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EU multiannual financial framework (MFF) negotiations

10 things you need to know to follow the MFF negotiations

The MFF negotiations cover more than just the MFF Regulation.
From mid-2011 onwards, the European Commission presented its proposals for a new multiannual financial framework (MFF) for the budget cycle 2014-2020. The proposals constitute what is known as the MFF package, because it contains a large number of proposals:
•    1 MFF Regulation,
•    5  legislative acts on the EU own resources, and
•    about 70 sector-specific proposals.

The MFF negotiations are about more than money.
The aim of the MFF negotiations is to broadly define for the next budget cycle:
•    expenditure limits that determine how much money the EU can spend;
•    spending programmes that determine on what the money should be spent;
•    rules defining how the expenditure should be financed.

The negotiations therefore determine to a large extent the shape of EU policies, the role of the European Union and its financial leeway for at least 5 years.

There are 3 negotiating parties.
The parties in the MFF negotiations are the European Commission, the Council, and the European Parliament. Each institution contributes in its own way to the adoption of the new MFF.

The European Commission proposed the MFF package which serves as a basis for the negotiations. Depending on the legal act, the Council adopts the MFF package either:
•    together with the European Parliament, or
•    after having received either the consent or the opinion of the European Parliament.

The European Council provides guidance to the Council in the form of a political agreement on the key political issues.

At the Council, the 27 Member States analyse, negotiate and agree on a common position on the MFF package.
The negotiations take place on 4 different levels:
•   Technical experts (working parties);
•   Ambassadors (Committee of Permanent Representatives);
•   Ministers (Council);
•   Heads of State or Government (European Council).

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The work in practice at the Council

Twin-track negotiations in the Council.
The political track: the 27 Member States work on the key political elements of the MFF package. 
A regular dialogue between the Council and the European Parliament takes place. Once the European Council reaches agreement on the political issues, its content feeds into the legislative work.

The legislative track:
•    In parallel to the political track the 27 Member States discuss in the relevant preparatory bodies and Council configurations the technical elements of the sector-specific proposals. The aim is to align the Member States' positions as far as possible. Care is taken to ensure that this work does not prejudge the outcome of the negotiations under the political track.
•   Once the European Council reaches agreement on the political issues, the legislative work covers all aspects of the MFF package.

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2 negotiation tracks

To facilitate the MFF negotiations, the rotating presidency develops a "negotiating box".
To focus the negotiations, the presidency produces a paper which outlines key issues and options of the MFF negotiation package. It is updated as the negotiations progress, and forms a basis for a unanimous agreement of the European Council.
The aim is to reach an agreement at the European Council on the key political elements of the MFF package by early 2013. This would allow legislative work to be finalised in time for the next MFF, new rules on own resources and new spending programmes to apply from 1 January 2014.

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The negotiating box

The MFF Regulation is not the annual EU budget.
The MFF Regulation lays down the maximum annual amounts - ceilings - which the EU is allowed to spend on different policy areas - headings - over a period of a minimum of five years. It also sets out an overall ceiling for total expenditure.
The EU budget is agreed in an annual budget procedure within the expenditure limits of the MFF Regulation. Since the MFF ceilings are not expenditure objectives the annual EU budget is usually lower than the expenditure ceilings in the MFF Regulation. The only exception is cohesion policy where the MFF ceiling is actually considered as an expenditure objective. 

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The MFF Regulation

The EU own resources constitute EU revenue.
Since EU expenditure must be wholly covered by revenue, own resources are closely linked to the MFF Regulation.
There are currently three types of own resources
•    Traditional own resources - mainly customs duties and sugar levies;
•    Own resources from VAT;
•    Own resources based on the gross national income (GNI).

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Own resources

The sector-specific proposals are spending programmes.
From mid-2011 onwards, the European Commission presented about 70 sector-specific proposals for activities including agriculture, cohesion, research, training, development and others. The proposals define rules such as the conditions of eligibility and the criteria for the allocation of funds and establish instruments in the individual policy areas.

Key political elements of these proposals, which have a clear financial implication, are dealt with in the political track of the negotiations. The technical aspects of the proposals are negotiated under the legislative track. The legislative work can be finalised only when an agreement on the political issues has been reached, probably by early 2013.

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Sector specific acts

Different rules apply for the adoption of the various legislative acts of the MFF package.
•    The MFF Regulation is adopted by the Council by unanimity after having obtained the consent of the European Parliament (the European Parliament may approve or reject the Council's position, but not adopt amendments).
•    The five legislative acts on own resources are also adopted by the Council, the basic act by unanimity and the implementing acts by qualified majority. The European Parliament has to give its consent on one implementing act and its opinion on all other acts.
•    The sector-specific legal acts are, as a general rule, subject of the ordinary legislative procedure (co-decision). This means that the Council and the European Parliament decide together, and that the Council decides by qualified majority.

The new MFF, including new rules on own resources and new sector-specific programmes, would apply as from 1 January 2014.

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The rules of adoption