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Services of General Interest Beyond the Single Market pp 351–370Cite as

The Impact of Free Trade Agreements on Local Self-government—The Provision of Drinking Water by Local Utilities in Germany as a Case Study

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Part of the book series: Legal Issues of Services of General Interest ((LEGAL))

Abstract

This chapter addresses the potential impact of free trade agreements on services of general interest which are provided in the context of local self-government and discusses how these agreements could interfere with Article 4(2) TEU. The chapter uses the provision of drinking water by local utilities in Germany as an example case study. The chapter begins with a brief overview of the current regime for the supply of drinking water , particularly with regard to the involvement of structures of self-government. Next, the chapter examines whether the provision of drinking water and the involvement of local self-government therein are likely to be influenced by free trade agreement regulation and, if so, to what extent. Finally, the results of the former analysis will be presented in relation to the EU primary law provision of Article 4(2) TEU.

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Notes

  1. 1.

    For example press release of the Association of German Cities (Deutscher Städtetag), 18 September 2009, available at: http://www.staedtetag.de/presse/mitteilungen/058308/index.html; press release of the German County Association (Deutscher Landkreistag), 4 November 2009, available at: http://www.kreise.de/__cms1/presseforum/pressemitteilungen/39-pres. This assessment is confirmed in the European Parliament resolution of 18 May 2010 on new developments in public procurement (2009/2175(INI)), para 9: “Points out that the Lisbon Treaty, which came into force on 1 December 2009, incorporates an acknowledgement of the right to regional and local self-government into European Union primary law for the first time (Article 4(2) of the Treaty on European Union); (…)”.

  2. 2.

    Supporters of subsidiarity might argue otherwise, however, the principle of subsidiarity is not a new one and the involvement of local authorities remained—even when taking into account the new Protocol No. 27—limited.

  3. 3.

    Emphasis added by the author.

  4. 4.

    Critical analysis e.g. Fiedziuk 2011.

  5. 5.

    Fiedziuk 2011, p. 236.

  6. 6.

    Szyszczak 2013, p. 5.

  7. 7.

    Fiedziuk 2011, p. 242.

  8. 8.

    Buendía Sierra and Munoz de Juan 2012, p. 64; Righini 2012, p. 5.

  9. 9.

    Protocol on services of general interest, OJ 2007 C 306, p. 158 f., hereinafter: Protocol No. 26.

  10. 10.

    Bauby and Similie 2012, p. 11.

  11. 11.

    Emphasis added by the author.

  12. 12.

    Sauter 2008, p. 173.

  13. 13.

    Fiedziuk 2011, p. 233.

  14. 14.

    Hatje 2012b, para 15.

  15. 15.

    Bauby and Similie 2012, p. 47.

  16. 16.

    European Charter of Local Self-Government of 15 October 1985, entry into force: 1 September 1988, CETS No.: 122, available at: http://conventions.coe.int/Treaty/en/Treaties/html/122.htm.

  17. 17.

    Article 12 of the European Charter of Local Self-Government.

  18. 18.

    See the Chart of signatures and ratifications, available at: http://conventions.coe.int/Treaty/Commun/ChercheSig.asp?NT=122&CM=1&DF=&CL=ENG.

  19. 19.

    See the list of declarations, reservations and other communications, available at: http://conventions.coe.int/Treaty/Commun/ListeDeclarations.asp?NT=122&CM=1&DF=&CL=ENG&VL=1; Hungary is not included in this list, however, according to the Treaty Office, it made no declaration under Article 12 of the Charter and is considered bound by the Charter in its entirety without exception.

  20. 20.

    See e.g. Article 4 para 2 of the Maastricht Treaty.

  21. 21.

    See Committee of the Regions, Key facts, available at: http://cor.europa.eu/en/about/Pages/key-facts.aspx.

  22. 22.

    Mission Statement of the Committee of the Regions of 21 April 2009.

  23. 23.

    Ruge 2008, p. 263.

  24. 24.

    Ruge 2008, p. 264.

  25. 25.

    Emphasis added by the author.

  26. 26.

    Sauter 2012, p. 313.

  27. 27.

    See for example the exchange of letters between, inter alia, EPSU and Commissioner Rehn, available at: http://www.epsu.org/a/9019.

  28. 28.

    European Commission, Proposal for a Directive of the European Parliament and of the Council on the award of concession contracts, COM(2011) 897 final, 20 December 2011.

  29. 29.

    European Commission, Proposal for a Directive of the European Parliament and of the Council on the award of concession contracts, COM(2011) 897 final, 20 December 2011, recital 11.

  30. 30.

    See “Water services: Directive on concessions will not lead to forced privatisation”, http://ec.europa.eu/archives/commission_2010-2014/barnier/headlines/news/2013/01/20130124_en.html. Last accessed 5 March 2015.

  31. 31.

    See n. 30.

  32. 32.

    The Commission reacted to this during the TTIP negotiations by publishing a paper which shall prove that the water sector forms no part of the negotiations. (http://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_152029.pdf; paper available in German only.).

  33. 33.

    See Chap. 3 by Weiß in this volume.

  34. 34.

    See Article 14 TFEU, Article 106 para 2 TFEU, Protocol No. 26 on services of general interest, Article 36 of the Charter of Fundamental Rights.

  35. 35.

    Kamaris 2012, p. 55.

  36. 36.

    European Commission, Communication accompanying the Communication on “A single market for 21st century Europe”, Services of general interest, including social services of general interest: A new European commitment, COM(2007) 725 final, 20 November 2007, “Other services of general economic interest, such as those in the area of waste management, water supply or waste water treatment, are not subject to a self-standing regulatory regime at EU level.”, p. 4.

  37. 37.

    German Federal Environmental Agency (Umweltbundesamt), Rund um das Trinkwasser. http://www.umweltbundesamt.de/sites/default/files/medien/378/publikationen/rund_um_das_trinkwasser.pdf, p. 14. Accessed 28 November 2014.

  38. 38.

    E.g. Article 57 para 3, first sentence Bavarian Municipal Code.

  39. 39.

    E.g. Article 83 para 1 Bavarian Constitution.

  40. 40.

    ATT et al. 2011, p. 19, 20. Municipalities can be members of self-governing corporations under public law as well. These corporations were usually founded for historical reasons.

  41. 41.

    German Constitutional Court, Decision of 16 May 1989, 1 BvR 705/88.

  42. 42.

    German Federal Administrative Court, Judgements of 20 January 2005, 3C 31.03, p. 9; Judgements of 16 March 2006, 4A 1075.04, para 480; German Constitutional Court, Judgement of 10 December, BVerfGE 38, 258(270); Judgement of 7 June 1977, BVerfGE 45, 63(78); Judgement of 23 June 1981, BVerfGE 58, 45(62).

  43. 43.

    Usually there is a footnote added which reads as follows (or similarly): “Public utilities exist in sectors such as related scientific and technical consulting services, R&D services on social sciences and humanities, technical testing and analysis services, environmental services, health services, transport services and services auxiliary to all modes of transport. Exclusive rights on such services are often granted to private operators, for instance operators with concessions from public authorities, subject to specific service obligations. Given that public utilities often also exist at the sub-central level, detailed and exhaustive sector-specific scheduling is not practical.”.

  44. 44.

    On this see Chap. 10 by Krajewski in this volume.

  45. 45.

    October Proposal, p. 4, point 3.1.

  46. 46.

    Hereinafter referred to as “Reflections Paper”.

  47. 47.

    Reflections Paper, p. 5. The analysis in this chapter will focus on a negative list approach as this will probably be applied in currently negotiated trade agreements.

  48. 48.

    Reflections Paper, p. 2.

  49. 49.

    The Reflections Paper included a reservation for the sector “water for human use and wastewater management”. However, this reservation was limited and read as follows for mode 3: “EU: None, except that waste management at local level may be subject to monopoly or exclusive rights granted to private operators.” For mode 4 it was indicated “Unbound; except as indicated in the horizontal section.” Therefore, unlike the title suggests, there was no exemption for water supply.

  50. 50.

    See for example Arbeiterkammer [(Austrian) Federal Chamber of Labour], Services of General Interest in Bilateral Free Trade Agreements—Reflection Paper of the European Commission, 2011.

  51. 51.

    Hereinafter referred to as “October Proposal”.

  52. 52.

    October Proposal, p. 1.

  53. 53.

    According to Article 207(3) TFEU the European Commission negotiates international agreements for the member states. The Council has a mandate for these negotiations. The mandate was made public and can be found at http://data.consilium.europa.eu/doc/document/ST-11103-2013-DCL-1/en/pdf. Last accessed 5 March 2015.

  54. 54.

    On this subject, see Chap. 10 by Krajewski in this volume.

  55. 55.

    See above n. 46 and n. 51.

  56. 56.

    Emphasis added by the author.

  57. 57.

    See TTIP Mandate, see no. 53.

  58. 58.

    Arbeiterkammer [(Austrian) Federal Chamber of Labour], Positionspapier Behandlung von Öffentlich-Privaten Partnerschaften (ÖPP) und Konzessionen in der TTIP, 2014.

  59. 59.

    European Commission, State of Play of TTIP negotiations after the 6th round, 29 July 2014.

  60. 60.

    See above under Sect. 14.3.3.

  61. 61.

    At least no stakeholder association or individual companies expressly articulate such interests for the moment.

  62. 62.

    See, for example, the EU-Korea agreement which states in Article 15.1 para 1 that the agreement shall be valid indefinitely.

  63. 63.

    Hatje 2012a, para 14; Geiger 2010, para 3, Streinz 2012, para 16, contra: Puttler 2011, paras 18, 19.

  64. 64.

    Bogdandy and Schill 2013, para 22.

  65. 65.

    German Constitutional Court, Judgement of 23 November 1988, BVerfGE 79, 127 II, 150.

  66. 66.

    German Constitutional Court, Judgement of 23 November 1988, BVerfGE 79, 127 II, 153.

  67. 67.

    German Constitutional Court, Decision of 16 May 1989, 1 BvR 705/88, German Constitutional Court, Judgement of 10 December 1974, BVerfGE 38, 258(270); Judgement of 7 June 1977, BVerfGE 45, 63(78); Judgement of 23 June 1981, BVerfGE 58, 45(62).

  68. 68.

    Compare CJEU, Case C-244/06, Dynamic Medien Vertriebs GmbH [2008] ECR I-505, para 44, where the Court decided on the discretion of member states with regards to different concepts of child protection which justify an exemption from Article 28 EC. The measures of the member states did not have to be aligned as the European law intended to respect the individual standards in the member states. This is also true for Article 4(2), first sentence, TEU, as otherwise the protection of “national” identities would be led ad absurdum.

  69. 69.

    Bogdandy and Schill 2013, para 25.

  70. 70.

    See no. 23.

  71. 71.

    Hatje 2012a, at para 18 with reference to Bogdandy and Schill, who do not share this view in the current edition of Das Recht der Europäischen Union: EUV/AEUV.

  72. 72.

    Bogdandy and Schill 2013, at paras 19–26.

  73. 73.

    Hatje 2012a, at para 20. The nature of this complaint is not defined any further.

  74. 74.

    See for example Section 12 EuZBLG (Gesetz über die Zusammenarbeit von Bund und Ländern in Angelegenheiten der Europäischen Union), IntVG (Gesetz über die Wahrnehmung der Integrationsverantwortung des Bundestages und des Bundesrates in Angelegenheiten der Europäischen Union).

  75. 75.

    Hatje 2012a, at para 19.

  76. 76.

    Trstenjak and Beysen 2012, p. 270.

  77. 77.

    Trstenjak and Beysen 2012, p. 270 with detailed references.

  78. 78.

    E.g. Bertelsmann Stiftung and Global Economic Dynamics, Die Transatlantische Handels- und Investitionspartnerschaft (THIP) Wem nutzt ein transatlantisches Freihandelsabkommen? http://www.bertelsmann-stiftung.de/cps/rde/xbcr/bst/xcms_bst_dms_38052_38053_2.pdf. Accessed 28 November 2014; ÖFSE and Austrian Foundation for Development Research 2014.

  79. 79.

    A possible justification because of problems with other features of Protocol No. 26, such as “a high level of quality, safety and affordability, equal treatment and the promotion of universal access and of user rights” which would ask for a European intervention is not evident with regards to water supply by local utilities in Germany.

  80. 80.

    Partially because prices were kept low for the citizens, partly because climate and demographic changes will necessitate technical adjustments. See e.g. for figures on the estimated need of investment: KfW Bankengruppe, KfW Kommunalpanel 2014. https://www.kfw.de/PDF/Download-Center/Konzernthemen/Research/PDF-Dokumente-KfW-Kommunalpanel/Kommunalpanel-2014.pdf. May 2014, pp. 14–15. Accessed 28 November 2014.

  81. 81.

    See Studie: Infrastruktur, Unterfinanzierung und Nachhaltigkeit im Fokus der US-Versorger EUWID, 30 June 2014.

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  1. University of Erlangen-Nuremberg, Erlangen, Germany

    Britta Kynast

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  1. Fachbereich Rechtswissenschaft, FAU Erlangen-Nürnberg, Erlangen, Germany

    Markus Krajewski

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Kynast, B. (2015). The Impact of Free Trade Agreements on Local Self-government—The Provision of Drinking Water by Local Utilities in Germany as a Case Study. In: Krajewski, M. (eds) Services of General Interest Beyond the Single Market. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-063-3_14

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