Wednesday

23rd May 2018

EU commission prepares ground for far-reaching economic powers

  • The German parliament - EU policy makers are increasingly wondering how to balance national democracy with central economic governance (Photo: PeterXIII)

The European Commission has started preparing the ground for legislation that would prevent member states from undertaking major tax, labour or financial reforms without running it by the commission and other governments first.

In an ideas paper published Wednesday (20 March), the commission said this ex-ante co-ordination should concern "major national economic reform plans and should take place at an early stage before the measures are adopted."

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The suggested scope of covered policies would implicate virtually all national government legislation - including competitiveness and employment laws, reforms that cover product and services markets, as well as those affecting tax systems and network industries.

Financial stability and fiscal sustainability are also suggested benchmarks for whether legislation should first be discussed in Brussels before being implemented at home.

The proposals - to eventually take shape as a draft legislation later this year - are part of a general attempt to induce the interdependent 17-country eurozone to behave more as one political and economic entity.

The current eurozone crisis has driven home how connected euro countries are.

Small, about-to-be-bailout-out Cyprus, with a vastly inflated banking sector, is considered a "systemic risk" to the rest of the eurozone.

Fears that markets would drive Italy in the same direction saw EU leaders in 2011 persuade former prime minister Silvio Berlusconi to step down in favour of reform-minded technocrat leader Mario Monti.

And member states already snipe at one another for what they consider unfair practices among their neighbours.

Ireland and Cyprus are frequently criticised for their low corporate taxes, while the Belgian government recently indicated it would complain to the European Commission about Germany's low wages.

The law could also hand far more power to the European Commission, which already has greatly increased oversight on national budgets since the start of the crisis in 2008.

One of the questions it is asking to be considered ahead of drawing up the legislation is whether it can have the power to make spontaneous requests for policy information from governments and whether it make changes to the proposed measures.

The commission is also working on a proposal for "contractual arrangements," whereby governments would enter into a contract with the EU executive to undertake specific economic reforms.

The idea was originally raised by the Netherlands, keen for a mechanism to rein in fiscally miscreant states.

Key details will be whether it is only economically ailing euro states that will undertake these contracts and whether it will be voluntary for them to sign.

As a sweetener, the commission is suggesting that member states signing up to the contracts will have financial help under "strict conditions" to make the reforms. But it remains unclear where this money would come from.

EU leaders are to discuss these ideas in detail at their June summit.

But the legislative proposals, when they come, are bound to once more raise questions about how to balance democratic concerns with the need to ensure economic harmony in the eurozone.

So far, EU policy makers have struggled to find a way to compensate for national law-makers having much less say over domestic budgets.

This issue is set to become much more acute when national taxation and labour policies - key and emotive policy areas - become the business of other member states and Brussels.

EU pessimistic on permanent US trade exemption

EU trade chief said the US will impose tariffs or "other limiting measures" on 1 June, as the EU's offer to start limited trade talks is probably not enough for the protectionist Trump presidency.

Commission 'playing tricks' with EU budget figures

The EU parliament's budget rapporteur complained the Commission is using numbers with a "desire to confuse". According to parliament estimates, the cohesion fund could suffer as much as a 45 percent cut.

Analysis

EU has no 'magic bullet' against US Iran sanctions

EU leaders in Sofia will discuss how they can protect the bloc's economic interests against US threats to sanction companies doing business in Iran. But their options are limited.

Opinion

EU budget must not fortify Europe at expense of peace

Given the European Commission new budget's heavy focus on migration, border management and security, many are asking whether the proposal will fortify Europe at the expense of its peace commitments.

Stakeholders' Highlights

  1. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  2. Centre Maurits Coppieters“Peace and reconciliation is a process that takes decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  3. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  4. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  5. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  6. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  7. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments
  8. International Partnership for Human RightsAnnual Report celebrates organization’s tenth anniversary
  9. Nordic Council of MinistersNordic Cooperation Needed on Green Exports and Funding
  10. Mission of China to the EUPremier Li Confirms China Will Continue to Open Up
  11. European Jewish CongressCalls on Brussels University to Revoke Decision to Honour Ken Loach
  12. Sustainable Energy Week 2018"Lead the Clean Energy Transition"- Register and Join Us in Brussels from 5 to 7 May

Latest News

  1. 'Killer robot' projects eligible for EU defence fund
  2. Funding for European values needs radical changes
  3. Feeble EU format deflates Zuckerberg 'hearing'
  4. Are EU data watchdogs staffed for GDPR?
  5. EU pessimistic on permanent US trade exemption
  6. US asks EU to go after Russian and African villains
  7. Facebook threatened with removal from EU-US data pact
  8. Defence firms 'reap benefits' of advice to EU

Stakeholders' Highlights

  1. EU Green Week 2018Green Cities for a Greener Future. Join the Debate in Brussels from 22 to 24 May
  2. Nordic Council of Ministers12 Recommendations for Nordic Leadership on Climate and Environment
  3. Macedonian Human Rights MovementOxford Professor Calls for an End to the Anti-Macedonian Name Negotiations
  4. ACCAPeople Who Speak-Up Should Feel Safe to Do So
  5. Mission of China to the EUProgress on China-EU Cooperation
  6. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  7. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  8. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  9. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  10. UNICEFCalls for the Protection of Children in the Gaza Strip
  11. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  12. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight