PRIMER: how to make an EU law

Having been in existence for over half a century it is a universally acknowledged truth that EU law is confusing, and how compromise is reached raises questions about transparency. Given this complexity, IFLR's latest primer concentrates on the process of developing a law in the world’s largest trading bloc.

"If you're trying to get a law passed quickly, it is inevitably easier to do that on a national scale than via 28 states,” said Sebastian Vos, global co-chair of Covington and Burling’s public policy practice and former European Commission worker.

The Treaties

EU law functions come down to just two treaties: The Treaty of the European Union and the Treaty on the Functioning of the European Union.

The Treaty on European Union (TEU) was signed by all member states in 2007. It followed unsuccessful attempts to establish a European Constitution, which collapsed following failed referendums in the Netherlands and France. It is the foundation of EU law, establishing it’s principle purposes of governance (the Commission, parliament and council), as well as rules on foreign policy.

The Treaty on the Functioning of the European Union (TFEU) has origins in the Treaty of Rome, which was signed in 1957. The TFEU also lies at the foundation of EU law, shaping the scope of its legislative authority and the principles of law where it is operational.  

Who proposes EU law?

“It’s simple and straightforward, we’re the only part of the world apart from North Korea where the law is introduced by a committee, not parliament,” joked a source in the European Parliament.

In article 17 (1) of the TEU, it’s declared that the Commission should "promote the general interest of the Union" while Article 17(3) adds that Commissioners should be "completely independent" and not "take instructions from any Government".

In between lurks controversy. Article 17(2) states: "Union legislative acts may only be adopted on the basis of a Commission proposal, except where the Treaties provide otherwise.”

Commission has monopoly on which laws come before the EU Council (representatives of member states) and the EU parliament (elected parliamentarians representing each member state). What remedies this is parliament’s ability to elect the Commission president with an absolute majority, usually meaning that the Commission does represent the political alignments of the parliament that has been elected.

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“Parliament holds a lot of power in the law-making process,” said Sirpa Pietikäinen, a Finnish MEP who sits with the European People’s Party. “But, only if MEPs know how to use it.”

Parliament has has the ability to initiate new political topics, such as the circular economy, and ensure that they are put in the Commission's agenda.

“Another power is our capacity to safeguard how these initiated political goals are achieved and respected in different legislation,” she continued, citing climate objectives in the Common Agricultural Policy as an example of a recent success for the parliament.

How does the legislative process work?

Once the Commission has put forward a proposal for a legislative text, an MEP working in one of the parliamentary committees will create a report. The parliamentary committee subsequently votes on this, with the opportunity to amend. Once consensus has been reached at committee stage, Parliament will adopt a position.

This process is repeated one more time, depending on the legislation and if agreement is reached with the Council. If agreement is not reached between parliament and the Council then the proposal proceeds to a conciliation committee, also known as a formal trilogue meeting, which can be held informally to speed up the legislative process.

What is a trilogue meeting, and why is it necessary?

This process involves representatives from the Commission, the Council and the parliament. It takes its name from the phrase 'the trilogue', or a conversation between three parties.

“As co-legislators, Parliament is on equal footing with Member States in trilogues and inter-institutional negotiations,” summarised Pietikäinen.

However, not all agree.

“While Parliament feels that its role is to bring European citizens closer to the legislative process, the extent to which the Council takes on board what Parliament proposes is more a matter of good will than an issue of legal obligation,” suggested Gibson Dunn partner, Peter Alexiadis.

“Legislation often has to get brought down to the lowest common denominator in order to be agreed upon," he continued. "That is a natural byproduct of the European legislative process, which is geared towards achieving compromise positions.”

Herbert Smith Freehills consultant, Eric White, also said that the trilogue process is peculiar. “It is a means to broker agreement rather than part of the formalised system. What else is slightly strange is the fact that it involves closed-door discussions where if all goes well there is an agreed text. However, it is not clear to the outside world how that agreed text came into place,” he added.

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The secrecy has spurred backlash, and led to accusations of a lack of democratic means. However, those in Brussels remain willing to defend it.

“The current system of trilogues works,” said parliamentary policy advisor, Dimitrios Pssarrakis. “The European Parliament is very strong and the Council cannot ignore or bypass the will of the Parliament.”

He continued that the Commission has one essential role: to facilitate and provide solutions when the negotiations between Parliament and Council are at an impasse.

“While it has its flaws, and one can raise issues such as lack of transparency, we aren’t discussing a national parliament here. The current practice under the co-legislative procedure is probably the only way that it can work,” concluded White’s Herbert Smith colleague, Lode Van Den Hende, who previously worked as a member state representative for the EU.

Will the EU’s law making process be impacted by Brexit?

In Brussels, there’s continued sadness about Britain’s decision, with speculation about a second referendum rife, and continued credence to Britain’s policymakers in the city’s European quarter. While the Commission has traditionally struggled with a dearth of British staffers, the country has been able to influence the EU in many areas.

“The UK influenced both the behavioural and technical standards within the EU,” said Vicky Pryce, a former government economist and adviser at the Centre for Economics and Business Research. “The real question is whether EU countries and the Commission will still be able to perform the necessary balancing act to broker the type of compromises that the mere existence of the UK on the negotiating table was often facilitating.”

Financial service expertise will also be mourned. As the EU moves to reform Mifid II, and find the compromise needed to finally implement both a European Banking Union (EBU) and Capital Markets Union (CMU), a lack of UK input will be noticed by policy makers. Read more: City cautiously optimistic about Brexit breakthrough 

In the next parliamentary term, market participants can expect to find themselves under the jurisdiction of an increasingly fractious assembly. Traditional troupes have shelled support to newer groupings, namely populist far right MEPs and left leaning ecological factions.

There’s also an increased contrast in the council: countries in the Mediterranean and the North of Europe have swung toward the left while countries in the East are increasingly electing nationalist, conservative parties.  

While the term has only just began there is every chance that it could deliver one of the most strained legislative processes yet, especially given that necessary compromises appear to be failing to surface.