EU financial and legal instruments

The most important financial instrument is the overall EU budget. In 2000, it amounted to 93.3 billion euros, which corresponds to approximately 2.5% of the total government spending of member states. Since 1967, the budgets of the three European Communities (EUS, Euratom, EEC) have been combined into the EU budget.

Initially, the budget was formed by contributions from Member States, but the EU Council created its own financial resources by a decision of the EEC Council of April 21, 1970. They consist of:

  1. Import duties; deductions from Member States in the amount of 0.75% of the collected value added tax (VAT);
  2. deductions of Member States established in accordance with the size of their GNP.

In order to maintain strict fiscal discipline, the limit on the total EU budget for the period from 2000 to 2006 is set at 1.27% of the total GNP of the member states.

Almost half of the budget goes to pursue a common agricultural policy. At the same time, in comparison with the 1960s and 1970s, the share of agricultural expenditures has significantly decreased, while EU spending on regional and social policies has increased.

Through the general budget, other areas of the EU’s internal policy (for example, scientific, technical, transport, etc.), as well as foreign policy, are partially financed. From this source humanitarian and food aid is financed to the needy countries of the world. In addition, since 2000, more than 3 billion euros have been annually allocated to finance projects of technical and structural development of countries preparing for EU accession, which makes up about 40% of all expenses on EU foreign policy.

The most important budget items are implemented through EU special structural funds: the Orientation and Guarantee Fund in the field of agriculture, responsible for the implementation of the EU common agricultural policy; Regional Development Fund, responsible for assistance programs for regions lagging behind in their development (for example, affected by a structural crisis in industry); A social fund stimulating the retraining of workers in regions and sectors with high unemployment, as well as in charge of vocational training for young people; The Fund for the Promotion of Economic Cohesion of Member States (Cohesion Fund), created in accordance with the Maastricht Treaty and aimed at developing countries with the lowest GDP per capita. There is also a special Financial Instrument for the Promotion of Fisheries through which funds are allocated to increase the competitiveness of enterprises related to fishing in the EU coastal areas.

In the framework of the EEC in 1958, another major EU financial instrument was formed – the European Investment Bank, which facilitates the implementation of long-term investment projects.

The legal instrument for the implementation of EU policies is Community law – acquis communautaire – the entire array of existing normative documents, including unwritten rules – that is, the general principles of law and the established traditions of interaction between Community institutions among themselves and with the bodies of the Member States. The adoption of this legislation in full is an indispensable condition for the accession of any state to the EU.

Community law consists of a large array of documents that can be divided into three large groups:

1) primary (contractual) law consisting of constituent agreements and documents attached to them – declarations, protocols, amendments, as well as agreements on accession to the EU;

2) secondary law – regulations, directives, recommendations, general and individual decisions issued by various EU bodies;

3) international agreements of the EU with third countries.

The leading role belongs to the Interstate Treaties on the Establishment and Functioning of the European Union: (Paris 1951, two Rome treaties 1957, Single European Act 1986, Maastricht 1992, Amsterdam 1997 and Nice 2000). They proclaim the main objectives of the EU, the procedure for the formation and activities of institutions, the competence of the EU. This category includes some secondary acts, such as the Treaty on the Establishment of a Single Council and a Single Commission 1965, the Act on the Election of the European Parliament 1976, the Agreement on the Single Economic Space 1994, the treaties on the accession of new members to the EU and some others.

Secondary EU legislation is constituted by regulations adopted by EU institutions within their competence. The EU Treaty identifies five types of legal documents that can be adopted by its institutions:

The Regulation is an act of a general nature, it has a universal effect and is subject to direct application in full. In other words, the regulation comes into force from the moment indicated in the text throughout the Community and is obligatory in all its elements for all subjects of law. It is enforced without the participation or consent of national authorities. The regulations govern general issues of relevance to all member states (for example, the creation of a single currency or the introduction of import quotas, etc.).

The directive, in contrast to the regulation, does not have a universal effect, since it has specific addresses – one or more member states. The directive defines the purpose or results of the legislative process that Member States are required to achieve. Specific methods for completing the task are left to the discretion of national authorities. For example, guided by the anti-money laundering directive, all member states have introduced relevant standards in their national legislation, but their scope, the mechanism of interaction between banking and police services, and the measure of responsibility in member states differ markedly. The directive enters into force by incorporating its provisions into national law, for which Member States have a specific time limit. However, in some cases, the directive can be applied directly: legal entities and individuals, protecting their interests, have the right to appeal directly to the directive if it was not included in the national legislation by the due date.

Decision, as well as directives, have specific recipients – they can be both member states and other legal entities. The decision requires specific actions to be taken, and in full, necessarily for those to whom it is addressed. Decisions are usually made to resolve a specific problem (for example, to introduce anti-dumping duties, to allow or prohibit mergers, to provide emergency assistance to third countries, etc.).

Recommendations and options are not binding. They are advisory acts declaring the position of Community institutions on a particular issue.

EU international agreements with third countries and international organizations are an integral part of Community law and are binding on both EU institutions and Member States. Along with the fundamental Treaties and secondary legislation, international agreements take precedence over national laws and are acts of direct application and direct action, unless the essence of the agreements themselves provides otherwise.

At the same time, they distinguish between agreements concluded between the Community and external countries, when the subject matter of the agreement is fully within the competence of the EU (for example, trade agreements or association agreements) and so-called “mixed” agreements concluded between, on the one hand, jointly operated by the Community and the states -members, and on the other, with third countries (for example, the 1994 Partnership and Cooperation Agreement between the Russian Federation and the EU). For the first type of treaties to enter into force, their approval by the EU institutions is sufficient; for the second, the treaties must not only be approved by the EU institutions, but also ratified by the Member States in accordance with their constitutional procedures.

This post is also available in: English Русский (Russian)

Back to top button