EU fleshes out how 'flexibility' would work

Two confidential European Union reports show that Britain's partners have ambitions to integrate policies in areas as far-reaching as taxation, social security, policing and immigration.

A new "flexibility chapter" in the Amsterdam treaty, due to be finalised in June, should create powers for countries to integrate in these areas, without a British veto, France and Germany are arguing.

The reports produce for the first time concrete ideas about how the hitherto nebulous concept of "flexibility" would work in EU decision-making. In effect, it would allow groups of member states to share powers without the rest.

France and Germany believe "flexibility" is the key to finalising a new EU treaty at Amsterdam. They believe that flexibility is vital if progress towards integration is to continue without British opposition. They also believe it is vital if the EU is to work effectively once new member states from central and eastern Europe have joined.

Furthermore France and Germany want "flexible" decision making to apply to Economic and Monetary Union, according to one of the reports.

The states want to strengthen indirect tax rules, and start to harmonise other tax policies after the launch of the single currency. They also want powers to enable them to harmonise other areas of tax and social security policy once the single currency is up and running.

The European Commission is opposed to more power-sharing in areas of macro-economic policy. The Maastricht treaty makes clear that member states inside a single currency should be free to set their own policies on tax and social security, while aspiring to meet overall economic convergence criteria. The majority of countries are also keen to ensure that a "hard core" share immigration, justice and environment policies.

The second set of proposals, prepared by the commission and to be discussed in Brussels today, sets out what a "flexible", "multi-speed" Europe would look like. The commission report is more cautious about listing areas to which flexibility should be applied. It would be most use in areas where unanimity at present applies.

Defence, armaments policy, policing, immigration and asylum policy are the areas most frequently evoked and would clearly be "possible" candidates for flexibility, says the report.

These are largely policies which are discussed under the so-called second and third "pillars" of the EU - governed by loose inter-governmental cooperation rather than strict community law. It would therefore be easier to set up flexible power-sharing in these areas, than under the "first pillar", which governs such core policy areas as the single market and monetary union.

The commission is in principle against multi-speed power-sharing in the first pillar. However, its report accepts that member states will push for flexibility in these areas.

Senior officials say "down the road" they accept that member states will want "flexibility" to pool powers in areas of economic policy-making such as taxation and social security. "If flexibility is not done inside the treaty it will be done outside," says the commission report, in a tacit acknowledgement that France and Germany are determined to increase integration even if a deal cannot be done at Amsterdam.

Integration proposals

n No veto on decisions about which countries can go ahead.

n Powers to apply flexible power sharing to most areas of policy.

n Areas to be specifically excluded from the flexibility plan should be the common fisheries policy, commercial policy, transport, competition and cohesion policies.

n Countries which do not join in a power-sharing arrangement at first, should be allowed to do so later.

n A majority of member states should want to pool powers flexibly, before a decision is taken to go ahead.

n The European Commission, not member states, should have the sole right to propose new power sharing under the flexibilty system.