The Polish government has made it clear that it will veto changes to the free movement of people in the EU Treaties. Since the EU Treaties can only be changed by unanimity, this is a blow to calls from Cameron's UK government (and from the Bavarian CSU) for changes to the system.
I've written before about how the UK debate seems to frame the single market as the only good thing about the EU when the social elements are such a big part of the bargain. This is desire for the single market to respect national social protections gives rise to a kind of European social contract - a kind of minimum (and from the left's point of view it is very minimum) level of protection that limits the single market in undercutting national welfare and social systems (though the single market has had a big impact on these). But now the debate has shifted to reviewing and limiting one of the fundamental freedoms of the single market.
The fears over EU immigration in the UK (with the ending of the restrictions on Romanian and Bulgarian citizens) has been the main spark for this, and the idea of being tough on immigration is popular. And because a "market" is seen as just goods you buy in a shop, rather than an economy people live in, the free movement of people is perhaps seen as not really being part of the single market. Despite this, there are polls indicating that Britain would be welcoming of immigrants who play by the rules, so the panic may be more linked to the rhetoric over benefits and the young than might be seen at first glance.
Watering down free movement rights is likely to come up against fierce opposition from many Member States - not just Poland, but also Spain, Ireland, Greece, and other countries afraid to see their citizens treated as second-class EU citizens - so it's unlikely to work. But watering down further the social side of the EU will make everyone more economically insecure and could further undermine support for free movement rights and solidarity in the wealthier Member States, and ultimately support for the single market.
For Cameron to be able to claim victory through renegotiation, he will have to get something big in the area of social policy now that so many other areas are sealed off (the UK is outside of Schengen, the Euro and has an opt in to justice legislation). The undermining of social rules and standards needs to be resisted.
Showing posts with label single market. Show all posts
Showing posts with label single market. Show all posts
Thursday, 9 January 2014
Thursday, 28 November 2013
A Strong Europe?: What the Grand Coalition has in store
Two months after the German elections the Grand Coalition deal between Merkel's CDU (and their sister party, the CSU) and the SPD has been signed. It's not a done deal until the SPD membership has endorsed the coalition treaty, and there is some resistance to it given their anti-Merkel election campaign and the frequency with which Merkel's coalition partners have the political life sucked from them. Still, the SPD leadership are likely to have their way, and with a membership vote on the deal the coalition will have a firm foundation for the next 4 years.
The headline policies, such as the minimum wage and reduced pension age (SPD) and road tolls for foreigners (CSU) have tended to be driven by the junior partners of the coalition. It's been suggested that the leadership style of Merkel's CDU (focusing on her leadership rather than policy) may have worked well in the campaign, but was a weakness when it came to coalition negotiations. So how is Germany's Europe policy shaping up?
The coalition agreement can be read here (PDF - in German), with the European policy at pp.15, 156-167.
Eurozone and the Single Market
The big one and, despite the hopes that the SPD may have moderated the austerity-centric policy, there is really no change here. In fact the strongly conservative tone is startling - there's plenty of talk about reducing debt and deficits and working on competitiveness, but when you turn to the "social Europe" section the rhetoric is pretty much repeated: austerity is the only way to ensure a social Europe seems to be the message.
On banking union there is little new. Yes, there must be banking union, and, yes, private banking debt must be separated from public debt (with banks taking the hit first). However the deal underlines that releasing funds under the European Stability Mechanism (ESM) or otherwise will remain subject to a vote by the Bundestag and emergency credit lines are a last resort only. The agreement both stresses that there will be no common liability at the European level since budgets are a national competence, and that budgets must be effectively overseen and co-ordinated at the European level. (It appears that the joined-up thinking demanded of Brussels has not similarly been applied here...). The SPD's leanings towards Eurobonds have apparently been stamped out altogether for the purposes of coalition.
On the future of emergency credit and the "reform contracts" that are supposed to accompany them, the German government supports the contract idea, though such deals must be "democratically legitimised". Presumably this means that the national parliament of the bail-outee will have to ratify the contract before being lent money.
Interestingly, the agreement states that there will have to be changes to the treaty basis of the currency union - a bit hint in favour of treaty change.
The new German government will support the completion of the single market, to which you can add the usual talk of both requiring further harmonisation to help create a level playing field and also ensuring the reduction of red tape, etc., etc., that always bolted on statements about the single market these days (and apparently copy-pasted here for emphasis). The stand out policy here is on posted workers, which should be "developed" to ensure that posted workers work under the same pay and conditions as nationals of the host country would.
Social Europe
Not much here at all. Under this heading the austerity rhetoric is repeated, perhaps on the basis that since times are tough austerity will have to stand in to reduce the number of policies, ironically causing a policy deficit in the process. There's not much here that isn't already long-standing policy at the EU level. Youth unemployment is bemoaned (the answer is held out to be structural reform and making free movement of this young educated workforce easier). Social and wage dumping are to be fought, and the new government will be supportive of tax harmonisation, which will have the alarm bells ringing from Dublin to Helsinki.
Money from the European Investment Bank has been promised for several types of projects and policy. Honestly, so many people have promised EIB money for so many things at this point that I'm starting to wonder if the next financial crisis will be when it collapses. It seems that when the EU budget is so small and you're cutting it, the answer is to promise to get the EIB to lend money for it. Just wait til the Europarty manifestos come out....
EU Democracy and foreign Policy
Enlargement, while supported, will face a tougher Germany: criteria must be more strictly applied, and Turkey's accession process won't "automatically" end in membership. Berlin also wants to beef up EU foreign policy through its humanitarian and development aid policies - and even military planning. It foresees a close cooperation between the EU and NATO here, which is probably something that would happen to a certain degree, directly or indirectly, though the neutral Member States may not be so happy with this.
When it comes to EU Democracy, there is nothing new: more education about Europe and supporting a more uniform electoral code seems to be the extent of the coalition's thinking here. There's not even a mention about how the 2014 elections can be used, never mind how they might affect the formation of the next Commission. Berlin will, however, want to see German on a more equal footing with French and English as a working language of the EU - it will be interesting to see how it pushes for this in practice.
Overall, very disappointing, if not entirely unexpected. For those of us on the left, the agreement's European paragraphs appear to contain no "social democratic handwriting". For those hoping for a change to Germany's Eurozone policy there is not only nothing, but a vigorous restatement of that nothing. For those looking for renegotiation there is an encouraging hint here, though the passage on social standards and the attitude towards the posting of workers will - or should - worry some British politicians who perhaps project too much of themselves into Germany's pro-single market outlook.
The headline policies, such as the minimum wage and reduced pension age (SPD) and road tolls for foreigners (CSU) have tended to be driven by the junior partners of the coalition. It's been suggested that the leadership style of Merkel's CDU (focusing on her leadership rather than policy) may have worked well in the campaign, but was a weakness when it came to coalition negotiations. So how is Germany's Europe policy shaping up?
The coalition agreement can be read here (PDF - in German), with the European policy at pp.15, 156-167.
Eurozone and the Single Market
The big one and, despite the hopes that the SPD may have moderated the austerity-centric policy, there is really no change here. In fact the strongly conservative tone is startling - there's plenty of talk about reducing debt and deficits and working on competitiveness, but when you turn to the "social Europe" section the rhetoric is pretty much repeated: austerity is the only way to ensure a social Europe seems to be the message.
On banking union there is little new. Yes, there must be banking union, and, yes, private banking debt must be separated from public debt (with banks taking the hit first). However the deal underlines that releasing funds under the European Stability Mechanism (ESM) or otherwise will remain subject to a vote by the Bundestag and emergency credit lines are a last resort only. The agreement both stresses that there will be no common liability at the European level since budgets are a national competence, and that budgets must be effectively overseen and co-ordinated at the European level. (It appears that the joined-up thinking demanded of Brussels has not similarly been applied here...). The SPD's leanings towards Eurobonds have apparently been stamped out altogether for the purposes of coalition.
On the future of emergency credit and the "reform contracts" that are supposed to accompany them, the German government supports the contract idea, though such deals must be "democratically legitimised". Presumably this means that the national parliament of the bail-outee will have to ratify the contract before being lent money.
Interestingly, the agreement states that there will have to be changes to the treaty basis of the currency union - a bit hint in favour of treaty change.
The new German government will support the completion of the single market, to which you can add the usual talk of both requiring further harmonisation to help create a level playing field and also ensuring the reduction of red tape, etc., etc., that always bolted on statements about the single market these days (and apparently copy-pasted here for emphasis). The stand out policy here is on posted workers, which should be "developed" to ensure that posted workers work under the same pay and conditions as nationals of the host country would.
Social Europe
Not much here at all. Under this heading the austerity rhetoric is repeated, perhaps on the basis that since times are tough austerity will have to stand in to reduce the number of policies, ironically causing a policy deficit in the process. There's not much here that isn't already long-standing policy at the EU level. Youth unemployment is bemoaned (the answer is held out to be structural reform and making free movement of this young educated workforce easier). Social and wage dumping are to be fought, and the new government will be supportive of tax harmonisation, which will have the alarm bells ringing from Dublin to Helsinki.
Money from the European Investment Bank has been promised for several types of projects and policy. Honestly, so many people have promised EIB money for so many things at this point that I'm starting to wonder if the next financial crisis will be when it collapses. It seems that when the EU budget is so small and you're cutting it, the answer is to promise to get the EIB to lend money for it. Just wait til the Europarty manifestos come out....
EU Democracy and foreign Policy
Enlargement, while supported, will face a tougher Germany: criteria must be more strictly applied, and Turkey's accession process won't "automatically" end in membership. Berlin also wants to beef up EU foreign policy through its humanitarian and development aid policies - and even military planning. It foresees a close cooperation between the EU and NATO here, which is probably something that would happen to a certain degree, directly or indirectly, though the neutral Member States may not be so happy with this.
When it comes to EU Democracy, there is nothing new: more education about Europe and supporting a more uniform electoral code seems to be the extent of the coalition's thinking here. There's not even a mention about how the 2014 elections can be used, never mind how they might affect the formation of the next Commission. Berlin will, however, want to see German on a more equal footing with French and English as a working language of the EU - it will be interesting to see how it pushes for this in practice.
Overall, very disappointing, if not entirely unexpected. For those of us on the left, the agreement's European paragraphs appear to contain no "social democratic handwriting". For those hoping for a change to Germany's Eurozone policy there is not only nothing, but a vigorous restatement of that nothing. For those looking for renegotiation there is an encouraging hint here, though the passage on social standards and the attitude towards the posting of workers will - or should - worry some British politicians who perhaps project too much of themselves into Germany's pro-single market outlook.
Wednesday, 19 June 2013
Who is afraid of the Working Time Directive? - Part 1
When it comes to renegotiating the UK’s place in the EU and
what Cameron wants to be repatriated in terms of powers, there’s very little to
go on. So far Cameron’s statements have been about changes for the whole of the EU if possible, but specific opt-outs for the UK if not – though he has no shopping list of powers, and there are only references to "flexibility" to go by. As the UK will probably choose to opt out of the
Justice and Home Affairs area of the EU (and "re-opt-in" to a few of the measures in
this area), the Working Time Directive seems to be the most prominent piece of
legislation that upsets the Tories, so it might be worth taking a closer look
at it.
The Working Time Directive is aimed at regulating the rest
periods that workers get in order to ensure health and safety at work (Article
1), and covers daily and weekly rest, annual leave and night shift organisation
– you can read an overview of the Directive on Wikipedia here. In the UK the Directive is implemented via the
Working Time Regulations (SI 1998/1833). Note that there are separate rules for
workers in the transport sector.
The minimum rules the Directive provides include:
- That workers are entitled to a minimum daily rest of 11 hours per 24 hour period (Article 3) – this means that there’s 11 hours where the worker is not at work, including when the worker’s asleep;- That workers are entitled to a break where the working day is longer than 6 hours (the period is left to collective agreements or national legislation) – Article 4);- That workers are entitled to a day off for every 7 day period, though there is a derogation to a minimum rest period of 24 hours if there are technical or work organisation conditions that require it (Article 5). The weekly day off is averaged over a fortnight (Article 16(a));- That workers work no more than an average of 48 hours per week (Article 6) – there is an opt-out, so that employees can sign a contract opting out of the 48 hour limit (Article 22). This is averaged over 4 months or less, depending on the Member State (Article 16(b));- That workers are entitled to paid annual leave of at least 4 weeks;- Night workers are treated separately under the Directive, and are entitled to health assessments and 8 hour work days (Articles 8-12);- Member States can have higher standards if they choose (Article 15), and Article 17 permits derogations for workers in certain sectors.
The UK Working Time Regulations that are based on this
Directive provide for the UK that:
- There is a maximum average weekly working time of 48 hours (Regulation 4) – this can be opted out of under an employment contract (Regulation 5). The average is taken by looking at the last 17 weeks of employment;- Workers will get the 11 hour daily rest and the weekly day off as set out in the Directive (Regulations 10 & 11), with some flexibility over how they’re used;- Where the daily working time is more than 6 hours, they are entitled to a minimum of a 20 minute break (30 minutes for 15-18 year olds working over 4.5 hours) – Regulation 12;- Workers are entitled to 28 days paid holiday annually (Regulation 13).
So the UK Regulations stick strictly to the maximum working
time permitted by the Directive per week, and employees are able to opt out of
the 48 hour average limit (though they should not suffer detriment for not opting out
– Regulation 31). On annual leave, the UK Regulations are more generous,
providing for 5.6 weeks holiday per year (though obviously you’ve fewer
holidays if you haven’t or won’t have worked a full year). For exceptions to
the rules and opting out of the 48 hour working week, see the Government’s
website here.
Interestingly, if you work more than 6 hours per day, you’re
only entitled to a minimum of 20 minutes break under UK law – a bit less than
the traditional lunch hour!
As the law currently stands, the UK Regulations mostly stick
closely to the Working Time Directive and do little to build on them. Are they really that much of a burden? How much would business really gain from reducing workers' rest breaks (since the headline 48 hour week can be opted out of anyway)? As Narmanda Thiranagama pointed out in her analysis of UKIP's current economic policy (which currently includes scrapping laws such as the WTD), SMEs have put such regulation last on their list of obstacles to growth:
When it comes to the UK's economic problems and the reality of regulation, it doesn't seem as if there's much that getting rid of this Directive will actually do for the British economy. And are the Tories campaigning with the message that British people don't work long enough hours? Even if they were, there is a debate to be had over longer hours versus productivity within those hours. While I hesitate to simply call a stance ideological - after all political parties are supposed to give us options from ideological viewpoints - it's hard to see where the practical impetus for policy change is coming from here, except that the WTD has become symbolic of EU regulation in the UK.
If you want to have a single market, then there will have to be some minimum social standards: EU Member States all have their own version of the welfare state, and their own idea of a work-life balance. Without some minimum standards, we would be constantly told that we our being out-competed by our neighbours and therefore have to give up the national standards and protections that people have fought for. How long would a single market survive if people were constantly told that it was the reason why they had to give up their working rights? A single market is deeper than free trade and a political project in itself; and if you want countries with welfare states to buy into it, then you will frankly have to expect common minimum social standards unless the political direction of the community changes.
The Tories in their European Conservatives and Reformists can campaign for more liberalisation and deregulation, either alone or with the Euorpean People's Party and others, but if it doesn't, then it shouldn't use renegotiation as a Trojan horse for its own ill-thought out ideological ends.
"In 2012, the SME Barometer found that SMEs thought that the biggest obstacle to growth was the economy. Of the 667 directors and owners they interviewsed, 32% believed that the economy was the biggest obstacle, followed by 13% who blamed taxation. "Regulations" languishes at the bottom of the table along with "competition" at 7%."
When it comes to the UK's economic problems and the reality of regulation, it doesn't seem as if there's much that getting rid of this Directive will actually do for the British economy. And are the Tories campaigning with the message that British people don't work long enough hours? Even if they were, there is a debate to be had over longer hours versus productivity within those hours. While I hesitate to simply call a stance ideological - after all political parties are supposed to give us options from ideological viewpoints - it's hard to see where the practical impetus for policy change is coming from here, except that the WTD has become symbolic of EU regulation in the UK.
If you want to have a single market, then there will have to be some minimum social standards: EU Member States all have their own version of the welfare state, and their own idea of a work-life balance. Without some minimum standards, we would be constantly told that we our being out-competed by our neighbours and therefore have to give up the national standards and protections that people have fought for. How long would a single market survive if people were constantly told that it was the reason why they had to give up their working rights? A single market is deeper than free trade and a political project in itself; and if you want countries with welfare states to buy into it, then you will frankly have to expect common minimum social standards unless the political direction of the community changes.
The Tories in their European Conservatives and Reformists can campaign for more liberalisation and deregulation, either alone or with the Euorpean People's Party and others, but if it doesn't, then it shouldn't use renegotiation as a Trojan horse for its own ill-thought out ideological ends.
Wednesday, 23 January 2013
Cameronian Europe is a Europe that is "done to people"
David Cameron's speech on Europe (full text here) didn't reveal much new on his thinking on Europe, but it is an important speech for the stark way in which the political lines are drawn. There may be little that Cameron actually wants or is able to repatriate apart from the Working Time Directive (his speech highlight more areas that powers had been or were being repatriated than areas for future negotiation), but the speech serves as a high-profile espousal of a certain ideology on Europe, along with some of the contradictions and bind-spots it has.
Central to this ideology is a very particular view of the single market. It is the fundamental reason for the EU's existence, and everything else that is defined as non-market is a distraction and a mark of waste. But this stance is also a denial of politics: it refuses the reality that the single market is an expansive concept that covers many areas, and that there can be many types of policy to deal with. Cameron asked:
He's right, there is no single market council. There is, however, an Economic and Financial Affairs Council, a Transport, Telecommunications and Energy Council, an Agriculture and Fisheries Council, and a Competitiveness (internal market, industry, research and space) Council. You may also notice that there's no single British minister for the market, but there is at least one British minister for each of these Councils (and parliamentary committees as well). This is because there are different policies and politics behind each of these areas - and therefore if you're going to have a single market, you're going to have to accept that there should be a room for these politics to play out.
There's also a Council for Employment and Social Affairs, but to hear Cameron and others speak, this is a corruption of the EU's single market purpose. But to strip away the social aspects of the EU would undermine the political basis of the single market - and the single market is just as much a political project as the Euro. Without common minimum social standards, there would be a race to the bottom as it is recommended to people to deregulate to undercut other Member States, or dissatisfaction would build at how other Member States are undercutting their own social protections. This is not an EU through which people can vote for a more left or right-wing single market through national and European elections, but setting up a mechanism for a Europe that just happens to people, with a bigger disconnect than today.
When it comes to the institutions, Cameron is contradictory. He wants a more fluid Europe of 27 speeds, but decries the complexity of the EU institutions: something that would increase to manage this 27 times 27 Europe of different relationships. He says that people can never be properly democratically represented at he European level, but wants to have fewer Commissioners than Member States, undercutting national representation in one of the major institutions. The other Member States are hardly going to accept an EU that reduces their political representation, and nor would it pass parliamentary votes or referendums in other European countries (Commission representation was a sticking point in the Lisbon referendums in Ireland and will likely be a sore point with small Member States).
The vague nature and the reality of negotiations mean that nothing so radical will happen, but the underlying ideology behind the speech and the direction of negotiations mean that no realistic negotiation will ever satisfy it. Politics cannot be drained from the European Union: even if it was reduced to just the single market, these issues are political and need a political and democratic forum to discuss and decide on these issues. The EU cannot be changed into a simplistic enforcement mechanism for the Tories' own market policies across Europe.
Central to this ideology is a very particular view of the single market. It is the fundamental reason for the EU's existence, and everything else that is defined as non-market is a distraction and a mark of waste. But this stance is also a denial of politics: it refuses the reality that the single market is an expansive concept that covers many areas, and that there can be many types of policy to deal with. Cameron asked:
"...when the competitiveness of the single market is so important, why is there an environment council, a transport council, an education council but not a single market council?"
He's right, there is no single market council. There is, however, an Economic and Financial Affairs Council, a Transport, Telecommunications and Energy Council, an Agriculture and Fisheries Council, and a Competitiveness (internal market, industry, research and space) Council. You may also notice that there's no single British minister for the market, but there is at least one British minister for each of these Councils (and parliamentary committees as well). This is because there are different policies and politics behind each of these areas - and therefore if you're going to have a single market, you're going to have to accept that there should be a room for these politics to play out.
There's also a Council for Employment and Social Affairs, but to hear Cameron and others speak, this is a corruption of the EU's single market purpose. But to strip away the social aspects of the EU would undermine the political basis of the single market - and the single market is just as much a political project as the Euro. Without common minimum social standards, there would be a race to the bottom as it is recommended to people to deregulate to undercut other Member States, or dissatisfaction would build at how other Member States are undercutting their own social protections. This is not an EU through which people can vote for a more left or right-wing single market through national and European elections, but setting up a mechanism for a Europe that just happens to people, with a bigger disconnect than today.
When it comes to the institutions, Cameron is contradictory. He wants a more fluid Europe of 27 speeds, but decries the complexity of the EU institutions: something that would increase to manage this 27 times 27 Europe of different relationships. He says that people can never be properly democratically represented at he European level, but wants to have fewer Commissioners than Member States, undercutting national representation in one of the major institutions. The other Member States are hardly going to accept an EU that reduces their political representation, and nor would it pass parliamentary votes or referendums in other European countries (Commission representation was a sticking point in the Lisbon referendums in Ireland and will likely be a sore point with small Member States).
The vague nature and the reality of negotiations mean that nothing so radical will happen, but the underlying ideology behind the speech and the direction of negotiations mean that no realistic negotiation will ever satisfy it. Politics cannot be drained from the European Union: even if it was reduced to just the single market, these issues are political and need a political and democratic forum to discuss and decide on these issues. The EU cannot be changed into a simplistic enforcement mechanism for the Tories' own market policies across Europe.
Wednesday, 14 December 2011
Unreasonableness and the Rebate
While political battles are being waged over Cameron's veto, there seems to be at least one point of consensus within Britain: that the demands on the protection for financial services were reasonable. The Labour party hasn't set out exactly what it would have done (it says it would have stayed at the table and achieved a better deal, though it's hard to run a "what-if" scenario since the Cameron government's relations and those of a Labour government with the other 26 Member States over the last few months would need to be taken into account), but it seems that Labour basically supports the government's position on the treaty changes it was seeking, and that such changes were reasonable.
But today the Commission President Barroso told the European Parliament that Britain's demands were unreasonable and would have threatened the internal market.
Unreasonable Demands?
Financial services are part of the internal market, and are covered by Article 114 TFEU. This article provides for the regulation of the internal market, and the legislative procedure is the ordinary legislative procedure (i.e. the Commission proposes, and the Council and Parliament have an equal say in amending and passing the legislation). Britain wanted to insert a protocol which would grant every Member State a veto if the regulation was concerned with the financial services sector. Because every Member State would have a veto, the British government argues that it wasn't merely seeking to protect the City or asking for special treatment for itself.
However, this does threaten the legal and political basis of the internal market. To make it harder to regulate one sector of the internal market is to privilege one sector of the internal market over all other sectors. While it may be technically correct that Britain wouldn't be legally privileged over the other Member States, this would have created a separate legal procedure for introducing regulations for a separate sector of the market, so it would have introduced a legal division in the treaties between financial services and the rest of the internal market.
Then there's the political concept of the internal market. That internal market legislation is passed by majority voting is not only necessary to ensure that legislation can be passed at a pace that more closely reflects the pace of innovation in the market (compared with unanimity - we don't want to return to the days of waiting years for a single regulation to be passed), but also this politically underlines the mutual trust between the Member States in each other as they work on the internal market. If legislation is passed by qualified majority vote, then everyone has to work together to get legislation passed (and can't simply oppose all legislation outright to get its way) and Member States also have to be sensitive to the needs of the others (in other words: if you outvote me here, I'll outvote you there, so let's not play the zero-sum game). By introducing special protections for parts of the market that have been identified as a key interest by one Member State, in political terms you are privileging that Member State over the others in the overall internal market negotiations, and weakening the trust that is supposed to underwrite the market.
So Barroso was right to say that what Britain was asking for was unacceptable (or at least that it would be unacceptable for other Member States). Why should the financial sector be treated differently to other parts of the internal market? Should Germany have a protocol so there's a veto in the area of environmental policy when it comes to the car industry? Why shouldn't economic sectors of interest to other Member States be more protected? Because the more you reverse the integration in the internal market, the more you break up that market. Similarly, most other Member States see the social chapter as protecting their welfare states from a race to the bottom while entrusting their economies to the competition of the internal market. Yes the UK is one of the most committed Member States to free markets and a liberal internal market. But it fails to see how these trade-offs are part of the "Single Market Pact" sometimes, and how unacceptable its position can appear to others. If you can't understand the position of those you negotiate with, then you don't stand a good chance in negotiations.
It should also be noted that there are plenty of EU regulations that only set minimum standards, above which Member States may regulate more heavily. It should be easy to negotiate this minimum standard approach, rather than pitch for a full legal division of the internal market.
Finally, Barroso claims that he tabled a motion that should have met key British demands on protecting the internal market from a Eurozone caucus:
The Rebate
Joseph Daul, the leader of the European People's Party group in the European Parliament, said:
For the UK, the rebate is like the EP's Strasbourg seat for France or the protection of the low corporation tax for Ireland. For Britain the rebate is a question of fairness: otherwise it would contribute more to the EU, which isn't fair as others get back more in the Common Agricultural Policy.
But times have changed since Thatcher demanded Britain's money back. Back then the EU was a club of fairly wealthy countries, but now it has expanded to include the former post-communist, Warsaw Pact countries. During the negotiations for the "Big Bang" enlargement - which the UK was a huge supporter of - the question of the British rebate was raised. With 10 new Member States joining, which would all be poorer than the then-current members, there would be greater pressure on the EU budget to cover the structural funds and CAP costs. Would Britain, who supported this enlargement so much, not either give up or reduce its rebate to help cover the costs of greater solidarity with the new members? No. In fact there was the sad situation where Poland had to ask how much more the new members would have to pay to make membership a reality. Because the EU budget cannot be based on debt, so other countries have to fund Britain's rebate.
Of course it's not as simple as saying that Britain should have surrendered its rebate at that point. It's not to say that there are not other interests that are protected in the EU budget and that these shouldn't be seriously negotiated over. But it is an odd policy to drive forward enlargement, while demanding the EU budget to remain static on the one hand, and defending the British rebate on the other. If Britain is to make the case for the fairness of the rebate, it will have to move on from the arguments of Thatcher.
The key point is that the EU is a compromise. The internal market isn't something that can be viewed in isolation, and it is a mistake of British politics that the EU is often only presented in that way. Without the solidarity with poorer regions, opening them up to the competition from the more advanced economies is a hard sell. A minimum level of solidarity is required to ensure that the welfare states and the communities in Member States won't be too negatively affected by the downsides of the internal market - and in some countries where euroscepticism is mainly on the left it is argued that the EU is neo-liberal and there isn't enough solidarity. So when discussing the internal market, social policy and the budget, we need to have a more nuanced and fuller idea of the fairness that's required in the EU for even a minimalist internal market to work.
But today the Commission President Barroso told the European Parliament that Britain's demands were unreasonable and would have threatened the internal market.
Unreasonable Demands?
Financial services are part of the internal market, and are covered by Article 114 TFEU. This article provides for the regulation of the internal market, and the legislative procedure is the ordinary legislative procedure (i.e. the Commission proposes, and the Council and Parliament have an equal say in amending and passing the legislation). Britain wanted to insert a protocol which would grant every Member State a veto if the regulation was concerned with the financial services sector. Because every Member State would have a veto, the British government argues that it wasn't merely seeking to protect the City or asking for special treatment for itself.
However, this does threaten the legal and political basis of the internal market. To make it harder to regulate one sector of the internal market is to privilege one sector of the internal market over all other sectors. While it may be technically correct that Britain wouldn't be legally privileged over the other Member States, this would have created a separate legal procedure for introducing regulations for a separate sector of the market, so it would have introduced a legal division in the treaties between financial services and the rest of the internal market.
Then there's the political concept of the internal market. That internal market legislation is passed by majority voting is not only necessary to ensure that legislation can be passed at a pace that more closely reflects the pace of innovation in the market (compared with unanimity - we don't want to return to the days of waiting years for a single regulation to be passed), but also this politically underlines the mutual trust between the Member States in each other as they work on the internal market. If legislation is passed by qualified majority vote, then everyone has to work together to get legislation passed (and can't simply oppose all legislation outright to get its way) and Member States also have to be sensitive to the needs of the others (in other words: if you outvote me here, I'll outvote you there, so let's not play the zero-sum game). By introducing special protections for parts of the market that have been identified as a key interest by one Member State, in political terms you are privileging that Member State over the others in the overall internal market negotiations, and weakening the trust that is supposed to underwrite the market.
So Barroso was right to say that what Britain was asking for was unacceptable (or at least that it would be unacceptable for other Member States). Why should the financial sector be treated differently to other parts of the internal market? Should Germany have a protocol so there's a veto in the area of environmental policy when it comes to the car industry? Why shouldn't economic sectors of interest to other Member States be more protected? Because the more you reverse the integration in the internal market, the more you break up that market. Similarly, most other Member States see the social chapter as protecting their welfare states from a race to the bottom while entrusting their economies to the competition of the internal market. Yes the UK is one of the most committed Member States to free markets and a liberal internal market. But it fails to see how these trade-offs are part of the "Single Market Pact" sometimes, and how unacceptable its position can appear to others. If you can't understand the position of those you negotiate with, then you don't stand a good chance in negotiations.
It should also be noted that there are plenty of EU regulations that only set minimum standards, above which Member States may regulate more heavily. It should be easy to negotiate this minimum standard approach, rather than pitch for a full legal division of the internal market.
Finally, Barroso claims that he tabled a motion that should have met key British demands on protecting the internal market from a Eurozone caucus:
"In search of compromise, I tabled a clause providing, in the EU treaties, that any measures adopted by the Council and applying to the euro area only, must not undermine the internal market including in financial services. Unfortunately this compromise proved impossible."
The Rebate
Joseph Daul, the leader of the European People's Party group in the European Parliament, said:
"I believe that the British rebate should be put into question. Our taxpayers' money should be used for things other than rewarding selfish and nationalistic attitudes."
For the UK, the rebate is like the EP's Strasbourg seat for France or the protection of the low corporation tax for Ireland. For Britain the rebate is a question of fairness: otherwise it would contribute more to the EU, which isn't fair as others get back more in the Common Agricultural Policy.
But times have changed since Thatcher demanded Britain's money back. Back then the EU was a club of fairly wealthy countries, but now it has expanded to include the former post-communist, Warsaw Pact countries. During the negotiations for the "Big Bang" enlargement - which the UK was a huge supporter of - the question of the British rebate was raised. With 10 new Member States joining, which would all be poorer than the then-current members, there would be greater pressure on the EU budget to cover the structural funds and CAP costs. Would Britain, who supported this enlargement so much, not either give up or reduce its rebate to help cover the costs of greater solidarity with the new members? No. In fact there was the sad situation where Poland had to ask how much more the new members would have to pay to make membership a reality. Because the EU budget cannot be based on debt, so other countries have to fund Britain's rebate.
Of course it's not as simple as saying that Britain should have surrendered its rebate at that point. It's not to say that there are not other interests that are protected in the EU budget and that these shouldn't be seriously negotiated over. But it is an odd policy to drive forward enlargement, while demanding the EU budget to remain static on the one hand, and defending the British rebate on the other. If Britain is to make the case for the fairness of the rebate, it will have to move on from the arguments of Thatcher.
The key point is that the EU is a compromise. The internal market isn't something that can be viewed in isolation, and it is a mistake of British politics that the EU is often only presented in that way. Without the solidarity with poorer regions, opening them up to the competition from the more advanced economies is a hard sell. A minimum level of solidarity is required to ensure that the welfare states and the communities in Member States won't be too negatively affected by the downsides of the internal market - and in some countries where euroscepticism is mainly on the left it is argued that the EU is neo-liberal and there isn't enough solidarity. So when discussing the internal market, social policy and the budget, we need to have a more nuanced and fuller idea of the fairness that's required in the EU for even a minimalist internal market to work.
Thursday, 5 March 2009
Red Tape Holds Europe Together
It's not meant as an insult, and it seems obvious, but it's true. And it's amazing to think that after all this time, the nature and need for European bureaucracy is so misunderstood. The standard calls by Eurosceptics for the end to the Brussels bureaucracy and for the EU to be turned into a free trade area, either don't understand the nature of the single market, or want less free trade. But some are waking up to the necessity for the EU, and the bureaucracy that it entails. That's not to say that I back all of the rules and regulations that come out of "Brussels", and I'm not supporting the equation of: bureaucracy is necessary, and therefore good, and therefore we need more.
Yet it's becoming clear that the EU is not equipped to deal with the crisis. The Commission's vague hints at a plan to help Europe, weak and ineffectual sounding even at the time, highlights the powerlessness of the EU to hold together and support its single market, which is the heart of the EU.
We need to dismiss this view that the single market is somehow equivalent to free trade areas in some way. It is so much more, and if we loose it now, we will all suffer. The single market is based on countries coming together to build a market between them which will be as integrated and free as domestic markets. This is clearly more than a free trade agreement, which merely deals with tariffs, but leaves other financial controls and non-tariff barriers in place. These restrict trade, and so for an effective single market there is a need for common rules to prevent national ones from distorting trade. Which requires common institutions and a common bureaucracy. The European bureaucracy is the life-support machine for the single market, and for the most free international trading system in the world.
The argument that the EFTA would be a good replacement is highly debatable. The success of the EFTA to date probably rests to a large extent with the success of the single market - EFTA members are buying into a more liberalised trading system without joining it: if the single market falls, then barriers to trade will rise up again, and an EFTA can't deal with this nor compensate for this. To tear the EU bureaucracy down, or diminish it now would be a grave mistake.
On the contrary, it needs to be strengthened, both in terms of power to deal with the crisis, and in democratic legitimacy. The current Commission is ineffective and without any power or imagination to lead in the crisis, rejecting proposals out of hand for fear of the member states' reaction, while the member states become more and more of a threat to the single market as they retreat into veiled protectionism and incoherence. Max Bergmann seems to hint that more political aspects are needed in the EU. I would agree with this, as far as democratic accountability is needed, both for its own sake (the single market economy affects us all, and should be more accountable) and to bring back confidence in the system. It will also give the EU the legitimacy to be pro-active in crisises.
This isn't political union, but the macro-economy needs to be dealt with at the macroeconomic level, and it should be accountable and effective. Europe needs good economic governance, and it needs it now. If we can't protect and support our single market, it will fall - and take us with it.
Yet it's becoming clear that the EU is not equipped to deal with the crisis. The Commission's vague hints at a plan to help Europe, weak and ineffectual sounding even at the time, highlights the powerlessness of the EU to hold together and support its single market, which is the heart of the EU.
We need to dismiss this view that the single market is somehow equivalent to free trade areas in some way. It is so much more, and if we loose it now, we will all suffer. The single market is based on countries coming together to build a market between them which will be as integrated and free as domestic markets. This is clearly more than a free trade agreement, which merely deals with tariffs, but leaves other financial controls and non-tariff barriers in place. These restrict trade, and so for an effective single market there is a need for common rules to prevent national ones from distorting trade. Which requires common institutions and a common bureaucracy. The European bureaucracy is the life-support machine for the single market, and for the most free international trading system in the world.
The argument that the EFTA would be a good replacement is highly debatable. The success of the EFTA to date probably rests to a large extent with the success of the single market - EFTA members are buying into a more liberalised trading system without joining it: if the single market falls, then barriers to trade will rise up again, and an EFTA can't deal with this nor compensate for this. To tear the EU bureaucracy down, or diminish it now would be a grave mistake.
On the contrary, it needs to be strengthened, both in terms of power to deal with the crisis, and in democratic legitimacy. The current Commission is ineffective and without any power or imagination to lead in the crisis, rejecting proposals out of hand for fear of the member states' reaction, while the member states become more and more of a threat to the single market as they retreat into veiled protectionism and incoherence. Max Bergmann seems to hint that more political aspects are needed in the EU. I would agree with this, as far as democratic accountability is needed, both for its own sake (the single market economy affects us all, and should be more accountable) and to bring back confidence in the system. It will also give the EU the legitimacy to be pro-active in crisises.
This isn't political union, but the macro-economy needs to be dealt with at the macroeconomic level, and it should be accountable and effective. Europe needs good economic governance, and it needs it now. If we can't protect and support our single market, it will fall - and take us with it.
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