Select Committee on European Union Forty-First Report


What is the draft Treaty about?

46. Some have argued that the draft Treaty turns the European Union into a state, others that what is proposed is principally consolidation of existing Treaties. We accordingly asked what kind of entity will the European Union be if the draft Treaty is adopted?

47. The Foreign Secretary has told the House of Commons:

We have a draft that begins by reciting that the Union is based on certain key principles—dignity, liberty, democracy, the rule of law and respect for human rights. It calls for a union of sovereign states of Europe, with decisions taken as closely as possible to the citizens. It specifies that the Union exercises only the powers that Member States give to it, acting at the EU level only when it needs to. It gives this House greater powers to police the principle of subsidiarity[21].

48. The Government has also told this House that there is no suggestion that the draft constitution then being debated by the Convention "will lead to significant changes in the relationship between the European Union and its citizens"[22].

49. In this chapter we deal first with the definition and objectives of the Union: what does the Treaty say the EU is for? We then examine the competences of the Union: in which areas will the draft Treaty allow the Union as opposed to the Member States to make laws? We also examine how far the draft Treaty will ensure respect for the principle of subsidiarity, before concluding by examining the Treaty's provisions to allow Member States to withdraw from the Union and the processes for future Treaty revision.

What is the EU?

Definition of the Union
Box 1

Article I-1 (1)

Reflecting the will of the citizens and States of Europe to build a common future, this Constitution establishes the European Union, on which the Member States confer competences to attain objectives they have in common. The Union shall co-ordinate the policies by which the Member States aim to achieve these objectives, and shall exercise in the Community way the competences they confer on it.

50. The definition of the European Union was not without controversy in the Convention. Introducing the Convention's final text to the European Council at Thessaloniki, the Convention's Chairman, Valéry Giscard d'Estaing said "In the course of the debate, extreme solutions were gradually set aside. The idea of creating a single European federal state which would ultimately swallow the identity of the Member States, which some people supported at the beginning of our work, was gradually abandoned as inappropriate to the structure of the new Europe. Similarly the watering down of Europe in a Confederation comprising only unshared, individual interests, by depriving it of the means of action it needs, was rejected almost unanimously."[23]

51. He described the definition of the European Union set out above as the expression of "the dual nature of the European system", "a Union of peoples and Union of States".

52. Several features of the definition are noteworthy. First, the definition refers to the will of the "citizens" of Europe. This term has been welcomed by our Government in contrast to the term "peoples"[24]. It is, however, unclear, who exactly comprise the "citizens …of Europe". Under the present Treaty, every national of a Member State is a citizen of the Union (the relevant provision is repeated in the draft Treaty as Article I-8 and the term has significance for the definition of rights under the Treaty[25]). We are not certain whether the term "citizens of Europe" is intended to be wider than "citizens" of the Union. We are satisfied, however, that a definition of "citizens" is not necessary for the purposes of Article I-1.

53. Secondly, while Article I-1 does not speak of the "peoples" or "people" of Europe[26], the aim of the Union is later stated (in Article I-3 (1), emphasis added) as "to promote peace, its values and the well-being of its peoples". In the absence of a genuine European demos any reference to "people" of Europe would be premature. By contrast, the term the "peoples of Europe" has a well-established legal pedigree, having been employed (apparently successfully to date) in both the Treaty establishing the European Community (the Treaty of Rome, as amended) and in the Treaty on European Union (the Maastricht Treaty, as amended). Hence we see no cause for concern in Article I-3(1).

54. There is no reference in the draft Treaty to the objective of creating an "ever closer Union", a phrase whose inclusion in the Treaties of Rome and Maastricht has continued to give rise to debate. We welcome the removal of the phrase. We note, however, that the Preamble (paragraph 4) speaks of "the peoples of Europe…united ever more closely".

55. On the other hand, the draft Treaty expressly states that the Union can only act within the limits of the competences which the Member States have conferred upon it (Article I-9(2)). We support this approach because the draft Treaty makes plain the intention that the European Union remains a union of sovereign Member States.

56. The phrase "in the Community way" has replaced the words "on a federal basis" which appeared in a version of Article I-1 earlier considered by the Convention. No doubt some will be delighted by the loss of the word "federal". It is not, however, clear what those drafting the Treaty had in mind by this new formulation. There will be no "Community"[27] after the draft Treaty enters into force. If the intention is to refer to what is now known as the "Community method" problems may arise, particularly if the phrase is in any way intended to govern the Common Foreign and Security Policy (CFSP).

57. The "Community method" connotes the order and procedures under the EC Treaty (First Pillar). The Commission has the sole right of initiative, legislation is adopted by the Council, frequently jointly with the European Parliament, and Community legislation and other action is subject to the jurisdiction of the Court of Justice and the principles of the primacy of Community law. The Community method is to be contrasted with the "intergovernmental" approach which has been a fundamental characteristic of the Second Pillar (CFSP) and Third Pillar (Police and Judicial Co-operation in Criminal Matters).

58. It has also been suggested[28] that the Community method would not always be appropriate to meeting the challenges of the post-Lisbon economic reform process.

59. What is meant by "in the Community way" needs to be made clear. The extent to which this phrase, because of its position and prominence in Article I-1(1), may, intentionally or not, constitute a superior rule or governing principle also needs further examination and explanation. In particular, the relationship between Article I-1(1) and those provisions of the new Treaty dealing with the CFSP need further careful examination. The concern strongly expressed about this matter in the House's debate on 9th September supports our view.

60. Overall, however, the draft Treaty's definition of the EU clearly sets out for the citizen what the EU is.

Objectives of the Union

Box 2

Article I-3

1. The Union's aim is to promote peace, its values and the well-being of its peoples.

2. The Union shall offer its citizens an area of freedom, security and justice without internal frontiers, and a single market where competition is free and undistorted.

3. The Union shall work for the sustainable development of Europe based on balanced economic growth, a social market economy, highly competitive and aiming at full employment and social progress, and with a high level of protection and improvement of the quality of the environment. It shall promote scientific and technological advance. It shall combat social exclusion and discrimination and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of children's rights. The Union shall respect its rich cultural and linguistic diversity, and shall ensure that Europe's cultural heritage is safe-guarded and enhanced.

4. In its relations with the wider world, the Union shall uphold and promote its values and interests. It shall contribute to peace, security, the sustainable development of the earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and protection of human rights and in particular children's rights, as well as to strict observance and development of international law, including respect for the principles of the United Nations Charter.

5. These objectives shall be pursued by appropriate means, depending on the extent to which relevant competences are attributed to the Union in this Constitution.

61. The objectives of the Union are set out in Article I-3[29]. Some are new (for example "to promote peace, its values and the well-being of its peoples") and need careful scrutiny. Others are familiar but the wording appears to be broader in scope than those currently in Article 2 TEU. This may reflect the development and aspiration of Union activity in the relevant areas. There is, for example, a clearer and stronger commitment to combating social exclusion and discrimination and to promoting social justice and protection.

62. The present objective of asserting the Union's identity on the international scene is broadened, to expressly include wide ranging and various aspects on Union external activity.

63. Another of the objectives of the Union is to "offer its citizens an area of freedom, security and justice without internal frontiers" (Article I-3 (2))[30]. The wording, but not the concept, is new and emphasises the absence of internal frontiers. This could call into question the continuance of the UK's special position, secured at the Amsterdam IGC, entitling the UK to maintain its external border controls. The Government has indicated that it does not intend to give this up[31].

64. One other change is noteworthy. It is no longer an express objective of the Union to maintain the acquis communautaire. That provision was inserted as part of the compromise reached at Maastricht to appease those Member States seeking a more integrationist structure for the Union. By dropping an unnecessarily rigid formulation, the draft Treaty could provide some flexibility, which we welcome.

65. We recommend that the Government, as part of its analysis of the draft Treaty, indicates in the case of each objective of the Union set out in Article I-3 how the wording has changed from any previous text. In addition, to promote public understanding and thus help to meet the objective of clarity, the European Union should publish with the final Treaty a detailed explanation of how each of the objectives affects citizens as individuals.



66. The issue of competences is central to the discussion of how far the EU is to change under the draft Treaty. Is the EU in fact taking new or extended powers? The question of competences can, we believe, be usefully considered under four headings: the basic principles; the division of competence; new competences; and future extension of competence.

67. The Government has supported the clearer logic provided by the draft Treaty's account of competences[32]. There is, however, no evidence that any competence has been or will be returned to Member States, as some had sought during the Convention. It is nevertheless noteworthy that, in defining the division of competence as between the Union and Member States, the Treaty expressly contemplates the Union deciding to cease exercising its competence, presumably in relation to a defined subject matter (see Article I-11(2)).

The fundamental principles

68. Article I-9(1) makes clear that the "limits" of Union competence are governed by the principle of conferral: it is clearly stated that the Union can only act within the limits of the competences which the Member States have conferred upon it - Article I-9(2). The principle has paramount significance as can be seen from the fact that it is, as mentioned above, also a constituent part of the definition of the Union in Article I-1.

69. The use of Union competence is expressly stated to be governed by the principles of subsidiarity and proportionality. What is not said, though it may be implicit or be implied from Article I-7, is that the exercise of Union competences is also governed by the need to respect fundamental rights. We believe that this should be made express in Article I-9.

The division of competences

70. Title III of Part I seeks to identify those competences which are exclusive to the Union (Article I-12); those shared between the Union and the Member States (Article I-13); and those where the Union may only take supporting, co-ordinating or complementary action (Article I-16). Economic and employment policies and the Common Foreign and Security Policy (CFSP) are excluded from this division and are the subject of separate Articles (Article I-14 and I-15 respectively).

71. Title III is completely new and responds to the request in the Laeken Declaration that there should be "a better division of and definition of competences in the European Union". We commented on this division in our earlier Report[33] and are pleased to see that a number of the criticisms we made have been addressed in the final text. For example the reference to the free movement of persons etc has been removed and "internal market" is more clearly a matter of shared competence. However, the reference to "competition" being a matter of exclusive competence, though qualified by the phrase "necessary for the functioning of the internal market", is still confusing and needs clarification.

72. We note the White Paper's assurance (in paragraph 56) that the draft Treaty "for the most part clarifies rather than alters the current division of powers". The list of exclusive competences is short and according to the Convention's Praesidium reflects the list of exclusive competences under the existing Treaties[34]. We accept this assurance. Article I-12(2), however, appears to give a power to amend the list in the case of concluding international agreements and we would welcome an explanation of the effect of this provision.

73. We also note the definition of shared competence in Article I-11(2). We would welcome further explanation of where the boundaries of shared competences will be set and who will have jurisdiction to settle disputes.

New competences

74. The detail in Part III of the Treaty shows where new competences for the Union are proposed or existing competences extended. Some of the areas where the Treaty creates new legal bases and where as a result the Union will have new or increased competence are:

·  capital movements - combating organised crime and terrorism (Article III-49)

·  combating tax fraud and evasion (Article III-63)

·  intellectual property (Article III-68)

·  space (Article III-155)

·  energy (Article III-157)

·  integrated management of external borders (Article III-166)

·  criminal procedure (Article III-171(2))

·  a European Public Prosecutor's Office (Article III-175)

·  sport (Article III-182(2)(g))

·  civil protection (Article III-184)

·  administrative co-operation (Article III-185) and

·  implementing solidarity (Article III-231).

75. The Treaty also makes changes to the text of the Articles dealing with the common commercial policy. (Article III-217). This appears to create a simpler regime than applies under the Nice Treaty, which we welcome, but Article III-217 remains complex and the Government should explain this provision.

76. The Government should provide a clear statement of the nature and extent of the new competences that would be accorded to the Union under the draft Treaty. As a contribution to accountability, the implications of these changes to the Treaties should be explained and justified to Parliament.

77. In addition, as these will be matters over which national parliaments will lose competence, Parliament must, on the specified occasions, have an opportunity to express a view on the proposed changes before the Government signs the Treaty. What we propose is a new procedure, in addition to the normal ratification process that will take place once the Treaty is signed. As we have already stressed, under the ratification process Parliament can only accept or reject the Treaty, not amend it. It is therefore essential, where the competences of national parliaments are at stake, to find new ways of involving Parliament at an earlier stage.

78. In addition, interested parties should be consulted as soon as possible so that the Government is fully informed of concerns as detailed discussion in the IGC proceeds. It is essential that such detailed consultation is begun by all the relevant Government departments well before any legislative measures begin to come forward that would have an impact on businesses and consumers. Only with such detailed supporting work will what is proposed by the draft Treaty be able to deliver a genuine enhancement of the Union's efficiency.

Future extension of competence

79. There were some who, at the beginning of the Convention's work, envisaged the new Treaty setting out a definitive list of competences if not for all time at least for the foreseeable future. The retention of a so-called "flexibility" clause in Article I-17 may therefore be controversial and needs examination.
Box 3

Flexibility Clause

Article I-17

1. If action by the Union should prove necessary within the framework of the policies defined in Part III to attain one of the objectives set by the Constitution, and the Constitution has not provided the necessary powers, the Council of Ministers, acting unanimously on a proposal from the Commission and after obtaining the consent of the European Parliament, shall take the appropriate measures.

2. Using the procedure for monitoring the subsidiarity principle referred to in Article 9(3), the Commission shall draw Member States' national Parliaments' attention to proposals based on this Article.

3. Provisions adopted on the basis of this Article may not entail harmonisation of Member States' laws or regulations in cases where the Constitution excludes such harmonisation.

80. The article has its precedent in the EC Treaty (as Article 308 EC)[35]. Its scope has been debated but what is clear is that it has been used on many occasions during the history of the European Community and has provided the basis for significant developments of Community law and policies. This Article has been seen by many as a major source of the mistrust which many people feel towards the existing Community and Union. It can be seen as a way to bypass domestic parliamentary control of Treaty amendment and the national constitutional requirements that would apply. Such mistrust may be heightened by the new Article I-17, because the new version of the flexibility clause would not be limited to traditional Community (First Pillar) matters but would extend to all the policies within Part III of the new Treaty, which includes the CFSP and police and criminal law.

81. Lord Owen urged the deletion of the Article as it provided an open door to amending the Treaty without full procedures. Amendments to a constitution should not be made easy, and keeping the text fixed would aid stability[36].

82. There are, however, certain safeguards: the Council can only act by unanimity after having obtained the "consent" of the European Parliament. The Commission must also "draw Member States' national parliaments attention to proposals based on" Article I-17. This is, however, only the slightest nod in the direction of national parliaments, even though the draft Treaty acknowledges that national parliaments constitute an important link in giving effect to the principle of representative democracy[37]. The Government welcomed the Article provided that CFSP was excluded from its provision[38]. Clarity in this regard is essential - it is simply too dangerous to leave the status of CFSP unclear - and we accordingly recommend that the Government ensures this.

83. The Government must also satisfy itself and Parliament that the new provisions, including those on shared competences in Article I-13, are not so open-ended that they could lead to a considerable expansion of European Union activity.

84. Furthermore, as we said in our earlier report, if national parliaments are to have a meaningful role in the context of Article I-17 their views on the vires and merits of a proposed extension of Union competence should be fully taken into account. The current provisions accordingly need to be strengthened to this effect.

85. In addition, any proposal to use the flexibility provision in Article I-17 to increase the competences of the European Union should not be supported by the Government without the prior approval of Parliament in each case. We call on the Government to state clearly whether they accept this new safeguard.

86. Nevertheless, subject to these caveats, we are satisfied with the safeguards provided in the new flexibility clause and would wish it to be retained as a contribution to the enhanced efficiency of the Union.

Qualified Majority Voting (QMV)

87. A significant issue in examining the draft Treaty is how far its provisions would extend the use of qualified majority voting into areas currently subject to unanimous agreement. Behind this lies the question whether QMV is the only realistic method for taking decisions and is essential in a Union of 25 or more Member States.

88. In introducing the draft Treaty at Thessaloniki, Valéry Giscard d'Estaing said that the number of areas subject to QMV and co-decision would be increased from 37 to around 80. He said: "In future, all the areas governing the most important Union policies will be governed by our legislative procedure, with qualified majority voting in the Council".[39]

89. The Government appears generally prepared to accept the proposed changes, indeed noting that certain extensions of QMV can be in the United Kingdom's interest if other Member States are blocking sensible changes. The Minister for Europe has told the House of Commons "More QMV is essential to push through our solutions to Europe-wide problems in key areas, such as asylum and immigration"[40]. And the White Paper makes it clear that QMV does not weaken the UK's position in Europe because "we are rarely outvoted…. We therefore welcome the use of QMV as the general rule for legislative proposals" (paragraphs 63 and 65).

90. On the other hand, the Government has made clear that there are some particular areas into which they would not wish to see an extension of QMV, principally in the areas of the CFSP (on which see Chapter 6 below) and also of taxation. In his Statement on the Thessaloniki European Council the Prime Minister identified the role of qualified majority voting as one of the "areas where there is continuing negotiation".[41] He was most likely referring to the desire of some to increase even further the matters which would become subject to QMV. The Minister for Europe has told the House of Commons that "there are areas on which we would not be prepared to move from unanimity. We would not agree to any changes on foreign policy, defence, taxation or social security which threatened the national interest"[42].

91. The White Paper (paragraph 66) sets out the following areas where the UK will insist on retaining unanimity: "Treaty change; and in other areas of vital national interest such as tax, social security, defence, key areas of criminal procedural law and the system of own resources (the EU's revenue raising mechanism). Unanimity must remain the general rule for CFSP, as proposed in the final Convention text".

92. Baroness Scotland of Asthal, Peter Hain's alternate at the Convention, was even more specific in the plenary session of 4th July[43], setting out the Government's objections to extending QMV in the following areas (in addition to CFSP) where further work was needed on the final text:

·  most of the economic and financial provisions in Part III, where the UK was looking to establish effective procedures without weakening national autonomy

·  Articles III-18 (system of benefits to migrant workers)

·  Article III-59 (harmonisation of indirect taxation) and

·  the UK strongly supported the principles of mutual recognition in judicial co-operation, but could not support QMV on criminal procedure.

93. The draft Treaty does not propose to extend QMV to matters of tax or social security. We encourage the Government to stand firm in resisting any attempt to amend the draft Treaty to do so.

94. Other Member States have reservations about proposed extensions of QMV: Germany in the field of immigration and asylum[44] and France on cultural matters which Peter Hain explained as follows: (Q23) "I think this is about the proportion of French-made television programmes, so that is going to be interesting. France is generally in favour of qualified majority voting when its national interests are at stake, but there you go."

95. The Commission on the other hand would support more QMV in well-defined, detailed areas with more precise demarcation of Union authority. The Commission wants QMV for Article I.53 Own Resources (the UK rebate), immediate transition to QMV in Article III.8 combating discrimination, Article III 10 right to vote in European and municipal elections, Article III 191 association agreements, Article III 221 financial co-operation with third countries and Article III 227 signing of European Convention of Human Rights, seeking in other areas a commitment to the move to QMV by a certain date. The Commission has also called on the IGC to examine the options for replacing unanimity, for example by a reinforced form of QMV, or by preventing the maintenance of a veto by one or two Member States over a set period of time.[45]

96. It is clear that the draft Treaty will not alter the way the economies of the EU will work. On the question of principle, however, we urge caution on the part of those strongly objecting to QMV in a particular area. This is because we agree that, in a Union of 25, the unanimity provision could make the decision-making process unduly rigid in some areas. We examine in Chapter 3 below certain specific procedural concerns regarding the use of QMV in the Council, including the Passerelle clause. We also examine in Chapter 5 below the extension, with the abolition of the Union's Pillar structure, of QMV into areas such as immigration and asylum.

97. The revisions to QMV are clearly designed to enhance the efficiency of the Union. Concerns about its use, however, remain and, in the interests of clarity and accountability, we accordingly urge the Government to set out, in detail and as a matter of urgency, those areas where concerns over QMV remain.


98. The Protocol on the Application of the Principles of Subsidiarity and Proportionality attached to the Amsterdam Treaty states that "for Community action to be justified, both aspects of the subsidiarity principle shall be met: the objectives of the proposed action cannot be sufficiently achieved by Member States' action in the framework of their national constitutional system and can therefore be better achieved by action on the part of the Community"[46].

99. The principle of subsidiarity therefore obliges the Commission to justify all EU legislative proposals and formally limits the Commission to legislate only in areas where action cannot be achieved sufficiently at national constitutional level. The draft Treaty states that "the use of Union competences is governed by the principles of subsidiarity and proportionality"[47]. The draft Treaty has further developed the importance of the principle of subsidiarity in the European decision-making process in three distinct ways, set out in a revised version of the Amsterdam Protocol.

100. First, the draft Treaty extends the requirements for the Commission to justify its legislative proposals with regard to subsidiarity. The Commission is obliged to send all its legislative proposals and its amended proposals directly to national parliaments at the same time as to the EU institutions. The draft Treaty also obliges the Commission to justify all legislative proposals with regard to subsidiarity and proportionality by issuing a detailed statement which will allow clear assessment of whether subsidiarity is being adhered to.

101. The draft Treaty stipulates that the subsidiarity statement must include an assessment of proposals' financial and legislative impact in Member States and must also substantiate the reasons for pursuing Community action through qualitative and wherever possible quantitative indicators. When proposing legislation, the Commission is obliged to take account of financial or administrative burdens at Union, national, regional or local level implied in proposed legislation. The Commission is also obliged by the draft Treaty to submit to EU institutions and the Member States' national parliaments an annual report on the application of the principle of subsidiarity.

102. Secondly, the draft Treaty introduces a formal role for national parliaments in monitoring compliance of legislation with the principle of subsidiarity. The draft Treaty states that any national parliament or chamber of a national parliament can issue an objection to a legislative proposal on the grounds of violation of the principle of subsidiarity. This objection must be sent (within six weeks of transmission of the Commission's proposal) to the Presidents of the European Parliament, the Council and the Commission and must consist of a reasoned opinion stating why the proposal does not comply with the principle of subsidiarity.

103. This procedure is referred to as the "yellow card". Unicameral national parliaments will have two votes, while the chambers of a bicameral parliament will have one vote each. If objections on the grounds of violation of the principle of subsidiarity are received from at least one third of all the votes allocated, the Commission will review its proposal and decide to maintain, amend or withdraw its proposal. (In the case of proposals in the area of freedom security and justice the level is set at one quarter). The Commission must give reasons for its decision.

104. In addition, the European Court of Justice will have jurisdiction to hear actions on grounds of infringement of the principle of subsidiarity brought by a Member State on behalf of its national parliament. There will, however, be no obligation on a government to do so. The Committee of the Regions may bring such an action in legislative areas where it has a right to be consulted.

105. It is unclear whether the proposed yellow card procedure will only apply when the Commission initiates or amends a proposal. What about proposals originating from the Council or the Member States, and amendments made by the Council or by the European Parliament, for example during co-decision and conciliation? Peter Hain told us (Q51):

I am pretty sure that the spirit at least of this proposal, as any new legislative proposal coming from wherever it is initiated from, is that this subsidiarity mechanism applies and it also tracks it through the process. One of the points made to me in the context of the Convention was that … sometimes it is the Council or the Parliament that amends Commission legislation that threatens subsidiarity or proportionality more than the Commission's proposal might have done.

106. In addition, under the provisions of the Protocol, national parliaments are, when operating the subsidiarity mechanism, to consult "where appropriate" regional assemblies with legislative powers.

107. The Protocol on Subsidiarity also refers to the principle of proportionality stating that: "Any action by the Community shall not go beyond what is necessary to achieve the objectives of this Treaty" (Protocol on Subsidiarity, Art 5.3) The principle of proportionality therefore requires any Union measure to be no more burdensome than is necessary to achieve its objectives. A judgement on whether a Union measure complies with the principle of proportionality is less clear-cut than one on the compliance with the principle of subsidiarity as it relates to substance. Nevertheless, in monitoring the compliance of measures with the principle of subsidiarity, national parliaments should also take into account the closely related principle of proportionality. Once the legitimate aim or objective of a measure is identified, an assessment of compliance with the principle of proportionality could be made by applying a three-fold test: is the measure a suitable or useful means of achieving the objective; is it necessary for achieving the objective; and is there a reasonable relationship between the measure and the objective[48].

108. We have considered carefully whether proposals giving national parliaments a "yellow card" procedure on subsidiarity go far enough. Some have argued that this procedure introduces an entirely new dynamic to the EU decision-making process. For the first time in the EU's history, national parliaments will have, by Treaty, a right to object directly to the Commission about proposed legislation. It was suggested to us that the very fact of the Commission having to read the views of national parliaments would be a contribution to enhancing the democratic legitimacy of the Union[49].

109. The Government has accordingly described the procedure as "groundbreaking"[50] arguing that it greatly strengthens the role of national parliaments in the EU decision-making process and provides mechanisms to ensure that the EU shall only act if the objectives of the intended legislation cannot be sufficiently achieved by the Member States. As such, it is argued, these proposals emphasise the role of Member States and introduce a voice for national suffrage in the EU decision-making process where none existed previously.

110. On the other hand some have described the procedure as "a mouse"[51] presumably on the grounds that none of this really matters if the Commission can just ignore the wishes of national parliaments and proceed with a proposal anyway. Hence there has been a call for a "red card", which would trigger the withdrawal of a Commission proposal. Its use could perhaps be confined to cases where the Commission has ignored a yellow card; or, as an alternative, the Council could be required to act unanimously in any case where a yellow card has been shown[52].

111. Some have argued that the Commission would not in practice ignore a yellow card. M Haenel suggested (Q10) it would be "very difficult" for the Commission to ignore the collective will of national parliaments under this procedure, a view endorsed by our own Government (White Paper, paragraph 69).

112. We accept the argument that, if national parliaments operate effectively, the yellow card procedure could have the effect of causing the Commission to change its proposals. We nevertheless also see force in the argument that the Protocol should also contain a "red card" procedure by which a higher threshold of national parliamentary votes - say two thirds (or half in the case of proposals in the area of freedom security and justice) - would have the effect of blocking a proposal if the Commission ignored the yellow card. This, it could be argued would provide a valuable long-stop, which would be only very rarely, if ever, used, but the fact that such a number of national parliaments continued to maintain serious concerns would indicate that there were significant issues that needed to be addressed.

113. On the other hand, we note that the existence of a red card might weaken the effect of a yellow card if that procedure was not sufficiently robust to be of value in itself. The danger would be that a yellow card would be easy to ignore, not being the ultimate sanction of a red card; and that a red card in turn would be almost impossible to obtain, given the high threshold.

114. The Government has argued that the subsidiarity provisions provide "a good basis for securing a more active role of national parliaments"[53]. If the Government and others are right that the yellow card will have effect in practice, then there is a significant duty on national parliaments to make these new provisions work.

115. Although we have previously pressed for a red card, we accept that the subsidiarity mechanism as it stands in the Protocol to the draft Treaty is intended to strengthen democracy in the EU. To do so, however, the mechanism must work, and must work effectively. The Government must accordingly satisfy Parliament that the yellow card will indeed be an effective mechanism. We consider that the yellow card procedure requires further safeguards and to this end we make a series of recommendations to strengthen what is proposed in the draft Protocol.

116. The draft Protocol provides for the Commission to give its reasons in responding to a "yellow card". If the yellow card is indeed to be the only procedure, there is a duty on the Commission to adhere strictly to its obligations and to be accountable for its decisions. Accordingly, the Commission's reasons for responding as it does to a "yellow card" should be detailed, should relate directly to the concerns expressed by national parliaments and should be promptly transmitted to national parliaments and to the Presidents of the European Parliament and the Council of Ministers (to whom the Protocol provides for national parliaments' concerns to be conveyed).

117. We also recommend that the Protocol's subsidiarity procedure should extend to issues of proportionality, that is cases where the Commission is thought to be acting correctly but too intrusively or too heavy-handedly. Although we can see an argument that concerns about proportionality will be less clear cut than those of subsidiarity, and the mechanism thus harder to operate, we nevertheless consider that, to enhance the democratic safeguards provided by the yellow card procedure, it should extend to proportionality as well as subsidiarity. We are thus pleased to see that our Government is pressing for this[54].

118. The draft Protocol also needs to make it clear that the proposed subsidiarity mechanism applies at every stage of every legislative proposal.

119. Looking to the role of national parliaments, we first recommend that this House develops a strong internal procedure for the subsidiarity mechanism, drawing on co-operation with the Commons where appropriate but recognising that each Chamber will have an independent vote. It should be noted that, even if the two Houses reach a different conclusion in a particular case, the votes will not cancel each other out, as the procedure envisages votes building to a threshold rather than seeking to achieve a majority. Once the draft Treaty has been agreed, we will report further to the House on the mechanics of operating the subsidiarity mechanism.

120. An effective subsidiarity mechanism will also require resolute and efficient collective action by national parliaments to ensure that concerns are shared within the timescales set by the Protocol.

121. On matters of detail, the draft Protocol does not specify who will count, record and announce the result of the voting under the yellow card. It may be implied that it will be the Commission. This would not be acceptable: an independent monitor should be appointed for this purpose.

122. We accordingly recommend that national parliaments develop a system to allow the collective recording of subsidiarity objections by a simple means - preferably by way of contributions by each national parliament to a special website. National parliaments, again acting collectively, should appoint a monitor to count objections and notify the Commission when the threshold is reached.

123. Overall, we consider that a subsidiarity mechanism with these additional features would indeed represent an important development of democracy in the Union and, by clearly stating and enhancing the role of national parliaments in helping to ensure that the Commission does not act when it should not do so, would help to confirm that the European Union is a union of Member States.

Exit Clause
Box 4

Voluntary withdrawal from the Union

Article 59

1. Any Member State may decide to withdraw from the European Union in accordance with its own constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention; the European Council shall examine that notification. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be concluded on behalf of the Union by the Council of Ministers, acting by a qualified majority, after obtaining the consent of the European Parliament.

The representative of the withdrawing Member State shall not participate in Council of Ministers or European Council discussions or decisions concerning it.

3. This Constitution shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council in agreement with the Member State concerned, decides to extend this period.

4. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 57.

124. The Foreign Secretary has told the House of Commons that "For the first time, there are provisions for a Member State to leave the EU, which is important"[55].

125. We asked why the Government was convinced that the European Union, having survived for many years without an exit mechanism, now required one. Peter Hain told us: "the exit clause is not something we particularly argued for, but found its way into the draft Constitution, and once it had found its way into it, I do not think it would have been politically sensible to try and pull it out because then you would almost be conveying the impression to Europe's citizens that they did not have a way out of the European Union. Of course every European Member State has the right to withdraw under existing provisions." (Q 52)

126. We doubt that the reality of any attempt to withdraw would be as simple as the draft implies. For example, what would be the consequences were a member of the eurozone to indicate that it wanted to leave the European Union? We would also not wish to see this provision used to force Treaty change on members.

Future Treaty revision

127. The White Paper makes it clear that the Government will "oppose anything which would undermine the role of national parliaments in Treaty change" (paragraph 62). The Commission, on the other hand, would support procedures for revising the Constitution which are more flexible: the Council should be able to make amendments to Part III by five/sixths majority of members following approval by the European Parliament and a favourable opinion by the Commission. Unanimity would remain the requirement in cases where the proposed amendment would alter the Union's competences or the balance between the institutions.[56]

128. We see no case for the Treaty to make a general provision for future revisions to be achieved other than by the normal process of Treaty amendment requiring unanimity between Member States and a process of ratification involving, in the case of the United Kingdom, the national parliament.

129. Nevertheless, we accept that there may be specific areas where some less rigid procedure is required. For example, we have made proposals for more flexibility in the Stability and Growth Pact[57]. To achieve that, the Treaty might usefully make express provision, in specified articles, for those articles to be amended by the Member States acting unanimously rather than by way of the formal Treaty revision process. By specifying the articles in the Treaty now, Parliament would be aware of what was envisaged before the Treaty came to be ratified.

130. On a separate point, we do not oppose the provision that, in certain cases, the convening of a Convention would precede the process of Treaty amendment and ratification. Article IV.7 sets out circumstances in which Treaty change would be preceded by consideration by a Convention. We will be examining in a separate report the extent to which the Convention procedure can be judged a success - a key test will of course by how far the IGC needs to unpick the Convention's work - and we will look more closely at this Article in that report.


131. Is the draft Treaty consolidation or something new? The Prime Minister's foreword to the White Paper describes the draft Treaty as "based largely on the existing European Treaties, but with some important modifications…[the EU] is not and will not be a federal state… [the Convention's proposals] do not alter the fundamental constitutional relationship between the Member States and the Union".

132. There are clearly a number of ways in which the European Union will not be a state, let alone a "superstate" (whatever that means), if these provisions are agreed. Under the draft Treaty, the Union cannot do a number of things a state can do, such as raise taxes, run a budget deficit or autonomously raise a military force. In addition the Union can only act on competences conferred on it by its Member States, while Article 1(5) strengthens identities of Member States and 1(9) their independence. Member States remain masters of constitutional change (by Treaty revision) and, for the first time, there is express provision for a Member State to leave the Union.

133. Lord Owen, however, remained concerned: "the more gradual and diffuse the transfer of powers the harder it is to define the threshold" beyond which the Union acquires the character of a national state. In particular it was important to retain the existing range of opt-outs: removing them all would fundamentally change the Union (p 15).

134. A considerable range of matters have already become subject to EU law in earlier Treaties[58]. The extension of EU law in this Treaty seems relatively limited by comparison and we repeat our earlier conclusion[59] that "it is clear that the balance of power is going to shift from the Commission to the Member States".

135. Thus there is considerable re-assurance in the draft Treaty for those who fear that the EU is becoming too like a state. We will be examining more closely in a further report whether there is a need to clarify the language of Article 10 of the draft Treaty about the primacy of EU law which has existed since 1964 and was, according to the White Paper (page 30), a key condition for UK membership of the EU. There is, however, a need for clarification whether matters of CFSP fall within the scope of Article 10.

136. There is also a need for clarity on the future position of the various existing national "opt-outs" under the draft Treaty. The Government has confirmed that the protocols attached to the Treaty will remain an integral part of it[60]. It is unclear, however, whether the IGC will amend the draft Treaty to provide for further opt-outs should they be desired by any Member States.

21   HC Deb 9 July 2003, col 1207. Back

22   HL Deb 2 June 2003, col 1049.  Back

23   Oral report to the European Council:  Back

24   See paragraph 6 of the Government response to our report on Articles 1-16 (Appendix 6 below).  Back

25   Article 1-8(2) lists the rights of EU citizens presently found in Articles 18-21 TEC.  Back

26   On many occasions the comparison has been made to the opening words of the US Constitution; "We the People of the United States, in Order to form a more perfect Union …" Back

27   What is to happen to the Euratom Treaty is unclear. It seems possible that that Treaty and the Community which it created will continue. Back

28   By our own Government, quoted by Lord Owen on page 39 below.  Back

29   See also our 9th report 2002-03 HL Paper 61.  Back

30   See also paragraphs 261-279.  Back

31   Protocol on the application of certain aspects of Article 7a of the Treaty establishing the European Community to the United Kingdom and to Ireland. The Protocol was annexed to the EC Treaty by the Treaty of Amsterdam. See paragraph 136 below.  Back

32   See paragraph 27 of the Government's response to our report on the Institutions (Appendix 6 below).  Back

33   9th report 2003-03 HL Paper 61.  Back

34   To quote the Praesdium's notes in document CONV 724/03: page 70: The areas referred to in this paragraph are areas which currently fall within the exclusive competence of the Union. The Praesidium thinks that the list of areas of exclusive competence (like areas of supporting action) should be restrictive. However, the list of areas of shared competence should not be restrictive as the latter is a residual category. This is all the more necessary given that in areas of exclusive competence it is the Union alone which can legislate and adopt legally binding acts. The order in which the areas of exclusive competence are listed has been changed so that the policies most relevant to the citizen are placed first. Free movement of persons, goods, services and capital has been deleted to accommodate several amendments to the effect that, since the four freedoms did not constitute a field in itself (the field being the internal market), they should be placed outside the Title on competences …. The new Article I-4 incorporates the four freedoms as freedoms guaranteed within and by the Union. The Praesidium has not added any new areas of exclusive competence to the list, given that the areas which some Convention members wanted to add either are not areas as such but acts which by their nature can only be adopted by the Union (budget, rules to ensure the functioning of the Institutions, Union statistics, etc.) or constitute areas of shared competence in accordance with the current provisions of Part Three (common agricultural and fisheries policy, common area of freedom and security, etc.) or constitute aspects of a broader area already covered by exclusive competence (monetary law and exchange-rate policy). Given that in areas of exclusive competence the Union has sole ability to legislate and adopt legally binding acts (except for the delegation of powers), a specific reference to the provisions in Part Three was not considered necessary since the question of delimitation of competences between the Union and the Member States arises in particular in relation to areas of shared competence and areas for supporting action. In any event, the reference in Article I-11(6) to Part Three covers all the fields under Title III of Part One, and thus includes areas of exclusive competence. Back

35   It was originally Article 235 of the Treaty of Rome. The Article was once known as "la petite revision" and became, after the consolidation of the Treaties post Amsterdam, Article 308 TEC. Back

36   See pages 41-42 of the evidence printed below. Back

37   Article I-45(2). Back

38   See the Paragraph 24 of the Government Response to our Report on Articles 1-16 (Appendix 6 below). Back

39   See note 23 above.  Back

40   HC Deb 8 July 2003 col 735W. Back

41   HC Deb 23 June 2003 col 707.  Back

42   HC Deb 8 July 2003 col 735W. Back

43  Back

44   HC Deb 9 July 2003, col 1208. Back

45   Op cit n. 6 above, p 7.  Back

46   Protocol on the application of the principles of subsidiarity and proportionality, Art 5. Back

47   CONV/1/03, Art I-9. Back

48   Law of the European Union, Jo Shaw, third edition, Palgrave 2000. Back

49   See evidence from Professor Eileen Denza, page 35 below.  Back

50   HL Deb 7 January 2003 col 981.  Back

51   HL Deb 9 September 2003 col 189.  Back

52   As suggested by Professor Denza (p 35) and Lord Owen (p 24) respectively.  Back

53   See paragraph 25 of the Government's Response to our Report on the Institutions (Appendix 6 below)  Back

54   HL Deb 9 September 2003 col 271.  Back

55   HC Deb 9 July 2003 col 1203.  Back

56   Op cit n.6 above, p 8.  Back

57   See our 13th Report, Session 2002-03 (HL Paper 72, March 2003).  Back

58   For examples see HL Deb 13 June 2003, col WA 90 and 4 July 2003 col WA 140-148. Back

59   21st Report, paragraph 11.  Back

60   HC Deb col 582W, 17 July 2003 and Peter Hain Q25.  Back

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