EUROPEAN COMMISSION Brussels, 15.7.2016 COM(2016) 471 final REPORT FROM THE COMMISSION ANNUAL REPORT 2015

ON RELATIONS BETWEEN THE EUROPEAN COMMISSION

AND NATIONAL PARLIAMENTS



REPORT FROM THE COMMISSION ANNUAL REPORT 2015 ON RELATIONS BETWEEN THE EUROPEAN COMMISSION

AND NATIONAL PARLIAMENTS 1. Introduction 2015 marked the first full year in office of the new Commission under the leadership of Jean-Claude Juncker. When setting out his political priorities for office, President Juncker underlined the importance of the Commission’s relationship with national Parliaments, particularly in enforcing the principle of subsidiarity. He also expressed his intention to explore ways of improving the Commission’s interaction with national Parliaments ‘as a way of bringing the European Union closer to its citizens’. The Commission’s commitment to forging a new partnership with national Parliaments was reflected in the mission letters that President Juncker addressed to his fellow Commissioners. In these, he called upon them to present and explain important proposals or initiatives to national Parliaments in person. The renewed emphasis on the importance of direct personal contacts saw Members of the Commission pay more than 200 visits to national Parliaments in the course of 2015 (see section 4 for more details). The Commission also took steps to reinvigorate its two traditional channels of written communication with national Parliaments, namely the political dialogue and the subsidiarity control mechanism. The Commission departed from its previous practice whereby replies to national Parliaments’ opinions were signed solely by the Vice-President in charge of interinstitutional relations. Now, replies are co-signed by the First Vice-President and either the Vice-President or Commissioner responsible for the policy area. This underlines the political importance that the Commission attaches to this dialogue. The Commission also took steps in 2015 to improve the manner in which it replies to national Parliaments’ opinions with the aim of reinforcing the political nature of replies while continuing to provide substantive answers to all technical issues raised. This eleventh annual report on relations between the Commission and national Parliaments focuses on the political dialogue that was launched by the Commission in 2006 to provide a framework for exchanging information and opinions across all policy areas, both on legislative proposals and on non-legislative initiatives. The subsidiarity control mechanism, which gives national Parliaments the right to assess whether legislative proposals in areas that do not fall within the exclusive competence of the European Union comply with the principle of subsidiarity, is addressed in the 2015 Annual Report on subsidiarity and proportionality. That report is published in parallel and should be seen as complementary to this report.

2. Written opinions from national Parliaments a. General observations Reflecting the new Commission’s political commitment to a more focused approach centred on priorities and results, its 2015 work programme listed 23 new initiatives to be adopted during the course of the year. This figure marked a steep decline from the average of more than 130 new initiatives proposed in the each annual work programme for the five preceding years. The Commission’s focus on a limited number of key issues of importance to European citizens and the reduction of new initiatives led to a fall in the total number of opinions (including reasoned opinions) received from national Parliaments. In 2015, the number declined by over 30 %, from 506 opinions received in 2014 to 350 in 2015 (see Annex 1). b. Participation and scope As in previous years, the political dialogue activity, measured by the number of opinions sent to the Commission, remained unequally distributed across national Parliaments. The 10 most active chambers accounted for approximately 70 % of all opinions, albeit down from 80 % in 2014. The Portuguese Assembleia da República submitted the highest number of opinions. Its 55 opinions accounted for some 15 % of the total number received. Nevertheless, its recent downward trend – both in the absolute number of opinions issued and their share of the overall total – continued (227 opinions in 2012 (31 %), 192 in 2013 (31 %) and 118 in 2014 (23 %)). The other national Parliaments or chambers that sent ten or more opinions in 2015 were the Romanian Camera Deputaţilor (47), the Czech Senát (25), the Italian Senato della Repubblica (25), the French Assemblée nationale (23), the UK House of Lords (22), the German Bundesrat (20), the Romanian Senat (14), the Spanish Congreso de los Diputados and Senado (11), the Czech Poslanecká snĕmovna (10) and the Swedish Riksdag (10). In contrast to recent years, however, when opinions were clearly focused on legislative proposals, a growing number of chambers chose to issue opinions on non-legislative proposals, such as communications and green papers. Eleven of the nineteen Commission documents that received most opinions from national Parliaments fell within these categories. The Commission has encouraged national Parliaments to become more engaged in the pre-legislative phase and welcomes these expressions of interest.



c. Key topics of the political dialogue and policy outcome The following Commission documents were among those that attracted particular attention – ten or more opinions – from national Parliaments in 2015 (for further details, see Annex 3).

1.Communication on the Commission Work Programme 2015: A New Start 2.Proposal for a Regulation establishing a crisis relocation mechanism and amending existing legislation relating to the handling by Member States of applications for international protection lodged by a non-EU national or a stateless person 3.Proposal for a Regulation amending existing legislation as regards the possibility for Member States to restrict or prohibit the use of genetically modified food and feed on their territory 4.Proposal for a Regulation on the European Fund for Strategic Investments 5.Proposal for a Council Directive amending existing legislation on mandatory automatic exchange of information in the field of taxation As three of these documents also gave rise to reasoned opinions from one or more chambers, reference is made to the Annual Report on subsidiarity and proportionality where a more detailed description of aspects relating to subsidiarity is provided. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the Commission Work Programme 2015: A New Start The first work programme of the Juncker Commission marked a clear change from the past. It had a commitment to focus the Commission’s efforts and resources on those proposals likely to have the biggest impact on jobs and growth. It presented a relatively limited number of new proposals focused on the ten priorities of President Juncker’s political guidelines, and it also listed for withdrawal some 80 pieces of pending legislation tabled by earlier Commissions. These had been dormant, overtaken by events, or watered down in negotiations to the point that they could no longer achieve their original purpose. The 2015 work programme also set out a commitment to review 79 pieces of existing legislation to see if they were still fit for purpose. The 2015 work programme was adopted on 16 December 2014 and sent by First Vice-President Frans Timmermans to the chairs of European affairs committees in all national Parliaments. In response, it attracted 26 opinions, making it the most commented upon Commission document in the year under review. This figure includes individual opinions on the work programme submitted by 12 chambers as well as a joint opinion from 14 chambers in which each chamber identified its own priorities among the initiatives proposed by the Commission. This joint opinion was submitted after an informal meeting – organised in Brussels on 19 January 2015 by the Dutch Tweede Kamer – on the role of national Parliaments. The meeting also discussed ways to improve the reasoned opinion or ‘yellow card’ procedure (see section 3 below). All chambers signing the joint opinion identified the digital single market strategy as a priority. Other initiatives prioritised by almost all chambers included the strategic framework for the energy union, the labour mobility package, the trade and investment strategy for jobs and growth and the European agenda on migration. In its replies to the opinions received, the Commission welcomed national Parliaments’ expression of interest in the work programme and the widespread support for the Commission’s focus on a smaller number of initiatives that add value at the European level. It also welcomed the opportunity presented by the work programme to have an early exchange of views with national Parliaments on priorities. Proposal for a Regulation of the European Parliament and of the Council establishing a crisis relocation mechanism and amending Regulation (EU) 604/2013 of the European Parliament and of the Council of 26 June 2013 establishing the criteria and mechanisms for determining the Member State responsible for examining an application for international protection lodged in one of the Member States by a third country national or a stateless person In response to the refugee crisis and in line with its European agenda on migration, the Commission’s proposal for a crisis relocation mechanism aims to introduce a structured solidarity mechanism. The Commission can trigger this at any time to help any Member State experiencing a crisis situation and extreme pressure on its asylum system as a result of a large and disproportionate inflow of non-EU nationals. Such future emergency situations and the redistribution of non-EU nationals would be set out by the Commission based on objective and verifiable criteria. It is part of a package of proposals that includes the emergency relocation of 120 000 refugees from Greece, Hungary and Italy, a common European list of safe countries of origin, and making the return policy more effective. The proposal gave rise to twelve opinions in 2015, including five reasoned opinions. In these opinions, national Parliaments argued: that the EU does not have the competence to introduce a permanent relocation mechanism that would be activated by the Commission; that the proposed Regulation would not have a real added value compared with the existing possibilities of Member State action; and that the draft Regulation goes beyond what is needed to achieve the objective and thus violates the principles of subsidiarity and proportionality. In its replies, the Commission noted that the proposal forms part of a broader package of ambitious measures – already proposed or to be proposed – to respond to the current refugee crisis. On the legal basis, the Commission underlined that the proposal should be adopted on the same legal basis as Regulation (EU) No 604/2013, which it is designed to amend. The Commission recalled that the refugee crisis had put Member States’ asylum systems under extreme pressure, which could jeopardise application of the Dublin rules. In that regard, the current system did not provide for any derogation from the responsibility criteria, thus generating imbalances and in some cases aggravating the crisis. The Commission further argued that a crisis mechanism for the relocation of applicants would allow the EU – without having to go through a lengthy adoption procedure each time – to respond to an urgent situation and to help Member States facing an emergency situation. The Commission stressed that action by individual Member States would not be sufficient to address these situations. Implementation of uncoordinated solutions would not be able to achieve a comprehensive response to the disproportionate inflow of persons nor a fair sharing of responsibility between Member States. Therefore, in the Commission’s view, it is clear that the actions of individual Member States cannot satisfactorily respond to the common challenges all Member States are confronted with in this area. Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1829/2003 as regards the possibility for the Member States to restrict or prohibit the use of genetically modified food and feed on their territory

When seeking the European Parliament’s endorsement as President of the European Commission, Jean-Claude Juncker stated his intention to review the legislation on the authorisation of genetically modified organisms. Under the current system, Member States have always failed to reach a qualified majority in favour of or against authorisation, thereby invariably leaving the final decision on authorisation to the Commission. The proposed review would allow Member States to take final decisions at national level – restricting or prohibiting the use of genetically modified food or feed – after they have been authorised at European level. Such decisions could only be taken under the condition that the national opt-outs are compatible with Union law and are not related to health and environmental reasons. These are assessed for the European Union as a whole by the European Food Safety Authority. The Commission received 12 opinions including two reasoned opinions that are described in greater detail in the 2015 Annual Report on subsidiarity and proportionality. Other points of criticism included unforeseen costs for producers and importers and potential disruption to the single market. It was also argued that genetically modified crops might be prohibited on political rather than scientific grounds. Several national Parliaments considered that the proposal was detrimental to the safety of genetically modified food and feed in the EU but had different views on the appropriate risk assessment mechanism. For example, the Irish Houses of the Oireachtas believed that the European Food Safety Authority should retain sole responsibility for assessing the safety of genetically modified organisms at European level. For its part, the German Bundesrat called for a complete overhaul of the risk assessment procedure. The European Parliament, in its first reading on 28 October 2015, rejected the proposal amid doubts over its compatibility with the single market and its feasibility. The Council has not yet taken a position on the proposal. The Commission, for its part, has identified the proposal as one of the initiatives on which it wishes to make rapid progress with the co-legislators (the European Parliament and the Council). Proposal for a Regulation of the European Parliament and of the Council on the European Fund for Strategic Investments and amending Regulations (EU) No 1291/2013 and (EU) No 1316/2013 The first priority listed by President Juncker in his political guidelines for the new Commission concerned the strengthening of Europe’s competitiveness and the promotion of investment to create jobs. In January 2015, in close partnership with the European Investment Bank, the Commission submitted a proposal to establish a European Fund for Strategic Investments. The aim was to overcome the current investment gap in the European Union by mobilising private financing for strategic investments that the market cannot finance alone. The Fund concentrates its activity on strategic investments in infrastructure and innovation, and on risk finance for small and medium-sized enterprises and mid-cap companies across Europe. This major policy initiative triggered eleven opinions under the political dialogue. In general, national Parliaments welcomed the proposal to create a mechanism to support strategic investments at European level. They called for a rapid implementation of the proposal and insisted on a transparent selection process for the projects that would receive funding. At the same time, a number of national Parliaments also feared that funding earmarked for science, research and innovation under the Horizon 2020 programme would be cut in order to finance the European Fund for Strategic Investments. Several chambers called for the Fund’s resources to focus on investments that are beneficial for research and innovation in Europe. The Austrian Bundesrat and the German Bundesrat opposed the use of the proposed fund as a means to finance nuclear energy projects. Finally, a number of chambers, including the Italian Senato della Repubblica, the Romanian Camera Deputaţilor, the Romanian Senat and the Slovakian Národná Rada, called for a balanced allocation of funds across Europe to reduce regional disparities. After approval in both the European Parliament and the Council, the Regulation setting up the European Fund for Strategic Investments entered into force on 25 June 2015. This timing met the ambitious objective set out in the Communication ‘An Investment Plan for Europe’ that the fund would become operational by June 2015. The Regulation as agreed by the

co-legislators reduces by EUR 500 million the proposed cut to the Horizon 2020 programme’s financial allocation. For the Connecting Europe Facility, the proposed reduction of EUR 3.3 billion has been cut to EUR 2.8 billion. On transparency of the European project pipeline, Article 15(1) of the Regulation specifies that the Commission, with the support of the European Investment Bank, will create a portal to serve as a publicly accessible and user-friendly project database, providing relevant information for each project. On the selection of projects, the co-legislators added an article on the eligibility criteria for the use of the European Union’s guarantee. This specifies that the European Fund for Strategic Investments is to support projects that: I.are economically viable; II.are consistent with Union policies, including the objective of territorial cohesion; III.provide additionality, as defined in Article 5 of the Regulation; IV.maximise the mobilisation of private sector capital; and V.are technically viable. The provision on being consistent with Union policies and the objective of territorial cohesion is a clear response to calls to ensure a regional balance. Since its entry into force, the European Investment Bank Group has already approved a wide range of projects for backing from the Fund. The European Investment Bank estimates that, by May 2016, the Fund had triggered around EUR 100 billion of investment in Europe. Proposal for a Council Directive amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation The 2015 work programme contained a clear commitment to step up efforts to combat tax evasion and tax fraud. During the course of the year, the Commission adopted a number of proposals designed to respond to public calls for fairness and tax transparency. At the same time, they ensure a level playing field for businesses within the single market. The proposed Directive forms part of a broader tax transparency package adopted on 18 March 2015. It also reflects work undertaken by the Organisation for Economic Cooperation and Development and G20 countries on tax base erosion and profit shifting. The proposal is for a more systematic and binding approach for the exchange of information between Member States and the Commission. This will cover all future cross-border tax rulings as well as any rulings issued in the preceding ten years that are still valid on the date when the proposed Directive enters into force. The Commission received ten opinions on this proposal including one reasoned opinion from the Swedish Riksdag challenging the proposal’s compliance with the principle of subsidiarity. The arguments advanced by the Swedish Riksdag and the Commission’s reply are described in greater detail in the 2015 Annual Report on subsidiarity and proportionality. As for the other chambers that submitted opinions, many expressed support for taking action at European level to tackle aggressive tax planning, but several raised concerns relating to specific elements of the proposal. In particular, some chambers questioned the proposal’s requirement to oblige Member States to exchange information on all tax rulings – provided they were still valid – issued in the ten years before the date on which the proposed Directive was expected to enter into force (1 January 2016). Two chambers objected to any retroactivity whatsoever. Several chambers expressed concerns in relation to the administrative burden that the proposed Directive would impose and the feasibility of it applying from 1 January 2016. The Slovak Národná Rada stressed the need to clearly define the type of information to be exchanged, and the obligations for Member States, so as to avoid the exchange of irrelevant information. The German Bundesrat considered that only those Member States directly concerned by a particular tax ruling should participate in the information exchange.

Following discussions in the European Parliament and the Council, the proposed Directive was adopted on 8 December 2015 just nine months after the Commission had tabled its initial proposal. The adopted Directive preserves the key principles proposed by the Commission but differed from the initial proposal on several points. Firstly, Member States will have until the end of 2016 to transpose the new rules into national law so the Directive will now come into effect on 1 January 2017, one year later than initially planned. Secondly, the requirement to exchange information on tax rulings issued in the ten-year period before the entry into force of the Directive was shortened to five years, with an additional provision for tax rulings issued, amended or renewed in 2012 and 2013. Lastly, the Directive also defines in greater detail what information should be exchanged between Member States and the more limited set of basic information that should be communicated to the Commission. Such information is to enable the Commission to monitor and evaluate the effective application of the mandatory automatic exchange of information on advance cross-border rulings and advance pricing arrangements at any time.



3. The wider context In 2015, national Parliaments continued discussions on their role in the European decision-making process. In doing so, they were able to draw on reports issued by three chambers in 2014. In January 2015, an informal working group consisting of a number of parliamentary chambers met in Brussels to discuss the Commission’s 2015 work programme. The group also discussed how to improve the reasoned opinion or ‘yellow card’ procedure set out in Protocol (No 2) to the Treaties on the application of the principles of subsidiarity and proportionality. Discussions on this latter point, as well as the possible introduction of an enhanced form of the political dialogue – also known as a ‘green card’ – were then held in a second informal working group in Warsaw in May. The results were reported to the LIII COSAC meeting (Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union). The working group on strengthening the political dialogue and improving the reasoned opinion procedure met again in October during Luxembourg’s COSAC presidency. At the July meeting of COSAC Chairpersons, First Vice-President Timmermans acknowledged that national Parliaments were looking for ways to play a more positive and proactive role in European affairs, for example through the use of the ‘green card’. While stressing the Commission’s exclusive right of initiative, he indicated that the Commission would look constructively upon any initiatives that could count on the broad support of national Parliaments. At the same time, however, he stressed the obligation on the Commission to work according to the current treaties, which included the eight-week period mentioned in the Protocol during which national Parliaments may issue a reasoned opinion on a draft legislative act. Shortly after the meeting of COSAC Chairpersons, 16 parliamentary chambers came together on the initiative of the UK House of Lords to co-sign a pilot ‘green card’. This called on the Commission – when tabling its revised Circular Economy package – to adopt a strategic approach to the reduction of food waste within the European Union. This initiative on food waste was also supported by two other national Parliaments and one chamber. In its response, the Commission thanked the chambers for their suggestions, which it viewed as a clear demonstration of their readiness to contribute in a proactive and constructive manner to the policy debate at European level. Some of the suggestions on food donation, data collection and monitoring were subsequently reflected in the Circular Economy package adopted in December. Finally, pursuant to Article 12 of the Treaty on European Union, national Parliaments play a specific role in the area of freedom, security and justice through their involvement in the evaluation mechanisms for the implementation of the Union policies in that area and through being involved in the political monitoring of Europol and the evaluation of Eurojust’s activities. In that context, the Commission tabled a proposal in 2013 for a regulation on Europol aligning this agency with the requirements of the Treaty of Lisbon. It proposed among other things to introduce a mechanism for the European Parliament together with national Parliaments to scrutinise Europol’s activities. After almost three years of interinstitutional negotiations, the co-legislators reached an agreement. The final compromise provides for the setting up of a Joint Parliamentary Scrutiny Group (JPSG), which will be established by the competent Committee of the European Parliament and national Parliaments. 4. Bilateral contacts and visits Members of the Commission responded to President Juncker’s call to ‘commit to a new partnership with national Parliaments’ by carrying out more than 200 visits to national Parliaments during 2015. Almost all 28 national Parliaments were visited by President Juncker, the Vice-Presidents or the Commissioners, with many chambers receiving more than one visit. In addition, some national Parliaments sent delegations to Brussels or convened committee meetings there and took advantage of the opportunity to meet Members of the Commission. Of particular note are the visits to Member States undertaken by Members of the Commission to present key initiatives to stakeholders and citizens. For example, the Investment Plan for Europe, one of the Commission’s main priorities in its first year in office, was promoted by Vice-President Jyrki Katainen in a roadshow that took in almost all Member States, including visits to national Parliaments. Similarly, Vice-President Maroš Šefčovič used his extensive Energy Union tour to discuss the benefits of the Commission’s new policy with national parliamentarians in almost all Member States. Finally, reflecting the high level of public interest in trade-related issues, Commissioner Cecilia Malmström visited many national Parliaments to discuss issues, including the Transatlantic Trade and Investment Partnership that the European Union is negotiating with the United States. From the Commission’s viewpoint, these direct contacts with national parliamentarians are invaluable for fostering a better understanding of and support for the Union’s policies. This point was underscored by First Vice-President Timmermans in his remarks to the July 2015 meeting of COSAC Chairpersons held in Luxembourg (see section below). As in previous years, Commission officials attended various meetings of committees of national Parliaments. In addition, Commission officials were regularly invited to present key initiatives at meetings of the Brussels-based permanent representatives of national Parliaments. Furthermore, European Semester Officers, who are based in the Commission Representations in Member States, remained in contact with national Parliaments on the European Semester and other economic issues. 5. Main meetings and conferences The Commission’s engagement with national Parliaments continued throughout 2015 with its attendance at a range of important interparliamentary meetings and conferences. COSAC The Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union (COSAC) maintained its regular cycle of meeting twice each semester. One meeting brings together the Chairpersons of the Parliamentary Committees and the second is in plenary format. The European Parliament attended all meetings as a member of COSAC. The Commission, which has observer status at COSAC, also attended all meetings. In line with its standard practice, the Commission provided a written response to the contributions adopted by COSAC at its two plenary meetings held during the year. At the February meeting of COSAC Chairpersons, attended by First Vice-President Timmermans, delegates debated the priorities of the Latvian Presidency and the Eastern Partnership ahead of the Riga Eastern Partnership Summit, which took place in May. The LIII COSAC plenary, which ran from 31 May to 2 June, saw participants discuss a range of issues including the Union’s energy and trade policies, with the participation of Vice-President Šefčovič and Commissioner Malmström respectively. Parliamentary scrutiny of European Union affairs was another important item on the agenda. At the COSAC Chairpersons’ meeting held during Luxembourg’s Presidency of the Council, delegates discussed – in the presence of First Vice-President Timmermans – how the political dialogue could be strengthened (see section 3 above). The LIV COSAC meeting held in Luxembourg from 30 November to 2 December provided a forum for debate on the European agenda on migration, the digital single market strategy – with a keynote speech from Vice-President Andrus Ansip – and enlargement policy. European Parliamentary Week and Article 13 Conferences