New EU-Constitution: Free Ticket for Liberalisation of Public Services

international | anti-capitalism | opinion/analysis Thursday July 24, 2003 11:33 by Dr. Franz-Josef Stummann - Assembly of European Regions f.stummann at a-e-r dot org 20 Place des Halles, F-67000 Strasbourg 0033388227447

Convention eliminates exeption for Education, Health and Social Affaires

The Final Draft of the EU -Constitution published 18 July 20003 by the Convention eliminates exemptions for Education, Health and Social Affaires in the Common Commercial Policy.
Interventions of national governments in order to protect Public Services are seriously threantened.
Partisans of unlimited Liberalizationof Trade in Services gained major victory.

Re: [GATS-education] Final Draft of EU-Constitution:Important changes for education under the EU-Common Commercial Policy/No further exemption of Education, Health and Social Policy/Council now can decide by Majority and overrule objections of individual member states-



Dr. Franz-Josef Stummann
Secretary to Committee B( Health and Social Affaires) and Committee D(Culture, education,media)
Assembly of European Regions


The European Convention in its final sessions on 13 June und 10 July 2003 adopted a draft of a "Treaty establishing a Constitution for Europe". The text (Conv 850/03) was published on 18 July 2003 and submitted to the European Council the same day. http://europeanconvention.eu.int/bienvenue.asp?lang=EN).

The Text will be discussed and decided upon at the Intergovernmental Conference, which has been scheduled to start at 15 October 2003. This Intergovernmental Conference will work till the end of 2003 ending with the adoption of the Constitution. Following formal entry of the new member states they will also be asked to adopt the treaty.
The text has also to be ratified either by parliamentary decisions of some member states or even by referenda, where Ireland and Denmark are bound to held them and other contries such as France,Spain and Italy are still undecided but by large in favour of consulting directly the electorate. The Constitution therefore will not be in force before 2005.


Background:

The text submitted by the Convention, composed of members of the European Parliament, of the Commission and of representatives of the national governments and parliaments of the member states (including also the representatives of the new states entering the EU) presents a turning point for the European Union. The task of the Convention was established by the European Council at its session in Laeken( Belgium) on 14 and 15 December 2001.

The Convention was asked to draw up proposals on three subjects:
-to bring citizens closer to the European concept and institutions
-to provide for a constitutional framework with regard to the organisation of politics in the European area and an enlarged Union
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-to make proposals how to develop the Union into a stabilising factor and a model in the new world order
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Major aspects of the envisaged European Constitution were:

-better division of Union and Member States competences
-merger of the existing Treaties and establishing the Union as a legal personality
-simplifications of the Union's instruments of action
-introducing measures to increase democracy, transparency and efficiency of the Union,
i.a. simplification of decision-making processes
-introduction of new measures to enhance the structure and role of the Union's three institutions,of the Council, the Commission and the European Parliament

The Convention decided not to restrict itself to a simple reformulation and restructuring of the existing treaties but to elaborate a new draft Treaty which establishes de facto a Constitution of the Union.
During the work not only politicians but also citizens, political interest groups, various organisations and NGO's made proposals to the Convention and were also asked to attend hearings.Particulary in relation to the preamble , the definition of the Union and its
objectives but also to fundamental rights and citizenship of the Union many suggestions and demands were made but only to a lesser extent incorporated in the text.

The new general framework , the definition and repartition of competences

The most important principle ,very much disputed, is laid down in "Article 10:Union law". Under paragraph 1 it is established that " the constitution, and law adopted by the Union's Institutions in exercising competences conferred on it ,shall have primacy over the law of the Member States." This implies that the Constitution of the Union has supremacy over the different national constitutions , being of a higher quality. It implies that member states can not pass anymore constitutional laws or national regulations in areas or political sectors where they rendered already exclusive or shared competences to the Union. Therefore consequently paragraph 2 of Article declares:" Member States shall take all appropriate measures, general or particular, to ensure fulfilment of the obligations flowing from the Constiution or resulting from the Union Institution's acts."
One can say that the most significant attributes of the sovereignity of a state are given up and passed to the Union. This touches the principle of the division of power with regard to insitutions and the structure of the member states, the competences a state helds so far and the decision making process within a state.

Special attention deserve the articles dealing with the definition and repartition of competences as they determine, expand or limit the scope of actions and the legal capacity of each institutional level including the member states.

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As a general rule all competences for those policy areas not particularily referred to in the Constitution remain the exclusive competence of the members. Further transfer of power or common action of the Union presuppose a decision based on a unanimity vote . Members can stop envisaged changes also via veto.(Article 9,2)
But as it is shown at a later stage through the introduction of so called " supportive actions" the Union will also be involved to a not negligible degree in the policy sectors, which remain in the exclusive competence of the member states.De facto there will be no policy area where the Union will not not be able to intervene to some extent.
Rules concerning the application of the principle of susbsidiarity (Article 17 and annexed "Protocol on the application of the principles of subsidiarity and proportionality")give the national parliaments of member states the right to monitor, if any actions or new initiatives of the Union may infringe the rights of the member states.


The convention established the following categories for competences in Article 11:

-Exclusive competences
Paragraph 1:"When the Constitution confers on the Union exclusive competence in a specific area, only the Union may legislate and adopt legally binding acts, the member States being able to do so themselves only if so empowered by the Union or for the implementation of acts adopted by the Union"

One has to note here that in relation to negotiations on trade and services - this includes GATS-under the heading of the Common Commercial Policy,( Chapter III, Article III-216 and III-) the Union has exclusive competences. This implies that the Union is entitled and obliged to make sure to achieving " the harmonious development of world trade, the progressive abolition of restrictions on international trade and foreign direct investment, and the lowering of customs and other barriers."

Other objectives for the Common Commercial Policy, as laid down in the constitution, demand that the Union assures a" common commercial policy based on uniform principles, particularily with regard to changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services and the commercial aspects of intellectual property…"
The Union is also bound to assure" the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those be taken in the event of dumping or subsidies"

Exclusive competences such as for the Common Commercial Policy practically forbid all individual initiatives of the member states and give the Commission acting for the Union the right of initative in the development of new policies. When adopted by the Council of Ministers by majority the Commission has the right to conduct and conclude negotiations, only assisted by a special committee of the Ministers.

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Shared competences
Paragraph 2: "When the Constitution confers on the Union a competence shared with the Member States in a specific area, the Union and the Member Sates shall have the power to legislate and adopt legally binding acts in that area.The Member States shall exercise their competences to the extent that the Union has not exercised, or has decided to cease exercising, its competence."
This Article gives practically also the primacy to the Union. Legislative acts of the Union restrict the members.
Shared competences exist between the Union and the member states i.a. in following areas:
-internal market
-agriculture and fisheries,
-transport
-energy
-social policy
-environment
-consumer protection
-common safety concerns in public health matters
On all these matters decisions are made by qualified majority

Areas of supporting, coordinating or complimentary actions

Article 16: These are areas, where the exclusive competences of the member states prevail, but where the Union is allowed to take action only in a supportive, coordinating or complimenting way.
These are above all:
-industry
-education, vocational training , youth and sport
-culture
-protection and improvement of human health

Decisions in these sectors ,but only on supportive actions ,can now be taken by qualified majority. But one should remember that the present Treaties still demand unanimity vote also for the supportive actions in culture.

The Current Regulations concerning the Common Commercial Policy with its exemption clause for culture( audiovisual matters),education, health and social policies

As mentioned before since the approval of the Nice-Treaty the Union already assumes exclusive competences for formulating and conducting the Common Commercial Policy. The European Commission acts on the basis of a mandate by the Council representing the member states.The Commission is assisted by the " ad hoc-Committee 133" which has further a specific group dealing with services.The Group derives its name from the Article 133 of the Nice-Treaty, which

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deals with the Common Commercial Policy. It may be seen as a curiosity, but due the fact
that for example in the Federal Republic of Germany exclusive competence for Culture and Education is constitutionally assigned to the Länder and not to the federal level, the German members of the " ad hoc-Committee 133-services" are delegated by the Länder.

The exclusive competence of the Union establishes that for the conclusion and adoption of agreements in trade and services the Council of Ministers will decide on the basis of a qualified majority, thus not allowing a veto of a single member in case it foresees negative consequences for the own internal national commercial policies.

Due to the insistence of France, Belgium and to a lesser extent Germany and also the majority of European Regions, led by the Assembly of European Regions the Nice –Treaty in Article 133, paragraph 5 rules, that the Council has to "act unanimously when negotiating and concluding an agreement… where that agreement includes provisions for which unanimity is required for the adoption of internal rules or where it relates to a field in which the community has not yet exercised the powers conferred upon it by this Treaty by adopting internal rules." This rule also applies in the case of horizontal agreements-this is of particular importance in relation to GATS- in those sectors still remaining in the exclusive competence of the member states

The text of paragraph 5 of Article 133 refers explicitly to the sectors listed under paragraph 6 of the same Article as" trade in cultural and audiovisual services, educational services, and social and human health services."
This special treatment is regarded as an" exemption clause" , where France particularily in view of its special interest in the national film production underlignes the aspect of the " cultural exemption".
In order to bring a certain logic into the Nice-Treaty, which establishes generally the exclusive competence of the Union for the Common Commercial Policy and in order to leave for the Union still the option open to take certain action and also to test the possibility for the negotiation of trade and service agreements on culture, education, these sectors when treated under its commercial aspects fall under the category of " shared competences".

There is also another reason for putting it under "shared competences".It is connected with the rules of the WTO, that the Union is under a certain obligation to pursue negotiations without taking note of specific reservations for certain sectors. The WTO-principle of " single undertaking" prohibits that sectors are treated separately. Each WTO-Agreement such as GATS, GATT, TRIPS etc. is treated as package which also has be accepted at the end of negotiations in its entirety.(see Thomas Fritz(http:wwww.attac.de/gats/hintergrund/fritz eu.konvent.doc) via link: http://int-protest-action.tripod.com/id277.htm

This means for the Union as a common commercial area that the package is either accepted by all or also refused by all . The latter would the case when no positive vote can be obtained by unanimity or one state declares a veto.
The present regulation in force of " all take it or all leave it" , so far all EU- member states are concerned, ,can be regarded as a permanent moratorium and blockade, totally depending on the existence of the" exemption clause ".
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We should remember the turmoil about the dead line for submitting new offers under the GATS agreement in spring 2003. The European Commission with Commissioner Lamy as the chief negotiator was desperately urging and pushing the member states to give way for widening the list of offers, but finally failed to gain consensus and unanimity vote for a new consolidated list.He finally had to give in by announcing that no further offers were to be made in education and culture.
One could argue that it was not primarily the protest of individual members of Parliaments,of trade unions, ONG's,Universities, teachers, Anti-GATS-Campaigns, Regional Ministers for Culture and Education or the Assembly of European Regions , which finally stopped the Commission. They certainly created a wider awareness of the issue and made the Commission to change its communication policy to suddenly posing as major defender of public services in culture and education.
But the decisive factor was finally the stumbling block of the unanimity requirement, which made the Commission and liberalization protagonists in the a number of governments of member states abandon the idea of achieving a consolidated list with new offers.
It is understandable that these provisions mobilize all those member states , which for example are seeking to make more liberalization offers under GATS, to push with much vigour for the elimination of the exemption clause . They argue for a transfer of power to the Union and the introduction of qualified majority voting.In the present round these were above all the UK and the Netherlands ( education, media. A preliminary survey suggests that with the entry of new members to the EU there will be in future a sound qualified majority backing an increased liberalization of public services , particularily in the sectors of education and culture.

This said the presented dilemma will not at present uproot or change the categorization of the mentioned sectors for which the exclusive competence of the member states is beyond doubt. ct Therefore deviating from the rule of qualified majority vote-normally applicable in case of shared competences -any decisions on trade and service agreements in these sectors can still only be made on the basis of unanimity in the Council.Members can also stop actions and negotiations by vetoing. But only so long as the provisions of Nice-Treaty remain intact.

On what basis the different member states arrive to their decisions is an internal matter. In the case of Germany the Länder and their body at the federal level, the Bundesrat, would have to agree.The Federal Government would not be able to make decisions on their behalf.Therefore the Federal level would also be obliged to support the veto to a decision on culture and education, if so demanded by the Länder.Similar regulations exist in Belgium and to a certain extent in Austria.

The new regulations in the Draft Constitutional Treaty

Seemingly unnoticed by the general public and also by critical GATS-Observers the Draft of the Constitutional Treaty proposes major changes which when adopted at the Intergovernmental

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Conference will have serious implications and consequences for the future handling of all trade negotiations within the WTO and particularily in relation to GATS.

It would present a real turning point for the different national educational systems and for cultural
diversity in Europe,as it paves the way for harmonization and unlimited liberalization of public services in these sectors.
Once adopted there is no chance to get back to the old regulations, as the Treaty marks a point of no return.

The draft Treaty is keeping only two exemptions. One concerns culture(Audiovisual) but with a rather important restriction. Under Article III-217,4 it says:
" The Council shall also act unanimously for the negotiation and conclusion of agreements in the field of trade in cultural and audiovisual services,where these risk prejudicing the Union's cultural and linguistic diversity."
The formulation of the restriction for culture is rather ambiguous and leaves much room for a wide range of interpretations about the procedure of the decision making process and the definition what are the elements and contents of agreements in culture and education, which could "risk prejudicing the Union's cultural and lingistic diversity".
Already a legal definition of the term and criterium " Union's cultural and linguistic diversity" poses enormous problems . The same goes for delivering a precise description and identification of the phenomenon when referred to the social and political reality of Europe and political strategies and actions.
It also an open question, if the risks of agreements have to be identified ex ante and before starting with negotiations or only then when there has to be a final assessment of negotiated agreements before concluding them.Does the formulation imply that there will be two different evaluations, one when starting with negotiations and another one when concluding an agreement?
What will be the final substance,what does require the vote by unanimity?
It remains to be seen,if negotiations can not be started on the basis of a decision by qualified majority.Negotiations are generally open with regard to results and therefore do not entail a risk.But we know from GATS that already the negotiations involve dealings ,which often lead to committments. Another question is,if the assessment has to cover in a broad way the entire agreement or if a it allows for a scrutiny of certain apects.
One can predict that defenders of cultural and linguistic diversity are facing a rather difficult task when trying to establish the risks of a certain agreement. Does for example the general opening of the University sector to unlimited competition pose a risk to the Union's cultural and linguistic diversity?

The setting of fixed bookprizes in the german speaking countries of Europe will certainly have to go as it will be hard to establish why it is undispensable for linguistic and cultural diversity. Will equal treatment of private TV and Radio Stations on one side and Public Corporations such as BBC or the German ARD on the other side encompass a real threat against cultural diversity?


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Some may argue that with the WTO-principle of"single undertaking " there will still be the possibility to veto the whole package with its different sectors , including education, by blocking the agreement through insisting on the unanimity requirement for the cultural sector.As they are too many interested to proceed in areas such as transport or energy, it is more than doubtful, that members playing this card, will finally stay firm and stop the whole process just because they insist that cultural diversity has to be rated higher than possible gains through new deals in international trade..

The second exception covers agreements "in the field of trade in services involving the movement of persons and the commercial aspects of intellectual property" where unanimity is required in those cases" where such agreements include provisions for which unanimity is required for the adoption of internal rules."(III-217,4). It is more than doubtful , if this provision will cover objections to modes of delivery under GATS such as presence of natural persons.



But all other sectors before covered by the obligation of obtaining unanimity for any decisions have been transferred into the Union's exclusive competence, notably education. The Council of Ministers can now decide with qualified majority .The Commission gets the right of initiative , to make recommendations to the Council and ask for authorization to open negotiations.A new aspect is also the regulation that the European Parliament has to be informed regularily "on the process of negotiations". This may seem positive in view of achieving more transparency.But taking account of the fact, that from now on the national parliaments or those regions with legislative power for education, health and social affaires- this is the case in Germany, Belgium and Austria- will have in future no say in the matters, this change presents no real advantage compared with the old regulation of Article 133.

Regretable in view of the transparancy of the discussions in the Convention the delimitation and assignment of the competences and formulation of the policy sectors were left to the last minute, so that the public had practically not much chance of influencing the debate.There was not much time even for the members of the Convention to comment the different proposals and to seek advice from outside. The subject here under discussion was de facto adopted only at the last day.

Those pushing for substantial changes, which eliminated the restriction, were well prepared, had lobbyed extensively in advance and achieved strong support of influential circles. Personalities such as Lamy, supported by other members of the Commission, but also the influential German MEP Elmar Brok( Christian Democrat, PPE)-according to his official entry in the books of the European Parliament lobbyist of the Media Giant Bertelsmann Corporation(Random House) with its considerable interests in the education business- were able to hold down any opposition.




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The members of the European Parliament, which is always eager to expand its role within the Union, were lured with a new regulation.Following Article III-217 , it is stated , that "European laws or framework law shall establish the measures required to implement the common
commercial policy". This wording implies a full European legal procedure.
Consequently according to Chapter VI,International Agreements , Article III-227,7e "for agreements covering fields to which legislative procedure applies", it is obligatory to obtain "the European Parliament's consent".
We are faced with the fact that to the detriment of national parliaments or in some specific cases of regions (Länder) with legislative competences the European Parliament gained new power and a decisive position when determining goals and objectives of the Commercial policy.

That means also that the European Parliament will in future have more influence in decisions about the future of public services than local, regional and national assemblies.

It has also to be said that education and culture, not to mention Social Policy and Health, did not receive the attention it deserved.They were obviously regarded as issues of minor importance.Therefore they were traded with much ease against other demands , regarded as more important, for example maintaining the requirement of unanimity vote in relation to immigration policy. Most of the German representatives with the exeption of the Ministerpresident Erwin Teufel from Baden-Württemberg did even not care considering that these issues touched above all the interests and competences of the Länder.
France was only interested in maintaining to some extent the "cultural exeption", but was also not able to gather full support in her own delegation.

As one of ardent defenders of the exemption of not only culture , but also of education,health and Social Policies, one has to mention the Scottish Liberal Democrat Robert Mclennan.He made the same point as frequently and permanently argued by the Assembly of European Regions(AER), that it is somehow contradictory and illogical to accept generally the exclusive competence of the member states for the above mentioned sectors, but to put them under the exclusive competence of the Union when treated under the aspects of trade and services.

Mclennan is also of the opinion, that phrase of Article III-217,53, which will be cited further down does not present a safeguard to protect the exclusive competences of the members. The term "Harmonisation of legislative or regulatory provisions" does not cover policy contents but only more formal administrative technicalities. The fact that the Union will be able proceed by qualified majority and force a member against his will to accept the decision in fact means that to a great extent his exclusive competence is infringed and corrupted. It is not anymore an



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exclusive competence in the strict meaning of the term.The phrase reads as follows:
"5. The exercise of the competences conferred by this Article in the field of commercial policy, shall not affect the delimitation of internal competences between the Union and the Member States, and shall not lead to harmonisation of legislative or regulatory provisions of member States insofar as the Constitution excludes such harmonisation."

Conclusions

One has to face it that with the decisions of the last sessions of the Convention
in the second week of July,the protagonists of liberalization gained what they were bargaining for all the way in a relatively easy way.The Commission, never really interested in protecting cultural diversity and maintaining fully public services in education , saw with the Constitutional Treaty the great chance, to obtain the powers it needed in order to proceed in future with no obstacles in its WTO negotiations.Therefore it did not cost much to announce in spring 2003 that in view of cultural and educational considerations one was not prepared to make further GATS-offers. GATS-Campaigners leaned back, because they thought the fight had been won finally.

There were only few voices ,which expressed concern.Many members of the convention, eager to establish more powers for the Union via the introduction of qualified majority voting, did not reflect in detail the consequences and the existing interests and what that this will mean for the more sensitive sectors such as education and culture with regard to GATS and the opening of these areas to more competition.

GATS-Protagonists in the European Parliament were also able to use the broad public sentiment
expressing the need for a stronger Union with more ability to act.This means introducing majority voting as a general rule and reducing the competences of the member states as much as possible.Unanimity vote is depicted as anti-democratic and seen as a symbol for blocking progress and further european integration.

The idea to have a clear repartition of competences , implying full and not restricted responsibility for policy areas at one institutional level, did not receive the necessary support.This applies also to the concrete application of the principle of subsidiarity .

There is still a chance, but only a limited one, to turn the tide and to obtain changes in the text.The Governments will have the last word in the Intergovernmental Conference, starting in October 2003.

Above all the national governments of the member states and the national parliaments should be put under strong pressure to veto the draft of the Constitutional Treaty in relation to Chapter III and the Articles III-216 and III,217.There is also the possibility to mobilize those regions with


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legislative powers for culture and education-particularily the Länder of Germany and Austria and the Belgian Regions-as their comptences will be seriously affected and curtailed.The proposed changes would according to their cosntitution need their consent.
Major demand should be to retain the version of the Nice-Article 133 in the new Treaty.

One has to be aware that present draft is generally regarded as a good compromise. The political elite in Europe is more than hesitant to change the text, as one is really afraid of launching a new debate debate, which could lead to an extensive scrutiny of the whole draft.
Action has to be mounted urgently. It will be too late, if one leaves it to start campaigning in October.The European Regions, bound by the Brixen Declaration,
(http://www.aer.org/COMMUN/A214a1.html#Brixen) will also use all their influence to lobby for a change of the Article on the Common Commercial Policy.


Strasbourg,23 July 2003


Dr. Franz-Josef Stummann
Assembly of European Regions
20 Place des Halles
F-67000 Strasbourg
Tel.: 0033 388227447
e-mail: fstummann@a-e-r.org
Web: http://www.a-e-r.org/