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There is something rotten in the state of Europe.1
The enthusiasm of the 1960s (with the establishment of the Common Customs Tariff and the introduction of the common policies), the euphoria of the 70s (with the expansion of negative integration and the gradual removal of obstacles to the four fundamental freedoms), the momentum of the 80s (with southward enlargement and the policy of economic and social cohesion) and even the hopes generated by the completion of the internal market and the launch of economic and monetary union and the single currency in the 90s - have all come and gone.
Europe is afflicted by doubt and in a soul-searching mood, as witnessed by a whole series of events: the BSE crisis ("mad cow disease"), which has undermined confidence in the ability of the European institutions to manage complex and critical situations for the well-being of the public,2 the resignation of the Santer Commission in the face of the rather cursory but irrevocable conclusion by the Committee of Independent Experts that it had lost control of and command over its departments,3 the recent Danish vote4 and three consecutive revisions of the Treaties in eight years which, despite their merits, have failed to come up with effective and convincing solutions to the malfunctions that have emerged and the challenges that lie ahead.5
The European Union (EU) now faces an unprecedented enlargement to the East without the institutional and administrative apparatus it needs to succeed.6
The new Prodi Commission has laid the emphasis on a thorough reform of its internal workings and urged the other institutions to follow suit.7 A vast reorganisation of internal structures and procedures is already under way, under the direction of Vice-President Kinnock and geared essentially to improving management.8 It is a good initiative. But is it enough?
Apparently not. The obvious management failings are merely symptoms of general inadequacies and a climate of malaise. They are not the deeper cause, which must be sought in the radical changes and ongoing mutations in the EU's general decision-making process and in the Commission in particular. A long series of developments, often perceptible, sometimes obvious, but mostly latent, have affected both the decision-making machinery and the interaction between the different players involved.
After a long initial period (1957-84) which can be described as consensual, these changes began to take place towards the end of the 1980s with the proliferation of measures needed to complete the internal market and to direct responsibility for managing a mass of concrete projects in fields ranging from regional policy to external relations, taking in social policy, education, culture, etc. 9
Introduction of the principles of partnership and subsidiarity were laudable attempts to stem this bout of regulatory and administrative bulimia.10 Application of these principles has borne some fruits but can they restore the balance while steering Europe towards a course of sound and effective action?11 The answer is clearly "no": The principle of partnership, even applied in a broad sense, not only to the Member States, to whom a large part of the burden of implementing Community rules has already been (re)delegated, but also to non-member countries, in particular the applicant countries,12 is not enough to curb the heavy workload of devising, preparing, negotiating, adopting and implementing general rules. Furthermore, the principle of subsidiarity, even if applied extensively, will never obviate the need to take a large proportion of regulatory decisions at Union level, precisely because even the most cautious use of that principle shows that both national and regional bodies are unsuited to taking this type of decision. It has even been pointed out - and quite rightly - that the Community's powers will be extended regardless of subsidiarity.13
The internal market is a great boon, but if it is to operate smoothly, more measures must be adopted to ensure rapid and effective enforcement throughout the Union of standards, uniform patents, authorisations for the circulation of new products, rules on safety and consumer protection and fair and healthy competition.14 Moreover, science and technology are proceeding apace in all these fields. Quick and effective action is needed. But how?
It is clear that the European institutions - and the Commission in particular - are neither designed nor equipped to tackle such a regulatory challenge. Worse still, this basic deficiency is now compounded by a crisis of identity and confusion over the model for European integration, which certainly do not facilitate the task of redefining and assigning different spheres of responsibility in a realistic and cool-headed manner.
The conclusion must be drawn that Europe is currently suffering from a genuine crisis of governance. In this context, President Prodi's White Paper on European Governance is a welcome development, as it highlights the need to think beyond a purely administrative reform and displays an awareness of the real nature and scale of the problem.15
We use the concept of governance here in its most commonly accepted meaning, to denote the importance of cooperation and positive interaction between the public authorities in different spheres of responsibility and/or at different geographical levels. The concept of governance puts the accent on unity, cooperation and decentralisation and thus forms a stark contrast to bureaucratic hierarchy, compartmentalisation and central control. It is a particularly useful concept for analysing the institutional and regulatory aspects of Europe, as the construction of the Community16 brings into a play a complex power struggle between the central authorities and national and regional authorities dispersed over a vast geographical territory, comprising several independent States with diverging legal and political traditions and requiring far-reaching coordination to ensure the consistency of policies implemented at different levels. In this context, the concept of governance appears to be a more faithful reflection of the institutional balance within the EU, which is a unique entity that cannot be assimilated to any existing model in national or international law.17
On the basis of these premises, President Prodi's communication identifies six areas where work needs to be done on European governance: the first is to enrich the public debate on European matters by bringing discussion of major issues to the people and making scientific expertise more democratic. The second is to improve the way in which the process for producing and implementing Community rules is handled - with special emphasis on aspects other than the adoption of rules, in particular their quality, acceptability and effectiveness - by establishing inclusive procedures and evaluation arrangements. The third area, which is of particular interest for the purposes of this study, is concerned with improving the exercise of European executive responsibilities where there is a plea for greater decentralisation. The fourth task is to promote coherence and cooperation through a "networked Europe". The fifth concerns the way in which Europe contributes to world governance in an increasingly interdependent world where its role is now that of an entire continent. The sixth and final task is to step up integration and strengthen the strategic dimension of policies across the European continent.
Our study relates to the third of these areas and covers in particular what can be termed horizontal/external decentralisation, rather than vertical/internal decentralisation. We have already mentioned the new regulatory challenges faced by Europe. We have also seen that the European institutions, and in particular the Commission, are neither designed nor equipped to face such a challenge. This takes us back to the question of delegating some regulatory authority to independent bodies, unless the Commission is to become a mammoth administration employing tens of thousands of officials, which seems neither politically acceptable nor materially feasible - or even desirable.
Europe has already sensed this need, as witnessed by the proliferation of agencies set up in the last ten years.18 However, because of the strict and detailed legal framework, and overly restrictive interpretation thereof, the role of these agencies has remained largely consultative and executive; hence, far short of what is really needed and what they themselves are capable of. On what terms could they be extended to the regulatory domain? In which sectors should new agencies be set up? How can we guarantee consistency of action? What guarantees must be laid down to ensure their independence, the transparency of their activities and their accountability? These are some of the questions we will ask and attempt to answer.
Because of the dominant line of thinking within the institutions, sustained by case-law dating back 45 years,19 the European legislator can only delegate regulatory powers to institutions provided for by the Treaties, for fear of upsetting the sacrosanct institutional balance. But which balance are we talking about here? Is it the one arising from the ECSC Treaty (establishing the European Coal and Steel Community), which was very different from the institutional balance laid down by the EEC Treaty (establishing the European Economic Community)? And, even if we could argue by analogy, is the institutional balance that existed at the end of the 1950s identical to the one we see today? Does the much-talked-about democratic deficit in the European institutions exist solely in the limited powers of the European Parliament or should it also be sought in the executive rule-making process between the Commission and Council? Are we satisfied with the workings and democratic legitimacy of the various committee procedures?20 What is the respective scope of laws and administrative regulations in Community law? When is the Commission really weakened? Are there lessons to be learned for the exercise of regulatory activity from the answers to the above questions?
Here are a few preliminary problems, which must be overcome before we reach any final conclusions.
It is my personal conviction that there is a crisis of governance in Europe and that one of the most effective remedies is to embark on a thorough overhaul of the EU's regulatory process. In this context, the delegation of regulatory powers, under scrupulous supervision, is I believe the best course to follow -if possible, without having to amend the Treaty first. This is a conviction I have formed from having worked in Commission departments for the past 22 years, including 16 years in the Legal Service, and having witnessed at close quarters the recent crisis culminating in the collective resignation of the Santer Commission, when I was a member of his private office in 1998-99.
This conviction has been further strengthened here in the United States, as I have been able to take a step back from events and study the American model of regulatory agencies, which I feel is in many ways relevant for an analysis of the situation in Europe.
It is now time to take that personal conviction further and present a rigorous demonstration of my intuitions.
I intend to do so as follows: first I shall describe the delegation of regulatory authority in the United States and the EU and the origins and workings of agencies on the two sides of the Atlantic in order to identify common features and differences (Part A).
I shall then look at the balance of powers in the two legal systems in order to demonstrate their intrinsic similarities, on the strength of which I shall relativise the arguments against regulatory agencies based on a supposed respect for an outdated institutional balance (Part B). In these two sections I shall demonstrate the need for and feasibility of regulatory agencies.
Third, I shall address the problem of the substantial and procedural guarantees for an efficient and transparent regulatory process, in particular guarantees of the accountability of the regulatory agencies, which will be examined from two standpoints: autonomy and control (Part C).
In my conclusions I shall attempt to refute the existing status quo in delegation theory within the EU and establish a revised version of the Meroni doctrine.
Last but not least, a few words about my methodological approach. This study does not have any particular theoretical ambitions. I have no epistemological inclinations and do not intend to add yet another "-ism" to what is already a well-stocked collection of different approaches for analysing the phenomenon of European integration.
If there is one point on which all authors agree, it is that the European venture is a highly original one. Researchers are unanimous in citing the unique nature of the Community's institutional architecture and legal system. From that starting point, advocates of the intergovernmentalist/internationalist approach (such as A. Moravcsik)21 stress the dominant role of Member States in the European process, the constitutionalists/supranationalists (such as J.H.H. Weiler)22 insist on the key role played by the Community's novel institutions in developing European integration, in particular the Commission and the Court of Justice, while those who favour the regulatory/infranationalist approach (such as G. Majone)23 highlight the central place of the rule-makers and civil society in the entire rule-making process.
But can and must the European or Community phenomenon be shoehorned into just one of these three main approaches -not to mention functional federalism, consensual or participatory federalism, the theory of integration through the law, institutionalism24 and so many other variants born of laudable intellectual attempts to investigate European integration from a scientific angle (whether multi-disciplinary or not)? My answer is a clear "no".
While it is true that the Council of Ministers lends itself more to an intergovernmental analysis, it is equally plain that the Commission and in particular the Court of Justice call for a more constitutionalist approach, while the utility of the regulatory approach for studying complex decision-making procedures, such as the codecision procedure between Parliament and the Council and in particular what is known as "committee procedure or comitology" (the so-called comitology), cannot be denied either.25
For all these reasons, I would describe that my approach as deliberately eclectic and pragmatic. It thus reflects the Community method, which can be summarised as an international treaty that provides for national powers to be ceded to supranational institutions on which this Treaty confers the right to initiate legislation (common interests), part of the decision-making process (obligation to cooperate) and the tasks of monitoring breaches of the new legal system thus created (adherence to the "federal" pact) and protecting the rights deriving from it (the rule of law).
We have now lived for nearly 50 years under the impact of this novel system whose initial objectives have -to say the least- been expanded in spectacular fashion. And everyone agrees that the practical operation of the system -and very often the results it obtains- go far beyond the aspirations and expectations of the founding fathers of the Treaty. Without any exaggeration, these can be described as unintended effects.26 The construction of the Community is a novel process, but also an open-ended and dynamic one. Each revision of the original Treaty reflects a shared degree of awareness of the additional steps to be taken to serve best the common interest.
It hardly matters if these steps are too timid for some and too bold for others. It hardly matters what each individual sees as the ultimate goal of this unprecedented enterprise. It hardly matters if we eventually arrive at a situation in which the people of Europe (a real European demos) are aware of their common future and want to defend it together.
The important thing is to let the Community method do its work. The rest will follow. It is impossible to predict what the final outcome will be, and most likely that outcome will not correspond exactly to any known formula. It would be contrary to the Community method to try to enclose it in a rigid and inflexible theoretical straitjacket. At the same time it would be a pity to curb its potential effects, which are certainly unpredictable and unintentional, but often fruitful and beneficial.27
For all these reasons I believe one cannot and must not create a single explanatory model of the workings of the Community institutions. If there is one model which fits best, it would be an evolutionary/transformational model, i.e. a model which evolves and is transformed with the institutions -in other words an "anti-model". When and if the process of European integration is ever complete, we shall be able to ask questions about the nature of the outcome and, possibly, formulate explanatory theories.
This study is of course no more than a modest contribution on a very specific individual feature of this magnificent process. It does not set out to draw generalisations, but focuses on the usefulness and feasibility of delegating Community regulatory authority to independent agencies. While taking care to stick to these methodological premises in the arguments I will develop, I shall nevertheless allow myself some necessary digressions to illustrate my theses.
1 To paraphrase a famous exclamation from Shakespeare's Hamlet.
2 The Commission already narrowly survived a censure motion in 1995-96.
3 See the Committee of Independent Experts' First Report on Allegations regarding Fraud, Mismanagement and Nepotism in the European Commission, 15 March 1999.
4 At a referendum on Denmark's membership of the euro, over 53% of the population voted against joining, despite the fact that the Government, the main political parties, employers and trade unions were in favour!
5 The Treaties of Maastricht, Amsterdam and Nice in 1993, 1997 and 2000.
6 Two groups of countries are knocking at the door: the first, consisting of Poland, Hungary, the Czech Republic, Slovenia, Estonia, Cyprus and possibly Malta, should join around 2004, while the second and more problematic group - Slovakia, Romania, Bulgaria, Latvia, Lithuania and possibly Turkey - is expected to join by the end of the decade. This means that around 2010 the EU could have twenty-eight Member States, without counting the former Republics of Yugoslavia (particularly Croatia, but also Macedonia, Bosnia and Serbia (with or without Kosovo and Montenegro) plus Albania, which will certainly have European aspirations once they have become democratic. And the question of Europe's geographical borders has not yet been settled ... See Jacques Attali: Europe(s). Fayard ed., Paris 1994.
7 See Vice-President Neil Kinnock's communication, Some Strategic Reform Issues, 10 November 1999.
8 See Neil Kinnock's communication, presented in agreement with the President and Ms Schreyer, Reforming the Commission, 1 March 2000. An amendment of the Staff Regulations of officials is also under way on the basis of proposals by the Reflection Group on Personnel Policy (the Williamson Report), European Commission, Brussels, 9 November 1998.
9 This was a period of massive extension of the Community's powers: backed up by the political will of the Member States, the Delors Commission assumed direct management of many of these new policy areas.
10 The principle of partnership, already a feature of the application of the common agricultural policy (CAP), was introduced into the management of the Structural Funds, which had gradually grown in importance to account for 35% of the Community budget; the principle of subsidiarity was introduced by the Maastricht Treaty to define more clearly how to exercise powers not held exclusively by the EU. See N. Emiliou: Subsidiarity: an effective barrier against the enterprises of ambition? ELR, vol. 17, 1992, p. 383-407.
11 The pace at which Community rules are introduced has clearly slowed and management of the CAP and regional policy by national government departments has been a marked success. But at the same time new needs have emerged. See below, p. 35-36.
12 Besides the agricultural and Structural Funds, the Commission recently delegated to national authorities the task of implementing major programmes in other fields of activity. See the communication on the Leonardo II, Socrates II and Youth programmes relating to education and training. (note 132 below). On the delegation of responsibilities to non-member countries, see the Report by the Planning and Coordination Group on Externalisation, SEC(2000)823, 11 May 2000.
13 Augustin José Menéndez, Another view of the democratic deficit: no taxation without representation in Symposium: "Responses to Joschka Fischer", Harvard Law School, Jean Monnet Chair Working Papers No 7/2000 (www.jeanmonnetprogram.org).
14 Several authors have sensed and drawn attention to the transfer to the EU of powers relating to risk management after the traumatic experience of the BSE crisis. See, among others, Giandomenico Majone: Europe's "democratic deficit": the question of standards. ELJ, vol. 4, no. 1, March 1998, p. 5-28.
15 See the White Paper on European Governance "Enhancing democracy in Europe" - communication from President Prodi on working methods, SEC(2000)901, 30 May 2000.
16 The term "European Community" refers to the economic aspects of the Treaties and designates what is now known as the "first pillar", while the term "European Union" has a wider meaning which also takes in the second and third pillars, i.e. the common foreign and security policy (CFSP) and cooperation in the fields of justice and home affairs. I use the two terms here interchangeably.
17 There is a vast bibliography on the institutional nature of the EU. However, all authors are agreed on its unique nature. See, among others, Jean-Victor Louis: The Community legal order, 2nd ed., European Perspective Series, European Commission, Brussels, 1990.
18 See below, p.28.
19 Meroni e Co, Industrie Metallurgiche, SpA v High Authority Cases 9 and 10/56, [1958] ECR 11-48 and 53-86.
20 See below, p.41-45.
21 Andrew Moravcsik: Why the European Community strengthens the State: domestic politics and international cooperation, Working Paper No 52, Center for European Studies, Harvard University, 1994. In his more recent work, the author places the civil society as the most important aspect of the European integration. See, The choice of Europe: Social Purpose and State Power from Messina to Maastricht. Ithaca, N.Y.: Cornell University Press, 1998.
22 Joseph. H. Weiler: European neo-constitutionalism: in search of foundations for the European constitutional order, Political Studies, no. 44, 1996, p. 517-533.
23 G. Majone: Regulating Europe, Ed. Routledge, London 1996.
24 In a recent, as yet unpublished study (The institutional foundations of intergovernmentalism and supranationalism in the EU, in IO, no. 56, 2001, forthcoming), G. Garrett and G. Tsebelis attempt to transcend the main schools of thought by establishing a general theory of the workings of the Community institutions based on their overall functional interaction (legislation, implementation, adjudication) as players in the decision-making process (game theory+veto players).
25 Juliet Lodge: Democracy in the EU: the interrelationship between supranational, national and subnational levels of government in Démocratie et construction européenne, M. Tello ed., ULB, Brussels 1995.
26 For example, whether the intergovernmentalists, institutionalists or functionalists like it or not, the procedure of referring cases for a preliminary ruling (Article 234 (former Article 177) of the Treaty) was neither planned nor designed to become a means of exercising indirect control over the constitutionality of national laws.
27 If there is a reliable model for analysing the Community phenomenon, I would say it is a combination of a bottom-up approach (from individuals to the institutions) and a top-down approach (from the Member States to the institutions and Union citizens) aimed at identifying the interaction of the main players in the process, i.e. national bodies and the Community institutions, but also individuals (natural and legal persons), who are perhaps the most active architects, but the least visible and very much neglected by orthodox thinking on European integration. See, Xénophon Yataganas: The individuals and the Member States before the Community's legality, 2 vol. Sakkoulas ed., Athens 1994 and 1998.