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Published online by Cambridge University Press: 27 October 2017
In May 1998, the Council, meeting in the composition of Heads of State or Government, unanimously decided, in accordance with Article 121(2) EC, that eleven Member States fulfilled the necessary conditions to move towards the third and final stage of economic and monetary union (EMU) with the adoption of the single currency on 1 January 1999. This article will discuss the legal position of the Member States which did not initially progress to the third stage of EMU, in particular, the opt-outs exercised by the United Kingdom (UK) and Denmark. There follows an analysis of the extent of the UK and Danish opt-outs and the derogation which exists in relation to Sweden (and previously Greece) together with the role of these Member States in the new institutional framework as in operation from 1 January 1999. The current political discussions on the Euro taking place within the UK and Denmark will be highlighted.
1 See Council Dec. C/98/124 of 2/3 May 1998 at http://europa.eu.int/euro/html/dossiers/00140/00140–en.pdf. In addition, it is important at this stage to point out that the necessary conditions to be met are referred to as the ‘convergence criteria’. These criteria can be found at Art. 121(1) EC and more specifically at Protocol 21 on the convergence criteria as attached to the Amsterdam Treaty (ex Protocol 6, attached to the Maastricht Treaty). The convergence criteria can be summarized as follows: first, the achievement of a high degree of price stability: in order to determine whether or not this has been achieved, the average rate of inflation will be examined; second, avoidance of an excessive government budgetary deficit; third, the observance of the normal fluctuation margins provided by the Exchange Rate Mechanism (ERM) for at least two years without severe tensions and without devaluation against the currency of any other Member State; finally, the durability of convergence achieved by the Member State as reflected in long-term interest rates.
2 The glossary page of the Euro website uses the term ‘pre-ins’ to refer to the four Member States that did not participate in adopting the Euro and a single monetary policy on 1 January 1999. As such, when referring to all four Member States, this term will be used in this article.
3 Council Dec., above n 1.
4 See Usher, J. The Law of Money and Financial Services in the European Community 2nd edn (Oxford, OUP, 2000) 202 Google Scholar, and Louis, J-V. ‘A Legal and Institutional Approach for Building a Monetary Union’ (1998) 35 CMLRev. 33 Google Scholar.
5 According to Art. 5 of the Protocol, the following articles do not apply to the UK: Arts. 4(2), 104(1), 104(9), 104(11), 105(1) to (5), 106,108,109,110, 111, 112(1), 112(2)(b), 123(4), and 123(5) EC.
6 According to Art. 6 of the Protocol, the following articles continue to apply to the UK: Arts. 116(4), 119, 120 EC. Arts. 114(4) and 124 EC shall apply to the UK as if it had a derogation.
7 Art. 11 of the UK Protocol.
8 Art. 122(2) EC.
9 Again, Art. 311 EC on the legal force of protocols attached to the Treaty.
10 Denmark and the Treaty of the European Union, Edinburgh European Council, 11 and 12 December 1992, Conclusions of the Presidency, OJ 1992 C348/1.
11 Art. 2 of the Protocol.
12 Art. 122(2) EC provides that, ‘At least once every two years, or at the request of a Member State with a derogation, the Commission and the ECB shall report to the Council in accordance with the procedure laid down in Art. 121(1).’
13 For a more detailed discussion of this point see, in particular, Curtin, D. and Van Ooik, R. ‘Denmark and the Edinburgh Summit: Maastricht without tears: A Legal Analysis’ in O’Keeffe, D. and Twomey, P. (eds) Legal Issues of the Maastricht Treaty (London, Wiley, 1994), 349, 356–58Google Scholar, and Howarth, D. ‘The Compromise on Denmark and the Treaty on European Union: A legal and Political Analysis’ (1994) 31 CMLRev. 765 Google Scholar.
14 Curtin and Van Ooik, above n 13 at 355. In this respect note the conclusion of Curtin and Van Ooik that the Danish decision was not part of the Community legal order as there were no organic or normative links between the decision and the Community legal order and that all terms of the decision were not justifiable by the ECJ. Howarth, above n 13, disagrees with this last point in that he believes that Section B of the decision would be justifiable before the ECJ as it concerns interpretations of the Rome Treaty
15 Howarth, above n 13.
16 Ibid.
17 Curtin and Van Ooik, above n 13.
18 Art. 11 provides that ‘[t]he consent of a State to be bound by a treaty may be expressed by signature … acceptance, approval … or by any other means if so agreed.’ As such, the fact that the decision did not expressly state that in order for the Member States to be bound ratification was required, then signature was enough.
19 Curtin and Van Ooik, above n 13.
20 Above n 13.
21 ‘Le Danemark et l’euro – Copenhague, jeudi 19 novembre 1998’, http://europa.eu.int/euro/html/section5.html?section=159&lang=5. [Emphasis added]. This point has also been confirmed by the fact that Denmark made no separate notification to the Council under the Protocol after this date.
22 ERM II is the system which governs the relationship between the currencies of the pre-ins with the Euro. It was established by a European Council Resolution of 16 June 1997. The UK and Sweden are not members of ERM II.
23 Above n 12.
24 OJ 2000 L167/19.
25 Above n 22.
26 This point is made by Usher, J. ‘Legal Background of the Euro’, in Beaumont, P. and Walker, N. (eds.) Legal framework of the Single European Currency (Oxford, Hart, 1999), 15 Google Scholar. For a criticism of the way in which ERM II functions in that it is outside the framework of the EC Treaty, see Usher above n 4.
27 Sideek, M. ‘A critical interpretation of the EMU convergence rules’ in Legal Issues of European Integration (London, Kluwer Law International, 1996-1997)Google Scholar.
28 See Editorial Comments ‘The birth of the Euro’ (1998) 35 CMLRev. 584, 590–91Google ScholarPubMed.
29 Ibid. at 591, where the question is raised as to whether the Commission could in theory have brought an action for failure to act under Art. 226 EC together with Art. 10 EC on the failure of Sweden to secure the independence of its national central bank.
30 Dunnett D.R.R. ‘Legal and Institutional Issues affecting Economic and Monetary Union’ in O’Keeffe and Twomey, above n 13, 135 at 146.
31 Eurogroup is the new term for the Euro 11.
32 Above n 28.
33 The Statute of the ESCB and the ECB can be found in Protocol 18 as attached to the Amsterdam Treaty (now Protocol 2). Chapter IX sets out those provisions of the Statute which do not apply to the Member States with a derogation and is extended to Denmark and the UK by virtue of their respective Protocols.
34 See above n 5.
35 Art. 7 of the Protocol.
36 Art. 8 of the UK Protocol with lists those articles of the Protocol on the Statute of the ESCB which do not apply to the UK.
37 Art. 116(5) EC placed an obligation on Member States to start progress leading to the independence of their central banks during the second phase of EMU. Furthermore, Arts. 108 and 109 EC required the independence of national central banks of all the Member States at the latest at the date of the ESCB.
38 HM Treasury website at http://www.hm-treasury.gov.uk. However, these conclusions date from pre-1999 and there is no consolidated update on the HM Treasury website.
39 The UK’s economic cycle and convergence is discussed at the HM Treasury website, above n 38, under ‘UK Membership of the Single Currency—an assessment of the five economic tests’.
40 Guild, E. ‘How can social protection survive EMU? A UK perspective’ (1999) 24 ELRev. 22 Google Scholar.
41 De Silguy, Y-T. L’Euro (Paris, Librarie Générale Française, 1998), 285 Google Scholar.
42 Van Vambergen, W. and Wachenfeld, M.G. ‘Economic and Monetary Union in Europe: Legal Implications of the Arrival of the Single Currency’ (1998) 22 Fordham International Law Journal 41 Google Scholar.
43 Guild, above n 40.
44 Ibid.
45 Currie D. ‘The Pros and Cons of EMU’ The Economist Intelligence Unit, 1997.
46 Ibid.
47 Van Vambergen and Wachenfeld, above n 42 at 40.
48 Ibid at 41.
49 Critical European Group website, http://www.keele.ac.uk/socs/ks40/ceghome.html under ‘Articles of Interest’, ‘Britain’s Future: Business, Industry, and a new relationship with the EU’. Professor Stephen Bush was the vice-chairman of the Campaign for an independent Britain (CIB) from 1991 to 1998.
50 For an in-depth discussion on this point see the seminal analysis by Gaja, G. ‘How Flexible is Flexibility under the Amsterdam Treaty?’ (1998) 35 CMLRev. 855 Google Scholar; see also Kortenberg, H. ‘Closer Co-operation in the Treaty of Amsterdam’ (1998) 35 CMLRev. 833 Google Scholar.
51 Howarth, above n 13.
52 Usher, above n 4.
53 Gaja, above n 50.
54 Kortenberg, above n 50.
55 See Art. 43(1)(c) TEU.
56 See Art. 43(1)(g) TEU.
57 In respect of the UK, it is stated explicitly at Art. 10(a) of the Protocol that the UK has a right to move to the third stage of EMU.
58 Kortenberg, above n 50.
59 Although it is possible to use the closer co-operation provisions in respect to taxation, the only move in this respect so far has been the proposal to use the closer co-operation provisions for adopting measures on energy tax. Whether these provisions will be used to adopt more central taxation measures, is yet to be seen.
60 The countries currently negotiating accession are (‘negotiating countries’): Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovak Republic and Slovenia. Turkey is a candidate country but is not currently involved in accession negotiations.
61 i.e. all negotiating countries with the exception of Bulgaria and Romania.
62 See Editorial Comments ‘Towards accession’ (2001) 38 CMLRev. 1329 Google Scholar.