Select Committee on European Communities Report



3.  PROPOSED COUNCIL REGULATION (EC) OF 18 NOVEMBER CREATING A COMMISSION INTERVENTION MECHANISM IN ORDER TO ELIMINATE CERTAIN OBSTACLES TO TRADE (12881/97 COM (97) 619)

Letter from Lord Tordoff, Chairman of the Committee, to Lord Simon of Highbury, Minister for Trade and Competitiveness in Europe, Department of Trade and Industry

  On 27 January Sub-Committee A scrutinised your Explanatory Memorandum of 12 January on this proposal.

  We were attracted by the prospect of a speedy resolution of the difficulties that have in recent years arisen from serious disruption to the free movement of goods. However, before reaching a firm view on this proposal, we should be grateful to have from the Government a further assessment of its likely effectiveness and legal and practical implications formed in the light of the consultation to which your Explanatory Memorandum refers.

  This letter does not raise the scrutiny reserve.

28 January 1998

Letter from Lord Simon of Highbury, Minister for Trade and Competitiveness in Europe, to Lord Tordoff, Chairman of the Committee

  Further to my letter of 10 February, I am now able to write in more detail on the Commission's proposal for a Regulation creating an intervention mechanism in order to eliminate certain obstacles to trade.

  Your letter of 28 January asked about the likely effectiveness of the proposal. This of course is hard to predict. But the proposal would require the Commission to take urgent action, including in pursuing proceedings under Article 169 of the Treaty, even if, at the end of the procedure envisaged in the proposal, the ECJ would set its own timetable. The proposal would nevertheless provide security to the Commission that in opening Article 169 proceedings within the scope of the proposal it could rely on not being successfully challenged for insisting on responses according to the deadlines cited in the Regulation.

  You also asked about the legal implications of the proposal. The Government's view is that it is unclear whether a Decision under the proposal would have the binding force attributed to it by the Commission. On one reading, the Regulation looks little more than an accelerated Article 169 procedure. However, the Commission clearly intend the decision to be binding, and there is at least a risk that any decision made under the Regulation would be interpreted in this way. Nevertheless, the Government considers that it would be contrary to the institutional balance established by the Treaty for the Commission to be able to adjudicate on whether a Member State had breached its Treaty obligations under Articles 30-36. As has been said, a majority of other Member States have similar concerns about extending such powers to the Commission. It is extremely unlikely the Regulation will therefore survive in its current form or in any form which contains such a power for the Commission.

  Finally, you ask about practical implications. As I said above, there is no question of Member States agreeing to a Decision which could be relied upon by third parties in national courts; and there is therefore no point in speculating on the practical implications that such a Decision might have. As to the accelerated use of Article 169, I consider that it would be in the national interest if other Member States were required to comply with tight timetables.

  As Presidency we must now seek alternative solutions to the problem of sustained violent attacks on transport of goods. We shall of course put to you any revised proposals.

  I enclose the consultation paper that we have distributed (not printed), and a list of recipients.

16 March 1998

Letter from Lord Simon of Highbury, Minister for Trade and Competitiveness in Europe, to Lord Tordoff, Chairman of the Committee

  On 16 March I wrote to you answering your requests for more information on the above Commission proposal. As I outlined in that letter, the Commission's proposal had encountered severe opposition from Member States and so I had been attempting, as President of the IMC, to find an acceptable alternative. The UK Presidency has now made a proposal for substantial amendment of the original proposal, and I enclose the amended proposal for your consideration. I will be providing an Explanatory Memorandum by the usual channels. However, I would also like to take this opportunity to give you more information on the negotiations which have led to this amendment, including the Internal Market Council (IMC) which took place on 30 March.

  Once it was clear that the Commission proposal would not be accepted, I looked at the possibility of a two part solution, consisting of a Regulation and a Resolution. Despite opposition from a minority of Member States to a legislative element, I believe that it is desirable in order to give the solution force. The Regulation would spell out Member States' obligations to act against obstacles to trade, and contain provisions for increased information flow between Member States and the Commission, including a system for early warning of possible obstacles. But it would drop the idea of a new power of decision for the Commission, which had been the main source of difficulty with their proposal. The Resolution would confirm Member States' political will to do all they can to tackle these severe obstacles swiftly.

  The discussion at the IMC showed that there was still the political resolve to find a solution to the problem. Ministers agreed that work should go forward to explore the two part option in more detail. This work has continued at official level, and produced the attached draft Regulation and Resolution. I am hopeful that there is now sufficient consensus in the Council that a strong measure of agreement can be reached on these drafts at the IMC on 18 May. The European Parliament will also be consulted on these drafts. It is unlikely that the Parliament's opinion will be available in sufficient time for the proposal to be adopted under the UK Presidency. However, I am keen to secure maximum possible political agreement at the May IMC so that it will be possible for the proposal to be formally adopted at the earliest opportunity in the Austrian Presidency.

  Some Member States have raised concerns that the Commission's proposal could adversely affect fundamental rights such as the right to strike. This is not the intention, and my colleagues on the Internal Market Council and I have agreed that any eventual solution should specifically and clearly guarantee such rights and freedoms as exist in national law. I believe that the wording in the Presidency proposal does so. This wording has been worked out during the negotiations at official level and seems to have a good level of agreement.

  As mentioned in the original Explanatory Memorandum, the Government has consulted a number of business organisations and trades unions on the Commission's original proposal. This consultees were also asked for their ideas of what should appear in any amendment of this proposal. I attach a summary of the views gathered during this consultation. These views have been taken into account in the drafting of the current Presidency proposal.

5 May 1998

Annex

REPLIES TO THE GOVERNMENT'S CONSULTATION ON THE PROPOSAL BY THE EUROPEAN COMMISSION ON THE FREE MOVEMENT OF GOODS

  On 3 March 1998 the Government sent a consultation paper on the above proposal to the attached list of unions, trade associations and employers organisations. The proposal would have set up a new mechanism whereby the Commission could intervene to force a Member State to take rapid action against serious obstacles to the free movement of goods in the Single Market which were causing serious loss or damage to individuals.

  Eight replies were received, evenly split between trade unions and employers' organisations. There was a range of views in these replies. All respondents agreed on the importance of ensuring the free movement of goods, but they disagreed on the correct methods for it, including whether the obstacles concerned here should be dealt with at a European level at all. Two replies, both from employers' organisations, supported the substance of the Commission's proposal, and another trade association wrote separately supporting the proposal.

  There was concern from most respondents, particularly the unions, that this proposal would have adverse effects on some fundamental rights, such as the right to strike. Some felt that the Commission would gain the right either to intervene in legitimate industrial disputes, or to force Member State governments to do so. Some unions echoed the ETUC view that the Commission proposal be dropped and the social partners consulted on any future proposal, to ensure it properly safeguards these fundamental rights.

  The employers' organisations said that these rights should be balanced against the rights of citizens to conduct lawful business. These pointed out that many of the previous cases which would have been affected by this proposal involved illegal acts including violence and damage to property.

LIST OF ORGANISATIONS CONSULTED BY THE GOVERNMENT

    —  Confederation of British Industry

    —  Institute of Directors

    —  Freight Transport Association

    —  Road Haulage Association

    —  The Advertising Association

    —  UNISON

    —  RMT

    —  United Road Transport Union

    —  Transport Salaried Staffs Association

    —  Transport and General Workers Union

    —  Trades Union Congress

5 May 1998

Letter from Lord Simon of Highbury, Minister for Trade and Competitiveness in Europe, to Lord Tordoff, Chairman of the Committee

  The above proposal was originally the subject of an Explanatory Memorandum on 12 January 1998. An amended text, and a draft Resolution, were covered in an Explanatory Memorandum submitted on 5 May, with a supplementary on 8 May. The Commons Committee has cleared these texts. Your Committee referred them to sub-committee A which has yet to consider them.

  My letter of 5 May explained the thinking behind the Presidency amendment. The combined effect of the Regulation and Resolution would be to bring pressure to bear on any Member State responsible for a breach either through action or inaction to come up with a solution rapidly. They would also ensure that all interested parties are kept informed about obstacles and the action being taken. Although the Commission can set any deadlines it sees fit for Article 169 cases, the Resolution would inhibit a Member State from claiming that a short deadline in a specific case is unreasonable. This would speed up infraction proceedings, which is a frequent complaint of business.

  I am writing to advise you that the texts will go to the Internal Market Council on 18 May for discussion. It is possible that the Council will reach agreement in principle on these texts, pending the European Parliament's opinion. Since the regulation requires unanimity in the Council, a UK scrutiny reserve would effectively prevent agreement on a text which the UK, as Presidency, has been instrumental in producing. Recent events in France, where lorries carrying Spanish fruit have again come under attack by farmers, show the urgent need to have agreement on an effective package of measures to ensure Member States meet all their obligations under the Treaty.

  Due to the fast moving nature of the negotiations, I appreciate that your Committee has not had an adequate opportunity to scrutinise measures before adoption in the Council. However, given the protracted negotiations to date and the importance of this measure, I consider that it would not be in the UK's interest to delay agreement. Therefore, I hope you will appreciate why the UK intends lifting our Parliamentary Scrutiny reserve and indicate UK support for the texts if an agreement is possible.

15 May 1998

Letter from Lord Tordoff, Chairman of the Committee, to Lord Simon of Highbury, Minister for Trade and Competitiveness in Europe, Department of Trade and Industry

  Thank you for your letter of 5 May. Sub-Committee A considered it at its meeting this morning and agreed to clear both document 12881/97 and the recent amendment proposed by the United Kingdom, on which a rather sketchy Explanatory Memorandum was submitted by your Department on 5 May.

21 May 1998


 
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