IMCO Committee to hold hearing for new Croatian Commissioner today

A new Member State, a new Commissioner. With the EU expanding to 28 Member States on 1st July, the Commission will also be adding a new member to its College. This is in line with the compromise struck with Ireland over the Lisbon Treaty, ensuring that each Member State will have one Commissioner.

The nominated Commissioner for Croatia is Neven Mimica, a member of the ruling Social Democrat Party in Zagreb and former minister for European Integration. Barroso plans to allocate the Consumer Protection portfolio to Mimica, so his European Parliamentary hearing will be before the Internal Market and Consumer Protection committee ("IMCO").

The hearing will take place in 1 hour (9:30-12:30 CET) and can be live streamed on the Parliament's website.

The European Parliament has put together a nice flowchart showing how Commissioners are appointed (outside of when the Commission as a whole is elected) here.

The Eurocrisis and Industrial Relations

That the Eurocrisis has changed industrial relations in Europe is the understated conclusion of the Commission's new paper, Industrial Relations in Europe 2012. The report comes from the DG for Employment, Social Affairs and Inclusion, headed by Commissioner László Andor, and focuses on:

• how the outcomes of European social dialogue can make a real difference to the working lives of Europeans, for example on improved health and safety at work and working conditions;
• industrial relations in the public sector (public administration, education and healthcare) in light of the government spending cuts in many Member States;
• the state of social dialogue in Central and Eastern Europe;
• the involvement of social partners in unemployment and pension system reforms and in the transition towards an economy that is more sustainable and less dependent on fossil fuels.

It's a hefty document at 338 pages, and in the light of the release of the Commission's in-depth review of macroeconomic imbalances earlier this week (see Social Europe Journal for an interesting critique of the Commission's approach here), it's may be tempting to see it as a note of dissent from one of the few Commissioners from the PES family, but he's insisted that there's no contradiction - and, reading it, the language is carefully constructed to portray support for dialogue with social partners as a part of the austerity process:

"This report argues that social dialogue mechanisms and instruments, which have served Europe well over many decades, are still relevant means of addressing the crisis and contributing to creating favourable conditions for growth and employment."

In itself the language is interesting as it shows how technocratic the Commission still is, years after Margot Wallstrom pushed for more politics in the Commission. Social dialogue is presented as a way of legitimising the implementation of austerity policies and of tailoring them to get the best results for employment and growth (comparisons between Ireland and the other bail-out countries are interesting here, although the renegotiation of the public sector Croke Park Agreement is facing some hurdles for trades union acceptance). The report's endorsement of social dialogue will be welcome for the left (as will it's call for progress on social dialogue in Central and Eastern Europe), though the failed attempt of the Commission to address concerns over collective action and the Viking and Laval cases and the review of the Working Time Directive show that there is plenty of room for improvement when it comes to practical policy.

The Politics of Appointing Borg

The European Parliament has to decide whether or not to confirm Tonio Borg as the new Commissioner for Health and Consumer Policy after John Dalli was controversially brought down by an OLAF investigation. Borg has met with opposition in the EP for his conservative views, particularly on divorce, abortion and cohabiting couples. The Greens, ALDE, United Left and Socialists and Democrats have concerns over Borg suitability and might reject him. Although Borg performed well in last week's hearing, saying that he will stick within the treaties and Charter of Fundamental Rights, these concerns remain, and the Parliament has released a check-list for consenting to his appointment:

"[Borg] should publicly commit to the following:

• The delivery of the legislative proposal on tobacco products by January 2013;
• The adoption of legislative proposals on animal cloning and novel food by mid-2013;
• The full respect of the March 2013 deadline for the ban of animal testing for cosmetics;
• Better enforcement of EU law on animal transport;
• Full respect of the EU Charter on Fundamental rights, in particular of Article 21, as well as of EU anti-discrimination legislation and case-law;
• Recognising the innate dignity of all citizens of the EU, regardless of their sexual orientations, actively working to address health inequalities and to acting against stigmatisation of people with HIV and AIDS;
• Actively supporting EU policies with regard to women’s rights."

There seems to be some confusion over the concerns these political groups have over Borg's appointment and  their connection to his prospective portfolio. While the battle over values echoes that of Rocco Buttiglione's rejection, the wider ideological battle is less obvious because the EP isn't electing the Commission en bloc, but is deciding on a replacement Commissioner, so the debate within the EP has been a bit more focused on the specific portfolio, so critics have been linking his conservatives views to the area of health, despite the EU's lack of power in this area. As Martin Holterman writes in his great article on how political Commissioner appointments could/should be:

"Judging, for example, from the headline of this opinion article on Public Service Europe, Mr. Borg’s critics seem to consider their objections to concern his “suitability” for the Health and Consumer Affairs portfolio in particular. They are not worried about the ideological balance of power in the College of Commissioners, and they are not even necessarily worried about ideology in general, but rather they seem to argue that his ideology will get in the way of his job performance in concrete ways. The author of this opinion article,Monika Kosiñska from the the European Public Health Alliance, for example, lists the candidate’s views on abortion, homosexuality and immigration as being particularly problematic. This is particularly curious because I’m not entirely sure how the Health and Consumer Affairs portfolio touches on these fields."

But while the views of the candidate and his or her specific competence are important, the general ideological  views of the candidate and the political make-up of the Commission does matter and is an important political issue. Commissioners vote on draft proposals before they are put to the Council and the Parliament, so the political viewpoints of each Commissioner matters for all areas of Commission policy, not just his or her own portfolio. Just this week Commissioner Reding introduced a watered-down version of her boardroom quotas law - watered down due to opposition that included fellow Commissioners who could vote to block the proposal.

This collective responsibility of the College of Commissioners means that its political make-up is a valid issue for the Parliament in deciding on new Commissioners. The fact that respect for women's rights is included on the list, and that the Commission is putting forward draft legislation in this area, shows that the ideology of the candidate is a relevant and live issue, and MEPs in the centre-ground and on the left should make it clear that the Commission should reflect the political make-up of the Parliament (or, better yet, the majority in Parliament). How will he influence policies in the areas of employment, social affairs, or justice and home affairs? For the political groups on the left, they should not vote for a candidate who holds such emphatically opposing political views unless something is won by way of coalition or concession.

OLAF investigation brings down Health Commissioner Dalli

An OLAF investigation into attempts by the tobacco industry to influence EU legislation has led to the resignation of Maltese Commissioner John Dalli, who had health as his portfolio.

The investigation was into whether a Maltese entrepreneur had used contacts with Dalli to influence future proposals on tobacco legislation. The complaint to OLAF was launched by the company Swedish Match (a tobacco producer) in May 2012, and the report was delivered to the Commission yesterday. The report found:

"...that the Maltese entrepreneur had approached the company using his contacts with Mr Dalli and sought to gain financial advantages in exchange for influence over a possible future legislative proposal on snus. No transaction was concluded between the company and the entrepreneur and no payment was made. The OLAF report did not find any conclusive evidence of the direct participation of Mr Dalli but did consider that he was aware of these events."

So while Dalli did not accept any bribes, OLAF considers that he was aware of these dodgy dealings. It is now for the Attorney General of Malta and the Maltese judiciary to decide on further action.

Dalli rejects the allegations.

Will Barroso set out his vision for the Eurozone?

Tomorrow Barroso will give his third State of the Union speech of the parliament. The last two have been focused on the legislative programme for the upcoming year, so they have been more of the traditional speech from the throne that are held in constitutional monarchies rather than the more fundamental state of the union speeches that the title implies. This year the expectation seems to be that Barroso will focus on the integration needed for economic union - what will be the balance between legislation for the upcoming year and integration rhetoric?

Commissarial Speech 2011

But what about the progress since his last speech? Barroso focused mainly on the economy and foreign affairs. He declared his support for the Financial Transaction Tax, where the Commission has published an impact assessment but there's little prospect of it being implemented. The Single Market Act is slowly being put into action and legislation in this area (e.g. on public procurement and professional qualifications) has been introduced and/or passed. Project bonds are now in a pilot stage. On foreign affairs, the EU is clearly not any more important globally than it was before.

So there's been some progress on the main goals set out and plenty of ongoing work to do.

The six-pack of legislation on rules for the Eurozone were also passed and the draft two-pack was introduced and is currently under debate in the Parliament.


Commissarial Speech 2012

The Commission is entering the last 2 years of its mandate, so the focus will start to shift to finishing its legislative priorities and plans (such as the two-pack, market regulation and the new general data protection laws) rather than introducing new draft legislation that the Commission might not have time to bring through the legislative process. That treaty change is on the political agenda (with Van Rompuy putting together some proposals), this is Barroso's (and the Commission's) chance to make a big political pitch for the type of EU he wants to see. It's also hard to see any legislative rabbits being pulled out of the hat at this point or many new investment or growth policies, particularly given Barroso's agreement with the general line on austerity and the crystallisation of Member State positions on the EU budget. So we should see a speech on the direction of the EU and European integration.That said, vision and ambition aren't the words that spring to mind when it comes to Barroso.

Apart from the economic crisis and discussion on European integration, the Union's justice and home affairs policy really needs attention. The area got scant attention last year and problems have built up, with the bust-up between the Council and the Parliament over Schengen (leading to the Parliament suspending talks on several important pieces of legislation) being the key event in the last 6 months. Will Barroso try to woo the Parliament back into working in this area, and can he present a coherent vision for the EU's security strategy? It's a delicate issue since he won't want to risk offending his audience by pushing Parliament too hard to give in to the Council and there is little Barroso can offer the Parliament here, but the lack of a political narrative and political leadership for justice and home affairs apart from a shopping list from the Member States is a major weakness.

The speech will be on at 9:00 CET on September 12th in the European Parliament.

The Fiscal Stability Regulation

The second proposal of the two-pack, the Fiscal Stability Regulation (PDF), focuses on budgetary surveillance where Member States are “experiencing or threatened with serious difficulties with respect to their financial stability”. The Regulation would only apply to the Eurozone Member States. The Regulation would mean that Eurozone Member States will, just like Member States requesting precautionary assistance from the EFSF, ESM or IMF, be subject to a higher level of budgetary surveillance than would normally be the case under the Eurozone legislation so far.

The Regulation

- The Commission can decide whether a Member State should be put under enhanced surveillance, and whether to prolong that status every 6 months. The Commission must put Member States receiving financial assistance on a precautionary basis under enhanced surveillance if they actually draw on the precautionary aid;

- If a Member State is under enhanced surveillance, it must adopt measures aimed at addressing the sources or potential sources of difficulties and, on request from the Commission, the Member State shall: communicate information on the financial situation of financial institutions under the surveillance of national supervisors to the Commission, ECB, and European Banking Authority; carry out stress tests to test the resilience of the banking sector to financial and macroeconomic shocks; be subject to regular assessments  of its supervisory capacities over the banking sector; communicate information needed for the monitoring of marco-imbalances

- The Commission will conduct regular review missions in Member States under enhanced surveillance. If further measures are needed, the Council may recommend that the Member State seek financial assistance on a qualified majority vote;

- Where financial assistance is sought, the Commission will prepare an analysis of the sustainability of the Member State’s government debt;

- The Member State receiving financial assistance will prepare a draft adjustment programme in agreement with the Commission to be approved by the Council by QMV. If the Commission highlights significant deviations from the programme, the Council may make a finding of non-compliance by QMV;

- The monitoring under adjustment programmes will suspend the monitoring over other Eurozone legislation;

- There will be “post-programme surveillance” as long as a minimum of 75% of the financial assistance received by a Member State has not been repaid, and this period may be extended by the Council, voting by QMV. For this surveillance, the Commission will conduct regular review missions and the Council may recommend corrective measures to the Member State on a QMV vote;

- For qualified majority votes, only Eurozone members can vote in procedures under this Regulation, with the Member State concerned excluded from the vote.

European Parliament Report

The report in the Economic and Monetary Affairs Committee was drafted by Jean-Paul Gauzes (EPP). The report was adopted by Committee by 25 votes to 4, with 13 abstentions. It was passed in a plenary vote, but I haven’t been able to find out what the vote was.

The report contains 72 amendments, and the main changes are:

- Like the Excessive Deficit Regulation, more referenced to employment and social protection have been made in the recitals, and in the first article with regard to wage formation and collective agreements;

- Amendment 8 would include a recital referring to ECJ case law that Member States can restrict the free movement of capital on ground of public security, stating that this may be possible to fight tax evasion where a Member State faces serious difficulties in retaining financial stability. It would also insert a reference to the ability of the Council, on a Commission proposal, to authorise restrictions in the free movement of capital concerning third countries. Provisions addressing this are also to be included as articles;

- It would make it a requirement for Member States to report debt issuance plans to the Commission and Council;

- The report seeks to tie the decision that a Member State is at risk more closely to objective factors, including warnings from the European Systemic Risk Board;

- Requiring the Commission to examine the potential negative spill-over effects generated by Member States, including in the field of taxation, and the Council may make recommendations to the Member State regarding this on a proposal from the Commission;

- Requiring the Commission to report the findings of its reviews (including post-programme reviews) to the European Parliament;

- Requiring Member States intending to request financial assistance to inform the European Parliament;

- That the assessment of government debt sustainability also include an assessment of the impact of the adjustment programme on the Member State’s ability to repay, and the Commission will make public its methods of economic assessment;

- The Commission would be given the power to approve draft macroeconomic adjustment plans, with the Council being able to reject an approval by qualified majority voting. Likewise, the Commission can adopt recommendation for a new draft plan where it judges the old one to be insufficient; a recommendation which the Council can reject. (This would increase the power of the Commission in comparison to the original draft);

- The Commission can also make changes to the adjustment programme where there is a significant gap between forecasts and realised figures, which the Council can reject by QMV within 10 days of the decision;

- Similarly, the Commission will be empowered to decide whether a Member State has significantly deviated from the adjustment plan, with the Council having 10 days to reject this decision;

- Adjustment plans must take into account the need to ensure sufficient means for fundamental policies such as education and healthcare;

- A Member State subject to an adjustment plan shall audit existing debt to assess the reasons for its accumulation;

- Social partners and civil society shall be given the opportunity to express their views on the Commission public recommendations and opinions provided for under this Regulation;

- A Member State can be placed under “legal protection” if it is going to default on a decision of the Commission (which can be rejected by the Council within 10 days). Under legal protection a Member State should be able to stabilise and honour its debt. Legal protection would: have the effect of “close-out netting” or “credit event” provisions becoming inoperative; maintain (freeze) loan interest rates and ensure that new loans (apart from financial assistance) are to be reimbursed as a priority; creditors of the Member State must make themselves known to the Commission within 2 months or have their debts extinguished; the Member State submits a recovery and debt settlement plan to the Commission for approval;

- For post-programme surveillance, the Commission can take these decisions, with the Council having the power of rejection.

Thoughts

The European Parliament has put forward some amendments to increase scrutiny and oversight over the budgetary monitoring, with more reporting to the European Parliament and opening up Commission recommendations and opinions to the comment of social partners and civil society. There are also references to the need for the social impact of the adjustment programmes to be assessed and for the necessary funding for health and education to be ensured.

However the drive to empower the Commission is striking. In all cases the Council can reject the Commission’s decision so the Commission still needs the Council’s consent in a way, but it matters that the consent can be implied through inaction and that it doesn’t have to be won in a vote. This would make it more likely for the provisions of the Regulation to be exercised since it is politically difficult for Member States to vote on issues for another Member State. The “legal protection” amendments are the most radical. I don’t know much about state bankruptcy, but the provisions seem to be far too concerned with ensuring that creditors can be paid off (and by implication that the failed adjustment programme be taken as far as possible to secure enough repayment as possible, despite this failure). That the Commission can declare this protection without an application by the Member State goes too far in empowering the Commission. There is no way this amendment will pass in the Council, and it should be noted that the Commission is considering ways bankruptcy could be dealt with in the Eurozone.

Excessive Deficit Regulation

The Excessive Deficit Regulation (PDF) builds on the six-pack legislation’s provisions on budgetary surveillance.

The Regulation

The Regulation would establish a common budgetary timeline (mid-term budgetary framework to be published by 15^th April, draft budget laws published by 15^th October, and budget laws should be adopted by 31^st December), and require the creation of national independent fiscal councils for monitoring the implementation of national fiscal rules for achieving budget balance.

For budget monitoring, the relevant information is (simplified list taken from Article 5(3)):

(a)    The targeted budget balance as a percentage of GDP;

(b)   The projections at unchanged policies for expenditure and revenue as a percentage of GDP;

(c)    Targeted expenditure and revenue as a percentage of GDP;

(d)   A detailed description of measures to be included in the budget to bridge the gap between the targets in (b) and (c);

(e)   The main assumptions about expected economic developments and important economic variables, based on independent macroeconomic growth forecast;

(f)     Any additional indications on how recommendations to the Member State will be met.

The Commission will give its opinion on the draft budgetary laws by 30^th November, and national parliaments can require a Commission presentation to them. There will also be an overall assessment for the Eurozone.

When a Member State is under the excessive deficit procedure it falls under closer budgetary scrutiny, with regular reports to the Commission on the execution of the budget on the general government and sub-sector levels. Under Article 7(6), the Commission can require a Member State to carry out and report on a comprehensive independent audit of its accounts and provide additional information on its progress on the excessive deficit. The Regulation would increase the Commission’s power in monitoring Member States’ budgets and involvement in budgets where there is an excessive deficit procedure in force.

European Parliament Report.

For the Economic and Monetary Affairs Committee, Elisa Ferreira (S&D) drafted the report for the Parliament’s response at first reading. The report was endorsed in Committee by 18 to 12, with 14 abstentions, and in plenary by 501 to 138, with 36 abstentions. The report was endorsed by an EPP-S&D-ALDE-Greens/EFA coalition.

The report submits 81 amendments that will be the Parliament’s starting negotiating point with the Member States in the Council. The main changes are:

- Greater reference to employment and social partners to be added to the recitals;

- It would add (non-binding) calls for a Financial Transaction Tax and a Common Consolidated Corporate Tax Base to the recitals;

- Specifies that the Regulation does not affect wage formation or collective agreements;

- Would define “particularly serious not compliance” as a deviation of 1% GDP in one year or an average of 0.5% GDP each year for two years from the budgetary objective if there are no exceptional circumstances;

- Gives some more flexibility with the deadlines;

- “Expected economic developments” will include an estimation of the assumed macroeconomic multiplier effects (so stimulus packages can be taken into account);

- Specifies that the Commission’s power to specify content of draft budgetary plans is through delegated acts, which brings it under closer control and scrutiny by the Parliament and Council;

- The European Parliament can also require that the Commission present its budgetary plans to it and the relevant EP Committee, as well as the Eurogroup, will discuss the Commission’s opinion on national budgetary plans and the budgetary situation in the Eurozone. The Commission may update its opinions in the light of these discussions;

- Overall assessments of the Eurozone shall also include stress tests that provide “an indication of the risks to public finance sustainability in the event of adverse financial or budgetary developments.”

- The requirement of Member states to report debt issuance to the Commission and the Eurogroup will be included;

- The Commission will be required to present a report on a roadmap towards Eurozone Stability bonds and present a proposal for a Eurozone sustainable growth instrument aiming at mobilising approx. 1% GDP per year over 10 years, including an increase in EIB capital and project bonds, to be invested in European infrastructure, science and technology;

- Eurozone Member States may agree an annual coordinated public debt issuance framework (this is for a future proposal, however);

- A European Redemption Fund shall be established based on joint liability and strict conditionality for 25 years (after which it will be wound up), covering debt over 60% GDP of non-assistance programme Eurozone Member States on a roll-over period of 5 years. There will also be a fiscal consolidation strategy and a structural reform agenda. The ERF’s day-to-day management will be under the Commission following a regulation by the EP and Council;

- Under the excessive deficit procedure, the relevant Member State will present its national plan, including areas of European Added Value, such as EIB credit lines;

- The Commission shall present a report, and possibly a proposal, on a European Debt Authority to the Parliament and Council that would be responsible for managing and coordinating all issues relating to the annual debt issuance plan of the Member States.

Thoughts

The report is clearly very ambitious, particularly inserting the creation of a European Redemption Fund, likely as a way of aiding Italy and Spain. The Parliament is keen to introduce a greater scope of variables to the process and to highlight the importance of social partners, respect for wages and collective agreements, and European solidarity through national plans indicating EIB and other economic help. It’s also clear that the Parliament is using this opportunity to push its ideas on to the agenda and to overcome being overshadowed by the European Council summitry that’s dominated the past 2-3 years of crisis. The Parliament has also tried to introduce more democratic and parliamentary controls over the Commission’s power, especially in ensuring the oversight of its delegated powers by the Parliament and Council. By reserving a right to demand Commission reports and the right of debate, the Parliament tried to ensure that all these plans are open to political debate and discussion.

Still, the need for the Parliament to cram requirements for further reports and debates on further aspects of Eurozone reform highlights how one-dimensional the current “fiscal union” is. The more radical elements are sure to be thrown out or heavily watered down – I don’t expect to see the redemption fund survive negotiations with the Council – but there are some grounded ideas for improving the content of reporting, planning, and of improving democratic oversight.

Member States v the Commission: the contradiction behind the EU budget

Member States reacted with shock that the Commission proposed a 6.8% increase for the EU budget, and the Commission argued it is necessary for the EU to be able to meet the commitments it has already made.

Really, it seems there's a contradiction between how the Member States act in the Council, and how they act outside it. In the Council they're open to all sorts of ideas and are trying to secure funding for themselves (the fight to retain structural funds and CAP money will begin in earnest if it hasn't already - Irish MEPs have already started to voice concerns over CAP).

Lately this kind of attitude can be seen in the UK's approach to the proposed EU PNR Directive, which will require the collection of data on all passengers flying into and out of the EU for the purposes of fighting crime and terrorism. The UK Minister for Immigration said to the House of Commons European Scrutiny Committee that they managed to get agreement in the Council for the proposal to permit Member States to collect PNR data for intra-EU flights and for other modes of transport if they wanted. On the question of depersonalising data gathered that has been stored for other 2 years (to limit the data the government holds on people), the Committee reports:

"Whilst UK experience suggests most requests for access to full PNR data will be made within the initial two year period, the Minister recognises that the requirement to mask data (rather than to archive it in accordance with existing practice in the UK) will have operational and cost implications for which the UK may seek EU funding. [Emphasis mine]."

The UK is a major supporter and player behind EU security legislation, and if it feels that it could summit applications for EU funding over these issues, the question has to be: where does the money come from? There are far more Member States which do not have any PNR system in place at all and would have to create their own if this Directive passes - should they get funding as well? This application might not yet have been made, but if Member States are caught in a culture where commitments - and funding applications - are easily made, but little thought is given to how they will be paid for, then perhaps its better to turn to a system of own resources, where the EU raises its own funds, within limits and subject to the consent of the Council and EP.

The more the institutions have responsibility for raising funding as well as spending money - and the more we can hold them directly accountable for it - the more pressure there will be to rationalise what the money will be used for.

ACTA referred to the European Court of Justice

The Commission has decided to refer the Anti-Counterfeiting Trade Agreement to the ECJ to assess its compatibility with EU law, including the fundamental rights guaranteed under EU law. Commissioner Karel de Gucht said:

"We are planning to ask Europe’s highest court to assess whether ACTA is incompatible - in any way - with the EU's fundamental rights and freedoms, such as freedom of expression and information or data protection and the right to property in case of intellectual property.

As you are no doubt aware, within the EU institutional process, the European Commission has already passed ACTA to national governments for ratification. The Council has adopted ACTA unanimously in December and authorised Member States to sign it. The Commission has also passed on ACTA to the European Parliament for debate and a future vote.

That said, I believe the European Commission has a responsibility to provide our parliamentary representatives and the public at large with the most detailed and accurate information available. So, a referral will allow for Europe’s top court to independently clarify the legality of this agreement."

However he goes on to say:

"As I have explained before the European Parliament on several occasions, ACTA is an agreement that aims to raise global standards of enforcement of intellectual property rights. These very standards are already enshrined in European law. What counts for us is getting other countries to adopt them so that European companies can defend themselves against blatant rip-offs of their products and works when they do business around the world.

This means that ACTA will not change anything in the European Union, but will matter for the European Union.

[...]

So let me be clear: ACTA will change nothing about how we use the internet and social websites today – since it does not introduce any new rules. ACTA only helps to enforce what is already law today.

ACTA will not censor websites or shut them down; ACTA will not hinder freedom of the internet or freedom of speech.

Let's cut through this fog of uncertainty and put ACTA in the spotlight of our highest independent judicial authority: the European Court of Justice.

This clarity should help support a calm, reasoned, open and democratic discussion on ACTA - whether at the national or at the European level. We will also be in contact with the other European institutions to explain this step and why it would make sense that they make the same move."

It seems odd to subject ACTA to judicial review when its provisions are open to national interpretation in places, while not reviewing the current IPR regime in the EU. After all, if the current regime has already largely introduced the ACTA system domestically, would a negative judgment by the Court result in a major investigation into the existing laws...?

This judicial review is mainly aimed at providing a visible counter to the accusations leveled at the Agreement by the European public. Because of the secret nature of the negotiations and the timing of the SOPA and PIPA legislative battles in the US, the Commission hasn't been able to effectively put its side of the story across, so it's relying on a court judgment to solve this problem. Given the vague nature of some of the provisions and the false accusations that have been flying around, the ECJ's judgment will be able to refute some of these. However this avoids the issue of whether we aren't balancing rights correctly through our intellectual property rights regime. The criticisms of the Treaty aren't just based on fundamental rights.

This balance has been pushed for a long time simply in the direction of ever stronger enforcement in a way that doesn't take into account the the issues raised by the internet age, particularly via the new focus on indirect "economic advantage" as opposed to commercial advantage. There are many uses of media now that are different from both their commercial use and the use of physical goods - from classic commercial activities which do need to be protected. We need to think more about the purpose of IPR and how far we should restrict "indirect economic advantage"; whether or not it should be punished at the same level as commercial advantages, or if different approaches should be used to reflect the social and economic value and impact of the relevant activity. And what about setting damages at the level of the retail price rather than the more proportionate level of the loss suffered?

This isn't a simple, headline grabbing fight over fundamental rights (although it raises some questions over how we want to balance them in practice), but also over the usefulness, proportionality and effectiveness of our IPR laws. I hope throwing out some of the wilder claims about ACTA does not puncture a necessary debate - will the EP measure up?

What legal action is the Commission taking against Hungary?

The Commission has announced that it will be taking legal action against Hungary, but only so much can be done under EU law. While people point out that:

"Viktor Orbán's regime combines the extreme centralisation of economic assets (including the expropriation of the private pension funds, of several public foundations and the forthcoming centralisation of the municipal government's assets) and the monopolisation of power in a single party that intends to dominate every aspect of social and private life, turning citizens into subjects. The improvised nature of many of the new laws creates a wide margin for arbitrary decisions that increase dependence and insecurity.

In addition to a frontal attack on civil liberties, the government has redistributed economic assets (particularly through the tax system and investment allocations) in favour of interest groups close to Fidesz and a restricted layer of the well-to-do. This group zealously defends the party's power and executes its guidelines.

At the same time – through the unilateral rewriting of the labour code, the restriction of union action and collective bargaining rights, the radical dismantling of social welfare nets and independent social care institutions – the government exposed the most vulnerable social groups (the poor, the unemployed, Roma, pensioners, sick and handicapped) to the unfolding economic crisis. Life is precarious for those who live on wages and have no reserves or additional revenue."

...the Commission doesn't have the jurisdiction (and neither does the European Court of Justice) to take Orban's government to task over all these issues. The Commission has decided to focus on the areas of the independence of the judiciary, the independence of the central bank, and the independence of Hungary's data protection authorities: probably because the EU legal case is strongest here. Let's look at some of the reasons behind the legal action:

"1) Independence of the national central bank

"The Commission has identified several breaches of primary law, notably breaches of Article 130 TFEU stipulating full independence of the central bank and of Article 127(4) TFEU requiring consultation with the ECB "on any draft legislative provision in its field of competence".

•Article 130 TFEU states that: “neither the ECB, nor national central bodies, from bank … shall seek or take instructions from Community institutions or any government of a Member State or from any other body”.

•Article 127(4) TFEU stipulates that "the ECB shall be consulted […] on any draft legislative provision in its field of competence"

Moreover, 14.2 of the Statute of the European System of Central Banks and of the ECB as well as Article 4 of Council decision (98/415/EC) on timely consultation of the ECB were not respected. On a number of elements, the Commission has invited the Hungarian authorities to provide clarification.

The infringements identified in the letter of formal notice concern both the MNB law ('Magyar Nemzeti Bank') but also the new constitution.

Under the MNB law, the Minister can participate directly in the meetings of the Monetary Council, offering to the government the possibility to influence the MNB from the inside. Similarly, the agenda of MNB meetings needs to be sent to the government in advance, thus impeding its capacity to hold confidential discussions. Also, changes in the remuneration scheme for the Governor are made again immediately applicable to the incumbent, while they should apply only as of a new term to avoid using salaries to put pressure on the MNB. Finally, the Governor and the members of the Monetary Council have to take an oath (of fidelity to the country and its interests) whose text is problematic given that the Governor of the MNB is also a member of the General Council of the ECB.

The Commission has doubts on the rules of dismissal for the Governor and the members of the Monetary Council which are prone to political interference (even the Parliament can propose to dismiss a member of the Monetary Council) and possible misuse. Also the frequent changes of the institutional framework of the MNB raise doubts, for instance via the increase in the number of Monetary Council members together with the possibility of increasing the number of deputy governors without due consideration of the MNB’s needs.

Moreover, a constitutional provision regulates the possible merger of the MNB with the financial supervisory authority. While the merger is not a problem as such, the MNB Governor would become a simple deputy chairman of the new structure, which would structurally encroach on his independence.

2) Independence of the judiciary

The infringement case affecting the judiciary focuses on the new retirement age for judges and prosecutors and relates to Hungary's decision to lower the mandatory retirement age for judges, prosecutors and public notaries from 70 years to the general pensionable age (62 years) as of 1 January 2012.

EU rules on equal treatment in employment (Directive 2000/78/EC) prohibit discrimination at the workplace on grounds of age. Under the case-law of the Court of Justice of the EU, an objective and proportionate justification is needed if a government decides to reduce the retirement age for one group of people and not for others. This principle was affirmed when the Court ruled on 13 September 2011 that prohibiting airline pilots from working after the age of 60 constitutes discrimination on grounds of age.

In Hungary's case, the Commission has not found any objective justification for treating judges and prosecutors differently than other groups, notably at a time when retirement ages across Europe are being progressively increased and not lowered. The situation is even more legally questionable because the government has already communicated to the Commission that it intends to raise the general retirement age to 65.

As regards the independence of the judiciary, the Commission is also asking Hungary for more information regarding new legislation on the organisation of the courts. Under the law, the president of a new National Judicial Office concentrates powers concerning the operational management of the courts, human resources, budget and allocation of cases. There is no longer collegial decision-making of the operational management of the courts or other appropriate safeguards. One person alone now makes all important decision on the judiciary, including as regards the appointment of judges. In addition, the mandate of the former president of the Supreme Court, who was elected for six years in June 2009, was prematurely terminated at the end of 2011. In contrast, other former judges of the Supreme Court continue their mandate as judges of the new Curia, which has replaced the Supreme Court. The Commission expects detailed answers of the Hungarian authorities to be able to decide whether further infringement proceedings are needed.

3) Independence of the data protection supervisory authority

The case on the data protection supervisor relates to Hungary's recent decision to create a new National Agency for Data Protection, replacing the current Data Protection Commissioner's Office as of 1 January 2012. As a result, the six-year term of the Data Protection Commissioner currently in office, who was appointed in 2008, will be prematurely put to an end. There are no interim measures until the term of the current Commissioner's term ends in 2014.The new rules also create the possibility that the prime minister and president could dismiss the new supervisor on arbitrary grounds.

The independence of data protection supervisors is guaranteed under Article 16 of the Treaty on the Functioning of the EU and Article 8 of the Charter of Fundamental Rights. In addition, EU rules on data protection (Directive 95/46/EC) require Member States to establish a supervisory body to monitor the application of the Directive acting in complete independence. This has been confirmed by the Court of Justice. In its ruling in a case concerning Germany (C-518/07 of 3 March 2010), the Court underlined that data protection supervisory authorities have to remain free from any external influence, including the direct or indirect influence of the state. The mere risk of political influence through state scrutiny is sufficient to hinder the independent performance of the supervisory authority's tasks, the Court ruled."

The outcry over what is going on in Hungary has been very political - in the sense that it's been about the high politics of rights and what makes a fair democracy - and rightly so. The Commission's response reveals the nature of the EU's power when it comes to protecting these key rights: as an organisation of sovereign Member States, the EU can only act where the Member States have contravened EU law. The EU treaties don't define a specific governing structure that Member States have to have, such as a presidential or parliamentary system or how their judiciary is organised (though it does set human rights and democratic tests for candidates to pass before they join), so the points of EU law can be quite narrow. This is especially obvious when it comes to the Commission's action over the judiciary laws - the action focuses on the unfair dismissal of serving judges, rather than the general separation of powers between the judiciary and the executive. The press release references these wider questions and demands answers, but whether or not there will be further legal action depends on whether or not the measures breach EU law.

The Commission (and the EU) is therefore not well placed to become a crusader for liberal democracy in its Member States, so there's a limit to what we can expect. The EU can, however, remove Hungary's EU voting rights via Article 7 TEU as a last resort, but this would require a super-majority. The Commission should investigate the changes to the electoral system and judiciary with an eye to using Article 7 if Hungary refuses to reverse any abuses. While the EU and the Commission's power might be limited (and we need to bear this in mind when Hungary claims it has changed its judicial rules in line with EU requirements), we should demand that all Member States live up to minimum democratic standards if they want to stay in the EU.

Today the European Parliament will be debating the Hungarian situation.

Brussels v Brussels: Belgium and the EU clash over the budget

The Commission’s scrutiny of Belgium’s draft budget has caused a political backlash from PS (PES) government minister Paul Magnette:

““Wie kent Olli Rehn? Wie heeft ooit het gezicht van Olli Rehn gezien? Wie weet waar hij vandaan komt en wat hij heeft gedaan? Niemand. Terwijl hij zegt hoe wij onze economische politiek moeten voeren.”

[“Who knows who Olli Rehn [Commissioner for Economic and Monetary Affairs] is? Who has seen Olli Rehn’s face? Who knows where he comes from and what he’s done? Nobody. Yet he tells us how we should conduct our economic policy.”]”

This was sparked by the Commission’s intervention through its budgetary surveillance role:

“The commission caused a flurry in Belgian political circles over the weekend by warning that the country needed to curb this year's spending. Rehn suggested the government's calculations that the budget deficit for 2012 would be 2.8 percent were too optimistic and asked for a cut of between €1.2 billion and €2 billion.

Belgium eventually settled on freezing €1.3 billion in spending, a move that saw it escape the threat of monetary sanctions on Wednesday (11 January) when the commission assessed the matter.”

Although the Commission has given Belgium a clean bill of health for its budget, how far the Commission should influence how Member States stick within the rules remains an issue. It’s up to Member States to meet their budget targets, but they’re free to do so however they want – it looks like the actual issue here was the credibility of the forecasts that the Belgian government built its budget on. Clearly the forecasts will have to be credible (if Member States could pluck numbers out of thin air or pick and force the Commission to accept them, then the rules would lose much of their force), but the political argument is over the democratic legitimacy of the Commission to involve itself in the sensitive area of national budgets. The Commission has rebutted the argument that it doesn’t have the democratic legitimacy to oversee the budgets:

“"De regels zijn regels die zijn goedgekeurd door het Europees parlement en door alle lidstaten", reageerde woordvoerder Amadeu Altafaj. "De 3 procent (de grens voor begrotingstekorten, nvdr) is dus geen dictaat van de Europese Commissie."

[“The rules are rules passed by the European Parliament and by Member States,” said spokesman Amadeu Altafaj. “The 3 procent (the limit for the budget deficit, nvdr) is therefore not a diktat from the European Commission.”]”

From the Commission’s point of view (and that of its supporters), it is applying the technical criteria set by the Parliament and Council (see three of the “six pact” acts for enforcement here, here and here [all PDFs]). But Magnette’s frustration goes further – he says the EU’s policies will cause a 15 year long recession, and that the Commission is a bastion of the “right and ultra liberal”. The Commission is dominated by the EPP, and it is a very political institution. But what’s happened with the “six pack” legislation on budgetary monitoring is that the political and economic assumptions behind the EU’s current direction have been enshrined in the technical rules governing the economic union. The Commission can say that it’s just applying the rules passed by the Member States and the democratically elected Parliament because, well, that’s what’s happening. However the Commission proposed these laws and it was politically active in shaping them and guiding them through the Union legislature – if Magnette (or indeed any government ministers or parliamentarians) want to push for different rules or attack the Commission for its political direction, it’s better done during the passage of legislation or when building a coalition for new legislation.

Like the new fiscal compact, there’s a problem for the left here. For there to be the necessary trust to build an economic union with more solidarity, there needs to be a certain level of discipline: it cannot be a one-sided bargain between those (currently) with deficit problems and the (current) core creditors. Magnette is right that the Commission is highly political (though we should distinguish between its political and technical functions), but those opposed to its political direction need to be equally political back. There needs to be support for Commission proposals for them to pass and the left will need a clearer strategy and narrative if it’s to build a coherent and effective opposition. Somehow I don’t expect it to be built around Di Rupo’s socialist-led government...

And Di Rupo? He distanced himself from Magnette’s remarks, citing Belgium’s pro-European traditions.

Shifts on the New Fiscal Compact

The EU Observer has reported some changes in the drafts on the new fiscal compact:

"The role of the EU commission in taking debt sinners to court for not properly transposing the golden rule into national law, an idea introduced in the second draft at the demand of the European Parliament, has also been watered down to the commission "issuing a report" at the demand of another country adhering to the pact.

The power of taking countries to court is instead to reside with countries - a u-turn going back to the first draft - after French worries the commission risks becoming too powerful.

[...]

Another watering down of earlier drafts rules out introducing new sanctions for countries that break rules on overall public debt, opting instead to limit such penalties to ballooning budget deficits.

[...]

The 'working group' which is pumping out the texts - a mixed bag of member states' officials led by a Luxemburger - kept another EU parliament demand, to enshrine the intergovernmental pact in EU Treaty law in the next five years.

But it also changed the threshold of countries needed to ratify the pact for it to come into force from 15 to 12. In the first draft, the threshold was even lower, at nine countries."

The "golden rule" on deficits will no longer have to be inserted into constitutions, so the final deal could simply require an act of parliament to ensure governments don't spend over a certain limit. This would get around the need for referendums in several Member States, but it could open up political problems in the future if budgets passed by parliaments are being challenged by other EU countries in the courts - a potentially politically toxic situation.

France's position on the Commission's powers is revealing and worrying for the credibility of the pact. Given that it's simply a Stability and Growth Pact Plus, further entrenching the current rules, the institutional and political credibility of the mechanisms actually working was the key problem. Of course, if any contracting country can take another to court, then it's more likely to happen than under the current system which requires a vote in Council. Still, France wants the Commission to be kept away from this position of power because diplomacy could still influence the outcome - and this would be much more advantageous to larger Member States who could throw their weight around more. The potential for differences in treatment echo the complaints from the smaller Member States that France and Germany were among the first to break the Stability and Growth Pact in the last decade. Also, the value of integrating the deal into the current treaties for the European Parliament is questionable if the Commission's role is minimal, since there would be little for the EP to act on.

Finally, setting the minimum number of Member States at 12 for the treaty to come into effect will, if it's in the final draft, have a big effect in the parliamentary votes and referendum campaigns as it ensures that even some Eurozone states could reject it (and stay outside it), and the deal wouldn't be completely stopped. The fear of exclusion (and the effect of this on the economies of the excluded Eurozone States) will make opposing the deal more problematic, and it will be a major feature of the Yes campaigns.



UPDATE: Honor Mahony has written a good blog on the problems these shifts reveal for the future of the negotiations.

Our Commissioner, for a given value of "our"...

The Commissioner for Financial Programming and Budget, Janusz Lewandowski, has been held up by the ruling Civic Platform Party in Poland as a means of getting the country a lot more money from the EU budget:

"Speaking in a wood-panelled room among fellow Civic Platform members, Lewandowski says: "We're talking about billions, even 300 billion zloty [€69 billion]. Thanks to this money we could reduce youth unemployment, even by half."

Fellow party member and foreign minister Radek Sikorski then pops up, adding: "That's what these elections are about. They are about money for Poland and who will get more of it. Why do we think we will do better? Because we have a strong team [gestures to Lewandowski] which can negotiate successfully.""

This has raised questions over the Commissioner's oath of independence, which Commissioners give when they are sworn into office to pledge that they will work in the general interest, and remain independent of national governments. EUObserver has reported that the Commission asserts that this was in line with the Commission's Code of Conduct:

"Commission spokeswoman Pia Ahrenkilde Hansen on Tuesday (20 September) said he did not cross the line because his remarks were of a "general" nature.

"The president [Barroso] is aware of the participation of the commissioner in this specific activity and it's our opinion that the commissioner, who intervened in a personal capacity, passed a very general message about the benefits of the general budget to Poland ... This activity, for which the commission punctually gave its agreement, is compatible with the code of conduct," she said."

Having a "national Commissioner" is a big issue. While there are far too many Commissioners, reatining one per Member State is a sticking point that is unlinkely to go away soon - the prospective loss of a Commissioner for 10 out of every 15 years was a major reason for the Irish rejection of the Lisbon Treaty in the first referendum, despite equal treatment of the proposed rotation of Commissioners between big and small Member States. Though the Commissioners may swear independence (you can find the oath as a PDF here), they are generally held to be a national voice in the College of Commissioners.

At the moment Commissioners are nominated by national governments,* accepted by the Commission President elect, and elected by the European Parliament (as part of the Commission as a whole), with the Commission being accountable to the EP between elections. The independence of the Commission, and the indivdual Commissioners could be strengthened by bringing an end to the national nominations. So while there could still be one Commissioner per Member State, the choice of who the Commissioner actually is would be for the Commission President and the Parliament to decide. However, this would require a treaty change.

*The Council adopts a list of Commissioners based on the suggestions of Member States which are effectively Member State nominations in practice. (Art. 17(7) TEU.

Onward, Community Soldiers

The Community method must be saved, cry the Community warriors. The European Council seems to be encroaching on Community territory: crisis after crisis has been dealt with by intergovernmental deal-making and policy taskforces set up by the President of the European Council, Herman Van Rompuy. The Lisbon Treaty had increased the powers of the European Parliament to set it on par with the Council as a co-legislator in the vast majority of policy areas, yet the Community method - where the Commission proposes and the Council and Parliament legislate and decide - seems to be threatened enough to elicit pledges of support from the Liberal and Social Democratic leaders in the EP to Commission action that takes on intergovernmentalism. Though the Commission has struck back against France over the Roma - an important and welcome development - the Commission doesn't seem to have the same leading role as it had 20 years ago.

There is no Community any more, of course. The Lisbon Treaty did away with the old pillar structure of the EU, so now there's just the Union (though the residue of the internal divisions of the pillar structure still remain within the Union).

Grahnlaw has written about the Community method and the European Council under Van Rompuy. Stanley has welcomed Van Rompuy's style of leadership, with his attempts to try and involve heads of state and government in the EU more (proposing more frequent meetings, for example), so that they take more ownership of the EU and European policies.

On the surface, involving European leaders more in the European Union is a good idea, but the embrace of this method of integration seems to be an optimistic attempt of integration through socalisation of the European leadership. It's important that there's solidarity in Europe, but I cannot see being extended by monthly meetings by the European Council. Member States show solidarity out of community spirit, but also because belonging to the same Union has brought similar interests. Intergovernmentalism is a necessary part of the EU, but the European Council is a bandage for crises, and should be restricted in its role.

The increase in power of the European Council in comparison to the Commission also weakens the EP. If part of the role of the EP is to scrutinise the executive, by taking over the responsibilities of the Commission in setting policy, the European Council renders the EU less transparent and accountable. It is also bad for most Member States. Supranationalism - the Community method - is a good check on the big Member States. When diplomacy, intergovernmentalism and vetos (whether formal or informal) are strong features of the system, the big 3 can dominate, since it's easy to steamroller small objecting states, and when there's a Member State consensus, the EP may be faced with a fait accompli. In comparison, QMV, though voting is weighted according to population size, levels the playing field by making big states more open to conpromise because of the need for coalition building, and the Parliament, though it may encounter consensus in the Council under QMV, is not faced with a fait accompli from on high and may not be as inhibited in the legislative process.

The "Community method" is key to the (more) transparent, open and more democratic decision-making of the EU. It also has a longer-term quality to it as decisions do not have to take place within the pressured short-termist deal-making of a summit. As I have written before, the importance of the supranationalist elements of the EU is not just based on the enthusaism of federalists, but is a key part of the good will in, and the smooth running of, the intergovernmental side.

So I think that there's a need to defend the "Community method". There is a new group set up earlier this month by MEPs to do so: the Spinelli Group. It is a very federalist group, and I am torn over it. On one hand, it is important that the Community method is not circumvented by a domineering European Council. On the other hand, the group seems to be a new form of the "European Alliance" that Verhofstadt has called for before, and which I strongly reject. The Community method and the EP will be well served by strengthening the coherence and political will of the Europarties and developing a clear, visible politics for the citizen. Member State pacts cannot be successfully countered in the loong run by cosy consensuses in the Parliament. If the Spinelli Group focused on defending Parliament and strengthening the Europarties, then it would be more relevant and attractive than a federalist's club.

[As for Grahnlaw's question of how the Community method and the EU's way of operating should be termed now, perhaps the "Union method" could be used in the same manner as the "Community method". Perhaps opposed to the "Council method" or "Special method"? Although that's only my suggestion to the cosmetic part of the question...]

The Commission bravely missed a good opportunity to stay quiet

"This is not how you speak to a major power like France," said France's junior EU minister, echoing Chirac's comments on the support of some eastern European member states for the Iraq War: "It is not really responsible behavior. It is not well brought-up behavior. They missed a good opportunity to keep quiet."

It was a response to yesterday's strong position taken by Commissioner Reding on the treatment - the mass deportations - of the Roma in France:

"My patience is wearing thin. Enough is enough," Ms Reding said, while pounding her fist on the pulpit.

France will be taken to court by the Commission for breaching EU law, which does not permit mass explusions based on ethnicity, which seems to be have been explicit French policy according to a French memo on the policy. Though the explusions were taking place too quickly for a case-by-case approach (which would have been permitted), French officials had been reassuring the Commission that they would deport people on a case-by-case basis. This deception by French officials empowered to discuss the matter in Brussels has upset Reding too.

I'm glad the Commission is finally taking a strong, outspoken stance on the issue. Reding had made an earlier statement, but this goes much further and has rightly attracted more attention, and is a welcome counter to attempts to make the explusions respectable by Europeanising the issue.

France's response highlights the government's view on Europe: as a place where a privillaged few major powers are treated differently to the smaller member states. This is a destructive attitude for the EU, since it erodes the confidence of small states and of citizens in the Commission when this vision is played out. When Paris feels that it can issue a lettres de cachet and not be effected by the rule of law, it naturally strikes at the heart of a system backed up only by the rule of law. It is easy for the Commission to become trapped between the big states and to play down its voice when they verge on breaking the law, so it's great to see the Commission bravely miss an opportunity to remain quiet.

You can watch Reding's statement here.

PES September Seminar: Primaries

The PES Primary Campaign activists have been invited to the September seminar of the PES in Brussels. The seminar is the beginnning of the internal PES debate on the Presidental candidate selection process. It's great to see this worthwhile campaign not only getting recognition from the party, but also being invited into discussions on how to shape the election process.

There are still many important questions on how a primary would be carried out:

"We will shortly provide details for supporters to give their ideas on what Desmond and José should present to the seminar in Brussels. We want to start a debate amongst PES activists and supporters on how they think the selection of our candidate should be organised. How should candidates be nominated? How should they be selected? Who should get to vote in the primaries? How should those votes be counted? Should the votes be weighted like the QMV votes are weighted in the European Council?"

Personally, I think that the voting should be internal to the party, to ensure that the PES and it's policies have a greater voice in the election. A criticism of the EP from Simon Hix, is that while the EP actually represents the average EU voter quite well, representing the average voter isn't really the point of the parliament. In the same way, the PES candidate should be selected by PES members, so that party membership has value (what better way to encourage participation in the Europarties than to give membership a real meaning by opening up opportunities for participation?), and that the candidate represents a truly "PES face" in the election. As for the internal electoral system, that's a more complicated question.

Thinking aloud, the candidate should be selected on the vote of the party members (without special weight attached to MPs, Councillors, MEPs), but I think that votes should be weighted to increase the say of the member parties of smaller member states. Otherwise it could lead to the debate and participation of the smaller states being neglected. On the other hand, the weighting needs to be carefully balanced, so that the majority needed isn't so great that only bland "all things to all people" candidiates are chosen. When it comes to nominations, I think that several methods could be used: a certain number of MEPs, MPs and members as supporters could be required to nominate someone for the primaries (perhaps the "voting value" of MEPs, MPs and members could be "translatable" at the nomination stage (e.g. 1 MEP = 15 MPs)).


Finally, an interesting question is how this would impact on the border make-up of the Commission. Since a coalition is likely to almost always be needed to elect the Commission President, what form will coalition politics at the European level take? Would PES coalition partners be satisfied with commitments to certain legislative proposals in the Commission's manifesto - or will coalition partners hold out for seats around the Commission table itself? Since the EP has to approve the whole Commission, the EP has the power to force the issue if the member states remain wedded to picking their own political favourites for the Commission; while there has to be a Commissioner member from every member state, it is not a requirement that each member be from the governing party of their member state. Even at a basic level we could ask, if there's an EPP majority in the Council, but a PES-led coalition majority in the EP and PES President of the Commission, then why should the Commission be conservative by majority? The Commission has votes on proposals it puts before the Council and EP, so why should a PES (or EPP) President be outvoted by an EPP (or PES) majority in the Commission? Afterall, the Commission is accountable as a body to the EP.

It's a question for the future, since we don't even have primaries yet. But it's an important issue, so I think we should keep it in mind. As the Commission becomes more accountable to the European Parliament, and its membership a question at the European elections, the rationale for allowing its membership to almost automatically mirror the Council's will be increasingly undermined.

Taxing Europe

There's been some debate on introducing some form of European tax over the last few days. Prompted by EU budget commissioner Janusz Lewandowski's interview with the Financial Times Deutschland that "the feelings on the idea of an EU tax had changed in national capitals", the debate seems to have been prematurely started by the Commission. (See the Commissioner's defence of the idea; and the supporting member states' vague arguments). While there are suggestions about a financial tax or environmental, CO2-based, tax, there are no firm, detailed proposals yet, and therefore the Commission seems to be left without a clear basis on which to argue for a tax, simply because it doesn't really know what it might propose come September.

The Commission is going about this the wrong way.

Jon Worth has written on how more direct taxation could be better than the current situation, where most of the budget consists of national contributions, by introducing transparency and accountability into how the EU is funded. It is obvious that the value of the tax depends on the tax and the goals it serves. Along with the sensitivity of the tax issue when it comes to matters of national sovereignty, we can say straight away that any tax proposal needs:

1. To be well thought out and planned. Arguing just that a tax might be a good idea is, at best, a naive way of discussing the issue. Without a clear tax proposal, it will come across simply as a desire for taxation powers for the sake of them, and it leaves the debate so open-ended and vague, that it is hardly the best way to have a good, rational, debate on the pros and cons of a policy. And that's without the poor reception of European political debate in the media.

2. To have a principle and goal behind it. The examples of financial transaction tax and CO2 tax are good, since they have some principle and goal to them, and they show where the tax burden will fall. In this way, we can talk about the pros and cons, the impact on society and their goals for society. Vital to any EU tax proposal is the element of added value. In other words, the EU needs to show that it can add value through the tax in question. Jon Worth has highlighted that aviation fuel tax is a good example, as planes can pick (within limits) where they refuel, and having an EU-wide tax would make it more effective. Any EU tax needs to be shown to be principled, goal-orientated, and one where the EU can add value because otherwise there is little reason to give the EU these powers. Since tax proposals need unanimity (and probably also need to pass an Irish referendum), people need to be convinced that the issue is at heart a European one, before they decide that it's better off being done by the EU rather than their member state.

3. To have a clear place within the EU structure. Does it add to or (partially) replace the national contributions of member states? Connected with point 2, the proposal should show where and how hard the burden of the tax will fall. This would provide certainty of the effect, and open up another side to the debate. At the moment, the budget is largely decided on by intergovernmental negotiations and sizing up the member states' economies in relation to each other. More direct taxes fall more transparently on certain types of activity and have a social and economic rationale that can be more easily open to debate and control. It could also lead to restructuring the tax system - member states could reduce taxes that fall more directly on citizens (though the degree would be tiny, considering the size of the EU budget), and CO2/financial taxes would shift it onto more specific groups for a more specific rationale.

In other words, the utility of direct taxes versus contributions needs to be highlighted and argued. If it can be argued and shown by supporters that a direct tax would lighten the "general burden" and instead have social utility, as well as making how we pay for the EU more transparent, the supporters would be on firmer ground. At the moment certain member states resent having to contribute a certain amount, and having a clear tax on (a) certain type(s) of activity would be a more rational an just way of distributing the burden. Also, an argument that making the EU responsible for more of its resources would make it more responsible with its spending (it depends on the structure, of course, but if spending and taxing is based more on principle and social utility determined through political debate rather than intergovernmental horse-trading, then it will arguably have to think and debate more openly on its priorities. Of course, intergovernmentalism in the budget is here to stay for a long time no matter what).

4. Any tax proposal has to be linked with proposals on the institutional mechanisms. Just as people wouldn't want the EU to tax if there wasn't an added European value to the exercise, so they wouldn't want the EU to have taxation powers unless there were clear limits on the areas and amount of taxation, as well as measures ensuring more democratic control over it. This would mean that the tax would have to be open to constant review and oversight by the European Parliament (with real control and influence on the subject, and there would need to be clear information on how much is raised where, from whom, and in what context [i.e. X from Austria, from airlines, because there where Y flights/Y% of flights from there]. Also, the Council would need a strong say and oversight role too. Above all, the taxation power given to the EU, if any, needs to be limited to the policy pursued.

Obviously this would mean that the debate would be very complex, but in my view the key point is that any taxation proposal needs to win support outside of national governments (particularly in the Irish, and perhaps UK cases, where referendums would be ratification methods). This can only be done if it can be shown that the issue is one that can be dealt with better at a European level and that the power will be limited. The debate we're having at the moment, while showing some of these elements, is nowhere near coherent or organised enough for there to be a rational, relevant debate.

The wider argument is that the internal market means that there are activities that have social and economic consequences, and it should be possible to make decisions on what is economically and socially important to us. Taxation policy, even if limited in scope, is a way of shaping the way we live. It is a tough issue, and a complicated and sensitive issue, so if we're going to debate it, let's do it right.

Citizen's Initiative Proposal

The Commission has produced proposals on how the Citizen’s Initiative, the ability of EU citizens to petition the Commission to make legislative proposals in an area, will function. The legislation would have to be passed by the Council and Parliament before becoming law, but the main points of the proposal are:

- minimum age for signees is the same as that for European elections,
- the 1 million signatures must come from at least 9 of the member states,
- there will be a threshold for each member state that must be reached for it to count,
- after 300,000 signatures have been collected from 3 member states, the Commission can be asked to say whether or not it would be admissible should it reach 1 million signatures,
- not only can petitions be rejected on the grounds of being outside the Commission’s area of competence, but also if they are judged to be frivolous, abusive or against European values (which seem to be judged against the Charter of Fundamental Rights and the values set out in the TEU),
- online petitions must be in a format approved of by the member state(s) concerned,
- organisers will have to be able to prove that they are not lobbyists.

The proposals set a high bar for the Citizen’s Initiative, and the intentions behind this seem to be: (1) to cut off time wasting petitions quickly/limit the amount of petitions the Commission may have to review; (2) create as wide a member-state basis to the petitions as possible; (3) (possibly) give a boost to the role of the European parties, since a petition on such a scale would probably need a level of organisation that the Europarties would be better placed than most to provide.

Rose over at A Bit More Complicated has raised the issues of ID cards and the worries over ID theft for UK & Irish citizens, and the complexity and validity of the member state threshold.

I can understand the member state threshold to a degree – it would be strange if you could say you’d support in a member state just because 1 citizen from that state signed your petition. However, I think that the proposed rules are too strict in this area, and forms too much of a barrier for citizens who might want to use the C.I. While it should be the role of the Europarties and NGOs to organise petitions and deal with the bureaucracy, would it really happen that often? And want does that say about true citizen involvement if organisations need to fill the gap in most cases? The C.I. could be in danger of being used so infrequently that it won’t contribute to bringing citizens closer to the EU.

So what could be done instead? Citizens should be freer under the petition system from member state-based restrictions than in the EP and in the EU institutions generally, since it’s supposed to be a more direct form of interaction with the EU. A lower threshold of member states – or at least lower member state thresholds – would go towards fixing this, but I think that it shouldn’t matter if the petitioners are geographically concentrated. Perhaps if the relevant EP committee in the policy area could review a petition to say whether it would support legislation in this area or not would act to balance it out – after all, if there’s nowhere near a majority in Parliament for the possibility of a proposal, it won’t pass (some level of threshold of member states would remain logical, however).

Finally, it seems strange with all these hoops to jump through, that when a petition is accepted, and the Commission says that it will produce a proposal based on it, there’s no time limit for the Commission to do that:

“Once a citizens' initiative has been registered, the commission has to say whether or not it is going to propose legislation in the area within four months. But, critically, there is no time constraint on when the commission actually then produces a draft law.”

Hopefully this will be changed. Given that the Commission would have committed to producing a proposal, it should have to come up with one within a reasonable time, or have to give good reasons for delays.

Communicating Europe

I've written a short essay (1,500 words) on the Commission's communication strategy over the last 5 years and where it should go next. You can read it here. I personally think that the parties in the EP need to take on the task of communicating themselves and their European visions more clearly - I think that a more adversarial form of politics would help communicate what different parties stand for, encourage participation and, as a result, people would become more familiar with how the EU works in a general sense (after all, the general public isn't really interested in the detail of how national legislatures work). Of course, interest and partcipation can only ever be encouraged to a certain extent as the EU's very technical, but there's still a lot of room for improvement.

So I think that the Commission is limited in what it can do, but if it becomes more political, and the Commissioners engage more in the mainstream mass media, then it will provoke some reaction and interest. Risks need to be taken by backing plans more publicly, though they may fail in Council or in the EP.

In the essay, I take a very general approach, since it's short, and since I think that the Commission can only act to encourage participation and interest, and that it remains dependent on other actors to a degree to achieve higher levels of interest.

Chasing Brussels #8: Van Rompuy, Ashton and Gender Politics

Episode #7 is out now, and this time we're discussing the new appointments from Thursday and gender politics and the campaign for a Gender Balanced Commission (with a certain amount of devil's advocate thrown in).

Host: Joe Litobarski
Panelists: Julien Frisch and myself.

Who are the new European Council President and the High Representative? Are they the right people for the job? Is the appointment of Ashton a victory for the gender balance argument, or could it deflate the Gender Balanced Commission's wider campaign to get gender balance over the whole Commission? Should gender politics be focused on the outcome of selection processes or on reforming the selection processes themselves?

I'd also recommend that you look up the Gender Balanced Commission campaign, and sign the petition.