Proposal for a Council Decision on the representation and position taking of the Community at international level in the context of Economic and Monetary Union
Date: 1998-11-09
Institutions: European Commission
Subjects: EU relations, Economic and Monetary Union, common position, external competence (EU), the EU's international role

COMMISSION OF THE EUROPEAN COMMUNITIES 
COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 09.11.1998 
Brussels, 09.11.1998 
COM(1998) 637  final 
COM(1998) 637  final 

Proposal for a 
Proposal for a 

COUNCIL DECISION 
COUNCIL DECISION 

on  the  Representation  and  Position  Taking  of  the  Community  at 
on  the  Representation  and  Position  Taking  of  the  Community  at 
International  Level  in  the context  of Economic  and  Monetary  Union 
International  Level  in  the context  of Economic  and  Monetary  Union 

(presented by the Commission) 
(presented by the Commission) 

Explanatory Memorandum 

The  introduction  of  the  euro  represents  an  extremely 
important  event  in  the 
international  monetary  and financial  system.  With the euro, the European  Community 
will  have  a  monetary  presence  which  corresponds  to  its  economic  and  commercial 
weight  in  the  world  economy.  To  take  full  advantage  of  this  new  reality,  the 
Community  will  need  to  speak  with  one  voice  in  a  broad  range  of  international 
institutions  and fora  where issues are discussed  and decided  that may affect  Economic 
and  Monetary  Union.  This  is  not  only  essential  for  the  Community,  but  also  for  its 
international partners. 

The  proposed  Council  decision  provides  that  the  representation  of  the Community  at 
international  level  when  economic  and  monetary  issues  are  discussed  would  be 
undertaken  by  the  Council  with the  Commission,  and  by  the  European  Central  Bank. 
This  approach  reflects  the  reality that  economic,  monetary  and  exchange  rate  policies 
are  closely  interrelated  oid  are  often  discussed  together.  As  the  Council,  the 
Commission  and  the  EC.3  have  specific  competences  in  these  policy  areas  at 
Community  level, they should each participate  in the representation  of the Community 
at international  level in a balanced way. 

* ** 

As  of  the  beginning  of  the  third  stage  of  EMU  (1  January  1999),  monetary  and 
exchange  rate  policies  concerning  the  euro  will  be  exclusively  a  matter  for  the 
Community1.  In  addition,  fas  Member  States  have,  since  the  beginning  of  stage two. 
had  to regard  their economic policies as a matter  of common  concern and have had to 
co-ordinate  them  within  the  Council-2.  As  of  1 January  Î999,  Member  States  have, 
moreover,  the  legal  obligation  to  avoid  excessive  deficits  and  could  be  subject  to 
sanctions under the terms of the Stability and Growth Pact3. 

These  changes  will  have  consequences  for  position-taking  and  representation  at 
international  level,  both  with  respect'to  relations  between  the  Community  and  third 
countries  and  in  international  fora.  Article  109(4) EC  Treaty  sets  out  procedures  to 
determine  the  Community's  position  at  international  level  for  issues  of  particular 

! Article 3a(2) EC Treaty. 
- Article  103(0  HC Treaty;  aiso Article  3a(I), which  refers  to the adoption  by the Member  States  and 
the  Community  of  an  economic  policy  which  is  based  on.  the  close  coordination  of  Member  States' 
economic  policies., on the internal  market and on the definition  of commovi objectives, and conducted  in 
accordance  with the principle of an open market economy  with free  competition. 
3 Council  Regulations  (EC)  1466/97  and  1467/97  of  7 July  1997; Resolution  of the  European  Council 
on  Growth  and  Employment  (Amsterdam,  16  June  1997)  and  on  the  Stability  and  Growth  Pact 
(Amsterdam,  17 June 1997). 

relevance  to  economic  and  monetary  union  and  for  deciding  its  representation  in 
compliance  with  the  allocation  of  powers  laid  down  in  Articles  103  and  1Ô5. 
Community  representation  will  thus  have  to  include  both  the  monetary  and  the 
economic poles of EMU. 

(On Article 1) 

Article  1 sets out the general principle that will apply to Community  representation  in 
international  relations  in  the  context  of  Economic  and  Monetary  Union  (Part  Three, 
Title  VI,  EC  Treaty).  It  provides  that  the  Community  will  be  represented  by  the 
Council with the Commission, and by the European Central Bank (ECB). 

The  reasons  to  include  the  Council, the ECB  and  the Commission  in the  Community 
representation for the purposes of Article  109(4) EC Treaty are manifold. 

When they met in Luxembourg in December  1997, the Heads of State and Government 
resolved  that the  Council  and the ECB would  carry  out their  tasks  in representing  the 
Community  at  international  level  in  an  efficient  manner  and  in  compliance  with  the 
allocation of powers laid down in the Treaty.  They also resolved that the Commission 
would  be  involved  in  external  representation  to  the  extent  required  to  enable  it  to 
perform  the role assigned to it by the Treaty. 

The  Council,  acting  unanimously  on a  Commission  proposal  and  after  consulting  the 
ECB,  is  to  decide  on  Community  representation  at  international  level.  This 
representation  has  to  be  in  compliance  with  the  allocation  of  powers  laid  down  in 
Articles  103  and  105.  The  reference  to  Article  105  means  that  the  ECB  should  be 
involved  when  monetary  policy  and  foreign  exchange  operations  are  discussed  at 
international  level.  The  reference  to  Article  103 means  that  when  economic  policies 
are  discussed,  representation  should  reflect  the  obligation  on  the  Member  States  to 
regard their economic policies as a matter of common concern and to co-ordinate these 
economic policies within the Council.  In the co-ordination and surveillance process, as 
set out in Article  103(2) and following, the Council and the Commission have an active 
role  in  the  preparation  and  adoption  of  the  Broad  Economic  Guidelines  and  the 
monitoring of their implementation. The Council and the Commission also conduct the 
surveillance  at Community  level, as defined  in Article  104c, of the budgetary  policies 
of the Member States. 

Thé  need  to  associate  the  Council,  the  Commission  and  the  ECB  in  the  Community 
representation  at  international  level  also  follows  from  Articles  109(1)  and  109(2), 
which  give  the  Commission  and  the  ECB  the  right  of  initiative  in the  formulation  of 
formal  agreements,  to  be  decided  by the  Council,  on an  exchange  rate system  for  the 
euro  in  relation  to  non-Community  currencies  and  in the  formulation  of such  general 
orientations  for  exchange  rate  policy  in  relation  to  third  countries  which  the  Council 
may  issue.  Moreover,  the Commission  has a general  obligation  to ensure  consistency 
in the external activities of the Community. This not only follows directly from  Article 

C  of  the  Treaty  on  European  Union4,  according  to  which  it  is to  share  this  obligation 
with  the Council, but also from  the fact  that Article  109 only applies to Member  States 
without  a  derogation  (Article  109k(3)).  Positions  taken  by  the  Council  under  Article 
109 may,  however,  have repercussions on the other  Member  States,  inter  alia  through 
the  operation  of  ERM2.  The  Commission  has  a  role  to  play  in  ensuring  consistency 
between the interests of the two groups of Member States. 

The  Commission  also  needs  to  be  fully  associated  in  representation  at  international 
level  as  it  must  be able  to prepare  proposals  for  Council  decisions  on the  Community 
position on issues of particular relevance to economic and monetary union. 

For  the purpose  of Article  109(4), "international  level"  is defined  as relations  between 
the  Community  and  third  countries  (including  visits),  proceedings  in  international 
organisations and in informal  groupings (including their preparatory meetings). 

(On Article 2) 

Article  2  specifies  die  modalities  for  Council  participation  in  representation  at 
international  level.  In line with the practice in the "Euro-1 !" group, the Member States 
have  acknowledged  that  this  Council  participation  should  be  assumed  by  a  Member 
State  that  has  the  euro  as  its  currency.  In  those  cases  where  the  Member  State  that 
holds  the  office  of  President  of  the  Council  does  not  have  the  euro  as  its  currency, 
participation  for  the  Council  in  the  representation  of  ihz  Community  at  international 
level would  be assumed  ay the Member State that is next to hold the office  of President 
of the Council and has the euro as its currency. 

The  modalities of the participation  of the two  other  institutions  of the Community- the 
Commission  and  the  ECB  -  in  the  international  representation  of  the  Community 
would be decided by the institution  concerned  in accordance with its statutes. 

(On Article 3) 

Article  3 provides  that  the  Member  States and  the  institutions  of  the  Community  that 
already  participate  in  international  fora  are  to  take  all  steps  needed  to  ensure  that  the 
Community  is represented  in accordance with Articles  1  and 2. 

In the case of the Gl  Finance and preparatory  groups, the Member  States in the G7 are 
to  ensure  with the other  G7 Finance partners  that  this  requirement  is met.  The  Article 
also  specifies  that  they  may  have  to  take  further  action  to  secure  Community 

4 Article C EU Treaty: 
"The  Union  shall  be  served  by  a single  institutional  framework  which  shall  ensure  the consistency  and 
the continuity of  the  activities  carried  out  in order  to  attain  its objectives  while  respecting  and  building 
upon  the  acquis  communautaire.  The  Union  shall  in  particular  ensure  the  consistency  of  its  external 
activities  as  a  whole  in  the  context  of  its  external  relations,  security,  economic  and  development 
policies.  The  Council  and  the  Commission  shall  be  responsible  for  ensuring  such  consistency.  They 
shall ensure  the implementation  of these policies, each  in accordance with  its respective powers." 

4 

participation  in  accordance  with  Articles  1 and  2 and  that  they  have  to report  back  to 
the Council  and  the Commission.  A similar  mandate  is given  in the case of  meetings 
of  G10  Finance  Ministers  and  preparatory  groups,  where  the  Commission  is  already 
observer. 

In  the  case  of  certain  OECD  meetings  that  discuss  economic  and  financial  matters, 
more  specifically  the  Economic  Policy  Committee  and  its  Working  Parties,  the 
Commission,  which  represents  the  Community  as  a  full  participant  (but  not  member) 
under  Protocol  n°l  to the OECD Convention,  is to  include  the  ECB and,  if  it  is not  a 
participant  in  these  meetings,  the  Member  State  as  defined  in  Article  2,  in  the 
Community  delegation. 

(On Article 4) 

While the general  principles provided  for  in Articles  1 and 2 will represent the rule as 
soon  as  the  decision  enters  into  force  in  fora  such  as  Gl  Finance,  G10 Finance,  G22 
and  other  informal  groupings,  institutional  constraints  may  impede  an  immediate 
implementation  in  certain  international  organisations  such  as  the  IMF.  Article  4, 
therefore,  provides that the Member  States and the institutions  of the Community  shall 
rapidly  adopt  and  implement  such  temporary  arrangements  which,  as  closely  as 
possible, comply with that principle. These arrangements  could  be amongst  themselves 
or, where needed, with the organisation  concerned. 

In  -the  specific  case  of  the  IMF,  the  Member  States  are  to  agree  temporary 
arrangements  amongst  themselves  and,  if  need  be5,  with  the  Fund  to  allow 
representatives  of  the  ECB  and  the  Commission  to  attend  meetings  of  the  IMF 
Executive  Board  at  which  issues  of  relevance  to  EMU  are  discussed.  These 
arrangements  could take the form  of a Community  "Observer  Office"  in the Fund  that 
would  be  made  up  of  the  Commission  and  the  ECB  and  that  would  work  closely 
together  with the Member  State as defined  in Article  2.  In accordance  with Article  5, 
this  Member  State  and  the  Observer  Office  would  co-operate  to  ensure  that  Board 
meetings, where issues of relevance to EMU were discussed, would be prepared well in 
advance  both  in  the  Economic  and  Financial  Committee  and  among  Executive 
Directors. 

The  decision  also  requires  the Member  States  to  enable  the  Community  to attend  and 
address meetings of the Interim Committee. 

(On Article 5) 

In  accordance  with  Article  109c(2)  EC  Treaty,  third  indent,  the  Economic  and 
Financial  Committee  is to contribute  to the  preparation  of  the  work  of the Council  as 
regards Community  positions at international  level.  Particularly  as positions may  have 
to  be adopted  at short  notice, efficient  procedures  and  communication  tools should  be 

5  Arrangements  with  the  Fund  would  not  be  needed  if  the  Member  States  were  to  agree  to  include 
representatives  from  the Commission  and the ECB in one or more constituencies. 

5 

established  linking  the  national  "Eeofm"  Ministries,  the  Commission,-the  ESCB  and 
the EFC Secretariat.  Co-ordination between  representatives of the Community  and ihe 
Member  States at the meetings  would  be ensured  by  the  Member  State  as  defined  in 
Article 2. 

Proposal tor a 

COUNCIL DECISION 

on 

the Representation and Position Taking of the Community 
at International Level in the context of Economic and Monetary Union 

THE COUNCIL OF THE EUROPEAN  UNION, 

Having regard to the Treaty establishing the European Community, and in particular 
Article  109(4) thereof, 

Having regard to the proposal from the Commission6, 

Having regard to the opinion of the European Central  Bank7, 

Whereas  Article  109(4)  provides  that  the  Council  shall,  on  a  proposal  from  the 
the 
Commission  and  after  consulting 
representation  of  the  Community  in  compliance  with  the  allocation  of  powers  laid 
down in Articles  103 and  105; 

the  ECB,  acting  unanimously,  decide 

Whereas  Article  109(4)  provides  that  the  Council  shall,  on  a  proposal  from  the 
Commission  and after  consulting  the ECB, acting  by qualified  majority,  decide on the 
position  of  the  Community  at  international  level  as  regards  issues  of  particular 
relevance to economic and monetary union; 

Whereas  the European  Council,  when  it  met  in  Luxembourg  on  12 and  13 December 
1997, resolved  that the  Council  and  the  European  Central  Bank  would  carry  out  their 
tasks in representing the Community at international  level in an efficient  manner and in 
compliance  with  the  allocation  of  powers  laid  down  in  the  Treaty;  whereas  the 
European  Council  also  resolved  that  the  Commission  would  be  involved  in  external 
representation  to  the  extent  required  to enable  it  to perform  the  role  assigned  to  it  by 
the Treaty; 

Whereas the Commission needs to be able to prepare Council  decisions on Community 
positions at international level; 

Whereas the Council  and the Commission  have  an  important  role  in the  co-ordination 
and  surveillance  of  Member  States'  economic  policies,  in  particular  in  the  context  of 
Articles  103 and  104c; 

Whereas  Article  109(1)  provides  that  the  Commission  and  the  ECB  have  a  right  of 
initiative  in the  formulation  of  formal  agreements  on  an exchange  rate  system  for  the 
euro in relation to non-Community  currencies; 

Whereas  Article  109(2)  provides  that  the  Commission  and  the  ECB  have  a  right  of 
initiative  in the formulation  of general orientations  for exchange  rate policy  in relation 
to non-Community currencies; 

Whereas economic, monetary and exchange rate policies are closely  interlinked; 

Whereas Article C of the Treaty on European  Union provides that the Council  and  the 
Commission are to ensure consistency in the external activities of the Community; 

Whereas  positions  on  issues  of  particular  relevance  to  economic  and  monetary  union 
will  have  repercussions  on the Member  States  that  have  not  adopted  the  euro  as  their 
currency;  whereas the Commission  has a role  to play  in ensuring  consistency  between 
the interests of the two groups of Member States; 

Whereas  the  ESCB  is  responsible  for  the  definition  and  implementation  of  monetary 
policy and the conduct of foreign  exchange operations; 

Whereas  Article  6(2)  of  Protocol  (No  3)  of  the  EC  Treaty  on  the  Statute  of  the 
European  System  of Central Banks and of the European Central  Bank provides that the 
ECB  may  participate  in  international  monetary  institutions;  whereas  according  to 
Article 6(3) this is to be without prejudice  to Article  109(4); 

Whereas for  the purpose  of Article  109(4),  "international  level"  is defined  as  relations 
between  the  Community  and  third  countries  (including  visits  to  these  countries)  and 
proceedings  in  international  organisations  and  in  informal  groupings  (including  their 
preparatory  meetings); 

Whereas it is appropriate  that the participation  for  the Council  in the representation  of 
the Community  at international  level  in the  context  of  Economic  and Monetary  Union 
is assumed  by  a Member  State that  has adopted  the euro; whereas  Heads  of  State  and 
Government  resolved  in  Luxembourg  that  the  Ministers  of  the  Member  States 
participating  in the euro area may meet  informally  among  themselves  to discuss  issues 
connected  with  their  shared  specific  responsibilities  for  the  single  currency;  whereas 
according  to  the  practice  adopted  in  that  group,  meetings  are  chaired  by  the  Member 
State  that holds  the office  of  President  of  the  Council  if that  Member  has adopted  the 
euro  as its currency;  whereas, in the event  that  the  Member  State  that  holds  the  office 
of  President  of the Council  has not adopted  the  euro  as its  currency,  the next  Member 
to  hold  the  office  of  President  of  the  Council  and  which  has  the  euro  as  its  currency 
chairs the meetings; whereas the same practice  should  be used  for  the participation  for 
the Council  in the representation of the Community  at international  level  in the  context 
of Economic and Monetary  Union; 

Whereas the principles on Community representation provided for  in Articles  1 and 2 
of  this  decision  are  to  be  fully  implemented;  whereas  the  Member  States  and  the 
institutions of the Community  will  need to ensure  that the appropriate steps are taken 
to this end; 

Whereas  Article  3 of  this  decision  would,  inter  alia,  apply  to  meetings  at  ministerial 
level  of  the  G7  Finance  and  the  G10  and  their  preparatory  meetings  and  to  certain 
meetings  within  the  OECD;  whereas  certain  Member  States  participate  in  those 
meetings; whereas  the  Commission  is observer  in  G10  meetings  and  a full  participant 
in the  OECD; whereas  Community  representation,  in accordance  with  the principle  of 
Article  1, needs to be ensured; 

Whereas  the  rules  of  international  organisations  may  not  allow  for  an  immediate 
implementation of the principles set out in Articles  1  and 2; 

Whereas,  in  those  cases,  arrangements  will  need  to  be  implemented  that  meet  as 
closely  as possible that principle  and  that  can  be  made  operational  as soon as possible 
after  1  January  1999; 

Whereas those arrangements should be temporary; 

Whereas  the  International  Monetary  Fund  is  a  core  organisation  in  the  international 
monetary and financial system;  whereas the IMF is an organisation  whose members are 
states; whereas the Community  is not represented  in the Fund; 

Whereas in the case of the IMF Executive  Board, temporary arrangements are to ensure 
that  Community positions  can be expressed  by  the  Member  State as defined  in Article 
2 and  that the Commission  and the ECB can attend  meetings where issues of relevance 
to EMU  are discussed; 

Whereas  in  the  case  of  the  IMF  Interim  Committee,  temporary  arrangements  should 
ensure  that  the  Council,  the  Commission  and  the  ECB  can  attend  and  address  the 
meetings, each in its field  of competence; 

Whereas  Article  109c(2)  provides  that  the  Economic  and  Financial  Committee  shall 
contribute  to  the  preparation  of  the  work  of  the  Council  referred  to  in  Article  109, 
without  prejudice  to Article  15.1; whereas  the  same  Article  provides  that  the  EFC  will 
keep  under  review  the  economic  and  financial  situation  of  the  Member  States  and  of 
the  Community  and  will  report  regularly 
thereon  to.  the  Council  and  to  the 
Commission,  in particular  on  financial  relations  with  third  countries  and  international 
organisations; 

Whereas  adequately  protected  communication  tools  would  help  in preparing  positions, 
in particular positions which need to be taken at short notice; 

Whereas,  pursuant  to  Article  109k(3),  Protocol  (Noll),  paragraph  5  and  Protocol 
(Noî2),  paragraph  2,  reference  to  the  Member  States  in  this  decision  shall,  unless 
otherwise specified,  mean the Member States which have adopted the euro; 

HAS ADOPTED THIS DECISION: 

Article  1 

In the context of Economic and Monetary Union, the Community shall be represented 
at  international  level  by  the  Council  with  the  Commission,  and  by  the  ECB.  This 
representation  shall  ensure  that the Community  speaks  with  one  voice.  International 
level shall refer to: 

- 
- 
- 

relations between the Community and third countries; 
international organisations; 
informal groupings. 

Article 2 

The  Council  shall  participate  in  the  representation  of  the  Community  through  the 
Member State that holds the office  of President  of the Council  provided that Member 
State has adopted the euro as its currency. Should the office  of President of the Council 
be held  by a Member State that has not adopted  the euro as  its currency,  the Council 
shall participate in the representation of the Community through the Member State that 
is next to hold the office  of President of the Council and that has adopted the euro as its 
currency. 

Article 3 

The Member States and the institutions of the Community shall take all such steps that 
are  necessary  to  ensure  that  the  Community  is  represented  at  international  level  in 
accordance with the principles set out in Articles  1  and 2. 

In particular: 

-  as regards G7 Finance meetings and preparatory groups, the participating  Member 
States  shall, ensure  that  the  Community  is  represented  in  accordance  with  the 
principles  set out in Articles  1 and 2 and will  take all  such other steps  as may, to 
this  end,  be  necessary;  they  will  report  to  the  Council  and  the  Commission 
accordingly; 

-  as  regards  G10  Ministerial  meetings  and  preparatory  groups,  the  participating 
Member  States  shall,  in close  consultation  with  the  Commission,  ensure  that  the 
Member  State  as  defined  in  Article  2  and  the  ECB  shall  also  participate  in 

10 

representing  the  Community;  they  will  report  to  the  Council  and  the  Commission 
accordingly; 

as regards  meetings of the Economic  Policy  Committee  and  its Working Parties of 
the  Organisation  for  Economic  Co-operation  and  Development,  the  Community 
delegation  will, in addition to the Commission,  include the ECB and, if it does not 
already participate in such meetings, the Member State as defined  in Article 2. 

Article  4 

Where  the rules of a particular  international  organisation  do not permit the  immediate 
implementation  of the principles laid down  in Articles  1  and 2, the Member States and 
the  institutions  of  the  Community  shall  rapidly  adopt  and  implement  such  temporary 
arrangements which, as closely as possible, comply with that principle. 

In particular: 

- 

- 

as regards the IMF Executive Board, such temporary  arrangements shall ensure that 
the  Member  State  as  defined  in  Article  2  is  able  to  speak  on  behalf  of  the 
Community  and  that  the  representatives  of  the  ECB  and  of  the  Commission  are 
able to attend meetings at which issues of relevance to EMU are discussed; 

as regards  the  IMF  Interim  Committee,  such  temporary  arrangements  shall  ensure 
that  the  Member  State  as  defined  in  Article  2,  the  Commission  and  the  ECB  are 
able  to  attend  its meetings throughout  and  are  able to  address  such meetings,  each 
in its own field of competence. 

Article  5 

For  meetings  at  international  level,  the  Member  State  as  defined  in  Article  2  shall 
ensure  that  Member  State  and  Community  representatives  fully  co-ordinate  with  one 
another to ensure that the Community  speaks with one voice. 

In  accordance  with  its  task  as regards  the  preparation  of  the  work  of  the Council,  the 
Economic  and  Financial  Committee  shall  assist  in  the  preparation  of  all  Community 
positions on the basis of a proposal or any other contribution  from  the Commission. 

For  the  purposes  of  preparing  positions,  in  particular  those  called  at  short  notice,  a 
network  of  adequately  protected  communication  tools  will  be  set  up  between  the 
Members of the Economic and Financial  Committee. 

11 

Article 6 

This decision is addressed to all the Member States. It shall enter into force on  1 
January 1999. 

Done at 

For the Council, 

12 

ISSN 0254-1475 

COM(98) 637  final 

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