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Unit 4. EU Institutions and Policies: Policies
Transcript of Unit 4. EU Institutions and Policies: Policies
Common Commercial Policy
Common Agricultural Policy
Common Foreign and Security Policy
Reasons for a CAP
for consumers and fair incomes for farmers,
preserve the food production
potential on a sustainable basis throughout the EU, so as to guarantee long-term food security
Challenges: food security, Climate change, territorial balance. Avoid marginalization and abandonment
History and evolution of the CAP
Common organisation of
and compliance with the principles adopted at the
in 1958 with the principles of
single prices, financial solidarity and Community preference
CAP has fulfilled its main objective: food self-sufficiency in the Community.
Agricultural expenditure accounts for some 45% of the Community budget.
Sicco Mansholt Plan (1968) after several CAP marathons
Competence is shared between EU and MC.
Under Art. 39 TFEU
QM in the Council and consultation of the European Parliament.
CAP proved necessary to correct imbalances and over-production
Direct income aid system
: initially in the UK (and where system has evolved). Agricultural products are imported at world prices. Additional payments are given to farmers
System of price support
: provide national farmers with sufficient income
fixing higher internal prices
than world prices. Difference is compensated by import levies or subsidies [Regulation 612/2009]: naturally lead to production surpluses
Rural development policies
(second pillar CAP). European Council of Göteborg of June 2001: sustainable use of natural resources and levels of waste, biodiversity, preserving ecosystems and avoiding desertification
How Monetary policy is managed
Articles 127 to 133 TFEU
ECB is the sole issuer of banknotes and bank reserves. It can set the conditions at which banks borrow from it
Monetary policy transmission mechanism: monetary policy decisions affect the economy in general and the price level in particular
Long-run neutrality of money: A change in the quantity of money in the economy will be reflected in a change in the general level of prices. But it will not induce permanent changes in real variables.
Real income or the level of employment are essentially determined by real factors.
In the long run a central bank cannot enhance economic growth by expanding the money supply
: to maintain price stability
Monetary policy operates by steering short-term interest rates, thereby influencing economic developments
The ECB's monetary policy strategy
The ECB has defined price stability as a year-on-year increase in the
Harmonised Index of Consumer Prices (HICP)
for the euro area of below 2%
Also maintaining inflation rates below, but close to, 2% over the medium term
to do this requires relevant information and analysis based on
economic analysis and monetary analysi
: ECB Governing Council + Council
The Governing Council of the ECB has adopted a set of monetary policy instruments and procedures described
in the General documentation on Eurosystem monetary policy instruments and procedures
Creation of the CFSP and principles according to the Treaties
Another external competence of the EU. Established in Maastricht
Objectives and instruments (Article 24 TEU)
Safeguard the common values, fundamental interests and the independence of EU
Strengthen the security of the EU and its MC in all ways
Preserve peace and strengthen international security
Promote international cooperation
Develop and consolidate democracy, rule of law, human rights, fundamental freedoms
Analyze the institutional framework of the CFSP and define the different decision instruments used
Lisbon Treaty: CFSP has now a larger framework of the Union’s external action
Effectiveness increased by entrusting the
with the mission to implement the strategies and decisions taken by the ECo and the CMi.
is supported by the European External Action Service (EEAS) and the Political and Security Committee (PSC)
- ECo given a formal role in outlining the principals for CFSP including an agenda
- CMi given the responsibility defining common positions and decide on joint actions
- EC given formal right to initiate in CFSP Required consultation to EP
Specific legal instruments: joint actions / common positions (
unanimity in CMi)
The Custom Union
Analyze the legal basis and objective of the CCP
External competence of the EU
Article 3 (1)(e) TFEU, exclusive competence
MS agreed to adopt an
external common customs tariff
in their relations with third countries
Common customs policy and common foreign trade policy . Completed on 1 July 1968, 18 months ahead
Article 206 TFEU contribution
in accordance with the common interest, to the harmonious development of world trade
, the gradual removal of restrictions to international trade and the lowering of customs barriers.
Article 28 TFEU. The customs union covers all trade in goods
Agreements with third countries
EC submits recommendations to the Council, which then authorises to open negotiations. The EC consults a special committee appointed by the Council to assist it in this task ( the ''207 Committee'')
Within guidelines issued by the Council (QM)
Objective: develop and protect trade from subsidies and dumping
The EC negotiates on the instructions of the CMi and EP (known as the 133 Committee)
Custom Rules for Imports as one of the instruments of the CCP
Code created in 2009 defining the custom tariffs. Textiles excluded, products from certain countries excluded
It includes an European Surveillance System: that protects european producers or consumers against injuries: the EC may take "safeguard measures" under certain conditions that must be in accordance with the WTO
Third countries may file consultation requests (before the 133 Committee)
A History of Foreign Policy Coordination in the EU
European Political Community (
I) and European Defense Community (EDC) in 1953 original attempts (ECSC) to coordinate foreign policy and create a joint military.
(1961/62, de Gaulle) to create a “Europe of States”.
The European Political Cooperation (EPC II) originated in 1970s the predecessor of European Council.
- Initiated byPompidou Created “summitry” Structurally follows organization of Council of Ministers (Coreper, shared President etc) minimum biannual meetings outside of the treaties and intergovernmental
- Throughout 1970s EPC II worked relatively well.
- EPC is reformed and officially recognized by the SEA treaty reforms within Title III: “the Member States, being members of the European Communities, shall endeavor jointly to formulate and implement a European foreign policy.”
- Title III was not officially incorporated as some MC refused to implement QMV.
- After SEA EPC II remained intergovernmental, voluntary and non- binding.
General overview of the Common Security and Defense Policy
(2003), military cooperation
Military and defense cooperation i launched in 1999. Non conventional. Peacekeeping, conflict prevention, crisis management, post- conflict stabilization, and humanitarian
Civilian activities such as police and judicial training (“rule of law”) and security sector reform
European Defense Agency (EDA) coordinates defense-industrial and procurement policy
Allow EU take necessary actions to address a considerable list of global challenges and security threats, including regional conflicts, proliferation of weapons of mass destruction, terrorism, state failure, organized crime, disease, and destabilizing poverty. (The 2008 Report on the Implementation of the European Security Strategy adds piracy, cyber security, energy security, and climate change to the list)
Allow EU focus on building regional security in the Balkans, Caucasus, Mediterranean region, Middle East
Allow the EU construct a long term rules-based, multilateral world order in which international law, peace, and security are ensured by strong regional and global institutions
Council of Ministers: EU defense ministers, HR in consensus building and implementation
EU Military Committee (EUMC) → MC’s Chiefs of Defense (CHOD) or their military representatives, provides input on military matters
Support structures (that belong to the EEAS)
Crisis Management Planning Directorate (CMPD) integrate civilians and military
Civilian Planning Conduct Capability (CPCC) to run civilian missions;
Joint Situation Centre (SitCen) for intelligence analysis and threat assessment;
EU Military Staff (EUMS) tasked by the EUMC to provide military expertise and advice to the HRVC
Role of the different institutions and instruments
Role of the Various Institutions
- ECo →Defines the Principals and general guidelines for CFSP
- CMi → Main decision making body within the general guidelines set by the European Council (unanimity with implementation by QMV, FA Council, chaired by HR-VC)
- COREPER → Liaison. Meets 1 per week.
- Working Groups: Senior diplomats plus EC representative. Work in specialized areas of expertise (geographical or topical) to prepare the work of COREPER and Council
- Amsterdam: Principles and Guidelines, Common Strategies, Joint Actions, Common Positions.
(1) on the strategic objectives and interests of the EU: Highest level of decision. Conclusions of meetings of the EuropeanCouncil. Declarations of the HR-VC
European Security Strategy, EU Strategy Against Proliferation of Weapons of Mass Destruction (2003), EU Counterterrorism Strategy (2005), EU Internal Security Strategy (2010)
(2) on common positions,
Usually regarding specific countries (Cuba, Zimbabwe)
(3) on joint actions, both entail specific commitments by the MC.
Usually appointment of EU Special Representatives and financial commitments
(4) on the implementing arrangements for common positions and actions.
The High Representative for Foreign Affairs and Security Policy (HR-VC) and The European External Action Service
Before the Treaty of Lisbon
The previous office of High Representative for the common foreign and security policy was introduced in 1999 (Amsterdam Treaty). It assisted the Council in foreign policy matters, in the External Relations Council configuration:
- Contributing to the formulation, preparation and implementation of policy decisions.
- Acting on behalf of the Council in conducting political dialogue with third parties.
The six-monthly rotating Presidency was in charge, representing the Union in CFSP matters, implementing the decisions taken and for expressing the EU position internationally.
The European Council (QM) with the agreement of the President of the EC.
She is subject, together with the President of the EC and the other EC members, to a vote of consent by the EP.
The HRVC (Articles 17 and 28 TEU):
- Conducts the Union's common foreign and security policy;
- Contributes by her proposals to the development of that policy, which she will carry out as mandated by the Council, and ensures implementation of the decisions adopted in this field;
- Presides over the Foreign Affairs Council;
- Is one of the Vice-Presidents of the EC.
o Ensures the consistency of the Union's external action.
o Is responsible within the EC for responsibilities incumbent on it in external relations and for coordinating other aspects of the Union's external action.
- Represents the Union for matters relating to CFSP, conduct political dialogue with third parties on the Union's behalf and expresses the Union's position in international organisations and at international conferences.
- Exercises authority over the European External Action Service and over the Union delegations in third countries and at international organisations.
European External Action Service (EEAS).
Article 27(3) TEU is the legal basis for the Council decision on the organisation and functioning of the EEAS.
“In fulfilling his mandate, the High Representative shall be assisted by a European External Action Service. This service shall work in cooperation with the diplomatic services of the Member States and shall comprise officials from relevant departments of the General Secretariat of the Council and of the Commission as well as staff seconded from national diplomatic services of the member states. The organisation and functioning of the European External Action Service shall be established by a decision of the Council. The Council shall act on a proposal from the High Representative after consulting the European Parliament and after obtaining the consent of the Commission.”
The European Council agreed on guidelines for the EEAS (doc. 14930/09), inviting the then future HR to present a proposal for the organisation and functioning of the EEAS as soon as possible after the entry into force of the Lisbon Treaty.
- a single service under the authority of the HRVC.
- organisational status reflecting and supporting the HRVC
- Composition: 1/3 Council, 1/3 EC, 1/3 Diplomats of the MC.
Former Commission's delegations became Union delegations under the authority of the HRVC, as part of the EEAS structure.
Delegations contain regular EEAS staff and staff from relevant EC services.
EU delegations will work in close cooperation with diplomatic services of the MC.
Humanitarian Aid and Development Assistance
MS and EU institutions have agreed to detailed frameworks and sets of principles that affirm humanitarian aid and development assistance as key elements of external policy.
EC Humanitarian Aid and Civil Protection directorate-general (DG ECHO) manages the delivery of emergency EU assistance in crisis.
The EU is the world’s largest aid donor (EC funds plus bilateral MC contributions), accounting for more than 40% of official global humanitarian assistance and over half of official global development assistance.
EC (ECHO) spends an average of €1 billion per year.
The EuropeAid Development and Cooperation directorate-general designs EU development policies and delivers assistance geared toward longer-term issues such as poverty, hunger, health, education, and governance.
Reasons for a reform
Permanent social, economic and climate changes have justified SIX CAP reforms
Rising concerns on global food security, enhance the sustainable management of resources
Increasing pressure on agricultural production conditions: climate change
Need for farmers to reduce their contribution to GHG emissions and renewable energy
Retain and enhance competitiveness and maintaining agricultural production across EU
Make best use of the diversity of EU farm structures and production systems
Maintain its social, territorial and structuring role
Strengthen territorial and social cohesion in the rural areas
Make CAP support equitable and balanced between MS and farmers
Simplification of procedures and enhance control. Reduce the administrative burden
Memorandum on the reform of agriculture in the EEC, 1972: modernisation. Permanent surpluses
(1988, "Delors package I"). Level of agricultural expenditure, budgetary discipline
. Compensation of the drop in farmers' income by compensatory amounts not linked to the quantities; and limiting means of production. Measures to conserve environment and landscapes: This made possible the Uruguay Round
. Towards EU enlargement, 1999
June 2003: single payment independent of production ("decoupling" of support) linked to environment, food safety, animal and plant health and animal welfare ; rural development policy, reduction of direct payments
, December 2013. "Greening" payment: 30% of direct income support for farmers will be granted only if they observe certain farming practices
Management & Financing : A general approach
Basic decisions on CAP definition are taken either by the EC or (in case of long term decisions) EC + CMi/EP
Considerable technical bias/puropose in most decisions:
Consultation to Committee of the Regions and the European Economic and Social Committee (EESC)
Farmers' professional bodies ensure that allowance is made for their interests:
Committee of Agricultural Organisations in the European Community (COPA): body for farmers;
General Committee for Agricultural Cooperation in the EC (COGECA): farm cooperatives;
Commission of the Agriculture and Food Industries (CIAA), representing these industrial sectors
Basic regulations by the EP and CMi (ordinary legislative procedure, Article 43 TFEU)
Management is either the joint responsibility of EC+CMi or EC alone
- General policy (annual setting of farm prices, undertaken in application of the basic regulations)
: EC after consulting professional organisations submits a proposal to the CMi (decision after consultation with EP)
- Long-application management provisions (adjustments of market mechanisms): a
is used: the EC proposes measures to the CMi, which takes a decision without consulting
: Implementation provisions for basic regulations and management: EC acts after receiving opinion of the Management Committee for the Common Organisation of Agricultural Markets
On January 14, 1962 (first agricultural marathon) CMi created one single fund to finance all expenditures. In June 2003, the Fund was replaced by two European agricultural funds:
European Agricultural Guarantee Fund (EAGF)
, for the financing of market measures
European Agricultural Fund for Rural Development (EAFRD)
, for the financing of rural development programmes
finances in a context of shared management between MC and the Union:
(a) refunds for the exportation of agricultural products to third countries
(b) intervention measures to regulate agricultural markets
direct payments to farmers
(d) EU financial contribution to information and promotion measures
EAGF and EAFRD: each respectively finance on a centralised basis (initiative of the EC)
Paying agencies: departments or bodies of the MS, controlled by MS certification bodies
MS manage most expenditure:
MS are responsible for administering payments and checks on payments
EC is responsible to make sure that efficient systems and procedures are set up
Integrated system. CMi has established a legal framework making it possible to identify unreliable economic operators ("black list") and to make them known
MS and EC in co-operation: advanced techniques to map land surfaces and verify land
Common Market Organization
Common market organisations (CMOs) Article 40 TFEU: Control of the operation and development of each common market for agricultural products
A single CMO Regulation
contains all the basic elements of the common organisation of the markets in agricultural products.
It aims to streamline, expand and simplify the provisions on public intervention, private storage, exceptional measures and aid to specific sectors, as well as to facilitate cooperation
Defined in 1962: market unity, Community (European) preference and financial solidarity
agricultural products move throughout the European Union under conditions similar to those in an internal market, thanks to the abolition of quantitative restrictions to trade (quotas, import monopolies...) and the removal of duties, taxes and measures having equivalent effect.
Community (European) preference
: products of European origin are bought in preference to imported products, in order to protect the common market against low-price imports and fluctuations in world prices. This principle, spread throughout the world, is enacted through import and export measures.
. European Agricultural Guarantee Fund (EAGF). MC are jointly liable as regards the financial consequences of the common agricultural markets policy.
The 2013 CAP reform altered the basis of direct aid to producers, paid to farmers or producers' associations, progressively phasing it out and
decoupling it from production
The vast majority of subsidies is paid independently from the volume of production
To avoid abandonment of production, MC may choose to maintain a limited link between subsidy and production
. These new "single farm payments" are linked to the respect of environmental, food safety and animal welfare standards
Rural Development and Leader Program, as an example
2nd pillar of the CAP, Art 39 TFEU, Agricultural Fund for Rural Development:
LEADER: Local development
- subsidiarity and partnership. Decentralisation of programming arrangements and consultation ;
- multi-functionality. Including the preservation of the rural heritage, emphasising alternative sources;
- a multi-sectoral approach creating new sources of income and employment;
- efficiency and flexibility of strategic, integrated programmes, based on a "menu" of measures.
. The Union priorities for rural development are six
(1) fostering knowledge transfer and innovation
(2) enhancing farm viability and competitiveness
(3) promoting food chain organisation
(4) restoring, preserving and enhancing ecosystems
(5) promoting resource efficiency
(6) promoting social inclusion
Financing and management of rural development
: European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund
Farm advisory system
. A set of advice services MS must set up to help farmers greening obligations;
management and control systems
to be put in place by MS;
. System created by the 2003 CAP reform: standards on environment, animal welfare and plant protection products;
Articles 127 to 133 TFEU
Taken by the ECB's
. Meets every month to analyse and assess economic and monetary developments and the risks to price stability and to decide interest rates
by MS (Art. 128(2)TFEU), the cooperation procedure applies, after consultation of the ECB;
exchange-rate policy guidelines
(Art. 219(2)TFEU), CMi decides QM on a recommendation from the ECB or from the EC after consulting the ECB;
exchange rate of the Euro against non-Community currencies
(Art. 219(1)), CMi decides
on a recommendation from the ECB or the EC, after consulting the EP.
Other institutional provisions (Articles 134-135, 283-84) and transitional provisions (Articles 139-144) have their own special decision-making procedures which are separate from those identified here.
Economic Policies: Lack of a pure economic policy in light of the Stability and Growth Pact
Based in 2 types of commitments by the MS
Resolution of the European Council on the
Stability and Growth Pact
(Amsterdam, 17 June 1997)
broad guidelines for economic policies (BGEPs): Recommendations adopted by the CMi. Their objective is to harmonise the economic policies of MS
Stability and growth pact: Public deficits control.
Council Recommendation 2010/410/EU of 13 July 2010 on broad guidelines for the economic policies of the Member States and of the Union
Multilateral Surveillance Procedure (monitoring) vs Excessive deficit procedure (EC Opinion + fines)
supervises compliance addressing warnings to MS (before Lisbon, the EC could only request the Council to adopt a resolution)
The CMi may adopt a resolution (the involved MS does not participate in the voting, only Euro MS may vote when a recommendation is related with an Euro MS)
... and How does the ECB do this??
Operational framework of the Eurosystem
1. Open market operations
Mainly: Regular liquidity-providing reverse transactions with a frequency and maturity of one week
. They are executed by the NCBs on the basis of standard tenders and according to a calendar.
Liquidity-providing reverse transactions
that are regularly conducted with a monthly frequency and a maturity of three months.
ad hoc basis to manage the liquidity situation in the market and to steer interest rates. In particular, they aim to smooth the effects on interest rates caused by unexpected liquidity fluctuations.
The Eurosystem may select a limited number of counterparties to participate in fine-tuning operations.
2. Standing facilities
: aim to provide and absorb overnight liquidity, signal the general monetary policy stance and bound overnight market interest rates.
3. Minimum reserve requirements
for credit institutions: modification of the reserve requirement of each institution (which is determined in relation to elements of its balance sheet.
EU Economic policy
. MS policies should be (coordination) geared towards common objectives (art 119 TFEU)
EU Monetary Policy
. MS common objective is to maintain
(art 127 TFEU)
Differ from Eurogroup to non-Euro countries
About 30 financial legislative acts during the last term of the EP
Article 3 TEU + Article 3 TFEU
1. The Union shall have exclusive competence in the following areas:
(c) monetary policy for the Member States whose currency is the euro
Art. 119 TFEU: "an economic policy which is based on the close coordination of economic policies, on the internal market and on the definition of common objectives, and conducted in accordance with the principle of an open market economy with free competition".
Art. 120 TFEU: "MC shall conduct their economic policies with a view to contributing to the achievement of the objectives of the Union, as defined in Article 3 TEU, and in the context of the broad guideline
Stages (i) No policy / Delors Report (ii) EMI / Maastricht (iii) EMU /ECB / Euro
Overview of the Banking Union
Worrying fragmentation of the Single Market in lending and funding.
Particularly damaging within the euro area, where monetary policy transmission is impaired and the ring-fencing of funding impedes efficient lending to the real economy.
Banking Union comprises single centralised mechanisms for the supervision and restructuring of banks.
(TFEU, article 127(6)) stipulates that supervisory tasks can be conferred on the ECB.
EC proposed to set up a single banking supervision mechanism in the euro area (see IP/12/953),
The pillars of the banking union
Single Supervisory Mechanism (SSM)
Single Supervisory Mechanism
is fully operational since November 2014.
The ECB is currently conducting direct supervision and the balance sheets of most relevant banks. all banks having assets of more than €30 billion or constituting at least 20% of their home country's GDP (around 130 banks),
Main features (SSM):
Coherent and consistent application of the
in the euro area. The ECB may at any moment decide to directly supervise one or more credit institutions
SSM is open to all non-euro area Member States.
Governance structure : a separate
Supervisory Board s
upported by a steering committee, the ECB Governing Council with the right to object to Supervisory Decisions from the Board, and a mediation panel
Common resolution financing arrangements including a
Single Resolution Fund
The SSM is governed by two texts:
a Single Resolution Mechanism regulation
covering the main aspects of the mechanism and an
intergovernmental agreement (IGA)
related to some specific aspects of the
Single Resolution Fund (SRF)
First defined in 1957
Common market had to be completed by 1968
in August 1971, United States dismantled Bretton Woods. Oil crises of 1973 and 1979
January 1985, Delors declared that all internal European borders should be eliminated by 1992
June 1985 EC forwarded to the ECo
the white paper on completing the internal market
Early movements towards economic integration
, in July 1968, abolition of customs duties and quantitative restrictions between MS
Establishment of a
common customs tariff
Definition of a
common agricultural policy
necessary for the free movement of agricultural goods
EC proposed a
for the EEC Treaty plus political cooperation:
Significant changes to the Community decision-making process
QM voting in the CMi acting in cooperation with the EP
SEA succeeded in removing the technical barriers to trade, creating a
Four fundamental freedoms
movement of salaried and non salaried workers
establishment of persons and companies and provision of services
capital movements for business or personal purposes
Legislative procedure: Article 207 TFEU
Common Commercial Policy
Ordinary Legislative procedure
Exclusive competence (article 3 TFEU)
- Customs union, internal market, single market
- Relations with the rest of the world (207 TFEU)
EC negotiates international agreements on behalf of the Union at the bilateral and multilateral levels
CMi concludes agreements (QM) with consent from the EP (CMi unanimity on trade in services, IP, direct foreign investments, audiovisual and cultural services, and social, educational and health services)
Tensions and Concerns
: The ideology of market freedom
protection: MS must have legitimate interests if they want to limit free movement
Minority protection: increasing structural imbalances
Regulatory competition: Race to the bottom? isolation?
6.1. Historical evolution: from the common market to the domestic market
Free movement of goods: Legal basis and development
to the customs union (July 1968)
customs barriers to intraCommunity trade
Technical obstacles : disparity of the legislation within the original Community: producers to manufacture different components, increase production lines, diversify stocks according to country of destination...
Articles 28 and 29 TFEU
directives establishing the single market
solved major problem
Incomplete or correct transposition of the directives
MS obligations to take all necessary measures to facilitate FMG
Early warning mechanism and a mechanism enabling the EC to request a MS to take the measures necessary [Regulation 2679/98 and COM/2001/0160]
Common, single, internal Market
A single European economic area based on a common market was the fundamental objective of Rome Treaty
"The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it
Definition of "common market", "single market" and "internal market"
stage in the multinational integration process.
Aims to remove all the barriers to intra-Community trade to the merger of national markets into a single market giving rise to conditions as close as possible to a genuine internal market
Also deals with NTB, which are not discussed under the common market
Lisbon ignores "single market" and "common market". It replaced the words ''common market'' (Nice) by the end result of the integration process, the
(Article 26 TFEU)
an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties
all import and export duties. 1968, customs union
: Free movement of production factors:
labor, capital and service
: Free establishment of persons and companies in all the territory of the MS
Elimination of NTB, 1985-1992
6.2. Free movement of goods
Banks, insurance companies and stock exchange: closely monitored by the official authorities
Any common market required that those services be liberalised from protectionism
Reconcile two contradictory requirements:
need to maintain very stringent criteria for control and financial security and
need to leave enough flexibility to meet the ever-more complex requirements of its customers
European System of Financial Supervision
Network of financial supervision at MS and EU level
Competent to ensure that the rules applicable to the financial sector are adequately implemented
a) European Systemic Risk Board (ESRB), macro-prudential oversight of the FS
b) European Banking Authority: Protection of depositors and investors in the Union
c) European Insurance and Occupational Pensions Authority; and
d) European Securities and Markets Authority (ESMA), which focuses on systemic risk
A Financial Services User Group advises the Commission in the context of the preparation of legislative acts or other policy initiatives affecting users of financial services, including consumers, retail investors and micro-enterprises [Decision 2010/C 199/02]
Freedom to provide services. Legal basis and development
Engine of economic growth of the EU, 70% of GDP and employment in most MS
Linchpin for smooth operation of the EU's internal market.
Originally based on
( consumer protection & others excluded)
Numerous barriers particularly SMEs, from extending their operations: necessary to remove barriers
Article 56 TFEU
: restrictions on "freedom to provide services" within the Union are prohibited in respect of nationals of MS other than that of the person for whom the services are intended. Any discrimination (nationality) is prohibited (directly)
Directive on the recognition of professional qualification
general legal framework facilitating the exercise of the freedom of establishment for service providers and the free movement of services [Directive 2006/123]
Definition of service vs permanent establishment.
Article 57 TFEU. Services (remuneration), not governed by the provisions relating goods, capital and persons
Limited in time
, against payment and with foreign aspect
A service provider may temporarily pursue his activity in the State where the service is provided
Article 57(3) TFEU. May be of a long
Acquisition of real estate in the country of provision of services is allowed
Permanent establishment: the person must remain established in the MS. Blurry distinction
3 December 1974 in the Van Binsbergen case
) established the direct applicability of the prohibition on discrimination in respect of the provision of services
6.3. Free movement of services
6.3. Free movement persons and workers
Legal basis and development
Borrowers - individuals, SMEs... - need to obtain capital where it is cheapest and best tailored
Not directly established in EEC Treaty - Less imperative manner
Scope and development
Article 63 TFEU. No definition. No discrimination needed, just a negative effect on trade
There are exceptions: art. 65 TFEU
, but these cannot be discriminatory or arbitrary (art. 65.3 TFEU)
Directive 88/361 and EEA Agreement ensure the full liberalisation of capital movements
Applicable inside EU and under certain conditions (and some potential limitations) also 3rd countries
Limitation: avoid capital movement for the purposes of laundering money generated by criminal activities
Treaty provisions are now directly applicable and without discriminatory approach
Overriding requirements of general interest, applied w/o discrimination and with proportionality
Prevention of infringement of national law (taxation and supervision of financial institutions)
Differential taxation depending on residence
6.4. Free movement of capitals
Obstacles and exceptions
Custom duties or charges
Articles 28-30 TFEU
Prohibition of discrimination. Safeguarded by Article
Definition of charge. Relevance of the effects
Art. 30 -> Duties and charges also MEE and CEE are prohibited
Permitted if they are related to a service provided in the border
Bresciani case (C-87/75): veterinary inspection
Article 110 to 113 TFEU, both direct and indirect
If a measure is
considered under art. 30 TFEU...
Internal taxation can lead to the same situation as border measures
Direct discrimination: not applicable to nationals /or foreigners
Indirect discrimination: intrinsically only applied to foreigners
Humblot case: 16CV cars in France
Differential taxation is permitted
Italy, Chemial Farmaceuti case
Article 110(1) v. article 110(2) TFEU: similar products
The determination of likeness
The determination of "protective effect"
Restrictions: 36 TFEU allows restrictions on imports
public morality, policy or security,
must not constitute disguised restrictions on trade
ECJ: "a desire to ensure the survival of a company cannot be a justification founded on this Article" [case 324/93].
Creativity in the EU: authors, performers, producers, consumers, culture, industry and the public
IP is an integral part of property and one of the keys to added value and competitiveness
Patents: new technical inventions
Trademarks: a word, logo or symbol that competitor companies that is protected
Designs: meaning the outward appearance of a product
Geographical indications: locally produced products
Copyright: literary and artistic works (books, articles, plays, films, music, paintings, maps)
In 2011 the EC published a new IP Strategy: Single Market in IP Rights
Copyright: Harmonized after directive 2001/29/EC (WIPO rules) now Directive 2014/26/EU: Collective management of copyright and royalties, collection societies protocol, transparency
Uniform protection over the last 20y. Madrid Protocol
various norms. Harmonized under Regulation 6/2002/EC
Unitary system since 2013 for 27 EU MS
: dual protection system: EU and MS
: Only agriculture. Regulation 510/2006 and WTO norms
: New strategy after 2014. Follow the money approach
Scope of the freedom to provide services
Definition of service?
4 types of service
What happens to those with a mixed nature:
Schindler Case (ancillary good in a lottery)
The official authority exception and the Reyners
Rights that are granted
Right to entry and reside. Granted by art. 56 TFEU and Directive 2004/38 (CRD)
Right to post workers
Right to access the market without discrimination. Also measures "indistinctly applicable" are covered if they negatively affect FMS
: equally applicable, proportional, justified on legitimate interest
: a German
Equivalence of goods (Dassonville), persons (Bosman) Services (Alpine Investments): Read
No need for discrimination
Alpine Investments: useful both for freedom and for tantamout measures
Some examples of these restrictions that are lawful in the
Freedom of establishment
Art. 49 TFEU + articles 51 to 54 TFEU (establishment of companies)
Removal of restrictions on the provision of services by maintaining permanent settled place
It covers any treatment, and not only national treatment
Then, what would happen to the national? Reverse discrimination
Gebhard case (paras 25 to 27): stable and continuous basis
case: Dutch national, Belgian Lawyer
Art. 52 TFEU
General interest (professionals, deonthology, consumer protection, etc.
The Four Freedoms
Harmonisation and Standarization
Article 115 TFEU provides for the approximation of legislation of MS that directly affects the common market
The EC has tried to align national regulations with Community standards
Very burdensome and expensive - It has however an economic rationale
Many fields affected by Harmonization directives: foodsuff, pharmaceuticals, car parts...
Prevention of new obstacles: Measures with an equivalent effect
ECJ case law excluded discrimination: change of paradigma. Discrimination v. recognition
Essential case: Dassonville: Effect, and not intention
The list of tantamount measures is broad
- promotion of domestic products
- rules of origin (marking): only acceptable if it implies a feature of the product
- regulation of public procurement
- administrative practices that systematically difficult foreigners from having access to certification /licensing
Also, there were measures that were not applied to imports (indistinctly)
- Mutual recognition unless mandatory requirements existed (Cassis de Dijon)
The new approach in Harmonization
Since 1985, a different harmonization method appeared
Harmonization limited to article 115 TFEU
Other measures: subject to independent agencies issuing standards that allow ignoring the directives
High value of mutual recognition
Single approach to marketing strategies: Public interests, health and safety, consumer protection, environment
CAP Principles and Reforms
Management & financing
Rural development and Leader Program
Industrial Policy of the EU
Lack of an Industrial Policy in the original treaties
Belief of the sufficiency of the 4 freedoms and the CCP
In the 90's increasing relevance of SME promotion, tourism sector (195 TFEU)
Many individual industries involved (think of coal and steel, or transport)
Outcome and principles of the Industrial Policy (competitiveness) implemented after Lisbon and Role of the EU in the promotion of SME
Relevance of the European Charter for SME and Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (COSME) (2014 - 2020): competitiveness + sustainability: growth of SMEs, advancement of the knowledge society, and development based on balanced economic growth:
paying attention to the specific needs of SMEs
strengthening the competitiveness and sustainability of the Union's enterprises,
encouraging entrepreneurial culture and promoting the creation and growth of SMEs.
Specific to COSME
improve access to finance for SMEs in the form of equity and debt
improve access to markets inside the Union
improve framework conditions for the tourism sector
Means to attain the objectives. Focus on new competitiveness:
Create economies of scale
Manufacturing excellence, design and reliability rather than traditional factors of competitiveness (like proximity to markets, distribution systems and customer loyalty)
Role of the EU in the clothing and textile industry
Many specific industries involved due to extremely different reasons .
In clothing, due to low technology and capital needs, EU lost competitive advantage. EU Social Fund helped
Internal policy. EC monitors national aids and applies a policy aiming at preventing such aids
External policy : organising international trade in textiles in order to provide breathing space for the European industry without frustrating the industrialisation hopes
GATT: Multifibre Arrangement substituted by the agreement on textiles and clothing
Social Policy of the EU
Social Policy in the EU
Analyze EU competences for a social policy at a EU level
Aimed ad compensating the regional imbalances. Vaguely discussed in EEC Treaty.
CMi unanimity after consulting EP
Human Rights and social cohesion: Article 6 TEU, Article 3 TEU
Workers: 145 to 150 TFEU; Social policy: 151 to 161 TFEU; Social Fund: 161 TFEU
Economic and territorial cohesion: Article 3 TEU and 174 TFEU
Social cohesion is relevant at all levels. Rome Treaty believed that free movement of workers would foster it
Creation of the European Social Fund (SEA, 1989)
In 1989 the Charter on Workers' Rights was approved (UK opted out). Repealed after CFREU (2000)
Several actions followed: Structural Funds. UK joined in 1997
A strong social policy (minimum level) is: basic to ensure an acceptable social and physical security conditions and
basic to maintain competitiveness and the internal market
Lisbon: After the Social Charter (1989), focus in employment, youth and living & working condition.
CMi and EP frame, EC and MS execute
Overview of the EU employment and youth policies
Supporting and supplementing competence (165 TFEU)
. Harmonization is excluded
Promotion of developing skills and mobility. Studies, opinions, consultation.
(1) Observatories: European Employment Observatory, Tripartite Social Summit for Growth and the Employment Committee
(2) Funds to allocate: European Globalization Adjustment Fund
(3) Information networks on vocational training (Eurydice, Advisory committee, Centre for its development, European Institute for Innovation and Technology...)
European youth policies include eductation + mobility: the Erasmus programme, Grundtvig, Jean Monnet, TEMPUS...
Overview of EU policies to promote gender equality and to combat social exclusion
cases (ECJ). This principle was reinforced by the EC and included in the Lisbon Treaty
Equal work equal pay, equal opportunities (Articles 8 and 157 TFEU). Not extended to same sex couples. Ordinary legislative procedure. Diverse Directives issued to guarantee equality.
Social exclusion (3 TEU and 151 TFEU).
competences: know how...
Competition Policy of the EU
Competition Policy in the EU
Foundations. Justification in the original communities.
101 and 102 TFEU
Competing in equal terms is essential for the single market. EC competition rules = neutral playing field
Consumer pays Protectionism. Lacks an end in itself
Controlled by the ECJ (legally) and EP (politically)
EC Regulations (105 TFEU) are used to develop the norms. Directives, communications, decisions.
CMi interprets and applies competition norms through regulations / directives (103 TFEU)
What is permitted and what is prohibited under EU competition law
Competition law covers: practices (abuses, discrimination), agreements, concentrations and State actions.
Concentration or market domination is not prohibited. Discrimination is key.
De minimis exclusion to non relevant practices
Prohibition: EC will evaluate after a claim or a suspicion appears
Concerted practices that may affect the common market, unless beneficial for consumers (EC guidelines)
Sharing markets to restrict competition, fixing prices
Exclusive distribution agreements are particularly complex
Market domination (abuse): Regulation on the control of concentrations. Several guidelines: assessment of mergers, etc. Here, the EC must be informed in advance.
Overview of how state action is controlled under EU competition law
107 TFEU. States can distort competition. Subsidies, protection of critical industries, artificially ensuring survival, favoring domestic companies, etc.
Those with a social character granted without discrimination will not be prohibited
EC decides: then the claim is forwarded to the ECJ. The CMi can make the EC drop the claim (unanimity)
Fiscal Policy in the EU
Necessary fiscal neutrality in the EU to attain the single market
Fiscal systems could also impact the single market (non tariff barrier). MS with tax freedom would impose tax barriers
No competence to impose a single fiscal system. At least, necessity for a neutral system (non discriminatory)
Stability and Growth Pact (economic policy) bore many fiscal constraints
More recently, two pack and six pack are examples of group of measures aimed at approaching economies with fiscal implications
Fiscalis 2020: Series of information systems for tax authorities enhancing technical progress
Scope of EU tax policy
indirect taxation: regulated at EU level to guarantee fiscal neutrality to secure free movement of goods and services
Direct taxation: It does not directly affect internal trade. Focused in fighting tax evasion (competition and capital movements)
(Article 110, 111, 113 TFEU). CMi (unanimity) + EP Consultation adopts harmonization provisions
Possibilities to impose a common fiscal policy
tax of origin: Risk of artificially comparative advantage
tax of destination: production could be concentrated where the comparative economic advantages were greatest.
Tax barriers remain: MS would maintain them to increase income
Cumulative multi-stage turnover tax system: taxes per transaction in some MS prejudiced SME
Excise duties: higher levels on certain products (regarded as luxury in some MS: alcohol, tobacco…)
Briefly discuss the relevance of VAT in the EU and how it is regulated
VAT: adopted in France (1954). In 1962, EC proposed the CMi to adopt (1967) the first harmonisation directive
In 2006 a common system of VAT was created: common rules on scope, territorial application, taxable persons & transactions… "
uniform application ensured by a number of Regulations (most recent in 2013)
Principle of common system of VAT:
Application to goods and services of a general tax on consumption exactly proportional to the price.
Not a cost of intermediaries, but for the end consumer
Neutral domestically (not favouring integrated companies) and at EU level (it cannot favour domestic products)
Week of March 17
How the European Communities evolved towards a domestic market. Differences between a common market, an internal market and a domestic market and the main stages within the EC
Goods. legal basis and how it has been developed. Obstacles and exceptions. Harmonization of legislation, prevention of technical obstacles and certification. IP rights
Services and establishment. Legal basis and development. Definition of service. Scope of freedom of establishment and scope of financial services
Workers. Legal basis and development. Concept of worker. Relation between European citizenship and workers’ rights
Capitals: Legal basis and development
Legal basis and how it has been developed
Obstacles and exceptions
Harmonization of legislation, prevention of technical obstacles and certification
Services and establishment
Legal basis and development
Definition of service
Scope of freedom of establishment and scope of financial services
Free movement of workers: Legal basis and development
Introduction. Basic norms
Right to work within the EU - art. 45 TFEU
Regulation 492/2011 - Directive 2004/38, basic conditions for entry and exit - ECJ Case law
Scope of the protection
What is the content of article 45 TFEU?
Content: (i) Right to move freely to take up employment (ii) Social protection
Purely internal situations
Public service situations
Definition of "worker"
Nationality: Defined under the laws of the MS
Income and time
Hoekstra case (1964) autonomous concept
Levin case: broad definition of worker. Even for part time workers
- services of economic value
- non self employed
- remuneration in return
- students: Grzelczyk case, students rights in Belgium
Legal basis and development
Concept of worker
Relation between European citizenship and workers’ rights
Common Agricultural Policy
History, evolution and outcome of the CAP
Reasons for a common policy in agriculture
CAP objectives according to the Treaties and reforms of the CAP
Basic CAP principles
CAP management and finance
Rural development and the Leader + program
CAP Objectives in the Treaties
Specified in Article 39 TFEU (ex-Article 33 TEC)
Higher agricultural productivity;
guarantee of a fair standard of living to farmers;
supply security and reasonable prices for consumers;
Means to attain these objectives, Article 40 TFEU (ex Article 34 TEC). Depending on the product, one of three:
common rules on competition,
compulsory coordination of the various national market organisations; or
European market organisation
Supplementary principles: rural development policies (CAP second pillar)
The guiding principles for the CAP second pillar, market and rural development policies, were set out by the ECo of Göteborg (2001)
strong economic performance must respect sustainable use of natural resources
reduced levels of waste, maintaining biodiversity, preserving ecosystems and avoiding desertification.
Means to meet these challenges
increasing emphasis on encouraging healthy, high-quality products,
environmentally sustainable production methods, including organic production, renewable raw materials and the protection of biodiversity
Economic and Monetary Policy
Legal basis in the Treaties for both the EU monetary and economic policies
Decision making procedures under the monetary policy
Lack of a pure economic policy in light of the Stability and Growth Pact
Overview of the purposes and instruments of the banking union
Why fiscal neutrality in the EU is necessary to attain the single market
Relevance of VAT in the EU and how it is regulated
Briefly. Efforts at a EU level to combat tax avoidance
Briefly. The two-pack and six-pack. To what extent the rules that they introduce have contributed to a closer economic convergence
Briefly discuss efforts at a EU level to combat tax avoidance
Direct taxation (income tax, company tax and capital gains tax) creates the problem of international tax avoidance: abnormal capital movements and distortions of conditions of competition.
Since 1977 a series of directives and regulations instituted mutual assistance by the competent authorities of MS exchange of information to coordinate their investigative actions…
Free Movement of Capital (1990) increased the risk of tax evasion: EU residents freely transfer their savings: Necessity to intensify the exchange of information (series of directives last amended).
Recently: In the global economy capital has become very mobile: many legal tax havens
Briefly: two-pack and six-pack. Rules for a closer economic convergence of MS after the crisis
Stability Pact has been affected by the crisis. 7 regulations approved to improve control, coordination and high level of transparency, credibility and democratic accountability
In 2011 six norms were enacted to
- Improve coordination: financial surveillance. Fines to ensure compliance with MS budgetary restrictions: "significant deviation from the medium-term objective"
- Isolate externalities: Higher coordination of MS macroeconomic rules (avoid negative externalities and contagion)
Since May 2013
- Stricter rules on budget pre-requirements: spillovers among euro area Member States' economic and budgetary situations
- Supplemented in the Eurozone with the Treaty on Stability, Coordination and Governance: MS with annual debt >0.5% GDP, must design déficit reduction plans and inform other MS accordingly
Difference in regulation may create barriers:
Necessity of legislative procedures that would facilitate the completion of SM
Harmonization (114 and 155 TFEU): unanimity in the CMi if no other applies (43, 50, 53, 91)
Article 114(4) TFEU: Very controversial. Tobacco Advertising case (C-380/03).
Difficult and intrusive
Art. 27 TFEU "least possible disturbance"
Prohibit norms that discriminate or hinder trade
- mutual recognition : Cassis de Dijon
There are limits to integration (Tobacco Advertising Directive): Now, Plain Packaging Directive
Old approach, v.
New approach to Harmonization
MS are required to notify the EC of any TBT (remember the CIA Belgian case?)
Spread the voice about mutual recognition: include clauses in internal laws
Control how (and when) MS are able to derogate from free movement
European Standardization bodies and structures
Since 2008: wide consultation strategy
Workers vs Citizens
Citizenship of the EU
Maastricht: Political Union
Meaning of "
"fundamental status of nationals of the EU": article 20 TFEU. Right to move and reside freely in EU
Additional to national citizenship
Specific rights: movement, vote, diplomatic protection, petition before EP
Directive 2004/38: both workers and self employed
Also participation rights: art. 10 TFEU
Rights held as long as the nationality of a MS is maintained
case: Lost Austrian nationality when acquiring German nationality, then lost German: governed by national law, but has to be examined under EU principle of proportionality
- explicitly manifests that citizen rights are independent from movement and residence
- nationality, prohibition of discrimination. Rights of families
Legal basis and development