Year LXIV, 2022, Single Issue, Page 13
The ECSC’s financial system
and its relevance today*
GIULIA ROSSOLILLO
1. Introduction.
The idea of endowing the European Coal and Steel Community and in particular its most important institution, the High Authority, with the power, acting independently of the member states, to procure the resources necessary to carry out its tasks first came to light just after the start of the conference that led to the drafting of the ECSC Treaty. It was then that Jean Monnet realised that granting the High Authority financial independence would not only prevent it from having to depend on contributions from the member states, but also enable it to access the credit market on advantageous terms, and use the funds it procured to guide investments in the general interest.[1]
The financial mechanism of the ECSC that stemmed from this insight is unique in the panorama of international organisations and illustrates the extremely advanced nature of this organisation, even compared with the current European Union. This nature emerged with particular clarity in the first years following the birth of the ECSC, before it was joined by the European Economic Community. Thereafter, the gravitational pull of the EEC,[2] an organisation with far broader aims than the ECSC, combined with a severe crisis in the coal and steel sector leading to declining revenue from levies,[3] led to a reduction of the High Authority’s autonomy vis-à-vis the member states.
This analysis therefore focuses on those early years, namely the period between 1952 and 1957, in an attempt to draw from the past useful elements for interpreting the current phase in the process of European integration and ideas for a possible reform of the EU’s funding system.
2. Levies: first European taxes?
The ECSC’s ability to fund itself by imposing levies on the production of coal and steel and by contracting loans, as envisaged by Article 49 of the ECSC Treaty,[4] was the clearest manifestation of the autonomy of the High Authority, and also the feature that distinguished the ECSC from other international organisations. Indeed, while the latter are typically financed by contributions from their member states, and therefore their very existence ultimately depends on the willingness of the latter to provide them with the economic resources necessary to carry out their tasks,[5] the ECSC could obtain part of its resources directly from companies (levies) and from its funders (loans).
The revolutionary character of this financial system[6] was underlined by commentators of the time, who defined the levies as the first ever European taxes (specifically the first indirect European taxes)[7] as they were compulsory, had neither colour nor country — [8] they could be used in the coal and the steel sectors and in any member state, regardless of its industrial production capacity[9] —, and were directly related to the ECSC’s competences.
The most important aspect, though, was that the High Authority exercised its relative power over enterprises directly, without any intermediation by the member states.[10] In fact, the ECSC had a centralised treasury, and on the 25th day of each month the coal and steel companies were required to pay the sums due into the accounts held by the High Authority in the states in which they operated; loans were also paid directly into these accounts.[11]
The autonomy of the High Authority in relation to the collection of levies was further underlined by Article 50 of the ECSC Treaty, which gave it the faculty to impose surcharges of up to 5 per cent for each quarterly delay on enterprises that failed to comply with its decisions regarding levies, and also by the fact that that any High Authority decisions imposing a pecuniary obligation were enforceable.[12] Furthermore, High Authority-appointed inspectors enjoyed “to the full extent required for the performance of their duties” the same powers as the member states’ own revenue officials.[13]
3. Loans and other forms of funding.
In addition to empowering the High Authority to impose levies, Article 49 of the ECSC Treaty also provided that it could take out loans, and therefore become indebted. Whereas the levies were intended to cover various types of expenses listed in the Treaty, funds obtained by borrowing could only be used for the granting of loans (Art. 51).[14]
There was, however, a close link between these two categories of resources. Since the ECSC Treaty made no mention of the balanced budget principle,[15] the High Authority, in the first phase of its operations, was actually able to set a levy rate that, also thanks to its limited expenses at this time, exceeded its needs.
These surpluses gave rise to a guarantee fund that made borrowing and lending operations possible and ensured that the ECSC was able to access the credit market on favourable terms.[16] In other words, it was the High Authority’s ability to procure, with a high degree of autonomy, the resources necessary to carry out its tasks that lent the ECSC financial credibility, and thus allowed it to contract loans on advantageous terms.
In this way, coal and steel companies were enabled to access resources far greater than those they themselves paid in levies, and funding (loans) provided by the ECSC provided support, over the years, for post-war reconstruction, for the development of internal production, and for social and structural projects such as the construction of housing for workers and the creation of jobs in areas affected by the decline of the coal and steel industry.[17] In short, it was able to effectively support the common coal and steel market.
4. The role of the Assembly and the absence of a true ECSC budget.
One peculiar aspect of the financial system of the ECSC, which distinguishes this organisation from the member states and also the European Union, is undoubtedly the fact that the ECSC did not have a proper budget, that is, a unitary document showing its expenses and income on an annual basis.[18] In fact, a budget, or état prévisionnel in the French version of the Treaty,[19] was envisaged only for administrative expenses. In accordance with Article 78 of the ECSC Treaty, each institution of the Community was required, each year, to draw up estimates of its administrative expenses. These estimates were then consolidated in a preliminary draft administrative budget that had to be approved by a Committee consisting of the presidents of the Court, High Authority, Assembly and Council, chaired by the President of the Court. This preliminary draft budget was then included in the general report on the activities and administrative expenditure of the Community published annually by the High Authority (Art. 17).
Expenses other than administrative expenses, on the other hand, were authorised directly by the High Authority without being included in the aforementioned budget.
The Committee of Presidents was therefore totally devoid of powers not only over expenditure other than administrative expenditure, but also in relation to revenue,[20] whose determination and management were left to the High Authority, albeit with the intervention of the Council when necessary.
But the main feature emerging from the above-described mechanism is the extremely limited role of the Common Assembly,[21] which during the approval of the preliminary draft administrative budget was represented solely by its president, and thereafter (i.e., once the budget had been approved) merely informed by the High Authority, through its report on the activities of the ECSC.[22]
This state of affairs can certainly be attributed to the fact that the ECSC’s institutional structure was built around the High Authority, a body that was meant, by Jean Monnet and the drafters of the Treaty, to give impetus to the organisation and embody the supranational nature of the ECSC.[23] It should also be added that the Assembly, being made up of delegates from national parliaments, was not elected by direct universal suffrage, an aspect that weakened its ability to stand as a representative of European citizens.
However, it was not long before the Assembly started demanding greater powers.[24] In fact, in a resolution dated March 1953,[25] the Assembly complained about not enjoying the powers normally assigned to a parliament and asked to be sent the estimated expenses of all the organs of the ECSC ahead of the Committee of Presidents’ annual ruling on the preliminary draft administrative budget. The following year, it proposed[26] that annual extraordinary annual constitutive sessions of the Common Assembly after the end of the financial year should thenceforth be held, ideally no later than four months after start of the new financial year so that the Assembly might be better able to exercise its supervisory powers. Along the same lines, in the December of that same year,[27] the Assembly, having ascertained that the ECSC Treaty did not exclude a right of control by the Common Assembly, and that such a right covered the use of the proceeds of the levies and of equalisations, called upon the High Authority “to take all necessary measures to enable parliamentary control of the use of its financial resources, and periodically inform the Committee for Accounting and Administration of the Community and the Common Assembly on the use of its resources and of intentions regarding its future use.”[28]
The question of the Assembly’s powers of control was then addressed by the 1955 Teitgen Report[29] that, after highlighting the fundamental role of political control that the Assembly ought to exercise over a body, the High Authority, with only apparently technical functions, underlined the importance of budgetary control and acknowledged, with satisfaction, the will of the High Authority, expressed by Jean Monnet in June 1953, to keep the Assembly and the competent committees informed, in a timely manner, of the High Authority’s general lines of action and projects, collect their observations, and declare the reasons for decisions taken.
From 1957 onwards, the Assembly, partly as a consequence of its harsh reaction to the High Authority’s decision, in 1955, to reduce the levy rate after consulting the Council but failing to inform the Assembly, was always consulted by the High Authority on all decisions relating to levies.[30]
5. The ECSC and the European Union compared.
Unlike the ECSC, the EEC (and today’s EU) was founded on a model that leaves the supranational authority dependent on member states to provide it with sources of funding and define the procedure for determining its revenue.[31]
Indeed, the 1957 Treaty established that the EEC would be financed by contributions from the member states, just like any other international organisation. At the same time, however, it envisaged the possibility of replacing these contributions with own resources, requiring, however, that the Council, acting unanimously and after consulting the Assembly, recommend the adoption by the member states of the necessary provisions, and that the member states adopt them in accordance with their respective constitutional rules.[32]
In 1970[33] the first own resources were therefore established,[34] consisting of customs tariff duties,[35] agricultural levies,[36] and a percentage of value added tax; the latter was not due to become an own resource until 1975, so as to allow the prior application, in all the member states, of the rules determining a uniform tax base.[37] In 1988,[38] following tensions between Parliament and the Council over the approval of the budget, and also as a way to address the increased financial needs of the Community due to the growth of its powers, the so-called fourth resource was introduced, consisting of a percentage of the member states’ GNI.
It has to be said that, of these various sources of funding, the so-called traditional own resources are the ones that can most accurately be defined “own”.[39] These are in fact resources that are strictly linked to the competences of the Community, and therefore paid entirely into its budget, and whose amount does not depend on the needs of the organisation itself. In this sense, they strongly resemble the ECSC levies.[40]
The same cannot be said of the percentage of value added tax, given that it is not related to powers exercised at supranational level, and is a tax whose yield is divided between member states and the Union.[41]
Above all, though, it is the fourth resource that is least appropriately labelled “own”. Being a percentage of the member states’ GNI, it is no different in any way from the national contributions that were the EEC’s only source of funding in its early years of operation. Furthermore, since it is intended to cover the part of the budget not financed by the other resources,[42] and also considering that the revenue from the latter has decreased over the years, it now covers about 70 per cent of the EU budget.
However, the aspect that most clearly shows the Union’s financial dependence on the member states is the procedure through which the type and amount of the Union’s revenues are established.
Indeed, although the Treaty of Paris established the type of resources and their source, it envisaged no procedure for placing a ceiling on the ECSC budget, and left the High Authority considerable freedom to set the levy rate, merely requiring it to obtain prior authorisation from the Council, acting by a two-thirds majority, should it wish to set it higher than 1per cent (Art. 50). Therefore, Article 50, despite being a measure that, as mentioned, made no provision for intervention by the Assembly, did not allow any state to exercise the right of veto and, within the limits provided for by the Treaty, gave supranational bodies the power to decide on resources, taking this away from the member states.
Instead, the current Article 311 TFEU is based on the opposite principle: the decision relating to the system of own resources, which sets a cap on these resources and establishes their types, is adopted by the Council unanimously, after consulting the European Parliament, and it comes into force only once it has been approved by the member states in accordance with their respective constitutional requirements. Moreover, since it is still the states that, through the fourth resource, fund a large proportion of the Union budget, and no country wishes to increase this contribution, the resulting budget is extremely meagre, until recently amounting to just over 1 per cent of the member states’ GNI.
Moreover, this is a mechanism that influences the Union’s expenditure. Given the fact that Article 310 TFEU expressly states that “revenue and expenditure shown in the budget shall be in balance”, meaning that Union cannot incur debt, the small size of EU revenue also has the effect of reducing the Union’s margin for intervention in its management of the various policies for which it is responsible.
The Union’s autonomy is further reduced by the fact that its own resources, unlike the ECSC levies, are received directly by the member states,[43] which actually retain a proportion of them by way of collection costs.[44] What this means is that the resources do not directly feed the EU budget, but rather appear, in different ways, in the budgets of the member states, which therefore remain the only subjects able to intervene by judicial or other means to obtain payment by individual parties (persons or undertakings).[45]
In what might be seen as a continuation of the ECSC experience, on the other hand, the European Parliament plays a very limited role in the EU funding process. The financial system of the European Union is, in fact, characterised by a clear distinction between the procedures relating to the determination of revenue as opposed to the definition of expenditure, and by the European Parliament’s possibility to decisively influence the latter, but not the former. Whereas, in the determination of expenditure, the European Parliament is called upon to approve the multiannual financial framework that is then adopted by the Council acting unanimously (Art. 312 TFEU), and participates in the budget approval procedure on an equal footing with the Council (Art. 314 TFEU), on the own resources decision it is merely consulted.
While the limited participation of the ECSC Assembly in this area might in part be justified by the lack of direct democratic legitimisation of this body, the marginal role assigned to the European Parliament is more difficult to defend and only goes to confirm the crucial role played by the member states.
6. The perspectives opened up by Next Generation EU.
The recent pandemic crisis and its serious economic consequences have led to the adoption of measures that could quite profoundly modify the whole picture just outlined.
I refer to the Next Generation EU package,[46] a toolkit designed to address the difficult situation created in many member states by the pandemic crisis. This package, which will remain active until 2026, will provide grants and loans worth €750 billion, funded by taking out European debt, in other words by EU Commission borrowing on the financial markets. This scheme therefore dispenses with the balanced budget principle that is one of the cornerstones of the EU financial system.[47]
Under this arrangement, the capital repayments and interest will be charged to the EU budget and all liabilities must be repaid in full by 31 December 2058. To guarantee this debt, the Union budget had to be increased and this was done by increasing the ceilings on own resources and also making provision for the creation of new own resources, to ensure that this increase will not eventually force member states to make larger contributions to the common budget.
In particular, as established by Article 6 of Council decision 2020/2053,[48] the own resources ceilings have been temporarily raised by 0.6 percentage points “for the sole purpose of covering all liabilities of the Union resulting from the borrowing”, taking the overall own resources ceiling to 2 per cent of GNI. As for the creation of new own resources, all that has been envisaged so far is the introduction of contributions calculated on the basis of the weight of non-recycled plastic packaging waste, but others are expected to be studied and introduced in the coming years.
So, even though it is a temporary plan adopted exclusively for the purpose of tackling a serious crisis, Next Generation EU seems to lay the foundations for a substantial transformation of the current system of EU funding.
The situation that has arisen following the COVID-19 pandemic has underlined two things: the size of the Union budget is insufficient to cope with crisis situations, and the procedure in place for determining the EU’s resources, requiring agreement to be reached between 27 states, is extremely time consuming and therefore completely inadequate in the face of situations demanding prompt and rapid responses. On the other hand, the above-described overcoming of the taboo of European debt, and therefore the fact that the EU has been allowed, albeit temporarily, to borrow, has opened up an approach, and possibilities, that it will not be easy to “put back in the box”, once the emergency is over.
If this is true, the need will inevitably arise for Union financing mechanisms that allow it to incur debt, but at the same time guarantee the debt through resources that do not depend on the member states, but are instead decided autonomously by the Union and paid directly, by natural and legal persons, into its budget. This would not mean starting out on a new and unknown path, but rather drawing inspiration from a financing system, the ECSC one, that, back in the 1950s, was already based on extremely advanced solutions. However, whereas, in the ECSC, the High Authority was the institution that, within the limits herein outlined, had the power to determine the organisation’s resources, in the Union a central role should be played by the European Parliament, which should be granted one of the key prerogatives of any parliament, namely the power to decide (together with the Council) not only on the expenses of the organisation, but also on its income.
[*] A longer version of this contribution has already been published in A. Arena (ed.), La prima assise di una comunità fra popoli: l’attualità della CECA a 70 anni dal trattato di Parigi, Naples, 2022.
[1] J. Monnet, Mémoires, Paris, Arthème Fayard, 1976, p. 468: “Au cours de cet exposé du 21 juin, je développai un nouvel aspect de l’indépendance et de la force de la Haute Autorité: elle aurait ses ressources propres, grâce à un prélèvement sur les productions de charbon et d’acier, et ne dépendrait pas pour son fonctionnement et ses interventions des subsides des gouvernements. De plus, son crédit moral et financier ferait d’elle le meilleur emprunteur d’Europe. Par ses prêts, elle pourrait orienter les investissements dans l’intérêt général, sans pouvoir coercitif”. On this point, cf. A. Zatti, Le finanze della CECA: spunti e riflessioni per il futuro della UE, in G. Rossolillo (ed.), L’integrazione europea prima dei trattati di Roma, Soveria Mannelli, Rubettino editore, 2019, p. 81.
[2] Moreover, it should be noted that the 1965 Merger Treaty (Treaty Establishing a Single Council and a Single Commission of the European Communities, of 8 April 1965, published in OJ 152, p. 2) replaced the various institutions of the ECSC, EEC and Euratom with a single Council and a single Commission.
[3] The crisis in the coal and steel sector led to a gradual lowering of the levy rate, which fell from 0.9 per cent in 1953 to 0.35 per cent in 1957.
[4] Article 49 reads “The High Authority is empowered to procure the funds it requires to carry out its tasks: – by imposing levies on the production of coal and steel; – by contracting loans. It may receive gifts”. However, as we will see, borrowed funds can only be used to lend to businesses. https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:11951K:EN:PDF.
[5] On the funding of international organisations, cf. G. Tesauro, Il finanziamento delle organizzazioni internazionali, Naples, Eugenio Jovene, 1969; N. Parisi, Il finanziamento delle organizzazioni internazionali. Contributo allo studio delle forme della cooperazione intergovernativa, Milan, Giuffrè, 1986.
[6] In this sense, cf. A. Rossignol, Les finances de la C.E.C.A. et le développement financier des institutions européennes, Revue du droit public et de la science politique en France et à l’étranger, 1954, p. 1019; F. Benvenuti, Ordinamento della Comunità Europea del Carbone e dell’Acciaio, Introduzione, Padua, CEDAM, 1961, p. 17, even sees the existence of a fiscal power as a manifestation of the state-like nature of the ECSC.
[7] On this point, cf. A. Rossignol, Les finances de la C.E.C.A…., op. cit., p. 1019; N.P. Weides, Das Finanzrecht der Europäischen Gemeinschaft für Kohle und Stahl, Frankfurt-Berlin, A. Metzler, 1960, pp. 112 ff., who reconstructs the debate on the fiscal nature of the levies; G. Olmi, Les ressources propres aux Communautés européennes, Cahiers de droit européen, 1971, p. 387; P. Mioche, Les cinquante années de l’Europe du charbon et de l’acier, Luxembourg, Commission européenne, Office des publications, 2004, p. 71; A. De Feo, Histoire des pouvoirs budgétaires et de la politique de l’Union européenne, Partie I: la Communauté européenne du charbon et de l’acier 1952-2002, Archives historiques du Parlement européen, Centre Robert Schuman d’études avancées, Série sur l’histoire de l’Union européenne, Mars 2015, p. 17. For a critique of this reconstruction, see G. Tesauro, Il finanziamento delle organizzazioni internazionali, op. cit., pp. 161 ff..
[8] This is the expression used by L. Monnory, Art. 49, in R. Quadri, R. Monaco, A. Trabucchi (directors), Trattato istitutivo della Comunità Europea del Carbone e dell’Acciaio, Commentario, vol. II. Art. 46-100, Milan, Giuffrè, 1970, p.656. As noted by D. Strasser, Le finanze dell’Europa, Commissione delle Comunità europee, Collezione “Prospettive europee”, Brussels, European Commission, Publications Office of the European Union, 1979, p. 76, over the years, this attribute of the levies, which fitted in with a logic of solidarity, had led to recriminations from industrialists in the steel sector, who resented the fact that more of the revenue was spent on the coal sector.
[9] As remarked by N.P. Weides, Das Finanzrecht der Europäischen Gemeinschaft …, op. cit., p. 140, the fact that more than 50 per cent of the revenue from the levies came from the German coal and steel industry was therefore irrelevant.
[10] On the contrary, G. Tesauro, Il finanziamento delle organizzazioni internazionali, op. cit., pp. 184 ff., maintains that the member states, not the High Authority, governed the entire taxation procedure.
[11] On this point, cf. A. Coppé, La Communauté européenne du charbon et de l’acier, in Aspects financiers et fiscaux de l’intégration économique internationale, Travaux de l’institut international de finances publiques, Session de Francfort, 1953, p. 180; D. Vignes, La Communauté européenne du charbon et de l’acier, Paris, 1956, pp. 93 ff.; A. Daussin, Le régime financier des Communautés, in W.J. Ganshof van Der Meersch (director), Droit des Communautés européennes, Brussels, Larcier, 1969, p. 476; L. Monnory, Art. 49, op. cit., pp. 662-663.
[12] According to Article 92 of the ECSC Treaty, “Decisions of the High Authority which impose a pecuniary obligation shall be enforceable. Enforcement in the territory of member states shall be carried out by means of the legal procedure in force in each state, after the order for enforcement in the form in use in the state in whose territory the decision is to be enforced has been appended to the decision, without other formality than verification of the authenticity of the decision. This formality shall be carried out at the instance of a minister designated for this purpose by each of the governments. Enforcement may be suspended only by a decision of the Court.” https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:11951K:EN:PDF. To see how this element, too, contributes to the originality and the supranational character of the ECSC, cf. N. Parisi, Il finanziamento delle organizzazioni internazionali…, op. cit., pp. 122 ff. For a position contrary to this view, cf. G. Tesauro, Il finanziamento delle organizzazioni internazionali, op. cit., p. 206.
[13] Art. 86, ECSC Treaty.
[14] According to A. Potteau, Recherches sur l’autonomie financière de l’Union européenne, Paris, Dalloz, 2004, p. 94, a section of Article 95 of the ECSC Treaty (https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:11951K:EN:PDF) — “if […] unforeseen difficulties emerging in the light of experience in the application of this Treaty, or fundamental economic or technical changes directly affecting the common market in coal and steel, make it necessary to adapt the rules for the High Authority’s exercise of its powers, appropriate amendments may be made; they must not, however, conflict with the provisions of Articles 2, 3 and 4 or interfere with the relationship between the powers of the High Authority and those of the other institutions of the Community” — could be understood to allow the High Authority, in the situations hypothesised, to resort to borrowing to finance the organisation. On this point, cf. K. Von Lindeiner-Wildau, La supranationalité en tant que principe de droit, Leiden, A.W. Sijthoff, 1970, p. 107, who maintains that this possibility of “minor revision” of the Treaty would be a manifestation of the constitutional autonomy of the ECSC and therefore of its supranationality.
[15] As remarked by A. Zatti, Le finanze della CECA…, op. cit., p. 63, the absence of an explicit annual balanced budget rule (present, instead, in the Treaty establishing the EEC and in the current TFEU), while not translating into a real possibility of financing operating expenses through borrowing — the sums obtained as loans could only be used to grant loans —, nevertheless gave the High Authority a certain margin of discretion, allowing it to accumulate reserves by setting aside funds or anticipating revenues to meet economic needs or exceptional circumstances.
[16] On this point, cf. D. Vignes, La Communauté européenne du charbon et de l’acier, op. cit., p. 92; A Zatti, Le finanze della CECA…, op. cit., pp. 71 and 81. The guarantee fund, not provided for by the founding treaty, differs from the reserve fund (never set up in practice) that is referred to in article 51, par. 3, according to which “The High Authority may so determine its conditions for loans or guarantees as to enable a reserve fund to be built up for the sole purpose of reducing whatever amounts may have to be paid out of the levies in accordance with the third subparagraph of Article 50(1); the sums thus accumulated must not, however, be used for any form of lending to undertakings” (https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:11951K:EN:PDF).
[17] On this point, cf. A. Zatti, Le finanze della CECA…, op. cit., pp. 81 ff..
[18] See, among others, A. Rossignol, Les finances de la C.E.C.A. …, op. cit., p. 989; D. Vignes, La Communauté européenne du charbon et de l’acier, op. cit., pp. 88-89; A. Zatti, Le finanze della CECA…, op. cit., p. 65.
[19] The use of the expression état prévisionnel rather than budget is highlighted by P. Reuter, La Communauté européenne du charbon et de l’acier, Paris, Librairie Générale de Droit et de Jurisprudence, 1953, p. 68, who links the failure to use the expression budget to an attitude of distrust towards the Assembly. On this point, cf. also A. Daussin, Le régime financier des Communautés, op. cit., p. 473.
[20] On this point, cf. N.P. Weides, Das Finanzrecht der Europäischen Gemeinschaft für Kohle und Stahl, op. cit., p. 144.
[21] According to A. Rossignol, Les finances de la C.E.C.A. …, op. cit., p. 996, assigning the Assembly a marginal role in this mechanism had the merit of avoiding lengthy discussions and also the risk of decision-making paralysis when approving the financial statements. On this point, see also F. Benvenuti, Ordinamento della Comunità Europea…, op. cit., p. 17, who notes that citizens in the ECSC lacked the power of self-taxation, that is, the faculty to intervene through their own representatives in setting taxes.
[22] A. Daussin, Les aspects budgétaires de l’intégration économique internationale, in Aspects financiers et fiscaux de l’intégration économique internationale, Travaux de l’institut international de finances publiques, Session de Francfort 1953, p. 73, points out that had the Treaty of Paris provided for the Assembly to be called upon to rule on the draft budget, the Assembly’s intervention would have been almost meaningless, since the budget only included administrative expenses. On the other hand, a posteriori approval of the financial management of the ECSC in the context of the High Authority’s own report on its activities was not subject to this limit, since it concerned all categories of expenditure.
[23] A. Daussin, Le régime…, op. cit., p. 472, maintains that in international organisations “il n’y a pas […] cet élément politique prédominant qui fait du vote du budget national l’expression de la confiance du parlement à l’égard du gouvernement. Dans l’organisation internationale l’acte d’approbation du budget ne met pas en présence deux pouvoirs, mais bien des Etats d’une part et, de l’autre, une institution à laquelle ils ont confié certaines tâches sur l’exécution desquelles ils entendent conserver un contrôle absolu”. However, this consideration seems perfectly applicable to international organisations financed by contributions from member states, but less so to an organisation such as the ECSC, which, albeit within certain limits, had been given a margin of financial autonomy.
[24] On this point, cf. D. Vignes, La Communauté européenne du charbon et de l’acier, op. cit., pp. 88 and 91; A. Rossignol, Les finances de la C.E.C.A. …, op. cit., p. 1019; G. Sperduti, La C.E.C.A. - Ente sovranazionale, Padua, 1966, pp. 57 ff.; C. Delon Desmolin, Existe-t-il un droit budgétaire communautaire?, in Mélanges en hommage à Guy Isaac, 50 ans de droit communautaire, Tome 2, Toulouse, Presse de l’Université de Toulouse, 2004, pp. 907 ff.; A. De Feo, Histoire des pouvoirs budgétaires…, op. cit., p.25.
[25] Résolution relative à la communication préalable à l’Assemblée Commune des projets d’états prévisionnels des autres institutions de la Communauté Européenne du Charbon et de l’Acier, 11 mars 1953, in Annuaire-Manuel de l’Assemblée Commune, Luxembourg, 1956, p. 379.
[26] Proposition de résolution relative à l'opportunité de prévoir une session constitutive de l'Assemblée Commune au début de l'exercice financier, Journal officiel de la Communauté européenne du charbon et de l'acier, 9 Juin 1954, p. 404.
[27] Journal officiel de la Communauté européenne du charbon et de l'acier, 11 Décembre 1954, p. 530.
[28] As noted by H.L. Mason, The European Coal and Steel Community, The Hague, Springer Dordrecht, 1955, pp. 104-105, from 1954 the High Authority kept the Commissions into which the Assembly was divided constantly informed. The Assembly’s rules of procedure (Articles 26 and 38) also provided that the Assembly could adopt resolutions addressed to the High Authority and that it could submit questions to the latter.
[29] Communauté Européenne du Charbon et de l’Acier, Rapport sur les pouvoirs de contrôle de l’Assemblée commune et leur exercice par M. P.-H. Teitgen (2 décembre 1954), Annuaire français de droit international, 1 (1955), pp. 708 ff..
[30] On this point, cf. A. De Feo, Histoire des pouvoirs budgétaires…, op. cit., p. 25.
[31] On this point, cf. G. Rossolillo, Autonomia finanziaria e integrazione differenziata, Il Diritto dell’Unione europea, 2013, pp. 793 ff.; V. Constantinesco, Le recours aux modèles fédéralistes?, in G. Isaac (director), Les ressources financières de la Communauté européenne, Paris, Economica, 1986, p. 377, to describe the system of financing the EEC, uses the term “confédéralisme financier”.
[32] Article 201 of the EEC Treaty reads: “The Commission shall study the conditions under which the financial contributions of Member States provided for in Article 200 may be replaced by other resources of the Community itself, in particular, by revenue accruing from the common customs tariff when the latter has been definitely introduced. For this purpose, the Commission shall submit proposals to the Council. The Council, acting by means of a unanimous vote and after consulting the Assembly on such proposals, may lay down the provisions whose adoption it shall recommend to the Member States in accordance with their respective constitutional rules”.
[33] Council Decision of 21 April 1970 on the Replacement of Financial Contributions from Member States by the Communities’ own Resources (70/243 ECSC, EEC, Euratom), OJ L 94, p. 19. On the background to this decision and its antecedents, cf. G. Olmi, Les ressources propres aux Communautés européennes, op. cit., pp. 400 ff..
[34] On the concept of own resources, cf. G. Olmi, Les ressources propres aux Communautés européennes, op. cit., p. 395; C.D. Ehlermann, The financing of the Community: the distinction between financial contributions and own resources, Common Market Law Review, 12 (1982), pp. 571 ff., especially pp. 574 ff.; G. Isaac, La notion de ressources propres, in Id. (director), Les ressources financières…, op. cit., p. 75.
[35] According to Article 2, letter b), of Council Decision… (70/243 ECSC, EEC, Euratom), op. cit.., “customs tariff duties” are “common customs tariff duties and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries”.
[36] According to Article 2, letter a), of Council Decision (70/243 ECSC, EEC, Euratom), op. cit., “agricultural levies” are defined as “levies, premiums, additional or compensatory amounts, additional amounts or factors and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries within the framework of the common agricultural policy, and also contributions and other duties provided for within the framework of the organisation of the markets in sugar”.
[37] The sixth VAT directive on the harmonisation of the laws of the member states relating to turnover taxes actually dates back to 1977 (Council Directive 77/388/EEC of 17 May 1977, OJ L 145, p. 1). The VAT resource was paid into the community budget only as from 1st January 1979.
[38] Council Decision 88/376/EEC, Euratom of 24 June 1988 on the system of the Communities’ own resources, OJ L 185, p. 24.
[39] The resources initially called customs duties and agricultural levies are now defined as traditional own resources and consist of “levies, premiums, additional or compensatory amounts, additional amounts or factors, Common Customs Tariff duties and other duties established or to be established by the institutions of the Union in respect of trade with third countries, customs duties on products under the expired Treaty establishing the European Coal and Steel Community, as well as contributions and other duties provided for within the framework of the common organisation of the markets in sugar” (cf. Article 2 of the Council Decision of 26 May 2014 on the system of own resources of the European Union (2014/335/EU, Euratom), OJ L 168, p. 105; Art. 2 of the Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom, OJ L 424, p. 1).
[40] On this point, cf. C.D. Ehlermann, The financing of the Community…, op. cit., p. 577.
[41] On this point and on the debate concerning the possibility of classifying Community VAT as an own resource, cf. C.D. Ehlermann, The financing of the Community…, op. cit., pp. 578 ff.; G. Isaac, Les ressources financières…, op. cit., pp. 73 ff..
[42] The fourth resource actually assumes the value of a residual resource (i.e., intended to cover the part of the budget not covered by the other resources) which was previously the role of the percentage of value added tax.
[43] On the Commission and Council’s different approaches to monitoring of the collection of own resources, which were ultimately resolved by the prevalence of the Council's position in regulation 2/71 (Regulation (EEC, Euratom, ECSC) No 2/71 of the Council of 2 January 1971 implementing the Decision of 21 April 1970 on the replacement of financial contributions from Member States by the Communities’ own resources, OJ L 3, p. 1) cf. G. Olmi, Les ressources propres aux Communautés européennes, op. cit., pp. 420 ff..
[44] Initially, once it was ascertained that the resources had been collected correctly, the Community would return 10 per cent of the traditional resources (customs duties and agricultural levies) to the states. Today, member states can directly retain a percentage of these resources, currently 25 per cent (Dec. (EU, Euratom) n. 2020/2053, op. cit.).
[45] According to G. Isaac, Les ressources financières…, op. cit., p. 76, complete autonomy of the Community (Union) from the member states would imply not only the allocation of fiscal resources to it, but also the possibility for the Community to collect these itself, if necessary by force. As noted by J-L. Chabot and G. Guillermin, La rétention des ressources propres de la part des Etats membres, in G. Isaac (director), Les ressources financières…, op. cit., pp. 87 ff., continued national “administrative sovereignty” in the collection of own resources allows states to use refusal to pay certain resources into the Union budget as a means of exerting pressure, a hypothesis illustrated in 1978, for example, when France, Great Britain and Denmark refused to pay Community VAT in protest at the increase in the sums allocated to the regional fund.
[46] Next Generation EU, adopted in parallel with the Multiannual Financial Framework 2021-2027, is based on the 2020/2053 decision on own resources (Dec. (EU, Euratom) n. 2020/2053, op. cit.), on the regulation establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis (Reg. (EU) 2020/2094, OJ L 433 I, p. 23), and on the regulation establishing the Recovery and Resilience Facility (Reg. (EU) 2021/241, OJ L 57, p. 17).
[47] For comments on Next Generation EU see, among others, L. Calzolari and F. Costamagna, La riforma del bilancio e la creazione di SURE e Next Generation EU, in P. Manzini and M. Vellano (eds.), Unione europea 2020. I dodici mesi che hanno segnato l’integrazione europea, Milan, CEDAM, 2021, pp. 169 ff.; B. De Witte, The European Union’s Covid-19 Recovery Plan: the Legal Engineering of an Economic Policy Shift, Common Market Law Review, 58 n. 3 (2021), pp. 635 ff.; P. Dermine, The EU’s Response to the COVID-19 Crisis and the Trajectory of Fiscal Integration in Europe: Between Continuity and Rupture, Legal Issues of Economic Integration, 47 n. 4 (2020), pp. 337 ff.; A. Hinarejos, Next Generation EU: on the Agreement on a COVID-19 Recovery Package, European Law Review, 26 (2020), pp. 451 ff.; B. Laffan and A De Feo (eds.), EU Financing for Next Decade: Beyond the MFF 2021-2027 and the Next Generation EU, European University Institute, Florence 2020; L. Lionello, Next Generation EU: Has the Hamiltonian Moment Come for Europe?, Eurojus, 7 n.1 (2020), pp. 22 ff..
[48] Dec. (UE, Euratom) n. 2020/2053, op. cit..
