Prime Minister Paavo Lipponen in Parliament at the preliminary debate on the Government's proposal concerning the Treaty of Nice June 18 2001

The European Council of Nice last December achieved political unanimity concerning the reform to which the Union's institutional framework and decision-making procedures shall be subjected in order to implement the enlargement of the Union. The Treaty of Nice and the concluding document related to it were signed in Nice on 26 February this year. The concluding document comprises twenty-seven declarations that the inter-governmental conference has adopted or taken into consideration. The Government proposes that Parliament adopt the Treaty of Nice.

The Government set as the main objective of the inter-governmental conference of 2000 the institutional reforms necessary for the enlargement that would give the Union the preconditions to grant accession to all applicant states involved in the enlargement process. In this respect the objectives were achieved, although the outcome does not fully comply with Finland's objectives.

The most difficult issue in the conference was the change in the Council's weighting of votes. The result ofthe negotiations can be accepted as a part of the comprehensive resolution, although the weighting model as such does not comply with the target set by Finland, that is, a balanced solution. Distribution of votes is not based on objective criteria and the outcome cannot, with regard to the efficiency of decision-making and the clarity of the system, be considered as entirely successful.

In the system reformed by the Treaty of Nice, decision-making requires that three different criteria be met. The weight of larger Member States will increase through the reweighting of votes, the higher threshold of votes, and a population threshold of 62 per cent. However, the weight of large Member States can be estimated to increase only through prevention of decisions, as the Treaty of Nice also includes a demand for an absolute majority of Member States as a precondition for majority ruling. This is in line with the principle supported by Finland, according to which majority rulings should always be supported by at least one half of the Union's population and one half of the Member States. Also, the number of Finland's votes (7) can be regarded as satisfactory.

It is probable that both the significance of the new Member State criterion and the population criterion will remain of minor importance in practice. For the time being, groups have been formed on the basis of different issues, which has led to the situation where juxtaposition of larger and smaller Member States has rarely occurred.

The strengthening of the operating possibilities of the President of the Commission and emphasis on the Commission's responsibility for its performance comply with Finland's objectives. Also, the decision to reform the assembly of the Commission and to apply a rotation system based on the principle of equality in appointing the Members of the Commission can be considered satisfactory. Appointing the Members of the Commission and its President on the basis of an absolute majority corresponds to Finland's other objectives related to appointments, although the issue was only presented at a late phase of the negotiations.

The Treaty of Nice also stipulates the maximum number of members in the Commission. In compliance with the transitional arrangements provided by the Treaty, the number of the Members of the Commission will be reduced so that it is smaller than the number of the Member States at the point where the number of Member States amounts to twenty-seven. Finland's initial objective was to appoint one citizen of each Member State to the Commission in order to secure the legitimacy of the Commission as well as the equal status of the Member States. However, Finland accepted the outcome of the negotiations, because the rotation system based on the principle of equality was formally recorded in the Treaty at the same time. The detailed regulations thereof shall be adopted by the Council unanimously.

On the distribution of representative seats in the European Parliament, Finland's objective was to establish a system that would be transparent, simple, and applicable in all phases of the enlargement. The distribution of seats in the Parliament, however, in Nice was integrated as a part of the Council's decision on the weighting of votes and was not negotiated as a separate issue. The decision made can be considered unjust towards those applicant states that have won less seats than older Member States with equally large populations. The number of representatives to be elected from the new Member States, however, can still be altered in conjunction with accession treaties.

As the enlargement of the European Union has proceeded to embrace twenty-seven Member States, Finland will have thirteen representatives in the European Parliament. This situation complies with Finland's objectives and enables appropriate political representation.

The use of decision-making on the basis of qualified majority will be expanded in a total of thirty-seven articles. Increasing the option of using the increaseof the option of majority ruling in the sector of commercial policy is, with certain exceptions, in line with Finland's original objectives. However, the intention to increase the use of decision-making on the basis of qualified majority in other politically vital articles failed. These issues include the coordination of social security, certain issues relating to taxation, and justice and home affairs that have become matters within the Community's competence, in particular immigration and asylum issues.

In commercial policy (TEC, art.133) the Community's competence will be expanded through including, with certain restrictions, services and the commercial aspects of intellectual property into the common commercial policy.

The European Community was originally established as an economic community and Customs Union. In accordance with the Treaty establishing the Community, the common commercial policy, which covered trade in goods, lay within the Community's exclusive competence. The increased significance of services and intellectual property rights as well as investments in international economic relationships have, however, led to a situation whereby the regulations concerning commercial policy as provided by the treaty establishing the Community are no longer up-to-date.

By the Treaty of Nice, the Community's competence will also be expanded through integrating into the common commercial policy services - excluding services in the cultural and audiovisual sectors as well as education, social and health services- and the commercial aspects of intellectual property. In the case of international agreements in the transport sector existing regulations will be followed. In addition, investments will remain outside the sphere of the common commercial policy.

Until now, decisions on issues in the sector of the common commercial policy may have been made by qualified majority. Agreements relating to services and intellectual property, however, will in certain cases require an unanimous decision.

The use of closer cooperation, that is, flexibility, will be facilitated in the field of the treaty establishing the European communities and in justice and home affairs enabling its use in the implementation of foreign and security policy. From Finland's point of view, the outcome of the negotiations can be regarded as acceptable. Commencement of a closer cooperation will be facilitated and the regulations concerning cooperation streamlined. However, no substantial content-related changes in general cooperation regulations, which secure the integrity of the Union, will be made.

The structure, assembly, and jurisdiction of the Court of Justice of the European Communities and the Court of First Instance will be reformed. This measure is aimed at rendering the work of the Courts more efficient and speeding up legal procedures. At this stage, all objectives concerning the judicial system that before the negotiations Finland had regarded as important were achieved.

Reforms concerning other institutions, that is, the Court of Auditors, the Committee of the Regions, the Economic and Social Committee, the European Central Bank, and the European Investment Bank, comply with Finland's objectives.

Protection of respect for liberty, democracy, human rights and fundamental freedoms as well as the principles of a constitutional state will be strengthened by establishing procedures for potential hazardous situations involving the violation of these principles. The new procedure, recorded in article 7 of the treaty establishing the European Union, emphasises the commitment of the Union and its Member States to the Union's fundamental principles, specified in paragraph 1 of article 6, and enhances the consistency of the Union's activities in adhering to them.

By the Treaty of Nice, regulations concerning the common foreign and security policy will be amended to correspond to reforms that have already been implemented in developing the Union's crisis management ability.The Treaty will not bring about changes in the defence systems of the Member States nor in the development of the Union's common defence; instead, the regulations provided by the Treaty of Amsterdam will remain in effect. That the Union would seek support from the resources of Nato in military crisis management is not explicitly stated in the Treaty, since cooperation is being developed gradually through various agreements, working groups, dialogues and exercises, without posing any restrictions on the independent decision-making of either of the two organisations.

The completed reforms are in line with the development that has taken place in particular in the enhancement of decision-making related to the common foreign and security policy and the strengthening of the Union's crisis management capabilities. Finland has supported this development and considers it important that the Union reach an operational crisis management capability as soon as possible.

Madam Speaker,

The Treaty of Nice includes a declaration on the future of the Union. Issues defined in the declaration as well as other issues are to be discussed in a conference of Government representatives convening in 2004 with the purpose of making amendments to the treaties. The objective of the conference is to improve the democratic legitimacy and openness of the Union and its institutions. Another objective is to bring the institutions closer to the citizens of the Member States.

Finland considers it important that broad-based preparations for the next inter-governmental conference be carried out, ensuring that various interest groups have the opportunity to participate in discussions on the future.

After the European Council convenes in Laeken in December this year, a preparatory committee should be convened in order to discuss openly proposals for reforming the Union and further develop the ideas already brought forth by different parties in discussions on the future. Representatives of national parliaments and governments as well as the European Parliament and Commission should be invited to the preparatory committee. The work of the preparatory committee should be completed by 2003 so that it can be taken into consideration as much as possible in the preparations for the actual negotiations in the inter-governmental conference.

The Government wishes to enter into active dialogue on the future of the Union with the representatives of the Finnish civic society. This week some eighty actors will receive an invitation to appoint their representatives to a forum of non-governmental organisations which will be transformed into a national channel for discussion and exchange of information on issues relating to the future of the European Union. The forum, chaired by the Prime Minister, is scheduled to convene once or twice during each EU presidency starting from next autumn.

Madam Speaker,

The ongoing discussion on the future of the European Union is dominated by three important, intertwined themes: the enlargement of the Union, closer integration and enhancement of cooperation through reforming the Union's internal policy, and the amendment of treaties at the inter-governmental conference of 2004.

The Treaty of Nice opens the door for the enlargement of the European Union. When the ratification process of the treaty is completed - which is expected to take place by the end of 2002 in all Member States - the Union will be ready to accept new Member States.

The European Council of Gothenburg set as a target the completion of accession negotiations by the end of 2002 with countries that are ready for membership by that time. It is the objective that the first applicant states participate in the election of the European Parliament as Member States in the summer of 2004. The discussion about the future of the Union also concerns the applicant states to a great extent, and they should have the opportunity to participate in the discussions alongside the current MemberStates.

The implementation of the Treaty of Nice is a significant step in the continuous work in which the enlarging Union must engage in order to strengthen the decision-making capability of its institutions, to increase openness, and to implement the political guidelines that representatives of the Member States have adopted in the European Council.

The institutional development of the Union is one of the most relevant themes in discussions on the future. Finland's experiences as a Member of the Union have been positive, since we have, through our membership, been able to strengthen our international position and obtained better opportunities than before to influence the development of our immediate operating environment. Equal participation in European decision-making is only possible if the Union follows common, clear rules and has common policies, implemented and controlled with the help of powerful institutions.

Further clarification and strengthening of decision-making in the enlarging Union should be started by streamlining the treaties and clarifying the division of spheres of competence. The citizens - fundamental rights should be included in the treaties. The unique nature of the European Union makes comparison futile, and the use of concepts learned from cooperation between sovereign states or federal structures are of little help. Instead of struggling with concepts, we should discuss the practical solutions needed to make the Union's institutional and decision-making systems function in a manner which is clear and worthy of the citizens - confidence.

Parliament, participating actively in Finland's policies with Europe, may contribute Union-level discussions with experience in developing the status of national parliaments. The situation of parliaments may be best improved by starting the work in each Member State through enhancing the dissemination of information and increasing the possibilities to influence European policies among the Members of Parliament. NewUnion-level institutions will most certainly not improve the clarity of the decision-making system.

The community character of the ways in which the Union operates would be strengthened if the Commission, which is the guardian of the common good of Europe and oversees that the rules are being followed, operated on a strong foundation with an explicitly limited competence. At the same time, the operating models of the Council should be improved following the recommendations adopted during the presidency of Finland.

The European Council is required to provide political direction and to resolve complex issues, but it cannot function as an operational institution that would replace work conducted by the Council and the Commission. In a similar way, the operations of the Union should not be expanded to areas where, in compliance with the principle of subsidiarity, the prevalence of the Member States - actions should be acknowledged and where cooperation at the level of Europe would not generate added value. In a less fortunate scenario, this development would lead to a quagmire of reports, comparisons and indicators that would burden national authorities, and would not improve the well-being of Europeans in any way.

Loose methods of coordination should neither replace a clear and binding legislation and common policy in cases where there is a need that has been recognised at the level of the Union, and where the enforcement of the equal rights of the Union's citizens so requires.

Models based on the Union's current development phase or future with emphasis on the inter-governmental nature are insufficient to respond to the challenge of European decision-making. The focus in developing the Union must be on functioning decision-making and transparency. This is the best way to ensure the equality of Member States and the pursuit for the common good rather than narrow national interests. Thus the community approach is well justified.

The European development should not be reversed. The European social model has valuable distinctive features. In addition to an extensive network of services maintaining well-being and the dialogue on the labour market it embraces as a relevant part the Union's common agricultural, regional and structural policy. It is not in Finland's interests to support any attempts to shut down the Union's central operating sectors. Agricultural, regional and structural policy, however, should be developed according to today's demands. Policies shall be outlined with emphasis on the consumers - point of view, increase in organic production, and versatile development of rural areas, taking simultaneously into account the enlargement of the Union and the liberalization of world trade, including the challenges posed by the developing countries - necessary entry to the market.

Madam Speaker,

The next inter-governmental conference should be prepared with care, and the reforms of the treaties should be based on extensive and open discussion with the citizens on the direction of the Union's development. This discussion involves a great deal more than proposals related to the institutional development of the Union. The European Union may only find justification and gain the citizens - confidence through such practical policies that indicate that European cooperation improves the citizens -opportunities for sustainable economic growth and better environmental protection, enabling the use of the Union in solving global problems.

There is every justification for basing the discussion on the future on questions relating to the content of policies that the Union tackles today, or on which it should be more active. From this point of view it could be stated that Parliament has the opportunity to work with the Union's future challenges in a versatile manner in conjunction with standard legislative action. Discussions on the Treaty of Nice offer an even wider perspective to this situation. In order to promote the discussion on the future, Government will also submit a separate report on the future of the Union to Parliament during the autumn term.