9 Cross-border road transport of euros
| (a)
(31849)
12675/10
COM(10) 376
(b)
(31850)
12680/10
COM(10) 377
+ ADDs 1-6
|
Draft Council Regulation (EU) concerning the extension of the scope of Regulation (EU) of the European Parliament and of the Council 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
|
| Legal base | (a) Article 352 TFEU; EP consent; unanimity
(b) Article 133 TFEU; co-decision; QMV
|
| Document originated | 14 July 2010
|
| Deposited in Parliament | 2 August 2010
|
| Department | Home Office
|
| Basis of consideration | Minister's letter of 17 November 2010
|
| Previous Committee Report | HC 428-ii (2010-11), chapter 14 (15 September 2010); HC 428-iv (2010-11), chapter 5 (20 October 2010)
|
| To be discussed in Council | No date set
|
| Committee's assessment | Legally and politically important
|
| Committee's decision | Not cleared; further information and progress reports requested
|
Background
9.1 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 together comprise the euro
area.[46] 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.
9.2 Document (b) seeks to facilitate the free circulation
of euro banknotes and coins within the euro area by means of a
Regulation establishing common rules on the cross-border transportation
of euro cash by road. It is based on 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". Article 133 is in Title VIII
of Part Three of the Treaty 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 (ECSB — 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
in euro Member States.
9.3 Article 133 TFEU applies only to those Member
States whose currency is the euro. This means that the UK and
the ten other non-euro Member States would not form part of the
qualified majority required to adopt the draft Regulation, would
not take part in the vote, and would not be bound by the Regulation.
9.4 Document (a) makes provision for the common rules
set out in document (b) to be extended automatically to any Member
State currently outside the euro area once the Council has decided
that it has satisfied the conditions for participating in the
single currency. It is based on Article 352 TFEU which empowers
the EU to act 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". EU measures must be unanimously agreed
by all Member States. Moreover, because Article 352 TFEU is a
residual legal base, only enabling the Union to act in the absence
of any other Treaty Article conferring the necessary powers, the
Lisbon Treaty expressly requires the Commission to alert national
parliaments to its proposed use.
9.5 The common rules proposed in document (b) would
require Member States within the euro area to establish a special
licensing regime for professional "cash-in-transit"
("CIT") companies wishing to transport euro cash by
road across internal borders to another euro Member State. EU
action is justified, according to the Commission, because Article
133 TFEU imposes a duty to ensure the free and efficient circulation
of euro cash and because it is the only practicable way of reconciling
divergent national rules which have resulted in a heavily segmented
CIT market.
Previous scrutiny
9.6 In her Explanatory Memorandum of 12 August, the
Minister of State for Security and Counter-Terrorism at the Home
Office (Baroness Neville-Jones) said that the Commission's proposals
would not apply to the UK unless the UK were to decide to join
the euro and so there would be no immediate legal, policy or financial
implications. She highlighted a number of provisions which would
present difficulties if they were to apply to the UK, notably
those concerning the carriage of firearms and the potential additional
costs for CIT companies. The Minister did not question the Commission's
choice of legal base for the proposals or their compliance with
the principle of subsidiarity.
9.7 When we first considered these proposals, on
15 September, we questioned both the choice of legal base for
documents (a) and (b) and the need for EU regulation in light
of the evidence adduced in the Commission's explanatory memorandum
that the CIT market was predominantly local in character and any
impediment to the free circulation of euros was mainly limited
to certain border areas.
9.8 In her response of 4 October 2010, the Parliamentary
Under-Secretary of State at the Home Office (Lynne Featherstone)
told us that the Government could see arguments in favour of a
single market legal base but thought that there was an arguable
case for the use of Article 133 TFEU and that the Government did
not therefore intend to challenge the Commission's choice of legal
base. She acknowledged that "the scale of the challenge the
Commission is addressing does not appear to be great" but
thought that unilateral action was likely to be a more efficient
means of improving the improved cross-border transportation of
euros within the eurozone than a series of bilateral agreements.
9.9 We continued to question the use of Article 133
TFEU as the legal base for document (b) and asked the Minister
to provide a more detailed explanation of her reasons for considering
that Article to be more appropriate than an internal market legal
base. We sought the Government's views on the implications for
the free movement of goods and services across the land border
between the Republic of Ireland and Northern Ireland, in light
of the limited scope of application of the common rules in document
(b). We also noted that Article 3(1)(c) TFEU states that the Union
has exclusive competence in the area of monetary policy and asked
the Minister whether she thought that the Commission, in proposing
Article 133 TFEU as the legal base for document (b), was seeking
to assert exclusive EU competence for rules governing the transportation
of euros.
The Minister's letter of 17 November 2010
9.10 The Parliamentary Under-Secretary of State at
the Home Office (Lynne Featherstone) re-iterates the Government's
view that Article 133 TFEU is the correct legal base:
"Given that the terms of document (b) make
it clear that the rules in question apply only in relation to
transfers of euros between 'participating Member States' (i.e.
those Member States participating in the single currency) by a
cash-in-transit company established in such a Member State it
seems clear that the predominant purpose of the measure in question
is to ensure the free movement of cash so as to ensure the effective
function of the single currency. On this basis we consider that
Article 133 is the appropriate legal base here. While the argument
might be different if the measure was designed to apply to transport
of euros and other cash amongst all Member States that is not
what the proposed Regulation is about."
9.11 She adds that, in light of the Government's
assessment that Article 133 TFEU is the correct legal base for
document (b), it follows that the use of Article 352 TFEU as the
legal base for document (a) is also appropriate. She explains:
"The EU institutions have taken the view that
Article 133 cannot apply to Member States which have not adopted
the euro and it is therefore the practice to resort to Article
352 and its predecessors so as to extend euro area instruments
to non-euro area Member States as far as relevant. Again, the
argument concerning the use of the Article 133 and 352 legal bases
might be different if the aim of the package of proposed
measures was to provide a regime governing transport of any currency
amongst all Member States, but that is not what the Commission
has proposed."
9.12 The Minister says that, as the proposed common
rules in document (b) would apply only to the transport of euros
between euro area Member States by CIT companies established in
such States, they would not apply to the transport of euros between,
for example, the Republic of Ireland and Northern Ireland.
9.13 Finally, on the Union's exclusive competence
in monetary matters, the Minister explains:
"While, for the reasons set out above, our
view is that the predominant purpose of document (b) is laying
down measures necessary for the use of the euro as a single currency,
the measure is not exclusively about monetary policy. Where though
the other purposes pursued by a measure are merely incidental,
the ECJ's clear jurisprudence is that the act in question must
be based on a single legal basis, namely that required by the
main or predominant purpose or component.
"The decision that the predominant purpose
pursued by a measure is one falling within an area of exclusive
EU competence does not, however, mean that anything else which
has been included within such a measure automatically becomes
an area of exclusive EU competence. In any event, as in the present
case, transportation of euros or any other currency between euro-area
and non euro-area States is not covered by the proposed Regulation,
Member States' ability to conclude agreements in such areas would
in our view be unaffected by the conclusion of document (b)."
Conclusion
9.14 We are grateful for the Minister's response.
However, we continue to harbour doubts about the use of Article
133 TFEU as the legal base for document (b) for three reasons.
9.15 First, we think that there is a risk of fragmentation
within the internal market. As we have noted previously, the Commission
recognises 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.[47]
The Minister explains that the common rules in document (b) are
only intended to apply to Member States participating in the euro
area and so would not apply to the cross-border transportation
of euros in border areas straddling euro and non-euro States,
for example the Republic of Ireland and Northern Ireland. Our
question was not, however, whether the rules would apply but whether
they could or should have a broader application within an internal
market in which euro currency is in free circulation. We understand
that dual pricing is a reality in border areas which straddle
euro and non-euro States and so it follows that there is a potential
market for CIT companies to transport euros which, on the basis
of the current proposals, they will be unable to exploit.
9.16 Second, the use of Article 133 TFEU to adopt
common rules applicable only within euro States necessitates the
use of Article 352 TFEU to extend those rules to non-euro States
as and when they become eligible to join the euro area. We think
that Article 352 should be used sparingly and we are not convinced
that its use is justified in this case because, in our view, an
internal market legal base could have been cited for the adoption
of the common rules contained in document (b).
9.17 Third, we note the Minister's explanation
that the adoption of a measure based on Article 133 TFEU does
not mean that it "automatically becomes an area of exclusive
EU competence". We think, nevertheless, that the use of Article
133 TFEU, in light of Article 3(1)(c) TFEU, at the very least
creates some small risk of establishing a new area of exclusive
EU competence and, given our doubts about the proposed choice
of legal base, question whether that risk is one worth taking.
9.18 We recognise that the Government remains
firmly of the view that Article 133 TFEU is the correct legal
base for document (b). We would, therefore, welcome the Government's
views on the Opinion issued by the European Central Bank which,
while endorsing the Commission's choice of legal base, proposes
amendments which would make provision for CIT companies to cross
the territory of a non-euro Member State in order to transport
euro cash between two euro States. The Bank says the amendments
are needed because the Commission cannot have intended to exclude
euro area Member States (such as Ireland) from the scope of application
of the common rules in document (b) simply because they have a
land border with a non-euro Member State. We ask the Minister
to tell us whether the Government would support the amendments
proposed by the European Central Bank. We also ask the Minister
to inform us of any significant developments in the course of
negotiations by means of progress reports. Meanwhile, the proposals
remain under scrutiny.
46 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
47
See the Conclusion of our Second Report of 15 September 2010,
HC 428-ii (2010-11), chapter 14. Back
|
