Saturday, June 19, 2004

Co-ordination of economic policy

Articles I-11 (3) and I-14 (1) refer.

These require, respectively, that the Member States shall co-ordinate their economic and employment policies "within arrangements as determined by Part III", which the Union shall have competence to provide, and that Member States shall co-ordinate their economic policies within the Union.

We then have a situation where the Council shall adopt measures (proposed by the Commission) "in particular broad guidelines for these policies".

These must be taken together with "Part III" and in particular Article III-69 (1) which specifies that the "activities of the Memeber States and the Union" shall include "...the adoption of an economic policy which is based on the close co-ordination of Member States' economic policies... and on the definition of common objectives".

These Articles, therefore, are of immense importance as they give the Commission direct power to interfere in and dictate the economic management of member states. And, because the voting method is not specified, the "default" applies, as per Article I-22 (3), making proposals subject to QMV.

The Treasury – meaning Gordon Brown - was apparently unhappy about conceding the veto on economic policy but seems to have been convinced that the use of the word "co-ordinate" was so vague as to be "harmless".

If that is truly the view, it grossly underestimates the power and persistence of the Commission. As we all know, if you give it an inch, it will take a kilometre. "Co-ordinate" can be interpreted very widely if there is inclination to do so.

Here, the construction of the wording in Art I-14 is interesting: the Council shall adopt measures "in particular broad guidelines…". While it may focus on those "broad guidelines", it should be noted that the wording does not confine the Council to them. By any measure, a major power has been ceded to the EU.

The UK is, in effect, obliged to subsume its general economic management to the EU, and pursue the "common objectives" set by the EU. Given the vital nature of economic management, can it be said that any country which is not able to define its own economic policy is truly independent?

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