Foreign Affairs CommitteeWritten evidence from Frank Vibert, Senior Visiting Fellow, Department of Government, London School of Economics (LSE)
DIFFERENTIATION IN THE EU
Summary and Conclusions
In the context of the EU, “differentiation” refers in a broad sense to the possibilities open to member states to pursue public policies along their own track in a particular policy field where the EU is active.
Differentiation, in one form or another, has long been possible within the EU and is now of critical importance. At one end of the spectrum, members of the Eurozone need to share powers in new areas such as fiscal policy and banking union. At the other end, the UK would like to repatriate certain powers. Potentially, an increase in differentiation offers a way to accommodate both ends of the spectrum.
Differentiation should not be seen simply, or even mainly, as a response to British “exceptionalism”. It provides a way for all member states to connect more closely with their own electorates and to help redress the “democratic deficit” in the EU. Greater differentiation will consolidate the direction of institutional change in the EU in favour of a more coherent involvement of national parliaments and constitutional courts. In addition, rather than a “turning inwards” it also provides a way for member states to recognize the importance of international rule making in forums that extend beyond the regional grouping offered by the EU.
This paper maps the scope for further policy differentiation and identifies the institutional implications of this more open architecture.
1.Background
Membership in the EU means that countries agree to share powers in order to pursue common policy objectives or to “pool sovereignty”. The preferred norm is that the EU becomes the focus for policy-making across the main fields of public policy making and that member states share their powers and give up the right of independent action in them.
The current scope for differentiation
In practice there are many exceptions, some of long standing and some recent, to the preferred norm of fully shared powers. These exceptions define the scope for differentiation as currently recognized in the EU’s treaty base. The main varieties are as follows:
First, there is differentiation that allows for different approaches to compliance with EU directives. (TFEU Art. 288) Differentiation in this case is about using different means to achieve the same effect.
Secondly, there is differentiation that allows for derogations that permit different time paths to implement common policies. For example in the case of enlargement both new and existing members have been provided with grace periods to allow time for policies to adapt. This form of differentiation assumes that grace periods will lapse and that policies will converge thereafter.
Thirdly, there is differentiation in the form of limited exemptions to harmonisation measures in the Internal Market. These are subject to a “Union control procedure” (TFEU Art.114 (4,5&10)).
Fourthly, there is differentiation in the form of general exemptions or derogations that allows member states to carry out their own polices in certain areas of shared competence, for example in the case of development cooperation (TFEU Title1 art.4 (3&4)) and in relation to the admission of third country nationals under the area of Freedom Security and Justice (Art. 79(5)). There are other derogations that permit members to enact higher standards than the EU agreed level in certain areas of the treaty such as in heath and the environment (for example TFEU Art.193).
Fifthly, there is differentiation that allows some member states to move ahead of others into new areas of common policies (areas of enhanced cooperation) while outsiders wait and see what the outcomes are, or wait to qualify as members of the in-group. (TEU Title IV Art. 20). This form of differentiation assumes a goal of eventual convergence and opt ins over the long run around the new areas of shared policy.
Sixthly, there is differentiation that allows for member states to stay outside an area of power sharing with no assumption that convergence will necessarily take place over time. This form of differentiation is built around “opt out” provisions in the Treaty base. A leading example is in the Protocol on the UK in relation to the Euro. “Unless the UK notifies the Council that it intends to adopt the euro, it is under no obligation to do so” (Protocol para1). As a variant, opt outs can also be framed in ways that allow for future opt ins to selected items or initiatives under a common policy. The leading example is in the Protocol on the UK & Ireland in relation to the Area of Freedom, Security and Justice (Protocol Art3).
Finally there is differentiation in the form of “structured cooperation” applying in the field of security and defence. This recognizes differentiation in two ways. First, it acknowledges the importance of wider international groupings and obligations—specifically NATO. (TEU Art. 42 (1) & (6) and Protocol). Secondly, it recognizes the importance of coalitions of the willing and able when it comes to implementation.
While differentiation in this wide variety of forms has been permitted under EU treaties it has also been regarded as a largely undesirable exception to the preferred norm of a uniform approach to power sharing around common policy objectives and the uniform application of the treaties. For example the use of the provisions for enhanced cooperation is referred to as a “last resort” (TEU Title IV Art.20(2)). Most of the opt outs are exercised by just four of the member states (UK, Ireland, Sweden and Denmark). The aspiration remains, even in cases where differentiation takes place, that convergence around common policies for all members should still be the ultimate goal.
Further differentiation challenges this treatment of differentiation as the exception. It would mean that differentiation would become part of the normal workings of the EU.
2. Mapping the Scope for Differentiation
Discussion of differentiation is best organized around the concept of policy “clusters”. “Clusters” are a familiar concept in spatial geography (for example the tendency of financial service providers to cluster around a dominant centre such as London or New York). They are also a relevant concept in policy terms. They measure how far policies are related or connected to each other. Those that are necessarily or very closely connected can be viewed as a “cluster”.
The second element in differentiation allows for variations in the degree to which members wish to associate themselves with particular clusters.
The scope for differentiation can be mapped by bringing together these two dimensions.
Degrees of Linkage between policy clusters
In this paper the mapping of policy clusters distinguishes between four categories of linkage:
The first is where there is a necessary connection between policies. For example it is accepted that monetary union must necessarily be accompanied by fiscal policy discipline for those that are members of the currency union. They are part of the same cluster.
The second is where there is a close connection. For example, policies that concern critical infrastructure in energy, water, telecommunications and transportation systems share a common concern about consumer satisfaction, the security of supply, the resilience of basic services as well as about interconnection policies and are therefore clustered together.
The third is where the connection is contingent. For example, the Common Agricultural Policy has a contingent connection with the Single Market in goods because income support provided to those in rural areas might distort the supply and pricing of agricultural goods. However it has a closer ideological connection with other policies related to achieving social cohesion and is therefore included with a cluster of other policies designed to increase social cohesion.
The final distinction is where connections are remote. For example, a common policy providing for the right of abode in member states has only a distant connection to the Common Fisheries Policy. They can be treated therefore as belonging to different policy clusters.
The clusters are illustrated in Annex 1. They are not exhaustive of the current range of polices pursued in the EU but are intended to be illustrative of the principle of clustering.
Degrees of association with policy clusters
In the same way that areas of public policy can be mapped by degrees of connectedness so too can different degrees of desired policy association be mapped for member states.
First, powers can be pooled in order to achieve a common objective in ways that mean that the member state concerned gives up the possibility of taking independent action in the same area.
Secondly, member states may wish to acknowledge that policies in a particular area are of common concern, and of concern to themselves, while retaining discretion as to whether and when exactly they want to pool powers. For example environmental policies can be seen as of common concern to all members because pollutants cross borders. Nevertheless some member states may still wish to conserve considerable policy discretion in their own hands (for example in determining the energy mix or in deciding which greenhouse gases to target). Areas of common concern lend themselves to an “opt in” approach.
Thirdly, there are some areas of policy that member states may wish to pursue in a wider international setting rather than in a regional (EU) one. As policy making becomes more global the issue extends well beyond the recognition of the importance for some countries of membership in NATO. For example, in the area of financial services the UK might wish to frame its policies in the context of international bodies such as IASB, FSB & IOSCO rather than in the context of a regional grouping such as the EU. In such areas both “opt outs” and “opt ins” have a role in structuring cooperation.
Finally, there are some areas of policy that member states may wish to keep as areas for their own independent domestic policy action—for example in respect of criminal justice, asylum policy or family law. Here, opt outs are also the relevant instrument.
3. The Map
The different degree to which policies are connected in different clusters and the different degree of closeness with which member states might wish to associate with the different policy clusters can be put together as a theoretical map that reflects the two sets of considerations.
Annex 2 shows a theoretical mapping. It charts four cases. They are summarized in the table below.
Table
A MAP OF DIFFERENTIATION
|
Degrees of association |
||||
|
Policy clusters |
Pooled |
common concern |
wider |
domestic |
|
Case a |
13 |
0 |
0 |
1 |
|
Case b |
9 |
3 |
1 |
1 |
|
Case c |
5 |
5 |
2 |
2 |
|
Case d |
2 |
4 |
3 |
5 |
The mapping exercise reflected in the table above is a purely theoretical one. It is not intended to correspond to the actual preferences of any identifiable member state. The point is simply that, in theory, a much greater degree of policy differentiation in the EU is possible.
4. The Institutional Implications
The theory of “functionalism” that is often used to track or to “explain” the development of the EU as a political union asserts that if the EU performs an increasing number of functional tasks successfully then democratic forms of government at the EU level can be constructed following in their wake. The assumption is that policy making at the EU level brings democracy at the EU level following in sequence. What this means is that any concerns about the alleged “democratic deficit” in the EU should be put on hold. If more policies are pooled successfully in more areas then democracy will follow. Differentiation is an obstacle to this sequencing and from this perspective an obstacle to the development of EU level democracy.
The experience of the recent past runs counter to this logic. As EU policies reach more deeply into matters traditionally regarded as falling within the policy discretion of individual member states the democratic voice is increasingly being expressed at the national level. It is not simply a matter that demonstrators choose to express their opposition to policies set at the EU level in front of their own parliaments. Nor is it simply that new parties are emerging at the national level because traditional parties no longer seem to aggregate opinion about EU policies effectively among their own supporters. It is also shown in the way that the head of the ECB finds it necessary to explain ECB policies to the German Parliament and it is the German constitutional court and Parliament that sets limits on the bail out of Greece.
Greater differentiation has institutional implications that go with the grain of reattaching democratic sentiment about EU policy making to national democratic institutions, both for member states that want to pool more powers and for member states that want to pool less. One key issue is how to articulate the role of national parliaments.
Joining up national parliaments—the “subject to approval” test
One of the most powerful reasons for developing the EP as the focal centre for representative democracy in the EU is that it is difficult to see in practical terms how the voice of 27 or more national parliaments could be expressed in any collective form. Despite all its limitations as the voice of the people the EP seems to be the only available platform for representation.
The simplest way in which the national parliaments can be brought into play as the voice of democracy on EU measures is through a new legislative procedure that stipulates that any agreement reached in the Council of Ministers is subject to the approval of their parliaments under an agreed timetable for approval.
The procedure offers three main advantages:
First, it makes decisions of governments in the Council more transparent in front of national electorates.
Secondly, it recognizes that, for a variety of reasons, what is termed “executive dominance” over national parliaments is much weaker than in the past in a number of member states and that this new reality needs to be respected.
Thirdly, the reassignment of legislative responsibilities provides a way of exploiting the value of the EP as a platform for integrationist views (that cut across and often over-ride party distinctions in the EP) while acknowledging the strengths of national parliaments in “socialising differences” on a conventional left/right continuum. This ability of national parliaments to “socialise differences” needs to be harnessed in respect of the approval of European measures.
7. Conclusions
Greater differentiation represents a different model of how the EU might develop. It goes with the grain of recent developments in the EU where some member states want to pool more powers and others less. It also goes with the grain of the reassertion of democratic opinion through national institutions. It provides the means to hold together in one union a greater diversity of expression.
14 January 2013
Annex 1
POLICY CLUSTERS. ILLUSTRATIVE GROUPINGS
IMG (Internal market –goods) prohibition on tariffs & quantitative restrictions on goods originating in member states (TFEU Arts. 28 & 34). Prohibition on tax discrimination (arts 110–112).
IM NFS (Internal market non financial services) Prohibition on restrictions to provide non financial services within EU. (TFEU Art 53). Including professions (Art. 57). Right of establishment (Art. 49).
IM FiS (Internal Market—financial services). Prohibition on right to provide financial services in EU (TFEU Art.53). Prohibition on restrictions of movement of capital (Art.63). Measures versus terrorism funding (Art. 75) Measures versus money laundering (Art. 83).
IM INFRA (Internal Market Critical Infrastructure). Transportation (TFEU Arts 90–100) TransEuropean Networks (Arts 170–172) Energy (art 194) Telecommunications & postal services.
Rules on competition and against market abuse (COMP) (TFEU Arts 101–103). Rules on state aids (Arts 107–108) Consumer Protection (art. 169).
Economic, Monetary & Fiscal Union (EMF) economic policy a matter of common concern (TFEU Art 121) exchange rate policy of common interest (Art.142) Excessive deficit procedure (art.126). monetary policy (Arts 127–128) provisions specific to Eurozone(136–138).
Environment (ENV) (TFEU Arts 191–193) Fisheries (TFEU Arts 38–44).
Taxation policies (TAX) Re harmonization of indirect taxes (TFEU Art.113) Own resources policy (Art. 311).
Research & development (R&D) (TFEU Arts 179–190).
Freedom, Justice & Home Affairs (FJHA) Freedom of movement of workers (TFEU Art.45) measures in field of social security (Art.48) Absence of internal border controls (Art.77) Common policy on immigration& external border control & asylum (Art.67 & 78) Measures to promote police & judicial cooperation & approximation of criminal laws (Art.67) Judicial cooperation on criminal & civil matters (Arts 81 & 82) Measures in field of crime prevention & police cooperation (Arts 84–88).
Social & Cohesion policy (SOCCOH) CAP (TFEU Art 39) Employment (Arts 145–150) Social policy (151–160) Education, public health, territorial cohesion, (Arts 165, 167, 168, 174–178). Budget (Arts 313–319).
Foreign policy (EX FOR) (TEU chap.2. Sect. 1 Arts 23–41) inc development cooperation (TFEU Arts 208–211), cooperation with third countries (Arts 212–214) International agreements (Arts 216–219) relations with international organisations (Art. 220).
Security & Defence (DEF) (TEU chap.2. sect.2 Arts 42–46)
Trade policy (TRADE) Tariff policy towards third countries (TFEU Arts 28 & 31). Common commercial policy (TFEU Arts 206–207).
Annex 2
HYPOTHETICAL CHOICES BEHIND THE MAPPING OF DIFFERENTIATION
This annex illustrates some hypothetical choices of how far different member states might wish to associate themselves with different areas of EU policies.
|
Case a |
case b |
case c |
case d. |
|
|
IM G |
P |
P |
P |
P |
|
IM NFS |
D |
P |
P |
D |
|
IM FiS |
P |
P |
P |
W |
|
IM INFRA. |
P |
P |
CC |
CC |
|
COMP |
P |
CC |
P |
P |
|
EMF |
P |
CC |
CC |
D |
|
ENV |
P |
CC |
W |
CC |
|
TAX |
P |
D |
CC |
D |
|
R & D |
P |
P |
CC |
CC |
|
FJHA |
P |
P |
D |
D |
|
SOCCOH |
P |
P |
D |
D |
|
EX FOR |
P |
P |
CC |
CC |
|
DEF |
P |
W |
W |
W |
|
TRADE |
P |
P |
P |
W |