TREATY:EURO AREA countries which do not adopt a new treaty designed to strengthen rules on government budgets may not have access to EU bailout funds in the future, according to an adviser to Herman Van Rompuy, the president of the European Council.
Richard Corbett, speaking yesterday at the Institute for International and European Affairs, also suggested that states’ credit ratings could be negatively affected by non-ratification of the treaty.
He went on to reject suggestions that the treaty would subject its signatories to permanent austerity, saying that it imposed no limits on government spending.
It did, however, impose strict limits on the spending of borrowed money, he said.
Mr Corbett acknowledged the slow pace of the EU-level response to the financial/sovereign debt crisis, but said that, unlike the last such crisis, in the 1930s, European countries had avoided protectionism and had agreed to use fiscal stimulus (shortly after its outbreak).
He also noted that, without the euro, there may have been competitive currency devaluations among countries now using the currency. Such devaluations in the past had caused tensions among the member states.
Mr Corbett, who was a member of the European parliament for the British Labour Party until 2009, outlined a series of measures he believed would re-energise the European economy. These included an acceleration of efforts to negotiate free trade agreements with large emerging economies. Liberalisation of commerce with developing countries had the potential to boost prosperity across the EU, he said.
The protracted failure of EU governments to agree a common European patent continues to the detriment of European innovators, Mr Corbett said. The cost of securing patent rights in the 27 member states is €30,000. This would be cut to one tenth if a single patent was needed to cover the entire bloc, he said.
Mr Corbett likened the EU to a Gothic cathedral and the new treaty to a flying buttress. He said it would have been preferable to strengthen the EU’s foundations internally, by agreeing to amend the EU’s treaties but this was not possible owing to the veto of one member state, referring to Britain’s rejection of this option last month.
This forced the other 26 member countries to provide external support to the EU by negotiating a treaty outside the bloc’s legal architecture, he said. Talks on finalising the treaty are due to be concluded by the end of the month.
