15 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 Decision amending Decision 2002/882/EC providing further macro-financial assistance to Bosnia and Herzegovina
Draft Decision amending Decision 2002/883/EC providing further macro-financial assistance to Serbia-Montenegro
|
| Legal base | Article 308 EC; consultation; unanimity
|
| Department | HM Treasury |
| Basis of consideration | Minister's letter of 21 March 2005
|
| Previous Committee Report | HC 38-x (2004-05), para 10 (2 March 2005)
|
| To be discussed in Council | Not known
|
| Committee's assessment | Legally important
|
| Committee's decision | Cleared (decision reported on 1 December 2004)
|
Background
15.1 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 these proposals was straightforward and that
normally we would not draw them specifically to the attention
of the House.
15.2 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 activity.[33]
15.3 In December 2004, following the Government's
explanation to us 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 about the legal
basis of the proposals.[34]
In January 2005 we reported our dissatisfaction with aspects of
the Government's response and asked for further comment.[35]
In March 2005, we considered the Government's further response,
which we again found not wholly satisfactory. We said that:
- we accepted 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 judgement[36]
drawn to our attention could be cited in support of that contention;
- on the other hand Article 308 clearly does require
such a link; and
- the distinction the Government sought 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.
So we asked the Government to address again the point
about a link to the operation of the common market and in particular
to explain what in its view the purpose of the words "in
the course of the operation of the common market" in Article
308 is and, if it accepts that there is a purpose, when they are
to be heeded and when they are to be ignored.[37]
The Minister's letter
15.4 The Financial Secretary to the Treasury (Mr
Stephen Timms) now responds to our request for a further comment.
He says:
"I very much sympathise with the position adopted
by the Committee and I recognise that the legal position is not
perfectly clear. There is little case law on this issue. One reason
for this might give the Committee some comfort, namely that Article
308 EC requires unanimity. This means that there have not been
challenges to Article 308 measures by Member States, as a Member
State opposed to such a measure can veto it. Article 181a EC,
which we looked at earlier in this correspondence, does not contain
the same safeguard.
"Having said that, I think it is relatively
clear that Article 308 EC is a residuary power, to be used in
the absence of a more specific legal base, and that, in the words
of the Court of Justice in its Opinion 2/94 (concerning accession
of the EC to the European Convention on Human Rights), it 'cannot
serve as a basis for widening the scope of Community powers beyond
the general framework created by the provisions of the Treaty
as a whole and, in particular, by those that that define the tasks
and activities of the Community'.
"With regard to your specific question concerning
the meaning of the words 'in the course of the operation of the
common market', I think that this should be taken to relate back
to the activities set out in Articles 3 and 4 EC, in light of
the tasks established in Article 2 EC.
"With regards to international agreements, this
view is supported by the Court's statement in AETR 'that in its
external relations, the Community enjoys the capacity to establish
contractual links with third countries over the whole field of
objectives defined in part One of the Treaty...' (para 14 of the
judgment). The ruling of the ECJ in the Etang de Berre case is
also relevant. This concerned the Protocol for the Protection
of the Mediterranean Sea against Pollution from Land-based Sources,
signed in Athens on 17 May 1980, which was approved by Council
Decision 83/101/EEC of 28 February 1983 acting under Article 235
(now Article 308). This is an example of a Council Decision under
Article 308 which gave rise to directly applicable Community obligations
even in the absence of corresponding internal powers and implementing
measures.
"In line with this, balance of payments support
falls within the overall scope of the Treaty. In my view, the
Community therefore has a power which justifies an external measure
such as the one we are discussing."
Conclusion
15.5 Although he does not say so explicitly, we
take the Minister to be saying that the Government finally accepts
our contention that the use of Article 308 can be justified only
if there is no other sufficient treaty provision and there
is a link to the operation of the common market. The Minister
does not spell what that link is in this case, but we take him
to be implying that there is in these two cases a link to the
operation of the common market. So we do not intend to pursue
this exchange any further.
15.6 However, the fact that Article 308 is subject
to unanimous agreement does not alter our underlying concern that
the Government should always insist on a justifiable legal base,
be it Article 308 or another treaty provision, for all legislative
proposals.
33 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
34
See HC 38-i (2004-05), para 25 (1 December 2004). Back
35
See HC 38-iv (2004-05), para 14 (19 January 2005). Back
36
Case 22/70 Commission v Council [1971] ECR 263. Back
37
See headnote. Back
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