Select Committee on European Union Forty-Fourth Report

CHAPTER 2: Review of substantive policy work

The draft Constitutional Treaty and the Institutions

The draft Treaty

16. Much of our work this year has been dominated by the Convention on the Future of Europe and the draft constitutional Treaty presented to the IGC. The Select Committee itself prepared a number of reports, including on the role of national parliaments and subsidiarity; on the institutions; and on the draft Treaty as it emerged from the Convention[6].

17. Our report on the Treaty as it is being considered by the IGC provides an overview of key issues and supplements the more detailed work done on particular areas of the Treaty. The attached box gives the conclusions of that report[7].

Box 1 Abstract from Report on draft constitutional Treaty

The draft Constitutional Treaty for the European Union is a significant document, meriting serious scrutiny and wide public debate. With ten new countries set to join the EU next year, it is necessary to agree a new Treaty now, as it is generally agreed that the present institutional structure would not function satisfactorily in a Union of 25. Whether or not the draft Treaty is a "constitution" is of less importance than what it says and how it will affect all our lives.

The draft Treaty was prepared by the Convention on the Future of Europe, which was composed of representatives of national parliaments and governments, including from the applicant countries, and of the European Parliament and the Commission. The Convention met in public[8]. The draft is now being considered by Ministers meeting in the Intergovernmental Conference, which does not meet in public.

The draft Treaty:

  • Reforms the institutions of the EU
  • Incorporates a Charter of Fundamental Rights
  • Changes the way the EU works, including granting the Union some new powers ("competences")
  • Enhances the role of national parliaments.

But the draft Treaty is also largely composed of the text of current Treaties - i.e. much of what it provides for is not new.

With an eye to whether the draft Treaty is good for Britain, and for the European Union, this report examines the draft Treaty against four key themes:

  • Does it confirm the EU as a union of Member States, rather than a state in its own right?
  • Does it mean significant improvements in democracy, accountability and transparency?
  • Will it make any difference to citizens, and bring the EU's institutions closer to them?
  • Will it make the EU more efficient?

The report concludes that the answer to the first question is yes[9]. But, as a consequence, provisions for direct democratic legitimacy are harder to achieve. For example, it is precisely because the EU is not a state that the Treaty does not provide some of the direct mechanisms (such as the power to remove a government) that would exist in a state.

Overall, the report concludes that the draft Treaty would make some contributions to democracy, accountability and efficiency in the EU. For example, the Treaty clearly sets out what the EU is. But it is far less successful in securing transparency or bringing the EU closer to citizens.

The Government could do much more to explain the draft Treaty, particularly to specialised audiences, but should also continue to do more to provide information to the public.

The report also concludes that the Intergovernmental Conference should not rush to agree the Treaty - they need to get it right. The report also makes recommendations for changes to the Treaty text in a number of areas, including with regard to the proposed European Foreign Minister.

A final key theme of the report is the need for national parliaments to do more, both collectively and individually, to hold the Governments, who take so many of the EU's decisions, to full account.

The report also concludes that the Intergovernmental Conference should not rush to agree the Treaty - they need to get it right. The report also makes recommendations for changes to the Treaty text in a number of areas, including with regard to the proposed European Foreign Minister.

A final key theme of the report is the need for national parliaments to do more, both collectively and individually, to hold the Governments, who take so many of the EU's decisions, to full account."

Analysis of Articles

18. Several of our Sub-Committees too busied themselves with studying the Convention's work and the draft Treaty. Between February and May, Sub-Committee E prepared five reports on the draft Articles for a proposed EU Constitutional Treaty produced by the Convention[10]. These gave a detailed analysis of each draft Article, including an explanation of whether each Article was new or appeared in the existing Treaties and an evaluation of the Convention's justification for the inclusion of each Article. The reports were well received in the House and were cited by the House's delegates to the Convention during its proceedings.

Foreign Affairs and Defence

19. The Convention on the Future of Europe and the draft Treaty were also closely followed by Sub-Committee C. The Sub-Committee began by considering the working group reports; considered relevant articles as they were published; and contributed to the Select Committee's report on the draft treaty. The results of the Working Group on defence were broadly welcomed. The external action debate, however, proved highly divisive. Sub-Committee C produced reports on both these areas.

Human Rights

20. In February 2003, Sub-Committee E reported on the Future Status of the EU Charter of Fundamental Rights. This report examined the issues surrounding the possible inclusion of the Charter of Fundamental Rights into a new EU Constitution, and the possibility of the EU acceding to the European Convention on Human Rights. We concluded that either option was feasible but would be curtailed in terms of practical benefits to individual citizens unless there was a reform of the remedies available for breaches of such rights.

Social Europe

21. Sub-Committee F examined the social aspects of the Convention on the Future of Europe. Our report—Convention on the Future of Europe: "Social Europe"[11]:

  • supported the inclusion of 'equality' in the values of the Union, but expressed doubts about the practicability of 'full employment' as an objective;
  • foresaw difficulty in an enlarged EU in operating on the basis of unanimity in the social policy field;
  • agreed that there should be no extension of competence in the social policy field except for public health;
  • endorsed the idea of a Treaty base for the 'open method of co-ordination', provided that it did not restrict unduly the flexibility of the procedure.

Court of Auditors

22. Sub-Committee A pursued the conclusions from its 2001 inquiry into the European Court of Auditors. The Committee wrote to the Government to reiterate the conclusions of the report, to ask what progress had been made since the debate in the House and to ask what steps the Government were taking to pursue reform of the Court through the Convention and the IGC. The Government have assured the Committee that they are pursuing reform of the ECA through the IGC. The Committee will continue to monitor this process.

Overarching Scrutiny

23. The Select Committee has continued to undertake scrutiny across the range of issues studied in depth by the Sub-Committees. This informs the work of the Sub-Committees. This scrutiny has involved evidence sessions both with the Commission on its Annual Work Programme and with the Minister for Europe on the outcomes of European Council meetings. We have also taken evidence from the ambassadors of Presidency States. All these evidence sessions have been reported to the House, and published.

Economic and financial affairs

The 2004 EC Budget

24. Implementing recommendations of the Scrutiny Review, Sub-Committee A reorganised the way in which it scrutinises the annual EC Budget, concentrating its efforts at an early stage in the budgetary cycle, where recommendations could have most impact. Once the Commission had adopted its proposals for the 2004 Budget, the Sub-Committee took oral evidence from the Government and published a report on 14 July, which was before the first reading of the Budget in the Budget Council. The Government welcomed the Committee's "valuable contribution to the debate on the 2004 EC Budget" and agreed to work to facilitate future inquiries by the Committee on the annual EC Budget.

The European Central Bank

25. An inquiry by Sub-Committee A entitled The European Central Bank: Is it working? followed up the Committee's earlier report[12] The European Central Bank: Will it Work? and reviewed the implementation of its recommendations. The report was published on 30 October, just before Mr Trichet took up office as the new President of the ECB. The Committee concluded that the ECB had performed well so far, but that reforms were needed to meet future challenges, particularly EU enlargement.

The Stability and Growth Pact

26. Sub-Committee A reviewed the workings of the Stability and Growth Pact. The report was published on 18 March, before the European Council in Brussels, where the Heads of State and Government announced conclusions on the Pact. The Committee agreed that there need to be fiscal rules to support the single currency, but called for greater flexibility in their interpretation. The Governors of the central banks of Poland and the Czech Republic wrote to say that they had read the report with interest and would follow the future output of the Committee; the Finance Committee of the French Senate is examining the report with a view to making recommendations about fiscal rules for France. The report was debated in the House on 4 June.

Taxation of Fuel in the EU

27. Sub-Committee A conducted a short inquiry to examine closely this controversial legislative proposal from the Commission. The report was published on 21 May. The Committee supported minimum rates of taxation on fuel but not harmonisation. The Committee emphasised the need for more coherence between transport policy, taxation and environmental issues at an EU level. The report received good coverage in the media and the Government endorsed all of the Committee's conclusions. The report was considered by a working group of the OECD that deals with financial and fiscal aspects of transport policy; the Australian Government got in touch to say that it was interested in the report.


28. Sub-Committee A is holding under scrutiny three proposals that would significantly amend the 6th VAT Directive (for instance, by introducing VAT on stamps and children's clothes). The Sub-Committee is in correspondence with the Government about each and examining RIAs.


29. Sub-Committee A scrutinised the proposal for a new EC Merger Regulation (ECMR); the Committee had already reported on the Commission's Green Paper in July 2002[13]. Almost all of the Committee's recommendations were adopted by the Commission.

6   We understand that our reports have assisted the European University Institute in Florence in its seminars "A Critical Analysis of the Draft Constitution for Europe". We also sent copies of our final report not only to Government Ministers and advisers but also to all Ambassadors of EU Member States and applicants, as well as to other member committees of COSAC, as we always do. We have had several letters commending the usefulness of the report. The full text is freely available on our website at Error! Bookmark not defined.. HTML text is also available. Back

7   The Report records the results of divisions in which a minority of Members of the Committee opposed certain provisions.  Back

8   Paragraph 218 of our report, however, did note that the Convention's Praesidium met in secret. Back

9   This conclusion was the subject of a division in the Committee, and was agreed by a majority.  Back

10   Areas covered by these reports include: the classification of competences; the question of legal personality for the EU; the Union's values and objectives; the flexibility clause; the legal acts of the Union; the implementation of the area of freedom, security and justice; the procedures for joining and leaving the EU; and the democratic life of the Union. Back

11   Published on 7 April 2003. Back

12   Published in May 1998 as our 24th Report of Session 1997-98 (HL Paper 112). Back

13   The Review of the EC Merger Regulation, Session 2001-02, 32nd Report, HL 165. Back

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