Documents considered by the Committee on 2 February 2011 - European Scrutiny Committee Contents


3   Co-ordination of social security within the European Economic Area

(32023)

13493/10

SEC(10) 1013

Draft Council Decision on the position to be taken by the EU in the EEA Joint Committee concerning an amendment to Annex VI (Social Security) and Protocol 37 to the EEA Agreement

Legal baseArticles 48, 218(9) and 352 TFEU; unanimity; EP consent
Document originated9 September 2010
Deposited in Parliament8 October 2010
DepartmentWork and Pensions
Basis of considerationMinister's letter of 19 January 2011
Previous Committee ReportHC 428-vii (2010-11), chapter 2 (10 November 2011)
Committee's assessmentLegally important
Committee's decisionNot cleared; further information requested

Background and previous scrutiny

3.1  The European Economic Area Agreement ("EEA Agreement") seeks to establish a homogeneous economic space covering the EU Member States and Iceland, Liechtenstein and Norway in which goods, persons, services and capital can move freely. It does so by extending the application of much of the EU's free movement "acquis" to the three EEA States. So, for example, in order to facilitate labour mobility, the Agreement incorporates EU laws on the co-ordination of social security systems which ensure that any entitlement to benefit acquired by workers, the self-employed and their dependants during a period of employment in one EEA State is not lost if they move to another EEA State.

3.2  On 1 May 2010, new EU Regulations on the co-ordination of social security systems took effect within the EU which extend the personal scope of existing arrangements to include non-economically active EU citizens, for example those who have never worked because of sickness, disability or caring responsibilities. The purpose of the draft Council Decision is to update the EEA Agreement to include the new EU Regulations, thereby maintaining symmetrical arrangements for social security co-ordination in EU and EEA Member States.

3.3  The draft Council Decision cites three Treaty Articles for its legal base. Article 48 of the Treaty on the Functioning of the European Union (TFEU) provides for the adoption of EU measures in the field of social security to facilitate the free movement of migrant workers (including the self-employed) and their dependants. Article 352 TFEU gives the EU power to act where such action is needed to achieve a Treaty objective but where the Treaties have not expressly conferred the necessary powers. We thought that this provision was needed because the new EU Regulations extend existing EU rules on social security co-ordination to EU citizens who are not economically active and are not, therefore, covered by Article 48 TFEU. Article 218(9) TFEU is essentially a procedural provision which empowers the Council to establish the position to be taken by the EU within the EEA Joint Committee — the body constituted by the EEA Agreement to amend its terms.

3.4  The Minister for Employment (Chris Grayling) told us in his Explanatory Memorandum of 15 October 2010 that the Government disagreed with the legal base proposed for the draft Council Decision. He said that Article 79(2)(b) TFEU — which provides for the adoption of EU measures on the rights of legally resident third country nationals and the conditions governing their freedom of movement and residence within the EU — was the correct legal base and that, as a result, the UK's Opt-In Protocol applied.

3.5  We asked the Minister to provide more detailed reasons to justify the Government's preferred choice of legal base, not least because Articles 48 and 79(2)(b) both appeared to have a limited territorial scope — the former only applying to migrant workers who were nationals of an EU Member State, the latter only applying to legally resident third county nationals moving from one EU Member State to another. We also asked the Government to explain whether limiting the territorial scope of the new EU arrangements for the co-ordination of social security to the movement of migrants within the EU rather than within the wider EEA was consistent with the EEA Agreement. Finally, we re-iterated our concern about the wording of Article 3 of the UK's Opt-In Protocol which states clearly that the three-month period for notifying the UK's opt-in decision runs from the date on which "a proposal or initiative has been presented to the Council pursuant to Title V of Part Three of the TFEU." We suggested that this wording meant that the inclusion of a Title V legal base — so far absent from the draft Council Decision— was the essential trigger for the notification procedure specified in Article 3 of the Protocol.

The Minister's letter of 19 January 2011

3.6  The Minister informs us that the Government has decided not to opt into the proposed Council Decision because it opposes any extension of social security rights "when we are having to take difficult decisions on access to welfare at home." He continues:

"Although the proposal does not contain a Title V legal base, we will assert our right not to opt in and make it clear that we will not be participating in the Council Decision. We will continue to argue in negotiations for the importance of citing a Title V legal base and the necessity of recitals reflecting the position of the UK being included in the text of the Agreement.

"The proposal is to update the EEA Agreement by linking it into the updated social security coordination regulations, Regulations 883/04 and 987/09. As you have seen the legal base for the proposal matches that of the principal EU Regulations. Your assumption about Article 352 is correct. The main legal base (Article 48 TFEU) covers social security coordination for the employed and self-employed and their families. Article 352 is there to cover those who have never worked. Of course before entry into force of the Lisbon Treaty, Article 42 (now Article 48) did not cover the self-employed, therefore Article 308 (now Article 352) was used to extend coordination to that group."

3.7  As regards the appropriate legal base for the draft Council Decision, the Minister says:

"I do not take the view that this is primarily an issue about territorial scope: I agree with the Committee that both Article 48 and Article 79(2)(b) deal with matters which are internal to the EU. I would however maintain that Article 79(2)(b) is the mores specific legal base when it comes to matters concerning third country nationals and that the EU legislator is obliged to use the more specific internal legal base. The power of the EU to act externally in situations such as this is governed primarily by Articles 216-218 of the TFEU but in order to exercise that external competence the EU must demonstrate it has specific internal competence to act in that area. Therefore the correct combined legal base for this measure is, in my view, Article 79(2)(b) and (in the case of the proposed Council Decision) Article 218(9)."

3.8  The Minister says that nationals of the three non-EU EEA States party to the EEA Agreement are (like Swiss nationals) to be considered as third country nationals. He continues:

"The EEA Agreement obliges the contracting parties to treat EEA nationals who are within the contemplation of the Agreement as having many of the same rights which EU nationals have (subject to the specific provisions of the Agreement) and that those EEA nationals do have full equal treatment rights as provided for in the Agreement. But that is because those EEA nationals (e.g. workers and the self-employed) are, as Article 4[5] makes clear, 'within the scope of application of the Agreement.' There is no suggestion in the Agreement that those who are not within the scope of the Agreement have the same equal treatment rights as those that do. I therefore agree with the Committee that it would be contrary to the Agreement to limit the territorial scope of arrangements for the co-ordination of social security systems to the movement of migrants exclusively within the EU. But, with respect, that will not be the effect of the view I have taken because there will be no such territorial limit on the movement of those falling within the scope of the Agreement in its original form which [...] is the version the UK will be applying."

3.9  Finally, the Minister notes that "in the Committee's opinion, the Government's position on the point at which the opt-in decision needs to be taken is not in accordance with Article 3 of Protocol 21" but adds that "the Government does not share that view."

Conclusion

3.10  We accept entirely that nationals of non-EU EEA States are in fact and in law third country nationals. Our point was whether, given the similarity of treatment accorded to EU and EEA nationals by virtue of the EEA Agreement, it would be contrary to the spirit of that Agreement to draw a new dividing line between non-economically active nationals of EU Member States and their EEA counterparts, especially as the latter constitute a numerically much smaller group.

3.11  We note the Government's position that it is possible for the UK to assert that it does not intend to opt into the draft Decision, notwithstanding it has not been presented to the Council "pursuant to Title V" and does not, as yet, include a Title V legal base. We agree that there is a case for citing Article 79(2)(b) TFEU — which forms part of Title V — as the substantive legal base for the draft Decision, for the reasons indicated by the Minister. The Minister does not tell us why the Commission and/or other Member States appear to oppose the use of a Title V legal base, but we note that one consequence would be to make it impossible for Denmark, and optional for Ireland, to participate in the draft Council Decision and there might therefore be a risk of fragmentation and loss of homogeneity within the EEA.

3.12  The Minister says that the Government will continue to press during negotiations for the inclusion of a Title V legal base in the draft Council Decision and for recitals reflecting the UK's position to be added to the text of the EEA Agreement. If, notwithstanding the Government's efforts, the draft Decision is adopted on the basis of Articles 48 and 352 TFEU, we ask the Minister to tell us whether the Government would accept that it would be legally bound by the Council Decision.

3.13  The Minister notes that "in the Committee's opinion, the Government's position on the point at which the opt-in decision needs to be taken is not in accordance with Article 3 of Protocol 21" and adds that the Government disagrees. Our concern is that the Government's assertion that the Opt-In applies in the absence of a Title V legal base creates the risk of considerable legal uncertainty. We therefore intend to keep the draft Council Decision under scrutiny, notwithstanding the Government's decision not to opt in, until the uncertainty as to the appropriate legal base has been resolved. We take this opportunity to remind the Minister that we have also asked to be kept informed of the outcome of further deliberations on the choice of legal base for a draft Council Decision to authorise changes of a similar nature to the Agreement between the EU and Switzerland on the free movement of persons.[6] Depending on the outcome in both cases, we may wish to consider inviting the Minister to give evidence.




5   This refers to Article 4 of the EEA Agreement which prohibits discrimination on grounds of nationality against those who are within the scope of application of the Agreement.  Back

6   (31756), 11630/10, see HC 428-vii (2010-11), chapter 9 (10 November 2010). Back


 
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