house of commons european scrutiny committee scrutiny committee, 33rd report, session 2013–14 3...

HC 83-xxx Published on 7 February 2014

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House of Commons

European Scrutiny Committee

Thirty-third Report of Session 2013–14 Documents considered by the Committee on 29 January 2014

Report, together with formal minutes

Ordered by The House of Commons to be printed 29 January 2014

£15.50

Notes

Numbering of documents

Three separate numbering systems are used in this Report for European Union documents:

Numbers in brackets are the Committee’s own reference numbers.

Numbers in the form “5467/05” are Council of Ministers reference numbers. This system is also used by

UK Government Departments, by the House of Commons Vote Office and for proceedings in the House.

Numbers preceded by the letters COM or SEC or JOIN are Commission reference numbers.

Where only a Committee number is given, this usually indicates that no official text is available and the

Government has submitted an “unnumbered Explanatory Memorandum” discussing what is likely to be included

in the document or covering an unofficial text.

Abbreviations used in the headnotes and footnotes

EC (in “Legal base”) Treaty establishing the European Community

EM Explanatory Memorandum (submitted by the Government to the Committee)*

EP European Parliament

EU (in “Legal base”) Treaty on European Union

GAERC General Affairs and External Relations Council

JHA Justice and Home Affairs

OJ Official Journal of the European Communities

QMV Qualified majority voting

RIA Regulatory Impact Assessment

SEM Supplementary Explanatory Memorandum

TEU Treaty on European Union

TFEU Treaty on the Functioning of the European Union

Euros

Where figures in euros have been converted to pounds sterling, this is normally at the market rate for the last

working day of the previous month.

Further information

Documents recommended by the Committee for debate, together with the times of forthcoming debates (where

known), are listed in the European Union Documents list, which is published in the House of Commons Vote

Bundle each Monday, and is also available on the parliamentary website. Documents awaiting consideration by

the Committee are listed in “Remaining Business”: www.parliament.uk/escom. The website also contains the

Committee’s Reports.

*Explanatory Memoranda (EMs) can be downloaded from the Cabinet Office website:

http://europeanmemoranda.cabinetoffice.gov.uk/.

Letters sent by Ministers to the Committee relating to European documents are available for the public to

inspect; anyone wishing to do so should contact the staff of the Committee (“Contacts” below).

Staff

The staff of the Committee are Sarah Davies (Clerk), David Griffiths (Clerk Adviser), Terry Byrne (Clerk Adviser),

Leigh Gibson (Clerk Adviser), Peter Harborne (Clerk Adviser), Paul Hardy (Legal Adviser) (Counsel for European

Legislation), Joanne Dee (Assistant Legal Adviser) (Assistant Counsel for European Legislation), Hannah Finer

(Assistant to the Clerk), Julie Evans (Senior Committee Assistant), Jane Lauder (Committee Assistant), Beatrice

Woods (Committee Assistant), Paula Saunderson and Ravi Abhayaratne (Office Support Assistants).

Contacts

All correspondence should be addressed to the Clerk of the European Scrutiny Committee, House of Commons, 7

Millbank, London SW1P 3JA. The telephone number for general enquiries is (020) 7219 3292/5465. The

Committee’s email address is [email protected]

European Scrutiny Committee, 33rd Report, Session 2013–14 1

Contents

Report Page

Meeting Summary 3

Documents not cleared

1 BIS (34738) Space policy 5

2 BIS (35628) Establishing a Quality Framework for Traineeships 9

3 CO (33687) A Statute for a European Foundation 16

4 DEFRA (35693) National Emissions Ceilings 18

5 DEFRA (35694) Atmospheric emissions from medium combustion plants 21

6 FSA (35695) EU regulation on novel foods 23

7 FCO (35684) The EU and the Gulf of Guinea 26

8 HMT (35250) (35251) (35276) Financial services: payment services 32

9 HO (34843) Reforming Europol 37

10 MOJ (34916) The EU Charter of Fundamental Rights 41

11 MOJ (35576) European Small Claims Procedure 44

12 MOJ (35653) Procedural safeguards for suspects and accused persons in criminal proceedings 48

Documents cleared

13 DEFRA (35690) Clean Air Programme 55

14 DH (34128) Regulating clinical trials 61

15 DH (34587) (35743) The manufacture, presentation and sale of tobacco and related products 68

16 DFID (35144) Financing EU external action: 11th European Development Fund 78

17 DFID (35334) Financing EU external action: 11th European Development Fund 82

18 FCO (35395) (35399) (35400) (35401) (35398) (35396) (35397) (35402) (35403) Enlargement Strategy and Main Challenges 2013–14 87

Annex 1: The Minister’s summary of the Commission report on Albania and his comments, contained in his Explanatory Memorandum of 28 October 2013 94

2 European Scrutiny Committee, 33rd Report, Session 2013–14

Annex 2: extract from the 17 December 2013 General Affairs Council Conclusions on Albania: 95

19 FCO (35736) (35737) EU restrictive measures against Tunisia 97

20 FCO (35739) The European network of independent non-proliferation think tanks 99

21 HO (35286) Protecting people and critical infrastructure against terrorist attacks 104

Documents not raising questions of sufficient legal or political importance to warrant a substantive report to the House

22 List of documents 106

Formal minutes 108

Standing Order and membership 109


Meeting Summary

This week the Committee considered the following documents:

Tobacco Products Directive:

These proposals to strengthen EU rules on the manufacture, presentation and sale of tobacco and related products have been, in various forms, under scrutiny since January 2013. The original Draft Directive was cleared from scrutiny following a debate in European Committee in December, but the Government accepted that the changes made to the proposals in the course of trilogue negotiations were sufficiently substantial to require a further Explanatory Memorandum, which re-imposes the scrutiny reserve. The Committee, therefore, is now considering the compromise text agreed (subject to formal approval) by the Council and European Parliament last December. The most significant change concerns the regulatory model for e-cigarettes, in which most e-cigarettes would be regulated as consumer products, not as medicines, as the UK Government had wished, but with additional safeguards to discourage their promotion and use by children, monitor their ingredients, emissions, nicotine dosage and product components, and limit their nicotine content, as well as restrictions on advertising and activities similar to those applicable to tobacco products. We welcome the publication and deposit of the compromise text so that it is open to scrutiny, and note that while the appropriate regulatory model for e-cigarettes continues to be contested, the Government believes that the overall public health benefits of strengthened EU tobacco controls outweigh its remaining concerns. We clear the proposal from scrutiny.

Clinical trials

This Draft Regulation would repeal the Clinical Trials Directive, in force since 2004, and replace it with what the Commission argues is a less burdensome set of rules covering the authorisation and conduct of clinical trials. We have held it under scrutiny since September 2012 and most recently have been following developments in trilogue negotiations. We note that the outcome of these negotiations, in the Government’s view, is likely to be acceptable to UK stakeholders and we welcome the strengthening of provisions on the transparency of clinical trials and clinical trial data which go a long way to achieving the objectives set out in the recent Report of the House of Commons Science and Technology Committee. Accordingly we clear the document from scrutiny.

EU enlargement strategy

This Commission Communication provides an annual overview of progress on EU enlargement. It and the accompanying Country Progress Reports were retained under scrutiny last November and further information requested. We clear the Communication but note one very significant outstanding issue: whether or not Albania should be granted accession candidate status, a question which will be discussed at EU level later this year. We ask the Minister at that time to provide us with an unqualified statement of the Government’s position before the event, so that we can scrutinise it.


Clean Air Programme, national emissions ceilings and atmospheric emissions from medium combustion plants

This package of a Commission Communication and two Draft Directives respectively: set out a Clean Air Programme for Europe; propose a new EU measure to reduce national emissions of certain atmospheric pollutants; and introduce limits on the emission of certain atmospheric pollutants from medium combustion plants. We report, but clear, the Communication, but retain the two Draft Directives under scrutiny, asking the Government for its assessment of the potential impact on the UK (including costs and benefits) and progress reports on negotiations.


1 Space policy

(34738) 6952/13 + ADDs 1–2 COM(13) 107

Draft Decision establishing a space surveillance and tracking support programme

Legal base Article 189(2) TFEU; co-decision; QMV Department Business, Innovation and Skills Basis of consideration Minister’s letter of 22 January 2014 Previous Committee Reports HC 86–xxxviii (2012–13), chapter 3 (17 April 2013)

and HC 83–iii (2013–14), chapter 4 (21 May 2013) Discussion in Council Not known Committee’s assessment Politically important Committee’s decision Not cleared; further information requested

Background

1.1 In its April 2011 Communication “Towards a space strategy for the European Union that benefits its citizens” the Commission set out proposals for a space policy and said a specific industrial policy was necessary to deliver greater competitiveness on the world stage, independence for specific sub-sectors such as launchers and the development of the market for space products and services.1

1.2 In a February 2013 Communication the Commission, building on the areas highlighted in the 2011 Communication, set out five specific objectives for a space industrial policy:

• to establish a coherent and stable regulatory framework;

• to further develop a competitive, solid, efficient and balanced industrial base in the EU and support SME participation;

• to support the global competitiveness of the EU space industry by encouraging the sector to become more cost-efficient along the value chain;

• to develop markets for space applications and services; and

• to ensure technological non-dependence and an independent access to space.

Underpinning these objectives were 37 specific proposals divided into six work streams, including supporting establishing and operation of an EU space surveillance and tracking (SST) service.2

1 See (32660) 8693/11 + ADDs 1–6: HC 428–xxvi (2010–12), chapter 1 (11 May 2011) and Gen Co Debs, European

Committee C, 23 May 2011, cols. 3–14.

2 See (34737) 6950/13: HC 86–xxxviii (2012–13), chapter 3 (17 April 2013) and HC 83-iii (2013–14), chapter 4 (21 May 2013).


1.3 In February 2013 the Commission also published this draft Decision, which would establish an SST support programme for the EU. In support of the proposal the Commission said that:

• spaced-based systems play a fundamental role in everyday life and are critical to the economy and security;

• there is a need to protect EU space infrastructure accordingly; and

• in order to mitigate the growing risk of collisions amongst satellites and orbital debris, it is necessary to identify and monitor space objects in an increasingly congested and contested orbital environment, in order to ensure the safety, security and sustainability of the space operations upon which there is are critical dependency.

1.4 The programme the Commission envisaged would aim to establish a SST capability in the EU with emphasis on:

• exploitation of existing sensors (optical and radar) to survey and track space objects;

• establishment and operation of a function to process and analyse SST data to support risk assessment involving collision avoidance in orbit and re-entry of objects into the Earth’s atmosphere; and

• setting up and operation of a SST function to support spacecraft operators and public authorities.

1.5 The Commission said that:

• the level of funding proposed for the SST support programme, €10 million (£8.34 million) per annum, was relatively modest and should be drawn from other programmes provided for in the MFF framework for 2014–20;

• it envisaged providing support and oversight for the development of services, but did not intend to invest in new SST sensors, relying upon the coordination of existing sensors, owned and operated by the Member States;

• those Member States wishing to participate in the programme would need to demonstrate ownership of SST sensors or capabilities and services and adequate resources to operate and deliver them and to provide a plan for engagement in the SST programme;

• it anticipated a coordinating role and funding for the EU Satellite Centre (EU SatCen) based in Torrejon, Spain; and

• information generated in the framework of the SST programme would be managed and exchanged in accordance with data security and governance rules, which would likely reflect similar existing measures developed by the EU SatCen for handling sensitive remote sensing data products.

1.6 When we last considered this matter, in May 2013, we heard that:


• negotiations on the proposed Decision were currently underway;

• the Presidency planned to update the May 2013 Competitiveness Council on progress; and

• there were a number of outstanding issues that still needed to be resolved, including funding of the proposal, data security and the role of the EU SatCen.

1.7 We noted this information, but said that before we would consider the proposal again we wanted a further account of progress in the negotiations on the various issues which had been drawn to our attention. Meanwhile the document remained under scrutiny.3

The Minister’s letter of 22 January 2014

1.8 The Minister for Universities and Science, Department for Business, Innovation and Skills (Mr David Willetts), tells us now that:

• no substantive negotiations on the draft Decision took place between June and November 2013;

• in November 2013 a redraft of the proposal emerged, presenting the SST support programme as a framework activity instead of a programme, with funding allocated rather than drawn from perceived beneficiary programmes including Galileo and Copernicus;

• an updated draft reflecting the framework nature of the programme was made available by the Presidency in December 2013;

• with the support of the Commission, the Greek Presidency has pushed for an agreement on the proposal within the current parliamentary period; and

• substantive negotiations were conducted at the Space Working Group on 10 January, with the Government negotiating team managing to secure significant improvements for the UK in redrafting the Commission’s draft text to reflect the Government’s major policy and security concerns.

1.9 The Minister continues that negotiations are now entering into the final phase, with informal trilogue discussions with the European Parliament and that he is updating us on progress and restating the Government’s general position. He encloses for us the most recent version of the Council draft text, but, since it is marked Limité, notes that we cannot report on it in any way which would bring detail contained in the text into the public domain.

1.10 The Minister tells us that:

• the Government continues to seek a solution wherein the EU SST support activity will be delivered by national entities comprising sensor and data centres, deriving SST information from observation data and releasing services in the form of

3 See headnote.


collision warning, in-orbit breakup detection, and re-entry estimation, and delivering services via the EU SatCen (which is currently performing a similar role for delivery of Earth observation services);

• it believes this operational approach enables it to address security concerns over release of sensitive orbit data and related information;

• its position on security and the respective roles of capable Member State entities is well aligned with the major SST players in the EU; and

• its biggest policy concern has related to previous references to the Internal Security Fund, of which the UK team has successfully negotiated deletion in the latest Council text, though references remain in the European Parliament text.

1.11 The Minister concludes that:

“As the House of Commons retains parliamentary scrutiny on this proposal, I am writing to bring you up to date on developments in case it is necessary to seek clearance from you at short notice.”

Conclusion

1.12 We have said previously that we wished to have an account of the progress in Council working group negotiations on the various issues which had been drawn to our attention. However, apart from the issue of the Internal Security Fund, we cannot discern clear enough information in the Minister’s letter about assured success on the other issues. So, if he is likely to want clearance from us at short notice, he needs to let us know soon where matters stand on:

• clarity on governance and management of the system in order to ensure that EU aspirations are practicable and deliverable;

• verification that the new functions proposed for the EU SatCen are compatible with its current competencies and capabilities;

• retention of Member State ownership of the overall EU SatCen product;

• robust data security; and

• a cap on programme expenditure.

1.13 In connection with the last point we are unclear as to what “presenting the SST support programme as a framework activity instead of a programme, with funding allocated rather than drawn from perceived beneficiary programmes including Galileo and Copernicus” means, particularly in relation to Multiannual Financial Framework limits.

1.14 In connection with the Minister’s comments about the limité status of the draft, we note that it represents an apparently significant development in the Council’s activity as a legislator. We observe that this secretive approach to considering legislation hardly enhances democratic legitimacy and refer the Minister to the comments we made last


week on the limité status of the Final draft of the Directive on the European Investigation Order.4 We ask the Government to convey this observation to the Presidency and the Commission and to report back to us.

1.15 In the meantime the document remains under scrutiny.

2 Establishing a Quality Framework for Traineeships

(35628) 17367/13 COM(13) 857 + ADDs 1–2

Draft Recommendation on a Quality Framework for Traineeships Commission staff working documents: Impact assessments

Legal base Articles 153, 166 and 292 TFEU; QMV Document originated 4 December 2013 Deposited in Parliament 10 December 2013 Department Business, Innovation and Skills Basis of consideration EM of 6 January 2014 Previous Committee Report None Discussion in Council Agreement expected in March 2014 Committee’s assessment Politically important Committee’s decision Not cleared; further information requested

Background

2.1 In recent months, we have reported on a number of EU initiatives which are intended to tackle high levels of youth unemployment. They include:

• a Commission Communication on Moving Youth into Employment which describes how EU cohesion funding can be used to reduce school drop-out rates, develop training and apprenticeship schemes, and encourage labour market mobility;5

• a Commission Communication on traineeships which recommends developing a quality framework to ensure that traineeships provide suitable learning content and adequate working conditions;6

4 See (33597) 18918/11: HC 83-xxviii (2013–14), Chapter 1 (22 January 2014).

5 See (34532) 17575/12: HC 86-xxxi (2012–13), chapter 4 (6 February 2013).



• a Commission Communication, Rethinking Education, which recommends reform of education and vocational training systems in order to match skills to labour market needs, increase productivity and boost growth and competitiveness;7

• a Council Recommendation establishing a Youth Guarantee, agreed in February 2013, which encourages Member States to ensure that all young people up to the age of 25 receive “a good quality offer of employment, continued education, an apprenticeship or traineeship within four months of becoming unemployed or leaving formal education”;8

• a Youth Employment Initiative establishing a dedicated source of EU funding (€6 billion for the period 2014–20) to support the implementation of the Youth Guarantee and other similar schemes in areas where the rate of youth unemployment exceeds 25%;9 and

• a draft Decision establishing a Network of Member States’ public employment services in order to improve the functioning and closer integration of labour markets across the EU, increase labour mobility, and help tackle social exclusion.10

2.2 All of these initiatives are intended to help Member States meet the headline targets on employment, school drop-out rates and social exclusion established as part of the Europe 2020 Strategy. They are also a response to alarming levels of youth unemployment in parts of the European Union. Data provided by Eurostat, the EU Statistical Office, for November 2013 indicate an unemployment rate of 23.6% for young people under the age of 25 across the EU as a whole (24.2% in the euro area) but disparities between Member States are significant. In Greece and Spain, the youth unemployment rate exceeds 50%. By contrast, the rate is lower than 10% in Austria and Germany.

2.3 Traineeships have become an important means of entering the labour market for young people. The Conclusions of the December 2012 European Council invited the Commission to accelerate work on a number of youth employment-related initiatives, including finalising a “quality framework for traineeships”. Before putting forward a proposal for EU action in the social policy field, the Commission is required to consult EU social partners (representative organisations of employers and trade unions) on the possible direction and content of any new initiative.11 Initial consultations revealed a diversity of views on the need for an EU initiative, its scope, form and the “quality” elements it should include.12 The Commission, however, considers that establishing an EU Quality Framework for Traineeships, based on a set of principles contained in a Council Recommendation, would improve the learning content of traineeships, help boost the employability of young people by developing relevant labour market skills and reduce youth unemployment, whilst also addressing concerns about the use of traineeships as a form of unpaid or precarious employment.

7 See (34435) 14871/12 + ADDs 1–8; HC 86-xxix (2012–13), chapter 3 (23 January 2013).


9 See (34677) 7589/13: HC 86-xxxviii (2012–13), chapter 1 (17 April 2013).

10 See (35104) 11474/13: HC 83-xii (2013–14), chapter 18 (17 July 2013).

11 See Article 154(2) and (3) of the Treaty on the Functioning of the European Union.

12 See (34533) 17578/12, reported in HC 86-xxxi (2012–13), chapter 4 (6 February 2013).


The draft Council Recommendation

2.4 In its explanatory memorandum accompanying the draft Recommendation, the Commission highlights two concerns:

• insufficient clarity as to the learning content of traineeships; and

• inadequate working conditions which can expose trainees to long working hours, uncertainty as to their legal status and entitlements, and poor or no remuneration.

2.5 These problems are compounded by a lack of transparency about the availability of traineeships, particularly in another Member State, which may impede mobility within the EU, and by significant differences in the way that traineeships are regulated in different Member States. The Commission suggests that a common understanding of what constitutes a traineeship, and the minimum standards that should apply, could help to shape Member States’ policies and regulatory approaches. The purpose of the draft Recommendation, therefore, is to establish guidelines for Member States that ensure “high-quality learning content and adequate working conditions” for traineeships.13 Compliance with the proposed Quality Framework would also serve as “an important reference point” for determining whether “a good quality offer” of a traineeship has been made under the recently agreed Youth Guarantee.

The main elements of the draft Recommendation

2.6 The draft Recommendation establishes a Quality Framework for so-called “open-market traineeships” which are agreed directly between a trainee and a traineeship provider and are intended to provide a period of work practice before taking up regular employment. The Framework would not apply to work experience placements that form part of academic or vocational study, or which are a mandatory component of professional training (for example, medicine).

2.7 The Quality Framework is based on the following principles:

• a written traineeship agreement setting out clear learning objectives, working conditions (including working time, holiday entitlement, sick leave arrangements), pay (if any), the duration of the traineeship and notice requirements;

• the provision of a certificate or letter of reference recognising the knowledge, skills and competences acquired;

• transparency in the terms and conditions of traineeships when advertised;

• active involvement of social partners in implementing the Quality Framework;

• encouragement for cross-border traineeships, including through greater use of the EURES network of national employment services to advertise traineeship vacancies in other Member States; and

13 See p.3 of the Commission’s explanatory memorandum accompanying the draft Recommendation.


• greater use of EU funding instruments for 2014–20 (the European Social Fund, the European Regional Development Fund and the Youth Employment Initiative) to increase the number and quality of traineeships.

2.8 The draft Recommendation urges Member States to ensure that a Quality Framework for Traineeships is in place by the end of 2014 and to promote the active involvement of employment services, educational institutions and training providers in implementing it.

2.9 Whilst the draft Recommendation is primarily directed towards Member States, it also notes the Commission’s intention to:

• monitor and report on the implementation of the Quality Framework;

• support exchanges of best practice and facilitate the use of EU funding by Member States;

• increase the availability of transnational traineeships under the EU’s Erasmus + programme; and

• set up a dedicated webpage on national legal frameworks for traineeships and include traineeships within the EURES network.

2.10 The draft Recommendation cites two substantive legal bases. Article 153 of the Treaty on the Functioning of the European Union (TFEU) concerns working conditions, social security and the social protection of workers (including measures to integrate those excluded from the labour market) and would apply to paid traineeships. Article 166 TFEU concerns vocational training and would cover unpaid traineeships.

2.11 The Commission considers that EU action is justified because training is an essential component of EU employment and educational policies and an integral part of the free movement of persons. It adds:

“In a situation of diverging regulatory frameworks it helps to have a common understanding of what a traineeship is and of its minimum standards.”14

2.12 The guidelines set out in the draft Recommendation would, it suggests,

• identify core quality standards for traineeships that should not differ fundamentally from one Member State to another;

• encourage mobility; and

• accelerate the process for defining and implementing internationally accepted quality standards, as requested by the European Council.

2.13 The Commission notes that Member States whose laws or practices already comply with the proposed Quality Framework would not be required to take further action and remain free to determine whether additional measures are needed at national level, particularly in relation to remuneration for traineeships.

14 See p.7 of the Commission’s explanatory memorandum accompanying the draft Recommendation.


The Government’s view

2.14 The Minister for Skills and Enterprise (Matthew Hancock) notes that the draft Recommendation is not legally binding and acknowledges that the EU has competence to act, but questions whether the EU has a legitimate role to play beyond facilitating policy exchange. He continues:

“It is the UK position that action should build on best practice rather than adopting this proposal. Individual Member States currently employ a variety of schemes that enable flexibility for both employers and young people. It is the UK view that it is both possible and preferable to develop quality standards for trainees at national level and that this proposal is unnecessary.”15

2.15 The Government therefore intends to oppose the adoption of the draft Recommendation, as drafted, not least because implementing the Quality Framework by means of domestic legislation or practice would place “extra bureaucratic and possible cost burdens on Government and employers”.16 He continues:

“The Recommendation calls on Member States to identify the public authority in charge of implementation, promote the active involvement of employment services, educational institutions, and training providers, and inform the Commission how the Framework has been implemented. It also asks Member States to promote the European network of Employment Services (EURES). All of this would require extra resource for little benefit to the UK government, employers, or young people.”

The Minister adds, however, that:

“other than the bureaucratic cost of opposing this Recommendation, there will be no cost to the UK.”17

2.16 The Minister suggests that the Quality Framework is unlikely to provide significant benefit for UK employers or young people for the following reasons:

• the majority of traineeships are already satisfactory, with Government efforts to improve the quality of internships and work experience focussed on better information and guidance for employers and young people;

• current UK schemes work because they can be tailored to individual need — a ‘one-size-fits-all’ approach may put off employers or young people;

• the number of traineeships may diminish, as was the case for internship vacancies advertised on the Graduate Talent Pool website following the introduction of a quality assurance process in October 2011. The Minister adds, however, that all vacancies now offer “genuine graduate and quality opportunities” and 98% are for paid positions; and

15 Para 23 of the Minister’s Explanatory Memorandum.




• setting the bar too high may lead employers to continue to offer ‘informal’ opportunities to those they know, excluding a wider talent pool.18

2.17 The Minister raises concerns about the scope of application of the draft Recommendation which, in turn, depends on the definition of a traineeship. He suggests that it would extend beyond ‘graduate internships’ to include any other form of work experience placement which is not part of formal education or a vocational course. As no age limit is specified, it would cover traineeships offered at any age or educational level. He suggests, however, that the English traineeships programme launched by the Department for Business, Innovation and Skills and the Department for Education in early 2013 would not fall within the scope of the draft Recommendation as the work experience element is part of a broader educational or vocational course.

2.18 Turning to the main ‘quality’ elements contained in the draft Recommendation, the Minister notes that the proposed requirement for a written traineeship agreement would formalise the relationship between the trainee and training provider. It would not necessarily constitute an employment contract under UK law but “could have an impact on the employment status of the trainee”.19

2.19 In conclusion, the Minister considers that the draft Recommendation would have:

“a disproportionate negative impact on employers offering ‘quality’ traineeships, compared to the potential positive improvements on employers offering ‘substandard’ traineeships, who are the real issue here.”20

2.20 He points to evidence in the Commission’s own Impact Assessment indicating that the majority of employers offering traineeships already comply with the quality elements set out in the draft Recommendation and suggests that:

“rather than driving changes in the quality of traineeships, this policy is likely to simply increase administrative burdens faced by business that already offer quality traineeships.”21

2.21 The Minister questions how the draft Recommendation would “change the incentive structure” for the relatively small number of employers offering sub-standard traineeships and highlights the recommendation contained in the Cut EU Red Tape report produced by the Prime Minister’s Business Taskforce on EU Regulation which stated in relation to traineeships that:

“Any Commission action should build on best practice and not resort to legislative proposals. It should also reflect the fact that individual Member States need a variety of schemes that can be flexible to young people and employers’ needs.”22





22 Paras 37 and 39 of the Minister’s Explanatory Memorandum.


2.22 The Minister expects the draft Recommendation to be put forward for adoption by the Council in March as measures to tackle youth unemployment are a priority for the Greek Presidency.

Conclusion

2.23 The Minister appears to see little value in this initiative, which responds to European Council Conclusions for rapid progress in establishing a quality framework for traineeships. We ask the Minister to explain how the framework proposed in the draft Recommendation differs from the outcome anticipated by the Government in agreeing, by consensus, the European Council Conclusions.

2.24 The Minister draws on the UK’s experience of introducing a ‘quality assurance process’ for internships advertised on the Graduate Talent Pool website, noting that it led to a reduction in the pool of available internships but enhanced the quality of the offer. We infer that a similar outcome might be expected if the UK were to implement the Quality Framework proposed in the draft Recommendation, but the Minister does not tell us whether he considers the trade-off between quantity and quality to be beneficial or harmful for trainees, employers and the wider economy. We ask him to do so.

2.25 We also ask the Minister to explain the basis for his concerns regarding the scope of the draft Recommendation. Does the Government consider that there should be different quality standards for graduate internships and other types of traineeships?

2.26 The Minister suggests a degree of uncertainty as to the status of written traineeship agreements under UK employment law. We ask him to clarify whether the Government has particular legal or policy objections to specifying the main elements of a traineeship in a written agreement.

2.27 The Minister expresses concern that the draft Recommendation would be excessively burdensome for, and have “a disproportionate negative impact” on, employers already offering ‘quality’ traineeships while offering few incentives to those offering ‘sub-standard’ traineeships. The Minister does not explain why this should be the case, or how the quality standards proposed in the draft Recommendation differ from those already in place for the majority of traineeships in the UK deemed to be satisfactory. Without this information, we do not see how the Government is in a position to assess compliance costs for employers. Nor is the Government’s position on costs and burdens easy to reconcile with the Minister’s statement that “other than the bureaucratic cost of opposing this Recommendation, there will be no cost to the UK”.23 We ask the Minister for a clearer indication of the expected compliance costs for employers set against the potential gains for trainees.

2.28 Finally, the Minister highlights the outcome of the Prime Minister’s Business Taskforce on EU Regulation which recommended that any action proposed by the Commission “should build on best practice and not resort to legislative proposals”. As



the draft Recommendation is a non-legislative, non-binding measure, we ask the Minister how he considers that the demand of the European Council for a quality framework for traineeships could be accomplished by less intrusive EU action. Meanwhile, the draft Recommendation remains under scrutiny.

3 A Statute for a European Foundation

(33687) 6580/12 + ADDs 1– 2 COM(12) 35

Draft Regulation on the Statute for a European Foundation

Legal base Article 352 TFEU; unanimity; consent Department Cabinet Office Basis of consideration Minister’s letter of 9 January 2014 Previous Committee Reports HC 83-viii (2013–14), chapter 4 (3 July 2013) and

HC 86-iii (2012–13), chapter 6 (23 May 2012) Discussion in Council Not known Committee’s assessment Legally important Committee’s decision Not cleared; further information requested

Background and previous scrutiny

3.1 We set out the full background to the proposal, a detailed account of its provisions and the Government’s initial view in our first Report.24

3.2 To recap, the Commission, which states that foundations with a public benefit purpose play an important role in the social agenda of the internal market and development of core EU “values and objectives”, wishes to make it easier for them to operate across national borders, in particular, to fund cross-border operations and reduce cost and administrative burdens arising from diversity in national legal and fiscal frameworks.

3.3 The Commission’s solution is the creation of a European Foundation (FE). This new legal form is intended to add to rather than supplant existing national legal forms. Under the proposed Regulation an FE would be an entity with a public benefit purpose and an exhaustive list of public benefit purposes is set out in the Regulation. FEs would have legal personality and full legal capacity in all Member States, subject to specified qualifying conditions.

3.4 In our last Report,25 we reported on the letter of 12 June 2013 which we had received, after some delay, from the Minister for Civil Society at the Cabinet Office (Nick Hurd),

24 See headnote: HC 86-iii (2012–13), chapter 6 (23 May 2012).


updating us on progress in negotiations and providing responses where possible to the questions we raised in our first Report.26

3.5 The areas covered by the Minister in that letter included the lack of progress in the negotiations of the proposal, the differences between Member States as the regulation of “public benefit” organisations (including their definition and tax treatment), the two-tiered system of regulation that would result from FEs having their own definition, the lack of Member State support for creating a new pan-European structure, the difficulties inherent in the tax elements of the proposal, the UK’s objections to the use of Article 352 TFEU as a legal base, changes to UK legal, tax and supervisory frameworks required to implement the proposed Regulation, the difficulties of assessing the costs of those changes, the feasibility of the Charitable Incorporated Organisation as an alternative to the FE and the potential abuse of the proposed FE framework for tax purposes.

3.6 In response, we asked the Minister to keep us more regularly informed in future, given the document’s potential to have a significant effect on domestic charity and tax law and policy. We kept the document under scrutiny.

Minister’s Letter of 9 January 2014

3.7 The Minister reminds us that as the proposal is based on Article 352 TFEU it would require unanimous agreement in Council and approval by way of an Act of Parliament under section 8 of the European Union Act 2011. He also says that:

“The tax elements of the FE proposal were widely considered to go beyond the existing non-discrimination principles set out in EU law with which the UK Government complies. The inclusion of tax elements meant that negotiations on the FE had stalled, with little prospect of further progress whilst tax remained on the table. Last month, the Permanent Representatives Committee agreed almost unanimously to remove all references to tax from the FE proposal.

“The inclusion of tax was one of our main objections to the FE proposal, and we welcome the removal of all of the tax provisions. However, we continue to doubt whether the proposed Regulation is necessary or proportionate. Tax law barriers or restrictions for foreign foundations and their donors were cited as one of the justifications for action at a European which the FE proposal will not now address. Other European legal structures have failed to live up to their promise. The European Cooperative Society (SCE) has been available since 2006 and yet fewer than 50 have been set up.

“We remain concerned that the additional costs involved in regulating FEs are difficult to justify at a time when UK regulators are facing reduced resources. The National Audit Office, in its recent report on the regulatory effectiveness of the Charity Commission for England and Wales27 recommended that the Cabinet Office

25 See headnote: HC 83-viii (2013–14), chapter 4 (3 July 2013).

26 See footnote 24.

27 National Audit Office, The regulatory effectiveness of the Charity Commission, (2013–14), HC 813, 4 December 2013.


help the Commission focus on its core regulatory functions by removing or reducing those activities that add little regulatory value.”

3.8 The Minister ends his letter with a commitment to continue to engage in the negotiations and to keep us informed of progress, particularly should it appear that the proposal, stripped of its tax provisions, attracts more support from Member States.

Conclusion

3.9 We thank the Minister for his update and in particular the welcome news about the removal of the tax elements of the proposal.

3.10 When the Minister next updates us, we would be interested to learn:

i) whether the Government has been able to assess more precisely the costs of implementing the proposal in its current form and, if so, the outcome of such an assessment; and

ii) what are the EU core “values and objectives” that would be covered by a European Foundation.

3.11 Pending that next update, the document remains under scrutiny.

4 National Emissions Ceilings

(35693) 18167/13 + ADDs 1–7 COM(13) 920

Draft Directive on the reduction of national emissions of certain atmospheric pollutants and amending Directive 2003/35/EC

Legal base Article 192(1) TFEU; co-decision; QMV Document originated 18 December 2013 Deposited in Parliament 31 December 2013 Department Environment, Food and Rural Affairs Basis of consideration EM of 14 January 2014 Previous Committee Report None Discussion in Council See para 4.7 below Committee’s assessment Politically important Committee’s decision Not cleared; further information awaited


Background

4.1 We have commented elsewhere in this Report on a Commission Communication28 setting out a Clean Air Programme for Europe against a background where the EU’s air quality standards lag behind those of other developed nations and compliance has proved challenging. In particular, the Communication noted that, in order to reduce air pollution and its adverse effects on health and the environment across the EU, and to comply with the provisions of the Gothenburg Protocol to the Convention on Long-range Transboundary Air Pollution (CLRTAP), the National Emissions Ceilings Directive (2001/81/EEC) had required Member States to establish national programmes and emissions inventories to limit their emissions of the main pollutants from 2010 onwards. However, although these had given rise to reductions of 82% for sulphur dioxide, 47% for nitrogen oxides, 56% for non-methane volatile organic compounds, and 28% for ammonia between 1990 and 2010, there were still significant adverse health and environmental impacts. In view of this, the Commission said that it intended to propose a revision to the Directive extending the policy horizon to 2030.

The current proposal

4.2 It has accordingly put forward this draft Directive, which seeks to address the remaining health and environmental impacts, and to align EU law with the Union’s new international commitments arising from an amendment to the Gothenburg Protocol adopted in 2012. The new Directive would repeal and replace Directive 2001/81/EC, and, in addition to laying down more detailed conditions for national plans and inventories, it sets out new national emission reduction commitments, to be met by 2020 and beyond. In particular, it sets new ceilings to apply from 2020 and 2030 for sulphur dioxide, nitrogen oxides, non-methane volatile organic compounds (NMVOC), ammonia and fine particulate matter (P2.5), as well as a ceiling for methane for 2030, and also lays down measures to be taken to control emissions of ammonia from agriculture and black carbon (a component of particulate matter, which is a short lived climate pollutant).

4.3 The percentage reductions which this would imply for the EU as a whole and for the UK, as compared with 2005, are as follows:

Sulphur dioxide

Nitrogen oxides

NMVOC Ammonia Particulates Methane

2020-2029

2030+ 2020-2029

2030+ 2020-2029

2030+ 2020-2029

2030+ 2020-2029

2030+ 2030+

EU 59% 81% 42% 69% 28% 50% 6% 27% 22% 51% 33%

UK 59% 84% 55% 73% 32% 49% 8% 21% 30% 47% 41%

4.4 The ceilings for 2020 would reflect the reduction commitments which the EU and UK have agreed as part of the recent amendment to the Gothenburg Protocol, in addition to which Member States would be required to limit their annual emissions of these pollutants in 2025 to levels consistent with a linear trajectory between 2020 and 2030, unless this

28 (35690) 18155/13: see chapter 13 of this Report.


would require measures entailing disproportionate costs. However, Member States would be able to offset against these targets emissions of sulphur dioxide, nitrogen oxides and particulate matter from international shipping within their economic zone, to implement jointly their reduction commitments for methane, and to propose adjusted emission inventories in the light of improved inventory methodology.

4.5 The proposed Directive also seeks to address some of the perceived shortcomings in the implementation of the current National Emission Ceilings Directive by providing for Member States to adopt, implement and regularly update national air pollution control programmes describing how their ceilings will be met, and to provide for enhanced co-ordination between emission reductions and air quality as well as climate change and biodiversity protection.


4.6 In his Explanatory Memorandum of 14 January 2014, the Parliamentary Under- Secretary of State at the Department for Environment, Food and Rural Affairs (Dan Rogerson) says that the proposed ceilings for 2020 reflect the reduction commitments which the UK has agreed to as part of the amendment to the Gothenburg Protocol and therefore can be supported. However, it is concerned to ensure that the ceilings for 2030 are realistic and deliverable at reasonable costs, and will therefore scrutinise carefully the ambition level and the limits in the proposal and consider their implications for different economic sectors, including industry, transport, energy and agriculture, as well as their potential to deliver benefits for the natural environment and human health and to assist in meeting commitments on biodiversity.

4.7 The Government also has concerns about the inclusion of methane in the proposed Directive as this is currently regulated as a greenhouse gas under the Climate Change Act 2008 and international legislation: and, although it supports greater co-ordination between emission reductions and air quality as well as climate change and biodiversity protection, it will scrutinise the proposals closely to ensure they will genuinely enhance implementation of the ceilings and do not create a significant new administrative burden for Member States or increase the complexity of the Directive.

4.8 As we have noted in connection with the over-arching Clean Air Programme, the Commission has published an Impact Assessment relating to the package as a whole, but this does not identify the effect of the individual measures within the package, or their impact on the UK. We understand that the Government will be undertaking its own analysis of the likely risks, costs and benefits of the proposals, including the impacts on business, human health and environmental issues such as biodiversity, the expectation being that it will provide the first such analysis by Easter 2014. We have also noted that the package will now be considered by the Council and the European Parliament, but that this process may take one to three years.

Conclusion

4.9 As we have noted, this proposal is part of a wider package of measures to reduce air pollution within the EU, but it is an important instrument in its own right, which we


think it right to draw to the attention of the House. It is also clear that it gives rise to a number of issues requiring further consideration by the Government, including an estimate of the likely benefits and costs within the UK, on which the Government has promised to provide information. We are therefore retaining the document under scrutiny, pending receipt of that indication and any further developments in Brussels.

5 Atmospheric emissions from medium combustion plants

(35694) 18170/13 + ADDs 1–7 COM(13) 919

Draft Directive on the limitation of emissions of certain pollutants into the air from medium combustion plants

Legal base Article 192(1) TFEU: co-decision; QMV Document originated 18 December 2013 Deposited in Parliament 31 December 2013 Department Environment, Food and Rural Affairs Basis of consideration EM of 14 January 2014 Previous Committee Report None Discussion in Council See para 5.4 below Committee’s assessment Politically important Committee’s decision Not cleared; further information awaited

Background

5.1 We have commented elsewhere in this Report on a Commission Communication29 setting out a Clean Air Programme for Europe against a background where the EU’s air quality standards lag behind those of other developed nations and compliance has proved challenging. In view of this, the Communication set out a number of measures which the EU could take both in the short term and in the medium to long term to address these issues, noting in the latter case that, although support through targeted EU source controls makes a significant contribution to reducing emissions, there is a significant gap concerning emissions from combustion plants. In particular, although small plants are covered by the Eco-design Directive (2009/125/EC), and large plants by the Industrial Emissions Directive (2010/75/EU), there are no corresponding provisions applying to installations with a thermal capacity between one and 50 MW.

29 See (35690) 18155/13: chapter 13 of this Report.


5.2 The Commission has therefore put forward this draft Directive30 to limit the emission of certain pollutants (notably nitrogen oxides, sulphur dioxide and particulate matter) from medium combustion plants through appropriate limit values,. These would be in line with those set in Directive 2010/75/EU for plants between 50 and 100 MW, although Member States would be able to apply stricter controls in zones which do not comply with EU air quality limit values, unless this would entail disproportionate costs. The Directive would apply from 1 January 2025 to existing plant (ie. that already in operation up to one year before the measures are transposed) with a rated thermal input greater than 5 MW, and from 1 January 2030 to that with a rated input between one and 5 MW, whilst it would apply immediately to plant put into operation after the transposition date. Also, there would be a number of mitigation measures in order to avoid a significant impact on small and medium-sized enterprises (SMEs), in which most medium combustion plants are located. Thus, they would not require a permit, but would need instead to notify the operation of the plant to the competent authorities to ensure registration, and they would be subject to simplified monitoring and reporting requirements.


5.3 In his Explanatory Memorandum of 14 January 2014, the Parliamentary Under- Secretary of State at the Department for Environment, Food and Rural Affairs (Dan Rogerson) notes that the proposal seeks to bridge the gap between small and large combustion plants, and says that, whilst supportive of EU measures to achieve emission reductions commitments, the Government will wish to ensure that the proposed measure is proportionate and does not result in excessive administrative burdens for operators (many of which will be SMEs) and enforcement authorities. He also observes that the UK currently regulates combustion plants with a rated thermal input of 20 MW and above and controls emissions from smaller plants under the Clean Air Act 1993, and that there is therefore a need to consider how the Commission’s proposals would impact on that regime.

5.4 As we have noted in connection with the over-arching Clean Air Programme, the Commission has published an Impact Assessment relating to the package as a whole, but this does not identify the effect of the individual measures within the package, or their impact on the UK. We understand that the Government will be undertaking its own analysis of the likely risks, costs and benefits of the proposals, including the impacts on business, human health and environmental issues such as biodiversity, the expectation being that it will provide the first such analysis by Easter 2014. We have also noted that the package will now be considered by the Council and the European Parliament, but that this process may take one to three years.

Conclusion

5.5 As we have noted, this proposal is part of a wider package of measures to reduce air pollution within the EU, but it is an important instrument in its own right, which we

30 (35694) 18170/13.


think it right to draw to the attention of the House. It is also clear that it gives rise to a number of issues requiring further consideration by the Government, including an estimate of the likely benefits and costs within the UK, on which the Government has promised to provide information. We are therefore retaining the document under scrutiny, pending receipt of that indication and any further developments in Brussels.

6 EU regulation on novel foods

(35695) 18171/13 COM(13) 894

Draft Regulation on novel foods

Legal base Article 114 TFEU; co-decision; QMV Document originated 18 December 2013 Deposited in Parliament 31 December 2013 Department Food Standards Agency Basis of consideration EM of 15 January 2014 Previous Committee Report None (but see para 6.2 below) Discussion in Council See para 6.6 below Committee’s assessment Politically important Committee’s decision Not cleared; further information requested

Background

6.1 For the purposes of EU legislation, “novel foods” are defined as all foods or food ingredients which have not been consumed in the Union to a significant degree before 15 May 1997, and they are currently subject to the provisions of Regulation (EC) No. 258/97 (which, among other things, requires a mandatory pre-market authorisation before such a food can be placed on the market).

6.2 In 2008, the Commission put forward a proposal to replace and repeal Regulation (EC) No. 258/97, and to streamline the authorisation procedure, but the subsequent negotiations broke down in 2011 without agreement between the Council and the European Parliament, notably over the inclusion of provisions on cloned animals. However, the controls over the cloning of farmed animals and the regulation of food from such animals has recently been the subject of separate proposals,31 which we reported to the House on 22 January 2014, and the Commission has now put forward this new proposal for an amended Novel Foods Regulation which excludes any reference to cloned animals.

31 see (35688) 18152/13 and (35689) 18153/13: HC 83-xxviii (2013–14), chapter 3 (22 January 2014).


The current proposal

6.3 Apart from that exclusion, the proposal is broadly similar to the 2008 text, its main purpose being to introduce a centralised authorisation procedure in place of the current system, which requires an initial assessment to be carried out by a single Member State, which is then sent to all other Member States for comment — a process which takes a significant period of time, particularly as most dossiers are later referred to European Food Safety Authority (EFSA) for safety assessment on any concerns raised. The proposed centralised process, which is intended to be more efficient and to result in a streamlined procedure, would require applications to be submitted to the Commission, with any opinion it requests from the EFSA being submitted to the Member States and the applicant as well: and, within nine-months of receiving that opinion, the Commission must submit to a draft implementing act to the Standing Committee on the Food Chain and Animal Health (where it would be subject to the procedures laid down in Regulation (EU) No. 182/2011).

6.4 The proposal would also introduce the following additional changes:

Simplified safety assessment of traditional food from third countries

At present, foods widely consumed elsewhere in the world have to undergo the same lengthy procedures as completely innovative products. The proposal will enable traditional foods, from primary production, to gain an authorisation relatively quickly if applicants are able to demonstrate a history of safe use outside the EU for at least 25 years.

Application to relevant new food technologies

The current provisions have, on occasions, been found to be ambiguous in their application to new technologies, such as nanotechnology, and the proposal will ensure that those not previously used in the food chain will require a pre-market safety evaluation.

Relation to legislation on specific food categories

Developments in EU legislation since 1997 have resulted in parallel authorisation procedures being established for ingredients in certain categories of food such as food supplements and medical foods. As a result, a new ingredient can require multiple authorisations before it can be placed on the market, and the proposal aims to minimise such overlaps.

Data Protection

Under the new proposal, applicants who have invested in new data to demonstrate the suitability of their product can seek a limited (five-year) period of data protection, whereby, if authorisation is granted, the applicant would be given the sole right to market the product during this period, thus providing an incentive for companies to invest in the development of new ingredients. Other operators could


apply for authorisation during the five-year period, but they would have to provide their own safety data.


6.5 In her Explanatory Memorandum of 15 January 2014, the Parliamentary Under Secretary of State for Public Health (Jane Ellison) says that the proposal is welcome as it updates the existing novel foods regulation, in order to align it with other food legislation and to clarify its scope. In particular, so long as the new authorisation procedure maintains the level of consumer protection provided by the current procedure and is equally transparent, she welcomes its increased efficiency in reducing the costs to applicants and the time needed to obtain an authorisation.

6.6 The Minister says that the proposal will be subject to separate consultations in England, Scotland, Wales and Northern Ireland, which are likely to begin early in February 2014, with an analysis of responses received being submitted in due course, and that, in the meantime, discussions at Council Working Group level are expected to begin in the next few weeks under the Greek Presidency. She also notes that the Commission has suggested that the European Economic and Social Committee should be consulted; that progress is likely to be linked to the two parallel proposals on animal cloning and on food from cloned animals; and that, given the impending European Parliament elections and the appointment of a new Commission, only limited progress is expected before September 2014.

Conclusion

6.7 The previous proposal in 2008 to amend the Novel Foods Regulation gave rise to a number of contentious issues relating to animal cloning. Whilst the current proposal appears more straightforward, we note that it is to be subject to separate consultations in England, Scotland, Wales and Northern Ireland, and that discussions at Council Working Group level are expected to begin shortly. We ask the Government to keep us informed of the outcome of those consultations and discussions, and in particular whether any suggestion emerges that the draft Regulation could result in a degree of competence creep. In the meantime, we are holding the document under scrutiny.


7 The EU and the Gulf of Guinea

(35684) 18099/13 JOIN(13) 31

Joint Communication: Elements for the EU’s Strategic Response to the Challenges in the Gulf of Guinea

Legal base — Document originated 18 December 2013 Deposited in Parliament 23 December 2013 Department Foreign and Commonwealth Office Basis of consideration EM of 21 January 2014 Previous Committee Report None; but see (35595) — and (35696) 17859/13: HC

83-xxvi (2013–14), chapter 9 (8 January 2014) Discussion in Council 10 February 2014 Foreign Affairs Council Committee’s assessment Politically important Committee’s decision Not cleared; further information requested

Background

7.1 In its Executive Summary, the Commission/European External Action Service (EEAS) note that States bordering the Gulf of Guinea coastline face many of the challenges familiar to countries throughout Africa. But the recent growth in threats emanating from the lack of control over coastal waters and access and security along the coast itself pose a particular challenge to the states of the region. The consequences include growth in criminal and terrorist activity, which also pose a growing threat to the EU.

The Joint Commission/High Representative Communication

7.2 The geographic scope of this Joint Communication spans a 6,000 kilometre coastline, from Senegal to Angola, and including the islands of Cape Verde and Sao Tome and Principe, covering two geographical, political and economic regions: the Economic Community of West African States (ECOWAS) and the Economic Community of Central African States (ECCAS), both of which are affiliated to the Gulf of Guinea Commission (GGC) and the African Union (AU).

7.3 The Joint Communication reviews the overall scale of the threat, the risks that it poses to the coastal states and the EU, and the potential actions that the EU, with the international community, could take to help those states tackle the problem.

Threats

7.4 The Commission/EEAS posit three distinct types of threat:


— those that take place uniquely at sea, including illegal fishing, illicit dumping of waste, and piracy and armed robbery at sea;32

— those that come from sea on to land, primarily trafficking of narcotics, arms, counterfeit goods and, often in the other direction, of human beings; and

— threats to sea-based economic activity from land, particularly to the offshore oil and gas industry, including hostage-taking, theft (“bunkering”), and criminal acts in ports.

Unchecked, these threats will grow to the extent that both local and international interests will be damaged.

Shared African and European interests

7.5 The Commission/EEAS note the following major interests that EU and the countries of the region have in common:

— a long coast line, rich in resources that are crucial both for local employment and consumption, and for trade with Europe;

— the sustainability of all maritime resources, including fisheries: a key concern for local communities as well as European customers;

— secure global shipping lanes, for commerce and trouble-free fishing;

— a significant proportion of EU energy supplies come from this region, and both investors and workers should be safeguarded from physical attack; and

— narcotics and other illegal goods trafficked along the coast and across land borders are increasingly damaging local communities and fuel problems in Europe.

7.6 The EU’s overriding objective should therefore be to help the states of the region — many of them very fragile — to achieve peace, security and prosperity through the successful and legitimate development of their economies and their institutions, in line with both the African Peace and Security Architecture (APSA) and overall EU policy; building political consensus, enabling and respecting African ownership and synchronising existing programmes in a comprehensive approach to regional development and security. The Commission/EEAS argue that experience elsewhere in Africa, particularly in the Horn of Africa, the Sahel and the Great Lakes, suggests that early preventive action, in close coordination with the countries of the region and African regional bodies, is much more cost-effective than a later cure; that experience having also demonstrated the value of integrating all aspects for greater cumulative effect; political, good-governance/anti-corruption, security, institutional, economic, and development.

32 The Commission/EEAS note that International law differentiates between “piracy” — incidents which take place in

international waters — and “armed robbery at sea” — incidents which take place in territorial waters.


Response

7.7 The Commission/EEAS suggest that the EU can mitigate these risks by helping states to strengthen the rule of law and effective governance across the region, including through improvements in maritime administration, law enforcement activity by the police, navy, military, coastguard, customs and immigration services.

7.8 As maritime boundaries are still not fully delineated, inherently hard to police and entirely permeable, strengthening cooperation between the coastal states and nascent regional coordination mechanisms is seen as an essential starting point. The EU can also support countries in the region to deliver on their international obligations as flag and coastal states.

7.9 The Commission/EEAS accordingly propose that the EU, including its institutions, Delegations and Member States working in coordination with other international organisations and local partners, adopt a comprehensive approach focusing on four specific objectives:

— building a common understanding of the scale of the threat and the need to address it among the countries in the region and the international community;

— helping governments of the region build robust institutions, maritime administrations and capabilities to ensure maritime awareness, security and the rule of law along the coast;

— supporting prosperous economies in this region in line with national and regional development strategies, to create employment and assist vulnerable communities to build resilience and resist criminal or violent activities; and

— strengthening cooperation structures between the countries of the region and the regional organisations to take the necessary actions to mitigate the threats at sea and on land.

7.10 In his Explanatory Memorandum of 21 January 2014, the Minister for Europe (Mr David Lidington) says that (the Joint Communication having been published on 18 December): Member States were consulted in the first half of 2013 and Member States, including France and Germany, contributed non-papers to influence the content; the UK “was heavily involved and influenced both the document and the non-papers which fed into it”; but “did not see any recent versions of this over the last few months ahead of this version of the document being circulated by the EU”. Looking ahead, the Minister says that the Joint Communication will be now be discussed at COAFR and other relevant working groups, as decided at the Political and Security Committee (PSC)33 on 21 January; following which it will become a Strategic Framework and be presented to the 10 February Foreign Affairs Council for Council decision.

33 The committee of ambassador-level officials from national delegations who, by virtue of article 38 TEU, under the

authority of the High Representative for Foreign Affairs and Security Policy (HR) and the Council, monitor the international situation in areas covered by the CFSP and exercise political control and strategic direction of crisis management operations, as set out in article 43 TEU. The chair is nominated by the HR.



7.11 The Minister describes tackling maritime criminality in the Gulf of Guinea as a UK priority:

“The region is increasingly important for international trade and energy security. Criminality poses direct and indirect security implications for the UK and EU: the region is becoming an increasingly-used route for narcotics trafficking to Europe and for illegal migration and human trafficking; weapons trafficking is contributing to violent crime and instability in the region which in turn increases the threat of international terrorism; and armed attacks against ships, including piracy, present a risk to shipping operating in the region affecting UK flagged vessels, companies and seafarers. These attacks are an added obstacle to the increasing offshore oil industry and trade hindering economic development in the region. Furthermore, illegal, unreported and unregulated fishing has significant food security, stability and migration implications for the States in West and Central Africa, the UK and EU.”

7.12 The Minister says that the UK is working proactively with the region to tackle these threats:

“We have adopted a tailored approach, learning the lessons from piracy off the coast of Somalia while recognising that the different and varied threats in the Gulf of Guinea and the greater levels of regional capacity in the region necessitate a distinct response.”

7.13 The Minister then notes that the UK maritime security strategy for the Gulf of Guinea “identifies the importance of a holistic approach” to tackling maritime criminality:

“We have focused on working across the region on threats, developing synergies with other workstreams to tackle transnational organised crime, and linking to other efforts promoting good governance and economic development. Our approach is based on supporting an African-led response, capacity building work which builds on existing initiatives, sustainable solutions and working in coordination with international partners to avoid duplication. In particular, we have established an informal technical level coordination group of international partners engaged in maritime capacity building efforts in the region: the G8++ Friends of the Gulf of Guinea (FOGG). We are working in partnership with regional States to provide training and expertise for example through training facilities in Sierra Leone and Nigeria and the provision of expertise to Sao Tome and Principe to develop a national maritime strategy. We are also working through international organisations to deliver judicial reform and encourage a multiagency approach by supporting the International Maritime Organization (IMO) and UN Office of Drugs and Crime (UNODC) programmes in the region.”

7.14 The Minister then notes that:

— a number of European partners engaged in capacity building work in West and Central Africa;


— the EU is also running various workstreams and projects relating to maritime security and capacity building work in the region (e.g., the Critical Maritime Routes for the Gulf of Guinea technical capacity building project in seven States across the region); projects to develop fisheries and tackle Illegal, Unregulated and Unreported fishing; African development programme and work to tackle transnational organised crime;

— the EU was also instrumental in work to tackle piracy off the coast of Somalia; and

— several member States are looking for the EU to become more engaged with counter piracy work in West Africa.

7.15 However, there is currently no agreed maritime strategy setting out a comprehensive approach to EU activities in this region which is limiting the effectiveness of EU programmes — hence the Joint Communication.

7.16 The Minister continues his comments thus:

“The Comprehensive Approach is a UK priority and we particularly welcomed the importance placed on this approach in Baroness Ashton’s recent review of the EEAS.34

“This approach will look to coordinate the EU activities to work in coordination and complement existing initiatives and workstreams, which would ensure the EU contribution to capacity building efforts is effective. The analysis, conclusions and broad actions proposed in the Joint Communication are in line with UK objectives and we are content with these as a basis for the Strategic Framework. We endorse the principles outlined in the document, namely African leadership, building sustainable solutions, taking a holistic approach, tackling maritime criminality on land, working with existing initiatives and coordinating with international partners to avoid duplication. The Minister endorses the four principal objectives (building a common understanding of the scale of the threat and enhancing regional public messaging; helping regional governments build capacity to ensure security and rule of law; supporting development in the; and strengthening cooperation structures between regional countries and organisations and the international community: c.f. paragraph 7.8 above).

7.17 With regard to the discussions at the PSC on 21 January and COAFR on 22 January, the Minister says that he will press for further revisions to ensure that the final Strategic Framework addresses his outstanding, “albeit relatively minor”, concerns, which he says relate to some of the content of the analysis, rather than the proposed areas for action:

• “The paper separates the maritime threats into sections. We think this is somewhat arbitrary given the linked nature of the threats and is inconsistent with the holistic approach advocated in the paper;

34 For the Committee’s consideration of the EU Comprehensive Approach, see (35595) — and (35696) 17859/13: HC 83-

xxvi (2013–14), chapter 9 (8 January 2014) at headnote. And for its consideration of the HR’s review of the EEAS, see (35271) —: HC 83-xxi (2013–14), chapter 4 (20 November 2013).


• “The document suggests there is potential for kidnapping attacks to develop into a piracy business model similar to that seen in Somalia. There is no evidence to support this assertion. Indeed, there are significant differences with Somali-based piracy particularly the lack of governance and capability in East Africa. We will seek to address this factual inaccuracy in the paper. Other Member States share our analysis;

• “Greater emphasis should be given in the Strategic Framework to encouraging the implementation of the priorities outlined in the ‘Code of Conduct Concerning the Prevention and Repression of Piracy, Armed Robbery against Ships and Illegal Maritime Activities in West and Central Africa’ which was adopted by Gulf of Guinea Heads of State in Yaoundé on 24–25 June 2013.

• “The communication is not specific about linkages with the EU Horn of Africa35 and EU Sahel36 strategies, nor lessons learned in these regions. It is important to understand how the Gulf of Guinea strategy will affect maritime resources and policy making attention in the Horn of Africa. It would also be useful for the document to discuss whether proliferation and trafficking through the Sahel is fuelling extremism and violence in the Gulf of Guinea.”

7.18 The Minister says: “We will strengthen these areas through discussions at the COAFR Working Group on 22 January ahead of the Council Conclusions on 10 or 23 February and thereafter”.

Conclusion

7.19 We understand that the timescale for further discussion is in fact somewhat more elastic, and that the only actual deadline is agreement on the Strategy prior to the 2–3 April Africa-EU Summit.

7.20 We should therefore be grateful if the Minister would write to us once this document has been finalised, outlining the changes that have been made and his views thereon, and prior to its adoption as the new Strategy.

7.21 In the meantime, we shall retain the document under scrutiny.

35 Set out at the Annex to the 14 November 2011 Council Conclusions on the Horn of Africa, which are available at

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/126052.pdf.

36 Available at http://www.eeas.europa.eu/africa/docs/sahel_strategy_en.pdf.


8 Financial services: payment services

(a) (35250) 12990/13 + ADDs 1, 3–4 COM(13) 547 (b) (35251) 12991/1/13 + ADDs 1–3 COM(13) 550 (c) (35276) 13425/13 COM(13) 549

Draft Directive on payment services in the internal market and amending Directives 2002/65/EC, 2013/36/EU and 2009/110/EC and repealing Directive 2007/64/EC Draft Regulation on interchange fees for card-based payment transactions Commission Report on the application of Directive 2007/64/EC on payment services in the internal market and on Regulation (EC) No. 924/2009 on cross-border payments in the Community

Legal base (a)–(b) Article 114 TFEU; co-decision; QMV

(c) — Department HM Treasury Basis of consideration Minister’s letter of 19 January 2014 Previous Committee Report HC 83-xvi (2013–14), chapter 10 (9 October 2013) Discussion in Council Not known Committee’s assessment Politically important Committee’s decision (a)–(b) Not cleared; further information requested

(c) Cleared

Background

8.1 Cross-border electronic payments are becoming increasingly common for individuals and businesses alike. There have been EU efforts, in connection with the single market, to facilitate such payments, most notably through development of the Single Euro Payments Area (SEPA). SEPA is based on the premise that there should be no distinction between cross-border and domestic electronic retail payments in euros across the EU. The project covers key retail payment instruments — credit transfers, direct debits and payment cards.

8.2 There is also the Payments Services Directive, Directive 2007/64/EC, (PSD) aimed at enhancing competition and transparency in the payments industry across the EU and ensuring that the level of consumer protection is sufficient and harmonised.

8.3 In January 2012 the Commission published a Green Paper Towards an integrated European market for card, internet and mobile payments, which looked at the rapidly changing market for card, internet and mobile payments in the EU, set out a number of barriers to development and launched a consultation on how to achieve a fully integrated


EU market for card, internet and mobile payments. The Commission invited responses to 32 questions in the Green Paper and foreshadowed the possibility of legislative proposals.37

8.4 In July 2013 the Commission published this draft Directive, document (a), under which the PSD would be repealed and replaced by Payment Services Directive II or PSD II, which would contain the bulk of the PSD’s substance with modifications. The Commission proposes modifications to the PSD to ensure consumer protection keeps up with innovations in the market and to streamline previous sections that the industry found cumbersome, unnecessary or unclear. The draft Directive deals with the following matters: increased scope, small payment institutions, surcharges, security measures and the European Banking Authority.

8.5 Interchange fees are fees set by the card network and paid by the merchant’s bank to the customer’s bank for the acceptance of card-based transactions. They are passed on to the retailer in the form of a service charge and, in turn, passed onto consumers in the form of higher prices. Multilateral interchange fees are set by the card schemes (VISA and MasterCard) — these are fees standardised between card issuers and a host of card acquirers and are the most frequently used. Bilateral interchange fees, a rarer phenomenon, are agreed directly between card issuers and card acquirers — so instead of being a cross industry standard, the merchant’s bank and customer’s bank would have their own deal arrangement.

8.6 The draft Regulation, document (b), published with the draft Directive, would regulate interchange fees that are applied to debit and credit card transactions within the EU and would cap the level of interchange fee that could be applied to a card transaction. The measure would deal with the following matters: a cap on interchange fees, separation between scheme and processing, co-badging, an honour all cards rule and steering of consumers.

8.7 The Commission has published a Report, document (c), also at the same time, on how the PSD has been applied by different Member States and which identifies the main issues that have arisen. The Report also touches on interchange fees. The Commission suggests that a number of changes could be envisaged to the PSD to enhance its effect and to clarify a number of its aspects. It also highlights the need to accommodate technological business development within the payments industry. Although the presentation of the draft Directive and the draft Regulation together with Commission’s impact assessment for the proposed legislation do not refer directly to the Report they do cite the two external reviews on which the Report is based.

8.8 When we considered these documents, in October 2013, we noted that at that stage the Government had little to say about what precise improvements it would need to seek to both the draft Directive and the draft Regulation in order to make them wholly acceptable. So we asked to have, before we considered these matters again and before Council working group negotiation had progressed very far, more information about the points at issue. As for the Commission Report we asked to hear as to what issues it raises that are not being,

37 See (33628) 5491/12: HC 428-l (2010–12), chapter 5 (8 February 2012) and HC 86-ii (2012–13), chapter 24 (16 May

2012).


but should in the view of the Government be, addressed in the proposed legislation. Meanwhile all three documents remained under scrutiny.38


8.9 The Financial Secretary to the Treasury (Sajid Javid) now tells us that the Government intends to pursue two overarching objectives during negotiations on the PSD II. He says first, that:

• the Government will seek to ensure that the Directive avoids imposing any unnecessary burdens on the UK financial services industry — for example, ensuring Third Party Payment Services providers (TPPs) remain within the scope of PSD II, so that consumers are adequately protected, while making sure the liability of each body involved in a payment transaction is fair and proportionate; and

• the Government has already received support for this position from a number of countries which have TPPs active in their market.

8.10 The Minister says secondly that:

• the Government aims to maximise protection for consumers, whilst ensuring they can benefit fully from technological advancement in the payments market;

• it welcomes the inclusion of digital payments within the scope of the Directive, though efforts are ongoing to determine whether the small payment exemption, currently proposed, is sufficient to ensure the continued growth of important types of digital transaction, particularly SMS-based charitable donations; and

• this includes consideration of whether the small payment exemption is too low.

8.11 Turning to the regulation of interchange fees, the Minister says that:

• the Government supports an EU-wide cap as the best way to address the issue of excessive interchange fees;

• a cap would mean significant benefits for businesses by providing the legal clarity needed for effective business planning and by delivering significant savings, which could be passed onto consumers;

• an EU-wide cap would also make it easier for SMEs planning a move into another Member State as they would have a clear understanding of the rules around interchange fees;

• the proposal has received strong support from the British Retail Consortium and the Prime Minister’s EU Business Taskforce, which estimated savings to UK businesses of £1 billion;

38 See headnote.


• the Government remains watchful, however, of unintended impacts of the proposals that could conflict with that objective and that might have negative impacts on small businesses and consumers; and

• the Commission has not yet provided enough evidence to support its proposed cap levels and the Government is pushing it to provide a more substantial evidence base.

8.12 Responding to our question as to whether there are any issues the Commission’s Report raises that are not being, but should in the view of the Government be, addressed in the proposed legislation, the Minister says that:

• the Report does not raise any issues that are not being addressed to the Government’s satisfaction in the proposed legislation;

• the major issue that has arisen since the first PSD was transposed has been the increased use of new innovative payment methods, such as mobile phones and TPPs;

• this has led to improved choice for consumers while at the same time increasing the risk to consumers and the need for adequate protection such as a right to refund for unauthorised payments;

• the Government believes that the proposed legislation is trying to address this issue by increasing the scope of the Directive to include more digital payments and TPPs; and

• this would ensure that the Directive is more technologically neutral and ensure that consumers using these more innovative payment methods are protected.

Representations

8.13 Since we last reported on these documents we have received three representations from interested parties in relation to the draft Regulation on interchange fees.39 MasterCard drew our attention to a Europe Economics report it had commissioned, which suggested that interchange regulation in the UK has the potential to impede recovery in bank lending, pose financing problems for small businesses and the self-employed, increase uncertainty in monetary policy, result in problems for implementation of Universal Credit and wider financial inclusion efforts, result in adverse consequences for research and development and innovation and have negative consequences for the UK’s e-commerce industry. In addition to critical comments on the draft Regulation and the Commission’s case for it, the company suggested to us a number of alternative ways to meet the Commission’s objectives.

8.14 The UK Cards Association asserted that the adverse impact of the draft Regulation on consumers would be that consumers would pay more, they would be driven to high cost credit, they would save nothing, they would subsidise retailers and there would be less

39 These can be seen on our website at http://www.parliament.uk/business/committees/committees-a-z/commons-

select/european-scrutiny-committee/submissions-to-the-committee1/.


competition and choice. As for the adverse impact on retailers the association said that there would be less secure transactions, increased fees and a boost to big retailers, not SMEs.

8.15 A joint statement by Christians against Poverty, the Centre for Responsible Credit, the Money Advice Trust, The Money Charity, MoneySavingExpert.com and Toynbee Hall said that, whilst these consumer bodies support the Commission’s wish to protect consumer interests, they are concerned that the proposals would in fact have the opposite effect. They drew attention to evidence that capping of interchange fees in the US, Spain and Australia had not led retailers to pass on their consequent savings to consumers, rather consumers had seen increased costs. They said that the Commission has produced no evidence that retailers would pass on their savings from fee capping to cardholders and consumers.

Conclusion

8.16 We note that at this stage the Minister has little to say about what precise improvements the Government will need to seek to both the draft Directive and the draft Regulation in order to make them wholly acceptable. So before we consider these matters again we should like to have, before Council working group negotiation has progressed very far, more information about the points at issue.

8.17 We should also like to hear from the Minister what the Government’s view is of the comments made to us by MasterCard, the UK Card Association and the group of consumer bodies.

8.18 Meanwhile these two documents remain under scrutiny.

8.19 However, in view of the Minister’s assurance about action on issues in the Commission Report we now clear it.


9 Reforming Europol

(34843) 8229/13 + ADDs 1–6 COM(13) 173

Draft Regulation on the European Union Agency for Law Enforcement Cooperation and Training (Europol) and repealing Decisions 2009/371/JHA and 2005/681/JHA

Legal base Articles 88 and 87(2)(b) TFEU; co-decision; QMV Department Home Office Basis of consideration Minister’s letter of 21 January 2014 Previous Committee Reports HC 83-xxvi (2013–14), chapter 11 (8 January 2014);

HC 83-xiii (2013–14), chapter 21 (4 September 2013); HC 83-xi (2013–14), (10 July 2013); HC 83-vii (2013–14), chapter 1(26 June 2013); and HC 83-iii (2013–14), chapter 1 (21 May 2013)

Discussion in Council No date set Committee’s assessment Legally and politically important Committee’s decision Not cleared; further information requested


9.1 The draft Regulation, which would establish a new legal base for cooperation between Member States’ law enforcement authorities and Europol, is subject to the UK’s Title V (justice and home affairs) opt-in. Our Third Report of 21 May 2013 provides a detailed overview of the draft Regulation. Our Seventh Report of 26 June 2013 sets out the Government’s response to a number of questions we raised on the detail of the draft Regulation.

9.2 The Government, anticipating that the draft Regulation would attract strong Parliamentary interest, offered an opt-in debate on the Floor of the House which we accepted. In advance of the debate, which took place on 15 July 2013, the Minister for Security (James Brokenshire) wrote to inform us that the Government intended to recommend not opting into the draft Regulation, but to play an active part in negotiations and seek changes which would enable the Government to recommend opting in once it had been adopted. He confirmed the Government’s decision not to opt into the draft Regulation in his letter of 18 July 2013.40

9.3 The Government’s decision was based mainly on two concerns. First, the draft Regulation would “increase obligations on Member States to provide data to Europol and call into question the operational independence of our police forces in exercising control over their own data”. Second, it would create “a presumption that Member States will comply with a request by Europol to initiate an investigation, as well as a stronger

40 See Eleventh Report of Session 2013–14, Reforming Europol, HC 83-xi, dated 10 July 2013, and HC 83-xiii (2013–14),

chapter 21 (4 September 2013).


requirement to explain why an investigation has not been carried out”. This would have implications for the operational independence of the UK’s law enforcement agencies.41

9.4 Negotiations on the draft Europol Regulation coincide with separate negotiations arising from the Government’s decision to opt out (with effect from 1 December 2014) of 130-odd pre-Lisbon EU police and criminal justice measures and to seek to rejoin 35 of them, including a 2009 Council Decision establishing the current basis for cooperation with Europol.42 Opting back into the 2009 Decision will provide a temporary stop-gap to secure continued UK participation in Europol. The Government accepts, however, that participation in the new Regulation will be necessary if the UK is to remain in Europol in the longer term.

9.5 The Government has told us that it would be premature to embark on a detailed consideration of whether, and on what terms, the UK would be able to cooperate with Europol in the event that it is unable to secure the changes needed to opt into the Regulation once it has been adopted. We have suggested that an assessment of all the possibilities for future cooperation with Europol, including outside the new legal framework proposed by the Commission, would be helpful in determining whether or not participation in the Regulation would be advantageous for the UK. We continue to urge the Government to embark on such an assessment and to share its analysis with us.

9.6 Meanwhile, we have welcomed the Government’s undertaking to provide regular progress reports on the negotiations and asked the Minister to ensure that they address the reasons given by the Government for deciding not to opt into the draft Regulation, as well as any other significant changes to the Commission’s proposal. We have also asked for progress reports on discussions with the Commission and other Member States on the Government’s recommendation to rejoin the 2009 Europol Council Decision.


9.7 The Minister (James Brokenshire) reports some progress made in initial Council Working Group discussions:

“The Lithuanian Presidency brought forward a number of compromise proposals to try to address concerns raised by Member States including the UK. The negotiations are still at a relatively early stage, and we cannot guarantee that any particular amendments will be in the final text. Nevertheless, we have made some progress, particularly in the two areas that led us not to opt in: Member States’ obligations to provide information to Europol and our concern that Europol could be able to require Member States’ law enforcement agencies to commence investigations.”

9.8 The Minister reiterates the Government’s concern to ensure that Member States are not placed under an obligation to provide information to Europol that would endanger national security. He continues:

41 See letter of 9 July 2013 from the Security Minister (James Brokenshire) to the Chair of the European Scrutiny

Committee.

42 See Twenty-first Report of Session 2013–14, The UK’s block opt-out of pre-Lisbon criminal law and policing measures, HC 683 dated 30th October 2013.


“The Presidency’s compromise text would exempt Member States from providing information where this would pose a risk to national security, ongoing investigations or an individual’s safety, essentially restoring a provision that appears in the existing Europol Council Decision. We strongly welcome this. The European Parliament’s rapporteur has proposed a similar amendment.

“On a related issue, we will continue to press for a provision in the text stating that information will be shared with Europol on Member States’ ‘own initiative’ (as set out in the current Europol Council Decision). This would confirm that Member States have the final say over the information they provide to Europol. We have some support from Member States for this position, and the European Parliament’s rapporteur has proposed an amendment to this effect. However, the Presidency has not yet included this in its compromise text.”

9.9 Turning to the role of Europol in initiating a criminal investigation, the Minister notes:

“The Presidency’s text does soften the wording of the Commission’s initial draft on Europol’s ability to request investigations (Article 6). The Commission initially proposed in Article 6(3) that, when they received a request from Europol, Member States’ National Units should inform it without delay of “the initiation of the investigation”. This implies that Member States would comply with the request. The Presidency has proposed changing this to a requirement to inform Europol of the Member State’s decision on the request, making it much clearer that Member States can refuse. We welcome this. We will, however, continue to press for a more explicit reference to Member States’ discretion to agree to or decline the request, as it is vital that Member States retain full control over how their law enforcement agencies are deployed.”

9.10 Another contentious element in the Commission proposal is to merge the functions of Europol and the European Police College (CEPOL) within a single EU Agency for Law Enforcement Cooperation and Training. The Minister confirms reports that Member States and the European Parliament oppose the proposed merger, and adds:

“References to the merger have not yet been deleted from the text, as the Presidency considers the issue to be on hold until the Commission decides whether to try and proceed with its proposal. We are optimistic that the proposed merger will ultimately be rejected.”

9.11 The Minister refers to Article 7(1) of the draft Regulation which requires Member States to cooperate with Europol in the fulfilment if its tasks. He continues:

“Following interventions from many Member States, including us, the Presidency has proposed to amend the proposed duty on Member States to cooperate with Europol (Article 7(1)) so it provides for a mutual obligation on Member States and Europol to cooperate with each other. We see this as positive, though we are still pressing for more information on what specific obligations a ‘duty to cooperate with Europol’ might place on Member States.”

9.12 The Minister expects discussions to continue during the Greek Presidency, with four Council Working Group meetings scheduled between January and June 2014. He notes


that the European Parliament’s Civil Liberties, Justice and Home Affairs (LIBE) Committee has produced a draft report on the draft Regulation and is likely to vote on possible amendments early in 2014. He adds:

“Once that has happened, a vote in plenary session may take place before the European elections, but we do not expect any negotiations between the Parliament and Council to take place until sometime after those elections. It therefore remains extremely unlikely that the draft Regulation will be adopted until 2015 at the earliest.”

9.13 The Minister refers to our Twenty-ninth Report, agreed on 8 January 2014, in which we set out the Opinion of the Home Affairs Committee on the arrangements proposed in the draft Regulation for Parliamentary scrutiny of Europol’s activities, as well as possible amendments being considered by the European Parliament’s LIBE Committee. Our Report asked the Government to confirm that discussions on this matter within the Council were proceeding on the basis that any new arrangements for inter-parliamentary scrutiny of Europol involving national parliaments and the European Parliament would only be introduced with the agreement of national parliaments. The Minister concurs, adding:

“I share the view [...] that the draft Europol Regulation’s provisions in this regard should be flexible and not prescriptive. They should also be in keeping with Article 9 of the Protocol on the Role of National Parliaments, which makes it clear that it is for the European Parliament and national Parliaments, and not the European Parliament and Council acting as co-legislators, to determine the organisation of inter-parliamentary cooperation. The Presidency has not so far indicated when these provisions are next due to be discussed. But we will firmly express the view that any new arrangements should be agreed by national Parliaments.”

9.14 Finally, the Minister acknowledges our request for a progress report on discussions with the Commission on the Government’s decision to seek to rejoin the 2009 Europol Council Decision, and observes:

“The Government remains committed to engaging fully with both Houses of Parliament on this matter. We can reiterate our commitment to keep Parliament informed of the progress of the negotiations as appropriate.”

Conclusion

9.15 We thank the Minister for his latest update. We look forward to receiving further progress reports on discussions within the Council Working Group, as well as a summary of the amendments proposed by the European Parliament (if agreed before the May elections) and the Government’s position on them. We welcome the Minister’s support for the views expressed in our Twenty-ninth Report on the arrangements for scrutiny of Europol’s activities by the European Parliament together with national parliaments, and are grateful for his assurance that the Government will seek to ensure that any new arrangements are agreed by national parliaments.

9.16 We note that negotiations on the draft Regulation are unlikely to be concluded before 2015, at the earliest. Progress on the Government’s proposal to rejoin the


current 2009 Europol Council Decision will clearly be of some importance in avoiding any operational gap in existing cooperation between Europol and UK law enforcement authorities, pending the adoption of the new Regulation and the Government’s decision on whether or not to opt in. We have made clear elsewhere that the Government should seek a mandate from the House to guide its negotiations on the measures subject to the UK’s 2014 block opt-out decision that it proposes to rejoin.43 In light of the Government’s commitment to engage fully with Parliament on this matter, we ask the Minister to tell us whether negotiations on the 2009 Europol Council Decision have begun and, if not, when he expects them to do so.

9.17 Given the uncertainty inherent in any negotiating process, the risk of an operational gap in the UK’s cooperation with Europol after 1 December 2014 cannot be discounted and the questions we have raised about the basis for future UK cooperation with Europol can no longer be dismissed as “hypothetical”.44 We therefore reiterate once more our request for a considered view from the Government of the scope for future UK cooperation with Europol outside the framework established by the 2009 Council Decision or that proposed in the draft Regulation. Meanwhile, the draft Regulation remains under scrutiny.

10 The EU Charter of Fundamental Rights

(34916) 9297/13 + ADDs 1–10 COM(13) 271

Commission Report 2012 on the application of the EU Charter of Fundamental Rights

Legal base — Department Ministry of Justice Basis of consideration Minister’s letter of 20 January 2014 Previous Committee Reports HC 83-xiii (2013–14) chapter 25 (4 September 2013);

HC 83-vi (2013–14) chapter 6 (19 June 2013) Discussion in Council Not known Committee’s assessment Legally and politically important Committee’s decision Not cleared


10.1 The background to the Charter of Fundamental Rights and our scrutiny of the two previous annual Commission reports on the application of the Charter are set out in our

43 See HC 683.

44 See the Minister’s letter of 18 July 2013, reported in HC 83-xiii (2013–14), chapter 21 (4 September 2013).


Sixth Report45 together with an account of this third annual report and the Government’s view of it.

10.2 In that Report, we said that whilst we recognised that the third annual report on the Charter had no immediate policy, legal or financial implications for the UK, we wanted the Government to comment further on the section of the report concerning how the Charter is being implemented in Member States, particularly in respect of the UK.

10.3 The response of the Secretary of State for Justice (Chris Grayling), in his letter of 16 July 2013 was reported in our Thirteenth Report.46 On the question of how the Charter is being applied by UK national courts, the Minister referred in particular to the June 2012 report of Association of Councils of States and of Supreme Administrative Courts (ACA-Europe). In answering the Committee’s second question, the Minister agreed that there should be “a clear and open policy about what data to include in the report” and said he would pursue this with the Commission.

10.4 We thanked the Minister for his comprehensive response which we said we were reporting fully for wider readership in the House because of the intrinsic importance of analysing the effect of the EU Charter on national law. We said that we concluded from what the Minister said that:

i) the Charter is being applied by the UK national courts in a manner that does not extend EU competences; and

ii) there is little basis for the Commission’s conclusion that there is “some evidence of an incorporation of the Charter in the national systems of fundamental rights protection.”

10.5 However, we asked the Minister to:

i) tell us whether he was concerned that the Commission should make the assertion about the incorporation of the Charter into national law and, if so, whether he intends to tackle the Commission over it; and

ii) write back to us in due course concerning any discussions he has with the Commission about agreeing a framework for the contents of future annual reports.

Minister’s letter of 20 January 2014

10.6 The Secretary of State for Justice, in response to the questions asked in our Thirteenth Report, says:

“I think it would be helpful to start by clarifying some of the points made in my letter of 16 July. First, to be absolutely clear, my Department’s assessment of the UK case law was not based on the ACA-Europe Report. I simply referred the Committee to that report for an analysis of the Charter case law of other EU Member States.

45 See headnote: HC 83-vi (2013–14) chapter 6 (19 June 2013).

46 See headnote.


Second, paragraph 6 of my letter transposed the attribution of the Commission and ACA reports, and should have read as follows:

“The Commission’s conclusion is that national judges seem to refer to the Charter to support their reasoning, even where there is not necessarily a link with EU law. There is no evidence of our national courts adopting such an approach; indeed, such evidence as emerges from the ACA report indicates the opposite.

“I am grateful for your Committee’s query concerning evidence of incorporation of the Charter into national systems of fundamental rights protections. The Commission’s Annual Report takes a broad brush approach, drawing data and examples from across all EU Member States; the ACA-Europe Report cites a number of other examples. As the Committee will appreciate incorporation of the Charter is not synonymous with its domestic application outside the scope of EU law. My concern is the application of the Charter in the UK; here I am reassured to note that UK judges are not relying on the Charter outside of the scope of EU law.

“As agreed, I have obtained information from the Commission on the data included in the report. The Commission draws on information it holds on Charter references in cases before the Court of Justice, the legislative process, actions of EU institutions and issues raised by MEPs and EU citizens, as well as information it holds on the application of the Charter by Member States when implementing EU law. For the 2012 report, the Commission additionally asked Member States to provide information on references to the Charter before their national courts, which was analysed with the help of the EU’s Fundamental Rights Agency (FRA).

“Finally, I think there is an error in paragraph 25.5 (bullet point 3) of your Committee’s report which could be corrected with the deletion of the word including. The paragraph currently states that there is no evidence of UK national judges referring to the Charter to support their reasoning, including where there is no link with EU law. National judges do refer to the Charter in cases where there is a link with EU law.”

Conclusion

10.7 We thank the Secretary of State for his clarifications.

10.8 There is considerable and continuing public interest in the important legal and political question of the application of the Charter of Fundamental Rights in the UK —hence our inquiry into these issues. Given that our inquiry is ongoing, and issues might arise which are relevant to this Commission report, we are holding it under scrutiny.


11 European Small Claims Procedure

(35576) 16749/13 + ADDs 1–2 COM(13) 794

Draft Regulation amending Regulation (EC) No. 861/2007 of 11 July 2007 establishing a European Small Claims Procedure and Regulation (EC) No. 1896/2006 of 12 December 2006 creating a European Order for Payment Procedure

Legal base Article 81 TFEU; QMV; co-decision Document originated 19 November 2013 Deposited in Parliament 27 November 2013 Department Ministry of Justice Basis of consideration EM of 4 December 2013 Previous Committee Report None Discussion in Council No date set Committee’s assessment Legally important Committee’s decision Not cleared; further information requested

The document

11.1 This is a proposal to revise the European Small Claims Regulation.

11.2 In evaluating the working of the current Regulation the Commission says that the procedure has reduced the costs of litigating cross-border small claims by up to 40% and reduced from two years and five months to five months the average duration of litigation. Two-thirds of those that had used the procedure were satisfied with it. However use of the procedure is quite limited. The reasons given for that include the low ceiling of €2,000 which is said to limit the availability for SMEs in particular; the inability of parties to be able to choose the jurisdiction of their common domicile under the Brussels I Regulation47 to determine their dispute; disproportionate court fees in relation to the value of the claim or high costs if parties are expected to attend a court hearing in another Member State; obstacles in the method of paying court fees; difficulties in completing the standard forms or the costs incurred in having unnecessary parts translated; barriers to the use of electronic or online procedures; and uncertainty about the way a judgment can be reviewed. The Commission has also suggested that improvements could be made to the way the Regulation is implemented and publicised.

11.3 Addressing these issues the Commission has proposed the following changes to the Regulation. First an increase in the threshold from €2,000 (approximately £1,670) to €10,000 (approximately £8,300). It believes this will be of particular benefit to SMEs. The Commission says that while 71% of consumer claims are within the current threshold, for SMEs only 20% of their claims are below €2,000. It is also stated that approximately 30% of all cross-border business claims are between €2,000 and €10,000. Where the value of the

47 44/2001.


claim exceeds €2,000 the Commission has suggested that an oral hearing should be held if requested by one of the parties.

11.4 Many changes are aimed at reducing the costs and burdens on parties wishing to use the procedure. These include allowing for the use of electronic service of documents where this is available in Member States; making electronic communication between the parties and courts the rule for documents not subject to formal service where the parties agree and where such methods are allowed under national law; obliging courts to use videoconferencing, teleconferencing and other means of distance communication for the conduct of oral hearings and taking of evidence unless a party expressly requests to be present in court; limiting court fees to 10% of the value of the claim; obliging Member States to allow distance payment of court fees; and obliging Member States to make available information on the amount of the fees and payment methods available. There is a suggestion that the translation requirements in standard form D, the certificate of enforcement, should be limited to the substance of the judgment to avoid unnecessary costs.

11.5 The Commission has also suggested amending the cross-border restriction in scope to include situations where the parties and the court are in the same Member State but the place of performance of the contract, the place where the facts on which the claim was based or the enforcement of the judgment are in a different Member State.

11.6 Other amendments include increasing the level of assistance that parties can receive from courts; making clearer the procedure allowing a defendant to apply for a review of the judgment in Article 18 by aligning it with a similar provision in the Maintenance Regulation.48 In addition Articles 26 and 27 have been amended to take into account the post-Lisbon Treaty comitology requirements. The proposal is to amend the Annexes by using the delegated acts procedure.

11.7 There is also a proposed change that will affect the European Order for Payment Regulation.49 Currently if a defendant lodges a statement of opposition in response to a European Order for Payment the claim is transferred to the ordinary civil procedure of the Member State concerned unless the claimant has requested that the proceedings be terminated in that event. The Commission proposes that where a statement of opposition has been lodged in such a case and the claim falls within the scope of a simplified procedure, including the Small Claims Regulation, it should be possible to transfer the claim to that procedure.


11.8 In his Explanatory Memorandum of 4 December 2013, the Secretary of State for Justice (Chris Grayling) says that the Government acknowledges the value of an effective cross-border small claims procedure and welcomes the opportunity this revision of the Regulation brings to improve it. It recognises that an increase in the threshold is likely to be of benefit to potential users of the procedure and could allow more businesses to use it.

48 4/2009.

49 1896/2006.


Given that the threshold for the domestic small claims procedure in England and Wales was raised for most cases to £10,000 in April 2013 the Government can support the Commission’s suggested threshold of €10,000.

11.9 Although the domestic small claims threshold for personal injury and housing disrepair cases remains £1,000, the Government does not see this as a reason to oppose the increase for cases within the remit of the European procedure. Domestically the vast majority of personal injury cases arise out of road traffic accidents or employers’ or public liability claims where there is a fixed costs out of court scheme for liability-admitted claims of up to £25,000. There is also a fixed costs regime for use where cases exit the out of court scheme, including where liability is not admitted and the case proceeds to court. Therefore the Government can see merit in the higher limit for the relatively few personal injury cases which might arise under the Regulation.

11.10 In Scotland the current limit for a small claim is £3,000 and for summary cause (another simplified procedure designed to allow litigants to bring a claim without the need for a lawyer) is £5,000. There is a proposal to combine both into a new “simple procedure” which will have a limit of £5,000, to be kept under review. In Northern Ireland the current small claims threshold is £3,000. The devolved administrations are considering the implications of the Commission’s suggestion.

11.11 While the Government agrees that the level of court fees should not be a disincentive to potential users of the procedure it believes that such matters are better left to Member States to decide in a way which best meets the needs of their legal systems. If the cap as suggested by the Commission is agreed, currently in England and Wales the court application fees for all claims except for those below £700 are well within the proposed 10%.

11.12 Of the other suggested changes, the Government can support use of more methods of electronic communication where they are available and appreciates the advantages of using videoconferencing or teleconferencing where hearings are thought necessary. While not all courts have videoconferencing facilities all can undertake telephone hearings. It can also support the use of distance payment of court fees and improved provision of information on the level of fees and the payment methods. While there is no online system currently available in our courts to accept fee payment, credit card payments can be accepted over the telephone.

11.13 The Government will want to ensure that any improvement in the assistance that courts can offer parties does not stray into the area of legal advice. It can support the mainly technical changes to the provision allowing a defendant a right to review of the judgment. The suggestion that it is only necessary to require the translation of the substance of the judgment in form D is sensible given that the form itself is standard in all official EU languages and that is the only section where free text is necessary.

11.14 The Government notes that the Commission proposes the delegated acts procedure for amending the standard forms. During the negotiations the Government will call for the implementing acts procedure to be used instead as it believes this will provide more oversight by Member States. The Government believes that the proposed changes to the European Order for Payment Regulation to allow a transfer of proceedings to the


European Small Claims Procedure in appropriate cases are sensible and will benefit creditors.

Legal base and opt-in

11.15 Article 81(1) TFEU requires that measures adopted under that provision must have cross-border implications. The Government believes that this restriction must be reflected properly in this proposed Regulation. While it will give further consideration to the Commission’s changes to Article 2, it currently remains concerned that those changes will not properly respect the Treaty’s cross-border restriction and would unduly extend the instrument’s scope of application to cover cases which should remain subject to national law only.

11.16 As this proposal has been brought under Article 81 TFEU the UK’s Title V opt in applies. The text was presented to the Council in English on 25 November. Therefore the eight week period before which the Government will not make a decision on the opt in expires on 20 January. When deciding whether to opt in, the Government will consider the effect on UK citizens and businesses if the UK no longer participates in the Regulation; how effective the Commission’s suggested changes will be in improving the quality and use of the procedure; and the negotiability of resisting the proposed changes to the cross-border restriction.

Regulatory impact assessment

11.17 The Government’s initial assessment is that the changes to this Regulation are unlikely to give rise to any significant regulatory impact. Parties with claims that fall within the Regulation’s scope will be able to choose whether to use the procedure. The purpose of the majority of amendments proposed seek to reduce the costs and burdens on parties who wish to use it. An EU checklist assessment is being prepared.

Financial implications

11.18 The Government does not at this stage expect the adoption of this proposal will have any significant financial implications for the United Kingdom.

Consultation

11.19 The Government will consult interested parties such as consumer organisations, the legal profession and the judiciary about this proposal to amend the Regulation.

Conclusion

11.20 We thank the Minister for his Explanatory Memorandum.

11.21 We take note of the Government’s concerns about the revised scope of the draft Regulation in Article 2, and ask the Minister to keep us informed of how negotiations on this Article in particular develop.


11.22 The Government acknowledges the value of an effective cross-border small claims procedure and welcomes the opportunity this revision of the Regulation brings to improve it. It recognises that an increase in the threshold is likely to be of benefit to potential users of the procedure and could allow more businesses to use it. Given that the threshold for the domestic small claims procedure in England and Wales was raised for most cases to £10,000 in April 2013 the Minister supports the Commission’s suggested threshold of €10,000. We do not have reason to disagree with the Government’s assessment; accordingly, we do not recommend that the opt-in decision on this amending Regulation be debated. We ask the Government to inform us of its decision in due course.

11.23 In the meantime the proposal remains under scrutiny.

12 Procedural safeguards for suspects and accused persons in criminal proceedings

(35653) 17645/13 COM(13) 820

Commission Communication: Making progress on the European Union Agenda on Procedural Safeguards for Suspects or Accused Persons — Strengthening the Foundation of the European Area of Criminal Justice

Legal base — Document originated 28 November 2013 Deposited in Parliament 16 December 2013 Department Ministry of Justice Basis of consideration EM of 22 January 2014 and Minister’s letter of 20

January 2014 Previous Committee Report None; but see (35642) 17621/1: HC 83-xxix (2013–14),

chapter 1 (22 January 2014); (35646) 17633/13: HC 83-xxix (2013–14), chapter 2 (22 January 2014); and (35652) 17635/13 chapter 3: HC 83-xxix (2013–14), chapter 3 (22 January 2014)

Discussion in Council None expected Committee’s assessment Legally and politically important Committee’s decision Not cleared; relevant to the opt-in debates

recommended on the above documents


12.1 Following the “procedural Rights Roadmap” (“the Roadmap”) which was agreed by resolution of the European Council in 2009 and later confirmed in the Stockholm Work Programme, the Commission proposed a Directive on the right to interpretation and


translation in criminal proceedings in October 2010, a second Directive on the right to information in criminal proceedings in May 2012 and a third Directive on the right of access to a lawyer in criminal proceedings on 22 October 2013. The UK Government exercised its rights pursuant to the JHA opt-in Protocol to participate in and be bound by the first two Directives, but not the third, though there is still the possibility of a post-adoption opt-in. The first of these Directives was implemented on 27 October 2013. The second will be transposed in time to be implemented in June 2014.

12.2 In implementing the Roadmap and Stockholm Work Programme, the Commission recently published its new Procedural Rights package including the following legally- binding measures:

i) A Directive on presumption of innocence and the right to be present at trial in criminal proceedings (35642)(17621/13);50

ii) A Directive on children suspected or accused in criminal proceedings (including European Arrest Warrant proceedings) (35646) (17633/13);51 and

iii) A Directive on legal aid (35652)(17635/13).52

12.3 The package also includes two non legally-binding proposals:

i) A Recommendation on vulnerable defendants (35656) (17642–13);53 and

ii) A Recommendation on legal aid (35657) (17643/13).54

12.4 As we had received the Government’s Explanatory Memoranda on those documents, supplemented by a letter from the Secretary of State for Justice (Chris Grayling) of 20 January 2014, we were able to report on all those proposals in our Thirty-second Report of 22 January. We recommended that, as regards the decision as to whether the UK should opt-in (pursuant to the JHA Protocol (No. 21)) to the legally-binding proposals, the three draft Directives should be debated separately on the floor of the House.55 We also recommended in our chapter on the draft Directive on the presumption of innocence56 that the House adopt the draft Reasoned Opinion (which argues that the proposal breaches the subsidiarity principle) attached to that Report, after debate on the floor of the House, to then be sent to the Presidents of the EU Institutions by 12 February.

12.5 We were not in a position to report on the current document, the Communication on the procedural rights package, at the same time as we had not by then received a signed Explanatory Memorandum from the Minister. The reason for this given by the Minister in his letter of 20 January was reported in paragraph 1.37 of our Thirty-first Report, (2013–14), HC 83-xxviii, dated 22 January 2014, on the draft Directive on the presumption of innocence (35642) 17621/13.

50 See HC 83-xxix (2013–14) chapter 1 (22 January 2014)





55 See footnotes 50–52.

56 See footnote 50.


The current document

12.6 The Communication sets out the context and rationale for the Commission’s latest and linked Procedural Rights proposals and then summarises the main elements of each proposal.

Directive on presumption of innocence

12.7 The Communication explains the Commission’s view that, whilst the production of a Presumption of Innocence Directive was not specified on the Roadmap, it was an area the Commission was invited to consider in the Stockholm Work Programme. It states that in its view the level of safeguards in Member States’ legislation in respect of this issue is in general acceptable and suggests that there does not seem to be any systemic problem in this area. However, it nonetheless considers there still exist points on which legal safeguards should be strengthened and sets out proposals on those aspects. The measure specifically proposes common rules on: prohibiting public references to guilt before conviction; any doubt about guilt being to the benefit of the accused; the right to remain silent and not to incriminate oneself; and the right to be present at one’s trial.

Directive on procedural safeguards for children

12.8 The Communication suggests the proposed Directive on procedural safeguards for children is necessary as, being inherently vulnerable, children require special attention and protections. The Directive sets out proposals to provide procedural safeguards for children from the time they are suspected or accused and provides children: will be assisted by appropriate adults in the process; have a right to legal assistance than cannot be waived; be assessed at an appropriate stage of proceedings and in any event before indictment, have their age and maturity recognised throughout the proceedings; have the right to be present at trial; that trials concerning children should be heard in private; and establishes that any deprivation of liberty before a conviction is only as a “last resort”. It also sets out provisions concerning training of the professionals involved working with child suspects.

Recommendation on vulnerable defendants

12.9 There is an associated Commission recommendation covering others who may be considered vulnerable in criminal proceedings for reasons other than age. It suggests assessment mechanisms should be set up to detect and recognise such suspects and these should be independent. It seeks to establish safeguards such as mandatory access to a lawyer, third-party assistance and audio-visual recording of police questioning. The Recommendation is not legally binding and is presented for Member States to consider and act upon as they consider merited. The Commission will, however, review the impact its Recommendation has had in four year’s time and suggests legislative measures might be proposed at that point if the Commission considers that is justified.

Directive on provisional legal aid

12.10 In discussing its proposed Directive on Legal Aid the Communication explains it considers the measure is necessary to enable the effective access to a lawyer for all. It


proposes common rules concerning “provisional legal aid” which would in its view guarantee legal aid was available at the early stages of proceedings and specifically makes rules concerning European Arrest Warrant proceedings. It provides that this “provisional legal aid” should be available pending any final decision on an application for legal aid. It also aims to guarantee the right to legal aid for persons subject to an EAW in certain other circumstances.

Recommendation on legal aid

12.11 The Commission Communication describes that its Recommendation on legal aid that accompanies the proposed Directive is made to facilitate greater convergence in the criteria for deciding on the right to legal aid amongst Member States, and to ensure the quality and effectiveness of legal aid services. The Recommendation is not legally binding and is an invitation for Member States to consider acting upon as each considers is merited. As with the Recommendation on vulnerable defendants the Communication adds that it is the Commission’s intention to review what steps have been taken by Member States in four years’ time and may at that point propose legislative measures on these aspects if it considers those are justified.

Rationale for the procedural rights package

12.12 The Commission says the following about the rationale of the overall package of proposals:

• that there is a need to give effect to a common legal framework for fundamental procedural rights: the EU Charter of Fundamental Rights and the European Convention on Human Rights (ECHR), in particular the right to an effective remedy, to a fair trial, to be presumed innocent and a right of defence as provided for in Articles 47 and 48 of the Charter and in Article 6 of the ECHR;

• existing EU legislation on judicial co-operation and mutual recognition, including the EAW, can only operate satisfactorily if Member States trust each other’s criminal justice systems — the best way of ensuring mutual trust is by setting common minimum standards for criminal procedural rights;

• that the need to protect the fair trial rights of suspects and accused involved in criminal proceedings has a clear cross-border dimension as 14.1 million EU citizens reside permanently outside their home country and they and other citizens travelling across borders risk becoming involved in criminal proceedings outside their country;

• there is a need to build on the existing EU procedural rights legislation by strengthening:

— the existing Directive on the right to information (including on the right to remain silent) with an EU-wide right to presumption of innocence;

— the existing Directive on interpretation and translation (for those who cannot linguistically understand criminal proceedings in another country) by ensuring


that children (who may not have the mental capacity to understand) are able to follow and participate in criminal proceedings; and

— the existing Directive on a right to access to a lawyer with a right to funding of that legal representation.

• that the package represents balanced action at EU level, with each element of the proposals having been assessed to decide whether such action is justified, particularly taking into account costs implications for Member States (giving as an example the lack of legally binding restrictions on eligibility testing for Legal Aid); and

• that the proposals will strengthen the legal safeguards for individuals involved in proceedings by the European Public Prosecutor’s Office (EPPO) and foster public trust in the EPPO, making reference to the recent proposal to establish an EPPO which provides that a suspect shall have all rights guaranteed by EU legislation, by the EU Charter and by applicable national law.

Conclusion

12.13 In the rest of the Communication, the Commission explores the main elements of each of the five documents referred to in paragraphs 12.2–12.3 above, but these have already been summarised by us in our Reports on these documents.57

12.14 It then concludes that the package “reflects common minimum standards for the right to fair trial in the EU” which combined with existing instruments “make cross-border judicial co-operation a reality in a climate of mutual trust” which “fosters the development of the European area of freedom, security and justice”.

12.15 It says that this progress on its Procedural Rights Agenda will be bolstered by the end of the transitional third pillar regime which expires on 30 November 2014, meaning that from that date, the Commission will have enforcement powers over the whole of the JHA acquis and the Court of Justice will have full jurisdiction for pre-Lisbon mutual recognition legislation. This, combined with the establishment of an EU-wide prosecution system for fraud on the EU budget (the EPPO) “will change the landscape of the EU area of criminal justice”. The internationalisation of crime makes this further development of procedural rights an imperative.

12.16 Finally the Commission, looking to the future, suggests that the impact of the proposed legislation will need to be reviewed once transposed and operational in national law to assess whether further consolidating (and remedying) EU legislation is needed.


12.17 In an Explanatory Memorandum submitted on 22 January 2014, the Secretary of State for Justice addresses the following points.

57 See headnote.


Policy implications

12.18 Given that the Communication is essentially a non-legislative discussion document to accompany publication of the individual proposals it has no policy implications of its own. The implications identified so far of the proposals themselves are set out in the relevant Explanatory Memoranda submitted separately on those proposals.

12.19 However the Minister recaps what the policy concerns are in relation to each draft Directive:

“The proposed Directive on presumption of innocence aims to set common minimum standards throughout the European Union on certain matters that the Commission has identified in relation to the rights of suspects and accused persons to be presumed innocent until proven guilty; and to be present at one’s trial. As set out in Justice Secretary’s letter of 20 January, the Government considers that the proposal reflects principles which are already part of the law of the UK (the presumption of innocence, burden and standard of proof, rights to remain silent and against self-incrimination and restrictions on trials in absentia). However, there is detail set out concerning those principles which would require changes to UK law. Some of these changes are of significance. In particular, as the EM identifies, the UK law permits in some circumstances inferences to be drawn from non-cooperation with a criminal investigation.

“The legal aid instrument is a proposal for a Directive to establish rules that aim to ensure that any persons suspected or accused of a crime, whose liberty is being deprived at the early stage of proceedings, (including those subject to a European Arrest Warrant (EAW)) have access to legal aid pending any assessment and final decision as to their eligibility for such assistance. It also aims to guarantee the right to legal aid for persons subject to an EAW in certain other circumstances. The Government’s initial analysis is that current UK practice already delivers the main provisions required by the draft Directive. However, there are areas in which change would be required, with associated financial implications. Any additional financial burdens will need to be scrutinised closely in light of the Government’s continuing efforts to address the cost of legal aid.

“The proposed child suspect Directive aims to establish common rules setting minimum standards throughout the European Union on certain matters concerning the treatment of children who are suspected or accused in criminal proceedings or subject to EAW proceedings. The Government considers that the UK has appropriate safeguards for child defendants and meets the general aims of the directive, the Directive (as detailed in the EM) in part goes beyond the current law and practice. To that extent, clearly the proposal would involve a review of the Police and Criminal Evidence Act (PACE) and its associated codes, in relation to England and Wales, and other legislative provisions and practice.”

Subsidiarity,

12.20 The Minister says that there are no issues arising out of the Communication itself relating to subsidiarity but each proposal needs to be considered separately in terms of


subsidiarity and that the Minister wrote to both us and the House of Lords EU Committee discussing the matter in further detail. The Minister says, referring to his letter of 20 January:

“the Government notes that the Commission’s explains its motivation in bringing forward these proposals is that minimum standards throughout the EU are required in order to support mutual trust which the Commission says it has in mind in particular given that courts extraditing suspects under the European Arrest Warrant will benefit from assurance that the defendant will receive a fair trial anywhere in Europe. That aim, if accepted, clearly cannot be achieved by Member States acting alone and must be done at EU level. To that extent they would comply with the principle of subsidiarity.”

12.21 He adds, again referring to his earlier letter:

“that is not to say that the Government accepts that these measures are necessary or proportionate, but those considerations are distinct from the principle of subsidiarity.”

Fundamental Rights

12.22 The Minister says that the three proposed Directives aim to enhance the rights of suspects or accused persons under Article 6 of the ECHR (the right to a fair trial). This Article 6 right encompasses (inter alia) the presumption of innocence, the right to be informed of the nature of the case against you, and the right of access to a lawyer. The impact of each Directive on Article 6 is analysed in each corresponding Explanatory Memorandum.

Impact Assessment and Financial Implications

12.23 The Commission has produced impact assessments for each proposal and the Government is in the process of carrying out its own assessment of potential impacts and will provide an impacts checklist assessment on the proposed Directives in due course.

12.24 While there are no financial implications anticipated from the Communication itself, possible financial implications from individual proposals in the package have been discussed in the corresponding Explanatory Memoranda.

Timetable

12.25 According to the Minister, no discussion or further action on the Communication is expected but preliminary technical and expert negotiations of the package of proposals are expected to begin in early 2014.

Conclusion

12.26 The Minister’s Explanatory Memorandum is helpful in providing some overview of the Government’s policy, particularly on the question of subsidiarity, on the current legislative proposals in the package on procedural safeguards. However, it lacks


information on whether the Government supported the Commission’s rationale in proposing the package. It also lacks information on whether the Government has concerns common to all three proposals, and so gives little indication of consistent policy on EU proposals in this field.

12.27 As the Communication itself provides important background to the three draft Directives which comprise the procedural rights package, it is relevant to the opt-in debate on each. In the course of those debates we ask the Government to say whether it agrees with the Commission’s rationale and to what extent its concerns are common to all three proposals.

12.28 The document remains under scrutiny.

13 Clean Air Programme

(35690) 18155/13 + ADDs 1–5 COM(13) 918

Commission Communication : A Clean Air Programme for Europe

Legal base — Document originated 18 December 2013 Deposited in Parliament 31 December 2013 Department Environment, Food and Rural Affairs Basis of consideration EM of 14 January 2014 Previous Committee Report None, but see footnotes Discussion in Council No date set Committee’s assessment Politically important Committee’s decision Cleared

Background

13.1 The need for cleaner air has been recognised for many years in order to address a range of environmental and human health issues, with action having been taken at both national and EU levels, as well as through active participation in international agreements, notably the Convention on Long-range Transboundary Air Pollution (CLRTAP). In particular, the EU has focused on establishing minimum quality standards for ambient air and tackling the problems of acid rain, eutrophication and ground level ozone, but it has also sought to reduce emissions from large combustion plant and mobile sources; to improve fuel quality; and to integrate environmental protection requirements into the transport and energy sectors.


13.2 However, despite significant improvements having been made, serious air pollution continued to be a problem, and the Sixth Environmental Action Programme (EAP) called for the development of a thematic strategy on air pollution, in order to avoid significant risks to human health and the environment. Having examined whether the existing legislation was sufficient to achieve these objectives by 2020, and concluded that substantial problems would persist even with effective implementation of that legislation, the Commission put forward in September 2005 a thematic strategy58 on air pollution, establishing interim objectives and proposing appropriate measures for achieving them.

13.3 In particular, it suggested setting health and environmental objectives and emission ceilings for the main pollutants from 2010 onwards, involving significant reductions in emissions of sulphur dioxide, nitrogen oxides, non-methane volatile organic compounds, ammonia, and primary particulate matter compared with 2000 (although it also pointed out that a large part of these reductions could be delivered by measures already implemented by the Member States). The strategy also proposed that the Air Quality Framework Directive59 should be combined with the three “daughter” directives60 adopted under it, with special arrangements for zones suffering from exceptional problems; that exposure to particulate matter should be controlled, with a cap of 25 µg/m3 on the more hazardous fine particles below 2.5µg in diameter, with all Member States having to achieve a uniform interim reduction target of 20% between 2010 and 2020; and that a review should be carried out of the National Emissions Ceilings Directive (2001/81/EC).

13.4 The Commission saw the proposed Strategy as consistent with climate change policies, as helping to halt the loss of biodiversity, and as supporting the EU Health & Environment Action Plan. In addition, it noted that the targets in it would require air quality concerns to be integrated into other policy areas, including energy, transport and agriculture, as well as emissions from small combustion plants.

The current document

13.5 The Commission says that, whilst the EU’s air quality standards still lag behind those of other developed nations, compliance with some of them has been challenging, and it has therefore put forward — as part of a wider Clean Air package — this new strategy, which builds upon the measures proposed in 2005. More specifically, it seeks to tackle the reasons for non-compliance, proposes legislation to reduce harmful emissions by 2030, and promotes measures which also mitigate climate change on a timescale which the Commission says is consistent with meeting the EU’s commitments in that area.

Short term measures to deliver air quality

13.6 The Commission notes that over one-third of the EU’s Air Quality Management Zones exceed limit values for particulate matter (PM10), with 17 Member States currently being subject to infringement proceedings, and that a quarter of Zones exceed limit values

58 See (26900) 12735/05: HC 34-x (2005–06), chapter 8 (16 November 2005) and HC 34-xvi (2005–06), chapter 7 (25

January 2006).

59 Directive 96/62/EC OJ No. L 296, 21.11.96, p.55.

60 Covering respectively sulphur dioxide, nitrogen dioxide, oxides of nitrogen, particulate matter and lead, benzene and carbon monoxide, and ozone.


for nitrogen dioxide. It then identifies the part to be played in the short to medium term by effective implementation of legislation on emissions from light-duty vehicles, particularly of nitrogen oxides (NOx), where those from cars type-approved since 2009 are about five times the limit value, and where it says that, following the CARS 2020 Communication61 in 2010, robust emission limits based on real-world driving conditions will applied for type approval no later than 2017.

13.7 In addition, the Commission says that Member States will be able to reinforce the development and implementation of air pollution control programmes by drawing on finance under the 2014–2020 European Structural and Investment Funds (ESIF) and the new LIFE instrument, whilst the scope for local action will be enhanced by Sustainable Urban Mobility Plans and Urban Vehicle Access Regulations. However, it says that the policy review has concluded that the Ambient Air Quality Directive should not be revised at present, with the focus being on achieving compliance with existing standards by 2020 at the latest, and using a revised National Emission Ceilings Directive (see below) to bring down pollution in the period to 2030.

Longer term measures to reduce air pollution

13.8 The Commission says that a combination of legislation and targets has delivered real benefits for human health and the environment in areas such as acidification and reducing emissions of particulate matter, and in stimulating innovation in abatement, but that considerable health and environmental impacts remain, with air pollution being the main environmental cause of premature deaths (resulting in over 400,000 such deaths in 2010) and 62% of EU ecosystem areas exceeding critical loads for eutrophication. It goes on to comment that, even if existing legislation is observed in full, these problems will still persist, with premature mortality in 2025 being reduced by little more than one-third compared with 2005, and only minor further improvements expected for eutrophication. It therefore proposes new air pollution policy objectives for the period up to 2030, which it suggests would deliver an additional health improvement of about one-third and an additional reduction in eutrophication of about one-half62 compared with existing legislation, producing benefits which would greatly outweigh the compliance costs involved.

13.9 The Commission says that, in order to deliver these targets, a combination of regulatory and non-regulatory measures will be needed, with the EU and Member States working together. It suggests that this will involve:

Revising the National Emission Ceilings Directive

This is the subject of a separate proposal,63 but the Commission says that the aim is to extend the policy horizon to 2030, and to strengthen coherence with the assessment and management of the standards contained in the Ambient Air Quality Directive

61 See (34409) 15962/12: HC 86-xxiii (2012–13), chapter 6 (12 December 2012).

62 Thus, as compared with 2005, premature mortality in 2030 would fall by 52%, rather than 40% under current legislation, whilst the ecosystem areas exceeding euthrophication limits would fall by 35% rather than 22%.



and with climate change mitigation. For 2030, the proposal includes cost-effective national emission reduction obligations for the four original air pollutants (sulphur dioxide, nitrogen oxides, non-methane volatile organic compounds, and ammonia) and two new ones (fine particulate matter (PM2.5) and methane). In addition, there would be two interim milestones — one in 2020 for transposition of the EU’s new international obligations agreed under a recently adopted amendment to the Gothenburg Protocol (see below), and the other in 2025, which will aim to maintain the trajectory between 2020 and 2030.

Industrial emissions, eco-design and non-road mobile machinery

The Commission says that, whilst the National Emission Ceilings Directive gives Member States maximum flexibility to identify appropriate measures, support is also needed through targeted EU source controls, which — with the exception of ammonia (see below) — continue to make a significant contribution to reducing emissions. These include the Ecodesign Directive (which tackles emissions from domestic combustion sources); the Industrial Emissions Directive (which covers the main industrial sources, including in particular combustion plants over 50MW); and the Non-Road Mobile Machinery Directive (which will be revised to extend the capacity range and machinery types covered, and to align controls with limits for heavy-duty vehicles).

Directive on medium combustion plants

The Commission notes that the main gap in EU source legislation (other than agriculture) concerns emissions from installations of a thermal capacity between one and 50 MW, and it has therefore put forward a draft Directive64 to limit the emission of certain pollutants (notably nitrogen oxides, sulphur dioxide and particulate matter) from medium combustion plants through appropriate limit values, coupled with a registration scheme.

Emissions of ammonia from agriculture

The Commission notes that the proposed National Emission Ceilings Directive requires a reduction in emissions of ammonia by 2030, and provides for a set of source measures for Member States when developing national programmes. However, it observes that the latter would in this instance deliver only about one-quarter of the required reduction, and says that options for further source controls will be examined, including a general requirement for a nutrient balance in the application of fertiliser, specific controls on manure management, and labelling and other provisions for inorganic fertilisers.



Emissions from shipping

The Commission says that a revision in 2012 of the Directive on the Sulphur Content of Liquid Fuels (2012/33/EU) has put in place additional measures, with previous analysis having shown that emissions from shipping will continue to affect air quality on land, and that reductions from that sector would be cost-effective. It will therefore seek to encourage action in this area by enabling reductions from shipping to be offset against the corresponding obligations for land-based sources in 2025 and 2030. However, it also points out that the international character of shipping and Europe’s dependence on it means that preference must always be given to policy development through the International Maritime Organisation.

Non-regulatory measures

The Commission suggests that a number of such measures should be taken, including active engagement with the farming sector through the establishment on an agricultural platform as part of the European Clean Air Forum (see below); mobilisation of international action by encouraging ratification of the 2012 amendment to the Gothenburg Protocol (including, where appropriate, the provision of financial assistance through EU development cooperation); and promoting an integrated approach to research and innovation under the Horizon 2020 programme.

Growth and competitiveness

13.10 The Commission says that the new air policy, and the enhanced focus on Horizon 2020 will provide a stimulus to the economy through enhanced labour productivity and markets for environmental technology and services, and it also notes that the market for this technology is increasingly international and highly competitive.

Monitoring, evaluation and review

13.11 The Commission says that it will set up a Clean Air Forum to facilitate implementation of the strategy, and that progress will be reviewed every five years, with the first review by 2020, when progress towards the new policy targets for 2020 will be assessed using relevant indicators.

13.12 The Commission has carried out a highly detailed impact assessment of the whole package, and suggests that seeking to achieve 70% of the maximum technically feasible reduction of health impacts by 2030 would reduce the total external costs of around €212 billion by about €40 billion, including direct economic benefits (such as labour productivity, health care costs, and reduced crop losses) amounting to more than €2.8 billion, whilst annual compliance costs across the EU would be €3.3 billion However, it does not detail the likely impact on the UK, and the Government says that it will be seeking further information from the Commission, and will be undertaking its own analysis of the likely risks, costs and benefits of the proposals, including those on business, human health and environmental issues (such as biodiversity).


Gothenburg Protocol

13.13 The most relevant international arrangement in this area is the Gothenburg Protocol to the CLRTAP, which aims to abate acidification, eutrophication and ground-level ozone, and the package includes a proposal65 to ratify, on behalf of the EU, an amendment to the Protocol agreed in 2012, which sets out new national emission reduction commitments, to be met by 2020 and beyond. The EU is a Party to the Protocol, which sets limits for the Union as well as for individual Member States. and the amended Protocol would become part of EU law upon ratification, its alignment with the amended Protocol being achieved through several legal instruments, including the revised National Emission Ceilings Directive and the proposed Directive on medium-sized combustion plants.


13.14 In his Explanatory Memorandum of 14 January 2014, the Parliamentary Under Secretary of State at the Department for Environment, Food and Rural Affairs (Dan Rogerson) says the Government is committed to improving air quality in the UK, and welcomes the Commission’s proposals in principle. He has also commented on individual aspects of the package — such as the proposed amendment to the National Emissions Directive, and the proposal to regulate emissions from medium-sized combustion plants — on which we are reporting separately. He adds that the package will now be considered by the Council and European Parliament, and that the process of negotiating and agreeing the different elements may well take up to three years. In the meantime, the Government will provide further information once it has made a preliminary assessment of the likely risks, costs and benefits, its expectation being that it will be able to provide the first such indication by Easter 2014.

Conclusion

13.15 This is a wide-ranging and important document, which sets out a range of measures which need to be taken, both in the short term and in the medium to longer term, to reduce further the adverse effects of atmospheric pollution on human health and the environment, and for that reason, we are drawing it to the attention of the House. However, it seems to us that the main focus will switch to the two measures — dealing with national emissions limits and emissions from medium combustion plants — which have been the subject of specific proposals, and which we are also drawing to the attention of the House (and holding under scrutiny). In view of this, we do not think it likely that this over-arching Communication will require further consideration, and we are therefore clearing it.

65 (35692) 18165/13.


14 Regulating clinical trials

(34128) 12751/12 COM(12) 369 + ADDs 1–3

Draft Regulation on clinical trials on medicinal products for human use, repealing Directive 2001/20/EC

Legal base Articles 114 and 168(4)(c) TFEU; co-decision; QMV Department Health Basis of consideration Minister’s letter of 21 January 2014 Previous Committee Reports HC 83-xxiii (2013–14), chapter 7 (4 December 2013);

HC 83-v (2013–14), chapter 4 (12 June 2013); HC 86-xxxix (2012–13), chapter 7 (24 April 2013); HC 86-xvi (2012–13), chapter 7 (24 October 2012); HC 86-xi (2012–13), chapter 9 (5 September 2012)

Discussion in Council No date set Committee’s assessment Politically important Committee’s decision Cleared


14.1 Clinical trials provide essential information on the safety, efficacy and therapeutic benefits of particular drug treatments and increasingly involve participants at different trial sites across a number of Member States. Since 2004, the authorisation and conduct of clinical trials within the EU has been regulated by the Clinical Trials Directive.66 The Commission believes that the Directive has improved the safety and ethical soundness of clinical trials across the EU, as well as the reliability of the data obtained. It also acknowledges that, since its entry into force, the Directive has increased costs and contributed to a decline in clinical trials in the EU, describing it as arguably the most heavily criticised piece of EU legislation in the area of pharmaceuticals.67

14.2 The draft Regulation would repeal the Directive, introduce a new and less costly authorisation procedure, and seek to ensure that the rules governing the conduct of trials are differentiated to take account of the degree of risk associated with each trial. An EU portal, linked to a database, would provide a single point of entry for the submission of all the information needed to assess the therapeutic and public health benefits of a proposed clinical trial, as well as potential risks to patients taking part in the trial. The EU portal would be used for all clinical trials. For trials involving more than one Member State, a single “reporting Member State” would be responsible for making an initial assessment, taking into account any views communicated by other Member States in which the clinical trial is proposed to take place. Each Member State would be responsible for assessing those aspects of the draft Regulation which the Commission describes as “intrinsically national,

66 Directive 2001/20/EC, OJ No. L 121, 01.05.2001, pp. 34–44.

67 See p.17 of ADD 2.


ethical or local” — these include the well-being of those participating in the clinical trial and requirements for obtaining their informed consent, the suitability of the clinical trial site and of those conducting the trial, and compensation arrangements.

14.3 In an attempt to reduce the financial burden associated with clinical trials, the Commission draws a distinction between “low intervention” clinical trials (where the risk to participants only marginally exceeds that already inherent in normal clinical practice) and others where there may be additional risk. For the latter, the Commission has proposed the introduction of a national indemnification mechanism, which would operate on a not-for-profit basis, in order to help non-commercial sponsors, such as academics involved in medical research, to obtain the necessary insurance cover for clinical trials.

14.4 The Government welcomes the draft Regulation, supports the “proportionate and risk-adapted approach” to clinical trials proposed by the Commission, and considers that it has the potential to reduce regulatory, administrative and financial burdens. Whilst endorsing the use of a single EU portal for all clinical trial applications in the EU, the Government has pressed for a clearer description of how the single authorisation procedure would work, focusing in particular on the relationship between the reporting Member State and other Member States likely to be involved in a clinical trial. It opposes the introduction of a national indemnification mechanism on the grounds that the commercial insurance market for clinical trials works well in the UK. Our earlier Reports provide a detailed overview of the draft Regulation, the Government’s position and the views of stakeholders.68

14.5 There is a broad consensus on the need to change the existing regulatory framework for clinical trials within the EU and we are grateful for the Government’s progress reports on the negotiations. When we last reported on the draft Regulation, we noted that trilogue discussions between the Council, European Parliament and Commission were expected to conclude before the end of 2013 and asked the Minister (Earl Howe) to provide further information on:

• the changes that have been made to the procedure for authorising clinical trials (including the relevant timescales) and, in particular, how the Member State carrying out the initial clinical assessment will take into account the views of other Member States in which a clinical trial is proposed to take place;

• whether the Commission’s proposal for the introduction of a national indemnification mechanism for certain types of clinical trials will be retained in the draft Regulation or, if not, what will replace it;

• any other significant changes to the Commission’s original proposal; and

• his assessment of the impact that the changes are likely to have on the authorisation, conduct and publication of the conclusions of clinical trials in the EU, as well as the availability of clinical trial data.

68 See headnote. The draft Regulation is also considered in some detail in the Third Report from the Science and

Technology Committee, (2013–14), Clinical Trials, HC 104.



14.6 The Parliamentary Under-Secretary of State for Quality (Earl Howe) tells us that an informal agreement has been reached on the draft Regulation, following the conclusion of trilogue discussions in December 2013. He considers that the compromise agreed meets the Government’s negotiating objectives, represents a significant improvement on the existing Directive, and will help to make the EU a more attractive place to conduct clinical research. He asks us to release the draft Regulation from scrutiny so that the Government is able to support its formal adoption at a forthcoming Council meeting.

14.7 The Minister describes the main changes to the Commission’s original proposal. Turning first to the authorisation procedure for clinical trials, he notes:

“The proposed efficiencies in the authorisation process — worth £595 million in savings according to the European Commission’s impact assessment — have all remained in the text. These include the EU portal and database, the single submission, the joint assessment of multi-state applications and the single decision at national level (combining the currently separate regulatory and ethics approvals).

“It has been agreed that the European Medicines Agency (EMA) will be responsible for building and maintaining the portal and the database and not the European Commission. The Government supports this because this will allow Member States to directly influence the development of the IT systems through the Management Board of the EMA. Because these IT systems are of critical importance for the implementation of the Regulation, provisions have been included in the text, on the basis of a UK proposal, that will allow for an independent audit of the functionality of the IT systems, commissioned and reviewed by the EMA Management Board, and that will ensure that the Regulation will only apply once all necessary IT systems are fully functional.”

14.8 The Minister notes that the Commission’s original proposal contained little detail on the practical operation of the joint assessment process for clinical trials involving more than one Member State. This has been rectified in the compromise text, which establishes three distinct “phases”:

• an initial assessment phase by the designated reporting Member State covering the clinical aspects of the trial;

• a coordinated review phase carried out by all Member States involved in the clinical trial; and

• a consolidation phase in which the reporting Member State produces a final assessment, taking due account of any concerns raised by other Member States and recording how they have been addressed.

14.9 Member States involved in the joint assessment process are bound by the outcome of the final assessment, unless they have reason to object on the following grounds:

• participation in the clinical trial would result in inferior treatment when compared with normal clinical practice in the objecting Member State;


• participation in the clinical trial would infringe national laws on the use of human cells, substances that induce abortion, or narcotic substances; or

• concerns raised during the joint assessment process which are based on safety and the reliability or robustness of the data submitted to support the clinical trial.

14.10 The Minister notes that the timelines for approving clinical trials have been extended (from 41 to 60 days if no questions are raised during the authorisation process, and from 65 to 91 days if there are questions), but adds:

“Tacit approval (if no decision is taken within the 60 day period, the authorisation is deemed to be given), although controversial among Member States, has remained in the text.”

14.11 He continues:

“The Government would have preferred to have seen timelines closer to the European Commission’s proposal. However, there was very little support from other Member States for these as the majority thought more time was needed for the multi-state assessment process and the coordination between regulator and ethics committees at national level. Although longer than we would have liked, the Government thinks the agreed timelines are acceptable given that the timeline includes joint assessment of multi-state applications and a joint ethical/regulatory decision at Member State level. UK only trials (approximately 50 percent of authorisations in the UK) will continue to be authorised well within the agreed timelines, ensuring that the UK remains competitive both within the EU and globally.”

14.12 The Minister adds that the shorter timelines envisaged by the Commission for low intervention clinical trials — those using medicines within the terms of their existing marketing authorisation or in a way that is evidence based and poses minimal additional risk to patients — have been removed. Nevertheless, he concludes that:

“Overall, the authorisation process for sponsors of clinical trials conducted in the EU will be much simpler and efficient than it is today. Sponsors will only have to submit one application for a trial in the EU to the EU portal where they currently have to submit two applications in every Member State (to the regulator and the ethics committee). The joint assessment of multi-state applications within a single common timeline will benefit sponsors further as will the single decision at Member State level. This will make it easier to conduct clinical research in the EU.”

14.13 The Minister notes that the draft Regulation clarifies how the ethical dimension of clinical trials is to be assessed. He continues:

“The European Commission’s proposal only referred to Member States and not ethics committees or national competent authorities. This was done to reflect divergent practices in Member States. In the current text, ‘ethics committee’ has been defined and it has been clarified that an ethical review must be performed and that this must be done by an independent ethics committee. Where the European Commission proposed to take the view of at least one patient into account when


assessing an application, this has now been changed to [a] lay person because it is not always possible to have patients participate in the assessment.”

14.14 Changes have been made to the provisions of the draft Regulation dealing with informed consent:

“The text has been amended to reflect that clinical trials on incapacitated subjects and minors can take place not only when there is direct benefit to the subject involved but also when there is some expected benefit to the population represented. In this situation the trial must only pose minimal risk to and minimal burden on trial subjects in comparison with the standard treatment.

“The text also introduces provisions for clinical trials on pregnant and breastfeeding women and provides Member States the possibility to maintain additional measures for clinical trials on persons in the military service, persons deprived of liberty or persons in residential care institutions. Although the Government believes the existing provisions covered all of these groups, we see no harm in having these additional provisions.”

14.15 New provision is made for the introduction of simplified informed consent for so-called “cluster trials” which only take place in one Member State. The Minister explains:

“Cluster trials are large scale trials with medicines used within their marketed authorisation in which GP practices or hospitals or even regions of the country, are randomised instead of the patients. The simplified consent must be in line with national legislation and is subject to review by an ethics committee.”

14.16 The Minister reiterates the Government’s objections to the proposed introduction of a national indemnification mechanism for certain clinical trials which would have obliged Member States to “take over the role of private insurers in insuring clinical trials”. He continues:

“The Government has been unable to support the mechanism because of the flaws in the European Commission’s impact assessment and the lack of evidence found in the UK that insurance for clinical trial activity is a problem. Member States unanimously rejected this proposal and this obligation has now, in agreement with the European Parliament, been removed from the text. It has been replaced by a general text requiring Member States to ensure that systems for compensation for damages suffered by a subject resulting from participation in a clinical trial are in place. These systems can be either private or public.”

14.17 Turning to the transparency of clinical trial data, an issue we raised in our previous Report on the draft Regulation, the Minister summarises the outcome agreed in the compromise text, following negotiations with the European Parliament:

“As proposed by the European Commission, all trials conducted in the EU will need to be registered and a summary of the results will need to be submitted to the EU portal within one year after the end of the trial. In addition to this, the structure and content of this summary has now been included in the annex to the Regulation and the requirement to include a lay summary has been introduced.


“In addition, clinical study reports that have been submitted in support of a marketing authorisation will have to be submitted to the EU database by the applicant within 30 days after a marketing authorisation has been granted, the decision making process has been completed or the applicant has withdrawn the application. The EU database will be publicly accessible except for when confidentiality is justified on the grounds of protecting personal data, protecting commercially confidential information, protecting confidential communications between Member States or ensuring effective supervision of the conduct of the trial by a Member State.”

14.18 The Minister adds:

“I believe the Regulation will have a very positive impact for the public on their knowledge of what clinical trials are actually taking place, because all trials will need to be registered. In anticipation of the application of the Regulation, the Health Research Authority (HRA) has already made trial registration a condition of a favourable ethics opinion. The availability of summaries of all trials and clinical study reports where available will also have a great impact on transparency of clinical trial results. Also as required by the Regulation, the European Commission will produce a guideline on the formatting and sharing of raw data on a voluntary basis.”

14.19 Finally, the Minister notes that the draft Regulation includes a clause requiring the Commission to undertake a review five years after it has become operational. The review will assess the impact of the Regulation on scientific and technological progress, provide comprehensive information on the different types of clinical trials authorised in the EU, and consider the measures needed to maintain the competitiveness of European clinical research (accompanied, if appropriate, by further legislative proposals to update the Regulation).

14.20 The Minister recognises that implementing the Regulation will present challenges, adding:

“The EU portal and database will need to be fully functional before the Regulation can apply and the Government will therefore influence the development of the IT systems where it can. Also, Member States will need to ensure that coordination mechanisms are in place between the regulator and ethics committees and that ethics committees can work to the agreed timelines. I believe that in the UK, we are in a good position to do this with the work that the Health Research Authority (HRA) has been doing on streamlining ethical review and the existing collaboration between the HRA and the Medicines and Healthcare Products Regulatory Agency (MHRA).”

Conclusion

14.21 We thank the Minister for providing a comprehensive update on the outcome of trilogue negotiations and a copy of the compromise text agreed. We welcome the inclusion of additional provisions clarifying how multi-State assessments of clinical trials will be conducted and take due account of the views of all participating Member States. We note that the Commission’s proposal for the introduction of mandatory national indemnification schemes to cover claims for damages arising from


participation in a clinical trial has been replaced by a requirement to ensure that appropriate systems for compensations are put in place in each Member State. We understand, in light of the responses to the Government’s consultation on clinical trial insurance, that the compromise agreed is likely to be acceptable to UK stakeholders.

14.22 We particularly welcome the strengthening of provisions on the transparency of clinical trials and clinical trial data. The Report on Clinical Trials published by the House of Commons Science and Technology Committee in September 2013 underlined the importance of clinical trial transparency and recommended that efforts to increase the availability of clinical trial data should focus on the provision of information that is “accessible, assessable, intelligible and usable”.69 We consider that the compromise text agreed by the Council and European Parliament goes a considerable way to achieving these objectives by requiring:

• registration of all applications for clinical trials to be conducted within the EU in a single, publicly accessible EU database;

• publication in the same database of the results of each authorised clinical trial, irrespective of the outcome of the trial, accompanied by;

• publication of a lay summary written in plain language that can be understood by non-experts.

14.23 We note, moreover, that Member States are required to establish “effective, proportionate and dissuasive” penalties covering, amongst other things, a failure to comply with the provisions on transparency.

14.24 We are satisfied that the outcome of negotiations on the draft Regulation has met the Government’s main negotiating objectives and are content to clear it from scrutiny. In so doing, we draw our Report to the attention of the Science and Technology Committee.

69 See HC 104 (2013–14), para 11 of Conclusions and Recommendations.


15 The manufacture, presentation and sale of tobacco and related products

(a) (34587) 18068/12 + ADDs 1–7 COM(12) 788 (b) (35743) — —

Draft Directive on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products Directive on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products — text for political agreement

Legal base (a) Article 114 TFEU; co-decision; QMV

(b) Articles 53(1), 62 and 114 TFEU; co-decision; QMV

Department Health Basis of consideration Minister’s letter and EM of 27 January 2014 Previous Committee Reports HC 83-xxiv (2013–14), chapter 1 (11 December 2013);

HC 83-xxxiii (2013–14), chapter 1 (4 December 2013);HC 83-xx (2013–14), chapter 1 (6 November 2013); HC 83-xiii (2013–14), chapter 1 (4 September 2013); HC 83-viii (2013–14), chapter 5 (3 July 2013); HC 83-vi (2013–14), chapter 1 (19 June 2013); HC 83-v (2013–14), chapter 5 (12 June 2013); HC 86-xxx (2012–13), chapter 3 (30 January 2013)

Discussion in Council Formal adoption expected in February/March 2014 Committee’s assessment Legally and politically important Committee’s decision Document (a): cleared following a debate in European

Committee C on 16 December 2013; Document (b): cleared

Background and previous scrutiny of document (a)

15.1 Document (a) is a draft Directive published by the Commission in December 2012. Its purpose is to update the current regulatory framework for tobacco products, in force for more than a decade, to take account of scientific, market and international developments, including the World Health Organisation Framework Convention on Tobacco Control. As with previous EU tobacco products Directives, it is an internal market measure based on Article 114 of the Treaty on the Functioning of the European Union (TFEU) and (as required by that Article) takes as its base a high level of public health protection. The changes proposed in the draft Directive are intended, in particular, to discourage tobacco


consumption by young people, as the Commission estimates that 70% of smokers start before the age of 18.

15.2 The draft Directive has had a long and fraught scrutiny history which is set out in our earlier Reports.70 It would repeal and replace the 2001 Tobacco Products Directive, but some elements of that Directive — such as the maximum tar, nicotine and carbon monoxide content of cigarettes — would remain unchanged. More often, existing provisions would be strengthened. For example, health warnings on cigarette packets and packaging for roll-your-own tobacco would be made larger and include a combined text warning and a colour photograph, and there would be further restrictions on product information and labelling to avoid any suggestion that tobacco products may have positive health or life style effects. New elements proposed in the draft Directive include:

• banning the use in tobacco products of flavourings which may increase their appeal for children (for example, chocolate or strawberry-flavoured cigarettes, but the ban would also extend to menthol cigarettes);

• banning the use of additives (for example, vitamins) or stimulants (such as caffeine) which may suggest energy or health-giving properties;

• prescribing the shape and size of cigarette packets (in effect, banning the sale of “lipstick packs” which may have particular appeal for girls);

• introducing new rules to make it easier to track and trace tobacco products through the supply chain and combat illicit trade;

• harmonising rules on cross-border distance selling of tobacco products in order to tackle under-age purchasing;

• requiring most non-tobacco nicotine-containing products (“NCPs”), such as e-cigarettes, to be regulated as medicines; and

• introducing health warnings for herbal products for smoking.

15.3 Whilst broadly supportive of the draft Directive, the Government’s ability to provide a clear indication of its views on key provisions was hampered by delays in securing cross-Government approval of the UK’s negotiating position and the need to await the outcome of research being undertaken by the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) on the regulation of NCPs as well as the Government’s consultation on the possible introduction of standardised (or plain) packaging for tobacco products.

15.4 In June 2013 the Health Council, with the UK’s support, agreed a general approach on the draft Directive which included the following changes to the Commission’s original proposal:

• a reduction (from 75% to 65%) in the surface area of combined (picture and text) health warnings on smoked tobacco products;

70 See headnote.


• the removal of the proposed ban on “slim” cigarettes, coupled with a requirement for the Commission to monitor market developments;

• flexibility for Member States to ban cross-border distance selling of tobacco products;

• a reduction in the number and scope of Commission delegated powers; and

• a lower threshold for regulating NCPs as medicines.

15.5 In addition, the Government secured changes to Article 24 of the draft Directive which it regarded as vital in protecting its ability to maintain or introduce more stringent domestic tobacco control measures (especially plain packaging) if duly justified on public health grounds.

15.6 In October 2013, the Government informed us that the European Parliament (EP) had voted on amendments to the draft Directive and would shortly be embarking on trilogue negotiations with the Council and Commission with a view to agreeing a compromise text for adoption before EP elections in May 2014. The most significant change proposed by the EP concerned the regulation of NCPs. Instead of requiring most NCPs to be regulated as medicines, the EP called for these products — essentially e-cigarettes — to be marketed as consumer products, but subject to specific regulatory requirements.

15.7 The draft Directive was debated in European Committee C on 16 December 2013, shortly before the conclusion of trilogue negotiations, and (following a resolution of the House) cleared from scrutiny. We have included it in this chapter because of its relevance to document (b), the compromise text agreed by the Council and European Parliament following the conclusion of trilogue negotiations. The Parliamentary Under-Secretary for Public Health (Jane Ellison) wrote to us on 30 December summarising the outcome of these negotiations. She recognised that the compromise text differed substantially, in some respects, from the text originally deposited for scrutiny, and confirmed that the Government would submit a further Explanatory Memorandum highlighting the key changes.

Document (b) — the compromise text

15.8 The compromise text agreed during the course of trilogue negotiations, initially classified as limité and not available for publication, has now been made public and deposited for scrutiny by the Government. The Minister expects it to be formally approved by the European Parliament at its plenary meeting in late February and by the Health Council in March. The Directive would come into effect two years later, in spring 2016. The Government’s position is set out in its Explanatory Memorandum which also summarises areas in which significant changes have been made.


15.9 The Minister (Jane Ellison) notes that the draft legislation originally proposed by the Commission was based on extensive consultation with stakeholders, external studies, and a


thorough Impact Assessment evaluating the economic, social and health effects of various policy options. She supports the primary objective of improving the functioning of the internal market, as well as the focus on public health and, in particular, protection of the health of children. Her Explanatory Memorandum describes the changes subsequently agreed by the Council and European Parliament during trilogue negotiations, which the Government broadly endorses.

Legal base

15.10 The compromise text continues to cite an internal market legal base (Article 114 TFEU) but also includes two additional legal bases — Articles 53(1) and 62 TFEU which concern the freedom to provide services or take up self-employment in another Member State. These legal bases were added at a late stage in trilogue negotiations and resisted by the Government on the grounds that the draft Directive falls within the scope of Article 114 TFEU alone. The Minister explains that their inclusion stems from a concern that changes to Article 18 and related recitals, on e-cigarettes, indicate that Treaty provisions on the freedom to provide services may be engaged.71 The addition of new legal bases does not affect the legislative procedure for the draft Directive.

Regulation of e-cigarettes

15.11 The Minister explains that NCPs are not covered by the 2001 Tobacco Products Directive, nor are they regulated by any specific domestic legislation in the UK. In some Member States, they are regulated as medicines or in a similar way to tobacco products. The Commission’s original proposal would have required NCPs exceeding a certain level or concentration of nicotine to be regulated as medicines. Those beneath this threshold would continue to be sold as consumer products, but carry a prominent health warning.

15.12 Scientific and market research undertaken by the MHRA on the physiological effects of nicotine and the impact of regulation on public health culminated in the publication of a report, in June 2013, recommending that all NCPs should be regulated as medicines. The Minister explains that the MHRA findings have informed the Government’s negotiating position, adding:

“Although the UK Government had concerns about the proposed threshold and the wording of the warning for low-dose NCPs, we concluded that the vast majority of NCPs could be effectively regulated as medicines to ensure the safety, quality and efficacy of these products, so we were broadly supportive of the Commission proposals. The vast majority of other Member States also supported medicines regulation. However, the European Parliament opposed medicines regulation for NCPs, seemingly on the grounds that such an approach would be costly and that it might restrict the availability of these products to pharmacies only in some Member States. We also understand that there was extensive lobbying activity in Brussels by

71 For example, recital 32h refers to disparities in national laws and practices on advertising and sponsorship which

might impede the free movement of goods and freedom to provide services.


e-cigarette manufacturers, importers and users. With the European Parliament taking this position, a compromise had to be found.”72

15.13 The Minister sets out the Government’s approach to trilogue discussions with the European Parliament:

“Throughout negotiations, the UK Government was clear that we did not want to force these increasingly popular products off the market. However, we were also very aware of the concern that e-cigarettes should not become attractive to young people. Additionally, in recognising how novel e-cigarettes are, we want the emerging e-cigarette market to be monitored closely.

“Therefore, during negotiations, the UK Government’s overall objectives with regard to the regulation of e-cigarettes were to (i) allow these products to support our harm reduction agenda (ii) to ensure the regulation of these products so that they will not be appealing to children and (iii) to provide information to enable this emerging market to be effectively monitored.”73

15.14 In pursuing these objectives, the Minister sets out the safeguards which the Government sought to secure during trilogue negotiations:

“Among those safeguards were: limitations on the opportunities to make e-cigarettes appealing to children through advertising and promotion; requirements for manufacturers/importers of e-cigarettes to provide full information on all ingredients and emissions of e-cigarettes made available for sale; and a maximum level for nicotine in e-cigarettes. In addition, we wanted Member States to have the option to be able to charge proportionate fees associated with collecting and analysing data provided by the industry; and for the Commission to undertake a comprehensive review of the NCP market.”74

15.15 The Minister notes that the compromise reached with the European Parliament is based on a provision — Article 18a — dealing exclusively with e-cigarettes, adding:

“With the exception of nicotine replacement products that are already regulated as medicines (such as nicotine gum and patches), e-cigarettes are currently the other main non-tobacco source of nicotine on the market.”75

15.16 Article 18a provides that the Directive will only apply to e-cigarettes that do not require authorisation as medicines or medical devices. The Minister explains the practical implications:

“In effect, that means that e-cigarette manufacturers/importers that wish to market their products as a smoking cessation aid can choose to apply for a marketing authorisation as a medicinal product. E-cigarettes that have a medicines licence


73 Paras 31–32 of the Minister’s Explanatory Memorandum.




would then be subject to the specific regulatory requirements set out in medicines legislation.”76

15.17 E-cigarettes that are not regulated as medicines or medical devices must comply with the requirements set out in Article 18a, of which the main elements (our summary) are:

• a requirement for manufacturers and importers of e-cigarettes and refill containers to:

• notify national authorities when their products are placed on the market;

• provide information on ingredients and emissions, toxicological data, nicotine dosage, product components and the manufacturing process;

• accept full responsibility for the quality and safety of their products; and

• submit comprehensive data on sales volumes, mode of sale, trends in consumption, and usage by young people and non-smokers;

• limitations on the volume of nicotine-containing liquid and on the nicotine content (equivalent, the Commission suggests, to the dosage of nicotine derived from a standard cigarette);

• a prohibition on the use of certain additives;

• a requirement to ensure consistency in the delivery of nicotine doses;

• a requirement to include an information leaflet with each unit packet of e-cigarettes and refill containers, to list ingredients, nicotine content and delivery per dose on the outer packaging, to carry one of two possible health warnings on the addictive properties of nicotine (covering 30% of each of the largest surfaces of the unit packet and any outer packaging), and to caution against use by young people and non-smokers;

• a ban on commercial advertising in the printed media, radio, TV or information society services, and restrictions on activities which directly or indirectly promote e-cigarettes;

• a requirement for Member States to:

• monitor the development of the e-cigarette market, including evidence of “gateway use” among young people and non-smokers;

• make publicly available all information received (subject to confidentiality);

• require manufacturers, importers or distributors to collect information, report and act on any suspected adverse effects of their products, or deficiencies in safety or quality; and

• a requirement for the Commission to report on potential risks to public health associated with the use of refillable electronic cigarettes within two years of the



Directive entering into force and, after five years (under Article 23 of the draft Directive), to report on developments in the e-cigarette market, including the impact on smoking cessation efforts as well as the uptake of e-cigarettes by young people and non-smokers.

15.18 Article 18a of the compromise text also includes provision for a Member State to take appropriate provisional measures if there are reasonable grounds for considering that a brand or type of e-cigarette or refill container presents a serious risk to public health. If at least three Member States impose a ban on justified grounds, the Commission may extend the prohibition to all Member States.

15.19 The Minister notes that the compromise text does not include age of sale restrictions, but nor would it prevent Member States from introducing such measures domestically. She indicates that the Government intends to do so by means of an amendment to the Children and Families Bill prohibiting the sale of e-cigarettes to those under the age of 18. The Government will also consider whether other measures may be necessary to safeguard the health of young people.

Labelling and packaging

15.20 The Minister explains that the compromise agreed on health warnings is in line with the Council’s general approach. Although the combined text and picture warnings will be smaller than originally proposed by the Commission, they will be significantly larger than current requirements (65% of the front and back of packs, compared with 40% for cigarette packets and 30% for roll-your-own tobacco under the 2001 Tobacco Products Directive).

15.21 The compromise text has reduced the minimum pack weight for roll-your-own tobacco from 40g in the Commission’s original proposal to 30g, but retained the 20-cigarette minimum pack size. As the European Parliament had advocated a lower minimum pack weight of 20g for roll-your-own tobacco, the Minister supports the compromise agreed, adding:

“Our support is based on the fact that [a] higher price for tobacco products can discourage consumption.”77

15.22 The Minister notes that a majority of Member States and the European Parliament rejected the Commission’s proposal to ban “slim” cigarettes with a diameter of less than 7.5mm, but says that the Government will continue to monitor the growing market in these products.

Member State flexibility — Article 24

15.23 Throughout the negotiations, the Government has underlined the importance of Article 24 in preserving flexibility for Member States to go beyond the requirements of the Directive where justified on public health grounds. Following the conclusion of trilogue negotiations, the Commission made clear in a press notice that Member States wishing to introduce standardised packaging would be free to do so “under the justifications and



conditions provided for in the Directive”.78 This is reflected in Article 24(2a) of the compromise text which provides:

“This Directive shall not affect the right of a Member State to maintain and introduce further requirements, applicable to all products placed on its market, in relation to standardisation of packaging of tobacco products, where it is justified on grounds of public health, taking into account the high level of protection achieved through this Directive. Such measures shall be proportionate and may not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. They shall be notified to the Commission together with the grounds for maintaining or introducing them.”

15.24 The Minister explains that the Government has commissioned an independent review of the public health evidence supporting standardised packaging which will report in March 2014. She continues:

“The Government will introduce standardised tobacco packaging if, following the review and consideration of the wider issues raised by this policy, we are satisfied that there are sufficient grounds to proceed, including public health benefit. The Government also intends to take advantage of the opportunity offered by the Children and Families Bill, which is currently being considered in the House of Lords, to table a Government amendment to take enabling powers now which would allow regulations to be made to introduce standardised tobacco packaging later, if it is decided to proceed with this policy.”79

15.25 Whilst expressing disappointment that the Council’s general approach text on Article 24 was amended during trilogue negotiations, the Minister expresses confidence that the compromise agreed will allow the Government to proceed with the changes it intends to propose to the Children and Families Bill, thereby paving the way for standardised packaging.

Cross-border distance sales

15.26 The Commission’s original proposal required retail outlets intending to sell tobacco products to consumers in another Member State to register with the competent national authorities and to introduce a mandatory age verification system. The compromise text goes further, expressly providing that Member States may prohibit cross-border distance sales, a flexibility which the Minister welcomes while making clear that the Government currently has no plans to introduce such a ban.

Traceability and security features

15.27 The Commission’s original proposal includes provisions on the tracking and traceability of tobacco products and the use of security features to ensure their authenticity which are broadly replicated in the compromise text. The Minister acknowledges that the

78 European Commission press notice, 18 December 2013, http://europa.eu/rapid/press-release_MEMO-13-1177_en.htm.



Government would have preferred these provisions to be removed from the draft Directive (and dealt with through EU customs and excise legislation or domestic action) or framed in such a way as to be consistent with the Protocol to the WHO Framework Convention on Tobacco Control concerning illicit trade which the UK and EU signed in December 2013. She continues:

“We were unable to secure enough support from other Member States or the European Parliament to achieve either of those objectives. While we are disappointed that Article 14 of the final compromise text places requirements on parties further down the supply chain than under the ITP [Illicit Trade Protocol], and will eventually cover a wider range of products than cigarettes and RYO [roll-your-own], on balance, we did not consider our concerns to be of a sufficient magnitude to justify opposing the revised Directive in its entirety. As it transpired, under the qualified majority voting system, and what we know about support among other Member States for the compromise text, the UK’s opposition would not have been sufficient to block the Directive anyway.”80

Impact of the changes agreed

15.28 The Minister considers what impact the changes agreed in the compromise text will have for industry and for national authorities. Turning first to industry, she observes:

“The current situation regarding e-cigarettes means that there is little regulatory cost for manufacturers/importers associated with their sale in the UK. The proposed Directive means that some additional regulatory costs will arise for manufacturers/importers of e-cigarettes.

“Nevertheless, the costs of complying with the revised Directive should not be as high as the costs that would have come from the requirements set out in the Commission’s original proposal. Reducing the regulatory costs for e-cigarette manufacturers/importers was one of the primary arguments of the European Parliament in justifying why e-cigarettes should be made available as general consumer products with specific requirements, rather than being regulated as medicines. The MHRA’s Impact Assessment estimated annualised costs to a single UK e-cigarette importer for complying with medicines regulation range from £87,000 to £266,000.”81

15.29 The Minister expects the removal of the prohibition on “slim” cigarettes to reduce compliance burdens for tobacco manufacturers.

15.30 There will be additional administrative costs for national authorities arising from the implementation and dissemination (amongst trading standards bodies) of new regulatory requirements for e-cigarettes which the Minister expects to build on existing arrangements to support local authorities in enforcing tobacco-related legislation.


81 Paras 58–9 of the Minister’s Explanatory Memorandum.


Delegated and implementing acts

15.31 The Minister confirms the Government’s view that the powers conferred on the Commission to adopt delegated and implementing acts are “appropriately defined and effectively constrained.”82

Conclusion

15.32 We are pleased that the limité classification applied to the compromise text agreed by the Council and European Parliament following trilogue negotiations has been removed and that the text is available for public scrutiny before its formal approval in the coming weeks. We also thank the Minister for providing a further Explanatory Memorandum setting out the Government’s position on the changes agreed to the Commission’s original proposal.

15.33 We welcome the Minister’s frankness in acknowledging that the Government has not secured all of its negotiating objectives, particularly in relation to the rapidly expanding e-cigarette market. We would add that the secretive nature of trilogue negotiations has not been conducive to parliamentary or public scrutiny of the important issues being discussed, despite the Minister’s efforts to keep us informed of developments. Nonetheless, we recognise that some compromise is inevitable when seeking to regulate such a contentious area where so many competing interests are at stake.

15.34 We have sought during the scrutiny process to elucidate the Government’s thinking on key elements of the draft Directive and to ensure that its views on the justification for further EU regulatory action are clearly stated. While some compromises have clearly been difficult for the Government, the Minister has consistently maintained that the internal market and public health benefits of a stronger EU regulatory framework for tobacco products and e-cigarettes outweigh disappointment with some elements of the compromise agreed.

15.35 We are aware that the appropriate regulatory model for e-cigarettes continues to be contested and note that the outcome agreed in the compromise text falls short of the approach advocated by the UK’s Medicines and Healthcare products Regulatory Agency and preferred by the Government. We also note that the provisions on e-cigarettes will be subject to further review within five years of the Directive taking effect, and to intensive monitoring in the meantime. Given the wide range of opinion on the appropriate level and intensity of regulation, we consider that the Government is best placed, drawing on the expert advice available to it, to determine whether the public health benefits of the draft Directive taken as a whole, are sufficient to support its adoption. Accordingly, we clear document (b) from scrutiny. Document (a) has already been cleared.

82 Para 64 of the Minister’s Explanatory Memorandum. See also chapter 1 of our Sixth Report, (2013-14) HC 83-vi,

dated 19 June 2013.


16 Financing EU external action: 11th European Development Fund

(35144) 11672/13 COM(13) 445

Draft Council Regulation on the Implementation of the 11th European Development Fund

Legal base — Department International Development Basis of consideration Minister’s letter of 20 January 2014 Previous Committee Report HC 83-xiv (2013–14), chapter 6 (11 September

2013 Discussion in Council To be determined Committee’s assessment Politically important Committee’s decision Cleared

Background

16.1 The European Development Fund (EDF) is the main instrument for delivering EU assistance for development cooperation under the Cotonou Agreement with ACP States and for financing EU cooperation with the Overseas Countries and Territories (OCT). Each EDF is concluded for a multi-annual period. The EDF is funded outside the EU budget by the Member States on the basis of specific contribution keys. The UK’s share is 14.68%.

16.2 The Multi-Annual Financial Framework (MFF) agreed at the February 2013 European Council included an overall figure of €30.5 billion for the EDF for the period 2014–20. This is part of a total package covering Heading 4 of the EU budget, on External Action, involving a range of other financial instruments (pre-accession finance, European Neighbourhood Partnership, Stability Instrument, etc.).

16.3 The full background thus far is set out in the earlier reports referred to in the headnote to our previous Report under reference.83 In essence, the EDF element was de-coupled from the rest of the Heading 4 process. Several parts of the EDF agreement — the Internal Agreement; the Implementing Regulation; and the Financial Regulation — specify the allocation and management of the fund.

16.4 The Committee cleared the Commission Communication and Council Decision dealing with the “top line” elements of the EDF 11 Internal Agreement at its meeting on 19 June, prior to the June EU/ACP Council of Ministers; having now been agreed with the ACP, it will form a new annex to the Cotonou Agreement. The Internal Agreement will only enter into force once all Member States have ratified it, which is expected to take 18 months or more. The Commission Communication accordingly proposed the provisional application of a number of articles of the EDF 11 Internal Agreement, so as to ensure all

83 See HC 83-xiv (2013-14), chapter 6 (11 September 2013).


appropriate decision making procedures and modalities for the implementation and programming of EDF 11 are put in place whilst Member States ratify the agreement — thereby minimising any delay to the disbursement of funds once full ratification has been completed. The articles to be provisionally applied include the adoption of an Implementing Regulation and a Financial Regulation. No commitment of any EDF 11 funds can be committed until ratification is completed by all Member States. (The same approach was followed for the transition from EDF 9 to EDF 10: to ensure some continuity and on-going predictability of aid flows to beneficiary countries, balances from EDF 8 and EDF 9 and de-committed funds from EDF 10 are expected to be made available during the period before EDF 11 enters into force.)84

The draft Council Regulation

16.5 The draft Implementing Regulation sets out the programming process and monitoring framework for all EDF 11 funds that will be spent on country and regional programmes, intra-ACP programmes such as the Africa Peace Facility, and the Cotonou Investment Facility.

16.6 The EDF 11 Implementing Regulation complies with the provisions of the Cotonou Agreement and aligns, where appropriate, with the main provisions of other development instruments, particularly the Development Cooperation Instrument (DCI) and the common rules and procedures for the implementation of the Union’s instruments for external action, the Common Implementation Regulation (CIR). This alignment would allow for the inclusion of the EDF in the EU budget post 2020, were the Member States so to decide.

16.7 It was helpfully summarised and commented upon by the Parliamentary Under-Secretary of State at the Department for International Development (Lynne Featherstone) in her Explanatory Memorandum of 27 August 2013 (see paragraphs 6.6 and 6.7 of our previous Report).85

16.8 Looking ahead, the Minister said that the Implementing Regulation would be negotiated by Member States in the ACP Working Group from 6 September, with the aim of agreement by unanimity by the end of the year.

Our assessment

16.9 It appeared that the fundamentals were sound — more differentiation; increased focus on poverty and fragile States; measures to increase effectiveness; a results-based approach. However, as the Minister noted, there were some important elements on which the details had yet to be finalised — ensuring sufficient EDF Management Committee oversight of resource allocation; the right sort of EU coordination at country level; appropriate Member States’ oversight of the new unallocated reserve; and embedding the agreement on dedicated funding for monitoring and evaluation.

84 See headnote of (34961) 10212/13: HC 83-vi (2013–14), chapter 9 (19 June 2013).

85 See HC 83-xiv (2013–14), chapter 6 (11 September 2013).


16.10 We therefore asked the Minister to write to us again when the negotiations had progressed further, and in good time prior to any planned adoption by the Council.

16.11 In the meantime, we retained the draft Regulation under scrutiny.

16.12 As with all of the process thus far, we also drew this latest stage to the attention of the International Development Committee.


16.13 The Minister says:

“Significant progress has been made towards the UK’s ambitions on each of the four areas highlighted in my EM of 27 August 2013 covering: results and embedding the agreement on dedicated funding for monitoring and evaluation; sufficient Member State management oversight of EDF resource allocation; Member State oversight of unallocated reserves; and appropriate level of EU coordination at country-level.”

16.14 The Minister continues as follows:

“I am pleased to inform you that significant improvements have been made to the Implementing Regulation to reflect a strengthened focus on results and evaluation, embedding the agreement on dedicated funding for these reforms set out in the 11th EDF Internal Agreement. The UK successfully argued for the Commission to produce an annual rather than biennial report on progress, which will draw from EuropeAid’s new results framework. This will include an analysis of key outputs and outcomes and, whenever possible, the EU’s contribution to broader development impacts. This is further strengthened by provisions which support country-led results frameworks based on, where appropriate, internationally agreed targets and comparable and aggregatable indicators such as those of the MDGs. Additionally, any evaluation of EuropeAid’s aid programmes, including recommendations and follow-up actions, may now be brought to the EDF Management Committee for discussion. In these cases, the Commission will report back to the EDF Committee one year after the implementation of agreed actions.

“Guidelines on programming of funds have also been revised to ensure that priority sectors are set out with objectives and expected results as well as key performance indicators for each sector of intervention. Furthermore, each specific programme will include a description of operations, including details of expected results using tailored indicators and targets and, where relevant, a cost-benefit analysis. These documents will also set out how they will contribute to delivery of the EU’s Agenda for Change, the risks to the project and proposals for their mitigation, as well as arrangements for monitoring, audit and evaluation.

“These amendments all contribute to an overall step-change in approach to ensure specific and effective monitoring, reporting and evaluation of the 11th EDF. The UK was instrumental in driving these changes and setting an ambitious target for the Commission to sign up to.


“The UK has also ensured a stronger level of EU coordination at country level whilst maintaining a level of flexibility to work with other partners or independently where required. The regulation promotes working towards EU joint programming, but it does not oblige Member States to participate.

“Appropriate EDF Committee oversight of resource allocation is still being negotiated. As I noted in my EM of 27 August 2013, we are pleased that the principles of the Commission’s Agenda for Change Communication are reflected in this regulation. In particular, the principle of differentiation (funding graduated according to the needs of partner countries, the willingness of the government to reform, and potential value added by EU assistance) has been reflected in the Commission’s methodology for allocating funds to country programmes which Member States have had the opportunity to discuss and input into. The UK is further satisfied that the EDF Committee has final approval of every individual financing and programming decision via standard qualified majority voting procedure. We are additionally pushing for the EDF Committee to give a final opinion on the overarching resource allocation methodology.

“Only one other outstanding issue remains. A proposal has been put forward by Germany to create a mechanism which will provide financial incentives for good performance on a range of governance and human rights objectives. This mechanism will draw funds from the unallocated reserves. In principle we support this, but the design of such a mechanism will be crucial if it is to have the desired impact on partner country governments. We are currently establishing how best this performance mechanism could be designed and implemented with other Member States. Member States will include a reference to this mechanism in the Implementing Regulation, but will devise its specific mechanics in technical meetings in Brussels during the coming months.

“I am further satisfied that Member States will approve all programmes coming from the unallocated reserves with the same scrutiny accorded to all financial decisions under standard EDF Committee operating procedure.

“The final draft of the Implementing Regulation is therefore nearing informal agreement at working group level. I expect that acceptable language on the broad scope of a performance mechanism should be agreed by the end of January. Once this last point is resolved, the regulation should progress for adoption in Council possibly as early as February 2014.”

16.15 Overall, the Minister professes herself pleased with the outcomes of the negotiations, which:

“enable the 11th Implementing Regulation to facilitate more differentiation in programming, with an increased focus on poverty and fragile states, together with stronger measures to increase effectiveness through a results-based approach and improved monitoring and evaluation. The EDF Committee retains critical oversight over all financing and programming decisions, and where appropriate the instrument has been aligned with the other EU budget external actions to enable coherent procedures and improve overall EU aid effectiveness.”


Conclusion

16.16 We are grateful to the Minister for this comprehensive and timely update. It is plain that good work has been done since last September. We have no reason to doubt that the only remaining issue (c.f. paragraph 16.15 above) will be satisfactorily resolved.

16.17 We are now therefore content to clear the draft EDF 11 Implementing Regulation from scrutiny.

16.18 We are again drawing this chapter of our Report to the attention of the International Development Committee.

17 Financing EU external action: 11th European Development Fund

(35334) 14081/13 + ADD 1 COM(13) 660

Draft Council Regulation on the financial regulation applicable to the 11th European Development Fund

Legal base Article 10(2) of the Internal Agreement of 17th July

2006; QMV Department International Development Basis of consideration Minister’s letter of 20 January 2014 Previous Committee Report HC 83-xix (2013–14), chapter 2 (30 October

2013); also see (35144) 11672/13: HC 83-xiv (2013–14), chapter 6 (11 September 2013)

Discussion in Council To be determined Committee’s assessment Politically important Committee’s decision Cleared

Background

17.1 The European Development Fund (EDF) is the main instrument for delivering EU assistance for development cooperation under the Cotonou Agreement with ACP States and for financing EU cooperation with the Overseas Countries and Territories (OCT). Each EDF is concluded for a multi-annual period. The EDF is funded outside the EU budget by the Member States on the basis of specific contribution keys. The UK’s share is 14.68%.

17.2 The Multi-Annual Financial Framework (MFF) agreed at the February 2013 European Council included an overall figure of €30.5 billion for the EDF for the period 2014–20. This is part of a total package covering Heading 4 of the EU budget, on External Action, involving a range of other financial instruments (pre-accession finance, European


Neighbourhood Partnership, Stability Instrument, etc.). The UK’s contribution to EDF 11 is €4.478 billion, equating to 14.68% of the total EDF.

17.3 The full background thus far is set out in the reports under reference in our previous Report.86 In essence, the EDF element was de-coupled from the rest of the Heading 4 process. Several parts of the EDF agreement — the Internal Agreement; the Implementing Regulation; and the Financial Regulation — specify the allocation and management of the fund.

The EDF 11 Internal Agreement

17.4 The Committee cleared the Commission Communication and Council Decision dealing with the “top line” elements of the EDF11 Internal Agreement at its meeting on 19 June, prior to the June EU/ACP Council of Ministers; having now been agreed with the ACP, it now forms a new annex to the Cotonou Agreement. The Internal Agreement will only enter into force once all 27 Member States have ratified it, which is expected to take 18 months or more from last June.87

The Implementing Regulation

17.5 The draft Implementing Regulation sets out the programming process and monitoring framework for all EDF 11 funds that will be spent on country and regional programmes, intra-ACP programmes such as the Africa Peace Facility, and the Cotonou Investment Facility. We consider the latest update from the Parliamentary Under-Secretary of State at the Department for International Development (Lynne Featherstone) elsewhere in this Report.88

The Financial Regulation

17.6 The draft Council Regulation contains the Commission’s proposal for the Financial Regulation, which provides the detailed rules for the financial management of EDF 11.

17.7 In her Explanatory Memorandum of 17 October 2013, the Minister said that:

• the Commission’s main aim with the Financial Regulation had been to simplify and to align where possible with the EU budget Financial Regulation and its Rules of Application, agreed by Member States in 2012;

• alignment had additionally been sought with the relevant provisions of Common Implementing Regulation (CIR);

• these had been transposed to this 11th EDF Financial Regulation where they were relevant; and

86 See headnote: HC 83-xix (2013–14), chapter 2 (30 October 2013).

87 See (34961) 10212/13: HC 83-vi (2013–14) at chapter 9.

88 Ditto.


• by so doing, the Commission hoped to reduce the diversity of Union external action funding rules, which created a burden for recipients, the Commission and other actors; although the Regulation also noted that the EDF had its own distinct framework for financial implementation, including the Cotonou partnership agreement and so could not be fully aligned.

17.8 The Minister’s helpful detailed analysis is set out in our previous Report (see paragraphs 2.8–2.15). She noted that the Financial Regulation would be negotiated by Member States in the ACP Working Group from the end of October, with the aim of agreement by unanimity by the end of the year.

Our assessment

17.9 As with the Implementing Regulation, the direction of travel with the draft Financial Regulation appeared to be satisfactory, but some important aspects had yet to be finalised — in this case, ensuring that:

• Member States retained access to the necessary information to provide a strong oversight role;

• the commitments in the EDF Internal Agreement requiring the Commission to report on efficiency savings, implement a comprehensive results framework and improve financial management and forecasting, were put into practice; and

• any further Trust Funds were well-managed and that the Commission did not overlap, or set itself up in competition with, the work already done by the EIB, but instead concentrated its work where it had the necessary skills, expertise, and comparative advantage over other organisations.

17.10 We therefore asked the Minister to write to us again when the negotiations had progressed further and, when she did so, to explain how the issues outlined above had been addressed.

17.11 In the meantime, we retained the document under scrutiny.

17.12 We also drew this chapter of our Report to the attention of the International Development Committee.


17.13 The Minister writes as follows:

“I am pleased to inform you that the Regulation has been amended to strengthen Member States’ oversight of financial forecasting. The Commission will now provide a forecast of the Member States’ annual contributions for three and four years ahead. Currently the Commission does not provide a forecast further than two years ahead. This revision will give Member States a clearer picture of, and more time to prepare for, future contributions to the EDF thereby minimising the potential for underspend and improving financial management. The text also explicitly states that the Commission must avoid significant variations between contributions for


different years and minimise the possibility of unused funds remaining in the Commission’s account each year. This latter point ensures that funds, and any interest earned, remain in Member States’ accounts until they are needed.

“The UK has also proposed an amendment which reinforces the commitment to improving the impact of EDF programmes, as agreed in the EDF Internal Agreement. This highlights that there is a specific amount ring-fenced within the Commission’s support costs which should be dedicated to a range of actions to improve the efficiency and results of the EDF. For the Financial Regulation this means improvements to the Commission’s processes for financial management and forecasting. We expect this amendment will be agreed imminently in working group.

“On trust funds, the regulation is consistent with other EU external action instruments in enabling the Commission to create trust funds for emergency, post-emergency and thematic actions only. In addition, the regulation specifies that there must be added-value to the EU’s intervention and that trust funds should not be created if they merely duplicate other existing funding channels or similar instruments. I am satisfied that trust funds should remain a possibility for the EDF and that in the right circumstances these could be a useful instrument. However, we will review these as and when they are proposed during EDF 11 to ensure their effective use.

“The European Court of Auditors provided its opinion on the Commission’s proposal for the EDF financial regulation in November 2013 and a number of amendments have been made as a result.89 The Commission has accepted three of the six suggestions in the Court’s report: clarifying procurement procedures; identifying the Court of Auditors’ responsibilities for external audit; and outlining conditions for sub-delegating tasks and EDF funds to other organisations. The UK agrees with the changes proposed and is pleased that the Commission has accepted these recommendations.

“The Commission has not taken on board three of the Court’s suggestions covering: the clarity of the drafting of the regulation; the strength of provisions determining conditionality on budget support; and whether the Commission should take into account the specific context in partner countries when using grants.

“On the first, the EDF regulation contains significant cross-referencing to the general Financial Regulation of the EU budget which makes it difficult to read. The Commission has explained that a guidance paper will be provided to help navigate the document and that the provisions of the regulation have been translated through internal guidelines, public guidelines for beneficiaries of EU funds and contract templates. We remain somewhat concerned that the regulation is overly complex. However, the Court of Auditors’ annual report on the EDF accounts and underlying processes should provide a regular check on whether the regulation is being correctly applied.

89 For the Committee’s consideration of this ECA Opinion, see (35597) —: HC 83-xxvii (2013–14), chapter 14 (8 January

2014).


“On budget support the Court noted that regulations also contained general statements of policy and that the text could be strengthened with respect to conditionality of budget support payments. The Commission has not amended these provisions as they are aligned with the recently adopted Common Implementing Rules governing the other EU aid instruments. The UK is satisfied that this is the case and the proposal for budget support is sufficiently balanced on the use of conditionality, providing appropriate flexibility and taking into account progress made by partner governments.

“As regards to grants, the Court noted that the regulation is not in line with the general Financial Regulation of the Budget as it emphasises a need for the Commission to take into account specific needs and contexts when considering types of aid. The Commission has not amended this as it is aligned with the Common Implementing Rules. We are satisfied that this is consistent with the other EU aid instruments and with the underlying principles of the Cotonou agreement.”

17.14 The Minister concludes by noting that “there are still a small number of outstanding articles” to be negotiated over the coming weeks in the ACP Working Group, which she envisages will be concluded by February 2014, at which point the draft Regulation will be passed to the Council for adoption.

Conclusion

17.15 We are grateful to the Minister for this helpful and comprehensive update. All the main issues appear to have been satisfactorily resolved.

17.16 We therefore now clear the draft Regulation.

17.17 We are also drawing this chapter of our Report to the attention of the International Development Committee.


18 Enlargement Strategy and Main Challenges 2013–14

(35395) 14942/13 COM(13) 700 (35399) 14946/1/13 SWD(13) 414 (35400) 14947/13 SWD(13) 415 (35401) 14948/13 SWD(13) 416 (35398) 14945/13 SWD(13) 413 (35396) 14943/13 SWD(13) 411 (35397) 14944/13 SWD(13) 412 (35402) 14949/13 SWD(13) 417 (35403) 14950/13 SWD(13) 418

Commission Communication: Enlargement Strategy and Main Challenges 2013–2014 Commission Staff Working Document: Albania 2013 Progress Report Commission Staff Working Document: Bosnia and Herzegovina 2013 Progress Report Commission Staff Working Document: Kosovo 2013 Progress Report90 Commission Staff Working Document: The former Yugoslav Republic of Macedonia 2013 Progress Report Commission Staff Working Document: Montenegro 2013 Progress Report Commission Staff Working Document: Serbia 2013 Progress Report Commission Staff Working Document: Turkey 2013 Progress Report Commission Staff Working Document: Iceland 2013 Progress Report

Legal base — Department Foreign and Commonwealth Office Basis of consideration Minister’s letter of 24 January 2014 Previous Committee Report HC 83-xx (2013–14), chapter 11 (6 November 2013) Discussion in Council 17 December 2013 General Affairs Council and 19–20

December 2013 European Council Committee’s assessment Politically important

90 Under UNSCR 1244/99.


Committee’s decision Cleared

Background

18.1 The Council is responsible for decisions on the admission of new Member States; the Commission’s annual report has traditionally provided the basis for the Council to take stock and give direction to the accession negotiations and pre-accession reform priorities.

The Commission Communication

18.2 The Commission Communication accordingly provides a statement of the EU’s evolving enlargement strategy, an assessment of progress, and a look forward to the challenges and priorities for 2014.

18.3 The Commission published its latest annual package of reports on 16 October 2013. The main document is the Enlargement Strategy and Main Challenges 2013–2014. This is accompanied by a set of comprehensive Progress Reports for each of the enlargement countries (including candidate and aspirant countries) and a Report on Iceland (Iceland remains a candidate country but the new government decided earlier in the year to suspend accession negotiations indefinitely). The other candidate countries are Macedonia, Montenegro, Serbia and Turkey. Potential candidate countries (those without formal candidate status but with an agreed EU perspective) are Albania, Bosnia and Herzegovina and Kosovo.

18.4 The Progress Reports analyse the progress made by individual countries in meeting the Copenhagen criteria for membership, i.e. political and economic criteria, as well as the capacity to assume the obligations of membership. The political criteria require the stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities. The economic criteria require a functioning market economy able to cope with the competitive pressure and market forces within the Union. The ability to assume the obligations of membership is based on progress in transposing and implementing the acquis (the body of EU law). For the purposes of accession negotiations this is split into 35 chapters ranging from the free movement of goods, through the judiciary and fundamental rights, to the environment and financial control.

18.5 The Minister for Europe’s (Mr David Lidington) very helpful and informative EM of 28 October 2013, on a package of documents that runs to several hundred pages (the main Commission Communication is nearly 50), forms the basis of our previous Report; his comments on the main Commission Communication and on each of the country reports are the sections in italics therein.91

18.6 The Minister described the strategy as a fair and balanced assessment, and as closely aligned with the Government’s priorities on enlargement, highlighting the importance of addressing the fundamentals first and strict but fair conditionality, and rightly focussing on the central challenges of: the rule of law, judicial reform and the fight against organised crime and corruption; economic governance and competitiveness; the importance of

91 See HC 83-xx (2013–14), chapter 11 (6 November 2013).


strengthening democratic institutions and protecting fundamental rights; and the need for good neighbourly relations and the resolution of bilateral disputes. He also welcomed the inclusion in the strategy of clearly defined action points to give clarity on how the Commission would provide support in each priority area, delivered through a more tightly focused IPA-II instrument.

18.7 The country-by-country picture was very much as expected. Croatia’s accession was a key indicator of the “transformative power and stabilising effect of the enlargement process and the EU’s soft power”; ditto the positive developments in and between Serbia and Kosovo. On the negative side were the usual, continuing “good governance” failings by the other Balkan aspirants: Bosnia-Herzegovina appeared to be going backwards. Positive developments in Turkey were somewhat blighted by the “Gezi Park” episode; forward movement continued to be overshadowed by the Cyprus problem. Another ongoing question — “the name issue” — continued to overshadow Macedonia. Montenegro was doing well, but would be the first aspirant to be subject to the tougher, post-Croatia, front-loading of the “good governance” elements.

18.8 The Minister explained that the Government was only able to provide an initial position on specific recommendations because, as conclusions on EU enlargement will be adopted at the General Affairs Council (GAC) on 17 December, with any formal decisions to be endorsed at the European Council on 19–20 December:

“there is time for further developments in the interim. The Government intends to take a final decision nearer December that will give time for its own considered analysis of countries’ progress, taking into account any further progress that countries make and the outcomes of the discussion in the relevant Council working groups. The Government will keep Parliament updated over the autumn on developments in its position.”

Our assessment

18.9 The open questions in the Minister’s mind appeared to be regarding Commission recommendations on:

— granting candidate status to Albania, but dependent on further action against organised crime and corruption;

— in favour of opening accession negotiations with Serbia, depending on the outcome of a review to be published in December of the implementation of the 19 April agreement between Serbia and Kosovo; and

— for the fifth successive year, in favour of opening accession negotiations with Macedonia.

18.10 This was essentially a re-run of the situation 12 months ago. Our assumption was that, as then, the Government would reserve its position until the eve of the European Council. However, there would no doubt be discussion of these issues at the December General Affairs Council. We therefore asked the Minister to update the Committee on his position on all these issues after that meeting; and, when he did so, to:


— outline what further action had been taken in the interim in Albania against organised crime and corruption, and provide his assessment of the prospects at that point for the granting of candidate status;92

— outline what developments had taken place, in the interim, in the implementation of the Serbia and Kosovo agreement, and provide his assessment of the prospects at that point for the opening of accession negotiations; and

— provide his assessment of the likely outcome regarding Macedonia.

18.11 In the meantime we retained all the documents under scrutiny.93


18.12 The Minister says that the purpose of his letter is to provide an update on the detail of the UK Government’s position as set out in his previous Explanatory Memorandum, and “clarity on the next steps following the GAC conclusions of 17 December” (a copy of which is enclosed with his letter).94

18.13 The Minister continues as follows:

Enlargement and conditionality

“The GAC discussed the Commission’s Annual Enlargement Package, published on 16 October, and agreed conclusions on the enlargement strategy and the Western Balkans, Turkey and Iceland. The conclusions closely match our own approach, with enlargement proceeding on the basis of strict, but fair conditionality and countries moving forward on merit as they meet the conditions. The conclusions also welcome Croatia as the EU’s 28th Member State from 1 July 2013 and the historic agreement between Serbia and Kosovo on 19 April 2013. The conclusions reiterate the EU’s commitment to enlargement and the need for continued momentum for all countries of the western Balkans and Turkey towards EU membership in coming years, with the door remaining open for Iceland should they choose to return to their negotiations.

Learning the lessons of the past

“The conclusions also recognise the importance of the EU learning the lessons of the past and ensuring that the enlargement process focuses on addressing the “fundamentals first”, particularly reaffirming the importance of candidate countries tackling the rule of law upfront in the accession process under the “new approach” to enlargement. The UK has been consistently clear that countries need as much time as possible to develop robust track records on issues such as organised crime and corruption. The accession process is a key lever and incentive for these reforms, and

92 The Minister’s summary of the Commission report on Albania and his comments are at Annex 1 to this chapter of

our Report.

93 See headnote: HC 83-xx (2013–14), chapter 11 (6 November 2013).

94 The Council Conclusions are available at http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/genaff/140142.pdf.


success in these areas helps ensure the continued robustness of the enlargement process and can also help to build the necessary political and public support for further and deeper reforms in the candidate countries. This year’s conclusions also support the Commission’s call for a renewed focus in the enlargement process on helping strengthen economic governance and competitiveness in the enlargement countries, as well as ensuring that funding under the Instrument for Pre-accession Assistance (IPA) is more strategic, results-focussed and tied to the objectives of the enlargement strategy. We welcome these moves.

Free movement

“In addition, I introduced at the GAC the Government’s thinking, in the context of future enlargement, on the need for a debate on how to return the concept of free movement to a more sensible basis. While I emphasised that the UK’s long-standing, strong support for further conditions-based enlargement has not changed, I highlighted the need for a debate on the transitional arrangements for future accession countries.

Serbia

“On the detail of the country conclusions, we were pleased that the GAC adopted the general EU position on Serbia’s accession negotiations, including the negotiating framework. This will allow accession negotiations with Serbia to open formally, with the first intergovernmental conference taking place in January 2014. The European Council on 19/20 December endorsed these decisions.

Serbia and Kosovo

“There has been further progress in Serbia’s relations with Kosovo since June. The EU-facilitated Dialogue enabled deals to be reached on energy and telecoms. There was also progress on integration of northern Kosovo Serbs into the Kosovo police. Importantly, local elections took place under Kosovo law in the Serb-majority municipalities in north Kosovo for the first time. There remains more to do, notably bringing northern Kosovo’s judicial structures into the Kosovo system. However we judged that steps taken included sufficiently tough and public actions to provide the evidence of solid progress that we required before Serbia opened accession negotiations.

“This progress must continue, with Serbia fully normalising relations with Kosovo before accession. To this end, we were pleased to secure strong language in the negotiating framework requiring ‘comprehensive normalisation of relations between Serbia and Kosovo’. This must be achieved in the form of a ‘legally binding agreement’ by the end of Serbia’s accession negotiations. We are confident that this framework will ensure that progress must be maintained throughout Serbia’s accession.

“Serbia’s negotiating framework also mirrors the ‘new approach’ of tackling the rule of law related acquis chapters (chapters 23 and 24) at the start of negotiations, which


was first introduced for Montenegro. This will ensure that Serbia will be locked into a long and rigorous process of rule of law reforms, where building track records of effective implementation and enforcement will be key.

In parallel, the GAC called on Kosovo to focus on the implementation of reforms to meet its obligations under the proposed Stabilisation and Association Agreement. These include reforming its legal framework, tackling organised crime and corruption, pursuing judicial and public administration reforms, ensuring the protection of human and rights and increasing efforts on economic reform. Negotiations on the Stabilisation and Association Agreement with Kosovo are continuing.

Albania

“The GAC also considered the Commission’s recommendation to grant Albania EU Candidate Status. Many Member States supported the recommendation. However, the Council concluded that it would return to this issue in June 2014. The Council highlighted several areas for short term action on organised crime and corruption issues. Any consideration of granting Candidate Status in June will be informed by progress in these areas, including through a further Commission Report on the continued implementation of anti-corruption and judicial reform strategies as well as a continued trend of pro-active investigations and prosecutions.

The Government welcomes the efforts of Albania’s new government in tacking organised crime and promoting the rule of law since it took office in September. We agree with the Council’s conclusion that more time is needed to demonstrate sustained and concrete delivery. Since my October Explanatory Memorandum, Albania has continued to make progress in arresting and prosecution [of] corrupt officials and businessmen, and taken action against organised criminal groups. The Government looks forward to Albania continuing in her efforts and will review further progress in due course.

Macedonia

“On Macedonia, the GAC was again unable to reach a unanimous decision to open accession negotiations. The Council promised to revert to the issue in 2014 on the basis of an update by the Commission on further progress on the High Level Accession Dialogue, implementation of the 1 March agreement (which resolved the Macedonian parliamentary crisis of early 2013), and on tangible steps taken towards solving the name issue. Prospects for accession negotiations in 2014 depend largely on whether sufficiently tangible steps can be taken on the name issue to reach unanimity in Council.

Bosnia and Herzegovina (BiH)

“On Bosnia and Herzegovina (BiH) we secured clear and tough GAC conclusions, highlighting a lack of political will from BiH’s leadership as the primary reason for the country stalling on its EU path. The Council noted that BiH’s failure to


implement required reforms had led to the loss of funding from the EU’s Instrument for Pre-Accession Assistance. The conclusions expressed concern also at the recent release of several BiH war criminals.

Turkey

“On Turkey, broadly positive Council conclusions were agreed, emphasising the need for the EU to remain the anchor for reforms in Turkey. Momentum for 2014 will be assisted by the signing of the EU/Turkey Readmission Agreement in the margins of the GAC, praise for Turkey’s efforts to find a solution to the Kurdish issue and the important humanitarian support being provided on the Syrian border. Positive developments on human rights in response to the protest of summer 2013 were highlighted, in particular the creation of a Human Rights Ombudsman. However, it was noted that further sustained efforts, in line with European standards, were needed before Turkey would meet fully the Copenhagen political criteria. The need for accession efforts to be underpinned by progress in the areas of rule of law and fundamental rights was reiterated throughout the conclusions. The importance attached to this by most Member States was also borne out in negotiations leading up to the GAC. In 2014, progress on EU Accession for Turkey depends largely on Turkey’s response in the area of rule of law and fundamental rights.”

Conclusion

18.14 In the short-term, there is only one outstanding issue: whether or not Albania should be granted accession candidate status. The Annexes to this chapter of our Report illustrate the breadth and depth of the issues that Albania still needs to address. The Minister highlights the importance of tackling the rule of law upfront, building track records of effective implementation and enforcement and developing robust track records on issues such as organised crime and corruption, in the pre-accession as well as the accession process. Although the Minister does not provide any details of what further progress Albania has made, or of its continued failings, we must presume that these tests have not yet been met in his eyes, even though some other Member States apparently take a more positive view.

18.15 Looking ahead to later this year, when the Minister deposits the further Commission report for scrutiny, we shall expect him to provide an unqualified statement of the Government’s position. By then, the position will be clear, one way or the other: there will be no justification for further prevarication about possible last-minute changes on the eve of the Council meeting.

18.16 In the meantime, we now clear these documents.


Annex 1: The Minister’s summary of the Commission report on Albania and his comments, contained in his Explanatory Memorandum of 28 October 2013

Albania

“In view of progress made, the Commission recommends granting Candidate Status, on the understanding that Albania continues to take action against organised crime and corruption.

“Albania has made progress against some aspects of the political criteria, including the passing of relevant legislation an d broadly well-conducted elections, but further progress is required in other areas.

“The report outlines where progress has been made in improving the efficiency and independence of the judiciary , and in tackling organised crime and corruption, but highlights that much more needs to be done in all these areas.

“Democracy and the rule of law. Despite a tense build-up, the Parliamentary Elections in June were broadly well-administered, and resulted in an orderly transition of power. Just prior to the elections, Parliament passed the three key measures on the Public Administration, the High Court, and on Parliament. However implementation of the measure on the Public Administration - designed to depoliticise the civil service - has been delayed until mid 2014. In general, legislation relating to public administration reform needs to be implemented more fully.

“Positively, the reporting period witnessed the adoption of several pieces of legislation designe d to improve the efficiency and independence of the judiciary, including the Law on the High Court, the Law on the Judicial Administration, and amendments to the Criminal and Civil Codes. However more needs to be done to strengthen the appointment processes of judges, including transparency, and on disciplinary procedures against lawyers.

“In the fight against organised crime and corruption, the report assesses that there has been an increase in the number of investigations and convictions, due in part to increased co operation between relevant institutions. But organised crime and corruption remain widespread problems in Albania, and further efforts are needed, particularly around enhancing capacity and ensuring the independence of institutions from political pressure.

“Human rights and protection of minorities. There has been uneven progress, with further legislation on freedom of expression being adopted, but with legislation on anti-discrimi nation either not being implemented (e.g. on LGBT issues) or not yet in place (e.g. on Roma rights). Discrimination against vulnerable groups such as the LGBT and Roma remains a problem.

“Regional issues and international obligations. Albania continues to play an active role in international and regional organisations, and is working constructively with neighbours on commercial initiative such as the Trans-Adriatic Pipeline. A short-


lived rise in nationalist rhetoric in late 2012 (around its 100 year anniversary) triggered concern in neighbouring countries but has since died away.

“As regards the economic criteria, Albania has maintained macroeconomic stability and inflation re mained low, but growth is slowing. Public debt increased to 62%, and unemployment remains high. The tax administration remains inconsistent and weak.

“As regards Albania’s ability to take on the obligations of membership, there has been pro gress in a number of areas, including public procurement, freedom and security, customs, and statistics. However, there has been little progress on intellectual and industrial property rights, the energy sector, and environmental protection.

“The Government welcomes the Commission’s assessment of Albania’s progress and agrees that, while progress has been made in some areas, further efforts are required, especially on the judiciary and tackling organised crime and corruption. The Government also agrees that there must be greater efforts around implementation of legislation across the board. The Government will monitor progress on the remaining key areas of concern before taking a final decision on Albania’s readiness for candidate status nearer the December GAC, based on all progress up to that date. The Government will continue to urge Albania to make the necessary progress and will support these efforts, including through project work in support of the rule of law.”

Annex 2: extract from the 17 December 2013 General Affairs Council Conclusions on Albania:

“ALBANIA

“36. In December 2012, with a view to deciding whether to grant candidate status, the Council invited the Commission to report as soon as the necessary progress had been achieved, also taking into account the further action taken by Albania to fight corruption and organised crime, including by proactive investigations and prosecutions of such cases. In this regard, the Council welcomes the adoption by Albania of the relevant key judicial, public administration and parliamentary reform measures with cross-party consensus as well as the successful conduct of the parliamentary elections in June. The Council welcomes the further action taken in the fight against corruption and organised crime, the commitment of the new government and commends its intensified efforts in these areas and encourages the authorities to maintain this new momentum. The Council will examine, on the basis of a report to be presented by the Commission, continued implementation of anti-corruption and judicial reform strategies and of recently adopted relevant legislation as well as a continued trend of pro-active investigations and prosecutions, including in the area of organised crime. In the light of this report, and on the understanding that Albania continues to build on the encouraging progress made so far, the Council looks forward to a decision regarding granting candidate status to Albania in June 2014, subject to endorsement by the European Council.


“37. In line with its 5 December 2011 conclusions, the Council notes that the opening of accession negotiations will be considered by the European Council, in line with established practice, once the Commission has assessed that Albania has achieved the necessary degree of compliance with the membership criteria. Further to the Commission’s 2010 Opinion and recalling the conditions set out in its 11 December 2012 conclusions, the Council underlines that Albania will need to meet the key priorities for the opening of accession negotiations. The Council underlines in particular the need to intensify efforts in the rule of law area, particularly reform of the judiciary, fight against organised crime and corruption and protection of human rights and anti-discrimination policies, including in the area of minorities, and their equal treatment, and implementation of property rights. Sustained implementation of reforms will also be required. The Council welcomes the launch of a high level dialogue on the key priorities.

“38. The Council underlines that constructive and sustainable dialogue between the government and the opposition on EU-related reforms will be vital in securing Albania’s EU future. It encourages the Albanian government to pursue its policy aimed at improving economic governance and investment climate. It welcomes Albania’s continued constructive engagement in regional cooperation and good neighbourly relations, which remains essential.”


19 EU restrictive measures against Tunisia

(a) (35736) — — (b) (35737) — —

Council Decision amending Decision 2011/72/CFSP concerning restrictive measures directed against certain persons and entities in view of the situation in Tunisia Council Implementing Regulation implementing Regulation (EC) No.101/2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Tunisia

Legal base (a) Article 29 TEU; unanimity

(b) Article 215(2) TFEU; QMV Document originated 16 January 2014 Deposited in Parliament 22 January 2014 Department Foreign and Commonwealth Office Basis of consideration EM of 23 January 2014 Previous Committee Report None; but see (34629) — : HC 86-xxx (2012–13),

chapter 11 (30 January 2013); (33626) —: HC 428-xlviii (2010-12), chapter 24 (25 January 2012), and (34392) 15927/12 and (34391) 15925/12: HC 86-xx (2012–13), chapter 21 (21 November 2012)

Discussion in Council 31 January 2013 Committee’s assessment Politically important Committee’s decision Cleared

Background

19.1 The full background to the measures in question is set out in our previous Reports. The following is a brief summary.

Council Decision 2011/72/CFSP and Council Regulation (EU) 270/2011

19.2 In January 2011, following major protests across the country, then President Ben Ali resigned and fled to Saudi Arabia. In his Explanatory Memorandum of 23 January 2014, the Minister for Europe (Mr David Lidington) recalls that:

— the EU then put in place sanctions measures in 2011 against Tunisia in response to a request from the interim government, which took power following the departure of the former President;

— 48 individuals were listed, including the former President, his wife Leila Trabelsi and other members and close associates of the Ben Ali and Trabelsi families;


— the names of those listed were initially provided by the Tunisian authorities — none was a UK proposal; and

— all are subject to on-going national judicial proceedings.

The Council Decision and the Council Implementing Regulation

19.3 This Council Decision and Implementing Regulation amends Council Decision 2011/72/CFSP by extending the current sanctions for another year until 31 January 2015.

19.4 The Decision and Implementing Regulation provide for the extension of restrictive measures against “persons responsible for misappropriation of Tunisian State funds, and who are thus depriving the Tunisian people of the benefits of the sustainable development of their economy and society and undermining the development of democracy in the country”. It also makes amendments to the grounds for listing of 45 of the 48 listed individuals.

19.5 The measures continue to consist of a freezing of funds and economic resources of those persons listed in the annex to the Decision.


19.6 As he did a year ago, the Minister says that Tunisia has made impressive progress in its transition to democracy.

19.7 He continues as follows:

“Addressing the corruption of the previous regime continues to be a priority for the government, though progress has been slow in a post revolution environment. The asset freeze does not itself enable Member States to seize any assets deemed to have been corruptly obtained, or return them to the Tunisian State. Further action through the criminal justice system is required before such measures can be taken. We therefore support the aspiration to extend the current restrictive measures to allow investigations into the alleged corruption of listed individuals to be completed and ensure that the structures and processes in Tunisia are in place to return misappropriated assets to their rightful owners.”

19.8 The Minister then notes that:

“Three of the listed individuals (Fahed Al Matri, Mohamed Trabelsi, and Slim Chiboub) successfully challenged their listing in the European Court of Justice (ECJ) in May 2013. The ECJ ruled that their statement of reason for listing (which referred to money laundering) did not meet the criterion for designation (responsibility for misappropriation of State funds) in the relevant Decision and Regulation. The Foreign Affairs Council adopted a new Decision and Implementing Regulation on 31 July 2013, which amended these statements so that they referred back to the


designation criteria, and ensured that Matri, Trabelsi and Chiboub remain listed.95 The current Decision and Implementing Regulation will make the same amendments to the remaining 45 listings, and reduce the risk of any further legal challenges being made.

“Legal proceedings against all the listed individuals are continuing in Tunisia. Although some individuals have challenged their listings, either on hardship grounds or by providing more detailed legal evidence, EU partners are satisfied that the existence of national legal proceedings provides sufficient justification to maintain all the listings.”

Conclusion

19.9 The renewal of these measures raises no questions in and of itself. But we are reporting it to the House nonetheless because of the level of interest in developments in “the new Tunisia”, and because it illustrates how the EU continues to endeavour to help a new regime that is itself endeavouring, in what are no doubt difficult circumstances, to develop a law-based approach that, if it can be developed in this sensitive area, could have much wider positive repercussions.

19.10 We now clear the documents.

20 The European network of independent non-proliferation think tanks

(35739) — —

Council Decision promoting the European network of independent non-proliferation think tanks, in support of the implementation of the EU Strategy against Proliferation of Weapons of Mass Destruction

Legal base Articles 26(2) and 31(1) TEU; unanimity Document originated 23 January 2014 Deposited in Parliament 23 January 2014 Department Foreign and Commonwealth Office Basis of consideration EM of 23 January 2014 Previous Committee Report None Discussion in Council 10 February 2014 Foreign Affairs Council Committee’s assessment Politically important Committee’s decision Cleared

95 Which the Committee cleared at its meeting on 4 September 2013, having concluded that these changes were of

insufficient legal or political significance to warrant a substantive Report: see (35244) — and (35245) —: HC 83-iv (2013–14), chapter 60 (4 September 2013).


Background

20.1 On 12 December 2003, the European Council adopted the EU Strategy against Proliferation of Weapons of Mass Destruction (WMD). The proliferation of WMD, and especially nuclear, chemical and biological weapons, and their means of delivery, were seen as a growing cause for concern, which could threaten the EU, directly or indirectly, including its broader interests (expatriate communities and economic interests). In response, it was argued, the EU should adopt a forceful, multilateral approach, in cooperation with the United States and its other partners. Export controls and the support of multilateral institutions charged with verification and upholding of compliance with the treaties are considered fundamental.

20.2 The WMD strategy implementation plan is accordingly based on:

— resolute action against proliferators;

— universalisation and, when necessary, strengthening of the main treaties, agreements and verification arrangements;

— fostering the role of the UN Security Council;

— enhancing political, financial and technical support to verification regimes;

— strengthening export control policies and practices;

— enhancing the security of proliferation-sensitive materials, equipment and expertise in the European Union against unauthorised access;

— strengthening identification, control and interception of illegal trafficking;

— reinforcing EU cooperative programmes with other countries, targeted at support for disarmament, control and security of sensitive materials, facilities and expertise;

— integrating the WMD non-proliferation concerns into the EU’s other activities and policies to increase their effectiveness; and

— cooperating closely with the United States and other key partners.96

20.3 On 8 December 2008, the Council adopted a document entitled “New lines for action by the European Union in combating the proliferation of weapons of mass destruction and their delivery systems” (referred to as the “New Lines for Action”); this stated that WMD proliferation continued to constitute one of the greatest security challenges, and non-proliferation policy to constitute an essential part of the Common Foreign and Security Policy. Within the New Lines for Action, the Council underlined that EU non-proliferation action — including the 2005 EU Small Arms and Light Weapons Strategy — would benefit from the support provided by a non-governmental non-proliferation network, bringing together foreign policy institutions and research centres specialising in

96 See

http://register.consilium.europa.eu/doc/srv?l=EN&t=PDF&gc=true&sc=false&f=ST%2015708%202003%20INIT&r=http%3A%2F%2Fregister.consilium.europa.eu%2Fpd%2Fen%2F03%2Fst15%2Fst15708.en03.pdf for the full text.


the Union’s strategic areas; its creation would improve policy dialogue in non proliferation Member States, provide the EU High Representative with a long lasting policy resource, and improve policy making in the EU and Member States.

Council Decision 2010/430/CFSP

20.4 On 26 July 2010, the Council adopted Decision 2010/430/CFSP which established the European Union Non-Proliferation Consortium network of independent think tanks. The Consortium brings together more than 60 think tanks and research centres.

The draft Council Decision

20.5 The draft Council Decision seeks to enhance the implementation of the EU Weapons of Mass Destruction (WMD) Non-proliferation Strategy by continuing the promotion and support of the EU network of independent non-proliferation think tanks’ activities for a further three years.


20.6 In his Explanatory Memorandum of 23 January 2014, the Minister for Europe (Mr David Lidington) explains that the UK is represented in the Consortium by the International Institute of Strategic Studies (IISS), an independent global think-tank researching political and military conflict:

“The IISS is responsible for the largest portion of the budget and there are a large number of UK academics and researchers who are Consortium members. As the EU intends to use the Consortium to help develop and shape its non-proliferation policies, this means that UK research is better able to inform EU non-proliferation policy-making.”

20.7 The Minister’s comments focus on the following points;

— the value that the Consortium could bring to the Middle East Weapons of Mass Destruction Free Zone (MEWMDFZ) process, which remains crucial to the Government’s Nuclear Non-Proliferation Treaty (NPT) objectives; previous seminars have provided a useful platform for dialogue on this complex issue; hosting a workshop to train young diplomats from the Middle East, on what a future MEWMDFZ might look like, would be able to build on this experience;

— with the 2014 NPT Preparatory Committee and 2015 NPT Review Conference nearing, a carefully handled workshop under the guidance of the Consortium could also provide further impetus and help to build intra-regional relationships, which as Co-convenors of the MEWMDFZ Conference would be particularly welcome. The Minister will engage with the Consortium to help ensure that its aims for further workshops on the MEWMDFZ align with those closely involved with agreeing the scope for a MEWMDFZ Conference;

— the useful conference arranged by the Consortium before the negotiations leading to the signing of the Arms Trade Treaty in June 2013, which helped EU Member States to


reach out to other regions in a coordinated and constructive way and prepare their positions in advance of the final successful negotiations; following entry into force of the Treaty, effectively implementing the ATT is one of the UK’s top Counter Proliferation priorities;

— the Consortium proposals to promote to the EU’s SALW Strategy (meetings, seminars and providing assistance to non-EU states) will engender a better understanding of the SALW strategy and build expertise; its work will also ensure continuous implementation of the EU SALW strategy and help to develop new aspects of EU work to cover both the preventative and reactive areas relating to SALW, including the illicit trade and excessive accumulation of SALW;

— the Consortium has established four managing think tanks plus a network of more than 60 think tanks and research centres combining almost the entire non-governmental expertise in the EU;

— the Consortium depends entirely on EU support and has no independent financial resources or legal authority to raise other funds; and

— not extending the EU Non-Proliferation network contract would signal a lack of UK interest and commitment to sustaining a leadership role in the non-proliferation field; EU and UK counter-proliferation objectives would lose impetus and supporting expertise gained over the previous three years.

20.8 The Minister goes on to explain that the Council Decision:

— aims to support continuation of the following specific activities:

• providing means for the organisation of three annual consultative meetings and up to seven ad hoc seminars for experts and practioners on the full range of non-proliferation and disarmament issues covering both unconventional and conventional arms;

• providing means for the holding of three major annual conferences with non-EU states and civil society to promote the EU WMD Non-Proliferation Strategy and the EU SALW Strategy; and

• addressing topics proposed by Member States and the EEAS in the overall Consortium research activities.

— and will support three new projects:

• setting up a help-desk facility within the Consortium to provide ad hoc expertise to questions related to the full range of conventional and unconventional arms issues;

• providing means for the management and the development of an internet platform to facilitate contacts and foster research dialogue among the network of think tanks analysing issues related to the prevention of proliferation of WMD and conventional weapons, including SALW; and


• providing means to raise awareness and develop expertise in non-proliferation and institutional capacity in think tanks and governments in the Union and third countries.

20.9 The Minister notes that the projects under this Council Decision will be funded from the CFSP budget with a budget of €3.6 million over three years (the UK currently contributes approximately 17% into the CFSP budget). This substantial increase over the previous budget (which was € 2.182 million over the previous three years) has, the Minister says, been agreed by all other EU Member States and is largely because of the three additional projects.

20.10 By way of example, the Minister says:

“The new ‘Help-desk’ function will enable the EU to mobilize expertise at short notice from across the network on topics on which there is a need for community-wide consultation and action. For example, if Democratic Peoples’ Republic of Korea (DPRK), were to test launch a new missile, Consortium experts could rapidly provide an independent assessment of the implications.”

Conclusion

20.11 Important as combating WMD proliferation is, we would not normally regard a well thought out, modestly-funded and properly controlled proposal of this nature of sufficient political or legal importance as warranting being drawn to the attention of the House — which is why we cleared the 2010 Council Decision.

20.12 However, combating WMD proliferation has moved up the political agenda; the Consortium has plainly done much valuable work; and one of the UK’s leading “think tanks” is playing the leading role. We concur with the Minister’s endorsement of this proposal.

20.13 We now clear the Council Decision.


21 Protecting people and critical infrastructure against terrorist attacks

(35286) 13173/13 COM(13) 580

Draft Council Decision on the repeal of Decision 2007/124/EC, Euratom

Legal base Articles 352 TFEU and 203 Euratom; unanimity; EP

consent Department Home Office Basis of consideration Minister’s letter of 22 January 2014 Previous Committee Reports HC 83-xxi (2013–14), chapter 12 (20 November

2013); HC 83-xvi (2013–14), chapter 11 (9 October 2013)

Discussion in Council No date set Committee’s assessment Legally important Committee’s decision Cleared


21.1 The draft Council Decision would repeal a 2007 Decision which established a specific EU funding programme for the period 2007–13 to protect people and critical infrastructure against terrorist attacks and other security-related incidents. The repeal is intended to take effect on 1 January 2014, the date on which a new EU Internal Security Fund was expected to come into force. This Fund includes a dedicated instrument to support police cooperation, action to prevent and combat crime, and crisis management, and will continue many of the activities foreseen under the 2007 Decision, including the protection of people and critical infrastructure and the management of security-related risks and crises. The Government decided not to opt into the police component of the Internal Security Fund but may seek to do so once it has been adopted — now expected to be in early 2014. Our Seventeenth Report of 9 October 2013 provides further information on the legal base for the draft Council Decision and the Government’s position.

21.2 Whilst recognising that the content and purpose of the draft Council Decision appeared unobjectionable, we expressed concern that the Explanatory Memorandum provided by the Minister for Security (James Brokenshire) made no reference to the domestic legal requirements arising under section 8 of the European Union Act 2011 which are intended to ensure a form of enhanced Parliamentary scrutiny of EU measures based on Article 352 of the Treaty on the Functioning of the European Union (TFEU) — the legal base for this draft Decision. The Minister subsequently confirmed that section 8 of the Act applied in this case and that the Government was undertaking its own assessment of the draft Decision to determine whether an Act of Parliament would be


required prior to its formal approval by the Council, or whether one of the exemptions set out in section 8(6) of the Act applied.97


21.3 The Minister describes the outcome of the Government’s assessment of the legal position:

“I am able to confirm that an Act of Parliament will be necessary, as I do not consider that the instrument must be passed as a matter of urgency and none of the exempt conditions in section 8(6) of the EU Act are met in relation to the instrument. I will take this forward through the usual channels.”

Conclusion

21.4 We thank the Minister for his letter. We agree with his conclusion that the draft Decision does not qualify as an urgent measure under section 8(4) of the European Union Act 2011, or fall within any of the exempt purposes set out in section 8(6) of that Act, and that an Act of Parliament will therefore be necessary before the Government may vote in favour of the draft Decision in the Council. We have no further grounds for holding the draft Decision under scrutiny and agree to clear it.

97 See letter of 8 November 2013 from the Minister for Security (James Brokenshire), reported in our Twenty-third

Report (2013–14) HC 83-xxi, dated 20 November 2013, chapter 12.


22 Documents not raising questions of sufficient legal or political importance to warrant a substantive report to the House

Department for Environment, Food and Rural Affairs

(35641) 17572/13 + ADDs 1–2 COM(13) 866

Commission Report on the case for a local farming and direct sales labelling scheme.

(35683) 18076/13 COM(13) 888

Commission Report on the case for an optional quality term ‘product of island farming’.

(35692) 18165/13 + ADDs 1–6 COM(13) 917

Draft Council Decision on the acceptance of the Amendment to the 1999 Protocol to the 1979 Convention on Long-Range Transboundary Air Pollution to Abate Acidification, Eutrophication and Ground-level Ozone.

Department for International Development

(35666) 17834/13 + ADD 1 COM(13) 881

Draft Council Regulation amending Regulation (EC) No. 617/2007 of 14 May 2007 on the implementation of the 10th EDF European Development Fund under the ACP-EC Partnership Agreement for the implementation of the Bridging Facility.

Foreign and Commonwealth Office

(35550) — —

Council implementing Decision 2013/…/CFSP of implementing Council Decision 2011/486/CFSP concerning restrictive measures directed against certain individuals, groups, undertakings and entities in view of the situation in Afghanistan.

(35551) — —

Council implementing Regulation 2013/…/CFSP of implementing Article 11(4) of Regulation (EU) No. 753/2011 concerning restrictive measures directed against certain individuals, groups, undertakings and entities in view of the situation in Afghanistan.

(35729) — —

Agreement between the European Union and the Swiss Confederation on the participation of the Swiss Confederation in the European Union military training mission in Mali (EUTM Mali).


HM Revenue and Customs

(35702) 18080/13 COM(13) 850

Commission Report on the functioning of the arrangements for the computerised supervision of excise movements under duty suspension and on the application of the administrative cooperation rules in the area of excise duties, in accordance with Article 8(3) of Decision No. 1152/2003/EC, Article 45(1) of Directive 2008/118/EC, Article 35(1) of Council Regulation (EC) No. 2073/2004 and Council Regulation (EU) No 389/2012.

HM Treasury

(35667) 17877/13 COM(13) 871

Commission Report on guarantees covered by the general budget — Situation at 31 December 2012.

(35676) 18030/13 + ADDs 1–2 COM(13) 934

Commission Communication: Application of net financial corrections on Member States for Agriculture and Cohesion Policy.

(35698) — —

Court of Auditors Opinion No. 4/2013 (pursuant to Article 322, TFEU) concerning a draft regulation amending Regulation (EU, Euratom) No. 966/2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No. 1605/2002.

Home Office

(35621) 17268/13 COM(13) 853

Draft Regulation amending Regulation (EC) No. 539/2001 listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement.

Office for National Statistics

(35723) 5204/14 COM(13) 883

Commission Report on the final evaluation of the implementation of the Community Statistical Programme 2008–2012.


Formal minutes

Wednesday 29 January 2014

Members present:

Mr William Cash, in the Chair

Andrew Bingham Nia Griffth Chris Kelly

Stephen PhillipsJacob Rees-Mogg Henry Smith

The Committee deliberated. Draft Report, proposed by the Chair, brought up and read. Ordered, That the draft Report be read a second time, paragraph by paragraph. Paragraphs 1.1 to 3.8 read and agreed to. Paragraphs 3.9 to 3.11 read, amended and agreed to. Paragraphs 4.1 to 6.6 read and agreed to. Paragraph 6.7 read, amended and agreed to. Paragraphs 7.1 to 10.7 read and agreed to. Paragraph 10.8 read, amended and agreed to. Paragraphs 11.1 to 22 read and agreed to. Resolved, That the Report be the Thirty-third Report of the Committee to the House. Ordered, That the Chair make the Report to the House.

****

[Adjourned till Wednesday 5 February at 2.00 p.m.


Standing Order and membership The European Scrutiny Committee is appointed under Standing Order No.143 to examine European Union documents and—

a) to report its opinion on the legal and political importance of each such document and, where it considers

appropriate, to report also on the reasons for its opinion and on any matters of principle, policy or law which

may be affected;

b) to make recommendations for the further consideration of any such document pursuant to Standing Order

No. 119 (European Committees); and

c) to consider any issue arising upon any such document or group of documents, or related matters.

The expression “European Union document” covers —

i) any proposal under the Community Treaties for legislation by the Council or the Council acting jointly with

the European Parliament;

ii) any document which is published for submission to the European Council, the Council or the European

Central Bank;

iii) any proposal for a common strategy, a joint action or a common position under Title V of the Treaty on

European Union which is prepared for submission to the Council or to the European Council;

iv) any proposal for a common position, framework decision, decision or a convention under Title VI of the

Treaty on European Union which is prepared for submission to the Council;

v) any document (not falling within (ii), (iii) or (iv) above) which is published by one Union institution for or

with a view to submission to another Union institution and which does not relate exclusively to consideration

of any proposal for legislation;

vi) any other document relating to European Union matters deposited in the House by a Minister of the Crown.

The Committee’s powers are set out in Standing Order No. 143.

The scrutiny reserve resolution, passed by the House, provides that Ministers should not give agreement to EU

proposals which have not been cleared by the European Scrutiny Committee, or on which, when they have been

recommended by the Committee for debate, the House has not yet agreed a resolution. The scrutiny reserve

resolution is printed with the House’s Standing Orders, which are available at www.parliament.uk.

Current membership

Mr William Cash MP (Conservative, Stone) (Chair)

Andrew Bingham MP (Conservative, High Peak)

Mr James Clappison MP (Conservative, Hertsmere)

Michael Connarty MP (Labour, Linlithgow and East Falkirk)

Geraint Davies MP (Labour/Cooperative, Swansea West)

Julie Elliott MP (Labour, Sunderland Central)

Stephen Gilbert MP (Liberal Democrat, St Austell and Newquay)

Nia Griffith MP (Labour, Llanelli)

Chris Heaton-Harris MP (Conservative, Daventry)

Kelvin Hopkins MP (Labour, Luton North)

Chris Kelly MP (Conservative, Dudley South)

Stephen Phillips MP (Conservative, Sleaford and North Hykeham)

Jacob Rees-Mogg MP (Conservative, North East Somerset)

Mrs Linda Riordan MP (Labour/Cooperative, Halifax)

Henry Smith MP (Conservative, Crawley)

Mr Michael Thornton MP (Liberal Democrat, Eastleigh)

The following members were also members of the committee during the parliament: Mr Joe Benton MP (Labour, Bootle) Jim Dobbin MP (Labour/Co-op, Heywood and Middleton) Tim Farron MP (Liberal Democrat, Westmorland and Lonsdale)


Penny Mordaunt MP (Conservative, Portsmouth North) Sandra Osborne MP (Labour, Ayr, Carrick and Cumnock) Ian Swales MP (Liberal Democrat, Redcar)