European Union
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About this ebook
Managers and executives, from EU Member States and from third countries, will find answers to practical questions concerning the role of the Union's principal institutions, and their impact on business issues.
The recent Greek, migration and Brexit crises have revived the interest among citizens as to the purpose and governance of EU institutions, which have acquired unprecedented power that impacts our daily activities and finances.
In addition to covering the main subjects of constitutional, law-giving, competition policy of the EU, its international trade, and the Commission's ambitious enlargement programme, the author discusses the need for the Union to further reform its operating frame in order to set the foundation for 'Europe of the 21st century', and outlines possible scenarios for doing so.
Students and managers from countries which are candidates for, or aspire to membership, are likely to find this text helpful in understanding Europe in clear terms.
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European Union - Jacques N. Couvas
EUROPEAN UNION
Institutions, Law, Trade, Future
JACQUES N. COUVAS
PNYX PRESS
2nd edition
EUROPEAN UNION
Institutions, Law, Trade, Future
2nd Edition
By Jacques N. Couvas
Copyright © 2016 by Jacques N. Couvas
The moral right of the author has been asserted
All rights reserved
PNYX PRESS
E-Book ISBN: 978-3-96028-929-6
GD Publishing Ltd. & Co KG, Berlin
E-Book Distribution: XinXii
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Licensing Agreement
This book is licensed for your personal enjoyment only. This book may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each reader. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please return to your favourite retailer and purchase your own copy. Thank you for respecting the hard work of this Author.
Not to be copied, distributed, peer-shared, or otherwise disseminated in any form and format and by any technology process(es). No part of this work may be used or reproduced in any manner without prior written permission from the Author. Not for resale or any other commercial use.
Citations:
Couvas, J.N., EU Institutions and Law (Pnyx Press, 2nd ed., 2016)
Inside cover picture:
Enlèvement d’Europe, Noël-Nicolas Coypel (1690-1734), Philadelphia Museum of Art (2014).
External cover picture:
The Flight of Europa, sculpture by Paul Manship (U.S.), 1925.
Photo by Flickr user cliff1066.
Table of Contents
Abbreviations
Preface to the second edition
1 The formation of the European Union
The beginnings
1.2. The EEC: 1957-1993
1.2.1. In search of new identity: 1969-1986
1.2.2. The Single European Act
1.3. Treaty of Maastricht: EU version 1
1.3.1. Incremental fine-tuning: Amsterdam, Nice Treaties
1.3.2. Project for a European Constitution
1.4. On the way to Lisbon: EU version 2
Conclusion
2 The Treaty of Lisbon
2.1. A jubilee and three mandates
2.2. Reform Treaty signed at Lisbon
2.3. Challenges to ToL ratification
2.4. Nature of the Treaty of Lisbon
Conclusion
3 The institutions of the Union
3.1. The European Parliament
3.1.1. Powers of the EP
3.2. The European Council
3.2.1 Powers of the European Council
3.3. The Council of the EU
3.3.1 Powers of the Council
3.4. The European Commission
3.4.1. Decision-making procedures
3.4.2. Powers of the Commission
3.5. The Court of Justice of the European Union
3.5.1. A particularity of ECJ: The Advocate General
3.5.2. Powers of the Court of Justice
3.5.3. The ECJ in figures
3.6. The European Central Bank
3.6.1. Structure and governance
3.6.2. Powers of the ECB
3.7. The European Court of Auditors (‘ECA’)
3.7.1. Structure and organisation of the ECA
3.7.2. Decision-making and powers of the ECA
3.7.3. Whistleblowing
Conclusion
4 How the EU creates legislation
4.1. What is Law
4.2. Competences of the European Union
4.2.1. Exclusive competences
4.2.2. Shared competences
4.2.3 Coordinating competences
4.2.4. Complementary competences
4.3. How law is made in the EU
4.3.1. Steps of the ‘ordinary’ legislative procedure
4.3.2. Steps of ‘special’ legislative procedures
4.4. Direct Union Law
Regulations
Decisions
4.5. Indirect Union Law
Directives
Recommendations
Soft law instruments
4.6. Constitutionalism in EU Law
4.6.1. Subsidiarity
4.6.2. Proportionality
4.6.3. Protocols and Declarations
4.6.4. Supremacy of EU Law
4.6.5. Direct effect
4.6.6. Horizontal direct effect
4.6.7. Indirect effect
4.6.8. Judicial enforcement of EU Law
4.6.9. Harmonisation of legislation
Conclusion
5 EU Competition Law
5.1. Evolution of competition law
5.1.1. The American paradigm
5.1.2. Competition law and economics
5.1.3. Elements of economic analysis
Demand, supply and price
Costs
Markets
Barriers to entry
5.2. EU competition law under the Treaty of Lisbon
5.2.1. Agreements under Article 101 TFEU
5.2.3. Generic types of agreements and related restraints
5.2.4. Agency Agreements
5.2.5. Horizontal block exemptions
5.3. Dominant position and abusive practices
5.3.1. Dominant position
5.3.2. Abuse of dominant position
5.3.3. Predatory pricing
5.4. Merger control in the EU
5.4.1. Mergers & Acquisitions
5.4.2. Joint Ventures
5.5. State Aid
5.6. Recent cases
5.6.1. Abuse of dominant position: Google
5.6.2. Cartel behaviour: European Truck Industry
5.6.3. State Aid to Spanish football clubs
5.6.4. State Aid to Apple, Inc. by Ireland
Conclusion
6 International Trade and the Union
6.1. Trade: core nature of the EU
6.1.1. Trade agreements
6.1.2. The World Trade Organisation
6.2. New trends: intercontinental trade agreements
6.2.1. TTIP
6.2.2. CETA
6.2.3. TPP
6.3. Trade between the EU and Turkey
6.3.1. Brief historical background
6.3.2. Customs Union Agreement, EU - Turkey
6.3.3. CUA: the facts
Conclusion
7 EU Enlargement Policy
7.1. Conceptual framework in EU enlargement
7.1.1. European integration
7.1.2. Europeanisation
7.2. European Neighbourhood Policy
7.3. Becoming a member: formal process
7.4. Turkey’s EU membership saga
7.4.1. How it all began
7.4.2. Current status of the accession process
7.4.3. Commission’s ‘Progress Report’ 2015
7.4.4. An additional obstacle
7.4.5. Pre-accession financial assistance to Turkey
Conclusion
8 Future of the EU
8.1. Internal issues
8.2. External challenges
8.3. A new design?
8.3.1. Two-speed EU
8.3.2. Euro in the line of fire
8.3.3. Multi-layer, multi-speed EU
Conclusion
Acknowledgments
EU updates
About the Author
APPENDIX I
APPENDIX II
APPENDIX III
APPENDIX IV
APPENDIX V
APPENDIX VI
APPENDIX VII
APPENDIX VIII
APPENDIX IX
APPENDIX X
APPENDIX XI
APPENDIX XII
APPENDIX XIII
Annotations
Abbreviations
AFSJ Area of Freedom, Security and Justice
CAP Common Agricultural Policy
CFSP Common Foreign and Security Policy
CoA Court of Auditors
CML Rev Common Market Law Review
Coreper Committee of the Permanent Representatives
CSDP Common Security and Defence Policy
CST Civil Service Tribunal
CT Constitutional Treaty
CU Customs Union
CUA Customs Union Agreement
EAEC See Euratom
EC (Treaty of the) European Community
ECB European Central Bank
ECHR European Convention of Human Rights
ECJ European Court of Justice
ECOFIN Council of Ministers for Economics and Finance
ECSC European Coal and Steel Community
ECtHR European Court of Human Rights
EDC European Defence Community
EEA European Economic Area
EEC (Treaty of the) European Economic Community (‘EC’ after Maastricht)
EFTA European Free Trade Association
ELRev European Law Review
EMU European Monetary Union
ENP European Neighbourhood Policy
EP European Parliament
EPC European Political Cooperation
ESCB European System of Central Banks
ESDP European Security and Defence Policy
EU European Union (also: Treaty of Maastricht establishing the European Union)
EuR EuropaRecht
Euratom European Atomic Energy Community
Eurojust EU Judicial Cooperation Unit
Europol European Police Office
FSJ Freedom, Security and Justice
FYRoM Former Yugoslav Republic of Macedonia
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GC General Court
GDP Gross Domestic Product
GNI Gross National Income
ICJ International Court of Justice
IGC Intergovernmental Conference
HR High Representative (of EU for Foreign Affairs and Security Policy)
ILO International Labour Organisation
JHA Justice and Home Affairs
MEEQR Measures Having an Equivalent Effect to Quantitative Restrictions
MEP Member of the European Parliament
MLR Modern Law Review
MS Member States
NATO North Atlantic Treaty Association
OECD Organisation for Economic Cooperation and Development
OEEC Organisation for European Economic Cooperation
OJ Official Journal of the European Union
OMC Open Method of Coordination
PJCC Police and Judicial Cooperation in Criminal Matters
QMV Qualified Majority Voting
SEA Single European Act
SGP Stability and Growth Pact
SIS Schengen Information Office
ToA Treaty of Amsterdam
TC Technical Cooperation
TEC Treaty establishing the European Community (replaced by TFEU)
TEU Treaty on European Union (generally referring to Lisbon Treaty)
(‘former’ or ‘old’ TEU refers to Treaty on European Union in force before Lisbon Treaty was enacted on 1 December 2009)
TFEU Treaty on the Functioning of the European Union (in Lisbon Treaty)
ToN Treaty of Nice
TRIPS Agreement on Trade-related Aspects of Intellectual Property Rights
TTIP Transatlantic Trade and Investment Partnership
UK United Kingdom
UN United Nations
U.S. United States of America
WEU Western European Union
WTO World Trade Organisation
YEL Yearbook of European Law
See also Appendix X for more abbreviations
Note: Throughout this book, ‘he’ shall mean ‘she’, without any prejudice or intention of discrimination, when a person of determined gender is, or cannot be identified in the text.
Preface to the second edition
Europe has already celebrated its 60th birthday, and, in spite of the recent crises, it seems to be alive and kicking, to the surprise and displeasure of those who have been predicting, decade after decade, its ‘imminent’ disaggregation.
From a modest six-nation association, which in 1955 adopted the Messina Declaration, it is now a 28-member¹ regional political and economic power, playing in the same league as the United States of America, Russia, China, and India. With a surface of 4.38 million sq. km, it is the seventh largest politically unified, state-equivalent part of the world, and the third most populated, with 508 million inhabitants. Its nominal GDP of US$ 16.22 trillion ($19.21 trillion PPP, 205) has placed Europe to the first position among the world’s ‘nations’, and its GDP per capita of US$ 35,116 makes it No. 14 worldwide in terms of personal wealth of its citizens.²
This book aims at consolidating the information available on the European Union’s formation, evolution, constitutional form, governing institutions, and legal frame, as are now in force and practice, after the enactment of the Treaty of Lisbon.
The present text takes into consideration the fact that it does not address EU Law students but, rather, those interested in management and political sciences. It is, therefore, tailored to provide sufficient understanding of the Union as a construct and a living entity, and to explain how Europe can affect business decisions and behaviour of corporations, governments and individuals in relations and interactions within the EU and between it and third countries.
The crises of 2014 and 2015 in Ukraine and Greece, assorted with the chaotic handling of the migration influx from the Middle East via Turkey, the result of the Brexit referendum in June 2016, and the deepening weaknesses of the economies of Spain, Portugal and Italy will certainly lead to major structural changes in the EU in the coming years and will impact on the Union’s ever-lasting enlargement strategy. Thoughts, trends and proposals on this subject are discussed in the last part of the book.
One of the objectives of this work is to stimulate further research and critical thinking by the reader, and to highlight the complexities of governance in a multi-cultural and pluralistic society such as the Union.
As mentalities have progressively evolved since the inception of the European Communities, new polity standards have become necessary in order to create a spirit of tolerance, collaboration and common vision among member states. This has resulted in an increased adherence to human rights and fundamental freedoms principles, and to fair legal and judicial practices, which must be embraced by candidate states before they can be cleared for full membership.
Solidarity and adoption of collective strategies as regards homeland security and foreign policy are now, in a region surrounded by unstable and unpredictable neighbours, paramount to the Union’s survival and success. This consideration renders the accession hurdles of new entrants and candidates even more difficult that in the past. These topics and issues will be covered in this revised volume as succinctly as possible.
This Second Edition takes into consideration the new challenges the EU is faced with, as discussed above. It also expands on the Competition Policy of the Union and addresses the Union’s international trade activity, mostly with Turkey, the United States, and with the emerging markets of Africa, Asia and Latin America, through a new wave of Free Trade Agreements (‘FTA’). The status of the Transatlantic Trade and Investment Partnership (‘TTIP’), still under negotiation at the time of going to press, is also reviewed.
The migration crisis of 2015-2016 and the faith-based terrorist attacks against the population in a number of Western European countries have divided the Continent not only along a North-South line, but also into two camps: Eastern European v Westerner European states. The divide is deeper than one realises from just following the media. The national and political cultures of the two blocs vary widely, and Brussels and Berlin will have hard time in reconciling these differences in the foreseeable future. Meanwhile, the Commission will be under pressure to review its ambitious enlargement plans. Turkey in early 2016 received promises for accelerating the screening process towards final accession negotiations, within a package of financial and diplomatic concessions made to Ankara by the German Chancellor Angela Merkel and the Commission’s President Jean-Claude Juncker in exchange for Turkey’s lasting effort to stop the massive departure of Syrian, Iraqi, Iranian, and Afghan migrants from the candidate state to Greece. The Western Balkan applicant states are also progressing in their effort to comply with the EU acquis. Moreover, their integration into the Union is geopolitically critical, as the governments of these countries are constantly flirted by Moscow, which feels that the Balkans should remain within the sphere of influence of Russia, as they had been historically.
The Turkish candidacy and EU’s overall enlargement policy have created the need to add text to this Second Edition in order to discuss Europeanisation of candidate states in general, and Turkey’s actual situation in particular.
The exit of the United Kingdom (‘UK’) from the Union, due to be finalised by the end of 2018, based on currently available information, will most likely lead to a new revision of the EU Treaties. The trends in constitutional thinking, as regards the future construction of Europe, will be discussed in the final section of the Second Edition.
1
The formation of the European Union
The beginnings
Robert Schuman, a French lawyer, politician and statesman (1886-1963), has been credited with the idea of a supranational Europe, following the two World Wars of 1914-1918 and 1939-1945, which devastated the Continent, causing 22.5 and 16.4 million casualties respectively. Schuman was born in Luxembourg, but had German nationality because of his father, who was from the Alsace-Lorraine region, occupied by Germany before WWI. Schuman became French national after this region was returned to France in 1918. He quickly realised that Europe would relapse to intestinal fights if the prevailing spirit of nation-state and nationalism were not replaced by a new paradigm, based on good neighbourhood and mutual respect among European countries and their constituents. His proposal for a European Assembly led in 1949 to the creation of the Council of Europe (‘CoE’). Schuman realised that a deeper association of states was possible and embarked on materialising this dream.
The idea of a unified Europe was neither unique nor new. Alexander the Great had 2300 years earlier consolidated the city-states of Greece to one entity. Rome had certainly achieved the control of Europe, from Britain to Malta and from Anatolia to Spain, whereas Charlemagne and Germanic emperors considered the region as one of geographical unit that could be administered by a central government.
Robert Schuman was inspired by the historical and intellectual figures of earlier times, that had imagined a different, cross-border society. In 1949 he reminded his audience that:
"Audacious minds, such as Dante, Erasmus, Abbé St Pierre, Rousseau, Kant, and Proudhon, had created in the abstract the framework for systems that were both ingenious and generous. The title of one of these systems became synonymous with all that is impractical: Utopia, itself a work of genius, written by Thomas More, the Chancellor of Henry VIII, King of England."³
Equally motivated by anti-war concerns, British Prime Minister Winston Churchill evoked already in 1945 in a speech given at the University of Zurich the idea of a united Europe:
In 1946 Churchill delivered another famous speech, at the University of Zurich, in which he advocated a ‘United States of Europe’, urging Europeans to turn their backs on the horrors of the past and look to the future. He declared that Europe could not afford to drag forward the hatred and revenge which sprung from the injuries of the past, and that the first step to recreate the ‘European family’ of justice, mercy and freedom was
to build a kind of United States of Europe. In this way only will hundreds of millions of toilers be able to regain the simple joys and hopes which make life worth living".⁴
Such rhetoric was consistent with various movements going on in Europe at the time: the formation of the European Economic Cooperation (1948), composed of sixteen countries to manage the Marshall Plan funds provided by the U.S. government; the Western European Union (1948), aimed at avoiding conflict within Europe and at assisting militarily any European country attacked; and, as mentioned above, the Council of Europe (1949), which focused on the protection of human rights. The establishment of the last two organisations was influenced by the Cold War and the souvenir of the atrocities of Nazi Germany, and by the contemporary abuses of Josep Stalin’s Soviet Union.
However, all these grand schemes did not reflect Schuman’s or Churchill’s ideal of a supranational state. Schuman, particularly, knew that new ideas could not be implemented unilaterally, and they were at risk of being usurped by the club of diplomats, who would try to work with them in the traditional fashion of 19th century Europe, which had failed to produce tangible results in creating a war-free Europe. He had, therefore, to resign himself to getting together nations that were willing to cooperate on matters that were pragmatic and of actuality to all participants.
The first opportunity presented itself with the Treaty of Paris (1951), which set up the European Coal and Steel Community (‘ECSC’). The original signatories were Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands. The ECSC had been created to integrate the industrial sectors of coal and steel, both vital for energy and for the development of heavy industries, thus of high political significance to the participating countries. The novelty of the concept was that it was a movement towards integration, instead of the usual forms of international organisations. Integration required genuine effort towards common solutions in good faith, rather than multiparty diplomatic negotiations.⁵
The Treaty of Paris and the ‘Messina Declaration’ of 1955,⁶ which followed it, were the departing points for further cross-European integration initiatives. In 1957, the six ECSC members signed the Treaties of Rome, which led to the establishment of two farther communities: The European Atomic Energy Community (‘Euratom’) and the European [Economic] Community (‘EEC’). Although there was, as of 1967, some consolidation of the activities of these communities,⁷ they continued to each have certain independence, and duplication of efforts, until 1993.⁸
Robert Schuman is credited with formulating on behalf of the French government the proposal for the ECSC. However, the initial suggestion to put coal and steel under the same umbrella had come from the U.S., through a letter of its Secretary of State Dean Acheson to Schuman. The United States, as much as the other western powers occupying defeated Germany after WWII, had direct interest in ensuring that West Germany would be integrated into Western Europe as quickly and swiftly as possible, in view of the threat presented by the Soviet Union and by its most loyal ally, East Germany. To achieve this, it was paramount that the West Germans would not be left out of decisions affecting the distribution and management of strategic resources, at a time when their country needed an enormous effort of reconstruction. This was also true for Italy, whose economy and infrastructure had been destroyed during the war. Because of the historical rivalry in European affairs between France and Germany, Acheson deemed that the initiative for West Germany’s inclusion should come from Paris, as a gesture of goodwill towards Bonn.⁹
The intention to build a common interests-based Europe, going beyond technical cooperation, was apparent in Schuman’s speech in 1950, which revealed the ECSC project:
Europe will not be made all at once, nor according to a single general plan. It will be formed by taking measures, which work primarily to bring about real solidarity. The gathering of the European nations requires the elimination of the age-old opposition of France and Germany. […] The pooling of coal and steel production will immediately ensure the establishment of common bases for economic development as a first step in the federation of Europe […].
¹⁰
This intention was confirmed through the Europe Declaration, which gave birth to the ECSC. The six signatories proclaimed that:
"In signing the treaty founding the European Community for Coal and Steel Community, a community of 160 million Europeans, the contracting parties give proof of their determination to call into life the first supranational institution, and consequently create the true foundation for an organized Europe.
This Europe is open to all European countries that are able to choose freely for themselves. We sincerely hope that other countries will join us in our common endeavour."¹¹
The reference to eligibility of ‘countries that are able to choose freely for themselves’ to join this association was aimed at Portugal and Spain, then under dictatorships led by Salazar and Franco respectively, and at the so-called ‘Democratic Republics’ of the Balkans and Eastern Europe, which were part of the Soviet bloc and had, therefore, no autonomy, their economies and political lives being driven by the Kremlin.
The ECSC was original in its structure in that it largely differed from traditional international organisations. Governance of the Community was delegated to a number of new institutions, with a Commission in its centre. It also had an Assembly--later renamed to Parliament--a Council, and a Court. But, as already said, the Commission was the main actor. Its role of achieving the common goals of the Communities and independence in its discharging its duties was safeguarded in the ECSC Treaty:
"[…] The [nine] members of the [Commission] shall, in the general interest of the Community, be completely independent in the performance of these duties, they shall neither seek nor take instructions from any government or from any other body. They shall refrain from any action incompatible with the supranational character of their duties […]."¹²
The Parliament was composed of delegates from each member state’s national parliament and had consultative role only. The Council was composed of members of the governments of the member states and had a policy-making and coordination role, ensuring that the Commission diligently implemented the Community strategy. The Court, consisting of seven independent judges from the member states, had as a mission to make sure that the Treaty was implemented according to the law—the Treaty itself being the legal basis of the Community—and that any amendments to the Treaty, or any actions by the Council and the Commission were also compatible with international law.¹³
Decisions made by the Council and the Commission were binding on all member states and individuals therein, having what is known as ‘direct effect’, which means that Community law automatically had inherent supremacy over national laws. The difference, therefore, with international organisations was that Community decisions did not need validation by national parliaments. This approach deprived national actors (e.g., opposition parties, civil society, etc.) of the right to veto, a common element to relations between international organisations and individual countries. ¹⁴ Another difference in the two systems—Community v international—was the decision-making formula: whereas in international organisations member states retain their sovereignty by making binding decisions through consensus, the Commission, as an independent ‘supranational’ body, could make decisions by majority of its own members, regardless of views of individual member states of the ECSC.
So, the legal formula adopted by the Community was quite novel, based on two main principles: (a) the absence of a normative veto in the national legal orders and (b) the absence of a decisional veto in the Community legal order. This dual approach formed the basis for the conceptualisation of EU law and, eventually, for the modus operandi of the European Union, where its application was expanded to a number of other areas of Community jurisdiction.¹⁵
Carried by the warm reception of the ECSC Treaty among the citizens of the six member states, the French government attempted to expand the collective project of ‘supranationalism’ to another sensitive