Documents considered by the Committee on 12 January 2011 - European Scrutiny Committee Contents

20 Cross-border road transport of euros




COM(10) 376




COM(10) 377

+ ADDs 1-6

Draft Regulation extending the scope of document (b) 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 originated14 July 2010
Deposited in Parliament2 August 2010
DepartmentHome Office
Basis of considerationMinister's letter of 7 January 2011
Previous Committee ReportHC 428-ii (2010-11), chapter 14 (15 September 2010); HC 428-iv (2010-11), chapter 5 (20 October 2010); HC 428-x (2010-11), chapter 9 (8 December 2010)
To be discussed in Council18 January 2011
Committee's assessmentLegally and politically important
Committee's decisionCleared

Background and previous scrutiny

20.1 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" and applies only to those Member States whose currency is the euro. The UK and other non-euro Member States would not, therefore, take part in the vote to adopt the draft Regulation and would not be bound by it.

20.2 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 from one euro Member State to another. The Commission says that EU action is justified because it is the only practicable way of reconciling divergent national rules which have resulted in a heavily segmented CIT market.

20.3 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 and must be agreed unanimously by all Member States.

20.4 We have considered the Commission's proposals on three occasions and questioned both the choice of legal base and the need for EU regulation in light of evidence adduced by the Commission which indicated that the scale of any impediment to the free circulation of euros was, in practice, small and mainly limited to certain border areas. We thought that, if there were to be common EU rules to make it easier for CIT companies to provide cross-border services, then there was a strong case for using an internal market legal base. We expressed concern that the use of Article 133 TFEU might create some small risk of establishing a new area of exclusive EU competence because it is amongst the provisions of the TFEU concerning monetary policy and the EU has exclusive competence for monetary policy for euro Member States. We also asked the Government for its views on the Opinion issued by the European Central Bank which said that document (b) should be amended to make express provision for CIT companies to cross the territory of a non-euro Member State in order to transport euro cash between two non-contiguous euro States.

The Minister's letter of 7 January 2011

20.5 The Minister for Immigration (Damian Green) says that the scope of the amendment proposed in the European Central Bank's Opinion is not entirely clear but he believes that it would require the common rules set out in document (b) to apply in all Member States which would need to be crossed in order to deliver euros to a euro Member State. He continues:

"In view of the UK's geography, it seems unlikely that our territory would often need to be crossed in this way, although it is conceivable that this situation could arise in Northern Ireland.

"As noted previously, if the Regulations applied to non-euro Member States and their territories were crossed then the rules on firearms, police notification and minimum wages would presumably have to apply to non-euro members. We would not be ready to accept such an extension to the proposals which obliged the UK to comply with the rules. On that basis we would not support the proposals made by the ECB."

20.6 The Minister says that the Government has noted, and understands, the Committee's concerns regarding the choice of legal base, but considers Articles 133 and 352 TFEU to be the appropriate legal bases "in light of the aim and content of the substantive measure" (document (b)). He adds that the Council will be asked to agree both Regulations on 18 January and asks us to consider clearing the proposals from scrutiny before then.


20.7 The Government has acknowledged that there are arguments to support the use of an internal market legal base but also believes that there is an arguable case for using Article 133 TFEU. This is because Article 133 only applies to Member States whose currency is the euro and regulatory differences between these States are likely to have much greater impact on the free circulation of euros than those in non-euro Member States. We can see the merit in this argument, even though we continue to think that the purpose of document (b), which is to facilitate the free circulation of euros by making it easier for CIT companies to provide cross-border services, fits more readily with the EU's internal market objectives than with EU monetary policy.

20.8 While the arguments as to the appropriate legal base may be finely balanced, the policy implications are more clear-cut. It is evident that the Government does not wish the UK to be bound by the common rules set out in document (b) which it believes will be costly and complex to implement. The use of Article 133 TFEU means that the common rules will not apply in the UK unless and until the UK decides to adopt the euro as its currency. By contrast, the use of an internal market legal base would require the UK to adopt new, potentially burdensome regulation to implement common EU rules for which there appears to be little demand within the UK's domestic CIT industry. We accept, moreover, that the risk of fragmenting the internal market by establishing a separate set of rules which are only applicable in euro Member States is likely to be small, given that the market for cross-border transportation of euros by road is (according to the Commission) highly localised and concentrated in relatively few border areas.

20.9 In the course of our scrutiny of the draft Regulations, we have raised a number of questions and wish to express our gratitude to the Minister for providing prompt and informative responses. We have no further questions to put to the Minister and are therefore content to clear the proposals from scrutiny.

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