Y O U R G U I D E T O T H E E U I N S T I T U T I O N S
Introducing the European Union
How it works, who does what
What this publication is about European values around the world. The success of these
ambitions depends on the ability to take effective and
This publication is a guide on how the European Union timely decisions and to implement them well.
(EU) works. ‘How the EU works’ means how decisions
are taken at EU level and who takes those decisions. At
the heart of this decision-making process are the EU The EU treaties
institutions — such as the Parliament, the Council and
the European Commission — which you may have The European Union is based on the rule of law. This
heard of, and there are others. To show how the EU means that every action taken by the EU is founded on
works, this publication first explains how EU legislation treaties that have been approved voluntarily and
is made. It then gives further insight into each of the EU democratically by all EU countries. The treaties are
institutions, as well as the agencies and bodies negotiated and agreed by all the EU Member States and
supporting them. then ratified by their parliaments or by referendum.
The treaties lay down the objectives of the European
Union, the rules for EU institutions, how decisions are
The European Union in brief made and the relationship between the EU and its
Member States. They have been amended each time
At the core of the EU are the Member States — the new Member States have joined. From time to time,
28 states that belong to the Union — and their citizens. they have also been amended to reform the European
The unique feature of the EU is that, although these are Union’s institutions and to give it new areas of
all sovereign, independent states, they have pooled responsibility.
some of their ‘sovereignty’ in order to gain strength and
the benefits of size. Pooling sovereignty means, in
practice, that the Member States delegate some of their
decision-making powers to the shared institutions they
have created, so that decisions on specific matters of
joint interest can be made democratically at European
level. The EU thus sits between the fully federal system
found in the United States and the loose,
intergovernmental cooperation system seen in the
United Nations.
The EU has achieved much since it was created in 1950.
It has built a single market for goods and services that
spans 28 Member States with over 500 million citizens
free to move and settle where they wish. It created the
single currency — the euro — which is now a major
world currency and which makes the single market
more efficient. It is also the largest supplier of
development and humanitarian aid programmes in the
world. These are just a few of the achievements so far.
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Looking ahead, the EU is working to get Europe out of
the economic crisis. It is at the forefront of the fight
against climate change and its consequences; it helps
neighbouring countries and continues ongoing On 9 May 1950, French Foreign Minister Robert Schuman first
negotiations on enlargements; and it is building a publicly proposed the ideas that led to the European Union.
common foreign policy which will do much to extend So 9 May is celebrated as the EU’s birthday.
4 H O W T H E E U R O P E A N U N I O N W O R K S
The last amending treaty — the Lisbon Treaty —
was signed in Lisbon on 13 December 2007, and
came into force on 1 December 2009. Earlier treaties
are now incorporated into the current consolidated
version, which comprises the Treaty on European
Union and the Treaty on the Functioning of the
European Union.
The Treaty on Stability, Coordination and Governance
(TSCG) in the Economic and Monetary Union is an
intergovernmental treaty which was signed by all EU
Member States except the Czech Republic and the
United Kingdom in 2012 and entered into force on
1 January 2013. It is not an EU treaty but an
intergovernmental treaty, and the intention is to bring
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it into EU law. It obliges the countries to have firm
rules to guarantee balanced public budgets and it
strengthens the governance of the euro area.
The work of the EU is based on the treaties agreed by
all the member countries — the latest main update was
signed in Lisbon in 2007.
A history of the EU treaties
When French Foreign Minister Robert Schuman X The Treaty on European Union (TEU) — the
proposed integrating western Europe’s coal and Maastricht Treaty — was signed in Maastricht
steel industries in 1950, his ideas were set out in on 7 February 1992 and came into force in
the Treaty of Paris the following year, and the 1993. It established the European Union, gave
precursor to the EU — the European Coal and Steel the Parliament more say in decision-making and
Community — was born. Since then, the EU has added new policy areas of cooperation.
regularly updated and added to the treaties to
X The Treaty of Amsterdam was signed on 2 Oct-
ensure effective policy and decision-making.
ober 1997 and came into force in 1999. It
X The Treaty of Paris, establishing the European amended previous treaties.
Coal and Steel Community, was signed in Paris
X The Treaty of Nice was signed on 26 February
on 18 April 1951 and entered into force in 1952.
It expired in 2002. 2001 and entered into force in 2003. It
streamlined the EU institutional system so that
X The Treaties of Rome, establishing the European it could continue to work effectively after the
Economic Community (EEC) and the European new wave of Member States joined in 2004.
Atomic Energy Community (Euratom), were
X The Treaty of Lisbon was signed on 13 Dec-
signed in Rome on 25 March 1957 and came
into force in 1958. ember 2007 and came into force in 2009. It
simplified working methods and voting rules,
X The Single European Act (SEA) was signed in created a President of the European Council and
February 1986 and came into force in 1987. It introduced new structures with a view to making
amended the EEC Treaty and paved the way for the EU a stronger actor on the global stage.
completing the single market.
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Who takes the decisions? X A directive is a law that binds the Member States,
or a group of Member States, to achieve a particular
Decision-making at EU level involves various European objective. Usually, directives must be transposed into
institutions, in particular: national law to become effective. Significantly, a
directive specifies the result to be achieved: it is up
X the European Parliament, which represents the to the Member States individually to decide how this
EU’s citizens and is directly elected by them; is done.
X the European Council, which consists of the X A decision can be addressed to Member States,
Heads of State or Government of the EU Member groups of people, or even individuals. It is binding in
States; its entirety. Decisions are used, for example, to rule
on proposed mergers between companies.
X the Council, which represents the governments of the
EU Member States; X Recommendations and opinions have no binding
force.
X the European Commission, which represents the
interests of the EU as a whole.
How is legislation passed?
The European Council defines the general political
direction and priorities of the EU but it does not exercise Every European law is based on a specific treaty article,
legislative functions. Generally, it is the European referred to as the ‘legal basis’ of the legislation. This
Commission that proposes new laws and it is the determines which legislative procedure must be
European Parliament and Council that adopt them. followed. The treaty sets out the decision-making
The Member States and the Commission then process, including Commission proposals, successive
implement them. readings by the Council and Parliament, and the
opinions of the advisory bodies. It also lays down when
unanimity is required, and when a qualified majority is
What types of legislation are there? sufficient for the Council to adopt legislation.
There are several types of legal acts which are applied The great majority of EU legislation is adopted using
in different ways. the ordinary legislative procedure. In this procedure,
the Parliament and the Council share legislative power.
X A regulation is a law that is applicable and binding
in all Member States directly. It does not need to be The procedure begins with the Commission. When
passed into national law by the Member States considering launching a proposal for action, the
although national laws may need to be changed to Commission often invites views on the topic from
avoid conflicting with the regulation. governments, business, civil society organisations and
The freedom for all citizens to
travel, live and work in all the
28 EU countries is one of the
main achievements of the
European Union.
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6 H O W T H E E U R O P E A N U N I O N W O R K S
ORDINARY LEGISLATIVE PROCEDURE
1. Proposal from the Commission
2. Opinions from national parliaments
3. Opinions from the European Economic and Social Committee and/or the Committee of the Regions
(when this is required)
FIRST READING
4. First reading by the European Parliament: Parliament adopts a position (amendments)
5. Commission can amend its proposal
6. First reading by the Council (*)
7. Council approves Parliament’s position. 8. Council and Parliament disagree on amendments.
The act is adopted Council adopts position at first reading
SECOND READING
9. Second reading by the Parliament: Parliament approves the Council’s position at first
reading — the act is adopted in ‘early second reading’ — or proposes amendments
10. Commission opinion on Parliament’s amendments
11. Second reading by the Council (*)
12. Council approves all Parliament’s amendments to
13. Council and Parliament disagree on amendments
the Council’s position at first reading.
to the Council’s position at first reading
The act is adopted
CONCILIATION
14. Conciliation Committee is convened
15. Conciliation Committee agrees on a joint text
16. Parliament and Council agree with the proposal 17. Parliament and/or Council disagree with the
from the Conciliation Committee, and proposal from the Conciliation Committee, and
the act is adopted the act is not adopted
(*) Council adopts its position by a qualified majority (the treaties provide for unanimity in a few exceptional areas). However, if the Council intends to deviate from the
Commission’s proposal/opinion it adopts its position by unanimity.
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individuals. The opinions collected feed into a X the Committee of the Regions, which ensures that
Commission proposal that is presented to the Council the voice of local and regional government is heard.
and the Parliament. The proposal may have been made
at the invitation of the Council, the European Council, In addition, other institutions and bodies may be
the Parliament or European citizens, or it may have consulted when a proposal falls within their area of
been made on the Commission’s own initiative. interest or expertise. For example, the European Central
Bank would expect to be consulted on proposals
The Council and the Parliament each read and discuss concerning economic or financial matters.
the proposal. If no agreement is reached at the second
reading, the proposal is put before a ‘conciliation
committee’ comprising equal numbers of Council and National oversight
Parliament representatives. Commission representatives
also attend the committee meetings and contribute to National parliaments receive draft legislative acts at
the discussions. Once the committee has reached an the same time as the European Parliament and the
agreement, the agreed text is then sent to the Parliament Council. They can give their opinion to ensure that
and the Council for a third reading, so that it can finally decisions are taken at the most appropriate level. EU
be adopted as law. In most cases, the Parliament votes actions are subject to the principle of subsidiarity
on proposals by simple majority and the Council by — which means that, except in the areas where it has
qualified majority voting, whereby at least half of the
total number of EU Member States, representing about
two thirds of the population, must vote in favour. In
some cases, unanimous voting is required in the Council.
Citizens’ participation
By means of a European citizens’ initiative, 1 million
Special procedures EU citizens from at least one quarter of the EU
Member States may invite the Commission to bring
Special legislative procedures are available depending forward a legislative proposal on a particular issue.
on the subject of the proposal. In the consultation The Commission will carefully examine all initiatives
procedure, the Council is required to consult the that fall within the framework of its powers and that
Parliament on a proposal from the Commission, but is have been supported by 1 million citizens. An
not required to accept the Parliament’s advice. This audition of the initiatives is done in the Parliament.
procedure is only applicable in a few areas, such as Such initiatives may therefore influence the work of
internal market exemptions and competition law. In the the EU institutions, as well as the public debate.
consent procedure, the Parliament may accept or
reject a proposal, but may not propose amendments.
This procedure can be used when the proposal concerns
the approval of an international treaty that has been
negotiated. In addition, there are limited cases where
the Council and the Commission, or the Commission
alone, can pass legislation.
Who is consulted, who can object?
In addition to the Commission–Council–Parliament
triangle, there are a number of advisory bodies that
must be consulted when proposed legislation involves
their area of interest. Even if their advice is not taken,
this contributes to the democratic oversight of EU
legislation by ensuring that it is subject to the widest
© Bernd Vogel/Corbis
scrutiny.
These bodies are:
X the European Economic and Social Committee,
which represents civil society groups such as Citizens can now propose new laws, by means of the European
employers, trades unions and social interest groups; Citizens’ Initiative.
8 H O W T H E E U R O P E A N U N I O N W O R K S
exclusive powers, the Union only acts where action will Fiscal policy — which concerns decisions about taxation,
be more effective at EU level than at national level. spending and borrowing — is the responsibility of the
National parliaments therefore monitor the correct 28 Member State governments. So are the policies
application of this principle in EU decision-making. about labour and welfare. However, as fiscal decisions
taken by one euro area Member State can have an
impact throughout the euro area, these decisions must
What decisions are taken conform to rules set at EU level. Therefore, the
coordination of sound public finances and structural
The treaties list the policy areas in which the EU can policies is necessary for the EMU to function effectively
take decisions. In some policy areas, the EU has and to ensure stability and growth. In particular, the
exclusive competence, which means that decisions economic crisis that began in 2008 highlighted the need
are taken at EU level by the Member States meeting in to strengthen economic governance in the EU and in the
the Council and the European Parliament. These policy euro area, by means of inter alia closer policy
areas cover trade, customs, competition rules, monetary coordination, monitoring and supervision.
policy for the euro area, and the conservation of fish.
The Council monitors Member States’ public finances
In other policy areas, the decision-making competences and economic policies and can make recommendations
are shared between the Union and the Member States. to individual EU Member States based on proposals
This means that if legislation is passed at EU level, then from the Commission. It may recommend adjustment
these laws have priority. However, if no legislation is measures and sanction euro area states that do not
adopted at EU level, then the individual Member States take corrective measures to reduce excessive deficit
may legislate at national level. Shared competence and debt levels.
applies in many policy areas, such as the internal
market, agriculture, the environment, consumer The governance of the euro area and major economic
protection and transport. policy reforms are also discussed in the euro summits,
where Heads of State or Government of euro area
In all other policy areas the decisions remain with the members meet.
Member States. Thus, if a policy area is not cited in a
treaty, the Commission cannot propose a law in that
area. However, in some fields, such as the space sector, The EU and foreign relations
education, culture and tourism, the Union can support
Member States’ efforts. And in others, such as overseas Relations with countries outside of the EU are under the
aid and scientific research, the EU can carry out parallel responsibility of the High Representative of the Union
activities, such as humanitarian aid programmes. for Foreign Affairs and Security Policy, who is appointed
by the European Council, but also holds the post of
European Commission Vice-President. At the level of
Economic coordination Heads of State or Government, the Union is represented
by the President of the European Council.
All EU Member States are part of the economic and
monetary union (EMU), meaning that they coordinate The European External Action Service (EEAS) serves as a
their economic policymaking and treat economic foreign ministry and diplomatic service for the Union
decisions as a matter of common concern. Within the under the authority of the High Representative. It is
EMU, no institution alone is responsible for overall composed of expert staff transferred from the Council,
economic policy. These responsibilities are divided the Member States and the European Commission.
between the Member States and the EU institutions.
The Council develops and takes decisions in the field of
Monetary policy — which deals with price stability and the EU’s foreign and security policy on the basis of
interest rates — is managed independently by the guidelines set by the European Council. The
European Central Bank (ECB) in the euro area, i.e. in Commission, on the other hand, is responsible for trade
those Member States which use the euro as their and funding for non-EU countries, such as humanitarian
currency. With Lithuania joining in January 2015, the or development aid. The Commission also represents
euro area has 19 countries. the Union in all areas of EU competence outside foreign
and security policy.