New treaty in force when 9 countries have ratified

16.12.11 @ 18:19

By Honor Mahony

BRUSSELS – The first draft of a new treaty meant to tighten economic governance in eurozone countries was circulated Friday (16 December) with the aim to have the text finalised by January and coming into force once nine countries have ratified it.

The ratification threshold would allow the treaty to go into place even if some euro states – such as Ireland which may have to hold a referendum – are having problems getting domestic approval.

A euro country that rejected the treaty after it had already come into place will not be bound by it.

“If you go into the political aspect, I don’t think it will be a very comfortable situation,” said one EU official dealing with the issue.

Non-euro countries, who agree to sign up to the treaty, will be bound by the agreement as soon as they take on the single currency, but can put in place some of the details immediately.

Containing just 14 articles, the text obliges those that have ratified it to introduce into their constitutions a balanced-budget rule. The treaty also says that those countries that are in excessive deficit will have to submit “economic partnership plans” to the commission and council.

Sanctions will also be more automatic for fiscal miscreants while the text says that major economic policy reforms should be coordinated at the euro level.

It also makes what is seen as an oblique reference to tax harmonisation – a bug bear of countries such as Slovakia – by saying that countries “where appropriate and necessary” will use a fast-track integration process known as “enhanced cooperation.”

“We put into the legal form the elements of substance that were contained in the statement of the 9 December (EU summit). We did nothing more. We did nothing less,” said the EU official.

Negotiations on the text will start next week in the euro working group – which brings together senior treasury officials from across the member states.

Following the UK’s refusal to allow full-blown treaty change, the pact is an intergovernmental treaty for the 17 euro states plus up to nine of the non-euro countries who have all indicated they will attempt to come on board.

But in a bid to draw a line under the potentially damaging rift between London and the rest of member states, all 27 countries will be at the negotiation table, although London will only have observer status.

The next negotiating meeting is set for the first week of January while the officials are hoping the text will be finalised by the end of January, and signed in March.

A treaty with bite?

By opting to go the international treaty route, negotiators are hemmed in by the fact that they are not allowed to alter the EU treaty in any way.

The same situation has raised legal questions about the legal capacity of the European Commission and European Court of Justice to enforce its provisions. This issue has exercised the finest legal minds in Brussels in the days since last week’s summit.

The draft contains only vague language asking the treaty members to “undertake” to support proposals by the commission if they are in excessive deficit.

The European Court will judge whether the balanced budget rule has been properly transposed into national law.

Meanwhile member states would have to take each other to the European court – a politically awkward idea – if they considered that the excessive deficit rules were being broken.

Link: http://euobserver.com/19/114668

EU & Law

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