Treaties, regulations and pacts
Treaty of Rome
The founding basis for the European Economic Community (EEC) and its associated bodies. Signed in Rome by the original six countries – France, West Germany, Italy, Belgium, the Netherlands and Luxembourg – in March 1957.
Single European Act
The legal document that underpins the 1992 single market by providing for more widespread use of qualified-majority voting. Agreed in Luxembourg in December 1985, signed in February 1986 and entered into force in July 1987.
Maastricht treaty
Formally the Treaty on European Union. The founding legal document for European economic and monetary union (EMU), agreed in Maastricht in December 1991, signed in February 1992 and ratified in October 1993. The treaty lays down five “convergence criteria” to be fulfilled by candidates to join EMU. Denmark and the UK were granted opt-outs from stage three, the adoption of a single currency.
Treaty of Amsterdam
Provides the legal basis for justice and home affairs and for a common foreign and security policy to become part of the EU. Agreed in Amsterdam in June 1997 and entered into force in May 1999.
Changed the voting weights and several EU institutions in preparation for the 2004 enlargement to take in ten new members, mainly from central and eastern Europe. Agreed in Nice in December 2000 and entered into force in February 2003.
Treaty of Lisbon
After the European constitutional treaty was rejected by referendums in 2005 in France and the Netherlands, its essential elements were subsumed into the Lisbon treaty, which was signed in December 2007 and entered into force in December 2009. The treaty changes the voting system, establishes a permanent president of the European Council and sets up a new external action service under a high representative for foreign policy.
Stability and Growth Pact
A set of regulations agreed in 1997 to impose budget discipline on euro-zone countries, with the possibility of swingeing fines on those with budget deficits over 3% of GDP. After France and Germany broke the pact in 2003–04, it was subsumed into a new excessive deficits procedure known as the six-pack (see below).
European Financial Stability Facility, European Stability Mechanism
The European Financial Stability Facility (EFSF) was set up in May 2010 as a temporary bail-out fund for the euro zone, used first for Greece. Its lending capacity was later raised to €440 billion. In 2012 it was replaced by a permanent European Stability Mechanism (ESM), based on an inter-governmental treaty, with a lending capacity initially of €500 billion.
Fiscal compact treaty
Formally known as the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union, the fiscal compact was agreed in December 2011 and entered into force in January 2013. The treaty commits signatories to amend national law to guarantee budget balance, defining this as keeping cyclically adjusted structural deficits below 0.5% of GDP. Because the UK and the Czech Republic refused to sign, the treaty was adopted as an inter-governmental one by 25 EU countries.
Six-pack, two-pack, Euro Plus Pact
Complementing the fiscal compact treaty are rules under the “excessive deficits procedure”, agreed in 2011 and 2012. The six-pack refers to five regulations and a directive to control budget deficits and macroeconomic imbalances; the two-pack to provisions for the European Commission to monitor and if necessary require amendments to national budgets. The voting for sanctions is changed from positive to negative qualified majority: that is, it now takes a majority of countries to reject rather than approve proposals from the Commission. The Euro Plus Pact, signed by six other EU countries besides the euro zone, concerns broader economic co-ordination. Collectively these provisions are known as the “European semester”.
Banking union
Negotiations on the details of banking union are continuing, but a single supervisory mechanism (SSM) has been set up and agreement has been reached on a single resolution mechanism (SRM). The first transfers supervision of the most important banks to the European Central Bank; the second sets out arrangements for managing a bank failure. These apply to euro-zone countries and other EU countries that choose to join (the UK, the Czech Republic and Sweden will not do so). The European Banking Authority continues to govern all banks in the EU.