COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Towards a Deep and Genuine Economic and Monetary Union Ex ante coordination of plans for major economic policy reforms
Date: 2013-03-20
Institutions: European Commission
Subjects: EU control, Economic and Monetary Union, economic reform, intergovernmental cooperation (EU), market supervision

EUROPEAN 
COMMISSION 

Brussels, 20.3.2013  
COM(2013) 166 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

Towards a Deep and Genuine Economic and Monetary Union 
Ex ante coordination of plans for major economic policy reforms 

EN 

   EN 

 
 
 
 
  
 
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

Towards a Deep and Genuine Economic and Monetary Union 
Ex ante coordination of plans for major economic policy reforms 

1. 

INTRODUCTION 

The lessons learned from the recent economic, financial and sovereign debt crisis have led to 
a  major  overhaul  of  the  EU's  and  Economic  and  Monetary  Union’s  (EMU)  economic 
governance.  The  surveillance  of  economic,  budgetary  and  structural  policies  that  has  been 
brought together into the European Semester has made EMU more robust than it was at the 
onset  of  the  crisis  and  better  equipped  for  the  future.  Its  scope  was  broadened  to  include 
competitiveness  and  internal  and  external  imbalances  under  the  new  Macroeconomic 
Imbalances Procedure (MIP). 

The  new  governance  framework  is  designed  to  help  the  Union  to  emerge  stronger  from  the 
crisis  by  boosting  competitiveness,  productivity,  growth  potential,  social  cohesion  and 
economic convergence. This will help the EU internally and also strengthen its international 
role as a key player in the global economy.  

The  new  economic  surveillance  architecture  in  the  EU,  and  in  the  Euro  area  in  particular, 
provides for differentiation between Member States depending on their economic conditions. 
This is reflected in different policy instruments ranging from preventive surveillance through 
the  European  Semester1  to  corrective  surveillance2  to  crisis  surveillance  of  a  Member  State 
that seeks recourse to the backstops. 

To  complement  this  governance  framework,  the  Commission  considers  it  important  that 
national plans for any major economic policy reforms are assessed and discussed at EU-level 
before  final  decisions  are  taken  at  the  national  level.  This  would  also  ensure  that  Member 
States  internalise  the  EU-level  dimension  of  key  reforms  in  their  national  decision-making 
process.  This  is  what  is  known  as  ex  ante  coordination,  which  also  reflects  the  spirit  of 
Article 121(1) of the Treaty3. 

The  concept  of  ex  ante  coordination  of  plans  for  major  economic  policy  reforms  was 
introduced  by  the  Treaty  on  Stability,  Coordination  and  Governance  in  the  Economic  and 
Monetary Union (TSCG)4. Article 11 of the TSCG includes a commitment to discuss ex ante 

1 

2 

3 
4 

Implemented  through  the  Europe  2020  Strategy  and  the  preventive  arms  of  the  Stability  and  Growth 
Pact and the Macroeconomic Imbalances Procedure 
under  the  corrective  arms  of  the  Stability  and  Growth  Pact  and  the  Macroeconomic  Imbalances 
Procedure 
"Member States shall regard their economic policies as a matter of common concern". 
http://european-council.europa.eu/media/639235/st00tscg26_en12.pdf. The Treaty was signed by all EU 
Member States except for the Czech Republic and the United Kingdom. It came into force on 1 January 
2013.  By  20  March  2013  it  had  been  ratified  by  all  euro  area  Member  States  except  for  Belgium, 
Luxembourg,  Malta  and  The  Netherlands.  Denmark  and  Romania  have  also  ratified  the  Treaty  and 
declared  their  intent  to  be  bound  by  its  fiscal  and  economic  provisions  (Titles  III  and  IV)  including 
Article  11.  For  the  other  non-euro  area  signatories  these  provisions  will  apply  once  they  ratify  the 

EN 

2 

   EN 

                                                 
and, where appropriate, coordinate all plans for major economic policy reforms. The TSCG 
foresees  the  incorporation  of  its  substance  into  the  legal  framework  of  the  European  Union 
within  five  years,  at  most,  of  the  date  of  its  entry  into  force.  Whereas  the  current  EU 
economic  surveillance  framework  includes  a  process  for  economic  policy  coordination,  it 
does  not  provide  for  a  structured  ex  ante  discussion  and  coordination  of  major  economic 
reform plans, as foreseen in Article 11 TSCG. A commitment to discuss major reforms with 
potential spill-over effects has also been confirmed in the 2012 Council Recommendation on 
the implementation  of the broad guidelines for the economic policies whose currency is the 
Euro5. 

The Commission already set out some reflections on ex ante coordination in its Blueprint for 
a  Deep  and  Genuine  Economic  and  Monetary  Union  in  November  20126.  The  European 
Council of 13 and 14 December 2012 requested the Presidents of the European Council and of 
the Commission for work to be taken forward in the areas of coordination of national reforms, 
the  social  dimension  of  EMU  including  social  dialogue,  the  feasibility  and  modalities  of 
mutually  agreed  contractual  arrangements  for  competitiveness  and  growth,  and  solidarity 
mechanisms  that  can  enhance  the  efforts  made  by  Member  States  that  enter  into  such 
arrangements7.  

This  Communication  is  a  contribution  to  the  debate  which  is  now  underway  between  key 
stakeholders on the next steps towards a deep and genuine EMU, in particular the European 
Parliament,  the  Member  States,  and  the  national  parliaments.  It  concentrates  on  ways  of 
implementing  ex  ante  coordination  of  plans  for  major  economic  policy  reforms  under  the 
existing Treaties  

2. 

SELECTION OF REFORMS SUBJECT TO EX ANTE COORDINATION  

The  Commission  considers  that  ex  ante  coordination  should  concern  only  major  national 
economic reform plans and that it should take place at an early stage before the measures are 
adopted. The reason for having ex ante coordination is to ensure that possible spillover effects 
of major economic reforms in one Member State on other Member States and/or on the Euro 
area and wider EU are also taken into account in the national decision-making process. The 
way reforms are implemented may influence the smooth functioning of the EMU.  

In  order  to  maximise  positive  spillovers  and  minimise  negative  ones,  the  Commission  is 
considering  proposing  that  the  reforms  to  be  coordinated  should  be  relevant  taking  into 
account the following filters: 

•  Trade  and  competitiveness  are  among  the  main  channels  through  which  spillovers  are 
transmitted.  Product,  services  and  labour  market  reforms  as  well  as  certain  tax  reforms 
may  affect  employment  and  growth  in  the  implementing  Member  State,  and  hence  the 
demand  for  products  and  services  from  other  Member  States.  This  is  because  a  reform 
may also have a positive  or  negative impact  on  the  reforming  Member  State's  price  and 
non-price competitiveness. 

Treaty  and  when  the  decision  abrogating  their  derogation  or  exemption  takes  effect  or  when  they 
provide a similar declaration. 
OJ C 219, 24.7.2012, p. 95. 
http://ec.europa.eu/commission_2010-2014/president/news/archives/2012/11/pdf/blueprint_en.pdf 
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/134353.pdf, par 12. 

5 
6 
7 

EN 

3 

   EN 

                                                                                                                                                         
•  Another channel through which spillovers are transmitted, are the financial markets. Some 
reforms  may  produce  spillovers  through  financial  markets  when  reforms  increase  the 
Member State's ability to withstand external shocks and limit the risk of contagion of risk 
premiums in case of concerns with regard to debt sustainability.  

•  Finally,  there  are  also  political  economy  considerations.  While  it  is  in  each  Member 
State's interest to foster reforms that improve competitiveness, successful implementation 
has  to  take  into  account  possible  domestic  opposition  to  reform.  Coordinated  reforms 
across  Member  States  can  help  communicate  the  broader  welfare  effects  of  structural 
reform. For example, Member States can learn from each other's policies. Benchmarking, 
mutual learning and the exchange of best practices  –  based  on  individual  examples  or  a 
horizontal overview of implemented reforms – can be helpful as demonstrated already in 
the work of many Council Committees.  

Questions for consultation: 

•  Do you agree that the formal ex ante coordination of major policy reforms at EU level 

should be limited to key reforms? 

•  Do  you  agree  that  such  key  reforms  include  competitiveness,  employment,  the 
functioning  of  product  and  services  markets  and  network  industries,  tax  systems,  as 
well  as  financial  stability  and  fiscal  sustainability?  Should  any  of  these  fields  be 
excluded? Should any other fields be included? 

•  Are the filters identified above the correct ones or should any others be considered?  

3. 

A  FRAMEWORK  FOR  THE  EX  ANTE  COORDINATION  OF  PLANS  FOR  MAJOR 
ECONOMIC POLICY REFORMS 

3.1.  Which Member States should be involved? 

While there are potential spillovers between all EU Member States, such effects are magnified 
in  the  Euro  area  due  to  the  stronger  interdependence  of  Euro  area  Member  States.  For  this 
reason the Commission is considering proposing that a binding framework to engage in the ex 
ante  coordination  of  major  economic  reform  plans  should  apply  to  all  euro  area  Member 
States. At the same time, ways should be found to involving other Member States. This would 
also reflect the spirit of Article 121(1) of the TFEU that concerns all EU Member States.  

While the Commission considers that Member States subject to a macroeconomic adjustment 
programme will be exempt from the reporting requirements and discussions in the context of 
ex  ante  coordination  as  they  are  already  subject  to  strict  reporting  requirements  and 
monitoring in the context of the programme8, it is considering providing for their participation 
on a voluntary basis.  

8 

Member  States  subject  to  a  macroeconomic  adjustment  programme  are  already  subject  to  strict 
reporting requirements and monitoring in the context of the programme - Proposal for a Regulation of 
the  European  Parliament  and  of  the  Council  on  the  strengthening  of  economic  and  budgetary 
surveillance of Member States experiencing or threatened with serious difficulties with respect to their 
financial stability in the euro area -   
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0819:FIN:EN:PDF 

EN 

4 

   EN 

                                                 
Questions for consultation: 

•  Do you agree that all Euro area Member States should be obliged to coordinate major 

economic policy reforms ex ante at EU level?  
If not, why not? If not, which Member States should be covered? 

• 
•  Do you agree that ways should be found to include non Euro area Member States? 
•  Do  you  agree  that  Member  States  participating  in  a  macroeconomic  adjustment 
programme  should  be  exempted?  Should  they  have  the  possibility  to  participate  on  a 
voluntary basis? 

3.2. 

Process 

The Commission is considering the following process of ex ante coordination: 

It will form an integral part of the European Semester.  

• 
•  Participating Member States will submit to the Commission information about their major 

economic reform plans. 

•  Since Member States have different national decision-making practices for the adoption of 
reform  proposals,  the  exact  timing  of  transmission  of  this  information  is  likely  to  vary 
across  Member  States.  However,  it  should  always  be  provided  in  a  timely  manner  for 
assessment and discussion at euro area or EU level. Outside urgency situations, Member 
States should make use of existing tools, such as the National Reform Programmes, to 
submit the aforementioned information. 

•  Where  the  urgency  of  the  economic  situation  requires  immediate  action,  a  particular 
urgency  provision  could  be  considered.  For  example,  rapid  endorsement  could  be  given 
by  the  Commission  for  a  certain  limited  period  during  which  the  normal  process  could 
take place. 

•  While Member States would be expected to submit information on their major economic 
reform  plans  on  their  own  initiative,  in  the  framework  of  the  European  Semester,  the 
Commission  or  the  Council  could  request  or  invite  them  to  do  so  where  necessary,  for 
example  when  new  policy  measures  are  being  prepared  after  a  new  government  takes 
office.  When  reporting  on  a  major  economic  policy  reform  plan,  Member  States  should 
provide the Commission with a detailed qualitative description of the reform, including an 
identification of the main economic target(s) pursued, a time frame and an estimate of the 
expected gains from the reform, and its budgetary impact.  

•  The Commission would make an assessment of the plans received and adopt an opinion 
within  a  reasonably  short  period  of  receiving  the  information  from  a  Member  State. 
Sufficient time will be needed to allow a proper assessment of the plans while, at the same 
time,  the  national  decision-making  process  should  be  taken  into  account.  It  is 
important to ensure that that the assessment and the subsequent EU-level discussions can 
be appropriately integrated in the national decision-making process, involving the national 
parliament  or  relevant  stakeholders  such  as  social  partners.  The  process  should  fully 
respect national decision-making powers, with the decision on the reform plan remaining 
with the Member State itself. 

•  The Commission assessment would include whether the proposed reform would be likely 
to  meet  its  declared  purpose  and  contribute  to  improving  the  competitiveness  and 
adjustment capacity of that Member State. The Commission could suggest modifications 
in order to ensure that the proposed reforms meet their purpose. Given the potential social 

EN 

5 

   EN 

impact  of  some  economic  reforms,  the  social  dimension9  of  the  reform  would  be  duly 
taken  into  account.  The  assessment  would  pay  specific  attention  to  the  impact  of  the 
reform on the functioning of the euro area and possible spill-over effects on other Member 
States.  The  Commission's  opinion  would  also  consider  any  accompanying  flanking 
measures in order to minimise the potential adverse social consequences of those reforms 
and other possible negative short-term effects. 

•  The  Commission's  assessment  and  opinion  would  be  presented  to  the  Council  and  the 
Eurogroup.  Relevant  Council  formations  could  be  involved  in  the  process  of  discussing 
the  plans.  The  Council  could  suggest  modifications  to  the  national  reform  plan  in  cases 
where  modifications  could  be  justified  by  the  expected  effects  on  other  Member  States 
and  the  functioning  of  the  EMU.  The  Commission  opinions  and  the  outcomes  of  the 
discussions in the Council and the Eurogroup should thereafter be taken into account in 
the policy advice issued to a Member State in the context of the European Semester.  
•  Where  relevant  the  Commission  would  highlight  (elements  of)  reforms  that  it  considers 
relevant  for  other  Member  States.  Benchmarking  and  mutual  learning  would  also  be 
taking place by the work of the Council and its Committees in reviewing national policies 
in individual policy areas. 

Questions for consultation: 

•  Do  you  agree  that  outside  of  the  annual  timetable  for  National  Reform  Programmes 
Member  States  should  be  able  to  inform  the  Commission  ex  ante  of  intended  major 
national economic policy reforms? 

•  Do  you  agree  that  the  Commission  should  be  able  to  request  information  and  to 
propose  changes  to  proposed  measures  which  could  affect  the  interests  of  other 
Member States or the Euro area and EU as a whole?  

3.3. 

Ensuring democratic legitimacy 

A framework for ex ante coordination of the most important national reforms can encourage 
the  implementation  and  improve  the  design  of  reforms,  guarantee  the  efficiency-enhancing 
nature  of  the  reform  and  ensure  that  spill-overs  on  other  countries  are  considered  in  the 
national process.  

The  democratic  legitimacy  and  accountability  of  the  process  must  start  with  the  national 
democratic institutions. The new process to be introduced respects national decision-making 
powers,  with  the  decision  on  the  reform  plan  remaining  with  the  Member  State  itself.  The 
process  described  in  Section  3.2  above  is  one  way  of  meeting  this  requirement.  Ex  ante 
coordination  at  the  EU  level  should  be  organised  to  facilitate  the  reform  process  in  the 
Member  States  and  add  value  through  better  design  of  reforms.  At  EU  level  a  process  of 
economic  dialogue  could  be  envisaged,  for  example  through  invitations  from  the  relevant 
committee of the European Parliament to the Commission, the President of the Council or the 
President  of  the  Eurogroup  to  discuss  the  Commission  opinion  on  a  Member  State's  reform 
plans as well as the conclusions of the discussions in the Council. The relevant committee of 
the  European  Parliament  could  also  invite  Member  States  to  participate  in  an  exchange  of 
views on planned, major economic policy reforms. 

9 

The  Commission  will  make  proposals  for  further  strengthening  the  social  dimension  of  the  European 
Semester, without creating new procedures. 

EN 

6 

   EN 

                                                 
Questions for consultation: 

•  How  can  the  national  decision-making  process  be  accommodated  in  the  ex  ante 

coordination? 

•  Do  you  agree  that  there  should  be  a  dialogue  process  at  EU  level  involving  the 

European Parliament, the Council and the Commission? 

4. 

NEXT STEPS 

Following  this  consultation  and  other  discussions  with  the  European  Parliament  and  the 
Council,  the  Commission  will  make  a  formal  legislative  proposal,  in  the  framework  of 
existing Treaties, in the course of 2013.  

EN 

7 

   EN