Select Committee on European Union Ninth Report


Article 10: Categories of competence


1.  When the Constitution confers on the Union exclusive competence in a specific area, only the Union may legislate and adopt legally binding acts, the Member States being able to do so themselves only if so empowered by the Union.

2.  When the Constitution confers on the Union a competence shared with the Member States in a specific area, the Union and the Member States shall have the power to legislate and adopt legally binding acts in this area. The Member States shall exercise their competence only if and to the extent that the Union has not exercised its.

3.  The Union shall have competence to coordinate the economic policies of the Member States.

4.  The Union shall have competence to define and implement a common foreign and security policy, including the progressive framing of a common defence policy.

5.  In certain areas and in the conditions laid down in the Constitution, the Union shall have competence to carry out actions to coordinate, supplement or support the actions of the Member States, without thereby superseding their competence in these areas.

6.  The Union shall exercise its competences to implement the policies defined in Part Two of the Constitution in accordance with the provisions specific to each area which are there set out.

Explanatory note

"This Article lists and describes the different categories of the Union's competences, stating for each category what the consequences of the Union's exercise of its competences are for the competences of the Member States.

The common foreign and security policy and coordination of the Member States' economic policies are given separate paragraphs, in order to reflect the specific nature of the Union's competences in those areas."

Commentary

52.  This Article defines the three basic categories of competence: exclusive competence; shared competence; and supporting action. It also confirms that the Union has competence to coordinate the economic policies of Member States and to define and implement a common foreign and security policy (CFSP). The Explanatory note justifies the express reference to economic policy and CFSP as being necessary "to reflect the specific nature of the Union's competences in those areas". The "specific nature" is not itself identified. Articles 10(3) and (4) seem out of place in a provision dealing with the categorisation of competences as they are expressed to confer, rather than to classify, competences. It may simply be that these two policies do not fit within the basic threefold classification. The uncertainty is compounded by the way in which Article 12(1) defines "shared competence", apparently including the Article 10(3) (Article 13) and 10(4) (Article 14) competences. Given these uncertainties it is difficult to see the logical justification for the inclusion of paragraphs (3) and (4) in Article 10. Some reference to them may be needed for political reasons but the way they are expressed in this Article hardly makes the division of competence "more transparent" as requested by the Laeken European Council. The Constitution must be clear on issues of such importance.

Article 11: Exclusive competences

1.  The Union shall have exclusive competence to ensure the free movement of persons, goods, services and capital, and establish competition rules, within the internal market, and in the following areas:

¾  customs union,

¾  common commercial policy,

¾  monetary policy for the Member States who have adopted the euro,

¾  the conservation of marine biological resources under the common fisheries policy.[26]

2.  The Union shall have exclusive competence for the conclusion of an international agreement when its conclusion is provided for in a legislative act of the Union, is necessary to enable the Union to exercise its competence internally, or affects an internal Union act.

Explanatory note

"The list in paragraph 1 of the areas of the Constitution in which the Union has exclusive competence goes beyond the present situation, as it includes the entire common commercial policy. This reflects the conclusion of Mr Dehaene's Group that Article 133(6) of the Nice Treaty should be deleted.

Paragraph 2 of this Article reflects the case law of the Court of Justice on the Union's exclusive competence to conclude international agreements."

Commentary

53.  Article 11 seeks to describe, and define, those areas where the Union has exclusive competence. It deals with internal (Article 11(1)) and external competence (Article 11(2)), which are two separate but related subjects. As will be explained below, it is possible for the Union to have exclusive external competence in an area where the Union and Member States have shared internal competence under the Treaty.

54.  The syntax of Article 11(1) is problematic. The relationship between the four specific "areas" listed and ensuring free movement within the internal market is unclear. The Article could be read as meaning that the Union only has exclusive competence in the four specific areas to the extent that such competence ensures free movement within the internal market but this would raise the question as to how the conservation of marine biological resources might ensure those freedoms. We read the Article as intending to give the Union exclusive competence (a) to ensure free movement etc within the internal market and, additionally, (b) in the four specified areas.

55.  If our interpretation of Article 11(1) is correct, the reference to ensuring free movement within the internal market raises substantial concerns. Free movement has always been a key element of the Community and now the Union. Similarly the competition rules can be traced back to the Treaty of Rome. The Community has both extensive powers to legislate to ensure free movement (for example Article 95 (goods and services)) and competition rules, which we would expect to see restated in Part Two of the new Treaty. But we doubt whether it is the case that Member States are, by virtue of the Community's competence, prohibited from legislating on any matter which might relate to the free movement of persons, goods, services and capital, or establishing competition, within the internal market. For example, all Member States have company laws. Are they prohibited from amending those laws if the consequence would be to affect the right of establishment in a positive way? Or only if that was intended?

56.  What the reference to free movement etc may mean is that the Union is to have exclusive competence to adapt measures specifically designed to permit freedom of movement (eg rules on the mutual recognition of qualifications) but not rules which may have an incidental effect on freedom of movement but are designed with another object in mind. It is unclear. Further, the draft Treaty is itself internally inconsistent. While Article 11(1) would suggest the Union has exclusive competence in relation to the internal market, Article 12 (Shared competence) lists "internal market" as one of the "principal areas" of shared competence (Article 12(4)).

57.  The reference to the competition rules is similarly confused and confusing. The Treaty already contains substantive competition rules (Articles 81 and 82 TEC) as well as powers to apply and implement them (Article 83). Article 83(2) (e) TEC expressly contemplates the co-existence of Community law and national competition laws and both inevitably will apply "within the internal market". We doubt that it is the draftsman's intention to exclude the application of national competition laws and indeed the latest Community regulation to be agreed on the implementation of Articles 81 and 83 TEC expressly contemplates the application of national laws alongside the Community rules.[27] The intention might be to give the Union exclusive competence to adapt competition rules which apply where trade between Member States is affected (ie where Articles 81 and 82 are engaged) but even that would limit Member States' existing powers.

58.  If all that the reference in Article 11(1) to free movement within the internal market is trying to say is that there are important rules on the subject in the Treaty and the Union has been given powers to legislate, that does not need saying. Article 11(1) is either a tautology or, on at least one construction, a substantial extension of competence.

59.  Article 11(2) seeks to consolidate the law on exclusive external competence. The Community's competence to conclude international agreements arises from two sources: (i) express provisions in the Treaty (for example, Article 133 enables the Community to enter into tariff and trade agreements within the scope of the Common Commercial Policy). Other examples can be found in Article 111 (monetary and foreign exchange agreements), Article 155 (TENs), Article 174 (Environment) and Article 181 (Development Cooperation); and (ii) the jurisprudence of the European Court of Justice (the Court has held that external competence may flow from other provisions of the Treaty and measures adopted within the framework of those provisions).[28] The existence of "internal rules"[29] or of unexercised Treaty powers[30] to adopt such rules confers external competence to the Community.

60.  The Community's ability to conduct external relations is restricted, as a matter of law, to those areas where it has competence (exclusive or shared). On the other hand, where and to the extent that the Community has competence, Member States' freedom of action is limited. They may not enter into agreements between themselves or with third States on the same subject matter. This is a consequence of the supremacy/primacy of Community law—Member States cannot prejudice the operation of Community law by entering into external obligations. Where the transfer of competence is partial, because the Treaty expressly preserves Member States' competence (eg Article 174(4) TEC) or the internal rules do not occupy the whole field, then the Community and the Member States share competence. Both will be parties to the international agreement, which is commonly referred to as a "mixed agreement". Internal and external competence are therefore directly related.

61.  The precise extent of Community competence in relation to a particular subject or agreement is frequently a matter of concern and debate between the Commission and the Member States. The external competence implications of a proposal may therefore influence Member States' decisions on the adoption or extension of internal rules.

Article 12: Shared competences

1.  The Union shall share competence with the Member States where the Constitution confers on it a competence which does not relate to the areas referred to in Articles 11 and 15.

2.  The scope of shared competences is determined by the provisions of Part Two.

3.  Where the Union has not exercised or ceases to exercise its competence in an area of shared competence, the Member States may exercise theirs.

4.  Shared competence applies in the following principal areas:

¾  internal market

¾  area of freedom, security and justice

¾  agriculture and fisheries

¾  transport

¾  trans-European networks

¾  energy

¾  social policy

¾  economic and social cohesion

¾  environment

¾  public health, and

¾  consumer protection.

5.  In the areas of research, technological development and space, the Union shall have competence to carry out actions, in particular to implement programmes; however, the exercise of that competence may not result in Member States being prevented from exercising their competence.

6.  In the areas of development cooperation and humanitarian aid, the Union shall have competence to take action and conduct a common policy; however, the exercise of that competence may not result in Member States being prevented from exercising their competence.

Explanatory note

"Areas in which there are shared competences are identified by their exclusion from the areas of exclusive competence and the areas for supporting action. The reference in paragraph 2 to Part Two of the Constitution is a link to the specific provisions of that Part determining the extent and intensity of Union competence in each area.

The inclusion of energy in the list of areas of shared competence requires the creation of a specific legal basis for that area in Part Two of the Constitution as no such legal basis exists in the current Treaties (thus far acts relating to this area have been adopted on the basis of Article 308).

The areas of development cooperation and research and technological development (and space) appear in separate paragraphs to indicate that even though the Union exercises its competence in these areas exhaustively, Member States still retain their competences. Despite the importance and scale of Union programmes for development aid and research the Constitution does not envisage the abolition of national programmes."

Commentary

62.  The list of shared competences is indicative and not exhaustive. And Article 13(2) makes it clear that the details will be set out in Part Two of the new Treaty.

63.  Article 12(3) sets out the relationship between the Union and Member States where competence is shared. Member States may exercise their competence where the EU has not exercised or ceases to exercise competence. This statement may require some expansion and qualification. As the commentary to the draft Treaty prepared by Professor Dashwood indicates,[31] a distinction may need to be drawn between "pre-emptive" EU legislation, where Member States are precluded from exercising any independent competence to derogate from or supplement the harmonised norms and "minimum harmonisation", where Member States are free to enact more stringent measures. If Article 12(3) does not expressly include or in practice permit such a distinction, Member States could not act in any case of shared competence where the Union has acted (this may also be inferred from 12(5) and 12(6), where Member States' freedom to act is expressly reserved). This might have significant implications, especially for areas such as the harmonisation of civil and criminal law within the context of the creation of an area of freedom, security and justice.

64.  A further question raised by Article 12(3) is: when will the Union have ceased to act? How in practice will that be discerned?

65.  Article 12(4) identifies eleven "principal areas" of shared competence. They are not new. The EC Treaty already includes extensive provisions on the internal market (most notably Article 95 TEC), the establishment of which has been a fundamental Community objective, especially since the 1980s and the Single European Act. The concept of the EU as an "area of freedom, security and justice" (AFSJ) was introduced in the Amsterdam Treaty, following the establishment of a Justice and Home Affairs competence for the EU in Maastricht. There are currently provisions on the AFSJ (which is also, according to draft Article 3(3), a Union objective) in both the First (Title IV TEC—Articles 61-69) and the Third Pillar (Title VI TEU—Articles 29-42). Agriculture—including the establishment of a Common Agricultural Policy (CAP)—is covered in Articles 32-38 TEC, transport in Articles 70-80 TEC and trans-European networks in Articles 154-156 TEC. The Treaty also includes provisions on economic and social cohesion (Articles 158-162 TEC), the environment (Articles 174-176 TEC), and consumer protection (Article 153 TEC).

66.  The inclusion of energy is noteworthy. There is a reference to energy in the context of trans-European networks, and Article 3(u) TEC lists 'measures in the field of energy" as an EC activity. Article 175(2) (in the environment title) also contains a reference to energy. The present Treaty references therefore are not as substantial as in relation to other areas listed in Article 12(4). It remains to be seen whether an energy title will be added at the next Inter-Governmental Conference (there was pressure to include such a title during the Amsterdam IGC). Extension of Union competence in matters of energy policy would have major consequences for domestic policies and therefore needs to be considered carefully.

67.  Public health and social policy are also noteworthy, but for a different reason. These are areas where the current Treaty provisions provide for both shared and supporting competence. The Community's powers relating to public health are currently set out in Article 152 TEC and are a mix of shared and supporting competences. Article 152(1), for example, envisages the Community taking action to complement national policies. Article 152(4) enables the adoption of measures (by co-decision of the Council and the European Parliament) setting standards of quality and safety inter alia of blood and blood derivatives. It is presumably the power given by Article 152(4) which has led to the classification of public health as a shared competence.

68.  The Treaty contains an extensive list of provisions on social policy (Articles 136-148 TEC). The Treaty grants the EC supporting/complementary competence regarding health and safety at work, working conditions, social security and social protection of workers, protection of workers where their employment contract is terminated, representation and collective defence of the interests of workers and employers, conditions for employment for legally resident third-country nationals, the information and consultation of workers, the integration of persons excluded from the labour market and equality between men and women with regard to labour market opportunities and treatment at work (Article 137). There are also provisions enabling coordinating action on employment, labour law and working conditions, vocational training, social security, prevention of occupational accidents and diseases, occupational hygiene and the right of association and collective bargaining (Article 140 TEC). Last, but not least, the Treaty includes the well-established principle of equal pay without discrimination based on sex (Article 141 TEC) which, according to the ECJ, is a fundamental principle of EC law.[32]

69.  What is not clear is what effect, if any, the inclusion of public health and social policy in Article 12(4) has. Is it intended to elevate public health and aspects of social policy (Articles 137 and 141 TEC) from areas of supporting/coordinating/complementary EC action to areas of shared competence? The answer is probably not, but careful scrutiny of the relevant Articles in Part Two of the new Treaty will be need to identify the extent, if any, of any change.

70.  The approach of Articles 12(5) and (6), as mentioned above, differs from that in Articles 12(3) and (4) in that it is expressly provided that in certain policy areas the exercise of Community competence "may not prevent" Member States from exercising their competence. The policy areas in Article 12(5) are research, technological development and space. While the Treaty contains a series of provisions on research and technological development (Articles 163-173), the reference to space is new. Article 12(6) refers to development cooperation and humanitarian aid. The TEC contains a separate Title on development cooperation (Title XX Articles 177-181). Article 180 TEC provides that the Community and Member States shall "consult each other on their aid programmes" and Member States "shall contribute if necessary to the implementation of Community aid programmes". A new Title on "economic, financial and technical cooperation with third countries" (Title XXI—Article 181a) has been added in the Nice Treaty, presumably also covering aspects of humanitarian aid. However, there is no specific reference to "humanitarian" aid in either of these Titles.


26   This derives from EC Treaty Articles dealing with agriculture, Regulations adopted establishing the common fisheries policy and Article 102 of the Act concerning the conditions of Accession and the Adjustments of the Treaties. See Cases 3, 4 and 6/76 Kramer and others [1976] ECR 1279. Back

27   Reg 1/2003 of 16 December 2002. [2003] 05 L1/1. Back

28   Opinion 1/94, WTO [1994] ECR I-5267Back

29   AETR, Case 22/70 Commission v Council [1971] ECR 263. Back

30   Rhine navigation. Opinion 1/76 [1977] ECRA 741. Back

31   The text of the draft Dashwood Treaty has now been published in the European Law Review: (2003) 28 E.L.Rev. 3. Back

32   Case 43/75 Defrenne v Sabena [1976] ECR 455. Back


 
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