EU reform proposals/analysis: The latest draft of an EU constitution marks a retreat by the President of the Convention on the Future of Europe, Mr Valéry Giscard d'Estaing, writes Denis Staunton, in Brussels.
Mr Valéry Giscard d'Estaing's latest proposals for the reform of EU institutions represent a comprehensive victory for Europe's small states - and a significant retreat on Mr Giscard's part.
The European Council, where EU leaders meet, will have a permanent president, but this figure will have no executive power and will simply co-ordinate the council's work and chair its meetings.
The President of the Council will represent the EU abroad but the task of shaping and articulating a common foreign policy will fall to the new EU Foreign Minister.
The chairing of sectoral councils - meetings of ministers of finance, justice, etc - will continue to rotate among the member-states, although the chair will change annually rather than every six months.
Mr Giscard has abandoned a proposal to cap the number of seats in the European Parliament at 700 and the division of seats will remain as agreed in the Nice Treaty.
But it is on the composition of the Commission that the small states have had their greatest triumph, seeing off an attempt to cut the size of the Commission and regaining the right - lost at Nice - of each member-state to nominate a commissioner.
From January 1st, 2009, each member-state will continue to nominate a commissioner but only 15 commissioners will have voting rights. The voting positions will rotate between member-states on the basis of strict equality.
The compromise has the merit of satisfying the small states' demand for equal representation on the Commission while reducing the body's size - one of the key demands of bigger states.
The retreat on the council presidency will be more difficult for the big states to swallow and they are likely to press for a major extension of qualified majority voting. For the moment, Mr Giscard is sticking to his revised formula for a qualified majority - a majority of member-states representing at least 60 per cent of the EU population.
He is proposing a "super qualified majority" for more sensitive issues such as foreign policy - two-thirds of the member-states representing 80 per cent of the EU's population.
The convention will meet again next week to work out the final details of the constitutional treaty, which will be presented to EU leaders on June 20th.
Mr Giscard will declare that he has a consensus if a majority in each of the convention's three main components - government representatives, national parliamentarians and MEPs - approve his final text.
The convention hopes to present the leaders with a single text with no alternative options or square brackets. The clearer the consensus is at the convention, the less likely it is that the inter-governmental conference that follows it will attempt a wholesale renegotiation.
Mr Giscard is confident that he has found the basis for agreement at the convention on institutional reform. But he faces a difficult task in persuading the 105 delegates to accept the abolition of national vetoes in 34 new policy areas.
The Government wants to retain the veto in foreign policy, some areas of justice and home affairs, and tax policy. Mr Giscard told the BBC yesterday that, although qualified majority voting could apply to tax policy where it involved unfair competition, other areas of tax policy would continue to be decided by unanimity.
"There is no proposal to create a competence about taxation of people, taxation of companies, or taxation of property on the Euro-level. So on that point you will keep unanimity, unanimity means veto," he said.