MEPs fight for right to wave red flag at changes to EU laws

By Anna McLauchlin

Date: 01/09/05

More EU business legislation could be delayed as the European Parliament and the Council of Ministers continue to battle over MEPs' rights to review any changes to laws once passed.

The latest casualty of the debate is a proposed law on auditing all EU companies listed on stock exchanges, on which MEPs were supposed to vote at the plenary session at the end of this month.

MEPs in the legal affairs committee approved a compromise in July but the Council's legal services are unhappy with the draft, which eliminates any references to the EU 'comitology process'.

Under the comitology procedures, once the Commission, the national governments and the Parliament have agreed on a framework law, it is left to expert committees to oversee the implementation. The Commission and the national governments are represented on the expert committees but that leaves the Parliament out of the picture.

According to the proposed EU constitution, the Parliament would have had the legal right to call back any measures that they were not happy with, but this right now looks insecure after rejection of the constitution by voters in France and the Netherlands.

The issue has already complicated the adoption of rules on the amount of risk capital banks have to set aside, under the proposed capital adequacy directive.

Rapporteur Alexander Radwan, a German centre-right MEP, has amended the proposal to weaken the Commission's powers to change the rules once adopted. The Parliament will vote on this draft in the plenary session on 29 September.

Council sources claim that modifying laws as the Parliament has done with both the audit and capital adequacy proposals is in breach of current EU law and they have so far rejected the Parliament's suggestions.

Instead of reviewing the system on a case-by-case basis, they want to revive a 2002 Commission proposal - left on one side because of the EU constitution - which would revise comitology procedures for all sectors.

"The UK presidency has alerted colleagues to the issue and will consult further," a presidency spokesman said.

But the comitology law will not be agreed overnight and listed companies and banks are wanting certainty about their future obligations. In the case of the law on capital adequacy, banks are expecting to implement the rules from 2007. If it is not approved in first reading this may not be possible.

Dutch centre-right MEP Bert Doorn, in charge of the Parliament's audit draft, has convened talks with his colleagues to discuss how they can amend the proposal to suit all sides.

"If we want to be taken seriously at the European Parliament we need this call-back right," he insisted. "We cannot simply draw the broad lines and then leave it to the Commission to decide on the detail."

Compromise options include 'sunset clauses' to ensure a review of the situation after a few years or extending the Lamfalussy process - a political version of the comitology process for financial services legislation - to the audit directive.

Doorn admitted the legislation could be delayed as a result of the problem. "We have still not had any response from the Council on this," he said.

Article reports on a dispute between the European Parliament and the Council of the European Union over MEPs' rights to review any changes to laws once passed under the so called comitology procedures.