Treaty errs on side of caution

The agreement is not as controversial as Lisbon and Nice were, says Tom O’Malley

GIVEN the relative frequency of constitutional amendments nowadays, it seems strange to recall that the amendment adopted in 1972 to facilitate Ireland’s entry to the European Economic Community was only the third amendment to the Constitution which had been enacted 35 years earlier.

It was the first amendment adopted by referendum. The 1972 amendment allowed Ireland to ratify the three central treaties which then constituted the EEC and, importantly, provided that nothing contained elsewhere in the Constitution could be invoked to invalidate any laws or measures which were necessitated by our membership of what is now the EU.

However, as became clear in of Crotty v Ireland, decided by the Supreme Court in 1987, the 1972 amendment could not be relied upon when the State wished to ratify any further treaty, which changed the “essential scope and objectives” of the Community that we had joined on Jan 1, 1973, and which was then essentially an economic union.

This decision had far reaching consequences and explains why Ireland, often uniquely among other EU states, had to hold referenda in order to ratify other major treaties such as those of Maastricht, Amsterdam, Nice, and Lisbon. Not every European treaty or initiative requires a referendum. All depends on the extent to which the measure in question alters the balance of power and authority between the government of Ireland and the governing bodies of the EU.

The fiscal treaty on which we will vote on May 31 is unusual in that it is not a European treaty in the true sense. It is an inter-governmental treaty which 25 of the 27 EU states may decide to ratify. This results from the decision of the British government effectively to veto a European treaty on the matter when it failed to secure concessions to protect its financial services industry.

While opinions vary as to whether we really need to hold a referendum, the Government was probably right to err on the side of caution if only because the existing provisions of the Constitution in this area deal with EU treaties. They might not be sufficient to immunise legislation enacted on foot of the treaty precisely because it is an inter-governmental treaty.

Another noteworthy feature of this treaty is that much of what it contains is not really new and would apply in any event under our existing treaty obligations. Granted, the elements relating to limits on the structural deficit are very important, but one significant element is that specific targets for deficit reduction may be set by way of agreement between individual countries and the EU.

Such targets are subject to change and a country will not be required to take corrective action unless it is missing its current target by a significant amount. This may be achieved by raising taxes or cutting public spending.

This treaty does not affect Ireland’s current bailout arrangements in any way. However, it has medium and long-term implications in this regard. Future bailout funds may be needed from the ESM and one of the preliminary recitals of the treaty states quite categorically that the granting of financial assistance under the ESM will be conditional, as of Mar 1, 2013, on the ratification of the fiscal treaty by the applicant state. This is one obvious argument, the so-called insurance policy argument, in favour of ratification.

Another question causing some unease concerns the role of the European Court of Justice (ECJ) in securing compliance with the terms of the treaty. In fact, the court’s role is quite limited and, in the ordinary course of events, it should seldom if ever have to intervene, at least in Ireland’s case.

States are obliged to enact laws giving effect to their budgetary obligations under the treaty. Failure to do so may lead to a case being taken to the ECJ against a state by the European Commission or another contracting state. The ECJ will specify the remedial steps to be taken within a defined period. It is only where the delinquent state fails to abide by the court’s direction that the court may then impose a fine not exceeding 0.1% of that state’s GDP. The court would have to apply the principle of proportionality in determining the fine in each case.

While the fiscal treaty gives rise to many debating points, it is much more comprehensible and manageable than those on which we have had previous referenda.

* Tom O’Malley is a senior lecturer in law at NUI Galway.


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