10 Macro-financial assistance for Bosnia
and Herzegovina and Serbia-Montenegro
| (a)
(25989)
12885/04
COM(04) 604
(b)
(25991)
12886/04
COM(04) 605
|
Draft Council Decision amending Council Decision 2002/882/EC providing further macro-financial assistance to Bosnia and Herzegovina
Draft Council Decision amending Council Decision 2002/883/EC providing further macro-financial assistance to Serbia and Montenegro
|
| Legal base | Article 308 EC; consultation; unanimity
|
| Department | HM Treasury |
| Basis of consideration | Minister's letter of 14 February 2005
|
| Previous Committee Report | HC 38-iv (2004-05), para 14 (19 January 2005)
|
| To be discussed in Council | Not known
|
| Committee's assessment | Legally important
|
| Committee's decision | Cleared (decision reported on 1 December 2004), but further information requested
|
Background
10.1 Macro-financial assistance (MFA) is a form of exceptional
balance of payments support the Community provides to countries
in the "near neighbourhood". In October 2004, we considered
these two draft Decisions to continue such assistance for Bosnia
and Herzegovina and for Serbia and Montenegro. We said then that
the substance of this proposal was straightforward and that normally
we would not draw it specifically to the attention of the House.
10.2 However, we were concerned about the justification
given by the Government for the use of Article 308 EC as the legal
base for the draft Decisions. It seemed to us that Article 181a
EC was sufficient for this purpose. We had commented before that
Article 308 EC was sometimes used without proper justification
and we asked for an explanation as to why use of Article 181a
was not more appropriate in this case. We drew attention
to a similar case we were still considering in relation to European
Investment Bank (EIB) activity.[32]
10.3 In December 2004, in the light of an explanation
given to us by the Government about a declaration annexed to the
Nice Treaty to the effect that balance-of-payments aid to third
countries falls outside the scope of Article 181a, we cleared
the document. But we asked the Government further questions in
relation to the legal basis of the proposals.[33]
In January 2005 we reported the Government's response. We commented
that we did not accept that it is not a prerequisite for the use
of Article 308 that the Community action proposed must be "in
the course of the operation of the common market". We noted
that not only does this requirement appear plainly on the face
of the Article, but we were unable to see anything in the AETR
judgement[34] cited by
the Government which supports the proposition that Article 308
does not require a "linkage" with the operation of the
common market. We asked for further comment on this point, particularly
as to why the Government thinks the AETR case is relevant to the
argument it seeks to make on the use of Article 308.[35]
The Minister's letter
10.4 The Financial Secretary to the Treasury (Mr
Stephen Timms) now responds to our request for a further comment.
He says:
"As stated in my earlier letter, 'the linkage
with the operation of the common market, i.e. the internal market
is not a prerequisite' to the Community's competence to conclude
international agreements. This was not a gloss on the AETR case,
but a response to the Committee's earlier request to the Government
to ' explain how the proposals relate to the operation of the
common market'.
"The language of Article 308 makes clear, the
Community objective to be attained by the use of Article 308 is
not tied to the operation of the common market, but rather the
need to attain it arises 'in the course of the operation of the
common market.' The AETR case and subsequent jurisprudence show
that external action does not necessarily presuppose the existence
of internal market measures."
Conclusion
10.5 We entirely accept that external action by
the Community, in particular the competence to conclude international
agreements, is not necessarily linked to the operation of the
common market. There are competences arising from various treaty
provisions which do not require such a link, and the AETR case
could be cited in support of that contention. But Article 308
clearly does require such a link, and it seems to us that the
distinction the Minister seeks to draw between "the operation
of the common market" and "in the course of the operation
of the common market" is neither real nor, more importantly,
relevant.
10.6 So, regrettably, we have to ask the Minister
to address this point again. In particular we should like him
to explain what in the Government's view the purpose of the words
"in the course of the operation of the common market"
in Article 308 is and, if it accepts there is a purpose, when
they are to be heeded and when they are to be ignored.
32 See HC 42-xxxiv (2003-04), para 14 (27 October 2004)
and, for the related case, (25705) 9886/04; see HC 38-iii (2004-05),
para 33 (12 January 2005). Back
33
See HC 38-i (2004-05), para 25 (1 December 2004). Back
34
Case 22/70 Commission v Council [1971] ECR 263. Back
35
See headnote. Back
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