20 Cross-border road transport of euros
| (a)
(31849)
12675/10
COM(10) 376
(b)
(31850)
12680/10
COM(10) 377
+ ADDs 1-6
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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
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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 | Minister's letter of 7 January 2011
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| Previous Committee Report | HC 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)
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| To be discussed in Council | 18 January 2011
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared
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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.
Conclusion
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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