House of Commons - European Scrutiny

Select Committee on European Scrutiny Written Evidence

Memorandum submitted by Professor A A Dashwood CBE

EUROPEAN COMMUNITY COMPETENCE UNDER ARTICLE 308 EC

INTRODUCTION

Article 308 EC provides:

"If action by the Community should prove necessary to attain, in the course of operation of the common market, one of the objectives of the Community and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament take the appropriate measures".

The Article needs to be understood in relation to the principle of conferral, [1]which is a cornerstone of the European Union's functional constitution. The principle is expressed, rather ineptly, by Article 5, first paragraph EC in these terms:

A corollary of the principle of conferral is that the Community is not endowed with general law-making competence to carry out the tasks and activities identified by Articles 2 to 4 EC. Where action by the Community is contemplated in a given field, it is normally necessary to identify a specific provision authorising the institutions to adopt measures of the kind in question. These power-conferring provisions are known in the jargon as "legal bases".

Article 308 is designed to provide a degree of flexibility in the system. It enables the Council, under certain procedural and substantive conditions, to create subsidiary powers for the institutions in cases where a specific legal basis is lacking. The procedural conditions are that the Council acts unanimously on a proposal by the Commission after consulting the European Parliament. A first substantive condition is the absence of a legal basis authorising action by the Community of the kind contemplated, which is usually unproblematic. A second substantive condition is that the action must have been found necessary in order to attain, in the course of the operation of the common market, one of the objectives of the Community. It is through the interpretation given to this rather obscure piece of drafting that the reconciliation of Article 308 with the principle of conferral has to be sought.

THE CONCEPT OF "THE COMMON MARKET"

In my opinion, there is an historical explanation for the reference to "the course of operation of the common market" in Article 308.

The present Article 2 EC contains a list of socio-economic objectives (a harmonious, balanced and sustainable development of economic activities etc.), which it is said to be the task of the Community to promote "by establishing a common market and an economic and monetary union and by implementing common policies or activities referred to in Article 3 and 4".[3] That description of the several means to be employed by the Community in performing its task dates from the Maastricht Treaty. The original version of Article 2 referred to only two such means: "establishing a common market and progressively approximating the economic policies of Member States". This suggests that "common market" was understood by the authors of the primordial EEC Treaty as a term of art, covering all the aspects of the Community's "task" other than the progressive approximation of national economic policies.

At the time, this special usage did not place an intolerable strain on language, since the activity of the Community was essentially focused on the creation of the common market mechanism, to replicate the conditions of a single national market in the economic relations between the Member States. The mechanism was conceived in a sophisticated way as comprising not only the four basic principles of free movement (for goods, persons, services and capital) together with rules on competition, but also a variety of flanking measures, such as the power to approximate national legislation and to develop a common commercial policy, the latter representing the common market's external aspect. The common policies on agriculture and transport were special market regimes adapted to the conditions of the economic sectors in question. Even the provisions of the Treaty Title on social policy were, at that time, very much oriented towards addressing problems liable to arise as a result of the removal of the barriers protecting Member States" national markets, eg the then Article 119 (now, after amendment, Article 141 EC) on equal pay for men and women, initially regarded as a means of levelling the playing field between Member States with more or less progressive employment legislation. This highly articulated mechanism, to be constructed by the Community institutions using the powers provided by the Treaty, was juxtaposed in Article 2 EEC with the complementary method of pursuing Community objectives through the harmonisation of Member States" economic policies.

ARTICLE 308 AND THE COMMON MARKET CONCEPT

On that analysis of the common market concept, the drafting of Article 308 (then Article 235 EEC) originally made perfect sense. The Article could be seen as supplementing the tool kit provided by the Treaty for constructing the mechanism central to the performance of the Community's task. Because co-extensive with the common market in the special sense of Article 2, the power conferred on the Council was broad in scope but fairly clearly demarcated. It could not be regarded as circumventing the principle of conferral, because any supplementary legal bases created by the Council must be integral to a market mechanism of the kind envisaged by the Treaty.

The logic of Article 308 has been undermined by the great extension of the range of Community competences, more particularly since Maastricht, which is reflected in the changed drafting of Article 2 and in the dropping of the word "Economic" from the title of the EC Treaty. The common market is no longer the concept unifying the different mechanisms, policies and actions through which the Community pursues its multifarious objectives. Indeed, for most practical purposes it has been displaced by the new concept of "the internal market", which was introduced by the Single European Act, though the relationship between the two concepts remains controversial. These developments raise questions about Article 308, to which no easy answer is possible. Should the reference to the common market be taken in the broad sense of the former Article 2 EEC or as a synonym for the internal market? On either reading, now that the Community's competences are so much wider, it seems odd that the particular set of activities more or less directly related to the establishment and functioning of the single market should be singled out for special treatment. A fairly convincing case can be made that Article 308 ought to be interpreted in an "evolutionary" way, reflecting the change in the nature of the Community; at this time of day, it should be understood as authorising the creation of supplementary powers perceived as necessary not just for the purposes of the common market (whatever that now means) but over the whole range of policy areas in which the Treaty allows action to be taken by the Community. To return to the metaphor that was used earlier: a bigger and more complex mechanism requires a tool kit capable of remedying deficiencies in all, not just some, of its working parts. For convenience, I shall refer to this as "the whole Treaty thesis" of the scope of Article 308.

CASE LAW ON ARTICLE 308

Opinion 2/94, [4]delivered by the Court of Justice on 28 March 1996, is the leading post-Maastricht authority on Article 308. In that Opinion, the Court ruled that, under the law as it stood at the time (and still does), the Community had no competence, including under Article 308, to accede to the European Convention for the Protection of Human Rights and Fundamental Freedoms.

In the key paragraph of the judgment for present purposes, the Court said, with reference to Article 308:

Two points can be made in the light of that passage. First, the Court insists that Article 308 be interpreted and applied consistently with the principle of conferred powers. This may seem obvious, but the view had been held in the past by some of those advising the Community institutions that Article 308 provided a means of making minor Treaty amendments (la petite revision). Secondly, there is no mention in the cited paragraph of its being a condition of recourse to Article 308 that the necessity of creating supplementary powers must have become apparent "in the course of the operation of the common market". The reference to "the general framework created by the provisions of the Treaty as a whole and, in particular, those that define the tasks and the activities of the Community" suggests rather that the Court was implicitly embracing the whole Treaty thesis of the scope of the Article.

Recently, the scope of Article 308 was considered by the Court of First Instance in the Yusuf and Kadi cases, which are now on appeal to the Court of Justice. [6]The cases concern Regulation (EC) No. 881/2002 freezing the assets of certain named individuals believed to be associated with international terrorism. [7]A special mechanism is provided for by Article 60 and Article 301 EC making it possible for the necessary legal steps to be taken under the EC Treaty, in order to implement a decision of the Union's common foreign and security policy (CFSP) imposing financial or economic sanctions on a third country. Since those Articles do not explicitly authorise so-called "smart sanctions" aimed at individuals, Regulation 881/2002 was given Article 308 as an additional legal basis. In holding that this was a proper use of Article 308, the Court of First Instance made no attempt to establish any connection with "the course of the operation of the common market". That is a further indication of the acceptance by the European judicature of the whole Treaty thesis of the scope of Article 308.

LEGISLATIVE PRACTICE

In broad terms, legislative practice in relation to Article 308 can be placed under two headings—supplementing the areas of authorised Community activity and supplementing the powers conferred by specific legal bases.

The most notable examples of practice of the former kind belong to the pre-Maastricht period. The then Article 235 was the legal basis for the measures establishing the Community's regional policy and environmental policy, as well as for the early development of a framework of protection against sex discrimination in the fields of employment and of social security provision. In my opinion, recourse to Article 308 in relation to such matters could reasonably be regarded as filling a gap in the powers necessary to establish a common market reflecting the evolution of socio-economic values since the 1950s, when the EC Treaty was drafted. Less justifiable was the use of the Article to authorise external relations activity not remotely connected with the common market, such as development aid, humanitarian and emergency aid and economic cooperation with countries other than developing countries under programmes like PHARE and TACIS. Those various external initiatives were, presumably, regarded by the Member States as so redolent of motherhood and apple pie that it would have been churlish to contest their legality.

All the Community activities referred to in the previous paragraph are now the subject of specific legal bases, inserted into the EC Treaty by the series of amending Treaties that began with the Single European Act. In my view, there can no longer be any legal justification—nor, indeed, any political excuse—for using Article 308 to open up new policy areas for action by the Community. An egregious example of a recent attempt to do so was the Commission's 2004 proposal for a Regulation, based on Article 308, to establish an "Instrument for Stability".[8] The general thrust of the proposed Instrument was defined in Article 1, first paragraph as being to "finance measures to promote peace and stability and assure the safety and security of the civilian population in third countries and territories...". This was correctly regarded by the Council as a misuse of Article 308, which would have trespassed upon the territory of the CFSP. In the event, the proposal was completely re-drafted, to give it the character of a measure ancillary to the Community's policy on cooperation with developing countries (Articles 177 t 181 EC) and with other third countries (Article 181a EC).

However, I believe Article 308 can still perform a useful and constitutionally proper function by allowing the powers of the institutions under specific legal bases to be supplemented, where this proves necessary in order to attain the Community objective for which the power in question has been conferred. An example would be the creation of new intellectual property forms, such as the Community trade mark. The Community-wide protection, which the trade mark gives, contributes to the well functioning of the internal (common) market. However, this could not have been achieved under the general legal basis for internal market legislation, Article 95 EC, which only provides for the adoption of measures to approximate (harmonise) national legislation. Basing the Community Trade Mark Regulation[9] on Article 308 can thus be seen as fully orthodox, even on a narrow construction of the Article. Another example would be Regulation 881/2002, which was referred to above. Extending the Council's power under Articles 60 and 301 EC, from the imposition of economic and financial sanctions against third countries, to the imposition of sanctions against specified individuals, enabled the EU to fulfil its international obligations in line with the evolving practice of the UN Security Council. This, again, can be regarded as orthodox recourse to Article 308, if the whole Treaty thesis is accepted, which it appears to have been by the European Courts.

A final point to note is that the "flexibility clause" contained in Article I-18 of the Treaty establishing a Constitution for Europe refers to action proving to be necessary "within the framework of the policies defined in Part III"; effectively, therefore, it adopts the whole Treaty thesis. The creation of subsidiary powers under Article I-18 would, however, be subjected to express conditions not found in Article 308: paragragraph (2) expressly requires the Commission to draw the attention of national parliaments to any proposal under Article I-18, so that they have the opportunity of activating the subsidiarity mechanism laid down by Protocol No 2; while paragraph (3) prohibits the use of the Article for adopting harmonisation measures in cases where this is excluded by the Constitution.

CONCLUSION AND SUMMARY OF EVIDENCE

The evidence presented above can be summarised as follows:

— The drafting of Article 308 harks back to the time when the establishment of the common market, including a full range of flanking policies designed to make it a practical reality, was the central project of the European Community.

— The Court of Justice has emphasised that Article 308 must be applied consistently with the principle of conferred powers. It may not be used to amend the EC Treaty, even in a minor way.

— Nevertheless, the European Courts have recognised that Article 308 is available to supplement the powers specifically conferred on the institutions of the Community across the whole range of its activities, not merely those connected with the establishment and functioning of the common market ("The whole Treaty thesis").

— The loose practice of the pre-Maastricht era, in which Article 308 was used to extend Community competence into fields that were not logically connected with the common market project, is no longer acceptable. However, there remains a role for Article 308 in allowing powers specifically attributed to the Community institutions by the EC Treaty to be supplemented, where this is demonstrably necessary to enable the objective, for which the power in question was conferred, to be achieved.

— In adopting the whole Treaty thesis, Article I-18 of the Treaty establishing a Constitution for Europe is consistent with the case law on the scope of Article 308, though it would impose some additional conditions.

21 May 2007