Development of Supranational Institutions and their Influence on Economic Integration of Europe - Essay Example

Development & failure of Supranational and their influence on Economic Integration of Europe since World War II European Integration since World War II Academia Research Writer Farzeela Introduction After World War II, where human, rather than minority, rights have become the focus of attention for the entire economic world, the United Nations Charter have endorsed both human rights and the classic sovereignty principle of nonintervention. At such a critical juncture EU emerges as a new model for supranational governance. EU is inconsistent with conventional sovereignty rules. Its member states have created supranational institutions (the European Court of Justice, the European Commission, and the Council of Ministers) that can make decisions opposed by some member states. The rulings of the court have direct effect and supremacy within national judicial systems, even though these doctrines were never explicitly endorsed in any treaty. Treaty of Rome served as a backbone to all other established treaties and theories. The European Act and the Maastricht Treaty have provided for majority, but not unanimous, voting in some issue areas. It is due to the liberalism of Neofunctionalism and Intergovernmentalism theories, which has resulted in the accomplishment of EU. In one sense, the European Union is a product of state sovereignty because it has been created through voluntary agreements among its member states. But, in another sense, it fundamentally contradicts conventional understandings of sovereignty because these same agreements have undermined the juridical autonomy of its individual members. (Stephen D. Krasner) Development & failure of supranational institution (Sacrifice of Sovereignty) and their influence on Economic Integration of Europe since World War II Sovereignty is the central organizing principle of the economic system either applied directly or indirectly, it is taken to mean the possession of absolute authority within a bounded territorial space. Until World War II (WWII), much of the international law was designed to reinforce sovereignty. However just after WWII much of the non-Western world had gained their independence in the decades by setting up a scenario in which many of the new states were not fully sovereign but later they gained recognition as sovereign states, by joining intergovernmental organizations (Eric Brahm). The European Union stands out as the most advanced example of a global economy followed by sovereignty, which is marked by unprecedented levels of economic interpenetration. The initial treaties relating the coal and steel sectors bounded a small group of six European nation states devastated by WWII, later expanded in the landmark Treaty of Rome was signed in 1957, to incorporate all sectors of the economy. Despite of all remarkable supra-national dimensions, European Union has not so much undermined member state sovereignty, as reinforced it by enabling a far greater degree of collective national control over the economy. (Jens Beckert) Today many organizations are state-based seeking to carve out additional authority for them and finding functional benefits in ceding authority to supranational organizations. (Eric Brahm) Schuman Plan Treaty of Paris, 1951 The Schuman Plan, created a supranational agency to manage aspects of national coal and steel policy, such as levels of production and prices. It was agreed that the six countries that signed the Treaty of Paris that were Belgium, France, Italy, Luxembourg, the Netherlands and West Germany, would pool its coal and steel resources. (Schuman) Member nations of ECSC pledged to pool their coal and steel resources by providing a unified market for their coal and steel products, lifting restrictions on imports and exports, and creating a unified labor market. Economically, the Coal and Steel Community achieved early success; between 1952 and 1960 iron and steel production rose by 75% in the ECSC nations, and industrial production rose 58%. When overproduction of coal became a problem after 1959, especially in Belgium, the ECSC demonstrated its flexibility by reducing Belgium's coal-producing capacity by 30% and by making available large sums of money to aid in retraining miners and developing new industries. The ECSC had, by 1970, granted about $150 million in aid to retrain over 400,000 coal miners. The executive machinery of the ECSC provided an important precedent for the future growth of a united Europe whose independence was guaranteed by providing the authority with its own source of income. (ECSC) ECSC (European Coal Steel Community) The British side was unconvinced right from the Second World War to participate in the Iron and Steel Federation. Government believed that their economic goals would be put at high risk if they surrendered control over coal and steel to a supranational authority, which was legally obliged to act in the well-being of the Community, they did not trust the supra national authority but when the government introduced a new regulatory system, whereby the industry's pricing and investment decisions were monitored and controlled by a public authority, they agreed to contribute, hence they contributed which resulted in adequate price control with protection against competition from overseas. It would not be wrong to say that ECSC contributed even more than the other treaties in forming a supranational institute by controlling the increase in pricing exercised by the Board, allowing them to make adequate profits when demand was strong, and above all it was the ECSC, which prevented a collapse of prices during the era of downturn. Treaty of Rome The EU has developed an elaborate institutional framework in the form of supranational power by founding the Treaty of Rome in 1957 for both economic integration and for coordination of military, political, and monetary policy. The treaty actually weakened its enforcement mechanisms compared to what they were in the European Coal and Steel Community (ECSC) in order to protect national sovereignty from European institutions. (Jonas Tallberg) Signed by France, Germany, Italy, Belgium, the Netherlands and Luxembourg, it established the European Economic Community (EEC) and gave existence to the European Atomic Energy Community (Euratom). European Economic Community (EEC) The EEC treaty provided for the gradual elimination of import duties and quotas on all trade between member nations and for the institution of a common external tariff. Member nations agreed to implement common policies regarding transportation, agriculture, and social insurance, and to permit the free movement of people and financial resources within the boundaries of the community. One of the most significant provisions of the treaty was that it could not be renounced by just one of the members and that, after a certain amount of time, further community decisions would be made by a majority vote of the member states rather than by unanimous action. (Derek W. Urwin) The best example of positive integration of EEC has been the introduction of a Single Currency. Promoting the free movement of capital and goods by market friendly regulatory policies has increased trade and foreign direct investment (FDI), which in turn encourages further economic convergence. In consequence, governments have transferred economic, monetary and fiscal policies to the European Central Bank (ECB), a supranational institution that sets interest rates, regulates money supply, supervises the Euro's exchange rate and effectively eliminates democratic mechanisms that influence macroeconomic policy. (Robert Hosking) European Atomic Energy Community (EAEC) Euratom or EAEC an economic organization that came into being as a treaty organization of what had became the European Union. However supranational components were downscaled, when EEC was tried to implement in broader competencies. Euratom loans were introduced to help finance the construction of nuclear installations in the EU. In 1990 the Council increased the amount to 4,000 million. But inside the EU less and less use was made of the loans. By the end of 1996 the amount of outstanding loans was only 572 million. Euratom loans were also made available to "certain countries" outside the EU, 1,100 million could be lent to finance upgrading and completion of nuclear reactors. (Wise 2005a) The members pledged themselves to the common development of Europe's nuclear energy resources by coordinating their nuclear research and development programs and by permitting the free movement of nuclear raw materials, equipment, investment capital, and specialists within the community. Euratom is vested with wide powers, including the right to conclude contracts, obtain raw materials, and establish standards to protect workers and the general population against the dangers of radiation. It is administered by the European Commission, which is advised by the Scientific and Technical Committee and the Economic and Social Committee (European Atomic Energy Community). Creation of Common External Tariff (CET) Just after the WWII, trade between Europe and other developing countries in Asia and Africa increased and as a result the primary producers in Asia and Africa started benefiting by the increases in the price of raw materials. As they were growing richer, their demand for European products increased. All these circumstances helped the war-torn countries to rebuild their agricultural policies accordingly and so was introduced the Common External Tariff which no doubt played a vital role in acknowledging a sovereign state of a supranational institution. Thus opening a new gateway to the trade policies escorted new dimensions towards sovereignty. (Economic Recovery, http://www.thecorner.org) Common Agricultural Policy (CAP) Common Agricultural Policy was implemented by the EU to isolate and solve the problems, which were even worst after the WWII, but the CAP absorbed such a high proportion of the budgetary expenditures of Supranational Authorities, that the adoption of other policies had to be either delayed or even aborted. Although the role of CAP is very vital in the sovereignty of Supranational institutions but the ever-present tension between national and supranational competence and authority regarding food policy is still there; CAP seemed not to be enough to combat the political as well as economical dilemma of the powerful agriculture lobbies winning their way through the threat of European wide starvation in the case of decreased subsidies to agriculture. Thus it can be clearly seen that all CAP has done is the increment of hunger, poverty and at the present moment absorbing 47.5% of the EC budget. European Agricultural Guidance and Guarantee Fund (EAGGF) With the aim of financing the CAP, the European Agricultural Guidance and Guarantee Fund (EAGGF) was established in 1962, which formed an integral part of the Community budget. Income generated by the CAP, such as through import levies or customs duties, formed part of the Community's own resources. Equally, however, the CAP was not designed to be self-financing, so the EAGGF had access to the other budgetary resources of the Community. (Agricultural Law) Maastricht Treaty Maastricht Treaty, another step that participated in the complex legal structure, which established the EC. The goal was to ensure economic and political integration of more than 12 sovereign states. For this purpose they used the instrument of international treaties to create an international treaty like organization, which possessed most of the attributes of sovereignty while at the same time seeked to protect essential aspects of their own sovereign independence, which they failed. Yet the system of treaties establishing the European Union created an international organization, which has some of the classic attributes of sovereignty: citizenship, control over territory and recognition. The unavoidable contradictions and ambiguities of the EC Treaties resulted in much confusion and lie at the heart of the controversy surrounding approval of the Maastricht Treaty. Other treaties also came to dominate the debate as an enlarged European Union was prepared for the 1996 Conference to further revise the Treaties, as provided by the Maastricht Treaty. The European Union created by the Maastricht Treaty does not supersede the sovereignty towards supranational institutions as European Community but rather envelopes it with an additional layer of international law. The Maastricht Treaty distinguished between all areas, which came under the exclusive competence of the Community and other areas where competences were shared. However, the Treaty was unable to explicitly specify the block of powers, leaving behind considerable ambiguity so as to provide utmost coverage to the sovereignty issues. Constitution European institutions are steadily and unambiguously expanding their power over the three pillars of EU policy since World War II: the common market, foreign and security policy, and justice and home affairs. With the addition of ten new members in May 2004, expansion has put significant stress on existing political institutions and accelerated efforts to create new ones. (Jeffrey Cimbalo) Failure to find common economic ground came just weeks after voters in France and the Netherlands dealt, what some observers call, a lethal blow to the Union's proposed new constitution. And they say the first casualty of Europe's latest crisis is EU's further expansion. European Union's enlargement was viewed as necessary for maintaining stability and prosperity of the supranational Institution. Deeper political integration, promised by the new Constitution, was supposed to strengthen the bloc's coherence. ( Jela De Franceschi) The new European Constitution began as an effort to reform the institutional framework of the EU in preparation for the 2004 enlargement but unfortunately the Constitution lacked all the measures to be successful. Currently the EU operates under the separate treaties signed over the years leading to its creation, making EU processes complex and at times non-transparent. Failure to ratify the constitution does not mean an end of the EU however. It simply means that the EU will continue under existing treaties. Analysts predict that some members may form partnerships to pursue deeper integration in certain areas. Some relatively uncontroversial aspects of the constitution may also be salvaged, such as the creation of a foreign minister post and a EU diplomatic service. Some also argue this shock has initiated much needed debate on Europe's political and economic direction, which could help European bureaucrats better connect with the citizens and seek ways to ensure Europe's competitiveness. (2005a) Theories of European Integration European integration has long been dominated by two major theoretical approaches: 'functionalism' and 'intergovernmentalism'. However, policy events, such as the ratification of the Maastricht Treaty and the advent of the single currency have exposed major weaknesses in the explanatory power of the two economic theories. Neofunctionalism and Intergovernmentalism Theories Stanley Hoffman's Theory of Neofunctionalism is all about to capture the problem of security. The idea that cooperation in technical, economic areas must eventually spill over into the higher-political areas of foreign and defense policy is the cornerstone of neofunctionalism and the basis of its theory of security (Bill Mcsweeney). When we examine competition policy in Europe through the lenses of theories like functionalism and intergovernmentalism (IG), these two theories are commonly used to explain cooperation in various policy areas at the European level, while bringing additional benefits. The approach begins with the assumption that for a while consider EU as a political system participating in policy making. First, it places attention on what the EU does. For example, neofunctionalism calls for a gradual but unmistakable shifting of loyalties to the supranational level resembling "the prevailing nature of government at the level of industrial nation in everything but constitutional terminology". Second, the approach permits to test, which policy would serve as the best either neofunctionalism or IG is appropriate within a decision-making framework that looks at the super systemic level, which, in their terms, examines history-making decisions ( Nikolaos Zahariadis). The main insight on the Perspectives on European Policymaking claims that no one theory can explain all policy concepts within a decision-making framework. Examples are the Maastricht Treaty or the Single European Act. The theories that best explain these decisions are liberal IG or neofunctionalism theories. Both functionalism and IG examine policy areas and seek to explain increases in EU competence or oversight. Both IG and functionalism have also broader concerns, e.g., enhanced powers for the European Parliament or different decision-making rules for the Council of Ministers (Nikolaos Zahariadis). Conclusion By conceptualizing a European Policy system, which has given birth to several communities and treaties along with focusing on national levels, it is clear that the end result is a framework, which is used to describe a European system, which is complex, multidimensional, and multi-level, with policy entrepreneurs playing a vital role in implementing policies, although they have not yet practiced to the utmost extent. As far as the Supranational Institutions influence is concerned these institutions' enforcement functions have generally been overlooked, although policy-making in the EU would be of little value if compliance with EU rules could not attain the desired security. The roles that Supra national Institutions have played until now, depend on what aspect of the EU policy process is under scrutiny. Bibliography Agricultural Law, < http://webjcli.ncl.ac.uk/2001/issue2/jack2.html > Barry Eichengreen, Bill Mcsweeney, "Security, Identity, and Interests: A Sociology of International Relations" England, Cambridge University Press, (1999). p 50. British Embassy, Common Agricultural Policy, 2001, ECSC, Eric Brahm, Derek W. Urwin, EU, Microsoft Encarta Euratom 2005, European Atomic Energy Community, European Integration and the Proposed EU Constitution in a Globalized World, 2005a European Commission Energy, External Trade, http://europa.eu.int/scadplus/leg/en/lvb/r11000.htm Jeffrey Cimbalo, Jela De Franceschi, < http://www.voanews.com/english/archive/2005-07/2005-07-04- voa25.cfmCFID=7485868&CFTOKEN=55715589> Jens Beckert, Jonas Tallberg, 2003, European Governance and Supranational Institutions: Making States Comply, p 145 Nikolaos Zahariadis, "Rethinking European Integration in the Competition Domain: A Public Policy Approach". Policy Studies Journal. Vol: 30. Issue: 2. (2002): 229. Robert Hosking, Rural Affairs, Schuman, Stephen D. Krasner, Treaty, 2005 Wise, 2005a, < http://www10.antenna.nl/wise/index.htmlhttp://www10.antenna.nl/wise/493- 4/h5.html> Read More