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In Every Nation for Itself: Winners and Losers in a G-Zero World, World Policy Institute Senior Fellow Ian Bremmer illustrates a historic shift in the international system and the world economy—and an unprecedented moment of global uncertainty.
From the Spring 2012 Speaking in Tongues issue
By Stanley Pignal
BRUSSELS—In a detailed three-page memo published nearly two decades ago, an unnamed European Union official set about codifying just what constitutes a good banana. Few could have predicted that “Commission Regulation (EC) No 2257/94 of 16 September 1994 laying down quality standards for bananas” would ever attract much outside attention. Even by the lexicon of regulatory documents, it is a turgid read. It lays down technical specifications for fruit imported or grown in the EU: their size (“minimum 14 cm”), how their crown is cut (“not beveled or torn”) and their shape (“free from abnormal curvature”). The blameless Eurocrat behind it could not have guessed that his proposals, which became law the following year, would morph into a cause célèbre among detractors of the European Union.
British tabloids led the charge, claiming the EU had become so regulation-crazed it even had an edict about “bendy bananas.” They used it as an illustration of how unelected bureaucrats were intent on burdening citizens in the EU’s 27 member states with unnecessary red tape. Even the banana rule’s partial repeal in 2008, part of a general amnesty for deformed fruit and vegetables, did little to quell the discontent of those who see the EU as a meddling force sapping national sovereignty. Periodically, the Commission still tries to fend off those rehashing the “bendy bananas” by explaining that setting such standards is the norm in all countries and essential for the smooth functioning of international trade. It is to no avail.
Laying aside the synthetic indignation of the British tabloids, the episode was among the first to highlight the creeping regulatory power of the European Union. Six decades of integration have turned Brussels, the home of the EU’s major institutions, into the principal drafting venue for laws that affect the bloc’s 500 million citizens. The historic shift towards monolithic, pan-European power—and it truly is historic—has continued even as the EU finds itself in the throes of a debt crisis that could call into question its very survival. From the environment to finance, anti-trust legislation to animal welfare, the union is increasingly governed by a single set of standards, which all too often are unevenly enforced or implemented. Quietly, EU norms have displaced national ones in a way even its own citizens do not always realize.
It is difficult to convey the scale of the EU’s regulatory ambitions. There is no nook or cranny of human activity in Europe that is not affected by it. As a gauge of the sheer amount of material that comes out of Brussels, consider this: Every year, the EU prints between 700 and 800 editions of its Official Journal, which compiles the decisions of the EU. The bulk of the Journal is dedicated to legislation that member states agree to observe. The physical copy runs to around 34,000 pages a year, taking up more than 13 feet of shelf space. And that is only for the English version. There are 23 official languages of the EU, from Slovak to Estonian to Portuguese to Irish and so on. Each gets a full translation on a daily basis.
A recent issue of the Journal, picked at random, gives a flavor of the scope. In 38 pages of text and some annexes, it describes how the EU has decided to increase the wages and pensions of EU employees working in Estonia to account for inflation; adjust fishing quotas in the Black Sea and nearby areas; approve the fungicide azoxystrobin and several related compounds for use in the EU; set the amount of aid for dried fodder at €33 ($43.50) per metric ton; tweak the standard import values for determining the entry price of certain fruits and vegetables; fix the export refunds on milk products, eggs, and pork; consent to a new fingerprinting scheme in the Czech Republic; approve several new bodies to certify sustainability in the biofuels sector; and call on member states to ensure all citizens are given access to basic bank accounts. That was the list for a single day—July 21, 2011—by no means an exceptional day.
“I would estimate that 60 to 70 percent of regulations in Europe today come either directly from the EU, or are measures taken in response to EU rules,” says Philippe De Buck, director general of BusinessEurope, a powerful employers’ lobby based in Brussels. Others put the figure closer to 80 percent. In all manners of policy, rules that once would have been crafted at the national level are now created in Brussels.
PACT ON STEROIDS
The reason for the growing regulatory clout of the EU, say policymakers, business groups, and lobbyists, is linked to the growing influence of the European Union. Half a dozen treaties since its inception in 1957, particularly the Lisbon Treaty of 2009, have bolstered the EU’s power in fields from foreign affairs to international trade. In many areas of policy, power has trickled upward from the national to the EU level. Of course, some powers, most notably over fiscal policy, have remained in the hands of governments, a hard reality which has caused many of the problems the Eurozone is now experiencing. The process of governments granting the EU more authority continues to come in waves. The strongest, which took shape in the mid-1980s, resulted in the gradual creation of a single market for goods and services in the then-12 countries of the EU.
The single market acts as a sort of international trade pact on steroids, eliminating non-tariff barriers stemming from divergent local regulations. So any attempt by national governments to come up with home-grown regulation is now interpreted as a de facto barrier to intra-EU trade, thus breaching the spirit, if not the letter, of the single market.
For EU countries, a single market has offered something akin to regulatory economies of scale. Actions once taken by 27 countries individually can now be done at the European level instead. Take, for instance, the regulation of chemicals—hardly a matter of high politics for any country, but a requirement nonetheless. In the past, each member state had its own regulations, which were broadly similar but could vary in important respects. This is problematic for a single market. If you can use a given chemical in Germany but not in Austria, it becomes necessary to police the import of all chemicals crossing the border. The EU rationale is that this is undesirable, and so it opted to harmonize the chemical laws instead. In 2005, the sweeping REACH regulation (short for “Registration, Evaluation, Authorization and Restriction of Chemicals”) did exactly this, building on previous EU rules.
Instinctively, this new tier of government, layered atop Europe’s nanny states, would appear to be an unwelcome added burden for businesses operating on the continent. The European Union is renowned for its snail-paced, indecisive decision-making, as the Eurozone crisis has shown. In fact, European-level regulation is overwhelmingly favored by businesses. Their rationale is that even though EU regulations are sometimes cumbersome and onerous, it is inevitably better to have one set of rules applied to the bloc than 27 divergent regulations at national levels. This is true even if the standardized rules are more stringent than some of the local regulations being replaced.
“A lot of businesses are willing to sacrifice quite a lot to get a single set of rules across Europe,” says Michael Raffan, head of the financial services group at the law firm Freshfields. “There is a limit, of course, but many see it as a big advantage.”
The case of REACH and chemicals is often invoked by businesses. On one hand, they decry the regulation as meddling and overly concerned about the potential health effects of chemicals that have been used without causing apparent harm for decades. REACH is undoubtedly tougher than some countries’ previous laws. But the advantage for businesses is that there is one single valid framework across the EU, eliminating the need to apply for permits in Germany, France, Italy, and wherever else they may have operations.
This requires a certain amount of sovereignty to be ceded by governments—or rather, the agreement by governments that each follows the same rules. Take driving licenses. Few doubt that it is desirable for licenses issued in any EU country to be recognized and accepted in any other member state. That only works if the requirements for issuing driving licenses are at least broadly similar. No EU country wants to have cars on its road driven by people who have not passed a test. But what if the Hungarian government wants to scrap all driving tests? It could, but it would have to leave the union. Conformity with the rules is the price to pay for the benefit of the single market.
National governments have wholeheartedly supported this process of European regulatory integration. Those who think that “unelected Eurocrats” are at the heart of all EU rule-making misunderstand the union’s politics. After all, it was national governments that endowed the European Commission, the EU’s executive arm, with the power to propose new regulations. But governments retain a large say over the crafting of EU laws. The EU Council, which must agree to all legislation, is made up of the 27 national governments, with voting rights allocated roughly in accordance to each country’s population. Depending on the dossier, the Council either has to agree unanimously or by hefty majority, which means in practice that larger member states exercise an effective veto.
The bulk of EU legislation consists of a negotiation between the Commission, which is appointed by national governments, and the national governments themselves in the Council. There is also the European parliament, which acts as a lower chamber and whose powers have grown considerably under the new Lisbon treaty. Since 1979, its members have been elected directly—previously, parliamentarians from national chambers volunteered for part-time European duty. Though it now also gives its assent to nearly every new regulation, and occasionally dramatically amends legislation, it remains the weakest institution in the process since it cannot originate legislative proposals.
The key to understanding the system is that EU-level regulation is not a case of Brussels imposing rules on national governments, but rather national governments imposing rules on themselves—and each other—via Brussels.
Still, the single market frequently falls short of its founders’ aspirations. Large swaths of policy remain exclusively within the preserve of national governments, with the EU retaining little say. There are basically no EU-level rules dealing with pay and working conditions—too politically sensitive to devolve from national democracies to the European level. There is no EU minimum wage nor standard retirement age, mandatory holidays, or income tax. In fact, most tax policy remains under national government jurisdiction, with little Brussels can do about it. EU-wide taxes are possible but only if agreed upon unanimously. Britain has used this to block the creation of a European tax on financial transactions, or Tobin tax, though France, Germany, and the European Commission are all pushing for one. Working conditions also differ widely. Doing business in Latvia—with its flat taxes, low wages, and low benefits—is quite different from doing business in Italy, where taxes, benefits, and wages are all high.
But even in those fields where Brussels has extensive powers to regulate internal markets, there is a chasm between theory and practice when it comes to EU regulation. Put bluntly, when looking at the enforcement of its rules, the EU starts looking less like a federal system in the mold of the United States, and more like the United Nations—a debating society that requires others to enforce decisions arrived at by its members. While there is an elaborate machinery to create legislation at the European level, there is no equivalent mechanism to enforce it. Despite five decades of integration, there is no European Union police nor an overarching legal system allowing courts across the continent to issue rulings based on EU law. Consider that the United States government has around two million employees, while the European Commission has just 30,000, the vast majority devising new policies in Brussels rather than enforcing existing ones. Thus it falls to national governments within member states to enforce EU rules. Some do so more enthusiastically than others, to the detriment of the single market.
The problems of non-enforcement start even before EU regulations come into force. Lacking an overarching legal structure, EU rules typically take the form of “directives,” legal acts which member states must transcribe into national law for them to take effect. The reason for this set-up is practical rather than ideological. With so many different legal traditions, it is impossible to develop a single text at the European level which courts in common-law Britain, say, will interpret in the same way as those in Roman-code France. “Every legal system is different, there is no way to harmonize an entire legal infrastructure,” says William Robinson, a European commercial law specialist at Freshfields. The complex solution crafted by the EU is to compel governments to pass a version of each overarching directive through normal national-level legislative processes. This amounts to recreating 27 national laws from a single EU mandate. Not surprisingly, in practice, fudges almost always occur. Implementing technocratic rules on telecoms regulation or chemical standards can easily fall in the face of a national government’s political priorities. This is particularly the case if the administrator who promulgated the text at the EU level is toppled before the directive is implemented. Often, directives are transposed incorrectly or partially. Conversely, some countries push further than the EU regulations, “gold-plating” the directive with additional burdens, and straying from the ideals of the single market.
Poor transposition and enforcement can lead to incongruous fights pitting one European country against another. One current example involves chicken coops, irate farmers, and errant governments. In 1999, under pressure from animal rights groups, the EU agreed to phase out the use of old-style chicken coops in favor of more humane farming methods. Member states had 12 years—until January 1, 2012—to comply, giving them ample time to pass the directive and get farmers to conform to the law. This is not cheap. In Britain alone, over €400 million has been spent on the upgrade.
But as farmers in Britain started dismantling their soon-to-be illegal coops, many complained about an unexpected twist—on eBay and specialist farming equipment venues, their coops were being snapped up by farmers in other EU countries. Their suspicions of foul play were soon proved correct. It emerged that no fewer than 13 EU governments had failed to implement the directive agreed upon in 1999 and were thus in essence ignoring the new rules that Britain was intending to observe. “It is unacceptable that after the ban on battery cages comes into effect around 50 million hens across Europe will still remain in poor conditions,” said British agriculture minister Jim Paice. The Commission says that 46 million hens out of about 330 million in the EU are still being housed in conditions that, in theory at least, are in breach of EU standards.
This is bread and butter single market stuff. If goods (in this case, eggs) are to be able to cross European borders seamlessly, regulations governing their production must be the same across the bloc. But even this is difficult to get right. “Inevitably, implementation depends on national rules, national customs, national habits,” says BusinessEurope’s De Buck.
With so many traditions of implementing the rule of law, this is hardly surprising. Monique Goyens, director general of BEUC, an umbrella group of over 40 national consumer rights organizations, shares De Buck’s frustration: “You see huge differences in how European law is implemented at national level,” she says. “Non-enforcement of EU rules is one of our biggest problems.” For an organization like BEUC, the failure to implement means that the benefits they campaigned for evaporate.
The errant chicken coops were a clear-cut breach of EU rules, but infringements are usually more subtle. The never-ending task of ensuring EU regulations are implemented and European treaties upheld lies with the European Commission. It has the power to take governments who fail to live up to their EU commitments to a system of European courts designed for this very purpose. The judges of the Court of Justice of the European Union, based in Luxembourg, have the power to impose fines worth tens of millions of euros a day on national governments who flout EU rules.
Every month, the Commission unveils a new “infringement package” outlining the areas where it thinks governments are failing to live up to their EU promises. This is an opportunity for Brussels to flex its muscle and potentially embarrass national governments. The first package of 2012 contained no fewer than 288 perceived infringements, all of which must be rectified by governments if they want to avoid court-imposed fines. The 13 countries who failed to implement the chicken coop directive were included. All but five of the EU’s 27 governments were targeted, including its biggest members, Germany and France.
The breadth and scope of past EU regulation is reflected in the enforcement action. Finland and Portugal have both been taken to court for breaching EU standards on driving licenses. This comes after a handful of prior reminders, as the Commission points out. Three years after a directive was passed making it easier for those with diabetes, epilepsy, or partial blindness to obtain a driving license, neither country has implemented the rules. Both have faced political upheaval—and a bail-out in the case of Portugal—but that is of no concern to the Commission. A single market relies on rules, which it wants to see enforced.
In the same infringement package, Belgium is being formally asked to change a tax rule designed a decade ago to attract foreign investors. The rule grants a tax break only for those Belgian companies that invest in Belgian real estate, thus discriminating against those that want to buy property in other EU countries. Even though the measure is central to Belgium’s economic strategy, the government now has to change it or face being taken to the European court in the spring.
This whole infringement mechanism—a mix of political and judicial processes—can take years from the moment the Commission identifies a problem until fines are imposed. More often than not, governments comply quickly, if only to dodge “Brussels attacks government” headlines in their national press. In some instances, governments see a slap-on-the-wrist fine as worth the price—financial or political—that may accrue to simply ignoring any ruling and the attendant penalties.
There are currently over 2,000 infringement procedures open, according to the Commission, though only a tiny number have gone to court and resulted in fines. In the past decade, nine cases have resulted in penalties. Coughing up €20 million in 2005, France holds the record for the largest daily fine for refusing to comply with EU regulations on selling undersized fish. The dispute focused on whether Paris had for two decades willingly turned a blind eye to the fact that its fishermen were selling undersized fish, in direct breach of European rules designed to protect dwindling stocks. French government inspectors were found idly watching undersized fish being offered at auction in six French ports, unwilling to confront powerful fishing unions. The cynical attitude—Paris repeatedly promising to crack down on the illegal fish sales while doing nothing—was cited by the court as a reason for the bumper fine.
So what can Brussels do to remedy this gap between regulatory theory and reality? In practice, its scope for action is quite limited. The Commission is unelected, though its composition is rubber-stamped by the European Parliament at the start of its mandate.
It knows full well that it cannot venture too boldly into sensitive national debates, particularly if that means pitting itself against elected governments. The tools at the Commission’s disposal are the ability to name and shame governments and to bring a case to the European court. Any more potent action risks political backlash.
Already, decisions made in Brussels, or in Luxembourg by the court, can lead to very public debates on the value of the European Union. Take a case last year when the court decided to ban insurance companies in the EU from offering lower prices to female drivers. The insurance industry had justified the price differences on the basis of statistical data that showed women were less likely to cause auto accidents than men. Similarly, men received higher monthly retirement payouts from private providers, because actuarial tables showed their pension pot needed to be spread over fewer post-retirement years. The EU said these longstanding practices by insurers in some EU countries amounted to illegal discrimination. The backlash was felt immediately—Brussels was “meddling” in an area where it had no business. Commission officials wince when such decisions fall, worried about their ability to put forward new regulations if existing ones attract public opprobrium.
Still, there are some narrow fields where the European Union does manage to act as enforcer rather than creator of regulations. This is most notably the case in anti-trust matters, when Brussels can impose fines that bite—up to 10 percent of global sales on a company found breaching competition rules—a power it has used against Microsoft (a €899 million fine in 2008, then worth some $1.35 billion). Microsoft, which at one point faced daily fines of €1.5 million, was charged with harming competitors by “bundling” products with its dominant Windows operating system. The company was stunned that a European regulator would take such an activist stance. Brussels’ view was that, even though the company was U.S.-based, its anti-competitive activity had harmed EU consumers, and thus was liable.
Brussels also acts as the arbiter of whether large mergers or acquisitions hurt consumers, just like the federal government in the United States. The competition commissioner can demand substantial concessions from merger parties, such as the sale of large parts of the combined business. Ultimately, Brussels can block mergers entirely, even in cases where the companies involved are based outside the EU but seek to do business there—as General Electric found out when its 2001 takeover bid for Honeywell was foiled by Mario Monti, then competition commissioner. The proposed tie-up of the New York Stock Exchange and Deutsche Börse was foiled by the Commission in February when the remedies it demanded to clear the deal—namely by selling off lucrative parts of their businesses—proved unacceptable to both parties.
Despite the cumbersome process required to craft EU-wide norms, the regulations are generally seen as being of mixed quality, a similar critique could equally apply to regulations made at a national level. Though most EU rules work perfectly well, there are occasional examples of poorly drafted laws, which supporters of the European project say damage the credibility of European-level regulation.
In 2007, there was a concerted push to limit workers’ exposure to electro-magnetic fields, such as hospital X-rays. Only after the directive was approved did it become clear that the new regulations would effectively ban the use of MRI scans, a basic tool in the fight against cancer. Implementing the directive has been repeatedly postponed, but it still threatens to make it onto the statute books even today. If unaltered, it will likely prove to be yet another
sweeping regulation, sweepingly ignored.
This followed another ill-fated directive that the EU nixed in the very last stages of the legislative process in 2005. Dubbed “the sunshine directive,” it also worried about the exposure of workers to harmful rays. But by including excessive doses of natural sunlight in its definition of rays, the EU near-proposal threatened to banish many outdoor jobs, at least according to its critics. “Will German barmaids be forced to cover their cleavage?” the German popular press asked. Still, 260 members of the European parliament voted for the measure, but were outnumbered by 397 opponents.
Many who are close to the policymaking process say European regulations often benefit from being conceived behind closed doors. “Discussions on new regulations are often more removed from public opinion than in the United States, so policy outcomes can be less swayed,” says James Stevens, senior vice president of Fleishman-Hillard, a communications group that engages in lobbying activities in Brussels. There is little of the paralyzing partisanship of American politics. Though the European Parliament’s competing political parties frequently disagree on political issues, they all have a common interest in winning the parliament more powers. As a relatively new institution, the chamber still frets about being excluded from the major decisions made by the EU. This cross-party desire to maximize influence often leads to factions in the parliament being in firm agreement about the importance of granting more powers to the European Union. It is up to the member states’ government to temper the parliament’s attempts at securing such power.
Stevens cites the EU’s ambitious emissions trading scheme as an example of a policy that might have been stillborn had it faced the full glare of political scrutiny in early stages. The EU, following scientific advice, has the most ambitious carbon reduction targets in the world. This only partly reflects the views of its citizens. Though there are fewer outright climate change skeptics in Europe than in the United States, public opinion in Europe remains divided. The EU itself, however, is unambiguously for carbon cuts. This has led to the creation of an ambitious cap-and-trade scheme. Part of this reflects the lack of interest in EU politics among most EU citizens, Stevens infers. Officials are left to follow the scientific advice without having to pander to voters’ prejudice.
The EU regulatory process is also incredibly slow by most national standards. Bills can take years to pass, often dragging on for the full five-year term of both the Commission and the parliament. They are often delayed at every twist and turn by having to be translated into the EU’s 23 national languages—even languages like Maltese, virtually all of whose 400,000 speakers also are fluent in English or Italian.
Another unique feature of the European system is that scrapping regulations is often just as cumbersome as creating them in the first place—if not more so. This is particularly true of directives that have already been transcribed into national statute books. “Reversing a directive is difficult,” says De Buck of BusinessEurope. “Just because you scrap the EU-level law does not mean that each member state reviews the legislation which they passed to comply with the directive in the first place.” In practice, an EU directive dies only if it is replaced by another EU rule in the same area. Businesses are aware of this danger and so are wary of asking that regulations they don’t like be scrapped. “You don’t want to ask for an area of regulation to be reopened if the outcome could be even worse,” says De Buck. Seeking greater leniency, the chemicals industry has called for a revisiting of the sweeping REACH directive that reshaped the sector in 2007. Now that the dossier is being revisited, it is becoming increasingly clear that the new rules will be even more stringent. The industry line is that no changes should be rushed through.
If anything, Brussels is currently gearing up for a tsunami of new regulation, and the financial sector is firmly in the EU’s sights. Banks have been required to bolster their regulatory capital levels and undergo “stress tests” administered by a new EU watchdog, the European Banking Authority, which unites the 27 national-level regulators. Credit rating agencies are defending themselves against proposed rule changes, as are audit firms and hedge funds.
These initiatives—and many more—are currently being overshadowed, at least publicly, by the eurozone crisis. But while national leaders prevaricate over how to stem the downturn, the EU bureaucracy in Brussels is chugging along in the background. “When it comes to regulation, the day-to-day activity of the EU is happily going on regardless of the crisis,” observes Stevens, the lobbyist. This is sometimes lampooned in the press as eurocrats rearranging the deckchairs of the eurozone Titanic but that perspective is misguided. Any reduction in EU regulation would be perceived by the same people as a sure sign of the impending demise of the whole one-Europe project.
ADAPTING TO CHANGE
That does not mean the eurozone crisis will not have a tangible impact on EU regulation. The shape of the bloc is changing as it seeks to adapt. The realization that a lack of economic competitiveness is at the very heart of Europe’s current malaise has bolstered the case of those pushing for a more unified market and faster structural reforms. Sadly, such medium- and long-term thinking only surfaces in the quiet moments with no fires to fight or “last-chance summits” to focus on. The issue of deepening the single market to accelerate economic growth will gain traction when the most acute part of the crisis abates. That, at least, is the hope of the European Commission.
Decision-making among the 17 members of the eurozone is changing, too. Germany, whose balance sheet is indispensable for bailing out the struggling countries on Europe’s periphery, is demanding more “fiscal integration” as a pre-condition for its participation. This is meant to resolve the asymmetry of having an economic union without a fiscal equivalent. In practice, it means Berlin asking the rest of the continent to be more German, most notably by keeping public finances on a sound footing and by moderating wage growth to boost productivity. The hope is that painful reforms in Greece and other member states will mollify German public opinion, intolerant of having workers in the “garlic belt” retire several years earlier than their German peers. It wants to exert pressure to change via the EU, where it is the biggest member by wealth and population.
How successful it will be remains to be seen. Reforms are assaulting the very heart of the welfare state that Europe has spent decades trying to build. Any changes will not come via directives or other cumbersome agreements led by the unelected European Commission in Brussels. It remains too weak and too unaccountable for that. Rather, intergovernmental agreements struck directly between national leaders, often in the small hours of the morning following exhaustive and exhausting negotiations, are becoming the norm. This is a new direction for Europe, with less prominence for the “community method,” where the Commission, parliament, and European courts have precedence. This will mark a threat to the single market, which depends on a powerful Commission for its continued success. It is also a recognition that many of the smaller, newer fringe members of the EU and the eurozone are simply unable or unwilling to accept the hard decisions being taken by some of their bigger, more venerable counterparts.
“The eurozone crisis has changed the dynamic in Europe,” says Mats Persson, director of Open Europe, a London-based euroskeptic think-tank. “Europe is grabbing power as a consequence of Berlin wanting more control over elements of social policy in exchange for lending its credit rating.”
How Europe conducts its business, including the way it regulates various fields, is bound to evolve as it works through its debt crisis. But the economic rationale for European-level rule-making is overwhelming and has not been questioned fundamentally during the past fraught year. The path to dynamic European growth goes through more harmonized EU rules that will deepen its single market. Whether that happens depends on how EU regulatory institutions emerge from the current crisis—particularly the European Commission. If they fade in importance, because the EU becomes governed more directly by national leaders meeting in late-night summits, it could mark the start of a muted period for the single market. National leaders demanding rapid solutions to please bond markets say they can’t rely on the sclerotic structures of the EU to make and enforce decisions. But the single market needs the slow-and-steady push by the Commission to thrive.
The Brussels institutions want to convey the image that it is business-as-usual during the crisis. Witness the 288 threatened lawsuits of the “infringement package” tackling the errant governments over chicken coops, driving licenses and the like. Taking governments to court over minor peccadilloes in this fashion may seem quaint to outsiders, but it is the beating heart of the single market. Will governments decide that, with the very survival of the EU in question, it is time to focus on big questions rather than sweating the small stuff? Governments have definitely reclaimed power as a result of the crisis, leaving the Commission in a far weaker position than before 2008. In terms of authority, it is a shadow of its 1980s self that imposed the single market. It continues to churn out regulation, as witnessed by its bulging Official Journal, but much of it pre-dates the eurozone crisis.
Like the rest of Europe, the Commission’s focus has been on sorting out the economic mess rather than the hum-drum task of keeping the single market thriving. Thus far, it has done a creditable job. But it remains the political tool of member states, who decide how much EU regulation they are willing to countenance. With so much on their plate right now, it is not hard to see how unpopular EU regulation in technical areas might slip down their agenda. British tabloids will cheer, rejoicing that cutting off the European regulatory machine will lead to less nonsense about “bendy bananas.” But on the contrary, far from being good news for European businesses, less red tape in this instance could result in more constraints. Corporations, no less than voters or eurocrats, need to understand the clear and present dangers of too little action rather than too much.
Stanley Pignal has been a Financial Times correspondent in Brussels since 2009.
[Photo: Jeff Werner]
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