Changes from plenary report to plenary report

RemovedEXPLANATORY STATEMENT

RemovedBackground

RemovedThe Commission’s communication “A new, modern, Multiannual Financial Framework for a European Union that delivers efficiently on its priorities post-2020” (COM (2018) 98), stresses that “the Union is a community of law and its values constitute the very basis of its existence. Respect for these values must therefore be ensured throughout all Union policies. This includes the EU Budget, where respect for fundamental values is an essential precondition for sound financial management and effective funding”.

RemovedConcerns about weaknesses in national checks and balances possibly undermining the respect of the fundamental values enshrined in Article 2 of the Treaty on European Union have been a matter of recent public debate. In that context, it has been suggested that the lack of respect of fundamental values should have consequences that include the suspension of disbursements from the EU budget.

RemovedIn particular, in its resolution of 14 March 2018 on the next Multiannual Financial Framework (MFF), the European Parliament called on the Commission “to propose a mechanism whereby Member States that do not respect the values enshrined in Article 2 of the Treaty on European Union (TEU) can be subject to financial consequences”. However, “final beneficiaries of the Union budget”, Parliament also warned, “can in no way be affected by breaches of rules for which they are not responsible”.

RemovedOn 2 May 2018, as an integral part of the 2021-20127 MFF package, the Commission published a legislative proposal to establish the rules necessary for the protection of the Union’s budget in the case of generalised deficiencies as regards the rule of law in Member States. The proposal is based on Article 322(1)(a) of the Treaty on the Functioning of the European Union, the same as the Financial Regulation.

RemovedAccording to the Commission proposal, in order to protect its financial interests from the risk of financial loss caused by generalised deficiencies as regards the rule of law, the EU should be able to impose appropriate measures that include suspending, reducing and restricting access to EU funding in a manner proportionate to the nature, gravity and scope of the deficiencies.

RemovedThe procedure proposed by the Commission to adopt those measures is the following: when there are reasonable grounds to believe that there is a generalised deficiency, the Commission first notifies the Member State concerned and examines its observations. When the Commission considers that a generalised deficiency is established, it submits a proposal for a decision on the measures to the Council, who decides in accordance with a reversed qualified majority vote (i.e. a qualified majority is needed to reject or amend the proposal). The same procedure applies to lift the measures when the deficiency ceases to exist.

RemovedThe Rapporteurs’ position

RemovedThe Rapporteurs share the broad objectives put forward by the Commission and propose a number of amendments in order to strengthen the proposal and increase its effectiveness, along the following lines.

Removed Fundamental values and Copenhagen criteria: Articles 2 and 3 should be amended to clarify that, as suggested in Parliament’s resolution of 14 March 2018 on the new MFF, the rule of law shall be understood having regard to the fundamental values enshrined in Article 2 TEU. The Copenhagen criteria, the essential conditions all candidate countries must satisfy to become a Member State of the Union, have to be considered when assessing the risk that a generalised deficiency as regards the rule of law poses to the principles of sound financial management. Those criteria include the stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities, a functioning market economy and the capacity to cope with competition and market forces, and the ability to take on the obligations of Union membership.

Removed Assessment of generalised deficiencies: when assessing the existence of a generalised deficiency and in order to ensure the proportionality of the measures being adopted, it is necessary that the Commission takes into account all relevant information, including information coming from the Parliament and from bodies such as the Venice Commission of the Council of Europe. The Commission must also take into account the criteria used in the context of accession negotiations, in particular the chapters on judiciary and fundamental rights (23), justice, freedom and security (24), financial control (32) and taxation (16), and the guidelines used in the context of the Cooperation and Verification Mechanism.

Removed Protection of final beneficiaries: while the Commission proposal specifies that the imposition of appropriate measures does not affect the obligation of government entities to implement programmes or funds, and in particular the obligation to make payments to final beneficiaries, it is not fully clear how this provision is to be enforced. The Commission should take all appropriate measures to assist final beneficiaries in enforcing their claims when legal obligations are not respected.

Removed Procedure to adopt/lift measures and involvement of the Parliament: the sole right conferred by the Commission proposal to the Parliament is to be informed of any measure proposed or adopted. This arrangement clearly does not respect the institutional prerogative of the Parliament as an arm of the EU budgetary authority, given the significant effect of the proposed measures on the Union’s budget. The Rapporteurs propose therefore a more balanced mechanism, which puts Parliament and Council on the same footing. According to the proposed procedure, the Commission would adopt a decision on the appropriate measures by its own implementing act, and simultaneously submit to the Parliament and the Council a proposal to transfer to a budgetary reserve an amount equivalent to the value of the measures adopted. That decision would only enter into force if the Parliament and the Council, within one month, do not reject it. The principle of reverse (qualified) majority voting included in the Commission proposal would be preserved in the proposed procedure.

Removed Other issues: amendments are proposed to specify more precisely what constitutes endangering the independence of the judiciary; to improve the certainty of the procedure by including indicative deadlines for the Commission to react to information received from Member States; and to ensure that if measures being imposed are not lifted after two years, the suspended funds are not lost but are entered in the Union Reserve for Commitments provided for in the 2021-2027 MFF Regulation.

Removed5.12.2018