Brussels, 12 May 2011
THE EUROPEAN UNION
No. Cion prop.: 14520/10 ECOFIN 590 UEM 278 CODEC 969
14496/10 ECOFIN 582 UEM 273
14515/10 ECOFIN 589 UEM 277 SOC 618 CODEC 968
14512/10 ECOFIN 587 UEM 276 SOC 617 CODEC 966
14497/10 ECOFIN 583 UEM 274
14498/10 ECOFIN 584 UEM 275 CODEC 960
State of play concerning the Economic Governance Package - Trialogue
On 29 September 2010, the Commission presented the following six proposals on reinforcing
Proposal for a Regulation of the European Parliament (EP) and of the Council amending
Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies
Proposal for a Council Regulation (EU) amending Regulation (EC) No 1467/97 on
speeding up and clarifying the implementation of the excessive deficit procedure
DG G I
Proposal for a Council Directive on requirements for budgetary frameworks
Proposal for a Regulation
of the EP and of the Council on the prevention and
correction of macroeconomic imbalances
Proposal for a Regulation of the EP and of the Council on enforcement measures to
correct excessive macroeconomic imbalances in the euro area
Proposal for a Regulation of the EP and of the Council on the effective enforcement of
budgetary surveillance in the euro area
On 15 March 2011 Council reached an agreement on the general approach related to all six
The Committee on Economic and Monetary Affairs voted on all six legislative proposals on
19 April 2011.
The first trialogue meeting was held on 20 April 2011. Further trialogues followed on 3, 4, 10
and 11 May.
STATE OF PLAY
Concerning the general direction and the main elements of the proposed new economic
surveillance framework the EP and the Council are broadly on the same line. The following
paragraphs outline a list of the main differences between the EP's position and the Council's
general approach. Considering that the EP is co-legislator on four of the six legislative
proposals, the Presidency is seeking guidance from Member States on the issues on which the
Council can move towards the EP's position.
DG G I
After initial exchange of views with the EP, three key issues and three additional horizontal
issues were identified to be addressed by the Council. The Presidency considers that a
concession is crucial on these key issues at the May Ecofin as a precondition for timely
conclusion of the process by June, repeatedly called for by the European Council. Clear
political guidance by the Council at this stage would enable the Presidency to preserve the
momentum and successfully proceed with the negotiations.
Issue 1: Application of fines
The EP adopted several amendments related to fines, both in the area of budgetary and
To introduce an interest-bearing deposit in the excessive imbalance procedure as an
initial enforcement measure, prior to imposing a fine.
To introduce the possibility to raise the fine imposed in the context of enforcement of
excessive imbalance procedure from 0.1 % to 0.3% of GDP in the case of deliberate
and severe non-compliance with recommendations.
To limit total yearly amount of cumulative fines imposed on an individual Member
State in the context of enforcement of both excessive imbalance procedure and
budgetary surveillance to 0.5% of GDP.
To introduce an additional fine of 0.5% of GDP, in case of manipulating financial
data, falsifying statistics or deliberately providing misleading information, in
particular resulting in a violation of the EU statistical rules.
To distribute the accrued interest on deposits and fines in the context of enforcement
of both excessive imbalance procedure and budgetary surveillance for EU relevant
projects financed by the European Investment Bank rather than the European Financial
Stability Facility (EFSF) prior to the establishment of a permanent stability
DG G I
The Presidency considers that the proposed introduction of the interest bearing deposit is in
line with the principle of the new Stability and Growth Pact, namely that the sanctions would
be applied progressively and starting at an earlier stage. At the same time, an upper limit for
the cumulative yearly amount of fines imposed on a Member State in different procedures
could be explicitly stated. While the Presidency considers the cumulative size of the fines
should correspond to the Council's general approach, some flexibility could be envisaged as to
the amount of respective fines. Therefore, the Presidency considers that the amendments
concerning the amount of individual and cumulative fines, as well as introduction of an
interest-bearing deposit in the excessive imbalance procedure could be further explored.
Whereas it seems reasonable to introduce an additional fine in case of repeated statistical
problems, as already foreseen by the Task Force, this could be addressed more adequately
within a separate Regulation. The Council could publicly invite the Commission to explore
possibilities for presenting a proposal for a separate act dealing with this matter.
If the accrued interest and fines and are transferred to the future permanent stability
mechanism, it seems only natural that before such a mechanism is established, the beneficiary
of these transfers would be its factual predecessor, the EFSF.
Issue 2: Reversed qualified majority voting
The EP proposes to extend application of reversed qualified majority voting in several
legislative proposals (1466, 1467 and EIP). The Council general approach is based on the
principle that reversed qualified majority voting would be limited to the texts providing for
Among others, the EP inserted the reversed qualified majority voting into 15 separate parts of
the draft Regulations, including in provisions for which Council's general approach did not
foresee any Council decisions.
DG G I
A list of these proposals is presented in the annex of the report, where reversed qualified
majority voting is proposed by the EP. They are divided into different cases:
in several instances, the Commission proposal, the Council general approach and the
proposed EP amendments already coincide;
for some others, legal analysis has shown that introduction of reversed qualified
majority voting would not be in line with the decision-making process set out by the
The Presidency considers that the possibility to introduce the reversed qualified majority
voting in some steps of the Excessive Imbalance Procedure could be explored, namely in the
case of a decision on interest-bearing deposit, and of a recommendation on declaring non
Issue 3: Role of the EP in the adoption of the scoreboard
The EP attaches great importance to the adoption and content of the scoreboard within the
draft Regulation on the prevention and correction of macroeconomic imbalances. The
Council's general approach was based on the principle that the legislative proposal defines
only the process through which the scoreboard will be defined, but not the content of the
The EP has two suggestions: first the adoption of the list of indicators by means of delegated
act and a listing of wider set of indicators (including R&D, unemployment rate, etc.) in the
legislative text itself.
The Presidency considers that the scoreboard is an analytical tool therefore it needs to be
flexible and updated from time-to-time. While the consultation with the Parliament seems to
be indispensable, a heavy legal procedure must be avoided. Moreover, consideration should
be given to include some basic guiding principles for selection of indicators in the scoreboard
in the present regulation.
DG G I
Additional important horizontal issues
Furthermore, several additional important horizontal issues were identified, on which the
Presidency would also like to seek guidance from the Council.
: Economic dialogue and transparency
The EP included provisions on economic dialogue in several proposals. These provisions aim
at introducing a framework for dialogue among the EP, the Council, the Commission and
national parliaments on macro-economic and budgetary surveillance, whereby the EP may
conduct hearings with the President of the Eurogroup, organise public debates and invite
Member States in certain steps of the surveillance procedure. It is also foreseen that Member
States under a procedure might turn to the EP and request a hearing for themselves.
Furthermore, the EP proposes the Council and the Commission to take into account the
outcome of these debates in their decisions.
From a legal perspective, provisions on hearings, public debates on macro economic and
budgetary surveillance may affect the inter-institutional balance as set out by the Treaties
whereby economic coordination is to take place within the Council and whereby economic
coordination is conceived as a peer review exercise.
The Presidency considers that the concept of the economic dialogue is worth to consider, the
same way as for example the Monetary Dialogue is conducted. Some elements of the
economic dialogue could be aligned with the implementation of the European Semester,
providing a framework for a better flow of information between the institutions. In addition,
the EP may invite Member States at certain important stages of the procedure as long as this
discussion does not interfere the decision making procedure of the Council.
DG G I
Issue 5: Medium-term solutions for crisis management
The EP proposes to empower the Commission to adopt emergency measures in case of a risk
to the stability in the euro area, followed by a debate in the EP, in the presence of all relevant
institutions. It furthermore proposes setting up a European Monetary Fund and introducing
The European Council has already decided on a limited Treaty change empowering the
Member States whose currency is the euro to establish a stability mechanism to be activated if
indispensable to safeguard the stability of the euro area as a whole.
Taking this fact into account, the Presidency considers that tasking the Commission to prepare
a report on the introduction of “euro-securities” could be explored as part of the review
Issue 6: Codification of the European Semester
The EP included provisions on the European Semester in several proposals. This choice
responds to the need to have a formalised procedure for the enforcement of the Europe 2020
The Presidency considers that the main elements of the European Semester and the National
Reform Programmes could be described in a concise manner in the legislation/a recital,
without threatening the effectiveness of the budgetary surveillance procedure.
DG G I
As a general way forward, the Council may wish to ask the Presidency to pursue the
negotiations with the EP on the basis of the above report.
DG G I
Reversed QMV proposals
EIP / EDP sanctions
decision on interest-bearing deposit (Article 3.1, EDP sanctions)
decision on mom-interest-bearing deposit (Article 4.1, EDP sanctions)
decision on fine (Article 5.1, EDP sanctions)
decision on EIP fine (Article 3.1a, EIP sanctions)
decision on interest-bearing deposit (Article 3.1a, EIP sanctions)
rejection of COM alert mechanism report (Article 4(3)a)
recommendations under Article 121 (2) TFEU for preventive actions (Article 6.1).
recommendations under Article 121 (4) for corrective policy actions and declaring the existence
of excessive imbalance (Article 7.2)
endorsing the corrective action plan or inviting the MS concerned to submit a new one (Article
rejection of COM report assessing whether or not the MS concerned has taken the
recommended action (Article 10.1)
recommendation on declaring non-compliance (Article 10.4)
decision on state of abeyance (Article 10.5)
SGP preventive arm
adoption of the opinion on the Stability programme
decision in case of non-compliance of the recommendation
SGP corrective arm
adoption of the recommendations 126(7) and 126(9)
DG G I