The (still) sleeping potential of the European single market

Written by Simon Eckert

As the former president of the European Commission, Jacques Delors (Delors, 1989) has pointed out, the citizens of the European Union (EU) cannot fall in love with the single market. While Delors pointed out that efforts in other policy areas should be increased, for this reason, it seems worthwhile to take a look at the single market once again since the absence of love for it may have led to less awareness of the opportunities that came with its establishment. In the following I will argue that, whilst there is no need for policymakers to fall in love with the single market, they should at least be thinking about whether it is time to marry the single market, both for practical reasons connected to the EU’s legitimacy with its citizens and to the EU’s role on the global stage. This seems to be important because there is still the often voiced complaint that the EU is declining on an international level. While it is true that the EU has a lower military capacity than China, Russia, or the United States, it is often forgotten that the third aspect of hegemonic power, besides the size of population and military capacity, is regarded to be the economic potential of a political entity (Lebow and Valentino, 2009, Lavenex et al., 2019).

The narrative that the EU is a loser of globalisation should be questioned on at least two grounds. One, since the fall of the iron curtain, the EU has increased in size due to new member states from the former block of the Warsaw Pact. Second, and more importantly for this article’s argument, there is significant evidence that the EU was able to increase its economic power since the fall of the iron curtain and might well be on the way to becoming the new economic hegemon in global affairs, if that is not already the case. Anu Bradford has shown that the EU does set standards for products on a global scale through its regulatory regime. According to her, this is due to three main factors: First, the EU is regulating a market for which it is relevant for companies to gain access on a global scale. Second, there are institutions in the EU that are capable of regulating this market, and third, there is the political will to deploy this regulatory capacity (Bradford, 2020). It is crucial to point out that this regulation seems to benefit the consumers of the EU since it leads to higher competition in the European Internal Market, and therefore to lower prices (Philippon, 2019). 

Of course, the argument that the EU deprives its member states of sovereignty cannot be warded off on these grounds. However, it should be noted that the debate about what exactly “state sovereignty” should mean in a more globalized world has recently gained traction. In this debate, defenders of a “Westphalian” understanding of sovereignty face opponents arguing that sovereignty can be and is in fact, divided on a European level (Hamuľák, 2015, Jackson, 2003). However, while proponents of the new understanding of sovereignty point out that the question about who the sovereign is has always changed historically, for example from the monarch to the people (Hamuľák, 2015: 84), they cannot convincingly explain how a European sovereign can preserve the democratic principle of fair representation. This is simply because some European Countries are far larger than others and a transnational democracy on a European level would therefore probably lead to a feeling of domination of big European countries, if small countries are not overrepresented, as they are in fact, in the European Parliament. Of course, this assumes that there is currently no majority in most, if not all member states for the nation-states to evolve into some kind of European federation (Winkler, 2019).

Another point that does not follow from the EU’s capacity to rule the world in terms of economic regulation of consumer markets is that the way in which the EU regulates the market is always flawless. It is true, that regulations in the interest of European consumers might undermine the room for economic policies in other parts of the world if small national economies need to submit to rules which might be contrary to the preferences of their population (Bradford, 2020). This could perhaps be called the external democratic deficit of the EU. This is especially interesting for wealthy economies in which many citizens are not only consumers but also shareholders. Philippon (2019: 29-30) describes quite vividly that more competition might not always be in the interest of every citizen, for example, if they hold shares in a leading firm in a highly concentrated market.

However, the main point of this article is not to evaluate how the EU uses its economic power, but to point out that the EU is already the world hegemon in terms of economic regulation of consumer markets, and therefore all but powerless. But one could rightfully ask, what does this have to do with the question of whether the EU enables or disables its member states to take sovereign decisions? The answer is that in terms of economics, market size is a substantial precondition for the capacity of authorities to regulate markets effectively (Bradford, 2020 andBradford, 2012). Thus, it can be argued that the economic integration of Europe has produced something that could be called the “sovereignty paradox”. It is a paradox because the economic integration at a European level has enabled nation-states to have a greater say in how the global economic system is regulated by giving up some autonomy to the level of the EU. This seems to show that the argument that sovereignty is indivisible and an all or nothing matter, like Carl Schmitt (c.f. Schmitt, 1922, esp.: p.9) whose work has recently experienced a revival of attention in far right-groups (Mehring and Steuer, 2019: 50) argued, does not remain convincing in a globalized world regarding economic policy. This is exemplified, by the fact that nation-states tend to lose regulatory capacity and therefore the ability to take their own political decisions if they attempt to influence the playing field of world economics on their own (Bradford, 2020). Of course, the sense in which decisions about regulations are “national decisions” changes at European level, as they are not the decisions of single member states. It should still be pointed out however, that member states and their preferences do play a key role when it comes to economic regulation at EU level (Moravcsik, 2013).    

This is most certainly a factor that EU Officials should consider when attempting to make the new commission “geopolitical”, since there is already a line of thought in international political economy literature that highlights the interdependence between economic forces and how they shape the policies of the globalized world that we are already live in (for possibly the most influential paper in that line of thought see Dietz et al., 2003). This seems even more urgent if it is considered that the “Brussels effect” seems to be a largely unintentional side-effect of EU legislation (Bradford, 2012: 4). It seems to be worth thinking about the consequences of this effect and where and how they might interfere with the geopolitical goals of the EU to achieve coherent policies across different policy areas as well. 

In conclusion, there are two things that policymakers should take from this debate around state sovereignty. First, the EU is, at least in terms of consumer market regulation, improving rather than undercutting the ability of nation-states to control their fate and take decisions according to their preferences. This is the point that should be voiced clearly in debates about EU-member state relationships, as this accurately contradicts the populist narrative of a weak EU that is unable to protect its citizens better than nation-states and only strives to gain greater regulatory power. Second, the EU should become much more aware of its foreign policy strength, seeming to be the hegemon in the world economy. Drawing on this awareness in order to work towards the goal of formulating regulation policies that are in line with other European foreign policy goals will support and reinforce wider European policy objectives. Of course, this is not an easy task, since all member states must agree in matters of foreign policy, but it seems to be an endeavour well worth undertaking as it could significantly strengthen the position of the EU both towards its citizens and towards political competitors.  

References

BRADFORD, A. 2012. The brussels effect. Nw. UL Rev.,107,1.

BRADFORD, A. 2020. The Brussels effect: How the European Union rules the world, Oxford University Press, USA.

DELORS, J. 1989. Address given by Jacques Delors to the European Parliament (17 January 1989). Bulletin of the European Communities.

DIETZ, T., OSTROM, E. & STERN, P. C. 2003. The struggle to govern the commons. science,302,1907-1912.

HAMUĽÁK, O. 2015. Lessons from the “Constitutional Mythology” or How to Reconcile the Concept of State Sovereignty with European Intagration. DANUBE: Law, Economics and Social Issues Review,6,75-90.

JACKSON, J. H. 2003. Sovereignty-modern: a new approach to an outdated concept. The American Journal of International Law,97,782-802.

LAVENEX, S., SERRANO, O. & BÜTHE, T. 2019. Power Transitions and the Rise of the Regulatory State: Global Market Governance in Flux. Regulation & Governance.

LEBOW, R. N. & VALENTINO, B. 2009. Lost in transition: A critical analysis of power transition theory. International Relations,23,389-410.

MEHRING, R. & STEUER, D. 2019. Carl Schmitt and the Politics of Identity. In:SEDGWICK, M. (ed.) Key Thinkers of the Radical Right.Oxford University Press.

MORAVCSIK, A. 2013. The choice for Europe: Social purpose and state power from Messina to Maastricht, Routledge.

PHILIPPON, T. 2019. The great reversal: How America gave up on free markets, Harvard University Press.

SCHMITT, C. 1922. Politische theologie: vier kapitel zur lehre von der souveränität, Duncker & Humblot.

WINKLER, H. A. 2019. Das Europaparlament erhebt einen Machtanspruch, der ihm nicht zusteht [Online]. Neue Zürcher Zeitung. Available: https://www.nzz.ch/meinung/heinrich-august-winkler-lehnt-das-projekt-spitzenkandidatur-fuer-europa-als-irrweg-ab-ld.1495522 [Accessed 08/10 2020].