The European Union's Reform Process: The Lisbon Treaty

The European Union’s Reform Process:
The Lisbon Treaty
Kristin Archick
Specialist in European Affairs
Foreign Affairs, Defense, and Trade Division
In December 2007, leaders of the European Union (EU) signed the Lisbon Treaty,
which seeks to reform the EU’s governing institutions and decisionmaking processes to
enable a larger EU to operate more effectively. This new treaty represents the latest
stage in a reform process begun in 2002 and essentially replaces the proposed EU
“constitution” that foundered after French and Dutch voters rejected it in referendums
in 2005. In order to avoid such risky public referendums on the Lisbon Treaty, all EU
member states except Ireland decided to ratify the new treaty through their parliaments;
Irish law, however, required that the treaty be ratified through a public vote. In June

2008, Irish voters rejected the Lisbon Treaty, and have thrown its future into doubt.

This report provides background information on EU reform efforts and possible
implications for U.S.-EU relations that may be of interest in the second session of theth

110 Congress. It will be updated as events warrant. Also see CRS Report RS21344,

European Union Enlargement, by Kristin Archick.
The European Union (EU) is a treaty-based, institutional framework that defines and
manages economic and political cooperation among its 27 member states (Austria,
Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the
United Kingdom). The Union represents the latest stage in a process of European
integration begun after World War II to promote peace and economic prosperity in
Europe. This European integration project has evolved from encompassing primarily
economic sectors to include developing a common foreign policy and closer police and
judicial cooperation. With the end of the Cold War, the Union has also sought to extend
the benefits of membership, especially to central and eastern Europe. Ten states —
Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,
Slovakia, and Slovenia — joined the EU on May 1, 2004. Two other states — Bulgaria
and Romania — acceded to the Union on January 1, 2007. Turkey is another candidate

for membership and began accession negotiations in October 2005, but these will take at
least a decade to complete. The western Balkan states also harbor EU aspirations in the
longer term. The EU opened accession talks with Croatia in October 2005 and has named
Macedonia as a candidate for membership.
The EU represents a unique
EU Institutionsform of cooperation among sovereign
states that has been built through a
The European Commission is essentially the EU’sseries of binding treaties. EU
executive and has the exclusive right of legislative initiative. Itmembers work together through
ensures that the provisions of the Treaties are carried outcommon institutions that embody the
properly. The 27 Commissioners, including a President, are
appointed by agreement among the governments of the memberEU’s dual supranational and
states for five-year terms. Each Commissioner holds a distinctintergovernmental character.
portfolio (e.g., agriculture). The President of the CommissionDifferent policy areas have different
sets its policy priorities, organizes its work, and represents the
Commission internationally.decision-making procedures;
The Council of the European Union (Council ofeconomic, trade, and social policies,
Ministers) is comprised of ministers from the nationalfor example, are currently decided by
governments. As the main decision-making body, it enactsa complicated system of majority
legislation based on proposals put forward by the, while decisions relating to
Different ministers participate depending on the subject under
consideration (e.g., economics ministers could convene toforeign and security policy require
discuss unemployment policy). The presidency of the Councilconsensus. Critics have long charged
currently rotates among the member states for a period of sixthat the EU’s decision-making
processes are too slow and
The European Council brings together the Heads ofcumbersome, and that the EU’s
State or Government of the member states and the President ofinstitutions are overly complex, lack
the Commission at least twice a year. It acts principally as a
guide and driving force for EU policy.transparency, and are unintelligible to
The European Parliament consists of 785 members.the average European citizen.
Since 1979, they have been directly elected in each member
state for five-year terms. The Parliament cannot enact laws likeKey institutional reforms in the
national parliaments, but it sharesco-decision” power in someEU’s December 2000 Treaty of Nice
areas with the Council of Ministers and can amend or reject the
EUs budget.were intended to enable an enlarged
The Court of Justice interprets EU law and its rulings areUnion to function effectively.Skeptics argued, however, that Nice
binding; a Court of Auditors monitors the Union’s financial
management. Additionally, a number of advisory bodiesset up an even more complex and less
represent economic, social, and regional interests.efficient decision-making process.
Thus, EU leaders in December 2001
announced they would convene a
Convention on the Future of Europe to examine how to reform EU decision-making
further and to review EU structures.
The European Constitution and the 2005 Ratification Crisis
Developing the European Constitution. The Convention on the Future of
Europe began work in March 2002 in Brussels, Belgium. EU member states appointed
former French President Valéry Giscard d’Estaing to serve as chairman, and charged the
105-member Convention with examining the EU’s institutions, encouraging the
development of the EU as a coherent foreign policy actor, and strengthening the Union’s
democratic legitimacy. In October 2002, the Convention decided to develop a draft
constitutional treaty — commonly referred to as a “constitution” — to merge and
reorganize the EU’s four existing treaties into a single document and lay out new

proposals for institutional reform. In July 2003, the Convention finalized a 240-page
“Draft Treaty establishing a Constitution for Europe” and concluded its work.
In October 2003, EU leaders convened an Intergovernmental Conference (IGC) to
work out the definitive text of the new constitutional treaty. A key sticking point for some
member states were the proposed voting rule changes. Poland in particular feared that the
simplified voting rules would give larger member states an advantage; the EU’s current
weighted voting system tends to favor smaller and medium-sized states. Polish concerns,
however, were overcome and EU leaders signed the constitutional treaty in October 2004;
they set November 2006 as the target date for the constitution’s entrance into force.
The 2005 Ratification Crisis. In order to come into effect, the EU’s
constitutional treaty had to be ratified by all 27 member states through either parliamentary
approval or public referendums. The constitution’s future was thrown into doubt
following its rejection by French and Dutch voters in separate referendums in May and
June 2005.1 In both countries, some arguments against the constitution reflected concerns
that it would enshrine liberal economic trends that could undermine French or Dutch
social protections. In addition, many French and Dutch voters viewed a “no” vote as a
way to express dissatisfaction with their unpopular national governments, the EU
bureaucracy, and Turkey’s prospective EU membership. Other reasons for rejecting the
constitution differed. In France, some feared that the constitution — by paving the way
for further EU enlargement — would erode French influence in the EU, while Dutch
voters complained that the EU’s big countries were already too strong and that certain
provisions of the constitution would increase their power even more.
Although several EU members had already approved the constitution by the spring
of 2005, the UK and others decided to shelve their ratification plans in the wake of the
French and Dutch “no” votes. At their June 2005 summit, EU leaders reaffirmed their
commitment to the constitution but acknowledged that the November 2006 ratification
deadline was no longer tenable. Thus, the constitution was effectively put on hold.2
Reviving the Constitution as a Reform Treaty and the Irish “No”
In January 2007, Germany assumed the EU’s rotating six-month presidency and made
reviving the stalled constitution one of its presidency priorities. German Chancellor
Angela Merkel appeared keen to get a new deal on the EU constitution in order to move
the Union beyond its internal crisis and forge a more cohesive, outward-looking EU.
Analysts say that Merkel’s task was eased by the April 2007 election of new French
President Nicolas Sarkozy, who shared Merkel’s goal of reviving the constitution in some
form in order to restore France’s role as a leader in Europe following the “no” vote.
Although Germany and many states that had already ratified the constitution were
eager to preserve as much of the original document as possible, it became evident that
some changes would be necessary in order to address French and Dutch concerns, as well
as those of some other states. The UK government, for example, was under public

1 French voters rejected the constitution by 55% to 45%; Dutch voters rejected it by 62% to 38%.
2 “Varied Reasons Behind Dutch No,” BBC News, June 1, 2005; “Humbled EU Leaders Scrap
Constitution Deadline,” Financial Times, June 17, 2005.

pressure to protect national prerogatives in the foreign policy and home affairs areas, while
Poland sought to get a better deal on voting rights. After contentious negotiations at the
EU summit in June 2007, EU leaders announced the outlines of a new EU “reform treaty”
that would essentially amend, not replace, the existing EU treaties. As such, EU leaders
sought to present the new treaty as a document that could be ratified by parliaments,
thereby avoiding risky public referendums in most EU states, except Ireland, which was
required by law to hold a public vote. EU leaders dropped the term “constitution” given
that it had become negatively associated in some countries with creating an EU
“superstate.” Another Intergovernmental Conference was convened in July 2007 to work
out the precise text of the new treaty; EU leaders signed the resulting Lisbon Treaty in
December 2007. EU officials had hoped the Lisbon Treaty would be ratified and enter
into force before the next European Parliament elections in the spring of 2009.
On June 12, 2008, Irish voters went to the polls and defeated the Lisbon Treaty by
53.4% to 46.6%. Opponents of the treaty argued that it would reduce Ireland’s influence
in the EU, undermine Ireland’s neutrality, and eliminate Ireland’s ability to set its own tax
rates. At their June 19-20, 2008 summit, EU leaders called on the ratification process to
continue in all remaining EU states (19 have completed ratification so far), and essentially
gave the Irish prime minister until October 2008 to propose a way forward. Some suggest
that Ireland may seek further modifications to the Lisbon Treaty and then hold another
public referendum, as happened with the previous Nice Treaty, which was also rejected
by Irish voters in an initial vote in 2001. Others point out that any major alterations would
likely be opposed by other member states that have already ratified the treaty. At the same
time, the Irish “no” vote has also led to renewed objections to the treaty in the Czech
Republic and Poland, which may further complicate EU efforts to save the Lisbon Treaty.3
Major changes to the EU’s governing institutions, decision-making processes, and
policies agreed to by EU leaders in the Lisbon Treaty include:
!A New President of the European Council. The Lisbon Treaty creates this
new position to help ensure policy continuity, raise the EU’s profile on
the world stage, and address concerns about the personnel and financial
burdens, especially for smaller members, of the EU’s rotating six-month
presidency. A modified system of rotation will remain, under which three
EU countries will work together for a period of 18 months to chair
various EU meetings. The new President will be elected by member
states for a term of two and one-half years, renewable once.
!A New Chief EU Diplomat. The Lisbon Treaty will create a new High
Representative of the Union for Foreign Affairs and Security Policy to
boost the EU’s international visibility. It will combine into one position
the current responsibilities of the Council’s High Representative for the
Common Foreign and Security Policy (CFSP) and the External Relations
Commissioner, who coordinates the European Commission’s diplomatic
activities and manages the EU’s development programs. The person in
this position will be an agent of the Council of Ministers (representing the

3 Kevin Sullivan, “Ireland Shoots Down Plan for a More Unified EU,” Washington Post, June

14, 2008; “EU Leaders Make It Clear Cowen’s Options Are Limited,” Irish Times, June 23, 2008.

member states), as well as a Vice-President of the Commission.
Originally called the EU “foreign minister” in the constitution, this term
was dropped because of UK objections on national sovereignty grounds.
!Simplified Voting Rules. After a contentious debate with Poland, EU
leaders agreed to simplify the EU’s current system of Qualified Majority
Voting (QMV), a complex weighted voting formula, largely as proposed
in the constitution. Decisions made by QMV will pass if supported by
55% of member states, representing 65% of the EU’s population; as a
concession to Poland, this new “double majority” system will be
introduced in 2014 (instead of 2009), and will be gradually phased in over
three years and not fully implemented until 2017. The use of QMV is
also expanded to policy areas previously subject to unanimity, especially
in matters related to police and judicial cooperation (the UK, however,
has been granted an opt-out). Member states will retain national vetoes
in sensitive areas such as taxation and most aspects of foreign policy.
!A Revamped European Commission. Starting in 2014, to help decrease
gridlock, the number of Commissioners will be reduced to correspond to
two-thirds of the number of member states (currently, the number would
drop from 27 to 15). Small states had initially opposed slimming down
the Commission, fearing that it would decrease their influence. However,
the European Council may alter the number of Commissioners, thus
leaving the door open to a larger Commission in the future.
!Increased Parliamentary Powers. The Lisbon Treaty will extend the
European Parliament’s right of “co-decision” with the Council of
Ministers to many additional policy areas, including agriculture and home
affairs issues. At the same time, it will give national parliaments a degree
of greater authority to challenge draft EU legislation.
!A New Solidarity Clause. This provision affirms that the EU “shall act
jointly in a spirit of solidarity” if any member is the victim of a terrorist
attack, energy supply problem, or other natural or man-made disaster; it
calls on member states to offer assistance, including military resources.
!Steps Toward Building a Common Defense Policy. As proposed in the
constitution, the Lisbon Treaty will assert that the Union shall seek “the
progressive framing of a common Union defense policy,” which “will
lead to a common defense.” It will establish a “mutual assistance clause”
permitting a member state that is the victim of armed aggression to ask
for military assistance from the other members. Member states may also
engage in “structured cooperation,” which would allow a smaller group
of members to cooperate more closely on military issues.
Many experts assess that over 90% of the substance of the original constitution has
been preserved in the Lisbon Treaty. As with the text of the constitution, almost all of the
proposed changes represent compromises between member states who favor greater EU
integration and those who prefer to keep the Union on an intergovernmental footing in
which members can better guard their national sovereignty. Also evident in many of the

provisions are compromises between big and medium/small states. France and the
Netherlands also secured changes from the original constitution that seek to address voter
concerns about safeguarding social protections and worries about EU enlargement. Critics
contend that the Lisbon Treaty will do little to simplify the EU, and note that some
changes will not take effect until 2014 at the earliest. In addition, they assert that many
difficult issues that are often the source of gridlock — such as foreign policy and taxation
— will remain subject to national vetoes.4
Implications for the United States
Many experts assert that passage of the Lisbon Treaty would have positive
implications for the U.S.-EU relationship because certain provisions — such as the new
president and chief diplomat positions — are designed to promote an EU able to “speak
with one voice” on foreign policy issues. Such an EU would be a more credible partner
for the United States in tackling common challenges such as terrorism and Middle East
instability. Supporters of this view also note that efforts to encourage a common EU
defense policy and the proposal for “structured cooperation” seek to improve European
defense capabilities. A more militarily-capable Europe, they argue, could shoulder a
greater degree of the security burden with the United States. And analysts note that the
Lisbon Treaty should remove at least the technical obstacles to further EU enlargement to
Turkey and the Balkans, which the United States strongly supports. (The Nice Treaty
effectively authorizes the EU to enlarge to 27 members but no more.) Conversely, some
contend that a failure to ratify the Lisbon Treaty could stymie further EU enlargement and
inhibit EU efforts to be a more effective U.S. partner because EU attention would likely
remain focused on internal reforms rather than on external challenges.
Other U.S. experts who worry that a larger and potentially more united EU may seek
to rival the United States are more sanguine about the Lisbon Treaty’s potential demise.
They contend that a more unified EU would likely lessen Washington’s leverage on
individual members and could complicate U.S. efforts to rally support for its initiatives
in institutions such as the United Nations or NATO. These skeptics remain concerned that
parts of the Lisbon Treaty that promote greater EU defense coordination could lead to the
eventual development of EU military structures that would duplicate those of NATO and
weaken the transatlantic link.
U.S.-EU trade relations are unlikely to be significantly affected by the new treaty,
which does not alter the roles of the European Commission or Council of Ministers in
formulating or approving the EU’s common external trade policy. Although EU rules
allow the Council to approve or reject trade agreements negotiated by the Commission
with QMV, in practice, the Council tends to employ consensus and will probably continue
to do so regardless of the changes in EU voting procedures.

4 George Parker, “EU Leaders Strike Deal on Reform Treaty,” Financial Times, June 22, 2007;
“Deal Paves Way for EU To Move On,” BBC News, June 23, 2007; Tobias Buck, “EU Treaty
Breaks Years of Deadlock,” Financial Times, June 24, 2007.