Please find below an update as of December 2016 regarding the Schengen Agreement:-
The following text is an extract from the website “The Freedom Initiative” authored by Nathan Riley.
This may be of interest and provide some clarification as to the current state of play and what is being proposed to the existing situation where it seems it is possible to stay in the Schengen area travelling between member states for longer than 90 days:
The European Commission and The Council of the European Union have acknowledged that it is possible for third country nationals (eg: AUS/NZ) to stay in Europe for longer than 90 days as a result of the various visa waiver agreements.
“The Schengen Convention (Article 20(2)) currently allows for Member States to “extend” the authorised stay of nationals of visa-free third countries (US, Australia, New Zealand, Japan, Israel, etc.) beyond 90 days on the basis of bilateral visa waiver agreements concluded in the past.
This leads to a situation where certain third-country nationals can stay for practically unlimited periods in the Schengen area under short-stay visa waivers without applying for a residence permit or any other authorisation.
For instance, New Zealand citizens can remain 51 months in the territory of the Schengen area (3 months Schengen visa-free stay plus 48 months on the basis of 16 bilateral visa waiver agreements).”
The Council of the European Union is trying to introduce a “Touring Visa” to manage this situation.
The proposed amendment appears to be still under consideration.
http://ec.europa.eu/dgs/secretariat_general/relations/relations_other/npo/docs/latvia/2014/com20140163/com20140163_saeima_reply_en.pdf (Dated: 28.7.2014)
http://www.statewatch.org/news/2016/oct/eu-council-exit-entry-bilaterals-12114.en16.pdf (Dated 20 September 2016)
http://www.statewatch.org/news/2016/nov/eu-council-entry-exi-touring-visa-13397-16.pdf (Dated: 25 October 2016)
http://www.statewatch.org/news/2016/nov/eu-council-easo-ees.htm (This provides a brief explanation of the implications of the amendment.)