The New Legislative and Budgetary Competences of the European Parliament in the European Constitution

The New Legislative and Budgetary Competences of the European Parliament in the European Constitution


This article looks at the new legislative and budgetary competences of the European Parliament under the Treaty establishing a Constitution for the European Union, according to the text approved by the Heads of State or Government of the EU at the summit meeting held in Brussels on 18 June 2004. In quoting the text the article uses the consolidated version drawn up by the General Secretariat of the Council on 2 July 2004 (CIG 86/04).


The European Parliament is probably the institution to benefit most from the European Constitution. Under it the Parliament is raised to the status of co-participant with the Council of Ministers in the exercise of the legislative and budgetary powers of the Union and extends its competences in both areas. However, in terms of legislative powers, a closer examination of Part III of the Constitutional Treaty suggests that no radical change has occurred; instead, the gradual process of increasing the legislative powers of the EP has inched forward once again.


The Background
As we know, the Convention on the future of Europe went much further than the mandate given at Laeken. The Convention assumed various responsibilities, among them that of reforming the institutional system recently adopted at Nice. This was the thorniest issue of the debate on the European Constitution and also the most improvised. Rather than being prepared by one of the Convention’s working groups, it was introduced directly by the chair in the plenary session debates. Evidence of this improvisation, which subsequently remained uncorrected, is the fact that the institutional system is dealt with not in one part of the Treaty, but in two. Election of the Commission, for example, is in Part I, but to find the censure motion, however, you have to go to Part III. In fact, the Convention’s Presidency was less worried about the technical details that were part of its mission to simplify the treaties than about overturning the terms agreed at Nice. Hence, it comes as no surprise that the complexity of the power-sharing system adopted at Nice is as nothing when compared with the wording of Article I-24 of the Constitution.

As a result, not only did the constitutional process teeter on the brink of derailment but, instead of being easier to understand, the system is even more complex and confusing than it ever was, with new twin-headed authorities (such as the President of the European Council, now on a par with what were the rotating Presidents) or three-headed authorities (such as the brand-new Minister of Foreign Affairs, answerable to the Commission, the Council of Ministers and the European Council), plus a Commission that has postponed reducing its number of members and whose future is difficult to foresee given the abundance of new authorities.

Against this background, the European Parliament (or EP for short), to which this article must be limited, emerged relatively unscathed. In this it was aided by the fact that contrary to the usual government representatives at intergovernmental conferences, the Convention was made up of a large number of parliamentarians. The coup de grâce at Brussels was that the system of power sharing, which was originally supposed to be a mere proposal open to debate, was deemed untouchable by the large heavily populated States it so blatantly favours.

But to return to the European Parliament, the main point from a symbolic standpoint –and we all know what symbols can do when it comes to legal quibbling– was that the EP was firmly recognised as co-participant with the Council of Ministers in exercising the legal and budgetary powers of the Union. Article I-19.1 of the Constitutional Treaty reads as follows.

‘The European Parliament shall, jointly with the Council, exercise legislative and budgetary functions. It shall exercise functions of political control and consultation as laid down in the Constitution. It shall elect the President of the Commission’.

No previous Community treaty awarded such status to the EP. True, since the Single European Act the EP had gradually increased its legislative powers (also its budgetary powers, although these were generally greater from the outset). Now, however, the European Constitution formally recognises not only its status but other matters besides, matters we will look at briefly in this article.

Legislative and Decision-making Competence
In legislative matters, the most significant change is suppression of the cooperation procedure (governed by the current Art. 252 TEC), thus turning the EP’s co-decisionmaking powers into standard legislative procedure. Art. I-33 of the European Constitution admits this clearly.

“Article I-33: Legislative acts

1.   European laws and European framework laws shall be adopted, on the basis of proposals from the Commission, jointly by the European Parliament and the Council under the ordinary legislative procedure as set out in Article III-302. If the two Institutions cannot reach agreement on an act, it shall not be adopted.

2.   In the specific cases provided for by the Constitution, European laws and European framework laws shall be adopted by the European Parliament with the participation of the Council, or by the latter with the participation of the European Parliament, in accordance with special legislative procedures.”

It is true that at Nice the cooperation procedure had been restricted to certain decisions relating to the Economic and Monetary Policy (Arts. 99.5, 102.2, 103.2, 106.2, TEC). This restriction has now been lifted and what Maastricht deemed the exception is now the rule. It does not mean that all future European laws and framework laws have to follow this procedure. The situation in this case is as ever: each of the EU institutions, including the EP, still have ‘conferral’ competences (Art. I-9.1 of the European Constitution) and should act “within the limits of the powers conferred on it in the Constitution, and in conformity with the procedures and conditions set out in it.” (Art. I-18.3 of the European Constitution). We have to go, therefore, to the rest of the Treaty and, in particular, to Part III, which deals with Union policies (Art. I-11.6).

A broad survey of the subject leads us to stress that, in fact, the conferral procedure has gradually extended to other fields, to the point where we can say that 95% of future European laws will have to follow this procedure (as the European Commission argues in its ‘non paper’ of 21/06/2004 on the final agreement on the Constitutional Treaty, p. 2). But, aside from this overview, the situation admits of very few generalisations; in fact, it is not much different from what it was originally. This is because, on one hand, the new European Constitution maintains multiple ‘special’ procedures other than the ordinary one. On the other, key issues are excluded from legislative competence, either because they are subject to a ‘regulatory reserve’ or, simpler still, they are defined as decisionmaking competences of the Council or the Commission. Let us take a look at both cases.

Special legislative or decisionmaking procedures (for, as we shall see, there is still no clear separation between a European law or a regulation, both of which are used indifferently in the European Constitution) of particular note, ie, those in which the EP is involved, may be categorised from greater to less importance, according to the faculties of the EP:

(a) In the first place we have the so-called EP laws or framework laws, previously vetted by the Council of Ministers, in a small number of cases (not all) in which they have to do in some way with the functioning of Parliament itself:
• Rules and regulations governing the duties of members of the EP (Art. III-232, with a requirement for unanimity in the Council of Ministers if the subject matter has to do with taxes).
• The rights of the EP to conduct inquiries (Art. III-235, here requiring the consent of the Commission).
• Rules and regulations governing the duties of the European Ombudsman (Art. III.237.4).

(b) Conversely, we have laws or framework laws of the Council of Ministers, with the prior approval of the EP:
• The multiannual financial framework (Art. I-54).
• Measures needed to combat discrimination based on sex, racial or ethnic origin, religion or belief, etc. (Art. III-8).
• Laws or framework laws which add to the rights of citizenship of the Union (Art. III-13).
• Establishment of a European Public Prosecutor’s Office (Art. III-175).
• The electoral system for the EP, to come into force only after it has been approved by the Member States (Art. III-232.1).

(If we may be allowed a brief aside, it is difficult, at least at a symbolic level, to see how, in a text designed to promote the democratisation of the EU, we find the expression “law of the Council of Ministers”. It is even harder to understand in cases where the EP is required to approve the law in question. This is another telltale sign of the sources of Community law, although, oddly enough, talking about regulations and directives, as we shall now, fails to arouse the same touchiness. This is something that will have to be put right in the future.).

(c) Then there are other major decisions of the Council of Ministers which, without ranking as laws, also require the approval of the EP:
• Measures to be approved pursuant to the flexibility clause (Art. I-17). This is an important matter, as it is the procedure laid down for extending the competences of the Union to meet the objectives of the European Constitution, the so-called subsidiary powers which the Constitution conferred upon itself in the still operative Article 308 TEC (the old and familiar Article 235), although in such cases the EP need only be consulted.
• Membership of the Union, including accession (Art. I-57), suspension of membership rights for serious breach of the values of the Union (Art. I-58) and voluntary withdrawal by a Member State (Art. I-59).
• Extending the terms laid down in the Constitution to define criminal offences and sanctions (Art. III-172).
• Agreements of association and other relevant international treaties included in the list of Article III-227.7, much as occurs now under Article 300 TEC.
• Authorisation to engage in enhanced cooperation (Art.III-325.1).
• The decision of the European Council not to call a Convention to amend the Treaty (Art. IV-7.2).
• Initiatives of the European Council relating to the simplified revision of the Treaty (Art. IV-7a (new).3).

All the above cases require the prior approval of the EP.

(d) There are still many instances where traditional consultative procedures have been maintained. Surprisingly, in many cases the incongruous expression laws or framework laws of the Council of Ministers, after consultation with the EP remains.

• The Union’s own resources (Art. I-53).
• Measures concerning passports, identity cards, residence permits, or those concerning social security or social protection of European citizens resident in a State of which they do not possess nationality. (Art. III-9).
• The exercise of the right to vote in a State of which one does not have nationality. (Art. III-10).
• Diplomatic and consular protection of citizens of the EU (Art. III-11).
• Measures constituting a step back in the liberalisation of movement of capital to or from third countries (Art. III-46.3).
• Measures for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation (Art. III-62).
• Approximation of national legislation which directly affects the establishment or functioning of the internal market (Art. III-65a).
• Language arrangements for European instruments to provide uniform intellectual property protection (Art. III-68).
• Measures to replace the Protocol on excessive deficits (Art. III-76.13).
• Measures relating to environmental policy of a fiscal nature or which affect town and country planning, water resources, land use or the choice of a Member State of its different energy sources or the general structure of its energy supply (Art. III-130.2).
• Measures concerning family law with cross-border implications (Art. III-170.3).
• Measures relating to operational police cooperation and activities carried out in the territory of another Member State (Art. III-176.3 and 178).

The Constitutional Treaty also provides for a wide-ranging regulatory reserve, ie, a long list of items for which the Council or the Commission holds regulatory or decisionmaking competence without the intervention of the EP. It includes regulations to ensure the progress of the internal market (Art. III-14.3), to adopt common customs tariffs (Art. III-39), to safeguard economic and monetary union (art III-48), on farm and fishing prices and subsidies (Art. III-127.3), procedures for association with third countries (Art. III-191), the rules to be adopted by European courts (Art. III-260, 261 and 264.5), remuneration of the members of Union institutions (Art. III-306), where such institutions have their headquarters (Art. III-338), the rules governing languages (Art. III-339), and so on. All this is over and above those policy areas where the EP has no legislative mandate, such as foreign and security policies (on which, according to Article I-39.6, parliament will be periodically consulted and ‘informed’) or the competences for coordinating economic and employment policies (Art. I-14.1).

It is true that in most Member States these matters are the competence of the executive branch of government. What Member States do not share with the Community system, however, is that in their case parliament is not banned from legislating in such areas nor is the body which exercises the main executive powers regarded as a co-legislator on an equal footing with parliament.

Finally, there is no shortage of cases in which these European rules or decisions should be adopted with the approval of the EP, reproducing the existing scheme:

• Regulations guaranteeing the principles of free competition in the internal market (Art. III-52).
• State aid compatible with the internal market (Art. III-58).
• Certain prohibitions of financial guarantees given by Member States (Art. III-74 and 75).
• Implementation of the Protocol on excessive deficits (Art. III-76.13).
• Measures relating to the circulation of coinage (Art. III-78.2) and on other monetary policy matters (Art. III-79.6).
• R&D programmes (Art. III-154).
• Administrative cooperation within the area of freedom, security and justice (Art. III-164).
• Emergency measures in the event of sudden influxes of nationals of third countries (Art. III-167.3).

What all this goes to show is that the situation in terms of subject areas open to parliamentary initiative or control is not really very different under the new sources of European law and recognition of co-decisionmaking by the Council and the EP as being the norm rather than the exception. This all-important change has yet to be accompanied by a root-and-branch revision of Part III, to adapt Union policies to the new legislative ground rules. A great many of the former procedures have remained, clothed in new wording, such as the particularly unfortunate “law of the Council of Ministers”. In my view the European Constitution has made progress in increasing the competences of the EP, in much the same way as Community treaties have advanced since the Single Act, but without any radical change occurring, however much the new terminology might lead one to believe otherwise.

However, there is one avenue in the Constitutional Treaty which could serve to usher in such a change. I refer to the ‘gateways’ provided for with respect to majorities and legislative procedure. They were first introduced in the final phase of the Convention as Article I-24.1 and then amended by the IGC, which rightly placed them in Part IV as a simplified procedure for amending the Constitution itself. In the case of legislative procedure, Article IV-7 says that the European Council can unanimously decide, after obtaining the approval of the EP and provided no national parliament objects within six months, that European laws or framework laws normally subject to special procedures be processed by means of the ordinary procedure. This is a totally new mechanism – which includes the decisive participation of national parliaments (to a much greater extent than in the Protocols) – and only time will tell what use will be made of it.

Budgetary competences
In budgetary affairs the EP has also improved its standing as a co-participant with the Council of Ministers in drawing up budgets. Here we note that the IGC substantially amended the text of the Convention to make it much more abstruse. The changes finally approved are as follows:

(1) The Commission, rather than the Council as was the case previously, is competent to approve the draft budget and to propose its amendment prior to convening the Conciliation Committee (Art. III-310.2). Here we should remember that the Commission is subject to the control of the EP, making it more receptive to parliamentary suggestions.

(2) The former distinction between ‘necessary’ or discretional budgetary allocations disappears (see Article 272.4 TEC), and with it, the voting limitations on the EP. In the past the Council could overrule parliament on such allocations, to which parliament could only respond by throwing out the entire budget, requiring a two-thirds majority. With this distinction removed, the EP can now amend both types of allocation on a simple majority.

(3) The ability of the EP to reject the budget (Art. 272.8 TEC) disappears. The reason for this is simple. Under the new procedure the EP can obtain the same result where no agreed text drawn up by the Conciliation Committee exists. Where such a text does exist, the EP can still reject it by a simple majority vote, as opposed to the previous two-third majority.

(4) The new procedure revolves around the Conciliation Committee, borrowed from the ordinary procedure. In budgetary matters, however, the committee only convenes following a first reading by the Council and the EP, when the Council refuses to accept the amendments of the EP. Its job is to find a common text admitted by both parties or, at least, not rejected by the two of them. The IGC amended the draft of the Convention, introducing various degrees of acceptance or rejection in terms, by the bye, which do not make for easy reading. What it says (Art. III-310.7), in essence, is the following:

• If both institutions approve the joint text or if they fail to reach a decision either way, the text is approved.
• If they both reject it, or if the EP rejects it by an absolute majority although the Council approves it, the Committee must redraft.
• If the Council rejects it but the EP approves it, the EP is not obliged to return the text to the Committee but can incorporate its original amendments on a three-fifths majority representing the absolute majority of the House.
• If the EP cannot obtain such a majority, or the Council rejects it and the EP adopts no decision, the text is taken as approved.
• Through this maze of complication, one perceives that here, too, though not with the clarity of the draft of the Convention, the EP has advanced its standing.


From this analysis we reach the following conclusions.

(1) The European Parliament is probably the institution to have done best out of the European Constitution. Symbolically, its single most important achievement is the solemn pronouncement that it is a co-participant with the Council of Ministers as the legislative and budgetary authorities of the Union.

(2) The most significant measure in legislative matters is the suppression of the cooperation process in favour of the ordinary legislative procedure. This does not mean that every future European law and framework law will necessarily undergo this procedure. The situation here is as always: EU institutions, and among them the EP, still have conferral competences, meaning they must act within the limits of the competences conferred on them by the Constitution, submitting to the procedures and conditions contained therein. In practice, therefore, the real position requires a close study of Part III of the Treaty, the section devoted to Union policies.

(3) A careful reading of Part III of the Constitutional Treaty shows that in terms of legislative powers the situation has not changed very much, given that the new system of sources of Community law and official recognition of the EP as co-legislator was not followed up by a root-and-branch revision of Union policies to bring them into line with the new legal context. Many of the existing procedures have been left standing, often under new nomenclature, such as the glaringly unfortunate “law of the Council of Ministers”.

(4) In short, the European Constitution marks another milestone in the slow progress of the EP to full legislative competences, as did other Community treaties such as the Single Act, though it would be wrong to describe the change as drastic.

(5) There is one new procedure, introduced in the closing stages of the Convention and amended by the IGC, which time alone will tell if it works: the gateway set up to circumvent stalled majorities and refloat wallowing initiatives (Art. IV-7a).

(6) In budgetary matters, too, the EP has strengthened its standing as co-participant with the Council of Ministers in budgetary affairs, with the removal of the distinction between necessary and discretionary expenditure and with the new rules for solving differences arising between the two institutions, rules drawn up, we cannot help saying, in an absurdly circuitous fashion.

Manuel Delgado-Iribarren García-Campero
Legal adviser to the Spanish Parliament (member of the Joint House Committee for the EU) and lecturer in European Community Law