Communication from the Commission to the European Parliament and the Council. Towards a deep and genuine economic and monetary union. Ex ante coordination of plans for major economic policy reforms

The lessons learned from the recent economic, financial and sovereign debt crisis have led to a major overhaul of the EU's and Economic and Monetary Union's (EMU) economic governance. The surveillance of economic, budgetary and structural policies that has been brought together into the European Semester has made EMU more robust than it was at the onset of the crisis and better equipped for the future. Its scope was broadened to include competitiveness and internal and external imbalances under the new Macroeconomic Imbalances Procedure (MIP).

The new governance framework is designed to help the Union to emerge stronger from the crisis by boosting competitiveness, productivity, growth potential, social cohesion and economic convergence. This will help the EU internally and also strengthen its international role as a key player in the global economy. The new economic surveillance architecture in the EU, and in the Euro area in particular, provides for differentiation between Member States depending on their economic conditions. This is reflected in different policy instruments ranging from preventive surveillance through the European Semester to corrective surveillance to crisis surveillance of a Member State that seeks recourse to the backstops.

To complement this governance framework, the Commission considers it important that national plans for any major economic policy reforms are assessed and discussed at EU-level before final decisions are taken at the national level. This would also ensure that Member States internalise the EU-level dimension of key reforms in their national decision-making process. This is what is known as ex ante coordination, which also reflects the spirit of Article 121(1) of the Treaty. The concept of ex ante coordination of plans for major economic policy reforms was introduced by the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG). Article 11 of the TSCG includes a commitment to discuss ex ante and, where appropriate, coordinate all plans for major economic policy reforms. The TSCG foresees the incorporation of its substance into the legal framework of the European Union within five years, at most, of the date of its entry into force.

Whereas the current EU economic surveillance framework includes a process for economic policy coordination, it does not provide for a structured ex ante discussion and coordination of major economic reform plans, as foreseen in Article 11 TSCG. A commitment to discuss major reforms with potential spill-over effects has also been confirmed in the 2012 Council Recommendation on the implementation of the broad guidelines for the economic policies whose currency is the Euro.

The Commission already set out some reflections on ex ante coordination in its Blueprint for a Deep and Genuine Economic and Monetary Union in November 2012. The European Council of 13-14 December 2012 requested the Presidents of the European Council and of the Commission for work to be taken forward in the areas of coordination of national reforms, the social dimension of EMU including social dialogue, the feasibility and modalities of mutually agreed contractual arrangements for competitiveness and growth, and solidarity mechanisms that can enhance the efforts made by Member States that enter into such arrangements.

This Communication is a contribution to the debate which is now underway between key stakeholders on the next steps towards a deep and genuine EMU, in particular the European Parliament, the Member States, and the national parliaments. It concentrates on ways of implementing ex ante coordination of plans for major economic policy reforms under the existing Treaties.

See also:
- Communication from the Commission to the European Parliament and the Council - Towards a deep and genuine Economic and Monetary Union: The introduction of a Convergence and Competitiveness Instrument

ESO: Background information: Commission sets out next steps towards a deep and genuine Economic and Monetary Union http://www.europeansources.info/record/press-release-commission-sets-out-next-steps-towards-a-deep-and-genuine-economic-and-monetary-union/

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