21st Oct 2016

Doubts increase over usefulness of new fiscal treaty

  • The European Parliament believes the treaty is unnecessary but wants to ensure democratic oversight (Photo: European Parliament)

Just a few days into the making of a new intergovernmental treaty on fiscal discipline, serious questions are being raised about whether the slight draft offered to date is either useful or necessary.

Following the first day of negotiation on the proposed 14-article treaty, first circulated at the end of last week, the three MEPs at the table noted that virtually all the provisions could be done using the current EU treaties.

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"It is for political, symbolic reasons that they want to do this agreement," said Guy Verhofstadt, Belgian liberal MEP, while his Socialist counterpart Italian MEP Roberto Gualtieri noted that "most, if not everything, could have been done through secondary legislation."

Both MEPs, briefing colleagues on Tuesday evening (20 December,) noted that the legal services could give no answer when specifically asked what in the draft pact could not be achieved under current EU law.

The idea for an intergovernmental agreement came about after a spat at a European summit earlier this month which saw 26 member states opt for an economic governance pact, outside EU law, after Britain refused to allow a full change of the EU treaties.

Since then there have been political and legal misgivings about the nature of such an agreement, especially the extent to which EU institutions can be involved and how its contents should be enforced.

The six-pack and not much more

Meanwhile, the draft treaty is remarkably similar to, or at times is in conflict with, six pieces of legislation, in force since 13 December, that dramatically increase budgetary surveillance at the EU level.

"If you read the draft treaty, then many of the demands contained there are actually asking for less than what the six-pack contains," said German centre-right MEP Elmar Brok.

Gualtieri spoke about "overlapping rules and competences" pointing out that specific percentage targets also differ between the draft new treaty and the fresh legislation involving economic convergence.

How the new treaty will be enforced is also a matter of concern.

There are legal doubts about whether an article in the EU treaty which suggests that if member states are in dispute over points of EU law the European Court of Justice can adjudicate, can be used as a model for the intergovernmental pact.

But the political barrier is possibly higher. Verhofstadt pointed out that there has never been an incidence of member states fighting over application of EU law to the stage that it goes before court.

Meanwhile, a suggestion in the draft pact that member states should police each others efforts to enforce the rules - for example Belgium bringing Germany to court for breaking the deficit rules - was similarly criticised.

The current such article in the normal EU treaty has been used just six times in the last 60 years. By contrast the European Commission has brought legal cases for breach of EU law over 2000 times in the same period.

As a general goal, the European Parliament is keen to see that it has democratic oversight and that such intergovernmental pacts do not becoming the norm for rule-making in this area.

A higher threshold for ratification

While throwing up lots of questions about the relevance of the treaty, Tuesday's meeting at the same time showcased the determination of Berlin to get its contents agreed.

According to one source, Berlin is insisting on linking approval of the permanent bailout fund (ESM), supposed to be ratified next year, with all euro countries agreeing to put a debt brake into national constitutions.

Berlin would also be in favour of raising the minimum number of countries needed for the treaty to go into force (currently nine of the 17 euro currency states) to make sure all of the southern, and troubled, single currency countries are on board.

The first meeting saw negotiators get no further than Article one. "This is going to be a slightly longer exercise than expected by those who suggested it," said Gualtieri.

Under the proposed plan, the final draft is expected to be ready by 20 January with signature by member states to follow in March. The next meeting of the 'working group' of national diplomats, MEPs and other EU officials is scheduled for the first week of January.

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