The Cameron express: could there be a ‘fast-track’ Treaty amendment on the free movement of workers?

 

Steve Peers

For EU law geeks, the Treaty amendment process is the World Cup, the general election and the second coming of the Millennium Falcon rolled into one. Following the Treaty of Lisbon, it seemed unlikely that there would be another significant Treaty amendment for years. But following David Cameron’s demand to renegotiate EU free movement rules (which was echoed to a lesser extent by the UK Labour party), it has become rather more likely.

So we must move on to the next question: what type of Treaty amendment would it be?  Before the Treaty of Lisbon, there was only one form of Treaty amendment set out in Article 48 of the Treaty on European Union (TEU). However, it was also possible to amend the Treaty by means of accession treaties, and there were sundry forms of minor Treaty amendment (such as amendments to the EU Court’s Statute) scattered around the rest of the Treaties.

Since the Treaty of Lisbon came into force five years ago today, this situation is considerably more complicated. The previous Treaty amendment process has been revised, and there are two variations of it; it’s now called the ‘ordinary revision procedure’. There are two entirely new ‘simplified revision procedures’. Furthermore, there are additional possibilities for minor Treaty amendment scattered around the rest of the Treaties, and it’s still possible to amend the Treaties via means of an accession treaty.

These distinctions are important because if Cameron’s plans could be put into place by using a simplified revision procedure, the process would be speeded up at EU level – although not necessarily at national level.

The changes were so fascinating that, in an explosion of EU law geekiness, I took over 100 pages to analyse them in an article for the Yearbook of European Law. I won’t subject you to all of my analysis there, but it’s the basis for my following comments on which Treaty amendment process would apply to Cameron’s reforms.

Legal framework

There’s no accession to the EU planned for the next five years. So even if an accession treaty could address David Cameron’s renegotiation demands (and I don’t think it could), that prospect is irrelevant, since they couldn’t be addressed by this route before the deadline he has set for a referendum on the UK’s membership of the EU (end of 2017). The minor Treaty amendment processes aren’t relevant to any of his renegotiation demands either.

That leaves us with the ordinary revision procedure and the two simplified revision procedures set out in Article 48 TEU. These have been discussed in posts on other blogs over the weekend, in particular the 'Boiling the Frog' blog. I’ll respond below to some of the points made there.

The ordinary revision procedure requires a ‘Convention’ to be called, consisting of representatives of national parliaments, Member State governments, the European Parliament and the Commission. The Convention meets for a while (the details have to be worked out on a case-by-case basis) and recommends Treaty amendments. An Inter-Governmental Conference (IGC) of Member State representatives then convenes to consider the proposed amendments. If the IGC reaches agreement by the ‘common accord’ (ie the positive support) of all Member States, then the resulting Treaty amendment must be ‘ratified by all Member States, in accordance with their respective constitutional requirements’.

As a variation on this procedure, it’s possible to skip the Convention stage if a simple majority (15/28) Member State governments think that it’s unnecessary, in light of the limited extent of the proposed amendments. But an (inevitably short) IGC and Treaty ratification process is still necessary. If governments want to skip the Convention stage, they must convince the European Parliament to consent to it.

What about the two simplified procedures? The first simplified procedure, set out in Article 48(6) TEU, is the only one that might be relevant to Cameron’s proposed amendments. It provides that a Decision to amend the treaties can be adopted by the ‘European Council’, ie the EU body consisting of Heads of State and Government (Cameron, Merkel, et al), acting unanimously. This Decision then has to be ‘approved by all Member States, in accordance with their respective constitutional requirements’. This procedure applies to amendments of ‘all of part of Part Three’ of the Treaty on the Functioning of the European Union (TFEU), the second of the two main Treaties establishing the EU (more below on what’s in Part Three of the TFEU). This process ‘shall not increase the competences conferred on’ the EU.

The second simplified procedure, set out in Article 48(7), provides for a shift away from unanimous voting of Member States to qualified majority voting, or for changes in the type of legislative procedure, as regards most (but not all) of the two main EU Treaties. Again, the decision concerned would be adopted by the European Council, acting unanimously. But instead of ratification or approval by national parliaments, the Decision could be adopted if no national parliament objected within six months.

Obviously the second procedure couldn’t apply to Cameron’s proposed amendments, since increasing qualified majority voting in the EU is the last thing on his mind. This means that the curtailed role for national parliaments in the second procedure would not apply to the amendments which Cameron is seeking. The Boiling the Frog blog post gets this point wrong.

Since the entry into force of the Treaty of Lisbon, Article 48 has been used four times for Treaty amendments. (There’s also been an accession treaty and some minor Treaty amendments). The ordinary revision procedure was used on three occasions, as regards: a Protocolincreasing the number of Members of the European Parliament temporarily; a Protocolon the concerns of the Irish people about the Treaty of Lisbon; and a Protocollimiting the effect of the EU Charter of Fundamental Rights in the Czech Republic.  The first of these Protocols entered into force in 2011; the second Protocol is still being ratified; and the ratification of the third Protocol stopped after a new Czech government withdrew its request, because it no longer wanted to limit the effect of the Charter.

The other Treaty amendment was based on Article 48(6). It consisted of a Decision adding a single paragraph to the TFEU in order to provide for Member States to adopt a treaty establishing a European Stabilisation Mechanism (ESM), ie a bailout fund for Eurozone Member States. This Decision entered into force in 2013.

The key questions about the possible use of the simplified Treaty amendment procedure set out in Article 48(6) for Cameron’s suggested changes are twofold. Firstly, how much easier is it to use than the usual Treaty amendment process? And secondly, when exactly can it be used? I’ll address these procedural and substantive questions in turn.

Procedural simplification

The simplified procedure doesn’t require a Convention to discuss the Treaty amendments. Furthermore, it allows a Convention to be skipped without the European Parliament’s consent; the Parliament only gets to be consulted on the Treaty amendment. There’s no IGC either, although inevitably there is some discussion among Member States, within the framework of the European Council, about the text which the European Council should adopt.

What about transparency? The last few IGCs have been fairly transparent, but when the European Council drew up an Article 48(6) amendment in 2010, no drafts of the Decision were published, and the European Council staff simply ignored my requests for access to the documents. Let’s hope this obnoxious attitude wouldn’t be applied to future cases. For a starting point, it was illegal to ignore my requests for access, since the EU’s access to documents rules apply to documents of the European Council. Furthermore,  while those rules allow for access to be refused in the interest of the institution’s decision-making efficiency, that interest can be overridden in the greater public interest. Obviously the public interest in scrutinising and debating planned Treaty amendments should take precedence.

While it's been suggested that a European Council Decision can be quietly adopted and presented as a fait accompli, that isn’t legally accurate or politically realistic. On the legal side, Article 48(6) expressly makes clear that the Decision will have to be ratified at national level. For the UK, if Cameron is doing the negotiating, that would also necessarily mean that the Conservative party either had obtained a majority at the next election or had done a deal with one or more parties to allow it to govern. In the scenario, an Act of Parliament providing for a ‘Brexit’ referendum would surely be on the statute books by the time the renegotiation of membership takes place.  

In the event of a Labour (or Labour-dominated) government, there would be no commitment to a Brexit referendum (unless that party changes its current policy). So the Treaty amendment in question would be subject to the European Union Act 2011, which requires an Act of Parliament for its ratification (see s. 3 of that Act; such a Treaty amendment is not among the list of changes which would require a referendum, according to s. 4 of that Act).

On the political side, if David Cameron secured a Treaty amendment and said he would not hold a Brexit referendum after all, he would not remain as Conservative party leader for more than 24 hours.  Anyway, since the referendum Act would presumably be on the books already, it’s hard to imagine a scenario in which a Conservative-dominated House of Commons would vote to rescind it. Equally, the Labour party says that it supports the European Union Act 2011, and if it has enough votes in the House of Commons to form a government, it should probably have enough votes to pass an Act of Parliament approving the Treaty amendment.

It’s often thought that all Treaty amendments require referendums in some other Member States, at least in Ireland. But that isn’t the case: the post-Lisbon Treaty amendments mentioned above didn’t require one. The crucial issue, according to Irish constitutional case law (see the Crottycase), is whether there is a fundamental change in the basis of Irish participation in the EU. It might be argued that a cut back in the rights of free movement of workers would constitute such a change; but the favourable immigration status of Irish people in the UK derives originally from UK domestic law, not the EU Treaties. On the other hand, an amendment to the Treaties would leave more flexibility for the UK to change that domestic law if it wished to.

Substantive issues

As a reminder, Article 48(6) can only be used if a Treaty amendment would revise Part Three of the TFEU, and would not increase the EU’s competences. Part Three of the TFEU is the biggest part of that Treaty, and sets out the main rules on the internal market, along with other EU internal policies on issues such as Justice and Home Affairs and the environment. Obviously, this means that the Treaty amendment could not be used to amend the separate TEU Treaty, or to amend the other six Parts of the TFEU.

What do these two legal constraints mean exactly? An interesting feature of Article 48(6) is that the CJEU has jurisdiction to rule on whether the European Council Decisions are valid or not. That’s because these particular Treaty amendments take the form of decisions of an EU institution, whereas the ordinary revision procedure results in acts of the Member States. The CJEU can rule on the validity of the former, but not the latter.

Challenges to the European Council Decision could come from the European Parliament (which might want to argue that the ordinary revision procedure should have been used), or via the national courts, which would send a question on validity to the CJEU. The latter process was indeed invoked when the Article 48(6) process was used before. In the case of Pringle, the CJEU was asked (among other things) whether the Treaty amendment relating to the ESM treaty was valid.

According to the Court, it was; and its judgment gives us some insight into the limits of Article 48(6). First of all, the Court assessed whether the Treaty amendment only amended Part Three TFEU. Formally speaking, that was an easy question to answer, since the amendment took the form of a new paragraph added to Article 136 TFEU concerning economic and monetary policy, and Article 136 is within Part Three. But the CJEU went further than that, and examined whether there was an indirect amendment to other provisions of the Treaties. This is surely the right approach, because otherwise it would be possible for an amendment placed in Part Three of the TFEU to limit the scope of an EU competence described in Part One of the TFEU, or to alter the Treaty amendment procedure as set out in the TEU (a separate Treaty).  

The importance of this point is that it could crop up again in respect of Cameron’s planned Treaty amendment. It could be argued, for instance, that a limit on EU workers’ rights might take the form only of an amendment to Article 45 TFEU (which sets out the basic rules on free movement of workers), it might impact upon the rules on EU citizenship and non-discrimination, which are set out in Part Two of the TFEU. Arguably, it might also impact upon the objectives of the EU, which include the free movement of workers, as set out in Article 3 TEU. Someone might also argue that it violates the EU Charter of Rights, which is separate from the Treaties but has the same legal value.

Furthermore, it’s clear that Cameron still wants to make changes to EU law besides the free movement rules. He confirmed this in his speech, when he said that he stood by every word of his Bloomberg speech of January 2013. The other changes he wants, such as a weakening of the ‘ever closer union’ rule and some changes relating to EU regulation, might not require a Treaty amendment, as I suggested earlier this year. But if Cameron did seek one, that would be problematic. The ‘ever closer union’ rule appears in the preamble, and Article 48(6) TEU cannot be used to amend the preamble either directly or indirectly. Arguably, any curtailment of the ‘ever closer union’ rule affects the entirety of the Treaties anyway. It would be easier to use Article 48(6)TEU as regards regulation issues, since the rules on the internal market and employment policy both appear in Part Three TFEU. But again it might be argued that such amendments have an indirect impact upon the objectives set out in Article 3 TEU, or the Charter.

What if the amendments took the form of a Protocol? Arguably Article 48(6) cannot be used to add, amend or repeal a Protocol, even if the content of that Protocol relates only to Part Three TFEU. The reason for this interpretation is that Protocols are attached to the entirety of both of the main EU Treaties, rather than to any Part of the TFEU as such.

That still leaves the issue of increasing EU competences. In Pringle, the CJEU ruled that the relevant Treaty amendment was acceptable on this point, since it simply confirmed the existence of competences that the Member States already had. Applying this to Cameron’s planned Treaty amendments, they could probably not take the form of permitting the EU institutions to pass legislation to curtail the free movement rules, since that might be described as a new competence for the EU, given that the institutions would be able to provide for more limits than they can at the moment.

So the amendments would have to take the form of a new power for the Member States to curtail workers’ free movement rights. In principle this should be acceptable legally, since the prohibition on increasing EU competences set out in Article 48(6) surely implies that this process can be used to decreasesuch competences. But remember, in Pringle, the CJEU stressed that the Treaty amendment was acceptable because it confirmed existing powers of Member States. The amendments to the rules on the free movement of workers would be giving Member States new powers. While this also seems to fall within the scope of Article 48(6), the CJEU sometimes takes unusual approaches to the interpretation of Treaty rules.

Conclusion

A simplified Treaty amendment for Cameron’s free movement plans is possible, but only if they remain tightly restricted to amending rules set out in Part Three TFEU, provide for powers for Member States (rather than the EU institutions), and (probably) do not take the form of a Protocol. In any event, there would likely be a legal challenge, either from those who do not like the proposed changes or who think they do not go far enough (or both). It’s possible that they would survive such a legal challenge, but it might be politically unhelpful.

Barnard & Peers: chapter 2 

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The Pro-European case for a renegotiation of and referendum on the UK’s membership of the EU

By Steve Peers

The Prime Minister, lacking a majority in the House of Commons, is harried by his Eurosceptic backbenchers. He promises a renegotiation of the UK’s membership of the EU, followed by a referendum on whether to stay in. It’s 2014 – but it’s also 1975.

That renegotiation and referendum ultimately resulted in a landslide vote in favour of staying in the EU. While the circumstances are different in some respects in 2014, there is a strong case for repeating this process.

The argument for a referendum on the EU has so far been made either by those who are opposed to the UK’s membership of it (UKIP), or as a concession to those backbenchers who are highly critical of it (the Conservative party). On the other hand, it has been resisted by those who are most in favour of the EU.

In that light, the purpose of this post is two-fold: (a) to make a pro-European case for a referendum and (b) to describe exactly how the UK should renegotiate its membership beforehand.

The pro-European case for a referendum

The case for a referendum on EU membership should stand on its own, and should not be seen as a defensive reaction to the results of the most recent European Parliament elections.

First and foremost, since 1975 there have been five major Treaty amendments, as well as substantial enlargement of the EU. The political and economic circumstances of the country, and the EU as a whole, have clearly changed. There is therefore a principled argument for allowing the voters to give their fresh consent (or not) for these developments.  

Secondly, the continued pro-European rejection of a referendum has made it possible for critics of the EU to characterise pro-Europeans as anti-democratic. Of course, it can be argued in response that representative democracy is also a valid form of democracy, one with longer and deeper roots in British political culture, and that the UK Independence Party has never (at least to date) won a single seat in the House of Commons. But in light of the growing tradition to decide important constitutional questions by popular referendum, that counter-argument has diminishing force. After all, voters cast their vote at general elections for many reasons besides their view on membership of the EU.

More broadly, pro-European opposition to a referendum makes it look as if pro-Europeans do not have the courage of their convictions. If the EU is, as they say, such a good thing for the UK, why fear a popular vote on it? In fact, on several occasions, pro-Europeans have promised a referendum on some aspect of the EU, and then apparently (if not technically) reneged on their promise. This gives the impression that pro-Europeans cannot be trusted, and so leads some voters to question the honesty of their arguments. The longer that pro-Europeans resist the case for a referendum, the more that these negative impressions will grow. Put simply, the pro-European resistance to an in/out referendum is surely damaging the pro-European cause.

While Labour and the Liberal Democrats have promised an in/out referendum, this would only take place in the event of a new Treaty transferring powers from the UK to the EU. While it is possible that there will be negotiations for Treaty amendments in the next few years, it is inconceivable that those parties would agree to the transfer of fresh powers from the UK to the EU in that context. So that referendum promise is meaningless. The Labour and Liberal Democrat position is like promising that if I had a sex change, I would stay married to my wife. But I’m not going to get a sex change.

In any event, the very offer of an in/out referendum, even  if the conditions for it to be held are unlikely ever to be satisfied, undermines the logic of the arguments against having such a referendum.

It must be emphasised that the case for a referendum is non-partisan: advocating a referendum does not necessarily mean supporting British withdrawal from the EU, or supporting any other policy espoused by the Conservative party.  

So the pro-European response to calls for a referendum should no longer be to find an excuse not have one, to promise one and renege on that promise, or to promise one that will never be held.  It should be, simply: Bring it on.

Renegotiation of UK membership

Before examining the details of renegotiation, one critical rule must be set down at the outset. Any renegotiation position must avoid insisting upon Treaty amendment, or upon a change in EU law which necessarily involves Treaty amendment (such as complete UK control over the free movement of persons). That’s because a Treaty amendment will be far more difficult to achieve, in particular if it becomes bound up with other possible amendments to the Treaties concerning other issues. Those who demand that such renegotiation positions (such as full control over the free movement of persons) should be a ‘red line’ are essentially dishonest. If that issue is crucially important to them, they should instead call for UK withdrawal of the EU, with all of the consequences which that entails.

In fact, back in 1975, other Member States agreed to a renegotiation consisting of amendments to EU secondary legislation, and the British public ultimately accepted that deal. Again, it would be possible today to address many of the issues arising from the UK’s membership of the EU by amending secondary legislation. Indeed, Jean-Claude Piris recently arguedthat the negotiation demands set out by David Cameron could all be addressed by amendment of secondary EU legislation.

As discussed in a previous post, this is correct. However, there is a risk that the critics of the EU would not be entirely satisfied by it. The better strategy is therefore to aim for an intermediate course: in conjunction with amendments to EU secondary legislation, there should be a decision of the EU Heads of State and Government, meeting within the European Council, which constitutes the EU’s response to the renegotiation request.

Such Decisions have been adopted in the past, as regards Denmark and Ireland, in order to address the former Member State’s difficulties ratifying the Maastricht Treaty and the latter Member State’s difficulties ratifying the Treaty of Lisbon. In the latter case, the European Council also agreed the broader legal and political context of this decision: the decision was ‘legally binding’, it did not constitute a Treaty amendment, and its content would be set out in a Protocol to be attached to the Treaties in future. Indeed, the latter protocol was subsequently signed as promised. The UK could be offered a similar commitment.

In order to indicate more clearly how the renegotiation would work, the annex to this post suggest a possible wording for such a decision, based upon the 2009 Decision concerning Ireland, adapted to the Conservative party’s negotiating demands.

The Heads of State or Government of the 28 Member States of the European Union, whose Governments are signatories of the Treaties,

Taking note of the concerns of the British people identified by the Prime Minister of the United Kingdom,

Desiring to address those concerns in conformity with the Treaties,

Having regard to the Conclusions of the European Council of [xx date] 2017,

Have agreed on the following Decision:

Section A

Enlargement and the movement of persons

In every forthcoming enlargement of the European Union, the current Member States agree that the free movement of persons from a new Member State will be dependent on a unanimous decision of the Council, which will be taken at the latest once the income of the new Member State concerned is 75% of that of the other Member States of the European Union.

Section B

Free movement of persons and social benefits

The Heads of State and Government confirm that, in accordance with the jurisprudence of the Court of Justice of the European Union, Member States may deny benefits to nationals of other Member States who are not workers or self-employed persons.

Note: see the recent Advocate-General’s opinion in the Dano case (press release here); see also the previous post discussing the current limits on expelling persons following unemployment and/or requests for social assistance.

Section C

Powers of national parliaments

The Heads of State and Government take note of the Commission’s firm commitment that, building upon the Protocols on national parliaments and on subsidiarity and proportionality attached to the Treaties, it will withdraw any proposal which is opposed by one-third of Member States’ parliaments.

Section D

Economic reform

The Heads of State and Government [make specific commitments as regards free trade agreements and amendments to EU legislation, or refer to such agreements and treaties which have already been agreed].  

Section E

Policing and criminal law

The Heads of State and Government reaffirm the United Kingdom’s sovereign power not to opt in to proposals for new legislation on criminal law or policing pursuant to the Protocols attached to the Treaties, and the provisions of the Treaties which require respect for the national identity and legal system of every Member State.

They confirm their strong support for the ongoing process of reform of the system established by the European Convention on Human Rights.

Note: if the process of ECHR reform is completed before the UK renegotiation of its EU membership, there could be a more specific commitment to give effect to the results of that process, for instance ratifying a new protocol to the ECHR.

Section F

Reduction of EU competences

The Heads of State and Government reaffirm that In accordance with Article 48 TEU, the competences conferred upon the Union can be reduced. In accordance with Articles 2 and 4 TFEU, the European Union can choose to exercise its competences less intensively in those areas where it shares competence with its Member States.

Note: this could be accompanied by specific commitments to repeal or reduce the scope of some existing EU legislation.

Section G

‘Ever Closer Union’

The Heads of State and Government confirm that the commitment in the Treaties to ‘ever closer union’ has no specific legal effect. It does not require that further competences be conferred upon the Union, or that the Union must exercise its existing competences. Nor, in accordance with Section D, does it constrain the Member States from adopting Treaty amendments which reduce the Union’s competences, or constrain the Union from choosing to exercise its competences less intensively.

Barnard & Peers: chapter 2, chapter 5, chapter 13, chapter 25

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Can Thomas Piketty reform capitalism and democracy in the European Union?

Steve Peers

A few months ago, no one would have predicted that a leftwing French economist would become the intellectual equivalent of a rock star, in particular the UK and the USA. Yet Thomas Piketty has managed this feat with Capital, a tome which suggests a radical new thesis about the link between capitalism and democracy.

Like other rock stars, Piketty cannot resist the call to lend to his name to good causes. But unlike Bono and Cher, his support for a French academic initiative for EU reform, published recently in The Guardian, is still linked back to his day job.

The EU used to be reasonably good at doing capitalism, but not very good at doing democracy; now it is not very good at doing either. So the Piketty thesis suggests a number of major reforms to address both failings.

The Piketty proposals

The first of three proposals is that France and Germany, and then other Eurozone countries ‘share’ (he means ‘harmonise’) their corporate income tax. This would entail a common tax base, a minimum rate of 20%, and a ‘federal’ rate of 10% imposed by a Eurozone authority. This would create a Eurozone capacity as regards investment programmes. There should also be automatic exchange of bank information within the Eurozone, an active policy for more progressive taxation of income and wealth and an ‘active fight’ against tax havens outside the Eurozone.

Secondly, there should be a parliamentary chamber for the Eurozone, made up of members of national parliaments, selected on the basis of political party representation in national parliaments. The numbers of representatives from each state would be (strictly?) proportionate to the population. It would start with those Eurozone members that support ‘great political, fiscal and budgetary union’, but would be open to all EU countries that share this goal. There would be a Eurozone minister of finance, and eventually a Eurozone government, answerable to this chamber.

Piketty and co reject the idea that a second chamber could be made up of heads of state, on the basis that a single individual cannot represent a state. They suggest that the European chamber could address issues such as corporate governance, childcare, training, social legislation and a price for carbon emissions.

Thirdly, there would be a debt redemption fund, paying off all debts over 60%, with the Eurozone parliament deciding on ‘the level of the common deficit’ each year.

As for how to achieve these aims, they assume that a Treaty change would be necessary. They assert that ‘the Treaties are being modified constantly’, such as in 2012. This is an apparent reference to the Treaty amendment relating to the European Stability Mechanism (ESM), the treaty between Eurozone states which created a sort of bail-out fund.

Comments

Assuming, for the purposes of argument, that Piketty’s economic analysis is valid, how feasible are the suggested remedies to address the undoubted challenges to capitalism and democracy within the European Union?

Starting with the reformers’ final point, Treaty reform is much harder than they suggest. While it is true to say that there have been several Treaty amendments in recent years, they were all minor. The four amendments agreed since the Treaty of Lisbon consist of: the single new paragraph of the Treaty relating to the ESM, which the CJEU said was not necessary anyway (Pringle); a Protocol clarifying the position of Ireland; a Protocol concerning the effects of the Charter of Rights on the Czech Republic (dropped when that country withdrew its request for it); and a Protocol on the numbers of MEPs. The latter three amendments were all leftovers from the Treaty of Lisbon, either being promises made to get it ratified (the Irish and Czech Protocols), or a transitional measure to take account of the delay in in its entry into force.

In comparison, a plan to negotiate a more significant Treaty amendment relating to economic governance collapsed in December 2011, when the UK and the other Member States could not agree whether there should be specific safeguards built in for the UK’s financial services industry. The last successful major Treaty amendment, the Treaty of Lisbon, took years to negotiate and ratify (taking into also account the efforts to drawn up and ratify the Constitutional Treaty). Perhaps Piketty and his colleagues were all on sabattical in 2005, when the French public rejected that Treaty in a referendum?

Having said that, a Treaty amendment would not be necessary as regards all of the points which they raise. Given the difficulties in agreeing any significant Treaty amendment, and the time it would take to come into force even if the effort is successful, any advocates for EU reform should consider first what reforms can be agreed within the current EU legal order, including enhanced cooperation, and/or in the form of treaties between a limited number of Member States outside the EU legal order.

As regards Piketty’s first proposal, a harmonised corporate tax base and a minimum rate could be the subject of EU law, by means of enhanced cooperation (which means using EU law to adopt measures for a minimum group of nine Member States, if not all Member States wish to participate). In fact, there is already a proposal to harmonise the corporate tax base under discussion. Alternatively, a treaty between Member States could address this issue, if it complies with other EU measures on corporate tax, as well as the Treaty requirement of non-discrimination between Member States.

However, the EU has limited powers as regards wealth and income taxes. On these issues, though, there could be a treaty among Member States, which would have to be consistent with the EU Treaty rules on non-discrimination.

There are many EU measures on the exchange of tax information an EU issue already, and the idea that a group of Member States fight against tax havens within the EU is hugely problematic due to EU free movement rules. Similarly, negotiations with non-EU tax havens can only be carried out by the EU, because to the extent that the issues concerned (like the exchange of information) have been dealt with by internal EU laws already, the EU has exclusive external competence to negotiate such treaties.

As for a Eurozone budget, it should be possible to arrange for one within or outside the Treaties, in either case without amending them.

On the other hand, Piketty’s third suggestion, the debt redemption fund, really will require Treaty reform, since it is likely to infringe the existing ‘no bail-out rule’ by making some Member States at least partly liable for the debts of other Member States.

This brings us to the institutional arrangements. While a Eurozone parliamentary chamber (and the accompanying government and ministers referred to) could be created in a treaty among Member States, any overlap between the powers of these bodies and the existing EU institutions is legally problematic, since the CJEU ruled in Pringle that treaties between Member States were also subject to the rules on the EU’s exclusive external competence. Clearly the proposals of Piketty, et al, would in part create such an overlap, since the Eurozone parliament and government would address issues such as carbon pricing and social legislation. Moreover, any powers concerning a debt redemption fund would entail an underlying Treaty amendment in the first place.

It is also unhelpful that the reform proposals ignore the very existence of the Council – the EU body which is made up of ministers from Member States (as distinct from the European Council, made up of heads of state), and which legally speaking does constitute an existing second legislative chamber (alongside the European Parliament) in the EU.

Certainly, the substance of any reform initiative could be more easily taken forward by means of reforming existing bodies, rather than creating new ones. It might be fairly quick and simple to agree on the creation of a Eurozone-only element of the European Parliament (if MEPs from non-Eurozone states agree to abstain, or if a treaty between Member States creates such a formation and gives it powers distinct from the normal powers of the European Parliament).

The one strong argument for creating a new Eurozone chamber is that such a radical step may be the only way politically to address widespread concern about the legitimacy and democracy of the EU, in particular as a response to the result of the upcoming EP elections. The particular make-up of that parliament being proposed would also address the concerns of the German Federal Constitutional Court about the current make-up of the European Parliament (ie the degressive proportionality that gives smaller Member States more MEPs per person). Again, though, the only safe way to create such a chamber legally is to ensure that its powers are clearly distinct from those of the EU institutions, for instance focussing at first on the harmonisation of taxes which the EU has not addressed, as well as supervision of the functioning of the ESM (which is mainly the subject of an international treaty).

One final consequential suggestion (although it would entail a Treaty amendment). The creation of a Eurozone parliamentary chamber would be bound to lead to disputes over exactly where to locate it. The obvious answer is Strasbourg – in return for the European Parliament finally being liberated from holding most of its plenary meetings there, and moving fully to Brussels. Surprisingly, these French reformers do not raise this issue.

Barnard & Peers: chapter 2, chapter 3, chapter 19

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Protecting the rule of law in the EU: should it be the Commission's task?

Steve Peers

For some time now, in particular in light of disputes about the behaviour of governments in Romania and Hungary, there has been concern about the protection of the rule of law within the European Union. While the EU can sanction infringements of EU law as such (via means of the Commission or Member States bringing infringement proceedings pursuant to Articles 258 and 259 TFEU), and can punish a Member State for serious and continuing breaches of EU values, including the rule of law (Articles 2 and 7 TEU), there is no means to address possible violations of EU values which are not directly connected to EU law and which fall short of such a serious and persistent breach. Moreover, the threshold to punish a Member State pursuant to Article 7 TEU is very high - the unanimity of all other Member States is required. While it is possible for the Council to address a warning to a Member State that it there is a 'clear risk' of it breaching EU values (Article 7(1) TEU, this also requires a high threshold (four-fifths of the Member States in favour, not counting the State concerned), and has never been used either.

The Commission has now issued a communication which aims to fill that gap. It sets out a detailed strategy which it will follow in future to address concerns about the rule of law which fall neither within the scope of the infringement procedure nor which call for the use of Article 7 TEU. Unlike the Commission's parallel discussion papers on the future of Justice and Home affairs policies, this new communication does not depend on endorsement by the European Council.

The new framework

The Commission identifies key features of the rule of law: legality, legal certainty, non-arbitrary exercise of power; independent and impartial courts; effective judicial review; and equality before the law. These concepts are further explained in an annex to the new communication.

As for the process, it is based on a list of principles: a dialogue with the Member State concerned to find a solution; an objective and thorough assessment; respect for the principle of equal treatment; and the indication of concrete actions to solve the problem. It consists of three stages.

In the first stage, the Commission will collect information, including from the Council of Europe and the EU Fundamental Rights Agency. There is no reference to what might trigger such an initial investigation. If the Commission believes that there is a systemic threat to the rule of law, it will send a 'rule of law' opinion to the Member State concerned, setting out its concerns and asking the Member State to respond. But there will be meetings with the Member State concerned before issuing this opinion. The Commission believes that the Member State will be under an obligation to cooperate, pursuant to Article 4(3) TEU (the loyal cooperation rule). The start of the Commission's assessment and the sending of the opinion will be public, but the content of the discussions will not. It is not clear whether the content of the opinion will be public.

If there is no satisfactory settlement, the Commission will move to the second phase: a 'rule of law recommendation', where is there objective evidence of a systemic threat which that Member State is not addressing. This will indicate the reasons for the concerns and the steps to be taken, which may include specific actions which that Member State should adopt. Sending the recommendation and its main content will be public.

In the third phase, there will be a follow-up to the recommendation, examining whether problems continue to recur. If the follow-up is not satisfactory, the Commission might trigger Article 7 TEU.

Comments

First of all, in order to address public concern about the possible infringement of the rule of law, it is important that the process be transparent. While it understandable that discussions with the Member State concerned remain confidential, the Commission should have committed itself to publishing the content of its opinion and the full context of the recommendation, any evidence received during the process, and the documents relating to follow-up.

Secondly, it might be questioned whether the Commission is the best-placed institution for this task. Its proposal broadly resembles the infringement procedure (a letter to a Member State, followed by a reasoned opinion, then seizing the Court of Justice), but that procedure ultimately results in a judgment by the CJEU, if it reaches that stage. The procedure also resembles the EU's economic governance process, but that process culminates in a decision by the Council. Given that the Article 7 process entails decisions by the European Council and the Council, perhaps those bodies (alongside the European Parliament) could be best placed to become involved in the rule of law determination.

Of course, that would entail a risk of politicisation of the process (as is clear from the application of the effective deficit procedure in practice). But the Commission is not immune to politicisation either, in particular if its President is in effect elected pursuant to the results of the European Parliament elections, as many EP parties presently suggest.

This could be avoided by handing the process over to the CJEU, but such new jurisdiction cannot be conferred without Treaty amendment. During the arguments concerning Hungary, the Commission considered the prospect of suing Hungary pursuant to the infringement procedure on the basis that 'packed' courts could not guarantee the effective and impartial application of EU law. Of course, there is a catch-22 here: a Member State flouting the rule of law may not care what the CJEU says.

It would therefore be best if the Commission relies, as heavily as possible, upon the reports of impartial outside observers such as the Venice Commission. In the long run, the best solution might be for some form of new quasi-judicial mediation body to be set up, avoiding both the charges of politicisation and the risk of non-enforcement of judgments.


Barnard & Peers: chapter 9

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The possibility of a UK referendum on the EU: The plot thickens

Steve Peers

What to make of the latest twist in the complicated tale of the UK's relationship with the European Union?

Back in January 2013, the Conservative party committed itself to a policy of renegotiating the UK's membership in the European Union by 2017, and then submitting the results of that renegotiation to an 'in/out' referendum, which would decide whether the UK stayed in the EU. It would only be in a position to deliver on that promise if it won a majority of seats in the next general election (May 2015), or at least came very close to holding a majority (possibly a small number of MPs from other parties would support its renegotiation and referendum pledge). So a referendum depended on the result of the next general election.

Now, an 'in/out' referendum at first glance seems more likely, with a change in the policy of the Labour party on March 11th to support such a referendum. However, the Labour party supports a referendum on a different basis than the Conservative party. It does not intend to aim for a renegotiation of UK membership, but rather supports an 'in/out' referendum only if there is an amendment to the EU treaties which transfers significant powers from the UK to the EU. This appears to align the Labour party policy on this issue with the longer-standing policy of the Liberal Democratic party - which could be relevant if the two parties decide to consider a coalition government or other form of political agreement following the 2015 election.

In fact, the European Union Act 2011 already requires a referendum in such circumstances - but it need only be a referendum on whether to approve the changes resulting from this Treaty amendment, rather than an 'in/out' referendum.  So the change in the Labour party's policy is really only meaningful if there is such a major Treaty amendment.

What are the odds of this? While there is some prospect of a major Treaty amendment to address the issues facing the eurozone, which might also apply to non-eurozone States that wished to participate in those changes, it would be easy to draft a treaty which made major changes, but exempted the UK from them. This would be particularly easy if those changes only applied to Member States applying the single currency, perhaps including those Member States obliged to apply it (all other Member States except the UK and Denmark) or all non-eurozone Member States that wished to participate.

This scenario could be combined with a renegotiation of the UK's position (if the Conservative party holds a majority), or could simply leave the UK's position untouched. It would seem odd to pass up the opportunity to, at the very least, clarify the relationship between the eurozone and non-eurozone Member States, which would be directly relevant to such a Treaty amendment.

A more likely scenario is that, if any amendments to the EU primary law are deemed necessary, they will take the form of a treaty among a group of Member States, avoiding the Treaty amendment procedure altogether. This process was approved by the CJEU in the Pringle judgment, at least as regards the treaty establishing the European Stabilisation Mechanism. It was also applied as regards the fiscal stability treaty, after David Cameron vetoed the possibility of a Treaty amendment to that end. Such treaties do not need all the Member States, or all their signatories, to enter into force, and at least in some circumstances can use the EU institutions to implement them.

So the net result of today's policy change is a slightly increased likelihood of using such a procedure in order to avoid a Treaty amendment. This was already likely in the event of a Conservative government; now it is also likely if the Labour party takes office. This outcome does nothing to improve the transparency or complexity of EU law. It would have been preferable to take the opportunity in the near future to consider the role and functions of the EU more fundamentally, not only as regards the UK, in order to attempt to rebuild its rather tarnished democratic legitimacy. 


Barnard & Peers: chapter 2

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Would an independent Scotland have to reapply to join the EU?

Steve Peers

There has been extensive discussion, during the current campaign on the referendum on Scottish independence, on the legal issues relating to an independent Scotland's membership of the European Union. Would an independent Scotland automatically be a member of the EU? Would the Treaties have to be renegotiated, with Scotland as a Member State participating fully? Or would Scotland have to apply to 'rejoin' the EU as a non Member State? Would an independent Scotland retain the UK’s current opt-outs from the single currency and Justice and Home Affairs (JHA) matters?

I have looked at these issues before, as part of a longer analysis of the legal issues arising from the EU Treaty amendment process, published in the Yearbook of European Law. However, now that the issue has arisen in practice, it's a good time to revisit the topic.

General points

First of all, as a matter of (non-legal) principle, it's clear what the answer ought to be. If Scottish independence is supported by a majority of Scottish votes, then, given that the legitimacy of the vote is accepted by the rest of the UK, Scotland ought to remain an EU Member State with the same opt-outs that the UK now has. Our views on the desirability of independence (for the record, I would be sad to see Scotland leave the UK) should not influence our interpretation of the legal position, or our recognition of the democratic legitimacy of the process. But nor can we assume that the legal position is aligned with what it ought to be.

Secondly, one aspect of the debate is worth noting: it seems to be taken for granted that Scotland ought to remain an EU Member State after independence. From the perspective of the Eurosceptic Deep South of the UK, this is surprising. There are, of course, some Eurosceptics in Scotland: the Shetland Islands and Western Isles voted against the Common Market in 1975. But polls show 2-1 support for remaining in the EU, so it doesn't seem to be an issue. Perhaps Scots just want to make sure that after separation from England, they would still have something to whinge about.

This raises a further interesting scenario: what if Scotland votes against independence this year, but the UK as a whole votes to leave the EU in a few years' time? Could support for independence then increase, given the link with the more popular (in Scotland) case for EU membership?

Finally, it's worth noting that Scottish independence would redress one 'reverse discrimination' issue in EU law, and exacerbate another one - assuming that both Scotland and the remaining UK were both EU Member States. It would end the anomaly by which students from other Member States have the same generous treatment as regards tuition fees in Scotland as Scottish students, while students from the rest of the UK do not. This might well raise questions about the affordability of this policy.

And it would create a new route for British citizens with third-country national family members to avoid the increasingly obnoxious constraints placed by British immigration law upon family reunion with their loved ones. Scottish politicians have talked about increasing immigration to Scotland; the combination of harsh immigration laws in the remaining UK and the application of EU free movement law would mean that they would get their wish.

The legal issues

Would it be possible for an independent Scotland simply to become an EU Member State without further ado, simply by virtue of its independence? The analogy here would be with Algeria, which technically remained a part of France (as a matter of EU law) until the Treaties were amended to catch up with reality in 1993. However, there is a world of difference between a third country which is no longer part of a a Member State and no longer wishes to remain part of the EU, and a State which, having been part of a Member State, wishes to succeed to that Member State's membership of the EU.

The starting point is that the EU Treaties (unlike the founding treaties of some other international organisations) list the Member States of the EU: see particularly Article 52 TEU, and the other provisions referred to in my Yearbook article. It must follow that to alter the list of Member States a Treaty amendment is needed, even where part of an existing Member State has seceded. It is not sufficient for the Member States to agree informally among themselves to this end, for the Court of Justice of the European Union (CJEU) has ruled that the Treaty can only be amended by using the formal procedures provided for to this end (Case 43/75 Defrenne II).

So which Treaty Article would apply to those amendments? Article 48 TEU provides for the Treaties to be amended by unanimous consent of the Member States, while Article 49 TEU provides for a new Member State to join by means of an accession treaty negotiated between the existing Member States and the new Member State, and then ratified by all of them. The key difference between the two procedures from an independent Scotland's point of view (there are other differences, but let's leave them aside for now) is that it would be in a stronger position as a would-be Member State (Article 48) than as a non-Member State (Article 49). So this is, not surprisingly, the view of the Scottish government.

However, the use of Article 48 has to be rejected. The basic legal problem is that only Member States can be party to a Treaty amendment pursuant to Article 48, whereas Scotland would not be a Member State, since it would not be listed in Article 52. If Scotland were a Member State already, recourse to Article 48 to amend the Treaties merely to confirm that fact would not be necessary. It cannot simply be asserted that the listing of the United Kingdom as a Member State in Article 52 implicitly covers Scotland also, after independence, since the whole purpose of holding an independence referendum is precisely to become a separate State. As others have pointed out: after a divorce, you're single.

Sir David Edward has argued that the drafters of the Treaties did not intend that a portion of a Member State which voted to secede from an existing Member State would have to apply as a new Member State. There is no evidence of what the Treaty drafters thought of this issue (if they thought about it at all), but given that some Member States face secessionist movements or even (in the case of Cyprus) breakaway self-declared States, it's hard to believe that all Treaty drafters took such a view.

Also, it has been argued that depriving Scots of EU citizenship would be a breach of the citizenship provisions of the Treaties, since they would lose that status without their consent. But this begs the question: for the reasons I set out here, a vote for an independent Scotland would be a vote to leave the EU. By the same token, the foundation of the EU on the principles of democracy (Article 2 TEU) is not as such relevant, since the second sentence of Article 2 states that these principles are common to the Member States. The same goes for the principle of sincere cooperation set out in Article 4(3) TEU. This argument essentially boils down to: an independent Scotland would remain a Member State, because it is a Member State. It's entirely circular.

The Scottish government seeks to circumvent this chicken-and-egg problem by stating that the current Member States (ie the 28 Member States not including Scotland) could amend the Treaties by means of Article 48 in the 18-month period before Scottish independence took effect, in order to provide for immediate Scottish EU membership upon independence day. It's not quite clear why, as a matter of politics, the other Member States would wish to do Scotland this enormous favour. Anyway, as a matter of law, they couldn't do it: as Professor Kenneth Armstrong has pointed out, Article 49 is obviously the lex specialis provision regarding the addition of new countries to the list of Member States set out in Article 52. However, it would be possible to use Article 48 to amend Article 49 on this point, at the same time as providing for new rules on Scottish membership. This seems an unlikely scenario, however, since it would encourage secessionist movements in other Member States, even if the amendment to Article 49 were limited to the case of Scotland.

In fact, in my view, Article 49 arguably has to be used in conjunction with Article 48, since any Treaty amendment which gives a permanent opt-out for a new Member State from significant EU policies goes beyond what can be addressed in an accession treaty (see my Yearbook article for elaboration), and presumably Scotland would want to keep the UK's current opt-outs. On the other hand, it might reasonably be argued that an exception to the latter rule might be made here, since the legal position as regards the territorial scope of those opt-outs would not really be changing.

Having said that, I am not convinced that the use of Article 49 necessarily would be that difficult in practice. In principle, it should be possible to draw up a very short accession treaty quite quickly, given that Scotland is already applying EU law by virtue of its integration into the United Kingdom. There would be a technical problem negotiating with a State which does not yet exist, but there could be informal talks during the period leading up to independence, with the accession treaty signed on the day of independence. It would arguably be possible (as Professor Armstrong has pointed out) to apply the accession treaty provisionally, pending full ratification, or retroactively if necessary.

An alternative route is to agree a very far-reaching association agreement between the EU and Scotland to ensure that EU law still applies to Scotland in the interim period before the accession treaty can be ratified or (if need be) negotiated. This treaty could in turn be applied provisionally from the date of independence (there are many precedents for the provisional application of treaties between the EU and third States, and Article 218 TFEU expressly provides for this possibility).

This potentially simple legal process could, however, be complicated by purely political problems, if one or more Member States (and it would only take one) wished to slow down the process for whatever reason. It cannot simply be assumed at this stage that this would (or would not) necessarily happen. While Sir David Edward has argued that there would be an obligation to negotiate in good faith in the event of a Scottish 'yes' vote, it is hard to find a provision in the Treaties which supports that proposition.

So, the bottom line is that when Commission President Barroso and Vice-President Reding argue that Scottish membership of the EU would entail (a) an accession treaty and (b) be lengthy and difficult, they are clearly right on the first point, but wildly speculating on the second.


Barnard & Peers: chapter 2 

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Is the European Union an ideal worth dying for? Thoughts on the future of Ukraine and the EU

Steve Peers

Undoubtedly there were many reasons to find fault with the Yanukovych government of Ukraine, but the catalyst for start of the protests which ultimately brought his government down was his refusal to sign an association agreement with the European Union. Some of the protesters killed last week were even flying the Union flag. Let's assume that fresh elections are held, as planned, in the near future (on the same day as the European Parliament elections) and result in a pro-European government. In that case, this apparently strong enthusiasm of a proportion of the Ukrainian population for joining the European Union will raise fundamental questions about the Union's future.

The initial steps following the election will be relatively easy. First of all, the association agreement will be quickly signed and ratified. This treaty goes much further to link Ukraine to the EU's legal order than the prior Europe Agreements (with Central and European countries) did, and the current Stabilisation and Association Agreements (with the Western Balkans) do. In particular, it contains an enormous list of specific EU laws which Ukraine must comply with by certain dates.

Another potential 'early harvest', which would be very popular with the Ukrainian population, would be the abolition of the visa requirement for Ukrainians to visit the EU. There is already a process to this end set up between the EU and Ukraine, and it could certainly result in a successful result in the near future if there is enough effort on the Ukrainian side - as the examples of the Western Balkans and Moldova prove. Various other treaties on specific issues could also be agreed between the EU and Ukraine. Yet I doubt if this will be enough.

The Copenhagen and Thessaloniki declarations, which set out the EU's clear willingness to admit the countries of (respectively) Central and Eastern Europe and the Western Balkans if the relevant conditions are met, have formed the core of the EU's relations with the countries concerned since their adoption. The realistic promise of EU membership for these countries formed the basis of broad and stable political support for widespread economic and political reform.Of course, in some cases, the promise of possible EU accession is not enough to overcome a country's manifold problems, as the example of Bosnia and Hercegovina shows. But it is hard to see how that country would be better off without that promise.

Indeed, the recent history of Ukraine arguably shows that the absence of a commitment by the Union to admit the relevant country in principle potentially weakens the pro-reform forces politically. Following the Orange Revolution of 2004, the EU would not commit to possible enlargement, suggesting instead the close association agreement which has since been negotiated, and pro-reform forces faced difficulties ever since. Of course, the EU's lack of enthusiasm for Ukrainian membership cannot have been the only reason for those difficulties. But again, the pro-reform forces would surely have been better off if that commitment had been made. You cannot build broad and stable political support for widespread economic and political reform around the goal of EU membership when the EU palpably doesn't want your country to join.

So this time, should the EU make a genuine commitment to admit Ukraine if the conditions are right? On the one hand, Ukraine fits the geographic criteria for membership, and has various historical, cultural and linguistic links with current Member States. It's very diverse, and its borders are historically arbitrary, but the same could be said of other Member States (and non-Member States too). If the political and economic circumstances there change, the potential accession process could always be put on hold for as long as necessary, as it has been in Bosnia and Hercegovina. Its accession would be of major strategic importance for the EU, significantly limiting Russia's sphere of influence in Europe.

On the other hand, the Union's elites and its population clearly have 'enlargement fatigue', and Ukraine is bigger, poorer and potentially more volatile than most of the countries which have joined in recent years. The weeks leading up to a European Parliament election are not an ideal time for politicians to consider making such a brave political commitment.

How can these conflicting considerations be reconciled? The Union has gone as far as it can in terms of developing a close association with Ukraine, in the form of the association agreement which will likely soon be signed. More protocols could be added to this treaty, but that would miss the point: pro-reform forces in Ukraine need a concrete commitment to EU membership as an anchor to build broad support for a significant programme of political and economic reform.

What the Union needs, then, is not a new form of association: it is very good at coming up with them, but that won't be sufficient in this case. What it needs instead is a new form of membership. Let's call it 'associate membership' (although that term is bound to be confused in practice with mere association) for convenience's sake.

An associate member would be legally a member of the EU, with many of the rights and obligations of EU membership, but not all of them. For instance, addressing one of the biggest public concerns in current EU Member States, the free movement of people would not fully apply. This is different from the transitional period for free movement of workers that has applied to many EU enlargements, in that there would be no fixed end date for the limitations concerned. Indeed, there would be no legal commitment to admit the country concerned as a full member of the EU, leaving that possibility subject to the current system for agreeing accession of new Member States.

This new possibility need not be confined to Ukraine: it could also be used for Western Balkan states, Turkey and other eastern neighbourhood countries. Indeed, it could also be used for existing Member States which may wish to scale back their current degree of membership in the EU without leaving it altogether. The United Kingdom would be the most obvious candidate for such a change of status, participating perhaps in a 'common market' version of associate membership.

Of course, the associate members could not expect to vote on EU measures which did not apply to them yet (again differentiating them from new full Member States), including any Treaty amendments that did not apply to them. Difficult issues would arise as regards their participation in EU institutions, but these could surely be solved if the political will were present.

Undeniably, this new form of EU membership could only be introduced by way of Treaty amendment, and many Member States dread starting the Treaty amendment process. But, if the political will were there, it would need only a minor amendment to the Treaties to provide for the existence of the new concept, with the details to be worked out in the treaties with the countries concerned, supplemented perhaps by a general legal framework governing the new form of EU membership (to be adopted by the Council or European Council by unanimity, with the consent of the European Parliament). This Treaty amendment could be severed from other possible Treaty amendment issues, reducing the political difficulties in negotiating and ratifying Treaty changes.

Back in 1989, the European Union responded quickly and fully to the end of the Cold War, putting in place a framework for enlargement that ultimately led to the reunification of much of the continent within the EU's legal order. The passion and enthusiasm of pro-European Ukrainians, as well as the Union's need to think creatively about ways to address its relative decline of influence in regional politics, suggest that the time is ripe to create a new form of membership in the European Union.


Barnard & Peers: chapter 2, chapter 24

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