The European Union: Politics - Term Paper Example

European Union: Politics To comprehend and analyze the factors behind the foundation of the EU politics, it is worthwhile to take a look at the economic aspect of the same and in identifying the basis for the ideology of the Union in opting for a single market. Its primary aim is to create good living conditions for people and to enable them to thrive in the unstable circumstances of the world. And one of the most significant measures taken by it is the creation of an integrated single market to stabilize economic growth and be prepared for financial or commercial crises in future. Evidently, mutual recognition seems to be just one of the tools employed in realizing this goal of the EU.1 The European Union’s Single Market Programme has been a particularly aspiring enterprise, encompassing a colossal governmental plan accomplished within a large, multi-faceted, and highly developed institutional organization. Practically three dozen directives have been effected in the area of financial services and capital movements, directed at liberalizing transactions and harmonizing rules and standards across the EU.2 The “European model” of market integration, like any other major political foundation, has undergone many changes and evolved considerably in the light of the unpredictable economic conditions, expanse of the zone of members participating in the same and many other unforeseen circumstances. Specifically speaking, the core plan of economic integration of Europe via an advanced programme of coordinating national legislation has, predominantly to the extent of financial markets, paved the way for a sweeping substitute founded on Member State “mutual recognition” of prevailing national legislation and regulation.3 The theme of this essay however, is to examine and understand whether this principle, which had been initiated on purely pragmatic grounds; has been able to contribute to the realization of the single market, and accommodated in its sphere other regional situations as well. The principle of mutual recognition essentially means that all Member States in the European Union agree to recognize the legitimacy of one anothers laws, regulations, and standards, and thus facilitate free trade in goods and services without prior synchronization.4 It provides that if a product is legitimately promoted in one Member State and is not subject to Union harmonization it is to be allowed to be marketed in any other Member State, regardless of the fact that it does not entirely conform to the procedural rules of the Member State of destination (or the Member State the product is to be marketed into).5 The exception to this rule is that a product will be disallowed from being marketed only if it can be proved that such refusal is integral to, and is in the best interests of public health, safety or environment of the Member State of Destination.6 This was substantially outlined in the European Commission’s 1985 White Paper which reflected the basic concept underlying European financial markets popularly known as “competition among rules”.7 It is noteworthy to mention that the inception of this principle is the culmination of a series of events whereby the European Community, though having put in its best efforts, remained unsuccessful in effectively eliminating trade barriers among Member States. In its endeavors, it still could not realize or accomplish its objective by either the Rome Treaty of 1957 or the “General Program” also now known as the “Old Approach” (which had been brought into place to harmonize technical legislations of respective Member States). 8 Keeping in perspective the failure of the harmonization of standards with respect to the racing progress in production technologies and other technical innovations, as well as the considerably sluggish implementation of the directives of the Old Approach; the Community hurled in place its “New Approach” in 1985 which is along the lines of mutual recognition.9 It may be marked that the provision of the vital rudiments of the norm of mutual recognition by the rulings of the very famous “Cassis de Dijon”10 case also spurred the establishment of a new program involving this inherent principle of facilitating free movement of goods. The current approach by far as, as opposed to the Old Approach, has been more effective as it ensures a greater degree of compliance in the sense that it integrates the process of ‘verification of conformity with essential requirements’ in the whole system and sees to the practical implementation of the same by establishing an executive framework for the same.11 Though the Old Approach has not been wiped out off the whole scenario, and is still in force and being updated; given its development in later years right from the time of its commencement, the New Approach has significantly aided in increasing the number of harmonized standards, from merely 20 in 1975 to a colossal 5500 in 1999.12 It needs to be mentioned that this principle has been given weightage under the EA13 as well, to facilitate fair market competition and respond to the high ideals of EU’s financial ideology.14 The creation and continuance of a Single Market system has also been in place since the implementation of the Investment Services Directive pursuant to Art. 57 of the Treaty of Rome. Post amendment of the same by the Financial Instruments Directive, mutual recognition has been acknowledged and least possible standards set up throughout the community. According to this principle a company itemized in one Member State can carry on business anyplace in the community without reregistering. It allows for the perpetuation of a single market in the sense that it protects protectionism,15 as was outlined in the case Commission vs. Italy.16 Though the EU has effectuated mutual recognition agreements with countries such as United States, Canada, Australia, New Zealand, Switzerland, Israel and Japan; one of the most widely discussed agreements of EU is with Turkey, under which the latter can suitably vouch for approximately half of its imports and exports.17 As per Decision 1/95 of the EC-Turkey Association Council as well Decision 2/97 of the EC-Turkey Association Council; it is dubiously implied that though a mutual recognition agreement in the non-harmonized area has not openly been laid down, the same will inevitably be comprehended if Turkey espouses and implements all that it had previously obliged to.18 The advantage of adhering to this principle is that it relaxes the barriers and conditions applicable to other countries and allows them a fair participation in the market scenario. The reason being, though Member States can exercise their authority and choice in holding their local needs exceptions to the acceptable standards of the Community, they are required to follow the principle of mutual recognition in accepting the variant standards of other Member States. Which consequently means, that a particular country may have strict regulatory measures in the manufacture of a certain product within its own territorial boundaries, however, it may not prevent the entering of such product within its market, regardless of the relatively lower standards employed by the other country in producing the same.19 To understand and truly comprehend the impact of this tool focus needs to be shifted to the current scenario where this regulatory scheme is being actively employed to improve and enhance international trade. One of the latest and most positive initiatives adopted by the EU has been the fresh approval of a proposal for coordinating the rules and procedures associated to varying marketing authorizations. These is expected to work towards aiding market access for those pharmaceutical companies running short of resources and owing to the costs involved in their management, are becoming progressively unaffordable in their own local market spheres.20 The current case in sight is that of Latvia, a member of the EU; which is reported to be found ranked as low as the 17th in a survey of a figure of 20 markets in Central and Eastern Europe. The danger of healthcare services becoming exorbitant for the average Latvian; the directive as proposed by the EC is based on a solitary set of legislation, and seeks to boost and endorse the employment of this principle for the sanction of preliminary marketing authorization of medicines.21 The recent Agreement on Mutual Recognition between the United States of America and the European Community (June 20, 1997), is also one to be discussed and examined closely for this is a fairly vigilant attempt of both the U.S. and the EU to work out terms of mutual trust, adherence to respective rules and utmost cooperation in their trading activities.22 This Agreement is important in the sense that it came into place due to the establishment of the single market and the symbiotic nature of the U.S. and European markets.23 This inherent principle gets all the more highlighted owing to the difference in attitude of the US and the EU; whereby the former enters into an agreement with a trading partner expecting that the partner will adopt the measures or make the initiative to assist FDA (Food and Drug Administration), in the accomplishment of applying local legal canons to products introduced in the United States.24 Whatever is the assistance provided to the FDA, the underlying assumption is that U.S. law shall ultimately override and decide or determine the standards as to the satisfactoriness of a scrutinized facility or an imported product. In this whole scenario, the other trading partner merely becomes a source of information or service provider, and its laws fall secondary or ancillary to core laws of the U.S.25 This is in stark contrast to what the principle of mutual recognition actually enumerates, in the sense that it introduces a single code of trade conduct or the same standards observed, so as to keep both the trading countries at par with each other. This very attitude spells out the shortcomings the U.S. faces in the internal execution of any agreement it becomes a part of. It also posed as one of the biggest challenges in the trade relations between these two parties, with U.S regulatory officials claiming or in the least, assuming that the FDA enforces the utmost criteria, simultaneously conforming to those standards.26 However such visible differences can be resolved only through the understanding and merging of law, procedure, and practice which are integral to the elimination of trade barriers through mutual recognition. Though there are diverging issues concerning U.S. and EU principles over health, environmental, and safety concerns particularly in the evolving zone of biotechnology seem to me the greater threat at present. The attitudinal differences between these two entities must culminate in some kind of a consensus with regard to segments and produces that fall within the realm of mutual recognition liberalization.27 Where the U.S.-EU business association encompasses the worlds most significant trade relationship, collectively responsible for $ 500 billion in trade in goods and services every year, and their ongoing commercial relationship hit crossroads, with virtually diverging yet radical mindset ascribed to each; in 1995 the New Transatlantic Agenda (NTA) came up to establish an agenda of procedures and internal bodies to assist the U.S. – EU economic cooperation. Needless to say, one among its many objectives was to provide encouragement and impetus to mutual recognition agreements based on the principle of mutual recognition.28And this again can be achieved by way of agreements through the NTM29 as envisioned by the NTA, to prevent the costs and impending regulatory complexities involving the respective rules and procedures of both the trading partners.30 The NTM mainly intends to do away with excessive market control of the host country, eliminating all kinds of market access constraints, as well as supervisory and procedural hurdles through mutual recognition of qualifications, protocols, and other necessities.31 Despite the challenges faced by the EU in it earlier agreement with the U.S., the EC maneuvers momentous market influence in shaping intercontinental standards and supervisory structures necessary to implement mutual recognition policies owing to the extent of its single market, which is currently larger than that of the United States. This market control will only experience an upsurge in the near future as the EC intends to expand its base and cover up to thirteen other nations within the next decade.32 The intense and rapid growth of EU’s Single Market Act inculcating the policy of mutual recognition is expected to coerce and convince foreign firms to adapt and accommodate their national system to pave the way for a mutual transaction arrangement.33 Though looked at it from the U.S. perspective as an impending danger on its own internal market scenario, neutrally viewed the principle of mutual recognition and its contribution to the realization to the single market in the EU; can be considered to be providing the incentive and the scope for competition as now the U.S. would need to acclimatize its own governing structures to once more gain the spotlight in the international market.34 Though the results are unpredictable as of now, the least that can happen is the gradual decrease of the dependence of the nations across the globe, on the U.S. economic structures and trade rules. Nevertheless, the EC model is being gradually accepted and adhered to, not only because it is now the growing force in the international market arena, but also, because the structure essentially works in a relaxed mode that allows for diversity on a platform involving great levels of economic exchange.35 Its concept of mutual recognition and the single market is deemed to be successful as it makes room for an intense and coordinated interaction among different governmental agents, regulatory officials and interested, participating communities; all of which can come together and improve the administrative framework in a global market. These bodies can work together to frame new policies, introduce groundbreaking techniques to further the establishment of a unified market. However, one must remember that as efficacious and applicable the concept of a single European market seems, it still suffers from certain discrepancies that are rendering it less in transparency in dealings and reliable by each passing day. This is resulting in the weakening of the entire ideological edifice of the European market integration system. There are several findings that indicate the same. First, where the European market structure is founded on the inherent principle of free movement of goods and services, without getting disadvantageously affected by the protectionist attitude of the Member States within the EU; the former are palpably flouting these inherent guidelines. A glaring example is that of the manipulative approach Germany adopts in evading foreign competition under the pretext of “services of general interest”.36 Secondly, the foundation of the concept of ‘single European market’ faces the danger of gradual failure with mutual recognition fading away out of sight as attempts are being made to present harmonization methods recommending constitutional guidelines "on a high level" as consistently as possible throughout Europe, as recurrently verbalized in the EUs legal mechanisms.37 In doing this all respective rules and customs of Member States are bunched up together which results in an outcome exactly opposite to what had originally been envisioned by the Single Market Theory.38 Thirdly, the concept is getting overstrained with social policy issues as advocated and brought to the forefront by Member States, who in a bid to escape their responsibility of positively revolutionizing the system are ascribing to or endorsing the perspective of an illusory “European social model”. 39The dangers of furthering this model are that is might propagate higher standards for countries in both Eastern and Western Europe, who by virtue of their individual traditions and capacities will face a lot more pressure to rise up to the standards the EU ironically introduces. Without adequate fundamental reforms at the basic level the European Community can hardly face competitors on an international level. It can only lead to more skepticism, domestic politics in an attempt to protect Member States from adverse and regressive competition, and ultimately lead to the failure of the single market theory.40 And finally, the single market system is recurrently and unabashedly being exploited for disparate political aims. For example, the abuse of Article 95 of the EU for the protection of Single Market by which the EU is permitted to harmonize nationwide regulations through Europe on the occasion of hindrance to the Single Market; spells doom in the light of repeated manipulation of this competence by way of framing rules on an EU platform in areas where it actually has no authority over.41 It is important to remember that the concept of European Single Market can only thrive if transparency among Member States is maintained, revolutionary measures brought about to increase the efficacy of the EU trade relations with other trading entities and the principle of mutual recognition given due regard and religious adherence, so as to pave the way for the growth and perpetuation of the Single Market system. This can only benefit international commercial relations. BIBLIOGRAPHY Engle, Eric. “The EU Means Business: A Survey of Legal Challenges and Opportunities in the New Europe”. DePaul Bus. & Comm. L.J 4 (Spring 2006): 3, accessed March 2010. Dr. Benn, Steil. “Regional Financial Market Integration: Learning from the European Experience”. (1997): 4, available on http://www.tcf.or.jp/data/19981015-16_Benn_Steil.pdf, accessed March 2010. “Mutual Recognition”. (0116)http://ec.europa.eu/enterprise/policies/single-market-goods/free-movement-non-harmonised-sectors/mutual-recognition/ -->, accessed March 2010. Yilmaz, Cetin. “The Elimination of the Technical Barriers to Trade between Turkey and the European Union and its Trade Effects on Turkey”. (May 2002): 5, available on http://www.dtm.gov.tr/dtmweb/yaziciDostu.cfm?dokuman=pdf&action=detayrk&yayinID=1668&icerikID=1804&dil=TR, accessed March 2010. Thione, Lorenzo. “Approaches to Facilitate the Recognition of results “The Experience of the European Co-operation for Accreditation”. March 16-17, 2006, p.7. 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L. 9 (Fall 2002):13 Smitherman III, Charles W. “The New Transatlantic Marketplace: A Contemporary Analysis of United States -- European Union Trade Relations and Possibilities for the Future”. Minn. J. Global Trade 12 (Summer 2003): 14. Bolkestein , Frits & Gerken , Luder . “The EU Single Market: Free Markets, Protectionism and Excessive Regulation”. P.1 available on http://www.cep.eu/fileadmin/user_upload/Pressemappe/EU_Single_Market_by_Bolkestein_and_Gerken.pdf, accessed March 2010 Read More