Referendum 2012: Fiscal Treaty Guide

Wednesday 23 May 2012 11.11
Referendum Day is 31 May
Referendum Day is 31 May

RTÉ Europe Editor Tony Connelly breaks down the Fiscal Treaty article-by-article and explains the key points affecting Ireland.

This is RTÉ’s guide to the Fiscal Treaty. We have gone through the treaty article-by-article to explain in as factual a way as possible what each one means and to provide some background on what the various elements are supposed to achieve.

Before you read the guide there a few key points worth bearing in mind.

The treaty is designed to gather up a lot of the recent changes to how the euro is governed, and to give those changes a more permanent legal status.

These changes have been implemented during the height of the Greek debt crisis, and are already part of EU legislation. They were put in place because the crisis exposed the weaknesses of the original rules to govern the single currency as set out in the Maastricht Treaty in 1992.

These new rules are already binding on eurozone member states like Ireland whether or not we ratify this Treaty.

However, while much of the treaty is based on existing rules, there are key new elements, and some rules which are made stricter in this treaty.

Some economists argue that other changes to the rule book are needed to avoid a repeat of the crisis, or even to prevent the collapse of the currency; things like eurobonds, a common eurozone treasury or finance minister and so on.

But that is another day’s work.

While the Government says the Fiscal Treaty is a short one, it contains much of the rules and jargon which have been around since the euro came into effect and which have been updated more recently.

So, in this guide you are going to come across terms like the Stability and Growth Pact, the Six Pack, the Excessive Deficit Procedure, the Medium Term Objective and so on.

We have done our best to explain these terms at the link below.

Referendum 2012: EU Jargon Guide

Since Ireland is in a bailout programme we are, for the moment, subject to specific rules and constraints which are often stricter than what the Fiscal Treaty envisages.

It is also worth noting that when Ireland comes out of the programme, we, and the other recipients like Greece and Portugal, will be given some transitional flexibility to adapt to the new Treaty, if we ratify it.

The Guide

We have not re-typed each article so it is necessary to have a copy of the Treaty to read alongside. 

"Treaty on Stability, Coordination and Governance in the Economic and Monetary Union."

That is the official title. As we can see it does not contain the word ‘fiscal’. The Government’s title for it is, the Stability Treaty. The No Campaign calls it the Austerity Treaty.

For convenience and consistency this guide refers to it as the Fiscal Treaty.

The first page sets out the member states who have signed up.

Because it is not an EU treaty they are called ‘Contracting Parties’ instead. There are 25 (all 27 EU member states with the exception of the Czech Republic and the United Kingdom.)

The Treaty begins with 27 so-called ‘recitals’ or paragraphs.

These set out the general rationale and broad principles behind the Treaty.

What are the two main innovations?

  • The new balanced budget rule
  • The role of the European Court of Justice in assessing whether or not that rule has been properly enshrined in national legislation

Many of the recitals restate EU rules which already exist. Again, this reflects the fact that the Treaty largely gathers up existing commitments and locks them into a binding treaty to give them greater effect.

Some of the recitals are of particular importance to Ireland.

One points out that the Treaty will not change the conditions under which Ireland gets its bailout.

"STRESSING that no provision of this Treaty is to be interpreted as altering in any way the economic policy conditions under which financial assistance has been granted to a Contracting Party in a stabilisation programme involving the European Union, its Member States or the International Monetary Fund."

Another recital confirms that from 1 March 2013 a country will have to have ratified the Fiscal Treaty in order to avail of any future funding from the European Stability Mechanism. That is the new permanent EU bailout fund with an eventual lending capacity of some €700 billion. It comes into effect in July 2012.

The separate ESM Treaty carries a corresponding provision stating that only those countries who have ratified the Fiscal Treaty can avail of its funding.

The recital for this treaty reads:

"STRESSING the importance of the Treaty establishing the European Stability Mechanism as an element of the global strategy to strengthen the economic and monetary union and POINTING OUT that the granting of financial assistance in the framework of the new programmes under the European Stability Mechanism will be conditional, as of March 1 2013, on the ratification of this Treaty…"

The original draft of the Fiscal Treaty contained no such precondition but during the early stages of negotiation it was insisted upon by Germany.

According to the Government, the principle of such a precondition was “not contested” and was “an obvious connection.”

Since the connection between the ESM and ratifying the Fiscal Treaty is in the preamble (i.e. the recitals) of the Treaty and not an article in the main body of the Treaty, does this make it less legally binding? Not according to officials who insist it is a clear part of the treaty and represents a clear statement of the intention of the contracting parties. The same goes for the corresponding clause in the ESM Treaty which states:

“It is acknowledged and agreed that the granting of financial assistance in the framework of new programmes under the ESM will be conditional, as of 1 March 2013, on the ratification of the TSCG [the Fiscal Treaty] by the ESM member concerned…”

The ESM is also an intergovernmental treaty; Ireland has signed it, and is in the process of ratifying it through the Dáil.

Does Ireland have a veto on the ESM?

  • No. The ESM comes into effect once the member states who contribute a combined 90% of its capital have ratified it. Since Ireland only contributes just over 1% then we have no veto power over it.

A clause to allow the ESM to go ahead will be inserted into Article 136 of the main EU treaty, the Treaty on the Functioning of the EU. That is to get around the “no bailout” clause in EU law, and responds to German concerns.

All member states have signed up to this insertion including Ireland; the Government is in the process of ratifying it through the Dáil.

If the Government fails to ratify this insertion into Article 136 does that mean Ireland wields a veto over the ESM?

  • No. The ESM is a stand alone intergovernmental treaty so even if there are reservations over Article 136 in the TFEU they are unlikely to be insufficient to block what is an agreement between sovereign states.

The Fiscal Treaty preamble also states that even though it is an intergovernmental treaty outside the normal EU framework, it is expected to be incorporated into the EU’s main treaties within five years.

The preamble concludes by reminding all eurozone countries that they will be subject to the Treaty once it is ratified, and that non-eurozone or future eurozone members (Bulgaria, Denmark, Latvia, Lithuania, Hungary, Poland, Romania and Sweden) will also be bound by it if they so wish.

Articles

The articles set out in detail what the new rules are and how they work.

Article 1 states that the Treaty aims to strengthen economic and monetary union by adopting rules to improve budetary discipline and to strengthen co-ordination of economic policies.

Article 2 is designed to establish the link between the Fiscal Treaty and European Union law. It reaffirms that even though this new treaty is not a normal EU treaty, it should conform as far as possible with existing EU treaties and should be compatible with those treaties. Nor should it encroach on the competence of the EU to act in the area of economic union.

Article 3 is really the most important substance of the Fiscal Treaty and deserves close attention.

It sets out the requirement for governments to run a balanced budget or one that is in surplus (ie governments generally cannot spend more than they raise in taxes), and how that concept will be monitored and reinforced.

How does the system measure if a country has a balanced budget?

  • This is where the structural deficit comes in. According to Article 3, the country’s structural deficit should be 0.5% of GDP. The current rule provides for a maximum structural deficit of 1%, so under the Fiscal Treaty it will be reduced to 0.5%.

What is a structural deficit?

  • A structural deficit occurs when a country is still posting a deficit (ie, it is spending more than it raises in taxes) even if its economy is operating at its full potential. It is different from a cyclical deficit. In a cyclical deficit a country may be in a deficit because it is in a recession or at a low point in the economic cycle. If it borrows money at that point, it will be repaid when the country returns to growth.

In a structural deficit, however, the country will still post a deficit no matter what stage the cycle is at, recession or boom. If there is still a deficit when the economy is performing at its full strength, that is a structural deficit.

The European Commission has for a number of years been using the structural deficit, or balance, as a reference point to measure the progress countries are making, across the economic cycle, to bring their budgets close to balance.

However, the actual structural deficit is really a forecast or estimate. It is difficult to measure precisely since an economic cycle is not an easily defined thing.

Furthermore, measuring Ireland’s structural deficit is particularly difficult. As a small, open economy we are more subject than many eurozone countries to external shocks and forces.

The European Commission says it will take these things into account.

In Ireland’s case, because we are in a bailout programme, we will have a transition period lasting until 2019 before we are expected to hit our structural deficit target. This will be done in conjunction with the European Commission which will take various factors into account.

Does this replace the so-called Maastricht Guidelines, which say that governments should have a deficit at, or close to, 3%?

  • No. The 3% deficit target remains the primary goal for all countries who are following programmes to bring their finances under control. The structural deficit is a reference that covers the entire economic cycle, the shocks or the surges.

How does the Fiscal Treaty foresee a country getting out of a structural deficit?

  • Under Article 3 each country is required to meet what is termed its Medium-Term Objective, essentially a programme of action on public finances which the European Commission recommends to eurozone countries in order to reduce their deficit. Again, MTOs have been used before, ever since the introduction of the euro.

This brings us back to the beginning of the Single Currency.

The Stability and Growth Pact was a key element in the creation of the euro and it came into effect in 1997 under the Maastricht Treaty. It was designed to co-ordinate the budgetary and economic policies of the countries which signed up to the euro so that the public finances of the euro area would be kept under control, and would keep the currency stable.

It was under the SGP that those famous targets for sound public finances were established: as mentioned above, budget deficits should be no more that 3% of Gross Domestic Product and debt levels should be no more than 60% of GDP.

The SGP had a preventive arm, under which Member States had to submit annual programmes showing how they would achieve sound fiscal positions, and a dissuasive arm. The dissuasive arm was known as the Excessive Deficit Procedure, whereby the European Commission would recommend to a country which had broken the 3% deficit rule how to get its house in order, and if those recommendations were repeatedly ignored the country would face fines.

Currently 23 out of 27 member states are subject to monitoring and recommendations under the Excessive Deficit Procedure because they are in breach of the 3% deficit limit.

Has the Stability and Growth Pact worked to date?

  • Hardly. Firstly the 3% budget deficit level was breached by France and Germany in 2003-2004. The rules were then changed in 2005 to make the pact more flexible.

    Then the Greek debt crisis exposed the overall weaknesses of the Stability and Growth Pact. Greece had not stuck to the rules and had actually hidden the true extent of its budgetary situation from Brussels so that by the time the truth emerged the damage was done.

    Also, because the fines for breaching the rules kicked in at the very end they were pointless, because theoretically at that stage the country would be on the verge of bankruptcy and unable to pay the fines anyway.

    Because of the crisis it became clear that the Stability and Growth Pact needed to be substantially strengthened, and that has already been done through the so-called Six Pack.

What is the Six Pack?

  • It is five regulations and one directive which apply to all 27 EU member states, but with more specific rules for the eurozone countries. It has already been agreed by EU governments and it came into force on 13 December 2011. Essentially, the Fiscal Treaty builds on the Six Pack, and enshrines it in treaty form.


Under the Six Pack there is stricter enforcement of the SGP rules both on the preventive side and on the dissuasive side.

On the preventive side, countries which breach debt limits – as well as deficit limits – would now also be subject to monitoring and potential fines for persistent offenders.

Also on the preventive side, countries would have to set out year by year how they intended to comply with the programme, ie the Medium Term Objective, to get them back to a more sustainable fiscal position.

On the dissuasive side, financial penalties would kick in at an earlier stage of the Exessive Deficit Procedure.

A non-interest bearing deposit of 0.2% of GDP may be requested from a country which is placed in EDP depending on the scale of the breach. Failure to take corrective action would result in a fine.

There are also measures to clamp down on what are known as macro-economic imbalances. These refer to things which we in Ireland should be familiar with, e.g. property bubbles. The rules are also to ensure that a country’s competitiveness position doesn’t slide, and this would be done through a scoreboard and an indepth country analysis. Again, if recommendations are not followed up on, then fines could apply.

The Six Pack also introduced the concept of Reverse Qualified Majority Voting.

In the past, under EU voting rules, a qualified majority of countries would have to get together to ensure a country breaching the rules was sanctioned or fined. Now it would be the reverse: once the European Commission felt a sanction was necessary the procedure would be proceed automatically, unless a qualified majority of countries grouped together to prevent it happening.

This is to avoid the situation in the early 2000s when France and Germany had sufficient clout within the Council of Ministers (i.e. the member states) to avoid facing financial penalties for breaching the rules.

Finally we get back to the Structural Deficit.

It is worth pointing out that the 0.5% target included in Article 3 is a tighter target than that included in the Six Pack which was a structural deficit of 1%.

So, what does the Fiscal Treaty say about the Six Pack?

  • It builds on it, so there are plenty of references to it in Article 3. As we have seen, each country will be expected to get close to the target of 0.5% of GDP through the use of the Medium-Term Objective as discussed above. 

Again, this is a programme of measures recommended by the European Commission “taking into consideration country-specific sustainability risks. Progress towards… the medium-term objective shall be evaluated on the basis of an overall assessment with the structural balance [ie deficit] as a reference, including an analysis of expenditure net of discretionary revenue measures, in line with the revised Stability and Growth Pact [ie the Six Pack].”

What that means is that the Commission will assess how each country is proceeding, taking into account elements like the size of its debt level and other factors.

Is there any further flexibility for a country in sticking to its targets, ie its medium-term objective?

  • This is contained in Article 3, paragraph 1 (c). “The contracting parties may temporarily deviate from their respective medium-term objective… only in exceptional circumstances.”

What are these expectional circumstances?

  • That is spelt out a few paragraphs later
    “[exceptional circumstances] refers to the case of an unusual event outside the control of the Contracting Party [ie member state] concerned which has a major impact on the financial position of the general government or to periods of severe economic downturn as set out in the revised Stability and Growth Pact, provided that the temporary deviation of the Contracting Party concerned does not endanger fiscal sustainability in the medium term.”

What we are talking about here are events like earthquakes or major disasters, or things which are completely unforseen and not normally part of an economic cycle.

But does the phrase “periods of severe economic downturn” provide further flexibility? In other words, if a country is in a bad recession, can it have flexibility on hitting its structural deficit target?

  • The answer is a qualified yes. If a country or a number of countries are in a severe recession – not a mild recession – then they are entitled to a delay in reaching the deficit target, provided they have been doing their homework and implementing reforms.

Is there any further flexibility?

  • Yes. Article 3, paragraph 1 (d) holds that for countries which keep their debt levels below 60% and where the risks to the long term sustainability of public finances are low, then there is more flexibility in terms of keeping to the Structural Deficit level. Instead of a target of 0.5% under that country’s Medium-Term Obective it can rise to a Structural Deficit of 1%.

This is the case for some eurozone and non-eurozone countries. According to the forecast for 2012 some 13 countries out of 27 have debt to GDP levels below 60% (Estonia, Luxembourg, Slovakia, Slovenia, Finland, Bulgaria, Czech Republic, Denmark, Latvia, Lithuania, Romania, Sweden and Poland).

The following paragraph (1 (e)) is a reminder, however, that those errant countries who repeatedly breach their programmes towards getting their finances in order will be subject to “automatic” measures.

“…in the event of significant observed deviations from the medium-term objective…, a corrective mechanism shall be triggered automatically. The mechanism shall include the obligation of the Contracting Party concerned to implement measures to correct the deviations over a period of time.”

This is a new element, but what does it mean?

  • The answer is spelled out in the following paragraph (Article 3, paragraph 2). It states that countries which sign the Treaty "shall put in place at national level the corrective mechanism… on the basis of common principles to be proposed by the European Commission, concerning in particular the nature, size and time-frame of the corrective action to be undertaken.”

So, member states will have to put in place something which is automatically triggered if they significantly swerve from what they should be doing in following their medium-term objectives.

However, there is a lack of clarity over what each national “corrective mechanism” will look like. The Treaty suggests that it is up to each country to come up with its own mechanism, and the European Commission will issue guidelines on how they should operate.

It is most likely that the Government will incude the “corrective mechanism” in the forthcoming Fiscal Responsibility Bill. The Bill will also contain the overall Debt Brake or Balanced Budget rule.

And this brings us to the last main element of Article 3.

It deals with the question of putting this new balanced budget rule into national legislation.

In the early part of negotiations Germany and other countries wanted the new rule to be enshrined in national constitutions. This was to ensure the permanent nature of the so called “debt brake.

However, a number of countries had problems with this, including Ireland, Finland and Denmark. In the end the final text held that the rule be “of binding force and permanent character, preferably constitutional.”

Article 4

This article is about keeping overall debt levels low. Under the Stability and Growth Pact governments are expected to keep their debt levels at, or close to, 60% of GDP (Ireland’s is currently at 119% of GDP, Greece’s is at 172%).

Now under the Fiscal Treaty signatories are obliged to lower their debt levels by an average of one twentieth per year. It is important to note that it is not the entire debt level that has to be reduced by one twentieth: it’s the excess debt level over and above the 60% threshold.

Therefore in Ireland’s case we would have to lower 59% of our debt level by one twentieth a year (119% – 59% = 60%).

This is already enshrined in the Six Pack.

When does the 1/20 rule take effect?

  • Under Six Pack rules it is not binding until four years after a country has brought its deficit below the threshold of 3pc of GDP.

Also, bailout countries like Ireland will be given a transition period to meet the debt reduction targets after emerging from a rescue programme. In Ireland’s case we will have from 2016-2018 to develop a pathway to reducing our debt, rather than having to face the deadline the moment we emerge from the bailout.

Article 5

This article is about what corrective action countries will have to take if they have breached the 3% budget deficit limit as enshrined in the Stability and Growth Pact. Again, the monitoring and correction elements included here are already in existence, and the wording of this article makes that clear.

What’s new is that the corrective mechanism is spelt out more clearly. We recall that a country which breaches the 3% deficit limit is already subject to an Excessive Deficit Procedure, i.e. the dissuasive arm of the Stability and Growth Pact. Article five spells out that such countries

“Shall put in place a budgetary and economic partnership programme including a detailed description of the structural reforms which must be put in place and implemented to ensure an effective and durable correction of its excessive deficit.”

So this article strengthens what already exists. However, there is still some uncertainty about what exactly a “budgetary and economic partnership programme” will look like and it is expected that the European Commission will produce new legislation on how these partnership programmes should work.

However, they are expected to be close in nature to the reporting mechanisms which already exist under the Stability and Growth Pact. For example, Ireland and other countries which are in an Excessive Deficit Procedure are already required to report on a regular basis what steps they are taking to reduce their deficits.

In any event, the correction programme will be submitted to the European Commission and the Council of the European Union, i.e. the other member states, for approval. Again, such monitoring already occurs under the Stability and Growth Pact; having it in Article 5 binds the rule into treaty form.

Article 6

This is about the requirement for countries to inform other member states of their plans to issue debt (ie borrow money). Under this article member states

“Shall report ex-ante [i.e. beforehand] on their public debt issuance plans to the Council of the European Union and to the European Commission.”

The intent is that the European Commission and fellow eurozone countries are kept abreast of major debt auctions. It does not mean, however, that either the Commission or the Council can veto a country’s debt issuance plans.

This idea forms part of what is called the Two Pack, two further pieces of legislation the Commission proposed in November 2011. These are still work in progress and member states are expected to have agreed them by the summer.

Article 7

This article spells out the new rule on what’s known as Reverse Qualified Majority Vote. As we saw above, this idea has already been included in the Six Pack. Again, it is now bound into treaty form.

As described above, Reverse QMV makes sanctions under the Excessive Deficit Procedure more automatic. In the past, action could only be taken against deficit offenders if a Qualified Majority of countries voted for it. More recently however it has been felt, particularly by fiscally prudent countries, that during the deficit controversies of the past 11 years it was too easy for eurozone capitals to horse-trade their way out of being sanctioned for breaking the rules.

Now the shoe is on the other foot, as it were. Once the European Commission recommends action be taken against a persistent deficit offender then it happens automatically, unless a Qualified Majority of member states group together to declare otherwise (hence, Reverse QMV).

Article 8

This article contains the second big innovation of the Treaty after the balanced budget rule, i.e. the involvement of the European Court of Justice.

The ECJ can be asked to declare whether or not a member state has effectively implemented the new balanced budget rule in its national legislation. If a country has not complied with the requirement properly, and if it refuses to do so after a warning and a time frame within which to correct the legislation, then the ECJ can impose fines.

The fine could take the form of a “lump sum” or “a penalty payment appropriate in the circumstances and that shall note exceed 0.1% of its gross domestic product.

Any fines imposed will be paid into the European Stability Mechanism, the EU’s permanent bailout mechanism, or into the general budget of the EU.

But how will this work legally?

  • To understand the context of this article it is worth going back to page 5 of the preamble.

    The preamble points out that the ECJ already has powers under Article 273 of the Treaty on the Functioning of the EU to take action in a dispute between member states if the dispute relates to anything which is in the EU treaties.

Since the European Commission cannot play its normal role in taking a member state to the ECJ (because this is not an EU treaty), the ECJ can step in because such a power is already reflected in EU law.

In effect, what will happen is that the Commission will draw up an opinion, i.e. that a eurozone country has not properly enshrined the balanced budget rule in its national legislation, and then it will be up to what is called the Trio Presidency to refer the matter to the ECJ.

The Trio Presidency is made up of the current, former and incoming presidencies of the EU. The involvement of the Trio is to avoid the somewhat unseemly situation of one member state taking another to the Court.

The ultimate sanction for the ECJ in this context is to impose fines. These are imposed at the end of the process if a country has not complied with several warnings to enshrine the balanced budget rule.

The reason, of course, that this is not an EU Treaty is because any change to European treaties requires all member states to approve, and during the December 2011 summit the UK refused to get involved.

That is why 25 countries (the Czech Republic is also not on board) decided to get together to create their own intergovernmental treaty.

Britain has since had concerns about using the legal machinery of the EU to police what is a non-EU treaty.

It has had observer status in the drafting of this treaty, and according to officials it had, in the end, no reservations about the use of the ECJ to police the balanced budget rule as explained above.

Article 9

Having gone through the requirements to copper fasten the stricter rules governing fiscal discipline, this article looks ahead.

In general it is a broad restatement of the general intention that eurozone rules should be adhered to and that all member states involved should “work jointly” towards an economic policy that fosters economic growth through “enhanced convergence and competitiveness.”

Member states are therefore committing themselves to do whatever is necessary to gain competitiveness, promote employment and to ensure public finances are sustainable.

Article 10

This article once again is about reaffirming the organic link between this treaty and existing EU treaties.

In particular it relates to a concept known as “enhanced co-operation”.

This was an innovation put into the Nice Treaty in 2000. With the EU increasing in size from 15 to 25 countries in 2004 it was felt that policy making would grind to a halt with so many member states and their competing agendas. In order to keep EU integration moving forward the new provision allowed a core group of member states to move ahead on a particular project, so long as it did not undermine the key pillars of the EU.

Indeed, the euro project itself is an example of enhanced co-operation, as is the Schengen passport-free travel zone, of which Ireland and the UK are not a part.

Now this article in the fiscal compact reasserts that under the enhanced co-operation rules which already exist in EU treaties countries which sign up to the fiscal treaty can forge ahead “on matters which are essential for the proper functioning of the euro area, without undermining the Internal Market.”

This last caveat is a nod to the UK which has been determined that whatever the members of this treaty agree to does not tinker with the free movement of goods, services and people as enshrined in the EU’s Internal Market.

Article 11

This article again restates what member states have already signed up to in existing rules, and again the point here is that those rules are set in binding treaty form.

When the article refers to “benchmarking best practices and working towards a more closely co-ordinated economic policy” it is referring to the efforts to improve competiveness and to pursue structural economic reforms as set out in the Six Pack and the revised Stability and Growth Pact.

Already member states must forward their budget and structural reform plans to the European Commission under the Six Pack before they are adopted.

Article 12

This article sets out in treaty form much of what EU prime ministers agreed when they meet at that dramatic summit in Brussels on 9 December 2011.

That summit was where the idea of a new intergovernmental treaty, in order to convince the world and international markets that eurozone members would agree on binding rules to have sustainable public finances, was agreed.

But other elements were agreed that day as well, and these are set out in this article.

Firstly, that eurzone prime ministers (heads of government) will hold informal Euro Summit meetings with the presidents of the ECB and the European Commission at least twice a year, and that they would appoint a new president of the Euro Summit (in March this year it was agreed that that role would go to Herman Van Rompuy, already the President of the European Council).

Paragraph 3 of Article 12 states that countries who have signed up to the fiscal treaty but who are not yet in the euro – Poland, Latvia, Hungary, Lithuania, Cyprus, Sweden, Denmark – will be invited to attend those summits insofar as they are about competitiveness, any changes to the overall architecture of the euro and any fundamental rules which will apply to the euro in the future.

This last paragraph was inserted to assuage the concerns particularly of Poland which feared being excluded from Euro Summits because it was not yet a member of the single currency.

Article 13

This article sets out the role of national parliaments in the future governance of the euro.

The idea that national parliaments have a more direct say on EU affairs is already enshrined in a protocol to the EU treaties.

Under this article the European Parliament and national parliaments in member states signing up to the treaty, are invited to organise regular conferences comprised of members from the relevant budgetary or economic affairs committees of the European Parliament and national parliaments. These conferences “will discuss budgetary policies and other issues covered by this Treaty."

Article 14

This article affirms that member states will ratify the treaty in their own way and that it will enter into force on January 1 2013 so long as 12 member states have completed ratification.

Article 15

This article states that those countries who have not chosen to sign up to the treaty will be welcome to do so in the future if they so wish. It refers principally to the UK and the Czech Republic, but also Croatia, which accedes to the European Union in June.

Article 16

This article reaffirms that it is hoped that the fiscal treaty will eventually be folded into the main body of EU treaties “on the basis of an assessment of the experience with its implementation.”

The article concludes the Treaty by confirming that it has been drawn up in the 22 official languages of the EU, including Irish.

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