Memorandum by the Department for Transport
(EU 01)
THE BALANCE OF COMPETENCES BETWEEN THE EUROPEAN
UNION AND MEMBER STATES
INTRODUCTION
I. The purpose of this memorandum is to
advise on the balance of competences of the European Union and
individual member states in transport, how those competences have
been exercised in practice, and what provision the EU makes for
evaluating the effectiveness of its measures. It is written in
response to the Select Committee's request for advice of 14 July
2003 to the Department for Transport.
II. The memorandum distinguishes between
the legal competence to act at the EU level which is bestowed
by the Treaty and the Courts, and how that competence is actually
taken up and exercised in practice through the Council
of Ministers, European Parliament and the European Commission.
III. It is also important to distinguish
exclusive Community competence and competence shared
with the member states. Exclusive competence means that the
Community alone can act. Where there is shared competence either
the Community or Member States or both can act.
IV. A further distinction can be made between
the Community's internal competence to act within the EU
and external competence to enter into international obligations.
V. This memorandum is set out in the following
sections:
— 1. The Treaty Basis for Community
Competence in Transport
— 2. How the Community has Exercised
its Competence in Practice
— 3. Community Competence in respect
of External Agreements
— 4. The EU's Evaluation of Effectiveness
of Community Legislation
SECTION 1—TREATY
BASIS FOR
COMMUNITY COMPETENCE
Main provisions in the Treaty conferring competence
in transport policy
1.1 The Treaty establishes an extensive
basis for EU competence. The founding principles of the Common
Transport Policy were laid down in the 1957 Treaty of Rome. The
current Treaty establishing the European Community states:
. . . the activities of the Community shall
include . . . a common policy in the sphere of transport . . .
[Article 3]
The objectives of this Treaty shall, in matters
governed by this title [ie Transport] be pursued by Member States
within the framework of a common transport policy. [Article 70]
It prescribes that the Council of Ministers
and the European Parliament working under codecision (as in Article
251):
. . . shall . . . lay down:
(a) common rules applicable to international
transport to or from the territory of a Member State or passing
across the territory of one or more Member States;
(b) the conditions under which non-resident
carriers may operate transport services within a Member State;
(c) measures to improve transport
safety;
(d) any other appropriate provisions.
[Article 71]
1.2 Article 80 specifies that the Common
Transport Policy shall apply to transport by rail, road
and inland waterways, and may apply to sea and air transport
to an extent determined by the Council.
1.3 The Maastricht Treaty added a new provision
for transport infrastructure:
. . . the Community shall contribute to the
establishment and development of trans-European networks in the
areas of transport, telecommunications and energy infrastructures
. . . . . . promoting the interconnection and interoperability
of national networks as well as access to such networks . . .
[Article 154]
Treaty provisions on state aid in transport
1.4 In principle, state aid for all transport
sectors is subject to the general provisions in Articles 87 and
89 of the Treaty. Road, rail and inland waterways ("inland
transport") are also covered by Article 73 which allows for
the granting of state aid which meets the needs of co-ordination
in transport or public service obligations. Article 73 has not
been extended to maritime or air transport. Articles 74-77 provide
for the elimination of discrimination in charges and conditions
in transport within the Community. There is a wealth of secondary
legislation and supporting guidelines which give effect to the
Treaty provisions on state aid.
Transport measures in other policy fields
1.5 Other Treaty provisions have a bearing
on EU transport policies—competition, environment, tax,
social policy, employment and the internal market. Most transport
proposals are considered in the Transport Council, even those
which have more than one Treaty Title as a base. However, other
Ministerial Councils adopt measures in their own policy fields
which impact on the transport sector. Under these provisions there
has been, for example, legislation on the working time of transport
employees and many environmental measures. Annex 1 gives examples.
For the sake of a clear and manageable focus, this memorandum
is confined to measures adopted by Transport Ministers, in the
Transport Council.
Subsidiarity
1.6 The Amsterdam Treaty made provision
for the principle of subsidiarity: in policy areas where competence
is shared between Community and member states, the Community shall
act "only if and in so far as the objectives of the proposed
action cannot be sufficiently achieved by the Member States"
(Article 5 of the Treaty). Treaty requirements on subsidiarity
and proportionality are a counter-balance to the exercise of competence.
For each new proposal the Commission gives its own position with
regard to the principles of subsidiarity and proportionality and
member states may take up the principles in debate.
EU-wide legislation and national exemptions
1.7 Community legislation is generally made
with uniform effect across the EU as a whole. Permanent exceptions
for particular member states are very rare because other member
states and the main EU institutions normally do not wish to compromise
the single market or other Community policies. However, there
are examples in Directives on rail interoperability where the
Commission may authorise derogations from uniform European technical
standards in certain circumstances, [1]and
where Northern Ireland, the Republic of Ireland and Greece are
exempted from certain provisions on grounds of their geographical
separation. [2]More
often, there are "derogations" where implementation
might be applied flexibly, perhaps to help some member states
cope with transition. An example of this would be time-limited
derogations for the Greek islands and the Azores on aviation liberalisation
measures. [3]
Qualified Majority Voting and codecision with
the Parliament
1.8 The development of a common transport
policy has taken place in the Council of Ministers through Qualified
Majority Voting (QMV). QMV came into effect in 1966 in respect
of road, rail and inland waterways transport. In 1987, the entering
into force of the Single European Act introduced QMV in the Council
for aviation and maritime issues. In 1999 the Amsterdam Treaty
extended "co-decision", under which legislation can
be adopted only if the Council and the Parliament agree. With
some limited exceptions, [4]transport
provisions under the Transport Chapter are subject to codecision.
SECTION 2—HOW
THE COMMUNITY
HAS EXERCISED
ITS COMPETENCE
IN TRANSPORT
IN PRACTICE
2.1 Although from the outset the Treaty
has given the Community significant powers in respect of transport,
progress in developing the Common Transport Policy remained slow
until the 1980s, apart from the adoption of some general transport
measures. Member states were often reluctant to give up control
of their transport markets—as a major state employer and
beneficiary of significant state subsidies, transport was, and
remains, a sensitive sector. A change occurred in the 1980s because
the European Parliament took the Council of Ministers to the European
Court of Justice for "failing to introduce a common policy
for transport and in particular to lay down the framework of such
a policy in a binding manner". In May 1985, the ECJ found
the Council in breach of the Treaty, [5]effectively
forcing it to act. The counterpart to the Community exercising
its competence has been the debate about the application of the
principles of subsidiarity and proportionality which set boundaries
to the exercise of EU competence.
Single Market Measures
2.2 Transport therefore formed an important
element of the Commission's proposals for the single market which
were published shortly afterwards. By 1992, the basic legislation
underpinning the single market in the aviation, maritime and road
sectors was in place. Since then the single market in transport
services has continued to be the main driver for establishing
the Common Transport Policy through the:
— Opening of transport markets to
competition. There have been successive waves of liberalisation
measures in respect of shipping, aviation, road haulage and rail.
The Commission has proposed further measures for rail liberalisation
and local transport services (ie revised Regulations on Public
Service Obligations). However, the opening of transport markets
has not been straightforward: opening the rail freight market
required lengthy negotiations about access conditions before it
could be agreed; and aviation liberalisation, which mainly came
into effect in 1993, has been constrained by airport congestion
and distorted by state aid to airlines.
— Creation of the TEN-Transport—Trans-European
Networks (TENs) for transport, telecommunications and energy were
given their own Title in the Maastricht Treaty with the aim of
strengthening economic and social cohesion as enshrined in Article
154 of the Treaty. In general, transport links had developed according
to national priorities often without much thought given to cross-border
traffic flows. TENS was an attempt to redress the balance by contributing
to the development of infrastructure by supporting "the
interconnection and interoperability of national networks as well
as access to such networks" taking account of "the
need to link island, landlocked and peripheral regions with the
central regions of the Community".
— Harmonisation of technical rules
to promote interoperability (eg recognition of driver licences
and haulage certification, rail capacity allocation, technical
specifications and safety management). In the rail sector, there
has been widespread acceptance of the need for some harmonisation
of the sector's technical rules to reduce costs and make open
access to different national networks a practical and not just
a theoretical possibility. There have been detailed negotiations
to ensure satisfactory safeguards against the imposition of disproportionate
costs in some member states. In the aviation sector, there is
the Single European Sky initiative in the field of air traffic
management to create a uniform operating environment, encouraging
the restructuring of airspace control to reflect traffic flow
rather than national borders, with the aims of reducing delays
and reinforcing safety.
2.3 Single market legislation has to be
backed up by Commission action to prevent unacceptable market
distortion. Liberalisation and privatisation often involve company
rationalisation and provisions, such as subsidies, to ensure that
commercially provided services meet the public need. With progressive
market opening in transport services, therefore, the Commission
has had to increase its activity to police competition policy
and state aid rules. It has recently proposed a tidying
up and extension of the rules on transport state aids.
2.4 Through the "Lisbon Agenda"
for economic reform (established in Spring 2000), European Councils
have recently been seeking an increase in the pace of liberalisation
across the Community, in the transport sector among others. The
UK has supported this process.
Other policy themes
2.5 The Community has also exercised the
transport powers in the Treaty to promote safety, environmental
protection, consumer and employee interests, etc. This can be
based either on a wish to provide an EU wide standard for the
benefit of all, or a wish to support the single market by ruling
out unfair competition based on lower standards. Measures can
be promoted to serve more than one policy objective, sometimes
under more than one Treaty Article.
2.6 In respect of safety, a number
of maritime measures were adopted in the mid-1990s, following
high profile shipping disasters. For example, regulations on the
safety management of roll-on/roll-off passenger ferries following
the Estonia disaster in 1994. In aviation, there have been measures
to harmonise technical safety standards, to establish principles
governing the investigation of air accidents and occurrence reporting,
and other measures. In rail, measures to harmonise safety regulation
in the member states are contained in a package currently under
negotiation. There has been EU legislation on road safety as well,
although the Commission and a number of member states have encouraged
the raising of standards through exchange of best practice; the
latest initiative is a suggested non-binding action plan.
2.7 Environmental protection is often
pursued under the environmental Title of the Treaty. Those measures
are negotiated through the Environment Council, sometimes dealing
with transport specifically, sometimes with more than one economic
sector. In parallel, however, Transport Ministers on occasion
adopt measures under the Transport Title. This has been evident
in the maritime sector where, recently, there have been measures
to protect the maritime environment following the Erika and Prestige
disasters.
2.8 Another area of activity has been that
of social or employment protection (eg the development
of the EU rules on drivers' hours for drivers of heavy goods vehicles
and passenger vehicles, and more recently on working time legislation
in transport).
2.9 There have been consumer protection
measures, such as rules in the aviation sector on denied boarding
compensation, computer reservation systems, and airline liability.
2.10 There has recently been a limited extension
of Community action into the field of transport security,
primarily an area of member state responsibility. For example,
as a reaction to the events of 11 September 2001, the Community,
prompted by the UK, chose to exercise its competence in respect
of security in the civil aviation sector. It adopted a new Regulation
6 to ensure that aviation security measures across the EU comply
with standards laid down by the European Civil Aviation Conference
(an inter-governmental organisation).
European Commission's powers and the "comitology"
procedures
2.11 After legislation has been adopted,
the practical negotiation of precisely what action should be taken
at Community level is partly carried out through the "comitology"
process, ie the committees constituted by legislation to help
the Commission exercise delegated regulatory and executive powers.
Such committees ensure that member states remain involved in the
exercise of those powers by the Commission, and the comitology
system allows for varying degrees of involvement in which the
member states or the Commission might have the greater role. There
are some 15 committees concerned with transport issues, engaged
in advisory, management or regulatory functions.
SECTION 3—COMMUNITY
COMPETENCE IN
RESPECT OF
EXTERNAL AGREEMENTS
3.1 Where the Community has exclusive external
competence, only it may negotiate or enter into international
obligations with non-EU countries or other international bodies.
There are two separate questions, which easily become conflated:
— who shall negotiate international
agreements? This concerns the role and influence of the Commission
acting on behalf of the Community versus that of the member states.
In itself this does not necessarily raise the subject of legal
competence in external affairs;
— who shall adopt agreements? This
does raise the question of "competence". The Community
might reach an agreement in an area of EU competence, but any
elements of that deal which remain in member states' sovereignty
would be separately ratified by them. In practice the dividing
line is often not clear until the outcome of the negotiations
is known.
3.2 Exclusive external Community competence
is derived in three ways:
— by virtue of an express provision
in the Treaty. External competence under the Treaty was extended
recently in the Nice Treaty, but not in transport. That Treaty,
in force since February 2003, widens the Common Commercial Policy
(with its general rule of external competence) from "trade
in goods" to "trade in services". Some services,
including transport services, were not included in the Common
Commercial Policy;
— by virtue of the adoption of internal
rules arising from the "AETR doctrine"[6],
a European Court of Justice judgement on the European Agreement
on Road Transport which held that member states cannot take on
external commitments which would affect the internal rules of
the Community; and
— by virtue of the fact that external
action is a necessary precondition of effective internal action
to achieve Treaty objectives. This arises from the "Rhine
Navigation Doctrine"[7].
3.3 Where the Community has exclusive external
competence, member states may not negotiate with third countries
on their own account. However, in order to negotiate on behalf
of the Community the Commission needs to obtain a mandate from
the Council, and any subsequent agreement must be approved and
ratified by the Council.
3.4 In practice, particularly in maritime
and aviation issues, the Commission may be mandated to negotiate
in areas which are within member states' competence—usually
this occurs when the negotiations are expected to cover both areas
that are subject to exclusive Community competence and some which
are not. In such situations the Council of Ministers may take
a policy decision to mandate the Commission to negotiate external
agreements on behalf of the Community, on the basis that there
would be added value in negotiating at Community level compared
with member states negotiating bilaterally.
3.5 An instructive example of this followed
the ECJ ruling in November 2002 on so-called "Open Skies"
aviation agreements between certain member states and the United
States. The Court ruled that in certain respects such agreements
were illegal, and in certain respects subject to exclusive Community
competence, but in other key respects remained a matter of national
competence. The post-ECJ debate resulted in the Commission being
granted a mandate to negotiate with the US on a Transatlantic
Open Aviation Area, plus a limited mandate to negotiate with other
third countries, whilst confirming that member states were free
to negotiate with third countries in other areas. This is an example
of how the Community institutions and member states can work together
and reconcile conflicting interests when the division of competence
is complex.
International Organisations
3.6 Special considerations apply to negotiations
within international organisations such as the International Maritime
Organisation (IMO) and the International Civil Aviation Organisation
(ICAO). Matters discussed within these organisations are often
subject either to exclusive Community competence or to shared
competence. In practice the picture is not always clear, and in
such shipping matters as safety, pollution, training and crew
competence, and security, and in such aviation matters as safety,
air traffic management, environmental standards, customs duties,
and security, there is considerable scope for discussion of where
competence lies. However in practice, since the Community is not
a member of these organisations and (excepting the Intergovernmental
Organisation for International Carriage by Rail—OTIF) has
little prospect of becoming one, member states continue to speak
on their own account, subject where appropriate to a process of
Community coordination.
3.7 There are also practical reasons for
not promoting Community membership of these other organisations
(eg the difficulties of changing their rules governing membership,
the potential loss of European votes, and the likely impact on
the organisations themselves), and EU policies and interests can
be effectively promoted by member states acting individually but
within the framework of a common agreed approach. For example,
there has recently been effective Community coordination in IMO
at negotiations on maritime security, and at ICAO at the fifth
Worldwide Air Transport Conference in 2003.
SECTION 4—EU
EVALUATION OF
EFFECTIVENESS OF
LEGISLATION
4.1 There are no provisions in the Treaty
which require regular evaluation or review of transport legislative
measures for their effectiveness. Some transport directives however,
do include a requirement for a periodic review of the implementing
measures to assess their impact. The European Commission has made
a number of Better Regulation commitments across the board.
Periodic Reviews
4.2 An example of a transport directive
requiring a periodic review is that on Community guidelines for
the development of the trans-European transport network[8].
This requires the Commission to report every two years to the
European Parliament, the Council, the Economic and Social Committee
and the Committee of the Regions on the implementation of the
guidelines described in the Decision. It also requires the Commission
to submit a report to the European Parliament and to the Council
every five years indicating whether the guidelines need to be
adapted to take account of economic and technological developments.
4.3 The agreement reached on the Second
Rail Package[9]
in March 2003 includes a requirement on the European Commission
to report to the Council, the European Parliament and its Committees
by 1 January 2007 on progress with implementation and on its impact
upon market development, modal shift, safety and working conditions.
4.4 A third example is Article 51 of Regulation
1592/2002 on the European Aviation Safety Agency. This includes
an "evaluation" process, requiring the Management Board
to commission an "independent external evaluation of the
implementation of the regulation" within three years of the
Agency taking up its responsibilities and every five years thereafter.
The results have to be forwarded to the Commission, which may
forward them to the European Parliament and Council, and must
be made public.
UK Assessments of Community Proposals
4.5 Although the Commission has not always
issued comprehensive statements of the expected benefits and costs,
as the Committee will be aware, in the UK the Department for Transport
normally includes an assessment of the anticipated policy impacts
of proposals in each Explanatory Memorandum submitted to the European
Scrutiny Committee. It also develops, in consultation with stakeholders,
a full Regulatory Impact Assessment, by the time implementing
measures are adopted in the UK. This systematic practice helps
the Department to identify potential problems with Community proposals
ahead of detailed negotiations in the Council, and also informs
the Department's advice to British MEPs on the European Parliament's
Regional Policy, Transport and Tourism Committee.
Better Regulation Proposals
4.6 EU institutions and member states have
recognised that Community measures could improve in terms of clarity,
brevity and simple language. The Commission has consequently issued
Better Regulation proposals[10]
which will be implemented over the next two years. The Commission
also announced its intention to restrict legislative proposals
to essential aspects only, and it invited the Parliament and the
Council to commit themselves similarly in terms of proportionality
and simplicity. The Commission has said that it intends to promote
a "culture of dialogue and participation", and to apply
a "systematic approach to assessing the costs and benefits
of its initiatives".
4.7 The Commission has an action plan and
timetable for simplifying and improving the regulatory environment
and for assessing policy proposals and subsequent evaluation.
The Plan details 16 actions to be put in place, either individually
or jointly by the EU institutions, without the necessity of changes
to the Treaty. The key elements of the Action Plan include:
— a programme of simplification aimed
at reducing the volume of Community law;
— a two-stage impact assessment process
covering the economic, social and environmental aspects of policy
proposals—to be implemented gradually from 2003 with full
implementation by 2004-05. The assessment is intended to make
it easier to decide whether action should be taken at Community
level, having regard to subsidiarity and proportionality;
— an internal better regulation network
within the Commission, part of whose mandate it will be to monitor
compliance with the principles of subsidiarity and proportionality;
and
— a review clause to be included in
legislative acts, particularly those which are subject to rapid
technological change, so that legislation can be updated and adjusted
regularly.
SECTION 5—FUTURE
DEVELOPMENTS
5.1 These developments on better regulation
and evaluation of policy are among a number of future developments
in the EU which the Select Committee might feel have relevance
to this enquiry. The following paragraphs suggest some others.
Intergovernmental Conference 2003-04
5.2 On 4 October 2003, the member states
of the European Union will launch an Intergovernmental Conference
to draw up a new Treaty for the EU. The starting point of the
negotiations will be the draft Constitutional Treaty drawn up
by the Convention on the Future of Europe. For transport, the
Intergovernmental Conference is primarily about ensuring the Treaty
is accessible and suitable for an EU of 25 member states. There
are only minor revisions proposed to the Transport Title. Thus,
the current draft of the new Treaty, if adopted, would not make
a significant difference to EU transport policy provisions.
5.3 However, there are a number of general
Treaty changes which, while not impacting on transport policy
directly, will deal with the position in respect of the Community's
and member states' competence. For example, the draft Treaty proposes
a new approach to defining different types of competence: where
member states have chosen to confer exclusive competence on the
Community; where the member states share competence with the Community;
and where the Community can only take supporting action to help
member states achieve their goals. The Government's position on
these and other proposals in the draft Treaty has been set out
in its White Paper entitled "A Constitutional Treaty for
the EU" of 9 September[11].
EU Enlargement
5.4 On 1 May 2004, Cyprus, the Czech Republic,
Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and
Slovenia will join the EU. Already the new members have observer
status and speaking rights at Council meetings. The implications
for the way in which competence is exercised in transport policy
are not yet clear. The UK will need to observe the new members'
positions on liberalisation, interoperability, subsidiarity and
proportionality, and so on. In addition, it remains to be seen
how far the emphasis in the next few years will be on new legislative
initiatives in the EU as a whole and how far on consolidation
and implementation in the new member states.
New European Transport Agencies
5.5 A number of Community agencies are being
set up, with differing roles and powers. The European Maritime
Safety Agency and the European Rail Agency are principally advisory,
ensuring that the Commission has direct access to technical expertise
but having no regulatory or enforcement powers of their own. By
contrast, the European Aviation Safety Agency assists the Commission
in carrying out its functions but also has a range of independent
executive functions including the issuing, renewal and revocation
of certain certificates and approvals. Annex 2 provides further
details on the new agencies.
5.6 In setting up the European Aviation
Safety Agency, member states wanted to establish an expert body,
as autonomous as possible, which could adopt aviation safety rules,
certificate aeronautical products, and standardise implementation.
They therefore negotiated a Regulation which exercised Community
agency powers as far as possible within the Treaty provisions.
An issue in respect of subsidiarity, which is now subject to discussion
in the Council working groups, is the Commission's proposal to
widen the ambit of the European Maritime Safety Agency to include
security.
UK Presidency 2005
5.7 The UK Presidency of the European Council
in the latter half of 2005 will give the UK responsibility for
setting the agenda and chairing negotiations within the Council.
The UK will need to work with the Council agenda that it inherits,
but will want to plan ahead so far as possible with the Commission
and other Presidencies to encourage the development of an appropriate
agenda, and to emphasise the principles of subsidiarity and proportionality,
of better regulation, and of assessment and evaluation of proposals.
In this spirit, in the Transport Council the UK has already offered
to return to a programme, initiated by the Greek Presidency, for
employment measures in shipping industries and which pursues its
aims principally via voluntary action.
September 2003
1 Directive 96/48/EC on the interoperability of the
high-speed trans-European rail network Directive 2001/16/EC on
the interoperability of the conventional trans-European rail network. Back
2
Directive 2001/12/EC amending Council Directive 91/440/EEC on
the development of the Community's railways. Back
3
Council Reg 2408/92 Art 14. Derogation set for six months with
the possibility to extend to five years and then another five
years after that. Back
4
Articles 71(2) and 75 TEC. Back
5
Case 13/83 Parliament v Commission [a985] ECR 1513. Back
6
Case 22/70, Commission v Council (Re: ERTA) (1971). Back
7
Opinion 1/76 (1977) ECR 741 at 759. Back
8
Decision No 1692/96/EC of the European Parliament and of the
Council of 23 July 1996 on Community Guidelines for the Development
of the Trans-European Network. Back
9
A draft Directive further amending 91/40/EC; a draft Directive
aligning/extending the scope of 96/48/EC and 2001/16/EC; a draft
Directive on safety regulation; a draft Regulation estabilshing
a European Rail Agency; and a Decision mandating the EC per se
to sign up to the International Convention on Transport by Rail
(COTIF). Back
10
Commission Communications COM(2002) 275 final of 5.6.2002 "European
Governance: Better Lawmaking" and COM (2002) 278 final of
5.6.2002 `Action plan "Simplifying and Improving the Regulatory
Environment"'. Back
11
"A Constitutional Treaty for the EU-The British Approach
to the European Union Intergovernmental Conference 2003"
(Cm 5934). Back
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