Obvious "losers" were Romania, which despite a population which is one third larger than the Netherlands' has only one extra vote; Malta, which is left in a category all of its own at the bottom of the list; and Latvia, Slovenia and Estonia, which are put on the same level as Cyprus and Luxembourg. The biggest losers of all, however, were Turkey and France, the former because, despite its candidate status, it does not figure at all on any list, and the latter, because by insisting on formal parity with Germany, it was forced to allow the introduction of a demographic criterion into the definition of the blocking minority, plus significantly more parliamentary seats for the Germans. Not to mention a huge loss of face as the negotiations stumbled from one disaster to another.
On the composition of the Commission, the outcome was significantly different from what had generally been expected after Amsterdam, where small state insistence on the principle of one Commissioner per member state appeared immovable. The new Treaty safeguards the principle for the time being, but provides for a break when Union membership finally reaches 27. Credit for this must go in part to Chirac, who to the consternation of his small state colleagues raised the stakes at Biarritz in October. The principal reason for the small states' change of front was undoubtedly however the prospect that the Union will eventually have significantly more than 27 members. Their readiness to concede was also made easier by the fact that when a rotation principle is eventually introduced, all member states will be treated on the basis of equality.
On qualified majority voting the result was predictably mixed. Expectations were higher on the eve of the Nice meeting. The final outcome was however significantly better than many if not most insiders had anticipated when the IGC began. British Prime Minister Tony Blair insisted that taxation remains a no go area and thwarted a Danish attempt to broker a compromise on social policy. German Chancellor Gerhard Schrvder and Chirac muddied the waters on Justice and Home Affairs, and Chirac and Greek Prime Minister Costas Simitis held their ground on certain aspects of Article 133, which deals with trade in services. Simitis also blocked extension of QMV to external assistance policies which might benefit Turkey (and therefore ipso facto other potential members).
There were however some positive features, and a few pleasant surprises. Thanks not least to energetic lobbying by Trade Commissioner Pascal Lamy, assisted at the Council table itself by Finnish Prime Minister Paavo Lipponen, the Commission got just about everything that it could reasonably have hoped for under Article 133 (see Meunier and Nicolaodis essay below). The Commission was also favored by the incorporation of the Lex Prodi-covering the powers of the President within the Commission-and, more surprisingly, by the introduction of QMV in connection with the appointment of the President and his colleagues. Had this system been in force in 1994, John Major could not have thwarted the candidacy of Jean-Luc Dehaene. Overall, with approximately 40 new provisions for QMV out of a possible list of around 75, the result was not bad, particularly as everybody shared the Commission's view that upwards of 20 items were off limits.
Over and above the Amsterdam leftovers, there were a number of other useful amendments, including new provisions regarding enhanced cooperation (see Philippart essay below), reform of the European Court of Justice, improved procedures under Article 7 (the article that was behind the Austrian affair in 2000), and an updating of Articles 17 and 25 to take account of ESDP developments including the virtual demise of WEU and the need for guidelines regarding operational responsibility in crisis management.
4. The most important outcome of Nice is, however, that unlike Amsterdam it finished.
There is a post-Nice agenda, but there are no Nice left-overs. As a result, there is no formal impediment on the Union's side to enlargement and the way is open to a "constitutional" debate, with which the candidates will be associated and which will culminate in another IGC in 2004 (see the essay by Bruno de Witte below).
Almost all the candidate countries were well pleased with Nice. With good reason. The European Conference on the first morning, the normal European Council and even the IGC all testified to the fact that enlargement is not only going to happen, but is going to happen rather soon. Having approved the Commission's strategy, which aims to make the conclusion of negotiations with the candidates who are ready possible by the middle of 2002, and Amato's proposal that the aim should be to have the first group in by the time of the next Parliamentary elections in June 2004, the Union has de facto adopted a timetable, even though the official line is still that this is not the case. The seriousness of the commitment is confirmed-and to a certain extent explained-by the transformation of the atmosphere regarding enlargement that was such a notable feature of the Brussels scene in the second half of 2000. The Council also decided to revamp the European Conference to include countries that it defined as "potential members," including in addition to the Balkan states, mention of whom is now routine, the EFTA countries. As Ukraine too was mentioned in an exchange between Chirac and Austrian Chancellor Wolfgang Sch|ssel, prospects for a Union of 35 members or more cannot be dismissed.
Nice also paved the way for a long overdue "constitutional" debate. The proximate reason was Chancellor Schrvder's need to satisfy the Ldnder that their concerns about the lack of clarity regarding the distribution of powers between the various levels of government would be taken up. The post-Nice agenda is also however an acknowledgement of much wider unease throughout the Union about where the whole process is going and who is in charge of what. The 1998 Vienna Council's decision to call for a Millennium Declaration was an early response. The miserable document that eventually emerged only confirmed however the lack of any clear thinking let alone consensus at the top.
Success is not of course guaranteed this time round, especially as 2004 is so close. A great deal will therefore depend on how the process is organized and how the agenda is defined.
As far as the former is concerned, some kind of Convention now appears inevitable. This is not in principle a bad thing. There are however two caveats. The first is that the objective of agreement by 2004 will disappear in smoke if those concerned believe that they can or should reinvent the wheel. We have a system which, for all its faults, is grounded in experience and logic. Which leads to the second point. At the core of the system is the European Council. Suggestions that the heads of state and government should somehow be marginalized are as misguided as they are impracticable. Whatever is agreed will only become reality if they sanction it, which means in the final analysis that they must somehow or other be identified with the process throughout. One solution would be to appoint one of themselves as President. Giuliano Amato's name is already circulating and it would be difficult to think of a better one.
The agenda sketched out at Nice is brief and will doubtless grow. The single most important missing item is however already obvious. Unless and until those involved attempt to define the structure of executive power in the EU system, efforts to make the latter more accountable are doomed. The omens are not good, as the ludicrous dispute between "intergovernmentalists" and defenders of the "Community method" illustrates all too clearly. We need a new language which takes account of the complex reality that has emerged by necessity rather than accident, let alone design. A beginning-but only a beginning-could be made if, under the chairmanship of a member or former member, the Convention would acknowledge that the European Council, whose membership and practices reflects the curious blend of intergovernmentalism and supranationalism which is the hallmark of the system as a whole, is more than ever the cornerstone on which everything else depends.
Peter Ludlow is Founding Director of the Center for European Policy Studies in Brussels; this article is based on a much longer analysis published elsewhere (Ludlow 2001).
Trade Competence in the Nice Treaty
Sophie Meunier and Kalypso Nicolaidis
THE NICE SUMMIT IS unlikely to be remembered as a French success in the story of European integration. The French presidency has been widely criticized for failing to put the interests of the Union above its own national interest and, as a result, for failing to produce a clear and elegant revised treaty. In doing so, however, one could argue that France succeeded in what really mattered to her: holding the bottom line on issues of vital national interest. As is well known, this was true for the relative voting weights of France and Germany. This was also true on the question of trade competence. As a result, the new compromise eventually reached on trade in the late hours of the Nice negotiations is another fascinating example of the EU's propensity for "evolutionary pragmatism" (cf. Moravcsik and Nicolaodis 1998).
The story of the trade competence debate leading up to Nice is well known and revolves on the distinction between exclusive and mixed competence (see Meunier and Nicolaodis 1999, 2001). In theory, mixed competence in trade simply means that delegation of authority is granted on an ad-hoc basis for negotiation purposes rather than once and for all. Individual member states retain a veto both through unanimity voting in the Council (at the mandate and ratification stage) and through ratification by their own national parliaments. They also retain the right to engage in bilateral negotiations with third countries. Under exclusive competence, a vote in the Council stands as ratification (although in practice, the difference has been blurred by the informal practice of agreement by consensus). While Article 113 of the Treaty of Rome granted exclusive competence to the EC on external trade matters, this state of affairs became contested with the introduction of so-called new trade issues--services and intellectual property--in the Uruguay Round (1986-1993). A majority of member states, fearing loss of control in these sensitive areas, argued that Article 113 was never meant to cover them in the first place. Analytically, it is hard to concur. The whole point of the Uruguay Round was to widen the scope of what has traditionally been understood as "trade." And the whole point of "Europe 1992" was to "extend" the internal market to services. But politics has its own logic. And in this case, the European Court of Justice took the "cautious" route by arguing in its 1994 ruling that only "crossborder" trade in services--that is one of the modes of services delivery--counted as traditional trade and therefore fell under exclusive competence (Court of Justice 1994).
Since 1994, therefore, the "trade competence" ball has been in the camp of high level politics. The question was intensely debated in the run-up to the Amsterdam summit where member states contemplated the option of expanding the scope of exclusive competence while at the same time introducing an unpalatable list of exceptions. In the end, they adopted a temporary fix: a short amendment to Article 113 (renumbered 133) allowing for future expansion of exclusive competence to the excluded sectors through a unanimous vote of the Council. This could be done on an ad-hoc basis without requiring an IGC.
Yet, it quickly became clear that the Amsterdam compromise was not sustainable. Since 1997, the extraordinary boom in trade in services, the chaos surrounding the WTO meeting in Seattle in 1999, and the prospect of imminent enlargement of the EU all contributed to calls for revisiting the trade competence issue. Moreover, streamlining of voting procedures on trade fell within the basic premise of the Nice IGC-the extension of qualified majority.
Players and Positions
We have argued elsewhere that national positions on trade competence were based both on political considerations reflecting a country's stance on the general question of division of sovereignty in the Union and the role of the Commission; and on economic or sectoral considerations whereby pro-free trade advocates tend to prefer exclusive competence which limits the veto power of protectionist groups, with exceptions due to individual countries' sectoral concerns (e.g., Greece and Denmark on maritime transportation, Germany on air transportation, France on audiovisual, public service and health policy). At Amsterdam, as in Nice, France was the most vocal opponent of exclusive competence--it did not trust the Commission to defend Europe's Maginot line against Hollywood. Its camp had shrunk significantly since Amsterdam, down only to Spain and to some extent Portugal.
Unsurprisingly, at Nice as at Amsterdam, the Commission was the strongest advocate of "communitarization"-ironically through the voice of its French trade commissioner, Pascal Lamy. It was supported by Finland, Sweden, Italy and the Benelux countries, and more quietly by Germany, Denmark and the UK. The UK government's position, in particular, was key in that this is the country in the EU with the highest stakes in trade in services. While it had progressively overcome its distrust of the Commission and favoured an expansion of exclusive competence, it was at the same time extremely concerned with the so-called "reverse ERTA" problem, in reference to the ECJ jurisprudence on the issue which linked internal and external competences. The concern was to prevent external commitments from driving the internal agenda in areas of the internal market where the Community had not completely pre-empted the field through harmonization or mutual recognition (e.g. banking or the professions).
On the non-governmental front, the Commission tried, with moderate success, to rally support from the business sector. At the same time, it was loudly criticized by the new post-Seattle players-NGOs such as ATTAC and the Observatoire de la Mondialisation, or the dedicated audiovisual pressure group, "red alert on 133."
Options and Final Compromise
Could there be a compromise between the "maximalist" option, which would communitarize all trade in services and intellectual property, and the "minimalist" option which would retain the "mixed competence" status quo except for the issues included in a list (the "negative list" approach)?
Over the course of the IGC, it became clear that a way forward would be to distinguish between two separate components of the negotiations: a) whether to "communitarize" competence; b) to the extent that (some or all) competence would be transferred to the Community level, whether to preserve unanimity voting. The introduction of this distinction was the crucial move which opened up the possibility for a compromise.
The final agreement reflects the bargaining dynamics of the negotiation. There was a general momentum at Nice to expand QMV, and article 133 was to be no exception. The general rule for trade in services will now be exclusive competence (Article 133.5). Even then, unanimity will be required for "provisions for which unanimity is required for the adoption of internal rules or where it relates to a field in which the Community has not yet exercised the powers conferred upon it by this Treaty by adopting internal rules." At the same time, exceptions to exclusive competence were kept to a minimum and carved out under a "positive list" approach. First and foremost, the concept of "mixed competence" developed by the Court in its 1994 jurisprudence is now enshrined in the Treaty as a new legal category. Particularly noteworthy is therefore the black-on-white inclusion of the "cultural exception" clause in Community law, with cultural and audiovisual services falling under shared competence alongside education, social and human health services. In addition, transport remains under a separate legal basis (Title V and Article 300) that some have referred to as "mixed competence." Finally, intellectual property is also divided in two components: "commercial aspects of intellectual property" fall under exclusive competence and all other aspects of intellectual property are shared. But the Council can decide by unanimity that the provisions relevant to exclusive competence can be extended to the latter-a last echo of the defunct Amsterdam compromise.
Sophie Meunier is Visiting Research Fellow and Lecturer in Public and International Affairs at Princeton University. Kalypso Nicolaidis is University Lecturer at St. Antony's College, Oxford.
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