Budgetary Treaties and European Union Politics

Abstract

In Europe, two budgetary treaties were adopted in 1970 and 1975, respectively. They changed the budgetary procedures on the founding treaties of the European Communities (EC). The main reason was the introduction of the concept of “own resources” in 1970 to replace national financial contributions. It was decided that customs duties, agricultural levies, and a certain percentage of the value-added tax (VAT) in the Member States should go to the EC budget. Since that would remove the budget control of the national parliaments, it was argued that the European Parliament should have budgetary powers. The argument was especially developed by the European Parliament. The Member States eventually accepted the argument, but with some hesitation, so in the end the Parliament got less than it demanded. The Member States focused on control and the Parliament focused on legitimacy. The Commission fought for its own prerogatives. Apart from empowering the European Parliament, the second budgetary treaty in 1975 also created the European Court of Auditors. And prior to the signing of the treaty, the institutions (Commission, Council, and Parliament) had also agreed to introduce a conciliation procedure as a part of the budgetary process. This was done by an inter-institutional agreement outside the new treaty. Tracing the processes of adopting the two treaties shows that there was a great deal of inter-institutional bargaining, but also inter-governmental bargaining within the Council of Ministers, where France arguably was the “laggard” in 1970, joined by Denmark in 1975, after the first enlargement in 1973. The United Kingdom, preoccupied with its renegotiation of membership and a referendum in June 1975, had a relatively low profile in the negotiations. Scholars have debated the explanatory power of the liberal intergovernmental approach (with emphasis on the role of the Member States), contrasting it with some institutionalist approach considered better suited to explaining these treaty reforms. Leading scholars have especially applied sociological and historical institutionalism.