Treaty Changes Research Articles

Multilateral Tax Treaty Revision to Combat Tax Avoidance: On the Merits and Limits of BEPS’s Multilateral Instrument

Abstract Since 2015, more than 140 countries have cooperated in the OECD’s “Base Erosion and Profit Shifting” (BEPS) project to combat multinational tax avoidance. Several of the key actions, most importantly measures against tax-treaty shopping, require changes to double taxation treaties. The OECD designed a special instrument—the ‘multilateral instrument’ (MLI) - to allow for a swift implementation of BEPS-related tax treaty changes. In this paper, we show that MLI take-up is incomplete, we present (partly surprising) correlates of the take-up decision and develop a simple theoretical model to rationalize the observed take-up behavior. A key insight is that conduit countries, which are the beneficiaries of tax treaty shopping, can benefit from anti-treaty shopping laws as firms have incentives to scale-up real activity in conduit nations in order to be exempted from the new anti-treaty shopping rules. Empirical findings are consistent with these considerations: MLI adoption rates of conduit countries are high. Treaty shopping has, to date, not significantly dropped. And there is indeed indication that firms have scaled up their real economic activity in conduit nations. Overall, our findings reject that treaty shopping has been “killed” as envisaged by the OECD. JEL classification: F21, F23, F53, H25, H26, H32, H87, K34

Rethinking the Constitutional Architecture of EU Executive Rulemaking: Treaty Change and Enhanced Democracy

Rethinking the Constitutional Architecture of EU Executive Rulemaking: Treaty Change and Enhanced Democracy

Rearranging the Puzzle: How Treaty Change Can Strengthen the Protection of EU Values

Rearranging the Puzzle: How Treaty Change Can Strengthen the Protection of EU Values

Crisis Learning or Reform Backlog? The European Parliament’s Treaty‐Change Proposals During the Polycrisis

In May 2022, the European Parliament (EP) launched a procedure to amend the EU treaties and began drafting a report with concrete reform proposals. In their resolution, EP members explicitly described this as a necessary response to recent crises (notably the Russian aggression against Ukraine, the Covid-19 pandemic, and climate change) as well as a follow-up to the Conference on the Future of Europe. However, the stated objectives of the reform, in particular more efficient and democratic EU decision-making, were not new but followed long-standing discourses on deepening EU integration. This raises the question of to what degree the EP’s initiative really reflected a lesson from recent crises—in line with a “failing forward” approach towards EU reform—or rather a “backlog” of reforms which had already been proposed before but whose implementation had been blocked by member states, and for which the crises only represented a window of opportunity. The article assesses the development of treaty change proposals by the EP and bodies close to it, comparing three comprehensive plans for institutional reform: the federalist Spinelli Group’s Fundamental Law for the EU (2013), the EP’s Verhofstadt Report (2017), and the EP’s latest Article 48 Report (2023). The comparison shows that, while the crises had an impact on the level of ambition in some policy areas, the EP’s general approach, especially on institutional issues, was characterised by a high degree of continuity.

Winds of Treaty change? Taking fundamental rights in the EU yet more seriously

Winds of Treaty change? Taking fundamental rights in the EU <i>yet</i> more seriously

The Causes and Modes of European Disintegration

This thematic issue on the causes and modes of European disintegration seeks to answer two main questions: What are the causes of (potential) European disintegration across countries? And what are the actual and potential modes of European disintegration? The articles on the causes of EU disintegration go beyond the immediate causes of Brexit, to date the prime example of European disintegration. They address, for instance, the impact of ignoring the results of referendums on EU treaty changes. The articles demonstrate that the extensively studied proximate causes of Brexit may be different from more long-term drivers of potential disintegration in the UK and other member states. The second question raises a point that has been largely overlooked. Going beyond the growing literature on Brexit, differentiated integration, and non-compliance, the articles on the modes of European disintegration address issues such as (temporary) opt-outs from the Schengen agreement. The thematic issue is innovative not only due to the questions it raises but also by deploying a multi-disciplinary social science perspective. Contributions are quantitative, qualitative, and theoretical from a wide array of social science disciplines. Taken together, the contributions to this thematic issue advance scholarly understanding of European (dis)integration.

Die differenzierte Integration und die Zukunft der Europäischen Union: Konsolidierung, Krisen und Erweiterung

Differentiated integration is a central feature of the European Union (EU). This article starts with an analysis of current developments in differentiated integration. We observe a trend of consolidation thanks to Brexit, the expiration of exemptions from Eastern enlargement, and the absence of new treaty changes and accessions. We further argue that the recent crises of the EU did not lend themselves to differentiated solutions because they affected highly integrated policies and constitutional and redistributive conflicts. We discuss the EU’s enlargement as an important driver of differentiation and argue in view of past trends and the current reform proposals that so far, no comprehensive model of differentiated membership is at the horizon and hence the current plans for enlargement are likely to increase temporary differentiation and demand institutional reforms.

Law and Politics: Constitutional Reform and Treaty Change

Law and Politics: Constitutional Reform and Treaty Change

CONFERENCE ON THE FUTURE OF EUROPE: RESULTS AND PERSPECTIVES

The article is timed to closing of the Conference on the Future Europe, which united the proposals of EU institutions and Member States, and most importantly, ensured direct participation of the EU citizens in discussion of the EU’s priority tasks in the medium term. The author compares the positions of the European Parliament, the Commission and the Council on the eve and during the Conference. The analysis of the final report on the results of the Conference allows to conclude that the EU citizens wish to deepen integration, in particular, when they propose the institutional reform, which would strengthen the supranational element of governance in the EU. On the other hand, the author observes no desire to spill back integration even from the Member States, although finds among them opponents of the institutional reform. The article explains the complex organizational structure of the Conference by the initial differences in the EU institutions’ views on the principles of its work, which reflects the existing inter-institutional tension. The author identifies the main stumbling block of the discussions – the EU Treaty change, which is needed to implement the institutional reform proposed by the participants: the European Parliament insists on the amendments, while the Council express no enthusiasm about this

The Need for an EU Expulsion Mechanism: Democratic Backsliding and the Failure of Article 7.

What should the EU do about the fact that some Member States are backsliding on their commitments to democracy, supposedly a fundamental value of the EU? The Treaty provisions under Article 7 TEU are widely criticized for being ineffective in preventing such developments. Are they legitimate? I argue that the ultimate sanction of Article 7 TEU falls into a performative contradiction, which undermines its ability to coherently defend fundamental values. Instead, expulsion from the EU is the appropriate, coherent and legitimate final political sanction for democratic and rule of law backsliding by a Member State. The argument has the following steps: In Part 1, I argue that the current Article 7 framework for responding to democratic and rule of law backsliding in the EU is normatively problematic, in that the mechanism currently in the Treaty undermines the values it purports to defend; in other words, it falls into a performative contradiction. It is undemocratic to deprive Member States of their right to vote in the Council while holding them subject to Council decisions. However, Part 2 studies relevant philosophical arguments from an adjacent literature on criminal disenfranchisement, concluding that allowing backsliding Member States to keep their voting rights in the Council also taints the democratic character of Council decision-making. In Part 3, I consider the resulting paradox in light of the literature on militant democracy. Could militant democracy justify Article 7? I argue not; even if we accept the hypothetical justifiability of militant measures, they are not legitimate here since a democratically acceptable alternative exists that would safeguard the democratic character and legitimacy of Council decision-making: expulsion from the Union. I also address a central objection to an expulsion mechanism—that it would require treaty change and is therefore practically impossible.

Über Visionen, Vertrauen und Werte: deutsch-nordisch-baltische Perspektiven auf die Zukunft der Europäischen Union

Since the 2010s, severe crises have hit the European Union (EU) approximately every five years: first the financial and euro crisis, then the migration crisis and Brexit, and last (but certainly not least) the COVID-19 pandemic. The crises have left their mark on the inner cohesion of the Union and on the level of solidarity between its member states. As a result, three central themes will shape the EU in the coming years: the lack of trust between member states, increasing value divergence within the EU, and a lack of a shared vision for the future of the Union. These factors will impact upcoming negotiations on key legislative initiatives such as the Green Deal, digitalisation, the Health Union, the renegotiation of EU fiscal rules, the strategic compass, or even on possible treaty changes following the Conference on the Future of Europe. How well the EU will be able to master these challenges, will depend on the member states’ ability to prioritise the common good of the Union above their national interests.

Report Addressed to the European Parliament and the Commission on Policy Recommendations and on Treaty Changes and Amendments to the EU Charter of Fundamental Rights

Report Addressed to the European Parliament and the Commission on Policy Recommendations and on Treaty Changes and Amendments to the EU Charter of Fundamental Rights

Expanding EU Competence in Health? The Need for and Feasibility of Treaty Change

Expanding EU Competence in Health? The Need for and Feasibility of Treaty Change

Fiscal Integration in an Experimental Union: How Path-Breaking Was the EU's Response to the COVID-19 Pandemic?

Fiscal Integration in an Experimental Union: How Path-Breaking Was the EU's Response to the COVID-19 Pandemic?

Remapping the European agenda‐setting landscape

AbstractIn the European Union (EU), agenda setting is formally centralized at the European Commission. During the last decade since the Lisbon Treaty, however, this agenda‐setting monopoly was challenged by other institutions against the backdrop of the Treaty change, intergovernmental crisis management, politicization, and more informal legislative bargaining. This symposium therefore surveys the emerging agenda‐setting powers of the EU's other main institutional actors in their relation to the Commission. The introduction provides a conceptual framework, distinguishing between procedural and discursive agenda‐setting power, as well as gatekeeping power and agenda leadership. Based on this typology, we argue that not only the European Council (agenda leadership) but even the Court of Justice of the EU (procedural agenda setting) and the European Parliament (discursive agenda setting) gained more influence on policy decisions through their informal agenda‐setting activities. The landscape has thus become variegated, and the Commission, although remaining center stage, now depends more strongly on interinstitutional alliances.

On selling sovereigns held by the ECB to the ESM

A repetition of austerity policies of the early 2010s is not consistent with maintaining adequate growth and sovereign debt sustainability in the post-pandemic environment, argue the authors of this CEPS Policy Insight. Likewise, a debt restructuring process with deep haircuts will just upset the fragile state of the markets and create a run on the debt of the most vulnerable member states, forcing the ECB to buy even more debt. Common policies are thus required to keep the sovereigns acquired by the ECB with its Asset Purchase Programme (APP) and Pandemic Emergency Purchase Programme (PEPP) programmes out of financial markets for an indefinite period. The European Stability Mechanism (ESM) can offer the appropriate instrument by purchasing the ECB-held sovereign debt and issuing own liabilities to fund the purchases. The programme could develop gradually, over several years, to ensure the smooth rollover of expiring securities. As the purchases would be funded by the ESM’s own liabilities, backed by the sovereign holdings, ESM debt would become the long- sought-after European safe asset. The authors argue that this ESM action could be conducted without an ESM Treaty change. It would be premised on the legal framework of the revised Article 14 (precautionary financial assistance). The ESM could then gradually evolve into a debt management agency for the euro area. The transfer of much of ECB sovereign holdings to the ESM would restore monetary policy independence and ease any frictions in this field, thereby allowing EU policymakers’ focus to shift to the completion of the European Banking Union. This paper follows up on a CEPS Policy Insight of October 2020, in which Stefano Micossi argued that the increase in sovereign indebtedness under way in the euro area should be managed through collective policy actions.

„Handlowe aspekty własności intelektualnej” jako część Wspólnej Polityki Handlowej – konsekwencje dla bezpośredniej skuteczności TRIPS

Przedmiot badań: Nieustanny rozwój technologiczny sprawia, że znaczenie własności inte­lektualnej rośnie, a ochrona prawna m.in. wynalazków nabiera ogromnego znaczenia, zwłasz­cza dla państw, których gospodarki oparte są na innowacyjności. Na przestrzeni lat Wspólna Polityka Handlowa Unii Europejskiej podlegała zmianom traktatowym, co skutkowało m.in. ewolucją jej zakresu przedmiotowego. Również charakter kompetencji Wspólnot Europejskich, a następnie Unii Europejskiej w tym zakresie zmieniał się. Jednym z najistotniejszych, a zara­zem powodującym najwięcej kontrowersji jest kwestia skutku bezpośredniego TRIPS w pań­stwach członkowskich Unii Europejskiej. Istotność tego zagadnienia wynika z postanowień TRIPS, które gwarantują minimalny zakres ochrony praw własności intelektualnej. Cel badawczy: Autor zmierza do ustalenia, jakim zakresem kompetencji dysponuje Unia Euro­pejska w odniesieniu do TRIPS. Artykuł ma na celu odpowiedzenie na pytanie – jak ewolucja Wspólnej Polityki Handlowej Unii Europejskiej wpłynęła na stosowanie TRIPS w państwach członkowskich Unii Europejskiej.&#x0D; Metoda badawcza: W artykule wykorzystano głównie metody: formalno-dogmatyczną oraz hi­storyczno-prawną. W zakresie badania orzecznictwa Trybunału Sprawiedliwości posłużono się metodą empiryczno-prawną.1&#x0D; Wyniki: Charakter kompetencji Wspólnot Europejskich, a następnie Unii Europejskiej w odnie­sieniu do Wspólnej Polityki Handlowej zmieniał się wraz ze zmianami postanowień traktatów. Od dnia wejścia w życie Traktatu z Lizbony (1.12.2009 r.) Wspólna Polityka Handlowa wchodzi w zakres jej kompetencji wyłącznych oraz obejmuje handlowe aspekty własności intelektualnej. Orzecznictwo Trybunału Sprawiedliwości potwierdziło, że TRIPS w całości objęty jest kompe­tencją UE, z czego mogłoby wynikać, że dla oceny skutku bezpośredniego jego postanowień miarodajne są – wbrew kontrowersjom w uprzednim stanie prawnym, gdy TRIPS miał charakter tzw. umowy mieszanej – unijne reguły skutku bezpośredniego. Z drugiej strony, Trybunał nie zdecydował się na zakwestionowanie dotychczasowego orzecznictwa w tym zakresie, co może prowadzić do wniosku, że odmowa skutku bezpośredniego TRIPS pozostaje w mocy. Niemniej problem stracił na znaczeniu praktycznym, bowiem postanowienia TRIPS zostały (po zakończeniu okresów przejściowych) recypowane do prawa krajowego państw członkowskich.

The Politics of Differentiated Integration: What do Governments Want? Country Report - Italy

The analysis of how differentiated integration is discussed in Italian politics returned two clear results. Firstly, the topic is not very salient in the period of time considered (2002-2020) and there is no clear trend overtime. Salience peaked around specific key events such as Treaty changes (2004-2005: Constitution, 2007-2008: Lisbon) and debates on the future of Europe (2016-2019). Secondly, despite the low saliency of the issue, Italian governments appear to hold a clear and coherent position on this issue. Italy supports the multi-end DI model and favours tools such as enhanced co-operation. In particular, after Brexit, Italian governments saw this tool as the solution to keep the EU together while moving forward with the integration process and keeping Italy in ‘core Europe.’ On the contrary, a multi-speed Europe is strongly opposed by Italian politicians, who fear that their country might be among those left behind if such a model of integration is implemented.

Conditions for Initiating the Procedure of Poland’s Withdrawal from the European Union

Polexit is a concept that emerged in the political science discourse when the United Kingdom held a referendum on its continued membership of the European Union on June 26, 2016. The article analyzes the reasons which facilitate a discussion on the withdrawal of Poland from the European Union. On the one hand, this results from disputes on the direction of the evolution of the European project between ‘old’ and ‘new’ member states. On the other, its intensity is affected by the dynamics of the dispute between the Polish government and the European Commission on the state of the rule of law in Poland. For supporters of a change in relations between European institutions and member states, the European parliamentary elections offered an opportunity of starting a discussion on the change of treaties. However, due to the fact that proponents of treaty changes failed to win the appropriate number of seats, the vision of an EU of ‘two speeds’ is becoming realistic. This may mark the beginning of a sequence of events concluded with a referendum on the withdrawal of Poland from the European Union.

Emancipating Health from the Internal Market: For a Stronger EU (Legislative) Competence in Public Health

It is a striking feature of European Union (EU) health law and policy that it has developed in a relative lack of awareness from the general public. This situation can be partly explained by the existence of only a limited competence in the field and the recourse to other legal bases to enact public health measures, particularly Article 114 TFEU. The use of internal market powers to conduct EU health policy has given rise to several problems, affecting the legitimacy of EU action and its capacity to adequately protect human health. Only a Treaty change can provide the EU with the clear competence and the solid legislative powers that it needs to tackle the various health challenges that Europe faces and will continue to face.