PROPOSAL FOR A COUNCIL DECISION ON THE ATTAINMENT OF PROGRESSIVE CONVERGENCE OF ECONOMIC PERFORMANCE DURING STAGE ONE OF ECONOMIC AND MONETARY UNION
Date: 1989-10-13
Institutions: European Commission
Subjects: Economic and Monetary Union, coordination of EMU policies, economic convergence, economic policy

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

C0M<89) 466 final 

Brussels, 13 October 1989 

Proposal for a 

COUNCIL  DECISION 

on the attainment  of progressive  convergence of 
economic  performance  during  stage one of 
Economic  and Monetary  Union 

(presented by the Commission) 

Proposal for a 

COUNCIL  DECISION 

on the attainment of progressive  convergence 
of economic performance during  stage one of 
Economic and Monetary  Union 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having  regard  to  the  Treaty  establishing  the  European  Economic 
Community, and  in particular  Articles  103 and  145 thereof, 

Having regard to the proposal  from the Commission, 

Having regard to the Opinion of the European Parliament, 

Having  regard  to  the  Opinion  of  the  Economic  and  Social  Commit 
tee, 

Whereas  the  European  Council,  at  its  meeting  in  Madrid  in  June 
1989, restated  "its determination  progressively  to achieve Econo 
mic  and  Monetary  Union  as provided  for  in  the  Single Act"; deci 
ded  that  "the  first  stage  of  the  realization  of  Economic  and 
Monetary  Union  would  begin  on  1st  July  1990";  and  stated  that 
"Economic  and  Monetary  Union  must  be  seen  in  the  perspective  of 
the completion  of  the  Internal  Market  and  in  the context  of eco 
nomic  and  social  cohesion", and  that  "its  realization  would  have 
to  take account  of  the parallelism  between  economic  and  monetary 
aspects,  respect  the  principle  of  'subsidiarity'  and  allow  for 
the diversity  of  specific situations", 

Whereas  in order  to facilitate  progress  towards  Economic  and 
Monetary Union, a high degree of convergence of economic perform 
ances between Member  States  is necessary through  greater compati 
bility  and  closer  coordination  of  economic  policy;  whereas 
such  strengthening  of  economic  policy  coordination  also  contri 
butes  to  the  achievement  of  Community  objectives, in  particular 
to  convergence  at  a  high  level  of  economic  performance  in  the 
framework  of monetary  stability, 

.../... 

-  2  -

Whereas  c o o r d i n a t i on  of  economic  p o l i c i es  should  be  based  on  an 
open  market  approach  both  i n t e r n a l ly  and  e x t e r n a l l y, 

the  Single  European 

t he  I n t e r n al  Market,  vhich  w i ll 
and 
-i.nplify  Lr>-
r e q u i re  more 

i n t e g r a t i on 
thus 

of 

the 

the  goals 

achievement 

of 
Whereas 
the  completion  of 
Act,  e s p e c i a l ly 
f i n a n c i al 
t he  degree  of  economic  and 
i n c r e a se 
r e i n f o r ce  competition  and  s t r u c t u r al  chango  and 
c r o s s - b o r d er 
of 
e f f e c t i ve  p o l i cy  c o o r d i n a t i o n;  whereas 
102a  Member  S t a t es  s h a ll 
in  c o o p e r a t i on  w i t h in 
System;  whereas 
the 
Union  should  provide  a  sound  b a s is 
development  and  s u s t a i n a b i l i t y, 

t a ke  account  of 
framework  of 
stage 

the 
first 

according 

e f f e c ts 

for 

i ts 

economic  p o l i c i e s,  w i ll 

the  experience  acquire-? 
the  European  Monetary 

of  Economic  and  Monetary 

s u c c e s s f ul 

f u r t h er 

to  Article 

the 

strengthening 

Whereas 
p o l i t i c al  w i ll 
nomic  p o l i cy  approach;  whereas  progress 
p r o c e ss  c a l ls 
ments  in  decision-making  as  well  as  for 

to  develop  f u r t h er 

f l e x i b i l i t y, 

for 

of 

coordination 

the 
the  consensus  on  the  broad  eco 

reply  on 

should 

in 

this 

coordination 

s u b s i d i a r i ty  and  mutual 

commit 

l e a r n i n g - b y - d o : n g, 

HAS ADOPTED THIS DECISION : 

Article 1 

In order  to achieve sustained  non-inflationary growth  m  the Com 
munity,  together  with  a  high  level  of  employment  and  the  degree 
of economic  convergence  necessary  for the success of  Stage One of 
Economic and Monetary Union, in the perspective of the completion 
of  the  Internal  Market  and  in  the  context  of  the  economic  and 
social  cohesion,  the  Council  shall  undertake  multilateral  sur 
veillance. In this context, it will examine on a regular basis : 

-  the  economic  conditions,  prospects  and  policies  in  the Commu 

nity and its Member States; 

-  the  compatibility  of  policies  within  Member  States  and  in  the 

Community  at large; 

- the  external  economic  environment  and  its  interaction  with  the 

economy of the Community. 

Multilateral  surveillance  shall  cover  ail  aspects  of  economic 
policy  in both  the short-term  and medium-term  perspectives. 

-  3 -

Article 2 

The  Council  shall  undertake  multilateral  surveillance  in  res 
tricted  sessions.  It  may  authorise  its  Chairman  to  make  public 
the results of  its deliberations. 

Through  learning-by-doing,  multilateral  surveillance  should  in 
creasingly result  in compatible policies by way of mutual commit 
ments  on  the part  of Member  States. In  this  context, the  Council 
may,  acting  on  proposal  from  the Commission, issue  policy  recom 
mendations. 

Article 3 

The  Council  shall  proceed  with  multilateral  surveillance  on  the 
basis  of  reports  and  analysis  submitted  by  the Commission. These 
shall include : 

-  indicators  of  economic  performance  including  monetary  and bud 

getary  policies,  supply  and  demand  trends,  price  and  cost 
developments,  employment,  financial  markets,  external  and 
internal imbalances; 

-  regular  country  reports  on  national  economic  conditions, pros 

pects and  policies; 

-  an annual report on the economic outlook of the Community which 
shall  review  the  economic  outlook  and  the  underlying  economic 
policy orientation. 

The Council's work on multilateral  surveillance  shall be prepared 
by the Monetary Committee, whose chairman will participate  in the 
Council meetings. 

Article 4 

On  a  proposal  from  the  Commission  the  annual  economic  report 
shall be adopted  by the Council, having regard to the opinions by 
the Eurooean Parliament and the Economic and Social Committee. 

.../... 

Article 5 

Multilateral  surveillance  shall  focus  on  macroeconom::,  micro-
economic  and  structural  policies.  It  shall  include  a  review o. 
budget  policies, to  the extent  possible  ahead  of  nar:>r il hudqc 
tary  planning,  focussing  particularly  on  the  si^e  an: finan^l.-. 
of  budget  deficits.  The  resulting  coordination  r.ir re ;are  sr.i. 
involve  analysis  of 
their  implications  for  overall  economic  policy.  ?. _• Economy. 
Policy Committee  shall be consulted  for the surveilla-. _*e exercis-
in this context. 

medium-term  budgetary  policy  - rends  an 

Article 6 

When  potential  or  actual  economic  developments  in  .::.= or  :nor-
Member  States  threaten  the  Community  economy,  tne  c^-r.cii,  :po-
proposal by the Commission and after consultation of i e Monetar; 
Committee,  shall proceed to an examination of the ecor.r.m  situa 
tion.  Such  examination  may  result  in the  formulation  f rountry-
specific  recommendations  with  a  view  to  promoting  t'••»•=• necessar; 
policy corrections. 

Article 7 

When  events outside  the Community  threaten  to have serious  consé 
quences  for  the Community  economy, the Council, upon  proposal  l,\ 
the  Commission  and  after  consultation  of  the Monetary  "ommittex.-
shall  meet  to  consider  possible  measures.  Where  "; ir.etary  :: 
exchange  rate policy  is concerned, the Committee  of  Governors o: 
the Central  Banks of  the Member  States of  the European  Commun... t; 
shall be consulted. 

Article rt 

In  order  to ensure  better  consistency  between monetary  and oc:.--: 
economic  policies,  the  Committee  of  Governors  of  the  Centra 
Banks  of  the  Member  States  of  the  European  Community  shall  re 
port  the  multilateral  surveillance  exercise.  Its  Cna.r-ia.n  shal 
be invited  to participate  in the Council meetings. 

-  s -

Article 9 

The Chairman of the Council and the Commission shall  report regu 
larly on the results of multilateral  surveillance  to the Europear 
Council and to the European  Parliament. 

Governments  shall  bring  the  results  of  the  multilateral  surveil 
lance  to  the  attention  of  their  national  parliaments  =o  that  i' 
can be taken  into account  in national policy making. 

Article 10 

On the basis of a report submitted by  the Commission,  the Council 
shall  periodically  examine  the  progress  made  in  muitilateri: 
surveillance  through  the  application  of  this  decision.  This 
report shall also be transmitted  to the European Parliament. 

The  following  a c ts  are  hereby  r e p e a l ed 

: 

Article 11 

( i) 

Council  Decision  74/120/EEC  of  18  February  1974  on  the  attainment 
of  a  high  degree  of  convergence  of 
t he  Member  S t a t es  of  t he  European  Community; 

the  economic  p o l i c i es  of 

( i i)  Council  Directive  74/121/EEC  of  18  February  1974  on  stability, 

growth and  full employment  in the Community. 

This Decision is addressed to the Member States. 

Article 12 

Done at 

For the Council 

ISSN 0254-1475 

COM(89) 466 final 

DOCUMENTS 

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Catalogue number : CB-CO-89-422-EN-C 

ISBN 92-77-53156-8 

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