14 Cross-border road transport of
euros
(a)
(31849)
12675/10
COM(10) 376
(b)
(31850)
12680/10
+ ADDs1-6
COM(10) 377
+ ADDs 1-6
| Draft Regulation extending the scope of Regulation XX on the professional cross-border transportation of euro cash by road between euro-area Member States
Draft Regulation on the professional cross-border transportation of euro cash by road between euro-area Member States
Commission staff working documents: impact assessment and summary of impact assessment
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Legal base | (a) Article 352 TFEU; EP consent; unanimity
(b) Article 133 TFEU; co-decision; QMV
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Document originated | 14 July 2010
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Deposited in Parliament | 2 August 2010
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Department | Home Office
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Basis of consideration | EM of 12 August 2010
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Previous Committee Report | None, but see (30685) 10875/09: HC 19-xxii (2008-09), chapter 11 (1 July 2009)
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To be discussed in Council | No date set
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Committee's assessment | Legally and politically important
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Committee's decision | Not cleared; further information requested
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Background
14.1 The euro was launched on 1 January 1999 and euro banknotes
and coins were introduced for cash payments on 1 January 2002.
There are currently 16 EU Member States which have adopted the
euro as their official currency and which together comprise the
euro area.[60] The UK
and Denmark both have an opt-out which exempts them from participation
in the euro. The remaining nine Member States have not yet met
the conditions for adopting the euro and are referred to as "Member
States with a derogation."[61]
14.2 In 2009 the Commission published a White
Paper which highlighted the difficulties faced by professional
cash-in-transit (CIT) companies in transporting euro banknotes
and coins by road between Member States. The White Paper included
a draft of common EU rules designed to remove obstacles to the
professional transportation of euros by road between euro area
Member States. The previous Committee considered the White Paper
in July 2009 and noted that the then Government and British and
EU associations representing the cash-in-transit industry had
considerable reservations about the Commission's proposals, largely
based on their cost and complexity.[62]
The draft Regulations
14.3 Following publication of its 2009 White
Paper, the Commission established an expert group comprising representatives
from euro area Member States to help formulate proposals to facilitate
the free circulation of euro cash within the euro area. Document
(b) sets out common rules for the cross-border transportation
of euro cash by road between euro area Member States which, according
to the Commission, reflect a high degree of consensus within the
expert group. Document (a) makes provision for the common rules
to be extended automatically to a Member State with a derogation
at the same time as the Council decides to lift its derogation,
thereby enabling it to adopt the euro as its currency and join
the euro area.
14.4 The legal base for document (b) is Article
133 of the Treaty on the Functioning of the European Union (TFEU)
which provides for the adoption of measures "necessary for
the use of the euro as the single currency". This Article
is included in Title VIII of Part Three of the TFEU concerning
economic and monetary policy, under the chapter on monetary policy.
The purpose of this chapter is to establish the objectives, tasks
and governance of the European System of Central Banks (ESCB
comprising the European Central Bank and national central banks);
regulate the issuing of euro banknotes and coins; and provide
the necessary powers to adopt measures for the use of the euro
as the single currency.
14.5 Article 133 TFEU does not apply to the UK
by virtue of its opt-out from the euro. Measures based on Article
133 TFEU are adopted by a qualified majority of those Member States
whose currency is the euro. This means that the UK and ten other
Member States that have not adopted the euro as their currency
would not participate in the vote in Council and the draft Regulation
would not apply to them. The effect of document (a), however,
would be to extend the scope of application of document (b) to
the UK or any other non-euro Member State if it decided to join
the euro at a later date.
14.6 The legal base for document (a) is Article
352 TFEU which provides for action by the Union "if necessary,
within the framework of the policies defined by the Treaties,
to attain one of the objectives set out in the Treaties, and the
Treaties have not provided the necessary powers". Proposals
based on Article 352 TFEU must be adopted by unanimity in the
Council and require the EP's consent. Moreover, under the Lisbon
Treaty, the Commission is required to draw the attention of national
parliaments to any proposal based on Article 352 TFEU.
14.7 The Commission's explanatory memorandum
accompanying document (b) says that the CIT market is currently
divided along national lines because of regulatory differences
affecting whether firearms may be carried and on what conditions,
the design and protection of CIT vehicles, staffing and training
requirements, the provision of information to the police, and
licensing rules. These differences make it difficult for commercial
banks and large retailers to enter into a contract with a CIT
company based in another Member State, even though it may be more
efficient and cost-effective to do so.
14.8 The proposals in document (b) are intended
to mitigate the impact of different national regulatory requirements
by establishing common rules applicable only to CIT companies
wishing to transport euros by road from their Member State of
origin to another Member State within the euro area. The main
elements are as follows:
- CIT companies would be required
to obtain a CIT cross-border licence in their Member State of
origin ("the granting authority") and comply with the
common rules set out in the draft Regulation as well as national
rules in a number of sensitive areas (for example, on firearms)
;
- Cross-border transportation of euros would only
be carried out between 6:00 and 22:00 hours and the CIT vehicle
would have to return to its Member State of origin within the
same day;
- CIT security staff would have to satisfy a number
of requirements relating to their health and suitability for the
job, training and language skills;
- The carriage of firearms would be governed by
the law of the Member State in which the CIT company was operating
(so, for example, armed CIT staff entering another Member State
which prohibits the carriage of firearms would be required to
place firearms in a weapons strong-box);
- Vehicles used to transport euro banknotes and
coins would have to meet the specifications set out in the draft
Regulation; and
- CIT staff involved in transporting euros to another
(host) Member State would be entitled to payment at the minimum
rate applicable in the host State (on a daily rate) where this
exceeds the rate of pay in their Member State of origin.
14.9 The Commission justifies EU action in relation
to document (b) on the grounds that Article 133 TFEU imposes a
"duty to take the necessary measures to ensure the free and
efficient circulation of euro cash since the current situation
creates obstacles to the cross-border transport of the euro and
thus to its use".[63]
According to the Commission, Member States' failure to conclude
bilateral or multilateral agreements with each other to facilitate
cross-border movements suggests that EU action is the only practicable
way of reconciling divergent national rules, while also taking
into account the future enlargement of the euro area, and so complies
with the principle of subsidiarity. Limiting the scope of the
draft Regulation to cross-border transportation of euros (and
thus excluding transportation within a single Member State) also
ensures that it complies with the principle of proportionality.
14.10 As regards document (a), the Commission
justifies the use of Article 352 TFEU on the grounds that EU action
is necessary in order to facilitate a smooth changeover to the
euro for those Member States that have not yet adopted the euro
as their currency but may do so in the future.
The Government's view
14.11 In her Explanatory Memorandum of 12 August
2010, the Minister of State for Security and Counter-Terrorism
at the Home Office (Baroness Neville-Jones) says that UK law already
includes a licensing requirement for UK contractors who wish to
transport cash or valuables within the UK. The draft Regulations
would create an additional cross-border licensing requirement
for those CIT companies seeking to transport euros from one euro
Member State to another. Neither of the proposals would apply
to the UK unless and until the UK were to decide to join the euro
and so there would be no immediate legal, policy or financial
implications for the UK.
14.12 As regards document (b), the Minister says
that the Government "believes that the overall aims of the
Regulation increasing financial freedom for the good of
the economy, while maintaining professional standards and the
safety of the public are sound."[64]
However, the Minister continues as follows:
"If the proposals were ever to apply to the
UK we believe that they would be complex and difficult to implement
effectively. We also believe that there are risks to licensing
by individual national 'granting authorities' which could leave
the receiving State with an obligation to accept foreign cash
transports. For example, in one State CIT companies may have a
weaker internal checking infrastructure but rely on staff carrying
firearms. If they had to forego firearms they might present a
risk in another State which had a stronger internal infrastructure.
"With regard to firearms, we would also have
concerns about firearms brought into the country (by CIT staff)
which is prohibited under UK law. While the arrangements
would require firearms to be kept in a remotely locked box while
the CIT staff are in the territory of a Member State whose domestic
law prohibits the carrying of forearms in these circumstances,
we would have concerns about this arrangement were the Regulations
ever to apply to the UK. Applications for the private possession
of firearms for the protection of large sums of money are, as
a rule, refused on the grounds that they are not an acceptable
means of protection."[65]
14.13 The Minister highlights further elements
of the draft Regulations which would be likely to cause difficulties
for the UK. These include possible additional responsibilities
for the police in tracking or escorting CIT vehicles, new costs
for industry (for example, a minimum of 200 initial hours of training
are required for CIT companies operating across borders, whereas
a UK licence requires a minimum of 35 hours), special requirements
for vehicle equipment and for the possession and carriage of firearms.
The Minister tells us that the British Security Industry Association
(BSIA) has commented on the Commission's draft proposals and expressed
a number of concerns. For example, BSIA suggested that the rules
on firearms would be likely to breach UK restrictions on the possession
and importation of firearms and that the costs of compliance could
be extensive, requiring significant investment in CIT vehicles
and in training CIT crews.
14.14 The Minister provides an analysis of the
implications of the draft Regulations for fundamental rights,
notably the freedom to conduct a business and the right to property,
and concludes that "the Government considers that any impact
on these rights is limited and justified by the overall objectives
pursued by the Union" which are to facilitate the free circulation
of the euro by removing existing regulatory barriers to the cross-border
transportation of euros.[66]
14.15 The Minister indicates that, although the
draft Regulations have no immediate financial implications, if
they were to apply to the UK in the future, the costs for CIT
companies wishing to apply for a CIT cross-border licence would
appear to be significant.
Conclusion
14.16 We note the Minister's view that the
draft Regulations would not have any immediate, legal, policy
or financial implications for the UK as they would not apply to
the UK unless and until the UK decided to join the euro. We are,
however, concerned that the legal bases proposed by the Commission
would mean that, if the UK were ever to decide to join the euro,
the UK would be bound to implement common rules over which it
had had little or no say. This is because the UK and other non-euro
Member States would be excluded from participating in the vote
in Council to adopt document (b) but the effect of document (a),
which requires the unanimous support of all Member States, would
be to extend the scope of application of document (b) to any Member
State which adopts the euro as its currency in the future. We
should therefore be grateful for the Minister's views on the following
questions:
- Is Article 133 TFEU the
correct legal base for document (b)?
We accept that there will be circumstances in
which euro area Member States will need to adopt measures for
the use of the euro which will bind any future participants in
the single currency. Article 133 TFEU specifies, however, that
the adoption of such measures must be "necessary for the
use of the euro as the single currency". The Commission does
not adduce any evidence to indicate that differing regulatory
regimes applicable to CIT companies have a detrimental impact
on the use of the euro in those Member States which have adopted
the single currency. The main justification for the Commission's
proposals would seem, rather, to be a desire to facilitate the
free circulation of euros between Member States within the euro
area, and to achieve this by removing national restrictions on
the ability of CIT companies to provide cross-border services.
This would seem to fit more readily with the EU's internal market
objectives than with EU monetary policy. We therefore ask the
Minister to confirm whether there is a possibility that the proposals
in document (b) would affect the free movement of goods and services
in non-eurozone Member States; and, if there is, whether an internal
market legal base should not be used instead of Article 133 TFEU
so that all Member States can take part in the negotiation and
adoption of the proposed Regulation.
- Is Article 352 TFEU the
correct legal base for document (a)?
The power conferred on the Union under this Article
to take action where the Treaties have not provided the necessary
powers is, in our view, to be used sparingly and must be fully
justified. We note that the need to use this Article would not
arise if the objectives of document (b) were to be regarded as
internal market objectives. We therefore ask the Minister whether
she is satisfied that the Commission has demonstrated a genuine
need for Union action under Article 352 TFEU and that there are
no other Treaty Articles which confer the necessary powers.
- Do both documents comply
with the principle of subsidiarity?
The Minister's Explanatory Memorandum appears
to accept that EU action is justified in order to facilitate the
free circulation of euro cash across national borders and to make
provision for the future enlargement of the euro area. Article
5 of the Treaty on European Union (TEU) provides that action at
EU level is justified only when the objectives of the proposed
action cannot be sufficiently achieved by the Member States but
can rather, by reason of the scale or effects, be better achieved
at Union level. The Commission recognises in its explanatory memorandum
that the CIT market is predominantly local in character and that
any impediment to the free circulation of euros is mainly limited
to border areas. We therefore ask the Minister to explain why
she considers that the scale or effects of any impediment to the
free circulation of euros are such as to warrant EU action of
the nature proposed by the Commission.
14.17 Pending the Minister's replies to our
questions, we shall keep both documents under scrutiny.
60 Participating Member States are Belgium, Germany,
Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria,
Portugal and Finland (since 1999), Greece (2001), Slovenia (2007),
Cyprus and Malta (2008) and Slovakia (2009). Back
61
See Article 139 of the Treaty on the Functioning of the European
Union. Back
62
(30685) 10875/09; see HC 19-xxii (2008-09), chapter 11 (1 July
2009). Back
63
Commission's explanatory memorandum on the legal aspects of the
proposal, page 8. Back
64
Minister's Explanatory Memorandum, para 27. Back
65
Minister's Explanatory Memorandum, paras 28 and 29. Back
66
Minister's Explanatory Memorandum, para 17. Back
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