SUMMARY

1. The Nice and Laeken European Councils requested that the delimitation of competence between the European Union and the Member States be examined in order to respond to criticism that the Union should take less action in certain areas and more in others. It was also pointed out that it is difficult for citizens to understand how such a delimitation is made, i.e. "who does what" within the European Union.

2. The note also aims at examining the problems raised with regard to the existing system of delimitation of legislative competence between the European Union and the Member States, while suggesting certain avenues to be explored to solve such problems (part II). To assist the discussion, part I of the note describes the existing system of delimitation of competence and an annex describes in greater detail the scope of the Union's/Community's competence in relation to that of the Member States' in the various areas covered by the
Treaties.

3. The existing system of delimitation of competence was established according to objectives to be achieved and means for achieving those objectives. In certain areas, the fields in which the Union may act are listed in some detail. In so doing, the system endeavours to reconcile the need for precision in delimiting competence with the need for flexibility in order to enable the Union to adapt to new challenges and respond better to citizens' expectations. As the merits of such a system have been widely recognised, most of the criticisms made tend to relate to the system's "excesses" or to the need to clarify it further rather than the need for a thorough overhaul.

4. The main problems raised with regard to the system of delimiting competence and the avenues to be explored, as described in the note, may be summarised as follows:

(a) The system's lack of clarity Certain provisions of the Treaties are complex and impenetrable and there are no provisions in the Treaties describing the principles governing the allocation of competence between the European Union and the Member States. The note suggests that the Convention should examine in particular whether and how to:
-explain in the Treaties the principles governing the existing system of allocation of competence and in particular the principle of allocation of competence;
-further clarify the various types of competence and the areas covered by each type;
-further explain the Member States' competence and in particular, the general principle that Member States have legislative competence except in the cases where this has been allocated to the Union/Community.

(b) The lack of precision of certain provisions of the Treaty
According to some criticisms, some provisions of the Treaty are not sufficiently precise, in particular Articles 94, 95 and 308. At the same time, it is widely recognised that those are the provisions which have enabled the Union to develop dynamically. A minority has requested that the existing system be replace by a "catalogue" of powers.
It is proposed that the Convention examine:
-possible clarification of the scope of Articles 94, 95 and 308 of the TEC;
-the possibility of laying down stricter rules governing recourse to Article 308;
-whether it is necessary to introduce clarification into other provisions;
-whether a "catalogue' of the Union's powers should be compiled.

(c) Failure to comply with the principles of subsidiarity and proportionality
Many believe that the principles of subsidiarity and proportionality are not always applied by the legislator, with political reasons or reasons of urgency taking precedence over observance of those principles. The note proposes that the Convention examine whether and, if so, how the application of those principles could be stepped up by the Institutions participating in the legislative procedure.

(d) In some cases the powers of the Union do not match citizens' expectations As a majority considers that citizens' expectations are one of the main criteria for deciding on the tasks to be carried out at Union level, the Laeken Declaration stresses that citizens want the Union to play a greater role in certain areas, while at the same time they find that the Union intervenes too much in other areas. On the basis of this principle, the notes suggests avenues to be explored to examine whether and, if so, how to adapt the Union's powers.

(e) Insufficient checks to ensure compliance with the delimitation of competence At present, political monitoring of compliance with the delimitation of competence is for the most part exercised by the Institutions of the Union. Legislative bodies at national level, in particular the national parliaments, exercise that monitoring only to a lesser degree.
As a broad majority of the members of the Convention call for such monitoring to be intensified, the note suggests avenues to be explored to strengthen political and/or judicial review of compliance with the delimitation of competence and the principle of subsidiarity, in particular by strengthening control by national parliaments and/or setting up an "ad hoc" monitoring mechanism.

INTRODUCTION

5. The question of the delimitation of competence between the European Union and the Member States has been placed at the centre of political debate as a result of claims that the delimitation is not precise enough, and that the European Union has a tendency to legislate, either in areas in which it is not competent (thus encroaching on the competence of the Member States), or in areas in which it is not appropriate for it to do so, or in too detailed a manner. The delimitation is also said to lack clarity, with the result that the European citizen finds it difficult to understand how powers are divided between the European Union (EU) and the Member States and has the impression either that the EU intervenes in areas where it should not or that it fails to intervene in areas where action at European level is necessary.

6. Seeking to address these concerns, the Nice and Laeken Declarations on the Future of the Union ask the Convention to look into the question of establishing a more precise delimitation of competence between the European Union and the Member States, and a means of monitoring compliance with that delimitation.

I. THE CURRENT SYSTEM FOR THE DELIMITATION OF COMPETENCE

7. The current system for the allocation of competence between the European Union and the Member States can be summarised as follows (paragraphs 8 to 12):

(A) LEGISLATIVE COMPETENCE
8. The European Union/European Community (EC) enjoys only those powers conferred on it (Article 5 of the TEC): the Union/Community acts within the limits of the powers conferred upon it and of the objectives assigned to it by the Treaties. Although in the original Treaties legislative competence was generally conferred upon the EC on the basis of objectives to be attained (Articles 2 and 3 of the TEC) and the means of attaining them (functional method), successive revisions of the Treaties have replaced this method in certain cases by a substantive allocation of competence consisting of defining the precise actions to be taken by the Community, in some instances accompanied by specific exclusions of competence (method of substantive allocation). Thus in certain areas the Union's legislative competence is defined both in terms of objectives and subjects.

9. Three types of legislative competence are conferred upon the Union/Community: exclusive, concurrent (or shared) and complementary. In the absence of any definition in the Treaty, these may be defined as follows:

(a) EXCLUSIVE COMPETENCE: the Union/Community enjoys exclusive competence when it alone is able to adopt rules in an area. Any intervention by the Member States is excluded unless it has the authorisation of the Community Institutions or where there is a lacuna needing to be filled. The areas where the Union has exclusive competence are: common commercial policy (to the extent existing prior to the entry into force of the Treaty of Nice), living marine resources in the zones covered by the Treaty; establishment of the Common Customs Tariff; monetary policy for the twelve Member States in the euro area. To these areas must be added those which become areas of exclusive competence because the Community legislates extensively in the area concerned on the basis of its concurrent competence. task which, Specific mention must be made of the establishment and operation of the internal market. This is a type of functional competence for the harmonisation of legislation, a as a matter of principle, can be carried out only by the Community. However, as long as the Community has not fully exercised that competence, Member States retain the capacity to legislate. Moreover, that competence may cover areas in which Member States retain legislative competence in any event. When a harmonisation measure has been adopted, the Member States may retain national provisions justified by certain requirements.
As regards the Treaty on European Union, only the section of Title VI relating to the setting up of joint bodies such as Europol or Eurojust may be regarded as falling within the exclusive competence of the Union given that this task, by its very nature, cannot be carried out by each Member State acting individually.

(b) CONCURENNT (OR SHARED) COMPETENCE: this covers areas in which Member States may legislate until such time and insofar as the Union/Community has not exercised its powers by adopting rules, which it may do as of right. Once the Union/Community has legislated in such an area, Member States may no longer legislate in the field covered by this legislation, except to the extent necessary to implement it, and the legislative rules adopted have precedence over those of the Member States. Community competence thus becomes exclusive through its exercise. The Union's legislative action in those areas is subject to compliance with the principles of subsidiarity (the Union/Community should take action only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore be better achieved at Community level) and proportionality (any action by the Union/Community should not go beyond what is necessary to achieve the objectives of the Treaty). The intensity of the legislative action sometimes depends on the type of measure and the type of legal act provided for in the Treaties. 3 Most Union/Community powers fall within this category:
– TEC: citizenship; agriculture and fisheries; the four freedoms (goods, people, services and capital); visas; asylum and immigration; transport; competition; taxation; social policy; environment; consumer protection; trans-European networks (interoperability and standards); economic and social cohesion; energy; civil protection; tourism.
– Title V of the TEU (common foreign and security policy), with the exception of defence.
– Title VI of the TEU (police and judicial cooperation in criminal matters).

(c) COMPLEMENTARY COMPETENCE: this covers areas in which the competence of the Union/Community is limited to supplementing or supporting the action of the Member States, adopting measures of encouragement or coordinating the action of the Member States. The bulk of the power to adopt legislative rules in these areas remains in the hands of the Member States and intervention by the Community cannot have the effect of excluding intervention by them.
This category includes economic policy; employment; customs cooperation; education, vocational training and youth; culture; public health; trans-European networks (except for interoperability and standards); industry; research and development; development cooperation; common defence policy (Title V of the TEU).
(d) Member States' competence: This covers areas not referred to in the Treaty and therefore, as a result of the principle of conferred powers, not within the competence of the EU/EC and remaining within that of the Member States, areas where the Treaties expressly exclude Union competence or expressly recognise the competence of Member States, and areas in which the Treaty forbids the Union/Community to legislate.
10. Although the competence of the Community is in principle allocated to it explicitly by the Treaties, the Court of Justice has taken the view that in some cases competence flows implicitly from the Treaty texts or their general structure. These tend to be cases in which competence is necessary to implement aims set by the Treaties, especially in the field of external relations.

(B) NON-LEGISLATIVE OR EXECUTIVE COMPETENCE
11. In the Treaty system, the general rule is that competence to implement and apply legislation in accordance with their respective constitutional rules (in some cases these provide for implementation by constitutional entities) rests with the Member States, with due regard for the Treaties and subject to monitoring by the Commission, national courts and the Court of Justice.
The Community exercises such competence in a subsidiary capacity only.

(1) Implementation of legislative acts ("third-level" rules):
This concerns the drafting of normative rules of general application, the purpose of which is to apply legislative acts. In accordance with the general principle referred to above, the implementation of Community
legislative acts is, generally speaking, a matter for Member States. Only if and insofar as the aims of the planned action cannot be adequately achieved by the Member States, or if it proves necessary to ensure uniform application of legislative measures throughout the Member States, will it be necessary for the Community to adopt regulations 4 in accordance with the basic legislative act.
(2) Administrative, material or budgetary implementation of Community acts ("fourth-level" rules):
This concerns administrative implementing measures, individual decisions, sanctions to ensure compliance with Community law, checks, etc. The adoption of such measures is a matter for Member States, which determine, in accordance with their constitutional and political framework, the proper bodies, procedures and conditions for ensuring the correct implementation of Community law. The Union/Community may nevertheless intervene in the administrative implementation of Community acts where the Treaty or the Community legislator gives it the power to do so (e.g. competition, administration of certain Community
programmes, etc.).

(C) CHECKING THE DELIMITATION OF COMPETENCE
12. There are currently two types of checks to ensure compliance with the delimitation of competence and the subsidiarity principle:
(a) political control: the question of whether the Treaties do or do not confer on the Union competence to act in a specific case and to what extent the subsidiarity principle is being complied with rests to a large extent with the Community Institutions participating in the legislative process. Each Institution must act in accordance with the powers allocated to it. The governments of the Member States, national parliaments and public opinion also exercise such a control to the extent that they control the positions adopted by their government representatives in the Council;
(b) judicial control: by appeal to the Court of Justice or national courts. The control exercised by the Court of Justice is wide-ranging in the case of the EC Treaty, limited under Title VI of the TEU, and non-existent under Title V of the TEU.

II. PROBLEMS AND AVENUES TO BE EXPLORED

13. The current system of delimitation of competence, the result of successive reforms of the Treaty which have accompanied the development of the Community, attempts to reconcile two requirements: on the one hand, the need for precise delimitation and, on the other, the need for a degree of flexibility.

14. The "functional" method of allocating powers laid down in the original Treaties which implies the existence of provisions granting the Community "functional" powers to meet its objectives (particularly Articles 94, 95 and 308 TEC), although less precise than the method of substantive allocation, nonetheless allows for some adjustment of the Union's powers to the new challenges which are emerging as the objectives of the Treaties are attained, without the need for recourse to the cumbersome procedure for revising the Treaties. Through successive reforms of the Treaties, the system of delimitation by objectives has been supplemented by delimitation by subject (either by means of a positive list of subjects, or by specific exclusions from competence) in areas where the need for greater precision has been felt. This has particularly been the case in areas where new powers have been allocated to the Community or in areas where qualified majority voting has replaced unanimity.

15. Any consideration of the problem of delimiting competence must take account of this need to find a balance between the demand for some flexibility and the demand for precision in delimitation. Every constitutional system which establishes a federal system or a system with a strong regional component tries to strike this balance in one way or another, but there is no "ideal" system for the delimitation of competence. In all existing constitutional texts – even in those based on a catalogue of powers – grey areas exist and constitutional courts are called on to resolve questions relating to the resultant conflicts of competence.

16. That said, it must be stressed that the majority of the criticisms made about the current system of allocating competence refer to the "excesses" of the system, to the need for it to be clarified, or to the need to make some adjustments to the allocation of competence, rather than to the need to change the system itself. The benefits of the system, which enables the Union to adapt to new challenges and to meet the expectations of citizens more effectively, have been widely acknowledged.

17. With non-legislative powers largely remaining with the Member States, the criticisms relate particularly to legislative powers, both as to their delimitation and as to monitoring compliance with it. As a result, let us examine only those problems raised by the delimitation of legislative powers between the European Union and its Member States, while suggesting paths to be explored to respond to such problems.

(a) The system's lack of clarity
18. One of the problems most often raised in relation to the system of delimiting legislative powers is its lack of clarity. Several factors might be cited in support of this criticism: the incorporation at the time of successive amendments to the Treaties of provisions drafted in a fashion which is often complex, as a result of political compromises; the lack of clarity in the drafting of certain provisions; the fact that neither the system for delimiting powers, nor the principles governing such a delimitation, nor the types of competence available to the Union and the areas covered by each type of competence are clearly defined by the Treaty; finally, the new open methods of coordination, which set objectives without taking account of the allocation of powers, contribute to the system's lack of clarity and give the impression that the Community's powers are very broad where this is not in fact the case. Thus misunderstandings and false ideas about the extent of the Union's legislative competence often exist because of the system's lack of clarity. Cases in point are culture, health and education, areas mentioned by several members of the Convention during the debates on 15 and 16 April. Although these are areas in which the Community's activities are limited to complementing the actions of the Member States, particularly by means of support programmes financed through the Community budget, and in which the Treaties expressly forbid the Community from legislating, the erroneous notion exists that the Community is competent to legislate in these areas.

19. Means must therefore be found to make the delimitation of competence clearer.

20. Avenues to be explored:

(1) what clarification needs to be incorporated into the Treaties s to explain better the principles regulating the current system of allocating powers, and in particular the principle of allocated powers, according to which the Union/Community cannot act in areas in which no power has been conferred on it, since these areas come under the powers of the Member States, who exercise those powers in accordance with their constitutional systems. During the discussions on 15 and 16 April, many members of the Convention argued that this principle, which is already implicit in the Treaty, should be made explicit.

(2) whether and, if so, how to clarify concepts relating to the different types of competence available to the Union, and the areas coming under each of those types.

(3) whether and, if so, how to spell out in the Treaty the powers which remain with the Member States. During the debates on 15 and 16 April, some speakers supported the idea of an Article of the Treaty listing the cases of explicit exclusion from Union/Community competence or the areas covered by the legislative competence of the Member States. However, a majority seemed to prefer the idea of recalling in the
Treaty the general principle whereby legislative competence rests with the Member Sates except where it is conferred on the Union/Community. They felt that such a list risked setting in stone the areas of competence of the Member States thereby running counter to the need for flexibility to adapt to new realities.

(4) examine the possibility of including in the Treaty a reference to the open method of coordination while establishing its limits.

(b) The lack of precision of certain provisions of the EC Treaty and particularly its "functional" provisions (Articles 94, 95 and 308 of the TEC)
21. Some believe that the lack of precise boundaries in some provisions allocating competence has the result that the Union acts in areas where it is not competent, thus infringing the powers of the Member States. The question arises in particular in regard to Articles 94, 95 and 308 of the EC Treaty 1 , but could also be examined in relation to other provisions of the Treaties.
22. Regarding Articles 94, 95 and 308, these provisions have been criticised by some on the grounds that, given their extremely broad sweep, they allow the Community to exceed the competences allocated by the Treaties. Certain members of the Convention noted that, while it may well be true that given their functional character, these provisions by their nature have a broad scope and may affect areas generally reserved to the Member States, these are the provisions which have made possible the dynamic development of the Community and the achievement of certain key policies of the Treaty such as the internal market. A large majority of those who spoke on the matter argued for keeping the evolution of competences flexible and dynamic and so for retaining those provisions. In addition, use of them is limited, as the Court of Justice has pointed out. 2 Some clarification and explanation of the use of these provisions is therefore possible.

23. As regards Article 308 of the TEC, a minority has called for its deletion. If such a course of action were to be considered, it would be necessary to weigh up the risk of paralysing the Community's activities by preventing it from adapting it to new realities and acting in certain cases where, to attain a Community objective laid down by the Treaty, but for which the Treaty did not provide all the necessary means, the Community would consider (with the Council acting unanimously as laid down in Article 308) that a measure needed to be adopted.

24. It has also been suggested that the architecture of the Treaties be changed radically, abandoning the current method of functional allocation, as one which would enable the Community to take powers not attributed to it by the Treaty, and replacing it with a system exclusively delimiting subjects, by drawing up a "catalogue" of powers. The risks and problems created by such a change were expounded at length by several members of the Convention during the debates on 15 and 16 April.

25. Avenues to be explored:
1) possible clarification of the scope of Articles 94, 95 and 308 of the TEC, particularly on the basis of the clarifications provided by the case-law of the Court of Justice;
2) the possibility of making recourse to Article 308 more difficult, while at the same time creating in the Treaty specific legal bases for areas where use is often made of this provision 3 ;
3) whether and, if so, to what extent clarifications should be introduced into the provisions assigning powers to the European Union in certain areas. More practically, this would involve examining whether and in which areas greater use should be made of delimitation by subject or of specific exclusions.
4) whether it is necessary to compile a "catalogue" of Union competences and to examine in particular to what extent such a catalogue would really mean a more precise delimitation of competences between the Union and the Member States, and the consequences of drawing up such a catalogue with regard to adaptation of Union competences and the development of the European Union.

(c) Failure to comply with the principles of subsidiarity and proportionality
26. Many believe that the principle of subsidiarity, introduced by the Maastricht Treaty as a mechanism to regulate the implementation of the Community's non-exclusive powers, has not produced the expected results. Since the application of the principle of subsidiarity involves political assessment by the Institutions on a case-by-case basis, political considerations, or urgency, may on occasion have overridden compliance with the principle. This is said to have made the Community intervene at times in areas where the objectives of the intended action could have been sufficiently attained by the Member States.The same applies to the principle of proportionality. Some consider that in some cases the Community's action has gone beyond what is necessary for achieving the objective in question.

27. Avenues to be explored:
1) The question arises of whether clarifications and more detailed criteria should be introduced for the application of the principles of subsidiarity and proportionality, and whether the means to ensure compliance with those principles should be strengthened, in particular with regard to the Institutions taking part in the legislative procedure, namely the European Parliament, the Council and the Commission.
2) Regarding the introduction of more detailed criteria, the question is whether or not the Protocol on the application of the principles of subsidiarity and proportionality, annexed to the Amsterdam Treaty, is sufficient. Regarding checks on compliance with these principles, see paragraph (e).

(d) In some cases the powers of the Union do not match citizens' expectations
28. It was clear that a large majority in the debates on 15 and 16 April considered that citizens' expectations and the principle of subsidiarity should be the main criteria for decisions on the tasks to be carried out at Union level. Some members considered that other principles such as solidarity should also be taken into account. On similar lines, the Laeken Declaration stresses that citizens want the Union to play a greater role in certain areas, while at the same time they find that the Union intervenes too much in others.

29. On this basis, the main question is to what extent the powers of the Union should be adjusted so that it focuses, and intensifies its action, on its essential tasks, and in particular on certain fields which are of most importance to the citizen, in areas in which only the Union can act, given the cross-border aspects of the action, or in areas in which the Union can act more effectively than Member States individually.

30. Avenues to be explored:
1) whether there are areas in which the Union is not competent but it would be desirable for it to act or whether there are areas in which it should take more action;
2) whether there are areas referred to in the Treaties where action would be more effective if it were taken at Member State level;
3) whether there are areas covered by the complementary or shared competence of the Union which should be covered by exclusive competence and vice versa.

(e) Insufficient monitoring to ensure respect for the delimitation of competence
31. While noting that clarity and precision in the delimitation of competence between the Union and Member States could be improved, several members of the Convention considered that the best guarantee for ensuring compliance with that delimitation would be to establish an effective monitoring mechanism. Furthermore, as there is no "ideal" system for distributing powers, there will always be conflicts of competence.
Accordingly, stepping up monitoring to ensure compliance with the delimitation of competence, including the principle of subsidiarity, is essential.

32. At present, political control of compliance with the delimitation of competence and the principle of subsidiarity is for the most part exercised by the Institutions of the Union participating in the legislative process. Legislative bodies at national level exercise such a control to a lesser degree. Each national parliament only exercises such control to the extent that it is able to control or influence the position which will be adopted by its Government within the Community Institutions. As this control is carried out during
the legislative procedure within the Union ("ex ante"), there is no mechanism for monitoring compliance with the principle of subsidiarity in the implementation and application of the Union's legislative acts ("ex post").
33. Judicial control is a matter for the Court of Justice and national courts.
34. Avenues to be explored:
The main question to be examined here is whether monitoring, political, and/or judicial, of compliance with the delimitation of competence and the subsidiarity principle should be strengthened (and if so how).

1) This would firstly involve examining whether and how the existing controls should be strengthened. As regards political controls, the possibility could be examined of giving national parliaments a greater role in checking compliance with these principles, either by their participation in the legislative procedure within the Union itself, or by enhancing their participation and control when positions are established by their Government.
One could also consider strengthening of control by the Court of Justice of the conformity with these principles of the legislative acts adopted, particularly by giving national parliaments the power to bring an action for annulment before the Court in the event of violation of the principles of subsidiarity and allocation of competence. Some have also raised the possibility of giving this power to constitutional bodies with legislative powers in the Member States or to the Committee of the Regions.

2) As several members of the Convention asked on 15 and 16 April, one should consider whether such strengthening should include the creation of a new mechanism for monitoring compliance with the principle of delimitation of competence and, if so, the political or judicial nature of such a mechanism and its composition and role. Several formulae have been put forward in this context ("subsidiarity" committee of the European Parliament and Council, establishment of an "ad hoc" body made up of national parliament; inclusion of representatives of national parliaments in Member States' delegations in the Council; a "mixed" European Parliament; mechanism for cooperation between the Court of Justice and national constitutional courts; new "ad hoc” Court, etc.).

3) The possibility could be examined of setting up a mechanism to monitor compliance with the principles of delimitation of competence and subsidiarity when Member States implement legislative acts adopted by the Union.