5 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 Regulation XX 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 4 October 2010
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| Previous Committee Report | HC 428-ii (2010-11) chapter 14 (15 September 2010)
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| To be discussed in Council | No date set
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background
5.1 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 that have adopted the
euro as their official currency, which together comprise the euro
area.[16] 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.
5.2 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.
5.3 Article 133 TFEU only applies 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.
5.4 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.
5.5 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
5.6 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.
5.7 We questioned the choice of legal base for documents
(a) and (b) for the following reasons:
- the principal purpose of document
(b) appeared to fit more readily with the EU's internal market
objectives, notably the removal of obstacles to the free movement
of goods and services, than with the monetary policy objectives
contained in Title VIII, Part Three of the TFEU;
- the use of an internal market legal base would
obviate the need for a separate Regulation — document (a)
— based on Article 352 TFEU and ensure that there was no
future risk that the UK might be bound to implement common rules
over which it had had little or no say; and
- there was, moreover, a possibility that the adoption
of the common rules proposed in document (b) would also affect
the free movement of goods and services in non-euro area Member
States, thus strengthening the case for an internal market legal
base.
5.8 We also questioned whether there was a sufficient
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. We invited
the Minister to respond to our concerns and kept both documents
under scrutiny.
The Minister's letter of 4 October 2010
5.9 The Parliamentary Under-Secretary of State at
the Home Office (Lynne Featherstone) tells us that the Government
can see arguments in favour of the use of the single market legal
base. She continues:
"However, we also believe that it is arguable
that Article 133 could be appropriate to achieve the aims it sets
out. We do not therefore intend to challenge the choice of legal
base in relation to this dossier. By virtue of Protocol 15 to
the Treaties, the UK Economic and Monetary Protocol, the UK does
not participate in the shaping of measures based on Article 133
TFEU and such measures do not apply to the UK unless and until
the UK decides to adopt the euro. Going forward, I understand
that Treasury colleagues will nevertheless carefully monitor the
use of Article 133 and are mindful of the risks that measures
adopted on the basis of this provision could lead to a partitioning
of the common market".
5.10 On the question of subsidiarity, the Minister
recognises that "the scale of the challenge the Commission
is addressing does not appear to be great" but says that
the Commission's Impact Assessment considered the possibility
of bilateral or multilateral agreements between neighbouring euro
Member States to establish rules for cross-border transportation
of euros and concluded that such agreements were unlikely to materialise
on a large scale. The Government's view, therefore, is that
"if the Commission is to pursue improved cross-border
transport of euros, then unilateral action appears to be the most
appropriate course. While bilateral agreements might have been
appropriate in the past, to seek to facilitate cross-border cash
transportation across all the euro-Member States by that means
now would seem bureaucratic and resource intensive. Moreover it
would become increasingly so if new members join the euro."
Conclusion
5.11 We thank the Minister for her response. However,
we continue to question whether Article 133 TFEU is the correct
legal base for document (b) for the following reasons. First,
the Minister says it is arguable that Article 133 could be appropriate
to achieve the aims set out in document (b). We should be grateful
if she could explain how and why she considers it to be appropriate,
in light of the wording of Article 133 and the broader objectives
set out in Title VIII, Part Three of the TFEU. Second, the Minister
says that there are arguments in favour of using a single market
legal base. If that is the case, we ask the Minister to explain
why she thinks the Commission is justified in proposing a further
Regulation — document (a) — based on Article 352 TFEU.
Article 352 only authorises EU action to attain one of the objectives
set out in the Treaties in cases where the Treaties have not provided
the necessary powers. The Minister appears to acknowledge that
the Treaty does confer the necessary powers to regulate the cash-in-transit
market and that they are to be found in the internal market provisions
of the TFEU. Use of these provisions would obviate the need for
a separate Regulation based on Article 352 TFEU.
5.12 In our previous Report, we asked the Government
to confirm whether there was a possibility that the common rules
proposed in document (b) would affect the free movement of goods
and services in Member States outside the euro area. If it would,
this would seem to strengthen the case for using an internal market
legal base. The example we have in mind is the land border between
the Republic of Ireland and Northern Ireland. We should be grateful
for the Government's view.
5.13 We raise a further concern regarding the
use of Article 133 TFEU. Article 3(1)(c) TFEU states that the
Union has exclusive competence in the area of monetary policy
for the Member States whose currency is the euro. As previously
noted, Article 133 features among the Articles in Title VIII of
Part Three of the TFEU dealing with monetary policy. We ask the
Government whether it considers that the Commission, in proposing
Article 133 as the legal base for document (b), is seeking to
assert exclusive competence for rules governing the transportation
of euros and, if so, to explain what consequences this would have
if, for example, the UK were to seek to conclude a bilateral agreement
on the transportation of currency by road with the Republic of
Ireland.
5.14 Pending the Government's response, we shall
keep the draft Regulations under scrutiny.
16 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
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