Subsidiarity in the EU and Federalism - Thesis Example

Subsidiarity Under European context, subsidiarity refers to the regulation of power to ascertain whether in specific region where joint relative competence is evident and where the Union can decide either to take action or abandon the matter to member states. Theoretically, subsidiarity refers to decision-making that must be taken closely with the citizens unless the EU perceived that specific matter can be effectively undertaken by the national, regional or domestic level (Eurofound, 2010a). Political analysts discuss subsidiarity in reference to federalism, a system of governance with substate/s autonomously operating in a decentralized manner and yet still connected to central government in a collaborative governance. From the historical vantage, the principle of subsidiarity was first introduced by the Treaty of Maastricht, also known as Treaty of European Union (TEU) signed at Maastricht town in 1991, with its elaborate applications explicated through the protocol stipulated in the Treaty of Amsterdam (Eurofound, 2010a). This was perceived to be the turning point of EU integration (Eurofound, 2010a). This paper aims to discuss the theory of subsidiarity of Britain within the light of Germany and United States experiences. The TEU offered a commitment from the European Council (EC) to full Economic and Monetary Union (EMU), provision for European Central Bank, and the establishment of the ‘three-pillar’ structures. These pillars are the European Council, Common Foreign and Security Policy, and Cooperation in Justice and Home Affairs (Eurofound, 2010a). Under EMU, the definition of community was broadened to include the convergence of economic laws, social protection, and of the development of socio-economic cohesion (Eurofound, 2010a). The council have also set monetary policy, coordination with convergence criteria and a single currency (Eurofound, 2010a). Anent thereto was the establishment of institutional reform increased the legislative power of the parliament with the introduction of co-decision processes (Eurofound, 2010a). The Treaty of Amsterdam, on the other hand, was signed on 2 October 1997 by the Foreign Ministers of 15 EU member states and became effective when they ratified this in accordance to their constitutional policies (Eurofound, 2010b). The Treaty of Amsterdam of 1997 substantially amended the three pillar structure of Treaty on European Union to include relevant matters on employment and industrial relations; the acquis of the 1985 Schengen Treaty pertaining to gradual abolition of common border; and the authorization of 13 Member States party to engage in future closer cooperation (Eurofound, 2010b). Hence, on matters of employment and industrial relations, the Agreement on Social Policy was established. The European Commission (2011) expounded that subsidiarity define the boundary between member state and EU’s responsibilities. In its simplest way of presenting the idea of subsidiarity, EC (2011) posits that “if the union has exclusive competence in a particular area, then the Union should act. If the union and the member states share competence, the principle favour that the member state should take into action (EC, 2011).” The Union could only act if member states cannot attain its objective sufficiently and if the Union can achieve them reasonably and effectively (EC, 2011). Such theory correlates with the concept of proportionality in the exercise of competence, exclusively or shared (EC, 2011). The content and form of action of the Union should not exceed from what was aimed by the Treaties (EC, 2011). Decisions on intervention are best slanted to the not restrictive option (EC, 2011). Under the principle of subsidiarity, in all areas which do not fall within its exclusive competence, the Union shall act only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional or local level, but can rather by reason of the scale or effects of the proposed action, be better achieved at Union level. The institutions of the Union shall apply the principle of subsidiarity as laid down in the Protocol on the application of the principle of subsidiarity. National Parliaments ensure compliance with the principle of subsidiarity in accordance with the procedure set out in that Protocol (Article 5(3) of the EU Treaty , as amended by the Treaty of Lisbon). The EU (2011) explicated that it is imperative that arguments on subsidiarity and proportionality be made transparent for constructive deliberation and to validate positions of all member states in the application of principles (EC, 2011) Irrespective of where the initiative originate, compliance of the principle is required for any proposed legislative act (EC, 2011) The Protocol required that statement should have assessment on financial impact, administrative burdens, and the implications to the national and regional rules. It must have substantive qualitative and quantitative indicators (EC, 2011). Further, subsidiarity should not be validated by operational criteria. Following the revision and application made by the Lisbon Treaty, conformity is no longer required e.g. necessity and EU value added (EC, 2011). It has prioritized the procedural aspects to ensure that key actors are able to participate in the process and decision-making (EC, 2011). An impartial or objective pre-legislative phase is important to ensure that the requisites of subsidiarity are exhausted and applied (EC, 2011); and in post-legislative stage, the Court could only check the legality of adopted legislation (EC, 2011) and annual it in case it technically breach subsidiarity (EC, 2011). These are done by in cases such as on the Directives on Aviation Security Charges, Protection of Soil, Equal Treatment outside Employment and Consumer Rights (EC, 2011) and many other cases subjected for rigorous debates by the commission and the parliament. A. Germany  In Germany, while the subsidiarity principle is not mentioned in the Grundgesetz explicitly, it still is evident in the relation between Bund and Länder. Article 30 states that “except as otherwise provided or permitted by this Basic Law, the exercise of state powers and the discharge of state functions is a matter for the Länder.” Thus, while the competence of the Länder is acknowledged, the Bund is restricted and limited in its competence and exercise of power. The history related how the federal State came play a significant role in this aspect. It was and is the Länder who gave competence to the Bund and not vice versa (Delors, 1991). The German Federal Constitutional Court decided its first case under the revised version of Article 72(2), which read as follows:  The Federation shall have the right to legislate on these matter if and to the extent that the establishment of equal living conditions throughout the federal territory or the maintenance of legal or economic unity renders federal regulation necessary in the national interest. An expression of the principle of subsidiarity is clearly noticed which posit that the principle of domestic constitutional law was aimed at being justified for those interested in federalism. Hence, in order that the federal legislation be held of utmost competence, it has to be held valid in accordance to the principle of subsidiarity as mentioned in article 72(2) of the act, as well as fulfil the requirement of the subject matter competency (Delors, 1991). In the year 2002, a federal law, the Geriatric Care Act, was challenged by the state of Bavaria on the grounds of its incapacity to satisfy the requirements of amended article in section 72(2), which incidentally turned out to be the first test of the amended provisions. A part of the Geriatric Care Act was already held invalid previously because it fell outside the federal legislature.  This is distinct from the subsidiarity principle as mentioned in article 72(2) and hence could be applied in any federation which used a traditional subject – matter catalogue for dividing the governmental authority between the centre as well as the regions. In 55 years of the formation of German Grundgesetz, no law ever had been held invalid owing to non-compliance to subsidiarity principle. Thus, it leads us to the question as to whether the principle of subsidiarity is practically amenable in accordance with the judicial enforcement.  In order to make the principle of subsidiarity worthy of justice, it was proposed (and later on rejected), to delegate the power of enforcing article 72(2) on the Bundesrat – the upper house of the German federal legislature, whose members include the delegations of the state governments, rather than the court.  But owing to the fact that the state governments are elected along party lines to the Bundesrat, conferring such power on one house of the legislature resulted in a highly party centric decision on the issue of subsidiarity.  The case of University Professors was also held invalid because it is outside the range of subsidiarity akin to the law pertaining to the shop trading hour was invalidated by the Federal Constitutional Court ---- on the purview of the insufficiency of the federal’s level of competence. Similar decision was rendered on a case on dangerous dogs because this was not supported by article 72(2), thereby not falling into the jurisdiction of a uniform law for the whole country. It is thus a question of utmost significance to deal with such laws that fall outside the jurisdiction of the traditional subject and are bereft of elements of subsidiarity. These German experiences made us reflect on the need to exercise adequate caution especially on legislated laws that are invalidated by court on the grounds of the subsidiarity principle (Taylor, 2006).  B. USA The United States of America the principle of subsidiarity is described concisely in the “Necessary and Proper Clause” of Article 1 (8) in the Constitution.  The country being a federalist republic possesses such decision-making on issues involving national security and of strategic relevance to the federal government. Resolving national issues or decision-making are done at the national level is also done as a federal state while the state governments on the other hand exercise complete authority over decision-making involving “state level” issues and other matters that the federal law assigns or delegates to the state government in accordance with the powers. Thus each state within the United States of America, exercises the decision making power, only on matters restricted to their particular states and local needs. The cities, in the country, however have their own “local government” that are vested with the decision-making authority within its jurisdiction. Delegation of authority functions in accordance to checks and balances method, whereby there exist vertical and horizontal checks and balances between the county as well as city governments, state governments and the federal government to regulate the executive, legislative as well judiciary branches of the government in the exercise of its inherent powers (Bermann, 1994). The system however is not without flaw which was evidently experienced under that infamous Katrina disaster where there was failure in the exercise of application of the principle of subsidiarity. The authorities at all levels of governmental structure were overwhelmed to exercise its vested powers under such devastation. In the light of this situation, the constitutional application of the principle of subsidiarity of the emerging European Union must integrate too the principles of checks and balances system to ensure its effective utilization and smooth functioning. The European Union must also refrain from excessively intervening in the internal affairs of the nations of the European Union. Let the states exercise their freedom and authority to make decision-making on issues that are directly and indirectly affecting them as member of EU. Although the impact of application of the principle of subsidiarity to eliminate the current socio – ecological mess could not be denied, but the widespread acceptance of the principle and its recognition among several levels of governance in all human institutions is proof enough of its positive effects and ability to bring about significant change in the delegation of authority and in decision-making at all levels (Gutierrez, 2005). C.Netherland In 1991, the Netherlands sought the annulment of Council Directive 98/44 because it is incorrectly adopted based of the EC Treaty Art.100a, now tag as the Art.95 of EC as a directive which violated and bypassed the measures for the approximation of Member States laws relating to their respective market (European Court of Justice, 2001). This opposition was inspired on the rigorous debate on intellectual property rights within European Union, especially matters involving biotechnology (European Court of Justice, 2001). Netherlands asserted breached of the principle of subsidiarity, based on Art.3b, now pronounced as Art.5 EC, and the principle of legal certainty. It argued that putting patent on body parts (on biotechnology product), it has undermined human dignity (European Court of Justice, 2001). The Netherland likewise asserted that the directive’s objective was to smoothen internal market and to protect biotechnological inventions which can’t be achieved by the member states alone, thus, failed to consider the requisite of community-based participation (in decision-making) and lacking in social acceptance (European Court of Justice, 2001). The court however ruled that the directive wasn’t contrary to the principle of legal certainty because it has not relied to laws of the Member States by looking into the limits and accounts of the specific nature of the subject matter, and because respect to human dignity is guaranteed under Art.5 (1) of the Directive which stipulated that “human body did not constitute a patentable invention during its formative or developmental stages (European Court of Justice, 2001).” The court also posit that Art.6 “excluded human cloning and modifications to human genetic identity from patentability and that only inventions with combined natural and technical elements are allowed for patent (European Court of Justice, 2001).” The case reflected that the concept of subsidiarity and proportionality are essential in policy-making in EU institutions. The subsidiarity control mechanism of national Parliaments, as introduced by the Lisbon Treaty, which came into force in 2009, made the structural mechanism of legislation more transparent and participatory (EC, 2011). The Lisbon Treaty was considered as the new ex ante political monitoring mechanism where national parliament or any of its chambers is enabled to issue reasoned opinion regarding compliance with the principle by EU proposals of a legislative nature. Said Lisbon Treaty makes provision for national parliaments to contribute for functional Union by (European Scrutiny Committee, 2008). a. Maintaining to be informed by the EU Institutions and forward draft legislative acts to them (European Scrutiny Committee, 2008); b. Ensure that the principle of subsidiarity is respected; c. Being involved in evaluating the implementation of EU policy in the area of freedom, security and justice (European Scrutiny Committee, 2008); d. Involving in the political monitoring of Europol and the evaluation of Eurojust’s activities (European Scrutiny Committee, 2008); e. Participation in the procedures of revising Treaties (European Scrutiny Committee, 2008); f. Notification of applications for accession to the Union (European Scrutiny Committee, 2008); and, g. Participating in inter-parliamentary cooperation between national parliaments and with the European Parliament(European Scrutiny Committee, 2008). With the amendment of the Protocol to the Treaty on European Union on the role of national parliaments, the Commission is now required to produce (a) evidences of documents on the conduct of actual participatory consultation; (b) copies of its annual legislative programme and other planning-related documents; and (c) copies of drafts of legislation (European Scrutiny Committee, 2008). The Parliament must likewise send (a) proposals for legislation originating from the European Parliament, a group of Member States, the European Court of Justice, the European Central Bank or the European Investment Bank, (b) the agendas for, and notice of the outcome of, Council meetings, and (c) the annual report of the European Court of Auditors (European Scrutiny Committee, 2008; Schutze, 1998). While the Treaty has detailed the technical requisites and processes, legal luminaries believed that the substance of the subsidiarity Article in the Lisbon Treaty is the same in its effect as the existing Article in the EC Treaty. However, some political analysts perceived that the changes instituted in Lisbon treaty brought EU to a less federal state and many where apparently confused about how much breathing space is left for a member state to enjoy that freedom for decision-making under its measure of standards. This, albeit understanding on proportionality principle that encourage Community action aimed at coordinating, complementing, supplementing or supporting each other under a federated system. Experts nonetheless argued that the community action becomes justified only when subsidiary principle is met: objectives of the proposed action cannot be sufficiently achieved by Member States’ action in the framework of their national constitutional system and can therefore be better achieved by action on the part of the Community. Guidelines were made to ascertain that some of these conditions are dealt appropriately. These are as follows: (a) The issue under consideration has transnational aspects which cannot be satisfactorily regulated by action by Member States; (b) Actions by Member States alone or lack of Community action would conflict with the requirements of the Treaty (e.g. complexity of competition to avoid disguised restrictions on trade and to strengthen economic and social cohesion) otherwise, this will negatively impact to Member States’ interests; ( c) action at the Community level produce clear benefits by reason of its scale or effects compared with action at the level of the Member States, provided, its processes are in conformity to subsidiarity enquiry; and, (d ) Community legislation’s objective must be relevant and can be substantially and qualitatively based on principles of subsidiarity and proportionality. The Council and the Parliament must likewise examine the Commission’s and assess its consistency under Article 5 of the Treaty. Hence, its protocol was infused with the philosophy of the process federalism but in its finalization, proponent must be ready of the possibility of judicial review in accordance with the rules laid by the Treaty and by the European Court of Justice. De Búrca (2000) opined that the increasing interdependence and political relations of states in a complex world requires a criteria that will regulate in managing relations and evaluating the appropriateness of decision-making of subsidiary states. It is observed that the political scope of European law and policy-making is more extensive than its legal nature (de Búrca, 2000). de Búrca (2000) proposed to broaden the legal formulation in Article 5 (formerly 3b) that relies solely on exclusive competence because these simply addresses two main levels of authority within the European Community (the EC and the Member State) and it only prefer efficiency over other criteria in evaluating the appropriateness of particular levels of decision-making (de Búrca, 2000) de Búrca (2000) pointed that there were legislative inquiries that are inspired from the different levels of government roles and of the various institutions, actors and tiers of political authority that are definitely beyond what is expressed in the various legal formulations of subsidiarity in the EU treaties. de Búrca (2000) opined that there are inquiries pertaining to the role of the Court of Justice in managing and altering the relationship between different levels of authority. de Búrca (2000) likewise pointed that questions pertaining to the structures of subnational, transnational and international levels are not addressed at all. de Búrca (2000) concluded that the concept of subsidiarity continues generate fundamental questions about the appropriate locus of political and legal authority within a complex and multiple-layered polity amid interconnected international order. Researcher reasserted the fact that the locus of authority for political decision-making is focused on the member states (de Búrca, 2000). Considerations were however pressed that although specific communities from member states are decision-makers, but author also recognized the increasing international obligations and establishment of international institutions with differing power due to broadening transnational undertakings and trans-boundary effects that has direct impact to social, political and economy (de Búrca, 2000). This reemphasizes the challenges that national governments regulate matters of political importance (de Búrca, 2000) but at the same time, recognizes the scaling alienation and disenchantment of traditional national democratic processes and fragmentation of political authority within nation states that demand more participation from local and regional levels of government (de Búrca, 2000). Author pressed that political institution or the legislative bodies must also reflect not only of the reasonableness and properties. Aside from this, the principle of subsidiarity has impact on EU legislative policy and in the formulation of decisions considering the adaptability and flexibility of the Treaty and the difficulty of ensuring compliance to the agreement, including the challenges of judicial review in this respect (de Búrca, 2000). Follesdal (1998) likewise shared that the principle of subsidiarity is challenged by the dispute over the “proper domain of sub-units to be regulated by that principle particularly over the status of sub-state regions (p. 196).” Advocates for the rights of the region contended that the principle of subsidiarity must apply all the way to ensure that decisions are done closely to the citizen. Follesdal (1998) also viewed the presence of dispute over the scope and mode of intervention of the EC. Follesdal (1998) cited the case of UK’s resistance to the Community Charter of the Fundamental Social Rights of Workers (1989) and its effect to governance, wages, economy and working conditions. It was unclear if the EC, in that period, would directly intervene in domestic industrial disputes or would it intervene in a general and broad terms. It was also documented that EU regulation is also contested about its power to regulate and rule over issues on bargaining of power and labour rights. Further, Follesdal (1998) also sees the need for the principle of subsidiarity in reference to objectives of political order; of the debates pertaining to redistribution of support services such as the use of structural funds and changes to respond to problems on unemployment and poverty in some regions. Some member thinks that this is a temporary side of payment s in the intergovernmental bargains but others think that the system is instrumental to attain community convergence to attain the living standards because of the socio-economic, cohesion and solidarity of member states (Follesdal, 1998). Subsidiarity may regulate territorial units as federal arrangement and beings centralized still with the EU (Follesdal, 1998; Schutze, 1998). This vertical application may still be horizontally enjoyed in the application of non-territoriality to socialization with all members of the social sectors and functions (Follesdal, 1998). It also addresses conflicts when groups are intermingled in areas and yet deprived by tolerance (Follesdal, 1998). The theological argument of subsidiarity on the other hand, relates to protect private and religious issues, or the ``natural groups of family, church and guild. This thought is maintained by the Delors and German Christian Democratic Party while labour union appreciates subsidiarity to corporatist and consociational arrangements (Follesdal,1998). But unlike United States, the subsidiarity principle used in EU is made distinct by its political, social and economic culture. The US federal system may have decentralized power and economic endeavours, but it is inspired so much with a western culture where democratic institutions have strong political interplay and dynamism in its political structures. Subsidiarity’s principle is also may be applied by any of three bodies: sub-units representation, by qualified majority or by the central unit may be applied by any of three bodies: the sub-units, by qualified majority, or by central unit (Follesdal, 1998). The latter occur where subsidiarity allocates or regulate the exercise of powers of the central unit though it remained reliant to the autonomy of the sub-unit in cooperation under EU’s intervention against national market restrictions (Follesdal, 1998) Further, the responsibility of applying judicial remedy to review the principle of subsidiarity can be filed in different judicial bodies. Demanding for assessment of comparative efficiency and necessity of central unit action is sometimes difficult (Follesdal, 1998). Hence, to avoid undue court activism reviewing authority must respect the political discretion of the Community actors (Follesdal, 1998). The court can review compliance via procedures of consultation and determine whether comparative efficiency is complied under the Treaty of Amsterdam (Follesdal, 1998). These are maybe still contentious issues but the aims of common undertaking and standards of achievement are often contested, including the standard of achievement, but notwithstanding, there is common undertaking to allocate authority to apply such norms (Follesdal, 1998). Conflict may still exist concerning the need for unanimity or qualified majority decisions but this is pretty normal in state of affairs and in governance (Follesdal, 1998), provided there is fiscal efficiency that can hold all burdens and public goods. From the different vantage, the discourse on comparative federalism is simply not about theoretical debates but is also viewed from the lenses that offer different nature that immediately comes to mind the application of these at the edge between domestic and international perspectives of politics and policies (Soudan & Leuven, 1998). Gelauff, Grilo, and Lejour (2008) further pointed the need to appreciate the division of competences between the Union and the Member States as significant in economic reform areas. Substantial policy adjustments must be undertaken here to ensure that the New Lisbon Strategy for Growth and Jobs (EC, 2005) could really help boost the potential of Europe’s economic performance (Gelauff, et.al., 2008). The Union, the Member States in their National Reform Programmes should, under the principle of subsidiarity, should exercise responsibility for initiation, design and implementation of reform policies to ensure economic developments (Gelauff, et.al., 2008). Collaborative efforts can be made by maximizing the dynamics of the areas in education and innovation; the internal market and agricultural policy; corporate taxation; and regional and transport policy (Gelauff, et.al., 2008). The fact that the majority of Commission proposals have not raised any subsidiarity concerns among national Parliaments, and were adopted by the legislators without major subsidiarity discussions, indicates that subsidiarity checks at an early stage of the policy development process are generally effective (Gelauff, et.al., 2008). However, in a limited number of cases, there has been an extensive debate between the European Parliament and the Council on how subsidiarity should be interpreted (Gelauff, et.al., 2008).Thorough political discussions have helped to find an appropriate balance between EU and Member State responsibilities (Gelauff, et.al., 2008). The practice and desirable level of coordination for functional subsidiarity depends on the political economy of European coordination (Gelauff, et.al., 2008). There maybe some imperfections in the process of decision-making but this can be address when subsidiarity is reflected in the economic framework of EU and member states (Gelauff, et.al., 2008). References Bermann, G.A. (1994). Taking Subsidiarity Seriously: Federalism in the European Community and the United States. Columbia Law Review, Vol. 94, No. 2, pp. 331–456. Delors, J. (1991). Le principe de subsidiarite, In: Le nouveau concert eurpeen, Paris, pp. 163-76. Eurofound, Treaty of Maastricht, Dublin, Ireland, 2010a, p. 1 Retrieved: http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/treatyofamsterdam.htm Eurofound, Treaty of Amsterdam, Dublin, Ireland, 2010b, p. 1 Retrieved: http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/treatyofamsterdam.htm European Court of Justice, Netherlands v European Parliament (C-377/98) / Legal Protection of Biotechnological Inventions, Re (C-377/98), Westlaw.uk 09 Oct, 2001, pp. 1-9. European Commission, Report From The Commission On Subsidiarity And Proportionality (18th report on Better Lawmaking), Brussels, 2011, pp. 1-8. European Scrutiny Committee, Subsidiarity, National Parliaments and the Lisbon Treaty: Thirty–third Report of Session 2007–08, House of Commons, London: The Stationery Office Limited, 2008, pp. 1-42. de Búrca, G., Reappraising Subsidiarity’s Significance after Amsterdam, Harvard Law School, MA: Cambridge, 2000, pp. 1-42. Follesdal, A. Survey Article: Subsidiarity, The Journal of Political Philosophy, Volume 6, Number 2, 1998, pp. 190-218. Gelauff, G., Grilo, I. & Lejour, A., Subsidiarity for Better Economic Reform? Netherlands: Springer -Verlag Berlin Heidelberg, 2008, pp. 1-340. Soudan, Y. & Leuven, K.U. Subsidiarity and Community in Europe, Ethical Perspectives, 1998, vol. 5, no. 2, p. 177-186. Schutze, R. Subsidiarity after Lisbon: reinforcing the safeguards of federalism? Cambridge Law Journal, 2009, pp. 1-5. Taylor, P. J. (1996). 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