On March 11, 2011 the Heads of State or Government of the Eurozone endorsed the Pact for the Euro. At the 24/25 March 2011 European Council, the same Heads of State or Government agreed on the Euro Plus Pact and were joined – hence the ‘Plus’ – by six others: Bulgaria, Denmark, Latvia, Lithuania, Poland, Romania (leaving only the UK, Czech Republic, Sweden and Hungary out).
The objective of the pact is to foster competitiveness, foster employment, contribute to the sustainability of public finances and reinforce financial stability. In the Euro-Plus-Pact the Heads of State or Government have entered into commitments on a number of policy areas, in which member states are competent.
What political/legal difficulties did the Czech Republic encounter in the negotiation of the Euro-Plus-Pact, in particular in relation to the implications of the Pact for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process.
After the Pact was endorsed on March 11, 2011 on the European level, it was discussed in the Parliament. On a general level, the Czech Government appreciated that the Pact was based on intergovernmental cooperation and not on a coordination method which would put the Commission at the helm. However, concerns about the unclear role of the Commission were raised. Regarding the content, a majority of the suggested measures have been already in force in CR or introduced as part of the Government’s national reform programme. CR however strongly disagreed with tax harmonization, including the suggested financial transaction tax. CR took into account that the Pact had softened these measures, however CR was worried about the future direction in this area, in particular, that the Pact might incite further plans on tax harmonisation and spread in the future into other areas that would mean practical enlargement of EU competences.
PM Nečas further worried about a number of potential issues – unclear legal basis of the Pact, unclear role of the Commission and other institutions (e.g. without any concrete legal basis in the Treaty the Pact untrusted the Commission with monitoring of the obligations resulting from the Pact). Given the obligation to incorporate the commitments into national reform programmes under Europe 2020, the Commission would in fact not only monitor, but also evaluate the progress of a MS and issue concrete recommendations on what to change. In result, the role of the Commission would be as strong as in the coordination method. PM also criticized that through such measures like Euro Plus Pact, a group of states would use the Commission (paid from the Czech contribution to the EU budget) for tasks that go beyond the competences of the Union. Finally, PM complained that CR could not participate in the negotiations (as non-Eurozone MS) and was presented with the final product only and asked to “take it or leave it” without a reasonable time to discuss the Pact, which would entail to adopt number of national legislative measures, with the Parliament and social partners getting involved (it is worth mentioning that the main trade union urged the Government not to participate in the Pact). Given all these reservations towards the Pact, CR decided not to join the Pact at the moment and wait for further development. The main opposition party, the Social Democrats, supported the Pact in general (including the possible future tax harmonization and creation of EU corporate taxes) and urged the Government to join the Pact.
What other information is relevant with regard to the Czech Republic and the Euro-Plus-Pact?
CR does not participate in the Pact.