Sixteenth Report of Session 2007–08 · 8 FCO (29497) EU support for the International Criminal Tribunal for the former Yugoslavia (ICTY) 28 9 FSA (29411) Marketing of products containing

HC 16-xiv

House of Commons

European Scrutiny Committee

Sixteenth Report of Session 2007–08 Documents considered by the Committee on 5 March 2008

HC 16-xiv Published on 14 March 2008

by authority of the House of Commons London: The Stationery Office Limited

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House of Commons

European Scrutiny Committee

Sixteenth Report of Session 2007–08 Documents considered by the Committee on 5 March 2008

Report, together with formal minutes

Ordered by The House of Commons to be printed 5 March 2008

Notes

Numbering of documents

Three separate numbering systems are used in this Report for European Union documents:

Numbers in brackets are the Committee’s own reference numbers.

Numbers in the form “5467/05” are Council of Ministers reference numbers. This system is also used by UK

Government Departments, by the House of Commons Vote Office and for proceedings in the House.

Numbers preceded by the letters COM or SEC are Commission reference numbers.

Where only a Committee number is given, this usually indicates that no official text is available and the

Government has submitted an “unnumbered Explanatory Memorandum” discussing what is likely to be included

in the document or covering an unofficial text.

Abbreviations used in the headnotes and footnotes

EC (in “Legal base”) Treaty establishing the European Community

EM Explanatory Memorandum (submitted by the Government to the Committee)

EP European Parliament

EU (in “Legal base”) Treaty on European Union

GAERC General Affairs and External Relations Council

JHA Justice and Home Affairs

OJ Official Journal of the European Communities

QMV Qualified majority voting

RIA Regulatory Impact Assessment

SEM Supplementary Explanatory Memorandum

Euros

Where figures in euros have been converted to pounds sterling, this is normally at the market rate for the last

working day of the previous month.

Further information

Documents recommended by the Committee for debate, together with the times of forthcoming debates (where

known), are listed in the European Union Documents list, which is in the House of Commons Vote Bundle on

Mondays and is also available on the parliamentary website. Documents awaiting consideration by the

Committee are listed in “Remaining Business”: www.parliament.uk/escom. The website also contains the

Committee’s Reports.

Letters sent by Ministers to the Committee about documents are available for the public to inspect; anyone

wishing to do so should contact the staff of the Committee (“Contacts” below).

Staff

The staff of the Committee are Alistair Doherty (Clerk), Emma Webbon (Second Clerk), David Griffiths (Clerk

Adviser), Terry Byrne (Clerk Adviser), Sir Edward Osmotherly (Clerk Adviser), Peter Harborne (Clerk Adviser),

Michael Carpenter (Legal Adviser) (Counsel for European Legislation), Dr Gunnar Beck (Assistant Legal Adviser),

Anwen Rees (Committee Assistant), Allen Mitchell (Chief Office Clerk), James Clarke (Chief Office Clerk), Mrs

Keely Bishop (Secretary), Dory Royle (Secretary), Sue Panchanathan (Secretary), Estelita Manalo (Office Support

Assistant).

Contacts

All correspondence should be addressed to the Clerk of the European Scrutiny Committee, House of Commons, 7

Millbank, London SW1P 3JA. The telephone number for general enquiries is (020) 7219 3292/5465. The

Committee’s email address is [email protected]

Contents

Report Page

Documents not cleared

1 DFT (29314) Carbon dioxide emissions from cars and light commercial vehicles 3

2 HMT (26118) Value added taxation 8

3 HMT (29451) (29452) (29453) (29454) (29455) (29456) (29457) (29458) (29459) (29460) (29461) Stability and Convergence Programmes 11

4 MOD (29267) Defence and security procurement 17

Documents cleared

5 BERR (28376) A common framework for the marketing of products 20

6 BERR (29331) Lead market initiative 22

7 BERR (29422) The single market: the first Consumer Scoreboard 25

8 FCO (29497) EU support for the International Criminal Tribunal for the former Yugoslavia (ICTY) 28

9 FSA (29411) Marketing of products containing genetically modified maize 31

10 HMT (29330) Financial services 33

11 MOJ (29445) EU Justice Forum 37

Documents not raising questions of sufficient legal or political importance to warrant a substantive report to the House

12 List of documents 41

Formal minutes 43

Standing order and membership 44

European Scrutiny Committee, 16th Report, Session 2007–08 3

1 Carbon dioxide emissions from cars and light commercial vehicles

(29314) 5089/08 + ADDS 1–2 COM(07) 856

Draft Regulation setting emissions performance standards for new passenger cars as part of the Community’s integrated approach to reduce carbon dioxide emissions from light-duty vehicles

Legal base Article 95 EC; co-decision; QMV Document originated 19 December 2007 Deposited in Parliament 9 January 2008 Department Transport Basis of consideration EM of 14 February 2008 Previous Committee Report None, but see footnotes 1 to 3 To be discussed in Council See para 1.19 below Committee’s assessment Politically important Committee’s decision Not cleared; further information awaited

Background

1.1 Because of the large (and increasing) contribution which carbon dioxide from vehicles makes to overall emissions of greenhouse gases, the Community has taken a number of measures to address this issue, including voluntary agreements with European, Japanese and Korean manufacturers aimed at reducing the level of such emissions from new cars from 186g/km in 1995 to 140g/km by 2008–09. In addition, the European Council has endorsed a target of 120g/km by 2012, and, in its Energy Efficiency Plan,1 the Commission said that it would if necessary propose in 2007 legislation to ensure that latter target is achieved — an aim subsequently re-iterated in the Communication it put forward in January 2007 about limiting global climate change.2

1.2 This was followed in February 2007 by a further Communication, in which the Commission set out the results of its review of the Community strategy to reduce carbon dioxide emissions from passenger cars and light-duty passenger vehicles. It said that the latest information available (for 2004) suggested that the 140g/km target for 2008–09 was unlikely to be met, and that additional measures, including a legislative requirement for vehicles to meet a target of 120g/km by 2012, were needed to complement the measures which it had already proposed on fuel quality.3 Part of this reduction (to 130g/km) would be delivered by improvements in vehicle technology, and the remaining 10g/km by a range of other measures, notably minimum efficiency standards for air-conditioning systems; the mandatory fitting of tyre pressure monitoring systems; maximum tyre rolling resistance

1 (27944) 14349/06: see HC 41–ii (2006–07), chapter 8 (29 November 2006).

2 (28275) 5422/07: see HC 41–x (2006–07), chapter 1 (21 February 2007).

3 (28348) 5389/07: see HC 41–x (2006–07), chapter 20 (21 February 2007) and (28351) 6145/07: see HC 41–xiv (2006–07), chapter 1 (14 March 2007).

4 European Scrutiny Committee, 16th Report, Session 2007–08

limits; the fitting of gear shift indicators; mandatory targets for fuel efficiency in vans (of 175g/km by 2012 and 160g/km by 2015); and increased use of biofuels “maximising environmental performance”.

1.3 The Commission also suggested other potential measures which would not form part of the 120g/km legislative target, and which would be either subject to other EU legislation, non-legislative measures, or pursued by individual Member States. These included taxation, consumer labelling and information; driver behaviour; and research towards a lower long term emissions target.

The current proposal

1.4 Against this background, and the decision taken by the European Council in spring 2007 that the Community’s emissions of carbon dioxide should by 2020 be reduced by at least 20%, the Commission has now put forward this draft Directive, which would specify that the average specific emissions of new passenger cars4 should not exceed 130g/km as from 2012. In particular, the proposal would:

• set mandatory targets for the specific emissions of carbon dioxide from new passenger cars according to their so-called “utility” (which in practice is proportional to their mass, as determined in the certification of conformity issued under Directive 2007/46/EC);

• enable manufacturers to apply these targets to the average of the emissions for all new cars they register in the Community in each calendar year, rather than to each individual model;

• allow different manufacturers to form, for a period up to five years, a pool, which would be treated as if it was one manufacturer for the purpose of determining compliance with the targets: however, in order to comply with Community competition rules, participants would be prohibited from sharing information except in relation to their carbon dioxide emissions target and actual emissions;

• require a manufacturer which fails to meet its target to pay an excess emissions premium for each calendar year from 2012 onwards, calculated by reference to the number of its newly registered cars and the extent to which its average emissions in grams per km exceed the target: for each such gram in excess of the target, the penalty will be €20 for 2012, €35 for 2013, €60 for 2014, and €95 for 2015 and each subsequent year, and the proceeds from the penalties imposed would be considered as revenue for the Community budget;

• oblige manufacturers to include in promotional literature for cars offered for sale information on the model’s specific emissions of carbon dioxide;

• require Member States to collect data on the new cars registered in their territory, and to report this to the Commission in order to enable compliance to be assessed; and

4 Category M1, as defined in Annex II of Directive 2007/46/EC, with a mass not exceeding 2,610kg.


• require the Commission to publish annually information on the performance of manufacturers.

Certain categories of “special purpose” vehicles (such as those providing wheel chair access) would be exempted from the proposals, and smaller, independent manufacturers registering fewer than 10,000 new passenger cars a year would be able to apply to the Commission for a lower target, provided this was consistent with its technical potential to reduce its carbon dioxide emissions.

1.5 The other elements identified in the earlier Communication, which would contribute to the remaining reduction of 10g/km envisaged under the Commission’s integrated approach, will be the subject of a further proposal later this year.

The Government’s view

1.6 In his Explanatory Memorandum of 14 February 2008, the Parliamentary Under Secretary of State at the Department for Transport (Mr Jim Fitzpatrick) says that the Government remains supportive of the Commission’s intention to legislate, and that, whilst it has concerns or questions about some particular aspects of the proposal, it generally welcomes its aims and its broad structure. He adds that, because of the amount of detail in the proposal, a UK Impact Assessment has not yet been produced, but that initial analysis suggests that the benefits to consumers will outweigh the costs to industry. This analysis is currently being updated, and the intention is to publish it in the Assessment alongside the forthcoming formal consultation.

1.7 In the meantime, he has the following comments:

Target level and date

1.8 The likely feasibility of the target and date set is important, as other elements of the proposal are conditional upon it. In particular, the motor industry typically has timescales of 5–7 years for product development, and, since the legislation could not realistically take effect earlier than 2009, this would leave very little time for preparation.

Scope

1.9 The rationale for allowing smaller manufacturers different treatment is that the cost of technology improvements tends to vary little by output, so that their cost per vehicle for such improvements would be very high; vehicles made by such producers account for only 0.16% of actual new car emissions; and the 10,000 unit threshold broadly defines a natural break point between small producers and the rest of the market. This distinction is likely to benefit the UK, as it has relatively more small-volume manufacturers than other Member States, but the extent of this will depend on how strictly the clause under which a manufacturer has to satisfy the Commission that its target is consistent with its reduction potential is implemented.


‘Pooling’

1.10 Analysis suggests that this can theoretically reduce total compliance costs by up to 12%, compared with each manufacturer being required to meet the target individually. However, as the mechanism proposed leaves manufacturers to make their own arrangements rather than setting up a trading system addressing the whole of the market, the savings are likely to be substantially lower.

1.11 Although exchanges of information between companies would in general be prohibited, many already make arrangements for mutually-beneficial exchanges, notably in relation to technologies, and it is uncertain how effectively this could take place within the limited exchanges which would be permitted.

1.12 Since the definition of “manufacturer” in the proposal extends to holding companies, formal pooling — rather than offsetting within a holding company — is likely to be used only by companies unconnected with each other. This has a bearing on manufacturers which are not part of any holding company and do not have a favourable emissions profile to exchange, since most of their vehicles have relatively high emissions per kilometre, and they would have to make cuts of up to 50% to meet utility-based targets, compared with around 20% for manufacturers in holding companies. This could potentially distort competition and market; and the viability of such companies would be threatened if they try to comply through abatement or through an onerous pooling arrangement. This is particularly an issue for the UK, which has a higher proportion of such companies than other Member States, and the Government would therefore like the Commission to include a provision ‘capping’ the maximum level of abatement a manufacturer has to make.

Utility

1.13 The UK’s volume production reflects the diversity of the sector, covering small, medium and large cars, so it should not be especially disadvantaged by the proposal’s provision for a moderately steep increase in the emissions target in relation to mass (though, as indicated above, there could be implications for certain ‘niche’ manufacturers).

1.14 The use of mass has the advantages of current good data availability, relatively even spread of effort between manufacturers, and consistency with other geographical jurisdictions. On the other hand, using it as a basis for a vehicle’s emissions target may encourage a manufacturer to add weight to provide an easier target, or at the least to avoid “light-weighting” to give it lower emissions. However, Commission studies suggest that, on the basis which has been proposed, this risk would not be significant.

Penalties

1.15 Where there is a straightforward choice between abatement and payment of a charge at a given level of over-emission, manufacturers are likely to choose the least-cost option, and an analysis suggests that unit charges would have to be at least €70 in the initial years for the 130g/km target to be met from the start. As the penalties in the four stages of implementation are €20, €35, €60 and €95 respectively, this implies that, for the first three


years, the target will not be met, and that the “premium” will therefore act merely as a charge.

1.16 It is not yet certain how charge income will be used or distributed once received by the Commission, but, in other schemes subject to a fine defined as such, income forming part of the general Community budget is distributed to Member States in proportion to their contributions.

Consumer information

1.17 Although Member States are already required to ensure that all written promotional material for new car sales (including advertisements) includes information on g/km emissions of carbon dioxide, this information would in future need to be comparative, rather than absolute. Manufacturers and car showrooms in the UK already use a colour-coded labelling system (along the lines of that used for household ‘white goods’), based around UK Excise Duty bands and indicating the vehicle’s actual g/km emissions. There might be concerns as to how useful the new provision would be in informing consumers, given that the current label model is still gaining familiarity, emission levels (as opposed to, say, fuel consumption) are still a relatively new concept, and weight-based utility is far from an intuitive characteristic.

Financial Implications

1.18 There will be some new cost to Member States for recording more detailed information on vehicles than is currently collected, but there may also be some new benefit to them (depending on how the income from penalties on manufacturers is used and distributed).

1.19 The Minister has also commented on the likely timetable. He says that, whilst the proposal is on the agenda for meetings of the Environment Council, it is not thought to be a priority for the Slovenian Presidency, and there is more likely to be progress during the French Presidency in the second half of the year. However, he also says that, in view of the many shades of opinion, debate may well last into 2009. He also observes that the European Parliament’s Environment Committee has proposed a target of 125 g/km by 2015, and that it is therefore by no means certain that the progress of the proposal through the Parliament will be straightforward.

Conclusion

1.20 This proposal is clearly relevant to the wider measures being taken to meet the emissions targets for 2020 and beyond set last year by the European Council, on which we have recently reported at some length,5 and, for that reason, we believe it is right to draw it to the attention of the House. However, we will reserve judgement on whether any further consideration is needed until we have seen the Government’s Impact Assessment. In the meantime, we are holding the document under scrutiny.

5 See HC 16–xiii (2007–08), chapters 1–4, 7 and 8 (27 February 2008).


2 Value added taxation

(26118) 14248/04 COM(04) 728

Draft Directive amending Directive 77/388/EEC with a view to simplifying value added tax obligations Draft Directive laying down detailed rules for the refund of value added tax, provided for in Directive 77/388/EEC, to enable taxable persons not established in the territory of the country but established in another Member State Draft Regulation amending Regulation (EC) No 1798/2003 as regards the introduction of administrative cooperation arrangements in the context of the one-stop scheme and the refund procedure for value added tax

Legal base Article 93 EC; consultation; unanimity Department HM Treasury Basis of consideration Minister’s letter of 28 February 2008 Previous Committee Report HC 38–ii (2004–05), chapter 5 (8 December 2004),

HC 34–vi (2005–06), chapter 12 (19 October 2005), HC 34–xi (2005–06), chapter 7 (23 November 2005), HC 34–xx (2005–06), chapter 13 (1 March 2006), HC 34–xxviii (2005–06), chapter 6 (10 May 2006), HC 41–xxii (2006–07), chapter 4 (16 May 2007) and HC 16–iv (2007–08), chapter 12 (28 November 2007)

To be discussed in Council Not known Committee’s assessment Politically important Committee’s decision Second draft Directive cleared (decision reported 16

May 2007), other draft Directive and draft Regulation not cleared

Background

2.1 In 2003 the Commission published a programme for improving the operation of the value added tax (VAT) system within the context of the internal market.6 The three legislative proposals in this document were presented by the Commission in October 2004 as a package dealing with simplification of VAT on cross-border supplies under that programme. They were:

• a draft Directive to introduce an electronic one-stop scheme for VAT, a technologically-based compliance framework which would allow businesses trading across borders to deal predominantly with a single tax authority, to give Member States more flexibility in setting thresholds and to provide for other simplification measures;

6 (24978) 13853/03: see HC 42–i (2003–04), chapter 1 (3 December 2003).


• a draft Directive to provide detailed rules for the refund procedure for businesses established in one Member State, where VAT is incurred by them in another Member State; and

• a draft Regulation to amend administrative cooperation arrangements to support the one-stop scheme and refund procedure.

2.2 Our predecessors and we have considered these several times in the light of the outcome of the department’s consultations and other matters the Government had reported to us. We had asked to be kept informed of developments, particularly on issues related to refund procedure and thresholds for VAT registration. When we reported in May 2007 we noted that, although progress on negotiating the draft Directive on simplification through a one-stop scheme had been slow, satisfactory progress on the draft Directive on cross-border refund procedures was faster and UK business was anxious to see the cross-border refund procedures introduced quickly. We noted also the possibility that the latter draft Directive would be taken out of the package for separate adoption and cleared it from scrutiny. We kept the other draft Directive and the draft Regulation under scrutiny pending further developments. When we reported most recently, in November 2007, we recorded that:

• there had indeed been progress on the draft Directive on cross-border refund procedures separate, but none on the other two proposals in this document;

• in June 2007 the Council agreed to carry forward the draft Directive, together with proposed changes to the VAT rules on the place of supply of services (which were cleared from scrutiny in February 2007).7 A package was essentially agreed at the Council, subject to some technical work which was being taken forward by the Portuguese Presidency; and

• the matter was due to return to the ECOFIN Council before the end of 2007 and, assuming Member States were able to agree, the proposed changes would then be formally adopted by the Council.8

The Minister’s letter

2.3 The Financial Secretary to the Treasury (Jane Kennedy) writes now to inform us of developments since November 2007. She tells us that:

• the draft Directive on cross-border refund procedures was agreed at the end of 2007, together with the proposed changes to the VAT rules on the place of supply of services; but

• there has been no progress on the other two elements in the document, the draft Directive to introduce an electronic one-stop scheme for VAT and the draft

7 (25221) 5051/04: see HC 42–ix (2003–04), chapter 19 (4 February 2004), HC 42–xviii (2003–04), chapter 4 (28 April

2004) and Stg Co Debs, European Standing Committee B, 10 March 2004, cols. 3–22 and (26739) 11439/05: see HC 34–v (2005–06), chapter 6 (12 October 2005), HC 34–xv (2005–06), chapter 3 (18 January 2006) and Stg Co Debs, European Standing Committee, 16 February 2006, cols. 3–20.

8 See headnote.


Regulation to amend administrative cooperation arrangements. There was no discussion of them under the Portuguese Presidency.

Conclusion

2.4 We are grateful to the Minister for this account of developments on the draft Directive on cross-border refund procedures.

2.5 However, we note, as the Minister acknowledges, that the other two elements of the document, the draft Directive on a one-stop scheme and the draft Regulation, remain under scrutiny. So we continue to expect further reporting in due course, including on the issue of thresholds.


3 Stability and Convergence Programmes

(a) (29451) 6306/08 — (b) (29452) 6309/08 — (c) (29453) 6311/08 — (d) (29454) 6312/08 — (e) (29455) 6313/08 — (f) (29456) 6314/08 — (g) (29457) 6315/08 — (h) (29458) 6316/08 — (i) (29459) 6317/08 — (j) (29460) 6318/08 —

Council Opinion on the updated Stability Programme of Luxembourg Council Opinion on the updated Stability Programme of Finland Council Opinion on the updated Stability Programme of the Netherlands Council Opinion on the updated Stability Programme of Germany Council Opinion on the updated Convergence Programme of Sweden Council Opinion on the updated Convergence Programme of Hungary Council Opinion on the updated Convergence Programme of the United Kingdom Council Opinion on the updated Stability Programme of Italy Council Opinion on the updated Stability Programme of France Council Opinion on the updated Convergence Programme of Romania


(k) (29461) 6320/08 —

Council Opinion on the updated Convergence Programme of Slovakia

Legal base Articles 99(4) and 104 EC; —; QMV Deposited in Parliament 14 February 2008 Department HM Treasury Basis of consideration EM of 29 February 2008 Previous Committee Report None Discussed in Council 12 February 2008 Committee’s assessment Politically important Committee’s decision Documents (a)-(f) and (h)-(k) cleared. Document (g)

not cleared; further information requested

Background

3.1 The Stability and Growth Pact adopted by the Amsterdam European Council in June 1997 emphasised the obligation of Member States to avoid excessive government deficits, defined as the ratio of a planned or actual deficit to gross domestic product (GDP) at market prices in excess of a “reference value” of 3%.9 Each year the Council of Economic and Finance Ministers (ECOFIN) issues an Opinion on the updated stability or convergence programme of each Member State.10 These Opinions, which are not binding on Member States, are based on a recommendation from the Commission. The economic content of the programmes is assessed with reference to the Commission’s current economic forecasts. If a Member State’s programme is found wanting, it may be invited by ECOFIN, in a Recommendation, to make adjustments to its economic policies, though such Recommendations are likewise not binding on Member States. This whole procedure is essentially the Pact’s preventative arm.

3.2 On the other hand, the Pact also endorsed a corrective arm involving action in cases of an excessive government deficit — the excessive deficit procedure provided for in Article 104 EC and the relevant Protocol. This procedure consists of Commission reports followed by a stepped series of Council Recommendations (the final two steps do not apply to non-members of the eurozone). Failure to comply with the final stage of Recommendations allows ECOFIN to require publication of additional information by the Member State concerned before issuing bonds and securities, to invite the European Investment Bank to reconsider its lending policy for the Member State concerned, to require a non-interest-bearing deposit from the Member State concerned whilst its deficit remains uncorrected, or to impose appropriate fines on the Member State concerned.

9 This obligation does not apply to Member States, including the UK, whilst they remain outside the eurozone, but

they are required to endeavour to avoid excessive deficits.

10 The 15 Member States (Austria, Belgium, Cyprus, Germany, Greece, Finland, France, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain) that have adopted the euro have Stability Programmes, whereas the other 12 Member States (including the UK) produce Convergence Programmes.


The documents

3.3 These documents provide the Council’s Opinion on the stability or convergence programmes of 11 Member States, which are assessed in relation to the Commission’s autumn 2007 economic forecasts. A summary of the Council’s comments for each of these Member States is provided by the Exchequer Secretary to the Treasury (Angela Eagle) in her helpful Explanatory Memorandum, as follows:

Luxembourg — Council opinion on the updated stability programme, 2007–2010

“It is estimated that real GDP growth will decrease from 6% in 2007 to 4.5% on average over the period 2008–2010. For 2007, the general government surplus is estimated at 1.2% of GDP in the Commission services’ autumn 2007 forecast and at 1.0% of GDP in the 2007 update of the stability programme, against a deficit of 0.9% of GDP targeted in the previous update. The headline surplus is projected to decrease from 1.0% of GDP in 2007 to 0.8% in 2008 as a result of cuts in personal income tax before gradually increasing thereafter. The primary surplus would follow a similar path. Luxembourg appears to be at medium risk with regard to the sustainability of its public finances.”

Finland — Council opinion on the updated stability programme, 2007–2011

“Real GDP growth is expected to moderate over the programme period, while remaining above 3% in 2008–2009 to drop to just above 2% by 2011. For 2007, the general government surplus is estimated at 4.5% of GDP in the current programme update, broadly in line with the Commission services’ autumn 2007 forecast, against a target of 2.8% of GDP set in the previous update of the stability programme. The headline and the primary balance are set to decline in each year, albeit from a high level in 2007. The programme plans to maintain structural surpluses above the Medium Term Objective (2% of GDP) throughout the programme period. Finland appears to be at low risk with regard to the sustainability of public finances.”

The Netherlands — Council opinion on the updated stability programme, 2007–2010

“Real GDP growth is expected to slow down from 2.75% in 2007 to 2.5% in 2008 and 1.75% over the rest of the programme period. For 2007, the general government deficit is estimated at 0.4% of GDP in the Commission services’ autumn 2007 forecast and in the programme, (although the latter also mentions the latest official estimate of 0.2% of GDP and the outturn could even be better according to the most recent information). The previous update of the stability programme had targeted a surplus of 0.2% of GDP. After the significant deterioration in 2007, the programme projects a return to small, broadly stable headline surpluses. The primary balance follows a similar path, stabilising at 2.75% of GDP in 2008–2010. Overall, the Netherlands appears to be at medium risk with regard to the sustainability of public finances.”

Germany — Council opinion on the updated stability programme, 2007–2011

“It is envisaged that real GDP growth will slow down from 2.4% in 2007 to 2% in 2008 and 1.5% on average over the rest of the programme period. For 2007, the


updated programme foresees the budget in balance, broadly in line with the Commission services’ autumn 2007 forecast, which projects a surplus of 0.1% of GDP, against a target of a deficit at 1.5% of GDP set in the previous update of the stability programme. The medium-term objective (MTO), which is a balanced position in structural terms, was broadly reached in 2007. The programme projects the structural balance to weaken somewhat in 2008 and then to improve subsequently, eventually achieving the MTO again in 2010 and a structural surplus by 2011. Economic conditions are assumed to support the move of the general government accounts into small surplus. The improvement in the primary balance follows the same pattern, with the surplus reaching 3.5% of GDP by 2011. Government gross debt, estimated to decline to 65% of GDP in 2007 (still above the 60% Treaty reference value), is projected to decline further by 7.5 percentage points over the programme period. The debt ratio seems to be sufficiently diminishing towards the reference value over the programme period. Overall, Germany appears to be at medium risk with regard to the sustainability of public finances.”

Sweden — Council opinion on the updated convergence programme, 2007–2010

“Real GDP growth is expected to slow down from 3.2% in 2007 to 2.6% on average over the rest of the programme period. For 2007, the general government surplus is estimated at 3.0% of GDP in the Commission services’ autumn 2007 forecast, against a target of 1.2% of GDP set in the previous update of the convergence programme. The general government surplus is estimated to decline slightly in 2008 to 2.8%, from 3.0% of GDP in 2007. Thereafter the balance is projected to recover progressively to 3.6% in 2010. Sweden appears to be at low risk with regard to the sustainability of public finances.”

Hungary — Council opinion on the updated convergence programme, 2007–2011

“Real GDP growth is expected to decelerate to below its long-term average in 2007 and 2008 and to return to 4% or above from 2009 onwards. For 2007, the general government deficit is estimated at 6.4% of GDP in the Commission services’ autumn 2007 forecast, against a target of 6.8% of GDP set in the previous update of the convergence programme. The main goal of the update is to correct the excessive deficit by 2009 (reducing it from 6.2% of GDP in 2007 to 3.2% of GDP in 2009), in line with the previous update against a background of a broadly similar macroeconomic scenario, and to further reduce it to 2.2% of GDP in 2011. The primary balance is projected to improve from a deficit of 2.2% of GDP in 2007 to a surplus of 1.1% of GDP in 2011. The debt ratio may not be sufficiently diminishing towards the reference value over the programme period. Hungary appears to be at high risk with regard to the sustainability of public finances.”

UK — Council opinion on the updated convergence programme, 2007/08–2012/13

“A slowdown in economic growth from 3% in 2007/08 to 2% in 2008/09 is expected by the Commission services. The programme envisages growth to return to 2.25% in 2009/10. For 2007/08, the general government deficit is estimated at 3% of GDP in the Commission services’ autumn 2007 forecast, against an estimate of 2.3% of GDP set in the previous update of the convergence programme. The structural deficit will


be higher than in the previous financial year. The programme foresees a gradual reduction in the general government deficit. In 2008/09, the deficit-to-GDP ratio is projected to be slightly lower than in the previous year. During the same year, the structural deficit is estimated to improve by about 0.3 percentage points. The programme forecasts a reduction in the general government deficit by 0.5 percentage points in 2009/10 and by an average of 0.25 percentage points per annum during the following three financial years. The primary balance is expected to improve from a deficit of 0.9% of GDP in 2008/09 to balance in 2010/11. The gross debt ratio is set to remain well under the reference value of 60% of GDP. The United Kingdom appears to be at medium risk with regard to the sustainability of public finances.”

Italy — Council opinion on the updated stability programme, 2007–2011

“Real GDP growth is expected to slow from 1.9% in 2007 to 1.5% in 2008. This will be followed by a mild but steady acceleration throughout the remainder of the programme period, whereby growth is expected to reach 1.8% in 2011. For 2007, the general government deficit is estimated at 2.4% of GDP in the 2007 update of the stability programme, against a target of 2.8% of GDP set in the previous update. The government deficit is targeted to narrow by only 0.2 percentage points of GDP in 2008 but by around 0.75 percentage points per year thereafter to turn into a balanced position in 2011. The gross debt-to-GDP ratio, estimated at 105% in 2007, i.e. far above the 60% of GDP Treaty reference value, is planned to decline by around 10 percentage points over the programme period. Overall, Italy is at medium risk with regard to the sustainability of public finances.”

France — Council opinion on the updated stability programme, 2007–2012

“Real GDP growth is expected to increase from 2% in 2007 to 2–2.5% in 2008 and to 2.5% over the rest of the programme period. For 2007, the general government deficit is estimated at 2.6% of GDP in the Commission services’ autumn 2007 forecast, against a target of 2.5% of GDP set in the previous update of the stability programme. In the new update the deficit is expected to come out at 2.4% of GDP. The headline deficit would fall marginally in 2008, from 2.4% of GDP in 2007 to 2.3% of GDP, and then more rapidly, by 0.6 percentage points per year, until a balanced position is reached in 2012. At the same time, the primary surplus would improve from 0.2% of GDP in 2007 to 2.5% of GDP in 2012. Government gross debt, estimated at 64.2% of GDP in 2007 in the update (i.e. above the 60% of GDP Treaty reference value), is projected to decline by over 4 percentage points of GDP over the programme period and reach the reference value in 2012. The debt ratio may not be sufficiently diminishing towards the reference value over the programme period. France is at medium risk with regard to the sustainability of public finances.”

Romania — Council opinion on the updated convergence programme, 2007–2010

“Real GDP growth is expected to accelerate from 6.1% in 2007 to 6.5% in 2008 and to ease towards 5.8% in 2010. The projected 2007 general government deficit is 2.9% of GDP. The programme targets a stabilisation of the headline deficit at 2.9% of GDP over the period 2007–2009 and a reduction to 2.4% of GDP in 2010. The primary balance follows a similar path. The overall conclusion is that the budgetary strategy


outlined in the programme is not in line with a prudent fiscal policy, necessary to contain the growing external deficit and inflationary pressures, which put at risk macroeconomic and financial stability and the convergence process.”

Slovakia — Council opinion on the updated convergence programme, 2007–2010

“The programme envisages that real GDP growth will drop from 8.8% in 2007 to 5% in 2010. For 2007, the general government deficit is estimated at 2.7% of GDP in the Commission services’ autumn 2007 forecast, against a target of 2.9% of GDP set in the previous update of the convergence programme and of 2.5% of GDP in the current update. The programme foresees the general government deficit to decrease from 2.5% of GDP in 2007 to 0.8% of GDP in 2010 in nominal terms, with the primary balance improving from a deficit of 1% of GDP in 2007 to a surplus of 0.5% of GDP in 2010. Slovakia appears to be at medium risk with regard to the long-term sustainability of public finances.”


3.4 The Exchequer Secretary to the Treasury (Angela Eagle) says, in familiar terms:

“The UK has consistently stated that it supports a prudent interpretation of the Stability and Growth Pact, which takes into account the economic cycle, sustainability and the important role of public investment. The UK agrees with the Council Opinions in these eleven cases.”

Conclusion

3.5 These documents show the working of the Stability and Growth Pact in relation to the stability and convergence programmes of Member States. And the documents and the Minister’s summaries also give a useful summary overview of the public finances of these 11 Member States in the context of their overall economies and implicitly of the Community’s economy as a whole. We clear ten of the documents, that is all except that relating to the UK.

3.6 As for the Council Opinion on the updated convergence programme of the UK, document (g), we note that the comments include “As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme continues to have substantial gaps in the required and optional data, with no evidence of improvement in response to the Council’s previous invitation in this regard” and “The United Kingdom is again invited to improve compliance with the data requirements of the code of conduct.”11 We presume that this is a continuation of the dispute we have noted previously about the Government’s compliance with the code.12 Given that the Minister says that the Government agrees with these present Council Opinions, including that on the UK, we should like to know whether the

11 Guidelines on the format and content of Stability and Convergence Programmes, commonly referred to as the code

of conduct.

12 (27377) 7384/06: see HC 34–xxv (2005–06), chapter 6 (19 April 2006), HC 34–xxxiv (2005–06), chapter 4 (5 July 2006) and HC 41–vi (2006–07), chapter 9 (17 January 2007).


Government is now planning to conform to the full requirements of the code of conduct.

3.7 Meanwhile this document remains uncleared.

4 Defence and security procurement

(29267) 16488/07 + ADDs 1–2 COM(07) 766

Draft Directive on the coordination of procedures for the award of certain public works contracts, public supply contracts and public service contracts in the fields of defence and security

Legal base Articles 47(2), 55 and 95 EC; co-decision; QMV Department Ministry of Defence Basis of consideration Minister’s letter of 27 February 2008 Previous Committee Report HC 16–xi (2007–08), chapter 6 (6 February 2008) To be discussed in Council No date set Committee’s assessment Legally and politically important Committee’s decision Not cleared; further information requested

Background

4.1 The proposed draft Directive on procurement in the fields of defence and security closely follows the terms of Directive 2004/18/EC (which applies generally to the procurement of goods, services and works by public authorities) but makes a number of adaptations to that regime for the purpose of applying it to the award of contracts in the fields of defence and security.

4.2 We considered the draft Directive on 6 February. We noted that the adaptations were intended to provide for greater flexibility for contracting authorities and to allow for safeguards to protect security of supply and of information, which safeguards could be taken into account as criteria for selection.

4.3 However, we also noted the concern expressed by the Secretary of State over the way in which other provisions of Directive 2004/18/EC had been reflected in the present proposal (or not reflected at all) and over the inclusion of other new provisions. In relation to these we noted the Government’s view that if these were not appropriately dealt with either by amendment or deletion, the Government would need to assess whether the benefits of the proposal were outweighed by its risks.

4.4 These concerns included the ‘security and secrecy’ exemption (i.e. equivalent of Article 14 of Directive 2004/18/EC currently used to protect very sensitive information). The new rules covering security of information make no provision for Member States to take special measures where information is, for example, too sensitive to release to non-national


companies. The Government’s concern was that it was important to ensure that the ECJ did not become involved in resolving differences of view concerning whether or not something was necessary for Member States’ security, despite competence on national security being a matter for the Member States. We commented, in this regard, that the definition of “sensitive information” (which referred to information “determined” to require protection) was such that it was not clear that the view of the relevant Member State on that issue was to be conclusive.

4.5 We shared the Government’s concern that legitimate reliance on Articles 30, 39, 46 and 55 (public security in respect of the free movement provisions of the EC Treaty) and Article 296(1)(b) EC (the national security exemption) might be more difficult over time if the proposal were to be adopted. We drew attention to the attempt to define “terrorism” and “criminal organisation” in an EC instrument, when these matters are within the scope of the EU Treaty, and asked the Secretary of State if these might better be deleted. We also noted that contracts awarded in third countries for the deployment of military forces or to conduct or support a military operation outside the EU were excluded, but questioned whether the proposed Directive should have any application where the contract is awarded in a country outside the European Union. We asked the Secretary of State to explain the degree to which extra-territorial jurisdiction is intended by this provision.

The Minister’s reply

4.6 In her letter of 27 February 2008 the Minister for Defence Equipment and Support (Baroness Ann Taylor) addresses these concerns. On the protection of sensitive information, the Minister agrees with us that it is the view of the Member State in question which should be conclusive. The Minister comments that only the individual Member State can determine which information is sensitive and that “it is not within the Commission’s power to dictate this”. The Minister adds that, in the light of our comments, there may be merit in asking for the inclusion of the words “solely by Member States” after “determined” in the definition so as to make the matter more clear.

4.7 In relation to the use, in an EC instrument, of the definitions of “terrorism” and “criminal organisation” the Minister simply comments that her department has sought the views of the Foreign and Commonwealth Office, Home Office and Security Service counterparts and that “they are content with these well accepted definitions”.

4.8 On the question of the extra-territorial effect of the proposal, the Minister comments that she is not aware of anything which restricts the application of Directive 2004/18/EC to contracts awarded in the European Union, and that “if a contracting authority established in the EU, to whom the Procurement Directive applies, wishes to let a contract for goods, works or services, wherever in the world these are to be provided, then the Directive applies (subject to the application of any exemptions)”.

Conclusion

4.9 We thank the Minister for her letter. On the question of sensitive information, we agree with the Minister that words should be included to make it clear that it is for the Member State to determine whether particular information is sensitive.


4.10 On the definitions of “terrorism” and “criminal organisation”, our concern is not so much with the content of the definitions (as the Ministers says, they are well accepted) as with the principle of including definitions of criminal conduct in an EC instrument, when the definition of crime is a matter for the EU Treaty. It seems to us that to re-state these definitions in such a detailed manner on the face of the Directive makes them a matter of EC law (and therefore subject to the Commission’s powers to bring infraction proceedings and the compulsory interpretative jurisdiction of the ECJ) and is also unnecessary. We also question whether there is any competence under the EC Treaty to adopt these definitions, and we should be grateful for the Minister’s views on this point.

4.11 On the extra-territorial effect of the proposed Directive, we note the Minister’s comments, but we still doubt that such a wide extra-territorial effect is intended, or should be conceded. In this context, we note that the second recital to the proposal refers (as does its counterpart in Directive 2004/18/EC) to the award of contracts concluded in the Member States. We therefore ask the Minister if it is intended (and, if so, if it is desirable), that suppliers anywhere in the world should be given rights under the proposed Directive, in circumstances where there is no reciprocal right of access by UK suppliers to those suppliers’ home markets.

4.12 We note that the exception under Article 9 (b) for contracts awarded in a third country refers to contracts with local economic operators “for” the deployment of military forces. We would be grateful if the Minister would explain what is meant, since we have some difficulty in understanding how the deployment of the armed forces could be the subject of a contract with a local economic operator. We therefore assume that the intended exception concerns contracts relating to the deployment of such forces, such as for their support or maintenance, rather than for their deployment. This would be closer to the exception in Article 15b of Directive 2004/18/EC, but we should be grateful for the Minister’s comments.

4.13 We shall hold the document under scrutiny pending the Minister’s reply.


5 A common framework for the marketing of products

(28376) 6378/07 COM(07) 53

Draft Decision on a common framework for the marketing of products

Legal base Article 95 EC; co-decision; QMV Department Business, Enterprise and Regulatory Reform Basis of consideration Minister’s letters of 26 and 27 February 2008 Previous Committee Report HC 41–xiv (2006–07), chapter 3 (14 March 2007) To be discussed in Council 18 March 2008 Committee’s assessment Politically important Committee’s decision Cleared

Background

5.1 Article 14 of the EC Treaty provides for the progressive establishment of the internal market, comprising an area without internal borders and in which the free movement of goods, people, services and capital is ensured.

5.2 The EC has adopted a substantial body of legislation to remove barriers to the free movement of goods and to protect consumers, the health and safety of workers and the environment. Much of it is specific to particular products but there is also legislation on matters relating to products generally, such as the procedure for conformity assessments (the process for evaluating a product to see whether it conforms to the relevant product Directive).

5.3 This draft Decision is one of four Commission initiatives to improve the operation of the internal market and reduce barriers to the free movement of goods. The four are introduced by a Communication on which we made a report to the House in March 2007.13

Previous scrutiny of the draft Decision

5.4 When we considered the draft Decision last year,14 we noted that its purpose is to assist the drafting of new product legislation or the revision of existing legislation by defining some general principles and providing some “model clauses”. The Decision is not addressed to Member States or businesses but to the European Parliament, the Council and the Commission itself. Article 1 provides that (subject to a few specified exceptions) the content of all new or revised EC legislation to harmonise the conditions for the marketing of products should reflect the common principles in Articles 2 to 5 and the model clauses in Articles 6 to 38 and Annexes I and II. For example:

13 (28373) 6312/07: see HC 41–xiv (2006–07), chapter 11 (14 March 2007).

14 See HC 41–xiv (2006–07), chapter 3 (14 March 2007).


• Article 2 provides that, as a general rule, new or revised EC product legislation should restrict itself to setting out the “essential requirements” to protect the public interest, expressed in terms of results to be achieved;

• Articles 7 to 12 provide model clauses on the responsibilities of manufacturers, importers, distributors and authorised representatives;

• Articles 13 to 17 contain model clauses on product conformity;

• Articles 18 to 34 contain model clauses on bodies concerned with conformity assessment; and

• Articles 35 to 38 contain model clauses on safeguards to protect human health and safety or other public interests against risks from a product.

The aim of providing common principles and model clauses is to simplify, clarify and avoid inconsistencies in future product legislation.

5.5 The then Minister for Science and Innovation at the Department of Trade and Industry (Malcolm Wicks) told us in February 2007 that the key features of the draft Decision appeared to be largely satisfactory. The Minister also said that the Commission considered that the costs and benefits of the proposal could not be quantified because the scope of the measure is so wide. In most cases, the organisations and individuals the Government had consulted about the draft Decision had not been able to quantify the costs and benefits. In any event, there would be no impact until specific new product Directives or Regulations, based on the principles and model clauses in the draft Decision, came into effect.

5.6 We could see the attractions of common principles and model provisions which might simplify and clarify EC product legislation. We concluded that the draft Decision was both important and constructive. Because the negotiations on the proposal were only just beginning, we asked the Minister to send us progress reports on the discussions. Meanwhile, we kept the document under scrutiny.

The Minister’s letters of 26 and 27 February 2008

5.7 The letters from the Parliamentary Under-Secretary of State for Trade and Consumer Affairs at the Department for Business, Enterprise and Regulatory Reform (Mr Gareth Thomas) provide the progress reports for which we asked. The Minister has also sent us a summary of the responses to the Government’s consultation paper on the draft Decision. The Minister says that the responses were of a high quality and broadly supported the proposal.

5.8 A first reading agreement has been reached between the European Parliament and the Council. The Minister encloses with his letter a “compromise text”, showing the amendments to the draft Decision they have agreed. The amendments clarify the text without affecting its substance significantly. The European Parliament adopted the compromise text on 21 February. The Agriculture Council may be invited to adopt it on 18 March.


5.9 The Government is content with the compromise text and wishes to take part in its adoption by the Council.

Conclusion

5.10 We remain persuaded of the benefits of the draft Decision. We welcome the successful outcome of the negotiations. We are now content to clear the document from scrutiny.

6 Lead market initiative

(29331) 5121/08 + ADDS 1–2 COM(07) 860

Commission Communication: Proposal for a lead market initiative for Europe

Legal base — Document originated 21 December 2007 Deposited in Parliament 11 January 2008 Department Business, Enterprise and Regulatory Reform Basis of consideration EM of 21 February 2008 Previous Committee Report None To be discussed in Council May 2008 Committee’s assessment Politically important Committee’s decision Cleared

Background

6.1 According to the Commission, developing an innovation-driven economy is crucial for competitiveness, as is the need to use in a consistent and strategic manner supporting tools and instruments. It also notes that the Competitiveness Council in December 2006 invited it to present during 2007 an initiative on lead markets, based on identifying areas where concerted action through key policy instruments and enhanced cooperation between key stakeholders can speed up market development, without interfering with competitive forces.

The current document

6.2 The Commission says that this document has been produced in response to that request, and aims first to identify promising emerging markets, and secondly to identify possible action at Community and Member State level which could help accelerate growth of demand for products, services and processes within those markets. It has also sought to do this on the basis of identifying activities which are driven by demand rather than


technology push; cover a broad market segment; have a strategic societal and economic interest (such as public health and the environment); provide the added value of concerted and targeted, but flexible, policy instruments; and avoid the picking of winners, or changes to the existing rules on state aid, procurement or competition.

6.3 On that basis, it has initially selected six markets as pilot areas — sustainable construction, eHealth, renewable energies, protective textiles, bio-based products and recycling. It suggests that these have a strong technological and industrial base in Europe, are highly innovative, have potential for further growth and for strong future global demand. In addition, it says that the markets in question are shaped by public procurement and other Government policies such as regulation and standardisation.

6.4 As regards the individual markets, it makes the following points:

Sustainable Construction

The construction sector represents 10% of Community GDP and is highly regulated, with a fragmented market between Member States and regions. This initiative is targeted at 5% of this overall market, including new construction and renovation in the residential, non-residential and infrastructure markets, a segment worth €24 billion in 2006 and employing 500,000 people. The initiative should increase demand for technologies related to building management, renewable energy integration, pre-fabrication, energy efficiency and air quality, and the Commission estimates that its proposals would increase uptake of relevant products and services by 5% per year in construction and 3% per year in renovation. It predicts that the segment will be worth €87 billion by 2020 and will employ 870,000 people.

E-Health

The health sector represents 9% of Community GDP and 10% of its workforce, and is expected to reach 16% of GDP by 2020. The E-Health segment, which includes clinical information systems, telemedicine and homecare, health information networks, non-clinical systems (educational tools and management systems), has an estimated market volume of €21 billion, and employs 250,000 people. European investment in health ICT is expected to more than double as a proportion of total revenues by 2010, leading to an anticipated market volume of €30 billion and a workforce of 360,000 by 2020.

Renewable Energy

Renewable energy technologies, which include wind, solar, biomass and hydro-power, provide 8.5% of Europe’s energy needs, with a turnover of €25 billion and a workforce of 300,000. Given the Community’s target of generating 20% of its energy from renewables by 2020, the Commission anticipates the market by then will be worth €79 billion and have a workforce of 634,000.


Protective Textiles

The Commission estimates that this market, which includes specialised clothing and accessories for military and security forces, emergency services and hospitals, is worth €8.8 billion and employs 205,000 people. It predicts strong global demand and export growth, leading by 2020 to a market value of €15.2 billion and a workforce of 228,000.

Bio-based products

These are industrial and consumer products based on renewable, biological materials, such as bio-plastics, bio-lubricants, enzymes and pharmaceuticals. The Commission estimates a current market value of €19 billion and 120,000 jobs, rising to €57 billion and 380,000 jobs by 2020.

Recycling

This sector was worth €24 billion and employed 500,000 people in 2006, potentially rising to €36 billion and 535,000 jobs by 2020.

6.5 The Commission says that the initiative will use a variety of policy instruments, including legislation, public procurement, standardisation, labelling and certification, and complementary instruments (such as business and innovation support services, training and communication, and financial support and incentives). It also comments that its success will depend on the commitment of the European institutions and the Member States to cooperate closely, and that it will put in place the necessary coordination structures. It will publish an interim report in 2009 and a final report in 2011.


6.6 In her Explanatory Memorandum of 21 February 2008, the Minister for Business and Competitiveness at the Department for Business, Enterprise and Regulatory Reform (Shriti Vadera) says that, in discussions with the Commission in 2007, the Government made its support conditional on the initiative addressing market failures which create barriers to private investment, and on it not creating costs which outweigh those of existing market failures (for example, by favouring specific technologies in ways which hinder the development of alternatives). She says that these concerns have been addressed in this document, and that the Government supports the initiative as one element in a broad-based innovation strategy. She adds that it is currently making detailed assessments of the action proposed, and that one initial concern will be to ensure that the Commission produces an impact assessment for any regulatory measure put forward, and also demonstrates that non-regulatory options have been considered fully. She also provides initial comments on the specific markets identified by the Commission, indicating that the Government broadly supports their inclusion.


Conclusion

6.7 As the Minister says in her Explanatory Memorandum, this Communication simply identifies a number of pilot areas for further study, and does not in itself contain any proposals for legislation. She also indicates that the Government will provide further Explanatory Memoranda if and when any such proposals are brought forward. For that reason, we see no need to withhold clearance of the document, but we think it right to draw it to the attention of the House.

7 The single market: the first Consumer Scoreboard

(29422) 5942/08 COM(08) 31 + ADD 1

Commission Communication — Monitoring consumer outcomes in the single market: the Consumer Markets Scoreboard Commission staff working paper: supporting information

Legal base — Document originated 29 January 2008 Deposited in Parliament 7 February 2008 Department Business, Enterprise and Regulatory Reform Basis of consideration EM of 28 February 2008 Previous Committee Report None To be discussed in Council No date set Committee’s assessment Politically important Committee’s decision Cleared

7.1 Last year, the Commission completed its review of the internal market. In January, we considered a document which summarised the Commission’s conclusions and proposals for action.15 One of those conclusions was that:

“The single market needs to deliver better results and tangible benefits for consumers … , responding to their expectations and concerns.”

The Commission said that the EU should concentrate on what matters most and take the action which will have the greatest effect. Reliable evidence is required to enable policy-makers to identify what matters and to prioritise action. The Commission has, therefore, developed a new methodology to monitor the functioning of markets for goods and services. The first stage of the process entails screening the economy to identify the sectors of greatest importance (for example, in value-added, employment, growth-potential,

15 (29198) 15651/07: see HC 16–viii (2007–08), chapter 9 (16 January 2008).


environmental impact) and where there is evidence of market failure (such as barriers to competition or lack of choice for consumers). As a contribution to the screening of sectors, the Commission would develop a “Consumer Scoreboard” to monitor the performance of markets from the consumers’ point of view.

7.2 This Communication discusses the information required for the scoreboard, notes the limitations of the data currently available and presents the first Scoreboard. The aim is to develop indicators to help show where and why markets may be failing consumers.

7.3 The Commission says that five indicators capture the main characteristics of each consumer market. The five are:

• customer complaints;

• prices;

• customer satisfaction;

• consumer switching between products; and

• safety.

7.4 The Commission will also collect information about the extent of cross-border retail trade and about the attitudes of consumers and retailers to cross-border buying and selling.

7.5 Moreover, the Commission will use four “benchmarks” to help understand the consumer environment in each Member State. The four “benchmarks” are:

• enforcement (for example, number of inspections of compliance with product safety requirements);

• consumer redress (for example, consumers’ perception of how easy it is to resolve complaints through the courts);

• consumer organisations (for example, indicators of consumers’ trust in consumers’ organisations which make comparative tests of products); and

• “consumer empowerment” (for example, availability of information for consumers and consumers’ awareness of their rights).

7.6 The Commission’s Communication concludes that the information currently available is inadequate. Most of the data are available only for a very limited number of market sectors; they are not available for all Member States; and they are not always reliable. These limitations affect the first Scoreboard. For example, the data are too limited to indicate which markets are functioning better than others. The first Scoreboard indicates, however, that European consumers tend not to buy cross-border goods and services, although the propensity to buy from abroad varies between Member States. Similarly, there are wide variations between Member States in consumers’ trust in their national consumer protection systems. The Commission says:


“Above all, this first scoreboard shows the need to collect new data sets and evidence for future scoreboards.”16

The annex to the Communication contains a commentary on the information available for the first Scoreboard.


7.7 The Parliamentary Under-Secretary of State for Trade and Consumer Protection at the Department for Business, Enterprise and Regulatory Reform (Mr Gareth Thomas) tells us that the first Scoreboard has no new policy implications for the UK. But the Scoreboards are, potentially, a useful way of making the single market deliver more for consumers and the Government supports the initiative. Gradually, the quality of the available data should improve and the Scoreboard could then become a “really useful exercise for comparing consumer perceptions and systems around Europe”.

7.8 Commenting on the information available for the first Scoreboard, the Minister says that:

“Overall the UK performs reasonably well in terms of consumer confidence and redress. For example the figures collected indicate 22% of UK consumers made some kind of formal complaint in the last 12 months. This compares with Netherlands (26%), Germany (19%), France (9%) and Greece (3%). Of those that did complain, 54% of UK consumers were satisfied with the way [the complaint] was handled. This compares less well with Germany (62%), favourably with France (43%) and is on a par with the Netherlands (57%).

“On the figures available, UK consumers, on the whole, feel [that] sellers respect their rights as customers although more than half of those surveyed had received unsolicited (cold call, spam, direct marketing etc) commercial advertisements —however only 4% responded to those advertisements which would indicate a high degree of consumer awareness. The figures show that a narrow majority of consumers are satisfied with their national consumer protection system, 54% (around 70% in the UK) and that they trust their public authorities to protect their rights as consumers, 57% (around 75% in the UK).”

Conclusion

7.9 The data currently available for the Scoreboard are patchy and of insufficient quality. So the first Scoreboard is of limited value. We see no need to keep it under scrutiny. We draw it to the attention of the House, however, because of the potential of future Scoreboards to contribute to improving the operation of the single market and getting a better deal for consumers.

16 Commission Communication, paragraph 43.


8 EU support for the International Criminal Tribunal for the former Yugoslavia (ICTY)

(29497) —

Council Common Position extending Common Position 2004/293/CFSP on further measures in support of the effective implementation of the mandate of the International Criminal Tribunal for the former Yugoslavia (ICTY)

Legal base Article 15 EU; unanimity Department Foreign and Commonwealth Office Basis of consideration EM of 28 February 2008 Previous Committee Report None; but see (29213) 15616/07, (29214) 15690/07 and

(29427) —: HC 16–xiv (2007–08), chapter 1 (20 February 2008)

To be discussed in Council 10 March General Affairs and External Relations Council

Committee’s assessment Politically important Committee’s decision Cleared; relevant to the debate to be held in the

European Committee on Serbia and the accession process in the Western Balkans

Background

8.1 The International Criminal Tribunal for the former Yugoslavia (ICTY) was established by UN Security Council Resolution 827(1993). This Resolution was decided on 25 May 1993 in the face of serious violations of international humanitarian law committed in the territory of the former Yugoslavia since 1991, and as a response to the threat to international peace and security posed by those serious violations.

8.2 The ICTY’s mission is to bring to justice those responsible for serious violations of international humanitarian law, render justice to the victims and deter further crimes, whilst contributing to the restoration of peace by holding those responsible personally accountable. Although judicially independent, the ICTY relies on cooperation by States and international organisations in order to carry out its mandate successfully, particularly with regard to the collection of evidence and the detention and transfer of accused persons.

8.3 The Stabilisation and Association Process is the process devised by the EU to bring the countries of the Western Balkans closer to the EU and to help prepare them for eventual membership. The Stabilisation and Association Agreement (SAA) is a key step on the path to EU membership.

The Common Position

8.4 This Common Position will extend Common Position 2004/293/CFSP, which will expire on 16 March, by 12 months. Common Position 2004/293/CFSP imposed an EU


travel ban on persons who help those indicted by the ICTY evade capture or otherwise obstruct the ICTY’s effective implementation of its mandate. No amendments will be made to the list of targeted individuals. These measures work in conjunction with the EU asset freeze on all funds and economic resources belonging to persons indicted by the ICTY imposed by Common Position 2004/693/CFSP.

8.5 In his 28 February 2008 Explanatory Memorandum, the Minister for Europe at the Foreign and Commonwealth Office (Mr Jim Murphy) notes that procedures for designating individuals under the EU visa ban are fully compliant with fundamental rights, in that individuals may only be listed where evidence exists that they are engaged in the activities listed under Article 1 of the Council Common Position. Furthermore, he says, individuals subject to a visa ban would be entitled to challenge such a measure in the Member State’s courts; in addition, Council Common Position 2004/293/CFSP provides that Member States may grant exemptions from the travel ban for specified reasons including, inter alia, where travel is justified on the grounds of urgent humanitarian need.

8.6 He further explains that, with regard to UK law, the travel ban is enforced using secondary legislation under Section 8B of the Immigration Act 1971 (as inserted by Section 8 of the Immigration and Asylum Act 1999) currently the Immigration (Designation of Travel Bans)(Amendment) Order 2007.


8.7 The Minister goes on to say that “supporting the mandate of the ICTY is a central pillar of UK policy in the Western Balkans region”. He notes that the Chief Prosecutor of the ICTY makes regular reports on the level of cooperation of relevant countries with the tribunal, and that “full co-operation with the ICTY is a key condition for signature of Bosnia and Herzegovina’s, and Serbia’s Stabilisation and Association Agreements (SAA) with the EU”. He says that the UK and EU continue to exert pressure on regional governments to improve their cooperation with the ICTY, and that it is:

“therefore important that we play our part in supporting the ICTY’s efforts to bring justice to the countries of the Former Yugoslavia by keeping up pressure on those individuals wanted for trial, including on their support networks. Extending the Common Position will support the work of the ICTY and increase the likelihood of the successful detention and trial of indicted individuals.”

Conclusion

8.8 As with other such SAAs, the one proposed with Serbia will establish a far-reaching legal relationship between the EU and Serbia, entailing mutual rights and obligations. It will ensure the gradual implementation of a free trade area and reforms designed to achieve the adoption of EU standards in areas such as justice, freedom and security. To this end provisions are made in the Agreement for political dialogue between the EU and Serbia, and enhanced regional cooperation.


8.9 Among the “Accused at Large” on the ICTY website17 are Radovan Karadžić and Ratko Mladić, who are generally recognised as the most egregious of those involved in the horrors that were perpetrated in the Balkans during the dissolution of the former Yugoslavia. Hitherto, “full cooperation” with the ICTY by Serbia has been seen as certification by the ICTY of whole-hearted support by the Serbian authorities in seeking their apprehension and surrender — it being the lack thereof that has held up signature and implementation of Serbia’s SAA, which is not only a major practical and legal but, above all, a symbolic next step in her integration into European structures.

8.10 When we considered the most recent developments in this process on 20 February 2008 — draft Council Decisions on the signing and on the conclusion of the SAA and an interim agreement on trade and trade-related matters, together with an Interim Political Agreement — we noted our concern that we had already asked the Minister to explain what “the necessary steps” were that would have to be “finalised” before the SAA could be signed, and whether they still included the ICTY certifying that full cooperation had been established with the Serbian authorities; that we still awaited an answer; and that, instead, the Minister had cited limited steps taken by the Serbian authorities which he regarded as improved cooperation with ICTY, but without saying whether the ICTY itself regarded them in the same light. Rather than answering our question, we felt that he had instead muddied the waters by saying that he “would be ready — in the interest of sending a clear signal of EU commitment to Serbia’s European future — to contemplate signature of an SAA if there were clear agreement that ICTY conditionality were to remain clearly embedded in the accession process and to apply at the next relevant stage”.

8.11 We further noted that we did not know what “clear agreement that ICTY conditionality” remaining “clearly embedded in the accession process”, and this being applied “at the next relevant stage”, meant — the general impression being that “the next relevant stage” was signature of the SAA, which was in turn dependent upon “full cooperation” by Serbia with the ICTY. We expressed our concern that, instead, what was now on offer was an arrangement that offered the benefits of an SAA without Serbia fulfilling what had hitherto been a crucial pre-condition.18

8.12 We have no wish to hold up the EU’s support for the ICTY: on the contrary, and now clear this document.

8.13 Our concern, however, is that the EU’s vital support of the ICTY is being undermined by a desire to compensate Serbia for her opposition to the EU’s recent action in Kosovo. We therefore consider that it is relevant to the debate to be held in the European Committee on Serbia and the accession process in the western Balkans, which will provide an opportunity to explore the apparent mismatch between what the Minister says now about full cooperation with the ICTY being a key condition for signature of Serbia’s — and Bosnia and Herzegovina’s — SAA and what he said to us two weeks ago.

17 See http://www.un.org/icty/ for full details of the ICTY’s rationale and operations.

18 See headnote: (29213) 15616/07, (29214) 15690/07 and (29427) — : HC 16–xiv (2007–08), chapter 1 (20 February 2008).


9 Marketing of products containing genetically modified maize

(29411) 5946/08 COM(08) 47

Draft Council Decision authorising the placing on the market of products containing, consisting of, or produced from genetically modified maize line GA21 (MON-ØØØ21–9) under Regulation (EC) No. 1829/2003

Legal base Regulation (EC) No. 1829/2003: QMV Documents originated 31 January 2008 Deposited in Parliament 5 February 2008 Department Food Standards Agency Basis of consideration EM and Minister’s letter of 29 February 2008 Previous Committee Report None Discussed in Council 18 February 2008 Committee’s assessment Politically important Committee’s decision Cleared; but further information requested

Background

9.1 The marketing of genetically modified organisms within the Community is governed by two pieces of legislation — Directive 2001/18/EC,19 which controls the release into the environment of the genetically modified product itself (typically maize), and Regulation (EC) No. 1829/2003,20 which authorises the placing on the market of food or feed products containing such material. In the latter case, the initial application is made to the relevant authority in the Member State concerned, which forwards details to the Commission, other Member States and the European Food Safety Authority (EFSA). Once the Authority has given its opinion, the Commission puts a draft Decision to a Standing Committee of Member States’ representatives, and the Decision is adopted if it secures the necessary qualified majority: if it does not, the matter is referred to the Council, which then has three months in which to reach a decision, failing which the Commission may adopt its original proposal.

The current proposal

9.2 This document deals with the authorisation of food, feed and other products produced from genetically modified maize (line GA21). An application was submitted to the UK, and subsequently received a favourable opinion from the European Food Safety Authority (EFSA), which concluded that it was unlikely that this would have adverse effects on human or animal health or the environment.

19 OJ No. L 106, 17.4.01, p.1.

20 OJ No. L 268, 18.10.03, p.1.


9.3 In the light of that opinion, a draft Commission Decision authorising the marketing of the products in question was prepared, and submitted to the Standing Committee on the Food Chain and Animal Health on 20 December 2007, when 13 Member States (155 votes) were in favour of the proposal, 5 Member States (65 votes) were against, six (114 votes) abstained, and three (11 votes) were not represented.

9.4 Since support for the proposal fell short of the qualified majority required, it had to be referred to the Council for a decision under the relevant rules of procedure (see above). However, notwithstanding the requirement for the Council to act within three months of a proposal being referred to it, we have been informed in a letter of 29 February 2008 from the Minister of State for Public Health at the Department of Health (Dawn Primarolo) that the matter was considered by the Agriculture Council on 18 February, only two weeks after the publication of the proposal. We also understand that the Council failed to reach a qualified majority either for or against the proposal, and that consequently the Commission is now free to approve it under its own competence.


9.5 In an Explanatory Memorandum of 29 February 2008, the Minister says that the UK accepts the safety advice from the EFSA, and considers that there are no grounds for not supporting authorisation. However, as the timetable followed by the Council meant that it was not possible to complete scrutiny before the meeting on 18 February, the Government decided on this occasion to register an abstention.

Conclusion

9.6 Although the authorisation of products containing genetically modified crops remains a matter of public interest, the content of this proposal is in line with the advice provided by the European Food Safety Authority, and is supported by the UK. We are therefore clearing it.

9.7 At the same time, we are concerned that the Council should in this instance have felt it necessary to take a decision so quickly after the publication of the proposal, prior to scrutiny clearance having been obtained, particularly as the rules of procedure allow it three months in which to do so. As it is not clear why this should have been the case, we would welcome an explanation from the Minister.


10 Financial services

(29330) 5120/08 + ADD 1 COM (07) 853

Commission Communication: Removing obstacles to cross-border investments by venture capital funds

Legal base — Document originated 21 December 2007 Deposited in Parliament 11 January 2008 Department HM Treasury Basis of consideration EM of 31 January 2008 Previous Committee Report None To be discussed in Council 29–30 May 2008 Committee’s assessment Politically important Committee’s decision Cleared

Background

10.1 Improving access to finance for innovative small and medium sized enterprises (SMEs) has been identified as important for enhancing Community competitiveness and meeting the objectives of the renewed Lisbon Strategy for Jobs and Growth. One source of finance is venture capital investment, which is key in raising capital for early stage or high growth potential SMEs. Venture capital markets vary significantly between Member States and the Community market remains fragmented along national lines, leaving significant obstacles in the way of realising the efficiencies of free movement of venture capital in the single market.

10.2 In December 2006 the Competitiveness Council asked the Commission “to report on obstacles to cross-border investments by venture capital funds”. This followed earlier Council discussions on venture capital in the context of the National Reform Programmes of the Lisbon Strategy and two Commission Communications, Implementing the Community Lisbon programme: Financing SME Growth — Adding European Value and Putting knowledge into practice: A broad based innovation strategy for the EU.21

The document

10.3 In this Communication the Commission responds to the Competitiveness Council’s request. It covers two areas of venture capital markets — the present situation across the Community, including where market failures exist in the single market, and non-legislative policy recommendations by the Commission.

21 (27673) 11216/06: see HC 34–xxxvii (2005–06), chapter 46 (11 October 2006) and (27816) 12940/06: see HC 34–xxxvii

(2005–06), chapter 64 (11 October 2006).


10.4 In relation to the Community’s present venture capital markets and obstacles to growth, the Commission:

• says fragmentation of venture capital markets in the Community limits supply of early-stage capital by failing to realise economies of scale across borders, creating high transaction costs in cross-border activity and unnecessarily complex structures for administering venture capital funds where the market is less developed;

• says removing obstacles to cross-border investment would benefit new or less developed Community markets, enabling them to reach a critical mass by spreading their risk portfolio across borders;

• says increasing cross-border activity could also help the most developed markets where mature sector funds could gain access to previously underdeveloped and cumbersome venture capital markets. Ultimately this would support the objective of delivering jobs and growth across the Community;

• highlights the important role venture capital already plays in the Community in the context of the key principles in its economic reform agenda — over 600,000 jobs have been created by venture capital backed companies, research and development spending levels are 45% of total company expenditure in venture capital backed companies and capital raising by venture capital companies on environmental sustainability projects came to €1.25 billion in 2006;

• notes that venture capital increased by 60% between 2005–2006, but this was mainly targeted at expansion growth, rather than early stage seed growth projects, which needs to be supported further;

• notes also that, significantly in terms of Community-US market comparisons, the Community is well below the average venture capital level, at €0.4 million per deal against €2.2 million per deal in the US;

• discusses issues such as the need for more liquid exit markets for venture capital, the role of clusters22 and universities for thriving venture capital and the special attention community innovation policy pays to supporting competitive clusters;

• comments that governments can help promote venture capital through policies, such as state aid or public private partnerships, and Community policies such as the Competitiveness and Innovation Programme, which already provides equity on market terms into venture capital funds focussed on SMEs in the early and expansion phase; and

22 Clusters are defined in the European Cluster Memorandum as “regional concentrations of specialised companies and

institutions linked through multiple linkages and spill-overs”, and as such are seen as drivers of innovation and competitiveness. The term “competitive clusters” can be used to make clear that this what is meant rather than companies which share a location but do not have these linkages. The Memorandum was presented by the High Level Advisory Group on Clusters to the Presidency at a conference in Stockholm on 22 January 2008. See http://www.proinno-europe.eu/NWEV/uploaded_documents/Cluster_Memorandum.pdf and http://www.europe-innova.org/index.jsp?type=page&cid=8858&lg=en .


• highlights the need it perceives for a long-term market solution to properly realise the benefits of the single market.

10.5 The Commission then suggests, under the heading A Strategy for improving the cross-border conditions, proposals that it thinks will enable market driven growth. The Commission:

• recognising the importance of developing structures at the national level, invites Member States to review their legislation by taking into account the possibilities of cross-border venture capital investments as well as local investments;

• suggests that where Member States do not have formal provisions for venture capital structures, any new regulations should facilitate cross-border provision;

• invites Member States to extend the use of the “prudent person rule” in venture capital markets through Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision, allowing some sectors such as pensions funds the ability to invest in venture capital funds, where they currently cannot. This would allow pensions managers to invest in venture capital and provide growth to the sector, but with an obligation to invest prudently through sensible portfolio diversification;

• is looking at ways to remove obstacles to cross-border private placement regimes, which would allow buyers and sellers to conclude transactions without many of the costly statutory requirements (mandatory disclosure documents, conduct of business rules and rules on general solicitation of interest in financial transactions). There is currently no Community private placement regime in place and such a regime could encourage greater investment in venture capital markets through facilitating less cumbersome transactions;

• noting that regimes and structures of venture capital funds vary widely across markets, that some current tax structures in Community markets require setting up complex vehicles to minimise tax obligations, including off-shore vehicles, that this leads to high transaction costs, lack of transparency and a disincentive to invest in Community venture capital markets and that, in particular it has identified problems with double taxation on cross-border operations, has set-up an expert group to identify technical solutions on this and other direct tax obstacles to cross-border venture capital investments;

• recognises that the possibility of a Community framework for venture capital can only be considered once the tax expert group has reported;

• highlights that venture capital structures that are appropriate and functioning well in one Member State should be recognised and adopted in other Member States and encourages mutual recognition; and

• advocates enhancing cooperation between Member State supervisory bodies to improve supervision and transparency.


10.6 The Communication is accompanied by a Commission staff working document which includes a glossary of terms used in the Communication and a Commission expert group report of March 2007, Removing obstacles to cross-border investment by venture capital funds.


10.7 The Exchequer Secretary to the Treasury (Angela Eagle) tells us that the UK accounts for approximately one third of the total Community venture capital market — this is supported by UK national and regional publicly funded instruments targeted at stimulating an increased flow of small business private sector investment. She says the Government has developed a “suite of venture capital products” building on previous funds and the development of a consolidated Enterprise Capital Fund (ECF) on a cross business sector basis. ECFs are commercial funds that invest a mix of private and public money in small high growth businesses that are seeking up to £2 million in risk capital. The Government believes that it is important to use this experience to contribute to work on the development of venture capital markets on a Community cross-border basis.

10.8 Turning to the Commission’s Communication the Minister says the Government:

• supports the principle of the Commission’s work towards developing a common Community regime for private placement of investment funds;

• believes that facilitating a single market in institutional investment funds has the potential to deliver significant benefits for investors and fund managers alike, in particular for those Member States that have a nascent venture capital market;

• is supportive of the policy of mutual recognition across a wide array of products and services in order to fully open up the single market in the movement of capital, goods and services;

• already has, in relation to the Commission’s specific recommendations to Member States, many of these in place. Venture capital funds from foreign countries can be sold into the UK to expert investors without further authorisation — there is no need for further relaxation of these rules — and, on supervision, the Financial Services Authority works closely with other supervisory authorities to promote acceptable levels of supervision and transparency;

• has officials participating in the Commission’s expert group to identify cases of double taxation and other direct tax obstacles to cross-border venture capital investments;

• remains clear that it is important for national tax authorities, both within the Community and elsewhere, to continue to work together both bilaterally and multilaterally to ensure that their domestic direct tax systems work together properly;

• is not persuaded of the case for a new Community venture capital structure and so welcomes the Communication’s emphasis on awaiting the report of the tax expert group; and


• in relation to competitive clusters, is currently considering the implications of the European Cluster Memorandum;

• strongly supports the emphasis in the Memorandum on the importance of completing the single market for cluster development and will be contributing evidence to the development of an agreed policy position on clusters which the French Presidency hopes to announce in November 2008; and

• supports the development of competitive clusters that are driven from the bottom up.

Conclusion

10.9 This Communication concerns an important matter, cross-border investment by venture capital funds, and as such we draw it to the attention of the House. In clearing the document we note that the possibility of Commission proposals for a Community framework for venture capital may emerge only after its expert tax group reports and that we would scrutinise in due course any such proposals.

11 EU Justice Forum

(29445) 6333/08 COM(08) 38

Commission Communication on the creation of a Forum for discussing EU justice policies and practice

Legal base — Document originated 4 February 2008 Deposited in Parliament 13 February 2008 Department Ministry of Justice Basis of consideration EM of 27 February 2008 Previous Committee Report None To be discussed in Council No date set Committee’s assessment Legally and politically important Committee’s decision Cleared; further information requested

Background

11.1 A number of institutions and professional bodies exist at European level which are concerned with the exchange of good practice on the administration of justice. These include the European Network of the Councils for the Judiciary, the European Network of Presidents of Supreme Courts, the Association of Councils of State, the European Association of Administrative Judges, the Council of Bars and Law Societies of Europe (CCBE), the European Judges and Prosecutors Association, the European Criminal Bar


Association (ECBA), Eurojustice, the European Notarial Network, PEOPIL (the Pan-European organisation of personal injury lawyers) and the European Judicial Network.

11.2 The Council of Europe has also long been active in this field. The CEPEJ (European Commission for the Efficiency of Justice) was established by the Council of Europe on 18 September 2002 to analyse and evaluate the judicial systems of Council of Europe States, to define ways of improving the functioning of such systems and to provide assistance to States at their request. The CEPEJ is composed of experts from all 47 Member States of the Council of Europe and, as well as carrying out its analytical work, also promotes contacts between practitioners, non-governmental organisations and information centres.

The Commission’s Communication

11.3 In its Communication the Commission indicates that it proposes to establish a “Justice Forum” to provide a “permanent mechanism for consulting stakeholders, receiving feedback and reviewing EU justice policies and practice transparently and objectively”. The Commission further indicates that the Forum would have two main areas of activity, the first being “to provide the Commission with specialist views on EU justice policy and legislation” and the second “to promote mutual trust between EU justice systems by improving mutual understanding of them”. The Commission goes on to argue that “an open dialogue between all actors in the justice system throughout the EU “will foster mutual trust. The Commission states that such an open dialogue will have an impact on the citizen who, it is said, “will be better able to accept and respect the EU justice system if he understands how and why it operates at the domestic level”.

11.4 The Communication further argues that there is a need for practitioners to “have an input at an early stage” in relation to proposals, and that the Forum’s main aim would be to provide a “permanent platform for dialogue with stakeholders” in relation to the review of the implementation of measures already in force. The Commission makes the (surprising) admission that the EU’s policy orientations and legislative programme have been drawn up “largely without impact for practitioners in the initial phase” although the Commission also notes that the input from practitioners has been useful at the Green Paper stage.

11.5 The Commission notes that most instruments adopted in the areas of criminal and civil justice require the Commission to prepare an evaluation report on their application in domestic legislation, and that the Commission would be able to consult the Forum at that stage. The Communication notes, in this regard, that the Council conclusions on the European Arrest Warrant in June 2005 called on the Commission to consult Member States before issuing a report “in order to avoid any misunderstanding of national legislation”.23

11.6 More generally, the Communication states that the Forum will provide an opportunity for discussion and dialogue about the justice systems of the Member States

23 We noted in our report of 19 October 2005 on the Commission’s first report on the implementation of the European

Arrest Warrant (HC 34–vi (2005–06), chapter 20) that the Commission had made a number of criticisms of UK implementing legislation which were factually inaccurate and that the Commission had not circulated its report in draft to the Member States so that its inaccuracies could be addressed.


and thereby will promote mutual trust. It points out that bringing practitioners into contact with each other “has been shown to promote mutual trust”.

11.7 The Communication emphasises the need for the Forum to avoid duplicating the activities of CEPEJ, indicating that cooperation between the Commission and the CEPEJ should continue and that it could include common initiatives. The Forum should also make use of the findings of the CEPEJ, notably in relation to the quality of interpretation in court or the provision of court services.

11.8 The Communication explains that the Forum will be made up of practitioners, representative of national justice administrations and academics and will therefore be able to offer “a global approach to judicial cooperation seen as a whole” as well as a more targeted examination of EU measures. The Communication indicates that Member States may wish to send delegates to the Forum’s plenary sessions and specific working groups if they so wish, but it also notes that certain Member States made it clear in 2006 that they did not wish to be involved in a “demanding process”. Also represented would be the European Judicial Networks (both criminal and civil) as well as Eurojust, and a range of European professional networks of judges, prosecutors and lawyers.

11.9 The Forum would be expected to meet several times a year, with an annual plenary session, with sub-groups meeting as often as necessary. Sub-groups would be constituted by reference to specific subjects. The Forum might be called on to provide an external assessment of the Commission’s reports on implementation, and itself to assess successful transposition of measures and to evaluate their effect.


11.10 In her Explanatory Memorandum of 27 February 2008 the Parliamentary Under-Secretary of State at the Ministry of Justice (Bridget Prentice) explains that the Government would welcome a means to consider, with those most likely to be able to express informed views, the need for and potential impact of future EU action, and to contribute towards evaluation of existing policies and measures.

11.11 However, the Minister also explains that it remains to be seen whether the proposed participants are best placed to contribute in this way, and comments as follows:

“Although the Government does not doubt that representatives of the pan-European bodies listed in the communication will be highly eminent in their fields, it is notable that some of these organisations are representative bodies and groups of academics. The Government would like to see a higher proportion of users of justice systems and practitioners, drawn from the Member States, who deal with the issues in question on a day to day basis, involved in providing evidence as to the need for proposed measures and the effectiveness of existing ones.”

11.12 The Minister also raises the issue of the weight to be given to the views expressed by the Forum. The Minister explains that the Government assumes that the Commission does not see this Forum as a substitute for formal consultation through Green Papers and similar exercises, or for formal impact assessments. The Minister emphasises that the Forum should be complementary. The Minister adds that the Government would welcome


clarity over the relative weight to be given to the views of the Forum on decisions on future work programmes, such as the successor to the Hague Programme. The Minister concludes that “although the views of a properly constituted Forum may be helpful, they should not outweigh the opinions and concerns of the Member States themselves”.

Conclusion

11.13 In her assessment of this proposal, the Minister makes two important points with which we agree whole-heartedly. The first concerns the composition of the Forum, and we agree with the Minister’s reservations over the representative nature of the Forum and over whether it will contain a plurality of informed opinion on the appropriateness of action at EU, as opposed to national, level. To some degree, those who are in receipt of EU funding for some of their activities can hardly be expected to be vehement on arguing for less action at EU level.

11.14 The Minister’s second point is of equal importance. It will be vitally important to ensure that the views of the Forum are not treated as a means of by-passing opinion in the Member States, or as conferring a kind of legitimacy over proposals for action at EU level.

11.15 We note that the Government would welcome clarity over the weight to be given to the views of the Forum, and we should be grateful to be informed of any response from the Commission.

11.16 Nevertheless, we are content to clear the document from scrutiny.


12 Documents not raising questions of sufficient legal or political importance to warrant a substantive report to the House

Department for Business, Enterprise and Regulatory Reform

(29447) 6400/08 COM(08) 79

Draft Council Decision on the conclusion of an Agreement in the form of an Exchange of Letters between the European Community and Ukraine concerning the elimination by Ukraine of export duties on trade in goods.

(29484) 5727/08 COM(08) 12

Draft Council Regulation amending the scope of the anti-dumping measures imposed by Council Regulation (EC) No.130/2006 on imports of tartaric acid originating in the People's Republic of China.

Department for Children, Schools and Families

(29442) 6328/08 COM(08) 56

Draft Decision amending Decision No.1719/2006/EC establishing the Youth in Action programme for the period 2007 to 2013.

Department for Culture, Media and Sport

(29440) 6322/08 COM(08) 59

Draft Decision amending Decision No.1904/2006/EC establishing for the period 2007 to 2013 the programme “Europe for Citizens” to promote active European citizenship.

(29441) 6327/08 COM(08) 57

Draft Decision amending Decision No.1855/2006/EC establishing the Culture Programme (2007 to 2013).

Department for Environment, Food and Rural Affairs

(29424) 6087/08 COM(08) 51

Draft Council Regulation amending Regulation (EC) No.1782/2003 as regards the transfer of tobacco aid to the Community Tobacco Fund for the years 2008 and 2009 and Regulation (EC) No.1234/2007 with regard to financing of the Community Tobacco Fund.

(29438) 6222/08 COM(08) 46

Commission Communication: Towards a Shared Environmental Information System (SEIS).


Foreign and Commonwealth Office

(29494) — —

Council Joint Action amending and extending Joint Action 2006/304/CFSP on the establishment of an EU Planning Team (EUPT Kosovo) regarding a possible European Security and Defence Policy crisis management operation in the field of rule of law and possible other areas in Kosovo.

Home Office

(29450) 5785/08 COM(07) 805

Commission Report pursuant to Article 6 of the Council Framework Decision of 24 February 2005 on confiscation of crime-related proceeds, instrumentalities and property (2005/212/JHA).

Department for Innovation, Universities and Skills

(29476) 6515/08 COM(08) 61

Draft Decision amending Decision No.1720/2006/EC establishing an action programme in the field of lifelong learning.


Formal minutes

Wednesday 5 March 2008

Members present:

Michael Connarty, in the Chair

Mr Adrian Bailey Mr David S Borrow Ms Katy Clark Jim Dobbin Mr Keith Hill

Kelvin Hopkins Bob Laxton Mr Anthony Steen Richard Younger Ross

***

2. The Committee met in public for the scrutiny of documents

Draft Report, proposed by the Chairman, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1.1 to 8.13 read and agreed to.

Paragraph 9, Headnote read. Amendment proposed in line 9, to leave out the word “Cleared”, and to insert the words “Not Cleared”. — (Mr Anthony Steen.)

Question put, That the Amendment be made.

The Committee divided.

Ayes, 2 Noes, 4

Mr Anthony Steen Richard Younger-Ross

Mr David S Borrow Jim Dobbin Mr Keith Hill Bob Laxton

Headnote agreed to.

Paragraphs 9.1 to 12 read and agreed to.

Resolved, That the Report be the Sixteenth Report of the Committee to the House.

Ordered, That the Chairman make the Report to the House.

[Adjourned till Wednesday 12 March at 2.30 p.m.


Standing order and membership

The European Scrutiny Committee is appointed under Standing Order No.143 to examine European Union

documents and—

a) to report its opinion on the legal and political importance of each such document and, where it considers

appropriate, to report also on the reasons for its opinion and on any matters of principle, policy or law which

may be affected;

b) to make recommendations for the further consideration of any such document pursuant to Standing Order

No. 119 (European Standing Committees); and

c) to consider any issue arising upon any such document or group of documents, or related matters.

The expression “European Union document” covers —

i) any proposal under the Community Treaties for legislation by the Council or the Council acting jointly with

the European Parliament;

ii) any document which is published for submission to the European Council, the Council or the European

Central Bank;

iii) any proposal for a common strategy, a joint action or a common position under Title V of the Treaty on

European Union which is prepared for submission to the Council or to the European Council;

iv) any proposal for a common position, framework decision, decision or a convention under Title VI of the

Treaty on European Union which is prepared for submission to the Council;

v) any document (not falling within (ii), (iii) or (iv) above) which is published by one Union institution for or

with a view to submission to another Union institution and which does not relate exclusively to consideration

of any proposal for legislation;

vi) any other document relating to European Union matters deposited in the House by a Minister of the Crown.

The Committee’s powers are set out in Standing Order No. 143.

The scrutiny reserve resolution, passed by the House, provides that Ministers should not give agreement to EU

proposals which have not been cleared by the European Scrutiny Committee, or on which, when they have been

recommended by the Committee for debate, the House has not yet agreed a resolution. The scrutiny reserve

resolution is printed with the House’s Standing Orders, which are available at www.parliament.uk.

Current membership

Michael Connarty MP (Labour, Linlithgow and East Falkirk) (Chairman) Mr Adrian Bailey MP (Labour/Co-op, West Bromwich West) Mr David S. Borrow MP (Labour, South Ribble) Mr William Cash MP (Conservative, Stone) Mr James Clappison MP (Conservative, Hertsmere) Ms Katy Clark MP (Labour, North Ayrshire and Arran) Jim Dobbin MP (Labour, Heywood and Middleton) Mr Greg Hands MP (Conservative, Hammersmith and Fulham) Mr David Heathcoat-Amory MP (Conservative, Wells) Keith Hill MP (Labour, Streatham) Kelvin Hopkins MP (Labour, Luton North) Mr Lindsay Hoyle MP (Labour, Chorley) Mr Bob Laxton MP (Labour, Derby North) Angus Robertson MP (SNP, Moray) Mr Anthony Steen MP (Conservative, Totnes) Richard Younger-Ross MP (Liberal Democrat, Teignbridge)