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
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| Legal base | Articles 48, 218(9) and 352 TFEU; unanimity; EP consent
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| Document originated | 9 September 2010
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| Deposited in Parliament | 8 October 2010
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| Department | Work and Pensions
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| Basis of consideration | Minister's letter of 19 January 2011
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| Previous Committee Report | HC 428-vii (2010-11), chapter 2 (10 November 2011)
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| Committee's assessment | Legally important
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| Committee's decision | Not cleared; further information requested
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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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