Cooperation with Latin-America, Russia and Asia on rather than new policy proposals, to bring about new policy
environmental aspects is being promoted through the EU– goals.
Latin America–Caribbean partnership, the EU–Russia
partnership and cooperation agreement (in force since 1997,
including a joint work programme on the environment) and Role of the European Parliament
the Europe–Asia cooperation strategy. Furthermore, there is Parliament has been behind a large amount of legislation, such
cooperation with the Danube Sea region and a Euro- as environmental impact assessments, free access to
Mediterranean partnership, both contributing to the information and the eco-label for environment-friendly
conservation of the marine ecosystem (see 4.10.5). products.
Commitment of the EU to global environmental problems was In its resolution of July 1998, the EP recognised that the use of
shown by the major role and the active contributions of the environmental levies could distort competition between those
Community during the UN World Summit on Sustainable Member States which introduced environmental taxes and
Development in Johannesburg 2002 (see 4.10.3) to the those which did not, thus making it desirable for such levies to
political declaration and plan of implementation (to improve be introduced by all Member States together.
access to basic sanitation and drinking water; to reduce At Parliament’s request, the 6EA programme (2001–10)
biodiversity loss, to halt the decline of fish stocks; and to contains provisions for listing and phasing out environmentally
minimise harmful effects on human health from the harmful subsidies, for environmental taxes at appropriate
production and use of chemicals by 2020). national or Community level, for Kyoto Protocol emission
targets and for thematic strategies for tackling environmental
7. European environment and health strategy
priorities. All legislation arising from the thematic strategies
There is a strong link between poor health and environmental has been and/or will be adopted by co-decision. In addition,
problems: as many as 60 000 deaths per year in large European targets are being sought under the programme for cutting
cities are caused by long-term exposure to air pollution. Being greenhouse gas emissions, linked to an assessment by the
more exposed to environmental risks than adults, one child in International Panel on Climate Change. The programme will
seven is affected by asthma. In June 2004 the Commission promote the development of alternative fuels and fuel-
presented a European environment and health action plan efficient vehicles. Under the agreement, the rising volumes of
2004–10 (COM(2004) 416), comprising points aimed at urban traffic will also be tackled and efforts made to improve
improving coordination between the health, environment and the quality of the urban environment.
research sectors. In June 2007, the EC published a mid-term
review of the action plan (COM(2007) 314). Furthermore, environmental concerns will be mainstreamed
into Community policymaking, which Parliament called for,
8. Lisbon partnership for growth and jobs and and special attention will be devoted to increasing
simplification of EU environmental law environmental awareness among the general public and local
authorities.
The EU’s sustainable development strategy calls for economic,
social and environmental policies to complement and In response to the communication on the precautionary
reinforce each other (see 4.10.3). Communication COM(97) principle, the European Parliament adopted in December 2000
592 on environment and employment, entitled ‘Building a a report calling for clearer guidelines on the application of the
sustainable Europe’, encourages new and clean technologies, principle, believing it should be invoked whenever a
thereby promoting new business opportunities. The ‘2005 provisional objective scientific evaluation of the risks shows
environment policy review’ (COM(2006) 70) highlights how that there are justified fears of potentially dangerous effects on
eco-innovation, environmental technologies and better the environment or human, animal or plant health that are
regulation can contribute to achieving the Lisbon strategy incompatible with a sufficiently high level of protection of the
objectives (COM(2000) 330). Community. Parliament’s resolution covers not only the
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4 10
definition and scope of the precautionary principle but also general and the environmental consequences in particular
risk assessment, risk management, risk communication and were concerned (‘Enlargement and environment’ workshop,
the burden of proof. November 2003).
In January 2005, Parliament adopted an own-initiative report With a view to improving legislative assistance to members,
on the European environment and health action plan 2004– Parliament’s Environment Committee has concluded three
10. Parliament considers the action plan to be insufficiently framework contracts with independent research institutes.
ambitious and insufficiently promoting preventive action. Under the terms of these contracts, the committee can ask for
Furthermore, it might have no added value for certain Member independent expert advice on a variety of emerging issues
States where an ‘environment and health’ strategy is already in falling within its area of responsibility.
place. In addition, Parliament is currently assessing the mid-
term review of the action plan.
g Yanne Goossens
During the long negotiations with the accession countries, July 2008
Parliament played an active role as far as enlargement in
4.10.2. Implementation of Community environmental law

The Århus Convention, in force since 2001, aims at involving the public in environmental activities, enabling access to
information, participation in decision-making and access to justice in this field. The electronic register of releases and
transfers of pollutants is already accessible to the public. Since 2007 the European Community also aims to regulate the
protection of the environment through criminal law.
Legal basis and objectives requirements of the convention. Decision 2005/370/EC

approves the Århus Convention on behalf of the
4.10.1.
Community. In 2003 the Commission proposed a
regulation to guarantee that the provisions and principles
Achievements of the Århus Convention are applied by Community
institutions and bodies (COM(2003) 622). After a
A. Århus Convention: access to information, public
conciliation procedure, Regulation (EC) No 1367/2006 was
participation and access to justice
adopted, containing the provisions necessary to apply the
In 1998 the European Community, together with the 15 Århus Convention to Community institutions and bodies
Member States, signed the UNECE Convention on Access to from 28 June 2007.
Information, Public Participation in decision-making and Access
to Justice in Environmental Matters (better known as the ‘Århus 1. Public access to information
Convention’). The convention, in force since 30 October 2001, is The first pillar of the convention, on public access to
based on the premise that greater public awareness of and environmental information, was implemented at Community
involvement in environmental matters will improve level by Directive 2003/4/EC, setting out the basic terms and
environmental protection. It is designed to help protect the conditions for granting access to environmental information
right of every person of present and future generations to live in held by or for public authorities and aiming at achieving the
an environment adequate to his or her health and well-being. To widest possible systematic availability and dissemination to
this end, it provides for action in three areas: the public.
— ensuring public access to environmental information held
Member States will be obliged to report by no later than 14
by the public authorities;
February 2009 on their experience gained in applying this
— fostering public participation in decision-making which directive, and will be required to submit a report to the
affects the environment; Commission by no later than 14 August 2009. In the light of
this experience and taking into account developments in
— extending the conditions of access to justice in
computing, telecommunications and electronics, the
environmental matters.
Commission will report to the European Parliament and to the
The signing of the Århus Convention obliges the European Council, including any proposals for revision which it may
Community to bring its legislation in line with the consider appropriate.
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2. Public participation in decision-making environmental law. The Commission ‘implementation task
The second pillar, which deals with public participation in forces’ identify four priorities: bad/non-transposition of
environmental plans and programmes, was transposed by directives; lack of compliance with fundamental secondary
Directive 2003/35/EC. This directive contributes to the obligations under directives; structural or systemic problems of
implementation of obligations arising from the Århus bad implementation and recurrent, large-scale
Convention, in particular by providing for public participation implementation problems; and bad implementation cases
in drawing up certain plans and programmes relating to the relating to big infrastructure projects, particularly projects with
environment and amending Council Directives 85/337/EEC EU funding. The seventh annual survey (SEC(2006) 1143),
and 96/61/EC with regard to public participation and access to which covers the year 2005, follows on previous surveys by
justice to ensure that they are fully compatible with the providing up-to-date information on the state of application of
provisions of the Århus Convention. Community environmental law.
3. Access to justice The infringement proceedings under Articles 226 and 228 of
the Treaty provide a powerful tool to address implementation
A proposal for a directive (COM(2003) 624) intended to
problems. Complaints on the implementation of
transpose the third pillar, which guarantees public access to
environmental legislation often take the form of written
justice in environmental matters, was brought forward in 2003,
questions and petitions to the European Parliament. This
but has so far only had its first reading in Parliament.
reflects the concern of European citizens about the state of the
Parliament wants the directive to establish a minimum
environment and Member States’ ‘green record’. In this context,
framework for access to justice in environmental matters and
new working methods need to be developed with Member
for Member States to be free to grant broader access. It
States at all stages of the implementation life cycle.
proposed amendments which would extend access to justice
in environmental matters to citizens’ organisations confronted D. Serious environmental crimes — protection of the
with a tangible environmental problem and not only to environment through criminal law
environmental entities as in the original proposal. In order to guarantee a high level of protection of the
B. Establishment of a European pollutant release and environment the increasing problem of environmental crime
transfer register must be tackled. The Community has adopted numerous
pieces of legislation protecting the environment. Member
In May 2003 the European Community signed the UNECE States are required to transpose and implement those acts.
protocol on pollutant release and transfer registers (the PRTR Experience has shown, however, that the sanctions currently
protocol) within the framework of the fifth ministerial applied by Member States are not always sufficient to achieve
conference ‘Environment for Europe’. The protocol aims to full compliance with Community law. Not all Member States
establish, for each Member State, a coherent, integrated and provide for criminal sanctions against the most serious
publicly accessible pollutant release and transfer register at breaches of Community law protecting the environment.
national level. Therefore a minimum standard on the constituent elements of
In 2004, the Commission adopted a proposal for a regulation criminal offences in breach of Community law protecting the
aiming at enhancing public access to environmental environment needs to be established. In order to ensure its
information through the establishment of a coherent, better and harmonised application in all Member States, this
integrated, Europe-wide PRTR (COM(2004) 634). Council objective can be better achieved at Community level rather
Decision 2006/61/EC approves the protocol on behalf of the than at national level.
European Community. Regulation (EC) No 166/2006 sets up a In February 2007, the Commission proposed a directive on the
pollutant release and transfer register (PRTR) at European protection of the environment through criminal law
Union (EU) level in the form of a publicly accessible electronic (COM(2007) 51). This proposal replaces the proposal for a
database. The public will be able to access this register free of directive of the Parliament and the Council on the protection
charge on the Internet and will be able to find information of the environment through criminal law (2001/0076(COD)) as
using various search criteria (type of pollutant, geographical amended after the first reading of the European Parliament, in
location, affected environment, source facility, etc.). order to implement the findings of the Court of Justice of the
European Communities in its judgment of 13 September 2005
C. Implementation and enforcement of Community
(C-176/03, Commission v Council) which annulled Framework
environmental law
Decision 2003/80/JHA on the protection of the environment
The Dublin European Council of June 1990 stressed that through criminal law.
Community environmental legislation would only be effective
if fully implemented and enforced by Member States. On 14
May 1997, in its resolution on the Commission’s Role of the European Parliament
communication COM(96) 500, Parliament called on the The European Parliament has always insisted on the need for
Commission to produce and publicise an annual report on better public access to environment-related information and
progress in adopting and implementing Community for improving public participation and access to justice in
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4 10
environmental matters and on that information being measures to improve respect for Community rules on the
disseminated using the latest technology available, enabling protection of the environment, the promotion of improved
Community legislation to be brought into line with the Århus standards of inspection, monitoring and enforcement by
Convention. Member States and a more systematic review of the
application of environmental legislation across the Member
The European Parliament also considers simplifying and
States.
improving Community legislation to be one of its duties and
has stressed the importance of clearer legislation which is The European Parliament strongly supports the objective of
better supervised and implemented. In addition, the European prompt, uniform and effective implementation of EU
Parliament supported proposals to establish a system of environmental law. As an example, in 1997 the European
minimum criminal sanctions for the most serious breaches of Parliament passed a resolution calling on the Commission to
Community law protecting the environment. produce and publicise annual reports on progress in adopting
and implementing EU environmental legislation. The
The effectiveness of EU environmental policy is largely
Commission now publishes annual surveys on the
determined by its implementation at national, regional and
implementation and enforcement of Community
local levels. At present, however, although the number of
environmental law in response to the European Parliament
complaints concerning instances of non-compliance with
calling on it to do so.
Community law is slightly decreasing, deficient application
and enforcement remains an important issue in the field of Implementation issues have been high on the agenda of
environmental law. The need for improved implementation Environment Committee meetings over the last few years. The
has been recognised as a key priority of both the fifth and the committee now draws up three follow-up reports each year, in
sixth environmental action programmes. which it looks at adopted EU legislation in the environment
The European Parliament stressed (see Decision No and related fields, examines problems of implementation and
1600/2002/EC on the sixth Community environment action assesses whether or not the legislation is meeting its initial
programme; 4.10.1) that ‘more effective implementation objectives.
and enforcement of Community legislation on the
environment’ should be regarded as one of the strategic g Yanne Goossens
objectives of EU environmental policy. The EP thus called for July 2008
4.10.3. Sustainable development and environmental

concerns
Sustainable development is a global concern and has been on the political agenda since 1992. To deal with the challenges
of our growing economy and our changing environment, the EU has developed a sustainable development strategy
covering economic, social, environmental and financial aspects. Promoting new, more environment-friendly technologies
connects the objectives of the Lisbon strategy to those of the Gothenburg European Council. In addition, European
legislation aims at integrating environmental considerations to the other EU policies.
Legal basis and objectives on Environment and Development, the statement of principles
for the sustainable management of forests, and the legally
4.10.1.
binding conventions on biological diversity and on climate
change. The UN Commission on Sustainable Development
Achievements (CSD) was established to ensure effective follow-up of the
UNCED of 1992. National, regional and global commitments
A. Introduction
were defined at the World Summit on Sustainable
In 1987, the Brundtland report ‘Our common future’ was Development (WSSD) in Johannesburg in 2002.
published, dealing with sustainable development and the
change in politics needed for achieving this. The 1992 United B. Global partnership for sustainable development
Nations Conference on Environment and Development Globalisation acts as a powerful force for sustaining global
(UNCED) led to the adoption of Agenda 21, the Rio Declaration growth and providing ways of dealing with international
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problems. However, market forces cause and exacerbate becoming ‘the most competitive and dynamic knowledge-
inequality and exclusion and can cause irreparable damage to based economy in the world’. At the Gothenburg European
the environment. Globalisation should therefore go hand in hand Council in June 2001, a strategy for sustainable development
with measures designed to prevent or mitigate these effects. was agreed by adding an environmental dimension to the
Lisbon strategy. Environmental technologies are an important
The EU sustainable development strategy (SDS) sets out a
bridge between the Lisbon strategy (4.1) and sustainable
roadmap for implementing sustainable development in the
development, having the potential to contribute to growth
European Union and covers economic, social, environmental
while at the same time improving the environment and
and financial aspects, as well as the coherence of EU policies
protecting natural resources.
and governance at all levels, including: harnessing globalisation
(trade for sustainable development); combating poverty and New and innovative environmental technologies can add to
promoting social development (reducing extreme poverty in economic growth in a number of ways. They can allow us to
the world, i.e. people who live on a euro a day or less, by 2015); get more environmental protection for less money, or to meet
sustainable management of natural and environmental current standards at a lower cost, thus freeing-up resources for
resources (reversing the trend of the loss of environmental use elsewhere in the economy. They also help to decouple
resources by 2015 as well as developing intermediate objectives environmental pollution and resource use from economic
in the sectors of water, land and soil, energy and biodiversity); growth, allowing our economies more scope to grow in the
better governance at all levels (meaning strengthening the long run while still remaining within the environment’s limits.
involvement of civil society, and the legitimacy, coherence and This is central to sustainable development. Finally, an
effectiveness of global economic, social and environmental innovative environmental technology sector can help
governance); and financing sustainable development. underpin growth if it is capable of tapping into rapidly
growing export markets. The communication ‘Stimulating
The communication entitled ‘The 2005 review of the EU
technologies for sustainable development: an environmental
sustainable development strategy: initial stocktaking and future
technologies action plan for the EU’ (COM(2004) 38) presents
orientations’ (COM(2005) 37) represents the Commission’s first
an action plan to improve the development and wider use of
step in reviewing the SDS, providing an initial assessment of the
environmental technologies. In July 2008, the Commission
progress made since 2001 and outlining a number of future
adopted a package of proposals (COM(2008) 397) related to
orientations. COM(2005) 658 reviews and further develops the
sustainable production and consumption (see 4.10.10).
SDS of 2001, with the goal of better integrating the domestic
and international dimensions of sustainable development. The D. Integration of environmental dimension into other
new SDS identifies seven key challenges with corresponding policies
targets and actions: climate change and clean energy;
In June 2004, the Commission adopted the working document
sustainable transport; sustainable consumption and production;
‘Integrating environmental considerations into other policy
conservation and management of natural resources; public
areas — a stocktaking of the Cardiff process’ (COM(2004) 394)
health; social inclusion, demography and migration; and global
as a follow-up from the Cardiff Summit of June 1998 and from
poverty and global sustainable development challenges.
the 2003 spring European Council, to complement the 2003
Following the review of the EU SDS in 2005 and on the basis of environment policy review (EPR) adopted in December 2003.
contributions from other EU institutions, the European Council
Since then, the European Commission adopts yearly its
adopted in June 2006 an ambitious and comprehensive
environment policy review and looks in detail at EU and
renewed sustainable development strategy (DOC 10117/06)
Member States’ environmental trends and policy performance.
for an enlarged European Union. This document sets out a
single, coherent strategy on how the EU will more effectively 1. Environment and the single market
live up to its long-standing commitment to meet the Environmental standards are often perceived as barriers to
challenges of sustainable development. The overall aim of the market access, just as open markets are frequently seen as a
renewed EU SDS is to support and promote actions to enable threat to the quality of the environment. A Commission
the EU to achieve continuous improvement of quality of life for proposal (COM(99) 263) tries to develop the synergies
both current and future generations, through the creation of between the single market and EU environment policy
sustainable communities able to manage and use resources following the strategy formulated by the European Council in
efficiently. The Commission adopted on 22 October 2007 the Vienna. Economic instruments such as taxes (environmental
‘Progress report on the sustainable development strategy taxes and charges) can be an appropriate way of
2007’ (COM(2007) 642), addressing in particular progress implementing the ‘polluter pays’ principle.
achieved on climate change, clean energy and health.
2. Environment and industry
C. Environmental technology for sustainable Industry has made considerable progress in environmental
development protection, by implementing environmental management and
At the European Council in Lisbon in March 2000, resulting in audit systems and new strategies and objectives (introducing
the ambitious Lisbon strategy, the EU set itself the objective of the concept of eco-efficiency, for example). According to the
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Council conclusions of 29 April 1999, environmental policy and (governments, public bodies, regional authorities, traditional or
sustainable development should be integrated into industrial local communities, cooperatives, international organisations,
policy. On 14 and 15 May 2001 the industry integration non-governmental organisations or private actors) in
strategy was adopted at the Industry/Energy Council. The developing countries and which are intended to promote
communication ‘Industrial policy in an enlarged Europe’ sustainable development may receive EU financial aid and
(COM(2002) 714 final) recognises the need to develop and technical assistance. The budget for applying the regulation
strengthen policies in the area of sustainable production. over the period 2000–06 was EUR 93 million. The
Communication COM(2006) 136 on corporate social communication COM(2004) 629 presents the specific
responsibility (CSR) aims at integrating social and objectives and the conditions governing the implementation
environmental concerns into business operations on a of the financial instrument for development cooperation and
voluntary basis. economic cooperation for the period 2007–13.
3. Environment and energy policy 6. Integrating environmental protection requirements
Directive 2006/32/EC on energy end-use efficiency and energy into the common fisheries policy (CFP)
requires Member States to draw up national action plans A communication from the Commission (COM(2002) 186) set
(NAPs) to achieve 1 % yearly energy savings in the retail, supply out a Community action plan to integrate environmental
and distribution of electricity, natural gas, urban heating, and protection requirements into the common fisheries policy.
other energy products including transport fuels. The target is Regulation (EC) No 2371/2002 sets measures to ensure the
only indicative but the NAPs will have to be submitted to the conservation and sustainable exploitation of fisheries
Commission for approval and will be reviewed every three resources. COM(2004) 438 promotes environment-friendly
years. The process will be spread over nine years, starting in fishing methods, focusing on bringing fishing effort down to
January 2008. This directive complements existing energy viable levels and maintain it there; optimising the catch of
legislation such as the energy performance of buildings target species and minimising unwanted catches; and
directive, the combined heat and power directive and the minimising the impact of fishing on marine habitats.
directives on the energy labelling of appliances.
7. Integrating the environmental dimension into
In January 2007, the Commission presented an ‘energy and sustainable development of the urban environment
climate change package’, focusing on the use of renewable In January 2006, the European Commission adopted the
energy and a reduced and more efficient use of energy. This thematic strategy on the urban environment (COM(2005) 718).
was followed by the climate and energy package of January The strategy sets out new measures to support and facilitate
2008 (see 4.10.7 and 4.13). the adoption of integrated approaches to the management of
4. Environmental and sustainable agriculture the urban environment by national, regional and local
The agri-environmental strategy of the common agricultural authorities. In July 2008 the European Parliament adopted an
policy (CAP) is largely aimed at enhancing the sustainability of own-initiative report on a recent Commission Green Paper to
agro-ecosystems. The measures set out to address the tackle the negative effects of urban transport on climate
integration of environmental concerns into the CAP change and the environment.
encompass environmental requirements (cross-compliance) 8. Integration of the environment into economic policy
and incentives (e.g. set-aside) integrated into the market and The Commission communication ‘Bringing our needs and
income policy, as well as targeted environmental measures responsibilities together — integrating environmental issues
that form part of the rural development programmes. with economic policy’ (COM(2000) 576) of September 2000 on
Simplification of the CAP in 2003 lead — amongst others — to integrating environmental issues into economic policy was the
the introduction of a new system of direct payments, known basis for the Ecofin Council’s ‘First step toward a strategy’ report
as the single payment scheme (SPS), under which aid is no of 27 November 2000 to the Nice European Council. Achieving
longer linked to production (decoupling). the Kyoto targets through market instruments, such as an
While the 2003 reform modernised the CAP, the 2007/08 CAP emissions trading system, was the underlying objective of the
health check proposals (COM(2007) 722) present an report. Furthermore, the report stressed the need for annual
opportunity to review this policy. This includes how to master broad economic policy guidelines fully incorporating the
new challenges, from climate change to growth in biofuels objectives of environmental integration. The best strategy for
and water management, and ongoing ones, such as integrating the environment into economic policy is to create
biodiversity, by adapting to the new risks and opportunities. or improve the functioning of markets for environmental
goods and to create and assign well-defined property rights
5. Integration of the environmental dimension in
for environmental goods and services which are enforceable
developing countries
by law and tradable.
Regulation (EC) No 2493/2000 promotes full integration of the
environmental dimension into the development process of 9. Integration of the environment into transport
developing countries. The regulation lays down the rules The European strategy on transport and environment (Council
under which cooperation projects initiated by various players report of 6 October 1999 to the European Council of Helsinki)
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defines the objectives for integrating environmental 2005, was the ENVI Committee’s own-initiative report on the
requirements into transport policy. It provides guidelines for a environmental aspects of sustainable development, adopted
range of measures in various transport sectors (road, air, rail and in plenary in January 2006, underlining the worsening of
maritime) and aims to ensure that environment is taken into unsustainable trends in a number of fields where
account when drawing up and implementing transport policy. improvements are needed: pollution-generating misuse of
natural resources, loss of biodiversity and worsening of
The thematic strategy on air pollution (COM(2005) 446; see
climate change, among others. The final report asked the
4.10.6) fixes targets for the reduction of certain pollutants and
Commission to step up its action in many fields, including:
reinforces the legislative framework to combat atmospheric
the transfer of a large proportion of road transport to more
pollution. Following the Commission’s communication
environment-friendly modes of transport; the promotion of
‘Reducing the climate change impact of aviation’ (COM(2005)
the use of biofuels; the reversal by 2010 of the current loss of
459), the European Parliament adopted a resolution on 4 July
biodiversity; the reduction at source of the production of
2006. This report calls for tough new measures to reduce the
waste; the increase of resource and energy efficiency; the
global warming impact of aviation and apply the ‘polluter pays’
reinforcement of the environmental and social aspects of
principle to the airline industry (see 4.10.7 for more
the impact assessments for all its legislative proposals; and
information).
the new proposals for a first European eco-tax. The
Environment Committee concluded that sustainable
Role of the European Parliament development must be a guiding principle for EU policies in
In May 2002, the European Parliament adopted a resolution on all areas. It points out that inaction will come at an
a Commission communication entitled ‘Towards a global increasingly high price and will have ever more considerable
partnership for sustainable development’ (COM(2002) 82) in direct consequences.
view of the 2002 WSSD in Johannesburg. As decided by the In its joint resolution, adopted in Strasbourg on 15 June 2006,
UN Commission on Sustainable Development, the political the European Parliament expresses its disappointment at the
focus for 2004 and 2005, was on water, sanitation and human lack of progress in developing and following up the
settlements. The cycle 2006/07 deals with energy, industrial sustainable development strategy adopted in Gothenburg in
development, air pollution and climate change. The cycle 2001. It considered that the Commission’s platform for action
2008/09 focuses on agriculture, rural development, land, on the review of the SDS was overly cautious and weak and, in
drought, desertification and Africa. its present form, would not succeed in mobilising public
In July 2005, the European Parliament adopted a resolution opinion and policymakers behind the vital tasks that lie ahead
(2004/2131(INI)), on the Commission’s environmental and considered that the 2005–10 strategy concentrated too
technologies action plan. Main issues addressed were: much on economic growth to the detriment of the
boosting demand for environmental technologies; creating a environmental and social pillars. Parliament welcomed,
fair and competitive market for environmental technologies; however, the valuable work of the Austrian Presidency in
meeting the demand for environmental technology (such as seeking to relaunch the SDS.
providing research with sufficient means); and coherent In March 2008 the European Parliament adopted a resolution
policies on an internal as well as an external level. Finally, on sustainable agriculture and biogas (INI/2007/2107), which
Parliament emphasised that sustainable development requires recognises that biogas is a vital energy resource contributing
global solutions and welcomed all initiatives to promote to sustainable economic, agricultural rural development and
environmental technologies in developing countries. Exports environmental protection.
of outdated and polluting technology to third countries must
be discouraged.
g Yanne Goossens
The European Parliament’s contribution to the debate on Gianpaolo Meneghini
the review of the EU sustainable development strategy of July 2008
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4.10.4. Natural resources and waste

Past and current patterns of resource use have led to high pollution levels, environmental degradation and depletion of
natural resources. The EU has agreed on a thematic strategy on the sustainable use of natural resources and on the
recycling and prevention of waste. Furthermore, several specific pieces of legislation were established to manage waste in
a more sustainable way.
Legal basis and objectives investment is required to prevent toxic emissions, as well as
careful planning and management of the plant and sensitive
4.10.1.
selection of sites.
General background The EU’s sixth environment action programme identifies waste
prevention and management as one of four top priorities. Its
All products used have a natural resource base. European primary objective is to decouple waste generation from
economies depend highly on natural resources, including economic activity, so that EU growth will no longer lead to
raw materials such as minerals, biomass and biological more and more rubbish. Recycling has great potential for
resources; environmental media such as air, water and soil; reducing pollution. Energy consumption is cut by between a
flow resources such as wind, geothermal, tidal and solar quarter and three fifths for every tonne of paper produced
energy; and space (land area). In using resources and from waste paper rather than wood, while atmospheric
transforming them, capital stocks are built up which add to the pollution is cut by 75 %. Recycling of paper, cardboard and
wealth of present and future generations. However, if current glass is therefore of prime importance. Levels of recycling in
patterns of resource use are maintained in Europe, the Member States range from 28 % to 53 % for paper and
environmental degradation and depletion of natural resources cardboard (EU average: 49.6 %) and between 21 % and 70 %
will continue. The dimensions of our current resource use are for glass.
such that the chances of future generations — and the
developing countries — to have access to their fair share of
scarce resources are endangered. The sustainable use of Achievements
resources, involving sustainable production and consumption A. Natural resources: thematic strategy on the
is hence a key ingredient of long-term prosperity, both within sustainable use of natural resources
the EU and globally.
In December 2005, the Commission presented a
European society has grown wealthier through the use of communication on the thematic strategy on the sustainable
these natural resources; however, not without repercussions use of natural resources (COM(2005) 670) to decouple
on the environment such as air pollution (4.10.6), global economic growth from environmental degradation. The
warming (4.10.7) and the production of waste. Total waste strategy focuses on improving knowledge, developing
generation in the EU is about 1.8 billion tonnes per year monitoring tools and fostering strategic approaches in specific
(excluding the 700 million tonnes of agricultural waste). This economic sectors and is closely linked with the thematic
means that approximately 3.5 tonnes per capita of waste is strategy on waste which was adopted the same day.
produced in the EU every year. This consists mainly of waste
from households, industry, commercial activities, agriculture, B. Waste management
construction and demolition projects, mining and quarrying 1. The thematic strategy on the prevention and recycling
activities and from energy generation. This amount is growing of waste
faster than GDP and less than a third of it is recycled. The
The thematic strategy on the prevention and recycling of
European Environment Agency (EEA) identifies the following
waste, as adopted by the European Commission in December
six major waste streams in the EU: manufacturing waste (26 %),
2005, deals with substantial environmental impacts
mining and quarrying waste (29 %), construction and
(COM(2005) 666). EU policy has several main objectives,
demolition waste (22 %) and municipal solid waste (14 %).
including avoiding waste by promoting environment-friendly
In the EU’s most densely populated areas, disposal by and less waste-intensive technologies and processes and by
dumping is reaching its limits, and while it remains a possible producing environmentally sound and recyclable products;
solution in other areas the opportunities are limited in the long promoting reprocessing, and in particular the recovery and
term by the threat of water and soil pollution and the protests reuse of waste as raw materials; improving waste disposal by
of local inhabitants. Recourse to dumping will depend on the introducing stringent European environmental standards,
availability of conveniently situated and well-planned sites and particularly in the form of legislation; tightening up the
the pre-treatment. Waste incineration is an option in many provisions governing the transport of dangerous substances
cases, having the advantage of energy recovery. However, and reclaiming contaminated land. These objectives are to be
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achieved by disposing of waste at appropriate facilities as close 593), aimed at reducing as far as possible the release of these
as possible to the place where it was produced. substances into the environment and their introduction into
The strategy provides for existing legislation to be simplified the food chain. PVC is one of the most widespread plastics
by proposing a revision of the 1975 waste framework directive. used today (the building sector accounting for 57 %). In July
This will mainly be done by merging the framework directive 2000, the Commission published a Green Paper on
on waste with the hazardous waste directive and the waste oil environmental issues of PVC (COM(2000) 469).
directive by removing any overlap between the framework c. Disposal of spent batteries and accumulators
directive on waste and the IPPC directive (see 4.10.6), for In 2003, the Commission proposed a new directive on
example regarding the award of permits, as well as by batteries and accumulators (COM(2003) 723). During
consolidating the three directives on waste from the titanium conciliation in May 2006, compromises were made on a
dioxide industry. The proposal for the new directive minimal ban on cadmium in batteries as well as a recycling
(COM(2005) 667) links the waste hierarchy (prevention, reuse, target of 50 % by 2016. In September 2006, the new directive
recycling, incineration and, finally, disposal in landfills) with its (2006/66/EC), repealing Directive 91/157/EEC, entered into
objectives of reducing the environmental impact of the force.
generation and management of waste.
3. Shipments of waste
Directives 75/442/EEC and 91/689/EC lay down the general
In June 2003, the Commission proposed a revision
and basic provisions for all waste and hazardous waste, while
(COM(2003) 379) of the 10-year-old waste shipment
Directives 75/439/EEC and 86/278/EEC set out requirements
regulation ((EEC) No 259/93) to simplify control procedures
for specific waste streams (waste oil and sewage sludge),
for shipments of waste. This regulation sets environmental
which differ due to the different waste types and problems
criteria for waste shipments within, into and outside the EU. It
involved.
covers shipments of practically all types of waste by all
In the meantime, Directive 2006/12/EC, codifying the waste means, including vehicles, trains, ships and planes. On 14
framework directive, has entered into force. No legal or June 2006, the European Parliament and Council issued a
political changes are made to the text during the codification new regulation ((EC) No 1013/2006) on shipments of waste
process. This directive will remain until the substantive (with effect from 12 July 2007). The new regulation is a step
proposal for a revision is adopted. In February 2007, the towards greater international harmonisation of waste
Commission published an interpretative communication on shipments, as it fully implements the UN Basel Convention
waste and by-products (COM(2007) 59) clarifying the definition (signed by the Community in 1989), which regulates
of waste and non-waste in a production-process context. In shipments of hazardous waste at international level, and
line with the action plan of the Commission ‘Simplifying and strengthens the current control procedures, simplifying and
improving the regulatory environment’, the Commission clarifying them to the benefit of both the environment and
proposes in its waste thematic strategy to codify and simplify waste shipment companies.
the three more than 15-year-old titanium dioxide directives.
C. Vertical waste legislations
2. Hazardous waste
1. End-of-life vehicles
a. Controlled management of hazardous waste
At the moment, 75 % of end-of-life vehicles (ELV) are recycled
The new waste framework directive would integrate the old
(metal content). The aim of the ELV directive (2000/53/EC) is to
hazardous waste directive. A number of the elements from the
increase the rate of reuse and recovery to 85 % by average
hazardous waste directive that have not been taken up in the
weight per vehicle and year by 2006, and to 95 % by 2015, and
proposal for the new framework are adequately covered by
to increase the rate of reuse and recycling over the same
other Community legislation such as Directive 2000/76/EC on
period to at least 80 % and 85 % respectively by average
the incineration of waste and Directive 96/59/EC on
weight per vehicle and year. Less stringent objectives may be
polychlorinated biphenyls (PCBs) and polychlorinated
set for vehicles produced before 1980. Commission Decision
terphenyls PCTs). Regulation (EC) No 166/2006 establishes a
2005/293/EC lays down detailed rules on monitoring and
European pollutant release and transfer register (PRTR),
reporting on achievement of the targets set out in the ELV
harmonising the rules on the regular reporting of information
directive. The ELV directive provides that the European
on pollutants, including waste, by Member States to the
Parliament and the Council shall re-examine the 2015 targets
Commission (see 4.10.2).
on the basis of a report from the Commission. In January 2007,
b. Disposal of PCBs and PCTs and environmental issues of PVC the Commission published COM(2007) 5 assessing the
Directive 96/59/EC approximates the Member States’ laws on environmental, economic and social impacts of the targets
the controlled disposal of PCBs and PCTs, the included in the ELV directive and alternative options. In March
decontamination or disposal of equipment containing PCBs 2008 the European Parliament and the Council adopted
and/or the disposal of used PCBs in order to eliminate them Directive 2008/33/EC amending Directive 2000/53/EC on end-
completely. In October 2001, the Commission adopted a of-life vehicles, as regards the implementing powers conferred
Community strategy on dioxins, furans and PCBs (COM(2001) on the Commission.
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2. End-of-life ships: ship dismantling radioactive waste and spent fuel will replace Directive 92/3/
On 22 May 2007, the Commission approved, following its Euratom. The provisions of this directive prohibit the export of
orientation debate of 28 March 2007, a Green Paper on better radioactive waste to the ACP countries, in line with the
ship dismantling (COM(2007) 269), which analyses the Cotonou Convention signed in 2000, to a destination south of
problems posed by this activity, sets out the options for action latitude 60° south or to a third country which does not have
at EU level and poses questions to the stakeholders. The the resources to manage the radioactive waste safely.
Commission bases its analysis on the fact that the dismantling 5. Packaging and packaging waste
of European ships nowadays often takes place in developing The packaging and packaging waste directive (94/62/EC)
countries under dangerous and environmentally harmful covers all packaging placed on the market in the Community
conditions, and contrary to Community waste shipment law. and all packaging waste, whether it is used or released at
On this basis, a consultation process of the stakeholders was industrial, commercial, office, shop, service, household or any
launched until 30 September 2007. In May 2008 the European other level, regardless of the material used. The directive
Parliament adopted a resolution on the Green Paper on better requires Member States to take measures, which may include
ship dismantling (2007/2279(INI)). national programmes, to prevent the formation of packaging
3. Waste electrical and electronic equipment waste, and to develop packaging reuse systems. Directive
Directive 2002/95/EC on the restriction of the use of certain 2004/12/EC (amending Directive 94/62/EC) establishes criteria
hazardous substances in electrical and electronic equipment clarifying the definition of the term ‘packaging’.
(the so-called RoHS directive) was adopted after a long and 6. Directive on the management of waste from extractive
controversial debate in the European Parliament (EP). This industries
directive aims to protect the soil, water and air against In 2006, Directive 2006/21/EC on the management of waste
pollution through the restriction of the use of certain from extractive industries was adopted, based on the
substances, such as lead, mercury, cadmium, chromium and Commission proposal COM(2003) 319. This directive seeks to
certain hexavalent brominated flame retardants. It lays down tackle the significant environmental and health risks associated
provisions to ensure that from 1 July 2006 new electrical and with the management of mining waste as a result of their
electronic equipment put on the market does not contain any volume and pollution potential.
of these substances. Certain exemptions apply, inter alia, to the
use of mercury in compact and straight fluorescent lamps, as D. Waste treatment
well as to the use of lead in different types of solders and as an 1. Use of sewage sludge in agriculture
alloying element. The progressive implementation of the urban wastewater
It provides for the prohibition of other hazardous substances treatment directive (91/271/EEC) in all Member States is
and for their replacement by more environment-friendly increasing the quantities of sewage sludge requiring disposal.
alternatives as soon as new scientific evidence is available, on Council Directive 86/278/EEC on the protection of the
the basis of a new proposal from the Commission. In 2008, two environment, and in particular of the soil, when sewage sludge
acts were adopted amending Directive 2002/95/EC: Directive is used in agriculture has been quite successful in preventing
2008/35/EC establishing maximum concentration values for crop contamination by pathogens which could have been
certain hazardous substances and Commission Decision caused by the use of sludge on agricultural soils. Some
2008/385/EC on adapting to technical progress the annex on Member States have a particularly high reuse rate; others
exemptions for applications of lead and cadmium. prefer to landfill or reincinerate the sludge they produce.
Directive 2002/96/EC on waste electrical and electronic 2. Landfill sites
equipment (WEEE) was also adopted after a long and Directive 1999/31/EC is intended to prevent or reduce the
controversial debate in the EP. It was later amended by adverse effects of the landfill of waste on the environment, in
Directive 2008/34/EC and aims at protecting soil, water and air particular on surface water, groundwater, soil and air, as well as
against pollution, through better disposal of WEEE. on human health. The directive sets up a system of operating
4. Radioactive waste and substances permits for landfill sites.
In accordance with Directive 80/836/Euratom, each Member 3. Incineration
State must make compulsory the reporting of activities which Directive 2000/76/EC has applied to existing plants since 28
involve a hazard arising from ionising radiation. In the light of December 2005 and has applied to new plants since
possible dangers, activities are subject to prior authorisation in December 2002, to prevent or reduce, as far as possible, air,
certain cases decided upon by each Member State. Shipments water and soil pollution caused by the incineration or co-
of radioactive waste between Member States and into and out incineration of waste. In the proposal for the new waste
of the EU are subject to the specific measures laid down by directive, the Commission called for more flexibility in the
Council Regulation (Euratom) No 1493/93 and Directive 92/3/ waste hierarchy to allow waste to be treated in a cheaper and
Euratom. From 25 December 2008, Directive 2006/117/ more energy-efficient way. The Commission had put forward
Euratom on the supervision and control of shipments of an energy-efficiency threshold to determine whether an
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incineration facility should be considered as a recovery instead Parliament made a series of recommendations concerning the
of a disposal facility. Assessment is necessary to define the Green Paper on environmental issues of PVC. The EP called for
energy-efficiency thresholds, the countries in which the ‘polluter pays’ principle, for a separate waste collection of
incinerators are located, and an estimated number of facilities PVC and for a ban on cadmium and lead-based stabilisers.
which would then qualify as ‘recovery’ or ‘disposal’ operations. Furthermore, the EP criticised the Commission for not having
However, Parliament rejected this reclassification in its performed any life-cycle analysis of PVC products to compare
February 2007 resolution. them with alternative materials and called on the Commission
to bring forward as soon as possible a draft long-term
Role of the European Parliament horizontal strategy on the replacement of PVC.
On 25 April 2007, the European Parliament adopted a During the conciliation process on batteries and
resolution based on the own-initiative report in response to accumulators, Parliament called for a more ambitious target
the Commission communication on a thematic strategy for (55 %) than that proposed in the common position (50 %) for
sustainable use of natural resources. Parliament considered recycling of batteries other than nickel-cadmium and lead-acid
that it should be seen as a first step in a process eventually batteries. The EP also supported the introduction of a closed-
leading to a comprehensive strategy for the sustainable use of loop for recycling of all the lead and cadmium contained in
natural resources. The Commission’s action platform for the waste batteries; and wished to oblige Member States to ensure
study of the sustainable development strategy was too that recycling processes achieved these targets. Given the
cautious and limited in scope and, in its present form, it would other improvements secured in the course of the procedure
not be able to persuade the public or political decision-makers and as part of an overall agreement, the Parliament delegation
to pursue the crucial goals for which it provides. The was willing to accept the compromises on a recycling target of
Commission was also urged to set binding targets and 50 % by 2016 and, on 4 July 2006, Parliament adopted a
timetables for natural resources by developing and resolution on a joint text. A few months later, the new directive
implementing best practices for every production chain and came into force. In March 2008 the European Parliament and
by achieving a quantitative greenhouse gas reduction of at the Council adopted Directive 2008/12/EC amending Directive
least 30 % by 2020 and 80 % by 2050 against 1990 levels. 2006/66/EC on batteries and accumulators and waste batteries
Moreover, the thematic strategy failed to pursue the objectives and accumulators, as regards the implementing powers
of the EU’s sixth environment action programme (EAP). conferred on the Commission.
In June 2008 the EP adopted, in second reading, new EU During conciliation for the two directives in 2001 on WEEE, the
waste legislation with binding targets for 2020. Waste EP insisted that the prevention of such waste should have
prevention targets will be considered by the Commission in absolute priority. It also urged the reuse, recycling and other
the future. Incineration of waste will be categorised as a forms of recovery of such waste so as to reduce the disposal
recovery operation rather than disposal, provided it meets a thereof. The EP also called for restrictions on the use of
certain energy efficiency standard. By 2020 reuse and recycling hazardous substances in electrical equipment in order to
must apply to 50 % of waste materials such as paper, metals contribute to the environmentally sound recovery and
and glass from households and similar waste stream, and 70 % disposal of WEEE by ensuring that substances causing major
of non-hazardous construction and demolition waste. The new problems during the waste management phase — such as
directive will oblige Member States to establish waste lead, mercury, cadmium, hexavalent chromium and certain
management plans and waste prevention programmes with brominated flame-retardants — are substituted. In March 2008
waste prevention objectives five years after entry into force of the European Parliament and Council adopted Directive
the directive. Further to this duty, the compromise includes a 2008/34/EC, amending Directive 2002/96/EC on WEEE, and
new article on waste prevention. The Commission shall Directive 2008/35/EC, amending Directive 2002/95/EC on the
propose, if appropriate, by the end of 2014 the setting of waste restriction of the use of certain hazardous substances in
prevention and decoupling objectives for 2020. electrical and electronic equipments as regards the
In a resolution adopted in January 2001 the EP recommended implementing powers conferred on the Commission.
improving implementation of Directive 96/59/EC on the
disposal of PCBs and PCTs rather than redrafting it. This g Yanne Goossens
contributed to the adoption of a Community strategy on Gianpaolo Meneghini
dioxins, furans and PCBs. In another resolution in April 2001 June 2008
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4.10.5. Water protection and management

The EU water framework directive aims to prevent and reduce pollution and promote sustainable use of water. It is
supplemented by international agreements and various pieces of specific legislation related to water pollution, water
quality and water quantity.
Legal basis and objectives data through its public web portal and rapid reaction to deal
with for example reporting of pollution.
4.10.1.
B. EU international agreements on regional waters
Achievements The Helsinki Convention on the protection and use of
transboundary watercourses and international lakes
A. Framework directive in the field of water policy
(Council Decision 95/308/EC) was signed on behalf of the EU
The objective of the water framework directive (WFD) in Helsinki in 1992. Actions of the parties are guided by the
(2000/60/EC) is to establish an EU framework for the precautionary principle, the ‘polluter pays’ principle and the
protection of inland surface waters, transitional waters, coastal principle of sustainability.
waters and groundwater, in order to prevent and reduce
pollution, promote sustainable water use, protect the aquatic The EU signed the Convention on the protection of the
environment, improve the status of aquatic ecosystems and Rhine in April 1999 in Berne (Council Decision 2000/706/EC).
mitigate the effects of floods and droughts. River basins The convention is designed to preserve and improve the
covering the territory of more than one Member State are ecosystem of the Rhine, strengthening cooperation between
assigned to an international river basin district. the Community and the Rhine riparian States.
By 2007 Member States must have completed an analysis of The Convention on cooperation and protection and
the characteristics of each river basin district, a review of the sustainable use of the Danube River and the Convention on
impact of human activity on the water, an economic analysis the protection of the Black Sea against pollution are the
of water use and a register of areas requiring special current instruments for environmental cooperation. The
protection. All bodies of water used for the abstraction of Commission communication COM(2001) 615 outlines a
water intended for human consumption providing more than strategy for environmental cooperation in the Danube–
10 m³ a day as an average or serving more than 50 persons Black Sea region.
must be identified. Nine years after the date of entry into force Today, 20 Mediterranean coastal States and the EU are the
of the directive, a management plan and programme of contracting parties to the Barcelona Convention, signed in
measures must be produced for each river basin district. 1976 by all Member States and amended in 1995 to establish
the precautionary principle and to set as a new and ultimate
By 2010 Member States must ensure that water pricing
target the full elimination of pollution sources. The most
policies provide adequate incentives for users to use water
significant aspect of the Barcelona Convention and the
resources efficiently and that the various economic sectors
Mediterranean action plan are its six protocols, dealing, for
contribute to the recovery of the costs of water services,
example, with pollution from ships and aircraft, pollution
including those relating to the environment and resources. By
from land-based sources, and pollution by transboundary
2012 at the latest and every six years thereafter, the
movements of hazardous waste. The Commission
Commission will publish a report on the implementation of
communication COM(2006) 475 establishes a strategy for
the directive and will convene, where appropriate, a
the Mediterranean basin to protect the marine
conference of interested parties on EU water policy.
environment and the coastline of this region and to reduce
The objectives of the WFD are to be achieved no later than 15 pollution by 2020.
years after its entry into force (2015), although this deadline
The Helsinki Convention on the protection of the Baltic
may be extended or relaxed under certain conditions, and the
Sea, signed in March 1974 by all States bordering the Baltic
first review of the river basin management plan should take
and in force since 1980, is intended to abate pollution of the
place in 2021. The 2007 implementation report ‘Towards
Baltic Sea area caused by discharges through rivers, estuaries,
sustainable water management in the EU’ (COM(2007) 128), as
outfalls and pipelines, dumping and normal operations of
presented on the EU Water Conference 2007, shows that
vessels.
significant progress has been made; however, there are still a
number of shortcomings. Simultaneously with the report, the The Paris Convention for the protection of the marine
Commission presented the new Community instrument WISE environment of the north-east Atlantic, signed in 1992,
(water information system for Europe) which contains data requires the parties to observe the precautionary and the
and information collected at EU level, allowing for exchange of ‘polluter pays’ principles.
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C. Conservation and protection of the marine D. Water quality legislation
environment 1. Groundwater and surface water intended for human
1. Thematic strategy on the conservation and protection consumption
of the marine environment As groundwater supplies 75 % of the EU’s drinking water,
In October 2005, the European Commission adopted a pollution from industry, waste dumps and nitrates from the
thematic strategy on the conservation and protection of the agricultural sector is a serious health risk. Given that many of
marine environment (COM(2005) 504), which aims to achieve a the pollutants washed out of the soil over the past decade
good biological, chemical and physical status in the marine have not yet reached the water table, it will take between 25
environment by 2021, and which will constitute the and 50 years for groundwater nitrate levels in the watersheds
environmental pillar of the future maritime strategy. The of the Netherlands, Belgium, Denmark and Germany to fall to
Council adopted its common position on 23 July 2007. The an acceptable figure in accordance with the drinking water
European Parliament adopted its position on second reading directive.
in December 2007.
Directive 98/83/EC, which repealed and replaced Directive
The principal threats to the marine environment identified, 80/778/EEC as of 25 December 2003, defines the essential
are over-fishing, the discharge of pollution from land-based quality standards for water intended for human consumption.
sources, oil spills, discharges from offshore oil and gas This directive takes into account scientific and technological
exploration, pollution from ship dismantling, noise progress and reduced the limit value on lead from 50 to 10
pollution, climate change, nutrient enrichment and micrograms/litre. It was claimed that this would have serious
associated algal blooms, the illegal discharges of financial implications because of the need to replace pipes.
radionuclides and noise pollution. The proposed directive The directive requires Member States to regularly monitor the
(COM(2005) 505) defines common objectives and principles quality of water intended for human consumption by using
at EU level, and European marine regions will be established the sampling points method and to draw up monitoring
as a basic unit for managing the marine environment. programmes.
Member States will be expected to develop a strategy for
each of their marine regions and to actively cooperate with The previous directive (75/440/EEC) on reduction and
one another. prevention of pollution of surface waters intended for the
abstraction of drinking water and Directive 79/869/EEC on
2. Marine pollution harmonisation of national rules on the monitoring of surface
Decision No 2850/2000/EC sets up a Community framework freshwater quality were repealed by the WFD with effect from
for cooperation in the field of accidental or deliberate marine 22 December 2007.
pollution for the period 2000–06. This decision was designed
Rules to protect against groundwater pollution have been in
to improve the control and reduction of pollution, EU
place since the adoption of Directive 80/68/EEC. This directive
information systems, and task forces to provide practical
should be repealed in 2013, after which the protection regime
assistance in the event of accidental marine pollution, and
should be continued through the water framework directive
integrate them into a single framework for cooperation. In
(WFD) and the present groundwater directive. Directive
December 2006, the Commission presented a communication
2006/116/EC on the protection of groundwater against
(COM(2006) 863) on cooperation in the field of accidental or
pollution and deterioration was put forward following
deliberate marine pollution after 2007.
Article 17 of the WFD, which provides for the adoption of
3. Compensation for oil pollution damage occurring in specific criteria for the assessment of good chemical status and
European waters the identification of significant and sustained upward trends
A compensation fund for oil pollution in European waters (the and for the definition of starting points for trend reversals.
COPE fund) is set up (COM(2000) 802) to provide 2. Bathing water
compensation to any person entitled to compensation for
In February 2006, the Commission adopted a new bathing
pollution damage but who has been unable to obtain full
water directive (2006/7/EC). This directive aims to enhance
compensation under the international regime due to
public health and environment protection by laying down
insufficient compensation limits. Member States must lay
provisions for the monitoring and classification (in four
down a system of financial penalties to be imposed on grossly
categories) of bathing water. It also provides for extensive
negligent behaviour.
public information and participation (in line with the Århus
4. Maritime policy Convention) as well as for comprehensive and modern
The Green Paper ‘Towards a future maritime policy for the management measures. The new directive will complement
Union: a European vision for the oceans and seas’ (COM(2006) the water framework directive as well as the directives on urban
275) sets out several aspects of a future EU maritime policy. It wastewater treatment and on nitrates pollution from
highlights Europe’s maritime identity and leadership, which is agricultural sources. The main issue addressed during the
worth preserving at a time when environmental pressures are conciliation procedure, was the severity of the health standards
threatening the future of maritime activities. that bathing sites must attain to comply with the directive.
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3. Quality required of shellfish waters and water to report to the Commission containing information on codes of
support fish life good agricultural practice, designated nitrate vulnerable zones
Specific measures are intended for the protection and/or (NVZ), the results of water monitoring and a summary of the
improvement of the quality of fresh waters which support relevant aspects of action programmes drawn up in relation to
certain fish species and shellfish. These are provided for in nitrate vulnerable zones.
Directive 79/923/EEC on the quality required of shellfish waters
F. Flood protection management and water scarcity
and Directive 78/659/EEC on the quality of fresh waters
needing protection or improvement in order to support fish Over the past 30 years droughts have dramatically increased
life. In accordance with the EU’s policy to simplify legislation, in number and intensity in the European Union and, in 2003,
the Commission proposed a codification of Directive 79/923/ one of the most widespread droughts affected over 100
EEC on shellfish waters and its subsequent amendments into a million people and about a third of the EU land. In January
single text (COM(2006) 205). The new directive (2006/113/EC) 2006 the European Commission proposed a directive on the
was adopted by Parliament and the Council in December assessment and management of floods (COM(2006) 15). In
2006. By 2013, the codifying directives on this subject will be November 2007, Directive 2007/60/EC on the assessment
repealed by the WFD. and management of flood risks entered into force. Its aim is
to reduce and manage the risks that floods pose to human
4. Urban wastewater treatment health, the environment, infrastructure and property. Under
Directive 91/271/EEC (amended by 98/15/EC) deals with urban the proposed directive Member States need to carry out a
wastewater treatments. Aid under the Structural Funds and preliminary assessment to identify the river basins and
the Cohesion Fund may be allocated and the Commission also associated coastal areas at risk of flooding. For such zones
intended to increase its support to small and medium-sized they need to draw up flood risk maps and flood risk
agglomerations affected by the deadline of 31 December 2005 management plans focused on prevention, protection and
as well as to the candidate countries, for which the preparedness.
implementation of the directive represents a major challenge.
Further to the request of a number of Member States to
E. Discharges of substances, limit values and nitrate initiate a European action on water scarcity and droughts
EU legislation has introduced a system of strict limit values for made during the Environment Council of March 2006, the
dangerous substances discharged into the aquatic Commission agreed to analyse this and to present a first report
environment, while at the same time leaving Member States for the June 2006 Environment Council. In recognition of the
free to choose the system of quality objectives, with the acuteness of the water scarcity and drought challenges in
corresponding obligation to show that these objectives are Europe, the Commission launched in early 2007 a study in
being met. The ‘basic directive’ on discharges of certain order to quantify the water saving potential across Europe. On
dangerous substances (76/464/EEC) contained a blacklist of 5 June 2007 the Impact Assessment Board adopted an opinion
132 substances declared dangerous by virtue of their toxicity on the draft version of the impact assessment of the
and bio-accumulation. It was supplemented by specific communication. In May 2008 the Commission presented a
directives prescribing limit values and quality objectives for communication ‘Addressing the challenge of water scarcity
cadmium, hexachlorocyclohexane (HCH), mercury and and droughts’ in the European Union.
titanium dioxide. Directive 2006/11/EC codifies and replaces
this directive and its subsequent amendments. Role of the European Parliament
Decision No 2455/2001/EC establishes a list of priority The European Parliament (EP) has frequently taken the
substances in the field of water policy for which quality initiative in the field of water protection. In January 2000,
standards and emission control measures will be set at following the oil slick disaster caused by the wreck of the Erika,
Community level, amending the WFD. In July 2006, the the EP called for a sustainable, long-term European transport
Commission adopted a proposal for a new directive on policy to be implemented to prevent the risk of any further oil
environmental quality standards in the field of water policy pollution disasters. It welcomed the initiative seeking to set up
(COM(2006) 397), amending the WFD. The proposed directive an EU cooperation framework in the field of accidental marine
will set limits on concentrations in surface waters of 41 pollution (COM(1998) 769), and insisted that this decision
dangerous chemical substances (33 priority substances and should be taken as quickly as possible in order to create the
eight other pollutants) that pose a particular risk to animal and optimum conditions for managing crises such as that caused
plant life in the aquatic environment and to human health. The by the Erika.
emission reduction programmes, as mentioned in the old
Moreover, the EP urged an effective, coherent, integrated
directive (76/464/EEC), will remain place until 2013.
policy on water, which would take account of the vulnerability
The protection of waters against pollution caused by nitrates of aquatic ecosystems near coasts and estuaries. The EP set
from agricultural sources is laid down by Directive 91/676/EEC, four objectives: coordination of Member State initiatives,
as amended by Regulation (EC) No 1882/2003. The nitrates charges for water use, a programme of measures for Member
directive requires Member States to submit every four years a States and exemptions.
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In November 2006, Parliament adopted an own-initiative management of flood risks, leading to its entry into force in
report on the thematic strategy for the conservation and November 2007. The main compromises concerned greater
protection of the marine environment and a first reading emphasis on floodplains and sustainable land use practices,
report on the marine strategy directive. Parliament called for a climate change adaptation, and better international
directive with clear, measurable targets to be achieved within cooperation in shared river basins.
shorter deadlines than in the proposal, and introduced the
obligation of the establishment of ‘marine protected areas’ in In June 2008 Parliament voted by a large majority in support
EU legislation. The establishment of marine protected areas is of new EU water quality rules based on a compromise
often seen as a valuable tool for improving both fishery agreement reached earlier with the Council on the proposed
management and marine environmental protection. In directive on environmental quality standards in the field of
December 2006, the Council reached political agreement on a water. The directive will set harmonised quality standards for
draft directive establishing a framework for Community action a list of currently 33 priority substances and will repeal five
in the field of marine environmental policy. The Council existing directives (82/176/EEC, 83/513/EEC, 84/156/EEC,
adopted its common position on 23 July 2007. Parliament 84/491/EEC, 86/280/EEC and 2000/60/EC). Through requiring
adopted its position in second reading on 11 December 2007. a revision of the list of priority substances within two years
after the entry into force, Parliament has ensured the
Concerning the Green Paper on an EU maritime strategy, the possibility of expanding the list of toxic substances.
EP stresses the importance of biodiversity, eco-innovations, the Furthermore, the objective of ceasing or phasing out
effects of climate change on the seas, and the target of emissions of 13 ‘priority hazardous substances’ within 20
achieving good ecological status. In May 2008, the EP adopted years was reinforced.
its resolution on an integrated maritime policy for the
European Union.
g Yanne Goossens
In April 2007 the EP and the Council reached an agreement on Gianpaolo Meneghini
the proposal for a directive on the assessment and June 2008
4.10.6. Air and noise pollution

Atmospheric pollution has three main sources: transport, emissions from stationary sources and emissions caused by the
production of electricity. The air quality directive and the thematic strategy on air pollution aim to prevent harmful effects
on the environment and health.
The ‘Clean air for Europe’ programme and the Inspire initiative gases and pollutants arising from them are harmful to human
aim at reducing such pollution by 2020. The reduction of health, corrode various materials and damage vegetation, have
atmospheric pollution, such as that caused by transportation, a detrimental effect on agricultural and forestry production
also means a reduction of noise pollution. and cause unpleasant smells. Many of these pollutants are
responsible for the greenhouse effect. Some substances such
Legal basis and objectives as arsenic, cadmium, nickel and polycyclic aromatic
hydrocarbons are human genotoxic carcinogens and there is
4.10.1. no identifiable threshold below which they do not pose a risk
to human health. The EU has taken important steps over the
General background past decade, leading to a decrease in the emissions to air and
Community activities to protect the air concern a wide range water of a number of pollutants. Between 1990 and 2002,
of problems: limiting depletion of stratospheric ozone, and emissions decreased by 43 % in the EU-15 and by 58 % in the
controlling acidification, ground-level ozone and other EU-10, despite increased economic activity.
pollutants and climate change. Atmospheric pollutants, which
enter the air from a wide variety of sources, can be subdivided Achievements
into three broad categories: emissions from mobile sources
(transport industry); emissions from immobile sources A. Management and quality of ambient air
(businesses, homes, farms and rubbish dumps); and emissions The ‘old’ air quality framework directive (96/62/EC) set out
caused by power generation. High concentrations of these the basic principles of a common strategy for establishing
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ambient air quality objectives with a view to reducing or 2. National emission ceilings for certain atmospheric
preventing harmful effects on the environment and health. It pollutants
was supplemented by four so-called ‘daughter’ directives, Directive 2001/81/EC on national emission ceilings for certain
relating to specific pollutants, which were merged (except for atmospheric pollutants is part of the follow-up to the
the fourth daughter directive) into a new air quality directive in Community strategy to combat acidification (COM(97) 88
May 2008 (see subsection B): final), which sought to establish national emission ceilings for
— the first directive (1999/30/EC) on sulphur dioxide, nitrogen sulphur dioxide (SO2), nitrogen oxide (NOx), volatile organic
dioxide and nitrogen oxides, particulates (PM10) and lead in compounds (VOC) and ammonia (NH3). The Commission
ambient air; adopted a proposal for the revision of the national ceilings
directive in summer 2007, which was built upon the work
— the second directive (2000/69/EC), which introduced performed under the CAFE programme and the thematic
specific limit values for benzene and carbon monoxide; strategy on air pollution.
— the third directive (2002/3/EC), which established an
C. Reduction of transport emissions
information threshold, an alert threshold (higher than
information threshold), target values and long-term aims Passenger transport volumes and freight transport have
for ozone concentration in ambient air; respectively risen by 20 % (period 1990–2003) and 43 % (since
1992) while GDP has increased by 30 %. Road and aviation
— the fourth directive (2004/107/EC), which establishes target were estimated to increase by 36 % and 105 % respectively
values for concentrations of arsenic, cadmium, mercury, between 2000 and 2020 in the EU-25, with the strongest
nickel and polycyclic aromatic hydrocarbon. growth taking place in the EU-10.
B. Thematic strategy on air pollution and the ‘Clean air While emissions from most sectors, such as energy supply,
for Europe’ programme industry and agriculture, dropped between 1990 and 2004 in
In 2001, a ‘Clean air for Europe’ (CAFE) programme (COM(2001) the EU-15, greenhouse gas emissions from transport rose by
245) was adopted by the Commission. In September 2005 a 26 %. Several directives have been adopted at Community
thematic strategy on air pollution (COM(2005) 446) and a level in order to limit pollution due to transport, setting
proposal for a CAFE directive (COM(2005) 447) were adopted. maximum emission limits for vehicles and other sources of
pollution and introducing tax measures in the transport sector
The objectives proposed in the thematic strategy are to aimed at encouraging the consumer to act in a more
reduce by 2020 the concentration of PM2.5 by 75 % and of environment-friendly manner. These actions at Community
ground level ozone by 60 %, as well as to reduce the threat to level have had positive results, but the progress achieved to
the natural environment from both acidification and date is threatened by the rising number of vehicles on the
eutrophication by 55 %, which is technically possible by road and vehicle use, leading to an increase of fuel
2020. This means cutting SO2 emissions by 82 %, NOx by consumption.
60 %, volatile organic chemicals (VOCs) by 51 %, ammonia by
1. Road vehicles: petrol and diesel engines
27 % and primary PM2.5 by 59 % from 2000 levels. It is
estimated that these reductions would save 1.71 million life Road transport generates about one fifth of the EU’s CO2
years by lowering exposure to PM, reduce acute mortality emissions, with passenger cars responsible for around 12 %.
from exposure to O3, deliver EUR 42 billion per year in health Motor vehicle emissions are regulated by Directive 70/220/EEC
benefits, reduce environmental damage to forests, lakes and (light vehicles) and 88/77/EC (heavy vehicles). In cooperation
streams and to biodiversity, reduce damage to buildings and with the oil and motor-vehicle industries, the Commission has
materials, and reduce the cost of damage to agricultural drawn up an ‘auto-oil’ programme to reduce exhaust gas
crops by EUR 0.3 billion per year. According to the proposed emissions. A review of the Oil programme, running from 1997
strategy, a large part of these reduction objectives will be until 2000, was published by the Commission in October 2000
delivered through improved implementation of measures (COM(2000) 626).
already adopted. Under the auto-oil programmes, several measures have been
1. New directive on ambient air quality and cleaner air adopted to tackle air pollution from motor-vehicle emissions
for Europe and to address the quality of petrol and diesel fuel through
banning lead in petrol and setting emission limit values
The new directive on ambient air quality and cleaner air
(Directives 98/70/EC, 98/69/EC, 98/77/EC, 1999/96/EC and
for Europe (Directive 2008/50/EC) was adopted in May 2008.
2003/17/EC).
This new directive merges most of existing legislation into a
single directive (except for the fourth daughter directive) with Within the context of the European climate change programme
no change to existing air quality objectives. It sets new air (see 4.10.7), the Commission proposed in January 2007 a
quality objectives for PM2.5 (fine particles) and includes the renewed Community strategy to reduce CO2 emissions from
possibility to discount natural sources of pollution when light-duty vehicles (passenger cars and light-commercial vans),
assessing compliance against limit values. with a view to reaching the EU objective of 120 g CO2/km by
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2012, a reduction of around 25 % from current levels, by 0.5 % in port areas, where ships will be required to switch off
improving fuel efficiency (COM(2007) 19). In addition, the all engines and use shore-side electricity while at berth in
Commission proposed a revision of EU fuel quality standards ports (Recommendation 2006/339/EC of May 2006). Whilst
(COM(2007) 18), encouraging the development of lower-carbon the European Parliament Environment Committee had
fuels and biofuels by obliging suppliers to reduce the hoped to fix a second phase for new limits to come in by
greenhouse gas emissions caused by the production, transport 2010, following negotiations with the Council, a revision
and use of their fuels by 10 % between 2011 and 2020. This will clause has been introduced. In March 2008 the Commission
cut emissions by a cumulative total of 500 million tonnes of proposed to amend Directive 2005/35/EC on ship source
carbon dioxide by 2020. pollution and on the introduction of penalties for
infringements (COM(2008) 134).
During the next few months, following close consultation with
key stakeholders, it was concluded that progress was slower 4. Emissions from aviation
than expected and that the 120 g CO2/km target would not be COM(1999) 640 sets out a strategy to put in place a coherent
met by 2012. Therefore, in December 2007, the Commission and environment-friendly policy in the field of air transport.
proposed a new strategy and new measures and legislation. The strategy includes improvement of technical environmental
The new regulation proposed aims at ensuring the proper standards on noise and gaseous emissions, leading to reduced
functioning of the internal market for passenger cars by laying fuel consumption, and the introduction of economic and
down harmonised rules to limit the average CO2 emissions regulatory market incentives to promote environment-friendly
from the new car fleet in the Community to 130 g CO2/km by technologies. In December 2007 the Council reached political
2012 (COM(2007) 856). Complementary measures, such as agreement on a draft directive (COM(2006) 818) to include
efficiency improvements (e.g. for tyres and air conditioning aviation activities in the greenhouse gas emission allowance
systems) and a gradual reduction in the carbon content of trading scheme within the Community (EU ETS) (see also
road fuels (e.g. through greater use of biofuels), would 4.10.7).
contribute a further emissions cut of up to 10 g/km, thus
reducing overall emissions to 120 g/km. Furthermore, the new D. Reduction of industrial emissions
measures foresee support for research efforts aimed at further 1. Integrated pollution prevention and control (IPPC)
reducing emissions from new cars to an average of 95 g CO2/km The former IPPC framework directive (96/61/EC) concerning
by 2020 and foresee promotion of fuel efficient vehicles highly polluting industrial activities, defined the basic
through, for example, more effective car labelling. obligations to be met by all the industrial installations
2. Non-road mobile machinery and tractors: gaseous concerned, whether new or existing, covering a list of
pollutants measures for preventing the pollution of water, air and soil by
Emissions and type-approval procedures for engines from industrial effluent and other waste and served as the basis for
non-road mobile machinery (such as excavators, bulldozers drawing up operating licences or permits for industrial
and chainsaws) are regulated through Directive 97/68/EC, as installations. In January 2008, the IPPC directive and its
amended by Directive 2002/88/EC. Emissions of agricultural amendments were codified into Directive 2008/1/EC.
and forestry tractors are regulated through Directive 2000/25/ In the meantime, the Commission adopted in December 2007
EC, amending Council Directive 74/150/EEC, particularly a package to improve the EU policy on industrial emissions,
concerning the definition of type-approval procedures by type including a proposal for a directive on industrial emissions. The
of engine and type of vehicle. By 31 December 2009 at the proposal recasts seven existing directives related to industrial
latest, the maximum permissible sulphur content of gas oils emissions into a single clear and coherent legislative
intended for use by non-road mobile machinery and instrument. The recast would include the IPPC directive, the
agricultural and forestry tractors, including inland waterway large combustion plants directive, the waste incineration
vessels, shall be 10 mg/kg. directive, the solvents emissions directive and three directives
on titanium dioxide.
3. Emissions from ship and rail transport
Directive 2004/26/EC extends the scope of Directive 97/68/EC The Commission’s proposal will lead to significant benefits to
to cover locomotives and inland waterway vessels. It reinforces the environment and human health by reducing harmful
the emission standards applicable, provides for means of industrial emissions across the EU, in particular through better
improving the methods of testing new engines prior to application of best available techniques. For the large
marketing, and introduces a label for greater market visibility combustion plants alone it will achieve net benefits of
for those manufacturers able to comply with the requirements EUR 7 billion to EUR 28 billion per year, including the reduction
before the deadline. of premature deaths and years of life lost by 13 000 and
125 000 respectively.
In 2005, shipping contributed 39 % of sulphur dioxide
emissions in the EU-15. Directive 2005/33/EC, amending 2. Pollution from large combustion plants (LCP)
Directive 1999/32/EC, aims at limiting the sulphur content of Directive 2001/80/EC (the LCP directive) applies to combustion
marine fuels to 1.5 % by 2007. This should be reduced to plants with a rated thermal input equal to or greater than
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50 MW, irrespective of the type of fuel used, and aims at established rules and procedures with regard to the
gradually reducing the annual emissions of SO2 and NOx from introduction of noise-related operating restrictions at
existing plants and lays down emission limit values in the case Community airports. In COM(2001) 74 the Commission
of new plants. Further requirements for plants below 50 MW proposes a directive on the establishment of a framework for
are under consideration as part of the implementation of the noise classification of civil subsonic aircraft for the purpose of
thematic strategy on air pollution. calculating noise charges, aiming at promoting the use of
less noisy aeroplanes.
3. Volatile organic compounds (VOCs)
Council Directive 1999/13/EC on the limitation of emissions of c. Railway traffic
VOCs due to the use of organic solvents in certain activities Directive 96/48/EC and Directive 2001/16/EC provide a
and installations is part of the overall strategy to reduce legislative framework for technical and operational
pollution. It complements the auto-oil programme, by harmonisation of the rail network for high-speed rail and
combating emissions of organic solvents from stationary conventional rail respectively. The low noise train development
commercial and industrial sources, and the 1994 directive on programme launched jointly by the German, Austrian and
VOC emissions resulting from the storage of petrol and its Italian railways aims to achieve a substantial reduction in noise
distribution chain. The requirements on the solvent content of emissions for the whole system, of up to 23 dB(A), by new
paints and varnishes are established in the paints directive goods train designs which optimise noise reduction. At EU
(2004/42/EC). level, a proposal dating back to 1984 to harmonise the
regulations governing noise emissions from trains was
E. Management of noise pollution withdrawn by the Commission on 28 July 1993.
The Green Paper on action against noise (COM(96) 540) sought
to develop a new approach to the problem of noise and a first d. Airborne noise emitted by household appliances and
step towards an integrated programme for combating noise equipment used outdoors
(mainly caused by traffic and by industrial and recreational Directive 86/594/EEC covers provisions related to measuring
activities). Economic incentives are an essential part of EU methods determining and monitoring the airborne noise
noise abatement policy. Possible measures are: subsidies for emitted by household appliances. The 1996 Commission
the development and the purchase of quieter products; a legal Green Paper on future noise policy highlighted the increase in
requirement to provide information on products; noise levies noise pollution in urban areas. Directive 2000/14/EC, as
in accordance with the ‘polluter pays’ principle; and the amended by Directive 2005/88/EC, is a framework directive
introduction of noise licences. designed to control noise emissions and labelling of more
than 50 types of equipment used outdoors.
1. Framework directive for the assessment and
management of exposure to environmental noise e. Industrial noise and construction plants
Directive 2002/49/EC relating to the assessment and Large industrial and agricultural installations covered by
management of environmental noise aims at harmonising the IPPC directive are subject to receiving permits, following
noise indicators and assessment methods, gathering noise the use of best available techniques (BATs) as references. Since
exposure information in the form of ‘noise maps’, and making industrial environmental noise is a local issue, measures to be
this information available to the public. Furthermore, it taken depend on the location, which makes it hard to establish
required the Member States to draw up action plans by no BATs for noise prevention and control. Noise emitted by
later than 18 July 2008. In 2004 the Commission submitted a construction plants such as excavators, loaders, earth-
report to the Council and the EP on existing EU measures moving machines and tower cranes is regulated by several
relating to sources of environmental noise (COM(2004) 160). directives and regulations at EU level.
2. Sectoral legislations f. Recreational craft
a. Road traffic Directive 2003/44/EC, amending Directive 94/25/EC, concerns
Directives 70/157/EEC and 97/24/EC set limits on the recreational motorboats, including personal watercraft, and
permissible sound level of motor vehicles (with a maximum complements its design and construction requirements with
speed of more than 25 km/h) and of mopeds and environmental standards regarding exhaust and noise
motorcycles respectively. Complementing legislation on emission limit values.
vehicles themselves, Directive 2001/43/EC provides for the
testing and limiting of tyre rolling noise levels, and for their Role of the European Parliament
phased reduction.
The European Parliament has played a decisive role in the
b. Air traffic formulation of a progressive environmental policy to combat
Directive 92/14/EEC was adopted in 1992, based on standards air pollution. Parliament welcomed the Commission’s
of the International Civil Aviation Organisation (ICAO), in order thematic strategy on air pollution, but noted with concern
to limit the operation of aeroplanes and ban the noisiest that the strategy does not show how the objectives of the
aircraft from European airports. Directive 2002/30/EC sixth Environmental action programme could be attained and
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does not include any legal requirement to reduce particulate 2020, average emissions should not exceed 95 g CO2/km, and
emissions, but simply confines itself to suggesting indicative believed that the EU should provide support for the necessary
targets. Parliament called for a strategy with more ambitious promotion of innovation through the seventh framework
reduction targets for NOx, VOC and PM2.5 while maintaining a programme for research. The report proposes the introduction,
balanced approach between costs and benefits. For particles in 2011, of a new closed market mechanism, the carbon
with a diameter of less than 2.5 micrometres (PM2.5), in allowance reductions system (CARS), through which
December 2007 Parliament and the Council agreed on an manufacturers and importers will be required to pay financial
initial target value of 25 µg/m3 from 2010. From 2015, this penalties in proportion to any excess over the emission limits
figure would become a binding limit. Parliament successfully per car sold.
argued for a second limit value — an indicative one — of
In addition, Parliament is currently looking at the revised
20 µg/m3 to be achieved by 1 January 2020, five years after the
strategy, put forward by the Commission in December 2007, to
first limit. The European Commission must review this
limit CO2 emissions from cars to help fight climate change,
indicative figure in 2013 to confirm the value laid down
reduce fuel costs and increase European competitiveness
(20 µg/m3) or to propose that it be altered. No modification of
(COM(2007) 856).
the annual PM10 limit value is included in the compromise
package. The new directive on air quality was adopted in May Parliament has repeatedly stressed the need for further cuts
2008. in limit values and improved measurement procedures with
regard to environmental noise. Parliament has called for the
In October 2007 the European Parliament adopted a report on
setting of EU values for noise around airports (including an
the Community strategy to reduce CO2 emissions from
eventual ban on night flying) and also for noise reduction
passenger cars and light-commercial vehicles, which aims
measures to be extended to cover military subsonic jet
to achieve the 120 g CO2/km emission target (2007/2119(INI)).
aircraft.
Parliament calls for binding annual emission targets to be set
with effect from 2011 to ensure that average emissions from
all passenger cars placed on the EU market in 2015 do not g Yanne Goossens
exceed 125 g CO2/km. Parliament insisted that, from 1 January June 2008
4.10.7. Climate change and the environment

In the Kyoto Protocol, the contracting parties have committed to reduce greenhouse gas emissions of 8 % below 1990
levels between 2008 and 2012. The EU has agreed to reduce its emissions by 20 % in 2020, while improving energy
efficiency by 20 % and increasing its share of using renewable energy sources by 20 %. A key mechanism in meeting this
goal is the EU emission trading scheme.
Legal basis and objectives particular deforestation and the burning of fossil fuels (such as
coal, oil and natural gas) and other fuels, which leads to the
4.10.1. emission of carbon dioxide (CO2), one of the most important
GHGs. Other important contributors to the recent climate
General background change are methane, nitrous oxide and fluorocarbons.
Over the past 100 years global mean temperature has 1. Impacts of climate change
increased by 0.7 °C and in Europe by about 1.0 °C. Global warming has led to: more extreme weather events such
Temperatures are projected to increase further by 1.4 to 5.8 °C as floods, droughts, heavy rain, heatwaves, forest fires; water
by 2100, with larger increases in eastern and southern Europe. availability issues; disappearance of glaciers and less snowfall;
There is increased evidence that most of this warming can be adaptation and sometimes shifts in the distribution patterns or
attributed to the emission of greenhouse gases (GHGs) and even the extinction of fauna and flora; promotion of certain
aerosols by human activities. The most important issue is the plant diseases and pests; a rising sea level; and intensified
large rise in concentrations of GHGs in the atmosphere. These photochemical smog, causing health problems. Ecosystems
gases trap heat that is radiated from the earth's surface and are known to have a certain capability (‘resilience’) to adapt to
prevent it escaping into space, causing ‘global warming’. disturbances, and should therefore be able to cope with the
Human activities that contribute to climate change include in climate changes by means of ‘moving’ into new relatively
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steady states. However, once the disturbances pass a certain CO2 emissions in 1990. The ‘burden-sharing agreement’ further
stress level, the ecosystem’s resilience might be ‘lost’, causing redistributes the overall 8 % reduction target among the EU
the ecosystem to jump from the one steady state to the other Member States, as can be found in Annex II to Council
in just a few years. Scientific evidence exists saying that the Decision 2002/358/EC. Decision No 280/2004/EC of the
risks of irreversible and possibly catastrophic changes would European Parliament and of the Council provides for a
greatly increase if global warming exceeded 2 °C above the mechanism for monitoring Community greenhouse gas
pre-industrial levels. The EU’s position is therefore that the emissions and for implementing the Kyoto Protocol.
objective of global action must be to keep the temperature
At the Montreal world climate conference in December 2005,
rise within this 2 °C limit.
the Commission and EU Member States pressed for, and
2. Cost of action versus cost of non-action successfully obtained, a decision that international talks should
The Stern review on the economics of climate change, start on future action to combat climate change after 2012,
commissioned by the UK government and published in when the Kyoto Protocol commitments expire (‘post-2012
October 2006, said that managing global warming and thus strategy’).
reducing GHG emissions would cost +/– 1 % of global GDP
B. Efforts within the EU
every year, while inaction could cost the economy ‘at least 5 %’
of GDP each year and up to 20 % in the worst-case scenario. In 1. European climate change programme (ECCP)
its impact assessment accompanying COM(2007) 2, the The ECCP was established in June 2000 on the basis of two
Commission shows that taking action to limit climate change communications (COM(2000) 88 and COM(2001) 580) to help
is fully compatible with sustaining global economic growth. identify the most environment-friendly and cost-effective EU
Around 0.5 % of total global GDP would be required to invest measures enabling the EU to meet its targets under the Kyoto
in a low-carbon economy for the period 2013–30, leading to a Protocol. Within the context of its first phase (ECCP I), working
0.19 % decrease in global GDP growth per year up to 2030 groups have investigated the possibilities of and the issues
(only a fraction of the expected annual GDP growth rate of related to: market-based mechanisms such as an emission
2.8 %). And this is without taking into account associated trading scheme (ETS), joint implementation and clean
health benefits, greater energy security and reduced damage development mechanism; energy supply and consumption
from avoided climate change. Tackling climate change has (including the use of renewable energy and the improvement
been on the agenda of the EU for the past few years and is of the energy performance of buildings); transport; industry;
being integrated into other policy areas, outside of agriculture and forestry (including their use as carbon sinks);
environment policies, as well. and research. The second phase (ECCP II) was launched in
October 2005. ECCP II consists of several working groups:
Helped by the EU-level policies and measures, as well as by ECCP I review (with five subgroups: transport, energy supply,
national initiatives, the EU has succeeded in ‘decoupling’ its energy demand, non-CO2 gases and agriculture); aviation; CO2
greenhouse gas emissions from economic growth. By 2004, and cars; environmentally safe use of carbon capture and
the EU-15 had collectively reduced its emissions by 0.9 % while storage; adaptation; and EU ETS review.
the economy grew by 32 % (compared to the base year of
1990 in most cases); the EU-25 achieved a 7.3 % reduction. 2. The climate and energy package
In 2005, the Commission issued a communication entitled
Models developed under the fourth IPPC assessment report ‘Winning the battle against global climate change’ (COM(2005)
(2007) show that if no action is taken to further reduce 35), which recommends a number of elements to be included
greenhouse gas emissions, the global mean temperature in the EU’s further climate change strategies and proposals to
would increase by about 3.4 °C by 2080 compared to 1990 prepare the EU’s position for future international negotiations.
levels, affecting negatively nearly all European regions.
In January 2007, the European Commission presented its
‘Climate and energy package’. It includes a communication
Achievements ‘Limiting global climate change to 2° Celsius: the way ahead
A. The Kyoto Protocol for 2020 and beyond’ (COM(2007) 2) setting out proposals and
Under the Kyoto Protocol to the United Nations Framework options for keeping climate change to manageable levels.
Convention on Climate Change (UNFCCC) concluded in 1997, In March 2007, EU leaders agreed on a binding target to
contracting parties committed themselves to reducing the six reduce the overall EU greenhouse gas emissions by 20 %,
greenhouse gases responsible for climate change: CO2, compared with 1990 levels, by 2020. This target would be
methane, nitrous oxide, hydrofluorcarbons, perfluorcarbons and raised to 30 % should other industrialised nations, including
sulphur hexafluoride. The European Community committed the USA, take similar steps. In addition, global emissions would
itself to achieving an overall reduction in CO2 emissions of 8 % in have to be cut by 50 % by 2050, implying reductions in
the period 2008–12 compared with 1990 levels. developed countries by 60 to 80 %.
The protocol entered into force in February 2005, after being Furthermore, the EU summit endorsed the Commission
ratified by 55 contracting parties, accounting for 55 % of total roadmap on a 20 % renewables target for energy consumption
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(see below). In addition, halting tropical deforestation phases of the ETS (2005–07 and 2008–12), followed by the
completely within the next two decades and then reversing it allocation of emission allowances to the companies which can
through reforestation and/or afforestation schemes, would be be traded between companies covered under the scheme.
essential, considering the fact that deforestation currently
The EU ETS aims at becoming an important building block for
contributes around 20 % of global greenhouse emissions;
the development of a global network of emission trading
more than transport. The Environment Council also underlined
systems. Linking other national or regional cap-and-trade
the important contribution of eco-innovation in achieving
emission trading systems to the EU ETS can create a bigger
both the Lisbon objectives and the objectives set in the
market, potentially lowering the aggregate cost of reducing
energy-climate package. In March 2007, the Commission
greenhouse gas emissions. A fine of EUR 40 per excess tonne
adopted a Green Paper (COM(2008) 140) on the use of market-
of CO2 emitted will be imposed on plants exceeding their
based instruments for environment and energy related policy
individual target, rising to EUR 100 in 2008.
purposes (‘green taxes’).
In December 2006, the Commission presented a proposal for
In response, on 23 January 2008, the European Commission legislation to include aviation into the EU ETS (COM(2006)
proposed a package of measures related to ‘climate 818). In June 2008, MEPs and national governments,
change and renewable energies’ to put those goals into represented by the Slovenian Presidency, reached a
practice and to adopt measures for the transition towards a compromise on the details of plans to include aviation in the
low carbon economy. In its communication ‘20 20 by 2020’ EU ETS as of 2012. The compromise agreement reached still
(COM(2008) 30), the EU aims to achieve by 2020: needs to be formally endorsed by the full Council and put to a
— a reduction of at least 20 % below 1990 levels in second reading vote at Parliament’s July 2008 plenary session
greenhouse gas emissions, which will be scaled up to as in Strasbourg.
much as 30 % under a new global climate change The reformed ETS, as proposed by the Commission in January
agreement if other developed countries make comparable 2008, would enter into force in 2013 and run until 2020. The
efforts; main elements are indicated below.
— a share of 20 % of renewable energies in energy — An EU-wide cap would be set at 21 % below 2005 levels
consumption and savings of 20 % of energy consumption instead of national cap-setting. To achieve this, the total
through energy efficiency. number of emissions allowances circulating at the end of
The package features guidelines for revised EU State aid for 2012 will be cut by 1.74 % annually.
environmental protection (2008/C82/01) and legislative — New sectors (aviation, petrochemicals, ammonia and the
proposals on: aluminium sector) and new gases (nitrous oxide and
— CO2 ‘burden sharing’ (COM(2008) 17), perfluorocarbons) would be included. Road transport,
shipping, waste, agriculture and forestry remain excluded.
— the post-2012 period of carbon trading under the EU ETS
(COM(2008) 16), — Industrial GHGs prevented from entering the atmosphere
through carbon capture and storage (CCS) technology (see
— carbon capture and storage (CCS) (COM(2008) 18), and below) are to be credited as not emitted under the EU ETS.
— renewable energies, including biofuels (COM(2008) 19). — Smaller installations, emitting under 10 000 tonnes of CO2
A key mechanism in meeting this goal will remain the EU’s per year, will be allowed to opt out from the ETS, provided
emissions trading scheme (EU ETS), initially launched in 2005 that alternative reduction measures are put in place.
in order to help achieve the Union’s Kyoto goal of cutting — The proposal foresees a huge increase in auctioning as
greenhouse gases by 8 % by 2012, by imposing caps on early as 2013, up to around 60 % of the total number of
emissions from energy-intensive industries such as steel, allowances in 2013, followed by full auctioning from 2013
cement and power generation. onwards for the power sector, while in other sectors free
3. Greenhouse gas emissions trading allocations will gradually be completely phased-out on an
a. EU emission trading scheme annual basis between 2013 and 2020. Exceptions to this
are certain energy-intensive sectors, subject to ‘carbon
The EU ETS, as established by Directive 2003/87/EC, aims to
leakage’, which will continue to get all their allowances for
ensure overall emission reductions with the lowest reduction
free. However, the sectors to be concerned by this measure
costs by giving emission reductions a market value. The
are yet to be determined (expected by 2010). The
systems would cover some 10 000 industrial plants across the
distribution method for free allowances will be developed
EU — such as power plants, refineries, steel mills —
at a later stage through comitology. Furthermore, some
accounting for almost half of the EU’s CO2 emissions.
sort of ‘carbon equalisation system’ might be introduced in
The ‘cap and trade’ system sets an overall cap or maximum 2011 in case of no international agreement to neutralise
amount of emissions per compliance period per country. Each any distorting effects from imports from countries with less
country set up national allocation plans (NAPs) for the first two stringent climate laws.
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b. Greenhouse gas emission trading in respect of the Kyoto concentrations in the atmosphere by up to 30 %. The EU set
Protocol’s project mechanisms up a technology platform on zero emission fossil fuel power
The so-called ‘linking directive’ (2004/101/EC) links the EU ETS plants at the end of 2004 and has proposed a regulatory
with the other Kyoto flexible mechanisms: joint framework to commercialise and subsidise this new
implementation (JI) and the clean development mechanism technology.
(CDM). CDM projects involve investment by rich nations in On 23 January 2008, the European Commission issued a
‘clean’ projects in the developing world in exchange for CO2 communication on CCS demonstration projects and a
emissions credits. The basic rationale for the CDM is that proposal for a directive on the legal framework for CCS as part
abatement of GHGs in developing countries can be achieved of the larger package on renewable energies and climate
at lower costs than in developed countries. JI projects are change (COM(2008) 18).
similar and allow for emission credits obtained through
projects in other developed countries. C. International policy on climate change
In addition to its firm independent commitment to a 20 %
c. Sources outside of the EU ETS: burden/effort sharing
reduction by 2020, the EU commits itself to a 30 % reduction in
Road transport, shipping, waste, agriculture and forestry greenhouse gas emissions by 2020 provided that other
remain excluded from the EU ETS. In order to achieve an developed countries commit themselves to comparable
average 10 % reduction of greenhouse gases from sectors not emission reductions and economically more advanced
covered by the ETS, the Commission has set national targets, in developing countries contribute adequately according to their
relation to the 2005 levels, according to countries’ per capita responsibilities and respective capabilities.
GDP (COM(2008) 17).
The EU played an important role in Bali in securing the
The use of credits obtained through financing emission agreement on the roadmap towards a new comprehensive
reduction projects in countries outside the EU through the agreement on cutting emissions to be reached by 2009, and is
CDM will be limited to 3 % of Member States’ emissions from convinced that developed countries can and should commit
sources outside the ETS in the year 2005. themselves to a 30 % cut in emission levels by 2020. The EU
4. Energy efficiency and renewable energy will continue to take the lead in the negotiation of an
ambitious international agreement, the next steps being the
In order to increase the share of renewable energy in Europe
COP14 meeting in Poznan in December 2008 and COP15 in
and to reduce oil-dependency, the European Commission
Copenhagen 2009.
adopted the EU biomass action plan (COM(2005) 628) and a
communication on the EU strategy for bio fuels (COM(2006) The main issues within the climate negotiations are:
34) to improve the production and use of bio-energy in — carbon trading versus a carbon tax;
Europe and in third countries.
— the need for predictable carbon prices and a possible
Following the energy–climate package of January 2007, future global carbon market;
European leaders signed up in March 2007 to a binding EU-
wide target to source 20 % of their energy needs from — sectoral approaches: auctioning versus free allocation;
renewables such as biomass, hydro, wind and solar power by — the possibility of imposing a carbon import tax on foreign
2020 while increasing energy efficiency by 20 %. As part of the goods produced by energy-intensive industries operating
overall target, a binding minimum target was set for each in countries that do not have tough restrictions on CO2
Member State to achieve at least 10 % of their transport fuel emissions; a similar option would be a WTO-wide deal on
consumption from biofuels. However, the binding character of the full elimination of tariffs on 43 products identified by
this target is ‘subject to production being sustainable’ and to the World Bank as environment friendly;
‘second-generation biofuels becoming commercially available’.
On 23 January 2008, the Commission put forward — technology financing and development of clean and
differentiated targets for the share of energy from renewable environment-friendly technologies;
sources in final energy consumption in 2020 for each EU — adaptation;
Member State, based on the per capita GDP of each country
— energy efficiency;
(COM(2008) 19).
— forest conservation: agreements were made in Bali to
5. Carbon capture and storage (CCS) expand on existing mechanisms under the Kyoto Protocol
CCS technology separates CO2 from atmospheric emissions that provide incentives for developing countries to prevent
(resulting from industrial processes), compresses the CO2 and deforestation on their territories.
transports it to a location where it can be stored in geological
or mineral formations and/or oceans. According to the UN D. Adaptation to climate change and the clean
Intergovernmental Panel on Climate Change, CCS could development mechanism
remove 80 to 90 % of CO2 emissions from power plants if The climate policy based on emission reduction needs to be
successful, and could reduce the costs of stabilising the CO2 complemented with an efficient response to the unavoidable
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consequences of climate change, which are already emissions at home, adopting a proactive approach to
happening today. There is a wide range of concrete actions for engage other main actors, developing strategic
adaptation, from soft and relatively inexpensive measures partnerships, promoting research and energy efficiency and
(water conservation, changes in crop rotation, sowing dates encouraging citizens to become directly involved. A future
and the use of drought tolerant crops, public planning, and regime should be based on ‘common but differentiated
awareness raising) to costly defence and relocation measures responsibilities’, based on recent science and aiming at not
(increasing the height of dykes; relocating ports, industry, cities exceeding a global average temperature increase of 2 °C
and villages from low-lying coastal areas and flood plains; with reasonable certainty. Cost-effectiveness should be a
building new power plants because of failing hydropower characteristic of all measures considered and a long-term
stations etc.). goal should therefore be to develop a global carbon market,
In June 2007 the Commission issued a Green Paper on based on cap and trade.
adaptation (COM(2007) 354). A European Advisory Group for Parliament strongly supported an EU 30 % emission
Adaptation to Climate Change will work on the development reduction target by 2020, regardless of post-Kyoto
of Community adaptation policies to be put forward by the international negotiations, and the cutting of global emissions
end of 2008. Early action at the EU level could include by 50 % in 2050 as proposed by the Commission in its climate
integrating adaptation when implementing existing and and energy package of January 2007.
upcoming legislation and policies, integrating adaptation into
In May 2008, the Committee on the Environment, Public
existing Community funding programmes and developing
Health and Food Safety (ENVI) adopted a report in second
new policy responses.
reading on the inclusion of aviation into the EU ETS. In
Efforts to adapt to the unpreventable effects of climate change June 2008, Parliament and the Council reached an ‘informal’
were given a boost when negotiators in Bali 2007 agreed to deal of auctioning 15 % of the allowances, although
allocate 2 % of the proceeds from Kyoto CDM projects into a Parliament had initially demanded 25 %. Furthermore, MEPs
climate change adaptation fund designed to help from the ENVI Committee pushed for the number of
developing nations deal with threats such as rising sea levels, pollution permits allocated to airlines to be capped at 90 %
desertification and biodiversity loss. If CDM projects flourish, of average greenhouse gases emitted in 2004–06 while the
the fund could grow between USD 1 billion and USD 5 billion Member States were demanding 100 %. A compromise was
annually by 2030, according to UN projections. made at 97 % and will be lowered to 95 % for the 2013–20
period unless there is agreement on an ETS. Parliament
Role of the European Parliament reports on the reform of the EU ETS and on effort sharing
are expected to be adopted in first reading in the ENVI
The European Parliament is still playing a leading and active
Committee by October 2008.
role in the long discussions between Parliament, the
Commission and the Council concerning the EU’s policy on In September 2006, Parliament adopted an opinion on the
climate change and on emissions trading. strategy on biomass and biofuels, asking for a mandatory
environmental certification for sustainable production and use
At the end of April 2007, Parliament established, for an initial
of biofuels. At this moment, the ENVI Committee is
period of 12 months, a Temporary Committee on Climate
investigating the renewables targets set in the ‘20 20 by 2020’
Change, comprising 60 members. The mandate has now been
package and the required GHG savings for ‘sustainable biofuels’
renewed for an additional period of nine months, with effect
within the context of the revision of the renewables directive.
from 10 May 2008. Its aim is to coordinate Parliament’s position
on climate change-related policies and to formulate proposals The Parliament report on carbon capture and storage (CCS)
on the EU’s future integrated policy on climate change. It also is expected to be adopted in the ENVI Committee by
intends to play a key role in awareness raising and in ensuring September 2008. The rapporteur wants all existing fossil fuel
this important issue remains high on the international agenda. power plants to be retrofitted with CO2 capture and storage
The temporary committee may make recommendations as to technology by 2025, and is calling for a moratorium on new
measures or initiatives to be taken and will contribute to shape plant constructions after 2015 unless the facilities are able to
the EU’s approach to developing the future integrated climate prevent 90 % of their CO2 emissions from entering the
change policy and influence the negotiations for the post- atmosphere.
2012 international climate change framework.
In the report on winning the battle against climate g Yanne Goossens
change, Parliament highlighted the importance of reducing July 2008
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4 10
4.10.8. Biodiversity, nature and soil

The contributions of the UNCED of 1992 represent a major step forward for the conservation of biodiversity and the
protection of nature. Other objectives foreseen in the habitat directive or CITES remain to be achieved. Since 2007, LIFE+
with its three components represents the most important financial instrument for the protection of biodiversity in the EU.
Legal basis biodiversity loss. In 2004, the EU biodiversity strategy was

4.10.1.
reviewed in Malahide (Scotland), followed by a report
presenting 18 priority objectives for halting biodiversity loss in
the EU. In May 2006, the Commission adopted a
Achievements communication entitled ‘Halting the loss of biodiversity by
The EU and its Member States have played an important 2010 — and beyond — Sustaining ecosystem services for
international role in seeking solutions to global problems such human well-being’ communication (COM(2006) 216), which
as biodiversity loss, climate change and the destruction of the provides an EU action plan with concrete measures, and which
tropical rainforests. The United Nations Conference on the outlines the responsibilities of EU institutions and Member
Environment and Development (UNCED), held in Rio de States. The action plan includes four key policy areas for
Janeiro in June 1992, was of major importance for actions and related 10 priority areas for the EU and Member
environmental policy. It ended with the adoption of the States to focus on. The German Environment Minister recently
Framework Convention on Climate Change, the Biological supported, at the G8 + 5 meeting in Potsdam in March 2007,
Diversity Convention, both of which are new treaties in the idea of publishing a report on the economic impact of
international law, the Rio Declaration and a statement of forest biodiversity loss, along the lines of the Stern review on the
principles and the ‘Agenda 21’ programme. At the Gothenburg economics of climate change, and the costs of non-action. An
Summit in 2001, EU Member States agreed to halt biodiversity interim report was published at the ninth Conference of the
loss by 2010 and to restore habitats and natural ecosystems. At Parties of the Convention of Biological Diversity (COP-MOP-9)
the Johannesburg World Summit on Sustainable Development in Bonn in May 2008.
in 2002, over 100 world leaders agreed to ‘significantly reduce 2. International conventions for the protection of fauna
the rate of biodiversity loss globally by 2010’. The millennium and flora
ecosystem assessment (2005) assessed biodiversity loss as one
The United Nations Environment Programme (UNEP) estimates
of the facets of the degradation of ecosystem services: 60 % of
that up to 24 % of species belonging to groups such as
the ecosystems were found to be degraded or used
butterflies, birds and mammals have completely disappeared
unsustainably.
from the territory of certain European countries. The European
Furthermore, on 29 January 2000, the Conference of the Union is a party to the following conventions:
Parties to the Convention on Biological Diversity (COP-MOP)
adopted a supplementary agreement to the convention — the Ramsar Convention on the Conservation of Wetlands
known as the Cartagena Protocol on Biosafety. The protocol of 1971;
seeks to protect biological diversity from the potential risks — the Washington Convention (CITES) of 3 March 1973 on
posed by living modified organisms resulting from modern International Trade in Endangered Species of Wild Fauna
biotechnology. It establishes an advance informed agreement and Flora;
(AIA) procedure for ensuring that countries are provided with
— the Bonn Convention of 23 June 1979 on the Protection of
the information necessary to make informed decisions before
Migratory Species of Wild Fauna;
agreeing to the import of such organisms into their territory.
— the Bern Convention on the Protection of European Wildlife
1. Biodiversity action plans
and Natural Habitats of 1982;
In 1998, the European Commission adopted a communication
on a European biodiversity strategy (COM(98) 42). In 2002 the — the Rio de Janeiro Convention on Biological Diversity of
Council adopted the Commission communication COM(2001) 1992; and
162 containing biodiversity action plans, each covering — more regional conventions such as the Helsinki Convention
individual areas: conservation of natural resources, agriculture, on the Baltic Sea (1974), the Barcelona Convention on the
fisheries, and development and economic cooperation. It Mediterranean (1976) and the Convention on the
outlined the steps which it considered necessary in each area Protection of the Alps (1991).
and identified indicators for evaluating their effectiveness,
some of which already exist, others yet to be developed. The 3. Financial instruments
main objectives of these action plans are to improve or Until the end of 2006, LIFE was the financial instrument
maintain the biodiversity status and prevent further supporting several projects in the areas LIFE–Nature, LIFE–
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Environment and LIFE–Third countries. In March 2007, political by the EU of the agreement on the international dolphin
agreement was reached between Parliament and the Council conservation programme helps to reduce incidental dolphin
on its successor, LIFE+, bringing the total funding to nearly mortality during tuna fishing. Directive 83/129/EEC prohibits
EUR 2 billion for the period 2007–13. The definitive LIFE+ the import of seal pup products into the EU, initially applying
regulation, resulting from the conciliation procedure between only until October 1985, but extended indefinitely by Directive
the European Parliament and the Council was established in 89/370/EEC.
May 2007. LIFE+ has several funding programmes and consists
In 1991, the Council adopted the ‘leghold trap regulation’
of three components: LIFE+ nature and biodiversity, LIFE+
((EEC) No 3254/91) banning the use of leg-hold traps in the EU
environment policy and governance, and LIFE+ information
and the import into the EU of pelts and manufactured goods
and communication. Other possible funding opportunities for
of certain wild species originating in countries which allow
the Member States to support the biodiversity targets could
leghold traps or trapping methods which do not meet
be taken up under the CAP, the CFP, the Cohesion and
international humane trapping standards. Commission
Structural Funds, and the seventh framework programme.
Decision 98/596/EC allows the import of furs into the EU from
Programmes financed through LIFE+ will be open to the
Canada, the Russian Federation and the USA as a result of the
participation of third countries notably: EFTA States, candidate
commitment of those countries to implement humane
countries for accession to the EU, and western Balkan
trapping standards (agreements have been approved by
countries.
Council Decisions 98/42/EC and 98/487/EC). In July 2004, the
Commission adopted a proposal for a directive introducing
Objectives humane trapping standards for certain animal species, which
1. Conservation of natural habitats and of wild fauna and will implement commitments and obligations arising from the
flora international engagements. Rules and guidelines for
The habitat directive (92/43/EEC) on the conservation of sustainable hunting of (wild) birds can be found in the birds
natural habitats and of wild fauna and flora (amended by directive.
97/62/EC) established a European ecological network known 3. Biodiversity related to animal welfare
as ‘Natura 2000’. The network comprises ‘sites of community Directive 1999/22/EC sets minimum standards for housing and
interest/special areas of conservation’ designated by Member caring for animals in zoos and reinforces the role of zoos in
States in accordance with the habitat directive, and ‘special conserving biodiversity while retaining a role in education and
protection areas’ classified pursuant to Directive 79/409/EEC scientific research. Directive 86/609/EEC was adopted by the
on the conservation of wild birds. The habitat directive aims Council in November 1986, following an EP resolution on
principally to promote the conservation of biological diversity limiting animal experiments and on the protection of
while taking account of economic, social, cultural and regional laboratory animals, in which it called for a limitation on animal
requirements. The birds directive covers the protection, experiments if similar results could be obtained by other
management and control of (wild) birds, including the rules for methods and if the results were stored in a central European
sustainable hunting. data bank. Furthermore, the Commission has set up a
In February 2008, the European Commission made a proposal Community action plan on the protection and welfare of
for a regulation amending Regulation (EC) No 338/97 on the animals 2006–10 (COM(2006) 13).
protection of species of wild fauna and flora by regulating 4. Marine biodiversity
trade therein as regards the implementing powers conferred
Marine biodiversity is covered within the scope of the
on the Commission.
biodiversity action plans for natural resources and fisheries. The
2. Exploitation and trade of wild fauna and flora review of the EU biodiversity strategy stresses the importance
In 1975 the Convention on International Trade in Endangered of ‘good ecological status’ of seas and coastal areas to support
Species of Wild Fauna and Flora (CITES) entered into force, biodiversity. Furthermore, the EU marine strategy of 2002
regulating international trade in specimens of species of wild (COM(2002) 539) proposes an ecosystem-based approach to
fauna and flora, i.e. (re-)export and import of live and dead ensure conservation and sustainable use of biodiversity (see
animals and plants and of parts and derivatives thereof, based 4.10.5).
on a system of permits and certificates which can be issued if 5. Forests
certain conditions are met. The basic regulation ((EC) No
Forests make up to 30 % of the surface area of the ‘Natura 2000’
338/97) on the protection of species of wild fauna and flora by
network. Several measures aim at the protection of forests.
regulating trade therein, applies in compliance with the
Regulations (EEC) No 3528/86 and (EEC) No 2158/92 on the
objectives, principles and provisions of CITES. The species
protection of the EU’s forests against atmospheric pollution
covered by the regulation are listed in four annexes.
and fire respectively, which expired in 2002, have been
Regarding the protection of marine fauna, Regulation (EEC) No integrated into the forest focus regulation ((EC) No 2152/2003).
348/81 sets common rules for imports of whales or other Council Regulation (EEC) No 1615/89 established the
cetacean products and Decision 1999/337/EC on the signature European forestry information and communication system
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4 10
(EFICS), setting up a system to collect, coordinate, standardise, which laid down common measures for the contained use of
process and disseminate information concerning the forestry genetically modified micro-organisms for the purposes of
sector and its development. Council resolution of 15 protecting human health and the environment. Furthermore,
December 1998 on EU forestry strategy established a in accordance with Directive 2001/18/EC introducing a new
framework for forest-related actions in support of sustainable efficient and transparent regulatory system on the deliberate
forest management (SFM). In June 2006, a communication on release of GMOs into the environment, it adopted (proposals
an EU forest action plan was adopted (COM(2006) 302). for) decisions on the placing on the market of certain
Regulation (EC) No 2494/2000 on measures to promote the genetically modified products or, where applicable, on a
conservation and sustainable management of tropical forests temporary ban on the sale and use of such products. In
and other forests in developing countries includes the March 2008 European Parliament and the Council adopted a
protection or restoration of biodiversity and ecological resolution and made some amendments to the
functions of forest ecosystems. Currently, the use of biofuels is Commission’s proposal to amend Directive 2001/18/EC on
under debate following possible negative impacts such as the deliberate release into the environment of GMOs by
rainforest depletion and increased competition with wood and introducing a reference to the new regulatory procedure
food production. A communication and a legislative proposal with scrutiny.
from the Commission to prevent the placing on the EU market
Regulation (EC) No 1829/2003 lays down procedures for the
of illegally harvested timber or timber products and a
authorisation, supervision and labelling of genetically modified
communication on measures to reduce deforestation are
food and feed and aims to guarantee a high level of protection
expected for the end of 2008.
for human life and health, animal health, the environment and
6. Soil protection consumers’ interests while ensuring that the internal market
In September 2006 the Commission adopted COM(2006) 231 functions properly. Regulation (EC) No 1830/2003 broadens
on a thematic strategy for soil protection together with a the concept and includes all types of foodstuffs containing or
proposal for a directive (COM(2006) 232) and an impact produced from GMOs (e.g. proteins), additives and flavourings
assessment. The thematic strategy for oil protection builds on for human consumption, and GMO animal feed. The European
a stakeholder consultation process of 2003 and covers erosion, Parliament and the Council adopted on 11 March 2008
organic matter loss, contamination, landslides, compaction, Regulation (EC) No 298/2008, amending Regulation (EC)
salinisation, sealing and other aspects of soil degradation. The No 1829/2003 on genetically modified food and feed, as
proposal for a soil framework directive is subject to the co- regards the implementing power conferred on the
decision procedure. The European Parliament adopted its first Commission.
reading opinion on 13 November 2007. Recommendation 2003/556/EC sets guidelines for the
7. Climate change and biodiversity development of national strategies and best practices to
ensure the coexistence of GMOs with conventional and
Climate change has led to the adaptation of several plant and
organic farming, in order to help Member States develop
animal species, leading in some cases to shifts in distribution
national (legislative) strategies for coexistence. In March 2006,
patterns or even the extinction of fauna and flora. Changing
the Commission adopted a report on the implementation of
ocean currents and sea level rise affect marine (wild) life and
such national measures (COM(2006) 104).
marine ecosystems such as coral reefs and mangroves.
Furthermore, climate change and the related temperature
increases are promoting certain plant diseases, pests and Role of the European Parliament
invasive plant/animal species, having implications, amongst The European Parliament has always played a decisive part in
others, on agriculture, food production, nature and establishing EU systems concerning the protection of nature
biodiversity. Approximately 20 to 30 % of plant and animal and biodiversity.
species assessed so far are likely to be at increased risk of
extinction if increases in global average temperature exceed In May 2007, Parliament adopted an own-initiative report on
1.5 to 2.5 °C. the Commission communication entitled ‘Halting the loss of
biodiversity by 2010 — and beyond — Sustaining ecosystem
On 29 June 2007 the European Commission adopted its first services for human well-being’ (COM(2006) 216). Parliament
policy document on adapting to the impacts of climate felt that the ‘EU action plan to 2010 and beyond’ would be
change. This Green Paper, entitled ‘adaptation to climate insufficient to conserve biodiversity and sustain ecosystem
change in Europe — options for EU action’, builds upon the services in the longer term. Biodiversity should be one of the
work and findings of the European climate change main principles of the ‘health check’ on the common
programme. In April 2008 the European Parliament adopted its agriculture policy (CAP) due to be carried out in 2008.
resolution.
On 24 April 2008, Parliament adopted a resolution on
8. Genetically modified organisms (GMOs) preparations for the COP–MOP meetings on biodiversity and
In June 2006, the Commission adopted a proposal for a biosafety in Bonn, Germany. Parliament expressed its deep
directive (COM(2006) 286), codifying Directive 90/219/EEC, concern at the continued loss of biodiversity and at the
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European Union’s ever increasing ecological footprint, which for a centralised management in which the Commission
extends the impact on biodiversity well beyond the borders of controls and approves the proposed projects and delegates
the EU. Parliament pointed out the direct link between the 22 % of the budget to cover administrative costs, while 78 %
conservation of biological diversity and the provision of comes under the responsibility of the Member States.
ecosystem services, such as food production, water
In November 2007 the European Parliament adopted a report
purification, nutrient circulation and climate regulation.
on the proposal for a regulation amending Regulation (EC)
A Commission proposal on LIFE+ (COM(2004) 621) originally No 1829/2003 on genetically modified food and feed. In
included two components: ‘implementation and governance’ addition, the European Parliament adopted a resolution to the
and ‘information and communication’. The EP proposed adding Commission’s proposal to amend Directive 2001/18/EC on the
a third component, ‘nature and biodiversity’. During the deliberate release into the environment of genetically
conciliation procedure of adopting the new LIFE+ regulation, modified organisms, by introducing a reference to the new
the European Parliament has pushed for a larger budget for regulatory procedure with scrutiny.
the programme, bringing the total LIFE funding to EUR 1.95
billion. Besides the budget, Parliament also focused on the g Yanne Goossens
management of the programme, battling against the Gianpaolo Meneghini
‘renationalisation’ of the LIFE+ funds. Agreement was reached June 2008
4.10.9. Chemicals
The guidelines adopted in the EU aim at protecting the population and the environment against the potential effects of
chemicals. The REACH directive regulates the registration, evaluation and authorisation of such substances and the
restrictions applicable to them. The Seveso directive aims to prevent and reduce serious industrial accidents while the
pesticides and biocides directives deal with the environmental and health risks of plant protection products.
Legal basis and objectives sustainable development context including substances which
were placed on the market prior to 1981.
See 4.10.1.
The REACH regulation established a European Chemicals
Agency (ECHA), inaugurated in Helsinki on 3 June 2008, to
Achievements
take a central role in the implementation of this regulation. The
A. Registration, evaluation, authorisation and restriction agency’s main initial job is to negotiate a six-month pre-
of chemicals (REACH) registration exercise in which firms must send basic substance
and company details and expected registration dates. The
Regulation (EC) No 1907/2006 of the European Parliament
information will be used to launch a registration phase that
and of the Council was adopted on 18 December 2006 and
will last until 2018. Firms that do not pre-register must register
entered into force on 1 June 2007. It concerns the registration,
their substances by 1 December 2008. Furthermore, the
evaluation, authorisation and restriction of chemicals (REACH).
REACH regulation amended Directive 1999/45/EC concerning
The aim of the REACH regulation is better protection of the approximation of the laws, regulations and administrative
humans and the environment from the possible risk of provisions of the Member States relating to the classification,
chemicals and to promote sustainable development. Although packaging and labelling of dangerous preparations.
EU legislation already prohibited some harmful chemicals
Council Regulation (EEC) No 793/93 on the evaluation and
(asbestos, for example), there have been gaps with regard to
control of the risks of existing substances and Commission
existing chemical substances. There has been a lack of
Regulation (EC) No 1488/94 as well as Council Directive
information on the effects of many existing substances which
76/769/EEC on the restriction of the use of other dangerous
were placed on the market prior to 1981, when the
substances and preparations are repealed. Commission
requirement for the testing and notification of new substances
Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC
was introduced. Such substances account for approximately
are repealed by the REACH regulation.
99 % of the total volume of substances available on the
market. The Commission considered a strategy to guarantee Directive 67/548/EEC aims: to guarantee adequate protection
the protection of human health and the environment in a for humans and the environment against the potential risks of
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4 10
chemical substances; to introduce a uniform notification provides for an obligation on industrial operators to put
procedure for new chemical substances and provisions on into effect safety management systems, including a
packaging and temporary labelling for dangerous substances; detailed risk assessment using possible accident scenarios.
to introduce an environmental hazard mark; and to reduce as
far as possible the number of experiments on animals. As the C. Vertical legislations
REACH regulation does not include rules for classification, 1. ‘Europe against cancer’
labelling and packaging of dangerous substances, Directive The ‘Europe against cancer’ programme within the framework
67/548/EEC will therefore continue to apply in its relevant parts. for action in the field of public health, adopted by Decision
But in order to adapt it to Regulation (EC) No 1907/2006 No 646/96/EC of the European Parliament and of the Council,
(REACH) it has been amended by Directive 2006/121/EC of as extended by Decision No 521/2001/EC of the European
the European Parliament and of the Council of 18 December Parliament and of the Council of 26 February 2001, comprises
2006. As the new regulation on REACH introduced the same an improving of health information and tackling lifestyle-
registration requirements for new chemicals as for the existing related health determinants in certain settings. Directive
substances, the rules for notification of new chemicals in 94/48/EC, which emerged from the 1990–94 action plan and
Directive 67/548/EEC had to be amended. the ‘Europe against cancer’ programme, aims to restrict the
Directive 2004/10/EC (amending and repealing Directives marketing and use of carcinogenic and mutagenic substances
87/18/EEC and 88/320/EEC) aims to harmonise laws, regulations and those causing birth defects, and of certain aliphatic
and administrative provisions relating to the application of the chlorinated hydrocarbons and coal-tar oils
principles of good laboratory practice and the verification of 2. PCPs
their applications for tests on chemical substances.
Production and use of pentachlorophenol (PCP) and its
B. Major accidents: Seveso directives compounds has been restricted in the EU since the 1980s.
After the accident at Seveso, the EU took steps to legislate in Directive 76/769/EEC (ban on the production in the EU) has
order to prevent major accidents and to limit their since been repealed by Regulation (EC) No 1907/2006 (REACH).
consequences as highlighted in the following directives. Directive 91/173/EC restricts its use to a concentration equal to
or greater than 0.1 % by mass, except in substances and
— Directive 82/501/EEC, updated in 1987, imposes the same preparations intended for use in industrial installations:
obligation on manufacturers in all Member States to inform treatment of wood; impregnation of heavy-duty textiles; and as
the authorities about substances, plants and risks of major a synthesising and/or processing agent in industrial processes.
accidents (excepting nuclear installations). It requires
Member States to inform persons likely to be affected by a 3. Asbestos
major accident. The Commission maintains files containing Directives 91/382/EEC and 2003/18/EC, amending Council
an account of major accidents, including an analysis of Directive 83/477/EEC, intend to protect workers against the
their causes and the measures taken in response. dangers of asbestos. The main point of Directive 2003/18/EC is
— Directive 88/610/EEC extended the original directive’s the introduction of a single limit value (of a maximum airborne
scope to include the storage of dangerous chemical concentration of 0.1 fibres per cm3 as an eight-hour time-
products, whether packaged or not, at any site. The weighted average) for the exposure of workers instead of the
provisions on informing the public have also been made two years in the original directive. This directive applies to both
more stringent; details are given of the minimum the maritime and air transport sectors, which was not the case
information which must be made available, e.g. the nature under the original directive. In a case where its provisions are
of the risk to the public and the environment, measures to more favourable, Directive 2004/37/EC on the protection of
be taken in the event of an accident, existing emergency workers from the risks related to exposure to carcinogens or
plans and provisions on access to further information. mutagens at work (‘the carcinogens directive’) will apply.
— The Seveso II directive (96/82/EC) replaced the original 4. Plant protection products (pesticides)
Seveso directive (82/501/EEC). It revised and extended the Two measures apply to pesticides: a European Parliament and
scope of the directive, introduced new requirements Council regulation on maximum residue levels (MRLs) of
relating to safety management systems, emergency pesticides in products of plant and animal origin, adopted in
planning and land-use planning and tightened up the April 2004, and Directive 79/117/EEC, concerning the
provisions on inspections to be carried out by Member harmonisation of legislation, which is intended to prohibit the
States. The directive constitutes the instrument for sale and use of plant protection products containing certain
transposing into law the EU’s obligations under the active substances. Directive 91/414/EEC on the placing of plant
Convention on the Trans-boundary Effects of Industrial protection products on the market (as last amended by Directive
Accidents of the United Nations Economic Commission for 99/1/EC) aims to create uniform conditions for the authorisation
Europe. The Seveso II directive was amended by Directive of pesticides and to establish an authorisation procedure. It
2003/105/EC. In view of recent industrial accidents (the complements provisions on classification, packaging and
Netherlands, France and Romania), the amended directive labelling. On 12 July 2006, the Commission adopted a proposal
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(COM(2006) 388) for a regulation to replace this directive. In April 2007 the Commission submitted the report on
Complementail, the Commission adopted a thematic strategy on phosphates in detergents to the Council and the European
the sustainable use of pesticides (COM(2006) 372) and a proposal Parliament. The report is pursuant to Article 16 of Regulation
for a directive establishing a framework for Community action to (EC) No 648/2004 on detergents, concerning the use of
achieve a sustainable use of pesticides (COM(2006) 373). In order phosphates.
to establish a transparent system for reporting and monitoring
By 8 April 2009 the Commission will carry out a review of the
the progress made towards the objectives of the strategy,
application of Regulation (EC) No 648/2004, paying particular
including the development of suitable indicators, it is necessary
regard to the biodegradability of surfactants, and will evaluate,
to enhance and harmonise the current data collection and
submit a report on and, where justified, present legislative
reporting systems and to put them on a legal footing. Therefore
proposals relating to anaerobic biodegradation and the
the Commission adopted on 11 December 2006 a proposal for a
biodegradation of main non-surfactant organic detergent
regulation of the European Parliament and of the Council
ingredients.
concerning statistics on plant protection products (COM(2006)
778). The proposed regulation creates a legal framework and lays No later than 8 October 2005 Member States had to adopt
down harmonised rules for the collection and dissemination of appropriate legal or administrative measures in order to deal
data concerning the placing on the market and use of plant with any infringement of the regulation and dissuasive, effective
protection products. In particular, it instructs the Member States: and proportionate sanctions for any such infringement.
to collect data regularly; on how to collect data, whether by 7. Mercury
representative surveys, statistical estimation procedures on the
On 28 January 2005, the Commission adopted the
basis of expert judgments or models, reporting obligations
communication to the Council and the European Parliament
imposed on the distribution chain for plant protection products,
on a Community strategy concerning mercury (COM(2005) 20
reporting obligations imposed on professional users, from
final). The strategy addresses all aspects of the mercury life
administrative sources or by a combination of these means; and
cycle. It proposes 20 actions, two of them implemented by the
on how to transmit data to the Commission. It also entrusts the
present proposal. To the extent that mercury is considered as
Commission with the tasks of adapting some technical aspects
waste, it falls within the scope of existing Community
and defining the quality evaluation criteria and the data
legislation on waste: Directive 75/442/EEC on waste,
transmission format.
Regulation (EEC) No 259/93 on waste shipments and, given
5. Biocides products the wide definition of ‘landfill’ in Article 2(g), Directive 1999/31/
Directive 98/8/EC established a regulatory framework for EC on the landfill of waste.
placing biocides on the market while ensuring a high level of
protection for man and the environment. These substances are D. Export and import of dangerous substances
authorised only if they appear on a positive list. Pursuant to the Regulation (EC) No 304/2003 concerning the export and import
mutual recognition principle, a substance authorised in one of dangerous chemicals was adopted on 28 January 2003. The
Member State may be used throughout the EU. Council current Community rules relating to the export and import of
Directive 76/769/EEC on the restriction of the use of other dangerous chemicals are laid down in Regulation (EC)
dangerous substances and preparations is also in force. No 304/2003, as most recently amended by Commission
Regulation (EC) No 777/2006. Regulation (EC) No 304/2003 aims
6. Detergents to implement the Rotterdam convention of 1998 (which
Regulation (EC) No 907/2006 of 20 June 2006 amends entered into force on 24 February 2004) and to establish import
Regulation (EC) No 648/2004 on detergents, in order to adapt and export notification procedures for dangerous chemicals.
Annexes III and VII. Regulation (EC) No 648/2004 ensures the
free circulation of detergents on the internal market while at E. Classification, labelling and packaging of substances
the same time providing a high level of protection to the and mixtures
environment and to human health by laying down rules for There are three Commission proposals which aim to
the ultimate biodegradation of surfactants for detergents, and implement an international, UN-level agreed system of
for the labelling of detergent ingredients. It expands rules classification, labelling and packaging of hazardous substances
contained in Commission recommendation 89/542/EEC. and mixtures (‘globally harmonised system’ (GHS)) into EU
Modernisation is provided by new biodegradability tests, legislation. The main Commission proposal establishes a
which will provide an enhanced level of protection to the general classification and labelling criteria. The existing EU
aquatic compartment. In addition, the scope of the tests is legislation on the classification and labelling of chemicals has
extended to all classes of surfactant, thereby including the developed over a long period of time. REACH does not include
10 % of surfactants that escape current legislation. As regards criteria for classification and labelling but has links to them.
labelling, rules are extended to include fragrance ingredients The Commission provides for a three-year transition period for
that could cause allergies, and manufacturers are obliged to substances and a five-year transition period for mixtures. It
disclose a full list of ingredients to medical practitioners takes up all GHS hazard classes as well as EU ‘leftovers’ which
treating patients suffering from allergies. are not yet covered by GHS.
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4 10
In June 2007 the Commission launched a decision amending reading, Parliament focused on the issues of duty of care, again
Council Directive 67/548/EEC and Regulation (EC) on role of the Parliament in the agency, SMEs, and
No 1907/2006. The purpose is to establish a new system on communication of information, comitology, again on
classification and labelling of hazardous substances and registration/data sharing, again on authorisation/substitution,
mixtures by implementing in the EU the international criteria and on animal testing. At the end of the legislative procedure,
agreed by the United Nations. the agreement achieved between Parliament and the Council on
the controversial issue of authorisation/substitution includes the
obligation to always present a substitution plan if suitable safer
alternatives exist (although a substitution plan will not be
The European Parliament played a key role in the developing of necessary in this case for granting the authorisation). The length
the promising regulation on REACH. The most controversial areas of the review period — to which all authorisations will be subject
within the REACH discussions have been ‘registration’ and — will be determined on the basis of the substitution plan.
‘authorisation/substitution’. In the first reading the EP made
amendments on registration, authorisation, substances in In December 2007, the Council reached political agreement on
articles, SMEs and the agency. In particular, in the registration a common position following its first reading of a draft
chapter, it introduced a targeted approach on data requirements directive establishing a framework for Community action to
for existing substances produced at lower tonnages (1 to 10 achieve a ‘sustainable use of pesticides’. In March 2008 the
tonnes) and introduced the ‘one substance, one registration’ Commission modified the legislative proposal of the placing of
(OSOR) approach to minimise costs, with an opt-out in specific plant protection products on the market. In addition, in March
conditions where it can be justified. On the authorisation chapter, 2008 the European Parliament adopted the report on statistics
Parliament was in favour of always considering available on plant protection products. It aims at establishing a
substitutes, favouring innovation through time-limited transparent system for reporting and monitoring the progress
authorisations (five years) and certainty through a list of the most made towards the objectives of the ‘thematic strategy on
hazardous substances. Parliament also strengthened the sustainable use of pesticides’.
European Chemicals Agency’s role for evaluating dossiers and In March 2008 the European Parliament and the Council of the
substances, while at the same time maximising the use of European Union adopted Regulation (EC) No 396/2005 on
Member States’ expertise on substance evaluation. maximum residue levels of pesticides in or on food and feed as
regards the implementing powers conferred on the Commission.
In its common position, the Council adopted an approach very
similar to Parliament’s on registration and evaluation; while
significant differences between the position of Parliament and g Gianpaolo Meneghini
the Council on the authorisation chapter remained. In second June 2008
4.10.10. Integrated product policy and industrial

technologies
In terms of products and industrial technology, European legislation promotes the use of environmental technologies
that can increase growth and improve the environment. Particular attention is also paid to the biotechnology that
may contribute to the improvement of environmental quality and food and to nanotechnology.
Legal basis and objectives influence the life-cycle environmental impacts of products:
4.10.1 and Articles 174 to 176 of the Treaty establishing the application of the ‘polluter pays’ principle in fixing the prices of
European Community (EC). products, information for consumer choice, and definition of
eco-designed products. The Green Paper on integrated
product policy (COM(2001) 68) presents a strategy for
Achievements
strengthening and refocusing product-related environmental
A. Integrated product policy (IPP) policies with a view to promoting the development of a
1. Green Paper on integrated product policy market for greener products and, ultimately, to stimulating
The integrated product policy (IPP) strategy focuses on the public discussion. In principle, all products and services fall
three stages in the decision-making process which strongly within the scope of this Green Paper. The strategy proposed in
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the Green Paper calls for the involvement of all the parties 2000/55/EC) on energy efficiency requirements for,
concerned at all possible levels of action and throughout the respectively, new hot-water boilers fired with liquid or gaseous
life cycle of the products. Eco-design must be promoted by fuels, for household electric refrigerators, freezers and
the manufacturers to ensure that products on the market are combinations thereof, and for ballasts for fluorescent lighting.
more environment friendly. Distributors should put green In December 2006 the Commission made a proposal to
products on the shelves and should inform consumers of their amend Directive 2005/32/EC (COM(2006) 907).
existence and benefits. Consumers should preferably choose
Eco-management and environmental audit schemes, such as
green products and use them in such a way as to prolong their
the EU’s EMAS, are important instruments in the quest to
shelf life and reduce their impact on the environment.
ascertain and control the effects of products on the
Stakeholders could play a role in identifying problems and
environment. They have a potential role to play in the
solutions with a view to creating products that are more
promotion of IPP. Voluntary participation by organisations to
environment friendly.
EMAS is regulated by Regulation (EEC) No 761/2001,
a. Setting product prices promoting environmental performances in the industrial
The environmental performance of products can be optimised sector (see 4.10.1). The European Commission published
by the market once all prices reflect the true environmental revised rules for the EU’s EMAS in autumn 2007 (Decision
costs of these products. This is not normally the case, but 2007/747/EC). The 2008 sustainable consumption and
application of the ‘polluter pays’ principle would enable these production plan (see further) includes an extension of EU eco-
market failures to be corrected by ensuring that the design legislation and a review of the bloc’s eco-label.
environmental costs were integrated into the price. The main 2. ‘Integrated product policy — Building on
idea advanced in the Green Paper as a means of implementing environmental life-cycle thinking’
the ‘polluter pays’ principle is differentiated taxation according Commission communication COM(2003) 302 entitled
to the environmental performance of products, e.g. the ‘Integrated product policy — Building on environmental life-
application of lower VAT rates to products carrying the eco- cycle thinking’ further outlines the strategy for reducing the
label (see 4.10.1). environmental impact caused by products. It sets out a
b. Informed consumer choice number of actions to encourage improvement in a product’s
The Green Paper sees the process of educating consumers environmental impact throughout its life cycle. It emphasises
(including children) and companies as an important way of three dimensions: ‘life-cycle thinking’; flexibility of policy
promoting demand for more environmentally friendly measures to be used; and stakeholders’ involvement.
products, thereby making for greener consumption. Another The communication proposes two approaches: to improve
way of ensuring informed consumer choice is to provide existing tools, and to take action towards a better
consumers with understandable, relevant and credible environmental performance. In 2004, The Commission has
technical information either through product labelling or published a handbook on green public procurement helping
through other readily accessible sources of information. In public administrations to use environmental criteria when
order to minimise the environmental impact, attention should buying products or services. In 2007, the Commission
be drawn to the appropriate conditions governing the use of identified a first set of products with the greatest potential for
these products. The Internet and other new information environmental improvement.
technologies open up prospects for data exchange, including
3. Integration of environmental considerations into
assessment and best practice data. The European eco-label
public procurement
represents a source of information for consumers, but its scope
needs to be widened. New public procurement directives (Directive 2004/18/EC on
the coordination of procedures for the award of public works
c. Eco-design of products and EMAS contracts, public supply contracts and public service contracts
With a view to extending eco-design across a broader range of and Directive 2004/17/EC coordinating the procurement
products, steps must be taken to produce and publish procedures of entities operating in the water, energy, transport
information on the environmental impact of products and postal services sectors) were adopted in 2004. The main
throughout their life cycle. Life-cycle inventories (LCIs) and life- objectives of the new directives are to simplify, clarify and
cycle analyses (LCAs) are effective instruments to this end, as modernise the procedures (notably through the introduction
are other tools designed to permit rapid environmental impact of electronic or e-procurement). The basic principles of non-
monitoring. The Green Paper notes that eco-design guidelines discrimination and transparency remain at the core of public
and a general strategy for integrating the environment into the procurement law and they stress the possibilities indicated by
design process could be used as instruments to promote the the Commission in its interpretative communication
life-cycle concept within companies. COM(2001) 274 on the possibilities for integrating
environmental considerations into public procurement.
Directive 2005/32/EC establishes a framework for the setting of
eco-design requirements for energy-using products, In February 2004, the Commission adopted COM(2004) 130
amending previous directives (92/42/EEC, 96/57/EC and on the integration of environmental aspects into European
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4 10
standardisation. This enables contracting authorities to ask fertilisers and pesticides, disease prevention, increased harvest,
for products with environmentally friendly production etc. However, GMOs have raised widespread public concern
methods or to award extra points for products manufactured about their possible impact on human health and the
as such. Other relevant provisions on ‘green’ public environment. The Community has adopted several directives,
procurement relate to: aiming at the safe use of GMOs, including a regulatory system
— environmental considerations and characteristics as award on the deliberate release of GMOs into the environment and
criterion; procedures for the authorisation, supervision and labelling of
genetically modified food and feed (see 4.10.8). Regulation
— environmental characteristics in terms of performance or (EC) No 258/97 on novel foods and novel food ingredients was
functional requirements; adopted after a long process of conciliation.
— information on obligations related to environmental
E. Nanotechnology
protection;
Nanotechnology deals with the manipulation of atoms or
— environmental management measures as a means to molecules to produce materials, devices and new
prove a tenderer’s capacity to execute a specific works or technologies. It involves the ‘nano-scale’ construction, atom by
service contract; atom and molecule by molecule, of new devices possessing
— explicit preference for EMAS (and equivalent means of extraordinary properties. Nanotechnology uses the individual
proof ) when asking for environmental management atoms directly and, through their manipulation and through
measures, as a way to certify the measures put in place. the application of assembly processes, groups of atoms are
formed with a view to manufacturing nanomaterials.
B. Action plan for sustainable consumption, production
and industry In 2004, the Commission presented an communication
entitled ‘Towards a European strategy for nanotechnology’
Current consumption and production patterns have led to
(COM(2004) 338). In 2005, the Commission published
increased emissions of greenhouse gases, pollution and the
COM(2005) 243 ‘Nanosciences and nanotechnologies: an
depletion of natural resources. More sustainable consumption
action plan for Europe 2005–09’, defining actions for the
and production could be achieved in Europe without
‘immediate implementation of a safe, integrated and
additional costs for companies and households, while bringing
responsible strategy for N & N [nanosciences and
benefits. In July 2008, the EC proposed a package of actions
nanotechnologies]’. This action plan complements the
and proposals (COM(2008) 397) to improve the environmental
Commission’s strategy on life sciences and biotechnology.
performance of products and stimulate the demand for more
sustainable goods and production technologies. EU industry Recent concern on lack of toxicity data on nanomaterials and
will be encouraged to take up new opportunities and innovate its impacts on health and the environment have become a
in order to ensure its continued leadership in environmental challenge to the safe commercialisation of nanotech products,
performance. The action plan also explores means for requiring an increased investment and coordination of
promoting sustainable production and consumption research and development in the EU. The Commission
internationally. published a scientific opinion on the appropriateness of the
EU technical guidance documents for chemicals with regard
C. Environmental technology action plan (ETAP) to nanomaterials in August 2007 and adopted in February
Environmental technologies constitute an important bridge 2008 a recommendation on a code of conduct for
between the Lisbon strategy and sustainable development, nanotechnology. Furthermore, in June 2008 the Commission
having the potential to contribute to growth while at the same published a communication on regulatory aspects of
time improving the environment and protecting natural nanomaterials (COM(2008) 366 final).
resources. The environmental technology action plan (ETAP),
as adopted in January 2004 (COM(2004) 38), aims at
supporting innovation in, and developing and using,
environmental technologies. It consists of: a survey of The integrated product policy strategy developed in the
promising technologies that could address the main Commission Green Paper is fully in line with the objectives
environmental problems; identification, with stakeholders, of and ideas of the European Parliament (as underlined on
the market and institutional barriers that are holding back various occasions). The European Parliament has stressed the
development and use of specific technologies; and an need for environmental criteria to be incorporated into
identification of a targeted package of measures. government procurement procedures, and has expressed the
view that a more exhaustive study should have been carried
D. Biotechnology out into the success and failures of existing IPP policies, such
New biotechnology techniques have the potential to deliver as the European eco-label scheme and the directive on
improved food quality and environmental benefits through, packaging. It also regretted the lack of clear objectives with
amongst others, agronomically enhanced crops. Genetically timetables and the lack of methods and indicators for
modified organisms (GMOs) may be linked to reduced use of monitoring IPP.
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Furthermore, the EP felt that the subsequent communication provisions allowing greener procurement in public
in 2003 provided only limited guidance on how to move procurement directives.
society in the direction of truly sustainable systems for In March 2008 the European Parliament and the Council
product development and design, and called on the adopted a report on the Commission proposal of December
Commission to formulate tangible objectives aimed at 2006, amending the eco-design directive.
establishing coherence and consistency in the area of
product-related environmental protection. The European g Yanne Goossens
Parliament also played a strong role in the introduction of July 2008
4.11. Consumer protection and public health
4.11.1. Consumer policy: principles and instruments

Consumer protection in the EU is taking shape with the Council resolution of 1975 and it is becoming an increasingly
important European policy, especially since the completion of the internal market. Educating and providing the consumer
with legal protection has become one of the greatest challenges.
Legal basis actions shall not prevent any Member State from maintaining
or introducing more stringent measures as long as they are
Articles 95 and 153 of the Treaty establishing the European
compatible with the EC Treaty.
Community (EC).
As a consequence, consumer policy is, nowadays, part of the
Objectives Union’s strategic objective of improving the quality of life of all
Article 95 is the legal basis for the measures of harmonisation its citizens. In addition to direct action to protect their rights,
which have as their object the establishment of the internal the Union ensures that consumer interests are built into EU
market. It also emphasises the objective of a high level of legislation in all relevant policy areas (Council resolution of
protection, taking into account any new development based on 31 December 1986). It is important that all 460 million citizens
scientific facts, when concerning consumer protection measures. in the EU benefit from the same high level of consumer
protection (Council resolution of 9 November 1989 on future
Article 153, as modified by the Amsterdam Treaty, introduced a priorities for relaunching consumer protection policy). EU
legal basis for a complete range of actions at European level. It legislation, cooperation with the national authorities, common
stipulates that ‘the Community shall contribute to protecting actions, co-regulation between consumer and business
the health, safety and economic interests of consumers as well organisations, good practice guidelines and support of
as to promoting their right to information, education and to consumer organisations are all considered major instruments.
organise themselves in order to safeguard their interests’. It also
provides for greater consideration to be given to consumer Achievements
interests in other EU policies. Article 153 strengthens, in this
sense, Article 95 and broadens its remit beyond single market A. General
issues to include access to goods and services, access to the EU action in favour of consumers has started in the form of a
courts, the quality of public services, and certain aspects of series of action plans, beginning with the Council resolution of
nutrition, food, housing and health policy. It also states that EU 14 April 1975.
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Common policies Consumer protection
4 11 and public health
Following the completion of the single market, consumer Decision No 20/2004/EC establishing a general framework for
policy objectives have now to be considered as part of the EU financing Community actions in support of consumer policy
major policies. provides that the Commission shall be assisted by an advisory
committee (see also Decision 2003/709/EC).
The most recent programme on the strategy for consumer
policy at European level for the period 2002–06 (Council 2. Consumer education
resolution of 2 December 2002) sets out three mid-term The EU has organised actions for consumer education at
objectives, implemented through actions in a short-term various stages, for example in primary and secondary schools
rolling programme (Decision No 20/2004/EC), which will be with the gradual inclusion of consumer education in school
regularly reviewed: syllabuses. The Commission has also piloted teacher-training
— a high common level of consumer protection; schemes.
— effective enforcement of consumer protection rules; The draft 2007–13 programme aims to introduce other special
actions in this sense, such as the support for the creation of
— involvement of consumer organisations in EU policies. Master courses on consumers’ rights and consumer policy at
EU consumer policy aims nowadays to: University level.
— guarantee essential health and safety standards, so that 3. Consumer information
buyers are confident about making cross-border purchases The ability of consumers to protect themselves is directly
and sure that the products are safe (see in this sense the linked to knowledge. Broad policy lines included: the
numerous European normative acts on the Community transparency of prices; product information; the development
eco-label); of consumer information services; increased comparative
testing of products.
— guarantee that they are protected against illegal and
abusive practices; A first step was reached with Directive 98/6/EC, which
established common rules for the indication of the prices of
— enable individuals to be informed and understand policies
products offered in the internal market.
that affect them;
Directives 90/313/EEC and 2003/4/EC introduced rules on
— establish a coherent and common environment across the
public access to environmental information.
Union for an effective enforcement of consumer protection
rules; The EU has set up European consumer information centres
(ECC-Net) to provide information and handle consumer
— ensure that consumer’s concerns are integrated into the
complaints and has reinforced the link with and between
whole range of relevant EU policies from environment and
consumer organisations. A parallel network, FIN-NET, fulfils the
transport to financial services and agriculture.
same role for complaints about cross-border financial services.
The Commission estimates that a major future objective is to
The Commission also published a practical guide for
harmonise and simplify all rules and actions in the area of
consumers.
consumer protection involving nowadays many directives, in
addition to the case-law and the various rules of the Member 4. Legal protection of consumer rights
States. Simplification of existing rules, where possible, could One of the major assets to be dealt with is, since the
help both consumers (access to a greater choice of products Amsterdam Treaty, the guarantee of the highest possible level
at better prices) and businesses (reducing their burdens). The of effective legal protection of consumer interests, via
methods of achieving this simplification are the adoption of administrative, jurisdictional and non-jurisdictional procedures.
new directives or the adoption of framework directives to be
Almost all directives have introduced rules concerning
supplemented by targeted directives and national rules. The
jurisdictional and alternative dispute resolutions that
method of framework directives is estimated by the
consumers can use to protect their rights when intra-national
Commission to be more effective in combination with the
conflicts arise, in order to guarantee the effectiveness of the
current self-regulation rules or codes of good conduct and the
actions and avoid excessive burdens and costs for the
voluntary undertakings from businesses with regard to
consumers themselves, in particular with the alternative
consumers (amended proposal for a decision establishing a
dispute resolution (ADR) procedures and the injunctions.
programme of Community actions in the field of health and
consumer protection policy 2007–13 (COM(2006) 235 final)). 5. Scientific support
Decision 93/53/EEC set up a scientific committee for
B. Sectoral measures designations of origin, geographical indications and
4.10.2. certificates of specific character.
1. Consumer groups Three scientific steering committees were created to bring
EU institutions wish to involve consumers’ interests wider scientific experience and overview into questions
representatives. related to consumers by Decision 2004/210/EC. The advice of
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the scientific committees are now public (including on the furtherance of the internal market to the recognition of the
Internet). consumer protection as part of the drive to improve the
objective of establishing a ‘citizens’ Europe’. The introduction of
6. Warning systems the co-decision procedure and the widening of the areas of
Existing information networks are: the European consumer legislation to be adopted under the qualified majority voting
centres network ‘Réseau CEC’ or ‘ECC-Net’; RAPEX (a system for procedure in the Council gave Parliament the power to
the rapid exchange of information on non-food products); a increase Community action in this area.
rapid alert system in case of food risks; a network for the
Parliament has been particularly active in ensuring higher
surveillance and control of communicable diseases; the
budgetary provisions for:
European Centre for Disease Prevention and Control; the
European judicial network; the Solvit network (the internal — information and the education of consumers;
market problem solving system). An internal market ‘product — the development of consumer representation in the
warning system’ exists now in the Commission and is at the Member States;
disposal of consumers for complaints.
— the need for a detailed consumer protection policy;
Role of the European Parliament — a greater coordination at EU level of the activities of

national consumer groups;
The strong and persistent pressure exerted by the Parliament
for consumer concerns to be dealt with comprehensively by — the need for European consumer information centres.
the other EU institutions has brought to the Single European
Act modifications which shifted consumer protection policy g Azelio Fulmini
from a technical harmonisation of standards policy in June 2006
4.11.2. Consumer protection measures

European measures for consumer protection aim to protect the health, safety and economic and legal interests of
European consumers, wherever they live or travel and wherever they buy in the EU. Several areas, such as drugs, GMOs, the
tobacco industry, cosmetics, toys and explosives, are subject to EU regulation in this regard.
Legal basis pollution-related diseases, injury prevention and rare diseases).

Articles 95 and 153 of the Treaty establishing the European The precautionary principle may be invoked where urgent
Community (EC). measures are needed to face a danger to public health.
Decision 2004/210/EC set up three advisory scientific
committees (consumer safety, public health and the
Objectives environment). The decision of 15 December 2004 and
— To ensure that all consumers in the Union, wherever they Regulation (EC) No 58/2003 set up an executive agency.
live, travel or shop in the EU, enjoy a high common level of
protection against risks and threats to their safety and 2. Foodstuffs safety legislation and genetically modified
economic interests. organisms (GMOs)
— To increase the ability of consumers to defend their own Directives 90/496/EEC, 94/54/EC, 1999/10/EC, 2000/13/EC and
interests. Regulations (EC) No 1468/1999, (EC) No 178/2002 and (EC) No
1304/2003 harmonised the rules on labelling, presentation and
advertising of foodstuffs and established the European Food
Achievements
Safety Authority (EFSA).
A. Protection of consumers’ health and safety
Directive 2001/18/EC and Regulations (EC) No 1830/2003 and
1. Community action in the field of public health
(EC) No 65/2004 strengthened EC rules on the release of
Directive 2001/37/EC and Decision 2003/641/EC harmonised GMOs into the environment and improved the efficiency and
national rules on tobacco products. transparency of the authorisation procedures for placing them
Decision No 1786/2002/EC adopted a 2003–08 programme on the market. It introduced a common methodology for risk
(health, cancer, drug addiction, health surveillance and assessment, a mandatory public consultation safety
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mechanism and GMO labelling and traceability, in accordance 6. European exchange of information and surveillance
with the precautionary principle. systems
3. Medicinal products Decisions 93/683/EEC and 93/580/EEC established a
European home and leisure accident surveillance system
Directive 89/381/EEC (as amended) contains special provisions
(EHLASS), a regular information system on accidents at home
to promote particularly high standards for medicinal products
and during leisure activities and a Community system for the
derived from human blood.
exchange of information between Member States on the
Directive 2001/83/EC introduces a code relating to medicinal dangers arising from the use of consumer products, except for
products for human use (governing production, placing on pharmaceuticals and products for trade use.
the market, distribution and utilisation). The good practices
regarding clinical trials for medicinal products for human use B. Protection of consumers’ economic interests
are laid down in Directive 2003/94/EC. Directive 92/28/EEC 1. Information society services, electronic commerce and
states rules concerning advertising medicinal products for electronic and cross-border payments
human use. Directive 2000/31/EC covers the liability of service providers
Set up in 1993, the European Medicines Agency (EMEA) established in the EU for services (services between
manages the procedures for the authorisation of marketing of enterprises, services between enterprises and consumers,
pharmaceutical products. No medicinal product may be services provided free to the recipient which are financed, for
placed on the market unless an authorisation has been issued. example, by advertising income or sponsoring), online
electronic transactions (interactive telesales of goods and
4. General product safety system services and online purchasing centres in particular), and
Directive 2001/95/EC organises a general product safety online activities such as newspapers, databases, financial
system requiring the respect of standards by any product put services, professional services (solicitors, doctors, accountants
on the market for consumers including all products that provide and estate agents), entertainment services (video on demand),
a service, products which are not eatable but could easily be direct marketing and advertising and Internet access services.
confused with foodstuff by their appearance, smell or packaging
Directive 2002/38/EC stipulates rules on taxation for services
(Directive 87/357/EC), excluding second-hand products and
supplied in electronic form over electronic networks
antiques. Distributors and manufacturers must provide
(information, cultural, artistic, sporting, scientific, educational,
consumers with the necessary information, take the necessary
entertainment or similar services as well as software, computer
measures to avoid such threats (e.g. withdraw products from the
games and computer services).
market, inform consumers, and recall products which have
already been supplied to consumers), monitor the safety of Directive 97/5/EC and Regulation (EC) No 2560/2001 ensure
products and provide the documents necessary to trace the that charges for cross-border payments in euros (cross-
products. If a product poses a serious threat calling for quick border credit transfers, cross-border electronic payment
action, the Member State involved immediately informs the transactions and cross-border cheques) are the same as those
Commission via RAPEX, a system for the rapid exchange of for payments in that currency within a Member State.
information between States and the Commission.
Directive 98/26/EC reduces the risks associated to the
5. Safety of cosmetic products, explosives for civilian use participation in payment and security systems. It lays down
and toys common rules stating that transfer orders and netting must be
Various directives (80/1335/EEC, 82/434/EEC, 83/514/EEC, legally enforceable and cannot be revoked once they have
85/490/EEC, 93/73/EEC, 95/32/EC and 96/45/EC) have been been entered into the system. The insolvency of a participant
adopted to improve the safety of cosmetic products, as well may not have retroactive effect and the insolvency law of the
as protecting consumers by providing for ingredient State whose system is involved is applicable.
inventories and more informative labelling. Directives 2002/58/EC, concerning the processing of personal
Safety requirements for explosives for civilian use and data and the protection of privacy in the electronic
similar products such as explosives and pyrotechnic articles communications sector, and 2002/22/EC, concerning the
are set out in Directives 93/15/EEC, 1999/45/EC and 2004/57/ ‘universal service’ and the users’ rights related to electronic
EC and Decision 2004/388/EC. The directives do not apply to communications and services, dealt with consumer protection.
explosives for military or police use and munitions. 2. TV without frontiers
Toy safety requirements (mechanical and physical danger, Directive 89/552/EEC, as amended, ensuring the free
toxicity and flammability, toys for children less than three years movement of broadcasting services preserves certain
old) are stipulated by Directives 88/378/EEC, as amended, and public interest objectives, such as cultural diversity, the right
76/769/EEC and by Decisions 93/465/EEC and 1999/815/EC. of reply, consumer protection and the protection of minors.
The Standardisation Committee (CEN) revises and develops The provisions relate to, inter alia, ethical considerations (in
new standards. Toys that meet these standards bear the ‘CE’ particular the protection of minors — programmes broadcast
conformity marking. in un-encoded form are to be preceded by an acoustic
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warning or identified by a visual symbol) and compliance this context, Member States will invest the jurisdictional or
with criteria concerning advertisements for alcoholic administrative bodies with effective powers.
beverages and teleshopping. Advertising of tobacco and
Comparative advertising is ‘any advertising which explicitly or
medicines, programmes involving pornography or extreme
by implication identifies a competitor’. It is permitted if it: is not
violence are prohibited. Events of major importance for
misleading; compares comparable goods or services;
society are to be broadcast freely in un-encoded form, even if
compares objectively; does not create confusion; does not
exclusive rights have been purchased by pay-TV channels.
discredit or denigrate; relates to products with the similar
3. Distance selling contracts and contracts negotiated designation of origin; does not take unfair advantage; does not
away from business premises present goods or services as imitations or replicas of protected
trademark or trade-name goods or services.
Directives 85/577/EEC, as amended, and 2002/65/EC,
amending Directives 90/619/EEC, 97/7/EC and 98/27/EC, 6. Liability for defective products and price indication
protect the consumer in respect of contracts: negotiated at a Directive 85/374/EEC, modified by Directive 1999/34/EEC,
distance (via the press and post, television, home computer, establishes the principle of objective liability or liability without
fax and telephone); stipulated away from business premises; fault of the producer in cases of damage caused by a defective
offered without the express wish of the consumer; in respect product. The injured consumer seeking for compensation
of which the consumer receives a visit from or takes part in an needs to prove the damage, a defect in the product and a
excursion organised by a trader. The consumers must be causal link, within three years.
informed in advance and by writing of: identity and the
Directive 98/6/EC on unit prices obliges traders to indicate sale
address of the supplier; characteristics of the goods or services;
prices and prices per measurement unit in order to improve
their price; delivery costs; arrangements for payment, delivery
and simplify comparisons of price and quantity between
or performance; the existence of a right of withdrawal; period
products on the market.
for which the offer or the price remains valid and the
minimum duration of the contract; cost of using the means of 7. Consumer credit and insurance
distance communication. Commission recommendation Directive 87/102/EC, as amended, aimed to make uniform the
92/295/EEC introduced a code of practice. level of protection of rights enjoyed by consumers in the
single market. Credit agreements are to be made in writing
4. The sale of goods and guarantees, unfair terms in
and must state the annual percentage rate of charge and the
contracts and unfair commercial practices
conditions under which it may be amended. The consumers
Directives 93/13/EEC and 1999/44/EC harmonise national must be informed on any change of the annual rate of interest
provisions on the sale of consumer goods (the principle of or of the relevant charges and may discharge their obligations
conformity of the product with the contract) and before the fixed time, with an equitable reduction in the cost
associated guarantees in order to ensure a uniform level of of the credit (communication of the Commission of 1 March
protection. A contractual term not individually negotiated 2001).
(particularly in the context of a pre-formulated standard
The harmonisation of the laws on compulsory insurance
contract) shall be regarded as unfair if, contrary to good faith, it
against civil liability (Directive 72/166/EEC, as amended, on the
causes a significant imbalance in the parties’ rights and
use of vehicles and Regulation (EC) No 785/2004 on insurance
obligations, to the detriment of the consumer.
requirements for air carriers and aircraft operators), life
Directive 2005/29/EC, to be implemented by the end of 2007, insurance (Directive 2002/83/EC), cross-frontier non-life
simplified existing EC legislation. Unfair commercial practices insurance (Directives 88/357/EEC and 92/49/EEC) and legal
(misleading and aggressive practices, ‘sharp practices’, such as expenses insurance (Directives 87/343/EEC and 87/344/EEC)
pressure selling, misleading marketing and unfair advertising, also concern the protection of consumers’ economic interests.
and practices which use coercion as a means of selling) are 8. Package holidays and timeshare properties
prohibited, irrespective of the place of purchase or sale. Criteria
Directive 90/314/EEC protects consumers purchasing package
to determine aggressive commercial practice (harassment,
holidays within the EU stating that: the information contained
coercion and undue influence) and a ‘blacklist’ of unfair
in the brochure is binding on the organiser; if the consumer
commercial practices (pyramid schemes, unsolicited supply or
withdraws from the contract or if the organiser cancels the
use of bait advertising, when the low-priced product is not
package, the consumer is entitled either to take an alternative
available, or use of advertorial — advertisement written in the
package or to be reimbursed; where appropriate, the
form of editorial copy) are included.
consumer is entitled to be compensated for non-performance
5. Comparative and misleading advertising or improper performance of the contract, except cases of fault
or force majeure.
Directives 84/450/EEC, 97/55/EC and 2005/29/EC harmonise
national legislations. The Member States will ensure that Directive 94/47/EC covers the obligation of information on the
effective action is taken at court, or before a competent constituent parts of the contract and the right to withdraw
administrative body, in the case of misleading advertising. In without giving any reason within 10 days, paying exclusively
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those expenses effectively incurred. The purchaser’s right of be opened at the competent national courts level, against
withdrawal may be exercised, with no costs, within three infringements (misleading advertising, unfair commercial
months if the information required by the directive is not practices, contracts negotiated away from business premises,
included in the contract. consumer credit, package travel, medicinal products for
9. Air transport human use, unfair contractual terms, time-shares, distance
contracts, sale of consumer goods and associated guarantees)
Regulations (EC) No 261/2004 and (EC) No 2027/97, as
made by commercial operators from other countries.
amended, establish common rules on compensation and
Consumers associations may seek to: stop or prohibit, under
assistance to passengers in the event of denied boarding and
an urgent procedure, any illegal act; adopt the needed
cancellation or long delay of flights and on air carrier liability
measures to eliminate the effects of the infringement; order
(passenger and baggage), in case of accidents. Passengers
the payment of a penalty in the event of failure to comply with
now have the right to demand a cash compensation payable
the former decision within the specified time limit.
within one month under the rules displayed at airports.
2. European judicial network in civil and commercial
Regulation (EEC) No 2299/89, as amended, on computerised
matters and obligation to cooperate for national
reservation systems (CRS) for air transport products establish
authorities
obligations for the system vendor (to allow any carrier on an
equal basis) and for the carriers (to communicate with equal Decision 2001/470/EC established such a network to simplify
care, and simultaneously, information to all systems). the life of citizens facing cross-border litigation by improving
the judicial cooperation mechanisms between Member States
Regulation (EEC) No 2409/92 introduces common criteria and in civil and commercial matters and by providing them with
procedures governing the establishment of the air fares and air practical information to facilitate their access to justice.
cargo rates charged by air carriers on air services within the
Community. Regulation (EC) No 2006/2004 establishes a network of
national authorities responsible for the effective enforcement
Regulation (EC) No 2320/2002, as amended, introduces of EC consumer protection law and obliges them, since
common rules in the field of civil aviation security standards, 29 December 2005, to cooperate to guarantee the
following the criminal acts of 9/11 (11 September 2001). enforcement of EC law and to stop any infringement, using
10. European consumer centres network (Euroguichets) appropriate legal instruments as the injunctions, in the case of
In the European consumer centres network (ECC-Net), intra-Community infringements.
Euroguichets give information and assistance to consumers
within the context of cross-border transactions. This network Role of the European Parliament
also works together with other European networks, notably
Parliament has been at the origin of most of the adopted
FIN-NET (financial), Solvit (internal market) and the European
measures (inter alia, European Food Safety Authority, European
judicial network in civil and commercial matters.
Medicines Agency, GMOs, safety in the areas of cosmetics,
C. Protection of consumers’ legal interests tourism, unfair contract terms, distance selling, door-to-door
1. Alternative dispute resolution (ADR) procedures and sales, use of hormones, exports of various dangerous
injunctions substances as pesticides, greater protection to workers and
consumers in the destination countries for EU exports, and
Recommendation 98/257/EC, Decision No 20/2004/EC and the
Directive 76/768/EEC on animal experiments for cosmetic
Council resolution of 25 May 2000 lay down the principles to
products).
be followed in ADR proceedings, aimed to guarantee the
single consumer with cheaper and faster intra-national legal Parliament has also supported traditional food and producers
remedies. located in isolated areas.
Directive 98/27/EC, as modified, harmonises existing EU and
national law and, in order to protect the collective interests of g Azelio Fulmini
consumers, introduces the ‘actions for injunctions’ which can June 2006
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4.11.3. Public health
The Treaty of Rome did not put in place a health policy. This matter was addressed by provisions relating to health or
safety. Health policy has played an increasingly important role since the end of the past century so the Directorate-General
for Health and Consumers was created. A new programme for 2003–09 will replace the eight previous programmes in the
public health field.
Legal basis — Mutual assistance: This is provided in the event of a

disaster or extremely serious illness.
The EC Treaty establishing the European Community (EC),
whilst not introducing an EU health policy, nonetheless takes a The emergence of drug addiction, cancer and AIDS (among
number of steps in that direction. Article 152 stipulates that: others) as major health issues, coupled with the increasingly
‘a high level of human health protection shall be ensured free movement of patients and health professionals within the
in the definition and implementation of all Community EU, pushed public health ever further on to the EU agenda.
policies and activities’ and that ‘by way of derogation from Major initiatives launched included the 1987 ‘Europe against
Article 37’ (CAP), the Council will adopt ‘measures in the cancer’ and the 1991 ‘Europe against AIDS’ programmes. In
veterinary and phytosanitary fields which have as their addition, several key resolutions were adopted by the Council’s
direct objective the protection of human health’. These health ministers on health policy, health and the environment,
measures, plus measures concerned with human blood and and monitoring and surveillance of communicable diseases.
organ quality and incentive measures designed to protect and
improve human health, are subject to qualified majority voting B. Developments following the Maastricht Treaty
in the Council. In November 1993 the Commission published a
communication on the framework for action in the field of
public health, which identified eight areas for action.
Objectives
1. Health promotion
Historically, EU health policy originated from health and safety
This Community action programme focused on promoting
provisions, and later developed as a result of the free
healthy lifestyles and behaviour, particularly in the areas of
movement of people and goods in the internal market, which
nutrition, alcohol consumption, tobacco and drugs, medicines
required coordination in public health. In harmonising
and medication.
measures to create the internal market, a high level of
protection formed the basis for proposals in the field of health 2. Health monitoring
and safety. This programme, based on cooperation, is less than that
proposed by Parliament, which wanted a specific budget and
Various factors, including the BSE crisis towards the end of the
much tighter specifications for an EU, as opposed to Member
20th century, put health and consumer protection high on the
State, programme, including a centre for data collection.
political agenda. As a result, DGXXIV (renamed the Health and
Consumers DG) was considerably reinforced. 3. Cancer
The ‘Europe against cancer’ programme ran until the end of
2002. New areas of activity include epidemiological studies to
Achievements
measure the impact of cancer on the population, and research
A. Early development collaboration and dissemination. In recognition of the strong
Despite the absence of a clear legal basis, public health policy link between cancer and lifestyles, a special part of the plan is
had developed in several areas prior to the current Treaty. dedicated to alcohol consumption, diet and, most importantly,
These included those listed below. smoking, both active and passive. This runs in conjunction
with existing EU legislation on tobacco, which includes:
— Medicines: Legislation introduced since 1965 sought to
achieve high standards in medicine research and — a Council resolution on banning smoking in public places
manufacturing, harmonisation of national drug licensing (1989);
procedures, and rules on advertising, labelling and — two directives on the labelling of tobacco products with
distribution. obligatory health warnings as well as tar and nicotine
yields, and also banning oral tobacco products (1989,
— Research: Medical and public health research programmes
1992), and a directive on the maximum tar yield of
date back to 1978 on subjects such as age-, environment-
cigarettes (1990);
and lifestyle-related health problems, radiation risks, and
human genome analysis, with special focus on major — agreement being reached by Parliament and the Council
diseases. on the text of a new directive to replace Directive 98/43/EC
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(which was the object of a successful legal challenge) on effectiveness because of the dilution caused by their disease-
the advertising and sponsorship of tobacco products. by-disease approach. Calls were made for a more horizontal,
Together with the directive on television advertising of inter-disciplinary approach concentrating on areas where EU
tobacco products, this directive will ban the advertising action could produce ‘added value’.
and sponsorship of tobacco products in the EU. 2. The 2003–09 programme
4. Drugs In May 2000 the Commission put forward a proposal for a new
Drugs is the only major scourge to be specifically mentioned programme to replace the existing eight programmes with a
in the EU Treaty and recognised in the Commission’s single, integrated, horizontal scheme. The proposal was
communication as a multi-faceted problem linked to social adopted after a long co-decision procedure and the final
exclusion and unemployment. The EU set up a European decision was published in October 2002. The scheme came
Committee to Combat Drugs (CELAD) in 1990, and a European into effect on 1 January 2003 to run for six years with a budget
Monitoring Centre for Drugs and Drug Addiction (based in of EUR 312 million. The new programme will focus on key
Lisbon) in 1995. The EU has also signed the UN Convention priorities where a real difference can be made. It focuses on
against Illicit Traffic in Narcotics, as well as developing bilateral three strands of action, as listed below.
contacts with producer countries. a. Mutual exchange of information
5. AIDS and communicable diseases This concerns knowledge about people’s health, health
The current programme comprises information, education and interventions and health system functioning. The inclusion of
preventive measures to combat AIDS and other related health system comparisons is a new element here since this
communicable diseases. Emphasis is also placed on had always been considered a purely national matter. In terms
collaborative research, international cooperation and of organisation it still is, but systems have much to learn from
information pooling. The Commission has also proposed the each other and Court of Justice decisions on citizens seeking
creation of a network for the epidemiological surveillance and medical help in other Member States have increased the
control of AIDS and other communicable diseases such as CJD. importance of this aspect, as has the fact that Member States
face the same kinds of problems in providing health services
6. Injury prevention
to an increasingly elderly population.
This programme focuses on home and leisure accidents and
targets children, adolescents and older people. Activities are b. Strengthening rapid response capacity
complementary to those pursued in other fields such as It is now seen as essential for the EU to have a rapid response
consumer protection, transport, civil protection and the capacity to react to major health threats in a coordinated
EHLASS programme. manner, especially given the threat of bioterrorism and the
potential for worldwide epidemics in an age of rapid global
7. Pollution-related diseases
transport making it easier for diseases to spread.
Many of the provisions of the fifth environmental action plan,
on energy, transport and agriculture, will have a significant c. Targeting actions to promote health and disease prevention
indirect health impact. The pollution-related diseases This is to be undertaken by tackling the key underlying causes
programme concentrates on improving data and risk of ill health relating to personal lifestyles and economic and
perception as well as disease-specific actions for respiratory environmental factors. It will entail, in particular, working
conditions and allergies. closely with other EU policy areas such as the environment,
transport, agriculture and economic development.
8. Rare diseases
This programme targets those diseases with a prevalence rate In addition, it will mean closer consultation with all interested
of less than five people per 10 000 EU population. It is parties and greater openness and transparency in decision-
intended to create an EU database and information exchange making. A key initiative in this is the setting-up of an EU Health
to improve early detection and identify possible ‘clusters’, as Forum as a consultative mechanism.
well as encourag the setting-up of support groups. Provisions have been made for structural arrangements,
9. Other activities establishing a new programme committee and strengthening
the Commission’s coordinating and technical capabilities by
Activities outside the eight programmes have included
externalising certain functions, and possibly by creating an
tobacco control, surveillance and control of communicable
executive agency for certain functions once a regulation on
diseases, safety of blood and blood products and various
the establishment of such agencies has been adopted.
reports and studies.
In addition to projects on specific areas of the three policy
C. Recent developments strands, there will be cross-cutting projects involving elements
1. Evaluation of the current programmes of all three. Projects will be much more clearly linked to policy
The eight programmes carried out between 1996 and 2002 development needs and will be larger than in the past to
were evaluated during 2003. During their lifetime the overall ensure added value at EU level and a measurable and
design of the programmes was criticised for being limited in sustainable contribution to public health. Some projects will
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involve all Member States as well as accession countries, — safety and self-sufficiency in the EU’s supply of blood for
whose inclusion in the programme from an early stage is seen transfusion and other medical purposes;
as essential. — hormones;
In recent years a number of initiatives have been taken to — drugs;
reinforce Community involvement in public health and
consumer protection, notably the establishment of specialised — tobacco and smoking;
agencies in these two areas. Developments include the — breast cancer and women’s health in particular;
setting-up of a European Food Safety Authority, in Parma, Italy,
— ionising radiation;
and a European Centre for Disease Prevention and Control, in
Stockholm, Sweden. The latter was created by Regulation (EC) — an EU health card — a European health card incorporating
No 851/2004 of the European Parliament and of the Council of a microchip containing essential medical data which could
21 April 2004 establishing a European Centre for Disease be read by any doctor;
Prevention and Control, published in the Official Journal of the — BSE and its aftermath, and food safety and health risks;
European Union on 30 April 2004.
— biotechnology and its medical implications;
Role of the European Parliament — the rights of patients to seek medical assistance and care in
other Member States.
Parliament has consistently promoted the establishment of
a coherent public health policy. It has also actively sought In 2005 work was initiated leading to the approval by co-
to strengthen and promote health policy through decision (following a single reading) of a programme of
numerous opinions and own-initiative reports on issues Community action in the field of health, 2007–13
including: (COD/2005/0042A), based on a communication from the
Commission to the European Parliament, the Council, the
— radiation protection for patients undergoing medical European Economic and Social Committee and the
treatment or diagnosis; Committee of the Regions on healthier, safer, more confident
— respect for life and care of the terminally ill; citizens: a health and consumer protection strategy (SEC(2005)
425 and COM(2005) 115 final).
— a European charter for children in hospital;
— research in biotechnology, including organ transplants and g M. Sosa
surrogate motherhood; November 2005
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Common policies An area of freedom,
4 12 security and justice
4.12. An area of freedom, security and justice
4.12.1. An area of freedom, security and justice: general

aspects
The areas of visa, asylum and immigration are now included in Title IV of the EC Treaty and are applied by the Community
method. However, police and judicial cooperation in criminal matters are handled by the method of intergovernmental
decision. The Treaty on the Functioning of the European Union brings other important changes to this policy.
Legal basis — freedom includes free movement of persons, asylum and

legal immigration;
Title IV (Articles 61 to 69) of the Treaty establishing the
European Community (EC) entitled ‘Visas, asylum, immigration — justice includes both civil and criminal matters;
and other policies related to free movement of persons’: these — security includes both internal and external aspects:
provisions, created by the Treaty of Maastricht outside the terrorism, crime, drug trafficking, trade in human beings,
Community context (third pillar), were incorporated in the EC illegal immigration.
Treaty by the Treaty of Amsterdam and to some extent come
under the Community decision-making system. 2. Partial ‘communitarisation’
The Amsterdam Treaty moved a good deal of the Maastricht
Title VI of the Treaty on European Union entitled ‘Provisions on third pillar into the Community sphere, in particular customs
police and judicial cooperation in criminal matters’: these cooperation and judicial cooperation in civil matters (see
provisions remain outside the Community context and are the Section B.3). However, this ‘communitarisation’ is only partial
subject of intergovernmental decisions. insofar as the decision-making procedures and the powers of
the Court of Justice in this respect do not comply with the
Objectives normal rules under Community law.
The gradual creation of an area of freedom, security and justice a. Decision-making procedure (Article 67 EC)
(AFSJ) was introduced by the Treaty of Amsterdam. It replaces i. During a transitional period of five years
the concept of justice and home affairs introduced by the
— The Commission’s right of legislative initiative is shared with
Treaty of Maastricht. As highlighted by the European Council
the Member States (except in a few areas (Article 67(3)).
(Tampere, 15 and 16 October 1999), the aim is to reconcile the
right to move freely throughout the Union with a high degree — Decisions are adopted by the Council acting by a qualified
of protection and legal guarantees for all. majority except in the areas referred to in Article 67(3).
The AFSJ embarked upon a new stage in its development with — Parliament is simply consulted.
the signature of the Constitution in October 2004 and ii. After the transitional period
adoption of the Hague programme in November 2004 and the
Hague action plan in June 2005. — The Commission largely regains its monopoly over
initiative as the Member States’ right of initiative is limited
to calling on the Commission to submit a proposal to the
Achievements Council, a request that the Commission is only required to
examine (Article 67(2)).
A. Developments brought about by the Treaty of
Amsterdam — A few areas become subject to co-decision (between
1. Scope Parliament and the Council) (Article 67(4)), and the Council
may decide (but only unanimously) to apply this system to
The policies which were originally grouped under the heading
other areas (Article 67(2)).
of ‘Justice and home affairs’ (JHA) in the Maastricht Treaty are
quite numerous and diverse. In the Amsterdam Treaty, which b. Jurisdiction of the Court of Justice (Article 68)
entered into force on 1 May 1999, they were enshrined under The Court’s jurisdiction is restricted in relation to ordinary law
three aspects: freedom, security and justice: under the EC Treaty.
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c. P
olice and judicial cooperation in criminal with regard to asylum and immigration in particular, despite
matters remain outside the EC Treaty and thus in the the fact that all of the necessary proposals had been
intergovernmental sphere, although they are subject to some submitted to the Council.
Community rules.
The Hague European Council of 4 and 5 November 2004
d. The entire system is highly complex: it includes three adopted the Hague programme which aims to build upon
types of flexibility clause, seven supplementary protocols, the work achieved during the Tampere programme, which
17 declarations by Member States, several calendars has now expired. The Hague programme sets ambitious
for implementation and the option to engage in closer objectives for the next five years, taking into account the
cooperation. It is thus extremely difficult to implement. objectives set by the Constitution for the creation of the area
B. Developments since Amsterdam of freedom, security and justice. The main steps forward
1. Contributions of the Treaty of Nice concern the adoption of measures for:
It extends the co-decision procedure (Article 67(5)) to: — completion of the second phase of the common asylum
policy by 2010;
— certain measures relating to asylum and refugees provided
that the Council has already adopted legislation defining — the start-up of debate on the possible creation of a
the common rules and basic principles governing these European corps of border guards;
issues; — creation of the Schengen information system (SIS II), due to
— judicial cooperation in civil matters with the exception of be up and running by 2007, and the visa information
aspects relating to family law. system (VIS);
2. Slow rate of progress — creation of the Internal Security Committee as set out in
The Cardiff European Council (June 1998) instructed the the Constitution;
Council and Commission to produce an action plan on the — creation of the European evidence warrant by 2005;
best method of implementing the new provisions. The plan,
— creation of a European police record information system.
approved by the Vienna European Council (December 1998),
establishes a calendar of priorities lasting two and five years. The Hague programme is translated into a series of concrete
measures by the Hague action plan, which was approved by
The Tampere European Council (October 1999) stressed its
the European Council meeting on 16 and 17 June 2005. The
intention to turn the EU into an area of freedom, security and
Hague action plan was updated at the end of 2006. It brought
justice. It called on the Commission to produce a scoreboard
out these objectives:
indicating the progress made and compliance with deadlines.
This scoreboard, which has been in operation since 2000, is — mutual recognition in civil and criminal matters;
updated twice a year and has three objectives: guaranteeing
— creation of a comprehensive EU migration policy;
transparency for citizens, maintaining the momentum
generated by the Tampere European Council and highlighting — improvement of police cooperation and more extensive
any delays that have been identified. operational cooperation;
The December 2001 meeting of the European Council in — fight against terrorism and organised crime;
Laeken provided an opportunity to assess the progress made. — development of the external dimension of justice and
The Commission, in its update of the scoreboard for the home affairs;
second half of 2001, concluded that the situation was positive
as a whole but that certain deadlines had not been respected, — establishment of the new-generation Schengen
notably with regard to immigration and asylum. It noted that information system;
the ‘change of pillar’ had not accelerated the process but that — enlargement of the Schengen area.
progress had been made as regards mutual recognition and
the creation of a range of new cooperation bodies. The 3. List of the main legal texts
Council broadly subscribed to these conditions. a. Action plan of the Council and the Commission on how to
best implement the dispositions in the Amsterdam Treaty
The Seville European Council (June 2002) highlighted the
concerning the creation of the area of freedom, security and
need to develop a common policy in the field of asylum and
justice. (OJ C 19, 23.1.1999 p. 1)
immigration. It stressed the importance of adopting tangible
measures to combat illegal immigration and manage external b. Conclusions of the European Council of Tampere, 15
borders on the basis of two plans adopted in this field during and 16 October 1999
the first half of 2002. c. Treaty establishing the European Community
(consolidated version) (OJ C 325, 24.12.2002)
At the end of 2002, the Commission noted that although the
Title IV (Articles 61 to 69 EC)
impetus given at the Laeken European Council was continuing
to bear fruit in certain areas, this had not made up for the delay — external frontiers
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— asylum policy entails for the achievement of an area of freedom, security and
justice, including a serious lack of parliamentary control.
— immigration and the rights of third-country nationals
Cooperation with the Council is considered to be insufficient.
— fight against fraud and cross-border corruption The EP hopes that the post-Nice process will see the co-
— fight against drug trafficking decision procedure being extended to all areas within justice
and home affairs. Parliament supports very much the
— customs cooperation developments which the Treaty on the Functioning of the
d. Treaty on the European Union (consolidated version) European Union, particularly its Article 294, would bring in the
(OJ C 325, 24.12.2002) field of freedom, security and justice as it would have co-
Third pillar (Title VI, Articles 29 to 42) decision powers in almost all AFSJ matters. Also most decisions
in the Council would take place by qualified majority voting
— police cooperation (QMV), which would increase the speed of development of the
— judicial cooperation in penal matters AFSJ.
— fight against organised crime It is critical of the current system, which encourages the
random initiatives proposed by the Member States instead of
— fight against trafficking in human beings proposals that are coherent and carefully prepared from a
e. Treaty establishing a Constitution for Europe. (OJ C310, strategic point of view.
16.12.2004) As regards the common asylum and immigration policy, the EP
f. The Hague programme notes that moving this area from the third to the first pillar
within the framework of the Treaty of Amsterdam has not
Role of the European Parliament resulted in any greater efficiency and regrets the fact that there
In accordance with Article 39 of the Treaty on European Union, are still many obstacles within the Council.
the European Parliament (EP) holds a debate each year on the Main European Parliament resolutions
progress made in the area of police and judicial cooperation in
— Resolution of 27 October 1999 on the European Council
criminal matters. In actual fact, its annual report covers all of
meeting in Tampere
the progress made in establishing an area of freedom, security
and justice. — Resolution of 10 March 2003 relative to the progresses
realised in 2002 toward the creation of the AFSJ
Parliament fully supports the creation of the AFSJ. Its role is
simultaneously to: — Resolution of 19 December 2003 on the outcome of the
Intergovernmental Conference
— legislate, by participating in the decision-making process;
— Resolution of 11 March 2004 on the progress made in 2003
— provide impetus, by initiating new projects; in creating an area of freedom, security and justice (AFSJ)
— act as a watchdog, by monitoring respect for adoption — Resolution of 8 June 2005 on the progress made in 2004 in
deadlines for texts and their compatibility with civil creating an area of freedom, security and justice (AFSJ)
liberties. (Articles 2 and 39 of the EU Treaty)
Parliament notes that the establishment of such an area is — Resolution of 30 November 2006 on the progress made in
today one of the main priorities of European integration. It the EU towards the area of freedom, security and justice
believes that it is vital to ensure a balance between the aims of (AFSJ) (Articles 2 and 39 of the EU Treaty)
freedom, security and justice, taking account of fundamental
rights and citizens’ freedoms. However, it considers that as a — Resolution of 21 June 2007 on an area of freedom, security
representative of the peoples of the EU, and without prejudice and justice: strategy on the external dimension, action plan
to its formal competences, it should be involved in the implementing the Hague programme (2006/2111(INI))
adoption of all measures, including those adopted within the
framework of the third pillar. It highlights the negative g Joanna Apap
consequences the division between the first and third pillar July 2008
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4.12.2. Asylum and immigration policies
The policies on asylum and immigration are aimed at harmonising asylum procedures of Member States and the
establishment of a balanced approach to the treatment of legal migration and illegal immigration. The Treaties of
Amsterdam and Nice have, one after the other, amended these policies, which are also governed by the Hague
programme, in force since 2005.
Legal basis related to free movement of persons’, which brings together

Article 63 of the Treaty establishing the European Community the most important provisions, is subject to a special
(EC). institutional mechanism providing for derogation on
numerous points from the supranational approach (Article 67,
see below) and allowing for a transitional period — five years
Objectives after the entry into force of the Treaty — before majority
Setting up a common asylum procedure: The aim is to set up a voting is introduced.
harmonised and effective asylum procedure to bring about a
a. Decision-making procedure (Article 67 EC)
common procedure and status for refugees.
i. During a transitional period of five years
Defining a balanced approach to immigration: The aim is to set
— The Commission’s right of legislative initiative is shared
up a balanced approach to dealing with legal migration and
with the Member States (except in a few areas
illegal immigration. Proper management of migration flows
(Article 67(3)).
also entails ensuring a more effective integration policy and
access to rights by third-country nationals within the EU as — Decisions are adopted by the Council acting by a qualified
well as greater cooperation with non-member countries in all majority except in the areas referred to in Article 67(3).
fields, including the readmission and return of migrants. — Parliament is simply consulted.
ii. After the transitional period (see also Section B.1)
Achievements
— The Commission largely regains its monopoly over
A. Developments brought about by the Treaty of initiative as the Member States’ right of initiative is limited
Amsterdam to calling on the Commission to submit a proposal to the
The entry into force of the Amsterdam Treaty on 1 May 1999 Council, a request that the Commission is only required to
marked a new stage in asylum and immigration matters. It examine (Article 67(2)).
provides for the establishment of an ‘area of freedom, security
— A few areas become subject to co-decision (between
and justice’ and gives the EU institutions new powers to
Parliament and the Council) (Article 67(4)), and the Council
develop legislation on immigration and asylum matters. For
may decide (but only unanimously) to apply this system to
the first time it has become possible to talk meaningfully of a
other areas (Article 67(2)).
European asylum policy and a European migration policy.
b. Jurisdiction of the Court of Justice (Article 68)
1. Scope
The Court’s jurisdiction is restricted in relation to ordinary law
The scope of Article 63 EC covers:
under the EC Treaty.
— asylum, refugees and temporary protection;
B. Developments since Amsterdam
— regular immigration (and relevant measures on integration
1. Contributions of the Treaty of Nice
of third-country nationals);
Under the Treaty of Nice visa (see 1.1.4), asylum and
— rights of regular third-country nationals, including the right immigration policies are to be decided mainly by the co-
to reside in another Member State; decision procedure. The shift to qualified majority voting is
— irregular immigration (including return measures). provided for under Article 63 of the EC Treaty for matters
concerning:
2. Communitarisation of asylum and immigration
matters — asylum and temporary protection, provided that the
With the Amsterdam Treaty, the transfer of competence of the Council has already adopted unanimously legislation
third pillar towards the first pillar seemed impressive: all the defining the common rules and basic principles governing
matters listed under Article K.1 of the Maastricht Treaty were these issues;
transferred the first pillar, except for police and judicial — illegal immigration and the repatriation of illegally resident
cooperation in penal matters, which remains in the third pillar. persons — the shift to qualified majority voting and co-
The new Title IV ‘Visas, asylum, immigration and other policies decision would have taken place as of 1 May 2004 (without
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the need for a unanimous decision as initially foreseen by — Council Regulation (EC) No 343/2003 of 18 February 2003
Article 67 EC); establishing the criteria and mechanisms for determining
the Member State responsible for examining an asylum
— regular migration once a ‘common framework’ has been
application lodged in one of the Member States by a third-
completed — which is still not the case.
country national (OJ L 50, 25.2.2003. p. 1)
2. Slow rate of progress
— Council Regulation (EC) No 1560/2003 of 2 September
The Treaty of Amsterdam established a Community
2003 laying down detailed rules for the application of
competence in asylum and immigration matters. However, in
Council Regulation (EC) No 343/2003 establishing the
matters of regular immigration the Council will continue to act
criteria and mechanisms for determining the Member State
unanimously and the European Parliament is simply consulted,
responsible for examining an asylum application lodged in
as the condition of a ‘common framework’ is still far from
one of the Member States by a third-country national
fulfilled. The Hague programme retains the current procedure.
(OJ L 222, 5.9.2003, p. 3)
Decisions will continue to be taken unanimously by 22 States.
— Council Decision 2004/904/EC of 2 December 2004
— By virtue of a protocol annexed to the Treaty of
establishing the second European Refugee Fund for the
Amsterdam, Denmark has no vote.
period 2005–10 (OJ L 381, 28.12.2004, p. 52)
— The United Kingdom and Ireland also abstain from voting,
by virtue of another protocol to the Treaty of Amsterdam, — Council Directive 2004/83/EC of 29 April 2004 on minimum
but an opt-in clause allows them to participate, on a case- standards for the qualification and status of third-country
by-case basis, in texts negotiated by the EU. nationals and stateless persons as refugees or as persons
who otherwise need international protection (OJ L 304,
3. List of the main EU legislative measures and other 30.9.2004, p. 12)
relevant legal texts since the Treaty of Amsterdam
— Council Directive 2005/85/EC of 1 December 2005 on
a. Asylum, refugees and temporary protection (Article 63(1) and
minimum standards on procedures in Member States for
(2) EC)
granting and withdrawing refugee status (OJ L 326,
i. Relevant international legal texts 13.12.2005)
— 1951 Convention of Geneva relating to the status of
— Council Decision 2006/167/EC of 21 February 2006 on the
refugee and the 1967 protocol relating to the status of
conclusion of a protocol to the agreement between the
refugees, the prohibition of expulsion or ‘principle of non-
European Community and the Republic of Iceland and the
refoulement’
Kingdom of Norway concerning the criteria and
— Agenda for protection of the United Nations, 26 June 2002 mechanisms for establishing the State responsible for
ii. The main EU legislative measures examining a request for asylum lodged in a Member State
or in Iceland or Norway (Text with EEA relevance) (OJ L 57,
— Council Decision 2000/596/EC of 20 September 2000 28.2.2006)
establishing a European Refugee Fund (OJ L 252, 6.10.2000,
p. 12) — Council Decision 2006/188/EC of 21 February 2006 on the
conclusion of the agreement between the European
— Council Regulation (EC) No 2725/2000 of 11 December Community and the Kingdom of Denmark extending to
2000 concerning the establishment of ‘Eurodac’ for the Denmark the provisions of Council Regulation (EC)
comparison of fingerprints for the effective application of No 343/2003 establishing the criteria and mechanisms for
the Dublin Convention (OJ L 316, 15.12.2000) determining the Member State responsible for examining
— Council Directive 2001/55/EC of 20 July 2001 on minimum an asylum application lodged in one of the Member States
standards for giving temporary protection in the event of a by a third-country national and Council Regulation (EC)
mass influx of displaced persons and on measures No 2725/2000 concerning the establishment of ‘Eurodac’
promoting a balance of efforts between Member States in for the comparison of fingerprints for the effective
receiving such persons and bearing the consequences application of the Dublin Convention (OJ L 66, 8.3.2006)
thereof (OJ L 212, 7.8.2001, p. 12) — Commission Decision 2006/401/EC of 20 January 2006
— Council Regulation (EC) No 407/2002 of 28 February 2002 laying down detailed rules for the implementation of
laying down certain rules to implement Regulation (EC) No Council Decision 2004/904/EC as regards Member States
2725/2000 concerning the establishment of ‘Eurodac’ for management and control systems, and rules for the
the comparison of fingerprints for the effective application administrative and financial management of projects co-
of the Dublin Convention (OJ L 62, 5.3.2002, p. 1) financed by the European Refugee Fund (notified under
document number 2006/C 51/3) (OJ L 162, 14.6.2006)
— Council Directive 2003/9/EC of 27 January 2003 laying
down minimum standards for the reception of asylum — Council Decision 2006/688/EC of 5 October 2006 on the
seekers (OJ L 31, 6.2.2003, p. 18) establishment of a mutual information mechanism
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concerning Member States’ measures in the areas of — Council Directive 2005/71/EC of 12 October 2005 on a
asylum and immigration (OJ L 283, 14.10.2006) specific procedure for admitting third-country nationals for
— Decision No 573/2007/EC of the European Parliament and the purposes of scientific research (OJ L 289, 3.11.2005)
of the Council of 23 May 2007 establishing the European — Proposal for a Council directive on a single application
Refugee Fund for the period 2008 to 2013 as part of the procedure for a single permit for third-country nationals to
general programme ‘Solidarity and management of reside and work in the territory of a Member State and on a
migration flows’ and repealing Council Decision 2004/904/ common set of rights for third-country workers legally
EC (OJ L 144, 6.6.2007) residing in a Member State (SEC(2007) 1393, SEC(2007)
— Decision No 575/2007/EC of the European Parliament and 1408)
of the Council of 23 May 2007 establishing the European — Proposal for a Council directive on the conditions of entry
Return Fund for the period 2008 to 2013 as part of the and residence of third-country nationals for the purposes
general programme ‘Solidarity and management of of highly qualified employment (SEC(2007) 1382, SEC(2007)
migration flows’ (OJ L 144, 6.6.2007) 1403)
— Council Decision 2007/435/EC of 25 June 2007 establishing ii. Other relevant EU legal measures
the European Fund for the integration of third-country
— Council Directive 2000/43/EC of 19 June 2000
nationals for the period 2007 to 2013 as part of the general
implementing the principle of equal treatment between
programme ‘Solidarity and management of migration
persons irrespective of racial or ethnic origin (OJ L 180,
flows’ (OJ L 168, 28.6.2007)
19.7.2000)
— Proposal for a Council directive amending Directive 2003/109/
EC to extend its scope to beneficiaries of international — Council Directive 2000/78/EC of 27 November 2000
protection (COM(2007) 298 final — CNS 2007/0112) establishing a general framework for equal treatment in
employment and occupation (OJ L 303, 2.12.2000)
iii. What are the next steps in EU policy as regards asylum?
c. Irregular immigration (including return measures)
The Hague programme reinforces the idea of the ‘external (Article 63(3)(b))
dimension of asylum’, i.e. integrating asylum into the EU’s
i. The main EU legislative measures
external relations with third countries. The programme invited
the Commission ‘to develop EU regional protection — Council Decision 2000/261/JHA of 27 March 2000, on the
programmes in partnership with the third countries concerned improved exchange of information to combat counterfeit
and in close consultation and cooperation with UNHCR’ (see travel documents. (OJ L 81, 1.4.2000, p. 1)
COM(2005) 388 final). — Council Directive 2001/51/EC of 28 June 2001
Also, according to the action plan implementing the Hague supplementing the provisions of Article 26 of the
programme, the Commission is to present a proposal before Convention implementing the Schengen Agreement of
the end of 2005 extending the so-called ‘EC long-term resident 14 June 1985 (OJ L 187, 10.7.2001, p. 45)
status’ to refugees. — Council framework Decision 2002/629/JHA of 19 July 2002
b. Regular immigration (Article 63(3)(a) and (4) EC) on combating trafficking of human beings (OJ L 203,
i. The main EU legislative measures 1.8.2002, p. 1).
— Council Directive 2003/86/EC of 22 September 2003 on the — Council framework Decision 2002/946/JHA of 28
right to family reunification (OJ L 251, 3.10.2003, p. 12) November 2002, on the strengthening of the penal
framework to prevent the facilitation of unauthorised entry,
— Council Directive 2003/109/EC of 25 November 2003
transit and residence (OJ L 328 5.12.2002, p. 1)
concerning the status of third-country nationals who are
long-term residents (OJ L 16, 23.1.2004, p. 44) — Council Directive 2002/90/EC of 28 November 2002
defining the facilitation of unauthorised entry, transit and
— Council Directive 2004/114/EC of 13 December 2004 on
residence. (OJ L 328, 5.12.2002, p. 17)
the conditions of admission of third-country nationals for
the purposes of studies, pupil exchange, unremunerated — Council framework Decision 2002/946/JHA of 28
training or voluntary service (OJ L 375, 23.12.2004) November 2002 on the strengthening of the penal
framework to prevent the facilitation of unauthorised entry,
— Council directive and two proposals for recommendations
transit and residence (OJ L 328, 5.12.2002, p. 1)
on the admission of third-country nationals to carry out
scientific research in the European Union (COM(2004) 178 — Council Directive 2003/110/EC of 25 November 2003 on
of 16 March 2004) assistance in cases of transit for the purposes of removal by
air (OJ L 321, 6.12.2003)
— Directive 2005/36/EC of the European Parliament and of
the Council of 7 September 2005 on the recognition of — Council Decision 2004/573/EC of 29 April 2004 on the
professional qualification (OJ L 255, 30.9.2005) organisation of joint flights for removals from the territory
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of two or more Member States, of third-country nationals — Agreement between the Republic of Albania and the
who are the subjects of individual removal orders (OJ L 261, European Community on the readmission of persons
6.8.2004, p. 28) residing without authorisation (OJ L 124, 17.5.2005)
— Council Regulation (EC) No 377/2004, of 19 February 2004, — Agreement between the European Community and the
on the creation of an immigration liaison officers network Russian Federation on readmission (OJ L 129, 17.5.2007)
(OJ L 64, 2.3.2004, pp. 1–4) — Agreement between the European Community and the
— Proposal for a directive of the European Parliament and of Republic of Moldova on the readmission of persons
the Council on common standards and procedures in residing without authorisation
Member States for returning illegally staying third-country — Proposal for a Council decision on the signature of the
nationals (SEC(2005) 1057, COM(2005)391 final — COD agreement between the European Community and
2005/0167) Ukraine on the readmission of persons (COM(2007) 197)
— Commission Decision 2007/675/EC of 17 October 2007 — Agreement between the European Community and the
setting up the Group of Experts on Trafficking in Human former Yugoslav Republic of Macedonia on the readmission
Beings (OJ L 277, 20.10.2007) of persons residing without authorisation (OJ L 334,
ii. What are the next steps in EU policy as regards 19.12.2007)
immigration? — Agreement between the European Community and the
As part of the work under the Hague programme, a policy plan Republic of Montenegro on the readmission of persons
on regular migration, including admission procedures, was residing without authorisation (OJ L 334, 19.12.2007)
presented at the end of 2005. This was built on the results of — Agreement between the European Community and Serbia
the discussions on the Green Paper on an EU approach to on readmission of persons residing without authorisation
managing economic migration (COM(2004) 811 final of 11 (OJ L 334, 19.12.2007)
January 2005, Brussels). The integration of migrants has been
placed at the top of the AFSJ agenda by the Hague — Agreement between the European Community and Bosnia
programme, where the Council reconfirmed the need for and Herzegovina on the readmission of persons residing
greater coordination of national integration policies and EU without authorisation (OJ L 334, 19.12.2007)
initiatives in this field. In view of the next steps on immigration, on 1 September
On the external dimension of migration, the Hague 2005 the Commission published a ‘migration package’
programme establishes that ‘policies which link migration, consisting of four communications.
development cooperation and humanitarian assistance should On 6 June 2007 the Commission presented the Green Paper
be coherent and be developed in partnership and dialogue on the future common European asylum system (CEAS) as a
with countries and regions of origin’. constituent part of an area of freedom, security and justice,
With regard to irregular migration the Hague programme calls emanating from the idea of making the European Union a
for an integrated approach towards return and repatriation single protection area for refugees, based on the full and
procedures. The instruments adopted should cohere with inclusive application of the Geneva Convention and on the
other external policies of the Community that include common humanitarian values shared by all Member States.
migration aspects (e.g. partnerships with the countries of The Hague programme action plan foresees the adoption of
origin or readmission agreements). In light of this, the so-called the proposal for CEAS by the end of 2010.
‘external dimension of asylum and immigration’ has become a
principal focus within the programme. Role of the European Parliament
List of readmission agreements The European Parliament (EP) supports very much the
— Agreement between the Government of the Hong Kong developments which Article 294 of the Treaty on the
Special Administrative Region of the People’s Republic of Functioning of the European Union, as amended, would bring
China and the European Community on the readmission of about in this field because of the extension of its co-decision
persons residing without authorisation (OJ L 17, 24.1.2004) powers as well as qualified majority voting (QMV) to all matters
under Article 63 EC.
— Agreement between the Democratic Socialist Republic of
Sri Lanka and the European Community on the On immigration policy the Constitution would incorporate
readmission of persons residing without authorisation the provisions of the Treaty of Amsterdam. It would provide
(OJ L 124, 17.5.2005) for:
— Agreement between the European Community and the — placing European policy for legal immigration in the
Macao Special Administrative Region of the People’s context of the management of migration flows;
Republic of China on the readmission of persons residing — the creation of a clear legal basis for the integration of
without authorisation (OJ L 143, 30.4.2004, p. 97) third-country nationals.
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The EP actively supports the introduction of a European — Resolution of 9 June 2005 on the link between legal and
immigration policy. On the admission of third-country illegal migration and the integration of immigrants
nationals, it calls for the development of legal means,
— Resolution of 26 October 2005 on an EU approach to
particularly to reduce incentives for illegal immigration.
managing economic migration
Parliament supports ‘controlled immigration’ and considers
that the EU admission policies must take into account — Resolution of 6 July 2006 on the integration of third-
reception capacity and enhanced cooperation with the country nationals
countries of origin.
— Resolution of 6 July 2006 on development and migration
The EP adopted a resolution on 9 June 2005 on the link
— Resolution of 28 September 2006 on the EU common
between legal and illegal migration and the integration of
immigration policy
immigrants. Parliament agreed with the Commission that the
mass regularisation of illegal immigrants is not a solution to the — Resolution of 24 October 2006 on women’s immigration:
problem of illegal immigration. In the absence of a common the role and place of immigrant women in the European
immigration and asylum system, it should be a one-off event, Union
since such measures do not resolve the real underlying
— Resolution of 26 September 2007 on legal migration,
problems. It called upon the Commission to study the Member
including admission procedures capable of responding to
States’ good practices, to be developed in the framework of an
fluctuating information regarding asylum and immigration
information-sharing and early warning system.
matters
In response to the Commission’s Green Paper on an EU
— Resolution of 26 September 2007 on the fight against
approach to managing economic migration, the EP adopted a
illegal immigration of third-country nationals
resolution on 26 October 2005 on economic migration.
Parliament regretted that the Council had decided to On asylum policy, the EP calls for the establishment of a
maintain unanimity and the consultation procedure in the single procedure for the European asylum system (resolution
whole area of legal immigration. Parliament felt that only by of 15 December 2004). It regrets the ‘Council’s inability to
means of the co-decision procedure will it be possible to respect the deadlines laid down by the European Council at
adopt effective and transparent legislation in that field. It Tampere, Laeken, Seville and Thessaloniki for the adoption of
recalled that migrants have made a major contribution to the the texts aimed at introducing the first stage’ (resolution of
prosperity and the economic, cultural and social development 1 April 2004).
of the Member States, and continue to do so. Economic
As for the next stage under the Hague programme, Parliament
migration is a positive human phenomenon which has always
supports the ‘Commission’s new approach’ on asylum.
promoted the development of civilisations and cultural and
technological exchanges. Parliament also regretted that the — It considers that:
Council had not yet managed to adopt a common
• t his new approach should be based on the prerequisite
immigration policy, and has concentrated essentially on the
of the harmonisation of national laws;
punitive aspect (readmission agreements, police checks at
borders, etc.). It indicated that the effective development of a • s uch harmonisation cannot be founded on the lowest
common migration policy with due regard for fundamental common denominator.
rights and international human rights obligations is a priority
— It also rejects:
goal of European integration.
• t he creation of regional protection zones and transit
On the integration of third-country nationals, the European
centres located outside the EU, which might not
Parliament:
guarantee an equivalent level of protection;
— supports the Commission’s idea of civic citizenship; it calls • o
utsourcing of the application process, which deprives
for the grant of political rights, including the right to vote the asylum seeker of democratic scrutiny.
in local and European elections;
The creation of a European asylum policy implies greater
— considers that EU policy must find the golden mean solidarity between the Member States. Such solidarity must
between immigrants’ rights and obligations and those of enable those most exposed to an influx of asylum seekers to
the host society; be assisted by the Union, without such intervention being
— warns that Member States must not misuse integration limited to cases of massive influx. In its communication of 3
policy as a way of rendering immigration impossible in June 2003, the Commission suggests a fairer sharing of
practice. burdens and costs between the Member States. It proposes
the establishment of an integrated approach taking into
Main European Parliament resolutions on migration and account not only the financial aspects, but also the material
integration aspects of reception of asylum seekers.
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Parliament supports the idea of greater solidarity: In a resolution of 21 June 2007, Parliament called for
practical cooperation, quality of decision-making in the
— between Member States.
common European asylum system:
In a resolution passed on 11 April 2000, Parliament called — between the EU and third countries.
for the introduction of a system allowing a sharing of
resources in proportion to the relative efforts made by In a resolution adopted on 1 April 2004, it advocated
each Member State. sharing the burden of taking in refugees ‘with third
countries on the basis of a partnership involving the
In a resolution of 6 July 2006, Parliament approves the countries of origin, transit, initial refuge and destination’.
Commission proposal on the establishment of a mutual
information procedure concerning Member States’ g Joanna Apap
measures in the areas of asylum and immigration. July 2008
4.12.3. Management of the external borders

EU legislation aims to establish common standards for the management of the external borders of the EU. The visa
information system and visa ‘L’ contribute to the control of those borders. In 2002 an action plan was drawn up for the
management of the external borders of EU Member States. The European Agency ‘Frontex’ was formed in 2004 and based
at Warsaw.
Legal basis — Defining a common approach to internal security in the

Article 62 of the Treaty establishing the European Community absence of internal controls.
(EC). 2. Communitarisation of the management of the external
border
Objectives a. Decision-making procedure (Article 67)
To establish common standards with regard to border During a transitional period of five years:
management and controls at the Union’s external borders to — for all the other measures related to Article 62 of the EC
enable thus an ‘area of freedom, security and justice’ without Treaty (apart from those related to Article 62(2)(b) the
controls at internal borders for persons, whatever their Commission’s right of legislative initiative was shared with
nationality, within the European Union. the Member States; Parliament was simply consulted and
decisions were taken by unanimity;
Achievements — for measures related to Article 62(2)(b) of the EC Treaty
(rules on visas for intended stays of no more than three
A. Developments brought about by the Treaty of
months) co-decision is used and decisions were adopted
Amsterdam
by the Council acting by qualified majority since the entry
In 1999, a protocol attached to the Amsterdam Treaty into force of the Amsterdam Treaty.
integrated part of the Schengen acquis into the EU legal
framework. Article 62 of the EC Treaty was designated as the b. Jurisdiction of the Court of Justice (Article 68)
legal base of any measure dealing with visas and borders. This The Court’s jurisdiction is restricted in relation to ordinary law
provision asks the Council to adopt instruments ‘with a view to under the EC Treaty.
ensuring [...] the absence of any controls on persons [...] when
B. Developments since Amsterdam
crossing internal borders [… or] on the crossing of the external
borders of the Member States’ along with ‘setting out the The Member States have developed a set of rules on border
conditions under which nationals of third countries shall have control and surveillance. These rules cover the control of
the freedom to travel within the territory of the Member States external border crossing points and their surveillance. A new
during a period of no more than three months’. agency, set up on 26 October 2004, is meant to enhance this
cooperation. In the context of enlargement and of
1. Scope strengthening relations with its new neighbours, the Union
— Management of the flow of persons entering and leaving would like to improve ‘management of external borders’. This
the common area of freedom of movement. action is being pursued under the Hague programme and two
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action plans: one of general scope approved by the European [visa information system] and SIS II [the second generation
Council of 21 and 22 June 2002 and the other, on maritime of the Schengen information system])’. Due to the delays in
borders, updated by the Council on 2 December 2004. the SIS II deployment, Portugal offered a modified version of
its SIS 1+ system called ‘SIS one4all’ as a temporary solution
1. Contributions of the Treaty of Nice
designed to enable nine of the Member States in 2004 to join
It extends the co-decision procedure (Article 67(5)). Schengen). The project of setting up the VIS had been
Pursuant to a Council decision of 22 December 2004, decided upon by the Council in June 2002 following
questions of control and surveillance of EU external borders recommendations by both the Laeken and Seville European
(Article 62 EC) are addressed under co-decision from 1 January Councils. It is a system for the exchange of visa data among
2005. Therefore decisions are taken in the Council by qualified Member States.
majority voting.
The Council adopted on 12 December 2003 an action plan to
2. Further steps combat illegal immigration through maritime routes. This
The adoption of measures for the control and surveillance of programme, which supplements the plan for the management
the EU’s external borders is in keeping with the development of external borders, follows a study published in September
of the area of freedom, security and justice. With the entry into 2003 stressing the urgent need for a European policy for the
force of the Treaty of Amsterdam, these matters came under management of maritime borders.
the Community’s areas of competence (see Section A). The European Justice and Home Affairs Council of 19 February
The conclusions of the Laeken European Council of 14 and 15 2004 adopted conclusions on the architecture, functionalities
December 2001 introduced a new concept, i.e. an ‘integrated and biometric identifiers to be included in the future European
management system for external borders.’ This concept covers visa system.
all activities exercised by the public authorities of the Member The visa information system (VIS) will constitute a new
States with the aim of: instrument intended to improve external border control. The
— accomplishing border control and surveillance; VIS will comprise two interfaces: a central visa information
system (C-VIS) and a national visa information system
— analysing the risks;
(N-VIS).
— anticipating personnel and facility needs.
All visas and residence permits issued to third-country
The Treaty on the Functioning of the European Union nationals by Member States will contain biometric data about
enshrines this concept and provides as already stated in the them that can be checked against the C-VIS. The latest
Tampere conclusions and later reified in the Laeken element in this evolution is Council Regulation (EC) No
conclusions that ‘better management of the Union’s external 2252/2004 of 13 December 2004, which lays down the
border controls will help in the fight against terrorism, illegal standards for security features and biometrics in travel
immigration networks and trafficking in human beings’ documents issued by Member States.
(Laeken conclusions).
The European Council of 17 and 18 June 2004 called for a
Based on a Commission communication of 7 May 2002 on revision of the 2003 action plan to combat illegal immigration.
integrated border management and a feasibility study of On 2 December 2004 the Council carried out an evaluation
30 May 2002 on a European border police, the Seville and drew up new recommendations.
European Council of 21 and 22 June 2002 approved an ‘action
plan on the management of external borders of the European The Hague programme, adopted by the Hague Council on
Union’ (APMEB). This document, drafted by the Council, sets 4 November 2005, which set out the objectives for the
measures to be taken on the following levels: following five years’ developments of the area of security and
justice, building upon the previous five years of the Tampere
— legislative: the APMEB recommends adopting a ‘common programme, represented a new phase in the development of
body of legislation’; a European policy for the management of its external borders.
— operational: the APMEB contemplates implementing joint It calls for:
operations between national services responsible for — further gradual establishment of the integrated
external border control and surveillance. It also expects the management system for external borders;
introduction of pilot projects in various areas, such as
training, repatriation of illegal aliens or cooperation with — strengthening of controls at and surveillance of external
third countries. borders.
The European Council of Thessaloniki on 19 and 20 June a. Controlling the external border
2003 held that ‘a coherent approach is needed in the EU on Crossing external borders is only allowed at border crossing
biometric identifiers or biometric data, which would result points called ‘authorised crossing points’, and during a set
in harmonised solutions for documents for third-country schedule. The list of crossing points is found in the annex to
nationals, EU citizens’ passports and information systems (VIS the common manual. This document allows for exceptions for
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local border traffic. On 20 December 2006, the European situated at various locations on all the outermost limits of the
Parliament and the Council adopted a regulation that defines Union (roads and ports) and within it (airports and railway
an applicable legal framework on crossing the external stations). Surveillance of the Union’s external borders is carried
borders: Regulation (EC) No 1931/2006 of the European out mainly at its eastern and southern borders (Russia, Ukraine,
Parliament and of the Council of 20 December 2006 laying the western Balkans, and the Mashreq and Maghreb
down rules on local border traffic at the external land borders countries).
of the Member States and amending the provisions of the
b. Supervision of the external borders
Schengen Convention (OJ L 405, 30.12.2006). The document
sets out more flexible conditions that favour persons who Supervision of the external borders is carried out by national
legally reside in the border zone. In particular, this proposal, authorities in the same way as it is carried out at the crossing
which follows the 9 September 2002 communication, points. National cooperation between these authorities falls
introduces a special ‘L’ visa (for local border traffic), for under mutual assistance in police and customs matters. The
which the acquisition rules are less strict than those for classic Union encourages this cooperation through the ARGO
Schengen visas. programme. Based on a Council decision of 13 June 2002, this
programme, which also concerns the operational aspects of
The main objectives of the VIS are to: border control, supports Member States’ measures aimed at
— facilitate the fight against the use of fraudulent documents; strengthening the efficiency of authorised crossing point
controls and offering an equivalent level of effective
— improve visa consultation and identifications for the protection and surveillance at the external borders. Also, the
application of provisions in relation to the Dublin II idea of the possible creation of a European corps of border
regulation (which establishes the criteria and mechanism guards is mentioned in the Hague programme, though no
for determining the State responsible for examining an deadline is given due to divergence of opinion between the
asylum application in one of the Member States of the EU) Member States.
and the return procedure;
Council Regulation (EC) No 2004/2007 establishes the Border
— enhance the administration of the common visa policy, Management Agency, to oversee operational cooperation
prevent ‘visa shopping’ by ensuring the ‘traceability’ of along the EU’s external borders. The agency, called Frontex,
every individual applying for a visa, and strengthen EU which is based in Warsaw, shall coordinate and assist Member
internal security. States’ various actions in managing (controlling) the common
EU frontier.
The border guards will be able to use the VIS to access a
database on: The tasks allocated to the EU’s new Border Management
Agency are:
— visas (issued, cancelled or refused);
— coordinating the operational cooperation between the
— the holder’s biometric data.
Member States as regards the management of the external
Pursuant to the provisions of the Convention applying the borders;
Schengen Agreement, the controls are carried out at the — training national border guards;
external borders of the Schengen area. This area includes 26
Member States, excluding the United Kingdom and Ireland but — carrying out risk analyses;
including Norway, Iceland and Switzerland. The 10 new — following up research on control and surveillance of the
countries that joined the EU in 2004 and Switzerland belong to external borders;
the Schengen area, even if the border controls with the other
Member States are being temporarily maintained. On — supporting Member States in circumstances wherein they
28 November 2003, the Council adopted conclusions to request increased technical and operational assistance at
improve the flow of traffic with the new Member States. In the external borders; and
conclusions, it recommends adopting bilateral agreements — supporting Member States in organising joint return
that are intended to ensure that persons should only have to operations
stop once to undergo both entry and exit control procedures.
3. List of the main legislative measures
The Hague programme underlines the necessity to rapidly — Council Decision 2002/463/EC of 13 June 2002 adopting
abolish border control with the new Member States. For the an action programme for administrative cooperation in the
nine Member States that joined in May 2004 (Cyprus did not fields of external borders, visas, asylum and immigration
meet the criteria) internal land and sea border checks on (ARGO programme)
persons were abolished as of 21 December 2007, while
— Council Decision 2004/512/EC of 8 June 2004 establishing
restrictions on air borders were lifted on 30 March 2008.
the visa information system (VIS)
Cyprus and the non-EU member Switzerland hope to join
Schengen next year and Romania and Bulgaria by 2011. — Council Regulation (EC) No 2007/2004 of 26 October 2004
Controls on external borders are carried out at crossing points establishing a European Agency for the Management of
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Operational Cooperation at the External Borders of the third countries whose nationals must be in possession of
Member States of the European Union visas when crossing the external borders and those whose
nationals are exempt from that requirement
— Council Decision 2004/867/EC of 13 December 2004
amending Decision 2002/463/EC — Proposal for a regulation of the European Parliament and of
— Council Regulation (EC) No 2252/2004 of 13 December the Council of […] amending Regulation (EC) No 562/2006
2004 on standards for security features and biometrics in as regards the use of the visa information system (VIS)
passports and travel documents issued by Member States under the Schengen borders code
— Council Regulation (EC) No 562/2006 of the European

Parliament and of the Council of 15 March 2006 establishing
a Community code on the rules governing the movement The European Parliament supports the introduction of a
of persons across borders (Schengen borders code) European policy for the management of external borders.
Parliament endorses the idea of strengthening international
— Decision No 895/2006/EC of the European Parliament and cooperation between national services and supported the
of the Council of 14 June 2006 introducing a simplified creation of the Border Management Agency. However, it is
regime for the control of persons at the external borders against the attribution of powers to the agency for the
based on the unilateral recognition by the Czech Republic, repatriation of foreigners, which could make it simply an
Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, ‘expulsion agency’ (resolution of 9 March 2004). It also supports
Slovenia and Slovakia of certain documents as equivalent the creation, in the medium term, of a Community-financed
to their national visas for the purposes of transit through European corps of border guards ‘which would in an emergency
their territories and at the request of the Member States, be deployed to assist
— Decision No 896/2006/EC of the European Parliament and of national authorities temporarily at vulnerable sections of the
the Council of 14 June 2006 establishing a simplified regime EU’s external borders’ (resolution of 15 January 2003). It calls for
for the control of persons at the external borders based on Member States to share the burden of border control and
the unilateral recognition by the Member States of certain surveillance and likewise encourages sharing of the effort
residence permits issued by Switzerland and Liechtenstein between Member States and third countries.
for the purpose of transit through their territory
— Council Regulation (EC) No 1932/2006 of 21 December g Joanna Apap
2006 amending Regulation (EC) No 539/2001 listing the July 2008
4.12.4. Judicial cooperation in civil and criminal matters

The European Community’s third pillar, judicial cooperation in civil and criminal matters, was established under the Treaty
of Maastricht. The Treaty of Amsterdam incorporated judicial cooperation in civil matters into Title I of the EC Treaty,
although it did not make it subject to Community decision-making procedures. The Treaty of Nice provides for use of the
procedure under Article 251 of the EC Treaty in relation to judicial cooperation in civil matters.
Legal basis To ensure legal certainty through recognition and

enforcement of judgments and decisions throughout the
Judicial cooperation in civil matters: Article 65 of the Treaty
European Union.
establishing the European Community (EC).
To align the legal systems in order to facilitate judicial
Judicial cooperation in criminal matters: Articles 29 and 31 of cooperation and prevent criminals from taking advantage of
the Treaty on European Union. the differences between the Member States.
These provisions are supplemented by Article 293 of the EC
Treaty. Achievements
A. Judicial cooperation in civil matters
Objectives 1. Before the Treaty of Amsterdam
To enable EU citizens to apply to the courts and authorities in Initially, judicial cooperation in civil matters took the form of
all the Member States just as easily as in their own country. international agreements.
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Since the Single European Act of 1987, which enshrined in the — Council Regulation (EC) No 44/2001 of 22 December 2000
Treaty of Rome the concept of a European Community on jurisdiction and the recognition and enforcement of
without borders, the idea of a ‘European judicial area’ has been judgments in civil and commercial matters;
acknowledged. The Treaty of Maastricht incorporated judicial — Council Regulation (EC) No 1206/2001 of 28 May 2001 on
cooperation in civil and criminal matters under Title VI as an cooperation between the courts of the Member States in
area of common interest to the EU Member States. the taking of evidence in civil or commercial matters;
2. The contribution of the Treaty of Amsterdam and the — Council Decision 2001/470/EC of 28 May 2001 establishing
Treaty of Nice a European judicial network in civil and commercial matters;
The Treaty of Amsterdam brought judicial cooperation in civil
— Council Regulation (EC) No 743/2002 of 25 April 2002
matters within the Community sphere although it did not
establishing a general Community framework of activities
make it subject to the Community decision-making
to facilitate the implementation of judicial cooperation in
procedures under ordinary law: the Commission does not
civil matters;
have a monopoly on right of initiative, the Council almost
always takes decisions in this area unanimously, and — Council Directive 2003/8/EC of 27 January 2003 to improve
Parliament only has a consultative role. access to justice in cross-border disputes by establishing
minimum common rules relating to legal aid for such
The Treaty of Nice allows measures relating to judicial
disputes;
cooperation in civil matters — except family law — to be
adopted using the procedure in Article 251 of the EC Treaty, in — Council Regulation (EC) No 2201/2003 of 27 November
co-decision with the European Parliament, with the Council 2003 concerning jurisdiction and the recognition and
acting by a majority. enforcement of judgments in matrimonial matters and
matters of parental responsibility, repealing Regulation (EC)
3. The Tampere European Council (1999) and the Hague
No 1347/2000;
programme (2004)
The Tampere European Council stressed that citizens can — Regulation (EC) No 805/2004 of the European Parliament
enjoy freedom only in a genuine common area of justice, and of the Council of 21 April 2004 creating a European
where everyone can apply to the courts and authorities in all enforcement order for uncontested claims.
the Member States just as easily as in their own country. It B. Judicial cooperation in criminal matters
concluded that there was a need for closer convergence of 1. Before the Treaty of Amsterdam
legislation, in particular with regard to cross-border matters
The Council of Europe drew up the first legal acts on judicial
and automatic referral to the principle of mutual recognition
cooperation in criminal matters. With the inclusion of this
of court decisions and pre-court decisions, such as those
sphere in the Treaty of Maastricht, a number of European
relating to evidence.
Union agreements joined the existing instruments:
The Hague programme stresses the need to make cross-
— 1995 agreement on a simplified extradition procedure
border civil law procedures easier by developing judicial
based on the 1957 convention;
cooperation in civil matters and mutual recognition.
Continuing to implement mutual recognition measures is an — 1996 agreement on extradition between Member States of
essential priority. the Union, supplementing the conventions of 1957 on
extradition and 1977 on the suppression of terrorism by
4. The Treaty of Lisbon
widening the scope of extradition proceedings;
Legal cooperation on civil matters is being developed in
accordance with the ordinary legislative procedure. However, — work began in 1996 on a draft convention on legal
family law is subject to a special legislative procedure: the Council assistance to supplement the 1959 Council of Europe
takes decisions unanimously once it has consulted Parliament. convention, extending mutual assistance between judicial
authorities and modernising the present methods;
The Council may decide that certain aspects of family law can
— special instruments adopted in the area of fraud and
be the subject of suitable regulations in accordance with the
corruption in the EU took the form of a 1995 convention
ordinary legislative procedure. In this case the proposal is
on protecting the Communities’ financial interests and a
notified to national parliaments. If a single national parliament
1997 convention on combating corruption involving civil
is opposed then this will prevent it from being adopted.
servants of the European Communities or the EU Member
5. Main legislation adopted States.
— Council Regulation (EC) No 1346/2000 of 29 May 2000 on 2. The contribution of the Treaty of Amsterdam and the
insolvency proceedings; Treaty of Nice
— Council Regulation (EC) No 1348/2000 of 29 May 2000 on The last-named initiative anticipated the entry into force of the
the service in the Member States of judicial and Treaty of Amsterdam. The new Title VI in the Treaty on
extrajudicial documents in civil or commercial matters; European Union, dealing with police and judicial cooperation
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in criminal matters, underlines the importance of fighting 6. A new body for cooperation: Eurojust
organised crime. It makes provision for coordinating the Council Decision 2002/187/JHA of 28 February 2002 sets up
national rules on offences and penalties applicable to Eurojust with a view to reinforcing the fight against serious
organised crime, terrorism and drug trafficking. crime. It aims to facilitate the coordination of action by the
The Treaty of Nice introduces several references to Eurojust. competent authorities for investigations and prosecutions
covering the territory of more than one Member State.
3. The Treaty establishing a Constitution for Europe Composed of one seconded member per Member State, who
This essentially integrated judicial cooperation in criminal must be a prosecutor, judge or police officer with equivalent
matters into the common procedures. It made provision for competencies, Eurojust cooperates closely with Europol and
the possibility of establishing a European Public Prosecutor’s has special links with the European judicial network. The Treaty
Office from Eurojust. of Lisbon integrates Eurojust within it. It makes provision for
4. The Tampere European Council and the Hague the possibility of establishing a European Public Prosecutor’s
programme Office from Eurojust.
The European Council stated that it was in favour of an 7. Main legislation adopted
efficient and comprehensive approach in the fight against all A number of acts seek to improve cooperation between the
forms of crime and in particular the serious forms of organised various competent national authorities, in particular:
and transnational crime. It highlighted the aspects linked to
prevention and called for the development of the exchange of — Joint Action 98/428/JHA of 29 June 1998 adopted by the
best practices and for the network of competent national Council on the creation of a European judicial network,
authorities and bodies to be strengthened. aimed at improving judicial assistance, particularly with
regard to serious crime;
As regards national criminal law, efforts to agree on common
definitions, incriminations and sanctions should be focused in — Council decision of 28 May 2001 establishing a European
the first instance on a limited number of sectors of particular crime prevention network, which seeks to promote
relevance, such as financial crime, drug trafficking, trafficking in exchanges of information and experience, analyse existing
human beings, high-tech crime and environmental crime. The activities and identify the main areas for collaboration;
Council also underlined the need for specific action to combat — Council decision of 28 June 2001 establishing a
money laundering. programme of incentives and exchanges, training and
The Hague programme stresses the need to develop mutual cooperation for the prevention of crime (Hippocrates); its
trust and to strengthen the coordination of investigations. aim is to encourage cooperation among all of the public
Mutual recognition of judicial decisions in criminal matters is the and private bodies involved in crime prevention;
cornerstone of judicial cooperation. It implies the development — Council framework decision of 13 June 2002 on joint
of equivalent standards for procedural rights in criminal investigation teams, which aims to carry out criminal
proceedings. The approximation of laws, in particular by the investigations in one or more Member States where the
establishment of minimum rules, is also a priority. Eurojust is a offences necessitate in particular coordinated, concerted
key player in judicial cooperation in criminal matters. action in several Member States;
5. The Treaty of Lisbon — Council decision of 22 July 2002 establishing a framework
Legal cooperation in criminal matters now comes within the programme on police and judicial cooperation in criminal
scope of the Community. This implies the use of the ordinary matters, which seeks above all to promote partnerships
legislative procedure — co-decision and qualified majority in and the exchange of good practice.
Council — but also the adoption of conventional Community
Certain acts help to align the Member States’ legislation on
legal instruments that benefit from direct effect and enhanced
criminal procedures or the definition of offences and the
legal monitoring. International agreements will be subject to
imposition of criminal sanctions, in particular:
the joint procedure, which requires the assent of Parliament.
— Council act of 29 May 2000 establishing in accordance with
However, a certain number of specific features remain: Member
Article 34 of the Treaty on European Union the Convention
States — at least a quarter of them — may present legislative
on Mutual Assistance in Criminal Matters between the
initiatives, a special legislative procedure — unanimity in
Member States of the European Union;
Council, consultation or, depending on the case, the assent of
Parliament — applies in certain cases. If a Member State believes — Council decision of 29 May 2000 to combat child
that a legislative proposal could infringe fundamental aspects of pornography on the Internet, which aims to promote the
its criminal justice system, it can request that the matter be prevention of, and fight against, this type of crime in all
referred to the European Council. Member States as well as cooperation in this field;
The powers of the Court of Justice will remain unchanged for a — Council framework decision of 15 March 2001 on the
transitional period of five years. standing of victims in criminal proceedings;
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— Directive 2001/97/EC of the European Parliament and of Member States that it considers necessary to ensure that the
the Council of 4 December 2001 amending Council rules which it lays down are fully effective. Thus, if the EU has a
Directive 91/308/EEC on prevention of the use of the legal basis for a policy under the EC Treaty, it should be
financial system for the purpose of money laundering; this possible to make provision if necessary for penal sanctions for
directive is aimed in particular at extending the implementation of this policy without being required to abide
identification and reporting obligations to a number of by the specific provisions of the third pillar.
activities and professions likely to be used for money
laundering purposes and ensuring better coverage of the Role of the European Parliament
financial and credit sectors;
1. Civil law
— Council framework decision of 13 June 2002 on combating Parliament considers that the Union’s objective should be to
terrorism, which aims in particular to approximate the simplify recourse to justice for citizens and companies and to
definition of terrorist offences, penalties and sanctions in all make justice more effective in an integrated European area,
of the Member States; particularly by encouraging the emergence of a common
— Council framework decision of 13 June 2002 on the judicial culture. It also thinks the recognition and enforcement
European arrest warrant and the surrender procedures of judgments should be a practically automatic process
between Member States, which seeks to replace the between Member States, and that there is therefore an urgent
extradition procedures with a simplified system for need to encourage the compatibility of legal rules and
surrender between judicial authorities for a range of proceedings.
serious crimes; 2. Criminal law
— Council framework decision of 19 July 2002 on combating The EP welcomes the incentive provided by the Commission
trafficking in human beings, which seeks to harmonise and the Council — generated to a large extent by the attacks
offences and sanctions in this area; of 11 September 2001 — that has resulted in the adoption of
important provisions, especially the European arrest warrant.
— Council framework decision of 27 January 2003 on the The establishment of Eurojust is also considered to be a major
protection of the environment through criminal law; step forward.
— Council framework decision of 22 July 2003 on the The EP’s primary concern is maintaining the balance between
execution in the European Union of orders freezing the objective of safety and respect for fundamental rights.
property or evidence;
The principle of mutual recognition of judicial decisions is the
— Council framework decision of 24 February 2005 on the cornerstone of judicial cooperation. Mutual trust between
application of the principle of mutual recognition to national judicial systems should be strengthened. The main
financial penalties; aim is to guarantee European citizens the right to justice both
— the Council has adopted a draft decision on the European in comparable conditions and on the basis of ever-higher
evidence warrant for use in proceedings in criminal matters quality standards. To this end, the European Parliament calls for
and a draft framework decision whereby Member States the definition, with the Member States, of a ‘Quality Charter for
would take account of decisions concerning convictions. Criminal Justice in Europe’. It has also called on the
Commission to submit to the EP legislative proposals to
In April 2007 the Council reached political agreement on improve the minimum guarantees concerning procedural
adoption of a framework decision on combating racism and rights. Common minimum standards for the common basic
xenophobia. procedural safeguards would facilitate both mutual
8. Consequences of the Court of Justice judgment in case recognition and mutual trust.
C-176/03 (13 September 2005)
It authorises the legislator, within the framework of the EC g Jean-Louis Antoine-Grégoire
Treaty, to take measures relating to the criminal law of the July 2008
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4.12.5. Police and customs cooperation
Police and customs cooperation is intended to ensure a high level of protection for EU citizens. The foundations for
cooperation were laid by the creation of the Trevi group in 1976. Cooperation was consolidated later, in particular in
Tampere and by The Hague programme.
Legal Basis 4. The Tampere European Council (1999) and the Hague
Police cooperation: Articles 29 and 30 of the Treaty on programme (2004)
European Union. The adoption of the Hague Programme by the European
Council has provided the EU with a new five-year programme,
Customs cooperation: Article 135 of the Treaty establishing the as a follow-up to the plan adopted in Tampere. Europol is to
European Community (EC). play a central role in the fight against serious forms of
organised crime and cross-border terrorism. The European
Objectives Police College (CEPOL) will help to increase mutual confidence
Guaranteeing citizens a high level of protection in an area of in order to improve police cooperation. The fight against
freedom and security through police cooperation between terrorism is a matter of the utmost importance.
the Member States. This objective is achieved through closer The exchange of information, when available, should begin in
cooperation between police forces and customs authorities, 2008.
both directly and through Europol.
5. The Lisbon Treaty
Police cooperation has been incorporated into the Community
Achievements system. This implies the extension of the co-decision procedure,
A. General development of police cooperation qualified majority voting in the Council, the use of Community
1. The Schengen agreements (1985–1990) legislative instruments with direct effect and a stronger role for
Formal police cooperation between the Member States’ the Court of Justice subject to a five-year transitional period (see
representatives began in 1976. judicial cooperation in criminal matters, 4.12.1.).
The Schengen system set up liaison officers in the signatory In the area of operational cooperation between police
States to coordinate the exchange of information on terrorism, authorities and law enforcement services, the Council takes
drugs, organised crime and illegal immigration networks. It decisions under the special legislative procedure, in other
introduced a right of pursuit across frontiers, enabling police words a unanimous decision following consultation of
officers to pursue a suspect on the territory of another Parliament. In the absence of unanimity, a group of at least
Member State, but Member States apply this right in different nine Member States may request that the matter be referred
ways. Patrols, in some cases with officers of different to the European Council. If no agreement is reached, at least
nationalities, carry out checks throughout the Schengen nine Member States may enter into enhanced cooperation.
territory. The Court of Justice does not have any jurisdiction, in
particular, to verify the validity or the proportionality of
2. The Treaties of Maastricht (1992), Amsterdam (1997) operations carried out by the police or other law enforcement
and Nice (2003) bodies in a Member State.
The Treaty of Maastricht spelt out matters of common interest
The Treaty brings Europol within the Community system. Its
on which it sought to encourage cooperation: terrorism, drugs
structure, functioning, area of action and tasks will be laid
and other forms of international crime. It also provided for a
down in a regulation in accordance with the ordinary
European Police Office (Europol), together with a system for
legislative procedure.
exchanging information throughout the Union.
The Treaty of Amsterdam defined the objectives of the B. The European Police Office (Europol)
Member States and the relevant authorities, calling for 1. Mission
cooperation between police forces, customs authorities and Created by a Council Act of 26 July 1995 (drawing up the
the courts to ensure a high level of safety. It also increased the Convention on the establishment of a European Police Office),
role of Europol. The Treaty of Nice did not introduce any Europol began to operate on 1 July 1999.
changes. a. Original mandate
3. The Treaty establishing a Constitution for Europe Europol’s objective is to improve the efficiency of the
(2004) competent services in the Member States and their
Police cooperation was integrated into EU policies and Europol cooperation in the fight against terrorism, drug trafficking and
was integrated into the institutional framework. other serious forms of international crime such as trafficking in
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nuclear and radioactive products, illegal immigration networks, senior officers of the Member States’ police forces. It supports
trafficking in human beings, trafficking in stolen cars and and develops a European approach to the major problems
money laundering connected with these types of crimes. The encountered by the Member States. To this end, it conducts
Council may also decide to entrust Europol with responsibility training sessions, participates in the development of
for other forms of crime. harmonised training programmes, and disseminates best
practice and research results.
Europol’s priority tasks are as follows: facilitating the exchange
of information between Member States, collating and The college takes the form of a network made up of the
analysing information and intelligence, aiding investigations in national institutes for the training of high-ranking police
the Member States by notifying them of any relevant officials. It has a permanent secretariat (headquarters:
information, and maintaining a computerised system of Bramshill, United Kingdom) and legal personality. From 2006
information collected directly from the Member States. onwards its budget is the responsibility of the EU. It will
therefore appear in the EU budget.
b. Extension of its mandate
Europol’s mandate was successively extended to include D. Other instruments for cooperation
money laundering in general (irrespective of the type of crime The task force of the police chiefs of the Member States was
connected with the money laundered) by the Council Act of established in October 2000. It meets at least once during
30 November 2000 and then all of the aspects of international each six-month presidency of the Council.
organised crime set out in the annex to the Europol
Convention by the Council Decision of 6 December 2001. The European network for crime prevention has been meeting
Further amendments were made in 2003 to reinforce the since 2001 to enable the exchange of experiences and good
operational support that Europol provides to the national practice between the national officers responsible for crime
police authorities. These provisions have now come into force. prevention in each Member State.
2. Organisation The European Forum for the prevention of organised crime

has, since 2001, brought together various groups, both public
a. Administration
and private, who are interested in discussing these questions.
Europol’s budget is financed by contributions from the Member
States and thus does not come under the EU budget. It is The Schengen information system, operational since 1995,
dependent upon the Council, which is responsible for permits the registration and consultation of a certain amount of
monitoring its activities and, in particular, appointing its director. data. It enables verifications to be carried out at external borders
as well as inside the Schengen area. A second-generation
About 590 people, including liaison officers from the Member information system (SIS II) should be operational in 2008.
States, work for Europol (headquarters: The Hague). Its budget
is EUR 70.5 million (2007). Joint investigations teams, created by the Council framework
decision of 13 June 2002, may be instituted to carry out
b. Means of action criminal investigations in one or more Member States. Europol
The Council Act of 28 November 2002 provides for Europol’s representatives may participate in them.
participation in joint investigation teams. It also authorises
Europol to ask the Member States to conduct criminal E. The fight against terrorism
investigations. The European Council has named terrorism as one of the
The Council Decision of 27 March 2000 authorises the director major threats to the EU’s interests. In 2001 it drew up a plan of
of Europol to hold negotiations to conclude agreements with action, revised in 2004, setting out the EU’s strategic objectives
third countries and bodies. In this respect, Europol has notably in the fight against terrorism. In December 2005 the Council
signed cooperation agreements with Interpol and, in adopted a new EU strategy aimed at combating terrorism.
December 2002, with the United States. In 2004, Europol The European Council appointed a counter-terrorism
signed an agreement with Eurojust. coordinator in 2004 (Mr Gijs de Vries). He coordinates the
3. Europol to become an EU agency Council’s work and ensures effective monitoring of its
decisions. The coordinator stepped down in March 2007 and a
In December 2006 the Council agreed to replace the Europol
new coordinator, Mr Gilles de Kerchove, was appointed in
Convention by a Council decision. At the end of December 2006
September 2007.
the Commission presented a proposal whereby Europol would
become an EU agency financed by the Community budget. Some instruments, adopted as part of judicial cooperation in
criminal matters, contribute directly to the fight against
C. The European Police College (CEPOL) terrorism; these are connected to money laundering and the
CEPOL was created through the Council Decision of European arrest warrant.
22 December 2000, replaced by that of 20 September 2005.
Specific legal measures have been adopted since 2001: the
The college’s objective is to optimise cooperation between the definition of terrorist acts and the harmonisation of sanctions,
various national institutes and to contribute to the training of the freezing of accounts of people linked to a terrorist
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organisation, a list of organisations and individuals to be Some new proposals seek to reinforce customs cooperation
considered terrorists, a mechanism to evaluate the application regarding the prevention of money laundering, control of the
at a national level of the international commitments with EU’s external borders and the fight against counterfeiting and
regard to the fight against terrorism and the allocation of new pirating.
functions to the Schengen information system.
Since September 2001, the heads of the anti-terrorist units in Role of the European Parliament
the Member States’ intelligence services have been meeting The EP considers that the creation of Europol is a vital measure
regularly. in the fight against organised crime in the EU. It stresses that in
A Council recommendation proposes the formation of ad hoc a system governed by the rule of law, policing must be subject
multinational investigation teams to collect and exchange to parliamentary control, although the Europol Convention
information regarding terrorists. only makes provision for an annual activity report to be
submitted to Parliament. It therefore calls for Europol to be
A directive concerning the retention of telecommunications integrated into the EU’s institutional framework and thus be
data in the fight against terrorism and organised crime was submitted to the democratic control of the EP, the judicial
adopted in February 2006. control of the Court of Justice, and financial and budgetary
F. Customs cooperation control in accordance with the EU’s usual provisions in this
On 7 September 1967, a convention on mutual assistance respect. Europol should therefore become a European agency.
between customs administrations was signed in Rome. The EP emphasises that the framework and methods of
On 26 July 1995, a convention established a common cooperation between Europol, Eurojust and the European
automated information system, or ‘customs information Anti-Fraud Office (OLAF) must be clearly defined.
system’ (CIS). The aim of this database is to disseminate The EP strongly criticises the clumsiness of the procedures for
information more rapidly and to increase the efficiency of the amending the Europol Convention, which require ratification
cooperation and control procedures of the customs by the Member States and are delaying the entry into force of
authorities of the Member States. This convention entered the new provisions. It requests that the Council decisions be
into force in November 2000 between the Member States applied, in application of Article 34(2) of the EU Treaty.
that had ratified it. The European Parliament emphasises that terrorism is the
A convention signed on 18 December 1997, known as main problem affecting European coexistence and security. It
Naples II, regulates in particular the arrangements for proposes that 11 March should be declared the European Day
cross-border assistance and cooperation between the customs of Commemoration of Victims of Terrorism, as approved by the
administrations of the Member States. Currently in the process European Council.
of being ratified, some Member States have already decided to In a more general way, the European Parliament emphasises
apply it among themselves. that it is necessary to reinforce the legitimacy of the area of
A European Parliament and Council decision of 19 December freedom, security and justice by deciding — in accordance
1996 established an action programme for customs in the with the spirit of the Constitution — to make use of the
Community, known as the Customs 2000 programme. It seeks present Article 42 of the EU Treaty.
to ensure uniform application of Community rules, prevent
fraud and illegal trafficking, and improve the efficiency of the
g Jean-Louis Antoine-Grégoire
national customs authorities and cooperation among them. July 2008
On 11 February 2003, this programme was replaced by the
Customs 2007 action programme, which covers the period
2003–07.
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4.13. Energy policy

Even if energy also comes under the scope of Community action, energy policy remains the responsibility of the Member
States, under the principle of subsidiarity. Currently, the EU is dependent on imports of oil and gas. But we can see the
constant concern of the EU for increasing the use of renewable energy and reducing the greenhouse effect.
Legal basis emphasise that energy policy must form part of the general
— Coal: the Treaty establishing the European Coal and Steel aims of EU economic policy based on market integration and
Community (ECSC), and in particular Articles 3 and 57 to 64 deregulation, and public intervention must be limited to what
(expired in 2002). is strictly necessary to safeguard public interest and welfare,
sustainable development, consumer protection and economic
— Nuclear energy: the Treaty establishing the European and social cohesion. However, beyond those general aims
Atomic Energy Community (EAEC) or Euratom, and in energy policy must pursue particular aims that reconcile
particular Articles 40 to 76 (investment, joint undertakings competitiveness, security of supply and protection of the
and supplies) and 92 to 100 (the nuclear common market). environment. In 2005, the Commission published Report on the
— Overall energy policy and energy policy in other fields: the Green Paper on energy: four years on European initiatives (ISBN
Treaty establishing the European Community (EC), and in 92-894-8419-5) that proposes initiatives to promote actions
particular Articles 100 (supply difficulties) and 308. towards a better and more sufficient energy supply.
The most recent revision of the EC Treaty has still not managed Another Green Paper on energy efficiency was adopted by the
to include a separate chapter on energy. Energy policy has Commission in 2005, which proposes actions in Member
simply been incorporated in the list of objectives (Article 1(u)); States to promote better use of all energy sources (COM(2005)
the subject of ‘energy’ is also included under the title 265). It was followed by the ‘Green Paper: a European strategy
‘Environment’ (Title XIX, Article 175(2)). In addition the Treaty for sustainable, competitive and secure energy’ (COM(2006)
mentions the trans-European networks, which include energy 105). This set out new energy realities facing Europe based on
infrastructure (Title XV, Articles 154 to 156 in connection with three main objectives: sustainability, competitiveness and
Article 158). security of supply. The overall framework — the first ‘strategic
EU energy review’ — should help to achieve these objectives.
The EC Treaty thus confirms that the sphere of activity of the Concrete proposals are made such as completing the internal
EU encompasses the energy sector. It is clear that certain gas and electricity market, ensuring that the EU`s internal
Member States are as yet not prepared to transfer important energy market guarantees security of supply and solidarity
responsibilities to the EU. According to the subsidiarity between Member States, asking for a real Community-wide
principle, energy policy must be largely regarded as the debate on the different energy sources, dealing with the
Member States’ responsibility. challenges of climate change in a manner compatible with the
The Treaty establishing a Constitution for Europe would, if Lisbon objectives, relying on a strategic energy technology
adopted, contain a distinct chapter on energy. In plan and enhancing a common external energy policy.
Article I-14(2(i), energy is defined as a shared competence; and
The European Council on 23 and 24 March 2006 called for an
in Section 10, Article III-256, the following is outlined as aims
energy policy for Europe (EPE) and invited the Council and the
for the Union’s policy on energy:
Commission to prepare a set of actions with a clear timetable
— ensure the functioning of the energy market; enabling it to adopt a prioritised action plan at its meeting in
— ensure security of energy supply in the Union, and spring 2007.
— promote energy efficiency and energy saving and the The EPE should be based on shared perspectives on long-term
development of new and renewable forms of energy. supply and demand and an objective, transparent assessment
of the advantages and drawbacks of all energy sources, and
contribute in a balanced way to its three main objectives:
Objectives
— increasing security of energy supply through the
EU energy policy is still directed towards the long-term energy
development of a common external policy approach and
objectives first set out in 1995 in the ‘White Paper — An
dialogues with Member States and partners;
energy policy for the EU’ (COM(95) 682), followed by the Green
Paper ‘Towards an European strategy for the security of energy — ensuring the competitiveness of European economies and
supply’ (COM(2000) 769) and subsequent report on it the affordability of energy supply by working with Member
(COM(2002) 321). Parliament, the Council and the Commission States to complete the opening of the internal market for
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electricity and gas for all consumers by mid-2007; a concerning the share of individual energy sources in total
transparent implementation of internal market legislation consumption. This is attributable not only to structural
is needed; differences between the Member States but also to different
national energy objectives (for example in respect of nuclear
— promoting environmental sustainability by strengthening
energy).
the EU leadership by adopting an action plan on energy
efficiency, continuing the development of renewable In order to harmonise the internal market in energy,
energies, and implementing the biomass action plan Regulation (EC) No 1228/2003, which sets rules for cross-
counting on support from research, development and border exchanges of electricity, was adopted in 2003. In
demonstration. addition, Directive 2003/54/EC sets common rules for the
internal market in electricity, and Directive 2003/55/EC creates
Apart from the general energy objectives, the EU has set
the same mechanism for the internal market in natural gas.
various sectoral objectives including: maintaining the
European Union legislation states that, from July 2007 at the
percentage of solid fuel (coal) in total energy consumption (in
latest, all consumers should be free to shop around for gas and
particular by making production capacity more competitive);
electricity supplies. Furthermore, the EU aims to ensure that
increasing the ratio of natural gas in the energy balance;
infrastructure, such as electricity and gas transmission
establishing maximum safety conditions as a prerequisite for
networks, is improved, to transport energy as efficiently as
planning, construction and operation of nuclear power
possible to where it is needed. Finally, regulators have been
stations; increasing the share of renewable sources of energy.
established in each EU country with the intention of ensuring
While the EU has achieved undeniable success in pursuing the
that suppliers and network companies operate correctly and
above objectives, the success rate of the various Member
provide the services promised to their customers
States in achieving these objectives is still very unequal.
Regulation (EC) No 1775/2005 addresses conditions for access
Parliament, the Council and the Commission are agreed that
to the natural gas transmission networks and Directive
an effort should be made to a least double the proportion of
2004/67/EC addresses the issue of security of gas supply. The
renewable energy sources in total energy consumption to
regulation of access to gas transmission networks is addressed
15 % by 2010 (substitution principle). The Commission has to
in COM(2003) 741.
translate this goal into concrete measures. There is some
opposition to individual measures and much controversy on B. Individual sectors (sectoral aspects) of energy policy
whether and in what form at EU level.
1. Coal and other solid fuels
EU energy policy objectives are to promote the use of coal and
Achievements make domestic production capacity more competitive to
A. Energy generation and consumption: general survey achieve a notable increase in solid fuel consumption.
Enlargement of the EU in May 2004 meant a change for the
In the past three decades, the EU has achieved a degree of
role of coal in the EU in respect of coal reserves and patterns of
success as regards its energy objectives (reduction of energy
production as well as consumption. Since enlargement in
dependence, development of crude oil substitutes, energy
2004, a number of energy-related issues have been discussed
saving, etc.). Since 1975, it has been possible to increase
intensively in the EU — including security of supply, not least
primary energy production considerably, especially as a result
sparked by the Ukraine–Russia gas dispute at the beginning of
of increased oil production in the UK. Despite a considerable
2006. Currently, reviews of the status quo and effects of the
increase in economic output, the rise in gross domestic energy
adopted regulation of the European energy markets are being
consumption in the EU has been relatively low (total
undertaken by the Commission. Coal combustion is associated
consumption for the EU-12 was 1 100 million toe in 1990, and
with emissions of air pollutants, such as sulphur dioxide, and
for the EU-25 1 131.6 million toe in 2003; energy consumption
carbon dioxide (CO2). However, coal is an abundant fuel and
has increased, but at a slower pace in the last few years —
will play an important role in energy security discussions as
approximately 0.8 % per year currently). This trend, has
well as other issues (for instance on energy mix, co-utilisation
changed in recent years as dependence is projected to be
and self-reliance). Many Member States have coal reserves, a
70 % in 2030, but not ultimately due to declining oil
situation that creates both employment and export
production in the UK. The EU currently imports 76.6 % of its oil
opportunities. Given that coal is likely to remain an important
demand, 53 % of its gas demand and 35.4 % of its coal
fuel for power generation worldwide in the next decades,
demand and by 2030 it is estimated that the EU will be 90 %
much has been done to develop the economic and
dependent on imports of oil and 80 % of gas.
technological potential of clean coal. Clean coal technologies
However, there are still considerable differences between the have been developed and employed and still hold potential
Member States as regards production and consumption, for further development. Increasingly, carbon dioxide capture
energy dependence and, in particular, the attainment of and storage (CCS) has been developed as an option to
energy conservation objectives and crude oil substitution. mitigate greenhouse gas emissions. The different CCS
There are also great differences between the Member States elements and technologies have reached different stages of
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development, but overall constitute a set of interesting renewable energy sources. The framework programme is
options for contributing to meet both future demand for worth EUR 200 million for the period 2003–06, though both
electricity and objectives to limit climate change (achieving the European Parliament (EP) and the Commission argued for
Kyoto and post-Kyoto targets). much more money.
2. Hydrocarbons Directive 2002/91/EC on the energy performance of buildings
EU energy policy objectives are to substitute crude oil by other (in particular insulation, air conditioning and the use of
forms of energy while also encouraging prospecting (offshore renewable energy sources) was adopted in 2002 (due for
exploration etc.) and the exploitation of indigenous implementation in 2006). This is concerned, first and foremost,
hydrocarbons. Security of supply is to be encouraged by with a method for calculating the energy performance of
diversifying sources and by EU rules on obligatory reserves buildings, minimum requirements for new and existing large
(Member States must keep 90 days’ stocks of the main buildings and energy certification.
petroleum products based on the previous year’s figures). With its proposed directive of July 2002 (COM(2002) 415), the
3. Nuclear energy and nuclear fuels Commission wanted to push ahead with the development
and use of cogeneration or combined heat and power
Nuclear energy is still accorded a key role in EU energy policy
production (CHP). The production of electricity and heat in a
objectives. However, the 1986 Chernobyl disaster made
single integrated process leads to savings in primary energy,
nuclear energy highly controversial. Abandonment of nuclear
and is therefore a further means of fulfilling the EU’s energy
power is at the earliest a medium-term prospect but, in any
policy objectives. The proposal gave rise to controversial
event, greater efforts must be made to improve the safety
discussions in both the EP and the Council and is mainly
standards of nuclear power stations. Despite the EAEC Treaty,
concerned with establishing a uniform definition for electricity
the Commission’s powers are far from adequate (for example,
produced in CHP plants. The directive (2004/8/EC) was
no uniform standards for safety and discharges; no EU
adopted in co-decision in February 2004.
consultation procedure concerning power stations sited near
frontiers; no clear EU provisions for the storage and transport Directive 2003/30/EC on the promotion of the use of biofuels
of nuclear fuels or nuclear waste; difficulties in establishing or other renewable fuels for transport was adopted in May
basic standards of radiation protection; no adequate EU 2003. The directive aims at promoting the use of biofuels or
system of information and monitoring in cases of nuclear other renewable fuels to replace diesel or petrol for transport
malfunctions; no agreed emergency procedures in case of purposes in each Member State, with a view to contributing to
disaster). objectives such as meeting climate change commitments,
environment-friendly security of supply and promoting
In the Green Paper on energy security, nuclear power was
renewable energy sources. The directive asks Member States
grouped (together with coal, oil, gas and renewables) as a ‘less
to ensure that a minimum proportion of biofuels and other
than perfect’ energy option, and the question was raised as to
renewable fuels is placed on their markets, and, to that effect,
how the EU can develop fusion technology and reactors for
to set national indicative targets. Reference values for these
the future, reinforce nuclear safety and find a solution to the
targets provided in the directive are 2 % by 31 December 2005
problem of nuclear waste. As nuclear safety could no longer
and 5.75 % by 31 December 2010, calculated on the basis of
be considered from a purely national perspective, in January
the energy content of all petrol and diesel for transport
2003, and in preparation for enlargement, the Commission
purposes placed on their markets.
adopted a new approach to safety of nuclear facilities and
nuclear waste (COM(2003) 32). In 2004, the Commission put Directive 2006/32/EC on energy end-use efficiency and energy
forward a revised proposal (COM(2004) 526) based inter alia on services (repealing Council Directive 93/76/EEC) was adopted
European Parliament suggestions which were grouped around on 5 April 2006. This aimed to boost energy efficiency in the
two new directives: one in the field of safety of nuclear EU and promote the market for energy services (such as
facilities (adopted finally as a Council regulation in 2006), and lighting, heating, hot water, ventilation).
another on radioactive waste management. In May 2004, the Commission adopted a communication to
4. Renewable sources of energy and energy efficiency the Parliament and the Council which proposed an evaluation
Promoting renewable energy is one of the main objectives of of the effect of the contribution of renewable energy sources
EU energy policy. As stated previously, the aim is to double in the EU and put forward proposals for concrete actions
renewables’ share of total energy consumed to 15 % by 2010 (COM(2004) 366).
and increase renewable energy sources for the internal Subsequently, in its resolution on the share of renewable
electricity market to 22.1 % of the total production (Directive energy in the EU and proposals for concrete actions
2001/77/EC). Decision No 1230/2003/EC ‘Intelligent energy for (2004/2153(INI)) the European Parliament recognised the
Europe’ contains measures to promote renewables and exceptional importance of renewable energies and stressed
increase energy efficiency. There are sub-programmes the importance of setting mandatory targets for 2020 that
supporting sustainable development projects and expanding send a clear signal to market actors as well as national
cooperation between the EU and developing countries for policymakers, emphasising that renewable energies are the
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future of energy in the EU and part of EU environmental and household customers). As not each Member State has taken
industrial strategy. The Commission followed with a appropriate actions to implement the directives, in April 2006,
communication ‘Biomass action plan’ (COM(2005) 628 of 7 the Commission sent infringement letters to those Member
December 2005) that set out measures to increase the States where issues subsisted concerning priority allocation of
development of biomass energy from wood, waste and cross-border network capacity in favour of pre-liberalisation
agricultural crops, by creating market-based incentives and contracts. Currently, the Commission is examining the
removing barriers to market development. The Commission responses from Member States and assessing whether further
communication ‘An EU strategy for biofuels’ (COM(2006)34 of 8 action is needed. For several Member States; priority access
February 2006) aimed to further promote biofuels and prepare has already been removed.
for their large-scale use, and explore opportunities for
National regulatory authorities will be established to supervise
developing countries.
public service obligations, security of supply and tariff
The ‘Green Paper: a European strategy for sustainable, formation. In future, the source of electricity will have to be
competitive and secure energy’ places particular emphasis on accurately labelled. Directive 2005/89/EC (concerning
renewable energy, the full potential of which will only be measures to safeguard security of electricity supply and
realised through a long-term commitment to develop and infrastructure investment) was adopted on 18 January 2006 in
install renewable energy. In addition to this the Commission order to strengthen competition in the internal electricity
intends to carry out a renewable energy roadmap. market and promote investment in energy infrastructure and
security of supply. This was accompanied by another initiative
C. Research, development and demonstration projects of the Commission, on energy infrastructure and security of
(4.14) supply (COM(2003) 743). The proposed new regulation on
The EU framework programme of research encompasses many access to gas transmission networks (COM(2003) 741) was
energy, R & D and demonstration projects to support energy adopted by the Council on 12 December 2007.
policy objectives. These are designed to improve the
Directive 2003/96/EC introduced a new EU system for taxation
acceptance level, competitiveness and scope of application of
of energy products. The proper functioning of the internal
traditional energy (e.g. reactor safety and management of
market and the achievement of the objectives of other EU
radioactive waste, and gasification and liquefaction in the case
policies require minimum levels of taxation at EU level for most
of coal), encourage the adoption of new forms of energy
energy products, including electricity, natural gas and coal.
(alternative energy sources, new technologies for a sustainable
Moreover, the taxation of energy products and, where
energy supply, nuclear fusion) or energy saving and rational use.
appropriate, electricity is one of the available instruments to
The seventh framework programme of the European achieve the Kyoto Protocol objectives. Directive 2003/96/EC
Community for research, technological development and widens the scope of the EU minimum rate system — currently
demonstration activities runs from 2007 to 2013 (COM(2005) limited to mineral oils — to all energy products, chiefly coal,
119) and this sets targets for research to be carried out to gas and electricity.
achieve the main targets of energy reduction. Moreover, it
The Commission has further proposed a directive (COM(2003)
proposes a wider cooperation and concentration of research
739) setting targets for a more effective end-use of energy and
in this area, including proposals for funding these actions (see
energy services. This proposal was adopted by the Council on
also 4.14).
4 April 2006.
D. Internal market
E. Greenhouse effect and international cooperation
In the energy sector, the completion of the internal market
The EU has stressed its commitment to international
requires the removal of numerous obstacles and trade barriers,
cooperation and fighting the effect of greenhouse gas
the approximation of tax and pricing policies and measures in
emissions. However, the 1992 proposal for a carbon dioxide
respect of norms and standards and environmental and safety
and energy tax (COM(92) 226) has not yet been implemented,
regulations. Following the directives adopted in 1990 and 1991
because of strong opposition by a number of Member States
on transit of electricity and gas, a further opening of the
and lack of support from the main competitors (USA and
electricity networks for large industrial customers (‘third-party
Japan) on international markets. The importance of an agreed
access’) was agreed on 25 July 1996 (Directive 96/92/EC).
action plan to reduce greenhouse gases (particularly CO2)
Directive 98/30/EC for the gas market was adopted on 22 June
became clear at the UN Kyoto conference in December 1997.
1998. The Commission will report annually to Parliament on
The EU has promised to reduce its CO2 emissions by 8 % from
the implementation of the two directives.
1990 levels by 2008–12. After long and controversial debate,
With two further directives for electricity (2003/54/EC) and gas the directive on greenhouse gas emissions (2003/87/EC) was
(2003/55/EC) — together with Regulation (EC) No 1228/2003 accepted in July 2003. By 2005, one of the largest emissions
on conditions for access to the network for cross-border trading schemes (ETS) in the world was created and is
exchange in electricity — the energy markets in electricity and currently undergoing review — a second stage is under
gas were to be fully open to competition by 2005 (2007 for consideration for 2012. The accession of new Member States
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4 14 development
to the EU will create the need to include them in the internal On 14 February 2006, Parliament adopted a resolution
energy market to benefit from open competition, containing recommendations on heating and cooling from
improvement of energy efficiency and the gradual renewable sources of energy (INI/2005/2122). The objective of
introduction of renewable energy sources. the proposal is to evaluate and exploit economic potential
with the aim of increasing the share of renewable energies
Role of the European Parliament used in heating and cooling in the EU from the present level of
approximately 10 % to a realistic though ambitious figure of at
Parliament’s main task is to convince Member States that the least 20 % by 2020 whilst setting binding national targets.
long-term common interest in solving these problems at EU
level is more important than short-term national interests In March 2006, Parliament adopted a joint resolution on
where other solutions may be given preference. Parliament has security of energy supply in the EU, urging the Council and the
repeatedly advocated a separate chapter on energy, now Commission to achieve a more resolute and concrete
planned for the first time in the EU Constitution. In the current European energy policy together with new, ambitious targets.
discussion on the EU’s future energy policy, Parliament is now
In its own-initiative report on the Green Paper on energy
pressing even more vigorously for the implementation of
efficiency or doing more with less (INI/2005/2210), the
important energy policy objectives (increasing energy
European Parliament proposed the creation of an energy
efficiency, developing alternative sources of energy and secure
efficiency fund by which local energy and environment
energy supply systems, combating the greenhouse effect and
agencies would receive financial support.
pursuing international cooperation and clarification in respect
of CO2 and energy taxes). The European Parliament has also considered the international
aspects in its ‘Non-legislative resolution on EU–Russia relations’
Two important initiatives were adopted by Parliament in 2005,
(INI/2004/2170). The resolution emphasises the need to further
the first on oil dependency (PE A6-0509/2005) calling for a
develop and implement a common energy strategy for Europe
wider action to diversify energy sources and create a coherent
that incorporates producers, distributors and consumers, and
global energy strategy, and the second a resolution on the
creates a transparent and sustainable energy system that
share of renewable energy (A6-0227/2005) with which
enhances the regional diversity of energy supplies.
Parliament calls for concrete action to replace classical energy
sources by using all other renewable energy, namely wind
power, hydropower plants, solar-thermal power, geothermal g Miklos Györffi
plants and biomass. September 2006
4.14. Policy for research and technological

development
European policy for research and technological development has occupied an important place in European legislation
since the establishment of the European Coal and Steel Community (ECSC) in 1952. The Single European Act introduced
multiannual framework programmes for research. Currently, FP7 covers the period 2007–13 and is structured around five
specific programmes.
Legal basis development of a European RTD policy was the adoption of

four Council resolutions on 14 January 1974, notably one
Community research and technological development (RTD)
concerning the coordination of national policies and the
policy was originally based on Article 55 of the Treaty
definition of projects of interest to the Community in the field
establishing the European Coal and Steel Community (ECSC)
of science and technology and one on the need for the
(expired in 2002), Articles 4 to 11 of the Treaty establishing the
Community to have its own science and technology policy.
European Atomic Energy Community (EAEC) (Euratom: nuclear
research), and Articles 35 and 308 of the Treaty establishing the Title XVIII ‘Research and technological development’ of the EC
European Community (EC). An important milestone in the Treaty was introduced by the Single European Act (SEA), which
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entered into force on 1 July 1987, and provided a new and Article 165 provides that: ‘The Community and the Member
explicit basis for RTD policy, based on multiannual framework States shall coordinate their […] activities so as to ensure that
programmes. national policies and Community policy are mutually
consistent.’
According to the SEA, the framework programme (FP) was
adopted by unanimity in the Council, after a single
consultation of the European Parliament (EP). With the entry Achievements
into force of the Maastricht Treaty on 1 November 1993 co-
A. Community RTD policy: a short review
decision by Parliament and the Council was introduced for the
adoption of the EC FP, while maintaining the requirement for The main instrument of Community RTD policy is the
unanimity in the Council. Article 7 of the Euratom Treaty multiannual FP, which sets objectives, priorities and the
(unanimity in the Council, with no formal requirement to financial package of support for a period of several years
consult the Parliament) was left unchanged. (usually five, with planning for successive FPs overlapping by
one or two years, but with distinct financial envelopes usually
With the entry into force of the Amsterdam Treaty on 1 May running over four years). With the first FP (1984–87),
1999 the requirement for Council unanimity to adopt the EC Community RTD activities were for the first time coordinated
FP was replaced by qualified majority. Once again the as part of a single, structured framework. The main aim of the
Euratom Treaty was left unchanged and the Euratom second FP (1987–91) was to develop technologies for the
‘framework programme’ is adopted unanimously by the future, integrating major Community programmes in the areas
Council following a single reading in Parliament. Specific of information technology (Esprit), materials (EURAM),
programmes within the FP are adopted by qualified majority industrial technologies (BRITE) and advanced communications
in Council, following simple consultation of the EP. Rules for technologies (RACE). The third FP (1990–94) broadly followed
the participation of undertakings, research centres and the same lines, focusing on fewer lines of action, but also on
universities in the EC FP were adopted by separate Council the dissemination of research results. In April 1994, after a long
decision (cooperation procedure) for the fourth and fifth FPs, and difficult procedure, Parliament and the Council (in the first
and by EP and Council regulation (co-decision procedure) for ever co-decision) adopted the fourth FP (1994–98). This
the sixth FP. programme built on the previous initiatives, but contained
several important innovations, such as a new programme on
Objectives targeted socioeconomic research. The fifth FP (1998–2002)
marked a shift from research concentrating largely on
The aim of Community RTD policy, since the SEA, has been to
technical performance towards research and innovation
strengthen the scientific and technological bases of European
addressing targeted socioeconomic objectives.
industry and to encourage it to become more competitive at
international level. Promoting industrial competitiveness was B. Implementation of RTD policy
central to the FPs as defined by Member States in the mid- to
A typical Community-funded project involves legal entities, i.e.
late 1980s. This key provision was amended in 1993 (Maastricht
universities, research centres, businesses, including small and
Treaty) by adding the phrase ‘while promoting all the research
medium-sized enterprises (SMEs), or individual researchers,
activities deemed necessary by virtue of other chapters of this
from several Member States, associated and third countries. A
Treaty’ (Article 163 of the EC Treaty).
balanced representation of industry and academia is generally
Article 164 of the EC Treaty specifies: ‘In pursuing these pursued. There are also special actions to support the
objectives, the Community shall carry out the following development of research activities in the less-favoured regions
activities, complementing the activities carried out in the of Member States and associated candidate countries. The FP
Member States: is implemented through specific programmes. The
Community has several means at its disposal to achieve its
(a) implementation of research, technological development
RTD objectives within these specific programmes:
and demonstration programmes, by promoting
cooperation with and between undertakings, research — direct actions carried out by the Joint Research Centre
centres and universities; (JRC) located at Ispra (Italy), Geel (Belgium), Petten
(Netherlands), Karlsruhe (Germany) and Seville (Spain), and
(b) promotion of cooperation in the field of Community
entirely financed by the Community;
research, technological development and demonstration
with third countries and international organisations; — indirect actions, which can be either: (i) collaborative
research projects carried out by consortia of legal entities
(c) dissemination and optimisation of the results of activities in
in Member States, associated and third countries and
Community research, technological development and
financed by the Community to a maximum of 50 %; or
demonstration;
(ii) coordination and support actions financed by the
(d) stimulation of the training and mobility of researchers in Community to a maximum of 100 %; or (iii) host and
the Community.’ individual-driven actions for the purposes of researchers’
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4 14 development
mobility in the context of various Marie Curie fellowship, — sustainable development, global change and ecosystems:
grant and award schemes, with a maximum Community EUR 2 329 million
contribution of 100 %.
— citizens and governance in a knowledge-based society:
C. The sixth framework programme (2002–06) EUR 247 million
1. Background — specific activities covering a wider field of research:
The sixth RTD framework programme (FP6) was adopted on EUR 1 409 million (including horizontal research activities
27 June 2002 (Decision No 1513/2002/EC of the European involving SMEs with a budget of EUR 473 million and
Parliament and of the Council). The programme runs from 1 specific measures in support of international cooperation
January 2003 to 31 December 2006. FP6 was specially with a budget of EUR 346 million)
designed to promote the establishment of a European — non-nuclear activities of the JRC: EUR 835 million
research area (ERA) endorsed by the Lisbon European Council
b. Structuring the ERA
in March 2000 and supported by the EP. The creation of an ERA
aims at: (i) ensuring the free movement of researchers, ideas Budget: EUR 2 854 billion:
and technology in Europe; (ii) overcoming the fragmentation — research and innovation: EUR 319 million
of European research and creating a critical mass; and
— human resources: EUR 1 732 billion
(iii) coordinating national and European programmes and
policies. — research infrastructures: EUR 715 million
2. Instruments — science and society: EUR 88 million
FP6 introduced two new instruments with the aim of c. Strengthening the foundations of the European research area
specifically addressing the problem of fragmentation of EUR 347 million
European research and increasing its impact:
4. Implementation of the programme
— networks of excellence, which aim at progressively a. Participation
integrating partners’ research capacities for the purpose of
promoting Community scientific and technological Any legal entity, i.e. any natural or legal person established in a
excellence; Member State or associated country in accordance with
national, international or Community law may respond to calls
— integrated projects, which are substantial in size and aim at for proposals and, if their proposal is accepted, receive
constituting a critical mass in research activities focusing Community support. Thus, universities, research centres,
on clearly defined scientific and technological objectives. businesses, including SMEs, and international organisations may
In addition, Article 169 of the EC Treaty was applied for the first ask for funding. Entities from third countries may also participate
time to a partnership between European and developing in consortia and even receive support for certain FP activities.
countries for carrying out a programme of clinical trials to b. Calls for proposals
combat AIDS, malaria and tuberculosis. As a general rule, project proposals are submitted in response to
3. Budget and lines of action calls for proposals. Consortia wishing to respond normally have
The initial FP6 budget of EUR 17.5 billion, of which at least three months to draw up and submit their proposal.
EUR 1.23 billion was for Euratom, was later increased to c. Information sources
EUR 19 235 million, of which EUR 1 352 million was for Calls for proposals are published in the Official Journal of the
Euratom, to take enlargement into account. The overall European Union and on the Commission Internet pages
financial amount for the EC FP (EUR 17 883 million) was designed for this purpose. The key instrument for the
distributed among different activities as follows. dissemination of information about calls for proposals and the
a. Focusing and integrating Community research (including FP in general, as well as about related policy issues, is the
thematic priorities) Commission-supported CORDIS server. RTD info magazine also
provides information.
Budget: EUR 14 682 million:
At national level in the Member States, associated countries
— life sciences, genomics and biotechnology for health: and other partner countries, there are national contact points
EUR 2 514 million (NCPs) to supply information on the FPs and assist potential
— information society technologies: EUR 3 984 million applicants.
— nanotechnologies, materials and new production d. Proposal evaluation and selection of projects
processes: EUR 1 429 million Project evaluation usually comprises a single step. For
particular activities a two-phase procedure is applied:
— aeronautics and space: EUR 1 182 million
participants are first invited to submit a summary proposal. If
— food quality and safety: EUR 753 million their initial application is accepted, they are invited to submit a
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detailed proposal. Projects are selected for funding by helping create new research infrastructures. The EC FP is
Commission decision, following inter-service consultation and structured into five specific programmes: ‘Cooperation’
a comitology procedure. (supporting collaborative research activities in nine thematic
priorities), ‘Ideas’ (introducing the European Research Council),
e. International cooperation (INCO)
‘People’ (supporting training and career development of
International cooperation is implemented in FP6 through: researchers), ‘Capacities’ (supporting key aspects of European
(i) opening the thematic priorities to third-country entities research and innovation capacities) and ‘Non-nuclear actions
with funding available for INCO-targeted countries of the JRC’. The Euratom FP is structured into two specific
(developing countries, Mediterranean countries, including the programmes and contains substantial funding for fusion
western Balkans, Russia and the new independent States); energy research, in line with the international commitments
(ii) specific measures in support of international cooperation undertaken by the Community for the realisation of the
involving INCO-targeted countries; (iii) international activities international thermonuclear experimental reactor (ITER)
under ‘human resources’. Finally, the Community has together with the China, Japan, Russia, the USA and South
concluded a number of bilateral scientific and technological Korea.
cooperation agreements with third countries.
f. Coordination of non-Community RTD activities F. European Institute of Technology (EIT)
The ERA-NET scheme, introduced for the first time under FP6, The European Commission in its communication from
aims at stepping up the coordination of national and regional President Barroso to the spring European Council ‘Working
research programmes carried out in the Member States and together for growth and jobs — A new start for the Lisbon
associated countries through networking, including ‘mutual strategy’ (COM(2005) 24 of 2 February 2005) noted the
opening’ of the programmes and implementation of joint Commission’s intention to submit a proposal on the
activities. FP6 also covers the operational costs of COST establishment of a European Institute of Technology. The EIT
(cooperation in the field of scientific and technical research of had been proposed by the Commission communication
activities of public interest financed nationally in Europe) and ‘Implementing the renewed partnership for growth and jobs
coordinates its activities with those of other European — Developing a knowledge flagship: the European Institute of
initiatives, such as Eureka (an intergovernmental initiative for Technology’ (COM(2006) 77 of 22 February 2006) as a reference
market-oriented research and development activities). model within an integrated strategy to mobilise all
components of the knowledge triangle of education, research
D. Prospects for European RTD policy and innovation towards the Lisbon goals. This communication,
The adoption of FP6 represents a clear step towards a new accompanied by a public consultation, was very well received
strategic orientation of Community research policy. However it by the stakeholders. A second Commission communication
is essential, as Parliament has in recent times repeatedly ‘The European Institute of Technology: further steps towards
stressed, to step up the research effort at EU level, since only in its creation’ (COM(2006) 276 of 8 June 2006) had a more
this way can Europe’s place in the field of technological positive impact among the expert communities, but still leaves
innovation be assured and the necessary conditions created to many questions unanswered, which hopefully should be dealt
safeguard Europe’s economic independence and social with in the forthcoming legislative proposals and the
cohesion, which are indispensable for the prosperity of its accompanying impact assessment.
citizens.
Compared with the main competitors on the world market Role of the European Parliament
(mainly the USA and Japan), EU research and development For more than 20 years the EP has promoted an increasingly
spending is insufficient (1.93 % of GDP in 2003, compared with ambitious EU RTD policy and has called for a substantial
2.59 % in the USA and 3.15 % in Japan). Thus, an important increase in total research spending in the Member States to
step in European research policy was taken at the Barcelona maintain and strengthen Europe’s international
European Council in March 2002, where Heads of State or competitiveness. The EP has also advocated more
Government agreed to raise investment in research and collaboration with non-EU partners, a serious integration of
development to 3 % by 2010. activities between the Structural Funds and the FPs and a
E. The seventh RTD framework programme (FP7) targeted approach to optimise the involvement of SMEs and
facilitate the participation of promising weaker actors.
The European Commission published its initial proposal on
Parliament further insisted that far more flexibility should be
6 April 2005 with an overall budget of EUR 72.7 billion (current
built into FPs, to enable the shifting of resources to more
prices) for the EC FP over the period 2007–13 and
promising areas and provide the ability to react to changing
EUR 3.1 billion for the Euratom FP over the period 2007–11.
circumstances and newly emerging priorities for research.
The proposals contain a number of important innovations,
including creating a European Research Council (ERC) in During the negotiations on FP6, the EP put forward a number
support of investigator-driven frontier research, launching joint of important proposals that are reflected in the legislative texts
technology initiatives (JTIs) around key technologies and that were finally adopted. Since the EU institutions had agreed
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4 14 development
at an early stage on the overall budget of the programme, Ideas 7 560

Parliament’s efforts concentrated on emphasising its priorities
People 4 927
and, where applicable, improving the budgetary provision for
them. These priorities mainly concerned the structure of the Capacities 4 042
programme (introducing a section on combating major Research infrastructures 1 708
diseases, including cancer and poverty-linked infectious Research for the benefit of SMEs 1 366
diseases, in the first thematic priority), the financing Regions of knowledge 126
instruments (introducing the concept of a ‘stairway of Research potential 350
excellence’ to accommodate small-scale participants with Science in society 359
innovative research projects), the rules of participation
Activities of international cooperation 133
(removing liability provisions that would have discouraged
small participants, introducing additional ‘soft’ evaluation Non-nuclear actions of the Joint Research 1 751
criteria on synergies with education, engaging society as a Centre
whole and increasing the role of women in research) and Total 50 862
support for science and society and international cooperation
activities. Adjustments were made to bring the framework programme
in line with the EP’s position on the Interinstitutional
To a large extent, the Commission’s FP7 proposals include the Agreement on budgetary discipline (including the financial
major demands contained in the EP resolution of 10 March perspectives 2007–13) as adopted by plenary on 15 May 2006,
2005 on the Commission communication ‘Guidelines for future and to indicate by internal budgetary allocation the priorities
European Union policy to support research’. The main issues for the framework programme which are shared by all political
addressed in that resolution concern: (i) the Commission’s groups in ITRE.
proposal to double the EU research budget; (ii) an adequately
funded, autonomous ERC to support basic research in all There is a broad political consensus in the Parliament on the
scientific fields on the basis of excellence; and (iii) JTIs, as a priorities among the different elements of FP7. The EP assigns
significant mechanism to bring research closer to industry. greatest priority to the ‘European Research Council’ (‘Ideas’
According to the exchanges of views held so far at committee objective), which in the EP’s opinion should be an
level, the Commission’s FP7 proposals have generally been independent structure to be established under the co-
well received by MEPs. After Parliament’s first-reading on decision procedure. Other EP priorities, in order of importance,
15 June 2006 and due to the substantial cut in the budget for are ‘People’ (recruitment, careers and exchange of researchers)
research by the Council, according to the agreement on the and ‘Cooperation’ (especially the themes ‘Energy’ and ‘Health’;
financial perspectives for the period 2007–13 reached in in ‘Energy’ the EP asks for two thirds of the funds to be
December 2005, the proposed budget and its breakdown is as earmarked for renewable energies and energy efficiency
follows (in EUR million). research). The EP also expressed concern about the possible
diversion of FP7 funds to the future European Institute of
Cooperation 32 582 Technology (EIT) and possible excessive earmarking of funds
Health 6 134 for the ‘Risk-sharing finance facility’.
Food, agriculture and biotechnology 1 935 In May 2006 the EP expressed scepticism over the necessity or
Information and communication technologies 9 050 usefulness of the EIT in its resolution on the Commission’s
Nanosciences, nanotechnologies, materials and annual policy strategy report (EP resolution of 18 May 2006 on
new production technologies 3 467 2007 budget: Commission’s annual strategic priorities, T6-
0221/2006) ‘[the EP] believes that the setting up of a new
Energy 2 415
European Institute of Technology may undermine or overlap
Environment (including climate change) 1 886
on existing structures and may therefore not be the most
Transport (including aeronautics) 4 180 effective use of funds in this context’.
Socioeconomic sciences and the humanities 657
Security 1 429
g Miklos Györffi
Space 1 429 September2006
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4.15. Small and medium-sized enterprises
SMEs constitute 99 % of companies in the EU, and they account for roughly 70 % of jobs and EU GDP. Various action
programmes have been adopted to support SMEs. The most recent, the Small Business Act (SBA), sums up all these
programmes and aims to create a comprehensive policy framework.
Legal basis EU policy for SMEs dates back to a first action programme,
adopted in 1983 at the close of the European Year of SMEs and
Small and medium-sized enterprises (SMEs) operate mainly at
the Craft Industry. A second such programme began in 1987
national level, as relatively few SMEs are engaged in cross-
and was reinforced by the Council for the period 1993–96. A
border business within the EU. However, independently of
third multiannual programme covered the period 1997–2000
their scope of operations, SMEs are affected by EU legislation
and a fourth multiannual programme initially ran for the
in various fields, such as taxation (Articles 90 to 93 of the Treaty
period 2001–05 with a budget of EUR 450 million (extended to
establishing the European Community (EC)), competition
2006 with an increase in the financial reference amount by
(Articles 81 to 89 EC) and company law (right of establishment
EUR 88.5 million). The five prime objectives of the fourth
— Articles 43 to 48 EC), regional and social policy (Articles 136
programme: enhancing growth and the competitiveness of
to 145 EC) and customs formalities (Articles 25 to 27 EC), to
business in a knowledge-based economy; promoting
mention a few areas.
entrepreneurship; simplifying and improving the
Various regulations, such as Council Regulation (EEC) No administrative and regulatory environment for business;
2137/85 on the European economic interest grouping, improving the financial environment for business; and giving
Regulation (EC) No 2157/2001 on the European company business easier access to EU support programmes.
statute and Directive 2001/86/EC on the involvement of
employees or Regulation (EC) No 70/2001 on State aid are The Council adopted the European Charter for Small
examples of secondary legislation that have a tangible impact Enterprises in June 2000, setting out recommendations for
on SMEs in the EU. small enterprises to take full advantage of the knowledge
economy. Since 2000 the Commission has produced annual
The Commission adopted a new definition of SMEs in implementation reports on the state of implementation of the
Recommendation 2003/361/EC. The staff thresholds used are charter.
the following: micro (0 to 10 employees), small (10 to 50
employees) and medium-sized enterprises (50 to 250 Various subsequent initiatives of the Commission have had a
employees). The recommendation increased the financial tangible impact on SMEs. For example, in 2001 the
ceilings (turnover or balance sheet total) to take account of Commission launched a ‘Go digital’ awareness campaign to
inflation since the first SME definition in 1996. The new demonstrate to SMEs the potential benefits of adopting and
definitions entered into force on 1 January 2005. efficiently using e-business. As a follow-up to the eEurope
2002 action plan and helping SMEs to ‘Go digital’, the
Commission has launched specific actions to help SMEs adopt
Objectives information and communication technologies (ICT) and
Micro, small and medium-sized enterprises make up 99 % of all e‑business.
enterprises in the EU. SMEs are about 23 million in number,
employing about 100 million and are an essential source of At the beginning of 2003 the Commission also launched a
entrepreneurial spirit and innovation, which is crucial for the public debate on how to further improve the entrepreneurship
competitiveness of European companies. EU policy for SMEs agenda, through its Green Paper on entrepreneurship in
aims to ensure that Community policies and actions are small- Europe (COM(2003) 27). This resulted in the Commission
business friendly and contribute to making Europe a more communication ‘Action plan: the European agenda for
attractive place for setting up a company and doing business. entrepreneurship’ (COM(2004) 70). Decision No 1639/2006/EC
of the European Parliament and of the Council of 24 October
2006 establishing a competitiveness and innovation
Achievements framework programme (2007–13) was the follow-up to this
A. General SME policy initiative.
Current SME policy in the EU largely falls within the scope of The CIP is especially directed at SMEs and brings together into
the Lisbon strategy, which aims to make the EU the most a common framework specific Community support
competitive and dynamic knowledge-based economy in the programmes and relevant parts of other Community
world. SMEs play a crucial role in this objective. programmes in fields critical to boosting European
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Common policies Small and medium-sized enterprises
4 15
productivity, innovation capacity and sustainable growth, stresses the need for the continuous improvement of the
whilst simultaneously addressing complementary framework conditions for businesses in the single market.
environmental concerns. It is composed of sub-programmes, Various initiatives and measures exist or are planned to
such as the entrepreneurship and innovation programme, the facilitate the establishment and operation of SMEs in the
ICT policy support programme and the ‘Intelligent energy — internal market. SMEs have been granted derogations in many
Europe’ programme. areas, for example the approximation of company law,
competition rules and taxation.
The Commission communication on better regulation for
growth and jobs (COM(2005) 97) adopted by the Commission 1. Company law
in 2005 aims to reform the way in which the European The ‘European company’ is regarded as one of the key
institutions, individually or jointly, legislate at European level, elements for the completion of the internal market. Since 2001
and how the Member States implement and apply this there exists a possibility for a public limited company to be set
legislation at national level. There have been two strategic up in the EU (Societas Europaea (SE)) which allows enterprises
reviews of this package. Under the better regulation initiative, to operate throughout the EU subject to the EU legislation
all EU legislation is also to be assessed as to its impact on SMEs, directly applicable in all Member States.
and if necessary to be made more SME friendly.
With the SBA, the European Commission adopted a proposal
Also in 2005, the European Commission adopted its ‘Modern for a European private company statute (also known as the
SME policy for growth and employment’ communication. This ‘Societas Privata Europaea (SPE)’ COM(2008) 396/3), in June
communication proposed action in five key areas, namely: 2008. The SPE statute contains a set of uniform company law
promoting entrepreneurship and skills; improving SMEs access rules that would apply to any private company incorporated as
to markets; cutting red tape; improving SMEs growth potential; SPE across all Member States, wider than those contained in
and strengthening the dialogue and consultation with SME the SE statute. This, if adopted, will bring considerable benefits
stakeholders. The initiative aimed to ensure that all aspects of for SMEs, saving time and reducing costs, especially when
EU policy to help SMEs are coordinated, and that the needs of setting up business across different Member States.
SMEs are more fully assessed in drawing up such policies.
2. Competition policy
B. The Small Business Act (SBA) The EU’s State aid policy has, for a long time, treated SMEs
The most comprehensive and encompassing initiative on favourably, recognising the special difficulties they face due to
SMEs to date was brought forward by the Commission as a their size. With the Small Business Act, the Commission
communication (COM(2008) 394) in June 2008 in the form of proposes a new exemption regulation (general block
the Small Business Act (SBA). exemption regulation (GBER)) on State aid, which consolidates
into one text and harmonises the rules previously existing in
The SBA consists of various different initiatives and principles. It five separate regulations, and enlarges the categories of State
is named an ‘Act’ to symbolically underline the political will aid covered by the exemption. Under the new rules, SMEs can
behind it in the absence of a binding legislative nature. The receive investment aid of up to EUR 7.5 million for a given
SBA aims to create a new policy framework integrating the project without having to notify the Commission. The initiative
existing instruments and building on the European Charter for also aims to facilitate environmental protection projects and
Small Enterprises and the ‘Modern SME’ policy. In this, it takes a promote female entrepreneurship.
‘political partnership approach with Member States’ rather
than proposing a fully fledged Community approach. The SBA In the past, the Commission made some efforts to modernise
aims to improve the overall approach to entrepreneurship in its competition rules, make procedures more efficient, increase
the EU by ‘thinking small first’. With the SBA, the Commission their transparency and facilitate their application. Aid for SMEs
attempts to establish a genuine partnership within the EU for has been on the agenda repeatedly. In January 2001,
SMEs’ benefit. Regulation (EC) No 70/2001 on the application of Articles 87
and 88 of the Treaty to State aid to SMEs replaced the
At the core of the SBA are 10 common guiding principles, such guidelines from 1996. It exempted investment aid (15 % of
as creating a more entrepreneur-friendly environment or eligible costs for small and 7.5 % for medium-sized
improving SMEs access to finance, which should be enterprises), aid for consultancy (50 % of eligible costs), and aid
implemented through policy measures both at the EU and for participation in fairs and exhibitions (50 % of eligible costs).
Member State levels. These principles are supplemented by
the announcement of four legislative proposals to follow at a 3. Taxation
later date: the European private company statute; a late The open consultations leading to the SBA contained the
payment directive; a new exemption regulation on State aid; question on the most common problems that SMEs faced in
and a directive on reduced VAT rates. the internal market. There, taxation was named among the
three single most important issues. Although the rules in
C. SMEs in the single market indirect taxation are to some extent harmonised under a
The Commission’s communication on the single market for Community framework, direct taxation (including company
21st century Europe (COM(2007) 724 of 20 November 2007) taxation) remains a full national competence. This has a
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considerable impact on the compliance costs and the USEandDiffuse targeting the health and ICT sectors, or
administrative burden in cross-border business, bearing ECOinno2SME focusing on the eco-innovation segment.
unproportionally highly on SMEs as they tend to have fewer
resources than bigger companies. F. Most important challenges for SMEs
1. Administrative burden
Since 2001, communications (e.g. COM(2001) 582) and studies
have addressed the problem of ‘Company taxation in the The administrative and regulatory burden was the single most
internal market’ (SEC(2001) 1681), but no solution has really important obstacle named in the open consultations for the
been found. The Commission is expected to present a SBA. Cutting red tape and bureaucracy is a high priority for the
legislative proposal for a common consolidated corporate tax Commission in the SBA. Making public administrations more
base in September 2008, which will remain optional for both responsive to SMEs’ needs can make a major contribution to
Member States and companies. For the specific needs of SMEs, the growth of SMEs, notably through e-government and one-
the proposal of Home State taxation (COM(2005) 702) has stop shop solutions, thus saving time and money and freeing
been put forward by the Commission. It foresees that Member resources for innovation. The ongoing implementation process
States allow SMEs to compute their company tax profits of the services directive should contribute to this goal,
according to the tax rules of the Home State of the parent reducing regulatory barriers to cross-border service activities.
company or head office. An SME wishing to establish a 2. Access to finance
subsidiary or branch in another Member State would as a Financial markets have often failed to provide SMEs with the
result be able to use the familiar tax rules of its Home State finance they need. Some progress has been made over the last
when calculating its taxable profits. However, no legislative few years in improving the availability of finance and credit for
progress has been made in this area. SMEs through the provision of loans, guarantees and venture
D. EU programmes and networks for SMEs capital. The European financial institutions — the European
Investment Bank (EIB) and the European Investment Fund (EIF)
Examples of SME policies and networks aimed at SMEs include, — have increased their operations for SMEs.
firstly, general support services for SMEs in the EU, for example
the ‘Enterprise Europe network’, ‘Solvit’, ‘Your Europe — However, the SBA still identifies access to finance as the second
business’, ‘SMEs and the environment’ as well as ‘Dealing with largest problem that individual SMEs face. More than
chemicals: national REACH helpdesks’. Secondly, support for EUR 1 billion will be available between 2007 and 2013 in the CIP
innovation and research includes the ‘IPR helpdesk’, ‘SME programme. This, the Commission calculates, should enable
Techweb’, ‘Network of FP7 national contact points (NCPs) for financial institutions to provide a total of EUR 30 billion to an
SMEs’, ‘China IPR helpdesk for SMEs’, ‘European business and estimated 475 000 SMEs. Moreover, the improved availability of
innovation centres (BIC) network — EBN’, ‘Innovation networks’, micro-loans (loans of less than EUR 25 000) is also foreseen.
‘Gate2Growth’, ‘CORDIS incubators service’, ‘CORDIS European
innovation portal’ and ‘Electronic marketplaces’. Role of the European Parliament
E. SMEs and research As early as 1983 the European Parliament (EP) declared a ‘Year of
Small and Medium-Sized Enterprises and the Craft Industry’ and
Research and development (R & D) is often much harder for
launched a series of initiatives to encourage their development.
SMEs than it is for large companies. Nevertheless R & D and
Since then the EP has consistently demonstrated its
innovation are crucial to the sustainable success and growth of
commitment to encouraging the development of European
SMEs in the EU.
SMEs. A few examples are listed below.
The sixth framework programme (FP6) included measures to
— In 1994 it welcomed the integrated programme for SMEs
assist SMEs’ access to new technologies through close
and the craft industry adopted by the Commission and
coordination between enterprise policy and R & D policy. FP6
called on it to take measures to give SMEs easier access to
devoted the highest ever budget to SMEs (nearly EUR 2 200
public procurement and to the EU’s financial instruments.
million). All the initiatives already established under FP5 aimed
at simplifying administrative procedures, reducing bureaucracy — In a 1997 resolution the EP commented on the
and helping SMEs were maintained and further improved. The internationalisation of small businesses, pointing out the
present seventh research framework programme (FP7), vital importance of access to loan and guarantee schemes
running from 2007 to 2013, also contains significant support to finance their start-up period and cover commercial and
dedicated to SMEs. Out of its total budget of EUR 54 billion political risks and the availability of information and
around 15 % is devoted to SMEs. cooperation between industrial networks. It also
recommended reducing corporation tax on small
Programmes under FP7 help SMEs with no research facilities to
businesses’ reinvested profits as an effective way of
outsource research, extend their networks, better exploit research
improving employment.
results and acquire technological know-how. To this end, the
Commission has also simplified the application procedures for — In another 1997 resolution the EP called for the banking
research funding. Best practices of FP7 projects for SMEs include and credit industries to grant facilities to all small
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Common policies Tourism Tourism
4 16
businesses in order to encourage growth, employment Enterprises (2005/2123(INI)), which comprises 10 ‘lines of
and investment, particularly by means of a special code of action’: education and training for entrepreneurship;
banking conduct for small businesses. cheaper and faster start-up; better legislation and
regulation; availability of skills; improving online access;
— In a 2002 resolution the EP stressed the importance for getting more out of the single market; taxation and
small businesses of open markets in telecommunications, financial matters; strengthening the technological
energy, postal services and transport. Parliament favoured capacity of small enterprises; making use of successful
applying experimental VAT-reduction measures across the e-business models and developing top-class small
board to all labour-intensive businesses. It called for access business support; developing stronger, more effective
to finance such as the EIB/EIF funds for normative representation of small enterprises’ interests at Union and
investments, and supported the funding of SMEs during national level.
start-up. Parliament welcomed progress in providing for
cheaper and quicker registration of enterprises in the EU. — The EP adopted the CIP (in first reading) on 1 June 2006.
The EP’s main concern was the structural orientation of the
— In 2005 the EP adopted a resolution entitled ‘Strengthening programme towards potential applicants, i.e. direct
European competitiveness — the effects of industrial beneficiaries in terms of radical simplification of the
change on policy and the role of SMEs’, in which it application procedure, including a one-stop shop
proposed a policy based on three elements: better approach (CIP agency). In the area of ICT programmes, it
lawmaking; developing an integrated approach to policy; was essential that the focus was shifted from where it
and pursuing appropriate sectoral policies and specific currently lies, with the authorities, to the real engine of
measures, which requires an in-depth knowledge of each innovation, which is SMEs.
industrial sector.
— In September 2005 the EP published an own-initiative g Arttu Makipaa
report on the implementation of the Charter for Small July 2008
4.16. Tourism
So far, the tourism policy has not been granted a place in the Treaties. As tourism is an area that can contribute to
achieving the goals of the Lisbon strategy, it has become an increasingly important part of the European policies. In the
event of ratification of the Treaty of Lisbon this policy will benefit from a specific legal basis.
Legal basis states, amongst other things, that the Union shall
complement the action of the Member States in the tourism
The Treaty establishing the European Community has not sector, in particular by promoting the competitiveness of
contained a specific chapter on tourism until now, but Union undertakings in that sector.
Article 3(u) of the Treaty has allowed the Community to pass
measures dealing with this area. Provisions on the free
movement of people, goods and services, SMEs and
Objectives
consumer protection, as well as environmental, transport and The EU tourism industry is made up of around 2 million
regional policies, are all relevant to tourism, because of its companies, primarily small and medium-sized enterprises. It
multifarious nature. The measures taken in these policy areas contributes 4 % of total GDP and employment (around
can affect tourism within the Community, whether directly or 8 million jobs). When its close association with other economic
indirectly. With the coming into force of the new Treaty of sectors is taken into account, this figure becomes even higher.
Lisbon, which is yet to be ratified by the Member States, the On the global stage, the EU is the most important tourist
Community’s tourism policy shall have a clear legal basis in region. Because of its economic weight, the tourism sector is
the form of the new Title XXI ‘Tourism’. The new Article 176 B an integral part of the European economy and thus measures
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are needed to help organise and develop it. From a European the drawing-up and the implementation of a European
perspective, the tourism policy also provides a means of Agenda 21 for tourism.
supporting general political goals in the fields of employment
In November 2003 the Commission adopted the
and growth. Tourism is also a part of the larger environmental
communication entitled ‘Basic orientations for the
policy and this dimension has gained in significance over time.
sustainability of European tourism’ (COM(2003) 716). It
outlined a series of measures to boost the Community’s
Achievements contribution. As a follow-up measure, the Sustainability in
A. General policy Tourism Expert Group was set up in 2004.
The first Council resolution on this subject, of 10 April 1984, On 17 March 2006, the Commission published a
acknowledged the importance of tourism for European communication entitled ‘A renewed EU tourism policy:
integration and invited the Commission to make proposals. Towards a stronger partnership for European tourism’
The subsequent decision of 22 December 1986 established an (COM(2006) 134). This discussed the current challenges to the
Advisory Committee on Tourism. industry, with the intention of bringing about a new
European tourism policy to meet these. The communication
Tourism generates considerable demand for transport services.
was based on the aforementioned Commission documents
The creation of an efficient passenger transport system
but included new aspects, in particular proposals on
with high-quality and safe transport services is thus a
optimising the use of EU financial instruments in the period
prerequisite for the economic development of tourism. Many
2007–13, on amending the existing regulations, and also the
decisions made in the field of European transport policy thus
promotion of tourism sustainability.
affect tourists and tourism companies, whether directly or
indirectly (see 4.6.1 Transport policy). B. Special measures
Since 1997, the EU has become increasingly aware of 1. For tourists
tourism’s contribution to employment in Europe. On the These included measures making it easier to cross borders and
basis of an expert group report on the growth and potential protecting health and safety as well as the material interests of
for employment of the tourism sector, which predicted tourists, such as the Council recommendation of 22 December
considerable growth until 2010, on 28 April 1999 the 1986 on fire safety in hotels and Directives 90/314/EEC on
Commission presented a communication entitled ‘Enhancing package tours and 94/47/EEC on timeshare properties. In
tourism’s potential for employment’ (COM(1999) 205). In its the field of transport, important rules were adopted on the
conclusions of 21 June 1999, the Council identified four protection of air passenger rights (4.6.6).
different action areas: Directive 2006/7/EC of 15 February 2006 on the quality of
— furthering the exchange and dissemination of information; bathing water is equally relevant to the tourism policy.
— improving training and qualifications in the tourism sector; 2. For the tourist industry and the regions
— improving the quality of products and services related to In light of the contribution made by tourism to regional
tourism; development and employment, projects supporting
tourism or cultural heritage received increased support
— promoting environmental protection and the sustainable within the framework of the Structural Funds in the period
development of tourism. 2000–06, with programmes such as Leader, Interreg and
By the end of 2001, the Commission had published a also the European Social Fund playing an important role.
communication entitled ‘Working together for the The EU tourism industry and companies within this sector
future of European tourism’ (COM(2001) 665), which were also supported by numerous other Community
proposed the creation of an operational framework, based programmes, including EU programmes for SMEs. The
on the method of open coordination between all Commission also produced an Internet guide on measures
stakeholders concerned. To this end, a plethora of measures taken by the EU to promote tourism companies and tourist
and actions were proposed for the different stakeholders so destinations.
as to safeguard the future of European tourism, from the
Great store was also placed on the creation of a Community
point of view of sustainability and competitiveness and
statistical information system in the field of tourism. An
through the improvement of information, training, and
initial two-year programme, aimed at harmonising the national
quality and the use of new technologies. One of the results
methods used, was introduced through Directive 95/57/EC of
of this strategy has been the annual European Tourism
23 November 1995.
Forum, held since 2002 with the participation of high-
ranking representatives from the tourism industry, EU The campaign against sex tourism involving children was
institutions and EU Member State governments. Amongst the subject of a 1996 Commission communication (COM(96)
these proposed measures, the cause of sustainable 547), which created a general framework for Community
development of tourism activities was championed through measures in this area.
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Role of the European Parliament that all investments which are clearly damaging to the
environment, human rights, the minimum labour
The European Parliament has made vital contributions to the
standards as set out by the International Labour
development of Community tourism and has often given
Organisation, the native way-of-life or the cultural heritage
momentum to concrete measures.
of the destination country are not supported. Furthermore,
— The European Parliament called for action against travel Parliament proposed the introduction of a certified
agencies, airlines and hotel chains which encourage sex ‘European fair trade tourism’ label to encourage ethical
tourism (resolution of 6 November 1997 on the Commission standards in tourism.
communication on combating child sex tourism). In the
— Likewise, on 8 September 2005 the European Parliament
resolution of 30 March 2000 on the same topic, Parliament
passed a resolution on new prospects and new
requested Member States to introduce universally-binding
challenges for sustainable European tourism, consisting
extraterritorial laws, making it possible to legally pursue and
of 70 paragraphs. The European Parliament set out its
punish people, who whilst abroad committed illegal acts
position and demands on the different aspects of an EÚ
relating to the sexual exploitation of children.
tourism policy. These aspects included: (a) competitiveness
— Moreover Parliament proposed the coordination of and quality of services, (b) safety in tourism, (c) new
Community policies on the promotion of employment in initiatives on sustainable tourism, (d) awareness and
the tourism industry with national employment policies as promotion of European tourism, (e) tourism and transport,
well as the improvement of quality and safety standards (f ) promotion of tourism at Community level,
within the European tourism industry (resolution on (g) coordination of regulations.
tourism and employment of 18 February 2000).
— In its resolution of 29 November 2007 on ‘A renewed EU
— In its resolution on the future of European tourism of tourism policy: towards a stronger partnership of
14 May 2002, Parliament emphasised the need for an European tourism’ the European Parliament dealt with,
integrated approach to all political measures affecting among other things, the effect the visa policy has on
tourism. On this point, it called for all the relevant tourism. It highlighted the need to simplify visa application
Commission directorates-general (Transport, Regional procedures and to reduce the costs of tourist visas for entry
Policy, Employment, Environment, Social Policy, Consumer into any Member State. It called on the Member States that
Protection, Education and Culture) to work towards the are party to the Schengen Agreement to establish
harmonisation of the hitherto fragmentary nature of the common consular desks for the grant of visas to third-
measures taken and towards an integration of all country applicants, to ensure that these desks have the
Community programmes aimed at safeguarding the same working methods and apply the same visa criteria
sustainable development of this sector. and to improve the reception given to visa applicants.
Furthermore, it advocated greater harmonisation of quality
— In its resolution on tourism and development of
standards for tourist accommodation in Europe as well as
8 September 2005, Parliament stressed the need to reinvest
the further development of quality management schemes
the profits generated by tourism back into local
in this area.
development. It called for all European investments in the
tourism industry of developing countries to be subject to
the same regulations as those applicable to the granting of g Nils Danklefsen
assistance within the European Union, so as to make sure December 2007
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4.17. Culture and education
4.17.1. Education and vocational training policy

Education policy and vocational training is one of the areas in which decision-making is done by the co-decision
procedure. According to the principle of subsidiarity, this policy is primarily the responsibility of Member States. However,
the EU has adopted several programmes of European and international dimension in order to promote exchanges,
mobility and intercultural understanding.

Articles 3, 140, 146, 149 and 150 of the Treaty establishing the A. Objectives pursuant to the EC Treaty
The EU is to contribute to the development of quality
The Treaty of Rome did not make any extensive reference to education by encouraging cooperation between Member
education. It simply called in Article 3 for the Member States to States and, if necessary, by supporting and supplementing
make a contribution to quality education and training. It was their action.
only with the Maastricht Treaty that comprehensive reference
was made to the contribution of the Community in the field of B. Current priorities
education and training. Among other things, education In order to achieve the Lisbon strategy objective of making the
became subject to co-decision. With the Amsterdam Treaty, Union the most competitive and dynamic knowledge-based
this was extended to vocational training as well. economy in the world, Heads of States or Government stated
in 2000 that ‘not only a radical transformation of the European
The Charter of Fundamental Rights states that ‘Everyone has economy, but also a challenging programme for the
the right to education and to have access to continuing and modernisation of social welfare and education systems’ was
vocational training’ (Article 14) and that ‘Everyone has the right needed.
to engage in work and to pursue a freely chosen or accepted
occupation’ (Article 15). As a consequence, the Council and Commission adopted a
10‑year work programme, ‘Education and training 2010’
According to the principle of subsidiarity, each Member State (2002/C 142/01). Its objectives include improving the quality
has full responsibility for the organisation and content of its of education and training systems and facilitating access to
education and vocational training systems. Any act of education and training for all, as well as opening up
harmonisation of legal and regulatory provisions of the education and training to the wider world. This programme
Member States is excluded from the scope of Articles 149 provides a new and coherent strategic framework
and 150. incorporating all action in the field of education at European
level, including vocational training. It is implemented
The Lisbon Treaty does not bring any significant changes in through the ‘open coordination method’, which means
the field of education and vocational training policy (see defining common objectives and translating them into
Articles 149 and 150 of the new ‘Treaty on the Functioning of national policies.
the European Union’). The Union’s role in these areas is
specified as follows: ‘The Union shall have competence to Since the adoption of the work programme, experts from 31
carry out actions to support, coordinate or supplement the European countries, international organisations and EU
actions of the Member States’ (Article 6 TFEU). A new institutions have been meeting regularly in working groups to
horizontal ‘social clause’ ensures that in defining and support the implementation of the objectives at national level
implementing its policies the Union takes account of ‘a high through exchange of good practice, study visits, peer reviews,
level of education [and] training’ (Article 9 TFEU). It should etc. With the support of the Standing Group on Indicators and
also be pointed out that with the Treaty’s entry into force, the Benchmarks set up by the Commission in 2002, indicators and
Charter of Fundamental Rights becomes legally binding benchmarks are being developed to monitor progress in
(Article 6 TEU). achieving objectives.
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Achievements language skills and cultural awareness and the dissemination

of good practice. In Phase II, which ran from 1 January 2000 to
A. Action programmes 31 December 2006, the programme had a budget of
Since the start of European cooperation in the field of EUR 1 150 million.
education, more than 30 years ago, the main priorities have
been to promote cross-border mobility of learners and 3. Tempus
teachers, to promote European cooperation between The first Tempus (Trans-European mobility scheme for
educational establishments and to improve the quality of university studies) programme was adopted by the Council in
education and vocational training. May 1990 after the fall of the Berlin Wall. Tempus is a trans-
European cooperation scheme involving higher education
With the help of action programmes and other initiatives a
establishments in the EU and in partner countries in eastern
great deal has already been achieved in this field. The
Europe, the western Balkans, the Middle East, north Africa and
following programmes and initiatives have been adopted.
Central Asia. The programme encourages cooperation projects
1. Socrates in the areas of curriculum development and modernisation,
This programme was launched in 1995 and consisted of eight teacher training, university management, and structural
actions. reforms in higher education. It puts special emphasis on the
mobility of academic and administrative staff. Tempus is now
— Action 1, Comenius (from pre-school to secondary in its fourth phase and covers 27 countries.
education), sought to improve the quality and the
European dimension of school education, in particular by 4. Erasmus Mundus
encouraging transnational cooperation between schools. It was established in July 2003 to promote cooperation with
— Action 2, Erasmus (higher education), encouraged third countries in higher education (Decision No 2317/2003/
transnational cooperation between universities and EC). The scheme provides financial assistance for the creation
mobility of university students and teachers. of EU masters courses involving at least three higher education
institutions from three different Member States, and leading to
— Action 3, Grundtvig (adult education and other educational the awarding of recognised double, multiple or joint degrees,
pathways), sought to encourage the European dimension offers scholarships for students and scholars from third
of lifelong learning. countries and supports partnerships between EU and third-
— Action 4, Lingua (language teaching and learning), country higher education institutions. The European
promoted cooperation in developing innovative materials Parliament increased the budget from EUR 200 million to
for use in language teaching and supported projects which EUR 230 million. The programme runs from 2004 to 2008. In
encourage language learning. the first three academic years (2004–06), more than 2 300
students took part. A Commission proposal to extend the
— Action 5, Minerva (open and distance learning, information programme for the period 2009–13 is currently under
and communication technologies in education), supported discussion in the European Parliament and the Council.
transversal measures relating to open and distance
learning. 5. The new lifelong learning programme
Decision 2493/95/EC established 1996 as the European Year of
— Actions 6, 7 and 8 were innovations and experimental
Lifelong Learning.
programmes entitled ‘Observation and innovation’, ‘Joint
Following the success of this initiative, in June 2002 the
actions with other EU programmes’ and ‘Accompanying
Council adopted a resolution on lifelong learning with a view
Measures’.
to enabling people to meet the challenges of the knowledge-
The Socrates programme was a great success, with the result based society by promoting the development of their
that a second phase was agreed with a total budget knowledge and skills at all stages of their lives. Since that time,
amounting to EUR 1 850 million for the period 2000–06. For lifelong learning has become the guiding principle for the
the period post-2007, most of the actions were incorporated further development of education and training policy. The
into the new lifelong learning programme (see below). goal is to provide people of all ages with equal and
Erasmus proved particularly popular: to date, it has enabled unhindered access to high-quality learning opportunities and
more than 1.5 million students to spend a study period abroad, to break down barriers between different forms of learning. In
with 31 European countries participating in this programme. order to facilitate the transition to a knowledge-based society,
2. Leonardo da Vinci the EU is supporting the introduction of strategies and specific
action for lifelong learning.
The European dimension of vocational training was promoted
by the Leonardo da Vinci programme, which was first An important step in this process was the launch in May
established in 1994 and which is intended to support and 2007 of the new ‘integrated action programme in the
supplement action by the Member States. The programme field of lifelong learning’ under which financial support
promoted transnational mobility, placement and exchange for the European education and training sector will be
projects, study visits, pilot projects, transnational networks, provided for the period 2007–13 (Decision No 1720/2006/
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EC of 15 November 2006). The programme will comprise Other EU initiatives
four sub-programmes which, in the main, formed part of 1. Quality education
the Socrates programme: Comenius (school education);
Quality education at all levels is a high priority for all EU
Erasmus (higher education and training); Leonardo da
Member States. Much importance is attached to this,
Vinci (vocational education and training); and Grundtvig
particularly for achieving the Lisbon objectives. However,
(adult education). It also incorporates a ‘transversal’
according to the Commission communication on ‘Education
programme covering four key activities (policy cooperation,
and training 2010’, the success of the Lisbon Strategy hinges
the promotion of language learning, e-learning and the
on urgent reforms and there is a shortfall of investment in
dissemination of best practice). The final aspect is the Jean
human resources in the Member States compared with the US
Monnet programme, supporting activities in the field of
and Japan. The Commission suggested simultaneous actions
European integration and institutions and associations
in all Member States in this context (COM(2003)685).
carrying out such work. The programme’s budget for the
period 2007–13 is EUR 6.97 billion. The Bologna Declaration on the European dimension in higher
education of 19 June 1999, signed by 29 countries, marks a
The challenges currently on the agenda are to improve adult
turning-point in the development of European higher
education and define the basic skills to be provided through
education. The so-called ‘Bologna process’, in which 45
lifelong learning in order to meet the demands of the labour
countries are already taking part, is aimed at establishing
market for a highly skilled workforce. A Commission
throughout Europe a three‑stage system of degree-level
communication (COM(2006)614) and the subsequent action
studies (bachelor, masters and doctorate), introducing a
plan on adult learning (COM(2007)558) set out
system of credits, encouraging mobility and promoting
recommendations for the development of more efficient and
European cooperation in the area of quality assurance.
better quality adult learning systems and for greater
participation in adult learning initiatives. The In 2002 the education ministers of 31 European countries
recommendation of the European Parliament and of the adopted the Copenhagen Declaration on enhanced
Council on key competences for lifelong learning European cooperation in the area of vocational education and
(2006/962/EC of 18 December 2006) establishes a European training. The declaration calls for concrete action to achieve
framework covering eight key competences, including greater transparency and mutual recognition and improve
communication in a person’s mother tongue, quality in this field. The so‑called Copenhagen process has
communication in foreign languages, competence in been introduced in order to implement enhanced European
mathematics and science, IT skills and learning skills. cooperation in vocational education and training, inter alia,
with a view to fulfilling the Lisbon objectives.
6. Other programmes in the education field
The Commission outlined its work on a quality European
a. Cooperation with third countries
education in a recent communication (COM(2006) 481) in
Pursuant to Articles 149 and 150 of the EC Treaty, the EU is to which it recommended promoting efficiency and fairness in
foster cooperation with third countries in the fields of equal measures in the education systems. Quality is also a key
education and vocational training. EU activities in these fields issue in the context of mobility. A European Quality Charter
have been steadily increasing and, in addition to the above- for Mobility (2006/961/EC) was adopted in 2006 with the aim
mentioned programmes, include programmes such as USA– of ensuring that knowledge acquired abroad fits in as much as
EU, Canada–EU, ALFA and ALßAN (for Latin American possible with the personal learning pathways.
countries), ASIA Link (for several countries in Asia), and pilot
programmes with Australia and Japan. 2. Recognition of qualifications
To promote mobility within the EU, several directives have
b. Support for bodies that are active at European level, action been adopted guaranteeing mutual recognition of
programme 2004–06 professional qualifications between Member States. As regards
Decision 791/2004/EC of the European Parliament and of the the recognition of periods of study undertaken abroad,
Council established a Community action programme university students currently benefit from the European credit
designed to promote bodies active at European level and to transfer system (ECTS), which was introduced by the
support specific activities in the field of education and training. Commission more than ten years ago and which is constantly
EUR 77 million was allocated for the period 2004–06. The being expanded. The networks NARIC (National Academic
overall aim of the programme was to support bodies and their Recognition Information Centres) and ENIC (set up by the
activities which seek to extend and deepen knowledge of the Council of Europe and Unesco) provide advice and information
building of Europe, or to contribute to the achievement of the on the academic recognition of diplomas and periods of study
common policy objectives in the field of education and undertaken abroad. The ENQA (European Association for
training, both inside and outside the European Union. The Quality Assurance in Higher Education), which was set up in
action programme’s aims have been incorporated into the 2000, disseminates information, experience and good practice
new lifelong learning programme (see above) for the period to quality assurance agencies, public authorities and higher
2007–13. education institutions. Quality assurance in higher education is
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also the focus of a recommendation on further European the development of the vocational training systems of the
cooperation in this area (2006/143/EC). It calls on universities countries of central and eastern Europe, the independent
and quality assurance agencies to introduce stringent quality States of the former Soviet Union, and Mongolia. The
controls and advocates the establishment of a European European University Institute in Florence (set up in 1976)
register of these agencies. contributes to the development of the cultural and scientific
Europass was set up by Decision No 2241/2004/EC with the heritage of Europe. The Eurydice network (set up in 1981),
aim of improving transparency of qualifications and skills. It collects information on education systems in the Member
offers Europe’s citizens the opportunity to present their skills States which is then disseminated via an internet portal
using harmonised documents. Comparability of skills is also (www.eurydice.org).
the objective of the recently established European
qualifications framework (COM(2006)479). It is intended to Role of the European Parliament
facilitate the transfer and recognition of qualifications acquired The European Parliament has always supported close
in various systems of education and training by defining cooperation between the Member States in the fields of
various levels of knowledge and thus enabling qualifications education and training and increasing the European
to be classified and compared. dimension in the Member States’ education policies. It has
3. eLearning therefore been an advocate for the establishment of a solid
Despite a high level of education, the EU remains behind the legal basis for education and training. Following the adoption
USA and Japan as regards new information and of the Maastricht and Amsterdam Treaties which introduced
communication technologies. The Commission has therefore two new articles in these fields, Parliament gained
adopted the ‘eLearning’ initiative to adapt the Member considerable influence over the policies carried out, since all
States’ education and training systems to the latest decisions are now taken under the co-decision procedure and
developments in this field. In Seville in June 2002, the with qualified majority voting in Council. Therefore the
European Council launched the eEurope 2005 Action Plan Parliament has been able to increase the budget for several
with the aim of developing modern public services and a Community programmes such as Socrates II and Erasmus
dynamic environment for e-business. In 2003 an eLearning Mundus. In the process of adopting the lifelong learning
programme was introduced with the aim of effectively programme, Parliament also called for a clear increase in the
integrating information and communication technologies into budget allocated and for easier access to these actions. In the
education and training systems in Europe. The four areas of negotiations with the Council, MEPs were successful in
action of the programme are: promoting digital literacy, increasing the monthly amount paid to students by EUR 50 to
European virtual campuses, e-twinning of schools in Europe, the current figure of EUR 200.
promoting further teacher training and transversal actions for Parliament regards education as the best way of ensuring the
the promotion of e-learning in Europe. Since 2007 the support EU’s competitiveness. With a view to achieving the Lisbon
measures for e-learning have been part of the new objectives, Parliament recently called on the Member States to
‘integrated action programme in the field of lifelong increase investment in education, frame more consistent
learning’ (see above). national education policies, promote scientific and technical
4. Community centres, institutes and networks studies, and develop an integrated strategy for lifelong
Cedefop, the European Centre for the Development of learning which will support social inclusion (T6-0384/2005).
Vocational Training (set up in 1975), assists the Commission in
implementing the Community vocational training policy. The g Constanze Itzel
European Training Foundation (set up in 1990) contributes to July 2008
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4.17.2. Youth policy
Youth policy is one area where the decision-making is done by co-decision. Several European programmes encourage
exchanges of young people within the EU and with third countries.
Legal basis these two programmes were merged to form the Community
Articles 149 and 150 of the Treaty establishing the European action programme for youth (2000–06). The programme was
Community (EC). supplemented by other actions such as ‘Initiatives for Youth’,
which aimed to support innovative and creative projects
Article 149 of the EC Treaty provides for youth exchanges and designed to promote the social integration of young people,
exchanges between socio-educational instructors. Action to ‘joint actions’ with the Socrates and Leonard da Vinci
promote vocational training under Article 150 also expressly programmes(4.17.1) and ‘accompanying measures’. The Youth
includes young people. programme also supported cooperation activities with third
Action falling within the scope of Articles 149 and 150 is countries through the Euro-Med Youth Programme I, which
subject to the co-decision procedure. In the field of youth was aimed at young people in 31 participating countries. The
policy there is no provision for harmonising Member States’ Youth programme also supported cooperation with countries
legislation. Rather, the Council mostly adopts in South-east Europe (SEE), the Commonwealth of
recommendations here. Independent States (CIS) and Latin America (LA).
The Lisbon Treaty adopted by the European Council in In November 2006, with Decision No 1714/2006/EC, the ‘Youth
October 2007, assuming that it comes into force, adds to the in action’ programme was adopted as the successor to ‘Youth’
tasks of the Union in relation to young people that of for the period 2007–13. The aim of the programme is to
promoting participation by young people in democracy in strengthen young people’s active citizenship, develop their
Europe (see Articles 149 and 150 of the new ‘Treaty on the solidarity and promote European cooperation on youth policy.
Functioning of the European Union’). These aims are based on the White Paper ‘A new Impetus for
European youth’ (see below). The five areas for action include
Attention is also drawn to the Charter of Fundamental European voluntary service, exchanges between young
Rights. It includes an article on children’s rights (Article 24) and people and political cooperation. The programme has a
an article forbidding child labour and providing for protection budget of EUR 885 million.
of young people in the workplace (Article 32). With the entry
2. Action programme to promote bodies active at
into force of the Treaty, the Charter of Fundamental Rights
European level in the field of youth
would acquire the force of law (Article 6 TEU).
Decision No 790/2004/EC of 21 April 2004 also established a
Community action programme to promote bodies active
Objectives at European level in the field of youth. The programme ran
The Treaty article on young people is explicitly aimed at from 2004 to 2006, with a budget of EUR 13 million. It
encouraging the development of youth exchanges and supported the activities of organisations which contribute to
exchanges of youth workers. With the Lisbon Treaty, the strengthening Community action and increasing its
promotion of increased participation by young people in effectiveness, inter alia through youth exchanges, educational
democratic life in Europe will be added to the objectives. In and vocational training measures, debates on youth policy,
addition to this article, children and young people benefit dissemination of information on Community policy and
from EU objectives in other fields, such as education and measures to promote involvement and initiative on the part of
training, health, or in relation to the rights of children and young people.
young people.
With the launch of the new generation of support
programmes on 1 January 2007, support for bodies working in
Achievements the youth field was brought under the umbrella of the new
‘Youth in Action’ programme.
A. Action programmes
1. ‘Youth’ and ‘Youth in action’
Other EU initiatives
The Community has promoted youth exchange in Europe for
the last 20 years. By 1988 the Community had already 1. Towards youth policy cooperation in Europe
established the ‘Youth for Europe’ programme to promote a. White Paper on Youth
exchanges between young people. In 1996 the Commission On 21 November 2001 the Commission adopted a White
then additionally proposed a Community action programme Paper entitled ‘A new impetus for European youth’
for a European voluntary service for young people. In 2000, (COM(2001)681), thus setting out a framework for cooperation
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in the field of youth. Its priorities are to promote participation, be made a permanent part of European youth policy. With
active citizenship and voluntary activities by young people. It is European Youth Week now forming part of the Youth in action
also intended to improve the information available to young programme, this has been achieved.
people on European issues and increase knowledge of youth-
d. Structured dialogue
related issues.
In a resolution adopted in 2005 the Council of Ministers called
The White Paper provided the impetus for the development of for the development of a structured dialogue with young
European cooperation in the youth field. This takes place on people, reiterating this goal frequently in subsequent years.
the basis of the ‘open coordination method’, which means Structured dialogue means that the EU institutions and
defining common objectives and translating them into national governments discuss selected themes with young
national policies. people. The theme for 2008 is ‘Future challenges for young
b. European Youth Pact people’. The dialogue is conducted at national and European
level and is coordinated by the Commission.
At its spring summit in March 2005 the European Council
adopted a European Pact for Youth as part of its revised Lisbon The structured dialogue also facilitates the evaluation of
strategy refocusing on growth and employment. The main European cooperation in the field of youth policy, which is
objective is to improve school education and vocational currently under way. In a consultation process, the
training, mobility, integration of Europe’s young people into experiences gained are evaluated and reviewed. Based on
the workplace and social inclusion. At the same time, the aim the outcomes of this consultation, the Commission is
is to make for a better work–life balance. The Commission also planning to propose new priorities and methods for Europe’s
calls for initiatives in the various areas to be organised in a future youth policy in early 2009.
more coherent way. 2. Protecting the rights of children and young people
The Commission subsequently adopted a communication a. EU strategy on the rights of the child
(COM(2005)206) setting out how the pact could be On 4 July 2006 the European Commission adopted the
implemented. The Commission believes that the pact’s communication ‘Towards an EU strategy on the rights of the
objectives should be integrated into the European child’ (COM(2006)367). The communication aims to introduce
employment strategies and the Education and training 2010 a comprehensive EU strategy to promote and effectively
work programme (4.17.1) and has identified measures and protect the rights of the child in internal and external
programmes that can support the pact’s objectives. European Union measures, as well as to support efforts by
Three years after the adoption of the pact, issues relating to the Member States in this area. The planned measures
young people’s education and labour market integration are include the attribution of single telephone numbers within
still on the political agenda. In a recent communication on the EU for a helpline for children in need and missing and
‘Promoting young people’s full participation in education, abused children. As one outcome of the communication, the
employment and society’ (COM(2007)498), the Commission European Forum on the Rights of the Child was created in
takes as its theme the issues of youth unemployment and the 2007 to provide the European institutions, national
unsatisfactory schooling received by numerous young people. governments, international organisations, non-governmental
In view of the current situation, the Commission calls for closer organisations, civil society and other stakeholders the
coordination between all the policy areas that have opportunity to exchange information about best practice
repercussions for young people. It proposes a series of new and to work together to improve the situation of children in
initiatives intended to build bridges between education and Europe.
employment. Young people’s participation in European b. Preventing and combating violence against children and
decision-making processes is also to be improved. young people
c. European Youth Week Since 2000 the EU has funded projects and actions to
combat violence against children, young people and
The third European Youth Week took place in June 2007. The
women via the Daphne programme. The target groups are
central event was held in Brussels. Here, more than 150 young
children and young people under 25 years of age, and
people from 35 European countries took part in seven
women. Since 2007 the Daphne programme has formed
workshops on issues such as European identity, intercultural
part of the general programme ‘Fundamental rights and
dialogue, enlargement, equality and discrimination. A number
justice’. The aim of the programme is ‘to contribute to the
of decentralised events also took place. During the fourth
protection of children, young people and women against all
European Youth Week in November 2008, numerous debates
forms of violence and to attain a high level of health
about current challenges and the future direction of youth
protection, well-being and social cohesion’ (Decision No
policy in Europe will be organised in all the participating
779/2007/EC). The programme also extends to the fight
countries.
against trafficking in human beings and sexual exploitation.
In light of the success of the European Youth Week, the Funding totalling EUR 116 million is available for the
European Parliament had called for European Youth Week to programme for the period 2007–13.
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c. Youth and media allocated and simplified access to these actions. Parliament
Youth protection is a key element of audiovisual policy at also stressed that young people with disabilities must be
European level and has acquired new topicality in connection included on an equal footing, in order to prevent
with the development of non-linear media services. discrimination.
(See 4.17.5: ‘Audiovisual and media policy’). The European Parliament has also played an important role in
relation to child rights. In a written declaration in 2005, 367
Role of the European Parliament MEPs called on the Commission to create a single telephone
number in Europe for children’s helplines and emergency
The European Parliament (EP) has always supported close hotlines, a step which has now been taken with the adoption
cooperation between the Member States in the youth field. of the EU strategy on the rights of the child.
Parliament led the way in the setting up of European
voluntary service and the promotion of exchanges between To encourage young people to pursue European projects of
young people. Indeed, the EP was advocating programmes their own, the European Parliament and the Foundation of the
to promote European voluntary service and exchanges International Charlemagne Prize of Aachen launched the
between young people as early as 1983. It was also an European Charlemagne Youth Prize in 2008. The Prize is
advocate for the establishment of a solid legal basis for youth awarded to projects which promote European and
policy. Following the adoption of the Maastricht and international understanding, foster the development of a
Amsterdam Treaties, the EP has gained considerable shared sense of European identity and integration and offer
influence over policies in this field, since all decisions are now practical examples of Europeans living together as one
taken under the co-decision procedure and with qualified community.
majority voting in Council.
In the process of adopting the ‘Youth in action’ programme, g Constanze Itzel
Parliament called for a significant increase in the budget July 2008
4.17.3. Language policy

The EU pursues a multifaceted policy of promoting multilingualism. Multilingualism in this context means, firstly,
languages as a source of wealth that is integral to Europe’s cultural diversity and, secondly, individuals ability to express
themselves in various languages.
Multilingualism, in the EU’s view, is an important element of of language (Article 21). Respect for linguistic diversity is a
Europe’s competitiveness. One of the objectives of the fundamental value of the European Union, in the same way
language policy of the EU is therefore that every European as respect for the person and openness towards other
citizen should master two other languages in addition to their cultures.
mother tongue. The EU institutions also take the principle of linguistic
diversity into account in their correspondence with citizens.
Legal basis Therefore each citizen of the Union has the right, ‘[to] write to
Articles 3, 21 and 149 of the Treaty establishing the European any of the institutions or bodies referred to in this Article or
Community (EC). in Article 7 in one of the languages mentioned in Article 314
and have an answer in the same language’ (Article 21 of the
In the field of education and vocational training, the EC Treaty EC Treaty).
gives the EU the task of supporting and supplementing action
The Lisbon Treaty further enhances the respect for language
by the Member States aimed at developing the European
diversity. Hence Article 3(3) of the EU Treaty on the tasks of the
dimension in education, particularly through the teaching and
Union shall now read: ‘It shall respect its rich cultural and
dissemination of EU languages (Article 149(2)), while fully
linguistic diversity, and shall ensure that Europe’s cultural
respecting cultural and linguistic diversity (Article 149(1)).
heritage is safeguarded and enhanced.’ The Charter of
The Charter of Fundamental Rights adopted in 2000 also Fundamental Rights shall also become legally binding with the
places an obligation on the Union to respect linguistic entry into force of the Reform Treaty (see Article 6 of the EU
diversity (Article 22) and prohibits discrimination on grounds Treaty).
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The aim of European Union language policy is to promote the A. Support programmes
teaching and learning of foreign languages in the EU and 1. Education and vocational training
create a language‑friendly environment for all Member State The main financial support for foreign language learning has
languages. Foreign language competence is regarded as one so far been provided under the Socrates and Leonardo da Vinci
of the basic skills which every EU citizen needs to acquire in educational and vocational training programmes. This support
order to improve his/her educational and employment will be continued in the period 2007–13 with the new lifelong
opportunities within the European learning society, in learning Programme (4.17.1).
particular by making use of the right to freedom of movement
a. Socrates: action programme in the field of education
of persons. Foreign language competence is also seen as very
important in supporting cultural exchange and personal The Socrates programme, launched in 1995, consisted of eight
development (2002/C 50/01). areas of action, four of which included measures to promote
language learning.
Within the framework of education and vocational training i. L ingua: promoting language teaching and language
policy, the European Union’s objective is therefore for every EU learning
citizen to master two other languages in addition to his/her
mother tongue. In order to achieve this objective, children are Lingua has supported projects which raise citizens’
to be taught two foreign languages in school from an early awareness of the European Union’s linguistic diversity,
age (2005/C 141/04). encourage people to learn languages throughout their
lifetime, and improve access to foreign language learning
In the context of the Lisbon strategy adopted by the resources across Europe. It also supported the
European Council in March 2000, the importance of foreign development and dissemination of innovative techniques
language learning in raising competitiveness is being and good practice in language teaching. Lingua also aimed
emphasised. In connection with the reforms of national to improve language teaching by ensuring that sufficient
education and vocational training systems needed in order to high-quality language learning tools and tools for assessing
achieve the Lisbon objectives, EU education ministers have set linguistic skills were made available.
themselves the goal of improving foreign language teaching, ii. Comenius: European cooperation on school education
encouraging language learning from an early age, and making
learning a foreign language more popular. The European Comenius included several measures to promote language
Commission, in designing and implementing the learning. Firstly, Comenius supported various types of school
multilingualism policy, shall be supported by an expert group, partnerships, one aim being to encourage language learning.
established in 2002 under the ‘Education and training 2010’ Training grants were also available to teachers. Those eligible
work programme. to apply were student teachers, language assistants, language
teachers and teacher training establishments.
For the 2004–2009 legislative term, a Commissioner whose iii. Erasmus: Community action programme in the field of
responsibilities expressly include multilingualism — Jan Figeľ higher education
from Slovakia — was appointed for the first time. Under
Commissioner Figeľ, the Commission presented its New Under the EU’s mobility programme for students, support
framework strategy for multilingualism (COM(2005)596) in was provided for intensive language courses, which give
November 2005, which has three main aims: to encourage students the opportunity to study the language of the host
language learning and promote linguistic diversity in society, country over three to eight weeks in the host country.
to promote a multilingual economy, and to give citizens Support was targeted especially at courses in less widely
easier access to information on the EU in their own used EU languages as well as languages spoken in third
languages. The Member States are also being called upon to countries participating in the Erasmus programme.
support the achievement of the first two of these aims by iv. Grundtvig: adult education and other educational
taking additional measures. Following the entry of Romania pathways
and Bulgaria into the EU on 1 January 2007, the Romanian
Encouraging foreign language learning was one of the main
Leonard Orban was appointed the first Commissioner for
aims of the European action programme for developing
Multilingualism. One of the new Commissioner’s aims is to
adult education. The EU therefore supports the design and
improve workers’ foreign language skills and foreign
production of teaching materials aimed at improving
language skills within small and medium-sized enterprises,
knowledge of Member States’ languages and culture.
and he has launched the Business Forum for Multilingualism
for this purpose. The Commission has also announced a b. Leonardo da Vinci: action programme in the field of vocational
Communication on Multilingualism for September 2008, training
which will define a new framework for the EU’s policy on The Leonardo programme supported projects aimed at
multilingualism. enhancing employees’ skills in the area of multilingual and
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multicultural communication through vocational training. In and minority languages in the European Union was
contrast to the support programmes under the Socrates undertaken. Entitled ‘Euromosaic’, the study investigates the
programme; these projects had to be specifically targeted at a status and situation of these languages in the various EU
target group in the area of vocational training. They were Member States.
intended to raise awareness among companies of the
importance of foreign language skills and support companies B. Other EU initiatives
in developing foreign language training opportunities. 1. Action plan and framework strategy
In addition, support was provided for exchange projects In response to a European Parliament resolution (T5-
between businesses, on the one hand, and vocational training 0718/2001) and a Council resolution (2002/C 50/01), in July
establishments, on the other, which were designed to 2003 the Commission adopted an action plan on ‘Promoting
contribute to developing and improving methods used in language learning and linguistic diversity’ (COM(2003)449),
vocational training in the area of language and intercultural setting out three areas in which it would be providing funding
skills. for short-term action to support measures taken by Member
States under existing Community programmes. The three
c. The new action programme for lifelong learning areas are: lifelong language learning, improving the teaching
Decision No 1720/2006/EC of 15 November 2006 established a of foreign languages, and creating a language‑friendly
new ‘integrated action programme in the field of lifelong environment. In 2005, the Action Plan was supplemented by
learning’ for the 2007–13 period to provide financial support the New Framework Strategy for Multilingualism
for education in Europe. The new integrated programme (COM(2005)596, see above). The results of the action plan on
combines current EU education programmes and therefore national and European levels were summed up by the
covers the four sub-programmes referred to above: Comenius Commission in a report (COM(2007)554) in autumn 2007. This
(school education), Erasmus (higher education), Leonardo da report is intended to serve as the basis fur further measures in
Vinci (vocational training) and Grundtvig (adult education). In the field of multilingualism policy.
this new programme languages will also be covered by a 2. Raising awareness of the importance of foreign
transversal programme aimed, inter alia, at promoting languages
language learning and linguistic diversity. Complementing the
four sub-programmes described above, the transversal In order to highlight the importance of linguistic diversity and
programme will also support initiatives which transcend foreign language learning in Europe, 2001 was declared the
individual programme boundaries and are relevant to several European Year of Languages by the EU and the Council of
target groups. Eligible measures include, for example, Europe. A total of 45 countries took part, with the aim of
multilateral projects to develop new materials for language encouraging language learning throughout Europe. During
learning, the development of instruments and courses to train that year many language projects took place, and included
language teachers, or the preparation of studies on language exhibitions, open days and mini language courses. The
learning and linguistic diversity. Commission bore a considerable proportion (EUR 6 million) of
the costs of projects. Hundreds of thousands of people took
2. Support under other EU programmes part in the different projects, in which over 60 languages were
In addition to educational and training programmes, financial represented.
assistance for language projects is available under other EU Encouraged by the huge success of the European Year of
programmes. For example, support is provided for the Languages, the EU and the Council of Europe decided to
translation of books and manuscripts under the EU’s cultural celebrate the so-called European Day of Languages every
programme Culture. The EU’s action programme in the field of year on 26 September, with all sorts of events promoting
audiovisual media, MEDIA, makes available funding for language learning. Like the earlier European Year of
dubbing and subtitling of European cinema and TV films. Languages, this action is also aimed at raising awareness
The EU has adopted various measures for the preservation and among citizens of the many languages spoken in Europe and
promotion of regional and minority languages. They include encouraging them to learn languages.
the provision of financial support to the European Bureau for 3. Comparability of data on language competence
Lesser-Used Languages (EBLUL), an independent non-
In August 2005 the Commission proposed to the Council and
governmental organisation (NGO) which promotes and
the European Parliament the introduction of a European
disseminates information about regional and minority
indicator of language competence (COM(2005)356 final).
languages on a network basis, and Mercator, a documentation
This indicator is intended to make a substantial contribution to
and information network which aims to improve the
achieving the objective of ‘mother tongue + two’ by enabling
accessibility and exchange of information about minority
foreign language competence to be measured in a
languages and cultures. The EU has also provided project
comparable way in all Member States.
funding for practical initiatives for the promotion and
preservation of regional and minority languages. Moreover, at In its resolution of March 2006 (T6-0184/2006) the European
the initiative of the Commission, a detailed study on regional Parliament welcomed the Commission proposal and called on
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both the Commission and the Council to propose further the different languages spoken by its citizens is a major
measures to strengthen multilingualism in the EU. factor in ensuring greater transparency, legitimacy and
effectiveness. Legislation adopted by the EU must be
Role of the European Parliament available to all EU citizens in their respective mother
tongue. In addition, every EU citizen has the right to
A. Multilingualism initiatives present requests or petitions in an official language of his or
From the outset of the process of integration, the European her home country to the European Parliament, other EU
Parliament has been an advocate for recognising the institutions and advisory bodies and the European
importance of, and promoting, linguistic diversity in the Ombudsman, and to receive a reply in that language. This
European Union. It was at the European Parliament’s initiative EU commitment to multilingualism in law-making and
that the European Bureau for Lesser-Used Languages (EBLUL) administration is unique throughout the world.
was established back in 1982; this is a non-governmental
organisation which promotes and disseminates information As regards interpreting, the European Parliament differs from
about regional and minority languages on a network basis. the other EU institutions in so far as the principle of
‘controlled full multilingualism’ is observed in its day-to-day
During the current legislative term, Parliament has already work. That means that interpretation is provided out of, and
produced own-initiative reports on a number of occasions to into, all EU official languages. With the exception of smaller
give fresh impetus to the development of language policy in meetings, interpretation is provided for part‑sessions and
Europe. In particular, the Committee on Culture and Education, meetings of parliamentary bodies, committees and groups
in its reports, has identified the need for action in certain areas on the basis of this principle, in so far as the capacity of the
and called on the Commission to draw up measures aimed at interpreting service allows. In the case of less widely used
recognising the importance of, and promoting, linguistic languages, it is ascertained prior to the meetings of smaller
diversity in the EU. For example, with regard to school bodies whether MEPs speaking these languages will be
education, the importance of a language‑friendly environment attending the meeting. An individual MEP’s right to
in helping children from immigrant communities to integrate interpretation of debates into his or her own mother tongue
has been highlighted (T6-0385/2005). The European and interpretation of his or her own speeches is enshrined in
Parliament has also repeatedly drawn attention in resolutions Parliament’s rules of procedure. In its efforts to safeguard the
to the situation and the need to support regional and minority use of all official languages in practice in parliamentary
languages (P5-B(2001)0815; P5-TA(2003)0372). proceedings, the European Parliament is the very
embodiment of linguistic diversity in the EU.
B. Principle of multilingualism applying to Parliament’s
work
On 1 January 2007, the number of official languages of g Constanze Itzel
the EU institutions rose to 23. The EU believes that using July 2008
4.17.4. Cultural policy

The European Union’s action in the field of culture supplements Member States’ cultural policy in various areas: for
example, the preservation of European cultural heritage, cooperation between various countries’ cultural institutions, or
the promotion of mobility of those working creatively and of collections. The cultural sector is also affected by provisions of
the EC Treaty which do not explicitly pertain to culture.
Legal basis the Member States, while respecting national and regional
Article 151 Treaty establishing the European Community (EC). diversity and at the same time bringing the common cultural
heritage to the fore. EU intervention in the field of culture is
Articles 3, 30, 87(3)(d) and Article 133 EC Treaty. governed by the principles of subsidiarity and
The Treaty of Rome did not contain a specific paragraph on complementarity. Any act of harmonisation of Member States’
cultural policy. Cultural policy received its own legal basis only legal and regulatory provisions is excluded from the scope of
with the adoption of the Maastricht Treaty. Article 151 of the Article 151. Measures are taken by the European Parliament
Nice Treaty provides a basis for action aimed at encouraging, and Council under the co-decision procedure; unanimity is at
supporting and if necessary supplementing the activities of present still required in the Council.
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Article 151 makes it possible to support and supplement further key proposal is that the cultural sector should be
Member States’ action in the following areas: improving more closely integrated into the EU’s activities through a
knowledge and disseminating the culture and history of the cultural Forum.
European peoples, conserving and safeguarding cultural
The Commission communication is an innovative and
heritage of European significance, non-commercial cultural
important strategy paper for cooperation at European level.
exchanges, and artistic and literary creation, including in the
On 16 November 2007, EU culture ministers welcomed the
audiovisual sector. The article also provides that the
proposed objectives and the methods and defined five priority
Community shall take cultural aspects into account in its
areas for action for the period 2008–10. These include
action under other provisions of the Treaty. And cooperation
improving the conditions for artists and other professionals in
with third countries and international organisations in the
the cultural field; developing data and statistics in the cultural
sphere of culture, in particular the Council of Europe, is to be
sector and improving their comparability; and maximising the
fostered.
potential of cultural and creative industries. Progress made in
Article 13 of the Charter of Fundamental Rights stipulates respect of cooperation towards the objectives set should be
that ‘The arts and scientific research shall be free of constraint’. reviewed after three years. In a work plan for culture 2008–10
Article 22 stipulates that ‘the...EU shall respect cultural, religious (2008/C 143/06), the Council lists specific measures to be
and linguistic diversity’. taken in the Member States, in working groups and by the
The Lisbon Treaty gives greater significance to culture: Commission over the next few years.
‘Drawing inspiration from the cultural, religious and humanist The European Parliament endorses the objectives of the new
inheritance of Europe’, states the Preamble to the Treaty on agenda for culture. In its resolution on this topic (P6-
European Union. One of the EU’s aims, stated in the Treaty, is to TA(2008)0124), however, it highlights the fact that the cultural
‘respect its rich cultural and linguistic diversity, and […] ensure sector plays an important part in attaining the objectives of
that Europe’s cultural heritage is safeguarded and enhanced’ the renewed Lisbon strategy but points out that it is important
(Article 3 TEU). The EU’s competences in the field of culture are not to lose sight of the issue of culture as a value in itself.
stated as follows: ‘The Union shall have competence to carry Members also request further measures from the Commission;
out actions to support, coordinate or supplement the actions among other things, Parliament calls on the Commission to
of the Member States’ (Article 6 of the Treaty on the propose specific programmes to preserve European cultural
Functioning of the European Union). An important innovation heritage and to employ the means needed to enforce and
is that decisions in the Council pertaining to the field of culture protect literary and artistic property rights, especially in the
are now to be taken by qualified majority rather than digital environment.
unanimity (Article 151(5) TFEU). In addition it must be noted
that when the Treaty comes into force the Charter of
Fundamental Rights will become legally binding (Art. 6 TEU). Achievements
A. Action programmes
Objectives Prior to the Maastricht Treaty coming into force, the
According to the definition in the EC Treaty, the Community Community provided small amounts of funding for cultural
shall contribute to the flowering of the cultures of the Member activities via the European Social Fund and the European
States, while respecting their national and regional diversity Regional Development Fund and through ad hoc initiatives. Its
and shall bring the common cultural heritage to the fore. activity focused on measures in the areas of protection of
In May 2007 the Commission adopted an important cultural heritage, grants for artists, assistance for literary
communication on culture, entitled ‘a European agenda for translation and support for cultural events.
culture in a globalising world’ (COM(2007)0242). This 1. First generation of cultural programmes
communication sets out new strategic objectives for the EU’s
With the introduction of a legal basis for culture in the
activities in the field of culture. The main objectives are:
Maastricht Treaty, the EU’s cultural activities were organised
— promotion of cultural diversity and intercultural dialogue; more systematically. This began with three programmes.
— promotion of culture as a catalyst for creativity in the — The Kaleidoscope programme was set up in 1996 and
framework of the Lisbon strategy for growth and jobs; aimed to encourage artistic creation and to promote
— promotion of culture as a vital element in the Union’s dissemination of the culture of the peoples of Europe.
international relations. — The Ariane programme was adopted in 1997 in order to
These objectives are to be achieved through new methods. increase cooperation between Member States in the fields
The Commission proposes that cooperation between EU of books and reading, and through translation to promote
institutions and the Member States be organised through the a wider knowledge of literary works and the history of the
‘open coordination method’, which means defining common European peoples. Vocational training measures in these
objectives and translating them into national policies. A fields were also among the range of measures funded.
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— The Raphael programme was adopted in 1997 with the people’s lives and professions are affected by many provisions
aim of encouraging cooperation between the Member of the EU Treaty. The EU has adopted directives on copyright,
States in the area of cultural heritage with a European intellectual property and legislation concerning resale rights,
dimension. and rental and lending rights (3.4.4). As a way of supporting
artistic and intellectual creativity, the EU allows Member States
2. Culture 2000
to apply reduced rates of VAT to certain goods and services
On the basis of the experiences of this first phase of such as the supply of books and periodicals, access to cultural
programmes, a first EU framework programme in support of events and reception of radio and TV broadcasts (minimum
Culture was established in 2000 with a total budget of standard rate: 15 %, reduced rate: 5 %).
EUR 167 million for a five-year period (2000-2004). Its purpose
was to simplify action by using a single instrument for The EC Treaty also guarantees workers’ freedom of movement.
financing and programming cultural cooperation. The In the case of workers in the cultural sector; however, this right,
programme aimed to: promote cultural dialogue and mutual and therefore artists’ mobility, is often hampered by national
knowledge of the culture and history of European peoples, administrative barriers, which still need to be removed.
promote cultural activity and transnational dissemination of In June 2007 Parliament adopted a report on the social status
culture and exchanges of artists and those working creatively of artists (T6-0236/2007), which highlights the fact that many
and in other ways in the field of culture and their works, artists working for a short time in various Member States face
promote cultural diversity and the development of new problems with visas, health insurance, unemployment benefits
forms of cultural expression, promote exchanges of and pensions. Among various other measures, it proposes
experience on conserving Europe’s cultural heritage and devising a practical guide for European artists. In addition, it
foster the intercultural dialogue between European and non- calls for a pilot project to introduce a European electronic
European cultures. In 2003 the programme was extended social security card, a European professional register and a
unchanged for the years 2005 and 2006. European mobility fund, on the lines of the Erasmus
3. The new Culture programme (2007–13) programme, which would help to promote exchanges of
teaching staff and young artists.
Since Culture 2000 was very successful, in 2004 the
Commission submitted a proposal to establish the Culture 2. Cultural industries
2007 programme for the period 2007–13 (COM(2004)469). The cultural industries such as cinema, audiovisual media,
Based on comprehensive evaluations and consultations, the publishing, craft industry and music contribute to job creation
programme continues the cultural actions referred to above. and economic prosperity in Europe, as recently confirmed by a
After long negotiations about the financial perspective, during study carried out for the Commission. In view of the tensions
which Parliament called for a substantial increase in the between culture and the economy, and to protect cultural
funding provision, the budget was set at EUR 400 million diversity, in some cases the cultural industries need different
(Decision No 1855/2006/EC). The programme aims to promote rules from those that apply to other sectors of industry.
the transnational mobility of people working in the cultural Because of the special nature of the cultural industries, in the
sector, encourage the transnational circulation of artistic and WTO trade negotiations the EU has always taken the position
cultural works and products and encourage intercultural that certain cultural and audiovisual sub-sectors should not be
dialogue. liberalised (the so-called cultural exception). Similarly in the
common market, culture is to a certain extent exempt from
4. Support for European bodies
the prohibition on State aid (Article 87(3)(d)), and many
European Parliament and Council Decision 792/2004/EC audiovisual services are exempt from the field of application of
established an action programme to promote bodies active at the services directive (2006/123/EC) adopted in December
European level in the field of culture for the period 2004–06, 2006; the text also clearly allows measures to protect or
with a reference amount of EUR 19 million. The general promote cultural or linguistic diversity or media pluralism.
objective was to support the activities of bodies whose work
programme or actions pursue aims of general European For the protection of cultural diversity the Unesco general
interest. After the programme expired, this support was conference in October 2005 adopted the ‘Convention on the
incorporated in the new culture programme. The support has Protection and Promotion of the Diversity of Cultural
been set at about 10 % of this programme’s budget, and is Expressions’. The convention contains a number of rights and
likely to amount to around EUR 40 million. obligations concerning the promotion and protection of
cultural diversity. Decision 2006/515/EC concerns the
B. Other activities European Community’s agreement to the Unesco convention
1. The situation of workers in the cultural sector in and its accession to it.
Europe The cultural industries have become an increasing focus of
The EU has approximately 7 million people professionally attention in European policy for some years. For example, the
active in the cultural sector. Apart from pure support for them important role of innovative cultural industries in promoting
through EU programmes such as Culture and MEDIA, these Europe’s competitiveness was underlined as an objective of
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the Lisbon strategy. Promoting cultural industries is also part of exchanges and mobility of citizens and promote civil society
the current Agenda for culture (see above), which is now to be institutions working on European topics.
implemented in a three-year work plan. 6. Intercultural dialogue
3. Cultural goods In view of the increasing multiculturalism of European
According to Article 30 of the EC Treaty, prohibitions or societies, the Commission aims to intensify and give a better
restrictions on the import, export or transit of national structure to the longstanding intercultural dialogue which has
treasures possessing artistic, historic or archaeological value been fostered by Community measures. To this end,
are permissible so long as they do not constitute a means of intercultural dialogue will become a horizontal priority in all
discrimination or restriction on trade between Member States. Community programmes in this area. The Commission has also
In view of the implications of the abolition of frontier controls proposed to make 2008 the European Year of Intercultural
in connection with the consolidation of the internal market, Dialogue. Through a number of diverse programmes in
rules were needed for the protection of cultural goods. connection with this year, civil society and its various
Therefore, the EU adopted Regulation (EEC) No 3911/92, representatives will be encouraged to engage in dialogue at
according to which the export of cultural goods is subject to European, national and local level. The relevant decision was
the presentation of an EU export licence, which is valid adopted in December 2006 (No 1983/2006/EC).
throughout the Community and is checked at the external Recently the European institutions have increasingly organised
borders. Council Directive 93/7/EEC was adopted in 1993 to initiatives concerned with dialogue with the representatives of
secure the return of national treasures of artistic, historic or various religions. This dimension will become more significant
archaeological value that have been unlawfully removed from when the new Lisbon Treaty comes into force. This states:
a Member State’s territory. ‘Recognising their identity and their specific contribution, the
4. European Capital of Culture Union shall maintain an open, transparent and regular
The European Capital of Culture was launched in Athens in dialogue with these churches and organisations.’ (Article 15b
1985 and has been a genuine success. In 1999, Decision TFEU).
No 1419/1999/EC laid down the selection procedure for
European Capitals of Culture from 2005. These are designated Role of the European Parliament
by the Council according to a set order of Member States, Parliament believes that European integration should be based
acting on a recommendation from the Commission, which on cultural values. To this end, Parliament decided to establish
takes the opinion of a selection panel into consideration. The a committee responsible for cultural matters after its first direct
decision also provides for the possibility of designating an elections in 1979. Parliament had for many years been of the
additional city from a third country. opinion that the EC Treaty should include a legal basis for
After enlargement, Decision 649/2005/EC came into force, cultural policy. With the adoption of the Maastricht Treaty, it
enabling the new Member States also to propose candidate not only saw this wish fulfilled, but it also obtained co-decision
cities. This means that now at least two capitals will be competence with the Council.
designated each year: one in one of the old Member States, In past years Parliament in its resolutions has called for
and the other in one of the new Member States. To further budgetary resources for culture to be increased, for the
improve the selection process, on 24 October 2006 a new situation of those working in the field of culture to be
decision was adopted (1622/2006/EC). This decision stresses improved and for Europe’s cultural heritage to be more
the European dimension, encourages competition between appreciated. With regard to artistic creation, Parliament is in
candidate cities in the Member States, and provides more favour of giving the Member States the option of applying
support to the selected cities in their preparation phase. The reduced VAT rates to a wider range of services and goods such
new procedure will come into force in 2013. as recorded music and films, provided that this does not affect
5. Town twinning and European citizenship the functioning of the internal market. It called for the
The idea of town twinning was born after World War II. It now continuation of the lower VAT rate experiment for some
brings together towns and localities from the whole of Europe sectors (resolution of 4 December 2003). Parliament also
and promotes close links between their citizens. On the adopted a resolution on new challenges for the circus (T6-
initiative of Parliament, in 1989 the EU established a support 0386/2005), calling on the Commission to introduce
scheme for twinning events. Since 2004 town twinning has mechanisms for Member States’ cooperation to guarantee and
been part of the Community action plan to promote active promote an adequate education for children from travelling
European citizenship (2004-2006). Every year the Commission communities. Improving conditions for travelling artists is also
awards ‘gold stars’ for town twinning to 10 outstanding a concern of the own-initiative report on the social security
projects which have made a successful contribution to status of artists (T6-0346/2007)
European integration. From 2007 town twinning will also As regards cultural heritage, in a resolution on this issue
receive support from the new Europe for citizens programme Parliament advocated better protection of cultural heritage in
(2007–13). (4.17.7). This programme will inter alia increase rural and island communities (T6-0355/2006). In addition, in
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talks on the new Culture programme and the European Constitutional Treaty. In a recent report of 10 April 2008 on
agenda for culture (see above), Parliament called for greater cultural industries in Europe (T6-0123/2008), the European
attention to be paid to protection of the European cultural Parliament calls for a task force for culture to be set up, along
heritage. with a programme to promote the cultural industries. Other
proposed measures include innovative funding methods and
The European Parliament has also considered the specific
a reduction in VAT.
nature of cultural industries on various occasions. In its
resolution of 4 September 2003 it supported unanimity in
the Council in the field of trade regarding cultural and g Constanze Itzel
audiovisual services, which is also recommended by the July 2008
4.17.5. Audiovisual and media policy

Audiovisual policy is mainly governed by Articles 151 and 157 of the Treaty establishing the European Community. The key
piece of legislation in EU audiovisual policy is the audiovisual media services directive, which entered into force in
December 2007. The main community instrument to help the industry (especially film) continues to be the MEDIA
programme. The Charter of Fundamental Rights states that the ‘freedom and pluralism of the media shall be respected’.

In the Treaty establishing the European Community (EC): According to Article 151, the European Union encourages
cooperation between Member States and, if necessary,
— Articles 23, 25, 28 and 29 (free movement of goods); supports and supplements their action in artistic and literary
creation, including the audiovisual sector.
— Articles 39 to 55 (free movement of people, services and
capital); Achievements
— Articles 81 to 89 (competition policy); A. First steps
Until the 1980s EU activity in the audiovisual sector was nearly
— Article 95 (technical harmonisation, including advanced
non-existent. The fact that the EU was perceived to be lagging
television services);
behind the United States in this area forced it to take initiatives.
— Articles 149 (education), 150 (professional training), 151 The Commission’s White Paper on the completion of the single
(culture) and 157 (industry). market (1985) mentioned several initiatives intended to open
up the audiovisual market to competition in the Member
The Treaty of Rome did not provide any direct powers in the States and promote high-definition television (HDTV). The
field of audiovisual and media policy. However, the powers to European Year of Cinema and Television (1988) provided the
act in this sector grew implicitly over the years thanks to the ideal opportunity for a debate with the national authorities
provisions of free movements of persons and services and and the audiovisual industry on possible measures in this
right of establishment. Competition rules and the common sector.
commercial policy also play an important part in the Important Community legislation was introduced in the late
audiovisual field. 1980s and 1990s to introduce common technical standards for
the audiovisual industry. Examples include Council Decisions
The Maastricht Treaty included a specific reference to the
89/337/EEC and 89/630/EEC concerning HDTV and Council
audiovisual sector in Article 151 on culture. The Amsterdam
Decision 93/424/EEC on an action plan for the introduction of
Treaty included a ‘Protocol on the system of public
advanced television services in Europe, aiming at promoting
broadcasting in the Member States’. The Nice Treaty altered
the widescreen 16:9 format. This industrial policy has seen
Article 157 on industry, including the audiovisual industry,
further developments.
replacing unanimity voting in Council with qualified majority
voting. The Charter of Fundamental Rights of the EU states During this period, major European audiovisual group
in Chapter II, Article 11 that ‘the freedom and pluralism of the strategies focused on the need to achieve critical mass and the
media shall be respected’. desire to diversify and secure access to larger international
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markets. A series of important mergers and acquisitions took the most recent, MEDIA 2007, provides a total of EUR 755
place, though many limited to a national scale. million to Europe’s film industry up to 2013 (75 % of resources
go to development and distributors).
B. The television without frontiers directive
However, EU aid to the audiovisual sector is still relatively
1. The 1989 directive
modest, and should be seen as complementing rather than
The adoption in 1989 of the television without frontiers substituting the actions of Member States.
(TVWF) directive (89/552/EEC) marked a new departure. This
directive, revised in 1997, 2002 and 2007, established the legal Since January 2006, the newly created Education, Audiovisual
framework for the free movement of television broadcasting and Culture Executive Agency has taken over the operational
services in the EU, based on the so-called ‘country of origin’ management of the MEDIA 2007 programme.
principle, meaning that programmes can circulate in the
internal market if they respect the legislation of the Member D. Audiovisual initiative
State from where they originate. This is possible because The European Commission and the European Investment Bank
national rules are themselves to some extent harmonised by decided in May 2001 to offer additional financial help to the
the directive. It also provides rules on: (a) advertising and audiovisual sector. They created the ‘i2i audiovisual initiative’,
sponsorship; (b) protection of minors; (c) availability to all of which provides medium to long-term financing to producers,
broadcasting of events of major importance to the public; distributors and exhibitors. This ‘i2i’ initiative forms part of the
(d) promotion of European works. Article 4 requires that new MEDIA 2007 programme.
broadcasters reserve a majority proportion of their
transmission time to European works. Article 5 requires that E. Other initiatives
10 % of their transmission time or programming budget be 1. Film heritage
dedicated to works by European independent producers. In November 2005 the European Parliament and the Council
2. The audiovisual media services directive adopted Recommendation 2005/865/CE [sic] on film heritage
and the competitiveness of related industrial activities. They
In December 2005, the Commission again proposed a revision
call on Member States to collect, catalogue, preserve and
of the TVWF directive (COM(2005) 646). This was necessary in
restore European film heritage, in order to ensure that it is
order to take into account developments in the sector,
passed down to future generations.
particularly in ‘convergence’ in services and technology.
Convergence means that traditional distinctions between 2. Europe Day at Cannes and film online
telecommunications and broadcasting are increasingly Since 1995 ‘Europe Day’ at the Cannes Film Festival has focused
blurred. A television channel, for example, can be viewed on a on promoting European film production. A ‘New talent in the
computer via the Internet. Another issue was the growth in European Union’ award was introduced in 2004 in order to
‘nonlinear’ services, which allow consumers to select which publicise young European directors who have followed
programmes to watch at an hour of their convenience. A MEDIA-sponsored training.
common regulatory environment is therefore required to
cover all such services, not just broadcasting, which is now In May 2006 EU audiovisual ministers endorsed the European
known as ‘audiovisual media services’ (AVMS), irrespective of Film Online Charter under the auspices of the European
the technology used to carry them or how they are viewed. Commission. The Charter seeks to identify a business model for
online film services and enhance cooperation in the fight
The new directive (see later) does not lay down specific against online piracy.
requirements for the presence of European works in nonlinear
services. It essentially leaves the issue in the hands of Member 3. Cultural diversity
States, who shall ensure the production and access to The EU and its Member States have often emphasised the
European works in on-demand services, ‘where practicable special nature of the audiovisual sector. The sector has an
and by appropriate means’ (new Article 3i). important political, social and cultural role and, despite its
growing economic importance, cannot be viewed from a
C. The MEDIA programmes purely economic standpoint. Therefore the EU has always
The European film landscape is characterised by strong taken the position in World Trade Organisation (WTO)
American market dominance. According to figures from the negotiations that certain cultural and audiovisual subsectors
European Audiovisual Observatory, Hollywood companies should not be liberalised (the so-called ‘cultural exception’).
enjoyed a market share of 63 % in the EU in 2007. In order to The Commission therefore supported the idea of developing a
promote the competitiveness of the European film and new international instrument on cultural diversity in the
audiovisual industry, the MEDIA I programme was established framework of the United Nations Educational, Scientific and
for a period of five years (1990–95). It has been followed by a Cultural Organisation (Unesco). In October 2005 such an
series of successor programmes, whose budgets have instrument came into being, when Unesco approved the
gradually increased. MEDIA II (1996–2000) was allocated ‘Convention on the protection and promotion of the diversity
EUR 310 million, MEDIA Plus (2001–05) EUR 400 million, and of cultural expressions’. The convention entered into force in
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4 17
March 2007, after achieving the required 30 ratifications by Role of the European Parliament
Unesco Member States. The EP has emphasised that the EU should stimulate the
4. Protection of minors and human dignity growth and competitiveness of the audiovisual sector whilst at
The protection of minors is an important element of the same time recognising its wider significance in
audiovisual policy, for which the AVMS directive contains safeguarding cultural diversity. The EP’s resolutions in the
specific provisions. In September 1998, the Council adopted 1980s and early 1990s on television repeatedly called for
Recommendation 98/560/EC on the protection of minors common technical standards for direct broadcasting by
and human dignity in audiovisual and information services, satellite and for HDTV.
which covers all electronic media. The recommendation A. Television without frontiers directive
offers guidelines for the development of national self-
1. Background
regulation regarding the protection of minors and human
dignity. On the basis of a 2003 evaluation report, the The EP has strongly supported the TVWF directive since 1989
Commission decided to propose an update of the and was even able to secure that Member States be allowed to
recommendation in April 2004 (COM(2004) 341). Parliament decide that some major national and international events,
adopted its final report on this issue in December 2006 (P6_ such as the Olympic Games, have to be shown on ‘free
TA(2006)0537). The rapporteur responsible was French MEP channels’ when the directive was revised in 1997.
Marielle de Sarnez. In a own-initiative report adopted in September 2005 (P6
An additional measure in this area is the multiannual action TA(2005)0322) on the respect of Articles 4 and 5 of the TVWF
plan to promote the safer use of the Internet by combating directive, the EP noted that the quotas for European works and
illegal and harmful content, which was established by Decision works of independent producers had ‘broadly been met’.
No 276/1999/EC of the European Parliament and of the 2. Current situation
Council of 25 January 1999. In November 2007, the EP approved the ‘audiovisual media
5. State aid to cinema services’ directive in second reading, making no changes to
the political agreement reached in the Culture Council of
In May 2008, Commissioners Kroes and Reding announced
Ministers on 24 May of the same year. The rapporteur
that current rules which allow cinema to be subsidised under
responsible for this ‘dossier’ was German MEP Ruth Hieronymi.
derogation from State aid rules will remain in force until 2011.
The European Parliament negotiated an ‘early’ agreement with
This exception is based on the 2001 communication on the
the Council, in order to secure approval of the new legislation,
future of cinema and the audiovisual industry in Europe
which it saw as urgent, as quickly as possible.
(COM(2001) 534 final), which allows public authorities to
subsidise up to 50 % of a film’s budget, under certain Member States have until December 2009 to transpose the
conditions. new directive into national legislation.
6. Media literacy The main elements in the new legislation are listed below.
In December 2007 the European Commission published a a. Product placement
communication where it stressed the importance of Product placement shall in principle be forbidden. However,
promoting a common European approach to media literacy Member States are left the choice to decide to authorise
(COM(2007) 833 final). ‘Media literacy’ means, in simple terms, product placement in cinematographic works, films and series,
the ability to understand the workings of the media, to sports programmes and light entertainment programmes. TV
critically evaluate its messages and to create one’s own audiences must be clearly informed on any product
communications, combining pictures, words and sound. placement, at the beginning and at the end of a TV broadcast.
Many believe that such skills are vital, not only for practical
reasons such as finding a job, but also to fully exercise In all cases, product placement is subject to some obligations,
citizenship. for example:
7. Creative content online — no product placement may take place in news, current
affairs and children’s programmes;
The Commission has also recently published a communication
on creative content online in the single market (COM(2007) — the placement of some goods, like tobacco and
836 final), which is expected to be rapidly followed by a prescription medicines, is forbidden.
recommendation on the same subject in the autumn of 2008. b. Advertising
This document sets out what the Commission believes are the
Advertising cannot exceed 15 % maximum of the daily
major obstacles to the growth of the internal market in online
transmission time and 20 % maximum within a given one-
creative goods, for example musical downloads. It selects a
hour period.
number of areas where an EU regulatory response is necessary,
for example on ‘multi-territory licensing’ and digital rights Advertising should not infringe upon gender, disability, age or
management systems (DRMs). sexual orientation, nor violate human dignity.
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Minors should be protected from the advertising of unhealthy competences in specific areas (for example audiovisual policy,
or ‘junk’ food products. competition policy and citizens’ rights) to ‘specify the
minimum conditions to be respected by the Member States to
The directive also contains other important elements such as
ensure an adequate level of pluralism’.
an obligation to encourage media service providers to
improve access for people with visual and hearing Parliament has recently returned to the issue, in the form of an
impairments. own-initiative report being drawn up by Estonian MEP
Marianne Mikko. The report, which will only be adopted in the
B. MEDIA 2007 programme autumn of 2008, suggests the creation of independent media
The EP’s amendments have been important in ensuring that ombudsmen or comparable institutions in the Member States
the budget for the various MEDIA programmes was increased. in which they do not already exist.
Moreover, Parliament has urged the Commission to encourage
the Member States to introduce tax incentives to attract D. Film heritage
investment in film. Parliament has encouraged the Member States to adopt a
system of obligatory film deposit and to improve the
The Commission initially proposed a budget of EUR 1 055
restoration and conservation of cinematographic heritage,
million for MEDIA 2007. The EP supported this figure, but EU
while guaranteeing European citizens equal access to this
leaders later decided to introduce funding cuts in the overall
shared heritage (see above).
‘financial perspective’. In the end, the budget allocated to
MEDIA 2007 amounts to EUR 755 million, a little over EUR 100 E. Media literacy
million per year.
The EP is currently preparing an own-initiative report on media
C. Media pluralism literacy, drawn up by Austrian MEP Christa Prets, which is
expected to be adopted in the winter of 2008.
The EP is worried about increasing media concentration and
has called on the Commission and the Member States to
safeguard media pluralism. In a report adopted in 2003 (P5_ g Gonçalo Macedo
TA(2004)0373) it stressed that the EU should use its July 2008
4.17.6. Sports policy

Sports policy has no specific legal base and is therefore currently governed by general provisions of the Treaty on the
internal market and by the jurisprudence of the Court of Justice. In the event of entry into force of the Lisbon Treaty, sport
will become an EU policy, although the Community would primarily play a supporting role to Member States.
Legal basis on the ‘specific characteristics of sport’, which recognised its

important social, educational and cultural functions.
In the Treaty establishing the European Community (EC):
— Articles 39 to 55 (free movement of people, services and The Treaty establishing a Constitution for Europe went even
capital); further in recognising sport as a strand of EU policy. It included
sport among the areas in which the EU can take supporting,
— Articles 81 to 89 (competition policy), coordinating or complementary action and again made
— Articles 149 (education), 150 (professional training), 151 specific reference to its social and educational functions. The
(culture) and 152 (public health). Lisbon Treaty, should it come into force, contains very similar
wording (Article 165).
Although no article in the Treaties mentions sport explicitly, in
practice many areas of EU competence have a direct impact Due to the lack of a specific legal basis, European sports law
on sport — notably on its economic aspects. These are has been shaped to a great extent by the case-law of the
governed, for example, by the articles on the freedom of Court of Justice of the European Communities (CJ). This
movement of workers. However, EU leaders gave a political situation has led to a high degree of legal uncertainty as it is
signal that they wished to recognise the wider role played by not clear up to what point sporting organisations are
sport by including a ‘Declaration on sport’ in the 1997 competent to act autonomously as self-regulators and where,
Amsterdam Treaty. The Nice Treaty also included a declaration on the other hand, the European regulator should intervene.
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4 17
As a general rule, and based on the existing Treaty provisions tackle the problem. The ‘Home-grown players rule’, currently
supported by the case-law of the CJ and decisions of the applied by UEFA, imposes that each professional football club
European Commission, it can be stated that sport, whenever should have at least eight players trained at the club or in the
representing an economic activity, falls under the scope of EC same country in its squad of 25. The other model is the FIFA
rules. Sport in Europe, however, is characterised by a very close sponsored ‘6 + 5’ proposal, under which in every professional
relationship between its professional and amateur branches. team 6 of the 11 players actually taking the field would have
This structure, described as the European sports ‘pyramid’ to be nationals of the country they are playing in. The
model, is founded on local and amateur sport and ends in the Commission has criticised this idea for being discriminatory
highly professional leagues and respective federations. The against non-nationals, which runs counter to the free
different layers are linked by the fact that competitions are not movement of workers, whereas it gave cautious support to the
closed (relegation is possible) and through certain ‘Home-grown players rule’.
redistributive measures which channel some of the profits
from the top to the amateur level. Therefore, a clear separation B. Competition policy
between professional and amateur and between economic There are two strands to sport: on the one hand, the sporting
and non-economic sporting activities in practical terms would activity itself which fulfils a social, integrating and cultural role
be impossible to achieve. to which the competition rules of the Treaty do not
theoretically apply, and, on the other hand, a series of
economic activities generated by sporting activities to which
Objectives
the competition rules of the Treaty do apply. The
In its action under the various Treaty provisions and interdependence and in particular the overlap between these
declarations, the EU deals with the economic, social, two strands makes the application of competition rules more
educational and cultural aspects of sport. complex.
Sporting federations are considered under EC law as
Achievements ‘undertakings’ and therefore fall under the scope of EC anti-
Many aspects of EU policies have an impact on the sporting trust rules. Hence Articles 81 and 82 of the Treaty play an
world. In addition to those listed above, it is worth mentioning important role in the sports sector. The Commission has the
audiovisual policy and health policy. task of ensuring that EU competition rules are respected. Many
complaints brought before the Commission and court cases
A. Free movement of workers
are based on the claim that a sports body has misused its
As an economic activity under the terms of Article 2 of the EC power and breached anti-trust rules (see for example the
Treaty, sport must comply with European law, in particular the recent case Meca-Medina and Majcen v Commission, Case
provisions relating to the free movement of workers, as C-519/04 P).
acknowledged by the Court of Justice ruling in the Walrave
case (1974). Since then, various cases (Dona, Deliège and Another competition aspect is State aid (Articles 87 to 89).
Lethonen) have confirmed this approach. In December 1995 Many sport clubs rely on subsidies granted by local, regional or
the Court, basing its reasoning on Article 48, ruled in the very national authorities (in the form of tax breaks, preferential
important Bosman case (C-415/93) that transfer fees, directly conditions for loans, etc), especially when it comes to financing
affecting a footballer’s access to the employment market in sports infrastructure. This practice, depending on the specific
another EU country, were an obstacle to the free movement of circumstances, could be considered a breach of State aid rules.
workers and thus illegal under the Treaty. The Court also ruled C. Sports events and audiovisual policy
against any limit on the number of non-national EU players
Television is the primary source of funding for professional
who could be fielded in a club team. In December 1998,
sport in Europe. Some sports, such as football and Formula 1,
following a number of complaints, the Commission expressed
achieve very high viewing figures, which explains the
several reservations to the International Federation of Football
importance attached to these events by broadcasters. Many
Associations (FIFA), with regard to its transfer system and its
broadcasters are willing to pay large amounts for the exclusive
compatibility with EU competition law and free movement of
right to broadcast popular sports events. In this regard the
workers. After long discussions, the Commission, FIFA and
audiovisual media services (AVMS) directive, is important since
UEFA (the Union of European Football Associations) and
it sets out guarantees as regards the unencoded broadcasting
professional footballers’ representatives (FIFPro) agreed in 2001
of certain major sporting events. The directive allows national
to bring the transfer system in line with EU law whilst taking
authorities to specify a limited number of events which must
account of the specific nature of football.
be available for broadcasting on ‘free’ channels.
Many argue that under current arrangements the training of
young sportspersons is not sufficiently taken into account. D. Public health and the fight against drug-taking
Especially in team sports, notably football, young talent is EU Member States have national legislation to combat drug-
increasingly ‘imported’ from outside national or EU borders to taking in sport, but EU sports ministers and the EU institutions
the detriment of young local players. Two models exist to have taken the view in several resolutions that the current
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situation can only be improved by increased cooperation at the health, education, social inclusion and volunteering, external
EU and international levels. The World Anti-Doping Agency relations and financing.
(WADA) was established on 10 November 1999 to promote and
coordinate the fight against drug-taking in sport in all its forms Role of the European Parliament
at international level. The European Commission played an
active part in setting up WADA. The conclusions of the informal The European Parliament (EP) is very much of the view that
meeting of EU sports ministers on the fight against doping in there is a growing necessity for the EU to deal with sports
February 2003 stated that the third draft of the WADA Anti- matters while fully respecting the principle of subsidiarity, and
Doping Code (which was approved during the WADA is therefore in favour of including an explicit reference to sport
Copenhagen Conference in March 2003) should be fully binding in the Treaties. Within the EP, the development of a European
on athletic bodies and organisations at all levels. The code was sports policy falls under the competence of the Committee on
updated in September 2007. Ministers have also stressed that Culture and Education.
close cooperation between the EU, the Council of Europe and
A. Sport and education
United Nations Educational, Scientific and Cultural Organisation
(Unesco) is needed in order to properly tackle the problem of As early as 1997 the EP asked the Commission to organise a
doping and its international and cross-border nature. European Year of Sport, which resulted in the establishment of
EYES 2004. In November 2007 it returned to this question on
E. Sport and education adopting an own-initiative report, drawn up by Hungarian MEP
In 2003 the EP and the Council established the European Year Pál Schmitt, on sport and education, which emphasises the
of Education through Sport (EYES) 2004 through Decision No importance of values transmitted by sport, such as self-discipline,
291/2003/EC. While this initiative had many aims, particular challenging personal limitations, solidarity and respect for others.
importance was attached to raising young people’s awareness Parliament called on Member States to promote body awareness
of the importance of sport in the development of personal and health through a higher degree of integration between
and social skills and to encouraging the links between physical education and academic subjects in school. Prior to this,
education and sport. EYES was very successful, making it the EP commissioned a study on the situation of physical
possible to finance 161 projects (including 10 Community education in the EU from academic experts.
projects, i.e. projects that brought participants together from
B. Drug-taking
more than eight European countries). There was also an
information campaign on the educational value of sport. This The EP is very concerned by doping in both professional and
success led experts to recommend that European action in the amateur sport and strongly supports the Commission’s plan to
field of education through sport should be continued. intensify cooperation to combat doping at international level.
In November 2004 the Committee on Culture organised a
Furthermore, sport is an important instrument to promote public hearing designed to draw attention to the subject. In
positive societal values such as the ideal of team spirit or fair July 2008 it heard an academic expert on the current situation
competition. It is also a means of inclusion of socially of the fight against doping.
disadvantaged people (for example immigrants) into society.
An example is the Homeless World Cup, held in South Africa in C. Women’s sport
September 2006. The EP has also called for greater recognition of the specifically
F. White Paper on sport female dimension of sport, in terms of both practice and
access, and has called on the European Commission to
After two years of consultations, the European Commission
support the promotion of women’s sport.
adopted a White Paper on sport in July 2007, which is its first
comprehensive document setting out its vision for the sector. D. Professional football
The White Paper aims at: In May 2006 the EP organised a joint public hearing on
— providing strategic orientation on the role of sport in the EU; professional football. Subsequently, in March 2007, Parliament
— encouraging debate between the EU and sport bodies on adopted an own-initiative report, drawn up by Belgian MEP Ivo
specific problems; Belet, on the future of professional football in Europe, where it
underlines that greater legal certainty is needed in the sector,
— enhancing the visibility of sport in EU policymaking; avoiding that its development continues to be determined on
— raising awareness of the needs and specificities of the a case-by-case basis by the CJ. The report also stresses the
sector; importance of fostering young talent and promoting better
balanced competitions. It therefore supports UEFA measures
— identifying the appropriate level of further action at EU to encourage the training of young players by requiring a
level. minimum number of home-grown players in club squads (see
The White Paper also proposes concrete actions in a detailed above) and advocates the introduction of a cost-control
action plan known as ‘Pierre de Coubertin’. The action plan system as a way of enhancing financial stability and the
concerns social and economic aspects of sport, such as public competitive balance between teams.
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The European Parliament has also been concerned by the EU to only complement the actions of Member States in
incidents of racism in professional football. In May 2006 it the sports field and to respect the autonomy of the sports
adopted a written declaration calling on UEFA to ensure that movement. Parliament also called for more consistency and
referees have the option, according to clear and strict legal certainty in EU policy, suggesting the setting up of a
guidelines, to stop or abandon matches in the event of serious ‘structured partnership and dialogue between the
racist abuse. Commission and the sports movement’.
E. The White Paper on sport
In May 2008, Parliament reacted to the White Paper on sport g Gonçalo Macedo
July 2008
on adopting a report drawn up by Greek MEP Manolis
Mavromatis (P6_TA(2008)0198), which stressed the need for
4.17.7. Communication policy

Communication policy is not governed by specific provisions in the Treaties, but flows naturally from the EU’s obligation to
explain its functioning and policies. It is also based on the Charter of Fundamental Rights, which provides citizens with a
right to information. In recent years, the EU institutions have made major changes to communication policy, especially in
the light of the ‘no’ votes in various national referendums.

A. Strategies and action plans
The Treaties do not contain any specific chapter or article
concerning communication policy. 1. ‘Debate Europe’
Since 2005, the European Commission has submitted
At present the EU’s communication policy is therefore based numerous policy documents on communication — which
on the Charter of Fundamental Rights: Article 11 (right to reflects the recent high profile of this policy — the latest of
information and freedom of expression, as well as freedom and which is ‘Debate Europe’ (COM(2008) 158/4), published in April
diversity of the media), Article 41 (right to be heard and right 2008. In it, the Commission clarifies that it wishes to pursue
of access to documents relating to oneself ), Article 42 (right of ‘Plan D’ (see below), focusing now on ‘D for democracy’. The
access to the documents of the European institutions) and objective is to enable ordinary citizens to summarise their
Article 44 (right of petition). For actions for which there is no views and discuss them with policymakers, including the
separate legal basis in the EC Treaty, a reference to Article 308 media.
of the Treaty establishing the European Community (EC) is So far, about 40 000 people have taken part in Plan D projects
necessary. in person and hundreds of thousands have participated via the
Internet.
2. ‘Communicating Europe in partnership’
Objectives
In October 2007 the Commission reformulated its
communication strategy in ‘Communicating Europe in
Even before the ‘no’ votes in the referendums on the European
partnership’ (COM(2007) 568), which emphasises the need for
Constitution in France and the Netherlands, and more recently
more pooling of efforts between the European institutions and
on the Lisbon Treaty in Ireland, the EU had set itself the
the Member States, in order to improve the information
objective of improving communication between the
offered to citizens at European, national and local levels. It also
institutions and the citizens of the Union. It felt this to be
proposed, in the same spirit, greater coordination between the
necessary because members of the public are insufficiently
three main EU institutions on communication, which would
informed on EU policies and of how these have an impact on
involve them signing an interinstitutional agreement for that
their everyday lives. More recently, the EU has stressed that
purpose.
communication must be ‘two-way’: on one hand, the quality
and quantity of information provided to citizens must be 3. The White Paper on a European communication policy
improved; on the other, better informed citizens should exert In February 2006, the European Commission published a White
more influence on the political debate at the EU level. Paper on a European communication policy (COM(2006) 35
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final). The main significance of this third document on — establishing contact at local level: national and local
communication policy to be published by the Commission forums and certain media to which priority is assigned are
within seven months lay in its shift of emphasis from a to be used as communication channels.
Brussels-based to a ‘going local’ approach.
The strategy is to be implemented in two stages:
The White Paper announced a six-month consultation of civil — by means of an internal action plan with practical
society, after which the responses were summarised with the measures to be initiated within the Commission;
aim of then proposing appropriate measures.
— by means of the White Paper (see above), which takes
The main purpose of the White Paper was to involve all major account of all parties concerned and in which the EU
stakeholders (Community institutions and bodies, Member decisions and initiatives are described which the
States, regional and local authorities, political parties and civil Commission plans jointly with the other EU institutions and
society) in the process. It defined five fields for practical with authorities of the Member States.
measures to be taken:
The action plan for better communication also aims to:
— defining common principles for communication measures
— make greater efforts to consult the public;
relating to European policies;
— coordinate communication work within the Union in order
— empowering citizens, enabling them to get to grips with to put the existing means of communication to more
European affairs; efficient use, inter alia by means of more professional
— working with the media and new audiovisual services to communication work using specific training for EU staff;
develop a European ‘public arena’; — make use of the means of communication which particular
— understanding public opinion; target groups favour, engaging in communication work
primarily through regional and local media;
— doing the job together, in partnership.
— formulate Commission proposals for political initiatives
4. Plan D for democracy, dialogue and debate of October clearly, so that the general public can understand them
2005 and that the advantages of the proposed measures are
The Commission’s ‘Plan D’ (COM(2005) 494 final), proposed made clear to the public;
after the ‘no’ votes in the referendums on the Treaty — develop the Commission’s representations in the Member
establishing a Constitution for Europe, in which the ‘D’ stands States in order to make contact with the public more
for democracy, dialogue and debate, creates a common effectively and thus enter into a communication
framework for launching a public debate at the national and partnership with the EU institutions.
European levels. The purpose is to think about the future of the
European Union and to strengthen democracy in Europe. 6. Changeover to the euro
Plan D was intended to breathe life into the ‘reflection period’ By means of its information and communication strategy
on which the EU had embarked and which was to run for a (COM(2004) 552 final) of August 2004, the Commission
limited time. adopted the objective of supporting the changeover to the
euro in the new Member States, persuading the public of the
The measures taken comprised a comprehensive programme benefits of the euro and of economic and monetary union
of visits to Member States by Commissioners and regular visits (EMU).
by them to national parliaments, support for European citizens’
projects, providing more information about Council meetings, The fundamentals of the strategy are decentralisation and
establishing a network to promote a wide-ranging debate on subsidiarity, coherence and flexibility of messages, partnership
the future of the European Union and efforts to increase agreements with Member States and a multidisciplinary
turnouts in European elections. multimedia approach.
5. The action plan to improve communicating Europe B. Practical implementation

This Commission action plan (SEC(2005) 985) was launched in 1. Internet forum on the future of Europe
July 2005. It aims to bring about a genuine dialogue with the This Internet discussion, which took place in 20 languages and
public and to take better account of their concerns in the in which all members of the public could participate, was part
Commission’s communication work. of Plan D (see above).
The three principles of the communication strategy are: During the first stage, the debate focused on three main sets
of themes:
— listening: so that EU citizens are not only informed but
also have their views and concerns taken into account; — Europe’s economic and social development;
— feeling towards Europe and the Union’s tasks;
— communicating information about how European policies
affect the everyday lives of citizens; — Europe’s borders and its role in the world.
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4 17
2. The Europe Direct information centres 6. The ‘Youth in action’ programme (2007–13)
The 400 new Europe Direct information centres which were (COM(2004) 471)
set up on 1 May 2005 provide information, advice and The new programme is aimed at young people between the
assistance to citizens of the EU and answer their questions ages of 13 and 30 in the Member States and in third countries,
about EU legislation, policies, programmes and sources of particularly those covered by the new neighbourhood policy.
financing. This initiative supports the Europe Direct contact ‘Youth in action’ comprises five measures, including European
centres, which can be telephoned free of charge from any voluntary service, youth exchange measures and the ‘Youth of
Member State on 00800 6 7 8 9 10 11. the world’ programme to promote projects with third
countries.
3. The Prince programme
The Prince programme (information programme for the The main proposed objectives are:
citizens of Europe) supplements and consolidates the — promoting young people’s active citizenship in general and
deployment of communication instruments in connection their European citizenship in particular;
with important EU topics. The information measures adopted
under the programme are based on the principle of — developing young people’s solidarity, in particular in order
partnership between the EU institutions and the authorities to reinforce social cohesion in the European Union;
and civil-society organisations in Member States. The — fostering mutual understanding between peoples through
information campaign launched by means of Prince has the young people;
purpose of cultivating public awareness of the benefits of the
— contributing to developing the quality of support systems
EU and the challenges facing it.
for youth activities and the capabilities of civil society
4. The European transparency initiative organisations in the youth field;
The main purpose of this initiative was to make the work of the — promoting European cooperation in youth policy.
EU institutions more transparent and accessible. One practical
measure for this purpose is the Commission’s intention of
publishing on its Europa website the names of those who
receive EU funding. Since 10 October 2006, it has in addition Over the years, the European Parliament has critically
been possible to access information about EU grants and examined the Commission’s proposals in the field of
contracts. communication. As the representative of the interests of
Europe’s citizens, it also itself has a duty to communicate what
A consultation exercise was launched based on the Green Europe is about and to articulate and act upon citizens’
Paper on the European transparency initiative. Participants interests in Europe. In its reports, Parliament has repeatedly
were invited to express their opinion on the following aspects made detailed proposals for improving the relationship
of transparency in the European Union. between the EU and its citizens, although in many cases the
— Transparency and representation of interests: This is Commission has only accepted them to a limited extent. As a
concerned with lobbying in the EU. result, members of the European Parliament have become
very critical of Commission initiatives. However, there is no
— The Commission’s minimum standards for consultation of dispute as to the fact that the EU’s communications capacity
interested parties: This part provides a structured needs to be significantly improved.
framework for feedback on the application of standards.
Parliament takes the view that, in its communication with
— Announcement of the names of recipients of EU funding: citizens and the media, the EU must express itself in a way that
This part was to be used for a debate on publication of the is easy to understand, as EU jargon widens the gulf between
names of recipients of money from various EU funds the EU institutions and citizens.
administered by the Commission in cooperation with the
Member States, particularly the Structural Funds and the For this reason, it believes that the methods used to
funds earmarked for the common agricultural policy. communicate with the public should be assigned high
priority. A two-way exchange of information and ideas is
5. The ‘Citizens for Europe’ programme (2007–13) called for, that is, a dialogue between the EU and its citizens
(COM(2005) 116) at all levels.
The low turnout in the 2004 elections to the European
In its report on the White Paper on a European communication
Parliament was one of the reasons why the European Union
policy, drawn up by Spanish MEP Luis Herrero-Tejedor and
decided to promote active participation by citizens, to place
approved in November 2006 (P6_TA(2006)0500), the EP called
citizens at centre stage and to give them the opportunity to
for the following measures.
act on their responsibilities as European citizens. The main
purpose of the programme is to promote cross-border — In order to ‘decentralise the message’, the EP advocated
involvement of citizens and thus cultivate a stronger European communicating European issues at national, regional and
awareness. local level. It also stressed the importance of local European
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administration, to facilitate important direct contacts — In order to implement communication policy, the EP
between the institutions and the public and simplify access stressed the need for greater cross-border cooperation on
to European initiatives and programmes. European political themes between regional and local
media. For this purpose it called upon the Commission to
— The financial support granted by Union should be made as
establish a ‘European Fund for (Investigative) Journalism
publicly visible as possible.
that would support projects in which journalists from
— As the public often tended to regard the EU as a single several Member States together explored a European
entity, despite its various institutions, the EP considered it subject in depth and considered it in relation to the
necessary for all the institutions to adopt a joint approach differences in local and regional situations.
to communication policy.
In the absence of a specific legal basis in the Treaties, the EP
— Active participation by the Member States was felt to be a has been unable to exercise powers of co-decision over
decisive factor in successful communication. One of the communication policy, which has in the past caused tensions
principal challenges was getting the Member States to with the European Commission. As an elected body, the EP
contribute technically and financially to the EU’s common feels that it should have a decisive voice in deciding on a
communication work and provide objective, reliable and common EU approach in this field. The proposed
impartial information about European policies. The interinstitutional agreement may provide a solution to this
Committee of the Regions also had an important role to problem.
play here.
— National, regional and local media should be involved g Cristina Spinei
more in communication policy. July 2008
4.18. Tax policy
4.18.1. General tax policy

Tax policy plays a significant role in the internal market. However, the EU has relatively little competence in taxation. Direct
taxation is regulated almost entirely through bilateral agreements, while the EC Treaty contains some provisions and
harmonisation in indirect taxation. The jurisprudence of the Court of Justice and the cooperation between the tax
authorities of Member States remains a key element of European fiscal policy.
Legal basis measures to prevent distortions of the market. Article 293 also
recommends the conclusion of inter-State fiscal conventions
Action in the general taxation field can be justified by the in order to avoid double taxation.
general aim of the Treaty establishing the European
Community (EC), expressed in Article 3, of eliminating
between Member States ‘customs duties [...] and all other Objectives
measures having equivalent effects’; and of ‘ensuring that
competition in the common market is not distorted’. Article 93 Both the creation of the single market and the completion of
deals specifically with indirect taxation (VAT and excise duties). economic and monetary union have led to new Community
Measures in other tax fields are generally taken on the basis of initiatives in the field of general taxation. The Community is
Article 94 (completed by Articles 96 and 97) covering pursuing a number of objectives.
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Common policies Tax policy
4 18
— A first, long-standing aim has been to prevent differences The average taxes on consumption are moderately on the rise
in indirect tax rates and systems from distorting while those on labour are moderately decreasing, in
competition within the single market. This has been the accordance with a rather global trend. However, the average
purpose of legislation under Article 93 on VAT and excise implicit tax rate on labour is still the highest with 34.8 % of
duties (4.18.2 and 4.18.3). GDP (EU-27), followed by consumption (22.1 %) and capital
(29 %). As to differences between Member States, labour taxes
— In the field of direct taxation, where the existing legal range from 21.5 % in Malta to 44.5 % in Sweden. Consumption
framework mostly takes the form of bilateral agreements was effectively taxed at 34.0 % in Denmark, while the lowest
between Member States, the primary objective of implicit consumption tax rates were registered in Spain
Community action has been to close the loopholes which (16.4 %). The highest implicit tax rates on capital were recorded
permit tax evasion and to prevent double taxation in Ireland (42.5 %), and the lowest in Estonia (8.4 %).
(4.17.5).
— The objective of ambitions towards a general taxation Achievements

policy has been to prevent the harmful effects of tax
competition, notably the migration of national tax bases A. General
as firms move between Member States in search of the In 1996 the Commission proposed a comprehensive review of
most favourable tax regime. Though such competition can taxation policy in ‘Taxation in the European Union’ (SEC(96) 487
have the beneficial effect of limiting governments’ ability to of 20 March). This highlighted the major challenges facing the
‘tax and spend’, it can also distort tax structures. Union: the need to create growth and employment, to stabilise
fiscal systems, and to fully establish the single market.
— The Maastricht Treaty provisions on economic and
monetary union introduced a new dimension to general In April 1996 the Council of Finance Ministers (Ecofin) set up a
taxation policy by limiting governments’ ability to finance High Level Group on Taxation chaired by the then Tax
public expenditure by borrowing. Under the Stability and Commissioner, Mario Monti. The Commission’s initial
Growth Pact, Member States participating in the euro area conclusions following the meetings of this group (in which the
must not at any time run budget deficits at a level above European Parliament was represented) appeared in October
3 % of GDP. The general aim of the pact is for Member 1996: ‘Taxation in the European Union: Report on the
States’ budgets to be roughly in balance over the development of tax systems’ (COM(96) 546).
economic cycle. At any given level of GDP, higher public The new European fiscal strategy (the ‘Monti package’) was
spending can therefore be financed only via higher tax published by the Commission in October 1997 (‘Towards tax
receipts. coordination in the European Union: a package to tackle
Despite broad acceptance of these objectives, however, harmful tax competition’, (COM(97) 495)). In addition to
national governments have been reluctant to see any major proposals on the taxation of interest and royalties, and on the
steps towards the harmonisation of taxation within the taxation of savings, it outlined a code of conduct for business
Community, or to end the Treaty provision that tax measures taxation, which was approved by Parliament and the Council,
must be adopted by unanimity in the Council. As the and is now in operation. Adherence to the code is monitored
Commission pointed out in a 1980 paper entitled ‘The scope by a body appointed by the national finance ministers: the
for convergence of tax systems in the Community’ (COM(80) Primarolo Group (4.18.5).
139), not only is ‘tax sovereignty [...] one of the fundamental In May 2001 the Commission published a new communication
components of national sovereignty’, but tax systems differ entitled ‘Tax policy in the European Union — Priorities for
widely as a result of differences in economic and social the years ahead’ (COM(2001) 260). This observed that ‘a high
structures and ‘different conceptions of the role of taxation in degree of harmonisation is essential in the indirect tax field’.
general or of one tax in particular’. The current ‘transitional’ VAT system was ‘complicated,
susceptible to fraud and out of date’. Nevertheless, Member
Average EU tax receipts rose from 34.4 % of GDP in 1970 to
States’ fears of losing revenue continued to make a ‘definitive’
39.9 % of GDP in 2006 (EU-27); but figures vary considerably
system, based on the origin principle, unacceptable to them.
between Member States. According to the latest available
The strategy of concentrating on improving the current
official data (Eurostat, 2006) overall taxation and social security
system was therefore reaffirmed (4.8.2).
contributions, for example, are just over 28 % in Romania
(28.6 %), Slovakia (29.3 %) and Lithuania (29.7 %), but almost As regards personal incomes, on the other hand, ‘the view is
50 % in Denmark (49.1 %) and Sweden (48.9 %). Social security that such taxes may be left to Member States’ subject to their
contributions vary from only 1.2 % in Denmark to just over respecting ‘the fundamental Treaty principles on non-
16 % in Germany and France (EU arithmetic average 13.1 % in discrimination and the free movement of workers’. In the case
2004). The Danish figures demonstrate how the social security of corporate taxation, a balance had to be found between
system can be almost entirely financed over taxes, as is the tackling direct obstacles to the internal market and the
case in Denmark. sovereignty of the Member States (4.8.5).
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Since the need for unanimity in Council limits the scope for — taxes on the use of vehicles: VAT and excise duties on fuel;
legislation on tax matters, the Commission suggested other tolls.
possibilities (COM(2001) 260).
In September 2002 the Commission published a
— The Commission intended to ‘adopt a more pro-active comprehensive strategy on the taxation of passenger cars
strategy generally in the field of tax infringement’. It (‘Taxation of passenger cars in the European Union — options
would be more ready to initiate action where it believed for action at national and Community levels’ (COM(2002) 431)).
that Community law was being broken and would ensure This identified a number of fiscal obstacles to the free
the correct application of the judgments of the Court of movement of cars — either permanently or temporarily —
Justice of the European Communities. from one Member State to another, for example, double
taxation (although ACT is sometimes reimbursed, unexpired
— Instruments exist which, unlike regulations or directives, do RT is never reimbursed). The Commission accordingly
not directly create Community law. These include proposed a gradual reduction of RT levels, with a view to total
recommendations, opinions, communications, abolition, to be made up by circulation taxes. In July 2005 the
guidelines, and interpretative notices. Commission presented a proposal for a new directive
— Much recent progress in the tax field — notably the code (COM(2005) 261).
of conduct on business taxation and the work of the D. The taxation of pensions
Primarolo Group — has taken the form of non-legislative
In June 1997 the Commission published a ‘Green’ consultation
agreements in the Council. The Amsterdam Treaty
paper on supplementary pensions in the single market (DG
introduced the possibility of building on such
XV). A report on the results of the consultation (‘Report on
arrangements by enabling sub-groups of Member States
pensions Green Paper’, COM(1999) 134) observed that ‘ tax
to conclude cooperation agreements within a Community
distortions are regarded by the industry and by the financial
framework.
sector as the main obstacles to the establishment of a genuine
B. Administrative cooperation single market in supplementary pensions’. The Commission
accordingly published a communication, ‘The elimination of
Cooperation between the tax authorities of Member States tax obstacles to the cross-border provision of occupational
has been a key element in the implementation of EU tax pensions’ (COM(2001) 214).
policy, in particular to combat tax fraud. In the field of VAT,
such cooperation has been an essential part of the transitional The systems of taxing pensions can be classified as follows:
system introduced in 1993 (4.18.2), together with the — taxed, exempt, exempt (TEE), where contributions must
computerised VIES facility for verifying VAT numbers. Initiatives be paid out of taxed income, but neither investment
in the last decade have included: a proposal to computerise returns nor benefits are in principle subject to tax; only
the movement and surveillance of excisable products Germany and Luxembourg fall into this category;
(COM(2001) 466); strengthening administrative cooperation in
— exempt, taxed, taxed (ETT), where contributions can be
the field of VAT (COM(2001) 294); and a Fiscalis programme
paid out of untaxed income, but where both investment
the first phase of which ran from 2003–07 with the second
returns and benefits are subject to tax; Denmark, Italy and
phase, decided in 2007, running until 2013. Fiscalis extends the
Sweden fall into this category;
work of the previous programme in improving information
exchange, joint investigation, training, etc. from the field of — exempt, exempt, taxed (EET), where neither
indirect taxation to that of direct taxation. contributions nor investment returns are subject to tax, but
where benefits are; all other Member States fall into this
C. The taxation of motor vehicles category.
In September 1997 the Commission published a study on The Commission’s preferred solution is to ‘strive for alignment
vehicle taxation in the European Union (XXI/306/98). All Member of Member States’ pension taxation systems on the basis of the
States, this noted, ‘rely heavily on a range of tax instruments to EET principle’.
ensure significant budgetary receipts from both private and
commercial road users’. But various pressures had resulted in
‘large differences in the overall strategies followed’. Vehicle taxes
were listed under three broad categories: Parliament has generally approved the broad lines of the
Commission’s programmes in the field of taxation, including
— taxes on the acquisition, purchase or registration of a the Monti package, the code of conduct and the work of the
vehicle: VAT, registration taxes (RT) and registration charges; Primarolo Group.
— taxes on the possession or ownership of a vehicle: annual Parliament’s latest report on general tax policy within the EU
circulation tax (ACT) — usually through the purchase of a was adopted in March 2002. The resolution stressed that ‘tax
sticker to be displayed on the windscreen; and obligatory competition is not at odds with the completion of the internal
third-party insurance, the premiums on which can incur tax; market’. It might ‘in itself be an effective instrument for
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4 18
reducing a high level of taxation’, and could help in attaining a be implemented as quickly as possible, and ‘especially the
reduction in administrative burdens, an increase in removal of those rules which discriminate between
competitiveness and a modernisation of the European social residents and non-residents or leave loopholes for fraud
model. and are thus incompatible with a single market’. Likewise,
there should be support for the initiatives taken within the
As regards excise duties, the report observed that ‘differing
OECD to restrict ‘the distortions produced by tax havens’.
policies regarding the setting of levels of duties do not in
themselves constitute a barrier to the internal market, except — Progress towards a ‘definitive VAT system which will apply,
when they are invoked to justify exceptions to the free in full, the country-of-origin principle’ should be a priority,
movement of goods’. since there was a danger that ‘the current system, which
was originally a transitional one, is increasingly becoming
The report also dealt with the related issue of how far action
definitive’. Measures to improve the current system were
concerning taxation should be decided at EU level. In
nevertheless welcome.
principle, it stressed that ‘the subsidiarity principle should
guide EU taxation policy’ and that ‘decisions on levels of tax — The Council should adopt the framework directive on the
must remain within the exclusive competence of the Member taxation of energy products ‘without delay’. The ‘polluter
States’. Where action at EU level was undertaken, ‘the principle pays’ principle should be applied more widely.
of unanimity should be retained whenever tax bases or rates
— ‘A multilateral tax agreement for the EU’, based on the
of taxation are at issue’.
OECD model tax agreement, should be framed to
Nevertheless, the report also drew attention to a number of ‘overcome the problems faced by companies and tax
areas in which action at EU level was necessary. administrations in the light of the existence of over 100
very different bilateral tax agreements.’
— Increased efforts were needed ‘to remove discrimination,
double taxation and administrative barriers’. There was ‘an — The report also supported a limited extension of qualified
urgent need for the Commission to tackle the main tax majority voting in the Council ‘for decisions concerning
obstacles to cross-border activity by European firms’, which mutual assistance and cooperation between tax
meant action on the fiscal treatment of intra-group transfer authorities’. In any case, ‘Parliament should be given co-
pricing, cross-border loss relief and cross-border flows of decision powers in the taxation area’.
income between associated companies.
— Tax competition had to take place ‘in the context of rules g Arttu Makipaa
preventing improper conduct’. The ‘Monti package’ should July 2008
4.18.2. Value added tax (VAT)

VAT has been applied in Member States since 1970. The EU legislative activities are aimed at coordinating and
harmonising VAT legislation for the purpose of a proper functioning of the internal market. Directive 2006/112/EC seeks a
harmonisation of regulations on VAT around two tax bands.
Legal basis and ‘re-taxing’ of imports in trade within the EEC (see below).
All Member States had introduced VAT by the early 1970s.
Under Article 93 of the Treaty establishing the European
Community (EC), the Council is required to adopt measures for
In April 1970 the decision was taken to finance the EEC budget
the harmonisation of ‘turnover taxes, excise duties and other
from the Communities’ own resources. These were to include
indirect taxes’ where this is ‘necessary to ensure the
payments based on a proportion of VAT and ‘obtained by
establishment and functioning of the internal market’.
applying a common rate of tax on a basis of assessment
determined in a uniform manner according to Community
Objectives rules’. The primary objective of Directive 77/388/EEC of 17 May
1977 — generally known as the sixth VAT directive — was to
Under the first VAT directive of 11 April 1967 Member States ensure that each Member State had a broadly identical ‘VAT
replaced their general indirect taxes by a common system in base’: i.e. levied VAT on the same transactions. Numerous
order to achieve transparency in the ‘de-taxing’ of exports subsequent amending directives have attempted to remove
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anomalies. Finally, Directive 2006/112/EC (the ‘VAT directive’), frontiers have been abolished, traders are required to keep
adopted in 2007, brings together various amendments to the detailed records of purchases from, and sales to, other
sixth VAT directive over the years in a single piece of legislation, countries, and the system is policed by administrative
thus simplifying and clarifying the legislation in this field. cooperation between Member States’ tax authorities.
In 1985 the Commission published the ‘Single market White The origin principle generally applies to all sales to final
Paper’, Part III of which covered the removal of fiscal barriers. consumers: that is, once VAT has been paid on goods in one
A substantial package of proposals for legislation was country, they can be moved within the Community without
published between 1987 and 1990. The need for action arose further control or liability to tax. There are three ‘special
from the ‘destination principle’ applied to transactions regimes’ where this principle does not apply.
between Member States. The rates of VAT and excise applied
are those of the country of final consumption; and the entire — Distance sales: Internet, mail-order or similar companies
revenue accrues to that country’s Exchequer. The method by having sales over a certain threshold to any Member State
which this system was then administered required physical must levy VAT at the rate applied in that country (i.e. where
frontier controls. As traded goods left one country, they were the goods are delivered).
‘de-taxed’ (e.g. in the case of VAT, zero rated), and were then — Tax-exempt legal persons (i.e. hospitals, banks, public
‘re-taxed’ on entering another. Complex documentation was authorities, etc.): Where these buy goods over a certain
necessary for goods transiting Member States. The Cecchini threshold from another Member State they are required to
report concluded that frontier controls were costing intra- pay VAT on them at their domestic rate, despite the fact
Community traders around ECU 8 000 million, or 2 % of their that the deliveries are theoretically zero rated (i.e. the
turnover. customer rather than the vendor is accountable for the
tax).
Achievements — New means of transport: Boats, aircraft and cars under six
A. The VAT system months old are taxable in the purchaser’s country, even if
1. Initial proposals acquired in another Member State.
The solution initially proposed by the Commission (COM(87) 3. Towards a ‘definitive’ system
322) involved a change to the so-called ‘origin principle’. The original intention was that this transitional system should
Instead of being zero rated, transactions between Member apply until the end of 1996. Under Article 35a of the amended
States liable to VAT would bear the tax already charged in the sixth VAT directive, the Commission was required to ‘submit
country of origin, which traders could then deduct as input tax proposals for a definitive system’ before the end of 1994, and
in the normal way. In theory, this would have resulted in goods for the Council to reach a decision on it before the end of
moving between, say, England and France, or France and 1995. However, no formal legislative proposals appeared.
Germany, being treated in exactly the same way as those
moving between England and Scotland or Bavaria and Hessen. In pursuit of this final objective, a draft directive was proposed
There would have remained, however, one big difference: VAT in 1997 to give the Committee on Value Added Tax, which
paid in England and Scotland goes into the same Treasury; consists of national representatives and is chaired by the
that paid in England and France does not. Estimates showed Commission, more powers of decision (COM(97) 325). New
that there would have been substantial transfers of tax proposals to replace the sixth VAT directive with a system of
revenues, notably to Germany and Benelux from the rest. deduction in the country of registration, together with a linked
Accordingly, the Commission proposed the establishment of a proposal on eligibility for deduction (COM(1998) 377) were
clearing system (COM(87) 323) to re-allocate the VAT published in 1998. However, all these proposals were
collected in the countries of origin to the countries of withdrawn by the Commission as there would have been no
consumption. This might have been based on VAT returns, on realistic chances for adoption.
macroeconomic statistics or on sampling techniques. 4. Viable strategy to improve the present system
2. The transitional system In 2000, the Commission shifted its emphasis from a move to a
The Commission proposals, however, proved unacceptable to ‘definitive’ system towards measures to improve the present
Member State governments. In the second half of 1989, a ‘transitional’ arrangements. In June 2000 it published a
high-level working party convened by the Council outlined an communication entitled ‘A strategy to improve the
alternative. operation of the VAT system within the context of the
internal market’ (COM(2000) 348), outlining a new list of
This retained the destination principle for transactions
priorities and a timetable. Improving the present system in
involving VAT-registered traders. This became the basis of
small steps rather than aiming for the ‘radical’ change towards
the transitional system proposed by the Commission in the
a definitive system seems to be the more viable alternative.
following year, and which came into effect at the beginning of
1993 (Directives 91/680/EEC of 16 December 1991 and On 20 October 2003, the Commission presented the
92/111/EEC of 14 December 1992). Though tax controls at communication ‘Review and update of VAT strategy
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4 18
priorities’ (COM(2003) 614) containing an interim report on Important legislation proposed by the Commission, but
the progress made between 2000 and 2003. During that time, pending in the Council include notably the so called ‘one-stop
nine VAT-related proposals presented in 2000 had been shop’ (COM(2004) 782) or the taxation of postal services
adopted. The general assessment of the Commission on the (COM(2003) 243). Moreover, in terms of pending procedures, in
success of the new strategy as of 2000 was positive, stating November 2007 the Commission proposed to modernise the
that the new strategy had provided the Council with some current legislation for insurance and financial services
new impetus in VAT matters. (COM(2007) 746 and 747).
Several directives had amended the sixth VAT directive b. More uniform application and administrative cooperation
(77/388/EC) since 1977. The most important recent piece of EU Council Regulation (EC) No 1777/2005 of 17 October
VAT legislation is Directive 2006/112/EC. This ‘VAT directive’ 2005 sets the basis for more uniform application of
is effectively a recast of the sixth VAT directive as common EU rules under the sixth directive. As differences in
amended over the years, bringing together various the practical application of common rules was becoming a
provisions (see points a and b below) in a single piece of real obstacle, the regulation now gives legal force to a
legislation, thus providing more clarity. number of agreed approaches to elements of VAT law,
In line with the revised strategy of 2000, Community action in ensuring transparency and legal certainty for both traders
the short term should focus broadly on simplification, and administrations.
modernisation, a more uniform application and administrative A proposal for simplifying VAT charging to counter tax
cooperation. evasion and avoidance and repealing certain decisions
a. Simplification and modernisation granting derogations was presented in COM(2005) 89 and
A simplification of the ‘tax representative’ system approved by the Council in July 2006. This gives all Member
(COM(1998) 660) was published in 1998 and adopted by the States the possibility to apply special rules to simplify the
Council in 2000. This directive annulled from 1 January 2002 application of VAT as many have proved successful. Until then,
the obligation made to European operators by the VAT system Member States could only apply such rules through individual
to appoint a tax representative for non-established taxable requests, the right to which remains in force.
persons. The administrative system in VAT requires a great deal of
A directive on harmonisation of content of invoices and cooperation between administrations, as under existing
electronic invoicing modernisations (COM(2000) 650) was mechanisms various loopholes exist to avoid tax payments.
adopted by the Council in 2002. This directive defined Combating fraud is therefore a priority objective for the
particulars that must appear on an invoice and simplified and Community. Important amendments to the sixth directive in
modernised to account for new invoicing technologies and this respect include administrative cooperation in the field
methods. of VAT (COM(2001) 294), adopted in 2003, and mutual
assistance in the recovery of claims (COM(1998) 364),
The growing importance of information technology focused adopted in June 2001.
attention on the application of VAT in this area. The
Commission proposed a directive on value added tax The Fiscalis programme, the first phase of which ran from 2003
arrangements applicable to telecommunications services to 2007 (Decision No 2235/2005/EC), and the second phase of
(COM(97) 4), following a decision by the Council to apply a which is currently running until 2013 (Decision No 1482/2007/
temporary derogation from the normal provisions of the sixth EC), as well as the computerised VAT information exchange
directive, and apply a ‘reverse charge’ procedure (which system (VIES) facility to verify VAT numbers (Regulation (EC) No
remains in force). An amendment on VAT on e‑commerce 638/2004) are meant to reinforce the functioning of indirect
(COM(2000) 349) was adopted in 2002, which created a level taxation systems in the EU in general. As the measures to
playing field in the taxation of e‑commerce. improve the present system continue, in March 2008 the
Commission proposed a package of measures to tackle VAT
On 7 October 2003 the sixth directive was amended by a evasion connected with intra-Community transactions more
directive on the place of supply of gas and electricity effectively (COM(2008) 147).
(COM(2002) 688). Its purpose was to review the current VAT
rules in order to avoid double or non-taxation by harmonising B. VAT rates
the rules governing the place of supply. The current structure of the VAT rates is in essence a snapshot
of the actual VAT rates prevailing in the Member States at the
Two directives were adopted in February 2008, one on the
moment the 1993 VAT harmonisation was undertaken.
place of supply for services (Directive 2008/8/EC), and the
other on VAT refunds (2008/9/EC). The new rules will ensure The Commission’s original proposals on VAT rates (COM(87)
that VAT on (business to business) services will accrue to the 321) were for ‘approximation’ within two tax bands: a standard
country of consumption, with some exceptions, such as rate between 14 and 20 %; and a reduced rate between 5 and
restaurant and catering services. The directive on VAT refunds 9 %. However, the main provisions of Directive 92/77/EEC of
will ensure a quicker processing of VAT refund claims. 19 October 1992 were:
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— a minimum standard rate of 15 %, subject to review and services, notably in the UK and Ireland. A specific
every two years; derogation contained in Article 28 of the sixth directive, refers
— the option for Member States to apply either a single or back to Article 17 of the second VAT directive of 11 April 1967.
two reduced rates over 5 % to any of the goods and The zero rates already in force on 31 December 1975 can
services listed in Annex H to the amended sixth VAT continue provided that they exist for clearly defined social
directive; reasons; that they benefit the final consumer; and that the
‘origin principle’ is still not being generally applied.
— derogations for certain Member States to apply a zero
rate, a ‘super-reduced’ rate or a ‘parking’ (i.e. transitional)
rate, pending the introduction of a definitive VAT system;
According to Community legislation in the field of VAT (mostly
— the abolition of ‘luxury’ or higher rates. based on Articles 93 and 94 of the EC Treaty), Parliament’s role
Commission reports on the results of this agreement have is limited to the consultation procedure.
concluded that there have been no significant changes in
cross-border purchasing patterns since 1 January 1993, nor A. The VAT system
any significant distortions of competition or deflections of In its resolution of 15 July 1991, Parliament accepted the
trade through disparities in VAT rates. In 1995 the Commission transitional regime ‘on the understanding that both
therefore proposed (COM(95) 731) no change in the 15 % Commission and Council are committed to the full abolition of
minimum, but suggested a new maximum rate of 25 %. The fiscal frontiers at the earliest possible date’. Since then,
Council, however, only agreed to make ‘every effort’ not to Parliament has continued to support moving to a ‘definitive’
widen the current 10 % span. A renewed proposal to fix VAT system based on taxation in the country of origin, most
rates in a 15 to 25 % band was made in 1998 (COM(1998) 693), recently in its resolution of 14 March 2002. In recent years,
which was also rejected by the Council. In December 2005, the Parliament has also been very committed to improving the
Council extended the 15 % minimum VAT standard rate working of the transitional arrangements and has adopted
applied by the Member States until 2010 (2005/92/EC). In numerous resolutions on VAT. In general, it is mostly supportive
derogation to this general rule, permanent reduced VAT rates of the Commission’s proactive stance to simplify and
for a number of goods and services are allowed for under modernise the present system.
Annex H to Directive 77/388/EEC.
B. VAT rates
Annex K to Directive 77/388/EEC allows for temporary reduced In June 1991, Parliament supported a 15 % minimum standard
rates for a further list of labour-intensive services including rate; later, in 1997, Parliament voted against the proposed
small repair services, the renovation of private dwellings, 25 % upper limit on the VAT standard rate but in 1998 it
window cleaning and private household cleaning, domestic approved a 15 to 25 % standard rate band under certain
care services and hairdressing. A communication by the conditions. In May 1998 Parliament also urged action to ensure
Commission was published in November 1997 entitled ‘Job a uniform application of rules on reduced VAT rates. It also
creation: Possibility of a reduced VAT rate on labour- pressed for Member States to be given the option of applying
intensive services for an experimental period and on an a reduced rate to certain labour-intensive or environment-
optional basis’ (SEC(97) 2089), and a formal proposal in 1999 friendly activities — pressure which was eventually successful.
(COM(1999) 62). This was originally agreed by the Council for a
In December 2005, Parliament then voted for a maximum rate
limited range of services and until the end of 2002. This period,
of 25 %. Also, Parliament confirmed its support for reduced
however, has been extended at various occasions, now lasting
rates for certain labour-intensive services. In December 2007,
until 31 December 2010 and applying also for most new
Parliament supported the extension of the temporary
Member States.
derogations for some new Member States; however, urging
Reduced VAT rates have repeatedly caused some controversy the Council to find a long-term solution on the structure of
between Member States, some of which have different rates until the end of 2010. Parliament also underlined that
preferences in terms of their application. As a result, in July locally supplied services do not affect the single market and
2008, the Commission put forward a proposal (COM(2008) Member States should therefore be allowed to apply reduced
428) to allow a more systematic use of reduced rates for locally rates, or even zero rates, in this area.
supplied services including labour-intensive services and
restaurant services. However, the required unanimity in the
Council remains uncertain in this area. g Arttu Makipaa
July 2008
In the past, some controversy has also taken place concerning
the continuing application of a zero VAT rate to certain goods
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4 18
4.18.3. Excise duties: alcohol and tobacco

In order to ensure the good functioning of the internal market and of its competition, European legislation provides for
harmonisation of excise duties on tobacco and alcohol. Typically, the applicable rates are minimum rates or target rates
on which there would be long-term convergence.
Legal basis (COM(85) 15) was also blocked. The single market programme
Under Article 93 of Treaty establishing the European of 1985, however, created a new impetus. All the existing texts
Community (EC), the Council is required to adopt measures for on structures were eventually replaced by a new proposal
the harmonisation of ‘turnover taxes, excise duties and other (COM(90) 432), which became Directive 92/83/EEC in October
forms of indirect taxation’ where this is ‘necessary to ensure the 1992. It defines the products on which excise is to be levied,
establishment and functioning of the internal market’. and the method of fixing the duty (e.g. in the case of beer by
reference to hl/degree Plato or hl/alcohol content).
Objectives 2. Rates
The Commission’s initial proposals under the single market
The rates and structures of excise duties vary between
programme (COM(87) 328) were that for each product there
Member States, affecting competition.
would be a single Community rate, fixed as the average of
Levying duties on products from other Member States at existing national rates. For both wine and beer this would have
higher rates than on those domestically produced is been ECU 0.17 per litre, and for spirits ECU 3.81 per 0.75 litre
discriminatory, and forbidden by Article 90 of the EC Treaty. bottle. Unlike VAT, however, few national alcohol excise rates
Very large discrepancies in the duty on a particular product are close to the average rate. No Member State found the
can result in tax-induced movements of goods, loss of revenue proposals acceptable. The Commission then proposed a more
and fraud. flexible approach (COM(89) 527). Instead of single, harmonised
rates there would be minimum rates and target rates, on
Attempts have therefore been made since the early 1970s to which there would be long-term convergence. Only the
harmonise both structures and rates, but progress has been minimum rates were retained in Directive 92/84/EEC. The
slight, in part because of considerations other than purely levels agreed were:
fiscal. For example, high levels of duty have been imposed in
— alcohol and alcoholic beverages (i.e. spirits): ECU 550 per hl
some Member States as part of general policies to discourage
of pure alcohol;
drinking and smoking. On the other hand, wine and tobacco
are important agricultural products in some Member States. — intermediate products: ECU 45 per hl;
Achievements — still wine and sparkling wine: ECU 0 per hl;

A. Alcoholic beverages — beer: ECU 0.748 per hl/degree Plato or ECU 1.87 per hl/
A further difficulty in the case of alcohol has been degree of alcohol.
disagreement about the extent to which different products Under the terms of the directive, the Council should have
are in competition with each other. In 1983 the Court ruled reviewed these rates by the end of 1994 and adopted any
on the levels of duty in the UK on wine and beer (Case 170/78 necessary changes. However, no Commission proposals were
ECR (1985)). The Court’s view was that the products could be published. A draft text suggested raising the minimum rates
considered substitutes since ‘the two beverages are capable of on spirits, intermediate products and beer to maintain their
meeting identical needs’. The Commission has traditionally real value, and raising the minimum for wine from zero to
taken the view that ‘all alcoholic drinks are more or less in ECU 9.925 per hl, but the text was not adopted. A Commission
competition’ (COM(79) 261). However, research for the report on the rates of excise duties was eventually published in
Commission (see Study on the competition between alcoholic September 1995 (COM(95) 285 final). Instead of suggesting
drinks: final report, Customs Associates Ltd, February 2001) new levels of minimum excise rates, this proposed that the
indicates that the degree of competition varies between whole issue should be examined in the course of general
different products. consultations on excise duties with national administrations
1. Structures and with trade and other interest groups.
The Commission’s initial proposals to harmonise excise duties Following debate in the Council, the Commission presented a
on beer, wine and spirits were made in 1972 (COM(72) 225). proposal in September 2006 to review the minimum rates and
Work on these in the Council was suspended at the end of carry out an inflation adjustment for the period after 1992. The
1974, and remained so despite communications in 1977 Commission’s preceding report (COM(2004) 223) was
(COM(77) 338) and 1979 (COM(79) 261). New draft legislation presented to the Council on 26 May 2004. However, the
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Commission then had not made any proposal concerning rate must be set ‘by reference to cigarettes in the most popular
levels of alcohol taxation because there was no agreement on price category’.
how a rate adjustment should be achieved. Member States Establishing clear criteria has nevertheless proved an
have very different views on the importance of alcohol excise intractable problem. The directive states that ‘at the final stage of
duty rates, reflecting their own national circumstances, harmonisation of structures’ the balance between the specific
cultures and traditions. In 2006, however, the inflation element and the proportional element (including the VAT
adjustment was strongly brought forward by the Finnish charged on top of the excise) should be the same in every
Presidency. Member State. The ratio should also ‘reflect fairly the differences
Below are the current minimum rate levels laid down in EU in the manufacturers’ delivery prices’. The most that was
legislation, which Member States are required to observe achieved, however, was that the specific element ‘may not be
when setting their national rates. The following table shows lower than 5 % nor higher than 75 % of the aggregate amount
the minimum rates for each product category expressed in of the proportional excise duty and the specific excise duty’, nor
euros per hectolitre per degree of alcohol, as well as the more than 55 % of the total tax burden (i.e. after VAT is added).
minimum rate expressed per litre of product at a degree of The difficulty in reaching a fixed ratio reflects the structure of
alcohol at which it is commonly sold. the Community tobacco industry. A specific tax — so many
euros per thousand cigarettes — benefits the more expensive
Minimum rate in products of the private companies by narrowing price
Minimum rate in
euros per litre of differences. A proportional tax, particularly when combined with
euros per 100
Product category product at the VAT, has the opposite effect, multiplying up price differences.
litres per degree
degree at which it Within the broad ratio so far laid down, some Member States
of alcohol
is commonly sold have chosen a minimum specific element, others have chosen a
Wine 0 Wine (12°) 0 maximum, so contributing to variations in retail prices.
Beer 1.87 Beer (5°) 0.1 2. Rates
Fermented 0 Cider (5°) 0 The Commission’s original proposals on excise duties within
beverages other the context of the single market programme (COM(87) 325
than wine and beer and COM(87) 326) were for the absolute harmonisation of
(e.g. cider and perry) rates. For tobacco products, the proposed rate was the
Intermediate 2.5 Intermediate arithmetic average: in the case of cigarettes, the average
products (e.g. products (18°) 0.45 specific rate (ECU 19.5 per thousand) plus the average
fortified wines such proportional rate (53 % including VAT). In the end, the
as port wines, sherry, directives on cigarettes (92/79/EEC) and other tobacco
etc. up to 22° products (92/80/EEC) set only minimum rates:
alcohol)
— cigarettes: 57 % of the tax-included retail price;
Ethyl alcohol and 5.5 Spirits (40°) 2.2
spirit drinks — hand-rolled tobacco: 30 % of the tax-included retail price,
or ECU 20 per kilo;
B. Tobacco products
— cigars and cigarillos: 5 % of the tax-included retail price, or
1. Structures ECU 7 per 1 000 or per kilo;
The basic structure of tobacco excise rates within the — Pipe tobacco: 20 % of the tax-included retail price, or
Community was established in 1972 by Directive 72/464/EEC. ECU 15 per kilo.
Between then and 1978 the directive was modified 13 times. A
second directive (79/32/EEC) was adopted at the end of 1978. Both directives required the Council, on the basis of a report
Finally, both directives were modified in the light of the single from the Commission, to examine these rates, and to adjust
market programme by Directive 92/78/EEC. All these directives them if necessary, before the end of 1994. The Commission
are now covered by a single consolidated text (COM(94) 355 of report, eventually published in September 1995 (COM(95)
3 October 1994). The categories of manufactured tobacco 285), noted that, in the case of cigarettes, a strict application
subject to taxation are defined as cigarettes, cigars and of the 57 % threshold risked widening rather than narrowing
cigarillos, smoking tobacco (fine-cut for rolling cigarettes), and the divergences between national excise rates. However,
smoking tobacco (other). where the earlier drafts had advocated the adoption of the
solution recommended by the European Parliament (see
In the case of cigarettes, the tax must consist of a below), the final report merely noted that ‘appropriate
proportional (ad valorem) excise duty, calculated as a proposals will be brought forward’ if necessary. In the case of
percentage of the maximum retail selling price, combined hand-rolled tobacco, the report observed that the ‘situation is
with a specific excise duty, calculated per unit of the product. giving rise to considerable fraud’ but that the cause ‘does not
Both rates must be the same for all cigarettes, and the specific lie exclusively in the taxation domain’.
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4 18
A further report published in May 1998 advocated a solution to strength’, with the final objective of reaching two rates per unit
the ‘57 % problem’ through a technical adjustment giving of alcohol: one for beverages with less than 15 % alcohol
Member States more flexibility in applying minimum rates. It content and another for those above.
also proposed increases in the specific minimum amounts to On tobacco products, the opinion adopted by Parliament
take account of inflation: + 18.5 % for the period 1992–98 and accepted the initial fixing of minimum rates only, but stated that
+ 4.5 % for 1999 and 2000 inclusive (though no Member State the various taxes ‘should be approximated stage by stage with a
actually charges below the resulting rates). Finally, it proposed view to achieving single target rates’. Parliament agreed with a
that reviews of the system should in future take place every five minimum overall rate of 57 % for cigarettes; but it suggested that
rather than every two years. These proposals were not adopted. there should be an alternative minimum overall rate of ECU 35 per
A new report and draft directive (COM(2001) 133) were 1 000 cigarettes, as in the case of other tobacco products.
published in 2001 and proposed:
B. 1997
— a EUR 70 minimum specific excise duty in conjunction
In September 1997 Parliament reaffirmed that there should be
with the 57 % rule; as regards cigarettes, most Member
no distortion of competition between different alcoholic
States would have to apply a minimum excise incidence
beverages, and suggested guidelines for future action:
(specific and ad valorem together) of 57 % of the tax-
inclusive retail selling price of the most popular price — the current differences in rates between wine, beer and
category and a minimum excise duty (specific and ad spirits should not be increased;
valorem together) of EUR 70 per 1 000 cigarettes; — lower rates on small distillers’ and brewers’ products;
— a EUR 100 minimum specific excise duty as an alternative — a full report on the wine market, including taxation, to be
to the 57 % rule; higher-taxing countries like Sweden, produced by the Commission;
which have difficulties in complying with the 57 % rule,
would have to apply either the minimum excise incidence — new forms and mixtures of alcohol to be taxed;
(specific and ad valorem together) of 57 % of the tax- — an assessment of the positive and negative health and
inclusive retail selling price of the most popular price social effects of alcohol consumption.
category, or a minimum excise duty (specific and ad
In the case of cigarettes and manufactured tobacco,
valorem together) of EUR 100 per 1 000 cigarettes for the
Parliament called in principle for an ‘upward harmonisation’ of
category most in demand;
rates, but also for further studies before any changes would be
— a higher minimum excise duty on very cheap (imported) made. In particular it asked the Commission to examine:
cigarettes.
— the ‘automatic trigger’ problem, which widened disparities
These proposals were rejected by the European Parliament in rates between Member States;
(see below), but in February 2002 were adopted in a modified
— social costs, health risks, nicotine addiction and
form by Council Directive 2002/10/EC. The EUR 100 per 1 000
monopolistic practices;
alternative threshold was reduced to EUR 95 and the EUR 70
additional threshold to EUR 60 per 1 000 from July 2002, rising — the smuggling of tobacco products;
to EUR 64 from July 2006. Spain and Greece were given later — the relationship between duty on cigarettes and that on
deadlines. The new Member States also enjoy transition hand-rolled tobacco;
periods until a final deadline of 2010 (with the exception of
Malta and Cyprus, which adopted the general regime). — the effect on employment of higher levels of duty.
C. 2002
Role of the European Parliament In 2002 Parliament rejected the Commission’s proposals for
A. 1987–92 changes in tobacco excise rates (see above), one of the main
Parliament’s Economic Affairs Committee examined the reasons being the projected impact on the enlargement
structure and rates of alcohol and tobacco excise in great countries, where rates are significantly below even the EU
detail, consulting widely with the various interests concerned. minimum rates which applied at the time.
A three-day public hearing was held in April 1988. In the case Parliament’s most recent report on EU tax policy was adopted
of alcoholic beverages, draft reports considered various in March 2002. It stated that Parliament ‘does not agree with
alternative approaches. Parliament’s final opinion on the draft the Commission’s policy with regard to duties on tobacco and
directives proposed the following minimum rates of duty: alcoholic products, particularly with regard to upwards
ECU 559.25 per hl/alcohol for spirits; ECU 37.4 per hl for harmonisation, through the constant raising of minimum
intermediate products; ECU 4.67 per hl for wine and sparkling taxation levels’.
wine: ECU 0.374 per hl/degree Plato for beer.
Parliament also called for the 1994 review to fix, for each g Arttu Makipaa
category, ‘a rate of excise duty proportional to the alcoholic September 2006
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4.18.4. Taxation of energy
Various fees were set at European level in the field of energy, in particular to protect the environment, public health or to
ensure a prudent and rational utilisation of natural resources. In this context, various regulations and minimum excise
duties have been established for mineral oils, diesel, fuels and biofuels.
Legal basis end of 1997. Council Decision 92/510/EEC authorised a

Under Article 93 of the Treaty establishing the European number of derogations for exemption or reduced rates
Community (EC), the Council is required to adopt measures for applying to certain products in different Member States.
the harmonisation of ‘turnover taxes, excise duties and other The duties are specific, i.e. calculated per 1 000 litres of the
forms of indirect taxation’ where this is ‘necessary to ensure the product or per 1 000 kg. For excise purposes, mineral oil means
establishment and functioning of the internal market’. leaded petrol, unleaded petrol, gas oil, heavy fuel oil, liquid
Article 175, introduced by the Maastricht Treaty, also allows the petroleum gas (LPG), methane and kerosene.
Community to take action, including that ‘of a fiscal nature’, to The Commission’s original proposals for excise duties on
pursue the objectives set out in Article 174: protection of the mineral oils, in the context of the single market programme
environment or of public health, and promotion of ‘prudent (COM(87) 327), were for absolute harmonisation, based on
and rational utilisation of natural resources’. average rates (for petrol and LPG the arithmetic average, for
fuel oil a weighted average). Even in a revised proposal in June
Objectives 1989 (COM(89) 260), the Commission argued that single rates
or rate bands should be applied to mineral oils because ‘the
Even before Maastricht, however, other factors had played as
risks of competitive distortion [...] are greater in this area than
important a part in determining the structure and levels of
for alcohol and tobacco’.
duties on mineral oils as those provided for in Article 93.
Several aspects of transport policy are clearly relevant: in Nevertheless, as for alcohol and tobacco, only minimum rates
particular, that of competition between different forms of were fixed by Directive 92/82/EEC:
transport and the search for transparency in the charging of — leaded petrol: ECU 337 per 1 000 litres;
infrastructure costs.
— unleaded petrol: ECU 287 per 1 000 litres on the
The control of pollution caused by the burning of mineral oils understanding that ‘in every case the rate of duty shall be
has always been a major element of environment policy. This below that charged on leaded petrol’;
was the determining factor in the laying down of different
— gas oil: ECU 245 per 1 000 litres with reduced rates for
minimum levels of duty on leaded and unleaded petrol.
heating oil;
General energy policy has also played a part in fixing the
— heavy fuel oil (diesel): ECU 13 per 1 000 kg;
levels of mineral oil duties: for example, the balances between
various energy sources (coal, oil, gas, nuclear, etc.) and — LPG and methane as a propellant: ECU 100 per 1 000 kg;
between indigenous and imported sources. other cases ECU 36 or ECU 0 per kg;
Agricultural policy objectives have also been relevant, — kerosene as a propellant: ECU 245 per 1 000 litres;
notably in the proposal (COM(92) 36) for a special reduced rate otherwise ECU 18 per 1 000 litres, or ECU 0.
of excise duty on motor fuels from agricultural sources
Every two years, ‘and for the first time not later than
(‘biofuels’).
31 December 1994’, these rates were to be reviewed ‘on the
Finally, within the context of Community policy on basis of a report and where appropriate a proposal from the
employment, a fiscal strategy has been developed to switch Commission’. The Commission’s report, however, was not
from the taxation of labour to other sources of revenue, formally published until September 1995 (COM(95) 285).
including taxing the use of raw materials and energy. Though earlier drafts had proposed various changes to the
minimum rates, the final report made no formal proposals.
Achievements
B. The CO2/energy tax proposal
A. Mineral oils The primary purpose of the Commission’s 1992 proposals for
The basic structure of mineral oil excise duties within the a Community-wide tax on carbon dioxide emissions and
Community was established by Directive 92/81/EEC. Every energy was to stabilise CO2 emissions by 2000 at their 1990
Member State is required to apply an excise duty to mineral level. This in, turn, was seen as a key element in worldwide
oils used as motor fuels or heating fuels, subject to certain policies to reduce emissions of greenhouse gases and halt
exemptions, which were to be reviewed by no later than the global warming. A subsidiary objective was general energy
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4 18
saving; and it was partly for this reason that the tax was outlined in a communication entitled ‘Environmental taxes and
conceived as being only 50 % on CO2 emissions, the other half charges in the single market’ (COM(97) 9).
being on energy content. The proposal was also seen as part
of an overall policy for fiscal reform. Since it was intended to C. The 1997 proposals
be ‘fiscally neutral’, the revenue raised could be used to reduce In 1997 the Commission published new proposals for
other taxes — in particular, to shift the general burden of restructuring the Community framework for the taxation of
taxation from ‘taxes on jobs’ (especially non-wage labour costs) energy products (COM(97) 30). This sought to build on the
to taxes on the use of resources. This has been described as system for taxing mineral oils by extending it to all energy
the ‘double dividend’. products, and in particular to products directly or indirectly
substitutable for mineral oils: coal, coke, lignite, bitumens and
Following deadlock in the Council on the 1992 proposals —
products derived from them; natural gas; and electricity.
which were opposed both for technical reasons and for
reasons of national fiscal sovereignty — the Commission In the case of electricity, the tax would be on the electricity
published a revised version (COM(94) 127), providing for itself rather than the fuel inputs, although a rebate would be
broad flexibility. The minimum rates set by the original possible where ‘environmentally preferable’ fuels were used for
proposal became target rates, and exemptions for various generation. The legislation proposed minimum excise duties.
industries were allowed. But the Council did not adopt the This proposal was debated in the EU’s Council of Ministers and
revised proposal either. Instead, individual Member States have was extensively changed before being adopted as Directive
been pursuing their own solutions towards reducing CO2 2003/96/EC of 27 October 2003. The minimum rate system for
emissions. The environmental aspects of the situation were energy products is listed in the following tables.
Energy products used as motor fuels

Leaded petrol (EUR per 1 000 l) 421 Gas oil (EUR per 1 000 l) 302
Unleaded petrol (EUR per 1 000 l) 359 LPG (EUR per 1 000 kg) 125
Natural gas (EUR per gigajoule) 2.6 Kerosene (EUR per 1 000 l) 302
Energy products used as motor fuels for certain industrial and commercial purposes
Gas oil (EUR per 1 000 l) 21 Kerosene (EUR per 1 000 l) 21
LPG (EUR per 1 000 kg) 41 Natural gas (EUR per gigajoule) 0.3
Energy products used as heating fuels

Heating gas oil (EUR per 1 000 l) 21 Heavy fuel oil (EUR per 1 000 kg) 15
Kerosene (EUR per 1 000 l) 0 LPG (EUR per 1 000 kg) 0
Natural gas (EUR per gigajoule) 0.15 Electricity (EUR per MWh) 0.5
Coal and coke (EUR per gigajoule) 0.15
Energy products used as heating fuels (non-business use)

Heating gas oil (EUR per 1 000 l) 21 Heavy fuel oil (EUR per 1 000 kg) 15
Kerosene (EUR per 1 000 l) 0 LPG (EUR per 1 000 kg) 0
Natural gas (EUR per gigajoule) 0.3 Electricity (EUR per MWh) 1
Coal and coke (EUR per gigajoule) 0.3
Directive 2004/74/EC amends the energy directive as regards introduced for the first time provisions which allow Member
the possibility for the Czech Republic, Estonia, Hungary, States to tax aviation fuel for domestic flights and, by means of
Latvia, Lithuania, Malta, Poland, Slovenia and Slovakia to bilateral agreements, fuel used for intra-Community flights. In
apply temporary exemptions or reductions in the levels of such cases, Member States may apply a level of taxation below
taxation. Additionally, Directive 2004/75/EC amends the the minimum level set out in this directive.
energy directive as regards the possibility for Cyprus to apply In 2000 the Commission also published a communication on
temporary exemptions or reductions in the levels of taxation. the taxation of aircraft fuel (COM(2000) 110), which outlined
Council Directive 2003/96/EC provides for a mandatory five possible systems, ranging from taxing national flights only
exemption from the harmonised excise duty for energy to the taxation of all flights for all carriers to all destinations.
products supplied for use as fuel for the purpose of air The discussions show that it will be very difficult, if not
navigation other than in private pleasure-flying. However, it impossible, to reach an agreement on this issue. During the
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discussions, which preceded the adoption of Directive proposal which would deal with the matter in a way that was
2003/96/EC, all but two Member States agreed that as a matter better coordinated with recently adopted directives on energy
of principle commercial aircraft fuel should be taxed on the taxation.
same basis as any other fuel. However, the question of
competition with third countries needs to be taken into E. The taxation of biofuels
account and any distortion of competition has to be avoided. Biofuels are any fuels deriving from organic and renewable
resources, the most obvious example being the oldest —
In the context of its drive to enhance development aid
wood. In the context of energy taxation the main specific fuels
effectiveness, the Commission services put forward a working
in question are: bioethanol, a form of ethanol produced
paper entitled ‘New sources of financing for development: a
largely from the fermentation of agricultural products (e.g.
review of options’ (SEC(2005) 467). This paper also deals with
sugar beet and cereals); biodiesel, produced by reaction
tax instruments such as kerosene and flight departure tax and
between plant oil and methanol; biogas (methane), produced
is expected to stimulate debate at European and national
from biodegradable waste; and etherised bioethanol,
levels.
biomethanol and biodimethylether.
D. Taxation of diesel A number of reasons can be advanced for encouraging the
On 24 July 2002 the European Commission presented new use of biofuels. They derive from renewable resources. They
proposals on the taxation of diesel, linked to that on unleaded can be produced domestically, reducing dependence on
petrol (COM(2002) 410). This has two aims: imported oil. Combustion results in fewer emissions of
— to harmonise, gradually, Member States’ excise duty on fuel particulates and environmentally-damaging or toxic gases.
used in international commercial haulage; They also provide the farming industry with alternative
commercial crops at a time when there is pressure to reduce
— to align the minimum excise rates on diesel used non- aid for food production. On the other hand, biofuels cannot
commercially — i.e. mostly in cars — with the rates on compete on price with established fuels.
unleaded petrol.
In November 2001 the European Commission proposed a set
In order to meet these twin aims, the proposal would create
of measures to promote the use of biofuels (COM(2001) 547),
two levels of taxation on diesel:
including the possibility of applying a reduced rate of excise
— a harmonised rate for international commercial use: by duty. The overall aim is to achieve a minimum biofuel share of
2010, the minimum rate of excise duty on commercially fuel consumption: 2 % by 2005 and 5.75 % by 2010. On
used diesel would be raised from the current EUR 245 per 20 June 2002 the Council reached a political agreement on the
1 000 litres to a higher, common ‘central’ rate; this would proposal. The directive was adopted in a co-decision
initially be set at EUR 350 in 2003 and would be adjusted procedure on 8 May 2003 and published in the Official Journal
thereafter for inflation on the basis of the consumer price of the European Union (OJ L 123, 17.5.2003).
index;
F. VAT on other fuels
— the minimum rate applied to unleaded petrol on the rest.
Among other recent tax proposal is in the energy field has
The principal justification for the proposals on commercially been that of December 2002 on VAT applying to natural gas
used diesel is to end the distortion of competition in the and electricity (COM(2002) 688). Currently, the place of
internal market for road haulage. Widely-differing rates of tax, taxation is the place of supply, but this is becoming
the Commission argues, give hauliers based in low-tax increasingly difficult to determine as cross-border trading in
countries but operating across national borders an unfair energy increases. The proposal would make the place where
competitive advantage. Linked to the distortion of the buyer was established the place of taxation for businesses.
competition is the issue of revenue loss by higher-taxed For final consumers, it would be the place of consumption.
countries. The proposal is also justified by two further
considerations: protection of the environment and fuel
efficiency. It is argued that trucks make unnecessary detours
on commercial journeys in order to refuel in low-tax countries, Parliament’s initial opinion on mineral oil excise duties was
so increasing journey lengths and fuel consumption. adopted in June 1991. It called both for target rates to be set
for petrol — ECU 445 by the year 2000 for unleaded petrol —
The Council reached an outline agreement in early February
and for a much higher minimum rate for heavy fuel oil (diesel):
2003 under which a minimum rate of EUR 302 per 1 000 litres
between ECU 245 and ECU 270.
would apply from the date the directive came into effect,
rising to EUR 330 in 2010. However, countries needing to make The European Parliament adopted its opinion on the
tax increases would have up to seven years to reach the Commission’s 1997 proposals in April 1999. The main
EUR 302 rate, and until 2012 to reach the EUR 330 rate. amendments sought to:
On 17 December 2003 the European Parliament rejected the — abolish the list of systematic exemptions but expand the
proposal and asked the Commission to present a new list of optional exemptions;
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4 18
— index the minimum tax rates to inflation; and applied more widely, particularly in the energy products
— establish a procedure allowing Member States to refund sector’, and that ‘it should be implemented not only through
the tax, in whole or in part, where firms could demonstrate taxation but also through regulation’.
that it was leading to a competitive handicap. Parliament gave a favourable opinion on the biofuel proposals
On the taxation of diesel proposals, Parliament has raised in October 2002 and adopted amendments designed to
certain questions concerning the practicality of operating two strengthen them.
rates of tax, and on the need for full harmonisation rather than
only minimum rates. g Arttu Makipaa
September 2006
In its resolution of April 2002 on EU tax policy in general,
Parliament argued that ‘the ‘polluter pays’ principle needs to be
4.18.5. Personal and company taxation

The field of direct taxation is not directly regulated by European legislation. Nevertheless, several directives and the
jurisprudence of the Court of Justice are helping to establish harmonised standards for corporate tax and income tax.
Moreover, communications and guidelines emphasise the concern to prevent tax evasion and double taxation within the EU.
Legal basis extensive network of bilateral tax treaties — involving both

Member States and third countries — covers the taxation of
There is no explicit provision in the Treaty establishing the
cross-border income flows.
European Community (EC) for legislative competences in the
area of direct taxes. Action in this field has therefore had to be
based on more general objectives. Objectives
Legislation on the taxation of companies has usually been Two specific objectives are the prevention of tax evasion
based on Article 94, which authorises ‘directives for the (e.g. the proposed withholding tax on interest) and the
approximation of such laws, regulations or administrative elimination of double taxation (e.g. agreements on dividend
provisions of Member States as directly affect the payments to non-residents).
establishment or functioning of the common market’. As in More generally, some harmonisation of business taxation
the case of Article 93 — and in contrast to Article 95 under (both corporation tax and the personal taxation of dividends)
which most single market legislation was adopted — is considered necessary to prevent distortions of
unanimity and the consultation procedure apply. competition, particularly of investment decisions.
Harmonisation might also be justified to prevent the
Article 58, introduced by the Maastricht Treaty, qualifies the free
undermining of revenues through tax competition (4.18.1)
movement of capital by allowing Member States to ‘distinguish
and to reduce the scope for manipulative accounting (e.g. via
between tax-payers who are not in the same situation with
transfer pricing).
regard to their place of residence or with regard to the place
where their capital is invested’. However, on 14 February 1995 the
Court ruled (Case C-279/93) that Article 39 is directly applicable Achievements
in the field of tax and social security. This article provides that A. Company taxation
freedom of movement for workers ‘shall entail the abolition of
Proposals for the harmonisation of corporation tax have been
any discrimination based on nationality between workers of the
debated within the European Community for over 30 years.
Member States as regards employment, remuneration and other
The Neumark report of 1962 and the van den Tempel report of
conditions of work and employment’. Article 293 requires
1970 both advocated harmonisation, though on different
Member States to ‘enter into negotiations’ for the abolition of
systems. In 1975 the Commission published a draft directive
double taxation within the Community and Article 294 forbids
proposing the introduction in all Member States of yet another
discrimination between the nationals of Member States ‘as
system, with an alignment of rates between 45 % and 55 %.
regards participation in the capital of companies’.
This proved unacceptable; and by 1980 the Commission was
Most of the arrangements in the field of direct taxation, arguing that, though a common system might be desirable on
however, lie outside the framework of Community law. An competition grounds, ‘any attempt to resolve the problem by
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way of harmonisation would probably be doomed to failure’ Meanwhile, at the end of 1998, the Commission was asked by
(‘Report on the scope for convergence of tax systems’ Member State governments to prepare ‘an analytical study of
(COM(80) 139)). company taxation in the European Community’. It accordingly
established two panels of experts, one academic and one from
Instead, the Commission decided to concentrate on more
the business community and trade unions. The study was
limited measures essential for completing the single market.
published in October 2001 (‘Company taxation in the internal
The ‘Guidelines for company taxation’ of 1990 (SEC(90) 601)
market’ (SEC(2001) 1681)). There followed a Commission
gave priority to three already published proposals, which were
communication ‘supplementing and building’ on the study
adopted later that year:
entitled ‘Towards an internal market without tax obstacles: a
— the mergers directive (90/434/EEC), on the treatment of strategy for providing companies with a consolidated
capital gains arising when companies merge; corporate tax base for their EU-wide activities (COM(2001) 582)).
— the parent companies and subsidiaries directive The main problem faced by companies, the documents
(90/435/EEC), eliminating double taxation of dividends observed, was that they were ‘confronted with a single
paid by a subsidiary in one Member State to a parent economic zone in which 15 different company tax systems
company in another; and apply’. The Commission proposed several approaches for
providing companies with a consolidated tax base for their
— the arbitration procedure convention (90/436/EEC),
EU-wide activities:
which introduced procedures for settling disputes
concerning the profits of associated companies in different — Home State taxation (HST),
Member States.
— an optional common consolidated tax base (CCTB),
At the beginning of the following year, the Commission also
— a European company tax,
published a proposal covering a common system of taxation
applicable to interest and royalty payments made — a compulsory, fully harmonised tax base.
between parent companies and subsidiaries in different
In order to discuss these proposals, the Commission organised
Member States (COM(90) 571). Despite being revised two
a conference on 29 April 2002, which agreed that companies
years later (COM(93) 196) and receiving a favourable opinion
operating in more than one country should be taxed on the
from Parliament, it was withdrawn as a result of failure to agree
basis of a consolidated tax base. For smaller companies (SMEs),
in the Council. A new version appeared in 1998 (COM(1998)
the preference was for HST; for larger companies, CCTB.
67) as part of the ‘Monti package’ (4.18.1), which also included
the code of conduct and the proposal on the taxation of A CCTB working group has been established and begun its
savings income (see below). work in November 2004. Experts from all 25 Member States
and the Commission participate in the working group and
Meanwhile, the Ruding Committee of Independent Experts,
contributions are made in a technical capacity.
established in 1991, reported in March 1999 (Report of the
Committee of Independent Experts on Company Taxation) B. The taxation of SMEs
recommending: a programme of action to eliminate double
In May 1994 the Commission published a ‘communication on
taxation; to harmonise corporation tax rates within a 30 % to
the Improvement of the fiscal environment of small and
40 % band; and to ensure full transparency of the various tax
medium-sized enterprises’ (COM(94) 206). Compared with
breaks given by Member States to promote investment. The
larger firms, SMEs faced three main problems: attracting
Commission published its reactions in June 1992 (SEC(92) 1118).
sufficient financial resources; coping with administrative
While not agreeing with all of Ruding — notably on rates of
complexity; and continuity when the business changed
corporation tax — it accepted the need for priority action on
ownership. Although there was no intention to ‘harmonise to
double taxation. In the following year it proposed amendments
any extent the purely national tax treatment of small and
to enlarge the scope of the directives on mergers and
medium-sized enterprises’, action might be needed on cross-
parent/subsidiaries (COM(93) 293), and drew attention to two
border aspects. Annexed to the communication was a first
draft directives that had already been tabled: that on the carry-
initiative on self-financing (94/390/EC). It invited Member
over of losses (COM(84) 404) and on losses of subsidiaries
States to act on two matters concerning sole proprietorships
situated in other Member States (COM(90) 595).
and partnerships: ‘to correct the deterrent effects of the
In 1996, the Commission launched a new approach to taxation progressive income tax payable [...] in respect of reinvested
(4.18.1). In the field of company tax the main result was the profits’ — for example, by allowing an option for corporation
code of conduct for business taxation, adopted as a Council tax — and ‘to eliminate the tax obstacles to changes in the
resolution in January 1998. The Council also established a code legal form of enterprises, in particular [...] incorporation’. Since
of conduct group (known as the ‘Primarolo Group’ after its 2001, and most recently in 2005, the Commission has
president) to examine notified cases of unfair business presented the ‘Home State taxation’ scheme (COM(2005) 702)
taxation. Its main report was presented in November 1999, as a possible solution for SMEs. Essentially, the scheme foresees
identifying 66 tax practices to be abolished within five years. that SMEs would be allowed to compute their profits
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4 18
according to their (familiar) Home State rules of the parent continue discussions on the draft directive, based on the
company or the head office when doing business in another principle that ‘all citizens resident in a Member State of the
Member State. European Union should pay the tax due on all their savings
income’. The UK Treasury then published a paper (Exchange of
C. Personal direct taxation information and the draft directive on taxation of savings, February
1. Income tax 2000) which argued that only the full exchange of information
The taxation of those who work in or draw a pension from one between tax authorities could achieve this.
Member State, but live and/or have dependent relatives in
After lengthy negotiations, a compromise was agreed at the
another, has been a source of problems. Bilateral agreements
Santa Maria de Feira European Council on 20 June 2000.
avoid double taxation in general, but fail to cover such
questions as applying various forms of tax relief available in the — The exchange of information model would be the ultimate
country of residence to income in the country of employment. objective, to be introduced within seven years of the
In order to ensure equal treatment between residents and adoption of the directive.
non-residents, the Commission proposed under Article 94 (ex
— Meanwhile, Austria and Luxembourg — which maintain
Article 100) a directive on the harmonisation of income tax
banking secrecy for non-residents — and possibly other
provisions with respect to freedom of movement (COM(79)
Member States would introduce a withholding tax on
737). This would have applied the general principle of taxation
interest paid to non-residents, at a rate to be decided. An
in the country of residence, but was not adopted by the
‘appropriate share of their revenue’ would be transferred to
Council and was withdrawn in 1993. Instead the Commission
the investor’s State of residence.
issued a recommendation under Article 211 (ex Article 155)
covering the principles that should apply to the tax — Introduction of the legislation would, however, be
treatment of non-residents’ income. conditional on agreement being reached on equivalent
measures with key third countries (notably Switzerland)
Meanwhile, the Commission brought infringement
and with the USA. A decision, by unanimity, would be
proceedings against some Member States for discrimination
taken on the matter by the end of 2002.
against non-national employees. The Court of Justice (CJ)
ruled in 1993 (Case C-112/91) that a country could tax its own On 3 June 2003, the Council adopted the directive on taxation
nationals more heavily if they resided in another Member of savings income in the form of interest payments. It entered
State. The Court found, however, that a country cannot treat a into force on 1 July 2005, and contains the following provisions.
non-resident national of another Member State less favourably
— All Member States will ultimately exchange information on
than its own nationals (see above: Case C-279/93). In general,
interest payments to individuals resident for tax purposes
the integration in the field of personal direct taxation can be
in another Member State. All Member States except
said to evolve through CJ rulings rather than ordinary decision-
Austria, Belgium and Luxembourg will immediately
making procedure of the institutions.
introduce a system of information reporting.
2. Taxation of bank and other interest paid to non-
residents — Austria, Belgium and Luxembourg are entitled to receive
information from other Member States and will introduce a
In principle, a taxpayer is required to declare such income. In
system of information reporting at the end of a transitional
practice, ‘the free movement of capital [...] together with the
period during which they will levy a withholding tax of
existence of bank secrecy [...] will increase the potential for tax
15 % for the first three years, 20 % for the following three
evasion by individuals’ (Ruding report). Some Member States
years and 35 % thereafter; 75 % of this revenue is to be
impose a withholding tax on interest income; but when in
transferred to the Member State of residence of the saver
1989 Germany introduced such a tax at the modest rate of
concerned.
10 %, there was massive movement of funds into Luxembourg,
and the German tax had temporarily to be abolished. — The transitional period will end if and when the EC enters
into agreement with Andorra, Liechtenstein, Monaco, San
That same year the Commission published a draft directive for a
Marino and Switzerland to exchange information upon
common system of withholding tax on interest income
request and these countries continue simultaneously to
(COM(89) 60), levied at the rate of 15 %. Some Member States
apply the withholding tax, and if and when the Council
opposed this on the grounds that it would lead to a flight of
agrees by unanimity that the USA is committed to
capital from the Community. The proposal was eventually
exchange of information.
withdrawn, and a new one, to ensure a minimum of effective
taxation of savings income in the form of interest payments On 2 June 2004 the Council adopted a decision on the
within the Community (COM(1998) 295), was presented. The agreement between the EC and Switzerland providing for
rate proposed was 20 %, but there was to be an alternative measures equivalent to those in the directive. The agreement
system of providing information on payments to the tax was signed on 26 October 2004. Its key elements also form the
authorities of the saver’s Home State. The European Council basis for agreements with Andorra, Liechtenstein, Monaco and
meeting in Helsinki in December 1999 reached an agreement to San Marino.
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— During the transitional period a withholding tax with — Exchange of information can be requested in cases of fraud
revenue sharing will be applied at the same rates as by and similar behaviour.
Austria, Belgium and Luxembourg. — The workings of the agreements can be reviewed over
— The individual concerned can opt to permit the disclosure time in line with international developments.
of his or her income as an alternative to the withholding
tax being applied.
Following agreement
2004–06 2007–09 2010+
with Switzerland, the USA, etc.
Belgium, Luxembourg Belgium, Luxembourg Belgium, Luxembourg Vote by unanimity on whether to adopt automatic
and Austria: 15 % and Austria: 20 % and Austria: 35 % information exchange, depending upon Andorra,
withholding tax. Others: withholding tax. Others: withholding tax. Others: Liechtenstein, Monaco, San Marino and Switzerland
automatic information automatic information automatic information adopting and the USA being ‘committed to’
exchange. exchange. exchange. information exchange ‘upon request as defined in
the OECD agreement’.
Role of the European Parliament (4.18.2). Of the alternatives under consideration, Parliament
On tax proposals, Parliament’s role is confined to the one- was ‘interested in the idea of Home State taxation, perhaps as
reading consultation procedure. Its resolutions and an intermediate stage in moving towards a common tax base’,
amendments have broadly supported all Commission understood as ‘new harmonised EU rules, existing in parallel to
proposals in the fields of both company and personal direct national rules, available to European companies as an optional
taxation — including all elements of the ‘Monti package’ scheme’. Most recently, Parliament adopted a resolution on
— while advocating a widening of their scope. It gave its corporate tax on 13 December 2005. In this resolution,
opinion on the Ruding report, and the Commission’s reaction to Parliament welcomes and reiterates its support for the
it, in a report adopted in April 1994. In giving general approval Commission proposals with regard to the common
to the Commission’s approach on SMEs on 24 October 1994, consolidated tax base and Home State taxation for SMEs.
Parliament called for a plan of action in a form that could form
part of an integrated programme for SMEs. g Arttu Makipaa
Parliament gave its initial views on the Commission’s proposals July 2008
in the field of corporate taxation in its resolution of March 2002
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5

Economic and monetary union

Economic and monetary union means greater coordination of the Member States’ economic
policies at European level and a commitment to avoid excessive budgetary deficits (Stability
and Growth Pact). EMU has led to the introduction of a single currency: the euro. Since 1
January 1999, the European Central Bank (ECB) has been responsible for steering European
monetary policy.
5.1. The development of economic 5.4. Coordination of economic

and monetary union, 415 policies, 425
5.2. The institutions of economic 5.5. Framework for fiscal policies, 429
and monetary union, 419
5.3. European monetary policy, 422
413
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BAAA08001ENC_cap05-06.indd 414 18/2/09 11:53:12
Economic and The development of economic
5 monetary union 1 and monetary union
5.1. The development of economic

and monetary union
The completion of the internal market also involves a monetary union between the EU Member States. Monetary union
became a reality through the introduction of a single European currency, the ‘euro’. The common currency is currently
used in 16 EU Member States. New Member States must also adopt the euro after a minimum of two years’ participation
in EMS II and fulfilment of the convergence criteria.
Legal basis fixed rates of exchange between the currencies and the
— Decisions of the European Summits of The Hague (1969), possibility of adjustment. The creation of a parallel system was
Paris (1972) and Brussels (1978). unnecessary.
— Articles 98 to 124 of the Treaty establishing the European B. Second period (1969–79): the first efforts towards
Community (EC), introduced by the Maastricht Treaty. integration
— Protocols annexed to the EU Treaty on the transition to the The demise of the Bretton Woods system, confirmed by the
third stage of economic and monetary union, the excessive ending of the dollar’s convertibility into gold on 15 August
deficit procedure, the convergence criteria, the opt-out 1971, was followed by a period of flexible exchange rates. With
clauses for the United Kingdom and Denmark, the Statutes the oil crisis of the early 1970s, the European currencies came
of the European Monetary Institute, the European System under even greater pressure. In the face of such general
of Central Banks and the European Central Bank. instability, the cause of serious economic and social difficulties,
the Member States sought to put in place a framework which
could provide a minimum of stability, at least at European
Objectives
level, and could lead to monetary union.
The main aims of monetary union are:
As early as 1969, when the international monetary system was
— to finalise the completion of the internal market by threatening to collapse, the Heads of State or Government had
removing exchange rate fluctuations and the costs already decided at the Hague Summit that the Community
inherent in exchange transactions, as well as the costs of should progressively be transformed into an economic and
hedging against currency fluctuation risks; monetary union.
— to ensure comparability of costs and prices within the In October 1970, Pierre Werner, the then Prime Minister of
Union, which helps consumers, stimulates Luxembourg, proposed the following.
intra-Community trade and facilitates business;
— In the first stage, that the fluctuation margins between the
— to reinforce Europe’s monetary stability and financial currencies of the Member States should be reduced.
power by:
— Then the complete freedom of capital movements should
• e nding, by definition, any possibility of speculation be achieved with integration of the financial markets,
between the Community currencies, particularly the banking systems.
• e nsuring, through the economic dimension of the
— Finally, exchange rates should be fixed irrevocably between
monetary union thus established, that the new
the currencies.
currency is largely invulnerable to international
speculation, On 12 April 1972 the ‘snake in the tunnel’ narrowed the
fluctuation margins between the Community currencies to
• e nabling the euro to become a major reserve and
± 2.25 % (the snake) and those operating between these
payment currency.
currencies and the dollar to ± 4.5 % (the tunnel). To ensure that
this mechanism functioned properly, in 1973 the Member
Achievements States created the European Monetary Cooperation Fund
A. First period (1957–69): absence of a European (EMCF) which was authorised to receive part of the national
monetary policy monetary reserves (5.2).
The Rome Treaty laid down only minor provisions for monetary The results of this mechanism were disappointing. The
cooperation. The six founding Member States of the Member States reacted to the disruption caused by the rise in
Community were participants in the Bretton Woods oil prices in different ways, which led to frequent and sharp
international monetary system, which was characterised by fluctuations in exchange rates. There were entrances and exits
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from the exchange stability mechanism and the snake, originally exchange-rate mechanism. The latter did not join the
designed as an agreement of Community scope, was reduced exchange rate mechanism until 1990.
to a zone of monetary stability around the German mark.
Greece, which became a member of the Community in 1981,
By the end of 1977, only five of the then nine Member States did not join the exchange-rate mechanism, but became a
(Belgium, Denmark, Germany, Luxembourg and the member of EMS II when it joined the common currency in
Netherlands) remained within the mechanism, the others 1999.
having decided to allow their currencies to float freely. The
Spain and Portugal became Member States of the Community
Werner Plan was abandoned the same year.
in 1986; Spain joined the exchange-rate mechanism in 1989
C. Third period (1979–87): the successful resumption of and Portugal in 1992, with a fluctuation margin of 6 %.
the integration process; the EMS b. The 1992-1993 crisis
Instigated by the German Chancellor Helmut Schmidt and the The EMS was seriously disrupted by the violent upheaval in the
French President Valéry Giscard d’Estaing, the Brussels European exchange markets in September and October 1992,
Summit of December 1978 decided to set up a European following the difficulties in ratifying the Maastricht Treaty in
Monetary System (EMS), which aimed to create a zone of Denmark and France. The pound sterling and the lira had to
monetary stability in Europe by reducing fluctuations between leave the exchange rate mechanism in September 1992 and in
the currencies of the participating countries. The EMS came November that year the peseta and the escudo devalued by
into operation on 13 March 1979. 6 % compared with the other currencies. In January 1993, the
1. Mechanisms of the European Monetary System Irish pound was devalued by 10 %; in May, the peseta and the
The EMS established a system of fixed but adjustable rates of escudo were further devalued. In the face of a further wave of
exchange between the currencies of the participating speculation, the fluctuation margins were raised to 15 %
countries. (1 August 1993).
a. The ECU (European currency unit) c. Assessment of the EMS

A central element of the system, this was a basket of European The main aim of the EMS, to guarantee a higher degree of
currencies in which the weight of each depended on the internal and external currency stability, was achieved. The
country’s share of Community GDP and intra-Community characteristic instability of the international monetary system
trade. It was an accounting currency used as a payment in the 1980s was averted in the participating countries. After
instrument between the central banks and to specify the efforts lasting over 20 years, a certain stability prevailed.
Community budget and was not legal tender. Monetary discipline led to economic convergence, with a
b. Exchange-rate mechanism reduction of inflation rates and an approximation of interest
Each currency was allocated a central rate in ECUs and the rates.
central rates together determined the rates of exchange Private use of the ECU (by contrast with its official use, i.e.
between the currencies (bilateral exchange rates). between central banks belonging to the EMS) developed
c. Fluctuation margins considerably. It was used increasingly in the launch of
international bond issues by the Community institutions,
These were permitted around the bilateral rates: 2.25 % initially
Member States and firms and became an international
(and 6 % for the Italian lira).
financial instrument. In these various ways, the EMS and the
d. ‘Divergence indicators’ ECU thus provided a strong basis for the introduction of the
If a currency came within 25 % of its maximum fluctuation single currency.
margin, it was deemed to be ‘divergent’ and the authorities
concerned were then required to take certain measures: D. Fourth period (1988–92): progress towards
raising interest rates, tightening up budgetary policy, economic and monetary union (EMU)
supporting the exchange rate if it fell and the reverse if it rose. The establishment of the internal market led the Community
to revive the objective of monetary union. The Hannover
e. Amendment of parity
European Council (June 1988) pointed out that ‘by adopting
Parities were not fixed permanently. They could be amended if the Single Act (which came into force on 1 July 1987), the
a particular currency diverged structurally from the fluctuation Member States of the Community confirmed the objective of
margins. However, such amendments, which entailed altering progressive realisation of economic and monetary union
the central rates, were to be made according to a common (EMU)’. It entrusted to a committee chaired by the Commission
procedure. President, Jacques Delors, ‘the task of studying and proposing
2. Development of the EMS: the 1980s concrete stages leading towards this union’.
a. Admission of new members In April 1989 the report of the Delors Committee envisaged
When the EMS was set up, all the Community’s Member States, the achievement of EMU in three stages: stepping up
with the exception of the United Kingdom, joined the cooperation between central banks; the establishment of a
416
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Economic and The development of economic
European System of Central Banks (ESCB); progressive transfer • a n inflation rate not exceeding more than 1.5 % the
of decision-making power for monetary policy to average of the three Member States achieving the best
supranational institutions; irrevocable fixing of parities result on price stability in the year preceding the third
between the national currencies and introduction of the single stage,
European currency.
• a budget deficit not exceeding 3 % of GDP, or at the
The Madrid European Council of June 1989 adopted the very least close to that level, provided that it has
Delors plan as a basis for its work and decided to implement declined continuously,
the first of these stages from 1 July 1990, when capital
movements and financial services would be fully liberalised. • g
overnment debt not exceeding 60 % of GDP, or at the
very least close to that level owing to a substantially
In December 1989 the Strasbourg European Council had to diminishing trend,
take account of a new situation that had emerged owing to
the prospect of German reunification. It was decided to • a long-term interest rate that does not exceed more
convene an Intergovernmental Conference (IGC) to prepare than 2 % the average of the three best performing
the amendments to the Rome Treaty in view of EMU. countries in the area of price stability,
Approved by the European Council of December 1991, the • m
aintenance of the normal fluctuation margins in the
amendments proposed by the Intergovernmental Conference exchange-rate mechanism of the European Monetary
were incorporated into the Treaty on European Union System and no devaluation against the currency of
signed in Maastricht on 7 February 1992. The Treaty’s EMU another Member State for at least two years.
project was based on the general outlines of the Delors plan
c. The decision to move on to the third stage
but differed from it on some significant points. In particular,
the second stage did not begin until 1 January 1994 and did Article 121 provided that the Council would set the date for
not include the transfer of responsibilities for monetary policy passage to the third stage, with a minimum date and cut-off
to a supranational body but simply the strengthening of date.
cooperation between central banks, replacing the former The Madrid European Council (15 and 16 December 1995)
Committee of Governors with the European Monetary Institute decided that the third stage would begin on 1 January 1999. It
(EMI) (5.2), which would be responsible, with the gave the single currency a name, the euro, and, after
Commission, for the technical preparation of EMU. consultation with the Commission and the EMI, adopted the
Establishment of the ESCB was deferred to the third stage. scenario for its introduction.
E. Fifth period: stages in economic and monetary union The Brussels European Council (2 May 1998), acting on the
(1990–2002) recommendation of the Commission and the Council for
1. First stage (1 July 1990 to 31 December 1993) Economic and Financial Affairs (Ecofin) and on the opinion of
This consisted of: the European Parliament, decided that 11 countries —
Germany, Belgium, Spain, France, Ireland, Italy, Luxembourg,
— completion of the internal market, entailing in particular the Netherlands, Austria, Portugal and Finland — would
the full liberalisation of capital; proceed to the next stage.
— strengthening of economic coordination, through
3. Third stage (1 January 1999 to 1 July 2002)
greater convergence on price stability and public finance
reform. On 1 January 1999, EMU started with those 11 countries.
Greece joined them on 1 January 2001.
2. Second stage (1 January 1994 to 31 December 1998)
a. The European Monetary Institute (EMI) a. The European System of Central Banks (ESCB) and European
Set up on 1 January 1994 (5.2), this was the precursor to the Central Bank (ECB) came into operation on 1 January 1999
future European Central Bank and was to prepare for the third (5.2)
stage of EMU. b. The process of introducing the euro
b. Budgetary and monetary discipline On 1 January 1999, the euro became the sole official currency
In this stage, Member States were to: of the participating Member States:
— render their central banks independent of the political — the parities of the participating currencies and their rate for
authorities (Article 116(5) of the EC Treaty); conversion into euro were irrevocably fixed;
— discontinue their overdraft facilities with their central banks — the euro became a currency in its own right and the ECU
and their privileged access to financial institutions basket ceased to exist;
(Articles 101, 102, 103 of the EC Treaty); — monetary policy and exchange-rate policy is carried out in
— endeavour to fulfil the following five convergence criteria euro and the participating Member States issue their new
(Article 121 of the EC Treaty): public-sector debt instruments in euro.
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Between 1 January 1999 and 1 January 2002, the ESCB and the longer participate in EMS II once Slovakia joins the euro zone
national and Community public authorities were to monitor on 1 January 2009. Furthermore, the Danish krone is also
the process of changeover to the single currency, particularly participating in EMS II with a fluctuation margin of 2.25 % on
in the financial and banking sector, and in all sectors of the either side of its central rate in relation to the euro.
economy.
Country (national Central rate Fluctuation
On 1 January 2002, banknotes and coins in euro began to
currency) (for 1 euro) band
circulate alongside national currency banknotes and coins. The
period of dual currency circulation lasted for two months, after Denmark (krone) 7.46038 +/- 2.25 %
which only euro banknotes and coins were legal tender. Estonia (kroon) 15.6466 +/- 15 %
Latvia (lat) 0.702804 +/- 15 %
c. Coordination of economic policies
Lithuania (lita) 3.45280 +/- 15 %
From the beginning of the third stage, Member States must
regard their economic policies as a matter of common Slovakia (koruna) 30.1260 +/- 15 %
concern (Articles 99 and 104 of the EC Treaty). In order to F. Enlargement of the euro area
achieve this, the Treaty provides for the adoption by the
Council of broad economic policy guidelines (BEPGs) The new Member States which joined the EU in 2004 and
applicable to all the Member States and a mechanism for 2007, as well as Sweden, have no opt-out clause. In order to
monitoring excessive public deficits (5.4). join the euro area they have to participate in the exchange
rate mechanism for a minimum of two years and they must
d. The Stability and Growth Pact fulfil all further nominal convergence criteria. Every two years
Adopted by the Amsterdam European Council on 16 and 17 the European Commission and the European Central Bank
June 1997 (5.5), its purpose is to ensure budgetary discipline submit a convergence report, verifying fulfilment of the criteria
by maintaining the obligation to conform to the deficit and in these countries. Convergence reports must also be issued if
indebtedness criteria laid down for initial access to the requested by a Member State in the interim period between
monetary union. On 20 March 2005, the Council adopted a the routine reports.
report entitled ‘Improving the implementation of the Stability
and Growth Pact’. The report was endorsed by the European In the first half of 2006 Slovenia and Lithuania requested that
Council in its conclusions of 22 March 2005, which stated that the Commission and the ECB report to the Council on the
the report updates and complements the Stability and Growth progress made by their countries in the fulfilment of the
Pact, of which it is now an integral part. On 27 June 2005 the convergence criteria with a view to joining the euro area on
pact was complemented by two additional regulations 1 January 2007. The Commission and the ECB subsequently
amending the Regulations (EC) No 1466/97 and (EC) No 1467/97. gave a positive assessment for Slovenia but rejected Lithuania’s
bid to enter the euro area. Slovenia thus became the 13th
e. EMS II member state of the euro area on 1 January 2007. At the
The European Council in Amsterdam also laid down the basic beginning of 2007, Cyprus and Malta requested verification of
principles and operational characteristics for a new exchange- convergence for their national economies. Both countries were
rate mechanism to regulate the relationship between the given the green light to join the euro area on 1 January 2008.
single currency and the currencies of the European Union In the spring of 2008, the European Commission and the ECB
Member States that are not members of the monetary union. submitted their routine convergence report, which concluded
‘EMS II’ was introduced on 1 January 1999, when the third that Slovakia fulfilled the convergence criteria. Slovakia will
stage of EMU started. Unlike the EMS, in which all the become the 16th Member State of the euro area
currencies established central parities between them (central on 1 January 2009.
rates) and fluctuation margins around them, the parities and
margins for the new exchange mechanism are now set solely
in relation to the euro. Role of the European Parliament
Participation in the mechanism is optional. However, the The European Parliament is consulted on the following
Member States that joined the EU in 2004 and 2007, as well as issues:
Sweden, will have to join EMS II as their preparations for — agreements on exchange rates between the euro and non-
adopting the euro advance. On 27 June 2004 the Estonian EU currencies;
kroon, the Lithuanian lita and the Slovenian tolar joined EMS II.
The Slovenian tolar ceased to participate in EMS II as Slovenia — choice of countries eligible to join the single currency in
joined the euro area on 1 January 2007. On 2 May 2005 three 1999 and subsequently;
other Member-State currencies joined EMS II: those of Cyprus,
— appointment of the President, Vice-President and other
Latvia and Malta. After Cyprus and Malta joined the euro area
members of the ECB Executive Board;
on 1 January 2008, the Maltese lira and Cypriot pound ceased
participating in EMS II. On 25 November 2005 the Slovak — legislation implementing the excessive deficit procedure
koruna joined the mechanism. The Slovakian koruna will no provided for in the Stability and Growth Pact.
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Economic and The institutions of economic
Parliament calls for closer involvement in the nomination and area since the tight timetable of this consultation process is
appointment of ECB Board members and is of the opinion that making it very difficult to verify the content of convergence
the democratic ex -ante reporting and transparency would be reports objectively.
improved if a candidate proposed by Council were to face a
vote of approval in Parliament. Parliament is calling for g Christine Bahr
improvements to the procedure for enlargements of the euro July 2008
5.2. The institutions of economic

and monetary union
The institutions of the European monetary union are largely responsible for establishing the European monetary policy,
the rulings on the issue of the euro and the price stability within the EU. These institutions are the ECB, the ESCB, the
Economic and Financial Committee, the Eurogroup and the Economic and Financial Affairs Council (Ecofin).
Legal basis • e nabling the euro to become a major reserve and

— Articles 105 to 124 of the Treaty establishing the European payment currency.
Community (EC).
— Protocols annexed to the Treaty on European Union Achievements
(Maastricht Treaty): No monetary institution was established during the first stage
of economic and monetary union (EMU) (1 July 1990 to
• on the European Monetary Institute (Articles 1 to 23),
31 December 1993).
• o
n the statutes of the European Monetary Institute, the
European System of Central Banks and the European A. The institutions of the second stage of EMU (1 January
Central Bank (Articles 1 to 53); 1994 to 31 December 1998)
• D
eclaration on Article 10(6) of the Statute of the 1. The European Monetary Institute (EMI)
European System of Central Banks and of the European a. Role
Central Bank, annexed to the Treaty of Nice. The EMI was established at the beginning of the second stage
of EMU, pursuant to Article 117 of the Treaty, and took over the
Objectives tasks of the Committee of Governors and the European
The main objectives of the institutions of economic and Monetary Cooperation Fund (EMCF). It had no say in the
monetary union are: conduct of monetary policy, which remained the prerogative
of the national authorities. Among its main tasks for the
— to finalise the completion of the internal market by implementation of the second stage of EMU were:
removing exchange-rate fluctuations and abolishing the
costs inherent in exchange transactions, as well as the — to strengthen cooperation between the national central
costs of hedging against currency fluctuation risks; banks;
— to ensure comparability of costs and prices within the — to strengthen coordination of the monetary policies of the
Union, which helps consumers, stimulates intra- Member States with a view to ensuring price stability;
Community trade and facilitates business; — to monitor the functioning of the European Monetary
— to reinforce Europe’s monetary stability and financial power by: System;
• e nding, by definition, any possibility of speculation — to facilitate the use of the European currency unit (ECU)
between the Community currencies, and oversee its development;
• e nsuring, through the economic dimension of the — to ascertain the state of compliance by the Member States
monetary union thus established, that the new currency with the convergence criteria for access to EMU and to
is largely invulnerable to international speculation, report thereon to the Council.
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For the preparation of the third stage of EMU it was required to: and Article 9 of the ECB Statute). It is based in Frankfurt-am-
— prepare the instruments and the procedures necessary for Main. It is run by two bodies that enjoy independence from
carrying out a single monetary policy; Community institutions and national authorities, the ECB
Governing Council and the Executive Board and — for certain
— promote the efficiency of cross-border payments; tasks — by the ECB General Council, which is not itself a
— promote the harmonisation of the rules and practices decision-making body of the ESCB.
governing statistics; i. The Governing Council
— specify the regulatory, organisational and logistical This comprises the members of the Executive Board and the
framework necessary for the European System of Central governors of the national central banks of those countries
Banks (ESCB) to perform its tasks. that have adopted the euro (Article 112(1) EC and Article 10.1
b. Institutional status of the Statute).
The EMI, which had a legal personality, was run and managed As the supreme decision-making body it adopts the guidelines
by a Council, which: and takes the decisions necessary to ensure the performance
— consisted of a President and the governors of the national of the tasks entrusted to the ESCB, formulates the monetary
central banks; policy of the Community including, as appropriate, decisions
relating to intermediate monetary objectives, key interest rates
— was independent of, and could not take instructions from,
and the supply of reserves in the ESCB, and establishes the
Community institutions or bodies or governments of
necessary guidelines for their implementation (Article 12 of
Member States (Article 8 of the Statute).
the Statute).
Its President was appointed by common accord of the
governments of the Member States at the level of Heads of ii. The Executive Board
State or Government, on a recommendation from the Council This comprises a President, Vice-President and four other
of the EMI, and after consulting the European Parliament and members, all appointed by common accord of the Heads of
the Council (Article 117 of the EC Treaty). State or Government of the euro area Member States for a
In accordance with Article 123(2) of the EC Treaty, the EMI was non-renewable period of eight years (Article 112(2) EC).
dissolved on the establishment of the ECB, for which it had It is entrusted with implementing monetary policy and in
paved the way (1 June 1998). doing so gives the necessary instructions to national central
2. The Monetary Committee banks. It is also responsible for the preparation of meetings of
This consisted of members appointed in equal number by the the Governing Council and for the current business of the ECB
Commission and by the Member States. (Articles 11 and 12 of the Statute).
Set up to promote coordination of the policies of Member iii. The General Council
States to the full extent needed for the functioning of the The General Council (Article 45(1) of the Statute) consists of
internal market (Article 114 EC), it had an advisory role. the President and Vice-President of the ECB and the governors
It had the task of: of the central banks of all EU Member States, regardless of
— keeping under review the monetary and financial situation of whether they have adopted the euro.
the Member States and of the Community and the general It contributes to the collection of statistical information,
payments system of the Member States and reporting coordinates the monetary policies of those Member States
regularly thereon to the Council and to the Commission; that have not adopted the euro and oversees the functioning
— delivering opinions to the Council or Commission, of the European exchange-rate mechanism (5.1).
contributing to the preparation of the work of the Council, b. Role
and examining, at least once a year, the situation regarding
Only the ECB may authorise the issue of banknotes within the
the movement of capital and the freedom of payments and
euro area. The ECB itself or the national central banks may
reporting to the Commission and to the Council thereon.
issue such notes. Member States may issue coins subject to
It was dissolved at the start of the third stage and replaced by approval by the ECB of the volume of the issue (Article 106 EC).
the Economic and Financial Committee.
The ECB takes decisions necessary for carrying out the tasks
B. The institutions of the third stage (beginning on entrusted to the ESCB under the latter’s Statute and under the
1 January 1999) Treaty (Article 110 EC).
1. The European Central Bank (ECB) Assisted by the national central banks, it collects the necessary
a. Organisation statistical information either from the national authorities
Established on 1 June 1998, the ECB is not a European responsible or directly from economic agents (Article 5 of the
institution, but does have legal personality (Article 107(2) EC Statute).
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Economic and The institutions of economic
It is consulted on any proposed Community act in its fields of 4. The Eurogroup

competence and, at the request of national authorities, on any Originally called Euro-11, the meeting of ministers of
draft legislative provision (Article 105 EC). economics and finance of the euro area changed its name to
It may perform specific tasks concerning policies relating to ‘Eurogroup’ in 1997. This advisory and informal body meets
the prudential supervision of credit institutions and other regularly to discuss all the issues connected with the smooth
financial institutions (Article 25(2) of the Statute). However, the running of the euro area and EMU. The Commission and,
authorities in the Member States continue to oversee the where necessary, the ECB are invited to attend these meetings.
banking system, as they did before the advent of the euro. At the informal Ecofin meeting in Scheveningen on
10 September 2004, the Prime Minister and Minister of Finance
It is responsible for the smooth running of the trans-European of Luxembourg, Jean-Claude Juncker, was elected President of
automated real-time gross settlement express transfer system the Eurogroup. He thus became the Eurogroup’s first elected
(Target), a euro payment system that links up the national and permanent President for a mandate that started on
payment systems and the ECB payment mechanism. 1 January 2005 and ends on 31 December 2006. In September
The ECB is making the arrangements to integrate the central 2006 his mandate was renewed for a further two years.
banks of the Member States joining the euro area into the 5. The Economic and Financial Affairs Council (Ecofin)
ESCB. Ecofin brings together the finance ministers of all EU Member
2. The European System of Central Banks (ESCB) and the States and is the decision-making body at European level.
euro system Having consulted the ECB, it takes decisions regarding the
a. Organisation exchange-rate policy of the euro vis-à-vis non-EU currencies,
whilst adhering to the objective of price stability.
The ESCB consists of the ECB and the national central banks of
all EU Member States (Article 107 paragraph 1 EC and Article 1
paragraph 2 of the Statute). It is governed by the same Role of the European Parliament
decision-making bodies as those of the ECB (Article 107
A. Legislative role
paragraph 2 EC).
1. The European Parliament is consulted on the following
The Eurosystem comprises only the ECB and the national issues:
central banks of the Member States in the euro area. — arrangements for Member States’ introduction of euro
b. Role coins (euro banknotes are the responsibility of the ECB);
The ESCB’s fundamental task lies in maintaining price stability — agreements on exchange rates between the euro and non-
(Article 105 EC). Without prejudice to this objective, the ESCB EU currencies;
supports the general economic policies contributing to the
— choice of countries eligible to join the single currency in
achievement of the objectives of the Community. It discharges
1999 and subsequently;
this task by carrying out the following functions (Article 105(2)
EC and Article 3 of the Statute): — nomination of the President, Vice-President and other
members of the ECB Executive Board;
— defining and implementing the monetary policy of the
Community; — any changes to voting arrangements within the ECB
Governing Council (Article 10 paragraph 2 of the Statute of
— conducting foreign-exchange operations consistent with
the ESCB and ECB) in accordance with the Declaration on
the provisions of Article 111 EC;
Article 10(6) of the Statute of the European System of
— holding and managing the official foreign reserves of the Central Banks and of the European Central Bank, annexed
Member States; to the Treaty of Nice;
— promoting the smooth operation of payment systems; — legislation implementing the excessive deficit procedure
provided for in the Stability and Growth Pact.
contributing to the smooth conduct of policies pursued by the
competent authorities relating to the prudential supervision of 2. The EP gives its assent
credit institutions and the stability of the financial system. — to any changes to the powers given to the Bank to
3. The Economic and Financial Committee supervise financial institutions;
Comprising not more than six members, a third of whom are — to the majority of changes to the Statute.
appointed by the Member States, a third by the Commission
and a third by the ECB, its duties are the same as those of the B. Supervisory role
Monetary Committee, which it succeeded on 1 January 1999, 1. Under the Treaty
with one important difference: notifying the Commission and The ECB addresses an annual report on the activities of the
Council of developments in the monetary situation is now the ESCB and on the monetary policy of both the previous and
responsibility of the ECB. current year to the European Parliament, the Council and the
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Commission, and to the European Council (Article 113(3) Functioning of the European Union), whereas it has no status
EC Treaty). whatsoever according to the provisions of the EC Treaty,
The President of the ECB must then present this report to the although it does have legal personality. The ECB is of the
Council and to the European Parliament, which may hold a opinion that its classification as a body contravenes its
general debate on that basis. independence. The Treaty of Lisbon states in addition that the
members of the ECB Executive Board are selected and
The President of the ECB and the other members of the appointed by mutual consent by a qualified majority in the
Executive Board may, at the request of Parliament or on their European Council (Article 283 of the Treaty on the Functioning
own initiative, be heard by relevant committees of the of the European Union) and not as stipulated in the EC Treaty.
European Parliament. In accordance with Article 113(3) EC,
Members of the European Parliament question the President On the other hand, Parliament welcomes the status of the ECB
of the ECB during the monetary dialogue held four times a as an EU body and believes that the recognition of the ECB as
year. They discuss the monetary decisions of the ECB and the such bolsters Parliament’s responsibility as an institution
economic situation, thereby ensuring that the ECB remains accountable to the ECB with regard to monetary decisions. In
democratically accountable. addition, Parliament argues that its role in appointing
members of the ECB Executive Board should be broadened
2. Parliament’s initiative given the status of the ECB as a body.
Parliament called for the extensive powers of the ECB provided
for under the Treaty — i.e. freedom to determine the monetary B. The Eurogroup
policy to be pursued — to be balanced by democratic The role of the Eurogroup is enhanced by the Treaty of Lisbon
accountability (resolution of 18 June 1996). To that end it with the aim of increasing coordination in the euro area. The
instituted ‘monetary dialogue’. The President of the ECB, or term ‘Eurogroup’ is also first mentioned in the Treaty. Official
another member of its Governing Council, appears before innovations include the election by the majority of the
Parliament’s Committee on Economic and Monetary Affairs at Member States represented in the Eurogroup of a chairman of
least once every three months to answer questions on the the Eurogroup for a term of two and a half years (Article 2,
economic outlook and to justify the conduct of monetary Protocol 14 of the Treaty on the Functioning of the European
policy in the euro area. In addition, Parliament routinely Union).
delivers an opinion on the ECB’s annual report in the context
Parliament recognises the Eurogroup’s growing contribution to
of an own-initiative report.
determining a major part of the economic agenda in the
European Union and welcomes the official amendments
Amendments introduced by the Treaty of Lisbon introduced by the Treaty of Lisbon in relation to the Eurogroup.
A. The European Central Bank
The Treaty of Lisbon manages the ECB as a body of the g Christine Bahr
European Union (Articles 282 to 284 of the Treaty on the July 2008
5.3. European monetary policy

The ECB and ESCB ensure the achievement of the primary goal of European monetary union, which is to maintain price
stability. The main instruments of the single monetary policy for the euro area are the open market operations, the
standing facilities and the holding of minimum reserves.

The primary objective of the ESCB under Article 105(1) of the
— Articles 98 to 124 of the Treaty establishing the European
EC Treaty is to guarantee price stability.
Community (EC).
Without prejudice to this objective, the ESCB supports the
— Protocol accompanying the Maastricht Treaty on the general economic policy in the Community, with a view to
statute of the European System of Central Banks (ESCB) and contributing to the achievement of the Community objectives
the European Central Bank (ECB): Articles 1 to 52. laid down in Article 2 of the EC Treaty. The ESCB acts in
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Economic and European monetary policy
5 monetary union 3
accordance with the principles of an open market economy As from the time when the number of members of the
with free competition, favouring an efficient use of resources. Governing Council exceeds 21, each member of the Executive
Board will have one vote and the number of governors of
Achievements national central banks eligible to vote, and thus the number of
voting rights held by the NCBs, will be 15. The voting rights will
A. The guiding principles of ECB action be assigned and rotate as follows:
1. The independence of the ECB — as from the time when the number of governors of
The essential principle of the ECB’s independence is set out national central banks exceeds 15 and until it reaches 22,
in Article 108 of the EC Treaty and Article 7 of the Statute of the NCB governors will be allocated to two groups,
the ESCB. When exercising powers and carrying out tasks and according to a ranking of the size of their Member State’s
duties, neither the ECB, nor a national central bank (NCB), nor share in the aggregate GDP at market prices and in the
any member of their decision-making bodies may seek or take total aggregated balance sheet of the monetary financial
instructions from Community institutions or bodies, from any institutions of the Member States which have adopted the
government of a Member State or from any other body. euro. The shares in the aggregate GDP at market prices and
Respect for Article 108 is guaranteed by the form of the in the total aggregated balance sheet of the monetary
mandate entrusted to the members of the Executive Board financial institutions will be assigned weights of 5/6 and
and the Governing Council (5.2). 1/6, respectively. The first group will be composed of five
The ECB’s independence is also maintained by the governors with five voting rights and the second group of
prohibitions referred to in Article 101 of the EC Treaty, which the remaining governors with the remaining votes.
also apply to the NCBs: overdraft facilities or any other type of — As from the time when the number of NCB governors is 22,
credit facility in favour of Community institutions or bodies, the governors will be allocated to three groups according
central governments, regional, local or other public authorities, to a ranking based on the above criteria. The first group will
other bodies governed by public law or public undertakings of be composed of five governors and will be assigned four
Member States are prohibited (5.2). voting rights. The second group will be composed of half
The independence of the ECB centres around the free choice of the total number of NCB governors, with any fraction
of monetary policy instruments. The Treaty provides for the use rounded up to the nearest integer, and will be assigned
of traditional instruments (Articles 18 and 19 of the Statute) eight voting rights. The third group will be composed of
and allows the Governing Council to decide by a majority of the remaining governors and will be assigned three voting
two thirds on the use of other methods as it sees fit (Article 20 rights.
of the Statute). — The Governing Council will adopt all the necessary
2. The principles of accountability and transparency of measures to implement the rotation of voting rights by a
the ECB majority of two thirds of its members, both eligible to vote
and not eligible to vote. In particular, the Governing
In order to ensure the credibility of the ECB, the Treaty (Article
Council may decide to defer the start of the rotation
113(3) EC) and the Statute (Article 15) impose reporting
system until such time as the number of NCB governors is
commitments. The ECB draws up and publishes reports on the
more than 18.
activities of the ESCB at least quarterly. A consolidated financial
statement of the ESCB is published each week. The ECB When carrying out their activities in the Governing Council,
addresses an annual report on the activities of the ESCB and the governors of the national central banks must not defend
on the monetary policy of both the previous and the current national interests but must act in the collective interest of the
year to the European Parliament. In practice the ECB publishes euro area. The minutes of the Governing Council meetings
Monthly Bulletins which provide an in-depth analysis of the and the breakdowns of votes cast are not published.
economic situation and the outlook for price developments.
B. The ECB’s monetary policy strategy
The ECB is also accountable to the European Parliament.
Members of the ECB’s Executive Board regularly appear before 1. Overview
the European Parliament (5.2). However, the EP cannot give At its meeting on 13 October 1998, the ECB Governing Council
any instructions to the ECB and has no a posteriori control. agreed on the main elements of its monetary policy strategy:
3. Voting rules in the ECB Governing Council quantitative definition of price stability; an important role for
(Article 11 of the Statute) the monitoring of the growth of the monetary mass identified
by an aggregate; and a broadly based assessment of the
Voting in the Governing Council respects the ‘one member, outlook for price developments.
one vote’ principle. Each member of the Governing Council
therefore has one vote. Monetary policy decisions are taken by The ECB has opted for a monetary strategy based on two
a simple majority of members eligible to vote; in the event of a pillars, whose respective roles were clearly defined once again
tie, the ECB President has the casting vote. during the review of the monetary strategy on 8 May 2003.
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2. Price stability Council indirectly affects the interest rates throughout the
Price stability was initially defined as a year-on-year increase in the euro area economy, and in particular the rates for loans
harmonised index of consumer prices (HICP) for the euro area of granted by commercial banks and for saving deposits.
below 2 %. It must be maintained over the medium term. The ECB uses a range of monetary policy instruments to
This definition was confirmed on 8 May 2003 and one implement its monetary policy.
important point was clarified: inflation rates below but close 1. Open market operations
to 2 % are to be achieved over the medium term. This
Open market operations play an important role in steering
underlined that a sufficient safety margin downwards was to
interest rates, managing the liquidity situation in the market
be provided to guard against the risk of deflation and to allow
and signalling the monetary policy stance through four
for a possible measurement bias in data collection and
categories of operations.
differences in inflation rates within the euro area.
3. The first pillar of the monetary policy strategy a. Main refinancing operations
The first pillar of the ECB’s monetary policy strategy is The main refinancing operations are the most important
economic analysis. This focuses mainly on the assessment of instrument of the monetary policy. They are regular liquidity-
current economic and financial developments and the implied providing reverse transactions with a weekly frequency and a
short- to medium-term risks to price stability. The economic maturity of two weeks. They provide the bulk of liquidity to the
and financial variables that are the subject of this analysis banking system. The minimum bid rate for the main
include, among others: developments in overall output; refinancing operations is the key ECB interest rates. It is within
aggregate demand and its components; fiscal policy; capital the limits of the rates of the deposit facility and the marginal
and labour market conditions; a broad range of price and cost lending facility. The level of these three key rates signals the
indicators; developments in the exchange rate, the global orientation of the monetary policy of the euro area.
economy and the balance of payments; financial markets; and b. Longer-term refinancing operations
the balance sheet positions of euro area sectors. All these These are liquidity-providing reverse transactions with a
factors are helpful in assessing the dynamics of real activity monthly frequency and a maturity of three months. They
and the likely development of prices from the perspective of represent only a limited part of the global refinancing volume
the interplay between supply and demand in the goods, and do not seek to send signals to the market.
services and factor markets at shorter horizons.
c. Fine-tuning operations
4. The second pillar of the monetary policy strategy
These ad hoc operations aim to deal with unexpected liquidity
The second pillar of the ECB’s monetary policy strategy is
fluctuations in the market, in particular with a view to
monetary analysis. In this, the ECB singles out money from
smoothing the effects on interest rates.
within the set of selected key indicators that it monitors and
studies closely. This decision was made in recognition of the d. Structural operations
fact that monetary growth and inflation are closely related in These operations are mainly aimed at adjusting on a
the medium to long run. This widely accepted relationship permanent basis the structural position of the euro system
provides monetary policy with a nominal anchor beyond the vis-à-vis the financial sector.
horizons conventionally adopted to construct inflation
forecasts. Taking policy decisions and evaluating their 2. Standing facilities
consequences, not only on the basis of the short-term Standing facilities provide or absorb liquidity with an overnight
indications stemming from the analysis of economic and maturity. Their interest rates bound overnight market interest
financial conditions but also on the basis of money and rates. This rate is known as the EONIA (euro overnight index
liquidity considerations, allows a central bank to see beyond average). Two standing facilities are available to eligible
the transient impact of the various shocks and avoids the counterparties:
temptation of taking an overly activist course. The marginal lending facility enables counterparties to
In order to provide a benchmark for the assessment of obtain overnight liquidity against eligible assets. The interest
monetary developments, the ECB announced a reference rate on this facility provides a ceiling for the overnight market
value for the monetary aggregate M3. This reference value interest rate;
refers to the annual rate of M3 growth that is deemed to be
The deposit facility enables counterparties to make
compatible with price stability over the medium term, and has
overnight deposits with the euro system. The interest rate on
stood at 4.5 % since the start of the EMU.
the deposit facility provides a floor for the overnight market
C. Implementation of the monetary policy: instruments interest rate.
and procedures Both of these rates aim to ensure the smooth operation of the
By establishing interest rates at which the commercial banks money market in situations of very high money supply and
can obtain money from the central bank, the ECB Governing demand.
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Economic and Coordination of economic policies
5 monetary union 4
3. Holding of minimum reserves Inflation averaged 2.1 % in 2007, a little above the level
In accordance with Article 19(1) of the Statute, the ECB may compatible with the definition of price stability. Since the end
require credit institutions established in Member States to hold of 2007 inflation has showed a marked increase as a result of
minimum reserves with the ECB and national central banks. the global economic situation. The ECB has not resorted to
The aim of the minimum reserves is to stabilise the short-term short-term voluntarism in response to this increase, however,
interest rates on the market and to create (or enlarge) a but is working to maintain price stability in the medium term,
structural liquidity shortage among the banking system vis-à- in accordance with its mandate.
vis the euro system, making it easier to control money market
rates through regular allocations of liquidity. The calculation Role of the European Parliament
methods and determination of the amount required are set by
the Governing Council. In its resolution on the ECB’s 2007 annual report the EP points
out that it has called for greater transparency in the ECB, and it
D. Assessment also emphatically demands improvements in the ECB’s
The euro, a visible symbol of European identity, became the communications policy. As regards the ECB’s monetary policy
second largest currency in the world when it was launched. It strategy the EP takes the view that the two-pillar model is an
has become an international currency of investment and appropriate method for measuring price stability.
currency on the markets alongside the dollar and the yen.
Since it started operating, the euro system has had to deal Changes resulting from the Lisbon Treaty
with the depreciation of the euro (25 % depreciation in
The Lisbon Treaty does not provide for any significant changes
relation to the dollar between the beginning of 1999 and the
to the implementation of Europe’s monetary policy.
beginning of 2002) then with a lengthy appreciation in relation
to the dollar from the beginning of June 2002, reaching new
highs as a result of the global financial crisis that began in g Christine Bahr
August 2007. July 2008
5.4. Coordination of economic policies

The coordination of economic policy is a necessary step to achieve the objectives of the Treaty. Such coordination is
essential notably in the fields of tax policy, budget policy and employment. One of the procedures used for coordination is
the open method of coordination which permits the identification and the application to other Member States of the best
practices used in one Member State.
Legal basis and forms of coordination are prescribed in subsequent

— Articles 2, 4 and 98 to 104, introduced by the Treaty of articles. Article 99 lays down the procedure related to the
Maastricht; and Articles 125, 126 of the Treaty establishing general policy recommendations (broad economic policy
the European Community (EC), introduced by the Treaty of guidelines). Article 100 is concerned with special provisions
Amsterdam. applicable in cases of serious economic difficulties. Articles 101
to 103 rule out privileged access to financing from the
— Protocol on the excessive deficit procedure annexed to the European Union or the European Central Bank (ECB) and the
Treaty. national central banks to any public body. Article 104
prescribes the procedure to be followed in cases of excessive
Objectives deficit. The thresholds for the level of public debt and deficit
are defined in a separate protocol to the Treaty (Protocol on
A. Treaty provisions excessive deficit procedure). The Title on employment,
Article 98 is the basis for coordination, requiring the Member introduced in the Treaty of Amsterdam, establishes
States to view their economic policies as a matter of common employment policy among the fields of economic policy
concern and coordinate them within the Council. The areas coordination (Articles 125 and 126) (4.9.3).
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B. Aims by the Lisbon Summit of March 2000, with the European
1. Contribute to the attainment of Treaty objectives leaders encouraging the Member States to set benchmarks,
The overall objectives of economic policy coordination are identify best practices and implement policy in line
those of the European Union, seeking to secure balanced, with these.
sustainable and non-inflationary growth, associated with high The legal framework for economic policy coordination,
employment and competitive industry in a market economy developed since Maastricht, is based on:
setting. This should lead to higher standards of living and
— Council Regulation (EC) No 3605/93 (amended by
quality of life together with increasing convergence of
Regulation (EC) No 475/2000) on the application of the
economic performance across Member States.
protocol on the excessive deficit procedure annexed to the
2. Tune national fiscal policies to single monetary policy Treaty establishing the European Community;
The euro area is a monetary union where the currency area — Council Regulation (EC) No 1466/97 (amended by
does not coincide with the area of budgetary sovereignty. Regulation (EC) No 1055/2005) on the strengthening of the
Policy coordination is needed to combine one monetary surveillance of budgetary positions and the surveillance
policy, pursued by the independent central bank, with fiscal and coordination of economic policies;
and structural policies, for which each Member State remains
responsible. — Council Regulation (EC) No 1467/97 (amended by
Regulation 1056/2005) on speeding up and clarifying the
3. Draw maximum benefit from economic integration implementation of the excessive deficit procedure, and
The EU is highly integrated in terms of trade and investment
— the Stability and Growth Pact (5.5).
flows. The high degree of interdependence between the
national economies needs to be taken into account because it A further framework for coordination is defined by decisions
increases the influence of one Member State’s policy decisions taken in the European Council. These decisions have created a
on the evolution of the others’ economies. Successful ‘soft’ legal basis for policy coordination in various areas or have
coordination guarantees that such external effects are taken made it more explicit:
into account in policy design, enabling the advantages offered — employment: conclusions of the Luxembourg Summit of
by a well-functioning large internal market to be fully November 1997;
exploited.
— structural policies: conclusions of the Cardiff European
4. Achieve economic convergence Council of June 1998;
The coordination of structural policies, i.e. in product and
— strategic goals for structural reform to be reached by 2010:
services markets, seeks to foster long-term convergence of
conclusions of the Lisbon European Council of March 2000
national economies since their evolution determines the
and their relaunch in 2005;
direction in which the EU economy as a whole will develop.
— the resolution of the Cologne European Council of June
C. Scope of coordination 1999, establishing the macroeconomic dialogue;
The scope of economic policy coordination is wide but not
— the code of conduct on the content and format of the
precisely defined. It can be seen as encompassing all actions
stability and convergence programmes, endorsed by the
aiming to provide economic conditions for balanced and
Ecofin Council on 11 October 2005, incorporating the
sustainable growth within the European economic and
essential elements of Council Regulation EC No 1467/97
monetary union (EMU) and the EU. Its main elements should be:
into guidelines to assist the Member States in drawing up
— a common assessment of the economic situation; their programmes. It also aims to facilitate the examination
— agreement on appropriate policy responses in the short of the programmes by the Commission, the Economic and
run and in the long run; Financial Committee and the Council.
— acceptance of peer pressure and, where necessary, B. Actors

adjustment of policies pursued. The European Council sets coordinated political priorities and
gives guidelines at the highest level. The Member States are in
Achievements charge of national reporting, exchange of information and the
implementation of recommendations and decisions adopted
A. Decision-making framework by the Ecofin Council. The Eurogroup (the finance ministers of
Economic policy coordination is mainly based on consensus the Member States that have introduced the euro currency)
without legally enforceable rules, except in the fiscal policy discusses EMU-related matters informally, usually before the
framework (5.5). In other areas the means employed consist Ecofin Council meeting. The ECB participates when matters are
in information exchange, discussion, peer review and, where linked to monetary or exchange rate policy. The Commission
appropriate, commonly agreed goals with common actions. (in particular the Commissioner and the Directorate-General in
The key concept of ‘open method of coordination’ was coined charge of economic and financial affairs) is in charge of
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Economic and Coordination of economic policies
5 monetary union 4
reporting, preparing and making recommendations, as well as BEPGs. Conversely, the recommendations issued in the BEPGs
of the follow-up of the implementation of decisions. The are to be applied when setting goals in other fields.
Economic and Financial Committee gives opinions and
2. The macroeconomic dialogue — the Cologne process
prepares the Council’s work, as does the Economic Policy
Committee (EPC), which also contributes to the Commission’s The Cologne summit of June 1999 introduced bi-annual
work. Finally, the social partners are involved in their fields of meetings of representatives of various European institutions
main interest: employment, wage developments and and the social partners, called the macroeconomic dialogue or
structural reform. the Cologne process. Its purpose is to be a forum for an
exchange of views, thereby fostering a common assessment of
C. Main tools the economic situation at the European Union level. It is
1. Overall policy coordination — broad economic policy hoped that such exchanges will lead to stability-oriented wage
guidelines (BEPGs) claims and a balanced macroeconomic policy mix, supporting
strong non-inflationary growth. The model for this procedure
a. Nature and frequency is the dialogue between management and labour
The BEPGs are the central, overarching policy document for organisations common in some Member States. The parties in
different areas of economic policy coordination. They cover the macroeconomic dialogue include the social partners, the
both macroeconomic and structural policy issues. The Ecofin Council, the Commission and the ECB.
Council adopts this strategic document, endorsed by the
3. Framework for fiscal policy — Stability and Growth Pact
European Council, in early summer of each year on the basis of
the Commission’s recommendation. In 2003 the period for The purpose of coordinating budgetary policies is to ensure a
major revisions was increased to three years, reflecting the sufficient degree of coherence between the Member States’
medium-term character of this strategy document. Since 2005 fiscal policies, given the common monetary policy conducted
the BEPGs and the employment guidelines have been by the ECB. The coordination of budgetary policies consists of
combined into the integrated guidelines for growth and jobs. multilateral surveillance and the excessive deficit procedure,
the rules for which are set out in detail in the Stability and
b. Content Growth Pact (5.5).
The purpose of the BEPGs is to give concrete
4. Employment — the Luxembourg process and the
recommendations to the Member States with regard to
employment guidelines
macroeconomic and structural policies. The document
consists of two broad sections, the first devoted to orientations a. Procedures
common to all Member States or all euro area Member States The employment guidelines constitute the centrepiece of this
and the second containing country-specific policy coordination process. The Council adopts this policy
recommendations. document on the basis of the Commission’s proposal. The
Member States are requested to take the guidelines into
c. Legal status account when formulating their national employment policies.
The BEPGs are not legally enforceable, but there is an emphasis They must submit to the Commission national action plans
on peer pressure exercised by other Member States making (NAPs) on employment, which are examined by the
the recommendations politically binding. To step up the Commission and the Council. The NAPs are an input to the
pressure, the Council can issue a recommendation to non- Commission’s joint employment report and thereby to the
compliant Member States and make it public. following year’s employment guidelines. Apart from the
Member States, the European Parliament, the Economic and
d. Implementation and follow-up
Social Committee and the Committee of the Regions each
Since 2000 the Commission has been publishing an annual to provide an input to the employment guidelines which are
enhance the follow-up of the recommendations. The report combined with the BEPGs into the new integrated guidelines
aims to give more visibility to progress made or missed, for growth and jobs (4.9.3).
permitting results to be taken into account when preparing
the BEPGs for the following year. The also constitutes an b. Legal status
important link between the BEPGs and the coordination of Policy coordination in employment matters uses the open
budgetary policies under the provisions relating to the method of coordination. It is based on regular reporting, peer
Stability and Growth Pact (5.5). review and general guidelines issued to Member States.
Country-specific recommendations can also be given, but they
e. Relationship with sectoral coordination
are not legally binding.
In order to guarantee the coherence of sectoral coordination
— the so called ‘processes’ — information must flow between 5. Structural reforms — Cardiff process and Lisbon
them and the overall coordination based on the BEPGs. Input targets
from the coordination in fields of budgetary policy and public a. Origin and content
finances, employment, structural reform and the general The aim of structural reforms is to make product, services and
macroeconomic dialogue is used in the preparation of the capital markets more efficient, thus promoting a high standard
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of living for the European citizen in a globalised world. In the continuation of the new economic governance cycle,
Progress in these fields is monitored in the Cardiff process, the integrated guidelines serve as the basis for drawing up the
named after the Cardiff European Council, which introduced national reform programmes that are presented by the
the procedure. Member States. These programmes respond to the Member
b. Procedures States’ specific needs and reflect the approach of the
integrated guidelines involving macroeconomic policies,
Coordination is voluntary and based on monitoring, the
micro-economic policies, and employment.
exchange of best practices between the Member States and
peer pressure. The centrepiece of the process is a reporting The guidelines as well as the national programmes will be
system on the measures taken to improve the functioning of valid for the period 2008–10 and may be adjusted, where
product and capital markets. Member States provide national necessary, each year in line with the provisions of the Treaty.
reports annually, on the basis of which the Commission The national programmes may — within the period of their
prepares a ‘Cardiff report’ for the EU. This report serves as an validity — also be amended by the Member States, if
input to the assessment of the implementation of the broad necessary, to take account of domestic policy requirements.
economic policy guidelines. The Commission has presented a Community Lisbon
c. Speeding up structural reforms — Lisbon targets programme to run in tandem with the national programmes
At the Lisbon European Council Summit of 2000 the Member and covering the Community-level measures to be taken to
States committed themselves to speeding up the structural promote growth and employment in the 2008–10 period.
reform process, in order to make the European Union the most
dynamic economy in the world by 2010. Numeric goals were Role of the European Parliament
set to be reached by 2010 in areas such as employment and In several resolutions Parliament has reiterated its view that it
research and development. The progress made in five years and the national parliaments should be more closely
has been disappointing and thus the Lisbon agenda was re- associated in the policy coordination processes, which have a
launched in 2005. significant impact on the national actions in areas of fiscal and
Since 2000 the spring summit of the Heads of State or structural policies. Parliament meets this requirement through
Government has focused specifically on economic policy, in a number of annual meetings with members of the national
particular evaluating progress on structural reforms. parliaments.
6. Integrated guidelines for growth and jobs Parliament adopts a non-legislative resolution on the broad
In March 2005, the European Council judged that it was vital to economic policy guidelines shortly before the spring summit
relaunch the Lisbon strategy without delay and to refocus of the Heads of State or Government so that its views are
priorities on growth and employment. In this context, the included in the process of economic governance. Parliament is
Council approved the integrated guidelines for growth and consulted every year on the employment guidelines.
jobs, which consist of the broad economic policy guidelines,
ensuring the overall economic consistency of the three Changes resulting from the Treaty of Lisbon
dimensions of the Lisbon strategy, and the employment The Treaty of Lisbon does not make provision for any
guidelines. significant changes in the area of economic policy
This restructuring of coordination instruments is a first result of coordination.
the new approach defined at the Council’s meeting in March
2005, which makes it possible to coordinate macroeconomic
g Christine Bahr
policies, microeconomic policies and employment policies July 2008
around integrated guidelines in a dynamic and consistent
fashion, in accordance with the procedures laid down in the
Treaty.
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Economic and Framework for fiscal policies
5 monetary union 5
5.5. Framework for fiscal policies

The framework for fiscal policies of EU Member States is primarily intended to monitor and supervise the deficits and debts
of each member country. The aim is to achieve balanced budgetary positions over the economic cycle. The Commission is
the institution responsible for the monitoring.
Legal basis would not work due to the moral hazard problem. Individual
— Articles 2, 4 and 98-104 of the Treaty establishing the countries cannot be made accountable for their budgetary
European Community (EC), introduced by the Treaty of imprudence as the credible mechanisms to punish them do
Maastricht. not exist. This is especially so as the non-bailout provisions in
EMU (Article 103 EC) cannot really be used as an effective
— Protocol on the excessive deficit procedure, annexed to the threat. Due to this uncertainty and given the experience of a
Treaty. drift towards ever-higher debt levels, the Member States have
— Protocol on the convergence criteria referred to in opted for a framework of rules-based fiscal policy.
Article 121, annexed to the Treaty. Keeping public finances in balance under normal
circumstances will give the Member States room for
Objectives manoeuvre, allowing them to use discretionary fiscal policy to
react to asymmetric economic shocks, i.e. those shocks hitting
A. Goals
only the Member State concerned but not the euro area as a
The purpose of the framework for fiscal policies of the Member whole.
States is to fulfil the Treaty objective of securing sound public
finances in the context of deeper economic integration, in
particular within economic and monetary union (EMU). Rules Achievements
outlining a common framework for national fiscal policies A. Framework
were introduced into EU law in the Treaty of Maastricht as an
1. Convergence criteria
essential element of the preparations for the completion of
EMU. Although national sovereignty in the field of fiscal policy The convergence criteria define the framework for fiscal
was maintained, the autonomy of Member States was reduced policies for EU Member States before their entry into EMU, and
by the convergence criteria, with which they had to comply in they therefore continue to apply to those Member States that
order to be allowed to adopt the euro (5.2). have not yet adopted the euro. For the first 11 Member States
that entered the third stage of EMU in 1999, along with Greece
1. Fiscal prerequisites in a monetary union — which was able to join at the beginning of 2001 — and all
In a monetary union with fiscal policy independence, a other countries that have since adopted the euro, the original
common framework for fiscal policies can be justified by the criteria are no longer applicable. The fiscal policy framework
risk of moral hazard. Such a problem arises when one applicable to them, however, draws heavily on the
participant can act knowing he will not be suffering the (full) convergence criteria and includes reporting procedures and
consequences of his actions. In EMU this might be the case if a sanctions. Council Regulation (EC) No 3605/93 on the
Member State chose to run high budget deficits and application of the protocol on the excessive deficit procedure
accumulate debt, expecting to escape the full cost of this remains applicable.
course of action because the other EMU members would bear
2. The Stability and Growth Pact
some of the cost. In the absence of a monetary union, a
country with such imprudent policies would be subjected to a The Stability and Growth Pact consists of:
higher cost of borrowing in the form of higher interest rates. In — the Resolutions of the Amsterdam European Council of
an extreme case, the debt might swell to a level which the June 1997 on stability, growth and employment;
debtor could not sustain without help from its partners, who
— Council Regulation (EC) No 1466/97 of 7 July 1997 on the
will be forced to pay in order to avoid damage to the common
strengthening of the surveillance of budgetary positions
currency. If the imprudent country was one of the big
and the surveillance and coordination of economic
economies, its behaviour might also lead to higher interest
policies, as amended by Council Regulation
rates for the EMU as a whole. Although some economists
(EC) No 1055/2005 of 27 June 2005; and
argue that global financial markets would be efficient enough
to charge individual Member States the full cost of higher — Council Regulation (EC) No 1467/97 of 7 July 1997 on
borrowing, thus persuading them not to run excessive deficits speeding up and clarifying the implementation of the
and debt, this outcome is anything but certain. Other excessive deficit procedure, as amended by Council
economists convincingly argue that these market mechanisms Regulation (EC) No 1056/2005 of 27 June 2005.
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These set out how the Treaty rules — in particular the excessive medium-term programmes with regard to their budgetary
deficit procedure — should be implemented. The Pact is position and the economic outlook on which they base their
applicable to all Member States, both those that have already budget plans. These programmes are called stability
adopted the euro, and those still in the waiting room (Sweden, programmes for the EMU Member States and convergence
the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland programmes for those outside EMU. They must cover a period
and Slovakia (Slovakia is to adopt the euro on 1 January 2009)) of three years following the year of submission, as well as the
or opting out (Denmark and the United Kingdom). year prior to submission and the current year. The programmes
With regard to the soundness of budgetary positions, the rules must be updated annually. Updates are submitted in the
are the same as the convergence criteria. They limit: autumn, which in most Member States coincides with the
presentation of the following year’s budget proposal to the
— the deficit in general government finances to 3 % of GDP national parliament.
in any year, and
a. Content
— the public debt-to-GDP ratio to 60 %.
The programmes must provide information on:
Additionally, the section on medium-term budgetary
— how the medium-term objective of close to balance or in
objectives in Council Regulation (EC) No 1466/1997 requires
surplus is to be achieved, as well as on the expected
general government finances to be close to balance or in
development path of the government debt ratio;
surplus in the medium term. This combined with the nominal
deficit limit of 3 % of GDP which is independent of the cyclical — the main assumptions about economic developments on
position of the economy means that, in times of strong growth which the programme is based, and measures of
public finances should be in surplus if deficits are to be budgetary and other economic policy carried out to
permitted during downturns. A balanced position in the achieve the objectives set out in the programme.
medium term permits the use of ‘automatic stabilisers’, leading
b. Assessment
to deficits during downturns because lower growth reduces
tax revenues and, at the same time, higher unemployment The programmes are assessed by the Commission and the
raises public expenditure. Economic and Financial Committee. On the basis of these
assessments, the Council examines whether:
Council Regulations (EC) No 1055/2005 and (EC) No 1056/2005
amended the original regulations in a reform of the Stability — based on the medium-term objectives set out in the
and Growth Pact. As a number of Member States were programme, an excessive deficit is likely to be avoided;
experiencing difficulties in respecting the rules of the pact, the — the measures taken or proposed are sufficient to achieve a
reform essentially increased its flexibility. Most notably, the balanced budget in the medium term;
reformed pact now gives greater attention to debt
developments as well as the implementation of structural — the underlying economic assumptions are realistic;
policies and also allows for a more differentiated country- — the programme is consistent with the recommendations
specific assessment in the medium-term objectives. It also addressed to the Member State in the broad economic
allows for more leeway in the enforcement of the excessive policy guidelines (5.4).
deficit procedure (see B.3). Particularly immediately after its
introduction, the reform was criticised for having gone too far The Council delivers an opinion on each programme acting on
in catering to the special needs of some Member States the recommendation of the Commission and after having
struggling with high budgetary deficits. However consulted the Economic and Financial Committee.
developments since 2006 can be interpreted as indicating that 2. Early warning
the increased flexibility and country-specific assessment have
a. Failure to respect the balanced-budget requirement
generally brought positive results and have led to a reduction
in budgetary deficits. If the Council finds that the development of a Member State’s
public finances diverges significantly from the objective of a
B. Enforcement balanced position in the medium-term or from the path
The procedures for guaranteeing that objectives are met are towards such a position, it must issue an early warning to the
based on multilateral surveillance, comprising regular Member State concerned. The early warning is given as a
reporting and recommendations for corrective action, if Council recommendation to make the policy adjustments that
commonly agreed targets are not met. While pecuniary are necessary.
sanctions are possible if the binding deficit limit is exceeded, b. Failure to implement the broad economic policy guidelines
no financial penalties are used for enforcing the limit set as
The Council can also give an early warning if it considers,
regards general government debt.
following a Commission recommendation, that a Member
1. Stability and convergence programmes State has not implemented in its stability or convergence
For the purposes of multilateral surveillance, all Member States programme the recommendations addressed to it in the
are required to submit to the Council and the Commission BEPGs.
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Economic and Framework for fiscal policies
5 monetary union 5
3. Excessive deficit procedure (EDP) 2002 was found to be excessive. In all cases, the Council
a. Concept subsequently adopted a decision on the existence of an
The purpose of the procedure is to ensure that excessive excessive deficit and a recommendation with a view to
deficits are promptly corrected. In normal circumstances, a bringing an end to the situation. In July 2004, the Council
general government deficit exceeding the reference value of decided that Hungary, together with five other countries (the
3 % of gross domestic product (GDP) at market prices is Czech Republic, Cyprus, Malta, Poland and Slovakia), had
considered excessive. This deficit limit is not applicable in a excessive deficits, as they were well in excess of the 3 %
severe recession. Before the reform of the pact in June 2005 a reference value laid down in the Maastricht Treaty. The
severe recession was defined as an annual drop in real GDP of deadline for the correction of the deficit was set at 2008 as the
at least 2 %. After the reform, a negative rate of GDP growth or deficit was significantly above the reference value on
a prolonged period of low growth suffices. The EDP may also membership date and because of the ongoing structural shift
be set aside in ‘exceptional’ circumstances, and the scope of to a modern, service-oriented market economy. Annual targets
these circumstances was increased in the reform in June 2005 were agreed according to Hungary’s own convergence
(now called ‘relevant factors’).Most importantly, additional programme. In accordance with the excessive deficit
relevant factors include circumstances where countries spend procedure defined in the Treaty on European Union and in
on efforts to ‘foster international solidarity and to achieving Regulation (EC) No 1467/97, the Council also set a deadline for
European policy goals, notably the reunification of Europe if it taking ‘effective action’ to reduce the deficit. In January 2005,
has a detrimental effect on the growth and fiscal burden of a the Council concluded that the action planned by the
Member State’. Hungarian Government was not sufficient to reach the deficit
target in 2005 and a new recommendation was issued. In
b. Implementation October 2005, the Commission concluded that the Hungarian
The Commission is responsible for monitoring the Member budgetary outlook had deteriorated considerably since the
States’ budgetary positions and debt levels. For this purpose, last assessment. The original 2005 target of 3.6 % was revised
the Member States report to the Commission their planned upwards to 6.1 % and a deficit target of 5.2 % was set for 2006.
and actual government deficits and debt levels twice a year, by The Commission therefore recommended that the Council
1 March and 1 September. If the Commission detects a deficit decide that Hungary had again failed to take effective action
that is or risks becoming excessive, it must draw up a report. to correct its excessive deficit. The deadline for Hungary to
The Commission may prepare a report even where the correct the deficit has now been set at 2009. In the meantime,
reference values are not exceeded, if it considers that there is a it has been possible to conclude the procedures against
risk of excessive deficit or debt. Based on a recommendation of Cyprus (2006), Malta (2007), Slovakia, Poland and the Czech
the Commission, the Council then decides whether an Republic (all 2008). In 2008 a new procedure was initiated
excessive deficit exists. If the Council concludes that there is an against the United Kingdom, which is to correct its excessive
excessive deficit, it will make a recommendation to the budget deficit by the 2009–10 financial year.
Member State, establishing a deadline of six months for
effective corrective action to be taken. If the Member State C. Evolution of deficits and debt
does not take adequate measures, the Council may require it,
The overall conclusion with regard to the fiscal rules remains
at the latest 10 months after the reporting of the data
positive: deficits and debt levels have decreased significantly
indicating the existence of an excessive deficit, to make a non-
since the rules were introduced in the Maastricht Treaty. After
interest bearing deposit. However, under the reformed Pact
an initial clear decline in deficits in the run-up to EMU, many
the Council may extend this period by one additional year. The
Member States entered EMU with a slightly excessive deficit,
payable deposit comprises a fixed component equal to 0.2 %
which led to time limits being set for achieving a budgetary
of GDP and a variable component linked to the size of the
position close to balance or in surplus. The purpose was to
deficit. Each subsequent year the Council may decide to
avoid the medium-term objective becoming a moving target
intensify the sanctions by requiring an additional deposit,
which would never be reached. However, most Member States
though the annual amount of deposits may not exceed the
used the economic upturn of the late 1990s to balance their
upper limit of 0.5 % of GDP. A deposit is as a rule converted
budgets also notably driven by the motivation to qualify for
into a fine if, in the view of the Council, the excessive deficit
the euro, the result being a significant reduction in public
has not been corrected after two years.
deficits. By the end of 2001, seven of the then 12 EMU
c. Practice Member States had achieved the target of close to balance or
Since the beginning of the third stage of EMU, the Commission in surplus. This picture was darkened at times by the
has prepared a number of reports under the excessive deficit subsequent deterioration in some Member States and by the
procedure. In September 2002, it concluded that the fact that among those that have so far failed to reach a
Portuguese government’s actual deficit of 4.1 % of GDP in balanced position are the euro area’s three largest economies
2001 was excessive. In November 2002, the Commission (France, Germany and Italy), which account for more than 70 %
reached the same conclusion concerning Germany’s projected of the total output. Following the reform of the Stability Pact,
deficit for 2002. In April 2003, the French deficit of 3.1 % in however, a slight improvement in average budgetary positions
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has in fact been observed since 2006, although this should by In several resolutions Parliament has reiterated its view that it
no means be taken to indicate that the pact is working and the national parliaments should be more closely
perfectly. associated in the policy coordination processes, which have a
Public debt has been decreasing in the euro area, but the significant impact on national fiscal policy.
average level still somewhat exceeds the 60 % reference value
as a result of the impact of three highly indebted countries Changes resulting from the Treaty of Lisbon
(Belgium, Greece and Italy). The Treaty of Lisbon does not make provision for any
significant changes to the framework for fiscal policies.
Parliament has certain prerogatives in the field of coordination g Christine Bahr
of fiscal policies. Arttu Makipaa
July 2008
— the Council informs Parliament of its decisions regarding
multilateral surveillance and excessive public deficit;
— Parliament is consulted on secondary legislation
implementing the excessive deficit procedure, including
the Stability and Growth Pact.
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6

The EU’s external relations

In order to broaden and enhance its relations with other countries and regions of the world,
the EU regularly holds summits with its main partners, which include Canada, Japan and
the United States and, more recently, China, India and Russia. There are many agreements
governing cooperation, trade and political dialogue between the EU and the countries of
the Mediterranean, the Middle East, Asia, Latin America, eastern Europe, central Asia and the
western Balkans. Within its common foreign and security policy (CFSP), the Union has also
developed a European security and defence policy (ESDP) that could eventually, subject to
further agreement, lead to the creation of a common defence structure.
6.1. Common foreign and security 6.4.4. Central Asia, 475

policy (CFSP), 435 6.4.5. The southern and eastern
6.1.1. Foreign policy: aims, instruments Mediterranean countries, 478
and achievements, 435 6.4.6. Arabian peninsula, Iraq and Iran, 481
6.1.2. Defending human rights and 6.4.7. Transatlantic relations: the USA and
democracy, 438 Canada, 485
6.1.3. Security and defence policy, 441 6.4.8. Latin America, 487
6.2. Economic policy and external 6.4.9. Japan, 490
trade, 445 6.4.10. The People’s Republic of China and
6.2.1. The European Union as a trade Taiwan, 492
power, 445 6.4.11. The countries of south Asia and the
6.2.2. The European Union and the World Indian subcontinent, 495
Trade Organisation (WTO), 450 6.4.12. ASEAN and the Korean
peninsula, 500
6.3. Framework for relations with certain 6.4.13. Australia and New Zealand, 504
groups of countries, 454
6.3.1. The enlargement of the Union, 454 6.5. General development policy, 507
6.3.2. The European Economic 6.5.1. A general survey of development
Area (EEA), 459 policy, 507
6.3.3. The European neighbourhood policy 6.5.2. Trade regimes applicable to developing
(ENP), 462 countries, 509
6.5.3. Humanitarian aid, 511
6.4. Relations with certain countries and 6.5.4. Relations with the countries of Africa,
regions, 465 the Caribbean and the Pacific: from the
6.4.1. The western Balkan countries, 465 Yaoundé and Lomé Conventions to the
6.4.2. The Russian Federation, 470 Cotonou Agreement, 514
6.4.3. The South Caucasus (Armenia,
Azerbaijan, Georgia), 473
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BAAA08001ENC_cap05-06.indd 434 18/2/09 11:53:15
The EU’s external Common foreign and
6 relations 1 security policy (CFSP)
6.1. Common foreign and security

policy (CFSP)
6.1.1. Foreign policy: aims, instruments and achievements

The foundations of EU foreign policy were built in 1969 with the Davignon report which was the first step towards a
European political cooperation. The Treaty on European Union then creates the concept of CFSP that the Treaties of
Amsterdam and Nice reformed and expanded.
Legal basis Charter, as well as the principles of the Helsinki Final Act
The Treaty on European Union (TEU) sets out the basis of the and the objectives of the Paris Charter, including those on
Common Foreign and Security Policy (CFSP) in Title V, Articles external borders;
11 to 28. — to promote international cooperation;
The CFSP is further consolidated by other provisions: — to develop and consolidate democracy and the rule of law,
— In the TEU: and respect for human rights and fundamental freedoms;
• Title I concerning the Common Provisions, especially Article 2(b) of Title I TEU (Common provisions) defines the
Articles 2 and 3; general objectives of the Union, which also apply to the
framework of the CFSP.
• Title VIII concerning the Final Provisions;
In addition, Member States are bound by a clause of loyalty
• Protocol on Article 17, annexed to the Treaty by the towards the EU. Article 11(2) stipulates that they shall;
Treaty of Amsterdam;
— support the CFSP actively and unreservedly;
• Declarations 27 to 30 adopted by the 1990
Intergovernmental Conference (Maastricht Treaty) and — refrain from any action which is contrary to the interests of
five declarations adopted by the 1996 the Union or is likely to impair its effectiveness in
Intergovernmental Conference (Treaty of Amsterdam): international relations;
No 2 on enhanced cooperation between the EU and — work together to enhance and develop their mutual
the Western European Union (WEU); No 3 on the WEU; political solidarity.
No 4 on Articles 24 and 38; No 5 on Article 25; and No 6
on the establishment of a policy planning and early
Achievements
warning unit (6.1.3). Declaration No 1 on the European
security and defence policy, adopted by the 2000 A. European political cooperation (EPC)
Intergovernmental Conference (Nice Treaty) is also After the failure of the ‘Pleven plan’ in 1954, which aimed to
relevant. create an integrated European army under joint command, the
— In the EC Treaty: Articles 296, 297, 300 and 301. first concrete projection of political will emerged at the Hague
Summit of 2 December 1969. The six foreign ministers
introduced a text, known as the ‘Davignon report’ which
Objectives
constituted the first steps towards European political
Article 11 of the Treaty on European Union defines the cooperation (EPC); this was based on cooperation procedures
following five objectives of the CFSP: between Member States outside the Community structure.
— to safeguard the common values, fundamental interests, Within the framework of the EPC, the Member States enhanced
independence and integrity of the Union in conformity coordination of foreign policies and adopted a number of
with the principles of the United Nations Charter; common positions, concerning especially the Middle East
region. The EPC was further strengthened by the creation of the
— to strengthen the security of the Union in all ways; European Council in 1974, which defined the general
— to preserve peace and strengthen international security, in orientations of the EPC agenda and by the Single European Act
accordance with the principles of the United Nations in 1987, which provided the legal basis for the procedure.
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B. The Maastricht Treaty (1992) on matters of foreign and security policy of general
The Treaty on European Union (TEU) introduced the three- interest.
pillar system distinguishing the different areas of EU 2. The policy planning and early warning unit
intervention. The second pillar, covering the common foreign
It was set up by a declaration annexed to the Amsterdam
and security policy (like the third pillar concerning cooperation
Treaty. Its main tasks within CFSP are:
in the fields of justice and home affairs), was based on
intergovernmental procedures, ,as opposed to the first and — to monitor and analyse developments and provide timely
main pillar, which concerned purely Community policies. In assessments and early warning;
establishing the concept of CFSP, the TEU constituted a — to provide assessments of the Union’s interests and identify
significant breakthrough. areas where the CFSP could focus in future;
1. Instruments — to produce argued policy-option papers as a contribution
The CFSP differed from the EPC by introducing concrete to policy formulation in the Council;
strategic means, which went beyond simple verbal statements.
— to provide direct policy support to the High
In their original, Maastricht version, Articles 12 and 13 provided
Representative.
for common positions and joint actions. Both were to be
decided unanimously by the Council and bind all Member 3. Decision-making process
States. Article 23 stipulates that decisions shall be taken by the
2. Single institutional framework Council acting unanimously. In seeking to overcome the
constraints that produced the rule of unanimity, the Treaty
One of the most innovative aspects of the TEU is the
introduced the instrument of constructive abstention
establishment of a single institutional framework. Thus,
(Article 23(1)) as a means towards more flexibility. Thus, when a
although the CFSP is based on intergovernmental
Member State abstains from a vote, it shall not be obliged to
consultation, many actors participate: the European Council,
apply the decision but shall accept that the decision commits
the Council (in its General Affairs and External Relations
the Union;
configuration (GAERC)), the Commission, the Parliament, the
Political and Security Committee. Furthermore, the Treaty tried to extend the sphere of qualified
majority voting (QMV). The Council can act by QMV when
3. Security and defence
adopting joint actions, common positions or taking any other
6.1.3 decision on the basis of a common strategy or when adopting
any decision implementing a joint action or a common
C. The Treaty of Amsterdam (1997)
position, though not on decisions with military or defence
Though expected at first to introduce comprehensive implications. If no Member State objects or calls for a
institutional reform to make the CFSP more coherent, in the unanimous decision in the European Council (‘emergency
end the Amsterdam Treaty left the established structure largely brake’), the decision is adopted by the Council by QMV
unchanged. It did, however, introduce a whole range of new (currently requiring 62 votes from at least 10 Member States).
instruments, as well as establish a much more efficient
decision-making process. 4. Implementation
Responsibility for implementation is granted to the Presidency,
1. Instruments
assisted by the Secretary-General of the Council, who acts as
Expanding Article 12, the Treaty of Amsterdam gave the the High Representative for the CFSP, a function introduced at
following instruments to the CFSP: the 1999 December European Council.
— principles and general guidelines (Article 13), decided by 5. Financing
the European Council, including matters with defence Both operational and administrative expenditures are charged
implications; under Article 28 to the budget of the European Communities.
— common strategies, decided by the European Council
upon recommendation of the Council in cases where the D. The Treaty of Nice (2003)
Member States have important common interests, In response to new developments in the international relations
common strategies must set out the objectives, duration system regarding security challenges the Member States
and means to be made available by the Union and the reconsidered the institutional framework of the CFSP. The Nice
Member States; they are also implemented by the Council; Treaty, which entered into force on 1 February 2003,
introduced the following changes:
— joint actions (Article 14);
1. Decision-making process
— common positions (Article 15);
By derogation from the provisions of Article 23(1), the Council
— systematic cooperation between Member States, which shall act by qualified majority when appointing a special
must inform and consult one another within the Council representative.
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2. Agreements with one or more States or international cooperation among smaller groups of Member States in this
organisations policy area as well.
Article 24 stipulates that when the agreement is envisaged in
order to implement a joint action or common position, the Role of the European Parliament
Council shall act by QMV.
A. Treaty provisions
3. Political and Security Committee (PSC)
Article 21 of the Amsterdam Treaty urges the Presidency to
The PSC, set up by Council decision in January 2001, is
consult the Parliament on the main aspects and the basic
authorised by the European Council to exercise political
choices of the CFSP. The European Parliament may ask
control and strategic direction of a crisis management
questions to the Council or make recommendations to it.
operation (Article 25).
4. Enhanced cooperation B. Interinstitutional Agreement
The Treaty’s Articles 27(a) to 27(e) extend the possibility for Under paragraph 40 of the Interinstitutional Agreement of
enhanced cooperation to the implementation of a joint action 6 May 1999, the Member States are required to prepare an
or a common position on CFSP issues that do not have any annual Council document on the main aspects and basis
military or defence implications. As for other policy areas, it choices of CFSP, including the financial implications for the
should be noted that enhanced cooperation may be general budget of the European Communities.
undertaken only as a last resort, once it is established that the
intended goal cannot be achieved within reasonable time C. Actual action
through applying the relevant Treaty provisions. Despite its modest formal role in the process, the European
Parliament has supported the concept of CFSP from its
E. The Treaty of Lisbon (2009?) inception and sought to extend its scope. Bearing in mind
After the failure of the EU Constitution project in 2005, its key conflicts throughout the world but especially those in the
institutional provisions were recast in a further reform treaty, Balkans and in the Middle East, as well the changing nature of
which was signed in Lisbon on 19 October 2007. If this Treaty the security situation after the terrorist attacks of
of Lisbon — despite being rejected in the Irish referendum on 11 September 2001, Parliament has repeatedly noted that the
12 June 2008 — is ultimately ratified, major changes would performance of the CFSP is weakened by the three-pillar
ensue in the foreign policy arena: structure, calling on Member States to make less systematic
1. High Representative use of the constructive abstention mechanism. It also pushed
for an EU ‘Foreign Minister’ and the creation of a single
The office of the European Union’s High Representative for European diplomatic service.
Foreign Affairs and Security Policy, currently combined with
the role of Secretary-General of the Council, would be Parliament’s main instrument in this political dialogue is the
substantially enhanced as the new High Representative annual report and resolution on CFSP (called the ‘Brok report’
(originally called the EU Minister for Foreign Affairs in the after its author, the current and long-serving chair of the
Constitution) would also be a Vice-President of the Foreign Affairs Committee). This report is Parliament’s direct
Commission, thus increasing the impact, coherence and response to the annual Council document on CFSP (see
visibility of the EU’s external action. above) and feeds into the budgetary procedure, under which
Parliament, as one half of the EU budgetary authority, must
2. European External Action Service
approve the CFSP budget.
A new European External Action Service would be established,
While waiting for the Constitutional Treaty to further formalise
composed of officials from the Council the Commission and
its role in CFSP, the European Parliament has achieved a degree
the Member States, to provide back-up and support to the
of informal cooperation in practice with the Presidency, the
High Representative, in conjunction with the diplomatic
Council Secretariat and the Commission. Representatives of all
services of the Member States, in the implementation of the
three entities regularly attend the meetings and hearings of
CFSP.
Parliament’s Committee on Foreign Affairs (AFET) and of the
3. Legal personality Sub-Committee on Security and Defence (SEDE), created in
A single legal personality for the Union would strengthen its 2004. It has also built working relations with national
role in external affairs and make it a more visible partner for parliaments in the field of foreign policy, holding an annual
third countries and international organisations. This would exchange with these on CFSP and ESDP.
enhance its effectiveness in multilateral forums and in bilateral
negotiations. g Stefan Schulz
4. Enhanced cooperation July 2008
Although special decision-making rules would continue to

apply in the ESDP, the way would be clear for enhanced
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6.1.2. Defending human rights and democracy
The European Union is committed to a policy in support of democracy and human rights in its external relations, based on
its founding principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law. In
practice, the European Union’s human rights policy includes various instruments to mainstream human rights concerns
into all EU policies and programmes, and financing specific projects through EU financial instruments to promote and
protect human rights.
Background Instruments
Article 6 of the Treaty on European Union (TEU), which is A. General
the underlying legal provision concerning human rights, 1. Common foreign and security policy decision-making
states: ‘The Union is founded on the principle of liberty,
Human rights issues arising in the EU’s external relations
democracy, respect for human rights and fundamental
through the common foreign and security policy (CFSP) or
freedoms’.
through the European Community’s trade or development
Article 2 of the Lisbon Treaty on European Union (consolidated policies are generally dealt with by EU foreign affairs
version, pending ratification) deepens this commitment by ministers in the General Affairs and External Relations
stating: ‘The Union is founded on the values of respect for Council, which meets every month. At working level within
human dignity, freedom, democracy, equality, the rule of law the Council, human rights issues in the EU’s external relations
and respect for human rights, including the rights of persons are the responsibility of officials who meet in a thematic
belonging to minorities’. Regarding the Union’s external Working Party on Human Rights (COHOM). This working
relations, the same article affirms the Union’s commitment to party is composed, as a general rule, of the heads of human
‘eradication of poverty and the protection of human rights, in rights divisions of the ministries of foreign affairs of each of
particular the rights of the child, as well as to the strict the Member States, as well as of a representative of the
observance and the development of international law, Commission.
including respect for the principles of the United Nations 2. Appointment of a personal representative of the High
Charter’. Representative on Human Rights in the area of the
CFSP
Objectives On 29 January 2007, the Secretary-General/High
Representative for Common Foreign and Security Policy
Article 11 of the TEU further specifies that one of the (CFSP), Javier Solana, appointed Dr Riina Kionka as his personal
objectives of the common foreign and security policy (CFSP) is representative for human rights in the area of common foreign
‘to develop and consolidate democracy and rule of law, and and security policy. Dr Kionka is the second person, following
respect for human rights and fundamental freedoms’. Mr Michael Matthiessen, to take up this position created by the
Council in December 2004, ‘as a contribution to the coherence
Furthermore, as far as development cooperation is concerned, and continuity of the EU human rights policy’.
‘Community policy in this area shall contribute to the general
objective of developing and consolidating democracy and the 3. Mainstreaming human rights and democratisation
rule of law, and to that of respecting human rights and policies in the external relations of the EU
fundamental freedoms’ (Article 177 of the Treaty establishing Mainstreaming is the process of integrating human rights
the European Community (EC)). and democratisation issues into all aspects of EU policy
decision-making and implementation, including external
Article 21 of the Lisbon Treaty on European Union assistance. The European Commission first outlined
(consolidated version, pending ratification) confirms and measures to this effect in its communication of May 2001
deepens these statements: ‘The Union’s action on the on the EU’s role in promoting human rights and democracy
international scene shall be guided by the principles which in third countries. In 2006 the Political and Security
have inspired its own creation, development and Committee of the Council of the European Union endorsed
enlargement, and which it seeks to advance in the wider recommendations on further measures on mainstreaming,
world: democracy, the rule of law, the universality and such as a more systematic use of reports and
indivisibility of human rights and fundamental freedoms, recommendations by UN special rapporteurs and Treaty
respect for human dignity, the principles of equality and monitoring bodies as well as addressing systematically the
solidarity, and respect for the principles of the United Nations protection of human rights in all phases of European
Charter and international law.’ security and defence policy (ESDP) operations.
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4. Adoption of guidelines for EU policy on key human rights clause. This is formalised as an ‘essential clause’, a provision
rights concerns stipulating that respect for human rights and democratic
The EU guidelines on human rights are policy documents principles underpins the internal and external policies of the
adopted by the Council of the EU. Guidelines are a practical parties and constitutes an essential element of the agreement. It
instrument of EU human rights policy for the different EU is often followed by an additional clause on non-execution of
actors allowing for a sustained action in a number of key areas the agreement in the case of breaches of such an essential
of concern: action against the death penalty (1998), the element of the agreement. Measures taken under the human
creation of specialised dialogues on human rights (2001), rights clause may take different forms, from reduction or
action against torture and other cruel, inhumane or degrading suspension of cooperation to more serious sanctions.
treatment or punishment (2001), the protection of children in 2. Common strategies, actions, positions
armed conflicts (2003), the protection of human rights
defenders (2004), compliance with international humanitarian The EU pursues its human rights and democracy objectives by
law (2005), and most recently the guidelines on the rights of defining the general principles on which its policy is based.
the child in December 2007. Specific EU action has been taken These principles may be reflected in ‘common strategies’ when
and recommendations have been made to Member States on the EU and its Member States have significant common interests
each of these guidelines. (e.g. Russia, the Mediterranean), in ‘joint actions’ when an EU
operational action is deemed to be necessary (e.g. appointment
5. European Instrument for Democracy and Human of special EU representatives and crisis management operations),
Rights (EIDHR) or in ‘common positions’ when it is a case of defining the EU’s
On 1 January 2007, a new regulation for the European position on a particular geographic or thematic issue. While
Instrument for Democracy and Human Rights (EIDHR) entered these instruments are not specifically designed to defend
into force. It is the key EU financial assistance instrument in human rights, they are regularly used for this purpose.
human rights and democracy promotion. In practice this is
3. Démarches and declarations
often done by supporting civil society actors working for
human rights and democracy in third countries. It follows an Diplomatic démarches taken by the Presidency of the EU
earlier European Initiative for Democracy and Human Rights Council, the troika or a Member State on behalf of all Member
(between 1994 and 2006) during which an average of some States vis-à-vis the authorities of a third country are a
EUR 120 million was allocated annually to projects related to significant means of pressure. They are generally taken
the improvement of the human rights situation and confidentially and involve reminding the authorities of their
democracy in third countries worldwide. international human rights commitments, whether in a
particular area (e.g. stoning, the death penalty), or as regards a
According to EIDHR strategy for the years 2007–10, the defender of human rights or an organisation facing particular
particular focus of EIDHR funding will be on the following areas: danger. In 2007 over 90 démarches were made related to
— enhancing respect for human rights and fundamental concerns on torture and ill treatment. General démarches on
freedoms in countries and regions where they are most at the death penalty were carried out in almost 30 countries.
risk; Along the same lines, public declarations can be used to call
upon a government to respect human rights or to welcome a
— strengthening the role of civil society in promoting human positive development (e.g. the holding of elections). Along the
rights and democratic reform; same lines, public declarations can be used to call upon a
— support to areas covered by EU guidelines on key human government to respect human rights or to welcome a positive
rights concerns; development (e.g. the holding of elections).
— supporting the international framework for human rights; 4. Political dialogue and specific human rights dialogues
— EU election observation missions. Human rights are systematically addressed within the political
dialogue that the European Union conducts with third
6. The drafting of an annual report on human rights countries or regional groups, in the framework of the common
Since 1999 the Council has published an annual report on foreign and security policy (CSFP). In addition, the European
human rights in order to make its policy and action in this field Union has engaged in dedicated human rights dialogues with
more transparent, while Parliament has published its own a growing number of countries, the first being created with
annual report on human rights in the world since 1984. China and Iran. In 2001 the Council adopted the ‘European
Union guidelines on human rights dialogues’. Based on these
B. EU initiatives in third countries guidelines, human rights dialogues should include discussions
1. The ‘human rights and democracy’ clause in external enhancing cooperation on human rights, registering the
EU agreements concern felt by the EU at the human rights situation in the
Since 1995, bilateral trade agreements and the various types of country concerned, and endeavouring to improve the human
association and cooperation agreements between the EU and rights situation in that country. In 2007 it was agreed that an
third countries or regional organisations have included a human EU–AU human rights dialogue should be an integral part of
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the EU–Africa strategic partnership. That was the first time that towards the ICC is contained in a common position agreed in
the EU as an entity entered into a human rights dialogue with 2003, supplemented by an action plan in 2004. As a
another entity, other than a State. A key challenge is for the consequence, a provision on ratifying and implementing the
human rights dialogues to go beyond recitation of well-known Rome statute was already included in the revision of the
positions and to lead to concrete improvement of the human Cotonou Agreement with the African, Caribbean and Pacific
rights situation on the ground. (ACP) countries signed in 2005. This reflects the commitment
of the EU and the ACP States to the institutions of global
Current situation governance. Similar provisions have since been included in all
partnership agreements with third countries.
EU human rights policy seeks to promote respect for all human
rights and fundamental freedoms — civil, political, economic, D. Rights of the child
social and cultural. However, within the wide range of human In December 2007 a new set of EU guidelines for the
rights issues which the EU tackles, there are some thematic promotion and protection of the rights of the child were
concerns of human rights and democracy promotion that have adopted by the Council of the EU. The importance attached by
received special attention from the European Union recently. the EU to the promotion of the rights of the child was already
reflected in the earlier guidelines on children and armed
A. The fight against the death penalty
conflict (2003) addressing the short-, medium- and long-term
The European Union is actively advocating the abolition of impact of armed conflict on children.
the death penalty, based on agreed ‘Guidelines on EU policy
towards third countries on the death penalty’ which were E. Women’s rights and gender equality
adopted in June 1998. The EU calls on the countries which Since the 1995 World Conference on Women, in Beijing, the EU
maintain capital punishment to take all necessary measures has played a substantive role to promote women’s human
to abolish the death penalty and, as a minimum, to rights and gender equality both within the Union and towards
introduce a moratorium as a first step towards abolition. The third countries. Following a policy of gender mainstreaming,
available financial instruments have been utilised to provide the European Union seeks to integrate the priorities and needs
concrete project support to this policy. By 2008, the of women and men in all key policies. On 8 March 2007 the
European Commission had funded around 30 projects Commission adopted a communication entitled ‘Gender
against the death penalty worldwide since 1994, with an equality and women’s empowerment in development
overall budget of around EUR 15 million. EU action in this cooperation’, as part of a series of EU policy initiatives aiming
area also includes the ‘Annual EU statement on the death to coordinate and harmonise the development assistance of
penalty’ on the World Day against the Death Penalty held on Member States and the Commission.
10 October.
F. Racism, xenophobia and the protection of minorities
B. The fight against torture and other cruel, inhuman and The fight against racism and xenophobia is both an internal
degrading treatment or punishment and external priority for the EU. At the international level, the
In line with the EU guidelines against torture, which were EU strongly supports the universal ratification of the UN
adopted in April 2001, the EU is heavily engaged in the global Convention on the Elimination of All Forms of Racial
struggle against torture. The EU has actively pursued this Discrimination (CERD), and has worked actively to ensure
policy on bilateral, regional and multilateral levels. At the appropriate follow-up to the landmark Durban World
United Nations, the European Union played a leading role in Conference against Racism, Racial Discrimination Xenophobia
the adoption of the optional protocol to the UN Convention and Related Intolerance (WCAR) held in 2001. In 2007 EU
against Torture, in December 2002, which entered into force Member States voted unanimously in favour of the UN
on 22 June 2006. This protocol institutes a system of national Declaration on the Rights of Indigenous Peoples.
and international visiting mechanisms to inspect places of
detention with a view to the prevention of torture. On the G. Election assistance and observation
United Nations International Day in Support of Victims of Since 2000 over 60 election observation missions and 10
Torture, 26 June 2008, the European Union underlined again election support missions have been deployed to countries in
the priority which it attaches to the global eradication of Africa, the Middle East, Central and South America and Asia,
torture and other cruel, inhuman or degrading treatment or involving the participation of some 5 000 experts and
punishment, and to the full rehabilitation of torture victims. observers in these missions. The aims of election observation
are to deter fraud and violence and to build confidence in the
C. International criminal justice and the fight against electoral process among political contestants, civil society and
impunity the wider electorate. EU election observation missions are
The EU has set itself the task of convincing countries through usually headed by a member of the European Parliament. As
diplomatic démarches, awareness-raising initiatives, and such EU election observation missions represent a very
financial support to ratify the Rome statute of the International significant democracy-building tool, thus contributing also to
Criminal Court, which entered into force in 2002. The EU policy the respect for human rights.
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Role of the European Parliament Defence Committees), or with European Parliament

For many years, defending human rights in the world has been delegations to the parliaments of third countries. The
one of Parliament’s primary concerns and an area in which it European Parliament also adopts an annual report on human
has been most prominently involved in public debate. rights in the world and the EU’s human rights policy.
A. Powers 2. Continuous dialogue with the international

community and civil society
The European Parliament has become an important voice on
human rights and democracy issues. It contributes to the The Subcommittee on Human Rights is the centre of
drafting, implementation and evaluation of policies in the field discussions on human rights in Parliament. It takes
of human rights through its resolutions, reports, missions to parliamentary initiatives in this policy sphere and provides a
third countries, human rights events, inter-parliamentary permanent forum for discussions on the human rights
delegations and joint parliamentary committees with third situation and the development of democracy in non-EU
countries, oral and written questions, special hearings on countries. The subcommittee meetings regularly feature
specific issues and its annual Sakharov Prize. Through public dialogues with other EU institutions, the UN special
discussions in plenary, committees, subcommittees and rapporteurs and other representatives of the UN or its
working groups, it holds the Council and the Commission to agencies, the Council of Europe, government representatives,
account. The President of the European Parliament also human rights activists and relevant NGOs. It also conducts
regularly takes up human rights issues with the representatives delegation visits to individual third countries, including the
of third countries, in direct talks or in correspondence. candidate countries to the European Union (e.g. Turkey). This
ongoing exchange of information allows for appropriate
B. Activities action in rapidly changing circumstances, and opens up, for
1. Ensuring the coherence of European Commission and example, the possibility of urgent resolutions in plenary
Council action session.
The European Parliament holds a permanent dialogue with
3. Organising and preparing the Sakharov Prize
the Council of the EU and the European Commission,
procedure
monitoring how they achieve the agreed policy priorities.
Parliament also seeks to express its point of view on their Parliament introduced the Sakharov Prize for Freedom of
action and encourage all the institutions to act when a Thought on 13 December 1985, at which time Andrei
common strategy or joint action is required. Sakharov was still in exile in Gorki. The prize is awarded
annually in recognition of an action or achievement relating to
Parliament’s principal organ in promoting human rights and
respect for the defence of human rights. Today it helps to
democracy and protecting minorities is the Human Rights
underscore Parliament’s commitments to defend human
Subcommittee (DROI), a subcommittee of the Committee on
rights and fundamental freedoms throughout the world.
Foreign Affairs. It deals with the day-to-day management of
human rights dossiers, sometimes in cooperation with other
Parliamentary committees (such as the Foreign Affairs, g Jarmo Oikarinen
Development, Civil Liberties, Women’s Rights or Security and July 2008
6.1.3. Security and defence policy

Many advances have been made in the field of the European security and defence policy since the failure of the European
Defence Community. Nevertheless, there is still room for significant progress in this area, and the European security
strategy is a step towards that progress.

Title V of the Treaty on the European Union (TEU) on the Five objectives were established for the CFSP (as modified by
common foreign and security policy (CFSP) (6.1.1) and the the Amsterdam Treaty):
five declarations on CFSP annexed to the TEU, particularly — to safeguard the common values, fundamental interests,
Nos 2 and 3 on the Western European Union (WEU). independence and integrity of the Union in conformity
with the principles of the United Nations Charter;
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— to strengthen the security of the Union in all ways; Amsterdam Treaty introduced the constructive abstention
— to preserve peace and strengthen international security, in procedure, by which a Member State can choose not to apply
accordance with the principles of the United Nations a particular decision even though it agrees that it commits the
Charter, as well as the principles of the Helsinki Final Act Union as a whole. The Council acts, by derogation, by qualified
and the objectives of the Paris Charter, including those on majority when adopting joint actions, common positions or
external borders; taking any other decision on the basis of a common strategy
and when adopting any decision implementing a joint action
— to promote international cooperation; or a common position.
— to develop and consolidate democracy and the rule of law, c. Implementation
and respect for human rights and fundamental freedoms. The Amsterdam Treaty introduces the new office of a High
Representative (HR) for CFSP. He or she will also be the Council
Achievements Secretary General. Under Article 26, the HR shall assist the
A. The Treaty of Amsterdam Council in the field of CFSP with the formulation, preparation
1. Content of the CFSP and implementation of policy decisions and, when
appropriate and acting on behalf of the Council at the request
a. The incorporation of the Petersburg tasks
of the Presidency, with conducting political dialogue with third
Under Article 17(4), the Treaty of Amsterdam incorporated into countries. Mr Javier Solana was appointed as the first HR and
the TEU the so-called Petersburg tasks, which include: took office on 18 October 1999.
humanitarian and rescue tasks, peace-keeping tasks and tasks of
combat forces in crisis management, including peace-making. The CFSP budget, which is part of the EC budget, is
They became part of the CFSP and the common defence policy. administered by the Commission.
All of the Union Member States may participate in these tasks
B. The Nice Treaty
(except Denmark which has an ‘opt out’ on defence matters
under Protocol 5 to the Treaty of Amsterdam). 1. Political and Security Committee
Under Article 25 of the Nice Treaty, the Political and Security
b. Common strategies Committee (now established after being introduced as an
This new instrument is decided by the European Council. ‘interim’ body at the June 2000 Feira European Council) shall
c. EU–WEU relations exercise, under the responsibility of the Council, political
Article 17(3) of the Treaty of Amsterdam seeks to clarify the control and strategic direction over crisis management
nature of these relations, stating that the EU will avail itself of operations. The Council may authorise the Committee, for the
the Western European Union (WEU) to implement decisions purposes and for the duration of a crisis management
which have defence implications, and that the EU will draw up operation, as determined by the Council, to take the relevant
political guidelines for such situations. However, following the decisions concerning the political control and strategic
European Council of Cologne in 1999 to strengthen the EU’s direction of the operation. This gives it an even more
European security and defence policy, the WEU is currently prominent role in the European security and defence policy
under transition. At Marseille in November 2000, the WEU (ESDP).
Ministerial decided to maintain a minimum Secretariat in order 2. Enhanced cooperation
to ensure that the functions and structures of the WEU can still Enhanced cooperation shall respect the principles, objectives,
serve the commitments of the Member States under the general guidelines and consistency of the CFSP and the
modified 1954 Brussels Treaty. The meetings of the Council of decisions taken within the framework of that policy. It shall
Ministers of the WEU in Oporto in May 2000 and in Marseille in relate to implementation of a joint action or a common
November 2000 paved the way for the transfer to the EU of the position, but not to matters having military or defence
WEU functions required for performing Petersburg tasks. As implications. If no Member States object or call for a
such the WEU’s Headquarters and its Military Staff has closed. unanimous decision in the European Council, enhanced
2. Decision-making process cooperation is adopted in the Council by a qualified majority
a. Initiative with a threshold of only eight Member States.
Under Article 18(4), the Commission is fully associated with the C. Further developments
work carried out in the field of CFSP and has, along with the 1. Cologne European Council
Member States, the right of initiative. It may also, as any
At the June 1999 European Council in Cologne, as a result of
Member State, request the Presidency to convene an
the Kosovo conflict, the EU took a major step towards
extraordinary Council meeting and make suggestions to the
establishing its own military ESDP. The aim was to create
Policy Unit for work to be undertaken.
capacity for autonomous action, backed up by credible
b. Decision military forces, and the readiness to respond to international
In order to allow a certain degree of flexibility to the general crises without prejudice to actions by NATO. The European
rule of unanimity in the decision-making process, the Council made it clear that the integration of the WEU into the
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EU institutional framework was not necessary, despite the fact and their strategic capabilities by implementing reforms in
that it was foreseen in the Amsterdam Treaty; rather, those their armed forces required for autonomous EU action.
functions that the WEU assumed in the field of Petersburg 5. Nice European Council
tasks would be included in the EU.
In December 2000, the European Council in Nice assessed
2. Helsinki European Council each Member State’s undertakings with regard to forming the
A concrete military aim was set up by the European Council, European security and defence policy.
known as the ‘headline goal’: by the year 2003, in voluntary 6. Gothenburg European Council
cooperation, the Member States should be able to deploy At the June 2001 European Council in Gothenburg, the EU was
within 60 days, and then sustain, forces capable of the full committed to developing and refining its capabilities,
range of Petersburg tasks, including the most demanding, in structures and procedures in order to improve its ability to
operations up to corps level (up to 15 brigades consisting of undertake the full range of conflict prevention and crisis
50 000 to 60 000 persons). This new force, to be called the management tasks, making use of military and civilian means.
European Rapid Reaction Force (ERRF), would be available for A particular emphasis was made to conflict prevention under
deployment to a crisis area up to 2 500 miles away within 60 an EU programme for the prevention of violent conflict.
days, and should be sustainable for up to one year. It is to be
noted that the achievement of this goal does not involve the 7. Laeken European Council
establishment of a European army. At the December 2001 European Council in Laeken, the EU
adopted a declaration on the operational capability of the
3. Feira European Council European security and defence policy saying that:
At the June 2000 Council, in Feira, Portugal, the EU formally
— the development of military capabilities does not imply
established the interim Political and Security Committee
the creation of a European army;
(PSC), composed of national representatives dealing with all
aspects of CFSP, including the ESDP. Feira also introduced a — the Union has begun to test its structures and procedures
body to provide military advice to the PSC in the form of an relating to civilian and military crisis management
interim EU Military Committee (EMC) (supported by an operations;
interim EU Military Staff ), composed of the chiefs of defence — the Union’s crisis management capability has been
represented by their military delegates, which will give strengthened by the development of consultation,
advice and make recommendations to the PSC. Similarly, in cooperation and transparency between the EU and NATO
the area of civilian crisis management, the Feira Council in crisis management in the western Balkans.
welcomed the establishment of the first meeting of the
Committee for Civilian Aspects of Crisis Management Furthermore, on capabilities widely regarded as lacking in
(CIVCOM). It also introduced priority areas in civilian crisis European inventories and essential for crisis management
management, in particular the commitment to provide by operations the Laeken Council approved the European
2003 up to 5 000 police officers for international missions capability action plan (ECAP). This called on Member States to
across the range of conflict prevention and crisis mobilise voluntarily all efforts, investments, developments and
management operations, to be able to identify and deploy coordination measures, both nationally and multinationally, in
up to 1 000 police officers within 30 days, and to welcome order to improve existing resources and progressively develop
the Commission to contribute to civilian crisis management the capabilities needed for the Union’s crisis management
within its spheres of action. The police officers will be under actions.
the control of the PSC, while effective operational control will 8. Seville European Council
be in the hands of the HR. It is estimated that such a The European Council welcomed the first crisis management
commitment would require a maximum pool of 15 000 exercise conducted by the Union in 2002, which tested
committed and trained personnel. successfully the ESDP structures and decision-making
4. The ‘Capabilities commitment conference’ procedures.
On 20 November 2000 in Brussels, the Member States took 9. Copenhagen European Council
part in the first ‘Capabilities commitment conference’, which is The European Council also indicated the Union’s willingness to
now an annual event. The conference provides an opportunity lead a military operation in Bosnia following NATO’s
for the Member States to ‘volunteer’ specific national Stabilisation Force (SFOR). It confirmed the Union’s readiness to
commitments corresponding to the military capability goals take over the military operation in the former Yugoslav
set by the Helsinki European Council. These commitments Republic of Macedonia as soon as possible in consultation
have been set out in a document known as the ‘Force with NATO. Subsequently, an agreement was reached with
catalogue’. In accordance with the guidelines of the Helsinki NATO in March 2003 known as ‘Berlin Plus’ that paved the way
and Feira European Councils on collective capability goals, the for the first military ESDP operation, known as Concordia. The
Member States committed themselves to medium and long- second military operation ‘Artemis’ in the Democratic Republic
term efforts in order to further improve both their operational of the Congo (CD), which was launched in June 2003,
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confirmed the EU’s ability to conduct an autonomous constrained by recognised shortfalls. Therefore a new 2010
operation under a ‘framework-nation’ concept, in this instance headline goal was developed and adopted at the Brussels
led by France. European Council in June 2004, which extended the original
Petersburg Tasks to also consider including joint disarmament
10. Brussels European Council
operations, the support for third countries in combating
At the March 2003 European Council in Brussels, the EU terrorism and security sector reform, as well as extending
welcomed the police operation in Bosnia and Herzegovina operational demand to include the ability to conduct
(1 January 2003). In December that year a second EU police concurrent operations thus sustaining several operations
operation (‘Proxima’) was launched in the former Yugoslav simultaneously at different levels of engagement. The
Republic of Macedonia which followed-on from the NATO Thessaloniki European Council also paved the way for the
military operation ‘Allied Harmony’. establishment of a European Defence Agency in 2004.
D. EU–NATO relations ‘Berlin Plus’ Subsequently capabilities have been further developed with
‘Berlin Plus’ is short-hand for EU access to NATO planning and an EU Operations Centre and the so-called battlegroups
capabilities for crisis management operations. Its origins refer (with two on stand-by for deployment from January 2007),
to the 1996 NATO Ministerial in Berlin, where foreign ministers being declared fully operational, i.e. they had reached full
agreed to make NATO assets available to WEU-led operations operational capacity (FOC) on 1 January 2007. In addition to
in a bid to boost European defence within NATO. At the 1999 the established military chain of command, the civilian chain
Washington Summit this provision was extended for EU-led of command has been strengthened recently by the creation
crisis management operations under the European security of the civilian planning conduct capability (CPCC). Both the
and defence policy. The ‘Washington communiqué’ said these civilian and military command could take advantage of the
arrangements would ‘cover […] operations in which the Operations Centre in Brussels which has been available since
Alliance as a whole is not engaged’. A final agreement January 2007 but can only be activated following a decision by
between the EU and NATO was held up between 1999 and the European Council. In addition, ongoing work continues on
December 2002 due to blocking manoeuvres by, alternatively, civilian capability development which is managed under
Greece and Turkey. A deal, originally, brokered by the UK and the so-called civilian headline goal 2010 process.
concluded on the margins of the Brussels European Council of In summary: Since the first EU civilian crisis management
November 2002 opened the way to the 16 December 2002 mission, the EU Police mission (EUPM) in Bosnia and
‘EU–NATO Declaration on ESDP’. Herzegovina, in January 2003 there has been a rapid increase
Therefore, the final EU–NATO ‘Berlin Plus’ agreement is in the number of operations conducted under the ESDP in
represented by a series of institutional arrangements between support of the CFSP. The first civilian operation was soon
the EU and NATO that enable them to exchange information followed by the first military crisis management mission,
securely and to establish the manner in which NATO makes Operation Concordia, in the former Yugoslav Republic of
available its assets. The final institutional agreement that was Macedonia in April 2003. In total there have been 10
necessary to formalise this relationship arrived with the completed missions and nine are still ongoing (eight of the 19
12 March 2003 ‘EU–NATO agreement on security of have been, at least in part, military related).
information’ (including 18 articles). The whole ‘Berlin Plus Of these 19 passed or current operations five have been purely
package’ could then be tied together with the so-called military operations with the remainder civilian or a mix of
‘framework agreement’, which consisted of an exchange of civilian and military components such as in the DRC (security
letters between the EU’s High Representative and NATO’s sector reform mission named EUSEC) and in the African Union-
Secretary General, dated 17 March 2003 — just in time for the owned and -led AMIS II (which interestingly draws upon EDF
EU to launch Operation Concordia on 31 March 2003, which funds under the so-called African Peace Facility). All civilian
required NATO assets and planning resources. missions (including the recent large police missions to Kosovo
and Afghanistan) have been funded from the CFSP budget
E. The European security strategy (ESS) and the new
and as such the European Parliament (along with the Council)
headline goal 2010
is called upon as a budgetary authority (i.e. decision-maker) in
In December 2003, the EU Member States adopted a landmark the context of the multiannual (financial perspectives) and
European security strategy (crisis management) which annual budget.
mapped out for the first time, in an EU framework, their
collective aspirations in this policy area. The crisis management
has become the key reference document for policy Role of the European Parliament
developments under ESDP, including defining relations with The European Parliament has repeatedly welcomed the
the United Nations, regional organisations and strategic debate on European security and defence policy (ESDP),
partnerships. At the Thessaloniki European Council, in June which began in Pörtschach in October 1998 and was
2003, they acknowledged that the EU operational capability elaborated in the bi-lateral Franco-British St Malo Declaration
across the full range of Petersburg tasks was still limited and before being confirmed by the 1999 Cologne European
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The EU’s external Economic policy
6 relations 2 and external trade
Council. At the beginning of the 2004 legislature, in implementation of international law, reminding that the use of
recognition of the rapid development in ESDP, the European force is authorised only by the UN Security Council.
Parliament sep up a new Subcommittee on Security and In addition, the EP proposes, in the context of the CFSP and
Defence (SEDE) within its Foreign Affairs Committee. The the ESDP, regular meetings bringing together representatives
European Parliament has consistently, through its resolutions, of the competent committees of national parliaments and the
pointed to the lack of a parliamentary dimension in the EP, with a view to examining the development of the two
development of ESDP and has noted a serious democratic policies jointly with the Council Presidency, the HR for the
deficit. CFSP and the Commissioner responsible for external relations.
In its resolutions of 15 June 2000 and of 30 November 2000, In its resolution of 2008 on the implementation of the
the EP stressed the importance of developing the military European security strategy and ESDP, the European Parliament
assets and capabilities of the Member States as well as the called once more for a strong parliamentary dimension to the
civilian instruments of conflict prevention and crisis ESDP by intensifying cooperation between the European
management. This was further elaborated in its resolution of parliament and the national parliaments, through joint
10 April 2003 on the new European security and defence meetings and regular consultation. It also called for a revision
architecture — priorities and deficiencies. Subsequently the EP of the European security strategy to include important issues
has adopted specific resolutions on the European security such as immigration, energy security, the international security
strategy and in 2008 on the implementation of the European implications of climate change and security-development
security strategy and European security and defence policy nexus of issues.
(ESDP). In addition, following discussions within SEDE on the
Furthermore, it considers that combating terrorism must
scrutiny of ESDP, the European Parliament has adopted
become a central component of European foreign and
resolutions approving the deployment of ESDP operations in
security policy, with aspects of external security having to be
BA (EUFOR Althea), the DRC (EUFOR RD Congo) and in Chad
combined with those of internal security.
(EUFOR Tchad/CAR).
European Parliament resolutions have underlined that the UN g Gerrard Quille

should be the only legitimate organisation for the July 2008
6.2. Economic policy and external trade
6.2.1. The European Union as a trade power

The EU is a major trading power since it is currently the second largest exporter after the United States and the largest
importer in the world. Trade in services also tend to be considered as trade in the EU.
I. Trade — it is the second importer after the United States with
19.0 %;
A. The EU’s place in world trade
2. However, its relative position has been falling in the long
1. In 2006, the EU accounted for almost a fifth of world
term. In 1980 (with only nine Member States) it accounted
trade:
for 21 % of exports and 27 % of imports. This can be
— it is the first exporter ahead of the United States with compared with the situation of China, excluding Hong
19.2 %. Kong, which during the same period rose from
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— 1.3 % to 11.2 % of exports;
— 1.3 % to 7.9 % of imports.
3. In the period 2002-2006, the EU’s trade balance was slightly
in deficit, whereas the United States is showing a growing
deficit. China is showing a growing surplus while Japan’s
trade surplus is constantly diminishing...
Table 1 — World exports of goods (billion EUR)

2002 2003 2004 2005 2006 % (2006)
EU-27 891.9 869.2 952.9 1 053.2 1 159.3 19.2 (*)
United States 713.6 624.4 639.0 709.1 804.8 12.0
China 337.5 379.6 466.1 599.5 752.8 11.2
Japan 412.9 389.5 421.1 443.0 478.3 7.1
World 4 689.1 4 519.1 5 026.8 5 851.2 6 718.2 100.0
(*) not including intra-Community trade
Source: IMF, Eurostat-COMEXT (EU)
Table 2 — World imports of goods (billion EUR)

2002 2003 2004 2005 2006 % (2006)
EU-27 937.0 935.2 1 027.5 1 179.8 1 351.7 19.0 (*)
United States 1 235.9 1 124.7 1 197.3 1 363.3 1 491.6 21.0
China 272.1 321.3 399.3 470.7 559.2 7.9
Japan 342.2 325.9 352.2 399.6 443.2 6.2
World 4 976.8 4 796.7 5 353.4 6 200.1 7 094.1 100.0
(*) not including intra-Community trade
Table 3 — Balance of trade (billion EUR)

2002 2003 2004 2005 2006
EU-27 -45.1 -66.0 -74.6 -126.7 -192.5
United States -522.4 -500.3 -558.3 -654.2 -686.8
China 65.3 58.2 66.9 128.8 193.6
Japan 70.7 63.6 68.9 43.4 35.1
B. The nature of the EU’s trade Table 4 — Breakdown of total exports by product
1. Main products
2000 2007
The European Union primarily buys and sells manufactured
goods: they represent 90 % of its exports and about three Foodstuffs and beverages 5.6 % 5.0 %
quarters of its imports. Raw materials 2.1 % 2.5 %
a. M
achines and transport equipment alone account for over Energy 3.4 % 5.0 %
44 % of exports and over 30 % of imports. Chemical products 14.0 % 15.9 %
Machines and transport equipment 46.3 % 43.8 %
b. Energy and chemical products come next.
Other 28.6 % 27.7 %
c. C
onversely, foodstuffs and raw materials constitute only Source: Eurostat
a little over 5 % of exports and 5.3 % of imports.
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Table 5 — Breakdown of total imports by product — a significant increase with China, the countries of the
Commonwealth of Independent States (CIS) and the OPEC
2000 2007 countries, as well as the candidate countries (Croatia,
Foodstuffs and beverages 5.5 % 5.3 % Macedonia and Turkey);
Raw materials 5.0 % 4.9 %
In spite of this progress, and with the exception of the United
Energy 16.2 % 23.3 % States, the EU candidate countries and the Southern and
Chemical products 7.1 % 8.4 % Eastern Mediterranean countries (MEDA), the EU’s trade
Machines and transport equipment 37.4 % 29.1 % balance continues to show a deficit with most of the
Other 28.8 % 29.0 % economic areas, notably China.
Source: Eurostat Table 7— Main trading partners of EU-27 (as a % of
total imports+exports)
2. Export-import balance by product
In 2007 the EU had a high surplus for chemical products and a 2000 2007
very high surplus for machines and transport equipment. On 1/USA 24.1 % 1/USA 16.6 %
the other hand, it has a considerable deficit for energy, which 2/Japan 7.5 % 2/China 11.4 %
almost doubled during the period 2000–07. 3/Switzerland 7.3 % 3/Russia 8.7 %
Table 6 — EU-27 balance of trade by product 4/China 5.5 % 4/Switzerland 6.4 %
(billion EUR) 5/Russia 4.7 % 5/Japan 4.6 %
6/Norway 4.0 % 6/Norway 4.5 %
2000 2007
7/Turkey 2.7 % 7/Turkey 3.7 %
Foodstuffs and beverages 7.1 -13.4
8/South Korea 2.4 % 8/South Korea 2.4 %
Raw materials -31.4 -39.7
9/Taiwan 2.4 % 9/India 2.1 %
Energy -131.9 -269.1
10/Canada 2.2 % 10/Brazil 2.0 %
Chemical products 48.4 77.4
Source: Eurostat
Machines and transport equipment 21.9 129.2
Other -42.7 -69.6
Table 8 — EU exports by economic area (billion EUR)
Total -142.9 -185.3
Source: Eurostat Variation
Zone or
2000 2007 2007/2000
Country
(as a %)
C. The EU’s main trading partners
United States 238.2 261.6 +8.9
With more than 16 % of total trade during the period 2000–07,
the United States remained the EU’s main trading partner, Candidate countries 39.5 67.9 +41.8
being the first customer and the first supplier. However, this EFTA 101.6 140.4 +27.6
share has declined somewhat since 2000. ACP countries 40.4 61.7 +15.1
During the same period China moved from fourth to second OPEC 55.3 102.2 +45.8
place, replacing Japan. Its exports to the EU increased fourfold MEDA 90.8 119.6 +24.0
and its imports tripled. ASEAN 41.8 54.5 +0.2
During this period Japan fell from second to fifth place behind Latin America 55.6 71.3 +0.2
Russia and Switzerland. Russia has made considerable EEA 1 693.9 2 649.0 +36.0
progress, moving from fifth to third place. CEECs 148.0 29.2 -80.2
Finally, India and Brazil have taken the places of Taiwan and DAE 83.6 98.9 +0.1
Canada respectively. During the period 2000–07, EU CIS 33.8 128.6 +73.7
exports to the major economic areas had varied success. China 25.8 71.7 +64.0
There was: Japan 45.4 43.7 +3.7
— no change with Latin America, ASEAN, the dynamic Asian Source: Eurostat
economies (DAE) and Japan; (1) Croatia, former Yugoslav Republic of Macedonia, Turkey
(2) MEDA: southern and eastern Mediterranean countries
— a slight increase with the United States; (3) EEA: European Economic Area
— a relative increase with the ACP countries, EFTA, the DAE: Dynamic Asian economies (Thailand, Malaysia, Singapore, South Korea,
Taiwan, Hong Kong)
southern and eastern Mediterranean countries (MEDA) and
CIS: Commonwealth of Independent States (countries of the former USSR)
the European Economic Area (EEA);
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Table 9 — Imports by economic area (billion EUR) II. Trade in services
Variation Alongside trade proper, in goods, mention should also be
Zone or
2000 2007 2007/2000 made of trade in services, which has acquired considerable
Country
(as a %) importance in recent years.
United States 206.2 181.1 -12.1
Candidate countries 22.4 53.7 +58.2 A. General situation
EFTA 112.3 157.2 +28.5 The European Union accounts for more than a third of world
trade in services. It is still the premier importer and premier
ACP countries 44.6 61.7 +27.7
exporter.
OPEC 87.2 126.3 +30.9
MEDA 67.3 107.1 +37.1 During the period 2004–07 the EU saw an increase in its
surplus, which is now higher than that of the United States.
ASEAN 75.3 80.2 +6.1
Japan has a persistent deficit.
Latin America 51.2 88.7 +42.2
EEA 1 656.6 2 624.7 +36.8
CEECs 122.5 13.3 -89.1
DAE 116.6 129.3 +9.8
CIS 76.5 184.6 +58.5
China 74.6 231.4 +67.7
Japan 92.0 78.1 -15.1
Source: Eurostat
Table 10 — Exports, imports and balance of trade in services (billion EUR)

2004 2005 2006 2007
EU-27
Credit 368.1 402.8 441.5 501.4
Debit 321.7 349.9 373.0 413.0
Balance 46.3 52.8 68.4 88.3
United States
Credit 278.3 309.1 333.5 346.6
Debit 234.9 253.7 273.0 271.6
Balance 43.4 55.4 60.5 75.0
Japan
Credit 78.5 88.8 93.4 ng
Debit 109.0 108.1 107.9 ng
Balance -30.5 -19.3 -14.5 ng
Source: Eurostat, IMF
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B. Type of services
Services (insurance, financial services, IT services, licences)
now rank first in exports, having displaced transport
and travel.
Table 11 — Trade in services of EU-27 (billion EUR)
2004 2007
Credit Debit Net Credit Debit Net
Total services 368.1 321.7 46.4 501.4 413.0 88.4
Transport 93.5 79.5 14.0 118.5 102.0 16.5
Travel 62.1 79.5 -17.4 76.7 94.1 -17.3
Communication services 6.4 7.1 -0.7 9.8 10.7 0.9
Construction 9.6 5.8 3.8 15.9 7.9 8.0
Insurance 10.7 8.4 2.3 14.3 7.7 6.5
Financial services 29.6 11.9 17.7 54.3 21.3 33.0
Information technology & information 16.3 8.1 8.2 23.6 10.3 13.2
Royalties and licence fees 20.4 29.4 -9.0 25.5 36.1 -10.6
Other business services 102.4 77.5 24.9 147.8 107.6 40.2
Personal, cultural and recreational services 5.1 6.3 -1.2 5.0 5.9 -0.9
Administrative services 9.1 5.5 3.7 7.7 7.2 0.7
Non-classified services 2.9 2.9 0.1 2.5 2.2 0.3
Source: Eurostat
C. Main partners
In 2007, 48 % of the trade of the EU-27 was with the
United States, 20 % was with Switzerland, 6.6 % with Japan,
6.2 % with Russia and 6.1 % with China.
Table 12 — The EU’s main trading partners (billion EUR)
2005 2006 2007
Credit Debit Net Credit Debit Net Credit Debit Net
Switzerland 49.4 38.1 11.3 52.7 37.8 15.0 60.6 41.8 18.9
Russia 12.3 9.1 3.2 14.2 10.8 3.4 18.1 11.5 6.7
Canada 9.0 7.6 1.3 10.2 8.2 2.0 11.3 9.5 1.8
United States 123.2 118.2 4.9 134.7 122.1 12.6 139.0 127.8 11.2
Brazil 4.6 4.0 06 5.2 4.6 0.5 6.6 4.8 1.8
China 12.3 9.6 2.7 12.8 11.3 1.4 17.7 13.1 4.6
Hong Kong 8.3 5.6 2.6 6.9 6.7 0.2 8.3 7.8 0.7
India 5.4 4.8 0.6 7.0 5.5 1.4 9.0 6.6 2.4
Japan 19.6 12.3 7.3 18.9 12.9 6.0 19.3 13.3 6.0
Source: Eurostat.
g Dominique Delaunay
July 2008
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6.2.2. The European Union and the World Trade
Organisation (WTO)
As a result of its commercial exclusive competence, the European Community is involved in global trade through its own
trade policy, but also through active participation in the structures responsible for facilitating global trade such as the
GATT and, since 1955, the WTO.
Legal basis 2. Decision-making mechanism

— International: the Agreement establishing the World Trade The unilateral measures (customs tariffs, antidumping
Organisation (WTO), which was signed in Marrakesh on measures) are:
15 April 1994 and entered into force on 1 January 1995.
— proposed by the Commission;
— European common commercial policy: Articles 26 and 27
— adopted by the Council acting by a qualified majority
and 131 to 134 of the Treaty establishing the European
(Articles 133 and 301).
Community (EC); conclusion of international agreements:
Articles 300 and 301 of the EC Treaty. The agreements with third countries are:
— negotiated by the Commission on the basis of Council
Objectives directives (adopted by a qualified majority);
The European Union is one of the most important trading
— concluded by the Council, in general by a qualified
regions in the world and has always played a key role in the
majority (Articles 133 and 300).
structures responsible for facilitating global trade: the General
Agreement Tariffs and Trade (GATT) then the WTO. Its ongoing The European Parliament is not involved even in a consultative
objectives in this respect are: role (except for association agreements which are subject to its
assent, 1.4.1 and 1.3.2).
— the liberalisation of trade in goods and services and
investment in order to ensure the growth of trade and thus 3. Changes proposed by the Lisbon Treaty
economic prosperity;
In terms of commercial policy, Article 188 C of the Lisbon
— the defence of European interests, particularly in certain Treaty incorporates the provisions of Article 133 of the Treaty
sectors of industry, agriculture, public services and culture; of Nice, with amendments. The main changes concern:
— provision of a framework for this liberalisation through — the extension of the exclusive competence of the EU to all
rules to protect the environment, protect employees and trade agreements;
ensure that the least developed countries have an
equitable share. — an increase in the role of the European Parliament.
It mainly provides that:
Achievements
— the ordinary legislative procedure (co-decision) will from
A. Decision-making competence now on apply to all autonomous commercial policy
instruments (basic regulations relating to trade protection,
1. Principle of exclusive Community competence GSPs, antidumping, rules of origin, etc.) (cf. Article 188 C(2);
In the light of the fact that, based on the Treaty of Rome, the
EC forms a customs union (completed with the end of the — all trade agreements will from now on be subject to the
transitional period in 1970), it has by definition exclusive approval of the European Parliament (Article 188 N(6)
competence for external trade policy. The aims of this concerning the procedure for the negotiation and
‘common commercial policy’ are to: conclusion of international agreements between the EU
and third countries or international organisations) and that
— establish and amend the common customs tariff; consequently this will be kept informed of the progress of
the negotiations (Article 188 N(110)), which was not the
— conclude tariff and trade agreements with third countries;
case under earlier treaties.
— implement an export policy;
The extension of the co-decision procedure should thus
— establish commercial defence measures (in the case of increase the democratic legitimacy of European legislation on
dumping for example). commercial policy.
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B. Background It gave considerable impetus to the conclusion of three

1. GATT essential agreements:
When the European Economic Community was set up at the — on information technologies (26 March): it accepted tariff
beginning of 1958, its six members were also members of reductions and even the suspension of the collection of
GATT (General Agreement on Tariffs and Trade), a body created certain duties under its common customs tariff;
in 1948 to ensure the development of international trade
— on basic telecommunications services (15 February);
through common rules.
— on financial services (12 December).
Since then, the Community has played an active role in GATT’s
work to liberalise trade, which has involved eight negotiating It provided the incentive for the Conference on initiatives for
rounds. It has supported the principles adopted by GATT to the least developed countries (LDCs). Integrating these
facilitate the gradual liberalisation of global trade: countries into the global trading system is one of the EU’s
priorities. The conference provided in the short term for all
— firstly, the principle of non-discrimination, which is
LDCs to be treated in accordance with the provisions of the
implemented in the form of the most-favoured nation clause;
Lomé Convention (6.5.4) and in the long term for their access
— secondly, the elimination of quantitative restrictions, the to markets free from customs duties.
prohibition of export subsidies, the principle that customs
2. 1998 and 1999
duties are the only instruments of protection, and the
transparency of national trade legislation; Following the 1998 Ministerial Conference in Geneva, the EU
played an important role in the WTO’s General Council in
— finally, more favourable treatment for developing countries. preparing for the 1999 conference in Seattle. Its objectives
The Community was particularly active during the Uruguay were:
Round, which was launched in September 1986 and proved — establishing rules governing liberalisation in various areas
to be the most significant round in the history of GATT due to: (investment, competition, public procurement);
— the importance of tariff and non-tariff reductions; — making the environment an integral feature;
— the scope of the liberalisation being extended to include — dialogue on social standards;
agriculture and new sectors not previously dealt with in
international negotiations such as intellectual property, — consideration of the interests of the least developed
public procurement, services and investment; countries.
— the systematic attention paid to trade protection measures, As the conference (November to December 1999) was a
especially antidumping and antisubsidy measures. complete failure, the EU subsequently argued for a new round
of negotiations. (For details of the Union’s overall approach, see
2. The creation of the WTO the Commission communication COM(1999) 331 and the
The Uruguay Round resulted in the creation of a new Council conclusions of 21 June, 27 September and
organisation, the WTO, through the Marrakesh agreements of 15 November).
15 April 1994. The EC played a very active role in negotiating
3. 2000–01
these agreements, which establish a new set of international
trading rules and a mechanism for their implementing them In the course of 2000, the EU endeavoured to restore
and for adopting new rules. It joined this organisation confidence and achieved a consensus on the launch of a new
immediately (entry into force of the agreements: 1 January round of negotiations aimed not only at continuing with the
1995). In doing so, it was agreeing to make major concessions liberalisation of trade but also at establishing a more solid
in relation to its own commercial policy, above all by replacing regulatory framework, promoting sustainable development
the agricultural levies at its external borders (a mechanism that and assisting the developing countries. It played an active role
provided a very high level of protection for its agriculture) with in the WTO’s working groups, in particular the Committee on
customs duties and reducing export subsidies (another key Technical Barriers to Trade, in which it put forward
element of the European preference in the area of agriculture). contributions on international standardisation and labelling. It
However, it intends to retain, through other means, the supported China’s accession to the organisation, which took
‘European social and rural model’ and to this end advocates place in 2001 along with that of Taiwan.
‘multifunctional’ agriculture. The EU welcomed the decision of the Doha Ministerial
Conference (November 2001) to launch a new round of trade
C. The EU’s participation in the major stages of the WTO’s negotiations, lasting three years. The conference addressed its
activities hopes of boosting growth through further liberalisation as well
1. 1996 and 1997 as greater regulation of the system through agreements on
Following the WTO Ministerial Conference in Singapore in investment, competition and public procurement, and
December 1996, the EU played an important role over the support for the developing countries, whose influence
course of 1997. increased at this conference.
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4. 2002–03 The draft compromise stipulated the following points.
Following the Doha Conference, the EU took the lead in terms — In terms of domestic support, the United States would
of the initiatives to ensure the success of the new round of reduce its agricultural subsidies by 70 % to USD 14.5
negotiations launched in 2001. Whilst pursuing its objectives billion (EUR 9.3 billion) and that the European Union would
of further liberalisation, tighter rules and the promotion of cut its subsidies by 80 % to EUR 24 billion. In addition,
sustainable development, it concentrated in particular on agricultural subsidies would be reduced over a period of
technical assistance to the developing countries for five years, by 80 % for the EU, 70 % for the US and Japan,
implementing the rules and participating in the multilateral and 50 % to 60 % for other developed countries.
trading system (see the Commission communication of
September 2002 ‘Trade and development: assisting — In terms of market access, the EU would reduce its highest
developing countries to benefit from trade’). agricultural import tariffs by 70 %, compared with a 36 %
decrease for developing countries. The least developed
However, the 2003 Ministerial Conference (held in September countries (LDCs) would not have to reduce theirs.
in Cancún) was a complete failure due, above all, to the
problem of agriculture. There was a North–South clash, in — The draft compromise allowed some exceptions: in order
particular between the United States–European Union to offset the effects of lower customs duty, developed
coalition (which had adopted a common position on countries would be allowed, in certain circumstances, to
agriculture just before the conference) and the so-called protect 4 % of their ‘sensitive’ products from this decrease,
Group of 21, led by China, Brazil and India, whose main aim developing countries 5.3 %. Developing countries would
was to put an end to the agricultural subsidies of the two also be able to limit the fall in duty to 12 % of all of their
major western unions. products, of which 5 % would be exempt from any
decrease. A ‘special safeguard mechanism’ would also
5. 2004–06 allow these countries to protect certain products in case of
WTO members agreed a framework agreement on 31 July a sharp rise in imports.
2004. The agreement focuses on agriculture, non-agricultural
— In terms of industrial products, customs duty would be
market access (NAMA), development services, and trade
between 11 % and 12 % for India and Brazil, compared
facilitation. The final agreement covers also trade and the
with 3 % for developed countries. Emerging countries
environment, dispute settlement, geographical indications
would be able to protect up to 14 % of their ‘sensitive’
(GI), and anti-dumping rules.
products. An ‘anti-concentration’ mechanism would
In December 2005, WTO members assembled in Hong Kong however be introduced to prevent countries from
agreed to abolish all subsidies for agricultural exports by 2013. protecting entire sectors. Developed countries would have
6. 2007–08 five years to apply these measures, emerging countries 10
years and China 13 to 14 years as the newest member of
Formally suspended since 23 July 2006, the Doha Round
the WTO.
negotiations resumed in February 2007 following the Davos
Summit. However, differences still persist to this day on the b. The breakdown of the negotiations
main points under discussion. Little progress has been made After nine days of intense negotiations, these failed mainly as a
on the most sensitive issues, such as access to agricultural and result of a disagreement between the United States, China and
industrial markets and liberalisation of the services market. The India on agricultural imports. The disagreement was over the
EU wants to maintain some tariff protection for its producers, safeguard clause for agricultural imports; in other words, the
while the USA is reluctant to cut subsidies for its farmers. The introduction of a threshold above which importing countries
new Farm Bill passed by Congress in June 2008 made would be allowed to increase customs tariffs on goods in
provision for a sharp rise in farming subsidies of around response to a sudden rise or fall in prices. India and China want
USD 290 million over five years. Finally, emerging countries, the threshold for applying the safeguard mechanism to be as
particularly Brazil and India, are calling for more progress to be low as possible to protect their agriculture, while the USA
made on these points, although they are reluctant to lower believed that this was a dangerous system which risked being
customs duty on industrial goods in return. used for protectionist ends.
7. The breakdown of the negotiations (Geneva, Other differences also contributed to the breakdown of the
21–29 July 2008) negotiations.
a. The draft compromise of the Director-General of the WTO — China reneged on its commitments by refusing to lower
In a bid to save the negotiations from running aground and agricultural customs duty on three key products (cotton,
bringing the entire Doha Round to a standstill in 2008, the rice and sugar) or participate in industry agreements on
Director-General of the WTO, Pascal Lamy, convened a tariff reductions for industrial products. This U-turn has
ministerial meeting on 21 July 2008 of the 153 members of the caused a major problem for developing countries
WTO in Geneva, where he proposed a draft compromise on dependent on a small number of exports, such as Thailand
the key aspects under discussion. (rice), African countries and India (cotton) and Brazil (sugar).
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— The cotton problem, where African producers (Benin, significant proportion of which have been directed at the
Burkina-Faso, Mali and Chad) and China are ranged against United States. Its greatest success was against the US
the US, the former calling for a 82 % drop in US domestic protection measures concerning steel imports: the DSB
production subsidies; condemned these measures and even authorised the EU to
establish retaliatory measures (which amounted to USD 4 000
— The banana problem: South American producers are
million); the United States finally withdrew their measures in
critical of the EU for applying prohibitive taxes on their
December 2003.
bananas. The EU has said that it would be willing to lower
the tax from EUR 176 per tonne to EUR 144 per tonne in
2016. An agreement in principle was reached. However, Role of the European Parliament
ACP countries, which have preferential treatment with The EP has supported the Commission in its desire to shield
regard to access to the European banana market, the health, education and audiovisual sectors from
threatened to block any global agreement in the absence liberalisation in order to safeguard universal service and
of financial compensation; cultural diversity (resolution of 12 March 2003).
— Finally, South Africa, Argentina and China continue to It has defended the place of social standards in the
oppose the opening up of their industrial markets. international trading system, calling for close cooperation in
The failure of the Doha Round negotiations reflects the this area between the WTO and the International Labour
difficulty in establishing a strong multilateral, rule-based Organisation (resolutions of 13 November 1996 and 13 January
commercial system. At this stage, it is difficult to predict when 1999).
negotiations might resume. In the meantime, the breakdown It has expressed its support for the export of affordable,
in talks risks encouraging a proliferation of bilateral essential medicines to the poorest countries through an
agreements, which could penalise the poorest countries. exemption from the authorisation of the patent-holder
(resolution of 12 February 2003), which was eventually
D. Participation in dispute settlement accepted by the WTO General Council.
One of the major breakthroughs of the WTO compared with
the GATT system has been the creation of a binding It has expressed the wish that the Doha Development Agenda
mechanism for the settlement of trade disputes between will place the development issue at the forefront of the
States, in the form of a permanent body with its own negotiations (resolution of 12 May 2005).
jurisdiction (the Dispute Settlement Body, DSB), which deals Finally, it has spoken out in favour of a reform of the World
with the issues referred to it by setting up special panels. Trade Organisation (resolution of 3 April 2008).
The EU has often had recourse to this body and has been
responsible for around one third of the panels set up since the g Dominique Delaunay
system began. It has won the majority of its disputes, a July 2008
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6.3. Framework for relations with certain
groups of countries
6.3.1. The enlargement of the Union

So far, and since its inception, the European Community has recorded six waves of accessions. The sixth came into force on
1 January 2007 when Romania and Bulgaria joined the EU. Nevertheless, the prospect of membership of the EU remains
open, notably to countries of the western Balkans.
Legal basis 2. Decision-making process

Articles 49 and 6 of the Treaty on European Union (TEU). The candidate country addresses its application to the Council,
which acts unanimously after consulting the Commission and
receiving the assent of the European Parliament, which acts by
Objectives
an absolute majority of its members. The conditions of
The enlargement of the European Union is not an objective in accession and the adjustments to the Treaties which it entails
itself. It has been, however, one of the most important and are laid down in a treaty of accession, which is subject to
successful policies contributing to the further integration of ratification by the acceding country and by all the Member
the European continent by peaceful means, and extending a States (Article 49 TEU).
zone of stability and prosperity to new members.
In practice, the European Commission prepares and adopts an
opinion on the relevant application for membership,
Background evaluating the situation of each country in relation to the
A. The legal framework accession criteria. The Commission takes into account
information provided by the candidate countries themselves;
1. Conditions of accession
assessments made by the Member States; European
According to Article 49 TEU, any European State which Parliament reports and resolutions; the work of other
respects the principles set out in Article 6(1) TEU may apply to international organisations and international financial
become a member of the European Union. Article 6(1) institutions (IFIs); and progress made under the existing
describes these principles as those of liberty, democracy, association and other agreements. The Commission opinion is
respect for human rights and fundamental freedoms, and the usually also a forward-looking analysis of expected progress.
rule of law, principles which are common to the Member Based on this evaluation the European Commission issues a
States. recommendation on the eventual opening of accession
In the context of the fifth enlargement round, the negotiations.
Copenhagen European Council of June 1993 laid down the
Following the unanimous decision of the Council to set a
basic criteria for accession which future members would
negotiating mandate, accession negotiations may be opened
have to meet in addition to the conditions in the Treaty,
between the candidate and all the Member States. Each
namely:
candidate country is set a negotiating framework, which
— stability of institutions guaranteeing democracy, rule of establishes the general guidelines for the accession
law, human rights and respect for and protection of negotiations. Before the actual negotiation starts the
minorities; Commission and the candidate country, in a joint exercise
known as ‘screening’, determine how well the candidate
— a functioning market economy and the ability to cope with
country is prepared. Each candidate country draws up an
competitive pressure and market forces within the Union;
action plan setting out what it will do, and when, to bring its
— the ability to take on the obligations of membership, administration and judiciary to the level required for accession.
including adherence to the aims of political, economic and The EU, using the instrument of accession (or European)
monetary union and adoption of the common rules, partnerships identifies the reforms and adaptations that the
standards and policies that make up the body of EU law — candidate country must undertake in order to join.
the acquis communautaire. Negotiations take place at the level of ministers and
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The EU’s external Framework for relations with
6 relations 3 certain groups of countries
ambassadors. They focus on the conditions and timing of the open negotiations with Bulgaria, Latvia, Lithuania, Malta,
adoption, implementation and enforcement of all the EU rules Romania and Slovakia and to recognise Turkey’s status as a
already in force (the acquis, which is not negotiable) by the candidate country.
candidate country. For the purpose of the accession
The negotiations have been guided by two fundamental
negotiations the EU legislation is divided into 35 subject-
principles:
related chapters. The Commission keeps the Council and the
European Parliament informed about the candidate countries — a single negotiating framework;
throughout the process, through regular progress reports
— separate negotiations with each country, starting in each
and strategy papers. It monitors fulfilment of benchmark
case at the appropriate time, depending on the applicant’s
requirements, and progress made by the candidate country in
level of preparation, and proceeding at their own pace.
applying EU legislation and respecting undertakings.
3. The pre-accession strategy — the instruments
When negotiations on all the chapters are completed to the
satisfaction of both sides, the detailed terms and conditions In 1994, the Essen European Council defined a pre-accession
are incorporated into a draft accession treaty, which lists all strategy to prepare the candidate countries of central and
transitional arrangements and deadlines, as well as details of eastern Europe for EU membership based on implementation
financial arrangements and any safeguard clauses. of the Europe agreements, the Phare programme of financial
assistance and a ‘structured dialogue’ bringing all Member
B. Earlier enlargements States and candidate countries together to discuss issues of
The six founder members were joined: common interest. The Luxembourg European Council, of
December 1997, decided on an enhanced pre-accession
— in 1973 by Denmark, the Republic of Ireland and the strategy for the 10 central and east European countries
United Kingdom; (CEECs). The strategy comprised two instruments.
— in 1981 by Greece;
— Accession partnerships: bringing all forms of EU
— in 1986 by Spain and Portugal; assistance within a single framework for the purpose of
— in 1995 by Austria, Finland and Sweden. implementing national programmes to prepare the
candidates for accession. The programmes cover the short-
C. The fifth enlargement term and medium-term priorities to be observed in
The fifth EU enlargement has been, in the view of the European adopting the acquis, and mobilise the financial resources
Parliament, a unique task of an unprecedented political and available for this purpose.
historic dimension, which provides an opportunity to further the — Community aid: the Berlin European Council of March
integration of the continent by peaceful means. The EP 1999 decided substantially to increase pre-accession aid
considered that all the applicant countries have a right to be and to create two specific instruments, ISPA (for transport
allowed to accede to the Union. However, it expressed concerns and environment) and Sapard (for agriculture and rural
on a number of occasions about the inadequacy of the EU’s development) to supplement the Phare programme, which
institutional framework and the additional resources required for would now concentrate on strengthening administrative
the financing of the enlarged Union. Throughout the and judicial systems and aiding investment related to the
subsequent negotiations it has stressed the need to evaluate adoption of the Community acquis. Assistance was
the candidate countries on the basis of merit and in line with stepped up with the adoption, in 2002, of the action plans
the principle of differentiation. for building administrative, judicial and institutional
1. Applications for accession capacity and the special transition facility for
Cyprus (July 1990) and Malta (July 1990, reactivated 1998), institution-building endorsed by the European Council
Hungary and Poland (March and April 1994), Romania and in October 2002.
Slovakia (June 1995), Latvia and Estonia (October and Cyprus and Malta received pre-accession assistance under a
November 1995), Bulgaria and Lithuania (December 1995), the specific Council regulation for 2000–04. Assistance has focused
Czech Republic and Slovenia (January and June 1996). (Turkey on the harmonisation process, and in the case of Cyprus, on
had already applied in 1987.) bi-communal measures that might help to bring about a
2. The accession process political settlement. The Helsinki European Council of
December 1999 decided that Turkey, like all the candidate
The Luxembourg European Council of December 1997
countries, would benefit from a pre-accession strategy to
endorsed the Commission’s opinion on the membership
support reforms.
applications and decided to launch the enlargement process
and open negotiations, initially with six applicant countries: the 4. Historic accession of 10 new Member States in 2004
Czech Republic, Estonia, Cyprus, Hungary, Poland and Slovenia. a. Accession on 1 May 2004
It also agreed on an enhanced pre-accession strategy. The The European Council in Copenhagen on 12 and 13
Helsinki European Council of December 1999 decided to December 2002 concluded accession negotiations with to
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countries (the Czech Republic, Estonia, Cyprus, Latvia, countries were fully prepared for membership by the time
Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia). they joined. In case serious difficulties were identified despite
the efforts undertaken by the two countries and the assistance
In a historic vote on 9 April 2003, Parliament adopted a
provided by the EU, provision was made enabling the
resolution on the conclusion of the negotiations on
Commission to make use of a number of safeguards,
enlargement in Copenhagen and formally gave its assent to
including the possibility of postponing accession by one
the membership applications of the 10 countries which had
year. This clause did not exist for the 10 new Member States.
completed the accession negotiations, thus enabling the
The two countries eventually joined on 1 January 2007.
Accession Treaty to be signed. Subsequently, members of the
national parliaments of the acceding countries were already
D. Adapting the Union (institutional arrangements)
able to participate in the work of the European Parliament as
observers from 1 May 2003. To meet the challenges of enlargement, while ensuring that it
does not jeopardise the level of integration already achieved
A single Accession Treaty with the 10 new Member States and the continuation of the integration progress, the Union
was signed in Athens on 16 April 2003. In all acceding has also had to adapt its institutional arrangements. In a
countries, except Cyprus, accession to the European Union ‘Protocol on the institutions’ the Amsterdam Treaty laid down
had been the subject of a national referendum, all of them the broad lines of, and the procedure for, adapting these
positive. arrangements.
The new Member States joined the EU on 1 May 2004.
The Nice Treaty (1.1.4) (which was signed on 26 February
b. Monitoring after accession 2001 and entered into force on 1 February 2003) and its
Monitoring by the European Commission of the commitments attached protocol on enlargement and its declarations set out
undertaken by the new Member States has been intended to the principles and methods for determining the number and
give further guidance to the acceding States in their efforts to distribution of seats in the European Parliament, the number
assume the responsibilities of membership as well as of votes in the Council and the thresholds for qualified
reassuring the current Member States. In addition to a general majority voting and the composition of the Commission. It
economic safeguard clause, specific safeguard clauses fixes the maximum number of seats in the European
concerning the operation of the internal market and justice Parliament at 732 for a Union of 27 Member States
and home affairs were included in the Accession Treaty to deal (anticipating already the accession of Romania and Bulgaria as
with unforeseen developments that may still arise in the first part of the fifth enlargement), with the possibility for this
three years after accession. number to be exceeded temporarily according to the actual
dates of accession of the various candidate countries. In the
After more than one year since accession, no major integration
case of Bulgaria and Romania, the April 2005 Accession Treaty
problems have arisen. This success can be attributed to a large
for these two countries was already based on the legal
extent to the EU’s emphasis on thorough preparation by the
environment of the Treaty establishing a Constitution for
acceding States, assisted and supported by the European
Europe, which had been scheduled to enter into force on
Commission, in the period leading up to their accession. This
1 November 2006. However, in case of complications in the
preparation process made it possible to identify and address
ratification process of the Treaty establishing a Constitution for
the main gaps before accession, obviating the need to make
Europe, which eventually materialised through the French and
use of the safeguard clauses.
Dutch negative vote in the respective referendums held in
5. Bulgaria and Romania May and June 2005 regarding its approval, the Accession
Accession negotiations with Bulgaria and Romania were Treaty also covered the possibility that the new Member
concluded in December 2004 with a view to their accession States join the ‘old’ Union.
on 1 January 2007. The agreed terms of accession were similar
On 19 October 2007 in Lisbon, the Member States of the
to those of the 10 new Member States which joined on 1 May
European Union agreed upon the text of the Draft Treaty
2004. This accession was, politically, considered to be part of
amending the Treaty on European Union and the Treaty
the same ‘fifth enlargement’. The European Parliament on
Establishing the European Community henceforth known
13 April 2005 gave its assent to admit Bulgaria and Romania to
as the ‘Lisbon Treaty’. The new Lisbon Treaty was formally
the EU. One single Accession Treaty was signed on 25 April
signed by the Heads of State or Government at the European
2005 and was, subsequently, ratified. With a view to accession
Council on 13 December 2007. This is the latest step in
in 2007, the European Parliament hosted 35 Romanian and 18
ongoing efforts to reform the institutions of the European
Bulgarian observer MPs from 26 September 2005.
Union as launched in February 2002 with the European
The period between the completion of accession negotiations Convention and which continued with the ill-fated Treaty
and the date of accession was longer, since Bulgaria and establishing a Constitution for Europe. The Lisbon Treaty
Romania had still considerable efforts to make. Particular should enter into force on 1 January 2009, once ratified by the
emphasis was therefore placed on enhanced monitoring of 27 Member States. However, there is some uncertainty as
the remaining commitments so as to ensure that both regards the Treaty’s ratification process following the Irish ‘No’
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in the June 2008 referendum for its approval. It is quite unlikely As regards freedom of expression the EP took the view that the
that the 1 January deadline will be met. repeal of Article 301 of the Turkish Constitution and other legal
provisions ‘representing an illegitimate restriction on freedom
While the main articles of the TEU (Articles 49 and 6(1))
of expression as guaranteed by international law would be the
concerning enlargement conditions are not substantially
best solution’.
modified, the Lisbon Treaty incorporates the main foreign
policy innovations contained in the Treaty establishing a The report also called for the armed forces to ‘fully and
Constitution for Europe. Among those it provides for the High unambiguously acknowledge civilian control’.
Representative for Foreign Affairs and Security Policy who will
be both Chairman of the Foreign Affairs Council and Vice- The EP urged the Turkish government to launch ‘a political
President of the European Commission and, in this capacity, initiative favouring a lasting settlement of the Kurdish issue’,
will be assisted by a European External Action Service. including a ‘comprehensive master plan to boost the
socioeconomic and cultural development of the south-east of
E. Future enlargement of the Union Turkey while, at the same time, it also urged Turkey ‘not to
1. Turkey engage in any disproportionate military operations violating
Iraq’s territory’.
Turkey had applied for EU membership in 1987. At the Helsinki
European Council of December 1999 Turkey was officially 2. Croatia
recognised as a candidate country on an equal footing with Croatia submitted its application for membership in February
other candidate countries. This marked the beginning of a 2003. Following a positive opinion and recommendation by
pre-accession strategy for Turkey designed to stimulate and the European Commission of April 2004, the June 2004
support its reform process through financial assistance and European Council decided that Croatia was a candidate
other forms of cooperation. The European Council of country. The December 2004 European Council decided that
December 2004 decided to start accession negotiations with accession negotiations would be opened on 17 March 2005
Turkey on 3 October 2005. This decision was based on the provided that Croatia cooperated fully with the UN
Commission’s recommendation of October 2004 which International Criminal Tribunal for the former Yugoslavia in The
recommended starting accession negotiations provided Hague (ICTY). However, the Council concluded in March 2005,
Turkey implemented certain key pieces of legislation in the as the Chief Prosecutor of the Hague Tribunal had done, that
judicial field. Following an intensive debate in the Council and Croatia was not fully cooperating with the ICTY. In an
the European Parliament as well as inside Member States, the important, positive signal to Croatia, the EU adopted a
accession negotiations with Turkey were opened on negotiating framework so that the only remaining obstacle to
3 October 2005. On 28 September 2005, the European be overcome before negotiations could begin was for Croatia
Parliament had given its backing to the opening of accession to take further measures to ensure full cooperation with the
talks with Turkey. However, the EP showed its dissatisfaction Tribunal. As this last remaining obstacle was later judged to be
with Turkey’s lack of formal recognition of the Cyprus removed, accession negotiations with Croatia were formally
government by postponing a vote on the extension of the opened on 3 October 2005. In its conclusions, the Council
EU–Turkey customs union to the 10 new Member States. The confirmed, however, that less than full cooperation with the
EP also called on Ankara to recognise the Armenian genocide. ICTY at any stage could lead to the suspension of negotiations.
Although Turkey has made progress as regards legislation and
In its most recent resolution of 10 April 2008 on the
practical implementation, the sustainability and irreversibility
Commission report concerning Croatia’s progress in 2007, the
of the reform process will need to be confirmed over a longer
European Parliament recalls that ‘the future of all western
period of time. In its resolution of 15 December 2004 the
Balkan countries lies effectively in the European Union’ and
European Parliament had noted that the negotiation process
says that ‘Croatia is well on the way to full membership of the
with Turkey ‘[...] by its very nature is an open-ended process
European Union’, provided that it continues to meet the
and does not lead “a priori” and automatically to accession [...]’.
necessary conditions. The EP congratulates Croatia on the
In its most recent resolution of 21 May 2008 on the progress it has made so far with regard to the opening of
Commission’s report concerning Turkey’s progress in 2007, the negotiating chapters, in meeting the benchmarks for opening
European Parliament reiterated that accession negotiations are new chapters and in alignment of Croatia’s corpus of law with
‘an open-ended process’ and stressed that ‘modernisation is EU standards. But the resolution also highlighted some
first and foremost in Turkey’s own interest,’ while it also noted concerns over judicial reform, administrative capacity and
that further delays in reform plans ‘will seriously affect the pace corruption, as well as the country’s outstanding border issues
of negotiations. MEPs added that ‘a new constitution is the with its neighbours, especially Slovenia and Bosnia and
only way the government can ensure separation of State and Herzegovina, which have to be resolved. The European
religion, and all civil society representatives need to be Parliament ‘shares with the Commission the view that, with
involved in this process’. The new constitution should also increased efforts on the part of Croatia and continuous
‘ensure gender equality, [...] and reaffirm women’s human support by the EU institutions, accession negotiations should,
rights as their individual rights’. in any event, be concluded in 2009’.
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3. Other western Balkan countries Council resolution 1244/1999) and Montenegro) also have
The former Yugoslav Republic of Macedonia applied for the prospect of future EU membership. This was recognised by
membership of the European Union in March 2004. The the European Council in Feira in 2000 and confirmed in
European Commission adopted its opinion on this application subsequent European Councils. The countries will advance
on 9 November 2005, noting substantial progress by the towards the EU, based on their own individual merits in
country. Following the Commission’s recommendation, the satisfying the 1993 Copenhagen criteria for EU membership
European Council decided, on 17 December 2005, to grant and the specific criteria under the specific stabilisation and
candidate status to the country. No start date for accession association process (SAP). Full cooperation with the UN
negotiations has been proposed or indicated yet by the International Criminal Tribunal for the former Yugoslavia (ICTY)
Council or Commission. Priorities in political, legislative, remains a sine qua non for making progress towards the EU.
institutional and economic reforms have been identified in a The SAP, as enriched by the Thessaloniki European Council in
European partnership (adopted by the Council on 30 January 2003, will remain the framework of EU policy for relations with
2006). the region until future membership.
Accession negotiations will not start until the country has

reached a sufficient degree of compliance with the accession
criteria. The latter is reassessed by the Commission in its The EP’s most significant power in respect of enlargement is to
progress report again at the end of 2006. give its assent (Article 49 TEU) before any country joins the EU.
This power is exercised only at the final stage, once the
In its most recent resolution of 10 April 2008 on the negotiations have been completed.
Commission report concerning progress of the former
Yugoslav Republic of Macedonia in 2007, the European However, in view of Parliament’s key role, it has been in the
Parliament reiterates that the bilateral name dispute of the interest of the other institutions to ensure its participation
former Yugoslav Republic of Macedonia with Greece should from the beginning. Parliament also has a significant role to
not obstruct the EU accession process of the former Yugoslav play with regard to the financial aspects of accession in its
Republic of Macedonia. The report welcomes the capacity as one of the two arms of the budgetary authority of
government’s achievements ‘in the implementation of the the EU. In the European Parliament, it is the Committee on
Ohrid framework agreement’, which deals with the political Foreign Affairs which is responsible for coordinating the work
aspects of inter-ethnic relations in the country, while noting on enlargement and ensuring consistency between the
the ‘continuing discrimination against the Roma community’. positions adopted by the Parliament and the activities of its
The EP also commended the government’s economic specialist committees, as well as those of the joint
performance, and the adoption of several crucial laws on parliamentary committees with the candidate countries.
prosecutors. In its most recent position, adopted on 10 July 2008, on the
Members regret the signing of a bilateral immunity agreement Commission’s ‘Enlargement strategy and main challenges
between the USA and the former Yugoslav Republic of 2007–08’, the European Parliament reiterates its ‘firm
Macedonia, granting exemption from the jurisdiction of the commitment to all candidate countries and to those which
International Criminal Court in The Hague, which ‘contradicts have been given clear membership prospects’, but also notes
EU standards and policies’. that ‘the Union must make efforts to strengthen its integration
capacity and that this capacity should be fully taken into
On the consistently contentious issue of the country’s bilateral account’. It also insists that more substantive policies are
name dispute with Greece, the report welcomes the increased needed to bridge the gap between the Union’s
bilateral cooperation, as well as people-to-people contacts neighbourhood and enlargement policies.
between Greece and the former Yugoslav Republic of
Macedonia. In that own-initiative report Parliament notes that ‘past
enlargements have been a great success, benefiting the old as
The report notes with satisfaction that bilateral talks have been well as the new EU Member States’ and recalls that ‘every
held in the region, under the auspices of the UN and assisted enlargement must be followed by adequate consolidation and
by Special Envoy Matthew Nimitz, with a view to finding a political concentration’ within the Union itself, if the EU is to be
mutually acceptable solution to the difference that has arisen able to continue functioning effectively.
over the name of the country. The EP calls on both sides to
The House therefore takes the view ‘that the success of the
seize the opportunity to reach a compromise solution, so that
enlargement process (and thus the success of the EU political
the issue does not continue to represent an obstacle to
integration process) can only be ensured if there is clear and
membership of international organisations for the former
long-lasting support for the EU membership of each candidate
Yugoslav Republic of Macedonia, as provided for in the Interim
country.’ The EP resolution ‘reminds the governments and
Accord of 1995, which is still in force.
parliaments of the Member States that it is their responsibility
The other western Balkan countries (Albania, Bosnia and adequately to inform public opinion about the positive
Herzegovina, Serbia and Kosovo (under the UN Security achievements of former enlargements’.
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On the issue of future enlargements, the report insists that ‘the The report affirms that ‘participation in the European
Union must make efforts to strengthen its integration capacity’. neighbourhood policy (ENP) does neither in principle nor in
Parliament ‘recalls in this context the need to undertake the practice constitute a substitute for membership or a stage
necessary internal reforms, aimed, among other things, at leading necessarily to membership’. Nevertheless, it argues
increasing efficiency, social cohesion and strengthening that there is a conceptual and legal gap between the
democratic accountability’. Members are also ‘convinced that European neighbourhood policy and the Union’s enlargement
any acceding State should resolve its main internal problems, policy, which needs to be bridged. MEPs therefore argue that
particularly concerning its territorial and constitutional set-up, the EU should ‘establish an area based on common policies’
before it can join the Union’. Parliament emphasises that the related to democracy, human rights and the rule of law.
guiding principles of the EU enlargement strategy should be Parliament supports further regional cooperation in the Black
‘consolidation, conditionality and communication’. Sea region by calling for a ‘Black Sea cooperation agreement,
MEPs note that the EU’s ‘integration capacity is linked with the which should include the EU, Turkey, and all Black Sea littoral
Union’s ability at a given point in time to decide and thus to States as equal partners, while seeking the full involvement of
achieve its political objectives’, and define the term ‘integration Russia, and which could, at a later stage, develop into a Union
capacity’ as having four elements: accession countries should of the Black Sea’.
contribute to and not impair the EU’s political objectives, the
Union’s institutions should be efficient and effective, its
g Georgios Ghiatis
financial resources should be adequate, and a communication July 2008
strategy should be set up to inform public opinion about the
implications of enlargement.
6.3.2. The European Economic Area (EEA)

Existing since 1994, the EEA has been created essentially for the purpose of extending the application of the EU internal
market to the three EFTA countries. All EU legislation relating to the internal market is constantly inserted in the EFTA
countries’ legislation and its proper implementation and enforcement are monitored by specific EFTA bodies.
Legal basis Community market, launched in 1985 and completed at the

Article 310 of the Treaty establishing the European Community end of 1992, proved to be extremely attractive to these
(EC) (association agreements). countries, which had in the meantime been joined by Iceland.
A formula was required to allow them to play a significant part
in this market without joining the Community.
Objectives
The purpose of the European Economic Area (EEA) is to extend 2. Creation of the EEA
the EC’s single market to include a number of countries in the Negotiated in 1992, the Agreement creating the European
European Free Trade Area (EFTA) that do not wish to join the Economic Area was signed on 2 May 1992 and was to enter
European Union or are not yet ready to do so. into force on 1 January 1994. It united the Community (which
at that stage had 12 members) and the six EFTA States. The
Achievements latter, however, soon saw their number reduced to five when
Switzerland failed to ratify the agreement following an adverse
A. Origin and background referendum result. Switzerland retains observer status with the
1. Initial context EEA, however, while bilateral agreements govern its relations
The initial context relates to the relations between the with the EC.
European Community (EC) and EFTA. In 1973 the accession to
3. Subsequent developments
the Community of two of its member countries, the United
Kingdom and Denmark, disrupted EFTA, which was left with a. A
s three other EFTA countries — Austria, Finland and
only five members: Austria, Finland, Norway, Switzerland and Sweden — joined the European Union at the beginning of
Sweden. Trade agreements had to be concluded with each of 1995, the EEA now only covers Iceland, Norway and
these countries. However, the plan to create a large internal Liechtenstein (which joined EFTA in May 1995).
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b. T he 10 new Member States that joined the EU on 1 May e. A
bove all, it does not integrate the three countries into the
2004 automatically became part of the EEA, as did Bulgaria European Union’s institutional and decision-making
and Romania, on the date they joined. system.
B. The nature of the European Economic Area C. The initial extension of the internal market to the three
1. A step beyond a free trade area EFTA States
a. An extension of the EC’s internal market. From the outset, the EEA Agreement incorporated a significant
proportion of the rules and policies of the internal market that
The basic aim of the EEA is to extend the EC’s internal market
existed at that time.
to cover the three EFTA countries. This market goes beyond
the removal of customs duties and quantitative restrictions 1. Basic principles (corresponding to primary
among the members: it seeks to remove all obstacles to the Community law)
creation of an area of complete freedom of movement similar a. The four freedoms
to a national market. To this end, the EEA covers: i. Freedom of movement of goods. The provisions in the
— the four main freedoms of movement of the internal EEA Agreement concerning the basic rules of the internal
market: movement of persons, goods, services and capital; market are identical or similar to those of the EC Treaty:
— Community policies closely linked to achieving the four — prohibition of customs duties and any charges having
freedoms, known as horizontal policies, one of the most equivalent effect together with quantitative restrictions
important being competition policy. and any measures having equivalent effect;
b. Participation in certain flanking Community policies — adjustment of commercial State monopolies;
The EEA Agreement stipulates that the EFTA countries may — simplification of border controls and customs
also participate in internal market flanking policies, which cooperation.
entails a financial contribution on their part. ii. Freedom of movement of persons, services and
In addition, these countries have decided to contribute capital:
financially to the Community structural policy. — abolition of discrimination based on nationality as
c. Adoption of Community legislation regards workers’ residence and access to employment;
Given that, unlike a free trade area, the EC internal market — — right of establishment for self-employed persons and
rather than limiting itself to a number of initial rules — undertakings;
constantly produces a considerable volume of legislation, the
— freedom to provide services;
EEA has had to establish a mechanism for extending these
rules to the EFTA countries. — measures to facilitate the exercise of these freedoms, in
particular the mutual recognition of qualifications.
2. The limits of EEA
a. Free trade itself is limited: it does not cover certain b. Horizontal policies required to achieve the four freedoms
sectors such as agriculture and fisheries. i. The most important of these is competition policy, for
which the EEA Agreement faithfully reproduces the
b. The extension of the internal market is not complete:
provisions of the EC Treaty:
— the free movement of persons only applies to workers
— as regards undertakings: ban on agreements and
although it applies to all people within the European
abuses of dominant positions, control of
Union, particularly in the Schengen area (2.3);
concentrations;
— there continue to be controls at the EU’s borders with — as regards States: control of public undertakings and
the three EFTA countries; services of general economic interest.
— there is no harmonisation of taxation. ii. The other Community policies integrated into the EEA
c. T
he EEA is not even a customs union as it does not have are:
any common external tariff. As a result, it does not have a — transport policy;
common commercial policy towards the rest of the world
either. — public procurement;
d. O
bviously, the EEA excludes the other elements of — company law;
European integration: — intellectual property;
— economic and monetary union; — social policy;
— external and common security policy; — consumer protection;
— cooperation in the field of justice and home affairs. — the environment.
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c. Participation in flanking policies (‘cooperation outside the four incorporated by including the acts in question in the lists of
freedoms’) protocols and annexes to the EEA Agreement.
i. Areas: The EEA Agreement provides for the participation of In all, some 3 000 Community acts have been incorporated
the EFTA countries in the EU’s activities in a number of into the EEA Agreement since its entry into force.
areas:
An EEA Council, made up of representatives of the EU Council
— research and development; and the foreign ministers of the EFTA states, meets at least
— information services; twice a year to provide a political incentive and guidelines for
the Joint Committee.
— education and training;
— youth; b. Transposition
Once a Community act has been incorporated into the EEA
— tourism; Agreement, it must be transposed into the national legislation
— SMEs; of the three EFTA countries, if the transposition is required
according to their constitutional arrangements. It may take the
— the audiovisual sector;
form of a simple governmental decision or may require
— civil protection. parliamentary approval.
ii. Forms: in these areas, the EFTA countries participate in c. Nature of the mechanism
particular in framework programmes and projects. The mechanism gives the impression that the extension of
iii. Principles: Community acts concerning the internal market to the EFTA
States must be assessed by those States, initially in the form of a
— equal rights and responsibilities in relation to the action
decision to incorporate the legislation by the Joint Committee
concerned;
and then in the form of a national decision on transposition. In
— financial participation of the EFTA States. reality, these decisions are essentially formal in nature: the
2. Incorporation of Community legislation Community legislation must be extended to these States; they
do not have any choice. The association agreement also requires
The EEA Agreement does not merely extend to the EFTA
the Joint Committee to decide as quickly as possible so that the
countries the fundamental rules of the EC Treaty on the
act in question may be applied more or less simultaneously in
internal market. It also incorporates all of the implementing
the Union and in the three countries; the only margin for
legislation for these rules produced by the Community at the
assessment is the possibility of purely technical adjustments.
time, the ‘secondary legislation’ or the ‘Community acquis’. This
legislation has been incorporated through the protocols and Provisions have been established to involve the EFTA countries
annexes attached to the agreement and it covers some 1 600 in the preparation of Community acts. Thus, the
Community acts: representatives of these countries are invited, on an equal
footing with their counterparts in the EU Member States, to
— regulations, directives, decisions and non-binding acts;
take part in the written and oral consultations, and at times in
— relating for the most part to the four freedoms and related the work of the standing committees set up for this purpose
policies and, to a lesser extent, to flanking policies. by the European Commission.
D. The continuing extension of the internal market to Even at the stage of the Community decision-making
cover the EFTA countries procedure (Commission proposal, consideration and decision
1. The continuous incorporation of Community of the Council and of the European Parliament), the EFTA
legislation countries are regularly informed and even consulted.
The EU continuously produces legislation on the internal Following the legislative decisions, the EFTA States are
market and related policies, legislation that naturally must be consulted again on the implementing measures for these
extended to the three EFTA states so that the EEA operates in decisions taken by the European Commission. They are often
an entirely homogeneous manner. The EEA Agreement invited to participate in the various committees that assist the
therefore establishes a permanent incorporation mechanism. Commission in exercising its executive power (‘comitology’)
a. Decisions on the incorporation of legislation although they do not have any voting rights.
As new texts are adopted by the EU, these decisions are taken Basically, the EFTA States clearly do not participate in the
by a Joint Committee, composed of representatives of the European Union’s decision-making procedures themselves
European Union and representatives of the three EFTA States, although many of these decisions apply to them more or less
and meeting at regular intervals (once a month) to decide automatically. That is the consequence of remaining outside
what proportion of the legislation and more generally all the EU. However, paradoxically, it means that with the EEA
Community acts (actions, programmes, etc.) should be mechanism they have less sovereignty than they would if they
incorporated into the EEA; the legislation is formally were members of the EU.
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2. Monitoring the extension of Community legislation to Community and the EFTA States in the fields covered by the
the EEA EEA Agreement. The JPC meets twice a year, with the EP and
Once the internal market legislation has been extended to the the EFTA parliaments taking turns in hosting the meeting.
EFTA countries, its correct transposition and application must Originally established as a 66-member body (33 MEPs and 33
be monitored. Given that these countries did not have any EFTA MPs), it was agreed by mutual consent following the
mechanism for such monitoring, the EEA Agreement accession to the EU in January 1995 of Austria, Finland and
stipulated that EFTA would establish an appropriate Sweden, to reduce the component delegations to 12
mechanism. This consists of: members each. The chair alternates annually between an MEP
and an MP from one of the EFTA States. Parliamentarians from
— a Surveillance Authority,
the Swiss Federal Assembly attend the meetings as observers.
— an EFTA Court.
All EC legislation applying to the EEA, as well as its
These bodies play the same role as the European Commission implementation, is subject to scrutiny by the EEA JPC, and
and the Court of First Instance and the Court of Justice members of the EEA JPC have the right to put oral and written
respectively within the European Union in ensuring that the questions to the representatives of the EEA Council and the
EFTA members of the EEA respect the rules in question. EEA Joint Committee. The EEA JPC expresses views in the form
of reports or resolutions, as appropriate. In particular, it
Role of the European Parliament examines the annual report of the EEA Joint Committee,
issued in accordance with Article 94(4) of the EEA Agreement,
Although first and foremost an international treaty, the EEA
on the functioning and the development of the Agreement. At
Agreement revolves around extending Community legislation
each of its meetings, the JPC has had discussions with
to the partner countries. Both the European Parliament and
representatives of the EEA Council of Ministers, the EEA Joint
the national parliaments of the partner countries are therefore
Committee, and the EFTA Surveillance Authority (ESA).
closely involved in monitoring its functioning. Under Article 95
of the Agreement, an EEA Joint Parliamentary Committee (JPC)
was established and tasked with contributing, through g Stefan Schulz
dialogue and debate, to a better understanding between the July 2008
6.3.3. The European neighbourhood policy (ENP)

As a consequence of its enlargement, the EU has new neighbours. The ENP provides a framework for relations with
neighbours — old and new, in the east and in the south — to which the EU has not given any EU membership
perspective, but with which it nevertheless wishes to have closer relations. The European Parliament supports the ENP.
Legal basis The ENP should prevent the emergence of new dividing lines
between the enlarged EU and its neighbours. The policy is
For the EU’s policy: Title V, on the common foreign and
based on commitments to common values, including
security policy (CFSP), of the Treaty on European Union
democracy, the rule of law, good governance and respect for
(TEU); Articles 133(3) (trade) and 300 (international
human rights, and the principles of market economy, free
agreements) of the Treaty establishing the European
trade and sustainable development, as well as poverty
Community (EC).
reduction.
For the bilateral relationships: partnership and cooperation Through the ENP, the EU strives inter alia to counteract or
agreements (with east European countries) and Euro- prevent the emergence of ‘soft security’ threats such as large-
Mediterranean Association agreements (with Mediterranean scale illegal immigration, disruption of energy imports,
countries). environmental degradation, penetration by organised crime
and terrorism. A part of the rationale of the ENP is also
Objectives reflected in the European security strategy (6.1.3, point E).
To contribute to increased stability, security and prosperity of
the EU and its neighbours to the east and south, in particular Background and geographic scope
by offering the countries covered an increasingly close In the run up to the 2004 ‘big bang’ enlargement which gave
relationship with the EU. the European Union 10 new Member States, it was widely
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recognised that this enlargement would have significant Commission elaborates a draft action plan, which is then
effects on the countries on the other side of the EU’s new negotiated with the relevant neighbouring country. The
external border in the east. It was argued that negative effects leading joint body set up under the respective PCA or Euro-
should be prevented or mitigated and that the potential to Med agreement thereafter endorses the action plan.
develop mutually beneficial cooperation with the new Each ENP action plan lists a number of political and economic
neighbours must be exploited. Discussion on a wider Europe reform objectives and concrete measures. In this regard, they
— a new neighbourhood initiative — started. resemble the accession partnerships which support candidate
In November 2002, the Council invited the Commission and the countries’ reforms and preparations for EU membership. In the
High Representative for the Common Foreign and Security ENP context, the EU does, however, not seek any general
Policy, Mr Javier Solana, to prepare proposals. The European adaptation to its laws and jurisprudence (the acquis
Council the next month made clear that the southern communautaire) and the absence of the incentive to reform
Mediterranean countries should also be included in the that a membership perspective represents is clearly felt.
initiative. Candidate and potential candidate countries (the latter ENP action plans are valid five years (those agreed with Israel,
referring to the countries of the western Balkans) remained Moldova and Ukraine, however, three years). The
outside and the absence of an EU membership perspective thus implementation is monitored by committees set up under the
emerged more clearly as the main selection criterion. respective agreement. Within two years of the adoption of an
The general character of the new policy was laid out in a action plan, the Commission presents a progress report.
March 2003 Commission communication. The new policy Since April 2008, this reporting is annual.
should according to the Commission President at the time, The EU will soon start to provide aid through the European
Mr Romano Prodi, be aimed at creating ‘a ring of friends’ and Neighbourhood and Partnership Instrument (ENPI). It
these should ultimately be offered participation in ‘everything replaces the Tacis technical assistance programme (for eastern
but the institutions’. The latter formula was not accepted by neighbours) and the MEDA programme (for southern
the Council, but in conclusions adopted in June 2003, the neighbours). According to the ENPI regulation, EUR 11.181
Council largely followed the Commission’s proposals. billion are available for this instrument over the period 2007–13.
Following the ‘Rose Revolution’ in Georgia in the end of 2003, This is about 32 % more than what was available for the ENPI
the Council a few months later decided to include Georgia, beneficiary countries in the earlier instruments during 2000–06.
Armenia and Azerbaijan in the new policy, henceforth called The European Instrument for Democracy and Human
the European neighbourhood policy (ENP). The ENP therefore Rights (EIDHR) is also used, including for supporting relevant
covers six countries in the east: Armenia, Azerbaijan, Belarus, civil society organisations through Commission delegations
Georgia, Moldova and Ukraine. In the south, it covers 10 in the ENP countries (except Libya, Syria and Tunisia, where
countries: Algeria, Egypt, Israel, Jordan, Lebanon, Libya, necessary conditions do not exist and other ways of
Morocco, the Palestinian territories, Syria and Tunisia. The promoting democracy and human rights will be looked for).
southern ENP countries also participate in the Barcelona In several ENP countries, actions financed through the
process (6.4.5). Instrument for Stability and the Nuclear Safety
The EU has no formal relations with Belarus or Libya and the Instrument are also carried out. Thematic programmes
ENP is applied in a different and very limited way to them. under the Development Cooperation Instrument, e.g. for
Russia at an early stage made clear that it did not wish to cooperation on migration and asylum and for support to
participate in the emerging ENP. EU–Russia relations are non-State actors and local actors, are also available, but the
instead centred on four ‘common policy spaces’. relevant sums are very small. The Humanitarian Assistance
Instrument and macro-financial assistance can also be used.
Instruments The ENP countries also benefit from loans on favourable
The ENP builds on the partnership and cooperation conditions from the European Investment Bank (EIB). In the
agreements (PCAs) and Euro-Mediterranean association period 2007–13, EUR 8.7 billion is available for ENP/South and
agreements that have been concluded with 13 of the 16 the EUR 3.7 billion for ENP/East (including the South Caucasus
countries covered. It does not presuppose the introduction of countries, which were not included in the previous lending
any new type of agreement, but as the initial periods of mandate of the EIB) and Russia.
application of the PCAs are running out, the question as to
what should be the future legal basis of the bilateral relations Current status
with eastern neighbours has to be answered. Negotiations In July 2008, ENP action plans for the following countries had
with Ukraine for what is currently referred to as a new been adopted: Israel, Jordan, Moldova, Morocco, Tunisia,
enhanced agreement began in spring 2007. Ukraine, the Palestinian territories (formal adoption January to
The core instrument of the ENP is bilateral a ENP action plan. July 2005), Armenia, Azerbaijan and Georgia (November 2006),
The preparation of an ENP action plan presupposes that a PCA Lebanon (January 2007) and Egypt (March 2007). The action
or Euro-Med agreement has entered into force. The plans for Israel, Moldova and Ukraine, which were originally
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intended to be valid for three years only, were at the beginning ‘nomenclature’, in EU budget speak) and the amounts on them
of 2008 rolled-over for one more year. in the annual EU budgets. After each budget year, Parliament
grants (or not) the Commission discharge for its
Algeria has shown an interest in the preparation of an ENP
implementation of the budget. Furthermore, under an
action plan. For Belarus, Libya and Syria, the requisite of an
agreement with the Council and the Commission concluded
existing bilateral agreement was not fulfilled. The Commission
before the adoption of the ENPI regulation, Parliament has the
presented reports on the implementation of all the action
right to scrutinise documents guiding the implementation of
plans in April 2008 and intends to publish new such reports in
the ENPI before they are adopted (a procedure known as
spring 2009.
‘democratic scrutiny’).
A December 2006 Commission communication concluded
that the credibility and impact of the ENP needed to be B. Activities
enhanced. Neighbours should receive a more attractive EU The Foreign Affairs Committee regularly prepares own-
offer of support for reform policies. This should be achieved initiative reports on the ENP. This committee also carries out
in particular through the pursuit of a new generation of ‘deep democratic scrutiny of ENPI implementation.
and comprehensive free trade agreements’ and this would be
Parliamentary cooperation committees have been set up with
‘consistent with a longer-term vision of an economic
all the eastern ENP countries, except Belarus. These meet once
community emerging between the EU and its ENP partners’.
a year and, in between, the EP’s delegations to these
The Commission also proposed visa facilitation, increased
committees regularly meet to discuss topical issues in relation
people-to-people contacts and greater EU involvement in
to the respective countries. In a similar way, an
addressing conflicts in its neighbourhood. Regional
interparliamentary meeting between an EP delegation and
cooperation, including in the Black Sea region, should be
each southern ENP country (except Libya) is normally held
promoted and the Commission called for exploration of the
once a year and the relevant EP delegations meet also in
case for developing a multilateral dimension of the ENP. The
between. In addition, the Euro-Mediterranean Parliamentary
Commission also suggested the creation of a governance
Assembly, which provides a parliamentary dimension to the
facility, whereby additional funds would be given each year
Euro-Mediterranean Partnership (‘the Barcelona process’) holds
to the country or countries which had made the most
a plenary session once a year and its committees work on a
progress on governance-related reforms, as well as a
continuous basis.
Neighbourhood Investment Fund to leverage funds from
international financial institutions. Such a facility and fund An ENP/East conference was held in the European Parliament
were created the following year. A December 2007 follow-up in June 2008. Delegations from the Armenian, Azerbaijani,
communication noted progress in some of the areas earlier Georgian, Moldovan and Ukrainian national parliaments, the
dealt with and commented on a number of thematic and Belarusian opposition and the European Parliament adopted a
operational issues. joint statement that inter alia called on the parliaments
represented in the conference to consider the setting up of an
A cooperation initiative for the Black Sea region was launched
EU–Neighbourhood East Parliamentary Assembly. In this
by the EU in 2007. The so-called Black Sea synergy covers inter
assembly, mutual assistance for closer integration with the EU
alia all the eastern ENP countries, except Belarus, in spite of the
could be provided.
fact that of these countries only Georgia and Ukraine have a
Black Sea coastline. The EP frequently participates in election observation in ENP
Reacting in particular to Polish–Swedish proposals on an countries.
eastern partnership, the European Council in June 2008 tasked C. Positions
the Commission with presenting proposals in spring 2009.
Through the eastern partnership, EU policy towards eastern Parliament called for the inclusion of the South Caucasus in
ENP partners could be enhanced in bilateral as well as the ENP long before the decision on this was taken by the
multilateral formats. Council. A January 2006 resolution on the ENP broadly
supported this policy, as it was being developed by the
Council and the Commission, and this support was confirmed
Role of the European Parliament in a November 2007 resolution on the ENP. The January 2006
A. Powers resolution stated that ‘the possibility of membership of the EU
must remain the ultimate incentive for all European countries
Parliament is not consulted at any stage of the preparation of
to follow the common European ideals and participate in the
action plans. Its extensive legislative, budgetary and control
European integration process’ and that action plans ‘should
powers nevertheless allow it to play a role.
serve as a tool towards achievement of the goals of potential
The regulation setting up the European Neighbourhood and EU membership for those countries that are eligible and ever
Partnership Instrument (ENPI) was adopted by the Council and closer partnership for the other countries included’
Parliament under the co-decision procedure in autumn 2006. (paragraphs 34 and 17, respectively). At the same time, the
Parliament defines the relevant budget lines (the resolution mentioned that the EU’s ‘absorption capacity’ is one
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The EU’s external Relations with certain countries
6 relations 4 and regions
of the criteria for EU membership and that ‘the Nice Treaty is ENP resolution). The same resolution affirms that ‘civil society
not an acceptable basis for further decisions on the accession in all ENP countries must be strongly supported’ (paragraph
of any more new Member States’ (recital H and paragraph 4, 5) and welcomes ‘the longer-term aim of establishing a
respectively). In its November 2007 resolution, the EP called for neighbourhood-wide free trade area’ (paragraph 11). The
association agreements with Moldova and Ukraine which budget of the ENPI should be increased (paragraph 21).
open a possibility of EU membership (paragraph 26). Belarus When consulted on the most recent revisions of the EIB’s
should have the same perspective, ‘once it embraces external lending mandate, Parliament supported the
democracy, respects fundamental human rights and freedoms extension to Belarus, Moldova and Ukraine, and actively
and enhances the rule of law’ (paragraph 29). sought the further extension to Armenia, Azerbaijan and
The EP ‘doubts [...] the meaningfulness of the ENP’s Georgia.
geographic scope, as it involves countries which
geographically are European together with Mediterranean g Dag Sourander
non-European countries’ (paragraph 2 of the November 2007 July 2008
6.4. Relations with certain countries

and regions
6.4.1. The western Balkan countries

In June 2008, the European Council conclusions reaffirmed its full support for the European perspective of the western
Balkans — as set out in the Thessaloniki agenda and the Salzburg Declaration — which remains essential for the stability,
reconciliation and the future of the region. The European Council also stressed that remaining western Balkans potential
candidates should achieve candidate status with EU membership once the necessary conditions and requirements will be
satisfied.
Legal basis emergency needs at that time. The EU’s assistance

Title V of the Treaty on European Union (TEU). programmes were substantial, totalling some EUR 5 500
million. As the region emerged from this difficult period, a
Articles 133 and 310 of the Treaty establishing the European more long-term approach to development was required. At
Community (EC). the EU’s initiative, the Stability Pact for South-Eastern
Europe (involving the countries of the western Balkans, other
Objectives countries of the region, the EU and several other countries,
To bring peace, stability and economic development to the international financial institutions and regional initiatives) was
region and open up the prospect of integration into the EU. adopted on 10 June 1999 in Cologne. As its main contribution
to the Stability Pact, the EU launched the stabilisation and
association process (SAP) for the countries of the western
Background Balkans in 1999. The European Councils at Feira and Nice (June
The former Yugoslavia benefited from a cooperation and December 2000) recognised that the countries of the
agreement with the EU from 1980. In June 1990 the western Balkans (Albania, Bosnia and Herzegovina, Croatia, the
Commission proposed measures to improve relations, but the former Yugoslav Republic of Macedonia and the Federal
break-up of the country in 1991, the war and the various Republic of Yugoslavia) all had a vocation to be potential
conflicts changed the situation entirely. The EU’s political, trade candidates for EU membership. It was stated that the western
and financial relations with the region focused on crisis Balkan countries had clear prospects of future accession once
management and reconstruction, reflecting the countries’ the relevant conditions had been met. Subsequent European
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Council meetings reiterated that the future of the western Since 2007, EU pre-accession funding is channelled through a
Balkans is within the EU. The ‘Thessaloniki agenda’, adopted in single, unified instrument (the Instrument for Pre-Accession
2003 by the EU and the countries of the western Balkans, Assistance (IPA)) designed to deliver focused support to both
reflected the evolution in the relationship. These countries candidate and potential candidate countries. The total pre-
moved, progressively from stabilisation and reconstruction accession funding for the current financial framework (2007–
towards consolidating stability, sustainable development, 13) is EUR 11.5 billion. In order to achieve each country’s
association and integration into European structures. The EU objectives in the most efficient way, IPA consists of the
confirmed its determination to support the countries in their following five components: (i) transition assistance and
efforts to implement reforms aimed at consolidating institution building; (ii) cross-border cooperation (with EU
democracy and stability and promoting economic Member States and other countries eligible for the IPA);
development and regional cooperation. Thus, the Union’s (iii) regional development (transport, environment and
policy of stabilisation and association, including the economic development); (iv) human resources development
stabilisation and association agreements enriched with (strengthening human capital and combating exclusion);
elements from the enlargement process, constitutes to date (v) rural development.
the overall framework for the European course of the western
The IPA places more focus on ownership of implementation by
Balkan countries towards their future accession.
the beneficiary countries, on support for cross-border
cooperation, and on ‘learning by doing’. It also prepares
Instruments candidate countries to implement the Regional, Social, Rural
Development and Cohesion Funds upon accession.
From the Stability Pact to the Regional Cooperation
Council Intensified efforts are also expected on regional cooperation,
enhancing good neighbourly relations, notably through the
The stabilisation and association process (SAP) established a new Regional Cooperation Council. This structure, which
strategic framework for the relations of the western Balkan succeeded the Stability Pact, promotes mutual cooperation
countries with the EU, combining a new contractual and European and Euro-Atlantic integration of south-eastern
relationship (stabilisation and association agreement (SAA) and Europe in order to reinvigorate economic and social
an assistance programme (CARDS)). The SAP is both bilateral development in the region to the benefit of its people.
and regional, creating strong links between each country and
the EU as well as encouraging cooperation between the
countries themselves and their neighbours in the region. Current status
Stabilisation and association agreements are legally binding In June 2008, the European Council conclusions reaffirmed its
international agreements, which after signature require EP full support for the European perspective of the western
assent and ratification by the parliament of the country Balkans — as set out in the Thessaloniki agenda and the
concluding the agreement as well as by all EU Member State Salzburg Declaration — which remains essential for the
parliaments. They require respect for democratic principles, stability, reconciliation and the future of the region. The
human rights and the rule of law; they foresee the European Council also stressed that remaining western Balkan
establishment of a free trade area with the EU and they set out potential candidates should achieve candidate status with EU
rights and obligations in areas such as competition and State membership once the necessary conditions and requirements
aid rules, intellectual property and establishment, which will are satisfied.
allow the economies of the region to begin to integrate with
that of the EU. Further to Albania, Croatia, the former Yugoslav Relations with the individual countries of the region
Republic of Macedonia, Montenegro and Serbia, on 16 June 1. Albania
2008 Bosnia and Herzegovina is the latest country to sign the There were no relations between the EU and Albania until the
stabilisation and association agreements. first contacts in 1980 following the collapse of Communism.
Current relations are based on a non-preferential agreement
The CARDS programme, which underpinned the objectives
on trade and economic cooperation, which entered into force
and mechanisms of the SAP, amounted for the period 2000–06
in December 1992. Albanian attempts to enhance its
to about EUR 5 billion in order to provide assistance to this
contractual relationship with the EU in 1995 and 1999 failed
region. As each country moved further in the stabilisation
due to the insufficient preparedness of the country.
process, assistance shifted, progressively, from rebuilding
infrastructure and fostering reconciliation towards developing Albania has been participating in the stabilisation and
government institutions and legislation and gradual association process since the beginning, and signed the
approximation with European norms and, eventually, stabilisation and association agreement (SAA) with the EU on
harmonisation with the EU acquis. Financial support was 12 June 2006. This country has made some progress on
directed at reinforcing democracy and the rule of law, human democracy and the rule of law; however, democratic culture
rights, civil society and the media and the operation of a free and in particular constructive dialogue between parties need
market economy. to be developed to enable the political system to function
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effectively and transparently. The Albanian parliament needs The EU has continued to deploy considerable resources in
to make considerable further progress in pushing forward Bosnia and Herzegovina in the framework of the CFSP and the
reform. The fight against corruption and organised crime ESDP. A new EU Special Representative (EUSR), who is also the
represents a major challenge. High Representative, took office in July 2007. The mandate of
the EUSR is to offer the EU’s advice and facilitation in the
Albania has continued to play a positive role in maintaining
political process and to promote overall political coordination
regional stability fostering good relations with other western
in Bosnia and Herzegovina.
Balkan and neighbouring EU countries, both multilaterally and
bilaterally. 3. Croatia
2. Bosnia and Herzegovina (BA) Since the dissolution of the Socialist Federal Republic of
Yugoslavia and until 2001, there were no global contractual
Since the Dayton/Paris Peace Agreement in 1995 brought the relations between Croatia and the EU because of the war and
war in Bosnia and Herzegovina to an end, the EU has the country’s failure to meet the requirements of democracy.
participated fully in the country’s reconstruction. Bosnia and Croatia was granted trading preferences on a unilateral basis.
Herzegovina has benefited from autonomous trade Financial cooperation was limited to humanitarian assistance,
preferences since 1996, but institutionalised contacts with the support for democratisation and, from 1996, reconstruction
EU started only in June 1998. With the introduction of the SAP assistance. After the change of government in 2000, Croatia
in 1999, Bosnia and Herzegovina also became a participant. In broke out of the international isolation which the policy of the
order to identify the most important issues for the country former government had caused, and became fully engaged in
under the SAP, the EU published a roadmap, setting out 18 the SAP. In October 2001, Croatia signed a stabilisation and
basic steps. This roadmap was substantially completed in association agreement with the EU, which entered into force
September 2002, and a November 2003 European Commission on 1 February 2005. An Interim agreement was signed in
feasibility study for the negotiation of a stabilisation and parallel, allowing the trade and trade-related matters of the
association agreement (SAA) identified the subsequent SAA to enter into force on 1 January 2002.
priorities for the country.
On 21 February 2003, Croatia submitted a formal request for
Bosnia and Herzegovina has, in the meantime, made EU membership, the first country of the western Balkans to do
significant progress on most of the priorities identified in the so. Following a positive opinion and recommendation by the
feasibility study. However, Bosnia and Herzegovina’s European Commission of April 2004, the December 2004
achievements have been, so far, mainly of a legislative nature. European Council decided that accession negotiations would
Bosnia and Herzegovina will need to increasingly focus on be opened on 17 March 2005 provided that Croatia
ensuring effective implementation and enforcement of the cooperated fully with the UN International Criminal Tribunal
adopted laws. Nevertheless, in October 2005, the European for the former Yugoslavia in The Hague (ICTY). However, the
Commission recommended to the Council the opening of Council concluded in March 2005, as the Chief Prosecutor of
SAA negotiations with Bosnia and Herzegovina. The The Hague Tribunal had done, that Croatia was not fully
negotiations on an SAA were launched in November 2005. cooperating with the ICTY. As this last remaining obstacle was
The SAA was initialled on 4 December 2007, and the later judged to be removed, accession negotiations with
agreement was signed on 16 June 2008 following progress in Croatia were formally opened on 3 October 2005.
addressing four key priorities: notably police reform, ICTY
cooperation, public broadcasting and public administration Following the completion of the screening process in October
reform. 2006, 16 negotiation chapters have been opened and two
were provisionally closed by February 2008. Croatia’s progress
Bosnia and Herzegovina has been an increasing focus of EU sends a signal to the other western Balkan countries on their
political interest, especially in relation to common foreign and own membership prospects, once they fulfil the necessary
security policy (CFSP) and the European security and defence conditions. For Croatia to make 2008 a decisive year in its
policy (ESDP) measures. The first operation under the ESDP accession process, the country needs to make further progress
started in Bosnia and Herzegovina on 1 January 2003, when with, among others, judicial and administrative reforms,
the European Union Police mission (EUPM) took over from the fighting corruption, minority rights, and refugee return.
UN’s International Police task force. In June 2004, the Council
adopted a joint action on an EU military operation in the 4. Serbia (Kosovo) and Montenegro
country (EUFOR/Althea). This decision led to the deployment Economic and trade relations were subject to an embargo for a
of troops in December 2004. Following the improved security long while, but had both resumed in some areas, when the
situation in Bosnia and Herzegovina, the EU defence ministers Kosovo crisis led to the restoration of economic and financial
decided in December 2006 on a force reduction of EUFOR/ sanctions and to NATO intervention in 1999. The end of the
Althea from some 6 000 to 2 500 troops. The mandate of the bombing and the Serb withdrawal from Kosovo on 21 June
EUPM has been extended by two years until the end of 2009. 1999 resulted in deployment of the NATO Kosovo force KFOR
The EUPM continues to be focused on police reform and the and the establishment of the UN Interim Administration in
fight against organised crime. Kosovo (UNMIK). Following the democratic change in the
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former Federal Republic of Yugoslavia in October 2000, the EU to determine the future status of Kosovo. This
re-established relations with the Belgrade administration and recommendation was delivered with the report from
quickly lifted most sanctions. With effect from 1 December Ambassador Kai Eide that concluded that despite corruption
2000, the EU included the former Federal Republic of and pervasive ethnic tension, enough progress had been
Yugoslavia in the liberalised EU preferential trade regime for the made in creating the institutions to make a government work
region. The former Federal Republic of Yugoslavia also became in Kosovo and that therefore it would be very unwise to stop
a full participant in the stabilisation and association process. the political momentum. The Security Council endorsed the
UNSG’s intentions. UNSG Annan appointed the former Finnish
The former Federal Republic of Yugoslavia formally ceased to
President, Martti Ahtissari, as his special representative to
exist on 4 February 2003 and was replaced by the new Union
oversee the process. Kosovo status talks started in February
of Serbia and Montenegro.
2006 in Vienna.
On 3 October 2005 the Council decided to open negotiations
On 17 February 2008 the Kosovo Assembly adopted a
for a stabilisation and association agreement (SAA) with Serbia
resolution which declared Kosovo to be independent,
and Montenegro. In line with the so-called twin-track
confirming its acceptance of the Ahtisaari plan, its willingness
approach, negotiations — officially opened on 10 October
for the EU to deploy new missions and for NATO to keep its
2005 — have been held with the State Union or the Republics
force there. On 16 February 2008, the Council approved the
according to the division of competences. However, since the
sending of the EU Rule of Law Mission to Kosovo, known as
country did not meet its commitments on cooperation with
EULEX Kosovo. EULEX Kosovo has a broad mandate ranging
the International Criminal Tribunal for the former Yugoslavia
from the maintenance and promotion of the rule of law, public
(ICTY) the Commission decided to call off the SAA
order and security to ensuring that cases of war crime, terrorism
negotiations on 3 May 2006.
and organised crime are investigated and prosecuted.
On 21 May 2006 Montenegro organised a referendum on
As confirmed by the Thessaloniki Summit in June 2003, Kosovo
independence, in line with the provisions of Article 60 of the
is firmly anchored in the framework of the stabilisation and
Constitutional Charter of Serbia and Montenegro. Following the
association process, the EU policy which applies to the
referendum and the subsequent declaration of independence
western Balkans. On 20 April 2005 the European Commission
by the Montenegrin parliament the EU Council adopted on
adopted the communication on Kosovo to the Council ‘A
12 June 2006 conclusions stating that ‘the EU and its Member
European future for Kosovo’, which reinforces the Commission’s
States decided to develop further their relations with the
commitment to Kosovo. Furthermore, on 20 January 2006, the
Republic of Montenegro as a sovereign, independent State’.
Council adopted a European partnership for Serbia and
4.1. Serbia Montenegro including Kosovo as defined by UNSCR1244. The
Serbia has a key role to play in the region from an economic European partnership is a means to materialise the European
and political point of view, which would benefit from a stable perspective of the western Balkan countries within the
and prosperous Serbia fully integrated into the family of framework of the stabilisation and association process.
European nations. 4.2. Montenegro
The country is currently faced with strategic choices regarding In June 2006, the EU recognised the independence of
its future. The presidential elections held in February 2008 Montenegro, which became later a potential candidate for EU
confirmed Serbia’s European aspirations. On 29 April 2008, membership. On 15 October 2007 Montenegro signed the
Serbia signed a stabilisation and association agreement with stabilisation and association agreement (SAA) with the
the European Union, usually the first step towards European Community and its Member States. The SAA will
membership. On 7 July 2008 a new pro-European government enter into force once its ratification process is completed. An
was formed in Belgrade. The EU encouraged the new Serb interim agreement on trade and trade-related issues, which
government to maintain positive relations with the European was signed on the same day, entered into force on 1 January
Union and its Member States and to take a constructive 2008. The adoption of a new constitution, broadly in line with
approach towards the EU’s efforts to contribute to peace and European standards, and the signing of the SAA were major
stability in the Balkan region. The President of the European steps for Montenegro and its relations with the EU. The
Parliament, Hans-Gert Pöttering, welcoming the arrest of constitution provides a satisfactory general framework for the
Bosnian Serb war crimes suspect Radovan Karadzic (21 July) judiciary, human rights and minority rights. However,
said ‘The arrest of Mr Karadzic is a clear indication that the new Montenegro is expected to step up preparations to ensure
Serbian government is committed to meeting its international implementation. Judicial independence and accountability
obligations, in particular with respect to the UN War Crimes need to be fully respected and efforts to fight corruption and
Tribunal in The Hague’. organised crime need to be enhanced.
Kosovo 5. The former Yugoslav Republic of Macedonia
On 7 October 2005, UN Secretary-General (UNSG) Kofi Annan The country declared independence from the collapsing
recommended the UN Security Council to launch the process Yugoslav federation in September 1991. A first trade and
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cooperation agreement with the EU entered into force in observers when elections took place in the region. With the
January 1998. In April 2001, the former Yugoslav Republic of entering into force of the stabilisation and association
Macedonia was the first country of the region to sign a agreements with Croatia and the former Yugoslav Republic of
stabilisation and association agreement (SAA). The agreement Macedonia, joint parliamentary committees between the
entered into force in April 2004. An Interim agreement was European Parliament and the partner country parliaments
signed in April 2001, which allowed the trade and trade- were set up in early 2005 as institutions under the agreement.
related matters of the SAA to enter into force on 1 June 2002. Since the EP elections in 2004, the new EP delegations for
relations with the countries of south-eastern Europe have
The former Yugoslav Republic of Macedonia faced a serious been the forum for interparliamentary dialogue and contacts
political crisis in 2001, due to a violent insurgency, which led to with the other countries, i.e. Albania, Bosnia and Herzegovina,
the deployment of a NATO mission. International military Montenegro and Serbia (including Kosovo).
presence was assured by NATO until 31 March 2002, when the
EU took over from NATO with its first-ever military Inter-parliamentary meetings, to which the representatives of
peacekeeping mission. the Presidency in office of the Council of the EU, the
government of the concerned country and the European
The former Yugoslav Republic of Macedonia applied for Commission are regularly invited, have allowed, due to their
membership of the European Union in March 2004. The continuity and to the relative good knowledge of participants
European Commission adopted its opinion on this application among themselves, frank debate and have focused more and
on 9 November 2005, noting substantial progress by the more on the importance of raising the standards of democracy
country. Following the European Commission’s and human rights (e.g. media-related legislation, property
recommendation, the European Council decided on restitution) and of improving measures needed to combat
17 December 2005 to grant candidate status to the country. criminal activity, trafficking and corruption. Preparing the
The European partnership, adopted by the Council on 30 various countries for the association and stabilisation process
January 2006, identified as priorities reforms in political, and the need for not just administrative and judicial reforms
legislative, institutional and economic fields. However, while but also economic reforms (infrastructures, energy and
the pace of reforms has, on the whole, been slow during the privatisation) and appropriate legislation on a number of new
past two years, there have recently been signs of reforms issues such as the environment, public health or education
gaining momentum. The accession partnership adopted by were among the topics for discussion. Thematic seminars and
the Council on 18 February 2008 identifies eight key priorities meetings with members of the European Parliament (MEPs)
for progress in the accession process by the former Yugoslav and staff from the parliaments of candidate and potential
Republic of Macedonia. These cover proper implementation of candidate countries are also organised by the European
all commitments undertaken under the SAA, dialogue Parliament’s secretariat. (The joint parliamentary meeting on
between political parties, implementation of the law on police the western Balkans was held in Brussels on 26 and 27 May
and anticorruption legislation, reform of the judiciary and 2008. This event brought together MEPs and parliamentarians
public administration, as well as measures in employment from EU Member States and the countries of the western
policy and for enhancing the business environment. The Balkans to share experiences on EU integration and debate
former Yugoslav Republic of Macedonia needs to meet these economic, security and justice issues).
key priorities in order to demonstrate its readiness to
undertake accession negotiations. The Commission considers In general, the EP often highlights the need for respect for
that, with sufficient political will and cross-party cooperation, democracy, the rule of law and the rights of minorities in the
the necessary progress can be made in 2008. The Commission region when addressing the western Balkans . It has insisted
will assess these key priorities as benchmarks in its autumn on full and effective cooperation of the countries concerned
regular report. A recommendation on the start of accession with the International Criminal Tribunal for the Former
negotiations will depend on the results achieved. Yugoslavia, the effective implementation of a policy in favour
of the return of refugees and an active policy against
organised crime and corruption.
The European Parliament (EP) had initially set up a delegation g Sandro D’Angelo
for south-eastern Europe, responsible for all the countries of Georgios Ghiatis
the western Balkans and regularly sending parliamentary July 2008
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6.4.2. The Russian Federation
A strategic partnership with Russia is one of the EU’s top foreign policy priorities. In recent years Russia’s assertive foreign
policy has presented additional challenges for EU–Russia relations. The legal basis underpinning current relations is a
partnership and cooperation agreement (PCA) that came into force in 1997 initially for 10 years and that has been
renewed automatically. Negotiations for a new agreement started in July 2008 but may take a long time to conclude.
Background Objectives
The Russian Federation is a key partner for the European EU relations with the Russian Federation are based on the
Union. Building a strategic partnership with Russia is of vital partnership and cooperation agreement (PCA), aimed at
importance for the EU for several reasons. First of all, Russia is strengthening the strategic partnership with Russia and
the largest neighbour of the EU, with a growing importance addressing common challenges on the European continent
also due to the EU’s enlargement in 2004 and 2007. The 2003 and globally.
EU security strategy highlights Russia as a key player in geo-
political and security terms at both the global and regional Instruments
level. Russia is a key actor in the UN Security Council and one
of the key players in the common European neighbourhood. A. The partnership and cooperation agreement (PCA)
Energy security is also a defining element of EU–Russia The PCA came into force in 1997 for an initial duration of 10
relations, given that Russia is a major supplier of energy to the years, which is automatically extended beyond 2007 on an
EU and its exports are predicted to increase further in the annual basis. It sets the principal common objectives,
coming years. Trade and investment relations with Russia establishes the institutional framework for bilateral contacts,
represent another area of dynamic growth. Russia is a large and calls for activities and dialogue in a number of areas.
market for EU goods and services, with considerable The partnership and cooperation agreement is based upon
expansion and growing purchasing power, making Russia the the following principles and objectives: the promotion of
third largest trade partner of the EU. The EU’s market, on the international peace and security; and support for democratic
other hand, is by far the most important destination for norms as well as for political and economic freedoms. It is
Russian exports. Companies from the EU are the main investors based on the idea of mutual partnership, aimed at
in Russia. strengthening political, commercial, economic and cultural
ties.
The fundamental values and principles of democracy, human
rights, the rule of law and the market economy underpin the The provisions of the PCA cover a wide range of policy areas
EU–Russia bilateral relationship and its legal basis, the including political dialogue, trade in goods and services,
partnership and cooperation agreement (PCA). Russia and business and investment, financial and legislative cooperation,
the EU are committed to work together to combat new science and technology, education and training, energy,
threats to international security, such as terrorism, organised cooperation in nuclear and space technology, environment,
crime, illegal migration and trafficking in people as well as transport and culture.
drugs. Russia is also a key country in combating climate Complementing the PCA, in June 1999 the European Council
change. adopted a common strategy — the first application of this
Russia remains a major geopolitical player. Therefore The EU instrument under the common foreign and security policy
and Russia have an extensive dialogue on political issues introduced by Article 13 of the Treaty on the European Union.
around the world, including the resolution of conflicts such as The strategy gave priority to four areas of action:
those in the Middle East, Afghanistan and the western Balkans — consolidation of democracy, rule of law and public
and preventing the proliferation of weapons of mass institutions in Russia,
destruction and the relevant technologies, as in the cases of
— integration of Russia into a common European economic
Iran and North Korea.
and social space,
Energy issues created significant tensions between Russia, its — cooperation to strengthen stability and security in Europe
immediate neighbours and the EU. Recent times have seen and beyond,
significant divergences on foreign policy issues, such as
Kosovo and the so-called frozen conflicts in the former Soviet — common challenges on the European continent.
Union republics. The armed conflict between Georgia and The PCA established an institutional framework for regular
Russia over South Ossetia may have important ramifications consultations between the European Union and the Russian
for EU–Russia relations. Federation. This includes summits of Heads of State and of
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Government, which take place twice a year and define the shores of the Baltic Sea, including the countries in its vicinity and
strategic direction for relations. At ministerial level in the from north-west Russia in the east, to Iceland and Greenland in
Permanent Partnership Council (PPC) meetings are held as the west. In its scope, the ND is increasingly focusing on
often as necessary to discuss specific issues. Meetings are also north-west Russia, forming the largest territory covered by this
held at senior officials and expert level. policy. The Baltic Sea, the Kaliningrad Oblast with its
opportunities for development given its particular geographical
Political dialogue takes place at regular foreign ministers
situation, as well as the extensive Arctic and sub-Arctic areas
meetings, meetings of senior EU officials with their Russian
including the Barents Region, are priority areas for the Northern
counterparts, monthly meetings of the Russian Ambassador to
Dimension policy. It will help to ensure that no dividing lines are
the EU with the troika of the Political and Security Committee
established in the north of Europe. The ND partners are the
and at expert level on a wide range of topical international
European Union, Iceland, Norway, and the Russian Federation;
issues. Since 2005, regular consultations have been held on
others, notably the regional organisations, participate.
human rights matters.
Members from the European Parliament and the Russian 3. Black Sea cooperation
Parliament (State Duma and Federation Council) meet in the With the accession of two Black Sea littoral States, Bulgaria and
EU–Russia Parliamentary Cooperation Committee on a Romania, the prosperity, stability and security of this region
regular basis and exchange views on current issues. has become even more important. The European Commission,
therefore, proposed to complement existing policies at a
Since 1991, EC technical assistance has been one of the
regional level, such as the European neighbourhood policy
leading programmes supporting the transition process in
(ENP), the pre-accession process with Turkey and the strategic
Russia. More recently, EC assistance has been refocused on a
Partnership with Russia, with a Black Sea cooperation initiative.
limited number of areas, in order to support institutional
Cooperation may take place within existing regional
reforms in Russia and achieve a systemic impact in key
mechanisms (such as the Commission for the Protection of the
socioeconomic fields linked to the PCA implementation
Black Sea aiming at environmental protection), while
process. Previous Tacis funding is now gradually replaced by
cooperation with the Black Sea Economic Community (BSEC)
funds through the European Neighbourhood and Partnership
will also be strengthened.
Instrument (ENPI), even if relations with Russia fall outside the
framework of the European neighbourhood policy. ENPI funds C. The common spaces
are linked to the implementation of the four common spaces
At the St. Petersburg Summit in May 2003, the EU and Russia
(see below). This assistance has been complemented by other
agreed to reinforce their cooperation by creating in the long
EC instruments, such as the European Initiative for Democracy
term four common spaces in the framework of the PCA and
and Human Rights, humanitarian aid in Chechnya and
on the basis of common values and shared interests.
cooperation in science and technology. Increased
coordination at all levels is also been sought with the EU The common economic space aims to make the EU and
Member States, the international financial institutions and Russia’s economies more compatible to help boost investment
other major donors. and trade. The ultimate objective is an integrated market
between the EU and Russia, on the basis of regulatory
B. Complementary agreements and mechanisms convergence, even if it does not necessarily imply the
1. Trade and economic cooperation harmonisation of Russian norms and standards with the EU
To complement the provisions of the PCA, a number of acquis. Energy cooperation and the environment also fall
sectoral and international agreements exist, as well as other within the common economic space. On this latter point, the
mechanisms for cooperation. Steel and textiles are the main EU welcomed Russia’s ratification of the Kyoto Protocol.
sectors covered by bilateral trade agreements. The latest steel Another area of discussion is the development of pan-
agreement covers the years 2007–08 and will come to an end European networks of transport (e.g. motorways; rail links),
if Russia becomes a member of the WTO. In 2002, the EU energy (e.g. pipelines, links between electricity grids) and
granted ‘market economy status’ to Russian exporters, which telecommunications.
has some significance for trade defence measures, though
The common space on freedom, security and justice
anti-dumping is not a major aspect in EU–Russia trade at
covers the area also known as justice and home affairs. This is a
present.
growing area of cooperation between the EU and Russia,
Bilateral EU–Russia negotiations for Russia’s accession to the based on respect for human rights, as the two face the
WTO were concluded in 2004 and negotiations at multilateral pressing common challenges of terrorism, illegal migration,
level are still ongoing. cross-border crime, including trafficking in human beings and
2. The Northern Dimension and cooperation with the drugs. The EU and Russia need effective judicial and police
Baltic Sea Region cooperation to tackle these problems.
The Northern Dimension (ND) covers a broad geographic area At the same time the pursuit of increased security and safe
from the European Arctic and Sub-Artic areas to the southern borders should not create barriers to the legitimate interaction
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between the economies and societies of the EU and Russia. and Lithuania due to tensions in their bilateral relations with
Citizens should be able to travel more easily. This is the Russia.
rationale behind the recent visa facilitation agreement. This
The aim of the new agreement will be to provide a durable
may pave the way to further facilitation of travel and, in the
and comprehensive framework for EU–Russia relations based
longer term, the possibility of mutual abolition of visa
on respect for common values and will provide the basis for
restrictions.
the relationship in the coming years. It is worth noting that
The common space on external security aims to enhance Russia insisted on a brief framework agreement supplemented
cooperation on foreign policy and security issues, while by a system of sectoral agreements while the EU aims at a
underlining the importance of international organisations such comprehensive agreement based on common values. The
as the UN, OSCE and Council of Europe. There is much scope negotiations may take several years to conclude.
for Russia and the EU to combine their efforts in conflict
prevention, crisis management and post-conflict Role of the European Parliament
reconstruction. This is especially the case with regard to ‘frozen’
regional conflicts in the common neighbourhood. A. Powers
The common space on research, education and culture According to the Treaties the European Parliament (EP) must
aims to promote scientific, educational and cultural give its assent to a new agreement, as in the case of the
cooperation, particularly through exchange programmes. previous PCA. Though the EP does not participate directly in
These will foster people-to-people ties and promote better defining the strategic needs and the concrete action
understanding among societies. programmes, it had an important role to play in establishing
the framework for financial cooperation by the ENPI regulation
The Moscow Summit in May 2005 adopted roadmaps to act as that was adopted by co-decision. Furthermore, under an
the short and medium-term instruments for the agreement with the Council and the Commission concluded
implementation of the four common spaces. These build on before the adoption of the ENPI regulation, Parliament has the
the ongoing cooperation as described above, set out further right to scrutinise documents guiding the implementation of
specific objectives, and specify the actions necessary to make the ENPI before they are adopted (a procedure known as
the common spaces a reality. They thereby determine the ‘democratic scrutiny’).
agenda for cooperation between the EU and Russia for the
medium term. B. Activities
The EU–Russia Parliamentary Cooperation Committee is the
Concrete projects (both under Tacis and ENPI) are defined
institutionalised framework for interparliamentary relations. Its
through a multi-step process. First The EU sets out the
rules of procedure provide for two meetings a year; however,
priorities agreed on with the Russian partner in a country
for some years members of the European Parliament also
strategy paper for Russia. Then, based on the country strategy
visited Russia regularly in a smaller working group format,
paper, the European Commission and the Russian government
ensuring more frequent contacts. The EP’s delegation to the
work together to determine the financial resources to be
PCC meets regularly to discuss topical issues and it regularly
allocated to the priority objectives and develop the national
receives visits from Russian government officials, including
indicative programme (NIP), which covers up to four years. The
Russia’s EU Ambassador and other institutions. In 2002–03 an
current national Indicative programme covers the period
ad hoc delegation was actively following developments in
2007–10. Finally, based on the NIP, the European Commission
Chechnya.
adopts annual programmes, called action programmes. These
programmes establish the specific, detailed projects that Parliament’s regular resolutions on Russia are linked to the EU–
match the objectives set forth in the strategy paper and Russia summits. Parliament also states its position with regard
indicative programme. As projects become ready for to Russia in several other own-initiative reports on energy
implementation, the European Commission selects issues, human rights (including on the occasion of the last
contractors for the projects through a competitive tendering parliamentary and presidential elections in Russia), the Baltic
process. Sea and Black Sea regions.
C. Positions
Current status
The European Parliament’s numerous resolutions on Russia,
At the EU–Russia summit organised in Khanty-Mansiisk in June including the 2008 own initiative report on EU–Russia
2008 the parties agreed to launch negotiations on a new relations, reflect that Parliament is in favour of a
agreement to replace the existing PCA. The new agreement comprehensive new agreement with Russia that has to be
will reflect political, economic and social changes both in the underpinned by common values and interests. Human rights
EU and Russia since the entry into force of the PCA in 1997. concerns have been repeatedly raised in various contexts.
The EU negotiating mandate was adopted at the end of May Parliament asked for stepping up the EU–Russia human rights
2008, following significant reservations earlier on from Poland consultation to make it more effective and results oriented and
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reminded Russia of its commitments and responsibilities as a need of speaking with one voice in energy matters and
member of the OSCE and the Council of Europe. proposed a possible High Official for Foreign Energy Policy in
In its report on EU–Russia economic and trade relations its report entitled ‘Towards a common European foreign policy
(September 2007), Parliament supported more integrated on energy’ (September 2007). MEPs also expressed concerns
economic ties, including a possible free trade agreement in about the environmental and various other risks in the Baltic
the future. The report emphasised the importance of Russia’s Sea area related to the Nord Stream pipeline.
accession to the WTO and, in this context, the need to resolve
the problem of export duties on timber, dual energy pricing g Levente Császi
and rail fees. July 2008
The European Parliament called for a suitable Treaty basis for
energy and the security of energy supply, emphasised the
6.4.3. The South Caucasus (Armenia, Azerbaijan, Georgia)

The EU’s enlargements, its energy interests and growing attention to security issues have stimulated it to conduct an
increasingly active policy in relation to the countries of the South Caucasus. The European Parliament was in the
vanguard of calls for several EU initiatives later taken, including the appointment of an EU Special Representative for the
region and the inclusion of the three countries in the European neighbourhood policy.
Legal basis There are several reasons for the growing EU interest. Through
its enlargements, the EU has got closer to the South Caucasus
For the EU’s policy: Title V, on the common foreign and security
geographically and gained new members to which this region
policy (CFSP), of the Treaty on European Union (TEU) and
matters more. With the Rose Revolution in Georgia in 2003–04,
Articles 133(3) (trade) and 300 (international agreements) of
new prospects for the spread of democracy and economic
the Treaty establishing the European Community (EC).
reforms suddenly appeared. Soon after, when Russia
For the bilateral relationships: partnership and cooperation interrupted energy supplies to Ukraine and Georgia, quite
agreements. possibly for political reasons, the EU was gripped by a new
sense of urgency to limit its own dependency on Russian
energy. Attention was quickly turned to the oil and gas
Objectives
resources in the Caspian basin and the transit possibilities in
To stimulate the countries of the region to carry out political the South Caucasus. The EU’s new energy interest in the region
and economic reforms, contribute to the settlement of gave it an additional reason to feel concerned about the
conflicts and facilitate implementation of such settlement, unresolved conflicts there, on top of the reasons mentioned in
support intra-regional cooperation and develop the countries’ the then newly adopted European security strategy to regard
relations with the EU. regional conflicts as a key threat. At the same time, there was,
and still is, considerable reluctance in some EU Member States
Background to let the EU get deeply involved in security matters in the
South Caucasus, not least because of links to Russia.
The South Caucasus earlier attracted relatively little EU
interest, but this is no longer the case. Since 2003, the EU has
a Special Representative for the South Caucasus. Since 2004, Instruments
the three countries are included in the European A partnership and cooperation agreement (PCA) with each
neighbourhood policy (ENP). EU aid to the region has been of the countries of the South Caucasus entered into force on
increased and in 2006, it was decided to add Armenia, 1 July 1999. The initial period of application is 10 years and
Azerbaijan and Georgia to the list of countries in which the each agreement will then remain in force as long as neither
European Investment Bank can extend loans. A modest but party takes any action.
steady trend towards deeper EU engagement remains in
place and this trend also encompasses efforts to solve the The PCAs with the South Caucasian countries are similar to
conflicts in the region. those concluded with other States which emerged in eastern
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Europe and central Asia in connection with the dissolution of The ENPI and IfS regulations were adopted by Parliament and
the Soviet Union in 1991. They provide for trade liberalisation, Council under the co-decision procedure in autumn 2006. The
economic cooperation and cooperation in various other areas, implementation of these regulations is subject to democratic
including prevention of crime and illegal migration. Joint scrutiny by Parliament, meaning in particular that Parliament
bodies, including a Cooperation Council at ministerial level gets the opportunity to express its views on drafts of
and a Parliamentary Cooperation Committee, ensure a regular important documents before these documents are adopted.
political dialogue. The implementation of the agreement is
supported also by committees bringing senior officials and B. Activities
experts together. A comprehensive resolution on the EU’s policy on the South
Caucasus was adopted on 17 January 2008 on the basis of a
The preamble of each agreement recognises that support for
Foreign Affairs Committee report (see below). The EP gives
the independence, sovereignty and territorial integrity of the
rapid reactions to particularly serious human rights
respective country will contribute to the safeguarding of
developments by adopting resolutions under a special
peace and stability in Europe. Article 2 states that ‘respect for
urgency procedure.
democracy, principles of international law and human rights
[...] constitute essential elements of partnership and of this Democratic scrutiny of the ENPI and IfS implementation is
agreement’. If either party considers that the other party has carried out by the Foreign Affairs Committee.
failed to fulfil an obligation under the agreement, it can ‘take In accordance with the PCAs, the EP has set up a Parliamentary
appropriate measures’ (including suspending the application Cooperation Committee (PCC) together with each of the
of the agreement or of a part of it). national parliaments of the South Caucasus States. These
An EU Special Representative (currently Mr Peter Semneby) committees meet once a year. In between, the EP’s delegation
contributes to the implementation of the EU’s to the PCCs, commonly referred to as the EP’s South Caucasus
abovementioned policy objectives in the region. Delegation, regularly meets to discuss topical issues in relation
to the three countries.
The South Caucasus countries are covered by the European
neighbourhood policy (ENP) (6.3.3). The main element of Parliament regularly participates in election observation led by
the ENP is action plans. Action plans for each of the countries the Organisation for Security and Cooperation in Europe
in the South Caucasus were adopted in November 2006. The (OSCE) and the Office for Democratic institutions and Human
European Commission prepares annual progress reports, the Rights (ODIHR) of this organisation.
most recent of which were published in April 2008.
C. Positions
The ENP is supported by EU aid, mainly through the European In its South Caucasus resolution of 17 January 2008, Parliament
Neighbourhood and Partnership Instrument (ENPI). points to the complex geopolitical situation in the region and
Democracy and respect for human rights are promoted ‘considers it of the utmost importance, therefore, that
through the European Instrument for Democracy and cooperation with the South Caucasus be given the highest
Human Rights (EIDHR). The Instrument for Stability (IfS) is priority, not least in matters relating to energy’ (paragraph 4).
also used. In addition, the European Investment Bank (EIB) The EU’s policy towards Armenia, Azerbaijan and Georgia in
can extend loans to the South Caucasus countries. the framework of the ENP is broadly supported, but ‘more
incentives are needed to motivate Armenia, Azerbaijan and
Trade Georgia to advance on the path of reforms’ (recital C). The EU
The EU is by far the most important trading partner for all the should assume the role of security and stability actor
countries of the region. The most important component of the (recital D). Moreover, a regional policy for the South Caucasus
trade is energy exports from Azerbaijan to the EU. Oil exports should be developed (paragraphs 4 and 6) and civil society
are increasing, as a result of the opening in 2005 of the Baku– should actively be included (paragraphs 6, 21, 24 and 50). The
Tbilisi–Ceyhan (BTC) oil pipeline, which connects the Caspian importance of trade policy as an instrument for ensuring
Sea with the Mediterranean. A largely parallel Baku–Tbilisi– political stability and economic development leading to
Erzurum gas pipeline (BTE, also called the South Caucasus poverty reduction is stressed (paragraph 8).
pipeline, SCP) was opened in the beginning of 2007. In relation to the conflicts of the region, Parliament
‘advocates the use of cross-border programmes and dialogue
Role of the European Parliament among civil societies as tools for conflict transformation and
confidence-building’ and ‘welcomes especially the
A. Powers Commission’s efforts to give aid and spread information to
Before the PCAs were concluded, the European Parliament (EP) Abkhazia and South Ossetia’. The resolution calls for ‘the same
gave its assent, as required for ‘agreements establishing a kind of aid and information dissemination to Nagorno-
specific institutional framework by organising cooperation Karabakh’
procedures’ according to Article 300 (ex Article 228), third (paragraph 29). The ‘contradiction between the principles of
paragraph, of the EC Treaty. self-determination and territorial integrity [...] can be
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overcome only through negotiations on the basis of the In a resolution on Georgia of 5 June 2008, the EP strongly
principles enshrined in the UN Charter and in the Helsinki criticised steps taken by Russia to develop official relations
Final Act and within the framework of regional integration’ with the breakaway-regions Abkhazia and South Ossetia in
(paragraph 31). The EP reiterates its support for the territorial Georgia. This resolution states that Russian troops in these
integrity and internationally recognised borders of Georgia regions ‘have lost their role of neutral and impartial
(paragraph 32) as well as Azerbaijan (paragraph 33), but adds peacekeepers’ and ‘calls for a deeper European involvement [...]
in the latter case a new reference to the principle of self- to move the peace processes forward’.
determination.
Both the inclusion of the South Caucasus in the ENP and the
The ‘further internationalisation of the unresolved post-Soviet
appointment of an EU Special Representative for the region
conflicts must be one of the key issues of EU relations
were preceded by calls from the European Parliament for these
(recital H) and ‘dialogue and coordination between the EU,
measures to be taken. Major resolutions on the South
Russia and the United States should help to promote
Caucasus adopted in 2003 and 2004 also called for greater
democracy, to enhance energy security and to strengthen
efforts to promote conflict resolution and stability in the
regional security in the South Caucasus’ (K).
region, including through a Stability Pact, drawing lessons
Parliament rejects ‘all attempts by foreign powers aimed at from the Stability Pact for South-Eastern Europe.
creating exclusive spheres of influence’ (paragraph 30) and
suggests ‘the setting up of a 3 + 3 Conference on security and
cooperation in the South Caucasus’, with the three States of g Dag Sourander
the region plus the EU, the USA and Russia (38). July 2008
6.4.4. Central Asia

The EU is increasing its engagement with central Asia. The European Parliament welcomes this, but wants a shift in
tone. Although very important, energy and trade goals should not be pursued at the expense of human rights, good
governance and social development. While, for example, counter-terrorism, migration and water management require
a regional focus, EU policies towards the five countries individually should more strongly reflect the marked differences
between them on key issues such as human rights and energy. The EP believes that massive repression, corruption and
exploitation, together with absence of political rights, heighten the risks of extremism and terrorism. A cautious
approach to security cooperation is necessary as regimes use the fight against these phenomena as a pretext for
general repression.
Legal basis Concrete measures announced in the strategy include a

regular political dialogue at foreign minister level, a European
Title V of the Treaty on European Union (TEU), on the common
education initiative, a rule of law initiative, a regular and result-
foreign and security policy (CFSP); and Articles 300
oriented human rights dialogue with each of the central Asian
(international agreements) and 133(3) (specifically on
States and a regular energy dialogue. The rule of law initiative
international trade agreements) of the Treaty establishing the
should address specific priorities identified by each country.
The strategy mentions judicial reform and administrative and
commercial lawmaking as areas where the EU will provide
Objectives support. This could help to pave the way for investments by
EU companies and dovetails with the aim to promote
The EU’s central Asia strategy, adopted in 2007 and available
development of energy, transport and trade infrastructure.
via the Commission’s central Asia website, affirms that the
EU has a strong interest in a peaceful, democratic and A section of the strategy about common threats and
economically prosperous central Asia and that these aims challenges mainly discusses the importance of border
are interrelated. Strengthening central Asian States’ management. Much of the EU’s assistance to central Asia goes
commitment to international law, the rule of law, human to this. It is mentioned in passing that the EU ‘will step up
rights and democratic values, as well as to a market cooperation with the central Asian States to combat
economy, will promote security and stability, the strategy international terrorism’, but no indication of what this could
notes. mean in practice is given.
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Background The PCAs provide for trade liberalisation, economic
cooperation and cooperation in various other areas. Joint
A number of developments in recent years have sparked
bodies, including a Cooperation Council at ministerial level
increased EU interest in central Asia. The first of these
and a Parliamentary Cooperation Committee, ensure a regular
developments started with the 11 September 2001 (9/11)
political dialogue. The implementation of each agreement is
terrorist attacks in New York and Washington. In the aftermath
also supported by committees bringing together senior
of these attacks, much attention was focused on Afghanistan,
officials and experts.
but also on the lack of stability and the presence of extremist
Islamic groups in the neighbouring central Asia region. This led Article 2 states that ‘respect for democracy, principles of
to a re-evaluation of the importance of EU engagement in international law and human rights [...] constitute essential
central Asia. Council conclusions of 10 December 2001 stated elements of partnership and of this agreement’. If either party
that lasting stability and security can only be achieved through considers that the other party has failed to fulfil an obligation
continuing reform and that it is important to tackle the root under the agreement, it can ‘take appropriate measures’
causes of terrorism and conflict in the region by supporting (including suspending the application of the agreement, or
efforts to improve governance and to reduce poverty. EU aid part of it).
to central Asia began to be increased from this time.
An EU Special Representative, currently Mr Pierre Morel, is
Since 2005–06, the EU’s new keenness to diversify the sources tasked with promoting good and close relations between the
of its energy supply has also stimulated engagement. countries of central Asia and the EU, contributing to the
Kazakhstan’s oil and gas and Turkmenistan’s gas attract much strengthening of democracy, rule of law, good governance
attention. Bringing it westwards without passing Russia would and respect for human rights and fundamental freedoms in
help to limit Russia’s control of the EU’s energy imports. EU and central Asia and enhancing the EU’s effectiveness in the region.
US efforts to achieve this have, however, so far largely failed. The latter should be achieved, inter alia, through closer
coordination with other relevant partners and international
Events within the region have also brought it into focus. This
organisations, such as the Organisation for Security and
goes in particular for the Tulip Revolution in the Kyrgyz
Cooperation in Europe (OSCE).
Republic in March 2005 and the massacre of demonstrators in
the city of Andijan, Uzbekistan, less than two months later. EU aid is given mainly through the Development
Moves by Turkmenistan to relax the policy of self-isolation that Cooperation Instrument (DCI), which is taking over from the
prevailed under its former leader raise the question as to how Tacis programme. A central Asia strategy paper (not to be
the EU should react. And Kazakhstan’s failure so far to honour a confused with the central Asia strategy mentioned above) and
number of its OSCE commitments now presents a special a regional indicative programme provide a framework for the
challenge in view of the fact that this country will chair the assistance. Much of the assistance has the related objectives of
OSCE in 2010. improving border management and combating drug
The EU’s growing interest in central Asia can to some extent be smuggling. The main aims are to promote stability in the
explained also by its 2004 and 2007 enlargements. They region and to reduce the flow of drugs to the EU. EU aid
somewhat reduced the geographical distance to central Asia should also support poverty reduction in the poorest
and triggered the launch of the European neighbourhood countries. Slightly less than EUR 80 million per year is allocated
policy (ENP) (6.3.3). This policy covers, inter alia, the South to central Asia in the years 2007–10. About a third of this
Caucasus and has therefore made the westernmost central amount should go to regional cooperation and the rest to
Asian countries ‘neighbours of our neighbours’. national programmes. Tajikistan and Kyrgyzstan (the poorest
countries) receive the highest sums. Limited funding from the
European Neighbourhood and Partnership Instrument (ENPI)
Instruments may be given for specific projects or programmes of a global,
Partnership and cooperation agreements (PCAs), similar to regional or cross-border nature.
those with east European countries, were concluded with Through the European Instrument for Democracy and
Kazakhstan, Kyrgyzstan and Uzbekistan in the mid-1990s and Human Rights (EIDHR), support is given to relevant civil
entered into force on 1 July 1999. Negotiations on PCAs with society organisations (except in Turkmenistan and Uzbekistan,
the two other countries of the region, Tajikistan and where government policies make it almost impossible for such
Turkmenistan, were concluded in 1998 and 2004 respectively. organisations to survive and foreign support to them is being
The ratification process for the Turkmenistan agreement was blocked). The Instrument for Stability (IfS) is used in
subsequently blocked by the European Parliament, due to Kyrgyzstan.
large-scale human rights violations in the country. Interim
agreements covering the trade aspects of the PCAs and not The Commission has a delegation to Kazakhstan, with offices
requiring ratification by the Member States have been also in the Kyrgyzstan and Tajikistan. It plans to open a
prepared. The interim agreement with Tajikistan entered into delegation to Uzbekistan and a Europa House in
force in May 2005. Turkmenistan.
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Trade Positions
From the EU perspective, EU trade with the central Asian The EP’s resolution on the EU’s central Asia strategy of
countries is minuscule. The share of total EU imports is 0.1 % 20 February 2008 stresses that social reforms, the fight against
or lower for all of the countries, with the notable exception of corruption and fair and sustainable economic development
Kazakhstan, which approaches 1 %. Energy imports from are crucial to ensuring long-term stability, security and
Kazakhstan and exports of various goods to it are now prosperity in central Asia (paragraph 10). It states that ‘it follows
booming, with roughly 40 % increases in total imports from, from the EU’s security and other interests, as well as from its
as well as exports to, Kazakhstan in 2006. values and support for the MDGs (millennium development
goals), that the hardship and lack of opportunities faced by
For Kazakhstan the EU is the most important trading partner. many people in this region [...] must be placed at the very core
For Tajikistan and Uzbekistan the EU is in second position, for of the EU’s approach to central Asia’ (recital I).
Turkmenistan it is in third, and for Kyrgyzstan the EU is in fifth
position. Further trade data is available in the bilateral trade Parliament considers ‘the strategy to be insufficiently
data section of the Commission’s external trade website. ambitious with regard to bilateral cooperation on human
rights, the rule of law, good governance and democratisation’
(paragraph 19). Human ‘rights issues should carry equal weight
Role of the European Parliament with the EU’s robust approach to energy, security and trade’
(paragraph 4). The resolution condemns ‘the persecution of
Powers
human rights defenders in Uzbekistan and Turkmenistan’
The EP’s assent is necessary for the conclusion of ‘agreements (paragraph 22). Other problems that are mentioned are abuse
establishing a specific institutional framework by organising of women (paragraphs 28 and 29), child labour (paragraph 30)
cooperation procedures’ (Article 300(3) (ex Article 228) of the and extradition of asylum seekers (paragraphs 33 and 34). The
EC Treaty). Partnership and cooperation agreements (PCAs) fall Council and the Commission are called upon ‘to set clear
within this category. PCAs with Kazakhstan, Kyrgyzstan and benchmarks, indicators and targets [in the areas of democracy,
Uzbekistan are in force, a PCA with Tajikistan is at the good governance, the rule of law and human rights], in
ratification stage and a corresponding agreement with consultation with the central Asian partner countries’
Turkmenistan has been negotiated. (paragraph 21). Specific references are made to political
The DCI regulation was adopted by Parliament and the prisoners, the media, the climate for human rights defenders
Council under the co-decision procedure in autumn 2006. DCI and the level of cooperation with UN special rapporteurs and
implementation is subject to democratic scrutiny by mechanisms (paragraphs 20 and 21).
Parliament, meaning in particular that Parliament gets the In relation to extremism and terrorism, the resolution states
opportunity to express its views on draft documents (strategy that ‘examples of massive repression, corruption and
papers, indicative programmes, annual action programmes, exploitation, and the denial of people’s fundamental rights and
‘project fiches’) before they are adopted. opportunities to improve their lives, together with the absence
of accepted channels for expressing grievances and
Activities participating in political processes, heighten the risks that
A comprehensive resolution on the EU’s central Asia strategy extremism and terrorism will grow’ (recital AD). It is also noted
was adopted on 20 February 2008 on the basis of a Foreign that ‘in some cases, the “fight against terrorism” is used as a
Affairs Committee report. The EP gives rapid reactions to cover for repressive actions against those who criticise the
particularly serious human rights developments by adopting government, human rights defenders, religious movements
resolutions under a special urgency procedure. and ordinary businesspeople’ (recital V). While recognising the
Democratic scrutiny of DCI implementation is carried out by need for regional cooperation on counter-terrorism (paragraph
the Development Committee, with the help of working groups 5), the EP emphasises ‘that EU contacts with security structures
set up by this committee. or EU support for security cooperation involving highly
repressive States should be minimised, and that any such
Because of the huge scale of the human rights violations in contacts should always be conducted transparently’
several of the central Asian countries, the EP’s Subcommittee (paragraph 23).
on Human Rights frequently discusses the situation there, not
Given the huge differences between the central Asian States,
least with human rights organisations.
the EU must differentiate its policies accordingly (recital T). The
Parliamentary cooperation committees (PCCs) have been set differentiation of the EU policy between the countries
up with the central Asian States with which a PCA is in force. should ‘be based in particular on the human rights situation in
PCCs normally meet once a year. Interparliamentary meetings each country, their government’s respect for OSCE
(IPMs) are held with the other two States of the region. The EP commitments, their development needs and their
delegation to the PCCs and IPMs regularly meets to discuss government’s commitments to improving the welfare of
topical issues in relation to the region. The EP has participated citizens, their current and potential importance to the EU as
in election observation missions in Kazakhstan and Kyrgyzstan. partners in trade, cooperation on energy and in other areas,
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and dialogue on international issues, and the prospects for the EP ‘urges the Kyrgyz authorities to safeguard the
success of EU actions, including various forms of assistance’ appropriate checks and balances’ in its political system
(paragraph 6). The Commission is called upon ‘to provide (paragraph 54). According to the EP resolution, the president
regular and detailed information to Parliament on the way in of Tajikistan ‘has systematically repressed all opposition’
which bilateral and regional assistance will relate to individual (paragraph 56). The ratification of the EU–Tajikistan partnership
MDGs and on the budget planned for the health and basic and cooperation agreement (PCA) should nevertheless be
education sectors’ (paragraph 9). accelerated and the EP aims to give its approval ‘in the near
The EP considers ‘that cooperation on the EU’s external energy future’.
policy is of the greatest importance in the context of its central ‘Turkmenistan must make progress in key areas in order for
Asia strategy’ and ‘supports, therefore, efforts by the EU to the EU to be able to move ahead with the interim agreement,
boost gas and oil imports from Kazakhstan and Turkmenistan inter alia, by allowing the International Committee of the Red
and to diversify transit routes’. It also ‘calls for active EU energy Cross free and unfettered access, by unconditionally releasing
cooperation with the region, especially with Kyrgyzstan, all political prisoners and prisoners of conscience, by
Tajikistan and, if possible, Uzbekistan, in order to address abolishing all government impediments to travel, and by
energy problems of particular importance to their huge allowing all NGOs and human rights bodies to operate freely in
human and economic development needs, difficult inter-State the country’ (paragraph 64).
relations and precarious security of supply’ (paragraph 81). Through the resolution, the EP also ‘confirms its support for the
Economic issues, including accession to the World Trade sanctions against Uzbekistan imposed by the EU after the
Organisation of further countries in the region, are Andijan massacre’ (paragraph 67), supports ‘the establishment
commented upon (paragraphs 11 to 18) and environmental of a human rights dialogue’ and ‘rejects every tendency to use
issues, including water issues, are dealt with in a specific the mere existence of this dialogue as an excuse for lifting
section (paragraphs 74 to 79). sanctions’ (paragraph 68). The Commission is urged to ‘lay
The resolution also includes a section on each of the central down concrete obligations and establish more efficient
Asian countries. The EP supports ‘the decision to let monitoring mechanisms’ (paragraph 69).
Kazakhstan assume the Chairmanship of the OSCE in 2010,
made possible by Kazakhstan’s pledges to defend the current g Dag Sourander
mandate of the ODIHR and to democratise and liberalise the July 2008
political system in Kazakhstan’ (paragraph 48). Commenting on
the new constitution of Kyrgyzstan adopted in October 2007,
6.4.5. The southern and eastern Mediterranean countries

The Euro-Mediterranean Partnership (EMP), established at the Barcelona Conference in November 1995, forms the basis
for cooperation between the EU and the Mediterranean countries. The EMP, enhanced since 2004 by the southern
dimension of the European neighbourhood policy, has a bilateral and a regional component. Financial support for the
EMP is provided through the European Neighbourhood and Partnership Instrument (ENPI), which came into force on
1 January 2007. At the Paris Summit in July 2008, the ‘Union for the Mediterranean’ was launched in an effort to give fresh
impetus to the EMP.
Legal basis Background

Title V of the Treaty on European Union. The end of East-West rivalry paved the way for a new
Articles 133 and 310 of the Treaty establishing the European North–South relationship. In parallel to the process of redefining
Community (EC). the EU’s links with the eastern part of Europe, it became
necessary to strengthen its relations with its Mediterranean
(Articles 188 and 217 of the Lisbon Treaty) neighbours as well. The prospect of a solution of the Arab-Israeli
conflict with the Oslo Agreements in the mid-1990s dominated
the hopes for cooperation with the Mediterranean that were
initiated in 1995 with the Barcelona process.
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Since then, the regional and international parameters have — As of 1 January 2007 the new European Neighbourhood
undergone a number of changes: the 2004 enlargement of the and Partnership Instrument (ENPI), within the European
EU with the initial partner countries, Malta and Cyprus, having neighbourhood policy, has replaced the MEDA regulation
joined as Member States; the opening of EU membership as the principal financial instrument for the
negotiations with Turkey, the fallback into violence in the implementation of the partnership. The following
Middle East, the Iraq crisis, the widespread outbreak of allocations have been made for 2007–10 (in millions of
terrorism and its impact on societies and, finally, the increasing euros): Regional Programme — South (343), Algeria (220),
importance of controlling migration flows. In response to Egypt (558), Israel (8), Jordan (265), Lebanon (187),
these changes, the EU launched its European neighbourhood Morocco (654), Syria (130), Tunisia (300), West Bank and
policy (ENP) in 2004 to reinforce and complement the Gaza Strip (632).
Barcelona Process (6.3.3).
Results
Objectives
A. In the political and security field:
The Euro-Mediterranean Conference of Ministers of Foreign
— information and training seminars for Euro-Mediterranean
Affairs, held in Barcelona on 27 and 28 November 1995,
diplomats;
established three main objectives of cooperation:
— network of foreign policy institutes (EuroMeSCo);
— the creation of a common area of peace and stability based
on the principles of human rights and democracy through — adoption of a plan for the management of natural disasters;
the reinforcement of political and security dialogue
— adoption of a code of conduct on countering
(political and security chapter);
terrorism;
— the construction of a zone of shared prosperity through
— enhanced political dialogue including subcommittees on
the progressive establishment of free trade between the
human rights set up with various countries under the
EU and its Mediterranean partners (2010) and amongst the
association agreements;
partners themselves (economic and financial chapter);
— Euro-Mediterranean human rights network;
— the improvement of mutual understanding among the
peoples of the region and the development of a free and — judicial cooperation
flourishing civil society (social, cultural and human B. In the economic and financial field:
chapter).
— on the basis of the 2007–10 budget allocation of
EUR 2 630.3 million, tri-annual national indicative
instruments programmes have been drawn up at national level; a
— The EU carries out a number of activities at bilateral level regional programme covers multilateral activities;
with each country. The most important are the association — since 2003 the EIB has been lending to Mediterranean
agreements which have entered into force with Algeria partners through the Facility for Euro-Mediterranean
(2005), Egypt (2004), Israel (2000), Jordan (2002), Lebanon Investment and Partnership (FEMIP); its transformation into
(2006), Morocco (2000), the Palestinian Authority (1997 a Euro-Mediterranean Development Bank has been under
interim agreement), Tunisia (1998) and Turkey (since 1996 a discussion for some time;
customs union is in force). With Syria, signature is still
pending. Negotiations on the liberalisation of services and — as an important step towards regional economic
investment were opened with interested Mediterranean integration, the Agadir Agreement for free trade between
partners. Since 2007, Mauritania and Albania have Egypt, Jordan, Morocco and Tunisia entered into force in
advanced from observer status to full membership of the March 2007;
Barcelona process but do not have an association — network of economic research institutes (Femise).
agreement with the EU.
C. In the social, cultural and human field:
— At multilateral level, regional dialogues and activities take
— since the events of 11 September 2001, the dialogue
place under all three chapters of the Barcelona Process. The
between cultures and civilisations has been strengthened,
Euro-Mediterranean Committee for the Barcelona Process
including through the setting up of the ‘Anna Lindh Euro-
consists of representatives of EU Member States,
Mediterranean Foundation for the Dialogue between
Mediterranean partners and the European Commission. It
Cultures’ which is to promote intellectual, cultural and civil
meets on a quarterly basis at senior official level and is
society exchanges;
chaired by the Presidency of the EU Council. The Committee
acts as a multilateral steering body for the entire regional — the Euromed Heritage, Euromed Audiovisual, Eumedis
process with the right to initiate activities to be financed by (develop information society) and Euromed Youth
the EU. It also prepares ministerial meetings, conferences etc. programmes are now operating;
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— the Euro-Mediterranean Civil Forum, which brings together observation to support the democratisation process in the
NGOs, trade unions and regional groups, meets before partner countries.
each meeting of the Euro-Mediterranean Ministers and is
coordinated by the Euromed Non Governmental Platform As the parliamentary institution of the Barcelona process, the
constituted in April 2005 to add coherence to the Civil EMPA has since 2003 brought together representatives of the
Forum activities and enhance civil society’s participation in European Parliament, EU national parliaments and parliaments
the Barcelona process; of the Mediterranean partners. Its 260 members consist of 130
MPs from national parliaments of the Mediterranean countries
— programme for the cooperation in higher education and 130 from the European Union, of whom 81 are appointed
(Tempus). by national parliaments and 49 by the European Parliament.
With the expansion of its membership through the ‘Union for
Further development the Mediterranean’ process, the allocation of EMPA seats will
have to be adjusted, but the total of 260 seats will be
At the instigation of French President Nicolas Sarkozy, the
maintained.
Barcelona process was politically enhanced by the launch of
the Union for the Mediterranean at the Paris Summit for the The first session of the EMPA was held in March 2005 in Cairo.
Mediterranean on 13 July 2008. It comprises the 27 members An extraordinary session took place in Rabat in November
of the European Union, the 10 countries of the Barcelona 2005 to celebrate the 10th anniversary of the EuroMed
process (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the partnership. The second session of the EMPA met in Brussels in
Palestinian Authority, Syria, Tunisia and Turkey) and Albania, March 2006, the third was held in Tunis in March 2007, and the
Bosnia and Herzegovina, Croatia, Monaco, Montenegro and fourth session took place in Athens in March 2008. In October
Mauritania. 2008, the EMPA will convene again for an extraordinary plenary
With a new leadership structure (summits of the Heads of session in Jordan.
State or Government to be held every two years, a Four parliamentary committees prepare the work of the
co-presidency of one president from the north and another plenary in the partnership’s main policy areas: the Committee
from the south, a Joint Permanent Committee in Brussels and on Political Affairs, Security and Human Rights; the Committee
a small secretariat), the aim is to drive forward a number of on Economic, Financial and Social Affairs and Education; the
practical regional projects. Once the Lisbon Treaty enters into Committee on Improving Quality of Life, Exchanges between
force, the co-presidency on the EU side will comprise the Civil Societies and Culture (each with 70 members); and the
President of the European Council and the Commission Committee on Women’s Rights in the Euro-Mediterranean
President (at the level of the Heads of State or Government) countries, newly established in 2008 (50 members).
and the High Representative/Vice-President of the
Commission (at foreign minister level). The EMPA plays a consultative role.
At the Paris Summit, six key initiatives were identified: de- — It provides parliamentary impetus, input and support for
pollution of the Mediterranean (building on the current the consolidation and development of the partnership.
‘Horizon 2020’ programme); expansion of maritime and land
highways; more intensive use of solar energy; development of — It expresses its views on all issues relating to the
regional research programmes through the Euro- Partnership, including the implementation of the
Mediterranean University in Slovenia; civil protection; and the association agreements.
Mediterranean Business Development Initiative.
— It adopts resolutions or recommendations, which are not
Financing: besides contributions from the EU budget (in legally binding, addressed to the Euro-Mediterranean
particular the EU regional programmes, as project funding Conference.
must not take place at the expense of bilateral allocations)
and partner countries’ contributions, new sources of In its resolution of 5 June 2008, the European Parliament
financing must be tapped, e.g. private sector participation, welcomed the initiative to establish the Union for the
international financial institutions and contributions from Mediterranean as a means to give fresh impetus to the
other countries. multilateral relations of the EU with its Mediterranean partners,
but emphasised that the achievements of the Barcelona
process should be duly taken into consideration. The EP has
Role of the European Parliament been critical from the outset about the creation of parallel
The EP and a number of EP bodies (committees, delegations structures or structures which overlap with the Barcelona
and the EP’s delegation to the Euro-Mediterranean process. In particular, the EP underlines the fact that greater
Parliamentary Assembly (EMPA)) are closely involved with the democratic legitimacy is necessary, as is a stronger role for the
development of the Barcelona process and have been EMPA, the only parliamentary assembly uniting the EU and the
particularly proactive in promoting the parliamentary Mediterranean, and it considers that the EMPA should have the
dimension of the partnership, including through election right to make proposals and assessments.
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In its Declaration on the Union for the Mediterranean, issued

on 12 July 2008, the EMPA Bureau takes up these demands
and calls for the EMPA, as a legitilately elected assembly, to
hold the new institutional structure of the Barcelona process:
Union for the Mediterranean to account.
g Stefan Krauss
July 2008
6.4.6. Arabian peninsula, Iraq and Iran

The EU has concluded a cooperation agreement with the countries of the Gulf Cooperation Council and a cooperation
agreement with Yemen. Relations between the EU and Iraq are limited to humanitarian assistance and the launching by
the EU of an integrated mission for the rule of law in Iraq. Currently the EU has no contractual relations with Iran and the
Commission does not have a delegation in Tehran.
Legal basis organisations, in view of the stabilising influence which further

Title V of the Treaty on European Union (TEU) (common integration between the Gulf States would inevitably have in
foreign and security policy). that region. Since 1994 there has been a GCC delegation in
Brussels, and in early 2004 the EU opened a delegation in
Articles 133 and 308 of the Treaty establishing the European Riyadh, the seat of the GCC Secretary General.
Community (EC).
Article 188N(6) and Article 188C(2) of the Lisbon Treaty. Objectives
— To contribute to strengthening stability in a region of
I. The countries of the Gulf strategic importance.
Cooperation Council (GCC) — To secure European energy supplies.
— To facilitate political dialogue.
Background — To broaden cooperation in various economic and technical
The oil-rich Gulf countries, where approximately 20 % of the fields, including through strengthening the process of
EU’s energy needs are sourced, are witnessing considerable economic development and diversification of the GCC
social and political dynamics, albeit reforms progress at an countries.
uneven pace. GCC countries like Saudi Arabia and Qatar have
also been ever more active as key diplomatic players in the Instruments
Middle East. While the EU has the ambition to become a
significant political agent in the region, EU–GCC relations have A. Cooperation agreement
been largely defined by economic and trade ties. Trade The agreement was signed in 1989 and entered into force on
volumes between the two sides have steadily increased since 1 January 1990. Its main aim is to facilitate transfers of
the 1980s. The GCC is the Union’s sixth largest export market technology through joint ventures and to promote
and principal trading partner in the Arab world. Economic cooperation on standards. However, it also covers trade,
interdependency is also at the core of EU efforts to support agriculture and fisheries, industry, energy, science and
the process of regional integration. technology, investment and environment. The agreement is
The GCC was established on 25 May 1981, with six countries as administered by a Joint Cooperation Council at ministerial
members: Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the level, which has met every year since 1990, alternating
United Arab Emirates sharing common points of culture and between Europe and the Gulf countries. Working groups have
language. The GCC’s monetary union project (initially been established in the fields of energy and the economy.
scheduled for 2010) bears similarities with the euro area B. Free trade agreement
experience and offers many possibilities for comparison. Negotiations on a free trade agreement started in 1990 but
The EU and the GCC have stated on a number of occasions faced a standstill pending the decision from the GCC in 1999
their joint positions on the problems of the Middle East and on to move towards a customs union by March 2005. Without
ways of establishing closer relations between the two that the EU would have to enter into agreements with each
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individual State, i.e. not with the GCC as such. The EU adopted management of natural resources. Relations were
a new set of negotiating directives in July 2001, including strengthened in 2004 when the European Commission
services and other areas included in recent FTAs. New clauses opened a Delegation in Sana’a and a political dialogue
on human rights, non-proliferation and counter-terrorism between the EU and Yemen was established.
confer the agreement a clear significance beyond trade. The EU deployed an elections observation mission for the 20
However, these clauses are also a major stumbling block in the September 2006 presidential and local elections that found
negotiations which resumed in March 2002 and have been the elections open and genuinely contested, but identified a
continuing since. series of democratic shortcomings related to the publication
C. Financing instruments of results, the participation of women, and the use of State
funds in the campaign.
Since 1 January 2007 funds from the financing instrument for
cooperation with industrialised and other high-income Cooperation remains the main component of the EU’s
countries and territories (ICI) are available for financing relations with Yemen. Since Yemen’s unification in 1990 to
measures to implement the EU–GCC cooperation agreement. 2006, the country was allocated EUR 200 million. The 2007–10
This includes the: assistance strategy focuses on good governance, private
sector development and human capital development. It is
— promotion of cooperation, partnerships and joint
accompanied by a EUR 60 million aid package. Beyond the
undertakings between economic, academic and scientific
bilateral assistance, Yemen can also benefit from thematic
actors;
programmes, such as food security, the European Instrument
— the stimulation of bilateral trade, investment flows and for Democracy and Human Rights, the migration and asylum
economic partnerships; programme, the ‘Investing in people’ programme, non-State
actors and local authorities in development, and the
— the promotion of dialogues between political, economic
environment programme as well as the renewed Erasmus
and social actors and other non-governmental
Mundus programme to facilitate exchanges of students.
organisations in relevant sectors;
— the promotion of people-to-people links, education and
training programmes and intellectual exchanges;
Under the Lisbon Treaty, Article 188N.6 the consent of the
— the promotion of cooperative projects in areas such as European Parliament is required for all trade agreements and
research, science and technology, energy, transport and co-decision applies to all autonomous commercial policy
environmental matters (including climate change), instruments (Article 188C.2). Hence, Parliament will have a
customs and financial issues. The GCC countries also greater say, including on trade relations with the GCC.
benefit from the Erasmus Mundus programme.
The EP covers most of the region through its Delegation for
relations with the Gulf States, including Yemen, which
Current status periodically holds interparliamentary meetings with individual
Whereas the conclusion of the agreement has many times Gulf States. Latest EP Delegation visits took place to Bahrain at
been announced as being imminent, few but crucial issues the beginning of the 1980s, to Qatar in 1990 and to the UAE in
remain to be tackled. The EU–GCC Joint Council at its 18th 2007.
session in Brussels on 26 May 2008 encouraged negotiators In January 2007, Qatar’s Second Deputy Prime Minister and
from both sides ‘to prepare the agreement for initialling before Minister of Energy and Industry, Abdullah Bin Hamad Al-
the end of 2008’. Attiyah visited the EP and met with the Committee on
Increased efforts are under way to raise awareness among GCC Industry, Research and Energy (ITRE).
countries of the EU, its policies and its role as an international Qatar’s Amir Shaikh Hamad bin Khalifa Al-Thani addressed the
actor. A first information day on research and development Plenary in Strasbourg in November 2006 criticising in particular
cooperation was held in Riyadh. Experts meetings on the international community’s boycott of the Palestinian
environment and climate change took place and the potential government.
cooperation between the EU and the GCC in the field of
sustainable and clean energy policies and technologies is Bahrain’s Vice-Prime Minister Shaikh Mohammed bin Mubarak
being explored. Al-Khalifa visited the EP on 3 May 2007 expressing Bahrain’s
wish to closer cooperate in terms of exchange and capacity
building.
II. Yemen
The EP has criticised the arrangements concerning the GCC
Yemen is the poorest country in the Middle East. EU–Yemen free trade agreement, firstly because the Council did not
relations are based on the 1997 cooperation agreement, consult it before adopting a negotiating mandate and,
covering trade, development cooperation, culture, secondly, because it believes that the agreement might have
communication and information, environment and negative effects on the EU’s petrochemical and fertiliser
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industries. It has called on the Commission to include for the relations with Iraq in February 2008. The Delegation
mechanisms in the agreement which prevent any distortion of aims to contribute to parliamentarian exchanges, to capacity
competition between the parties. building and training/information on the work of
parliamentary structures and legislative procedures.
In its resolution of 10 March 2005, the EP welcomed the first-
ever nationwide electoral process in Saudi Arabia, witnessed High-ranking visits to the EP related to Iraq include Kurdish
by a European Parliament delegation. However, it called also President Barzani in May 2007, Speaker Mashhadani in October
for enhanced women’s rights, the abolition of the death 2008, Deputy Speaker Sheik Khalid al-Attiya in February 2008,
penalty and an upgrading of the working conditions and the UN Secretary General’s Special Representative for Iraq,
treatment of immigrant workers. Staffan de Mistura, on 10 April 2008, and Iraqi Prime Minister
Nuri al-Maliki on 16 April 2008.
There are no specific resolutions on Yemen.
The EP resolution on the EU’s role in Iraq of 13 March 2008
III. Iraq following the report of Ana Maria Gomes (PSE) recommends ‘a
new reinforced strategy for action’, based on respect for
human rights. One of the cornerstones of the report is the
Background suggestion to engage more fully with Iraqi parliamentarians.
Since the end of the war against Iraq, the EU, through the The reinforced strategy would include:
European Commission has been a major aid with the — using existing EU financial instruments to channel
implementation of the IRFFI (International Reconstruction European financial assistance, rather than multilateral trust
Fund Facility for Iraq) in the process of making Iraq slowly but funds (see the EP’s continued requests to the European
surely viable. The IFFRI has two distinct trust funds working Commission for more transparent information related to
independently: the discharge exercise 2006);
— the United Nations Development Group Iraq Trust Fund; — encouraging the Iraqi government to commit more funds
— the World Bank Iraq Trust Fund. to helping refugees and displaced persons;
The European Commission granted the amount of EUR 829 — supporting the Commission’s negotiations of a trade and
million from 2003 to 2007. Those funds have been divided cooperation agreement;
through various sectors such as basic services (education, — persuading European businesses to return to Iraq;
health, infrastructure, water and sanitation), human
development (agriculture, rural development, poverty — engaging with Iraq’s neighbours, including Iran, Syria, Saudi
reduction, durable solution for refugees), political process Arabia and Turkey.
(elections, constitutional process) and capacity building (civil
society, human rights, trade and customs, technical assistance, IV. Iran
justice and the rule of law). With a 44 % share the EC is first in
the IRFFI donors’ contributions list. The EU’s relations with Iran are dominated by the nuclear issue,
meaning Iran’s suspected pursuit of nuclear weapons
An integrated EU rule of law mission (EU-JUST LEX), launched on capability and the international community’s attempts to
1 July 2005 under the scope of the ESDP, contributes to enhance make Iran halt the most sensitive nuclear activities. The EU’s
the rule of law, providing training for almost 800 Iraqi judges, High Representative for the Common Foreign and Security
police and prison officers. The positive impact of the EUJUST LEX Policy, Mr Javier Solana, also represents China, France, Russia
programme has repeatedly been highlighted by the Iraqi the UK and the USA (i.e. the permanent members of the UN
authorities. In September 2007, the EUJUST LEX mission was Security Council, also referred to as ‘the P‑5’), as well as
extended for another 18 months until 30 June 2009. Germany, when seeking the start of negotiations with Iran on
Negotiations for a trade and cooperation agreement (TCA) a settlement of the nuclear issue.
between the EU and Iraq started on 20 November 2006. Talks A further obstacle to closer EU relations with Iran is the Iranian
cover trade, especially of goods and services, but also deal with regime’s massive and further increasing violations of human
issues such as combating poverty, protecting the environment rights.
and education. Human rights issues, counter-terrorism and the
proliferation of weapons of mass destruction will also be The EU does not have any contractual relations with Iran. In
tackled. A third round of talks took place in February. The 2001, the Council approved a Commission communications
signing of the TCA could materialise in early 2009. on EU relations with Iran which set out perspectives and
conditions for developing closer relations with Iran, including
the conclusion of a trade and cooperation agreement. The EU
Role of the European Parliament Council adopted a negotiating mandate for such an
In order to strengthen its relations with the Iraqi Council of agreement the following year. Progress in deepening
Representatives, the EP set up a permanent ad hoc Delegation economic and commercial cooperation with Iran should go in
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parallel with progress on political issues, in particular as Role of the European Parliament
regards the attitude to human rights, non-proliferation, The Iran nuclear issue is regularly discussed by the European
terrorism and the Middle East peace process. Parliament (EP) with Mr Solana, his personal representative on
Iran has signed and ratified the Nuclear Non-Proliferation non-proliferation of weapons of mass destruction, Ms Annalisa
Treaty (NPT) and a safeguards agreement, through which non- Giannella, representatives of the Presidency-in-office of the
nuclear-weapon States undertake not to acquire nuclear Council of the EU and other interlocutors, occasionally
weapons and accept subjecting themselves to certain including an Iranian representative at top level. These
controls. Reports from the International Atomic Energy Agency discussions mainly take place in the EP plenary, the Foreign
(IAEA) on the implementation of the safeguards agreement Affairs Committee and the Subcommittee on Security and
have, however, fuelled suspicions that Iran is nevertheless Defence.
carrying out preparations for constructing nuclear arms. An EP Delegation for relations with Iran follows developments
The three EU Member States, Germany, France and the United in this country and in Iran’s international relations. EP–Iran
Kingdom (the ‘EU-3’) in 2003 took the lead in efforts to reach interparliamentary meetings were held in Brussels in 2006 and
an agreement with Iran providing guarantees of the peaceful in Tehran in 2007. Human rights issues in relation to Iran are
nature of its nuclear activities. With the support of the EU High also dealt with by the EP’s Subcommittee on Human Rights.
Representative for the Common Foreign and Security Policy, In a number of resolutions on Iran adopted in recent years (to
Mr Solana, the EU-3 on 15 November 2003 reached an find them, click this link and search for the word ‘Iran’), the
agreement with Iran on full suspension of all enrichment and European Parliament has criticised the human rights situation
reprocessing activities and negotiations on long-term in the country, often drawing attention to individual cases and
arrangements. This agreement is known as the Paris calling for the release of certain prisoners. The most recent
Agreement. such resolution was adopted on 16 November 2006.
In August 2005, following the election of Mr Ahmadinejad as Parliament supports the work of the EU-3. In a resolution of
new President and rejection of an EU-3 proposal for a 15 February 2006, it stated that the nuclear issue must be
framework for a long-term agreement, Iran announced that it resolved in accordance with international law and that a
would resume uranium conversion — an enrichment-related comprehensive agreement, which takes account of Iran’s
activity. In the beginning of 2006, Iran proceeded to uranium security concerns, should be strived for (paragraphs 8 and 9
enrichment. The IAEA reported the case to the UN Security respectively). A zone free of weapons of mass destruction
Council, which called on Iran to end sensitive activities. In June (WMDs) in the Middle East could, according to this resolution,
2006, a package of incentives and disincentives was presented be an important step towards meeting security concerns of
to Iran by Mr Solana on behalf of the EU, the P-5 and Germany. the countries of the region (paragraph 14). A resolution of
Against the background of continued failure to reach a 31 January 2008 clearly rejected the idea of military action and
diplomatic solution, the UN Security Council in UNSC regime change policies (paragraph 5).
resolution 1737 of 27 December 2006 decided that limited
sanctions should be imposed on Iran. The scope of these Aggressive statements on Israel by President Ahmadinejad
sanctions was widened in UNSC resolution 1747 of 24 March prompted the adoption of a specific resolution of
2007 and UNSC resolution 1804 of 3 March 2008. While 17 November 2005, condemning these statements.
implementing these and some additional sanctions, the EU
continues to seek a negotiated settlement. Mr Solana, still g Stefan Krauss
acting on behalf of the EU, the P-5 and Germany, in June 2008 Dag Sourander (Iran parts)
presented an updated and somewhat expanded package of July 2008
incentives to Iran.
Meanwhile, the human rights situation in Iran has further
deteriorated. The EU strongly criticises, inter alia, the frequent
use of the death penalty.
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6.4.7. Transatlantic relations: the USA and Canada

The EU–US relations are based on political cooperation marked by the Transatlantic Declaration of November 1990, on
the New Transatlantic Agenda and the joint action programme of 1995 as well as on a strong economic cooperation. The
EU-Canada relations are very old and date back to 1959. These linkages are also based on the framework agreement for
trade and economic cooperation of 1976.
Legal basis — biannual consultations between the Commission and the

— For the USA: Article 133 of the Treaty establishing the US government at cabinet level;
European Community (EC). — briefings by the Presidency of the EU Council to US
— For Canada: Articles 133 and 308 of the EC Treaty and representatives on the common foreign and security policy
Article 101 of the Euratom Treaty. (CFSP) at ministerial level.
2. The new Transatlantic Agenda and the joint action
Objectives plan (1995)
Maintaining a free exchange of goods while protecting the The EU–US Summit of December 1995 adopted a statement of
European Union’s interests remains one of the main objectives political commitment, the New Transatlantic Agenda (NTA),
of the Union’s important trade relations with the USA. The USA and a comprehensive joint EU-US action plan. The new
and the Union play a major role in international bodies such as agenda enables the two sides to join forces to achieve four
the World Trade Organisation (WTO). Efforts to bring about broad objectives: promoting peace, development and
closer coordination have been in evidence at world economic democracy around the world; responding to global
summits and have also had tangible results in the aid challenges; contributing to the expansion of world trade; as
programme for the countries of eastern Europe. The framework well as closer economic relations and building bridges across
agreement with Canada aims to establish direct links between the Atlantic. The action plan identifies over 150 fields for action
the two parties and to consolidate and diversify economic and where the EU and the USA have agreed to work together, both
commercial cooperation to the greatest possible extent. bilaterally and multilaterally. To promote peace and stability,
the EU and the USA have pledged to cooperate in creating an
increasingly stable and prosperous Europe. Cooperation and
Achievements joint action are focused on the reconstruction of the former
Yugoslavia, on fostering democratic and economic reform in
I. United States central and eastern Europe, Russia, Ukraine and other former
Soviet republics, on securing peace in the Middle East and on
A. General a common approach to development and humanitarian
EU–US relations today are both multilateral and bilateral. In the assistance.
multilateral context, they involve working together to advance 3. The latest developments
shared goals such as democratic government, human rights
a. Areas of agreement
and market economy. This also entails EU-US common
interests in confronting global challenges such as threats to Following sharp divisions over the conflict in Iraq during 2003
security and stability, proliferation of weapons, unemployment, and early 2004, dialogue intensified once again with President
environmental degradation, drugs, crime and terrorism and Bush’s visit to Brussels in February 2005 (the first visit by a US
other issues. President to the EU institutions). This was followed by the June
2005 summit in Washington, which adopted joint declarations
B. Political cooperation on democracy, freedom and human rights; on enhancing
1. The Transatlantic Declaration of November 1990 cooperation on non-proliferation; countering terrorism; and on
The Transatlantic Declaration provides for a system of regular Africa and the Middle East. Both sides also launched an
consultations: initiative to enhance transatlantic economic integration and
growth, together with specific declarations reflecting their
— biannual consultations between the Presidency of the EU shared interest in combating counterfeiting and in ensuring a
Council plus the Commission and the US President; secure and efficient energy supply.
— biannual consultations between the EU foreign ministers b. Areas of disagreement
plus the Commission and the US Secretary of State;
Disagreements remain over issues such as genetically modified
— ad hoc consultations between the Presidency Foreign crops — which the USA is much keener to develop and exploit
Minister and the US Secretary of State; than the EU — and global competition in sectors like steel
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production and aircraft building (Boeing v. Airbus). Other Since then, the EU’s cooperation with Canada has spread far
differences of opinion also exist towards the International beyond the limited scope of the 1976 agreement, despite the
Criminal Court , the use of military force in international fact that this agreement still provides the principal legal basis
relations generally, and the balance of human and civil rights for the formal relationship between the EU and Canada. To
v. intelligence in the struggle against international terrorism. ease cooperation across a far broader range of policy areas,
political declarations were adopted in 1990 and again in 1996.
C. Economic cooperation In March 2004, both sides adopted a partnership agenda
The EU and the USA are each other’s main trading partners, identifying areas for joint action on global issues.
accounting for about two fifths of world trade. Trade flows The EU and Canada now meet in a variety of forums to take
across the Atlantic are running at around EUR 1.7 billion a day. forward their cooperative agenda. Twice-a-year meetings take
The much-publicised trade disputes in reality only concern place at foreign minister level, as do regular summit meetings
some 2 % of EU–US trade. The overall ‘transatlantic workforce’ between the Presidency of the European Council, the
is estimated at up to 14 million, split about equally, illustrating President of the Commission and the Prime Minister of
the high degree of interdependency of the two economies. Canada. The annual meeting of the Joint Cooperation
Transatlantic trade relations define the shape of the global Committee (JCC) established by the 1976 framework
economy as a whole since either the EU or the US is also the agreement meets back-to-back with informal meetings of
largest trade and investment partner for almost all other senior officials in the fields of justice and home affairs (JHA).
countries.
B. Economic relations
The EU–US summit in Washington on 30 April 2007 adopted
the ‘Framework for advancing transatlantic economic The EU remains the second most popular destination for
integration between the USA and the EU’. Key elements of Canadian direct investment after the USA. Canada is an
this framework were the adoption of a work programme of important trade partner for the EU both bilaterally (place in
cooperation and the establishment of the Transatlantic 2006) and on global trade policy.
Economic Council to oversee, guide and accelerate the Bilateral trade patterns are characterised by an exchange of
implementation of this work programme. The Transatlantic high value-added goods (machinery, transport equipment,
Economic Council (TEC) is a political body, chaired by chemicals), while agricultural products dropped to 7.8 % of
European Commission Vice-President Günter Verheugen, and Canada’s exports to the EU in 2006.
Dan Price, Assistant to the US President for International
Bilateral agreements were concluded on the recognition of
Economic Affairs. The TEC also brings together those Members
conformity assessments (1998), veterinary matters (1999),
of the European Commission and US Cabinet Members who
competition enforcement cooperation (1999) and trade in
carry the political responsibility for the policy areas covered by
wines and spirits (2003).
the framework. On the European side, the permanent
members of the TEC are the Commissioners for External The Ottawa Summit in March 2004 agreed on the framework
Relations (Benita Ferrero-Waldner), for External Trade (Peter for a Canada–EU trade and investment enhancement
Mandelson) and for Internal Market and Services (Charlie agreement (TIEA), which would provide for close cooperation
McCreevy). In addition, other Commissioners can participate between EU and Canadian regulators on subjects ranging
upon invitation by the co-chairs or upon their own request. from the mutual recognition of professional qualifications,
The first meeting of the TEC was held on 9 November 2007 in through financial services, to government procurement. After
Washington D.C. and the second took place in Brussels in May a first round in 2005/06, negotiations are currently on hold
2008. There are plans to hold a further meeting in October pending the outcome of the Doha Development Round of
2008 in order to safeguard the continuity of the process during WTO negotiations.
the critical period of the US elections.
II. Canada As with most other countries and regions of the world, the
European Parliament maintains regular interparliamentary
A. General contacts with the USA and Canada through standing
The European Community’s relationship with Canada dates delegations meeting with their counterparts at least once a
back to 1959, when an agreement was concluded between year. These contacts are among the European Parliament’s
the Government of Canada and the European Atomic Energy longest-standing external relations, dating back to 1972 and
Community for cooperation in the peaceful uses of atomic 1973 respectively.
energy (Euratom’s oldest international agreement). In 1976, the In the case of the United States, it was soon felt that a more
framework agreement for commercial and economic intense exchange was needed, and in an exception to
cooperation between the European Communities and Canada Parliament’s rules, the frequency of meetings was increased to
was concluded: the Community’s first cooperation agreement twice yearly from 1980. In the wake of the New Transatlantic
with an industrialised country. Agenda, the 50th EU–US Interparliamentary Meeting in
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Strasbourg agreed, on 16 January 1999, to recast the contacts Consumer Dialogue and Transatlantic Business Dialogue) are
in the framework of a Transatlantic Legislators’ ex-officio members of the Group of Advisers, mandated to
Dialogue (TLD). reach out to the broader stakeholder community and to give a
In addition to upgraded twice-yearly meetings, the TLD voice to their concerns.
provides the platform for continued exchange of information The European Parliament has welcomed this inclusion of
through the web, liaison between specialised committees of legislators in the new structure, but noted that it falls short of
both parliaments, teleconferences on subjects of particular its resolutions of 1 June 2006 and 25 April 2007, which
importance, as well as regular meetings with the senior-level reiterated the need to strengthen the parliamentary
group of officials preparing the annual EU–US summits. A dimension of the transatlantic framework and called for
steering committee, co-chaired by the chairs of the Delegation transforming the TLD into a transatlantic assembly.
for Relations with the United States and the Committee on
Foreign Affairs, coordinates all European Parliament activities
g Stefan Schulz
relating to the TLD. July 2008
In the context of the Transatlantic Economic Council above,
the co-chairs of the TLD (along with those of the Transatlantic
6.4.8. Latin America

The EU’s relations with Latin America take different forms: multilateral relations, as with the Rio Group, bilateral relations,
as with Central America, the Andean Community and Mercosur, bilateral agreements, such as those with Mexico and
Chile and, finally, the regular organisation of summits of the Heads of State or Government of both regions (EU/LAC).

Title V of the Treaty on European Union as regards general A. Relations with the continent as a whole
relations. 1. Development cooperation
Treaty establishing the European Community (EC): Since the 1960s, Latin America has benefited from financial
— Article 37 for fisheries agreements, and technical assistance from the European Union, which is its
biggest provider of official development aid. The aims of the
— Articles 133 and 300 for trade relations, Union’s development and cooperation policy are to combat
— Article 308 for cooperation agreements. poverty and social inequalities, to promote the integration of
developing countries into the global economy and to
Objectives consolidate the rule of law. This policy is conducted by means
of regional and bilateral agreements covering all areas of
— to reinforce political ties; commercial, technical, financial, cultural and political activity.
— to strengthen economic and trade relations; Latin America also receives assistance under specific
— to support democratic development and economic and programmes of technical and financial aid, including ALFA for
social progress in Latin American countries; university cooperation, ALBAN, a programme of high-level
scholarships, AL-Invest for cooperation between companies,
— to foster regional integration. ATLAS for cooperation between chambers of commerce,
These objectives are reflected in particular in ‘fourth- ALURE for cooperation in the energy sector, @LIS, the new
generation’ agreements, which are more ambitious than programme designed to promote more widespread use of
previous ones, going beyond simple trade and development information technology, URB-AL for decentralised cooperation
aid agreements and providing for political cooperation and between local authorities and the project for the creation of an
free trade areas. Observatory of EU–Latin American Relations (OREAL). The EU
will contribute a total of EUR 2 700 million to Latin America
until 2013 within the framework of the cooperation policy.
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2. Relations with the Rio Group and summits of Heads of — SICA) has since brought progress in the domain of regional
State or Government integration.
The Rio Group, which was founded in 1986, is the principal At the ministerial conference in Madrid in 2002, the parties
mechanism for political consultation at continental level. It decided to draw up a new agreement on cooperation and
now covers the whole of Latin America and also includes political dialogue to replace the 1993 agreement. This new
representatives of the Caribbean countries. Relations between instrument, which was signed in Rome on 15 December 2003,
the EU and the Rio Group were placed on an official footing by formalises the political dialogue that was launched in 1984. It
a declaration made in Rome on 20 December 1990. The extends the scope of cooperation to immigration control,
biregional dialogue includes an annual meeting of foreign economic cooperation and the fight against terrorism. The
ministers and a two-yearly summit of Heads of State or new agreement, however, does not include the liberalisation
Government. The partnership between the two regions of trade as the countries of Central America originally wished it
consists of: to do, taking as their model the Union’s agreements with
— political dialogue, Mexico and Chile. Nevertheless, it does proclaim the joint
objective of ‘creating conditions’ for a so-called ‘fourth-
— trading links, generation’ association agreement that would include free
— technical, financial and economic cooperation. trade provisions and be based on the outcome of the Doha
Round of WTO negotiations and on progress made in the
After an initial summit in Rio de Janeiro in June 1999, the regional integration process. The start of negotiations on this
Heads of State or Government of the countries of the EU, Latin agreement was announced at the Vienna Summit in May 2006
America and the Caribbean met again in Madrid in May 2002, and it is due to be signed in 2009.
Guadalajara in May 2004, Vienna in May 2006 and Lima in May
2008. At this latest summit, which was the first involving the 2. Andean Community
27-member Union, the participants emphasised the need for: The EU has maintained regular contact with Andean countries
(Bolivia, Colombia, Ecuador and Peru) since 1969, when the
— multilateralism: consolidating the multilateral system by
Andean Group was founded (the Group became the Andean
making it more effective and more democratic, under the
Community in 1996). It concluded a first cooperation
auspices of the UN, thanks to greater LAC–EU coordination
agreement with them in 1983, followed by a ‘third-generation’
and cooperation;
agreement in 1993, which provided for economic and trade
— social cohesion: combating exclusion by means of effective cooperation and development cooperation and included a
social policies, higher budgetary appropriations and most-favoured-nation clause.
experience-sharing;
At their meeting on the fringe of the Rio Summit in 1999, the
— sustainable development: need to work to promote Andean countries raised the possibility of a new cooperation
sustainable development and to integrate economic and agreement, which would be wider in scope than the 1993
social development with environmental protection agreement. In Madrid in 2002, the two sides took a decision to
focusing in particular on climate change, desertification, update the agreement. The new agreement was signed in
energy, water, biodiversity, forests, etc.; Rome in December 2003. The new provisions do not, however,
include the liberalisation of trade, which the Andean countries
— regional integration: strengthening regional integration
had originally wished them to cover, citing the EU–Mexico and
and other forms of association, as well as biregional
EU–Chile agreements as models. Nevertheless, one of the aims
processes for political dialogue, cooperation and trade,
of the updated agreement is to create conditions for an
taking into account the imbalances between both regions.
association agreement which would include free trade and
B. Relations with regional groupings and agreements would be based on the results of the Doha Round of WTO
concluded negotiations and on progress made in the regional integration
process. The 2003 agreement extends the scope of
1. Central America
cooperation to the fight against terrorism and illegal
In September 1984, representatives of the EU and Central immigration. In addition, it institutionalises the mechanisms of
American countries (Costa Rica, Guatemala, Honduras, political dialogue that were created in 1996. Finally, in
Nicaragua, Panama and El Salvador) met in San José in Costa December 2006 the Commission asked the Council for a
Rica to examine the situation in the region, which at that time mandate to open EU–Andean Community negotiations for the
was in crisis. They have continued to meet annually, in a signing of an association agreement. These negotiations are
Central American or European capital, to pursue this San José continuing and the Commission hopes to conclude them in
dialogue. The EU relies on this dialogue to promote political 2009.
stability, respect for human rights and economic and social
development in the countries concerned as well as regional 3. Mercosur
integration. The establishment in 1991 of the Central American In 1991, Argentina, Brazil, Paraguay and Uruguay announced
Integration System (Sistema de Integración Centroamericana their intention of establishing a Southern Cone Common
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Market (Mercosur). Relations between the EU and Mercosur innovative agreement ever concluded by the EU with a
were institutionalised by the framework agreement of 1995, country which is not an applicant for accession.
which paved the way for political cooperation and
negotiations on the establishment of free trade between the
two parties. At the Madrid Summit in 2002, the representatives
of the EU and Mercosur relaunched the economic and trade Following the 2004 elections, the European Parliament, having
negotiations. In particular, the two parties agreed on a regard to the various agreements signed by the EU with Latin
timetable and negotiating procedures and defined their levels American partners, established delegations for relations with
of expectation with regard to the future agreement. The global Mexico, Central America, the Andean Community, Mercosur
economic slump, and especially the crisis of 2001–02 in and Chile. It also maintains close contact with parliaments in
Argentina, had an adverse impact on the negotiations. At a the region, in particular the Latin American Parliament
ministerial meeting between the EU and Mercosur on (Parlatino), the Central American Parliament (Parlacen), the
12 November 2003, it was decided to complete the Mercosur Joint Parliamentary Committee (CPCM), the Andean
negotiation of an association and free trade agreement in Parliament (Parlandino) and the Congress and Senate in Chile
October 2004 in Lisbon. The failure of this meeting showed and Mexico. Joint parliamentary committees have been
that the main obstacle to the conclusion of the agreement lay established between the European Parliament and the
in its agricultural component. Despite encouragement from parliaments of both countries, as envisaged in the association
the Guadalajara, Vienna and Lima Summits, the negotiations agreements. Since 1974, the European Parliament has also
are still far from being concluded. The conditions for resuming been organising interparliamentary conferences with its Latin
negotiations and the timetable of work are now linked to the American counterpart, the Parlatino, and these have been the
progress of the WTO negotiations on trade liberalisation. main channel of dialogue and cooperation between the
elected representatives of the two regions. A total of
C. Relations with individual countries 17 EU–Latin American interparliamentary conferences have
1. Mexico taken place since 1974; the most recent was held in Lima
in June 2005.
The economic partnership, political coordination and
cooperation agreement, also known as the Mexico–EU Global In its resolution of 26 April 2006, the European Parliament
Agreement, was signed on 8 December 1997. It entered into repeated its call for the adoption of a common EU strategy for
force on 1 July 2000 for industrial and agricultural goods and in Latin America and the Caribbean, to ‘give substance and
March 2001 for services, intellectual property and investments. direction to EU action in launching the strategic bi-regional
Mexican industrial exports have had completely free access to partnership’ agreed upon at the Rio Summit of June 1999 and
the EU market since 2003, and the Mexican market has been reaffirmed at the Madrid, Guadalajara and Vienna Summits. In a
fully open to EU exports since 2007. This fourth-generation very detailed resolution comprising 93 operative paragraphs,
agreement not only created a free trade area but also the European Parliament defines the aims of the common
institutionalised a political dialogue for the promotion of strategy. Foremost among these are:
democratic principles and respect for human rights. The — in the political sphere, creating an EU–Latin American
volume of trade has grown since the entry into force of the Transatlantic Assembly (EuroLat) to reinforce parliamentary
free trade agreement, with EU exports to Mexico increasing by dialogue, signing an EU–Latin American peace and security
30 % and Mexican exports to the EU practically doubling. An charter, setting up a bi-regional conflict prevention centre
agreement on scientific and technological cooperation was and launching a political and security partnership;
signed in 2004. The two parties are also planning to conclude
an agreement in the fields of education, youth and training. — in the economic, financial and commercial spheres, putting
an EU–Latin American free trade area in place by 2012, and
2. Chile simultaneously implementing association agreements
In 1996, a cooperation agreement was concluded between between the EU and its regional partners — Mercosur, the
the EU and Chile. Three years later, negotiations were opened Andean Community and Central America;
on an association agreement. The negotiations were
— in the social and cultural spheres, setting up a bi-regional
completed in March 2002, and the agreement, also of the
solidarity fund, which would support the efforts of the
fourth generation, was signed on 18 November 2002. It
various partners of the EU to combat poverty and social
comprises three strands: politics, trade and development
exclusion in Latin America and would involve participation
cooperation. Provision is made for a political dialogue, in which
and financial support on the part of international public
civil society is also to be involved. The agreement almost
and private funding bodies.
completely opens the economies of both parties, with gradual
liberalisation of trade in Chilean products, 97 % of which will The resolution also emphasises that another of the aims of
have free access to the EU market by January 2012. In the reinforced cooperation should be to promote human rights,
European Parliament, the deal was hailed as an agreement for democracy, good governance, transparency and the rule of
the 21st century, and indeed it is the most ambitious and law, in a context of genuine multilateralism.
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On 8 November 2006 the first of the three objectives partnership uniting the two geographical blocs: enhancing
mentioned above was achieved: the new EU–Latin American multilateralism in economic and political affairs at international
Transatlantic Assembly (EuroLat), the parliamentary showcase level, greater regional integration within the geographical sub-
of the EU–Latin America strategic and regional association, regions (Central America, Andean Community and Mercosur),
came into being in Brussels. The Assembly has 120 members unreserved support for the priority topics of the Lima agenda,
from the European Parliament, the Latin American Parliament, i.e. poverty eradication, social inequalities and integration, the
Parlacen, Parlandino, the Mercosur Parliament and Members of fight against climate change and sustainable development.
the Mexican and Chilean parliaments. The new Assembly, The EuroLat Assembly also recommends that the EU–Central
which is on similar lines to the ACP–EU Joint Parliamentary America and EU–Andean Community partnership agreements
Assembly and the Euro-Mediterranean Parliamentary be concluded ‘by mid-2009 at the latest’, that the negotiations
Assembly, has three standing committees: Political Affairs, aimed at concluding an EU-Mercosur partnership agreement
Security and Human Rights; Economic and Commercial Affairs; be concluded ‘as soon as possible’, and that the specific
Social Affairs, Human Exchanges, Environment, Education and agreements linking the EU and Chile and Mexico be applied
Culture. ‘more comprehensively’.
Meeting in Lima a few days before the summit of Heads of
State or Government, the EuroLat Assembly sent a message to g Pedro Neves
those participating in the summit, calling for reaffirmation of July 2008
the principles and values at the root of the strategic
6.4.9. Japan
The foundations of EU–Japan relations have been established by the political statement of 1991. Their relations are based
notably on deregulation which aims to limit the number of unnecessary regulations that impede trade and foreign
investment, but also on the promotion of trade and investment.

Article 133 (ex Article 113) of the Treaty establishing the A. General
A major pillar of bilateral EU–Japan relations is the two-way
dialogue on deregulation, aimed at reducing the number of
Objectives unnecessary and obstructive regulations which hinder trade
After the largely trade-related focus of relations between Japan and foreign investment. Since 1995, the EU and Japan have
and the EC/EU in the 1970s and 1980s, more far-reaching participated actively in each other’s regulatory reform efforts
common principles for the relations between Japan and the through dialogue. Thus the nature of the EU dialogue with
EU and its Member States were laid down in a political Japan has changed: while in the past economic relations with
declaration of 1991. This declaration also contains a list of Japan were dominated by trade disputes, nowadays the focus
common objectives in the fields of politics, the economy, is on EU requests for deregulation and structural reforms in
cooperation and culture and provides a consultation Japan. The EU and Japan cooperate closely in exchanging lists
framework for the annual meetings between Japan and the of deregulation proposals on an annual basis and engaging in
EU. Moreover, since 2001, a 10-year action plan has been in an extensive series of high-level and expert meetings.
place to reinforce the bilateral partnership and enable it to
The regulatory reform dialogue (RRD) has taken place annually
move from consultation to joint action. The action plan
since 1994. It is a two-way process in which Japan and the EU
addresses four major objectives:
present deregulation requests to each other. The EU presents
— promoting peace and security; requests to Japan in a manner designed to feed into the
— strengthening the economic and trade partnership utilising annual work cycle of the Regulatory Reform Committee (now
the dynamism of globalisation for the benefit of all; succeeded by the institutionally stronger Consultative Council
on Regulatory Reform), while Japan submits requests to the EU
— coping with global and societal challenges; on its concerns in the EU. At the last high-level RRD meeting
— bringing together people and cultures. on 4 March 2005, discussions focused on commercial
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legislation, trade and customs regulations, visa and work EU seems to be competitive internationally. A striking
permits, intellectual property protection, financial services, the illustration of this is EU exports of office machinery and
EU chemical policy (REACH) and new environmental directives telecommunications equipment. Food products are another
affecting products such as batteries, electrical waste and category where Union exports to Japan should be larger.
chemicals.
Most of these trade issues are being tackled, not only in the
B. Political dialogue framework of WTO but also bilaterally. Europe is determined to
The current structure of the political dialogue between the EU pursue certain unresolved matters bilaterally. In this context, a
and Japan was set out in the joint declaration of 1991 and mutual recognition agreement (MRA) entered into force on 1
consists of: annual consultations between the President of the January 2002. The MRA will cut red tape for trade and mean
European Council, the President of the Commission and the annual savings for exporters of up to EUR 400 m. The MRA
Japanese Prime Minister; annual meetings between the permits acceptance of conformity assessment conducted in
Commission and the Japanese government at ministerial level; one party according to the regulations of the other in four
two annual meetings between the foreign ministers of the product areas (telecommunications terminal equipment and
EU troika including the Commissioner in charge of Foreign radio equipment, electrical products, good laboratory
Relations and the Japanese Foreign Minister, and two annual practices for chemicals and good manufacturing practices for
meetings between the EU political directors troika and the pharmaceuticals), an important step in facilitating market
Japanese Political Director. access.
At the 2000 Tokyo Summit the EU and Japan launched a The agreement on cooperation and anti-competitive activities
decade of cooperation (2001–11) which gave a decisive (Council decision of 16 June 2003) should facilitate bilateral
impetus to the overall EU–Japan relationship and which cooperation in assessing competition aspects of major merger
defined ambitious objectives for a comprehensive and action- and acquisition cases.
oriented partnership. In the WTO the EU and Japan, as the second and third largest
The 17th EU–Japan summit took place in Tokyo on 23 April economies in the world, have established close policy
2008. The leaders reviewed the implementation of the action cooperation. Developing that cooperation is one of the key
plan for EU–Japan cooperation and set priorities for action to initiatives in the action plan.
be taken by the time of the next summit. They also discussed a
wide range of issues aiming at creating a more effective d. Cooperation in other sectors
partnership to address key international issues (especially The EU and Japan cooperate across a very broad range of
climate change, development issues and the world trade subjects. There are standing forums for discussion on sectors
system) more effectively and identify constructive solutions to such as industrial policy, science and technology, research,
bilateral issues. telecommunications and related services, social affairs,
development aid, environmental protection, dialogue on
C. Trade and investment macroeconomics and financial issues as well as transport
Trade and investment links between Japan and the EU remain issues. The EU and Japan are partners in the international
strong. The Japanese market is opening more and more to thermonuclear experimental reactor (ITER) project, for which
foreign competition. Yet, total foreign investment in Japan an agreement has been reached on its location in France.
remains very low (less than 2 % of GDP), if compared with Japan, the EU, the US and Korea cooperate in the Korean
other developed countries. The EU remains the leading foreign Energy Development Organisation (KEDO). KEDO was formed
direct investor (FDI) in Japan, but total amounts are falling. In because of the need to reduce the risk of nuclear proliferation
2003/04 Europe had a 33 % share (JPY700 billion) of inward FDI in North Korea and promote the peaceful uses of nuclear
to Japan (compared to JPY1 400 billion in 1999/2000). energy. The European Commission supports the EU–Japan
Likewise, Europe is a popular destination for Japanese Business Dialogue Round Table (EUJBDRT), a private sector
investment. Japan invested JPY1 400 billion in Europe in initiative to strengthen links between European and Japanese
2003/04, representing a 35 % share of Japan’s outward FDI, businesses, and welcomes focused private sector input to
with the US receiving just under 30 %. government authorities to promote trade and investment
Despite China now becoming Japan’s largest trading partner, between Europe and Japan. The EUJBDRT contributes to the
trade between the EU and Japan remains strong. From 1999 to identification of mutually beneficial initiatives and keeps close
2003, EU exports to Japan grew by 3.5 % on average per year. track of the progress achieved by both the European and the
In 2004, 13 % of all Japan’s imports came from the EU (14 % Japanese administrations.
from US, 21 % from China) while the EU remained Japan’s
second largest market with 16 % of Japanese exports, behind Role of the European Parliament
the US on 22 %.
Since 1979, a delegation from the European Parliament meets
The Union is concerned at the lack of a significant increase of most years with a delegation from the Japanese Parliament, the
EU exports to Japan in certain sectors where, nevertheless, the Diet, comprising members of the Upper and the Lower House,
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and alternating between venues within the European Union access, others with political issues. The following resolutions
and Japan. The last EP/Japan inter-parliamentary meeting (the are of particular interest: resolution of 18 September 1997 on
29th) took place in Brussels in early June 2008, after which the the Commission communication ‘The next steps’; resolution of
Japanese delegation visited Vienna. The agenda included 13 April 1999 on a programme of specific measures and
reciprocal information about political developments at national actions to improve access of EU goods and cross-border
and regional level, an exchange of views on climate change and services to Japan; resolution of 7 October 1999 on the nuclear
energy policy, and a discussion of economic cooperation. accident in Japan; resolution of 13 June 2002 on the abolition
Furthermore, in February 2008, the President of the European of capital punishment in Japan, South Korea and Taiwan;
Parliament, Hans-Gert Pöttering, paid an official visit to Japan, resolution of 3 July 2002 on the EC/Japan agreement
during which he was received not only by the parliament and concerning cooperation on anti-competitive activities.
government but also by the Emperor.
The EP has held several debates over recent years on relations g Stefan Schulz
with Japan, some dealing with trade relations and market July 2008
6.4.10. The People’s Republic of China and Taiwan

EU–China relations, suspended following the massacres of Tiananmen Square in 1989, resumed in 1994 with a new
framework for the organisation of a bilateral political dialogue. Being committed to the ‘One China’ principle, the EU has
no diplomatic relations with Taiwan.
Legal basis followed by China in the second half of the 1970s. A trade
agreement was signed in April 1978.
— Title V of the Treaty on European Union (TEU).
b. In 1980 China was included in the list of countries eligible
— Articles 133 and 310 Treaty establishing the European
for the Community’s generalised system of preferences.
Community (EC).
The 1978 agreement was superseded in 1985 by a broader
agreement on economic and trade cooperation. In 1988
Objectives the Commission opened a Delegation in Beijing.
— To develop trade and other relations between the 2. A setback
European Union and the People’s Republic of China (PRC). The progress in relations was brought to a sudden halt by the
— To raise the EU’s political, commercial and economic profile Tiananmen Square massacre in June 1989, which was
in China. immediately condemned by the Community. The Madrid
European Council of 26 and 27 June ordered the suspension of
— To engage China further on the world stage, through its high-level bilateral meetings, the postponement of new
integration into the world economy; to support China’s cooperation projects and cutbacks in existing programmes. An
transition to an open society based upon the rule of law embargo on arms sales and military cooperation was
and respect for human rights. instituted.
— To support the process of economic and social reform 3. The gradual resumption of relations: policy papers
under way in the country. a. Until 1994 Europe’s hopes of seeing a change in Chinese
human rights policy were repeatedly disappointed since
Achievements the arrest and imprisonment of opponents continued.
b. In June 1994 a new framework for bilateral political
I. Peoples’ Republic of China (PRC) dialogue was set up.
c. In July 1995 the Commission issued a communication
A. General pattern of relations
entitled ‘A long-term policy for China–Europe relations’,
1. Initial developments which was endorsed by the European Council and
a. It was not until 1975 that China and the EU agreed to reflected China’s rise as a global economic and political
establish official relations to reflect the ‘open door policy’ power. Ever since, EU–China relations have been pursued
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under the three main headings: political dialogue consultations between the Commission and China; ad hoc
(including human rights), economic and trade relations meetings between foreign ministers; two annual meetings
and the EU–China cooperation programme. between the Chinese Foreign Minister and the EU
Ambassador in Beijing and, equally, between the foreign
In 1998, the European Commission adopted its
minister of the country holding the Presidency of the EU
communication ‘Building a comprehensive partnership with
Council and the Chinese ambassador to that country.
China’, the main objective of which was to upgrade the EU’s
relationship with the People’s Republic of China. Current EU b. C
oncern about human rights has been a major theme of
policy towards China is based on the Commission’s policy EU–China relations since the Tiananmen Square crackdown
paper of June 2001: ‘EU strategy towards China’. A new in 1989. A dialogue solely devoted to human rights has
policy paper ‘A maturing partnership: shared interests and been established since 1996. To that effect, two annual
challenges in EU–China relations’ was endorsed on 13 meetings are held between the EU troika and the Chinese
October 2003. The 2003 policy paper suggests ways of government. Topics raised have included the ‘fundamental
further developing EU–China relations by enhancing the rights’ of political dissidents, treatment of religious faiths
existing mechanisms and the systematic inclusion of global and the Falungong spiritual movement, freedom of
and regional governance and security issues. expression, application of torture and the death penalty
and the situation of ethnic minorities. The situation in Tibet
The Commission produced in late 2006 two separate but
and individual cases are also raised. The dialogue is
coordinated communications to define the overall future
complemented by financial support to projects such as
approach to the relationship. ‘EU–China: closer partners,
implementation of UN human rights covenants, local
growing responsibilities’ takes stock of EU–China relations
democracy and judicial reform.
in the context of China’s re-emergence as a global
economic and political power. It signals the EU’s wish to The first regular EU–China political summit was held in
continue and further intensify its comprehensive London in April 1998. The most recent summit, the 10th,
engagement with China. The communication pursues a took place in Beijing on 28 November 2007. Leaders took
five-pronged strategy that focuses on the support for stock of the progress achieved over the decade in EU–
China’s transition towards a plural society, the promotion of China relations, and called it historical. They discussed the
sustainable development, the improvement of our trade full range of bilateral and international issues, with
and economic relations, the strengthening of our bilateral particular focus on strengthening cooperation on some of
cooperation as well as the fostering of regional and today’s key global challenges, such as climate change and
international cooperation. More generally, the energy security and supporting development in Africa.
communication stresses that increased responsibilities and Apart from discussions on bilateral issues — including the
expectations should go hand in hand with China’s stronger state of play on negotiations for a PCA, and concerns about
influence and position in the world. Released the same day exchange rate/trade deficit — EU and Chinese leaders also
as the communication, the working paper on EU–China exchanged views on regional and international issues,
trade and investment, ‘Competition and partnership’, including Burma/Myanmar, non-proliferation in North
further elaborates on policy options to ensure mutually Korea and Iran, and the Middle East peace process. Both
beneficial trade relations. sides agreed to establish a high-level economic and trade
dialogue to discuss strategies in EU–China trade,
d. C
hina released on 13 October 2003 its first ever policy investment and economic cooperation, and the EIB signed
paper on the EU. China supports EU integration and called a EUR 500 million framework loan to support projects that
the EU to grant it ‘full market economy status’. China contribute to combating climate change. On the other
expects the EU to become China’s largest trading and hand progress has been limited since the last summit on
investment partner. the main contentious issues of the arms embargo, market
e. In December 2005 the Council gave a mandate to the economy status and human rights.
Commission to replace the ‘EEC–China trade and On 12 February 2004, the European Community and the
cooperation agreement’, agreed in 1985, with a China National Tourism Administration signed an accord
comprehensive partnership and cooperation agreement that will facilitate Chinese group tourism to the EU (except
(PCA) setting out the agenda for EU–China relations in the for the non-Schengen countries, which will seek bilateral
21st century. Negotiations were launched in January 2007 agreements).
and will include an updating of the 1985 trade agreement.
c. T he handover of Hong Kong to China in 1997 did not affect
B. Current relations EU relations with Hong Kong, where it still has a
1. Political relations Delegation.
a. P
olitical dialogue continues within the framework d. E qually, the handover of Macau in 1999 had no effect on
established in 1994. This comprises regular meetings of relations with the EU, and the trade and cooperation
ministers of the EU troika with Chinese ministers; high-level agreement remained valid. In November 1999 the
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Commission adopted a communication to the Council and b. T he 1985 agreement provided for cooperation in industry,
the European Parliament entitled ‘The EU and Macau: mining, energy, transport, communications and
beyond 2000’. The communication underlined the respect technology. A science and technology agreement was
for the principles set out in the Basic Law of the Macao signed in 1999. A new agreement on cooperation in the
Special Administrative Region (MSAR) and the full EU’s Galileo satellite navigation programme was signed on
implementation of the concept ‘one country, two systems’ 30 October 2003. Another agreement covering joint
and guarantees the specific social, economic and cultural research on the peaceful use of nuclear energy was
identity of Macau. concluded at the 2004 EU–China summit.
e. In both Hong Kong and Macau the Commission monitors c. In May 2000 the EU and China signed a bilateral agreement
the situation to ensure that democracy and human rights paving the way for China’s accession to the WTO, which
are respected and issues annual reports. was completed by the end of that year. In order to help the
f. O
n Taiwan, the EU pursues a ‘One China’ policy, recognising Chinese government implement commitments under the
the Government of the PRC as the sole legal government WTO, the EU worked in partnership and designed a
of China. number of WTO-oriented technical assistance projects,
with a budget totalling about EUR 22 million.
g. O
n 24 and 25 April 2008, the President of the European
Commission and nine Commissioners travelled to China to d. T he current strategy for EC cooperation with China is
open a dialogue with the Chinese government, focusing defined in the ‘Country strategy paper 2007–13’ (CSP),
on climate change and sustainable development (trade, which proposes a concentration of activities in three areas:
economic cooperation, energy). providing support for China’s reform programme in areas
covered by sectoral dialogues; assisting China in tackling
2. Trade relations global concerns and challenges over the environment,
a. The 1985 economic and trade cooperation agreement energy and climate change; and supporting China’s human
provides a non-preferential basis for increasing bilateral resource development. Indicative funding for the seven-
trade on the basis of market prices. It is managed by a joint year period amounts to EUR 224 million (for the first period,
committee, which meets every year to monitor the 2007–10, a budget of EUR 128 million has been made
progress of relations. available).
Trade has developed very rapidly since 1975 when it was e. H
umanitarian aid: China also benefits from Community
almost non-existent. Total two-way trade has increased support through the EU human rights and democracy
more than 60-fold since reforms began in China in 1978, programme and a few projects also receive funding from
and was worth EUR 254 billion in 2006. The EU has gone the Community’s non-governmental organisation (NGO)
from a trade surplus at the beginning of the 1980s to a budget. In addition, emergency aid has been provided
deficit of EUR 128 billion in 2006, its largest trade deficit from the European Community Directorate-General for
with any partner. Overall, China is now the EU’s second Humanitarian Aid (ECHO) budget. In May 2008 ECHO
largest non-European trading partner after the USA, and the provided emergency relief funding of EUR 2 million to help
EU is now China’s first trading partner. In recent years, EU victims of the earthquake that struck the Sichuan province.
companies have invested considerably in China (EU inward
investment to China amounted to EUR 6 billion in 2006).
II. Taiwan
b. F ollowing China’s entry into the WTO, the Multifibre
Agreement came to an end in 2004, after several decades The EU, like most other countries, follows a ‘One China’ policy
which were supposed to give European producers time to and thus has no diplomatic relations with Taiwan. However, it
prepare for increased competition. The magnitude of the recognises Taiwan as an economic and commercial entity, and
onslaught in the first few months of 2005 came as a has solid relations with Taiwan in non-political areas, such as
surprise, however, with China’s share of EU textile imports economic relations, science, education and culture. Taiwan is
increasing dramatically over this period. The problem was the EU’s third largest trading partner in Asia, after Japan and
contained after an agreement to reintroduce temporary the PRC. The EU strongly supported Taiwan’s accession to the
quotas. China remains the second largest beneficiary of the WTO, which took place on 1 January 2002. In March 2003, the
EU’s generalised system of preferences (GSP) scheme, Commission established a permanent Economic and Trade
under which the EU grants autonomous trade preferences Office in Taiwan. The EU supports a peaceful resolution of
to imports from developing countries. differences between Taiwan and the PRC.
3. EU–China cooperation
a. The EU supports China’s reforms and liberalisation through Role of the European Parliament
its cooperation programme. Project management The 26th European Parliament–China Interparliamentary
responsibilities have been transferred from the Meeting took place in Brussels on 2 and 3 June 2008. Working
Commission in Brussels to the Delegation in Beijing. sessions took place with counterparts from the National
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People’s Congress (NPC). The meeting agenda dealt with, inter The European Parliament has also addressed more
alia, global security issues, human rights, EU–China relations, controversial issues such as the Taiwan question (13 April 2000,
the world financial situation and agricultural development. In 7 July 2005 and 18 May 2006), the arms embargo
its numerous resolutions dealing with China, the European (18 December 2003 and 17 November 2004), the protection of
Parliament has significantly contributed to enhancing bilateral human rights (resolution of 15 February 2001 and of
cooperation between the EU and China (visas, the WTO, 8 September 2005 on freedom of religion in the PRC),
science and technology, maritime transport), for example, especially in Tibet (resolutions of 13 April 2000, 19 December
European Parliament resolutions of 7 September 2006, 2002, 13 January 2005, 27 October 2005, 15 December 2005
25 October 2001, 9 February 1999 and 12 June 1997 on jointly with concerns over democracy in Hong Kong,
EU–China relations; a resolution of 2 September 2003 on 26 October 2006 and 10 April 2008).
maritime transport; a resolution of 25 October 2001 on China’s The EP has urged the Chinese government to respond to
accession to the WTO; a resolution of 4 November 1999 on international calls for improvement in the human rights
EC–China technological and scientific cooperation. A situation and to guarantee democracy, freedom of expression,
resolution was adopted on 6 September 2005 on trade in freedom of the media and political and religious freedom in
textiles and clothing; on 17 January 2006 on farming of bear China. On the question of Taiwan, the EP rejected military
bile; on 17 January 2006 on EU–China relations in the field of threats and called on both China and Taiwan to refrain from
transport; on 26 September 2007 on the safety of products, provocative actions and to find a negotiated solution to their
and toys in particular; on 11 October 2007 on the conclusion differences. The EP has also called upon the Council and the
of the relevant agreements under Article XXI GATS and on Member States to maintain the EU embargo on trade in arms
13 December 2007 on the EU–China summit and the with the People’s Republic of China.
EU/China human rights dialogue. Recently, in 2008, three more
resolutions were adopted by the European Parliament (EP): a
resolution of 23 April 2008 on China’s policy and its effects on g Xavier Nuttin
Africa; a resolution of 22 May 2008 on the natural disaster that July 2008
struck Sichuan province; and a resolution of 10 July 2008 on
the situation in China after the earthquake and before the
Olympic Games.
6.4.11. The countries of south Asia and the Indian

subcontinent
The EU maintains bilateral relations with each of the eight South Asian Association for Regional Cooperation (SAARC)
countries that form the SAARC regional organisation in the Indian subcontinent. At the 13th SAARC summit held in 2005
SAARC leaders agreed on the membership of Afghanistan. The entry into force of the preferential trade agreement SAPTA
on 1 January 2006 represents a positive achievement.
Legal basis Cooperation (SAARC). SAARC is the only regional organisation

Under Article 133 of the Treaty establishing the European for cooperation in south Asia. It aims to promote peace, trade
Community (EC), responsibility for commercial policy vis-à-vis and development in the region through dialogue and
third countries lies with the Community. Existing cooperation cooperation. The agenda of the organisation is mainly driven
agreements are based on Article 308 EC. The new third- by efforts at promoting trade facilitation. SAARC has no
generation cooperation agreements are based both on vocation to address bilateral politically contentious issues
Article 133 and on Articles 181 and 300. although regular summits and ministerial meetings provide
opportunities for informal ‘corridor talks’.
Objectives
Achievements
The EU’s objectives with regard to south Asia include
strengthening its bilateral relations with the countries of the A. SAARC relations
area, and consolidating the regional cooperation process Europe is the south Asian countries’ most important trading
represented by the South Asian Association for Regional partner and a major export market. Development cooperation
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between the EU and the countries of south Asia covers India Joint Commission oversees the entire field of
financial and technical aid as well as economic cooperation. cooperation. A science and technology agreement was
Priorities include regional stability, the fight against terrorism signed in November 2001.
and poverty reduction. SAARC was founded in 1985 and
— Since 2000, the EU and India have held a summit at
groups seven countries of the Indian subcontinent (India,
government level each year. The eighth summit took place
Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan, Afghanistan
in Delhi on 30 November 2007. The meeting focused on a
and the Maldives). For several reasons, SAARC has not been as
new legal framework agreement for EU–India relations, FTA
successful as other similar regional groupings. Despite
negotiations, and cooperation in energy and in tackling
structural constraints, the entry into force in 2006 of the SAARC
climate change. The WTO/DDA negotiations, cooperation
preferential trading arrangement (SAPTA) was a positive
in civil nuclear energy and a more active involvement of
achievement.
India in its neighbourhood (particularly Burma/Myanmar
In its dialogue with SAARC the EU has consistently affirmed and Sri Lanka) were also on the agenda. Negotiations on
an interest in strengthening links with SAARC as a regional civil aviation and maritime agreements were ongoing and
organisation. This sentiment is equally consistently a European Business and Technology Centre was
reciprocated by SAARC. The EU obtained observer status in established.
2006 and can help consolidate the ongoing integration — The agreement at the EU–India summit in November 2004
process through its economic presence in the region, its own to launch a strategic partnership and to implement it
historical experience of dealing with diversity, and its interest through an action plan set the scene for another quantum
in crisis prevention. The EU remains convinced that SAARC leap in relations. The action plan and new joint political
could play a useful role in regional cooperation and dialogue, statement were agreed at the sixth summit in Delhi on
although so far SAARC development has been less than 7 September 2005. The action plan spells out concrete
breathtaking in the economic and political arena. areas where the EU and India should become active and
Hence, the EC took the initiative in 1996 to sign a influential collaborators in global political, economic and
memorandum of understanding (MoU) with the SAARC social developments.
Secretariat, offering them technical assistance. Yet, the internal On 23 April 2007 the Council approved a mandate for the
problems of SAARC largely prevented any effective negotiation of a free trade agreement (FTA) with India. In the
implementation of the MoU. The main result of this otherwise same decision the Council requested the Commission to
limited cooperation is the inclusion of SAARC in the general engage with India in exploratory talks for the possible
system of preferences (GSP). negotiation of a partnership and cooperation agreement (PCA)
which would replace the 1994 agreement. It is also worth
B. Bilateral relations
noting that India joined the ASEM process in 2006.
1. India
The EU–India ‘Country strategy paper 2007–13’ will make
India is the second most populous country in the world, the
EUR 470 million available to support India’s efforts in economic
dominant political and military power in the region and one of
and social development, a substantial increase compared to
the most dynamic economies among developing countries,
funding provided in the past. The CSP aims to make EU
with, in particular, a fast-growing information technology
cooperation gradually shift away from traditional development
sector. Its democracy is healthier and more vibrant than ever
assistance to address the most recent challenges of India’s
and the country is an increasingly important player in global
economic transition process. It proposes to mobilise EU funds
issues. Both the EU and India promote an effective multilateral
in support of the implementation of the joint action plan (JAP),
approach.
notably economic cooperation and sectoral dialogues/
EU–India relations go back to the early 1960s: India was regulatory convergence, as well as in helping India achieve its
amongst the first countries to set up diplomatic relations with millennium development goals in the health and education
the EEC. sectors.
— The first cooperation agreement concluded in 1973 2. Pakistan
between the EC and India was superseded in 1981 by a After being delayed on account of the country’s nuclear
more extensive agreement covering not only trade but programme and human rights abuses, a third-generation
also economic cooperation, and then in 1994 by a ‘third- cooperation agreement was signed in November 2001, and
generation’ agreement which provides for greater ratified by the European Parliament in April 2004. It is a non-
cooperation, particularly in the sphere of trade. Based on preferential agreement with no financial protocol. First, it
adherence to the most-favoured-nation clause, it is establishes respect for human rights and democratic principles
compatible with World Trade Organisation rules. It also as an essential basis for cooperation. Secondly, the scope of
includes dispute resolution and anti-dumping measures. cooperation between Pakistan and the Community will be
Cooperation covers the industrial and services sector, significantly enlarged. Not only does the agreement provide
communications, energy and private investment. The EU– the framework for commercial, economic and development
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cooperation, but it opens up possibilities for dialogue and economic growth and contributing towards the country’s
cooperation in important new areas, including the integration in the world market, issues of exclusion and
environment, regional cooperation, science and technology, poverty remain priorities. In order to increase the impact of the
drugs and money-laundering. However, since mid-2004, the measures and to promote greater efficiency in the use of
EU has not gone ahead with full implementation of the resources, the EC will concentrate the scope of its
agreement because of stalled negotiations on readmission development commitments on three focal areas: human and
(return of illegal migrants). social development; good governance and human rights;
economic and trade development.
The EU is Pakistan’s largest trading partner, accounting for
more than 20 % of Pakistan’s total trade. 4. Sri Lanka
Since the start of its cooperation with Pakistan in 1976, the Sri Lanka first signed a cooperation agreement with the EU in
Commission has committed more than EUR 500 million to 1975. A third-generation agreement came into force in 1995,
projects and programmes. Over 2007–13 the EU will make focusing on partnership, cooperation, and respect for human
available some EUR 398 million for development and rights and democracy, the same year that the Commission
economic cooperation with Pakistan. opened a Delegation in Colombo. The Joint Commission met
in Colombo on 10 and 11 June 2008, after a four-year delay.
In line with Pakistan’s policy priorities, the ‘Country strategy
paper 2007–13’ has identified poverty reduction as the key The EU is one of the four co-chairs that were appointed by the
objective. The first focal area for assistance will be rural June 2003 Tokyo conference to support Norway’s facilitation
development and natural resources management in North- effort and monitor progress in the peace process. The
West Frontier Province (NWFP) and Baluchistan with a view to European Union decided on 29 May 2006 to include the
reducing regional disparities and promoting stability in Liberation Tigers of Tamil Eelam (LTTE) on the EU list for the
Pakistan’s sensitive provinces bordering Afghanistan. The application of specific measures to combat terrorism and
second focal area will be education and human resources issued on 7 January 2008 a statement deeply regretting the
development, which is a critical ingredient for developing a government’s decision to terminate the ceasefire agreement
well-trained workforce and creating a moderate and stable with the LTTE. Since 1 July 2005 Sri Lanka has been benefiting
Pakistan. Other areas of assistance are trade development, from the new GSP+ preferential trade system, which offers
democratisation and human rights and anti-money- specific incentives for countries having ratified certain
laundering. conventions on sustainable development and good
governance. A review of the GSP+ scheme is, however, taking
In response to the October 2005 earthquake in Azad Kashmir, place in 2008.
the Commission proposed an assistance package of
EUR 98.6 million, consisting of both humanitarian aid and Following the tsunami that hit Sri Lanka on 26 December 2004
reconstruction support. and caused massive flooding, death and devastation, major
assistance was provided to the country. Initial emergency relief
3. Bangladesh assistance was sent through ECHO, quickly followed by large
Relations with Bangladesh date back to 1973, shortly after the rehabilitation/reconstruction programmes with a
country’s independence. EUR 95 million budget allocation. Flanking measures in trade,
fisheries and early warning systems were also approved.
The commercial cooperation agreement signed in 1976 has
now been replaced by a new cooperation agreement, signed The 2007–13 EU–Sri Lanka ‘Country strategy paper’ (CSP) for
in 2000, and in force since March 2001. This newer agreement which an envelope of EUR 112 million has been set aside is in
aims to support sustainable economic and social development line with the EC’s established strategy of focusing on conflict
of Bangladesh and particularly of the poorest sections of its prevention and poverty reduction. The priority sector will be
population, with special emphasis on women, taking into support to the peace process and poverty reduction in the
account its least-developed country status. It focuses on trade north and east through sustainable integrated district
and commercial cooperation, development cooperation, development. In addition, the CSP includes a smaller allocation
environmental policies, the establishment of a more to support two non-focal sectors: first, trade facilitation
favourable climate for private investment, science and including assistance to Sri Lanka to take maximum advantage
technology, the fight against drug trafficking and money- of the significant trade concessions offered by the EU,
laundering, and activities in the field of information, culture specifically under the generalised system of preferences
and communication. (GSP+) scheme. The second non-focal sector is the promotion
of good governance through electoral reform, human rights
The EC’s ‘Country strategy paper 2007–13’ for Bangladesh
monitoring and advocacy and conflict resolution.
addresses the challenges contained in the government’s
poverty reduction strategy paper with an indicative budget The political and security situation in the country has, however,
allocation of EUR 403 million. At the same time, the EC strategy led the EC to start implementation of the CSP according to the
seeks to strike a balance between social and economic ‘full scale war’ scenario, meaning that support focuses on the
development commitments; while providing support for communities and people who have been uprooted and is
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delivered through the UN and NGOs outside the government inspection). The Maldives has achieved buoyant growth over
channels. Particular emphasis needs indeed to be put on the past two decades. The development of the tourism and
offering potential ‘peace dividends’ through aid programmes fisheries sectors, favourable external conditions, inflows of
and on encouraging conflict resolution and dialogue. external aid and good economic management contributed to
steady economic growth. The Maldives’ social indicators have
5. Nepal
also shown significant improvements. But the Maldives still
The EU established diplomatic relations with Nepal in 1975
faces several key development challenges.
and signed the EC–Nepal cooperation agreement on
20 November 1995 covering the following areas: respect for The 26 December 2004 tsunami created a disaster of national
human rights and democratic principles, cooperation in trade, proportion. Although the human toll was relatively small, the
development, science and technology, energy, agriculture, the tsunami affected almost the entire country. Of the 199
environment, and action to combat drugs and AIDS. An EC inhabited islands in the archipelago, 14 were destroyed and
Delegation was established in Kathmandu in April 2002. Direct about 15 000 people were displaced. The country has been
cooperation with the government was put on hold after the allocated EUR 16 million by the EC to build on the
2005 royal coup but has now resumed. achievements of the humanitarian aid phase that was
implemented by ECHO.
EC assistance to Nepal started in 1977 and by 2006 it
amounted to some EUR 240 million, all aid included. The EC The Maldives-EC ‘Country strategy paper 2007–13’ has set aside
has gradually expanded its cooperation areas, which now an envelope of EUR 10 million. The EC strategy in the Maldives
include renewable natural resources (energy), rural will focus on environmental sustainability through
development, education, health, environment, human rights, regional development, to help the government to promote
conflict mitigation and export diversification. The EU sent an larger, safer, more economically and environmentally
election observation mission to Nepal in April 2008 to support sustainable islands, where the population will be better
the peace process. protected from natural disasters and have improved job
opportunities. Good governance, human rights and
In an effort to support the government’s development
democratisation are also key concerns of EC development
objectives, the EC’s assistance to Nepal during the period
policy in the Maldives and constitute a non-focal sector of
2007–13 will have an estimated budget of EUR 120 million and
assistance.
will target the following three areas: education (EUR 72
million); stability and peace building (EUR 36 million); and 8. Afghanistan
trade facilitation and economic capacity building (EUR 12 European Union relations with Afghanistan are firmly within
million). The 2007–13 CSP is bringing about a policy shift from the wider international community’s relations with, and
individual rural development projects (that were the priority reconstruction efforts for, Afghanistan. While the EU
under the previous EC-funded programmes) towards (Eurocorps) and its Member States have contributed militarily
supporting the government’s reform agenda through a sector- to Afghanistan (through ISAF), reconstruction and
support programme in education and support to the peace development aid is the pillar of political relations. The
process. Commission is on track to deliver its 2002 Tokyo pledge of
6. Bhutan EUR 1 billion of reconstruction assistance over the period
2002–06. Overall, the EU is the second-largest aid donor to
European Commission aid to Bhutan started in 1982 and has
Afghanistan, after the USA.
provided some EUR 80 million in assistance since then.
The EC’s efforts also included co-hosting a March 2003
Within the overarching objective of poverty alleviation and
Afghanistan High Level Strategic Forum, to which the
taking into account other donors’ interventions, EC
Afghanistan government invited key donors and multilateral
cooperation in Bhutan for the period 2007–13, will focus on
organisations. It covered the progress and future vision for
the renewable natural resource sector (with environment as a
State-building in Afghanistan, as well as the long-term funding
cross-cutting issue) and on good governance and
requirements for reconstruction. On 30 January 2006, the
democratisation (to develop and strengthen the long-term
Council welcomed the launch of the Afghanistan Compact,
human resource capacity of key governance institutions). A
based on a partnership between the Afghan government and
budget of EUR 8 million has been earmarked for those two
the international community, seen as a step towards Afghan-
programmes during the period 2007–10. A continuation of the
led reconstruction efforts.
activities carried out under the ongoing trade project is
foreseen for the period 2011–13. In terms of security and tackling the drugs issue, the EU
supplies financial aid to support Germany and Italy in their
7. The Maldives
lead role on law, order and justice, as well as actively
Diplomatic relations between the Maldives and the EC were
supporting the UK in its lead role in the fight against poppy
established in 1983.
production. The EC is supplying EUR 65 million to help the
From 1981 to 2004, the Maldives received EUR 5 million in EU Afghan police impose law and order, another key component
development assistance (projects in tourism and fish in Afghanistan’s fight against drugs, while it also finances a
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project to strengthen controls on the Afghanistan–Iran border In the sixth term a resolution on the EU–India strategic
so the authorities are better able to interdict and stop drug partnership was adopted on 29 September 2005 and another
smugglers. on economic and trade relations on 28 September 2006.
Resolutions on Kashmir were voted on 17 November 2005 and
EC representation in Kabul has been operational since
24 May 2007. The EP also voted on 1 February 2007 a
February 2002. The ECHO Afghanistan office opened in
resolution on the human rights situation of the Dalits.
January 2002. An EU Special Representative has been sent to
Kabul in order to implement EU policy in Afghanistan, by way 2. Pakistan
of close contact with Afghan leaders and those of surrounding The EP reminded Pakistan of the importance that the EU
countries, to promote a stable government for Afghanistan. attaches to respect for human rights as an integral part of its
external relations and of any cooperation agreement. It
Role of the European Parliament reiterated its call on the Commission to institute cooperation
programmes offering active support to NGOs in the human
A. SAARC relations rights field (resolution of 5 April 2001). Its concerns over the
The European Parliament (EP) has recommended the fairness of the general elections of October 2002 led the
strengthening of economic, political and cultural ties between Council to postpone ratification of the 2001 cooperation
the EU and Asia in general, particularly through increased agreement until April 2004. A new resolution on human rights
trade and investment, and better coordination in the fields of and democracy was adopted on the same day. It has also
cooperation and development with the most-developed expressed concern over Pakistan’s nuclear status, calling on it
countries in the region. It has emphasised the efforts made to on 17 November 2005 to join the Nuclear Non-Proliferation
improve democratic freedoms, human and minority rights, Treaty (NPT). The EP adopted a resolution on country strategy
social rights, and health and environmental protection papers and indicative programmes (15 February 2007) and
regulations. In April 2007, the EP Delegation for relations with three resolutions on the humanitarian and political situation
SAARC countries was split into a Delegation for relations with on 12 July 2007, on 25 October 2007 and on 15 November 2007.
India and a Delegation for relations with south Asia covering
3. Bangladesh
Pakistan, Bangladesh, Nepal, Bhutan and the Maldives.
The EP has expressed concern at the human rights situation
B. Bilateral relations (arbitrary arrests, detention and torture) in Bangladesh. It
The European Parliament has passed numerous resolutions on encouraged the Government of Bangladesh to protect human
the political developments, including human rights, in the rights and apply democratic principles in all areas, including
SAARC countries. their action to deal with rising crime rates. It called on the
Commission to engage with the Government of Bangladesh
1. India under the EU–Bangladesh cooperation agreement to ensure
The EP believes that there is a considerable potential for an all- that violations stop, human rights are protected and the EP is
round bilateral relationship between the European Union and kept informed (resolution of 21 November 2002). In the sixth
India, given India’s values of democracy, cultural pluralism and a term a resolution on the political developments and security
robust entrepreneurial spirit which are underpinned by free situation was adopted on 14 April 2005. Since then, the EP has
elections, an independent judiciary, a free national and regional addressed the political and humanitarian situation in
press, active NGOs as well as an open and transparent civil Bangladesh every year (resolutions of 16 November 2006,
society, and thus called for the organisation of a comprehensive 6 September 2007 and 10 July 2008).
dialogue that covers all aspects of bilateral relations, including
issues relating to the non-proliferation of nuclear weapons. It 4. Sri Lanka
has urged India to continue the dialogue with Pakistan and The EP has repeatedly (18 May 2000, 14 March 2002 and
welcomed India’s efforts to strengthen regional cooperation 20 November 2003) stated its views on the political situation in
between the Member States of SAARC, in particular its efforts to Sri Lanka, particularly drawing attention to the need for human
promote the south Asian free trade area. rights to be respected and for support for the peace process in
the resolution of the ethnic conflict between the Singhalese
The first meeting between the European Parliament and the Lok majority and the Tamil minority. On 14 December 2004, a
Sabha, the lower chamber of the Indian parliament, took place resolution was adopted supporting the EC–Sri Lanka
in 1981 and parliamentary exchanges between the EP and India agreement on the readmission of persons residing without
have been institutionalised for several years under the EP authorisation. In 2006, two resolutions on the political situation
Delegation for relations with the countries of south Asia and the in Sri Lanka were adopted, on 18 May and on 7 September.
South Asian Association for Regional Cooperation (SAARC). On
12 April 2007 the EP decided to set up a specific Delegation for 5. Nepal
relations with India distinct from the SAARC Delegation. The The EP expressed its deep concern at the breakdown of the
objective of the new Delegation is to enhance political, ceasefire and the recent upsurge in violence in Nepal leading
economic and cultural relations with this new strategic partner to huge loss of life and injury. It urged the Government of
with a particular emphasis on parliamentary diplomacy. Nepal and the Maoist rebels to declare an immediate ceasefire
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(resolution of 23 October 2003). On 24 February 2005 the EP has covered issues like the freezing of Taliban-linked assets and
condemned the seizure of power by King Gyanendra and repealing embargoes on the State. A recent EP resolution
urged him to re-establish parliamentary democracy. On specifically on the situation in Afghanistan, based on the own-
29 September 2005, the EP welcomed the ceasefire and on initiative report by André Brie (EUL/NGL, D) and the Foreign
18 May 2006 saluted the then favourable turn in Nepalese Affairs Committee, was adopted on 12 February 2004.
politics. The EP participated in the EU election observation President Karzai visited the EU institutions in May 2005 and
mission in April 2008 with a specific delegation of seven MEPs. addressed the European Parliament in Strasbourg on 10 May
2005. An EP resolution on the situation in Afghanistan was
6. Afghanistan
adopted on 18 January 2006 and the EP, in October 2007,
The EP’s main contribution has been budgetary, maintaining
made recommendations to the Council of the EU on the
an emphasis on reconstruction, de-mining and election
production of opium for medical purposes in Afghanistan.
support. The EP sent a delegation to Afghanistan in September
Most recently, on 8 July 2008, a resolution was approved on
2005 to observe the national legislative elections.
the stabilisation of Afghanistan, stressing challenges for the EU
Afghanistan has emerged in several EP debates. MEPs, for and the international community.
example, have raised worries about the kidnapping of aid
workers, the problem of landmines or the increase in the
supply of opium in Europe, particularly from Afghanistan. The g Xavier Nuttin
EP has passed several resolutions. Since the fall of the Taliban it July 2008
6.4.12. ASEAN and the Korean peninsula

Relations between the EU and ASEAN are based on the cooperation agreement of 1980 and cover the political, technical
and commercial fields. Burma/Myanmar, however, is excluded from this cooperation because of its failure to move
towards a democratic regime and its lack of respect for human rights. The EU maintains diplomatic and economic
relations with the Republic of Korea and the Democratic People’s Republic of Korea.

Articles 133 and 308 of Treaty on European Union (TEU).
I. Asean
Objectives
A. Evolution
The EU’s relationship with south-east Asia has the following
Established in 1967, the Association of South-East Asian
aims:
Nations (ASEAN) now includes, apart from the five original
— to promote peace, regional stability and security through member nations (Indonesia, Malaysia, Philippines, Singapore
bilateral and multinational channels; and Thailand), Brunei, Vietnam, Laos, Burma/Myanmar and
— to strengthen trade and investment relations; Cambodia.
— to support the development of the less prosperous 1. The 1980 cooperation agreement
countries; The EU–ASEAN relationship dates from 1972, when a Special
Coordinating Committee of ASEAN was set up to deal with the
— to promote human rights, democratic principles and good
EU. Since then the EU has built up an extensive network of
governance;
commercial, economic and political relations with ASEAN.
— to cooperate in combating transnational crime and Relations were formalised in 1980 with the conclusion of a
terrorism; cooperation agreement It sets out objectives for commercial,
— to bring together peoples and cultures. economic and development cooperation and establishes a
Joint Cooperation Committee to promote the various
cooperation activities envisaged by the two sides. Although it
is a cooperation rather than a trade agreement, it provides for
most-favoured-nation treatment in accordance with the WTO.
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2. Developments after the 1980 agreement The ASEM 6 summit was held in Helsinki in September 2006
When Brunei (1984), Vietnam (1995), Laos (1997) and and held comprehensive, in-depth and fruitful discussions on
Cambodia (1999) joined ASEAN, the EU agreed to the various topical issues of common interest under the
accession of these countries to the 1980 cooperation overarching theme: ‘Ten years of ASEM: global challenges joint
agreement. Burma/Myanmar became a member of ASEAN in responses’. The summit adopted the Helsinki Declaration on
1997 but the agreement was not extended to that country. the future of ASEM, identifying the key areas where ASEM
should focus its work in the second decade. These include
ASEAN–EU relations have changed radically since the 1980
strengthening multilateralism and addressing global threats,
agreement, above all as a result of the remarkable growth of
globalisation and competitiveness, sustainable development
south-east Asian countries and the evolution of ASEAN
and intercultural and interfaith dialogue. The declaration also
towards a political and economic community. In 1980 relations
proposes, in its annex on ASEM working methods and
were conducted on a donor–recipient basis. They have
institutional mechanisms, improvements to ASEM’s
evolved towards balanced trade, development of investment,
institutional mechanisms, while stressing its informal nature.
greater economic cooperation and a growing political
dialogue. ASEAN has been given a primary role in the EU’s b. ASEAN–EU Ministerial Meeting (AEMM)
strategy for Asia, adopted in July 1994. This strategy seeks to
strengthen links between Asia and Europe and is the EU Attended by foreign ministers every second year since 1978,
response to the changing political and economic situation in the AEMM is the highest institutional level providing the
the region. strategic guidance for monitoring progress in political
dialogue.
In September 2001, the European Commission presented its
communication ‘Europe and Asia: a strategic framework for After suspension due to the Burma/Myanmar problem, an
enhanced partnerships’, which identified ASEAN as a key AEMM held in December 2000 in Laos approved a joint
economic and political partner of the EC and emphasised its declaration which called for a rapid resumption of talks
importance as a locomotive for overall relations between between the military junta of Burma/Myanmar in Rangoon/
Europe and Asia. The Commission communication ‘A new Yangon and the democratic opposition. The declaration also
partnership with south-east Asia’, presented in July 2003, backed the joint efforts of the international community and
reaffirms the importance of the EC–ASEAN partnership. Indonesia to quickly solve the refugee situation in East Timor,
mentioned respect for human rights, and placed back on track
B. Present relations cooperation between the EU and ASEAN in economic and
1. Political regional security matters.
a. Asia–Europe Meetings (ASEM)
Political and security relations between Asia and the major At the 15th AEMM held in Indonesia in March 2005, the EU’s
powers have been undergoing a gradual and profound shift, ‘New partnership with south-east Asia’ strategy was confirmed
following the end of the Cold War. The new Asia strategy was as being at the origin of enhanced relations. The meeting
given a boost with the first Asia–Europe Meeting (ASEM), an decided to increase support for ASEAN integration and to
informal gathering of Heads of State, held in Bangkok in 1996. develop concrete joint cooperation in the fight against
The ASEM brings together the EU Member States with the 10 terrorism. The meeting also provided the Commission with an
Member States of ASEAN but also with China, Japan and Korea occasion to brief the region on the EC’s substantial action plan
and has developed into a structure with three pillars: political; for post-tsunami reconstruction.
economic and financial; cultural and intellectual. The ASEM 6 The 16th ASEAN–EU Ministerial Meeting took place in
summit held in September 2006 in Helsinki decided to admit Nuremberg on 14 and 15 March 2007. There was a shared
Bulgaria and Romania on the European side, and India, perception that the EU and ASEAN, together representing
Mongolia, Pakistan and the ASEAN Secretariat on the Asian around 1 billion people and committed to the same principles
side to the ASEM process. The decision means that ASEM will of regional and multilateral cooperation, had a very great
now bring together in a single forum countries from south- potential to work together to address global challenges. The
east Asia, north-east Asia, south Asia and an enlarged EU, as meeting discussed the progress made in the EC–ASEAN
well as the ASEAN Secretariat and the European Commission. cooperation programmes, the negotiations of partnership and
It will consist of 45 partners and encompass nearly 60 % of the cooperation agreements, the various sector dialogues
world’s population. between the two regions, and the strengthening of the
The third ASEM summit, in Seoul 2000, adopted a 10-year economic relations. The ministers discussed regional
‘action framework’ and declared support for ‘rapprochement’ developments in the EU and ASEAN and a range of
between the two Koreas. Both parties called for cultural links international issues. The meeting marked a step change in
to be strengthened through the Europe–Asia Foundation in EU–ASEAN relations, reflecting a wish by both sides to increase
Singapore (ASEF), the only institution from ASEM dialogue engagement at a time when ASEAN accelerates the pace of its
charged with promoting cultural, intellectual and people-to- own integration and the EU seeks an enhanced role in south-
people contacts between the two regions. east Asia.
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c. A first-ever EU–ASEAN summit took place on 22 November agreement. The main EU exports to ASEAN in 2006 were
2007 in Singapore. The event was organised to celebrate 30 chemical products, machinery and transport equipment. The
years of formal relations between the EU and ASEAN. The main imports from ASEAN to the EU were machinery and
summit meeting discussed the achievements and prospects of transport equipment, as well as chemicals, textiles and
the EU–ASEAN partnership, as well as regional and global clothing. The EU is by far the largest investor in ASEAN
issues such as the process of ASEAN integration, energy, countries: 27 % of total FDI inflows from 2001 to 2005 came
climate change and environmental sustainability, and the from the EU, compared with 15 % from the USA.
situation in Burma/Myanmar. A joint declaration covering
As a region, ASEAN has benefited significantly from the EU’s
these and other issues was issued following the event. a plan
generalised system of preferences (GSP). Countries such as
of action detailing cooperation activities in the mid-term was
Thailand and Indonesia have ‘graduated’ a number of sectors
also endorsed by the summit.
where they have become competitive in the last few years,
d. ASEAN Regional Forum (ARF) losing the benefit of the GSP for important products — in
The EU participates as a dialogue partner in the ASEAN particular, fishery products for Thailand. Singapore, due to its
Regional Forum (ARF), a body established in 1994 as the main advanced level of development, is excluded from the system.
multilateral forum in the region on global and security issues. It In October 2006, the Commission issued the communication
is, in the EU’s view, an appropriate forum to address key ‘Global Europe, competing in the world’, where ASEAN
regional security issues and build a consensus among Asian emerged as a priority FTA partner. Such an FTA would need to
countries on such issues. The recent positions taken by ARF on be comprehensive and ambitious in coverage, aiming at the
Burma/Myanmar and on the Korean peninsula are highest possible degree of trade liberalisation including far-
encouraging developments in this respect, although the ARF reaching liberalisation of services and investment. On 23 April
could be more active in addressing regional conflicts and 2007 the Council authorised the Commission to start
tensions. On terrorism, the EU has participated in the last negotiating an FTA with ASEAN (and also with India and Korea)
intersessional meetings and supports the view that ARF is a and negotiations were officially launched on 4 May 2007. Both
good forum to exchange information and for expert level sides, however, confirmed that a successful conclusion of the
cooperation. DDA round of multilateral trade negotiations remains their
e. Technical: the Joint Cooperation Committee (JCC) priority.
This senior-officials-level committee, supported by a wide The negotiating process between EU and ASEAN is based on a
range of subcommittees, is the only body formally established region-to-region approach. It is clearly more complicated and
by the 1980 cooperation agreement responsible for its time-consuming to negotiate an agreement with 10
implementation. It meets every 18 months to discuss ongoing independent countries than an agreement with a single
and future activities. It consists of representatives of the country, particularly when there is wide variation of
European Commission (though EU Member States are also development level. Those different levels of development and
represented) and the governments of ASEAN. Since 1994 it has capacity of individual ASEAN members have to be recognised
set up five subcommittees dealing with trade and investment, and taken into account. Laos and Cambodia already benefit
economic and industrial cooperation, science and technology, from the EBA system while Burma/Myanmar’s political
forestry, environment, and narcotics. The September 2001 JCC situation means that the EU objects to its full participation in
agreed on a new approach to cooperation: a clear focus on the negotiations unless a credible democratisation process
policy dialogue where the EU can support ASEAN regional begins.
integration and other key priority areas. Future cooperation
programmes should derive from the policy dialogue and C. The EU and Burma/Myanmar
should be subject to a two-way value added test. The 2003 In 1996, the European Council first imposed an embargo on
communication ‘A new partnership with south-east Asia’ export of goods which may be used for repression, refused
confirmed that the JCC would continue to steer the visas for a list of junta officials and froze funds held by those
implementation of the existing agreements. The last EC– officials abroad. When Burma/Myanmar joined ASEAN in 1997,
ASEAN Joint Cooperation Committee took place on 4 May the EU refused to allow the country to accede to the 1980 EU–
2007. ASEAN cooperation agreement, and ASEAN–EU Ministerial
Meetings (AEMMs) were suspended. While strengthening
2. Trade relations sanctions, the changes made in spring 2000 made possible
The enlarged EU is currently ASEAN’s second largest trading Burma/Myanmar’s participation in the AEMM that year, in
partner, ahead of China and Japan, and accounting for 11.7 % which the EU reaffirmed its willingness to pursue dialogue
of ASEAN trade in 2006. ASEAN as a bloc is the EU’s fifth largest with all parties concerned. The meeting made it possible for
overall trading partner, ahead of Japan, Norway and Turkey. the European troika to visit Rangoon in January 2001 and to
Despite the current level of trade, the enormous potential have a meeting at senior-official level with Daw Aung San Suu
from enhancing the economic partnership led the EU and Kyi, the opposition leader of Burma/Myanmar and Nobel Prize
ASEAN in 2007 to launch negotiations on a free trade winner. In October 2002, the EU again urged the restoration of
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democracy, the pursuit of national reconciliation and the due to begin in 2008. In parallel to the trade and
protection of human rights in Burma/Myanmar. cooperation agreement, an agreement on cooperation and
mutual administrative assistance in customs matters has
On 26 April 2004, the EU common position on Burma/
been in force since 1997. Additionally, the EU has
Myanmar was extended by the Council in view of the military
established a permanent forum for consultation, sharing
regime’s failure to make any significant progress in normalising
experience and views on competition policy as well as its
administration of the country and addressing any of the EU’s
enforcement, and is currently negotiating a more specific
concerns as regards human rights. Specifically, the visa ban on
cooperation agreement concerning the application of
senior military officials travelling to the EU was extended while
competition laws to anti-competitive activities.
new restrictions have been authorised to prohibit EU
companies from investing in State-owned enterprises of 3. In view of the rapidly growing economic partnership,
Burma/Myanmar. Following the monks’ uprising in September South Korea was designated a priority partner for a free
2007 the EU Council decided on 15 October 2007 to increase trade agreement (FTA) in the ‘Global Europe’ trade policy
direct pressure on the regime through additional restrictive strategy of 2006. A comprehensive and ambitious FTA with
measures on exports, imports and investments in the sectors South Korea, including far-reaching liberalisation of
of logs and timber and mining of metals, minerals, precious services and investment, is deemed to lie in the interests of
and semi-precious stones. The EU also calls for the immediate both sides. Launched in Seoul in May 2007, negotiations
release of all political prisoners and for an international went into their seventh round in May 2008. Despite
embargo on arms exports to the regime. Targeted financial divergence on issues such as industrial tariffs and rules of
sanctions to prevent access to international banking services origin, and the popular backlash against trade with the
by leading military officials and their business partners are also USA over beef, both sides believe it is possible to complete
on the books. negotiations in 2008.
The common position has been renewed again on 29 April 4. Today’s relationship between South Korea and the EU is
2008 but at the same time the EU follows a balanced policy founded on: (i) increasingly shared political values;
that combines pressure with incentives to change (ii) strong economic links reflecting large bilateral trade and
(humanitarian assistance and support to health and education investment flows; and (iii) the EU’s reiterated support for
programmes) and where sanctions are part of a broader South Korea’s ‘sunshine’ policy of engagement with the
toolkit. The EU is ready to review or amend these measures in north. On the global scene, the EU and South Korea
light of developments on the ground. cooperate closely in a number of multilateral frameworks
apart from cooperation in the framework of the WTO; both
II. The Korean peninsula parties also have a close relationship within the
Asian–Europe Meeting (ASEM). The ‘Trans-Eurasia
A. The Republic of Korea information network’, launched in 2001, is one of the joint
EU–Korea initiatives.
1. Economic relations of the EU with South Korea are strong.
From a Korean perspective, the EU has become its second
B. The Democratic People’s Republic of Korea
largest export partner (after China). The total volume of
bilateral trade has grown by an average of 10 % per annum 1. Diplomatic relations with the Democratic People’s Republic
in recent years, and exceeded EUR 60 billion in 2006. The of Korea (North Korea) were established in May 2001. Since
EU is also the largest foreign investor, both on an annual 1998, there have been annual political dialogue troika
base, where it accounts for a third of the total inflow into meetings between the EU and North Korea at Regional
South Korea, and in terms of cumulative total since 1962. Director level. In addition, EU–North Korean contacts are
maintained through the heads of missions in Pyongyang
2. A strong attachment to democratic values in South Korea, and possible ad hoc visits by North Korean authorities to
and the rapid development of this country’s market Europe. On the issue of human rights, the EU had raised its
economy have allowed the development of close political concerns during this political dialogue, as well as in UN
and economic links between South Korea and the EU. forums.
These are currently based on the framework agreement on
trade and cooperation, which was signed in 1996 and 2. The basis of EU–North Korea economic ties is one-way aid.
entered into force in 2001. This agreement commits the The EC has provided various aid packages, including
parties to developing trade and investment and also EUR 344 million in food and humanitarian aid since 1995,
provides for collaboration in the fields of justice, home with the humanitarian assistance programme (through
affairs, science and culture. The agreement provides for a ECHO) alone worth EUR 93 million. The food aid/food
Joint Committee, regular summit meetings and a security programme initially concentrated on cereals,
ministerial troika. In April 2007, the Council of the EU called maize, sugar and oil donations, but it has been increasingly
for an updating of the framework agreement as part of a oriented towards agricultural rehabilitation since 2000
wider strengthening of relations. Negotiations on this are (fertilisers and agricultural inputs).
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3. Although not a participant of the Six-Party Talks, the EU of a quick deal. The EP also insists that negotiations with
strongly supports the process, in line with its long-standing ASEAN remain complementary to the WTO–DDA, which
support to all efforts aimed at reducing tensions in the remains the Union’s trade priority.
Korean peninsula and fostering direct dialogue as a means As a result of an initiative of the EP, the Asia–Europe
to inter-Korean reconciliation. Parliamentary Partnership (ASEP) offers the opportunity for
parliamentarians from the EP and from the national
Role of the European Parliament parliaments of the EU Member States to meet their
The first contacts between the European Parliament (EP) and counterparts from China, Japan, Korea and the ASEAN
the ASEAN countries took place in 1976, but it was only in countries. The initial ASEP meeting was held on 1 April 1996, in
1979 that regular meetings between the EP and the ASEAN Strasbourg. Subsequent ASEP meetings took place in Manila in
Inter-parliamentary Organisation (AIPO) were established. August 2002, Hue in March 2004, Helsinki in May 2006 and
Relations are conducted by the EP Delegation for relations Beijing in June 2008. ASEP has become the parliamentary arm
with ASEAN and are now developing along two fronts: of the Asia–Europe Meeting (ASEM) by giving parliamentary
through bilateral visits to member countries of ASEAN to guidance to the ASEM process and involving parliaments in
maintain contacts with the national parliaments in the region the implementation of ASEM initiatives.
and through participation as observer at the annual general Since September 2004, the European Parliament’s Delegation
assembly of AIPO (now called AIPA). The EP continuously for relations with the Korean peninsula maintains annual
emphasises the need to restore the democratic process in contacts both with the South Korean National Assembly and
Burma/Myanmar and to release all political prisoners. During with the Supreme People’s Assembly of North Korea. (Prior to
2004–09, no less than 10 resolutions were voted on this date, relations with South Korea were covered by the
concerning Burma/Myanmar. The EP also called on several ASEAN Delegation while North Korea was dealt with directly
occasions on Vietnam to undertake in-depth political reforms by the Foreign Affairs Committee). Recent encounters with
notably involving the abolition of the death penalty and the South Korea have focused on the outstanding issues in the FTA
end to religious persecution. The EP has also adopted many negotiations, as well as progress in the Six-Party Process, and
resolutions with regard to political and human rights in delegation visits to North Korea regularly include consultation
Cambodia. and debriefing stops in Seoul.
The EP adopted on 8 May 2008 a resolution on trade and
economic relations with ASEAN that supports an ambitious g Xavier Nuttin
trade agreement that would greatly benefit both sides. The EP Stefan Schulz
also expresses its concern about the slow pace of negotiations July 2008
but refuses to sacrifice the quality of the agreement in search
6.4.13. Australia and New Zealand

The EU was the first economic partner of Australia 12 years ago. The EU’s policy towards the country aims to maintain
stable trade relations and deepen cooperation. Relations between the EU and New Zealand received a formal framework
in 1999 and now the EU is the second largest trading partner of New Zealand, after Australia.

Article 133 of the Treaty establishing the European Community The EU maintains strong historic and economic links with
(EC) (basis for the EU’s common commercial policy). Australia and New Zealand and intends to further strengthen its
Council Regulation (EC) No 1934/2006 (the Industrialised ties with both countries especially in view of the increasing
Countries Instrument (ICI), which is the basis for cooperation importance of the Asia–Pacific area. EU policy towards both
with industrialised and other high-income countries and countries concentrates on maintaining stable trade relations
territories in North America, the Asia–Pacific region and the and deepening cooperation. Given their historical dependence
Gulf region) on farm exports to the UK, both countries were affected by the
UK’s accession to the EU: the Commonwealth preferential
arrangements had to be adapted to the EU’s agricultural policy.
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Achievements — developing bilateral cooperation between Australian law

enforcement authorities and Europol.
I. Australia 2. Trade
Commitment to resolving outstanding issues in the bilateral
A. Basic elements of relations Wine Agreement.
1. Strong economic relations
Cooperation on the WTO Doha Development Agenda.
The EU has been Australia’s largest economic partner for the
Notwithstanding differences in some areas, joint efforts will
past 12 years and in 2001 and 2002 accounted for 20 % of all
continue to ensure an ambitious approach overall on market
Australian overseas transactions compared with 17 % for the
access issues, on rule-making issues and on issues related to
USA and 13 % for Japan and ASEAN. The EU was also the largest
development. Recognition of the importance and complexity
source of Australian imports (with a 22 % share of total imports,
of the negotiations on agriculture and commitment to
mainly medicines, cars and telecommunications equipment)
reaching an outcome consistent with the Doha Declaration. As
and the third-largest market for Australian exports (with a 12 %
for developing countries, the parties will work together:
share of total exports, mainly coal, iron, wool and wine). The EU
remains Australia’s largest partner in terms of trade in services — to implement and promote policies to grant duty- and
(22 %) and is the leading investor in the country (accounting for quota-free market access for least-developed countries;
33 % of foreign investment in Australia). Total trade in goods
— to assist these countries with access to affordable
and services exceeded EUR 35 billion in 2002. In recent years
medicines; and
bilateral agreements have been concluded on trade in wine,
cooperation in the field of science and technology and — to deliver technical assistance and capacity-building
standards and certification. activities.
2. Will to cooperate Focus on resolving differences on bilateral agriculture and
In June 1997 a joint declaration on EU–Australia relations trade issues, including food safety and animal and plant health
established a partnership for dialogue and cooperation in matters, through intensified consultations, particularly in the
areas of common interest bilaterally and within international Agricultural Trade and Marketing Experts’ Group.
organisations. Among these are bilateral negotiations in the 3. Education, science and technology
veterinary and plant-health fields, prospects for a new round of
trade negotiations, the accession of new members to the Having successfully initiated the first Australia-EU pilot project
World Trade Organisation (WTO) and issues relating to climate on higher education cooperation, it was agreed that a second
change, the environment, marine science, biotechnology and pilot project be established on a similar matching-funding
information and telecommunication technologies. Another basis when the necessary funding procedures are finalised.
area of cooperation involves the coordination of development Development of an action plan designed to stimulate
aid in the Pacific region. In January 1982, an agreement on collaborative Australia-EU scientific and technological projects
uranium and the transfer of nuclear material to the EU was within the sixth framework programme for research.
concluded for a period of 30 years.
Commitment to make optimal use of the Forum for
B. Priorities for future cooperation European–Australian Science and Technology cooperation
At consultations in Brussels in April 2002, the parties agreed to (FEAST) as a key vehicle in this process.
take stock of developments in the relationship since the 5. Transport
signing of the joint declaration. The following areas were
Development of arrangements between the Australian Global
identified as high priorities over the following five years:
Navigation Satellite System Coordination Committee and the
1. Security and strategic issues European Commission to enable cooperation associated with
There should be increased sharing of assessments on the Galileo satellite navigation project.
international and regional security developments, with Increased cooperative activity in the fields of intelligent
particular attention to: transport systems (ITS) and sustainable transport strategies.
— intensifying cooperation on counter-terrorism and critical
Close cooperation on transport, including the aviation
infrastructure protection by exchanging information on
liberalisation agenda in multilateral forums such as the
international terrorist networks and protecting information
International Civil Aviation Organisation, the Organisation for
infrastructure, and by supporting counter-terrorism
Economic Cooperation and Development and the WTO
capacity-building in the Asia–Pacific region;
(General Agreement on Trade in Services) and by working
— enhancing dialogue on non-proliferation and export towards a bilateral agreement on relaxing ownership and
control issues, particularly with regard to regulating trade control rules, inward investment opportunities, and
in dual-use items and on respective engagement with opportunities to develop intermodal services in the respective
countries of concern; markets.
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6. Environment A number of common goals are proclaimed, such as support
On the basis of the existing framework of cooperation, for democracy, the rule of law and respect for human rights,
continuing collaboration on climate change, in particular, promotion of the effectiveness of the UN, cooperation on
specific attention could be given to: development issues in the South Pacific, promotion of
sustainable development and the protection of the global
— technology development and deployment; environment. To this end several areas of cooperation are
— climate science, impacts and adaptation; identified.
— harmonisation of emissions monitoring, reporting, The joint declaration also sets up a consultative framework
verification and certification procedures; and in which such cooperation can take place:
— evolution of mitigation commitments. — regular political dialogue, including consultations at

ministerial level between the EU and New Zealand;
Agreement to improve mutual understanding of respective
approaches to environmental protection and how the — consultations as appropriate between officials of both
approaches affect international policy-making and respective sides to cover relevant aspects of the relationship.
and joint interests. The general objectives set out in the joint declaration were
7. Development cooperation translated into practical activities by the action plan ‘Priorities
for future cooperation’ adopted in 2004. The Joint Declaration
Pursue opportunities for further collaboration in development
on relations and cooperation between the European Union
cooperation programmes in areas of mutual interest, including
and New Zealand was signed in September 2007. Combining
through:
the 1999 Joint Declaration and the 2004 Action Plan, the new
— assisting the recovery and nation-building processes in Declaration runs for a period of five years.
East Timor and the Solomon Islands;
B. Economic relations
— gearing programmes to build good governance and
The EU is New Zealand’s second-largest trading partner after
economic growth in nations in the Pacific, particularly
Australia. While the UK remains New Zealand’s first export
Papua New Guinea; and
destination in the EU, other countries, such as France, have also
— providing support and funding for the Asia–Pacific become more important. Total trade in goods and services
Leadership Forum on HIV/AIDS and Development. approached EUR 7 billion in 2002. The EU accounts for 17 % of
foreign direct investment in New Zealand. Similarly, the EU is
8. Migration and asylum
among the prime destinations for investments from New
Enhancement of information exchange and cooperation on Zealand, accounting for 28 % of New Zealand’s direct
approaches to address the challenges posed by global investment abroad. The importance of Europe as a reliable and
migration, consulting closely in multilateral forums and stable partner has increased following the Asian financial crisis.
bilaterally, in particular, focus on development of
policy-making and practical cooperation with respect to: The veterinary agreement (1997) aims to facilitate trade in
live animals and animal products while safeguarding public
— asylum-seeker and refugee readmission to countries of first and animal health and meeting consumer expectations in
asylum; relation to the wholesomeness of food products. Despite delay
— improving capacity-building (including in border there is a common willingness to see the agreement fully
management) in third countries that are of mutual interest; implemented.
— the integration of migrants and the link between The mutual recognition agreement (1999) facilitates trade in
development and migration; industrial products between the EU and New Zealand. It
covers exchanges estimated at more than EUR 500 million in
— exchange of information on trafficking in human beings sectors such as medical devices, pharmaceutical goods and
and related transnational crime; telecommunications terminal equipment. A parallel
— exchange of information on new technologies and agreement was also signed with Australia. These agreements
electronic support structures to assist in combating are the first mutual recognition agreements the EU has ever
irregular migration and identity and document fraud. signed with a third country.
II. New Zealand Role of the European Parliament

As with most other countries and regions of the world, the
A. General European Parliament maintains regular inter-parliamentary
The EU–New Zealand relationship was given a formal contacts with Australia and New Zealand, through a standing
framework in the shape of the May 1999 joint declaration on delegation for relations with both countries. The first
relations between the two parties. interparliamentary meetings with both countries took place in
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The EU’s external General development policy
6 relations 5
early 1981. As a rule, bilateral meetings should now be held

once per year. They are supplemented by a regular exchange
of views with the respective ambassadors. Subjects discussed
cover both bilateral issues, such as agricultural policy and
trade, and shared global concerns ranging from environmental
and climate issues to security challenges.
g Stefan Schulz
July 2008
6.5. General development policy
6.5.1. A general survey of development policy

Development policy is a key area of the European Union’s external relations. Ever since its creation, the European
Community has supported the development of many of the world’s regions: the Africa, Caribbean and Pacific (ACP)
countries and, later, developing countries as a whole, either through development assistance or preferential trade
arrangements. The overriding objective of European development policy is poverty eradication. Each year, the Community
and its Member States provide 55 % of international development assistance.
Legal basis co-decision procedure, three obligations are imposed on the

— Development and cooperation policy in general: Articles Community and its Member States. According to Article 178,
177-181 of the Treaty establishing the European the European Union shall take account of development
Community (EC). objectives in the policies that it implements which are likely to
affect developing countries. Article 180 requires the European
— Cotonou Agreement and various association agreements Union and the Member States to coordinate their policies on
(particularly with Asia and Latin America): Article 310 of the development cooperation and to consult each other on their
EC Treaty. aid programmes. According to Article 181, the Community
— Generalised scheme of preferences and cooperation and the Member States shall, within their respective spheres of
agreements: Article 133 of the EC Treaty. competence, cooperate with third countries and with the
competent international organisations.
Objectives The Lisbon Treaty does not significantly amend development
Article 177 of the EC Treaty states that Community policy will policy (Articles 208 to 210 of the TFEU). It does, however, take
contribute to the general objective of developing and over the acquis of the European consensus on European Union
consolidating democracy and the rule of law as well as development policy, making poverty eradication the
fostering the sustainable economic and social development of overriding objective of development policy (Article 208-1(2)
the developing countries, their smooth and gradual TFEU). The principles that are defined as development
integration into the world economy and the campaign against principles in the current EC Treaty (since foreign policy is not
poverty in those countries. part of the Community pillar) become the EU’s external action
principles (Article 21-2 TEU).
The inclusion of development-policy provisions in the Treaty
establishing the European Community is politically significant,
since it establishes development policy as a Community policy Achievements
in its own right. In addition to the formulation of general The priorities for implementing the European Union’s
development policy objectives, which are adopted under the development policy have changed in recent years. The
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political framework has been redefined to place poverty the Development Cooperation Instrument, other instruments
eradication at the heart of European policy and the financial are important for the development of the partner countries in
framework has been simplified around a single instrument, the question, particularly the European neighbourhood policy. The
Development Cooperation Instrument (DCI), although Humanitarian Aid Instrument, the European Democracy and
development cooperation with ACP countries continues to be Human Rights Instrument and the Stability Instrument also
financed through an intergovernmental instrument (the enable specific Community assistance to be provided to
European Development Fund) and not the EU’s general developing countries.
budget (6.5.4). 2. The Development Cooperation Instrument
A. The political framework The Development Cooperation Instrument simplifies the
On 20 December 2005 the three institutions — Council, previous financial cooperation framework by amalgamating
Parliament and Commission — jointly adopted the first the different geographic and thematic instruments into one. It
European consensus on European Union development policy. replaces the previous regulations adopted on the basis of
This text is, in fact, a revised version of the EC’s development Article 179 of the EC Treaty.
policy dating from 2000. It is, however, the first text common The Development Cooperation Instrument comprises:
to the Community institutions and the Member States. This
— geographic programmes: country strategy papers for Asia
new single body of principles will guide the future action of
and Latin America, South Africa and the Middle East;
the Commission and its 27 Member States and is firmly in line
with the Millennium Development Goals adopted by the — five thematic programmes: investing in human resources;
United Nations in 2000. environment and sustainable natural resource
management, including energy; the role of non-State
The EU’s development policy makes poverty eradication its players and local authorities in development; food security;
overriding objective. It is based on promoting good migration and asylum.
governance, democracy and human rights as well as on a
partnership with the developing countries. Being a joint text, — a programme of support measures for the 18 ACP
the consensus emphasises the need for consistency between signatories to the Sugar Protocol, in order to help them
Community and Member State actions, out of a spirit of following reform of the Community’s sugar regime.
complementarity, such that the European Union offers a truly Through the DCI, the EC finances measures aimed at
common development vision. supporting cooperation with developing countries on the list
In order to implement its policy, the EU has undertaken to of countries benefiting from the support of the OECD’s
increase its aid budgets to 0.7 % of gross national income (GNI) Development Assistance Committee. The ACP countries are,
by 2015, with an intermediary objective of 0.56 % by 2010. Half however, eligible for thematic programmes. The scope of the
of this increased assistance will be directed at sub-Saharan thematic programmes is thus greater than that of the
Africa and will need to be focused on the least developed accompanying geographic cooperation.
countries as a priority. In addition to the amount of assistance, Community assistance may be granted to countries or regions
the EU will also pay particular attention to the effectiveness of but also to decentralised bodies within beneficiary countries,
this assistance. For this, greater coordination will be needed international organisations, EU agencies and non-
with the beneficiary countries and other donors. governmental organisations. A significant proportion of
An improved division of work between the EC and its Member community assistance is given to UN agencies.
States is essential if the effectiveness of the EU’s assistance is to The budget for 2007–13 is EUR 16.987 billion, including
be strengthened. The consensus establishes the areas in which EUR 10.057 billion for geographic programmes, EUR 5.596
the EC’s value added is greatest, given its global presence in billion for thematic programmes and EUR 1.244 billion for ACP
particular. The Community will therefore focus its activity on signatories to the Sugar Protocol.
regional trade and integration, the environment and natural
resource management, infrastructure; water and energy; rural
development; agriculture and food security; governance,
democracy and human rights, and support for economic and Development policy is a Community policy, in respect of
institutional reform; conflict prevention and State fragility; which the European Parliament has the power of co-decision.
human development, social cohesion and employment. It is, according to the current Treaties, the only area of foreign
policy in which the Council shares legislative powers with
B. The legislative and financial framework Parliament.
1. Scope The DCI was adopted by the EP on 12 December 2006, within
At the end of 2004 the European Commission proposed a new the framework of the co-decision procedure. Parliament was
‘simplified architecture’ for external relations. The dozens of initially strongly opposed to the text proposed by the
existing legislative texts were replaced by seven instruments, Commission. Members of the European Parliament considered
the majority of them adopted at the end of 2006. Along with that the proposed version of the regulation would weaken
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Parliament’s powers, given that it conferred vast implementing content, the EP secured education and health as priority
powers on the Commission and the Council, at the expense of sectors for the Community’s development assistance: 20 % of
Parliament’s legislative and budgetary powers. Negotiations all assistance must go to these sectors in 2009.
came to a satisfactory conclusion at the end of 2006, however,
and the EP obtained a right of oversight with regard to country
(CSPs) and regional (geographic programmes) strategy papers, g Armelle Douaud
as well as with regard to thematic programmes. In terms of July 2008
6.5.2. Trade regimes applicable to developing countries

The generalised system of preferences (GSP) scheme is an autonomous trade arrangement through which the EU provides
non-reciprocal preferential access to the EU market to developing countries and territories in the form of reduced tariffs for
their goods when entering the EU market. The EU’s GSP system is one of the most significant trade-related development
instruments operated by any developed country.
Objectives Andean Community, the Central American Common Market

and Pakistan.
The primary objective of the GSP is to contribute to the
reduction of poverty through increased trade, as well as to The GSP scheme is implemented by a Council regulation
promote sustainable development and good governance. applicable for a period of three years at a time. It covers three
Tariff preferences on the EU market enable developing separate preference regimes:
countries to participate more fully in international trade and — the standard GSP, which provides preferences to 176
generate additional export revenue to support developing countries and territories on over 6 300 tariff lines;
implementation of their own sustainable development and
poverty reduction policy strategies. — the special incentive arrangement for sustainable
development and good governance, known as GSP+,
which offers additional tariff reductions to support
Instruments and historic evolution vulnerable developing countries in their ratification and
The European Community started offering preferential access implementation of relevant international conventions in
to its market in 1971 with the aim of enhancing developing these fields; and
countries’ participation in international trade. The GSP scheme — the EBA arrangement, which provides duty-free, quota-free
has been revised several times, with the most recent system access for the 50 least-developed countries (LDCs).
running until the end of 2008 and the new Council regulation
adopted in July 2008 for the period 2009–11. The scheme’s There has been a significant increase in recent years in the
successive revisions increased the number of tariff lines eligible value of preferential imports under GSP. Imports under the
for preferential access and established a more efficient scheme totalled EUR 51 billion in 2006 (an increase of 10 %
mechanism of evaluation and adjustment. over 2005) and EUR 57 billion in 2007 (an increase of 12 %
over 2006). The current regulation especially focused
In 2001 the Council adopted the ‘Everything but arms’ (EBA) preferences on those countries most in need of the benefits
initiative, granting duty-free access to imports of all products from trade. In this regard, imports from LDCs increased by
from least-developed countries (LDCs), except arms and 35 % in 2006 and then remained broadly stable in 2007, while
ammunitions, without any quantitative restrictions. The only GSP+ beneficiaries saw a rise in their exports to the EU of 15 %
exceptions were bananas, sugar and rice for a limited period. in 2006 and a further 10 % in 2007.
EBA was incorporated in the GSP scheme.
On the basis of trade data for 2007, the overall volumes of EU
In 2005 the EU also set up a GSP+ scheme, which is a special imports under each of the three GSP regimes and the rough
incentive arrangement for sustainable development and good value of the preferences provided in terms of nominal duty
governance, offering additional tariff privileges. This new GSP+ loss if the same products had been imported and duties paid
scheme also replaced earlier special arrangements supporting under the EU’s standard MFN conditions of access were as
measures to combat drugs in the Member States of the shown in the following table.
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GSP preferential Nominal Russia, Section VI (Products of the chemical or allied industries)
2007 imports duty loss and Section XV (Base metals)
(million EUR) (million EUR ) South Africa, Section XVII (Transport equipment)
Standard GSP 47 848 1.542 Thailand, Section XVII (Transport equipment)
GSP+ 4 900 0.501
2. Graduation (suspension of preferences)
EBA 4 302 0.505
Vietnam, Section XII (Footwear, headgear, umbrellas, sun
Total 57 050 2.548
umbrellas, artificial flowers, etc.)
The net effect of these adjustments is worth at least EUR 160
The new GSP regulation for 2009–11 million to beneficiary countries in terms of import duties that
With the current three-year phase of GSP set to expire at the would otherwise be imposed.
end of 2008, the European Commission made a proposal for a
B. GSP+
successor regulation on 21 December 2007. Following the
opinion of the European Parliament, the EU General Affairs and Under the current scheme 14 beneficiary countries qualified to
External Relations Council adopted a regulation on 22 July receive the additional preferences offered under the GSP+
2008 applying a new GSP scheme for the period 1 January incentive arrangement (Bolivia, Columbia, Costa Rica, Ecuador,
2009 to 31 December 2011. El Salvador, Georgia, Guatemala, Honduras, Mongolia,
Nicaragua, Panama, Peru, Sri Lanka and Venezuela). Any
Two countries (Burma/Myanmar and Belarus) remain country, including current GSP+ beneficiaries, which wishes to
temporarily withdrawn from GSP preferences on the basis of receive GSP+ preferences from January 2009, has to submit an
Council Regulations (EC) No 552/97 and (EC) No 1933/2006 application before 31 October 2008.
respectively, as the reasons for their withdrawals still persist. According to the qualifying criteria, any GSP+ beneficiary
Moldova was already removed from the beneficiary list of the country must be considered ‘vulnerable’ and have ratified and
current GSP regulation at the same time as the EC granted it effectively implemented 27 specified international
more far-reaching autonomous preferences under a separate conventions in the fields of human rights, core labour
legal instrument in March 2008. standards, sustainable development and good governance.
In response to desires expressed by users of GSP to ensure For countries that do not yet meet the GSP+ qualifying criteria
continued stability, predictability and transparency, the this year, the new regulation provides an additional
scheme remains broadly unchanged. However, it does opportunity for applications in mid-2010. This is an added
implement some technical changes, in particular taking advantage under the new rules, so that potential applicants
account of evolutions in trade flows. that do not yet meet all the criteria are not obliged to wait
three years before being able to re-apply.
A. Graduation and de-graduation C. EBA
Whenever an individual country’s performance on the EU Currently for 41 tariff lines concerning rice and sugar, duty-free
market over a three-year period exceeds or falls below a set quotas are established until full liberalisation is achieved in
threshold, preferential tariffs are either suspended or re- September 2009 (rice) and October 2009 (sugar). The new
established. These calculations are made on the basis of regulation incorporates a minimum price arrangement for
product sections established in the harmonised system for sugar in order to ensure coherence with the results of EPA
classification of goods for trade. This graduation mechanism is negotiations. This minimum price arrangement will apply from
not relevant for EBA. Graduation is triggered when a country 1 October 2009 to 30 September 2012.
becomes competitive in one or more product groups and is
therefore considered no longer to be in need of the Role of the European Parliament
preferential tariff rates. As a result of the re-calculations made
The current Treaties do not grant any legislative power to the
on trade data for the period 2004–06, GSP preferences will be
European Parliament in the area of trade policy. The European
re-established for six countries and suspended for one, in the
Parliament was consulted only for opinion at the time of the
following beneficiary country and product group
GSP reviews, including in 2008. Among other things
combinations:
Parliament asked for a thorough evaluation and impact
1. De-graduation (re-establishment of preferences): assessment, increased transparency and predictability and the
possibility to submit applications for the GSP+ scheme by
Algeria, Section V (Mineral products)
interested countries on an annual basis. Following the opinion
India, Section XIV (Jewellery, pearls, precious metals and of the European Parliament, the EU General Affairs and External
stones) Relations Council adopted a regulation on 22 July 2008
applying a new GSP scheme for the period from 1 January
Indonesia, Section IX (Wood and articles of wood) 2009 to 31 December 2011.
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If it enters into force, the Lisbon Treaty will substantially

increase Parliament’s competences in trade policy. It provides
that the ordinary legislative procedure shall apply to most
areas of trade policy, including the GSP system and
autonomous trade measures.
g Levente Csaszi
July 2008
6.5.3. Humanitarian aid

Since 1960, the European Commission grants humanitarian assistance to people affected by conflicts or disasters, both
natural and man-made, in third countries. The large number of such operations undertaken since the late 1980s has
made it a key element of the Community’s external action. Since 1992, EC humanitarian aid is managed by the
Directorate-General for Humanitarian Aid (ECHO), which has adjusted itself over the years to the growing and changing
nature of humanitarian challenges. Today the European Union — i.e. the European Commission and the Member States,
collectively — is the world’s leading humanitarian donor.
Legal basis — to support civil operations to protect the victims of fighting
or comparable emergencies, in accordance with current
Article 179 of the Treaty establishing the European
international agreements.
Community (EC).
Achievements
Objectives
The Community has been involved in humanitarian aid
The regulatory framework of EC humanitarian operations is operations since the end of the 1960s. The significant amount
Council Regulation (EC) No 1257/96 of 20 June 1996. of aid supplied since the late 1980s has made it a key element
According to the regulation, the Community’s humanitarian of the Community’s international policy. The EU — the
aid shall comprise assistance, relief and protection operations, European Commission and the Member States, collectively
conducted on a non-discriminatory basis to help people in — has now become the world’s largest provider of
third countries, and especially the most vulnerable among humanitarian aid, contributing in 2006 with over EUR 2 billion
them. In particular, the principal objectives of EC humanitarian (more than 40 % of official international assistance). Since
aid operations shall be: 1992, EC humanitarian aid is managed by the Directorate-
General for Humanitarian Aid (ECHO).
— to save and preserve life during emergencies, natural
disasters and their immediate aftermath; A. Role of ECHO
— to provide the necessary assistance and relief to people ECHO was established with the aim of centralising the
affected by long-lasting crises arising, in particular, from Commission’s humanitarian aid operations and thereby
outbreaks of fighting or wars; organising them more effectively. ECHO does not
implement assistance programmes itself; it funds
— to help finance the transport of aid and efforts to ensure operations through more than 200 partners (NGOs, UN
that it is accessible to those for whom it is intended; agencies, international organisations — such as the Red
Cross/Red Crescent Movement).
— to carry out short-term rehabilitation and reconstruction
work, especially on infrastructure and equipment, with a ECHO’s main task is to ensure that humanitarian goods and
view to facilitating the arrival of relief; services get through these partners to vulnerable populations
in crisis zones effectively and rapidly, that they are delivered
— to cope with the consequences of population movements according to real needs, and to ensure sound financial
(refugees, displaced people and returnees) caused by management.
natural and man-made disasters;
The rapidity of aid delivery is facilitated by special provisions in
— to ensure preparedness for risks of natural disasters or the Financial Regulation and its implementing rules, thus
comparable exceptional circumstances and use a suitable allowing the Commission to take emergency decisions on
rapid early warning and intervention system; financing relief. These decisions can inject up to EUR 3 million
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within 72 hours and up to EUR 10 million within 10 days into B. General policy framework: the European Consensus on
humanitarian operations through fast-track budgeting Humanitarian Aid
procedures at the onset of a humanitarian disaster. In addition, Over recent decades, the magnitude, strength and number of
ECHO’s partners (over 200 of them) have signed either a natural and man-made disasters have increased and become
framework partnership agreement (FPA) (for NGOs and more complex and protracted in time. The number of people
international organisations) or a financial and administrative affected has also increased and the poorest people have been
framework agreement (FAFA) (for UN agencies). These ex ante affected disproportionately. The international context in which
contractual arrangements have facilitated and expedited the humanitarian aid takes place has become increasingly
allocation of resources, promoting at the same time ECHO’s challenging, with new State and non-State actors on the
partners’ accountability. scene, blatant violations of the international humanitarian law,
ECHO allocates financial assistance exclusively on the basis of and the security of humanitarian workers often put at risk.
humanitarian needs assessments, in full respect of the basic In this context, the three EU institutions (the European
humanitarian principles of humanity, neutrality, impartiality and Parliament, Council and Commission) signed in December 2007
independence. For this purpose ECHO has developed its own a European Consensus on Humanitarian Aid, after six-months of
methodology based on a double approach: analytical ranking negotiations. The consensus is a collective effort by the European
of third countries according the their overall vulnerability, Union (including its Member States) to shape the future of the
matched with the evaluation in the field by ECHO’s experts, EU’s humanitarian aid, tackling the new challenges and
who are also instrumental in the rapid identification of suitable responding, for the first time, with a single, more effective voice.
partners and projects to meet the needs. It represents a significant landmark for EU humanitarian aid.
The implementation of humanitarian operations is then
The consensus reconfirms the EU commitment to
followed up by ECHO’s on-the-spot monitoring of its partners
humanitarian principles, international humanitarian law and
and projects in order to ensure a sound financial management
the need for enhanced coordination at EU level, while
and that the allocated resources have been used for their
respecting the central coordinating role of the United Nations.
intended purpose. ECHO’s evaluation unit, set up in 1996, has
It also emphasises the need for more resources and that the
helped to strengthen the monitoring and effectiveness of the
aid should be delivered by dedicated professionals. It also
EC humanitarian operations.
clearly delimits the role of State actors and, in particular, their
ECHO’s assistance also aims at facilitating, together with other armed forces, which should be used only as a last resort in
aid instruments, the return of populations to self-sufficiency meeting critical humanitarian needs.
wherever and whenever possible, and to permit the phasing out
The consensus was followed in 2008 by an action plan
of humanitarian funding in good conditions. In that perspective,
presented by the Commission, including concrete and
ECHO is actively engaged in implementing a linkage strategy
measurable actions in each of the areas, which was welcomed
between relief, rehabilitation and development (LRRD).
by both the Council and the European Parliament. From its
Beyond its core task of funding humanitarian interventions, side, the Council decided to extend and adapt the mandate of
ECHO deals with related issues aimed at supporting the its Working Parting on Food Aid, to be referred as from
delivery and quality of humanitarian aid. ECHO: 1 January 2009 as the ‘Working Party on Humanitarian Aid and
— pursues its active relationship with other institutions, Food Aid’. This important decision, which should be seen as
Member States and international organisations to enhance one of the immediate consequences of the adoption of the
humanitarian policy; consensus, will at last establish an appropriate forum for
regular policy debate in the Council.
— promotes the respect for international humanitarian law
and humanitarian principles and the defence of the C. Treaty of Lisbon
humanitarian space; Should the Lisbon Treaty finally enter into force, it would entail
— has developed a security and safety policy for ECHO’s staff a number of novelties for EU humanitarian aid, including
involved in the delivery of humanitarian aid; humanitarian aid as a policy in its own right in the EC Treaty.
Currently humanitarian aid is based, by default, on Article 179
— cooperates with training programmes, such as the network of the EC Treaty (development policy).
on humanitarian assistance (NOHA), and gives its partners
technical assistance; The provisions of the Treaty of Lisbon would confirm, on the
whole, current objectives, basic principles and procedures
— raises public awareness about humanitarian issues in
(co-decision), and would insert EU humanitarian policy under
Europe and elsewhere.
the overall provisions of EU external action. In addition, the
To fulfil its various tasks, ECHO has grown over the years and it Treaty provides for the creation of a European Voluntary
currently has 200 officials working at its Brussels headquarters, Humanitarian Aid Corps — a framework for joint
plus 100 field experts and 250 local staff working in its contributions from young Europeans to the humanitarian aid
approximately 40 support offices in third countries. operations of the Union.
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D. Sources and destination of ECHO funds The largest single funding allocations in 2007 were devoted to
Sudan, the Palestinian territories and the Democratic Republic
1. The budget
of the Congo.
ECHO has two primary sources of funds: the general budget of
the European Union and the European Development Fund ECHO’s aid strategy remains continuously focused on
(EDF), to be used for exceptional humanitarian assistance to ‘forgotten crises’: situations where major humanitarian needs
ACP countries (countries of Africa, the Caribbean and the receive little attention on the part of the donors — reflected
Pacific). The Commission applies the same principles and by the low level of aid received compared to the needs — and
guidelines for aid financed from the EDF and aid from the the media. The forgotten crises identified in 2007 were:
general budget. Sahrawi refugees, Chechnya, Jammu and Kashmir (India),
Nepal, Burma/Myanmar and Colombia. Apart from Colombia,
In order to be able to respond rapidly to specific aid all these crises were already identified as ‘forgotten crises’ in
requirements resulting from events which could not have 2006. The amount of funds allocated to ‘forgotten crises’ has
been foreseen when the budget was established, ECHO may been decreasing over the recent years: EUR 89 million in 2005
also call on an Emergency Aid Reserve. For this to be (18.7 % of the budget), EUR 65 million in 2006 (14 % of the
mobilised, there needs to be trilateral agreement between the budget) and EUR 60.7 million in 2007 (13 % of the budget).
Commission, the Council and the Parliament. The year 2007
b. Disaster preparedness
was exceptional in that no major unexpected crises or
disasters occurred and, subsequently, ECHO did not have to Natural disasters are mostly impossible to avert. However, their
draw on the Commission’s Emergency Aid Reserve. negative impact can often be substantially reduced or
prevented. In line with its mandate, ECHO promotes disaster
ECHO, like all other Commission departments, is accountable preparedness through coordination, advocacy and Dipecho,
to the Parliament and the Council, notably through annual its specific programme on disaster preparedness, which has
reports detailing its activities. Its budget management is also been operational since 1998. Dipecho finances community-
subject to ongoing auditing by the Court of Auditors, which based projects aimed at enhancing the prevention and
reports to Parliament and the Council. Every year, Parliament response capacities of vulnerable communities, emphasising
and the Council are invited to give their opinion on the training, capacity building, awareness raising, the
discharge of past budgets. establishment or improvement of local early warning systems
and contingency planning. Dipecho now covers six disaster-
Since 1992 to date, ECHO has provided over EUR 7 billion of prone regions (Central America, South America, the Caribbean,
humanitarian aid in more than 85 countries worldwide. ECHO’s central Asia, south Asia and south-east Asia). Since its creation,
budget was modest at the outset, but it rose rapidly to reach a Dipecho has financed more than 400 projects worldwide,
level similar to the assistance provided bilaterally by the EU worth over EUR 119 million. In 2007 an amount of EUR 19.5
Member States. Between 2000 and 2005, ECHO’s average million was allocated to the Dipecho programme (2.5 % of the
annual budget was EUR 543 million (including the Emergency total budget).
Aid Reserve). For the period 2007–13, this budget will
gradually increase to an annual budget of EUR 875 million in Furthermore, ECHO actively cooperates with the main
2013, though a large part of this increase is due to the transfer development cooperation actors, aiming to better integrate
of the humanitarian food aid budget line to ECHO as of disaster risk reduction into development activities and ensure
1 January 2007 (previously managed by EuropeAid together a stronger linkage with efforts relating to climate change
with food security operations). ECHO’s allocations in 2007 adaptation in high-level risk countries.
amounted to almost EUR 769 million.
c. Thematic funding
2. Allocation of funds The EU commitment to working closely with international
a. Country/region interventions institutions in improving global humanitarian response
capacity is demonstrated through ECHO’s thematic funding
In terms of geographical distribution of humanitarian programme. In 2007, a total of EUR 27.5 million was allocated
interventions, the relative share of the funding to ACP to supporting the reinforcement of institutional capacities of
countries has continuously increased, apart from 2005, when UN agencies and the Red Cross/Red Crescent Movement.
two big crises in Asia received most of the funding: the Indian
Ocean tsunami and the earthquake in Kashmir. In 2007 ACP
countries received EUR 422.7 million (i.e. 55 % of the total final Role of the European Parliament
ECHO budget), followed by Asia (EUR 110 million or 14 % of Through its opinions and resolutions, the European Parliament
the budget), the Middle East and North Africa (EUR 99 million (EP) has always expressed its concern with regard to
or 12.8 % of the budget), Latin America (EUR 32 million or 4 % humanitarian aid, thus bringing considerable pressure to bear
of the budget) and, finally, eastern Europe and the new for a constant improvement to, and development of, a range
independent States (NIS) — including Chechnya (EUR 25.8 of instruments. In particular, the idea of creating ECHO
million or 3.3 % of the budget). originated in the EP.
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As the institution for adopting the EU budget, the EP has In order to enhance its position on humanitarian aid issues, the
insisted regularly on an increase in the appropriations for EP created in 2006 the post of Standing Rapporteur for
humanitarian aid, not only in general but also for specific Humanitarian Aid, whose mandate includes preserving
regions or countries, including the increase of disaster humanitarian aid budget interests, monitoring the
preparedness activities and the use of emergency funds to implementation of Community’s humanitarian programmes
deal with the food price crisis. The EP has also frequently sent and keeping close contacts with the humanitarian community.
delegations to study the situation of local populations on the The firm positions taken by the EP during the negotiations of
ground, to enable it to make specific proposals to improve aid. the European Consensus on Humanitarian Aid were
It is worth noting that the EP regularly adopts resolutions on instrumental in order to achieve some tangible results, such as
the situations in various troubled spots around the globe. Over the commitment by the Council to create an appropriate
the past few years the EP has concerned itself with the forum for humanitarian aid policy discussions.
humanitarian crises in the Great Lakes Region, Sudan, Somalia,
the Palestinian Territories, Burma/Myanmar, Ethiopia and g Anna Caprile
Eritrea, Niger, Zimbabwe, Haiti, Nepal and the Democratic the Armelle Douaud
People’s Republic of Korea, among others. July 2008
6.5.4. Relations with the countries of Africa, the Caribbean

and the Pacific: from the Yaoundé and Lomé
Conventions to the Cotonou Agreement
Relations between the EU and the ACP countries were formalised over time through the conclusion of several agreements
or conventions. These are the conventions of Yaoundé, Lomé and Cotonou. These agreements had as their primary goal
the eradication of poverty through increased integration of the ACP countries into the world trading system and have
gradually integrated significant elements of good governance, political dialogue and economic cooperation.
Legal basis procedures for the allocation of aid. References to the aims of
Article 310 of the Treaty establishing the European curbing the proliferation of weapons of mass destruction and
Community (EC). combating terrorism were also added to the agreement.
Following the expiration of the fourth Lomé Convention on A. Previous agreements
29 February 2000, the partnership agreement signed in 1. From Yaoundé to Lomé
Cotonou, Benin, on 23 June 2000 established a new 20-year
Part Four of the EEC Treaty, together with an implementing
framework for future relations between the European Union
convention, governed relations between the EEC and overseas
(EU) and the African, Caribbean and Pacific (ACP) countries.
countries and territories (OCTs). After these countries gained
Just like the Lomé Convention, the Cotonou Agreement aims
independence, the 18-member, and later 19-member, African
to improve the standards of living and economic development
States, Madagascar and Mauritius (ASMM) group became
of the ACP countries and establish close cooperation with
associated with the EEC under the two Yaoundé Conventions
them on a spirit of true partnership. The new agreement,
(1964–69 and 1971–75). At the same time, the Convention of
however, differs from the previous conventions in that its
Arusha (1971–75) established trade links with the three east
coverage extends beyond the traditional range of
African States of Kenya, Uganda and Tanzania.
development issues. Its main aim is the eradication of poverty
through fuller integration of the ACP States into the world Protocol 22 to the Acts of Accession of the United Kingdom,
trading system. It also reinforces the institutional and political Ireland and Denmark offered the 20 Commonwealth countries
dimension of ACP–EU relations, especially in crucial areas such in Africa, the Caribbean and the Pacific the opportunity to
as human rights, democracy and good governance. The first negotiate on the structure of their future relations with the
revision of the agreement, in 2005, was designed to improve EEC. Other African States that were not members of the
political dialogue, to enshrine all parties’ recognition of the Commonwealth or the ASMM group were also given the same
jurisdiction of the International Criminal Court and to simplify option.
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This led to the First Lomé Convention (1975–80) which was development, financial cooperation and regional integration.
followed by three more (1981–85, 1986–90 and 1990-2000). Development strategies focus on the reduction of poverty,
which they establish as a priority objective.
2. The fourth Lomé Convention
The fourth Lomé Convention was signed on 15 December 3. The institutional and political dimension
1989 for a period of 10 years and came into force on 1 March a. institutions
1990, while the associated Financial Protocol was adopted for The joint institutions are the Council of Ministers, the Committee
five years only. The amended Convention resulting from the of Ambassadors and the Joint Parliamentary Assembly. The new
mid-term review and the second Financial Protocol to the agreement renames the former Joint Assembly ‘the Joint
Lomé IV Convention were signed on 4 November 1995 and Parliamentary Assembly’ in order to emphasise the parliamentary
expired on 29 February 2000. nature of this body. Included in the tasks of the Joint
Practically all products originating in the ACP States (99.5 %) Parliamentary Assembly is the organisation of regular contacts,
had free access to the Community. Reciprocal arrangements not only with economic and social actors as in the previous
were not compulsory; the ACP countries were merely required Lomé Convention, but also with civil society (Article 17). The
to grant the EU most-favoured-nation status. The Stabex main innovation as regards the Joint Council of Ministers is the
system (stabilisation of export earnings) guaranteed the ACP broadening of its mandate to conduct an ongoing dialogue with
countries a certain level of export earnings by protecting the representatives of the social and economic partners and other
latter against the fluctuations to which they would normally members of civil society (Article 15).
be subject as a result of the functioning of markets or the b. Actors in the partnership (Articles 4 to 7)
vicissitudes of production. The system for mineral products
One of the most significant innovations of the new agreement
(Sysmin) provided subsidies to deal with temporary
is the inclusion of a chapter on the actors involved in the ACP–
production or export problems in the mining sector. Under
EU partnership. The ACP countries recognise the
Lomé IV the system covered eight minerals.
complementary role of non-governmental players in the
As a result of the mid-term review, a clause (Article 366a) was development process. To this end, non-governmental bodies
inserted under which aid to a State might be partially or totally are informed and involved in consultation on cooperation
suspended if it breached Article 5 (human rights, democracy policies and on the political dialogue. They are involved in the
and the rule of law) of the convention. implementation of cooperation projects and provided with
adequate support for capacity building.
B. The conclusion of the Cotonou Partnership Agreement
1. Process c. Political dialogue (Articles 8 to 10)
The negotiations on the ACP–EU Partnership Agreement were The parties are to engage regularly in a comprehensive and
concluded in Brussels on 3 February 2000. A separate balanced political dialogue conducted in a flexible manner at the
agreement was signed with South Africa (6.5.1) in pursuance appropriate level in order to exchange information and to
of the protocol establishing South Africa’s partial accession establish priorities and common principles. The objectives of the
with effect from April 1997. The signing ceremony took place dialogue include regional cooperation, conflict prevention and
in Cotonou, Benin, on 23 June 2000. peaceful settlement of disputes. Through dialogue, the parties are
to contribute to peace, security and stability and promote a stable
The ratification process was completed on 27 February 2003,
and democratic political environment (Article 8(3)). Following the
when the Council of the European Union deposited its
2005 revision of the Cotonou Agreement, representatives of the
instrument of ratification. The new agreement entered into
ACP Group and the ACP–EU Joint Parliamentary Assembly can
force on 1 April 2003, but many of its provisions had already
now take part in the political dialogue.
been applied since August 2000, though not the clauses
relating to the ninth European Development Fund. The new The dialogue covers all fields of cooperation laid down by the
agreement has a term of 20 years and may be revised at five- agreement as well as questions of common interest, including
yearly intervals (Article 95). The first revision of the agreement the environment, equality between men and women,
was concluded on 25 June 2005. migration and cultural matters. It devotes special attention to
human rights, democratic principles, the rule of law and good
2. Main substance of the agreement (Articles 2 and 4)
governance, the arms trade, anti-personnel landmines, military
The Cotonou Agreement, characterised by the term expenditure, corruption, drugs and organised crime and
‘partnership’, is all about mutual commitment and ethnic, religious or racial discrimination. The EU provides
responsibility, hence the emphasis given to political dialogue, assistance for capacity building to promote democracy,
covering such issues as democracy, good governance and transparency, improved access to justice and more efficient
migration issues, and to broad-based involvement of civil law-enforcement procedures.
society. The new agreement also focuses on the sustainable
economic development of ACP States and their smooth and d. Migration (Article 13)
gradual integration into the global economy through a The agreement establishes a framework for dealing with
strategy combining trade, investments, private-sector migration through the readmission clause: each ACP or EU
515
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State is to accept the repatriation of any of its nationals who c. Financial cooperation
are illegally present in the territory of an EU or ACP State and The amount of EU financial assistance for the first five years of
readmit them at the request of the latter without further the agreement (2003–08) was EUR 13 500 million (ninth EDF).
formalities. The agreement also includes a provision An additional sum of EUR 2 500 million was also available from
establishing non-discriminatory treatment of legally employed the previous European Development Fund (EDF), taking the
workers from ACP countries in EU Member States or vice versa. total to EUR 16 000 million, to which EUR 1 700 million were
4. Trade and financial framework added from the European Investment Bank (EIB) in the form of
a. The economic partnership agreements (Articles 36 and 37) loans. A further amount of EUR 10 000 in the form of grants
(6.5.2) was earmarked to support long-term development. The 10th
EDF for the subsequent six-year period (2008–13) has been set
The Cotonou Agreement foresees the finalisation of the long
at EUR 22 682 million. From these funds, a total of EUR 21 966
standing non-reciprocal trade preferences granted to ACP
should be allocated to ACP States, while EUR 286 million
countries since the first Yaoundé Convention. The agreement
should be allocated to the OCTs (overseas countries and
provides for a preparatory period of eight years towards the
territories), and EUR 430 million to support Commission
conclusion of new WTO- compatible trade arrangements (the
expenditures linked to EDF programming and
economic partnership agreements — EPAs), by January 2008.
implementation. Contrary to the past, balances from the ninth
During this preparatory period the trade preferences granted
EDF or from previous EDF funds can no longer be
under Lomé IV should be retained. The economic partnership
recommitted, unless the EU Council decides otherwise by
agreements were initially designed to create an entirely new
unanimity. The 10th EDF entered into force on 1 July 2008,
framework for the flow of trade and investment between the
after six months of delay.
EU and the ACP countries, encouraging, amongst other
positive factors, regional integration between ACP countries. In addition to EDF funds, ACP States should benefit from
EUR 2 000 million under the Investment Facility, managed by
Formal negotiations for these trade agreements started in
the European Investment Bank. The Investment Facility is
September 2002. At the end of 2005, the negotiations entered
designed to help businesses in ACP countries by supporting
their third phase, in which the EU started negotiations on
sound private companies, promoting privatisation, providing
economic partnership agreements with the six ACP regions.
long-term finance and risk capital and strengthening local
The process was seriously delayed, however, due to principle
banks and capital markets.
disagreements between the parties about the timing and
coverage of trade liberalisation, compensation measures for d. Resource allocation and programming
lost revenues and the degree of asymmetry in its The Cotonou Agreement introduces significant changes to
implementation. As a result only one ‘full’ EPA was concluded programming procedures and resource allocation. ACP States
by the end of 2007, with the Cariforum. A series of interim must now define eligible non-governmental players and
agreements, covering almost exclusively goods liberalisation, specify the amount of resources earmarked for such players in
were concluded with a number of individual countries and their national indicative programmes. Resource allocation to
small regions in Africa and the Pacific, with a view to negotiate ACP countries will be based on both needs and performance.
full EPAs in 2008. Each ACP State and region will receive an indication of the
b. Trade-related areas and investment resources it could receive over a five-year term. In addition to
For the first time, the ACP–EU Agreement contains provisions mid-term and end-of-term reviews of national indicative
(Chapter 5) on trade factors such as non-tariff barriers, including programmes, ACP and EU authorities will jointly carry out an
intellectual property rights and biodiversity measures, annual review to identify the causes of any delays in
competition policy, standards, plant-health measures and implementation and propose measures to improve the
environmental and labour standards. In Article 46, both parties situation. Following mid-term and end-of-term reviews, the EU
underline the importance of the international agreement on may revise resource allocation to ACP States according to their
trade-related aspects of intellectual property rights (TRIPs) needs and performance. The allocated resources will consist of
and the Convention on Biological Diversity. two main elements: an allocation for macroeconomic support,
programmes and projects and an allocation to cover
The new agreement places greater emphasis on support for unforeseen needs, such as emergency assistance.
investment and the private sector. Cooperation in the field of
investment will include: The implementation of the 10th EDF will be regulated by
Council Regulation (EC) No 617/2007, adopted by the Council
— measures to create and maintain stable investment on 14 May 2007. The regulation indicates as primary and
conditions, encouraging private investment in ACP overarching objective of cooperation the eradication of
countries, poverty in the context of sustainable development, including
— support for the long-term investment of financial pursuit of the millennium development goals.
resources, and
Additional novelties introduced in the implementation of the
— investment-guarantee schemes. 10th EDF are:
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6 relations 5
— the ‘incentive tranche’, i.e. resources to be added to national — trade, regional integration and infrastructure,
indicative allocations on the basis of good governance
— millennium development goals,
performance criteria;
— energy,
— a significant increase in budgetary support, linked to
positive progress towards achievement of MDGs; — climate change,
— substantial funding for regional integration, especially in — migration, mobility and employment,
the framework of the EPA process; — science, information society and space.
— the possibility of co-financing development projects with
Member States or other donors; Role of the European Parliament
— funding of the Africa Peace Facility (EUR 300 million). The European Parliament is kept regularly informed by the
e. Stabilisation of export revenue Commission of the implementation of the ACP–EU partnership
agreement. The powers of the EP in respect of the allocation of
The agreement replaces Stabex and Sysmin with a support
aid are though very reduced as the EDF is not included in the
system designed to mitigate the adverse effects of short-term
EC budget. Nevertheless, it must grant an annual discharge in
fluctuations in export revenue. Resources for this system will
respect of the operations financed under the EDF. The EP has
be allocated through the national indicative programmes.
regularly requested the inclusion of the EDF into the EC
Support may be provided if a worsening public deficit
budget, and the Commission presented a communication in
coincides with a loss of overall export earnings or a loss of
this sense in 2003. Should the Treaty of Lisbon be finally
export earnings from agricultural and mineral products. The
ratified, this debate may be reopened since the new treaty
least developed countries (LDCs) benefit from an arrangement
eliminates the explicit exclusion of the EDF from the area of EC
whereby a smaller loss of export revenue triggers support
competence (Article 179.3 EC).
payments (Article 68).
In addition, Parliament assented to the partnership agreement,
f. Debt relief
and each revision is also subject to parliamentary assent, as
Outside the ACP–EU framework, the ACP countries agreed to well as each economic partnership agreement. In the view of
an EU proposal for the use of up to EUR 1 billion from the European Parliament, increases in aid under the Cotonou
uncommitted EDF funds to support highly indebted poor Agreement should have been important enough to honour
countries in the ACP Group. On a case-by-case basis, the pledges given by the EU to increase public development
uncommitted resources from past indicative programmes aid in order to achieve the millennium development goals.
have been used for debt relief. Technical assistance relating to
debt management will be provided to ACP States (Articles 66 The European Parliament makes a significant contribution to
and 67). ACP–EU cooperation through the work of its Committee on
Development and through the ACP–EU Joint Parliamentary
C. EU regional strategies Assembly, the successor body of the former Joint Assembly,
In 2006 the Commission presented concept papers for EU which has a fundamental role to play in the development and
strategic relationships with individual ACP regions: the strengthening of relations between the EU and its ACP partners
Caribbean, the Pacific, Africa and a separate one to deal with and brings together the elected representatives of the EU (the
South Africa. members of the European Parliament) and of the ACP States
twice a year. The European Parliament has also established a
The objective of the proposed EU regional strategies is to
delegation in charge of relations with the Pan-African Parliament
highlight how the challenges facing each of the regions can
(PAP), with a programme of regular meetings and field visits.
be transformed into opportunities by focusing on the right
Each year Parliament adopts a resolution expressing its views
‘policy-mix’, in parallel with full optimisation of the
and concerns about the work of the ACP–EU Joint Parliamentary
opportunities of the Cotonou Agreement. These objectives are
Assembly and ACP–EU cooperation.
to be achieved through a new enhanced partnership
composed of a set of interrelated facets: shaping political Members of the European Parliament pay regular official visits
partnership and helping the region address its economic, to ACP countries, either in connection with their work in the
social and environmental vulnerabilities. Committee on Development and in the Joint Parliamentary
Furthermore, the second EU–Africa summit was finally held in Assembly or as election observers. In 2005–07 Members
Lisbon in December 2007, after several delays. During this monitored the elections in Ethiopia, Liberia, Uganda, the
summit, which signalled a qualitative leap in EU–Africa relations, Democratic Republic of the Congo, Mauritania, East Timor and
the joint Africa–EU strategy was adopted. The associated action Togo.
plan (2008–10) establishes eight partnerships:
— peace and security, g Armelle Douaud
Anna Caprile
— democratic governance and human rights, July 2008
517
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BAAA08001ENC_cap05-06.indd 518 18/2/09 11:53:28
European Parliament
Fact Sheets on the European Union
Luxembourg: Office for Official Publications of the European Communities
2009 — 517 pp. — 22 × 27 cm
ISBN 978-92-823-2469-1
Price (excluding VAT) in Luxembourg: EUR 40
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2009 EDITION

Fact Sheets on the European Union – 2009 EDITION

Fact Sheets on the

Price (excluding VAT) in Luxembourg: EUR 40

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Fact Sheets on the

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More information on the European Union is available on the Internet (http://europa.eu).

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Secretariat of the European Parliament

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The European Union at a glance

How the European Union works Common policies

1 The European Union (EU) has its own

Citizens’ Europe 5 Economic and monetary union (EMU) is the

2 For EU citizens, the right to travel, live and

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1 How the European Union works

3 The internal market

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6 The EU’s external relations

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Economic and monetary

3 The internal market 6 The EU’s external relations

How the European Union works

1.1. Historical evolution of European 1.3.5. The European Parliament: relations

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1.1. Historical evolution of European

1.1.1. The first Treaties

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1.1.2. Developments up to the Single European Act

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I. The Maastricht Treaty A. The European Community (first pillar)

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1.1.4. The Treaty of Nice and the Convention on the

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1.1.5. The Treaty establishing a Constitution for Europe

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1.1.6. The Treaty of Lisbon

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The protocol on the application of the principles of subsidiarity

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1.2.1. Sources and scope of European Union law

D. Conference of the Community and European Affairs E. Cooperation

— whose independence is beyond doubt.

Legal Basis A. Responsibilities of the Court of First Instance

B. Type of mandate — any body which manages revenue or expenditure on the

Legal basis — 21 for Spain and Poland;

Legal basis — decide whether to increase the subscribed capital;