Table 2.

The Evolution of EU Fiscal and Economic Policy Coordination under the EU Treaties, T0 to T2

T0 (Maastricht Treaty), based on IGC 1990–1991	Treaty bases for EU economic policy coordination and surveillance: Article 103 TEC and Article 189c TEC* (i.e., the co-operation procedure); Measures and policies developed: SGP starts in 1997; Council Regulation (EC) 1466/97 addresses the issue of strengthening surveillance of budgetary positions, surveillance and coordination of economic policies. Start of national submission of the SCPs
T1 (Amsterdam Treaty and Nice Treaty)	T1a (Amsterdam Treaty, based on IGC 1996)	T1b (Nice Treaty, based on IGC 2000)
	Treaty bases: Article 99 (ex Article 103) TEC and Article 252 (ex Article 189c) TEC (i.e., the co-operation procedure); no changes introduced by the Amsterdam Treaty to the two relevant Articles of the Maastricht Treaty; Measures and policies developed: Lisbon Strategy launched in March 2000	Treaty bases: Article 99 and Article 252 TEC; no changes brought by the Nice Treaty to the two relevant Articles of the Amsterdam Treaty and the earlier Maastricht Treaty; Measures and policies developed: (a) re-launched Lisbon Strategy in 2005; introduction of the practices of NRPs and CSRs; (b) SGP reforms in 2005, including Council Regulation (EC) No 1055/2005 amending Regulation (EC) No 1466/97
T0 to T1a/T1b: Assessment of Analytical Factors (1)–(9)
(1) Shifts in domestic conditions	Yes	Yes
(2) Sunk costs (micro-level adaptations)	No; The SGP for budgetary surveillance and economic policy coordination was not in place when the 1996 IGC took place; the factor of micro-level adaptations was absent. Policy coordination, however, became an important factor for economic prosperity. Switching away from the idea of policy coordination encompassed costs	Yes; SGP rules and Lisbon Strategy are seen as beneficial and necessary measures to promote (micro-level) economic growth within the EU
(3) Accumulated policy constraints	No; economic policy coordination under the BEPGs and the EGs are not legally binding	No; no legally binding decisions possible on the issues concerned
(4) Heavily discounted or unintended effects	No; relevant legal bases are not changed; EU member states’ control over relevant EU policies is not reduced; EU institutions are not able to issue legally binding decisions on EU member states	No; legal bases for the issues concerned are not changed; absence of legally binding decisions remains; hence, EU member states’ control over relevant EU policies is not reduced
(5) Changed preferences of Member States	No; Amsterdam Treaty renumbers ex Articles 103 and 189c TEC; but contents are not changed	No; no changes made to the two relevant Articles taken over from the Amsterdam Treaty; co-operation procedure remains unchanged; hence power and competencies of the supranational institutions remains unchanged compared to the TEU
(6) New powers and preferences for supranational institutions	No; legal basis and co-operation procedure to adopt the measures related to economic policy coordination and fiscal surveillance is not changed compared to TEU
(7) New decision-making rules and policy competences at the European level
(8) Reinforcement between actors’ preferences and the rules that bind them	Yes; although there were no binding rules for the issues at stake, the SGP had established a given equilibrium between EU institutions and EU member states; launch of the Lisbon Strategy reflected preferences for enhanced co-operation between member states	Yes; although there were no binding rules for the issues at stake, a given equilibrium between EU supranational surveillance and EU member states’ ultimate decisions on their budgetary plans and economic policies was established and strengthened. The SGP reforms and the re-launched Lisbon Strategy reflected reinforced preferences of governments and EU institutions
(9) An increasing unlikeliness to change the rules codified at t endogenously	Yes; SGP was continued without changes	Yes; though the SGP was amended, the aim was to strengthen SGP rules as well as EU economic governance as a whole; basic principles entailed in the SGP were not adapted, demonstrating the ‘stickiness’ of SGP rules and a decreasing prospect to change or radically break away from the SGP provisions
T2 (Lisbon Treaty, based on IGC of 2007)	Treaty bases: Article 121 of the Treaty on the Functioning of the European Union (TFEU) *) (amending ex Article 99 TEC) and Article 294 TFEU (ex Article 251 TEC) (i.e., the co-decision procedure / ordinary legislative procedure (OLP)) Measures and policies developed: (a) Europe 2020 launched in March 2010, based on the lessons and experiences gained based on Lisbon Strategy; (b) ES implemented on 1 January 2011, codified into EU law in December 2011; (c) new coordination and monitoring elements (e.g., AMR of MIP) added into the ES procedure, particularly by the ‘six-pack’ and the ‘two-pack’ reforms of the SGP
T1a/T1b to T2: Assessment of Analytical Factors (1)–(3)
(1) Changes to member state preferences	Member state preferences changed from co-operation procedure to the OLP to codify relevant measures into EU law. Preference for greater role for the EP and the European Commission suggested (more democratic control and enhanced willingness to strengthen economic policy coordination and surveillance of fiscal performance on the supranational level). Presence of factor (2) at time T1b (Nice Treaty), absent at time T1a (the Amsterdam Treaty) reflects preference changes, while mechanism (4) of the posited path dependence model seems absent
(2) Changes in member state bargaining power	EU member states essentially agree on the need to strengthen the framework of economic and fiscal governance. Agreement largely by consensus rather than reflection of given power distributions. Discussion over member state bargaining powers not deemed necessary, moreover, due to the negation of (3) and (4) at time T1b (Nice Treaty)
(3) Power of other actors	Treaty changes made to ex Article 99 TEC; prescribed more responsibilities for the European Commission and the EP; relevant legislative procedure shifted from co-operation procedure to OLP. Thus, negation of (4) at time T1b (Nice Treaty) appeared inadequate to account for changes in the power of other actors at time T2 (Lisbon Treaty). But essence of equilibrium between the EU institutions and member states, since adoption of preventive arm of SGP in 1997, remained unchanged (due to the non-binding decisions in this domain). Redefined role of the EU institutions (3) can be explained by T1 variables of (2), (5), (8), and (9)

^*Before the Lisbon Treaty, the abbreviation TEC (Treaty establishing the European Community) was often used after a TEU Article of the first pillar of the EU (i.e. the Community pillar), distinguishing it from TEU articles of the second pillar (i.e., the Common Foreign and Security Policy) and the third pillar (i.e., police and judicial co-operation in criminal matters). Lisbon Treaty abolished three-pillar structure of the EU, with the TEC becoming the TFEU (while the TEU retains the same label)

Source: Adapted from Pan (2015, 2018), based on an analysis of EU Treaty provisions, assessing twelve potential indicators contained in the HI three-stage analytical model