VI - Euro Plus Pact

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 Netherlands 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.

The political reality in The Netherlands at the time of negotiation of the Euro-Plus-Pact was delicate. At the time there was a minority government in power, led by the Liberals and Christian Democrats that relied on support from the Party for Freedom for a majority in the House of Representatives. However, the Party for Freedom is outspoken anti-EU and government had to rely on the pro-EU opposition parties to get a mandate for the negotiation of the Euro-Plus-Pact. A clear majority within House of Representatives (that includes the Social Democrats, Centre Right Liberals and Greens) is pro-EU and, eventually, government received a broadly supported mandate to negotiate the Euro-Plus-Pact.[1] The House of Representatives did request the government to ensure in all its negotiations on the combined economic governance measures, coined as the Europact in The Netherlands, to ensure not to move towards a political union. Concretely this meant that there could be no transfer of powers on the level of policy measures to be undertaken on a national level (e.g. changing pension age).[2] The government now consequently refers to this motion of House of Representatives – that is to say that they respect the boundaries set by the House of Representatives – in the policy updates it sends to the House of Representatives regarding EU negotiations. [3]

During parliamentary debates the government strongly maintained its position that the Euro-Plus-Pact would not involve any transfer of sovereignty. In so far as there was any transfer of sovereignty this could only be said to be the case with respect to the enforced stability and growth pact that would include stronger sanctioning mechanisms. It has been suggested by some parties in the discussion that the Pact did involve a transfer of sovereignty because of the process whereby reports have to be provided to the Commission that would then be graded on a benchmarking basis, which could then subsequently induce to changes in policy. The government maintained that this does not at all affect the capacity to set goals and the means to pursue them (it could only inspire to do better), therefore no transfer of sovereignty would take place.[4] As such the commitments made in the pact are considered to be a reflection of the determination to increase competitiveness without real mechanisms to force Member States to changes anything (in this sense they were considered to be more political than legal commitments).

What other information is relevant with regard to The Netherlands and the Euro-Plus-Pact?

As to national measures on economic/social issues adopted in reaction to the Euro-Plus-Pact, the following can be said on the basis of the national reform programmes of The Netherlands that were submitted to the Commission.[5] The national reform programmes of 2011 and 2012 made explicit reference to links between the Euro-Plus-Pact and national reform measures. The 2013 reform programme no longer contains any references to the Euro-Plus-Pact.[6] It appears that the Euro-Plus-Pact objectives have been integrated in the more general reporting mechanisms of the European Semester and the country specific recommendations that are made in that context.

It is relevant to note that on a national level no references whatsoever are made that link the Euro-Plus-Pact objectives and the national measures. In fact, most of the measures that are presented in the context of national reform programmes as responses to the EU objectives already existed prior to the objectives of the Euro-Plus-Pact. From this perspective, the actual impact of the Euro-Plus-Pact is questionable. However, the below points have been communicated to the European Commission as being the implementing measures for the Euro-Plus-Pact.

1. Competitiveness: the introduction of a new business policy, consisting of a sectoral approach with more demand-side management by industry, fewer special-purpose grants, more generic  reductions in taxation and administrative burden and more freedom for entrepreneurs.

2. Employment: measures to ensure increased activating of social security and reduced dependency on unemployment  benefits through the introduction of a scheme to reform existing schemes for the lower end of the  labour market.

3. Sustainability of public finances: introduction  of a new Act to embed the Stability and Growth  Pact agreements in national legislation see further on this act below in the section of Fiscal Compact.

4. Financial stability: the introduction of a new Act that will provide more power to intervene in financial institutions than the statutory instruments of the Financial Supervision Act and the Bankruptcy Act.

[1] 03 Euro-Plus-Pact 230311 parliamentary debate 1/2, 03 Euro-Plus-Pact 230311 parliamentary debate 2/2. 

[2] 03 Euro-Plus-Pact 230311 Parliamentary condition no transfer of powers on the level of policy measures.

[3] For an example, 03 Euro-Plus-Pact 110311 policy update, page 6.

[4] 03 Euro-Plus-Pact 230311 parliamentary debate 2/2. 

[5] 03 Euro-Plus-Pact nrp2012 and 03 Euro-Plus-Pact nrp2013 in addition also 03 070411 Euro-Plus-Pact policy letter government on EuroPlusPact measures.

[6] 03 Euro-Plus-Pact nrp2013.