CELEX: 51989PC0466
Language: en
Date: 1989-10-13
Title: PROPOSAL FOR A COUNCIL DECISION ON THE ATTAINMENT OF PROGRESSIVE CONVERGENCE OF ECONOMIC PERFORMANCE DURING STAGE ONE OF ECONOMIC AND MONETARY UNION

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)
 ---pagebreak---                           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,
                                                            .../...
 ---pagebreak---                                                        - 2 -
Whereas c o o r d i n a t i o n of economic p o l i c i e s should be based on an
open market approach both i n t e r n a l l y and e x t e r n a l l y ,
Whereas         the    achievement        of       the   goals of       the  Single European
Act, e s p e c i a l l y the completion of t h e I n t e r n a l Market, vhich w i l l
i n c r e a s e t h e degree of economic and f i n a n c i a l i n t e g r a t i o n and
r e i n f o r c e competition and s t r u c t u r a l chango and thus -i.nplify Lr>-
c r o s s - b o r d e r e f f e c t s of economic p o l i c i e s , w i l l r e q u i r e more
e f f e c t i v e p o l i c y c o o r d i n a t i o n ; whereas according to Article
102a Member S t a t e s s h a l l t a k e account of the experience acquire-?
i n c o o p e r a t i o n w i t h i n the framework of the European                     Monetary
System; whereas the first stage of Economic and Monetary
Union should provide a sound b a s i s for i t s s u c c e s s f u l f u r t h e r
development and s u s t a i n a b i l i t y ,
Whereas the strengthening of coordination should reply on the
p o l i t i c a l w i l l t o develop f u r t h e r the consensus on the broad eco-
nomic p o l i c y approach; whereas progress in this coordination
p r o c e s s c a l l s for f l e x i b i l i t y , s u b s i d i a r i t y and mutual commit-
ments in decision-making as well as for 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.
 ---pagebreak---                               - 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.
                                                    .../...
 ---pagebreak---                             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    medium-term budgetary policy - rends an
their implications for overall economic policy. ?. _• Economy.
Policy Committee shall be consulted for the surveilla-. _*e exercis-
in this context.
                            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.
 ---pagebreak---                                         - 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.
                                      Article 11
The following a c t s are hereby r e p e a l e d :
(i)    Council Decision 74/120/EEC of       18 February 1974 on the attainment
      of a high degree of convergence of the economic p o l i c i e s of
      t h e Member S t a t e s of t h e European Community;
(ii)  Council Directive 74/121/EEC of 18 February 1974 on stability,
      growth and full employment in the Community.
                                      Article 12
This Decision is addressed to the Member States.
Done at                                                       For the Council
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(89) 466 final
                                                      DOCUMENTS
EN                                                                              10
                                 Catalogue number : CB-CO-89-422-EN-C
                                                             ISBN 92-77-53156-8
Office for Official Publications of the European Communities
L-2985 Luxembourg