Lecture 1' Course description and EU evolution

1
Lecture 1. Course description and EU evolution

• Objectives
• To introduce the course, assessment,
  administration etc.
• To outline some of the issues to be discussed
  in the course
• To familiarise students with the institutional
  development of the EU since 1958 in the context
  of the debate on the EU draft constitution

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The European Economy courseModule A

• Course focus is on the methods, consequences and
  management of economic integration in Europe
  within the European Union
• How should we manage integration?
• How can the EU add value to national actions?
  What is the appropriate division of competences
  between the EU, Member States and regions? What
  budget resources should EU have?
• the economic welfare effects of different types
  of economic integration
• Customs union, single market, factor market
  mobility
• selected EU sectoral policies
• Agriculture, industry and research, competition,
  social and employment
• EU external policies
• Trade policy, development cooperation policy

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The European Economy

• Module 2 (Mr Alan Murphy) deals with monetary
  integration, the euro, EU trade policy and
  regional issues
• Texts El-Agraa other texts
• Assignments and assessment
• Class programme
• Web site
• Contact
• Alan Matthews
• Room 3013
• Email Alan.Matthews_at_tcd.ie

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Part 1. How to structure thinking about EU
evolution

• Three suggestions
• Widening, deepening, enlargement
• Balassas stages of integration
• The idea of an economic constitution (Pelkmans)

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Deepening, widening and enlargement

• Pelkmans distinctions between deepening,
  widening and enlargement as different dimensions
  of integration
• Examples of deepening
• Court's Cassis de Dijon ruling which led to
  introduction of the mutual recognition principle
  for technical standards giving EU its own budget
  resources use of qualified majority voting (QVM)
  in single market matters
• Examples of widening
• EMU, environment, social chapter, etc.
• Examples of enlargement
• UK, Irish and Danish membership in 1973
  Eastward enlargement in 2004

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Balassa stages of economic integration
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Critique of Balassa stages

• Stages seen as a move from negative to positive
  integration
• Presented in a functionalist perspective as a
  inevitable process of dynamic integration
• BUT
• Stages do not reflect the actual experience of
  the EU. Classification is a taxonomic rather
  than an ordered one (i.e. running from lower to
  higher degrees of integration)
• Positive integration required in mixed economies
  even in the earliest stages of integration
• Vision of a centralised union as the end goal
  ignores the economic theory of federalism and the
  need to search for the optimal distribution of
  powers

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Elements of an economic constitution

• economic aims, such as balanced growth, full
  employment and so on
• the means or instruments available to fulfil the
  economic aims, i.e. the powers assigned to the
  state to pursue these aims and undertake these
  functions
• the institutional architecture, what institutions
  are established, what are their powers, how
  decisions are taken etc.

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Part 2.Milestones in EU development

• Origins and the EC-6 (1950-1973)
• differences in Franco-German and UK/Scandinavian
  perspectives on motives for integration
• 1951 European Coal and Steel Community
• 1955 Spaak Committee
• 1958 EEC and Euratom Treaties
• 1961 formation of EFTA by UK and Scandinavians
• 1960s period of successful growth attributed to
  EC

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Economic powers under the Rome Treaty, 1958

• Economic aims
• harmonious development of economic activities
• continuous and balanced expansion
• increase in stability
• accelerated raising of the standard of living
• Means
• common market
• approximation of economic policies (e.g.
  competition, agriculture, transport)
• Institutions
• Very weak powers of the EP, largely
  inter-governmental decision-making in the Council
  of Ministers

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Limitations of the economic powers under the Rome
Treaty

• Existence of escape provisions allowed Member
  States to postpone commitments
• Large areas of policy left out of Treaty
  altogether (e.g. industrial, regional,
  macroeconomic policies)
• No clear mechanism to extend economic
  competencies, apart from Article 308 (ex Art 235)
  which provides for the widening of EU powers
  without treaty revision, but on the basis of
  unanimity, and only if such a new competence
  falls within the operation of the common market
• Requirement for unanimity (formal and informal
  the Luxembourg compromise)

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Milestones in EU development

• Enlargement and stagnation (1973-1985)
• 1973 first enlargement (UK, Ireland and Denmark)
• Integration stagnated in the decade after 1973,
  partly due to the unfavourable external
  environment (oil prices and monetary instability)
• Euroschlerosis
• Much of period dominated by bad-tempered rows
  over budgets
• Second enlargement (Greece 1981, Spain and
  Portugal 1986)

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Milestones in EU development

• The Delors period (1986- 1993)
• First Intergovernmental Conference in 1985 led to
  1986 Single European Act which launched the
  single market programme
• budget resources increased and placed on a
  medium-term footing
• Structural Funds strengthened and given more
  focus
• 1993 European Economic Area
• two intergovernmental conferences (on economic
  and monetary union and European Political Union)
  led to Treaty on European Union (Maastricht)
  ratified in Nov 1993
• EU agenda expanded to three pillar structure to
  include justice and home affairs, and foreign
  policy and security

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The value added of the Single European Act, 1986

• No changes to aims or principles
• Changes to the means
• definition of the internal market as an area
  without frontiers
• addition of specific instruments such as
  environment and RD and EMS cooperation, as well
  as economic and social cohesion and health and
  safety at work
• addition of mutual recognition as a regulatory
  principle
• Institutional changes
• far more qualified majority voting on internal
  market matters
• formalisation of role of the European Council
• greater powers for the EP

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Maastricht Treaty on European Union, 1992

• Reformulation of economic aims
• harmonious and balanced development of economic
  activities
• sustainable and non-inflationary growth,
  respecting the environment
• a high degree of convergence of economic
  performance
• a high level of employment and of social
  protection
• the raising of the standard of living and the
  quality of life
• economic and social cohesion and solidarity among
  the Member States
• Means and instruments
• introduction of a third instrument, EMU
• expansion of common policies (esp. RD,
  infrastructure, consumer protection and the
  social protocol)
• Institutions
• introduction of principle of subsidiarity

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Milestones in EU development

• Post-Maastricht blues
• ratification difficulties revealed public
  scepticism for EU project
• deep and prolonged recession, related to the
  aftermath of German reunification and the need to
  curb government budget deficits in the run-up to
  EMU.
• The 1995 enlargement from 12 to 15 to include
  Sweden, Finland and Austria exposed the
  inadequacies of the institutional structure of
  the Community.
• Santer Commission weakened by BSE and fraud
  difficulties

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Milestones in EU development

• Fourth IGC concluded in 1997 with Treaty of
  Amsterdam
• Intended to address the institutional changes
  needed for enlargement, but failed to do this
• Nonetheless
• Extended QVM
• Strengthened role of EP as co-legislator
• Introduced mechanism for flexible cooperation
• Transferred some third pillar actions to the
  first pillar
• Introduced new competences, e.g. employment

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Treaty of Amsterdam, 1997

• Economic aims
• Strengthens references to the employment
  objective
• Means and instruments
• Adds new, or extends, policy competencies in
  areas of consumer protection, employment,
  environment, public health, free movement of
  persons (moved from third pillar)
• Institutions
• role of the EP significantly broadened in the
  first pillar
• Introduction of flexibility (enhanced cooperation)

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Milestones in EU development

• Fifth IGC concluded in 2000 with Nice Treaty
  which came into force in February 2003. Designed
  to prepare EU for enlargement
• Streamlining of the Commission
• Seats in the European Parliament
• Reweighting of QVM
• Limited extension of QVM
• Easier access to the flexible co-operation
  procedures
• But general agreement that the IGC process had
  been fatally flawed. Post-Nice process initiated
  with a Declaration on the Future of Europe.

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The Treaty of Nice, 2003

• Institutional reform
• size and representation in the Commission College
• reweighting of voting strengths
• limitations on unanimity requirement
• Enhanced co-operation
• conditions under which sub-groups of EU members
  might be allowed to proceed with further
  integration

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The post-Nice process

• Laeken European Council Dec 2001 established a
  Convention on the Future of Europe
• Better division and definition of competence in
  the European Union
• Simplification of the Unions instruments
• More democracy, transparency and efficiency in
  the EU
• A European constitution
• The Convention process
• Completed in June 2003. Sixth IGC launched in
  Oct 2003, completed under Irish Presidency early
  2004

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The draft EU constitution

• EU President European Council President, to give
  the EU a public face and improve strategic
  guidance
• Foreign policy New EU foreign minister to give
  Europe more visibility on the world stage with a
  common foreign and security policy
• Defence A core group to lead the way in
  defence cooperation.
• Justice and Home Affairs EU will get new
  immigration and asylum powers
• Fundamental rights A charter of rights,
  including the right to strike.
• Commission reform Smaller Commission
• Decision-making Change in definition of
  qualified majority, fewer national vetos, more
  powers for the European Parliament
• National parliaments A new role in scrutinising
  proposed EU laws
• Legal changes Three treaties merged, with an
  exit clause
• Deeper union A mechanism for possible abolition
  of national vetoes in all remaining fields.