Select Committee on European Communities Twelfth Report

(COM(96) 331)

Letter from John Watts, MP, Minister for Railways, Roads and Local Transport, Department of Transport, to Jimmy Hood, MP, Chairman of the House of Commons European Legislation Committee

  At the end of its report on this proposal on 20 November (fourth report, HC 36-iv, paragraph 3.13) the Committee asked how, in view of the ruling of the European Court of Justice in Case C-300/89; the Government believed a dual legal base could be justified and whether it would be more prudent to press instead either for Article 99 as the sole legal base or for the proposal to be divided into two measures.

  Our starting point was that Article 75 on its own, as proposed by the Commission, was not acceptable for a proposal which includes elements which unquestionably relate to an excise duty. We therefore considered Article 99 to be essential to the legal base, as had been the case with the existing Directive (93/89) which this proposal is intended to replace.

  The Government is well aware of the ECJ case law on the combination of co-operation and unanimity. Originally therefore it was our view that the best course might be to split the proposal into two, one part based on Article 99, the other on Article 75. Alternatively as second best, we could accept Article 99 as the sole legal base. Splitting the proposal would be a novel procedure which would itself not be without risk. If the two proposals, one adopted under unanimity the other under co-operation, were seen as linked to each other, that might itself be thought to infringe the prerogatives of the European Parliament and be open to the same objections as a dual legal base might be. Even if the two proposals could be independent of each other, splitting would still depend on the Commission's willingness to proceed in that way. Although the Council could in principle amend the proposal by deleting the provisions relating to vehicle excise duty, only the Commission would be able to bring forward a separate new proposal containing those provisions. It is doubtful whether the Commission would agree to do that.

  At its meeting on 3 October 1996 the Transport Council noted that changes in the balance between the Community institutions brought about in the Maastricht Treaty opened up the possibility that if a proposal based on Articles 75 and 99 jointly were referred to it, the ECJ would review its judgment in Case C-300/89. The fact that the Treaty explicitly provides for combining the co-decision and unanimity procedures (in the culture and environment titles) strengthened the likelihood, it was argued, that the Court would accept a combination of the co-operation and unanimity procedures. The UK has some reservations about the robustness of this argument, but since it appeared to have a fair element of support in the Council it may in the end have a better chance of success than trying to obtain agreement to the measure being split or based on Article 99 alone. That is why our Explanatory Memorandum of 4 November said that we believed the case for a dual legal base had been strengthened. However, there are, in our view, potentially greater risks in the dual base course than in splitting the proposal.

  We shall have to see how things develop in the Council. It is likely, as a result of the Council's further discussion of the Commission's proposal on 12 December, that some significant changes will be made in it. I expect the Council to concentrate on the substance of the proposal in the first instance, and to revert to the question of legal base only when the text is more settled. An important consideration then will be the degree of support in the Council for each of the possible courses.

  I am sending a copy of this letter to the Lord Geddes, Chairman of Sub-Committee B of the House of Lords European Communities Committee, which asked to see our response on this point to your Committee.[12] I will let you have a Supplementary Memorandum on the draft Directive when the prospective changes to it have crystallised sufficiently.

17 January 1997

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